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Operator: Good afternoon, and welcome to Savers Value Village conference call to discuss financial results for the fourth quarter ending January 3, 2026. [Operator Instructions]. Please note that this call is being recorded, and a replay of this call and related materials will be available on the company's Investor Relations website. The comments made during this call and the Q&A that follows are copyrighted by the company and cannot be reproduced without written authorization from the company. Certain comments made during this call may constitute forward-looking statements, which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from expectations or historical performance. Please review the disclosure on forward-looking statements, including in the company's earnings release and filings with the SEC for a discussion of these risks and uncertainties. Please be advised that statements are current only as of the date of this call. And while the company may choose to update these statements in the future, it is under no obligation to do so unless required by applicable law or regulation. The company may also discuss certain non-GAAP financial measures. A reconciliation of each of the historical non-GAAP measures to the most directly comparable GAAP financial measure can be found in today's earnings release and SEC filings. Joining from management on today's call are Mark Walsh, Chief Executive Officer; Jubran Tanious, President and Chief Operating Officer; Michael Maher, Chief Financial Officer; and Ed Yruma, Vice President of Investor Relations and Treasury. Mr. Walsh, you may go ahead, sir. Mark Walsh: Thank you, and good afternoon, everyone. We appreciate you joining us today. We are very pleased with our fourth quarter results. We delivered our anticipated inflection in earnings, posting our first quarter of year-over-year adjusted EBITDA growth in nearly 2 years, supported by profit contribution gains in both countries. We are also thrilled with the momentum in the U.S., where thrift adoption continues to accelerate and strength remains broad-based across categories and regions. Before we look towards the compelling growth opportunities ahead, let me start with a few highlights from the quarter. Sales in our U.S. business grew 20.6%, or 12.6% when excluding the benefit of the 53rd week, with comps up 8.8%, driven by both transactions and average basket. We attribute this performance to accelerating consumer adoption of thrift and stellar execution by our team, delivering compelling value to consumers. In Canada, our sales trends have stabilized with a 0.7% comp during the quarter. As we take a conservative approach to planning our business in Canada, we have tightly managed production levels, helping us drive year-over-year segment profit growth. We opened 10 new stores in the quarter, finishing the year with 26 openings. As a class, our new stores continue to perform in line with our expectations. We remain confident in our long-term store growth opportunity and a targeted 20% store level contribution margin. Financially, we generated over $74 million of adjusted EBITDA in the quarter or 15.9% of sales. Looking at our loyalty program, we have 6.1 million total active members. As it relates to pricing, we are monitoring trends closely. We feel very good about our competitive positioning and value gaps as new clothing and footwear prices continue to increase in the U.S. Finally, we are pleased to announce our outlook for 2026, and Michael will provide further additional details on our outlook in his remarks. Turning to our results by geography. The U.S. business continues to shine. Our 8.8% comp was driven largely by mature stores with minimal contribution from new stores that are only now beginning to enter the comp base. We are also seeing our customer base continue to skew younger and more affluent. As we shared at ICR, based on our loyalty program data, roughly 40% of our U.S. shoppers are under the age of 45 and about 45% of the household income above $100,000. These trends reinforce the powerful secular shift towards thrift in the U.S. At the same time, attractive real estate opportunities supported by our off-site processing capabilities continue to strengthen our confidence in the long runway for disciplined square footage expansion. In Canada, macro conditions remain largely unchanged. And with a mature market, we continue to plan the business conservatively, which is reflected in the modest growth we saw again this quarter. That said, trends have stabilized and our disciplined approach to managing production allowed us to grow our Canadian segment profit during the quarter. As we significantly slow new store openings and focus on operating more efficiently, we expect margin expansion in Canada and for our Canadian business to continue to be a meaningful contributor to free cash flow. Moving on to new stores. We continue to be pleased with the results, and they are performing in line with our expectations. As I previously noted, our inflection in profitability was in large part driven by the on-plan maturation of new stores, and we believe we can expand our store fleet in the U.S. at current rates over the years to come. We opened 10 new stores during the quarter, bringing our total to 26 new store openings for 2025. For 2026, we are planning to open around 25 new stores. And as a reminder, we're expecting over 20 of those openings will be in the U.S., including expansion in new markets in North Carolina and Tennessee. To this end, we are pleased to be planning store openings across 11 states and a nice mix of infill and new markets. Store growth remains the highest return and most important use of our capital, and we are excited to bring our value offering to more consumers. Shifting now to innovation, which remains a core part of Savers' DNA. At ICR, we introduced ABP Lite, an asset-light extension of our automated book processing or ABP system. We expect returns comparable to our existing ABP system, and we expect that ABP Lite can bring capabilities to roughly 85% of the fleet by the end of the second quarter. We are also investing in proven in-store efficiency initiatives to help offset cost inflation, including autonomous floor scrubbers and AI-enabled HVAC integration. Our innovation agenda continues to focus on 3 key areas: strengthening our price value equation, driving efficiency and cost reduction, and lastly, expanding our data science and business insights. I look forward to sharing more in future quarters. I would like to close by reflecting on another year of meaningful progress since our IPO. At ICR, we outlined 3 strategic pillars for long-term value creation: growth, innovation and capital allocation. In 2025, we made meaningful progress on all 3 of these pillars. Our new stores are maturing as expected and help drive our inflection point with a return to growth in both segment contribution and enterprise adjusted EBITDA. We also continue to advance our innovation agenda, sharpening our price value equation and driving labor efficiency with the initiatives I mentioned earlier a strong example. And we put in place a new capital structure that reduces annual interest expense by $17 million and provides flexibility for continued debt reduction. I'm incredibly proud of the execution from our nearly 24,000 team members and grateful for all of their hard work throughout 2025. Their efforts strengthen our business and helped us deliver on our commitments to shareholders. We are as energized as ever to continue expanding our footprint and bringing our value proposition to more consumers as thrift adoption grows. Our mission is to make secondhand second nature, and we believe that we are well positioned for continued success. I'll now hand the call over to Michael to discuss our fourth quarter financial performance and the outlook for 2026. Michael Maher: Thank you, Mark, and good afternoon, everyone. As Mark indicated, we had a strong fourth quarter. Total net sales increased 15.6% to $465 million. Excluding the benefit of the 53rd week, total net sales increased 8.4%. On a constant currency basis, net sales also increased 8.4% and comparable store sales increased 5.4%. We are especially pleased with our sales results in the U.S., where net sales increased 20.6% to $266 million. Excluding the benefit of the 53rd week, net sales increased 12.6%. Comparable store sales increased 8.8%, fueled by both transactions and average basket with broad-based gains across categories and regions. We believe we're still in the early innings of thrift adoption in the U.S. and are eager to accelerate expansion in markets where we are significantly underpenetrated. We also saw stability in Canada, where net sales increased 9.1% or 3.1% when excluding the benefit of the 53rd week. On a constant currency basis, Canadian net sales increased 3% to $156 million and comparable store sales increased 0.7%, driven by an increase in average basket. In the near term, we do not assume any material improvement in the Canadian economy, and as such, we'll be planning our Canadian business conservatively. However, as Mark mentioned, we do believe that we can still expand segment margins and grow profit contribution even with roughly flat comps through strong execution, efficiency gains and the continued maturation of our new stores. We will also significantly decelerate store openings in Canada, which will provide a benefit to segment margins. Cost of merchandise sold as a percentage of net sales increased 30 basis points to 44.6% due to the impact of new stores, partially offset by comp leverage and associated growth in on-site donations. Salaries, wages and benefits expense was $93 million. Excluding IPO-related stock-based compensation, salaries, wages and benefits as a percentage of net sales increased 90 basis points to 19.2%. The increase was driven primarily by new store growth, an increase in annual incentive plan expense and higher wage rates. Selling, general and administrative expenses increased 8% to $99 million, primarily due to growth in our store base. However, as a percentage of net sales, SG&A decreased 150 basis points to 21.4%. Excluding impairment and contingent consideration charges in the prior year, SG&A as a percentage of net sales was roughly flat. Depreciation and amortization increased 32% to $22 million, reflecting investments in new stores, the impact of the extra week and accelerated depreciation on 7 stores that we closed during the quarter. Net interest expense decreased 8% to $14 million, primarily due to the impact of our recent debt refinancing, partially offset by the impact of the extra week. GAAP net income for the quarter was $22 million or $0.14 per diluted share. Adjusted net income was $24 million or $0.15 per diluted share. Fourth quarter adjusted EBITDA was $74 million, and adjusted EBITDA margin was 15.9%. U.S. segment profit was $60 million, an increase of $11 million, primarily due to increased profit from our comparable stores and new store productivity progression. Canada segment profit was $43 million or up $4 million due to favorable comparable store and new store performance. This acceleration of profit growth in both countries reflects the fact that new stores continue to perform in line with our expectations and mature on schedule as their contribution ramps. Our balance sheet remains strong with $86 million in cash and cash equivalents and a net leverage ratio of 2.5x at the end of the quarter. As previously announced, we repaid $20 million of debt during the quarter and also repurchased 1.1 million shares at a weighted average price of $8.75. This speaks to the power of our model, which enables us to organically fund new store growth, repay debt and repurchase shares, consistent with our capital allocation strategy. Our strong cash flow generation will enable us to further deleverage our business as we target a net leverage ratio of under 2x within the next couple of years. I'd like to now turn to our guidance and discuss our outlook for fiscal 2026, which we believe reflects the momentum in our business as well as an inflection in our earnings. I'll start by providing some important context for our outlook. First, we're at an inflection in our long-term growth strategy, and we're expecting adjusted EBITDA growth in 2026 with roughly flat adjusted EBITDA margins. This reflects the continued maturation of our new stores, some of which are now entering their third year of operations. As we build our pipeline over the next few years, we expect continued improvements in profitability with a long-term target of high teens adjusted EBITDA margins. Second, adjusted EBITDA and EBITDA margins continue to reflect significant preopening expenses, which we estimate will be approximately $14 million to $16 million in 2026, consistent with 2025. We've made good progress on the consistency and flow of our real estate pipeline. We expect new store openings to be reasonably balanced between the first and second half of the year, with most occurring in the second and third quarters, whereas 2025 openings were concentrated in the third and fourth quarters. As a result, preopening expenses will be more front-loaded than last year. Next, consistent with our long-term financial algorithm, we're taking a conservative approach to planning comparable store sales growth, assuming mid-single-digit comp performance in the U.S. and flat to low single-digit comps in Canada. We are assuming no material change in the U.S. or Canadian economies in 2026. We expect modest improvement in gross profit margins as new store headwinds abate and we continue to drive efficiencies in store and off-site processing. We also expect modest operating expense leverage as our IPO-related stock-based compensation will fully run off by the end of the first half of 2026. We expect to recognize approximately $8 million of IPO-related stock-based compensation expense evenly split between Q1 and Q2 of 2026. Excluding noncash items, we expect slight operating expense deleverage due to new stores, roughly offsetting gross margin expansion. As it relates to Canada, our outlook for 2026 is based on an estimated exchange rate of USD 0.72 per Canadian dollar. Also, in 2026, we will be lapping a 53-week fiscal year that will be approximately a 2% headwind to total sales growth. There's no impact on net income, adjusted net income or adjusted EBITDA. Additionally, there's no impact on comparable store sales growth, which is reported on a like-for-like 52-week basis. With that context in mind, our full year outlook for 2026 includes the following: net sales of $1.76 billion to $1.79 billion; comparable store sales growth of 2.5% to 4%; net income of $66 million to $78 million or $0.41 to $0.48 per diluted share; adjusted net income of $73 million to $85 million or $0.45 to $0.53 per diluted share; adjusted EBITDA of $260 million to $275 million; capital expenditures of $125 million to $145 million; and roughly 25 new store openings. Our outlook for net income assumes net interest expense of approximately $50 million and an effective tax rate of approximately 28%. For adjusted net income, we're assuming an effective tax rate of approximately 27%. We are projecting weighted average diluted shares outstanding to be approximately 163 million for the full year. This does not contemplate any potential future share repurchases. Finally, I'd like to briefly touch on our expectations for the first quarter, which is our smallest in terms of both revenue and adjusted EBITDA due to normal seasonal patterns. Q1 has limited new store openings and reflects the impact of an earlier Easter, including store closures in Canada on Good Friday. And as previously noted, preopening expenses will be higher in Q1 this year than last year. Based on these factors, we expect mid- to high single-digit total revenue growth in the first quarter with adjusted EBITDA roughly flat to slightly up compared with last year. We also expect the cadence of earnings through the balance of the year to resemble 2025. This concludes our prepared remarks. We would now like to open the call for questions. Operator? Operator: [Operator Instructions] Your first question comes from Matthew Boss of JPMorgan. Matthew Boss: Congrats on a nice quarter. So Mark, could you speak to the progression of same-store sales that you've seen post holidays in the U.S., just maybe relative to the momentum that you saw in the fourth quarter? How best to think about comp trends in the first quarter relative to the mid-single-digit guide in the U.S. for the year? Michael Maher: Matt, it's Michael. I'll go ahead and take that. So yes, we have continued to see, for the quarter, good momentum in the U.S. Certainly choppy, you're aware of the significant storm there towards the end of January. That definitely disrupted our business in the U.S. We saw similarly severe weather in Canada in January. But thus far, we've seen a nice rebound in February. So for the quarter-to-date, we're continuing to see strength in the U.S., and Canada remains up slightly. So essentially feel good about that relative to the directional guide we've given for Q1. Matthew Boss: Great. And then maybe just a follow-up on stores. So with the acceleration in the pace of new store growth in the U.S. for this year, could you elaborate on new store productivity, maybe what you're seeing, and just expected returns on new stores in the U.S. Michael Maher: Yes. So we continue to be very pleased. New stores progressing in line with our expectations. Really no change there, Matt. I think we've outlined now the overall new store economics averaging around $3 million in sales in the first year, ramping up to around $5 million by the fifth year, again, unprofitable in that first year, but typically breakeven or better by year 2 and something close to 20% contribution margin by year 5. So nothing in the recent openings has changed our view on that. Continue to feel good about that. Operator: Your next question comes from Brooke Roach of Goldman Sachs. Brooke Roach: What are your latest thoughts on pricing, particularly as the industry has raised prices in recent months? Are you seeing any opportunities to lean into specific areas of market share gains by letting price gaps widen in specific categories? And is this driving additional trade-down customer traffic to your stores, particularly in the U.S.? Mark Walsh: Thanks, Brooke. Look, I think as we've talked about in the past, we continually monitor our pricing relative to competition. And obviously, our core objective is to deliver a compelling price value relationship. If others do raise price, we do think it's an opportunity for us to gain share, absolutely. But we also target price increases to aggregate a little under inflation, which 2025 is a good example. We do think we're gaining some share with what is a small but growing price differential relative to what we see in discount retail. Brooke Roach: And then just as a follow-up, Michael, can you help us walk through the puts and takes of the inflection back to gross profit margin expansion that you expect in 2026? Are there any other particular geographical or comp considerations on that, that we should be considering? Michael Maher: Brooke, yes, so first of all, I just would emphasize, it's going to be relatively modest. I mean, as we talked about our EBITDA margins, we're expecting something roughly flat, and that's a modest gross margin leverage, modest OpEx deleverage. I think the biggest thing, obviously, is the maturation of new stores. And so as you think about the fact that our new store growth now is shifting to the U.S., and we really are not going to have a whole lot of new openings, a low single-digit number in Canada, combining that with our efficiency initiatives there, you saw in the fourth quarter that even on a very low comp, we were able to drive contribution growth in Canada, essentially hold contribution margin flat there. We think we have an opportunity to really drive continued margin improvement in Canada even on relatively low growth. Operator: Your next question comes from Mark Altschwager from Baird. Mark Altschwager: I guess, first, with the comp trends you're seeing, can you give us a sense of the trends with the need-to-shop-thrift customer versus the want-to-shop-thrift customer? And then separately, just any color on regional trends within the U.S. And as we think about the growth outlook this year for comps and new stores, what you're most excited about? Mark Walsh: Well, from a consumer perspective, as we talked about at ICR, Mark, we're really excited about what are 2 really important underlying trends for us, the continued growth of our younger customers and the continued growth of more affluent customers or trade down. That is a big win for us. It's a big win from a value perspective. And I think what you're seeing is they're drawn to what is a well-merchandised environment with a terrific price value proposition. Jubran Tanious: Yes. And Mark, this is Jubran. On your question on geography, really no distinction. I mean, we see it across the country, a variety of different markets, different geographies. We see it across very mature stores, and we certainly see growth, transaction growth and sales growth in younger stores as well. So it's pretty encouraging, seeing broad-based growth. Mark Altschwager: And maybe just a follow-up for Michael. Now that we've hit this inflection point in the business in terms of profitability, how should we think about the goal for annual margin leverage on a low to mid-single-digit comp, high single-digit revenue growth? Michael Maher: Yes, Mark, I think as we said, so this year, expecting margins to be roughly flat, and that is an inflection in terms of the profit dollars. We do expect profit margin to follow. And as our new store pipeline continues to mature, we just have stores entering their third year now as we go forward and have stores filling out the fourth and fifth year of that pipeline and continuing to work toward that 20% business contribution, we expect not only a continued tailwind to profit dollars, but to profit margins toward our long-term algorithm goal of high teens. So we do expect further build in that as we go forward. Operator: Your next question comes from Dylan Carden of William Blair. Dylan Carden: Michael, just a point of clarification. So you gave the first quarter flat to slightly up EBITDA margin. Is that kind of the outlook for the balance of the year? It sounded like you said it would be linear? Or do you simply mean it would follow sort of similar seasonality? Can you just unpack some of those comments about what to expect as far as the cadence of them? Michael Maher: Sure, Dylan. Let me just clarify, first of all, Q1 is flat to slightly up EBITDA dollars. I want to be clear about that, not margin. And just to give a little more color on that, we do expect our business contribution to grow. However, we've got some timing issues in Q1 this year relative to last year. We've got -- preopening expenses are more front-loaded because our new store openings are more even across the year. That's a good thing. We've been working toward that, but it does have that implication in terms of the timing of those preopening expenses. And we've got the earlier Easter, meaning we've got some store closures in Canada on Good Friday, which will negatively impact our comp there by a little less than 1 point for the quarter. And so those 2 things are going to weigh on our Q1 EBITDA dollars. After that, we expect the flow, not necessarily that it's flat every quarter, but that the overall cadence and shape of the earnings will resemble 2025. Does that make sense? Dylan Carden: Yes. I appreciate it. And then if not price, can you just unpack kind of the drivers behind basket being up? I don't know if that sort of speaks to customer behavior or what type of customers are in the store, but that would be helpful. Mark Walsh: Yes. Look, I think it's really about transactions in both countries. The U.S., the business and the comp was driven principally by transactions. Obviously, there's a mix of price and UPT in the basket composition. And in Canada, a lot of the stability was led by the increase in transactions as well. So really, really balanced and like the trend in both countries. Dylan Carden: And then just to confirm, the stimulus that everyone is kind of anticipating here on the tax refund, that's not embedded in the expectations here? Are you seeing any kind of early signs that, that might be happening? Any comment there would be helpful. Mark Walsh: It's not embedded in our expectations. We do historically see activity in our business related to the timing of government payments to consumers such as tax refunds, stimulus checks. And look, any time our customers have more money in their pocket, that's good for business. Momentum is strong. We think we'll get our fair share as that occurs. Operator: Your next question comes from Bob Drbul of BTIG. Robert Drbul: Just a couple of quick questions. On the new markets, can you talk a little bit about supply in the new markets or any surprises that you're seeing? And then I guess the other question that I have is largely around the plan for new stores. Have there been any sort of changes to, I guess, the backlog of the new store plan or the new store opening schedule? Jubran Tanious: Bob, this is Jubran. I can take that and the guys can jump in with additional color. So in terms of the new markets, you're absolutely right. Mark referenced that in his opening comments. Really, the majority of our new stores, starting this year, in 2026, 20-plus openings are going to be in the U.S. Pretty excited about the mix. It's a nice mix of both infill and greenfield markets. So in total, we're talking about opening stores in 11 different states. Very excited about our foray into North Carolina and Tennessee. When we think about supply, the first thing to know, and we've said this on previous calls, is that we will not open a new store unless we feel good about that supply equation. And the cornerstone of that is the on-site donation. So these specific locations that we're looking forward to opening, we think they set up very well in terms of a robust on-site donation growth, which we expect to continue to grow for many, many years, just like we see in our mature stores. So that's the first thing to start with. In terms of the delivered supply, we have a number of different tools in our tool belt. We talk about GreenDrop, we talk about all the different ways in which you can collect supply, and we participate in all of them. So it's always market specific. We're always looking ahead. But in terms of any concerns around supply feeding these new stores with their OSD performance and then attractive cost-effective delivered supply to make up the balance, no concerns there. In terms of the second part of your question, backlog, not really. We continue to get really great traction in the tone and tenor of the conversations that we're having with landlords as they see thrift as part of their mix. I think Michael talked about this earlier where we've been working for a couple of years now to get those new store openings feathered across the quarters in a more balanced way, and we've made progress on that each and every year. We'll make more progress on that in 2026. So that's really the goal from an execution perspective is to get that kind of balanced out. Operator: Your next question comes from Peter Keith of Piper Sandler. Alexia Morgan: This is Alexia Morgan on for Peter Keith. Given the typical margin drag associated with new store openings, what gives you confidence in your ability to drive EBITDA margin expansion looking longer term over the coming years while keeping unit growth steady. Are there any specific efficiencies we should be considering that might offset that new store pressure? Michael Maher: Yes. Thanks, Alexia. The biggest thing is the continued maturation of new stores. It's almost a math equation, right? As they continue to develop and grow profitability toward a mature store level, and as we fill out that pipeline and with stores entering their third, fourth and fifth years, we just start to get more offsetting tailwind, more momentum to counteract the impact of the 25 or so new stores that we'll open in any given year. And if you want sort of a near-term proof point of that, if you just look at Q4 and what we did in both countries, frankly, we grew EBITDA, and we actually held EBITDA margin on a business contribution level at least. And that was including in Canada on what was just a little bit above a flat comp. And so that just speaks to the fact that as the new stores continue to mature, that's starting to provide a meaningful tailwind to us as we go forward. By the way, that's not reflecting all kinds of other things we're working on in terms of the innovation agenda around, again, price value equation, cost efficiency and so on that we think can provide additional longer-term benefits. Alexia Morgan: Okay. And then just one more on sales. So U.S. performance was really good. Could you elaborate on the specific drivers of that acceleration and then perhaps give more detail on what informs your Canada forecast going forward? Mark Walsh: In the U.S., look, it's a lot about the secular trend continuing and terrific selection and value and an exceptional brick-and-mortar experience for thrifters. And I think the 8.8% comp is that evidence. The things that we're really excited about in the U.S. in terms of the momentum is, as I stated before, the continued increase in the younger customer and the higher household income customer and transactions and basket drove comps. And I think the other thing that's really exciting about the U.S. momentum is that our new stores are resonating, and we see a lot of momentum from that as well. Michael, do you want to handle the second half of that question? Michael Maher: Yes. So Alexia, you asked about the assumptions behind our Canadian comp plan. So we're planning very conservatively for Canada, something in the flat to low single-digit comp level for the year. And that's pretty consistent with what we've seen both in the fourth quarter and thus far in the first quarter. I think it's a reflection of an economy that appears to have broadly stabilized, albeit at certainly a weaker level than what we see in the U.S. And we're planning our business accordingly. We're not assuming any material change in that in the near term. Mark Walsh: But to add to Michael's comments about Canada, fourth quarter was another step forward. And I think it's indicative of our expectations around Canada moving forward with that increased segment profit growth in a modest comp environment and generating nice strong free cash flow. Operator: Your next question comes from Owen Rickert of Northland Capital Markets. Owen Rickert: We've seen a lot of commentary lately about consumers leaning pretty heavily into thrift for holiday gifting. I guess, based off what you saw in 4Q, strong quarter, obviously. But do you think that behavior is pretty sticky and could potentially carry over to other major holidays and seasonal moments maybe throughout the year? And then maybe secondly, anything you can just share on how holiday shopping patterns this year compared to prior years? Mark Walsh: I'll answer the sticky question. I think overall, what we're seeing with thrift adoption and with our own loyalty database is a very low attrition rate. Once we sign people up and get them into our family, they love the experience, they love the value we're providing. So our attrition rates are exceptionally low. And I think that speaks volumes about the stickiness. On the Q-over-Q... Michael Maher: Yes, Owen, I guess, I just think this is the second consecutive year that we've seen the strongest comp of the year in the fourth quarter for the U.S. So it's hard for us, obviously, to parse all the motivation behind that. But I do think it's consistent with that sort of broader consumer adoption and the acceptance of thrift, including for gifting. And I think we also see it in terms of sort of some of the more giftable categories in the hard goods that you might think about toys, for example, or jewelry continuing to outperform. So I certainly think it's consistent with that thesis. Operator: Your next question comes from Jeremy Hamblin of Craig-Hallum Capital Group. Jeremy Hamblin: I'll add my congratulations on the strong results and hitting that inflection point on profitability. I wanted to start actually on that point about EBITDA drag, which you called out roughly $10 million of hit to EBITDA from new store openings and kind of the impact of those first couple of years. As you're getting through the maturation of the '23 and '24 class of stores, can you give us a sense of what the EBITDA drag will look like in '26? And then as you start hitting, let's call, that tailwind effect that's going to happen as those stores get into years 4, 5 and beyond. Can you give us a sense for what that might be as a help to 2027? Michael Maher: Jeremy, thanks. It's Michael. Yes, it's really not a drag anymore. As we've said now for a while, we expected by '26 that drag to become a tailwind, and it is. It's a modest tailwind this year, because we really only started opening stores in earnest just over 2 years ago, it was sort of second half of 2024, not even really 2 years ago. And so we have these stores now just beginning to enter their third years and that is allowing that net year-over-year impact to be slightly positive this year relative to 2025. And the size of that tailwind, we expect to continue to grow as those stores enter years 4 and 5 and so on. So not ready to guide with any specificity for 2027, other than just to say, as we have for a while, over the longer term, we do expect both EBITDA dollars and margin to grow as the new stores, as that pipeline continues to fill up. And our long-term target remains an EBITDA margin in the high teens. Jeremy Hamblin: Great. And then just my other question. You got some noise related to having a 53rd week in '25. As we think about Q4 in '26, can you just help us understand a little bit of what you think the implications might be on SG&A in particular in Q4 year-over-year and then kind of salary, wages and benefits. Michael Maher: Yes. Well, I guess maybe the way to think about that, Jeremy, is that the fourth quarter impact of giving back that 53rd week, obviously, it's especially pronounced there, 6 or 7 points, give or take, in the fourth quarter. But we also lose that extra week of salary and benefits and cost of merchandise sold in SG&A, and that's why there really isn't much, if any, impact on the bottom line. So it just roughly neutralizes. Operator: Your next question comes from Anthony Chukumba of Loop Capital Markets. Anthony Chukumba: So you guys have talked a lot about the fact you have very high brand recognition in Canada. I was just wondering, I guess, what's that comparable number? I want to say it's like over 90%. What's that comparable number in the U.S.? And then how has that changed over like the last year? Mark Walsh: Look, I think every U.S. market is different. As we've talked about, Anthony, the supply and demand comes from within a 10- to 12-mile radius. I think in our more mature stores, we've got very strong but unquantified brand recognition. And in new markets, we're gaining rapidly as we see in the performance of those new stores. Anthony Chukumba: Got it. And then just one last quick one. Have you seen any shifts in terms of source of supply like between in-store versus GreenDrop versus delivered by the nonprofit, anything notable there that you've seen? Jubran Tanious: Anthony, it's Jubran. Short answer is, no, we haven't. I mean the one thing that we have seen is, of all the different sources of supply, we like the on-site donation for its quality and its cost, and we like our execution on that. We're seeing, across all 3 countries and across the regions within those countries, good robust on-site donation growth. In terms of the composition of the donation or the nature of the supply, no, not really seeing any changes there. Just that we kind of make our own weather when it comes to growing on-site donations. It's totally within our control. We expect it to grow again this year in 2026 and for years to come. Operator: There are no further questions at this time. I would hand over the call to Mark Walsh for closing remarks. Please go ahead. Mark Walsh: Just want to say thank you to everyone for their time and their interest today in Savers Value Village, and we look forward to speaking to you after our next quarter. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Thank you for standing by, and welcome to the PolyNovo First Half FY '26 Results Webcast. [Operator Instructions] I'd now like to hand the conference over to Mr. Leon Hoare, Chairman. Please go ahead. Leon Hoare: Welcome, everyone, to PolyNovo's half 1 results update for the 2026 financial year. My name is Leon Hoare, and I'm the Chair of PolyNovo. I'll provide a brief introduction before I then hand over to our CEO, Bruce Peatey, for his overview, and we will then have our CFO, Jan Gielen, provide the financial update for the half year, and then we'll take questions. I'm very pleased to introduce our new CEO. Bruce joined us in December, so it was about 10 weeks into the role. He joins us with a highly impressive background in med tech executive leadership roles across Australia, APAC and the U.S.A. And he has now engaged with the PolyNovo team around the world, including a U.S.A. visit and has met with key clinicians and customers. Impressively, Bruce has rapidly built a strong understanding of the business and has identified several areas to enhance and many opportunities to pursue. The Board are delighted to have Bruce leading the business. PolyNovo is a company already generating strong results. You will see the financial results. Suffice to say, our momentum is very positive. We've completed our new factory and expanded our R&D capability, and we have a highly talented group of professionals driving our growth. PolyNovo is focused on growth. We're broadening our global reach. We are adding to our clinical indications. We have a highly innovative NovoSorb platform technology that we've only begun to leverage. We have a pipeline of opportunities. And importantly, our products and technology in clinicians' hands provide excellent clinical outcomes. PolyNovo is at an exciting point in its journey and well positioned for strong growth going forward. I now have pleasure introducing our CEO, Bruce, over to you. Bruce Peatey: Thanks, Leon. Hello, everyone. Thank you for joining us today for our first half results, my first as CEO, and I'm extremely proud to be leading this great Australian company. Over the past few months, I've been impressed by the resilience and professionalism of the PolyNovo team during the leadership transition, and I want to acknowledge their efforts as well as the continued support of our shareholders. As PolyNovo moves into this next phase, you should expect to hear greater clarity, more consistent communication and decisive execution, things that ultimately shape long-term value. I'll start with an update on the executive leadership team. I'm genuinely impressed by the depth of experience across our management team. The balanced mix of tenure and fresh perspective gives me great confidence in our collective strength. We are delighted to welcome Amy Demediuk as our new Company Secretary and General Counsel. She joins PolyNovo this week after a stellar career at CSL, including a recent experience in Philadelphia U.S.A., but is now returning to her hometown of Melbourne. Reinforcing PolyNovo's commitment to quality, I would like to highlight that Allison Myers was recently promoted to the role of Chief Quality and Regulatory Affairs Officer. Allison joined PolyNovo last year after nearly 30 years with GSK, both in Australia and the U.K. Finally, we are progressing the recruitment of a Chief Scientific Officer for the organization. It's a critical role for PolyNovo's future to accelerate the pace of our core business expansion, pipeline productivity and strategic partnerships to fully unlock the value of the NovoSorb platform. To that end, we are building a global slate of candidates with the technical capabilities and leadership experience required to drive this next phase of growth. In the first half, group sales grew strongly to $68.2 million, up 26% year-on-year. The U.S. continues to be our key growth engine, delivering $51.7 million, an increase of 25.4%, reflecting strong execution and continued market penetration. The rest of the world delivered 28% growth. This is a good result and shows clear momentum across several markets, but I believe we have room to accelerate further. We see opportunities to strengthen execution to expand adoption and to better leverage our distribution footprint. Jan will walk through our profitability results shortly, including some timing-related and one-off items that we expect to normalize over the full year. Providing more color to the regional performance, APAC delivered an excellent first half with Australia executing well as we broadened adoption beyond traditional burn applications with both NovoSorb BTM and MTX. In India, while the team have faced a complex and slow-moving tender environment, the groundwork they've put in is beginning to pay off. We are seeing increased tender success and growing clinician adoption as more surgeons gain experience with NovoSorb products and share their results with their peers. Across North America, the U.S. continues to perform strongly, and Canada is contributing with solid growth, too. EMEA grew a respectable 22.9% with the U.K. demonstrating the versatility of our portfolio across multiple specialties. With MTX launching later this year, we are well positioned to build on this momentum. Outside the U.K., we've expanded our geographic footprint with several new distribution partners, and our focus is now on accelerating adoption in these newer markets. I'm pleased to report that we are now in the final stages of our PMA submission for an on-label indication for NovoSorb BTM in full-thickness burns. This has been a significant undertaking in partnership with BARDA, enabled by strong cross-functional collaboration across the organizations. Securing PMA approval will strengthen our position in the U.S. burns market and unlock access to other major markets such as Japan and China. The team remains on track to finalize the submission by financial year-end, and we are working diligently to ensure we deliver a robust submission. So I'd like to provide a brief update on the CMS policy changes in the U.S. outpatient market and what they mean for PolyNovo. First to note, the inpatient hospital market remains a strong growth engine for us, and it is unaffected by these policy changes. It's important to clarify that we are committed to maintaining current momentum as we build a disciplined strategic entry into the outpatient setting. Considering the reimbursement changes, we are prioritizing specific outpatient procedures where the provider economics align naturally with the NovoSorb portfolio. In anticipation of the need, we developed a NovoSorb bilayer SynPath brand, specifically for the outpatient environment. SynPath already has an existing HCPCS code, giving us the fastest pathway into the market, closely followed by NovoSorb SynPath monolayer matrix once the code is received later this year. We are currently building inventory in new product sizes appropriate for these procedures with availability expected within this half. And our U.S. commercial team is well positioned to execute across both inpatient and outpatient settings. Often the same surgeons operate in both environments, which gives us strong continuity and leverage with the existing relationships. We are also progressing discussions with office-based distributors and building the go-to-market model to accelerate entry into physician office settings as appropriate. To drive the strategy, we are strengthening market access capabilities. Already supported by an experienced consultant, recruitment is well advanced for a Market Access Director and a Senior Product Manager in the U.S., roles that will significantly enhance our competitiveness in the outpatient market. From a clinical evidence perspective, our evidence base is robust. We now have 348 peer-reviewed real-world evidence studies supporting the NovoSorb platform, giving us a high level of confidence in its clinical performance across a wide range of applications. Importantly, 65 of these studies directly translate into outpatient use, reinforcing the platform suitability across care settings. This includes 5 published studies in the diabetic limb salvage, an area where SynPath has strong potential. And we're expecting data from a randomized controlled trial in diabetic limb salvage out of Adelaide over the next 6 to 12 months, which will further strengthen our evidence base. Looking ahead, we do anticipate the need for a dedicated RCT to support CMS reimbursement in the office setting, particularly for diabetic foot ulcers and venous leg ulcers. We have a robust protocol developed to execute as the clinical evidence requirements become clearer. Our growth priorities are clear. We are focused on maximizing the value of the NovoSorb platform and accelerating the momentum already visible in our core business. NovoSorb BTM and MTX continue to deliver strong performance, and we see substantial runway ahead, both in the U.S. and internationally. In the U.S., our footprint now spans more than 800 hospitals, supported by a highly capable commercial team of over 80 representatives. Importantly, adoption is expanding well beyond burns with clinicians increasingly using our products across a range of reconstructive applications. At the same time, we are progressing the key catalysts that will underpin the next phase of growth. Disciplined execution in the outpatient opportunity, advancing the PMA submission, strengthening our presence in priority global markets and adding velocity to our pipeline through the appointment of a Chief Scientific Officer. Together, these initiatives will give us clear visibility into sustained growth, both in the second half and over the medium term as we fully leverage the versatility of the NovoSorb platform. Today, we're launching our upgraded online investor platform designed to give shareholders clear visibility of our strategy, performance and key milestones. This new hub centralizes all ASX announcements, reports, video content and insights in one place with the ability for investors to subscribe for regular updates. The platform enhances transparency and improves the cadence of communication, making it easier for investors to follow our progress and engage directly with PolyNovo. Over time, this will help us build stronger investor relationships, broaden reach and ensure the market better understands our growth trajectory. You can scan the QR code on the screen or visit investors.polynovo.com to sign up. I will now hand over to Jan to present the financial results. Thanks, Jan. Jan-Marcel Gielen: Great. Thanks, Bruce, and thanks again, everyone, for joining the webcast today. I'll start with our commercial sales performance. NovoSorb product sales were $68.2 million for the period, up 26%, which is an increase of $14.1 million. You can see from the graph presented in dollar terms, $14.1 million of growth achieved this half was greater than what was achieved at the same time last year being $11.9 million. This is a good indicator of the momentum in the business as we head into the second half. We experienced continued strong growth in the U.S., achieving sales of $51.7 million, up 25.3% on the prior period. This growth was driven by strong account acquisition, adding 95 new hospital accounts during the period and continued penetration of existing accounts. In regard to the rest of world results, we reported sales of $16.5 million, up 28.3%. This includes some exceptional results in a number of markets, some with growth rates of 50%, which I will highlight a bit later in the presentation. NovoSorb sales for the group was $6.2 million, up 195.2% with the majority of sales being in the U.S. Moving on to additional highlights for the U.S. As mentioned, the U.S. achieved 25.3% sales growth for the period. NovoSorb MTX sales in the U.S. were $6 million, up 193%. Surgeon adoption of NovoSorb MTX continues to grow and will accelerate across the customer base as more clinical evidence is generated and shared. NovoSorb MTX is now being used in over 240 accounts in the U.S. We recorded strong sales growth in our contracted U.S. networks with GPO sales up 37.8%, IDM sales up 34.1% and federal account sales up 87.2%. Contracted accounts represent 39.9% of total sales in the U.S., and these growth rates are an important indicator of the momentum in the U.S. business. The U.S. business is profitable and growing, generating strong cash flows, and we ended the period with over 800 customer accounts. Moving on to rest of world results. As mentioned, sales were up 28.3% on the prior period. We achieved some exceptional results with -- both in relatively new and well-established markets. In particular, Australia, our home market that we entered several years ago, grew by 52%, which is an excellent result. Other well-established markets such as Canada and Germany grew by 50.8% and 28.3%, respectively. These results are a good indicator of the adoption by surgeons using NovoSorb BTM, not just in large burns, but across a range of indications. Turkey's strong growth continued, up 91.3% for the period. In Turkey, they have reimbursement for NovoSorb BTM for the treatment of burns, but BTM is being increasingly used outside of burns without government reimbursement. This demonstrates the rapid seeding of BTM when we start with reimbursement in a market. India performed well, recording 49.1% growth in what was always going to be a challenging market to develop, but we are making progress. rest of world share of global sales now stands at 24%. We see significant opportunities for growth, particularly in Europe and the Middle East in the short term and new market entries such as Japan and China in the medium term. Moving on to cash flow and the balance sheet. We ended the period with $29.2 million cash on hand. Cash flow from operations of $9 million improved significantly compared to the prior period where a $12.5 million cash outflow from operations was recorded. We turned around the [ aging ] debtor days issue in the U.S. from over 90 days outstanding down to 56 days currently, which is a great result. The impact on cash flow is evident. We completed construction of the new manufacturing facility in Port Melbourne, with CapEx payments of $10.8 million for the period. $2.2 million in CapEx remains outstanding for the new facility and will be paid during the second half. It's obvious from the graph presented, aside from the one-off CapEx spend, the business would have generated free cash flow for the period. With only $2.2 million in CapEx remaining to be paid for the new manufacturing facility, we will be generating free cash flow in the second half, which will be an important milestone achievement for the business. We ended the half period with a strong balance sheet and cash flow, which will enable us to focus further investment on driving revenue growth. Moving on to the P&L. I want to start off by highlighting the underlying EBITDA performance for the period. After adjusting EBITDA for significant items being the impact of the R&D lab fire and unrealized ForEx impact on translation of the balance sheet due to the strong Australian dollar, adjusted EBITDA was $4.7 million, up 82% on the prior period. There are a number of one-off items impacting the reported net profit after tax result, which I'll now explain. BARDA revenue is down on the prior period as expected. The pivotal trial -- pivotal burns trial is near completion as we move closer to submission for premarket approval with the FDA. In connection with the BARDA pivotal trial nearing completion, the trial costs have reduced, which explains the lower R&D expense for the period. Other income includes a $4.6 million interim insurance claim related to the R&D lab fire. This offsets the $4.4 million asset write-off recorded further below in the P&L. Employee-related costs were up 12.2%, which includes $700,000 for restructuring costs in Australia. Employee headcount at the same time last year was 254, which then increased to 301 in June 2025. Since then, headcount has remained steady. Currently, we have 302 employees. Corporate admin and overhead expenses were up only 4.7% after excluding the unrealized ForEx movement on translation of the balance sheet. Due to the Australian dollar appreciating during the period, an unrealized ForEx loss of $761,000 was recorded for the period compared to a $4.6 million unrealized gain in the prior period. During the period, with inventory at comfortable levels after building them up during FY '25, we took the opportunity to bring forward attending to various tasks in our manufacturing facilities in preparation for the premarket approval submission and FDA audit that will follow later this year. To do so, we temporarily reduced manufacturing output, which in turn reduces production recovery to cover manufacturing overhead costs, resulting in an unfavorable manufacturing variance for the period of $3.7 million and gross margin of 88.8% for the half. With these activities now complete, manufacturing output in January has already ramped up without interruption and will improve our production recovery result in the second half. This will increase our gross margin back up to above 90-plus percent for the full year FY '26. And looking forward, we expect to achieve a much improved profit result in the second half. Now we're going to turn to questions. We've got covering analysts dialing in to ask questions, and then we'll move to the web platform for written questions from all our shareholders. So Operator, if you could please connect through the first caller. Thanks. Operator: [Operator Instructions] First question today comes from Shane Storey from Canaccord Genuity. Shane Storey: I'm going to start with Jan, please. Jan, when I back calculate and look at U.S. BTM sales over the period, you see that there's quite a bit of a reversion between after a very strong Q1 and it looked a little bit softer in Q2. And I suppose surgeons are telling us that November was quiet. So the first question was, was that just your general observation? And then I guess, looking ahead, how are you looking at sort of growth rates for BTM specifically over the next couple of years, please? Jan-Marcel Gielen: Sure. Thanks, Shane. Good to hear from you. So look, the second quarter this year was a little bit softer in the U.S. in November itself across a large number of accounts. We just didn't have as many large burn cases come through as we would on average. And also Thanksgiving. So generally, we see lower activity in that month. It bounced back though in December, and we had a solid result for the half, as you can see. Looking forward, I think BTM growth will continue. We still have a lot of growth left in large burns in the U.S. And when we get the PMA approval, that will assist further with penetrating that market and grabbing more market share. And with that, NovoSorb MTX, the release of that is actually assisting sales. It's not cannibalizing sales of BTM. It's enabling them to a large extent. So we've got surgeons now using BTM with MTX where before they wouldn't have used either because MTX wasn't available and the type of wound that they need to heal that needed some packing like 2 or 3 layers of MTX, they couldn't do that with BTM because it's got the temporizing film on it. So it's actually assisting our sales of BTM. So we're still bullish on sales of BTM in burn to an extent, but then we've seen great traction outside of burn. And Bruce will talk a couple of examples of that where we've got some reps are doing some outstanding sales results outside of burn in their territories. But hopefully, that answers your question, Shane. Shane Storey: Yes. I mean we were aware of that sort of adjunctive use of the 2 products together. I guess I'm pretty interested though, outside of that, maybe early observations as to what use cases or indications do you think it's winning, [indiscernible]? Jan-Marcel Gielen: Sure. And Bruce, just as with regards to MTX, you might want to jump in as well and add some color to that, but just where the product is being used. So we are seeing it being used in cases where there are large deficits and you need to stack the device. The idea of MTX as well without the temporizing film is it opens up wounds that can be treated in one step. So with BTM with the temporizing film, you need to go back into surgery after it's been applied to have the film removed. And that's why it's generally used in large burns because it temporizes the wound to the patient and gives the surgeons time to deal with other issues that the patient might have. With MTX, it opens up the opportunity to any type of wound. We know the product can heal a wound where you're missing a dermis. So now from skin cancer excisions to you falling off a motorcycle or whatever it may be, where a surgeon just wants to treat the patient and get them in and out in 1 day or overnight and not have to go back into surgery to have the film removed like with BTM. You don't have to do that with MTX. So it opens up a whole wide range of indications and basically anywhere where you've lost your dermis. We know our product works. MTX can be used. Bruce Peatey: And I'll add a couple of a words -- and I'll add a couple of words to that, Shane. The BTM in that burn space is already doing very well in terms of share and growing. But the opportunity to Jan's point, is that plastic and reconstruction space. And we're broadening into that and the trauma space as well. We're broadening into that, but that will -- that's a much bigger lateral journey for the team. And clearly, it's not as significant in individual patient experiences because you get smaller square centimeter areas of repair required, but there's a much higher volume of patients versus an acute burn. So the team is broadening into that and doing that gradually to put adjunct into our growth rate over and above major burns. If that answers your question. Shane Storey: It does. That's very clear. My last question, just if you could please remind us where the new manufacturing facility takes the business to in terms of the annual revenue demand that it could service. Jan-Marcel Gielen: You dropped out there a little bit, Shane. Is that something about manual processes or... Shane Storey: Yes, the new manufacturing facility, once that's embedded and operational, where does the whole business sort of get to in terms of the... Bruce Peatey: I think it gives us somewhere around 5x our previous capacity. Hopefully, Shane, we're using that over a journey at growing capacity. But it certainly allows us to scale our volume. That's correct, isn't it, Jan, about that sort of ratio? Jan-Marcel Gielen: Absolutely. And it just helps with the complexity as we bring in release different types of devices, different sizes, different SKUs. The modular setup of the new facility gives us a lot of flexibility in how we run shifts and how we make product. So there's that added benefit as well. Bruce Peatey: And we should have that operational in a building mode in the second half of this calendar year. Jan-Marcel Gielen: It's actually -- yes, it's complete, built. We're just going through validation and qualification activities. And July onwards is when we're looking to start firing up the facility. Operator: Your next question comes from Lyanne Harrison from Bank of America. Lyanne Harrison: Bruce, I might start with you. I know you've only been in the seat for 2 and a bit months now. But can you comment on where your 3 key focus areas might be for the next 12 months? Bruce Peatey: Okay. Yes. Thanks, Lyanne. Great to be here. I think like you say, just new in the role, clearly, working with the key stakeholders in the business, like I mentioned already or Leon mentioned, going to the U.S. was an important part of understanding the business with the majority of the revenue coming from there, but also making sure that we're getting -- building a high-performing executive leadership team is probably another focus area for me. I think there's definitely opportunity to sharpen our strategy. The strategy is working well. But as I mentioned previously, is that my focus really is on disciplined execution of the strategy and making sure that we've got a very clear path forward for the team. So really early days, very positive signs for me and what I'm seeing in the organization, but definitely some areas that we can tighten up and look forward to doing that. Lyanne Harrison: Okay. And with, I guess, the strategy outside of the United States, are you comfortable with the markets that PolyNovo is in and growing? Or is there any chance you might change or tweak that a little bit over the next few -- over the next 12 to 24 months? Bruce Peatey: Well, I think the team have done a good job expanding into markets. I think we're over 46 countries around the world now. Clearly, through my experience in Asia, I'm interested in what we can do in Asia, particularly the discussions around Japan and even China, moving forward. I think exploring that opportunity is important for me. But again, for me, it's not really a measure of how many countries we're in. It's how we're performing in those countries. So particularly the work that we've done in EMEA to expand the footprint, it's about making sure we're executing in those markets and supporting our third-party partners to help them grow the business like we've done successfully in our direct markets. Lyanne Harrison: And Jan, you talked about, I guess, some of the softness in November of last year. But can you comment on trading to date in this half, in particular, January and what you're seeing in February? Jan-Marcel Gielen: It's in line with the year-to-date result at the half. So we're trailing well, but we're only early into the second half, as you know. But I guess that should give you a good indication. Lyanne Harrison: And then if I could comment on just some of the rest of the world growth there. Australia, in particular, we saw some quite significant growth there. And you've been in Australia for a number of years now. So what's really changed to get that sort of momentum? And can we expect that to continue in the future? Bruce Peatey: I'll take that one. I think looking into the results in Australia, yes, very positive, and I'm very say, encouraged by what's possible in a market that we've been in for some time. Part of it is, it's a fluctuating type of business when you're in the burn space, of course, and that's, I think, well known. But clearly, I'm very impressed with what the team have been able to do expanding the footprint outside of burns, so into new indications, whether it's BTM or MTX, they've done an excellent job in that space. Operator: [Operator Instructions] Your next question comes from Andrew Paine from CLSA. Andrew Paine: Just coming back to the growth you're seeing in new markets outside the U.S. that you've listed in the presentation. Can you work through the outlook for some of these regions that you see as the key drivers of medium-term growth and really wanting to understand what the investment is or the required investment to ramp up these opportunities? Jan-Marcel Gielen: Bruce, do you want to take that? Bruce Peatey: Yes, I'll start with you, Jan, and I'll come in. Jan-Marcel Gielen: Yes, no problem. Yes. So Andrew, thanks for your question. Good to hear from you. Look, I think as I sort of outlined in one of the slides in the deck when we're covering rest of world. But in the short term, we still see a lot of opportunity in Europe, Middle East, to be quite honest. That's an area where I know Bruce, the chats we've been having since you've arrived that we really want to dig into and focus on. There's a lot of opportunity left in that region. In the regions we're already in and like the U.S. and markets like Australia, but particularly the U.S., and we've seen what we've done in the U.K. and Australia, there's so much more we can do outside of burn, and we're already doing it. And I'm going to steal Bruce's thunder, but we've got one rep in the U.S. who sold last year over $2 million worth of product outside of burn. He doesn't have a burn center in his territory. So that's an example of real success, expanding into indications outside of burns. So there's a lot more depth in left in the U.S. to go, enormous amount. There's -- in Europe, Middle East, there's a lot of that opportunity as well that we need to dig into with our distributor networks. And they're doing well, but there's more we can do. And then in the medium term, Japan, followed by China will be the 2 next big markets, but Japan particularly being one of the most advanced markets in terms of med tech, that's going to be really important for us. But Bruce, you want to add any color to that. Bruce Peatey: Thanks. The one thing I'd add to that is the example of the U.K., a majority of the revenue in the U.K. is outside of burns and the team has done a great job there as well. And it gives us really a best practice or a benchmark that we can work towards in the other markets. So for me, that gives us a lot of -- not just potential, but examples of where it's a reality in markets that we're already in. Andrew Paine: And just, I guess, progressing that a little bit in terms of the investment required for those opportunities. Is that -- is there any insights you can give us there? Just trying to understand the profile going forward? Bruce Peatey: Sorry, so early days. As we've leaned on distribution partners in the majority of the markets in Europe, now it's the time to look at how do we support them with maybe some direct presence, not to necessarily go direct in the market, but to make sure we've got the right support for those -- our distribution partners to help grow into these other areas with a specific level of expertise. So early days, but that's the initial thoughts. I'll be in Europe for the first time with this team next month, and that's when we start shaping the way forward. Leon Hoare: And Andrew, and in the medium term, as Bruce mentioned -- that's right. And Jan mentioned, we'll be looking at our investment requirements for our pathway to market in major countries like Japan. We await our PMA submission because that will be an important adjunct to how we sort of plan that journey, and that will require significant investment working out how we're going to actually enter that market. And longer term, that will be China as well. Andrew Paine: And just one other on FX. Can you just give us any insights of how that's moving at the moment and how that will affect the coming, let's say, 12 months? Jan-Marcel Gielen: Obviously, not helping us and a lot of other Australian, how I can I say, export. So if I had a crystal ball, I could tell you, Andrew. But at this point, with our forecast, we factored in a conservative approach. We allocate resources based on that to make sure we optimize our results, particularly for the full year coming up. So we'll see how things pan out, but we certainly keep it obviously front of mind because we do have a result we need to manage, and that's what we're focusing on. Operator: Your next question comes from [ David Naygan from AMP ]. Unknown Analyst: if you could please just follow up a little bit on some of the questions around the manufacturing variance that you talked about. I believe you said that inventory fell 14.5% to 11.9% in the result. Are you comfortable with the current stock levels to support H2 demand, particularly given the growth trajectory? And is there any risk of a supply constraint whilst this new facility is being validated? Jan-Marcel Gielen: Thanks, David, for your question. So look, no risk of any supply constraint, and it's all really well managed, and we plan everything with the intent of how it ends up coming out the numbers. So what happened for the half is we slowed down manufacturing after building up inventory levels last year, you would have noticed inventory levels got to a higher level than not where we'd normally keep them. But that was purposeful. We had to pause manufacturing and slow it down. We chose to do so in this half just to attend to some activities in preparation for the PMA submission and the FDA will follow later in the year. So we decided to bring that forward. So what that means is we just have less output than planned for the half. And when you have less output, you have less production recovery and less cost -- manufacturing overhead costs getting capitalized into inventory. So we ended up with this $3.6 million unfavorable manufacturing variance for the half. But what happens in the second half, we've ramped up production again. So already in January, it's fired up again, and the result is going to look a lot different for the full year. So for the half, gross margin was 88.8% as a result of that. But for the full year, we'll be up over 90% in line with our budget plan. So it was all premeditated but it is just, I guess, a timing issue. If we weren't reporting at the half, you would just be looking at the year-end number and gross margin will be well over 90%. So hopefully, that answers your question. Unknown Analyst: I might ask a couple more if it's all right. On the CMS output -- outpatient opportunity, -- so I know you've submitted your clinical evidence package already and waiting a response. Just curious if any feedback from the FDA on the timing -- sorry, from the CMS on the timing for the decision. And if there's any revenue contribution that you might have already assumed for your outpatient opportunity in your internal planning for, say, H2 or for FY '27? Bruce Peatey: Yes. So just on the response from the CMS, we're still waiting on that response. However, as I mentioned, we're moving forward quickly with the SynPath brand into the outpatient space. And that's going to be -- that's something that we have ready to go as far as the code is concerned. So now we're ramping up production of those specific sizes that you need for those smaller procedures that are linked to that outpatient setting. Jan, you can speak to potentially the forecasting. Jan-Marcel Gielen: Sure. With forecasting for outpatient, it's all upside to what we currently got in our plans. So there's a lot of opportunities, not just in DFU and so forth. There's a lot of opportunity for our product outside of the hospital arena and even outpatient within the hospital. But right now, we're sort of working through the sales team and the marketing team to sort of shore up our plans and then what that means in terms of sales and production, but it's definitely an upside to our current forecast. Unknown Analyst: Okay. We're treating as upside for now. Yes. Got it. And then last one for me is just on the PMA submission. Do you have any expectations for the FDA review? Is it standard review cycle, PMA review cycle? Or is there any indication that this could be expedited given BARDA's involvement? Bruce Peatey: We haven't had any indication that it had been expedited. We're anticipating a standard review process. Operator: Your next question comes from John Hester from Bell Potter. John Hester: So gents, obviously, the stock has significantly underperformed in the last 12 months or so, it's underperformed the ASX 200, and you've just recorded the weakest period of revenue growth in recent history. So my question is, you spent the last 20 minutes talking about the growth story, but it really hasn't delivered. And I'm just thinking, what are you actually going to do to get that growth rate back above 30%, which sort of is required to justify the premium that this stock has historically been rated at. Jan-Marcel Gielen: John, thanks for the question. Just from my perspective, you're right, we're talking about the growth potential in the U.S. looking into new indications, whether it's within BTM or MTX. We've spoken about the outpatient opportunity as well. And then most importantly, the rest of world, as I mentioned, even though growing at 28% is good. We think that there is opportunity to grow more in that space through that focused execution and partnership with our distribution partners. So whether it is in those new indications and then expanding MTX into the market as well in other markets outside of Australia and the U.S., that's where we see the potential. But ultimately, it's about execution, and that's what we'll focus on. Bruce Peatey: And John, I'd add to that, in the medium term, we see opportunities outside of purely BTM, MTX, SynPath that may or may not be in our hands. So we still see lots of platform and pipeline product development opportunities that will add to what Bruce has just described. Jan-Marcel Gielen: And I might add, Leon, to that. For the half, we added $14.1 million in sales and growth in dollar terms. I'm sure we're going off a lower base. But at the same time last year, it was $11.9 million. So there is a lot of momentum there. And last year was a challenging year. We've got a lot of focus in the business moving forward this year, particularly. And there's some real good examples of success. And like we talked about that rep before that selling product outside of burn $2 million worth a year one rep. So think about that and do the math. So the potential is there. We know what success looks like, and we're just going to -- with Bruce's help, make sure that we're all executing as we should be to make sure that happens. Operator: There are no further phone questions at this time. I'll now hand back for any webcast questions to be addressed. Jan-Marcel Gielen: Great. Thank you. We've got quite a few, and of that a few is complete. We've answered quite a few questions during the discussion so far. But bear with me while I scroll up. Some questions around India and just the prospects and how we've gone to date and what the future looks like there in terms of performance. Bruce Peatey: Yes. So look, as mentioned, with India, yes, we show a significant growth rate off a low base from what I've seen so far working with the India team or connecting with the leadership there. I say they're putting the building blocks in place. More than likely, it's taken longer than anticipated originally to get through that complex tender process. I'm very familiar with the Indian market, have been for many years and not that surprised that it's taking time to get through. The good news is we are starting to see more and more frequent approvals coming through from these tenders. So as I mentioned, the groundwork has been done. It's a very solid and experienced leader that we've got in place there that's built a team ready to execute. We've actually got the largest burn conference that's occurring next week. We've got, I think, what is it, the 33rd Annual Conference of the National Burns Academy. We were there last year with more and more, you could say, evidence being generated and shared on BTM last year. We're very enthusiastic to see how that has progressed over the course of the year. From what we know anecdotally and working with the team, we're seeing more and more cases where surgeons are working with BTM and sharing those results with their peers. So we're quite confident. On top of that, we've got one of our KOLs out of Australia is there in the week leading up to the [ Navacom ] meeting. And Associate Professor Marcus Wagstaff is there. Also, we have [ MJ Panderwal ] from the U.S., actually touring around the U.S. and sharing their experiences with key surgeons around the country. So it's like early days. We expect good things out of India, but in my experience, that will build over time. And from what I see, the building blocks are in place. Jan-Marcel Gielen: Great. Thanks, Bruce. I've got another question here just from -- regarding Beta Cell and just the progress of our relationship with Beta Cell. Bruce Peatey: Yes. So we -- again, we mentioned before, we're very supportive of the work that's being done at Beta Cell. [indiscernible] I met the leaders of Beta Cell last week in Adelaide and again, reiterate that support as we have done in the past, supplying product to help with the development of that really novel technology. So we intend to continue that partnership as we have in the past. Jan-Marcel Gielen: Great. Thanks, Bruce. We've got a question here around operating leverage, and I can take that one. If we look at the numbers themselves for the half, sales growth up 26%, corporate and admin costs, underlying up 4.7%. We removed that unrealized ForEx movement, which gets lumped in that category in the stat accounts and employees up only 12%. We did have some redundancy payouts and various things in the half, but headcount was steady at 302 employees. We had 301 employees at 30 June. So the leverage is there, and it hasn't come through, I guess, in the net profit after tax result because of that manufacturing recovery. But the adjusted EBITDA was $4.7 million for the half and was up 82%. So if you take that $4.7 million and if we didn't purposefully slow down manufacturing that we had to, to attempt certain things, you add on that $3.6 million and all of a sudden, it's over $8 million EBITDA for the half. So the second half is looking a lot more positive because of these one-offs that we don't have to deal with. But the operating leverage is there. And I think we'll see that coming through in the second half and next year as well as well as free cash flow, which would be an important achievement for the business. Just moving on. There's a question around the fire, and we probably should address that just on what caused the fire and if we can comment and if we can't, I think we can't. But maybe, Bruce, if you or Leon want to address that one. Bruce Peatey: Yes. So I think at this stage, investigations are ongoing. We are not in a position to comment on the actual cause of the fire at this point. But I think that's all we've got to say on that topic unless you want to add some more, Leon? Leon Hoare: Well, I mean, we're unhappy that it occurred. Clearly, the team and our insurers have done a thorough investigation. The teams are working through the rebuild project of what was the new R&D lab. The actual technical elements. We know where the focus was, but there are some technical investigations still ongoing by our insurers. On the other side, just to reinforce the point, we haven't compromised our R&D capability. All our projects are ongoing. We had our old lab that we hadn't done anything differently with. And so our team has been highly productive in the journey. We're a little frustrated that our brand-new R&D lab is now awaiting a minor rebuild, but that's where we're at. The good news is we're completely covered for those rebuild costs. Jan-Marcel Gielen: Great. Thanks, Leon. Some questions just around the R&D pipeline and what we've got planned, what's sort of on the horizon? Bruce Peatey: Yes. So it's early days. As I mentioned, I think there's a potential to accelerate our output from the R&D function. And clearly, the search for the Chief Scientific Officer and putting that critical role in place is going to help to that end. We've got a significant -- I think we've shared it before. The output from that R&D pipeline is there. We just need to get it -- say, get some more velocity into that pipeline and get that out into the market, whether it is through our commercial execution ourselves or through strategic partnerships. And that's another key decision to make to make sure that we're really maximizing the value we can extract from this wonderful NovoSorb platform. Jan-Marcel Gielen: Great. Thanks, Bruce. Some questions here around the outpatient market in the U.S. and the requirement for an RCT, whether that's needed for DFU or not? And is that only just for DFU or can we sell the product SynPath for other indications right now? Bruce Peatey: Yes. So we can sell SynPath for other indications right now. Actually, this year, we can sell it for DFU as well. The need for an RCT, we say, is anticipated, although we're still working to clarify the exact clinical evidence requirements with the CMS. So at this stage, we're anticipating it. Like I said, we've got a protocol that we've worked on to make that possible. And as we move forward, looking at how we could accelerate that as well, -- but right now, we can sell SynPath because we have the code into all of those care settings in the outpatient piece. Leon Hoare: Important, just if I can add to that before we close on that point. As Bruce mentioned in his presentation, we're working through the hospital outpatient element of that market opportunity, if you like. And that likely would be in our team's hands, but Bruce and the U.S. team are working through that. And the outside of hospital element where in probably the easiest description would be investigation mode. We're likely looking at partnerships to get SynPath to market there. CMS is still very much in flux in terms of the industry's understanding of all the outcomes, and we're learning that as we do more discovery. Jan-Marcel Gielen: Great. Thanks. Just 2 more questions. We're coming up on the hour. So let's run to the next one here. So a question on BARDA and just our relationship with BARDA and how that's going in light of the trial coming to an end and the support that we're getting from BARDA. Bruce Peatey: Well, excellent support from BARDA. I appreciated meeting the leadership there as well. We're on regular meetings with them as we go through the process to finalize the submission. They've been a wonderful partner and they continue to be. So yes, it's all very positive. Cf Thanks, Bruce. We'll make our last question given the timing. Just a question on guidance. This comes up quite often, but we're happy to answer it again. We don't provide guidance in the past, but do we intend to in the near future? Leon Hoare: I'll take that. I mean, at this stage, we're still very much a company on a rapid growth phase. As Bruce has said, we've got many opportunities in our growth going forward. We see very strong growth momentum. We see strong pipeline opportunities. We see strong market sector opportunities like CMS as one example. Medium term, we see other geographies like Japan. But near term, we're still also heavily exposed to the burn segment. and that's highly variable. So as we build a more predictable longer-term growth rate, and we'll consider guidance. But in the nearer term, we're not going to formally provide guidance for the period going forward. Jan-Marcel Gielen: Thanks, Leon. And before I hand back to Bruce, just to call out to Rachel Harwood from Macquarie. He's based in Dallas and it's quite late. But 4 questions I've got, we've answered quite well, but I appreciate you sending the questions Rachel. So with that, I'll hand back to Bruce to close. Bruce Peatey: Thanks, Jan, and thank you all for joining us today and for your continued support of PolyNovo. As you've heard, we are entering the second half with strong momentum, a clear strategy and a deep commitment to execution. Our focus remains on delivering meaningful clinical impact while scaling globally and unlocking the full value of the NovoSorb platform. I'm incredibly, incredibly proud of what the team has achieved and confident in the opportunities ahead. We look forward to updating you on our progress and appreciate your engagement today. Thanks, everyone. Leon Hoare: Thank you. Jan-Marcel Gielen: Thank you.
Filippa Bolz: Hello, everyone, and welcome to Klarna Fourth Quarter 2025 Earnings Call. My name is Filippa Bolz, Head of Communications at Klarna, and I'm joined today by Sebastian Siemiatkowski and Niclas Neglen. Our Q4 results were released at around 7:30 a.m. Eastern Time, and they are available on our Investor Relations website. During this call, we will discuss our business outlook and make forward-looking statements. These statements are based on our current expectations and assumptions as of today. Actual results may differ materially due to various risks and uncertainties, including those described in our most recent filings with the SEC. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of non-IFRS to IFRS measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website as well as filed with the SEC. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period in 2024. [Operator Instructions] Before we move to Q&A, we will begin with a short presentation. Sebastian, please go ahead. Sebastian Siemiatkowski: Thank you for joining Klarna's Q4 earnings call. Klarna is accelerating its growth of our banking relationships and our revenue per customer. Millions of consumers are adopting more of our services, the Klarna Card, Klarna's Deposit accounts, Klarna Fair Financing products and, of course, our well-known buy now, pay later services. Now this is exactly what we had planned for and wanted to achieve. And in Q4 2025, the adoption of these products accelerated beyond our expectations. As we scale this business, delivering on profitability is a key priority. In Q4, we delivered. Active consumers reached 118 million, up 28% year-over-year. Merchants grew to 966,000, up 42% year-over-year. GMV came in at $38.7 billion, above the top end of our guidance and revenue grew 38% to over $1 billion, also beating guidance. Now let's put these numbers in perspective. We are a bank with an exceptional network that is growing at 38% revenue year-over-year. In '25, we did over $127 billion worth of volume across 26 markets and across 3 continents. And we're growing exceptionally well on every top line metric, cementing our U.S. as well as our global leadership position. Transaction margin dollars before provisions grew 31% to $622 million, an acceleration of $107 million versus prior quarter. And after provisions, transaction margin dollar was $372 million, up 17% year-over-year and up 28% sequentially from Q3. Now the fact that transaction margin accelerated quarter-over-quarter points to the compounding nature of our model as more of our cohort's mature revenue and it's compounding at a faster rate. Now I want to be direct and transparent. This quarter's transaction margin dollar result did not land where we guided. We take that seriously. The acceleration in lending growth is the primary driver of that outcome. Now let's look at an illustrative example of that to understand the impact I'm speaking about. In this example, we have about $1 billion of loans originated. The lifetime profit of these loans, you can see on the left-hand side is $100 million in revenue, while your provision would be about $40 million and you would have other costs of $25 million, resulting in a net profit of $35 million. Now like all banks, we recognize these loan cohorts over a period of time. In the first quarter, as you can see on the right-hand side, we would recognize a fraction of the revenue, but we would recognize all of the expected provisioning upfront. This results in a first quarter transaction margin dollar drag of $25 million, as you can see on the red there. During the remaining quarters, we recognize the remaining revenue as well as the other costs. So the resulting lifetime net profit remains the same $35 million. It is simply spread over time and we see a $60 million positive impact on the P&L for the remaining quarters. This effect in the first quarter happens even when the underlying economics are strong and credit quality is stable. This is value creation that is deferred. For every provision we book today, we gain a future profit stream. Now let's take a Klarna example. For $2.5 billion of U.S. Fair Financing portfolio originated this quarter, Q4 '25, we booked $80 million in provisions upfront, and we recognized $40 million in revenue. So yes, this quarter, that's a $40 million headwind. But there's an additional $180 million of interest income still to come, while the cost, the expected credit losses have been provisioned for already. Just to repeat, faster growth, faster adoption means lower upfront transaction margins and operating profit. So when you look at our Q4 transaction margin dollars of $372 million, this primarily reflects the fact that the adoption of our expanding set of banking services are growing faster than we expected, including Fair Financing, GMV currently growing at 165% annually. At the same time, to support our accelerating growth in a capital-efficient manner, we ramped up our loan sales. And in Q4 '25, we initiated our first Fair Financing forward flow with $73 million of gain on sales recognized in Q4 '25. Continuing this strategy will further accelerate our profitability improvement in '26. Now let me speak to exactly what that growth looks like and why we're so confident in our strategy. Our partnership strategy, as described on our previous earnings call, continues to compound and support our long-term strategy of being ubiquitous everywhere as our payments network expands its acceptance points. Over the year, we added 285,000 merchants, up 42% year-over-year. We continued to scale our default relationship with Stripe. We began the default-on rollout with Nexi through Paytrail, and we expanded Apple Pay and Google Pay into additional markets. We also launched new partnerships with Emirates, LEGO, Vinted and StockX, while further deepening our relationship with large global merchants such as Walmart, Lufthansa and Etsy. At the same time, we're accelerating our product ubiquity, ensuring that we have relevant payment options wherever the consumer shops. We doubled the amount of merchants where fare financing is available and continue to expand our pay in full product to almost half of our total merchant base. The benefit of building that network, close to 1 million merchants globally across 26 markets, online and offline, is that we've already captured the hardest thing to win, the consumers everyday spend. The checkout moments where trust is built, and that is the foundation. And now we're leveraging it. Once you have the everyday spending relationship, once the consumer is using Klarna 10, 15, 20 times a year at checkout, the step into a banking relationship is natural, low friction and extraordinarily cost effective. There is no cold start. We already know these customers, and they already trust us. And in Q4, this played out at an accelerating pace. Active card users grew to 4.2 million, up 288% year-over-year. Consumer deposits reached $13 billion, up 37%. And our most engaged consumers, the Klarna banking customers, reached 15.8 million, growing at 101% year-over-year. This growth is not linear. It is compounding as we build deeper relationship with our consumers. Let's deep dive into a comparison of that total consumer base versus the banking consumers that have adopted more of those banking products. Our base of 180 million Klarna consumers is growing at 28% year-over-year and transact about 10x a year with us. They have an average revenue per user of about $30. But now look at what happens when that relationship expands into a deeper banking relationship. Those 15.8 million consumers transact nearly 3x as often, 28.5x a year with an ARPU of $107. The average deposits jumps from $64 for our paying customers to $475 for our banking customers. And credit balances remain modest. Compare that to any credit card bank that would usually be at about $6,500 or 10x as much. And the charge-off rate moves from 0.6% to just 1.1%, a fraction of the 4% to 5% you would see at normal standard credit card banks. So more engagement, more revenue, disciplined risk. That's the conversion we're driving, and it's why we're leaning into this growth despite the near-term provisioning drag. Now this expansion of our banking product is built on our transaction relationship with our consumers and the knowledge we have built around risk management for the past 20 years. Our proprietary underwriting systems that we've developed underwrite every single transaction. We don't issue revolving credit, and we leverage our deep understanding of our consumer spending habits as well as external data. The result is consistent and stable charge-off profiles as evidenced by the stable 3% to 4% charge-off rates for our U.S. Fair Financing product. And we are delivering all of this with a fundamentally different operating model. Leading into technology allows Klarna to deliver a range of services with a headcount that is a fraction of the size of a traditional bank. Klarna's success is built on talent density and relentless focus on efficiency, and we believe this is a lasting competitive advantage. Now look at this, revenue per employee now reached $1.24 million in '25, a 3.6x increase since '22. And critically, we've reinvested some of these savings back into our talent. That's the operating leverage that compounds alongside the banking growth I've just described. Since 2022, we have accelerated our revenue growing 104%, while at the same time, managing our adjusted operating expenses effectively as it has declined by 8%. In 2026, we expect to continue to expand revenues faster than our operating costs as we focus on building the consumer bank of the future. As we provide 2026 guidance for the first time, we are incorporating this growth trajectory and the associated timing effects, while being disciplined and realistic in how we frame expectations. The underlying trajectory, revenue compounding, cohorts maturing, a lean cost base give us confidence in the path ahead. Thank you. Filippa Bolz: Thank you for that presentation. We'll start with 3 investor questions from Say Technologies. The first question is from Shubhayan. When are you planning to become profitable? Klarna's share price has declined since the IPO and investors aren't happy. What changes do you think may be needed in the organization or the product? Sebastian Siemiatkowski: That's a great question. So as our illustrative example showed, this is how the dynamics work in general. Every additional $1 billion in loans that we add in a single quarter will reduce TMD or transaction margin dollars by something like $25 million that same quarter, but it will increase transaction margin dollars by $60 million in the upcoming quarters. So the more we grow in these books, especially the more profit we're generating for the future. So the real question is simply, do we want to make more money even if it means slightly less today to make significantly more tomorrow. You might also though ask, obviously, for how long. Well, the good news is we have natural cushions. As we sell more loan portfolios where revenue and costs are recognized immediately, the timing effect diminishes. We did $4.5 billion in Fair Financing last year, growing 165%, winning deals like Walmart and rolling out across all Stripe merchants and so forth. So as these growth rates obviously eventually will normalize, so will this dynamic. Some of you may even remember JPMorgan Chase faced this, Jamie Dimon famously said on the Sapphire card that he wish he taken twice the losses. This was 2017, slightly different rules, but the same concept. So the question becomes, given that we can issue those additional loans, should we? And as a shareholder, at least my answer is an absolute yes. Klarna has issued over $0.5 trillion in loans over 20 years with record low losses across that entire period. That's a proven underwriting machine. And when we have the opportunity to deploy that machine and create significant value, we should. In addition to that, to answer the question even more specifically, Niclas will speak about our guidance soon to give you a more concrete answer for this year. Filippa Bolz: Thank you. The second question is from Marc. How will you prioritize capital allocation between reinvestment, debt reduction and shareholder returns over the next 12 to 24 months? Sebastian Siemiatkowski: Well, I think it's -- we're seeing really fantastic growth here, and we're seeing an amazing acceleration in the adoption of our banking products. And you may, at the same time, some of you may have picked up that we have a rapid product announcements, and we're basically quickly closing any feature gaps to both neobanks and incumbents alike. All of this while being disciplined on costs. So the outcome of this translates to more revenue and more profit. And when it is in the books, we can also discuss what we will do with it. Filippa Bolz: And the third and final question is from Adam. With the 102% surge in credit loss provisions reported in Q3 '25 still weighing on sentiment, what are the latest delinquency trends? And how confident are you that provisions will stabilize or decline as a percentage of GMV heading into 2026? Niclas Neglen: Thanks, Filippa. That's a great question. From a credit perspective, what we're seeing is actually stability, not a deterioration. Provision credit -- for credit losses actually declined in Q4 versus Q3 from 0.72% of GMV to 0.65%. And that really reflects both a stable delinquency trend and an impact of the increased loan sales that Sebastian previously explained. Filippa Bolz: Thank you. We will now move to questions from the analysts. [Operator Instructions] Our first question comes from Sanjay Sakhrani at KBW. Sanjay Sakhrani: I appreciate all the commentary. Niclas, do you mind just digging a little bit deeper into this quarter's impact from the excess loan growth? I'm just trying to parse apart sort of the provision related to credit versus the provision related to growth that sort of speaks to that mitigating impact on transaction margin dollars. And then maybe if you could talk about how it might affect 2026, that would be great, too. Niclas Neglen: Great. Thanks. Sanjay, thanks for the question. Look, I mean, in Q4 '25, and I think the dynamics are here are twofold, right? You're seeing a very strong growth and seasonality that drove significantly higher pay later volumes, and those are on our noninterest-bearing loan product, right? These are actually classified as sold or held for sale as part of the cost of funds, which you can see in the broken-out report that you have on the CFO letter, right? And these loans are actually primarily sold through our forward flow programs. And so those loans are measured at fair value. And so the result is that you get a fair value adjustment that is substantially offset by a corresponding reduction in the provisions for credit losses. And while you then see the credit losses that we have today, primarily then driven by Fair Financing. And if you think about it, right, and we've broken out the Fair Financing volume as well in the back end of the paper. But ultimately, what you're seeing is a mix shift towards Fair Financing that was stronger than what we had expected as we're seeing more and more banking consumers coming with more banking product with us. And that's really what's been driving that. '26, we have a guidance there, and I can take you through the details of that. But ultimately, we're seeing similar trends there. Year-to-date in January, we're seeing good, moderately stronger growth than in Q4 '25. And so I think we're heading in that right direction from that perspective. Filippa Bolz: Perfect. Thank you so much. Sanjay Sakhrani: Okay, great. Maybe just one follow-up. Filippa Bolz: Okay. Go ahead. Niclas Neglen: Go ahead. Go ahead, Sanjay. Sanjay Sakhrani: Sorry, I didn't know if I could ask to. Maybe just one quick follow-up for Sebastian. I mean maybe just how you feel like the Walmart rollout has played out, if you're happy with it and sort of any traction otherwise you're seeing in the United States? Sebastian Siemiatkowski: No, I think Walmart is obviously one great accomplishment, and it's looking really well when you look at the rollout. But I think that what excites me the most is the strategy that we set up that we're executing on, which is to become a truly third-party network and rely even stronger on the distribution of our partners, be it JPMorgan Chase, be it Stripe, be it Adyen and so forth. And that's why you're seeing these acceptance points and merchant numbers coming up so much. This is also why you're seeing Fair Financing growth because not all of our merchants historically have that. And the way we now work with our distributors is we try to make sure that they offer all of our payment methods. So not only is it about number of merchants that accept us, it's also about making sure that pay now, pay in later as well as Fair Financing is available at every checkout. So there's always a relevant payment option independently of what the retailer might be selling, everything from furniture to games. And so -- and that's really what's kind of -- what is the foundation of this growth. But at the same point in time, it's early days. A lot of these large distributors of ours are still implementing, still taking us live and so forth. And that's why we're very pleased about this because we know that this will continue to drive very solid growth for us in the coming years. So very happy about what we've seen so far with Walmart and also generally seeing the effect of this both in the U.S. and then globally as well. Filippa Bolz: The next question comes from Will Nance at Goldman Sachs. William Nance: I was wondering if we could drill down into the transaction margin expectations for the coming year. As we look at the guidance that you guys have laid out, it seems like transaction margin is coming in roughly 10% or so below current consensus expectations and hear you on sort of the front-loading impact of provisions in GMV. But when we look at the first quarter, GMV was much closer to the guide, whereas transaction margin was something like 3, 4 points below. So I guess with that context, can you talk about the transaction margin trajectory that you are expecting now versus what you had previously expected? What are the changes? And how do you think about the path to getting towards transaction margins in the kind of 115% to 120% range where the company had operated historically prior to the big expansion in lending? Niclas Neglen: Sure, Will. Thanks a lot for the question. I appreciate that. So maybe just before kind of answering you specifically, I think it's good for me to just take you through our thoughts on the guidance and how we've kind of thought about it. So I'll start with that a little bit. Start with the first quarter, right? So we've -- like I said, already entered 2026 with a strong momentum. We're tracking modestly ahead of Q4 '25 levels already. The banking products, fare financing, the Klarna card, et cetera, remains the primary driver of that growth, and we're seeing that continued strong adoption, right? So that is one element of what we're seeing into '26, right? Our forward flow programs, which are providing that kind of capital-light foundation for the sustained higher growth, we actually expect to continue to execute some of these agreements throughout the year, including one in Q1, and that's actually reflected in our transaction margin dollars and our adjusted operating income ranges for Q1 as well. Transaction margin dollars as a percentage of JV is also expected to be broadly consistent with Q4 '25 as we continue that investment in supporting the rapid scaling, right? And so what you should be able to see then when we get into 2026 in full year, right, you're going to see that GMV growth and revenue growth in line with 2025, which on the context of $127 billion worth of volume this year, I think, is very, very healthy growth. As the mix of maturing Fair Financing cohorts increase, what you're going to see is revenue compounding through the year and transaction margin growth accelerating into the second half. And that's really the natural payoff of that upfront provisioning model, which you highlighted yourself, right? So adjusted operating income margin is expected then to become greater than about 6.9% as we continue to have that revenue and TMD outpace the growth of our operating costs, right? So ultimately, in very simple terms, when you look at transaction margin dollars, it is really a mix question of the geographies we're growing in, but also in regards to how much Fair Financing that we're doing as part of that banking evolution that Sebastian spoke about. William Nance: That's great. I appreciate all that color. And just you mentioned the offloading dynamics starting in the first quarter, likely continuing for the year. I was wondering if you could provide your latest thoughts on just expected offloading on the Fair Financing book in the U.S., maybe relative to the amount of loans sold in the quarter. Is there any kind of parameters around percentage of production sold that you guys are targeting for the full year as we just try to true up that part of the model? Niclas Neglen: Yes. So we're not going to give exact guidance because we are really commercial in the way that we think about this. We have some great partners that we work with in this regard, but we also want to be sure that we balance it, right? So my expectation is that we're looking at the transaction in Q1. If you look at Q4, we sold about $1.6 billion. This transaction will be slightly smaller than that, right? And so what we'll see is through the year, as and when it makes sense to do these sales, we will be executing them, and that might change depending on quarter-to-quarter, right? So that's probably the best I can answer at this stage. Filippa Bolz: Over to our next question, which comes from Jason Kupferberg at Wells Fargo. Jason Kupferberg: So can you just talk maybe a little bit more specifically about what you're embedding in the guidance for 2026 for Fair Financing, specifically just in terms of loan growth there? I mean, obviously, you're going to lap Walmart later this year, but I would like to get a sense of what's assumed in the initial outlook here. Niclas Neglen: Yes. So we're not going to give a specific split, but what I can say is that we're going to, from an absolute volume base, accelerate in comparison to 2025. Now as we go through the year, just given the fact that we started where we started and have been scaling so quickly, the year-over-year percentage comps through the year will kind of pan out or it kind of decelerate to some extent, right? But that's from a percentage perspective. On an absolute basis, we're continuing to compound. Jason Kupferberg: Okay. Understood. And then maybe one for Sebastian, just big picture. On agentic commerce, I think a lot of debate out there about what branded button presentment and prominence might look like in a truly agentic world where transactions are being completed natively on an AI platform. How is Klarna thinking about that, preparing for it? Obviously, you guys have announced some partnerships, but would just love to get a sense of what your crystal ball is in terms of what consumer checkout experience might look like in that scenario down the road. Sebastian Siemiatkowski: Thank you, Jason. Fantastic question. Look, I think there are many ways to answer that. I try to keep it short. But first and foremost is that like we have believe that this is the evolution of e-commerce for a long period of time. That's been part of our thinking. As a consequence of that, we have thought it was very important to have the partnerships and distribution of people like Stripe and Adyen since those are often the companies that people go to, to implement agentic commerce. And so by making ourselves default and always available in all these points, that makes us like always available in those points as well. In addition to that, you see things like we launched with Apple Pay and Google Pay makes us again available everywhere where those are being used, which again then gives us additional coverage in this. But then obviously, we also court the big AI companies, and I can't promise anything there, but like obviously, that's part of what we do as well in that sense. I think the additional thing that I find very promising is that the conviction that we have which is that buy now, pay later is a healthier form of credit than credit cards. The fact that it's interest-free, fixed installments and so forth. This is truth. And then sometimes people write about different things in media this and that. But the truth is if you go and ask even the big AI companies, which form of credit should I be using, which is the one that's most healthy. It will recognize the benefits that buy now, pay later provides. And so we think the fact that we have a healthier product also means that even AI will recommend to rather use this one than revolve at 30%, right? So I think like all of these combined, these are the -- we feel that we're very well prepared and that we are in a great position as this agentic commerce rolls out. Filippa Bolz: Our next question comes from Harshita Rawat at Bernstein. Harshita Rawat: So I want to ask about the competitive environment. Some of your peers have talked about intensified dynamics in Europe and the U.S. Maybe talk about what you're seeing in the market? And then also maybe comment separately on the consumer kind of I think there's concern around continued kind of pressure on the low-income consumer. What are you seeing and hearing from your customer base, both in the U.S. and Europe? Sebastian Siemiatkowski: Harshita, Sebastian, I'll jump in on that one. Let's start with competitive. I think that the -- I feel very, very confident on this topic. And the reason again comes back to what we said about our partnerships. It was always very critical to me to become a global payment solution. So many times, we talk to merchants in different markets, and they look for global solutions. And now Klarna is perceived as a global solution, which means that we get tremendous benefit from working with everyone from an H&M to Shein to a Walmart to Sephora. The fact is that they can work with one party that can offer pay now -- buy now, pay later and fare financing across all of these jurisdictions. This has not been -- even look at the big home electronics manufacturers, none -- that has never been possible before. So the geographic coverage means a lot when it comes to signing these deals, and it's unparalleled. Nobody else in the industry has the geographical coverage of Klarna. So you will always find individual companies and individual markets, but that is just giving us such a tremendous strategic advantage that we see. And that's also super critical when we work with the Stripe and the Adyen of the world because there -- it's also for them much more interesting to launch with somebody that can offer their services at such high global coverage. So I feel very, very confident in our continuous ability to grow and preserve margins throughout. Now when it comes to the consumer, we are very confident and feel very solid here as well. What we're seeing is that, again, the audience that uses our product is an audience that is what we call the selfaware avoiders. These are financially conscious, both American consumers and European consumers who are actively keeping away from credit cards, who are borrowing much less. Their average balance may be on a credit card, people would have $4,000, $5,000. As you saw in our presentation, a pay, what we call a Klarna paying customer has $100. A Klarna banking may have $400 or $500. So it's actually 10%. And so these are financially conscious customers. They enjoy the fact that our products are 0 interest, fixed installments. They find them as a healthier alternative, and they're also keeping their economy in better shape. So we see good performance. We see that they are shopping as they used to, they're spending as they used to, and they are also borrowing responsibly, which we appreciate and find is important. Filippa Bolz: The next question comes from Darrin Peller at Wolfe Research. Darrin Peller: I really just want to go in a little bit more maybe for Sebastian on the tools. But basically, the idea of where you believe the right balance should be between lending and interest income and transactional streams. Just as far as the company's longer-term goals, I understand it's demand driven to some degree and to the most degree. But anything you could help us with and where you see that sort of leveling off? And then Niclas, just maybe on a short-term basis, we're also trying to understand where we expect to see the inflection on provisions offloaded to a degree that it actually does help the TMD grow at a faster rate this year potentially. Sebastian Siemiatkowski: Maybe you want to start, Niclas? Niclas Neglen: Yes, sure. Thanks, Darrin. I appreciate it. I think it's a good question. If you look at it, what we actually are looking at from a TMD perspective is a significant uptick in growth, right? And you've seen that kind of sequential increase both from Q3 into Q4 now, right, with TMD. And I think as we continue to compound through the year, like I said earlier, Q1 definitely still has a lot of that rapid growth coming in. And then you start kind of cycling into an absolute growth balance, but then the percentages from a comp perspective kind of recede a bit into the second half of the year, right, which is kind of what I said. So I think that is kind of the short answer to that. And I think you're going to see that continuous TMD acceleration through kind of the second half of the year, as I said earlier. Filippa Bolz: Thank you, Niclas. Sorry, Darrin. Would you mind just repeating your question for Sebastian? Darrin Peller: Yes. I was just trying to figure out what do you guys' think is the right mix sort of in a steady state? Obviously, you're in hyper growth right now around Fair Financing in your banking products, but trying to get a better sense of where you think that should level off, where you'd like it to level off, thinking about interest income as a percentage of the mix of the business versus other revenue streams. Sebastian Siemiatkowski: Yes, it's a great question. That's -- I think as a rule of thumb, even for myself, when I look at those provision for credit losses, the rule of thumb is that 80% of it is associated for kind of forward-looking, while 20% is kind of backwards looking. So to your point, obviously, as we're growing Fair Financing right now, and we're kind of in that phase of that being a high-growth product at this point in time. But I don't think that is necessarily always going to be the case. When we look and compare ourselves to other neobanks, some of the other neobanks are much -- most of them are much smaller on the lending side and much bigger on deposits, on subscriptions, on tiers, et cetera. So partially, what we're seeing right now is just the effect of the strategy that we implemented a few years back to, again, have our partners distribute us. And you saw that number as well in the presentation that still only about 200,000 merchants offer Fair Financing of the total 800,000. So there will probably be some continuous growth there as more and more offer that product. But I'm very keen on growing the other revenue lines as well, the marketing revenue, the subscriptions revenue and so forth. And I think that finding a healthy balance as well as deposit revenue as well. So I think over time, it's probably going to skew more again towards the other revenue lines, but that is a little bit more -- takes a little bit longer time. And it takes time, obviously, because we're a fairly big bank right now. So like even if we make changes to our products and so forth before you fully see that materialize in the numbers is a little bit further out. Filippa Bolz: Next question comes from Tien-Tsin Huang at JPMorgan. Tien-Tsin Huang: I want to ask on the processing cost side, if you don't mind, a model question. Lots of moving pieces, I know with partner and product ramps as we've discussed here. But how should that processing line trend in relation to GMV? Any insight there to share? Niclas Neglen: Sure. Yes. Thanks, Jason. I think in -- the reality is like partially, this is a mix question with regards to how much volume is coming in from the U.S., et cetera, as well as the type of product that you take on and the tender of that product. So in the short term, you're going to see something similar to this that you've seen through 2025. But I think the evolution of this in the longer term or medium to long-term, right, is very much one of the -- and you've heard Sebastian say this before, one of our focus areas is really to find ways to improve that line, right? And so we are actively looking to find ways to get that trend line to move in the opposite direction, not only purely from a mix perspective, but actually getting things like now that we -- now we have a current account, we have the balance, et cetera, and we're starting to see refunds come into our accounts, which obviously then reduces the requirement for us to use other rails. What we have slightly working against that right now is also that we have more card issuance, right, as more and more consumers are using us. So similar to some extent, similar to the Fair Financing upfront provisioning, we are making some investments here with now over 4.2 million active card users, right? We are seeing a lot of growth, and that obviously has a bit of cost in the upfront. But what we actually are creating is a very sticky consumer that's going to help us then to be able to drive more of the transactions within our own rails, which will help to reduce that processing and servicing line. Sebastian Siemiatkowski: And I think to add to that quickly, Tien-Tsin Huang, is that, I mean, we -- in this case, we're coming from Europe where payment and funding costs were virtually 0 or very low. And then we move into the U.S., and we've seen significant growth. And we know looking at other fintechs and competitors that are larger and originating in the U.S. that there are smart ways to fix this. But it's going to be a continuous focus for us to do that, obviously, because to your point, there's tons of potential in there, but we need to execute it, implement it and see the results in the financials. Tien-Tsin Huang: Understood. So it's a work in progress. Good to know. Just quickly on the -- I think, Niclas, you mentioned stable delinquency trends. It looks like from the charts in the shareholder letter that some of the newer vintages on the delinquency side are a little steeper and higher than prior vintages. I'm just curious if there's any surprises there. Or I just want to better understand those trends. Niclas Neglen: No, there are no surprises there, right? If you look at it, again, you have to understand that we're obviously ramping quite quickly through these processes. But at the same time, you're seeing that it's very much within the trend base that we expected. And as you go -- your models, as you scale, get better and better. And you can see that's why I actually included not only the 60 days past due view, right, which is we've been showing consistently, but I also show you the 30 days past due, where you can see that those trends are normalizing over time, right? And I think that is a really key point here, right? We underwrite every single transaction. We've been doing this for 20 years. Yes, we are scaling the business, but what we're actually doing is doing that in a very disciplined fashion. And we have the ability with our low average order values and short durations to be able to manage and flex these models consistently, and that's really what we're showing on that page. Sebastian Siemiatkowski: I think in addition to that, what's also important is that we -- the way we think about it is that we prefer starting with buy now, pay later and pay now with small value transactions, $50, $100, build a big audience of customers that we get to know that we've underwritten, that we've seen their payments performance. And then we're scaling like we're doing now for financing, where a large proportion of those Fair Financing volumes are existing customers that we already have relationships and doing underwriting for a few years. And that's a critical part of our thesis, which we think is very special to Klarna that it's important for us to be in those daily transactions, both because it grows a stronger relationship with the customer, but also means that we understand them better. We follow them for a longer period of time, and it makes -- it helps a lot in the underwriting decision. Niclas Neglen: Yes. I would say that the vast majority of our Fair Financing that's being underwritten is with consumers that have had products -- other types of products in advance. Filippa Bolz: Moving on to Mihir Bhatia from Bank of America. Mihir Bhatia: Maybe first question I had, I just wanted to start going with the Klarna card. Can you just talk a little bit more about how consumers are using the card? Is it actually becoming a top of the wallet card? Or is it just being pulled out more for financing transactions? Are you seeing differences in geographies or the types of customers use -- in -- how they're using the card? Sebastian Siemiatkowski: Yes. Mihir, it's Sebastian. So I -- we are excited about it a lot. I mean I think that I probably -- I was trying to find a bank issuer that had launched a card with this kind of number of active users on such a short period of time since this basically started rolling out in summer. I think it's actually unprecedented, which is pretty cool. We see very good usage of this product, both in the U.S. and Europe. What we're happy to see is that it isn't, to your point, only a -- or as you mentioned, it isn't just being used for like a pay later or Fair Financing card. It is actually has a very healthy proportion that's being used for debit transactions for day-to-day spend, which is exactly what we wanted to do. So when we think about this, again, like when we move consumers that we call them the Klarna payers to the Klarna bankers, we want them to adopt more of our financial products. And that is both deposits, debit spending as well as credit to some degree and other -- the subscription tiers and the loyalty cards and the cash back offers that we do and so forth. So we're very optimistic about what we've seen so far in regards to that. Niclas Neglen: Could I just add something there, Sebastian. I think it's really critical point to make that what we're seeing is a high teens growth even in established markets like Sweden, where we have 80% population penetration. And that is very much because of the card, right? You're seeing that people are adopting us both online and offline here. And I think that's a very unique positioning for us to find ways to grow with our customers in the way that Sebastian described, but also then ability to expand that monetization opportunity as well. Mihir Bhatia: Got it. And then if I could just follow-up, I want to go back to the questions around the trajectory of transaction margin as a percent of GMV or revenues, however, you want to answer it. But look, I think I hear you regarding the mix and the Fair Financing growth pressuring 2026 margins a bit. But I guess, like when does the delayed profit from the back book start to offset some of that growth? Like how are you thinking about those margins maybe as you go out a couple of years? Where do you think transaction margins should settle out? Like your competitor has obviously given some guidance. And I was just wondering if you have a view on that, like where transaction margin as a percent of GMV should settle out medium to long-term? Niclas Neglen: Okay. So I think TMD, generally speaking, right, is now moving towards -- and we're not going to give like longer-term guidance and beyond 2026. But I think we gave some frameworks previously -- and we've talked about the range of somewhere between 1.5, 2 percentage points. But again, like the key thing here is the mix of the revenues that we've got, right? And so the way I would think about this is that we can really think about what is the trajectory of the Fair Financing element of this and how that is moving forward and scaling. And I think as we get an understanding of the abilities of balances of this, we will see how those things proceed. Filippa Bolz: Moving on to Robert... Sebastian Siemiatkowski: Maybe I can add something on the topic, just if you like -- I mean, generally speaking, Klarna has always seen over my 20 years is that you either go through high-growth phases. When you go to high-growth phases, you always see slight temporary deterioration in GMV and margins, et cetera. And then as you kind of mature a little bit and growth comes down, then profit transaction margin dollars return. So this is always a continuous discussion because when you grow faster, then as we've seen, for example, the accounting that was described and so forth, and this always results in these kind of effects. So that creates a lot of confidence for me. Niclas Neglen: Sorry, I think -- yes, that's a much better answer to the question. I think from the perspective of long-term guidance, I think the key thing is we're focusing on '26 right now and how we're thinking about the transaction margin there is really how you should all be thinking about it. Filippa Bolz: Moving on to Robert Wildhack at Autonomous Research. Robert Wildhack: You've talked a lot about the upfront provision for banking services. And I guess in the letter, those banking services include Fair Financing, but you've also got some products in there that at least to me, would seem lower loss like the card and savings. So that's -- I think the thing I'm having trouble understanding is like how does -- fare financing was always going to grow this year, but then you're going to also grow into products that would seem to have a lower blended loss content, yet there's more pressure on the transaction margin, not pressure, but it doesn't go up as much in '26. So how do you square those 2 things? Sebastian Siemiatkowski: Yes. Thank you, Robert. Great question. Look, I think that the 2 things are important here. The -- what surprised us was the embracement of Fair Financing among our customer base. So more people took up this product than we expected. And hence, on the transaction margin dollar, you saw more negative pressure because of that upfront booking, which is the primary driver of that. So that is it. But to your point, we're also seeing all these other products growing really well, the card, the subscriptions. Now ironically, they also come with a slight additional upfront cost. For example, every time we issue a card, there's costs associated with that at the front end of it. So each one of those, but those effects are obviously more limited. So we think that you're going to see a positive impact that's going to come as those products have also been growing. I mean the subscription products and so forth. So I feel quite optimistic here on this topic as well. I don't know if you want to add anything, Niclas to that. Niclas Neglen: Yes. No, I agree. I mean the subscription; we're already seeing a huge amount of people coming in. We have about 3.5 million already, and we're seeing that just expand on a monthly basis. So those revenues will start building up over time through 2026 as well. Robert Wildhack: Okay. And then I see the negative fair value adjustment on pay later in the funding costs. Given the short duration there and your ability to grow deposits and the balance sheet capacity you have, what's the benefit of selling pay later at a discount? Niclas Neglen: So the vast majority of the economics of that actually sits in the merchant discount rate, right? And so the purpose of this is really from a liquidity as well as from a capital perspective. We've done a few of those, and we may do some more in the future. But ultimately, the key thing here is really to be able to balance how much return I get from every asset that I get in. So there's also a value to Sebastian's earlier point of holding Fair Financing that generates a higher yield as well. So it's constantly a mix of ensuring that we keep ourselves capital light that we can continue to grow and expand as much as possible. But we want every tool in the toolkit, and that's why we've leveraged this type of transaction. Filippa Bolz: Moving on to Nate Svensson at Deutsche Bank Securities. Christopher Svensson: Maybe I'll sneak in 2 here. Then some questions on the competitive environment, agentic placement. Maybe a related question on that is just the topic of exclusivity, which I think is probably worth exploring in light of some recent comments from your competitors in the U.S. I guess our understanding is that exclusivity is more the exception than the rule in the industry. Obviously, you guys have Walmart. I guess just in light of what we're hearing from competitors, do you think that dynamic is going to change? Is Klarna going to try to go after more exclusive deals? Or is something like Walmart once again kind of more the exception than the rule? And then briefly, maybe this one is for Niclas. Just on funding costs. I know earlier in the Q&A talking about funding costs moving from Europe to the U.S. that went up again quarter-over-quarter in 4Q, presumably because of the continued fast growth in the U.S. Just wondering how we should think about funding costs as a percentage of GMV in 2026 as the year progresses. Sebastian Siemiatkowski: I can start. Nate, thank you for the question. Look, I think it is -- I think that this exclusivity -- I mean, sometimes it makes sense to sign those, but I always tell my sales guys that like the best competitive advantage comes if we're the most preferred payment method in the checkout by the consumers. And so as much as sometimes it could make sense tactically to enter such deals, we don't mind being side-by-side with others, just like Visa has been side-by-side with Mastercard or Amex has been side-by-side with them for a long period of time. So instead, what we focus on primarily is that there's always customer preference. And we know by experience that there are some merchants that even offer 3 options, for example, within the buy now, pay later space, and we see that we get -- we grab the highest share of checkout among consumers. And that, to me, is like the primary thing to keep an eye on. Then tactically, occasionally, it could make sense to be exclusive, nonexclusive, et cetera. But also in addition, I mean, we see what's amazing now with Apple Pay, for example, is that anyone in the U.S. that has any card from any bank can use Klarna buy now, pay later as an example, on any merchant without -- so I think that's the right way to think about it. Build consumer preference is the key long-term strategic objective. Over to you, Niclas. Niclas Neglen: Yes. Great. Look, the reality is if you look into some of the details in the notes, you can see that what you'll see with cost of funds because we model it in accordance with the forward views on interest rates, et cetera, you would expect that to decline in line with forward interest rates, assuming that they are correct, right? And that's really how we model it. And then like I said, we have a stable outlook with regards to the forward flows that we're doing. So those are there already practically speaking. So to me, that should be support an improvement over time, depending obviously on the interest rate base that you see, right? So that's simply where I'd say. I think the key thing is also just to note on your comment with regards to the U.S. I think it's important to appreciate that it's not really just the fact that we're moving or we're expanding more volume in the U.S. It's actually we're expanding our volume across the board, right? We have very, very healthy growth, both in Southern Europe, but also like I mentioned earlier, in our established markets because we are expanding that banking services that we were speaking about. Filippa Bolz: Your next question comes from James Faucette at Morgan Stanley. James Faucette: Appreciate all the commentary here. I wanted to follow-up on a couple of points that were made earlier. I guess on -- I want to go back to the TMD and that kind of thing. Is there a point -- and I recognize that the pace of Fair Financing growth will naturally drive [ BQs ] higher. But I'm wondering if you could talk to us about how we should be thinking about a delinquency high watermark where you might -- if you got to that, you might feel like you were compelled to pull back on GMV. Just helping us bracket how we should think about that, especially as you continue to ramp their financing and some of the other initiatives. Sebastian Siemiatkowski: I'll let Niclas answer that. James, but again, like I think it's important to remember, Klarna under the time I've been here, has underwritten $0.5 trillion with record low credit losses for that, right? So we are -- we have an extremely strong confidence into our underwriting, into our proprietary models and so forth. And as we've highlighted here, we see this as predominantly a question about timing than nothing else. And that's the same that we think about here going forward. So yes, so I think that's the beginning, and maybe you want to jump in more specifically. Niclas Neglen: Yes, sure. James, I think the key thing when you want to think about this is that because we, firstly, underwrite relatively low average order values, and we do so on very short tenures. We have the ability to constantly adjust the portfolio, which is what we do. So it's not so much a question of like, oh, well, there's this bar for something. It's more a question of how comfortable do we feel with those continuous cohorts that we're looking at. And we're not just looking at cohorts on a quarter or a month or something. We're looking at the cohorts literally on a weekly basis, right, and understanding the performance of that. And that's what we've been doing for 20 years. That's what we're going to continue to do, right? And so I think we've evidenced historically, and we've talked about it before with regards to how can we adjust this and what are the impacts of those adjustments as we go along. So that's really how we think about it. And obviously, we're always trying to keep an eye on that profitability and ensuring that we do this in a balanced fashion, right? And I think we've evidenced that we can do so over the last 20 years. Sebastian Siemiatkowski: Yes. I think like underwrite primarily to existing customers keep low average balances per customer, again, $100 versus $500 on the banking versus like the big banks being at like $5,000 on a credit card. So keep like -- keep low tickets per on average and then have very short duration in general compared to other banks, right? Like they sit with credit card volumes that are commitments for -- like continuously, we have very, very short durations and have great abilities to adjust our underwriting to macroeconomical conditions. James Faucette: Got it. And then I wanted to follow-up on more of a thematic question. I know most of this conversation today has been around kind of the mechanics here. But any initial takes on how unit economics in agentic e-commerce will evolve for Klarna, especially in an environment where it seems like some of the labs are charging merchants as much as 4% or more. Sebastian Siemiatkowski: No, I don't think really, we have a comment on that. I mean, again, what we've seen is that like we have great distribution and we're growing. And we have -- we generally still see U.S. as a higher margin opportunity because Europe is used to seeing lower cost of payments, and that's where we've been coming competing from. Filippa Bolz: Next question comes from Harry Bartlett at Rothschild & Co Redburn. Harry Bartlett: I just had a question on the GMV guide. I mean it implies kind of a minor decel. But I just wanted to touch on your comments around the U.S. Fair Financing, Klarna card all kind of coming in above your expectations and a year-on-year acceleration. So I guess, does that imply that maybe there's a bit of an offset in some other products or other regions? And maybe you could just give some color there. Niclas Neglen: Sure. Thanks. Harry. Look, when you look at the '25 versus '26, we are literally growing at the same pace off the back of a significant amount of volume, right? So ultimately, when we look at these guides for '26, like I said before, we are very much focused on ensuring that we get the -- continue to grow at those paces across all these markets. And I think we're seeing very good growth across all of them. Sebastian Siemiatkowski: Yes. And I would just add again, since we're coming a little bit to the end here, Harry. I think, look, looking at Klarna, we set out as an ambition to grow a global retail bank. And when I look at this quarter, I see that we're on a fantastic trajectory towards that. We have 120 -- almost 120 million users globally, growing at 28%. We have 15 million now banking, growing at over 100%. We're seeing all the different new revenue lines, such as subscriptions such as the card and also Fair Financing growing at a very, very healthy rate. And I think it's very likely that Klarna, if it continues on this trajectory, will become one of the major retail banks in the world. I mean, if you even look at the current card growth rate and you just say that you extrapolate that forward, you are very soon to be one of the bigger issuers of credit cards and cards in the world. So I think that, that is -- we're very excited about what we're seeing. And then we -- yes. Filippa Bolz: Thank you. We now have time for one final question, which comes from Timothy Chiodo at UBS. Timothy Chiodo: I want to hit one around TAM expansion and the topic of 0% loans to consumers merchant funded for the longer term. You mentioned earlier talking about sort of starting with smaller loans for new customers as you build, I'm just assuming in the U.S. market. But as we look at TAM expansion going to higher income consumers, maybe with better credit profiles, it's a bigger topic for your competitor. I was hoping you could just give an update on where this sits within your mix of GMV and where it could go in terms of offering longer-term pay later merchant-funded loans to consumers? And then I have a follow-up on the U.S. business. Sebastian Siemiatkowski: All right. Thank you. That's a great question. Look, I don't think it's necessarily a smaller topic with us. We just have a lot of topics to cover. So I think that like from our perspective, our experience from Europe is that Klarna over time becomes an everyday spending partner for every consumer. I mean you have to remember, in a lot of our original markets like the German-speaking ones or the Nordic-speaking ones or the Nordic ones, we're seeing like a population penetration of like 70%, 80% or 50%. So it's really everyone using this product of every background and type. And we believe that the same will over time happen in the U.S. as well, and then you will adjust your offering. 0% financing for that is a fantastic offering. And we see great demand among global retailers and global brands, again, because they're looking for that kind of offering across the globe. They want to work with a provider that can do that with them in all markets. If you're a home electronics or a phone manufacturer or whatever it might be, you find it interesting that you can sign one contract and work with one team, and then get this live in more than 20 markets. So very much of a big priority for -- Sykes, who's not here today, our Chief Commercial Officer, but not necessarily what we covered mostly today on the call. So yes. And the last question, maybe Niclas, I don't know if... Niclas Neglen: Tim, you didn't ask... Sebastian Siemiatkowski: No, he didn't ask the last one, Tim, sorry. Timothy Chiodo: That's okay. Yes. It was on the U.S. volume growth. If there were any undercurrents that you could talk about. We would have expected a slightly faster growth in the U.S. in Q4, given Q3 had a partial contribution from Walmart and Q4 had a complete or full or close to full contribution from Walmart. And we were just wondering if there were other factors that might have led to that lack of acceleration in U.S. volume. Sebastian Siemiatkowski: I must say that I'm happy to hear that you have high expectations on us. Personally, I'm very, very pleased with the performance in the U.S. And -- but what I do know is that when it comes to all these big strategic partnerships like that, there's always fixing this, fixing that, a little bit extra this and that, and you work on kind of continuously doing that. And that will continue to happen in regards to all these partnerships, both the ones you mentioned as well as the ones I've been talking about like the Stripes of the world and the Adyens of the world and so forth. So there is continuous more work getting done there, and we're seeing fantastic results. Filippa Bolz: And with that, we conclude the call. Thank you so much, everyone. Niclas Neglen: Thanks, everybody. Sebastian Siemiatkowski: Thank you so much.
Operator: Good afternoon. Thank you for attending the Century Aluminum Company Fourth Quarter 2025 Earnings Conference Call. My name is Matt, and I'll your moderator for today's call [Operator Instructions] I'd now like to pass the conference over to our host, Chad Rigg, Vice President of Finance and Treasurer. Chad Rigg: Thank you, operator. Good afternoon, everyone, and welcome to the fourth quarter conference call. I'm joined here today by Jesse Gary, Century's President and Chief Executive Officer; and Peter Trpkovski, Executive Vice President and Chief Financial Officer. After our prepared comments, we will take your questions. As a reminder, today's presentation is available on our website at www.centuryaluminum.com. We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Turning to Slide 2. Please take a moment to review the cautionary statements with respect to forward-looking statements and non-GAAP financial measures in today's discussion. And with that, I'll hand the call to Jesse. Jesse Gary: Thanks, Chad. Thanks to everyone for joining. I'll start today with a discussion of Century's leading position in the American aluminum market, including exciting developments on our Oklahoma smelter partnership with EGA and the redevelopment of the Hawesville site into an AI digital infrastructure campus. I'll then review our Q4 operational performance, including good news on the timing of the restart of Line 2 at Grundartangi before concluding my initial remarks with a review of the outstanding global market conditions that we are operating in today. Pete will then walk you through our Q4 results and Q1 outlook. Before I conclude the call with a discussion on the significant tailwinds we see for the company in 2026, including our Mt. Holly expansion project. No company is more dedicated to U.S. aluminum production than Century. Century is already the largest producer of aluminum in the United States, smelting nearly 60% of the country's primary aluminum, employing more American primary aluminum workers than any other company, and thanks to President Trump's leadership and the Section 232 program, we plan to invest billions more in new and expanded production at Mt. Holly and our Oklahoma smelter project. This has all been enabled by President Trump and the administration's policies, including the Section 232 program, which continues to be enforced with no exceptions and no exemptions. This sacred program has leveled the playing field for American aluminum producers and workers. And now for the first time in a generation, is leading to the reshoring of production of this critical mineral and a new modern smelter in Oklahoma. Century is grateful to President Trump for his leadership and we intend to continue to invest in America as the largest supplier of this critical mineral in the United States for decades to come. To this end, Century made substantial progress on our new smelter project in 2025, culminating in our recently announced partnership with EGA to build the first new smelter in the U.S. in nearly 50 years. By combining efforts with EGA, we will pair Century's significant operating and supply chain expertise in the U.S. with EGA's world-class expertise in aluminum smelting technology, construction and operation. As partners in Oklahoma smelter, EGA will own 60% and Century will own 40% and the project will benefit from our previously announced $500 million grant from the U.S. Department of Energy. The project recently retained Bechtel to complete the next stage of engineering work, which should enable a final investment decision in groundbreaking by the end of the year. In addition, the Oklahoma smelter will be the first new smelter built with EGA's state-of-the-art EX smelting technology, which will integrate cutting-edge Industry 4.0 and AI applications into the design and operation of the smelter and is expected to improve production capacity by over 20% from previous technology. This has allowed us to increase the expected size of the smelter to 750,000 metric tons which alone will more than double total U.S. aluminum production and expand Century's position as the largest American producer. Truly, once built, the Oklahoma smelter will be amongst the most efficient and advanced in the world and the crown jewel of the U.S. industrial base. We were also very pleased earlier this month to announce the sale and redevelopment of the Hawesville site into a digital infrastructure campus, supporting high-performance computing and artificial intelligence workloads by TeraWulf. This was an excellent result for the site and the community, which will benefit from the significant investment in job creation that will come from the data center development. Under the terms of the transaction, Century received $200 million in cash and a 6.8% interest in the completed data center. We are very glad to retain the stake in the future of the Hawesville site which will allow us to participate in the value creation of a cutting-edge AI data center with ready access to 482 megawatts of immediately available power. The speed to power possibilities of the site have driven lots of immediate demand from hyperscalers and should drive desirable lease rates for the site and TeraWulf has indicated it could have a data center online by the second half of 2027. We are confident that this equity stake should provide returns well in excess of the initial cash payment. Our 6.8% interest does not require any additional funding towards the multibillion-dollar data center build-out, and we have the right to put our interest to TeraWulf on the first anniversary of data center operations commencing, providing a certainty of exit should we so choose. Turning to Page 4 on operations. We saw excellent performance across our smelter assets in the fourth quarter with Grundartangi quickly and safely restoring stability following the outage of potline 2 and Mt. Holly returning to the strong performance we have come to expect from the plan. I would like to take a specific moment to commend the team at Sebree, who battled through some tough weather in the fourth quarter to conclude a record year for the smelter across a suite of KPIs and profitability metrics. To be able to achieve record performance after 50 years of operations is a testament to plant management and our entire workforce at Sebree. Congratulations to all. At Jamalco, as everyone knows, in late October, Hurricane Melissa made landfall in Jamaica as a Category 5 hurricane. Our team did a good job preparing the plan, which included exercising their precautionary shutdown procedures ahead of the storm. This preparedness paid off as the refinery made it through the storm without significant damage and without separating a single injury. Following the storm, the plant was able to quickly restart basic operations. Damage to the broader Jamaican grid, however, did create significant instability in the supply of electrical power to the refinery, including lengthy periods where the refinery was without external power at all. This instability in electrical supply led to higher-than-expected costs in November and December and lower production volumes from a number of outages and a slower return to full capacity. Good news is the refinery is now well on its way to full and stable production. Importantly, at Jamalco, we are also nearing completion of our first major capital improvement project at the plant with the installation of our new on-site power generation turbine known as TG4 on track to be completed in April. Once complete, TG4 will enable us to run the refinery with entirely self-generated energy, eliminating expensive purchases from the Jamaican grid and allowing us to run the entire refinery independently. The completion of TG4, which will gradually ramp up over the second quarter, will substantially lower the cost structure of the refinery and is a big part of our overall goal of returning the refinery to the second quartile of the global cost curve. Nice job to the Jamalco team on keeping this project safe and on track despite the hurricane. Turning to Iceland. We have good news to report at Grundartangi, where our global team is working tirelessly to return the smelter to full production much faster than originally anticipated. As we announced in October, the Grundartangi smelter was forced to temporarily stop production in potline 2 following the failure of 3 of its electrical transformers and the time line for restart was dependent on how quickly replacement transformers could be manufactured, shipped and installed at Grundartangi. With global supply chains for transformers stressed by the unprecedented demand from global data center construction, we continue to expect it will take until Q4 of this year for the new replacement transformers to be installed. The replacement transformers have all been ordered and are being manufactured now. The good news here is we now expect that we will be able to repair some of the damage transformers and begin to restart Line 2 at the end of April, about 6 months sooner than originally anticipated. We still plan to install the new replacement transformers once they are completed, but we are confident that the repair transformers will allow us to return the line to close to full production in the interim. While we will be conservative in our ramp-up plans and operations to avoid undue stress on the repair transformers, we expect that Line 2 and Grundartangi as a whole, will return to close to full production by the end of July. This schedule and our anticipated production is included in our full year volume guidance shown on Page 12. Finally, our insurers have now confirmed coverage from the event and the subsequent business interruption as we anticipated. We have recently received our first payment under these insurance policies, and we expect to receive additional payments under the policies on a lag as the claim is processed month by month through the end of the year. Pete will keep you updated as the cash comes in. If you turn to Page 5, let's take a minute to review the excellent market conditions that we find ourselves in before I turn it over to Pete. Aluminum prices continue to rise in Q4 and into Q1 as global demand [ growth ] paired with a persistently challenged supply side, drove aluminum prices to a 4-year high of $3,325 in January, with spot prices today of approximately $3,100. The concurrent rally in copper and other industrial metals are providing additional support to the aluminum price rally. As you can see on Page 6, we continue to project global deficit of aluminum units in 2026, driving further contraction of global inventories to another post financial crisis low and leaving the market exposed to further supply disruptions. A good example of the supply side challenges is the recent confirmation that the 580,000 metric ton Mozal smelter in Mozambique will curtail full operations in March causing a further drop in global inventories in order to replace those units in the market. The Mozal closure is likely to have the largest impact on the European regional premium as it is one of the largest suppliers of low-carbon aluminum to Continental Europe. Mozal like Grundartangi benefits from tariff-free access to the EU market but replacement units will likely need to be sourced from tariff countries, putting further upward pressure on the EU duty paid premium and providing a benefit to other European producers like Grundartangi. The European premium has already begun rising following the initial implementation of Europe's Carbon Border Adjustment Tax, otherwise known as CBAM. In the U.S., the increasing strength of the U.S. economy, as demonstrated by strong industrial manufacturing activity and end user demand, and improving building and construction data has continued to drive the Midwest premium higher in Q4 and into Q1. Power and data infrastructure build-out should continue to drive additional aluminum demand in both the U.S. and globally. Midwest and European spot premiums have climbed to $1.04 per pound and $365 per ton, respectively, as of today. Pete will now take you through our financial performance for Q1 and full year outlook. Peter Trpkovski: Thank you, Jesse. I will start by outlining our year-end financial results and cash flow. I'll then address the timing of cash flows from the business interruption losses in Iceland, followed by a discussion of proceeds from Hawesville, including our joint venture stake in the new data center project. Finally, I'll provide our Q1 outlook and highlight key expectations for the full year 2026. Let's turn to Slide 8 and review our Q4 performance. On a consolidated basis, fourth quarter shipments totaled approximately 140,000 tons, a decrease from the prior quarter due to the line loss in Iceland. Net sales for the quarter were $634 million, a $2 million increase sequentially, primarily due to higher realized LME and Midwest premium, partially offset by lower shipments. For the quarter, we reported net income of $1.8 million or $0.02 per share. Our adjusted net income was $128 million or $1.25 per share, excluding exceptional items. Exceptional items mainly comprised of adjustments for share-based compensation, unrealized losses on derivative contracts, business interruption losses in Iceland and the impact of Hurricane Melissa in Jamaica. Adjusted EBITDA for the quarter was $171 million, primarily attributable to higher LME and regional premiums as well as improved operating expenses and increased volume at Mt. Holly from Q3 levels. During the quarter, we continued to strengthen our balance sheet. We ended the period with a cash balance of $134 million. As previously communicated, the proceeds from the refinancing of senior notes were utilized to fully repay the remaining Iceland casthouse facility debt in Q4, further simplifying our capital structure and reducing net debt to $421 million. Now let's turn to Page 9, and I'll provide a breakdown of adjusted EBITDA results from Q3 to Q4. Adjusted EBITDA for the fourth quarter increased $70 million to $171 million. Realized LME of $2,615 per ton was up $105 versus prior quarter, realized U.S. Midwest premium of $0.80 a pound or $1,775 per ton was up $350 and higher European premium was up $35 per ton to $230. Taken together, LME and regional premium pricing contributed an incremental $59 million compared with the prior quarter. Energy costs were flat in Q4 as anticipated. Alumina and our other key raw materials were in line with our previously provided outlook. As mentioned on our last call, improved operational performance at Mt. Holly, increased volume and lowered operating costs, improving adjusted EBITDA by $10 million and $5 million, respectively, compared to Q3. Now let's turn to Slide 10 for a look at cash flow. We began the quarter with $151 million in cash. During the fourth quarter, we generated operating cash flow of $170 million and received our 45x check for fiscal year '24 in the amount of $75 million, as mentioned on our last call. We continue to accrue 45x tax credits. As of December 31, we have a receivable of $173 million related to full year 2023 and 2025 U.S. production. We expect to receive the majority of this credit in cash shortly after our tax filing sometime in Q2. During the fourth quarter, we reduced net debt by $54 million. This reduction was primarily due to the repayment of the outstanding Iceland casthouse notes, partially offset by the mismatch in timing from lost margin at Grundartangi. The Iceland revolver draw reflects increased working capital needs as business interruption losses started to accumulate when Grundartangi line went down in late October. As Jesse mentioned, we now have confirmation of coverage from our insurers at Grundartangi, and we will have received a reimbursement of close to $40 million in Q1. We expect to receive insurance reimbursements on about a 1- to 2-quarter lag from our realized business interruption losses. We funded $34 million of capital expenditures in the quarter that went towards the new power generator and other ongoing investments at Jamalco, the initial payments for new replacement transformers in Iceland as well as sustaining CapEx at the smelters. We had $15 million in hedge settlements during the quarter. At year-end, the company paid $18 million in withholding taxes on share-based compensation. Finally, we had a working capital build this quarter due to the timing of LME-linked alumina shipments. We ended Q4 with $134 million in cash and strong liquidity in place to support our continued focus on restarting idle capacity at Mt. Holly to increase U.S. aluminum production by 10%. As Jesse mentioned, we made good progress in Q4 on planning the restart of Line 2 at Grundartangi, where, amongst other things, we ordered 3 new transformers to replace the failed units. The cash flow timing mismatch from Grundartangi restart spend and lost margin in Q4 and the insurance recoveries received in Q1 left us short of our capital allocation targets at year-end. We are on track to exceed those capital allocation targets in Q1, and we would expect to come back to you on our Q1 call with detail on our go-forward capital allocation plans in line with the guidance Jesse shared with you all on our Q3 call. Our year-end cash does not include the $200 million from the recent sale of Hawesville, which closed in February. In addition, we retained a 6.8% non-dilutive stake in the fully completed data center at the site. Based on current lease pricing, TeraWulf operating margins for data center colocation facilities and prevailing sector valuation multiples, we believe our 6.8% interest is worth well in excess of our initial cash proceeds. Importantly, Century has no obligation to fund development costs at Hawesville. Now let's turn to Slide 11 and look ahead to the next 90 days. For Q1, the lagged LME of $2,850 per ton is expected to be up about $230 versus Q4 realized prices. The Q1 lagged U.S. Midwest premium of $2,140 per ton or about $0.97 per pound is up $365 per ton versus Q4. The European duty paid premium is expected to be about $315 per ton in Q1 or about -- up about $80. Taken together, the lagged LME and delivery premium changes are expected to have a $70 million to $80 million increase to Q1 adjusted EBITDA when compared with Q4 levels, partially offsetting improved revenues was a temporary U.S. energy price spike that lasted about 2 weeks from winter storm Fern that impacted prices at Sebree. This approximate 2-week impact had a $20 million adjusted EBITDA headwind at Sebree. As a reminder, we do have financial hedges that sit below the line and out of adjusted EBITDA that will have a cash settlement. For Q1, we had hedged approximately 25% of our Indiana Hub exposure. Thus, the net cash impact of this 2-week impact is approximately $15 million after considering $5 million of positive hedge settlements. Temperatures have now improved across the Midwest and energy prices have already returned to historical levels. Looking at our raw materials, we continue to see moderate increases in our coke, pitch and caustic prices. Taken together, we see a small headwind of about $0 to $5 million sequentially. We expect OpEx to be a headwind of $0 to $5 million into Q1 and as we prepare to bring back all of our idle production in Q2. Volume and sales mix should also improve by $5 million as our new sales contracts begin to reflect an uplift in billet sales, as indicated on our last call. All told, at expected realized prices, we expect Q1 adjusted EBITDA in the range of $215 million to $235 million. Consistent with prior practice, we also include the estimated hedge and tax impacts to help model our business at the bottom of the page. We expect a $10 million to $15 million headwind from realized hedge settlements and a $0 million to $5 million tax expense, both flowing through our Q1 P&L and impacting adjusted net income and adjusted earnings per share. Our appendix details the full hedge book and continues to show the vast majority of LME and regional premium volumes are exposed to market prices. Finally, before I hand it back to Jesse, I'd like to walk through our fiscal year 2026 outlook, which is summarized on Page 12. We expect to ship approximately 630,000 tons of primary aluminum this year. This reflects the partial impact of restarting the remaining 90 pots at Mt. Holly and bringing back Line 2 at Grundartangi earlier than previously anticipated. Once completed, our total annualized production levels would be closer to 750,000 tons per year. Turning to capital spending. We expect total CapEx for the year in the range of $115 million to $125 million for both sustaining and investment. This includes $45 million to bring back the last 90 pots at Mt. Pali. This does not include the investment in transformer replacements at Iceland as this capital is expected to be largely offset by insurance proceeds net applicable deductibles. Across our portfolio, we are making positive high-return investments to improve the performance and profitability of our asset base, including growing production at Mt. Holly and continuing to lower the cost structure of our Jamalco investment. Finally, we expect cash interest to decline in 2026, reflecting lower coupon on our senior notes and simplified capital structure. And with that, I'll hand the call back to Jesse. Jesse Gary: Thanks, Pete. Century has an exciting 2026 ahead of us. Strong demand conditions, combined with fundamentally short U.S. and European markets have created large global aluminum deficits and historically low inventory levels. This environment creates a unique opportunity for Century to be able to add production in a market that is otherwise becoming increasingly short. In Europe, our improved restart time line in Iceland should enable Grundartangi to supply additional metal units into a rising EDPP environment caused by the initial implementation of CBAM, and production shortfalls in both Zambique and elsewhere. In the U.S., our Mt. Holly restart project is on track to increase U.S. aluminum production by nearly 10% in 2026. The project is progressing on time and on budget, and we expect to begin restarting production in April and to be complete by the end of June. We've already hired over 100 incremental workers who are undergoing training to support the additional production and preparation in the pot lines and other areas of the plant are well advanced. Combined with our Oklahoma smelter project, no one is investing more in American primary aluminum than Century. We are proud to follow President Trump's lead and to do our part to reindustrialize the U.S. and restore American aluminum expertise and support American workers. It's hard not to peek forward to this summer, where for the first time in over a decade, all of Century's assets will be operating at full production capacity. These units have never been more needed and valuable than in today's resource-constrained world. Our new and existing production will benefit from strong spot aluminum prices flowing through our contractual lags, driving higher realized prices than we have seen at any point in 2025 or year-to-date. At the same time, our total cost structure should be improved as the addition of the TG4 power turbine at Jamalco will be complete, lowering Jamalco energy costs and U.S. power prices should have returned to normal following winter storm Fern. 2026 is setting up to be a historic year for Century, and we are laser-focused on execution to benefit from the opportunities that are in front of us. Thanks for your time, and we look forward to taking your questions today. Operator: [Operator Instructions] First question is from the line of Nick Giles with B. Riley. Nick Giles: Guys congrats on getting the Hawesville done deal with say a leading player like TeraWulf, that was really good to see. My first question, maybe just to clarify, one, the Q1 guide to $15 million to $235 million, that does add back to EBITDA that would have been recognized from Grundartangi, correct? Peter Trpkovski: Nick, it's Pete. That's correct. Similar to how we did on the last call. We are adding back the loss margin at Grundartangi and including that here in our guide. So no further adjustments are required. Nick Giles: Okay. Great. Great. Appreciate that. Maybe a broader question. Metal tariffs seem well intact here. Midwest premium remains at record high. So it's nice to see you guys continue to benefit from this. But investors really have varying views of whether tariffs hold, where MWP goes? So my question is, can you just give us a sense of earnings power, not only in the current environment, but maybe other price environments? And what this means for your capital allocation approach? Peter Trpkovski: Yes. Thanks, Nick. It's Pete again. And it's a great question. As we did on Page 11, we gave you what that $215 million to $235 million gets you from a realized price perspective. And you may have saw in our appendix on Page 18, we included our sensitivities for the major inputs for our business. But just a quick highlights to point out again, referencing Page 11, if you look at our realized LME in that guide of $2,850 per ton. And you sort of marked it to spot price today, LME is around $3,100 a ton. That's about a $250 per ton increase and you can use the sensitivity to see what that mark is. And continuing on the revenue side, Midwest, again, we used $0.97 per pound in our guide on a realized basis today, it's about $1.04 per pound and that increase will also equate to an uplift in Midwest. And there is a little bit of an uptick in EDPP, the European Duty-Paid Premium, we used the $315 million per expectation on the guide. I think spot price today is around $365 per ton. So that's another $50 per ton. So for the 3 major revenue components, again, if you took our midpoint of our guide of $225 million. I think that's just a little bit over $50 million, $5-0 million of uplift when you mark the 3 revenue components to spot. And then don't forget, we had the winter storm Fern impact in the first quarter already behind us with temperatures already moderating. But as you see here, again, on Page 11, we had an Indiana hub for Sebree power price of around $69 estimated. I think if you look at where we are today, it's February 19, we have a good idea of where we are in Q1 and just assume a forward for the balance of Q1 and maybe the forward price looking into Q2, it's about $40 on the screen. So that's about a $30 improvement in Indiana Hub power price, and that sensitivity is going to be just over $20 million. So sorry, long-winded answer, but just to sum it up for you, in revenue and in power combined, that's about a $75 million uplift from our midpoint if you're taking the guide of $225 million to spot. Nick Giles: That's super helpful. I really appreciate that. Maybe my next question, just you're making progress in Oklahoma, good to hear, Bechtel is involved. Obviously, 1 of the key aspects will be an energy contract. I think in your initial press release, you used the word progressing. So I was curious if there's anything you can share on that front? How would you expect that asset to compare to energy costs in the rest of your portfolio? Anything you can add on that process would be really helpful. Jesse Gary: Sure, Nick, it's Jesse. And obviously, we're super excited about the Oklahoma project, super excited to be joining with EGA in that joint venture and really -- I think there's a bright future ahead for that project and what's to come. As we mentioned, we are working on finalizing that power contract with EGA and with PSO, who is the power provider, utility in that region. And we've been engaged, making good progress. There's a lot of support from the state, including from Governor Stitt. And so we just really need to do the work there and get where we need to be. In terms of where we end up on the pricing side, I'm not going to give any guidance there. But what I will say is, obviously, for an investment of this size, that power contract needs to be enabling and attractive to make sure that we can get the return on the investment that's required, and that's obviously a key aspect for us and something that we're driving towards with PSO. Operator: Next question is from the line of Katja Jancic with BMO. Katja Jancic: Maybe starting on the new smelter. So when you look ahead, what are some of the next milestones beyond the power contracts that we should be looking out for? Jesse Gary: Sure, Katja. Thanks. So as I said, working with EGA and as we recently announced, we've hired Bechtel to do the engineering work there. So next steps are, finalize that power contract work with Bechtel to finish the next stage of engineering work, finalize our cost and CapEx structure and as you might imagine, there's a number of other work streams there. But those are really the big ones, finalizing that. Our contract working through the final stages of engineering work, making some progress on the financing for the project and working towards making a final investment decision in Q4 of this year. Katja Jancic: And regarding financing options, are you in any discussions with potentially with the government to get or do you qualify for any government type of project level finance beyond the DOE money that you got? Jesse Gary: There are a number of financing options available to us, Katja, some of which are potentially available from the government. So we're working down all those paths simultaneously to find whatever is the most attractive package. But we are excited about the various different options outstanding. We do think they will be attractive in the end. And we just need to do the work to bring those to fruition. Katja Jancic: Maybe just 1 quick one. I don't know if I missed this, but did you tell us what the assumed margin loss in first Q is for the Iceland in the guidance? Peter Trpkovski: Katja, no, I didn't say the number specifically. But as you recall, and I think what you saw in the cash flow [ walk ], we have lost margin of $40 million to $50 million in the fourth quarter. And as the prices continue to rise higher, that could have an impact on that number. So no specific guidance on that, but we're just mainly looking at price changes quarter-to-quarter. And just a reminder, Katja, we did start to get the insurance proceeds to offset that lack of cash margin in the quarter. So we will have the cash in the first quarter, sort of lines up nicely with the Q4 loss margin. And as I said on the call earlier, continue to expect those insurance proceeds to come sort of on a 1- to 2-quarter lag basis. Operator: Next question is from the line of Matthew K. with Texas Capital. Matthew Key: I wanted to touch on the outage at Iceland. What type of capacity utilization should we be expecting over the first half of '26 kind of while we wait for the new transformers? I'm just trying to get a sense for shipment cadence out of there. Jesse Gary: Yes. So until that Line 2 comes back up, Nick, and you're looking right now Line 1, it's producing about 1/3 of the overall Grundartangi volume. So if you just take our normal run rate of 315,000 to 320,000, I take that as 1/3, that's about where we're getting out of Iceland until Line 2 is back up and running. And then also just keep in mind, in Q2, we're going to be restarting those additional Mt. Holly tons, and so those will come on over the course of that quarter, returning that plant to full production. So really, if you take both Grundartangi and Mt. Holly, take yourself to with respect to Mt. Holly end of June, with respect to Grundartangi, end of July, we should be entering August running at full production, 100% utilization capacity across the smelters. Matthew Key: Got it. Okay. That's helpful. And just in regards to the sale of Hawesville and the put option on that data center ownership, do you expect to utilize that ownership or that put option for the ownership to fund the new smelter? Or should we be thinking that -- thinking of that as more of a long-term investment for the company, based on the timing of when those -- both of those projects are expected to come online, I imagine it would be pretty tight window there. But I just wanted to get your thoughts on that. Jesse Gary: Yes, Matt. I think that it does provide a great liquidity option for us and certainty that we will be able to exit should we so choose. But as you can see and even just using the walk that Pete just did, marking our current outlook to spot, we will be generating significant EBITDA and cash flow just from the regular operation of the business that should be more than sufficient to cover any financing needs that we need for the new Oklahoma smelter over this time period. But -- so we will just continue then to maximize the value of that Hawesville stake in whatever format it needs to be. But the put option is nice because it does give us certainty of exit should we so wish. We actually are very hopeful that, that stake is going to be quite valuable, and we will continue to either hold that if that's what makes the most sense or we can look to sell or exit to a third party as well if that happens to be what makes sense. So we'll just value maximize there over time. But we're excited to own it. I think it's a great way for us to stay a participant in Hawesville and also create -- should hopefully create a lot of value for shareholders. Operator: Next question is a follow-up from Nick Giles. Nick Giles: Jesse, on the point of when you start to annualize the Q1 guide, it is a significant amount of EBITDA and cash flow. I know there's a lot of noise in the cash flow statement this year with all that's happening, but you're not really going to be spending a lot of the cash in Oklahoma until I assume 2027 at the earliest. So what do you plan to do with the cash in the meantime? Would you be willing to pay down incremental debt between now and then? Would shareholder returns be on the table? Just appreciate any commentary around timing? Jesse Gary: Sure, Nick. Thanks. Great question. And obviously, on Slide 22 of the appendix, we do have our capital allocation slide, and you have our capital allocation targets. Now as Pete mentioned, in Q1, we should achieve those targets. And as you just said, we should be generating significant cash flow. So we always have the capability to pay down debt. We'll run down and continue to fund our organic CapEx as we have those opportunities. Good examples there, Mt. Holly Restart or TG4 at Jamalco, and we'll continue to be opportunistic when looking at M&A. And then if we do have cash left over, we will look at returns to shareholders. And as I laid out on our Q3 call to give you some idea of the type of returns that we might be looking at. Nick Giles: Awesome. Awesome. It's good to hear. Maybe just 1 more while I have you. I'm sure it's more obvious to others than it is to me. But -- can you just talk about the logical alumina supply for Oklahoma? Or just kind of what -- remind us what type of excess capacity that you have at your disposal and we can make our assumptions about where that would go. Jesse Gary: Sure. As you know, our current book consists of our own production out of Jamalco, which is a great refinery, great quality of alumina. And so that would be one source that's available. We're also the largest customer of the Gramercy refinery in Louisiana. And we have a number of third-party contracts that we source alumina from. So all of those are potential sources for the new smelter, and we'll work with EGA to determine the best source for the new EX technology there and make sure we're running alumina sources through that maximize the value of that really high-caliber technology we're installing in Oklahoma. But basic answer to your question, Nick, I think there's a number of sources that should be available, including sources within our own control. Operator: [Operator Instructions] There are currently no further questions registered. There are no additional questions waiting at this time. So I'll pass the call back to the management team for any closing remarks. Jesse Gary: Thanks, everyone, for joining. Super excited about what 2026 holds for Century and look forward to talking to you all again on the Q1 call. Thanks lot. Bye. Operator: That concludes the conference call. Thank you for your participation. You may now disconnect your lines.
Operator: Good day, ladies and gentlemen, and thank you all for joining us for today's Farmer Mac 2025 Earnings Results Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to Senior Director of Investor Relations, Jalpa Nazareth. Welcome, Jalpa. Jalpa Nazareth: Good afternoon, and thank you for joining us for our fourth quarter and full year 2025 earnings conference call. I'm Jalpa Nazareth, Senior Director of Investor Relations and Finance Strategy here at Farmer Mac. As we begin, please note that the information provided during this call may contain forward-looking statements about the company's business, strategies and prospects. These statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected. Please refer to Farmer Mac's 2025 annual report on Form 10-K and subsequent SEC filings for a full discussion of the company's risk factors. On today's call, we will also be discussing certain non-GAAP financial measures. Disclosures and reconciliations of these non-GAAP measures can be found in the most recent Form 10-K and earnings release posted on our website. Joining me today are Chief Executive Officer, Brad Nordholm; our President and Chief Operating Officer, Zack Carpenter; and Chief Financial Officer and Treasurer, Matt Pullins. At this time, I'll turn the call over to our CEO, Brad Nordholm. Brad? Bradford Nordholm: Thanks very much, Jalpa. Good afternoon, everyone, and thank you very much for joining us. 2025 was another strong year for Farmer Mac. We surpassed $33 billion in outstanding business volume, achieved record revenue of $410 million, a 13% increase relative to the prior year and produced $183 million in core earnings, our 10th consecutive year of record annual core earnings. We thoughtfully balanced returning capital to our shareholders with investing for future growth while continuing to execute on our mission of providing vital liquidity to agriculture and rural America. As you saw in this afternoon's earnings release, we announced a $0.10 per share increase in our quarterly dividend to $1.60 per share. This is our 15th consecutive annual increase, reflecting our confidence in the durability of our earnings profile and our long-term cash flow generation. We were active in share repurchase program in the fourth quarter, which was modified last August by Board of Directors to approve share repurchases of up to $50 million of Farmer Mac's Class C common stock. During the fourth quarter, we completed $12.9 million under the amended program, and we have $37.1 million remaining under the current authorization. In total, we returned $78 million to shareholders through dividends and share repurchases in 2025. Looking ahead, we remain committed to this balanced capital allocation approach that prioritizes prudent growth, balance sheet strength and consistent shareholder returns. During the quarter, we also completed our seventh Farm securitization transaction, further building liquidity and efficiency in the agricultural mortgage-based securitization market. This risk transfer tool strengthens our ability to optimize capital and enhance the amount of market liquidity we can provide through our businesses. By transferring a portion of the underlying credit exposure to investors, we free up capital, which is then available to be redeployed into new mission-aligned lending activities. We are very pleased with the tremendous support we've seen for this program, and we look forward to exploring other credit risk transfer opportunities in order to grow our platform while continuing to deliver high-quality opportunities to our various classes of investors. We anticipate introducing a new product in the market this year that will support the strong investor demand for agricultural assets, while also remaining in alignment with our mission fulfillment. The agricultural real estate market remains very active. The USDA expects demand for real estate mortgages will remain robust in 2026, with the total volume of transactions projected to increase by 5% this year relative to 2025 levels. As it relates to our portfolio, we were pleased to see a very positive outcome from recent property sales for a distressed borrower, which we expect will result in recognizing previously unaccrued fees and interest and meaningfully reducing our 90-plus day delinquencies during the first half of 2026. Despite the volatility and uncertainty in today's environment, whether from interest rate movement, commodity price fluctuation, supply chain disruptions, consumer behavior changes or broader geopolitical and policy dynamics, Farmer Mac continues to be resilient. Our diversified business model, strong capital position and disciplined risk management position allows us to provide vital liquidity to agriculture and rural infrastructure sectors in all economic environments. Matt Pullins, who joined us as our new Chief Financial Officer in mid-December, will review our financial results in more detail, but I want to hasten to add that we are thrilled to have Matt join the team. He brings more than 2 decades of experience in corporate finance, capital markets and strategic planning, paired with a personal connection to American agriculture. His combination of deep financial expertise and authentic understanding of rural America makes him an exceptional addition to Farmer Mac, and we're excited for the impact he will have on our organization. Now I'll turn the call over to Zack, our President and Chief Operating Officer, to discuss our customers and market developments in more detail. Zack? Zachary Carpenter: Thanks, Brad, and good afternoon, everyone. Our results continue to demonstrate the benefits of the strategy we have been executing for several years now, diversifying our portfolio into higher spread mission-aligned businesses while maintaining strong underwriting standards and disciplined risk management. Serving agricultural businesses and providing liquidity to enhance and enable rural infrastructure are both critical to our mission of driving economic opportunity to rural America. Farmer Mac is broadening the pursuit of its mission in response to the evolving economic landscape in rural America, and this proactive business diversification continues to deliver meaningful benefits to the communities we serve. Our team delivered another outstanding year of business volume activity with broad-based net volume growth in every segment, reflecting strong customer demand and the continued relevance of our secondary market solutions. We achieved a record $3.8 billion of net new business volume in 2025, resulting in total outstanding business volume of $33.4 billion as of year-end. The net volume increase highlights quality asset growth across all our product sets, which in turn drove significant growth in net effective spread. Our agricultural finance outstanding business volume grew $1 billion last year with our Farm & Ranch segment accounting for nearly all of that net growth. Activity in Farm & Ranch accelerated meaningfully in the fourth quarter and has carried over into 2026, which reinforces the momentum we're seeing in this business. We expect loan purchase growth to continue as tighter agricultural conditions driven by higher input costs, trade and tariff concerns and low commodity prices, increased producers' need for liquidity. The Farm & Ranch segment is core to our mission, and we remain committed to bringing our customers products that provide capital and risk management solutions, which support their borrowers' financial needs. Our Farm & Ranch AgVantage securities portfolio reached an inflection point in the fourth quarter as the portfolio reversed the runoff trend and grew $500 million. As we discussed on our prior call, this increase reflects the additional fundings we anticipated after closing a new $4.3 billion facility with a large agricultural counterparty. We expect this momentum to continue in 2026 and remain on track to return to sustained net growth in this product as we work closely with new and existing counterparties to determine the right timing for refinancing maturing securities or providing incremental financing based on market conditions and return on capital objectives. We remain steadfast in our commitment to deliver a broad spectrum of financial solutions to the agricultural community by working alongside our growing customer base. Our Corporate AgFinance segment saw a net growth of $63 million during 2025, reflecting our continued efforts to support larger, more complex agribusinesses that span the food, fuel and fiber supply chain. We anticipate seeing more activity in this segment in the first quarter of 2026 as deal flow activity levels are higher relative to prior years. However, ongoing refinancings and maturities will continue to create a headwind going forward. Turning to our infrastructure finance line of business. Outstanding business volume increased to $11.8 billion at year-end 2025, up over $2.8 billion from the prior year, with all 3 segments contributing significantly to net growth. This is a continuation of the strong interest and investment in data centers, broadband expansion as well as the construction and completion of renewable energy projects, coupled with the overall need for significant energy generation and transmission capacity for rural America. Volume in our Power & Utilities segment grew by over $1 billion, largely due to strong load purchase activity and net new advantage security issuances, supporting investment needs of rural electric generation, transmission and distribution cooperatives. Our Renewable Energy segment also grew more than $1 billion last year, supported by strong deal flow, accelerated construction deadlines and continued project finance momentum. Despite increased policy uncertainty across the renewable power investment market, we expect to continue participating in renewable energy transactions for both new projects and refinancings of existing projects, utilizing the same strong credit standards. Looking ahead, while we anticipate another construction-related rush in the first half of this year, primarily tied to the July 4 deadline included H.R. 1, we believe the substantial need for new power generation will continue to drive growth in this segment. We're seeing strong deal flow, allowing us to be selective with our capital deployment in this sector to pursue deals that are appropriately structured with strong counterparties, which underscores the strength of our reputation in the market. Beyond 2027, we anticipate activity in this space to be more market-driven rather than policy-driven as the underlying driver remains the same, a massive surge in power demand, requiring significant new power supply. Our Broadband Infrastructure segment grew by $700 million in 2025, more than double the prior year's growth with nearly 90% of volume growth tied to data center-related demand. We anticipate increased financing opportunities in this segment for data center build-outs given the increasing investment in capacity to support AI, cloud storage and enterprise digitization, particularly by large hyperscalers, and we will continue to emphasize diversification across geographies, sponsors and tenants. We believe these developments are crucial for rural economic growth and support the historically strong market demand for connectivity needs across rural America. Growing business volume in our Infrastructure Finance segment remains a top priority, and we will continue to focus on strategic investments and resources in these areas to build our expertise and capacity as market opportunities arise. Despite this backdrop of broader market uncertainties stemming from factors such as interest rates, regulatory shifts and trade policy changes, we are confident in our ability to continue to deliver growth and consistent results. Our total portfolio is well diversified by both commodity and geography, and we remain confident in the overall health of our portfolio as evidenced by our continued strong asset quality metrics. To summarize, 2025 was a year of strong, broad-based disciplined volume and net effective spread growth across all of our operating segments, and our pipelines remain strong as we move into 2026. We expect continued customer demand for liquidity, capital efficiency and long-term funding solutions as market conditions evolve. Our robust capital and liquidity, along with our strong underwriting criteria, position us to capitalize on this opportunity. Importantly, we are confident in our ability to continue to deliver consistent results as we support rural America through this economic cycle and beyond. With that, I'll turn it over to Matt Pullins, our new Chief Financial Officer. I'm thrilled to welcome him to Farmer Mac and to the leadership team as we continue to advance our long-term strategic priorities and position Farmer Mac for its next phase of growth. Matt? Matthew Pullins: Thank you, Zack. I'd like to begin by saying how pleased I am to be here and to help lead this mission-driven organization. Growing up on a family farm in Western Ohio and remaining deeply connected to production agriculture today make it especially meaningful and energizing to support an institution whose mission is so closely aligned with my own background and values. First, I'd like to touch on our fourth quarter 2025 results. Our net effective spread was $101.4 million, reflecting a 16% increase over the prior year quarter and an all-time quarterly record. Net effective spread as a percentage was 122 basis points, reflecting the portfolio mix shift to more accretive assets and continued disciplined funding execution. Core earnings were $40 million for the fourth quarter, a $3.6 million decline from the prior year period. Fourth quarter core earnings results were negatively impacted by credit provisions related to a small number of loans originated from 2021 to 2023 in the Corporate AgFinance and Broadband Infrastructure segments. The charges impacting these specific loans this quarter were concentrated within a few borrowers facing business-specific obstacles. We do not believe the charges are indicative of a meaningful change in the high credit quality that persists across our portfolios. If these charges were not concentrated to the fourth quarter, we estimate core earnings would have reflected a 20% increase over the prior year period. Now turning to our full year results. 2025 was another year of strong financial and operational execution for Farmer Mac. We delivered a record net effective spread of $383 million, an increase of $43.5 million or 13% from the prior year. As Zack mentioned, the company's strategic decision to diversify our loan portfolio into newer lines of business that play to our competitive advantages in intermediate and long-term financing solutions such as Renewable Energy, Broadband Infrastructure and Corporate AgFinance has been a key priority. The broadening of our business is benefiting us through changing market cycles. Also contributing to our net effective spread growth is our effective asset liability management and funding execution. The strengthening of our capital position through retained earnings growth and preferred stock issuance supports our balance sheet management strategies, which are fundamental to the resilience of our business model as these strategies enable us to be nimble and responsive to changing market conditions. Core earnings for the full year were $182.9 million, up 6.6% compared to the prior year, reflecting strong revenue growth, partially offset by elevated credit expenses and higher operating costs. Also reflected in our 2025 core earnings results is the purchase of $61.5 million of renewable energy investment tax credits, resulting in a $4.8 million benefit in 2025. As of year-end, we had approximately $80 million of remaining capacity to use renewable energy tax credits. We will continue to evaluate future tax credit purchase opportunities in relation to our tax capacity. Partially offsetting strong earnings growth was a 14% increase in operating expenses over the prior year. This increase was largely due to resources and investments needed to support increased business volume, such as transaction-related legal costs, technology investments and hiring-related expenses. We maintain our deliberate approach to expense management by proactively monitoring and managing expense growth against incoming revenue streams. We will continue making targeted investments in business development and our operational and technology platforms to support future growth and scalability while managing expenses within our long-term efficiency ratio target of 30%. We experienced $32.9 million of provision for credit loss expense in 2025. The provision expense reflects $19.6 million attributable to certain individually significant credit deteriorations in our Corporate AgFinance and Broadband Infrastructure portfolios. Outstanding business volume growth across our business segments accounted for an additional $9.6 million provision expense. Corporate AgFinance, Renewable Energy and Broadband Infrastructure segments accounted for 84% of the total provision expense attributed to new business. It's important to note that when diversifying into these different segments, Farmer Mac developed underwriting standards consistent with industry practices, acquired significant expertise in these newer segments and implemented a comprehensive framework that appropriately aligns with our risk appetite. As these portfolios continue to season, we may see credit costs trend higher than the levels historically observed in our Farm & Ranch and Power & Utility segments. Importantly, these portfolios earn higher yields commensurate with the underlying risk return profile. Charge-offs totaled $20.9 million in 2025, the majority of which occurred in the fourth quarter and were primarily related to borrowers facing business-specific headwinds. The total allowance for losses as of December 31, 2025, was $39.7 million or 17% of nonaccrual assets as of year-end. This compares with $25.3 million or 15% of nonaccrual assets as of December 31, 2024. This metric is useful for evaluating the level of our allowance relative to accounts for which it is probable, we will not be able to collect all amounts due under the loan agreement. We are comfortable with the level of the allowance given the value of the collateral that is supporting these loans. The fundamentals of our underwriting and risk analytics enable us to continue to effectively navigate the current volatility and uncertainty in the agricultural cycle. While credit losses are inherent in lending, we anticipate the strength and diversity of our overall portfolio will moderate the potential impact of a credit cycle on our overall business. Farmer Mac's core capital increased by $204 million in 2025 to $1.7 billion, which exceeded our statutory requirement by $678 million or 66%. Core capital increased $13 million in the fourth quarter, largely due to higher retained earnings. Our Tier 1 capital ratio was 13.3% as of December 31, 2025, compared to 14.2% as of the prior year period. The change in our Tier 1 capital reflects the effect of strong loan purchase volume growth in our agriculture finance and infrastructure finance portfolios. Our strong capital position has enabled us to grow and diversify our revenue streams, remain resilient through volatile credit environments and continue providing competitively priced liquidity to our customers and their borrowers. Looking ahead, we will maintain a thoughtful and balanced approach to managing our overall capital position. Organic capital generation, selective capital issuance and the use of risk transfer tools will help ensure we have sufficient capital to support future growth, particularly in more accretive segments, which are more capital intensive. In conclusion, our strong earnings performance, effective balance sheet management, robust capital position and solid liquidity levels underscore the strength and resilience of Farmer Mac's business model. The results this year reflect disciplined execution across our enterprise and the continued benefit of a diversified platform that deepens our value to lenders, borrowers and investors across rural America. I am grateful for the opportunity to join this organization at such an important moment, and I look forward to partnering closely with the leadership team as we continue advancing Farmer Mac's mission and long-term strategic priorities. And with that, I'd like to turn the call back over to Brad. Bradford Nordholm: Good. Well, thank you very much, Matt. As we look ahead, we are excited about the opportunities in front of us and confidence that the depth and capability of our management team positions us well to continue executing on our long-term strategic priorities. Before we begin the Q&A period, I'd also like to remind everyone that we will be hosting our Investor Day on March 18 in New York at the New York Stock Exchange. We look forward to providing a deeper dive into our strategy, growth initiatives and the future of Farmer Mac and actually having some formal and informal conversations with you. We hope to see many of you there. And now, operator, I'd like to see if we have questions from anyone on the line today. Operator: [Operator Instructions] We'll hear first today from Bose George at KBW. Bose George: Welcome, Matt. The first question I had was on the credit issues. While you note that these losses are customer specific, is there a good way for us to think about the run rate provision just based on the changing mix? Like is the 2025 annual level a decent number if we kind of spread that out over a full year? Bradford Nordholm: Bose, nice to hear from you today. Keep in mind that when Matt took you through the numbers, the $32 million, of that $13 million was attributable to automatic provisions that are added through our CECL modeling attributable to the growth in the portfolio. And so looking forward, we're actually starting out 2026 in strong fashion. And while we don't have specific allocations across portfolios, we're continuing to see a very nice mix across portfolios. So there's going to be a core level of automatic provisioning reflecting the growth in 2026. So that's kind of the first piece of it. The second piece of it, any special provisions associated with individual credits, that's much, much harder for us to forecast. I guess all I could say today is that we don't foresee see anything today that would cause us to think that, that number would be going up. There's nothing that we're identifying as of this time. Bose George: Okay. Great. That's helpful. And then just one on the spread expectation for the year. Is the current spread levels sort of a reasonable number based on your expectations? Zachary Carpenter: Bose, this is Zack Carpenter. Good question. I think really, this boils down to volume mix. In 2025, it was a year of substantial growth across our newer segments. And as we've talked about in our script, those carry more accretive yields than some of our legacy or other assets that didn't grow as fast in 2025. We talked about an inflection point in AgVantage in 2024. We see strong momentum heading into the first part of this year. And just given the strength of the counterparties, those assets carry much tighter credit spreads than some of the other products. So it's really hard to pinpoint where we anticipate spreads going. It really focuses on product mix and growth opportunities. And as we look out to the first part or at least the first half of 2026, we see strong and sizable growth across all of our segments and products. And so the size of that growth will impact the overall -- any net effective spread percentage. That being said, we're really focused on growing the revenues or the total net effective dollar amount. And we feel confident that just given our risk profile of these assets and the growth opportunities, we'll see strong growth there as well. Operator: Our next question will come from Bill Ryan at Seaport Research Partners. William Ryan: I'd also like to extend my congratulations to Matt. Question following up on the last one on the provision. Historically, the credit provisioning has been kind of related to some idiosyncratic events, but it sounded like there may have been a little bit more going on in the portfolio. You highlighted broadband, a few small credits and also in Corporate AgFinance. I was wondering if you might be able to unpack that a little bit more to say -- to kind of let us know, is there something kind of going on with these smaller credits that caused a little bit more disruption in the fourth quarter? Or is it just kind of like a one-off event that you, again, concentrated among these credits? Bradford Nordholm: Yes. Zack will give you additional color on that, Bill. I guess the one thing I would just say at the outset is that we're quite emphatic that there's nothing systemic here in the portfolio. Zachary Carpenter: Yes. When we talk about a few small credits here, I do want to highlight it is a few loans compared to thousands and thousands of loans we have on our balance sheet. And I do want to highlight, if you look at our financials, the acceptable loan quality is very high across all of our segments. So we feel very confident that there's no systemic or portfolio-wide issues that we're not aware of. As it pertains to a few of these individual loans, it is very borrower specific. In the lending space, you're going to have operational issues, management issues, market changes, market dynamics and consumer changes that all impact businesses. As we noted in the script, some of these loans were purchased right out outside of COVID and things have changed post-COVID and some businesses are just dealing with that and struggling to rightsize their operations. And for a few of these loans, I think it was those type of market dynamics that created the risks that we saw in 2025. We've been monitoring these loans for some time now. So we were aware. Things just transpired in the fourth quarter that created further deterioration. That being said, it's a few borrowers, and this was very borrower specific. And overall, we feel very confident with the quality of our portfolios. William Ryan: Okay. And one follow-up on credit, just a couple more questions. In the Farm & Ranch business, I believe the loan payments are due January 1 and July 1 each year. And I was wondering if you can might be able to give us some indication. Obviously, farm credit has been in the headlines for the past several months. Is there anything of note that took place when these payments came due on January 1? And kind of following up on that, I believe there's going to be a disbursement of market stabilization payments from the government in February, which should help out the farmers as well. Zachary Carpenter: Yes, it's great. January 1 and July 1 are typically our large prepayment periods. The January 1 prepayment cycle was in line with January 1, 2025. There was nothing unique about this payment cycle. In fact, we've seen significantly more growth during the month of January than prepayments, which shows, again, the momentum that we've had in the space. You're right, as it pertains to government program payments, the projected 2026 net cash farm income is going to be supported by a significant amount of government payments. And there's a couple of components to that. First, in H.R. 1, there were some farm bill enhancements primarily related to price triggered commodity programs. It's about $13 billion in 2026 that will be going out later. Some of the ad hoc and disaster aids, about $24 billion. Some of this was a carryover from 2025 as those start going out. So we have seen some of those being dispersed. They are supporting the tight Ag economy cycle right now, especially in the row crop space. So those will be a benefit going forward just given the substantial amount of government payments going out in 2026. William Ryan: Okay. And just one last question. I'll try and get one more in here. On the expense outlook, obviously, a bump up in expenses on some of the things that you highlighted over the course of the year, transaction expenses, personnel investments. Fourth quarter number looked like it came back down quite a bit year-over-year. How should we be thinking about expense growth in 2026? Matthew Pullins: Bill, this is Matt. To give you a little bit of insight into expense growth, a couple of things to keep in mind. There is some modest seasonality that factored into the slowing of expense growth in the fourth quarter. When we turn the page and turn the calendar into 2026, the first quarter tends to have higher personnel expenses as we look at resetting things like payroll taxes and the like. That's one factor to keep in mind. More broadly for the business, as we look to 2026, there will be a level of expense growth that will be incurred as we continue to grow outstanding business volume. There are transaction-related expenses, operational expenses and the need for incremental personnel to support the growing business. We will also be looking for strategic investments, particularly in the technology platform as well as selective investments in business development to further enhance the growth and take advantage of the market opportunities that are present at this point in time. So with that being said, we are being very mindful of making sure that we continue to operate within the target efficiency ratio of 30%. And you'll see that we were over 2% below that here in the quarter, and we will continue to balance making investments while operating very efficiently in the future. Operator: We'll move forward to Brendan McCarthy at Sidoti. Brendan Michael McCarthy: Just want to start off on your outlook for the volume mix heading into 2026. I know you mentioned you're pretty positive outlook for broad gains across the portfolio. Are you able to kind of dissect that outlook a little bit more as to which specific segments or lines of business you're more bullish on relative to others? Zachary Carpenter: Brendan, it's Zack Carpenter here. Yes, I think it's a very consistent theme with one notable exception that we experienced in 2025. So first and foremost, the pipelines across our infrastructure finance line of business continue to remain at very strong and elevated levels. We talked about that a little in the script. It's just a function of the need for energy that's coming from all sources of our segments as well as the strong growth in data centers. So for the foreseeable future, at least the next couple of quarters, we see very, very strong pipelines across all 3 of those segments, which is just a continuation of what we saw in 2025. Looking over on the agricultural finance line of business, as I noted, Farm & Ranch continues to perform at a very, very elevated level. Loans submissions, approvals were a record in January. So a lot of the momentum we saw in the second half of 2025 continues to roll over just given the dynamics in the agricultural environment as well as our customers, financial institutions managing capital, liquidity, et cetera. So continue to expect to see strong growth in Farm & Ranch. And I think the one notable exception from 2025 is really Farm & Ranch AgVantage. We had a very strong fourth quarter. We're having very strong conversations right now with our counterparties plus new counterparties. So we anticipate that growth trend increasing in 2026, starting very early. And so I think from a mix perspective, it's a little bit all over the board across all segments with one notable exception being we see some pretty strong growth in Farm & Ranch AgVantage, which, as you've known, has been in kind of a decline mode over the last couple of years. Brendan Michael McCarthy: Great. I appreciate that detail. And just as a follow-up there with the AgVantage business. I know that's more kind of like a relative value proposition, and it sounds like that relative value might be increasing. What's really driving that? Is this maybe lower rates? Or is it just what you're able to offer counterparties? Zachary Carpenter: There's a lot of components to that question, but I think there's a couple of key requirements that I think are driving the opportunity set here. First is some of these counterparties, these new counterparties that we've talking about, their facilities have closed. I mean these are very complex, time-consuming facilities and in many instances, require counterparty regulatory approval, and that could take months. And so as those approvals have started coming in, there is now a closed facility where these counterparties want to leverage our relative value versus other opportunities and pledge the collateral to support their growth and their balance sheet. The second is, as we've modified certain facilities with existing counterparties that have provided more value or more available capacity, they're seeing more utilization as they continue to grow and originate loans. So I guess what I would say is fourth quarter was kind of the inflection point where a lot of these components that we've been talking about over the last 12 to 18 months have come to fruition and concluded, and now we're seeing the benefits of that, just given the relative value of this product set versus other liquidity sources in the market. Brendan Michael McCarthy: Understood. And one more question for me. Just really looking at the credit side, I believe that, Brad, I believe you mentioned there may be a recovery in the outlook there. Did I hear that correctly? Zachary Carpenter: Yes, Brendan, this is Zack again. That's correct. As we've disclosed in our financials and talked about over the last couple of years, clearly, the permanent planting, specifically almonds in California experienced a stressed environment. On the positive side, in 2025, we've seen some improvement in pricing. And as Brad noted in the call, a borrower that had experienced stress in our portfolio, we are seeing some resolve in that transaction, which we believe in the first half of this year will result in a meaningful reduction in our 90-plus day delinquencies as well as some recoupment of fees and interest income that we've been holding back given the status of that loan. Matthew Pullins: Brendan, this is Matt. If I could just add one additional point there is the specific borrower that was referenced in Brad's comments and that Zack just touched on, that is actually not going to meaningfully impact credit costs or recoveries as we have not charged any of that borrowers' assets off at this point. The positive financial impact for that particular borrower will be recognized through an increase in net effective spread as that asset has been on nonaccrual for some period of time. Operator: And we'll take a question from the line of Gary Gordon. Gary Gordon: A couple of things. One, the dividend increase of 7%. I think historically it is on the low side. I mean, is some of your thinking that you're laying out strong business growth and also the repurchase opportunity. So the assumption that more of your capital than normal would be used to fund the balance sheet growth and potentially share repurchase. Bradford Nordholm: Yes. Gary, obviously, we have a number of tools for managing capital growth, including earnings, dividends from that, preferred stock issuances, securitizations, which can change relative requirements rather than notional requirements. And so we look at all the tools that we have available to us. And probably the most significant factor in kind of looking at what's the appropriate amount of dividend increase this year is the fact that our growth has been very, very strong. And our growth has been very, very strong in segments of business that consume a bit more capital. And so you see that reflected. For the long-term financial strength and performance of Farmer Mac, that's a very, very positive thing. Gary Gordon: Okay. Two, on the problem loans, you said they were from '21 to '23. You said they were one-offs, but were there lessons learned there that affected your underwriting today? Zachary Carpenter: Yes, Gary, we can constantly evolve and monitor markets and adjust our philosophy and underwriting. We don't change our standards, but we update our thought process based on what we've seen in the markets. For a couple of these, especially the one originated in 2021, dramatically different times in COVID and out of COVID and certain markets reacted differently and certain supply and demand dynamics changed. And I think a couple of these individual borrowers experienced some of those market changes, consumer behavior changes and just frankly, some operational issues that management struggled working through. I think when you take a step back from an underwriting standpoint, our primary focus is, first and foremost, having the right expertise in-house. You've seen our increase in headcount. A lot of that is to get the right personnel to adjudicate and understand the risk and monitor the risk in these newer segments, which we've done. And the second is, as markets evolve and we see transactions like this, it does help in future adjudication of transactions to take a step back and see what's transpired in the markets. Every market is operating differently, and we want to use the most up-to-date information to make appropriate credit decisions as we move forward. So I think the long answer is yes, we continue to assess markets and borrow-specific issues and adjust our thinking in risk adjudication when that comes up. Gary Gordon: Okay. Last thing is the data center demand. Has that had any material and sort of general impact on farmland prices. And if so, I can imagine for existing loans, that would be a positive, but it could create a little more risk lending today. Zachary Carpenter: Gary, the opportunities that we've seen in the data center space have been in really rural areas, not necessarily in productive farmland areas. I know there's been some out there and some articles that have highlighted the interaction between arable and productive farmland versus renewable energy projects and data centers. We haven't seen that or experienced that in our portfolio. From a farmland value perspective, it's been relatively stable. We've seen some declines just given the overall commodity cycle in some of the regions that we have loans in our portfolio. But we really haven't seen a correlation between data center investments and constructions and changes in -- or increases in farmland values. Operator: And thank you to our audience members who had shared your questions. Mr. Nordholm, I'm pleased to turn it back to you, sir, for any additional or closing remarks. Bradford Nordholm: Great. Well, thank you. Thank you all very much for joining us. And thanks for your patience. I think we had a couple of situations with background sirens today. And our office here at 2100 Pennsylvania Avenue, a couple of blocks from the White House, occasionally, especially when there are a lot of foreign dignitaries in town for events, results in motorcades and ambulances, and thank you for -- thank you for bearing with us today. But I would like to conclude by thanking everyone for listening in on the call. We'll, of course, be having our regular scheduled call again in May to report our first quarter results. We look forward to sharing information with you at that time. But in the meantime, please do consider joining us for our Investor Day in New York, and please follow up with Jalpa with any other questions that you may have. With that, thanks again. And operator, we will conclude the call. Operator: Ladies and gentlemen, this does conclude today's Farmer Mac 2025 Earnings Results Conference Call. And we do thank you all for your participation. You may now disconnect your lines. Please enjoy the rest of your day.
Naureen Quayum: Good morning, everyone. Welcome to True Corporation's earnings disclosure for the fourth quarter and full year of 2025. My name is Naureen. I'm the Head of Investor Relations. With us today are our Group CEO, Khun Sigve; and our Co-CFO, Khun Nakul. I would also like to welcome all the analysts who have joined us in the room today and to those of you who are joining us online. Our presentation today is going to be a bit different. We will have the first segment, which will focus on the results of the fourth quarter and the full year. And we will have the second segment, which will focus on the strategy and the mid- to long-term guidance that we have provided. All our presentations are available for download on our website. We will take Q&A at the end of the presentation. For those of you who are online, please raise your hand or drop your questions in the comment box. We will do a mix of questions from the room and questions online. With that, I now welcome Khun Sigve to start our presentation. Sigve Brekke: Sorry. Thanks, Naureen, and good morning to all of you, our Asian colleagues and good afternoon or whatever to the rest of the world. And good to see also several of the analysts being present here in the room. Let me take one look back before we go forward, and I'm taking a look back on 2025 and some key highlights from that year. First, 2025 was the year where we became profitable. We reported a net profit after tax for the first time in Q1 last year and continued to be a profitable company ever since. And more importantly, we declared our first dividend since amalgamation in Q3 '25, reinforcing our commitment to disciplined capital allocation and shareholder return. Secondly, we also last year achieved a significant milestone on our network. We completed our ONE Network integration successfully and actually ahead of plan. And with the acquisition of the 2.3 megahertz and the 1,500 megahertz, we now have the biggest spectrum portfolio in the market, which puts us in a very good position to deliver best network experience going forward. And thirdly, customers remain at the core of everything we do. And we had some challenges during the year, being the earthquake, being flood, being border situation and also being the network outage that we had. But throughout there, we kept the relationship with our customers. We also unified ex-dtac customers and ex-True customers into a one digital-first platform, delivering a seamless and consistent experience through the new True app, where our customers then could get the first digital platform experience. Finally, we also started to see in the fourth quarter signs of growth momentum returning. I said when we had our third quarter presentation that we are bottoming out and returning back to growth. And that was exactly what happened in the fourth quarter. Mobile service revenue increased quarter-on-quarter. EBITDA continued to expand. This reflects a shift towards a healthier, more sustainable growth, with customers firmly at the core. These milestones represent what I call a shift from integration that we have done in the last 3 years to a disciplined execution and a sustainable performance going forward. And I'm going to talk more about that. But first, let me ask Khun Nakul to go through some of the financials from the quarter. Please, Nakul. Nakul Sehgal: Thank you so much, Khun Sigve. Good morning, good afternoon, everyone. Let me walk you through the financial highlights of Q4 '25 and full year of '25. First, as far as the service revenue is concerned, on a normalized basis, excluding the impact of the decline in domestic roaming, we are delivering a negative 0.2% year-on-year for Q4 and a flat on a quarter-on-quarter basis. For the full year, we are negative 0.2%, a shade lower than the guidance that we have given to the capital markets. As far as the EBITDA is concerned, a 10.3% growth on a year-on-year basis and a 3.2% on a Q-on-Q, with the full year being 7% growth. The net profit after tax, THB 4 billion of reported profits, 2.5x of what you saw in the previous quarter. And at the same time, normalized profit was THB 6.1 billion, with the full year reported profit being THB 9.2 billion. And as Khun Sigve said, fourth consecutive quarter of profit for the company. The leverage continues to decline. It's a negative 0.2x on a year-on-year and also on a quarter-on-quarter basis. And even here, we meet or slightly exceed the guidance that we had given to the capital markets. We do also announce a final dividend for the year at about THB 4.1 billion, which is THB 0.12. With this, the FY '25 payout is 56% of our normalized profits. Then if I go into the financial numbers in a little bit more detail. As far as the service revenue for Q4 is concerned, even though it's declined 1% on a year-on-year basis, that's primarily on account of domestic roaming and PayTV. But on a normalized basis, it remained flat on a Q-on-Q and declined on a negative 0.2% on a year-on-year basis. The full-year service revenue declined due to lower contribution from mobile as well as the PayTV segments, and I'll explain that in the second graph that you see in the middle. If you look at the waterfall from Q4 '24 to Q4 '25 and also for the full-year '24 to full-year '25, the 2 businesses that have declined is basically mobile and PayTV, where there is growth registered in online. The decline in the mobile business is primarily on account of domestic roaming, while the underlying core mobile business has grown. As far as the total revenue is concerned, first, if you can see, the product sales for Q4 '25 has increased approximately 37% due to launch of the iPhone. And this is where you see the numbers clearly indicating that increase. THB 4.2 billion has gone up to THB 5.8 billion. And then also as far as the full year is concerned, the decline of 5% that you see is primarily on account of the reduction in the network rental revenue, which is as expected -- expiration of the spectrum rental arrangement that we had with NT, and that's the reason why there is a decline. Other than that, it's stable. Then if I move on to the different businesses. First, the mobile business. Let me first walk you through the middle section, which is the subscriber growth. As Khun Sigve mentioned, we had kind of promised in Q3 that we're going to be back to growth in this business. And as a consequence, we are pleased to report a 580,000 net adds positive in this quarter, 100,000 coming from postpaid and about 480,000 coming from prepaid. The growth in postpaid is basically on account of B2B. With the growth in the subscribers and also an improvement in the ARPU, as you can see on the extreme right, the ARPU in the prepaid space has improved 2.6% Q-on-Q. Full year is approximately 10%. Also, as far as the postpaid business is concerned, it's a slight improvement, 0.4% quarter-on-quarter. That's primarily because of the seasonal roaming revenues. And as a consequence, the Q-on-Q and year-on-year blended ARPU has shown a good increase, reaching at THB 225, which is a 4.5% increase year-on-year. The revenue development is a function of the subscriber and ARPU. And as a consequence, you can see Q-on-Q, the mobile business has grown 1.2%. And the full year -- and the growth normalized for the roaming is about 1.4%, and that's where we are saying that we are back to growth as far as this business is concerned. Then let me move on to online. We registered a 1.5% growth year-on-year in online revenues, which is basically driven by the growth in subscribers. If you see the number of subscribers, we report a 32,000 net adds positive in this quarter, but the subscriber number will be a little bit of a surprise to you, and let me address this question upfront. What we've done is we have actually revised how we report the subscribers on the broadband space where we've done 2 adjustments. Number one, we've excluded B2B broadband subscribers here because that was skewing the ARPU very differently because B2B ARPU is much higher because of the corporate solutions. And the second, we had historically double counted certain subscribers who were using a fixed line phone and also using a broadband connection. And over a period of time, these fixed line subscribers don't really pay for the fixed line phone anymore. So, that's why we thought it was more appropriate to show a normalized view of the subscribers. And hence, you see a 3.3 million subs, which is increasing 32,000 on a quarter-on-quarter basis. ARPU has more or less remained flat. And as a consequence, you see on the left-hand side, the subscription revenue has marginally improved 0.8% Q-on-Q. The full revenue, including B2B, has declined 1.9%, but that's, as we had mentioned earlier, it's because of the one-time revenues on certain corporate solutions that we had in Q3. Full year is a growth of 2.2%. Then I move on to PayTV. PayTV, as you know, Q3 was a quarter where we had reported some exceptional revenues, which was basically on account of music and entertainment. These are seasonal in nature and come once in a while at different times of the year. So, even though on a reported basis, you see a 14.3% decline year-on-year and a 24.4% on a quarter-on-quarter. The majority of the decline is because of the lower seasonal concerts in Q4 as compared to Q3. As far as the subscriber is concerned, the trend is continuing from what you had seen in the past. It's roughly about a 4% decline, and the ARPU is more or less stable from Q3 and Q4. The other reason for the big reduction on our subscription revenues is -- you are all aware, it's because of EPL not being in our portfolio anymore. And let me once again reiterate, losing EPL is net positive for us as a business, even though what we are trying to do is the net savings from EPL is being re-channelized into other content that we want to do to retain our customers. Then let me move on to the OpEx picture. There is a 28.8% year-on-year decline in OpEx, which is benefited by acquisition of spectrum and also on the synergies. But first, the regulatory cost, as you're all aware, has increased 12.6% on a year-on-year basis, which is basically on account of the full-year effect on the rate, which is because of the expiry of spectrum. Some more of this effect is going to come in '26. As far as the network cost is concerned, it declined 27.5% year-on-year and also 9.2% Q-on-Q, which is benefited by 2 things. One is because of the acquisition of spectrum because certain costs are not booked now. They are actually booked below the line, even though they are much smaller. And the second is on account of the network modernization that has taken place, wherein we have reduced approximately 18,000 sites. The cost of sales have declined 4% year-on-year, but they have increased 33.7%, in tandem with the increase in the sales of the handsets as well. So, this should be looked at jointly. We have eliminated the spectrum rental cost. Of course, this is due to the expiry of the spectrum rental arrangement. And as you can see from the left-hand side of the chart, THB 1.9 billion cost in Q3 '25 is not there anymore in Q4 of '25. The other cost of providing services has declined 8.4%, mainly driven by the net savings from EPL. But of course, there are many items that are actually considered here. And as a consequence, the total OpEx has declined roughly 28.8% year-on-year and 3.4% on a quarter-on-quarter basis. Then let me move on to the profitability matrices. We report a 10.3% increase in the EBITDA on a year-on-year basis, which is driven by benefit from spectrum and also on the synergies. Q-on-Q, as mentioned earlier, is also a 3.2% growth. Full year at a 7% growth, we are actually at the lower end of the guidance that we had communicated to the capital markets. But what may be a positive surprise to some of you, we report a very healthy EBITDA margin to service revenue, which currently stands at 67.5% for Q4. For the full year, it's 63.7%. Another thing that we are quite proud of is since amalgamation, True Corporation has improved the EBITDA by THB 8.4 billion, which is 43% since amalgamation. Then as far as net profit is concerned, the reported profit in Q4 is THB 4 billion, which is increasing about 2.5x from THB 1.6 billion in Q3. As far as the normalized profit is concerned, we report a THB 6.1 billion. Basically, there are roughly about THB 2.1 billion of normalizations. And let me just walk you through those normalizations briefly because I'm sure you'll have some questions on that. First normalization that we've done, an annual impairment exercise has been carried out for the significant investments that we have in the company and for which we have recorded a THB 2.4 billion impairment. Second, the usual suspect that you see every quarter because we have been doing a network modernization. So the redundant assets that are not to be used pursuing the network modernization have been written off. That's about THB 1.2 billion. Then at the same time, we have recorded an annual impairment of THB 0.5 billion on account of goodwill for the TV business. Number fourth, we have recorded a gain, which is a deferred tax asset that has been recorded on the losses of the company of about THB 1.5 billion and also unrealized loss on forward contracts, totaling about THB 1.8 billion. And this has been recorded as a gain in this quarter. The reason why the deferred tax asset has been recorded is because now we are reporting a full year of profit. So, that's why it is an opportune time for us to record the DTA. Last but not the least, we also have a gain of THB 0.5 billion from our investment in associates, which is basically the revaluation of assets at DIF, an annual exercise, as you already know. Another thing that we are quite proud of is the financial cost has actually decreased 4% on a year-on-year basis and also the D&A has slightly increased 1.7% year-on-year due to acquisition of the new spectrum. As far as the CapEx is concerned, we report roughly THB 11.5 billion CapEx in Q4, with the full year being about THB 31.2 billion and CapEx to sales of about 17%, a shade higher than what we had guided to the capital markets. The reason why the CapEx is slightly higher is because we have accelerated investment into the broadband network, an area that we had told you many times in the past that we have been underinvesting in that area, so we want to resurrect that. So, that's the reason for the THB 1 billion increase as compared to what we had mentioned earlier. I will tell you the long-term projections on CapEx to sales at the end of the presentation. Then on the leverage. From a 4.2x Q3 2025 of leverage, we are down to 4x. Actually, we had mentioned that we are going to be less than 4.1. So, we are actually less than 4.1 at about 4x on the leverage. The good story that you continue to see is the effective interest rate on our borrowings. From 4.1%, now we are down to 3.8%. The net debt has decreased Q-on-Q, basically on account of the disciplined cash flow management that you've seen over the last 12, 13 quarters and also reduced gross borrowings. The lease liabilities have actually increased year-on-year, basically on account of the transfer of assets to DIF and accounting adjustment that we've been explaining to you since the last couple of quarters. We've also issued debentures of about THB 16 billion at 2.88% weighted average rate, which continues to reduce on every round of borrowing that we do. And at the same time, the tenor of the borrowing also increases. So, this actually healthily shows our effective debt management. We have refinanced THB 126 billion during the year '24, THB 113 billion in '25. And what we need to refinance in '26 is actually only THB 66 billion, which shows that now it's getting more and more easier for us to manage our debt portfolio. Then just to give you a perspective of '24 versus '25. On the left, you have the total revenues, but I also want to indicate that even though there is a 5% reduction in total revenues, the reduction is mainly on account of the spectrum rental going away pursuant to the spectrum arrangement that has expired. It is net positive to the EBITDA as well as to the net income, as you're already aware. The service revenue is a negative 0.2% year-on-year, normalized for the effective -- the NT roaming. The total OpEx, as you have seen, is reducing about 16% on a year-on-year basis from 24% to 25%. And as a consequence, the EBITDA has improved 7%. The net profit after tax is about THB 9.4 billion for the full year, which is increasing THB 20.2 billion since '24. Then just to give you a perspective of what we had guided to the capital markets and what we have achieved. We had guided a flat to 1% growth in service revenues. We are a shade lower to that at a negative 0.2%, as I have just explained. Even with the flat to 1% growth in the revenues, we had guided a 7% to 8% growth in EBITDA. I'm happy to announce that we meet that guidance at about 7% growth. CapEx, we had indicated at about THB 30 billion. We end the year at about THB 31 billion. And last but not the least, we had said that we're going to be profitable on a reported basis for the year, and we are profitable since Q1 of 2025. I will end this section of the presentation by talking about the dividend for Q4. At about THB 4.1 billion, this is about THB 0.12 as final dividend. The record date is going to be 11th of May, with the payout being on 26th of May, of course, subject to the approval of the shareholders. The total dividend for the year is about THB 0.31, which is at 116% payout ratio on the reported profits. And as we have explained to you, on the reported profit, it is always going to be higher because of the lot of one-offs that we have in the last 1 year. So therefore, on the normalized profit, the payout ratio is about 56%. The total dividend is roughly THB 10.7 billion for the full year. With this, I pass it on to Khun Sigve to walk you through the big moves for the next 3 years. Sigve Brekke: Yes. Bear with me now for some slides because we are now going to look into the next 3 years, and you are more than welcome to ask questions about Q4 also in the end. And I'm going to give you some perspectives on both, how we see the industry, but also what we plan to do ourselves. And as the headline on this slide, we feel that after 3 years of amalgamation and synergy focus, we have now built a solid fundament to move forward and that's what this story is going to be about. The first fundament that is in place is our network, and we have seen a significant improvement after we consolidated the network into one. We have now reached 94% 5G population coverage. We have increased the 5G speed with 23%. And with these improvements, we now see that our net promoter score has improved by approximately 28% year-on-year. The other fundament that is in place that we see an improvement in our customer interaction. Customer complaints are significantly down and customers are now changing to digital interaction with us with a higher customer satisfaction. Churn, both on postpaid and on prepaid and on the online business is also significantly down. And this comes from a focus on quality acquisitions. And as a result of these improvements, we are now back to growth with also a positive subscriber net adds as we showed. We have also made significant progress since the amalgamation around our organization. Our organizational efficiency has improved approximately 45%, supported by a flatter structure and early gains from also automation and use of AI. And looking ahead then into 2026 and '28. And let me start with how we see the industry landscape. The industry landscape is evolving, and we want to be an agile part of building our strategy around those changes. The external environment continues to be supportive for long-term digital growth. Thailand's digital economy is actually growing much faster than the GDP as such, with a 6.2% year-on-year growth. The digital economy in Thailand is expected to account for around 30% of the GDP by 2027. And at the same time, AI adoption is accelerating very rapidly, with growth estimated of 4x compared with the level we saw in 2024. And it's in this picture, we want to position ourselves for this digital future with significant growth opportunities. And to do that, we need to prepare ourselves for the industry shift. And an important part of this is to acknowledge that our customers' expectations are changing and evolving beyond only delivering network performance and traditional customer acquisition. And let me go through the 3 main shifts that we see in the industry and that we are preparing ourselves for. First, best network experience is now a basic expectation. It's a hygiene factor, not a differentiator. And customers increasingly value a seamless and end-to-end customer experience across digital channels, service interactions and also various touch points. So it's a shift from focusing on delivering a network experience alone to an end-to-end seamless customer experience. In parallel with that, when the overall telecom market now is reaching maturity with a total subscriber growth approaching its peak, as a result of that, we need to shift. And our focus, we need to shift from a subscriber-led focus, which we have had for 25 years into an ARPU and also an ARPA-led value creation. And you will hear more about that a little bit later. This shift also requires a change in how we go to the market. We are moving from a mass-market product approach in our marketing and our sales efforts where we basically had a one-size-fit-all offering to now a hyper-personalized and a much, much more granular execution model, enabled with all the data we have from our customers, but also from our network. And this evolution from a traditional way of running a telco operation that we have done for 25 years to a more telco-tech model underpins the strategy we have for the coming 3 years. And it allows us now to combine the strength of our scale with the agility required to win in the next phase of the growth. And as a result of this, you will hear me talking about these 4 big moves in the coming quarters. We have concentrated our strategy around these 4 big moves. It's a growth move. It's an experience move. It's an AI move, and it's a people move. And let me go through each of the 4 to explain a little bit more in detail. Our first move is on customer experience because, as I said, experience is now the primary way to differentiate yourself in the industry. On mobile, our key focus will be on delivering the best 5G network, the best 5G speed and the best 5G consistency. And we are now fully leveraging our leading spectrum portfolio across the 2.3 megahertz spectrum we have, the 2.6 megahertz spectrum we have and also selectively on our 1,500 megahertz spectrum. We are also refarming our 2.6 spectrum now to free up more capacity, both for 4G and 5G. And such improvements will significantly help us to increase 5G penetration with our customers. For True Online, we are revamping the entire customer experience. This includes network experience, and we are investing in the online network. It includes simplifying our customer journeys, and we expect these efforts to enable us to reduce churn further in our online business. And in addition to that, take our fair share of the online market growth that we still see existing in this market. In parallel with that, we will continue to modernize our IT systems for greater simplification and better performance. This includes simplifying our IT architecture through system consolidation. I'm talking about system consolidation on building platforms, on CRM platforms and IT customer front platforms. It includes upgrade key systems to improve performance and reliability, and it also includes enabling what we call touch-free operations for faster issue resolutions. Finally, we will also focus on delivering a seamless digital-first experience where customers can interact with us constantly across digital channel, shop and call centers. This includes enhance the true -- digital True App with more features to be at service parity with the service you get when you walk into a shop or when you call a call center, to move those physical interactions into digital interaction. It includes leverage AI to provide personalized experiences and issue resolutions as well as human-alike conversational AI agents. Our second big move is on growth, and let me start with consumer. The growth we are pursuing on the consumer side is very different from the growth we have done in the past. And let me explain what the difference is. We are shifting from selling individual products, basically SIM cards, voice and then data into now winning the entire household through a more-for-more concept. Most of our customers have only one product with True. So the first step is to have them to use our connectivity services, both on the go as they do on mobile, but also when they are at home through a better conversion offering. However, it's more than conversions. We don't want to stop there. We also want to provide our customers with relevant add-on services that addresses their entire needs that they have in the various customer segments, that being games, that being content, that being home AI solutions or other digital services, both to drive customer stickiness and to drive value creation. To do that successfully, we need to be smart in how we approach our customers. We already leverage data and AI engine to create personalized offers for each customer so we can cross-sell relevant services to the right person at the right moment and through the most appropriate channel. And when we do that, we see that a customer churn when customers are using more than one product with us is going significantly down, and we see the ARPU of the value creation going up. In our TV and content business, investments in original content is our prime differentiator after we moved out of the EPL, allowing us to drive engagement across various segments of customers, not only the TV but also on the mobile and online business. In 2026, we will aggressively scale up our production to more than 30 Thai original content series and partner up with 20 leading studios. With a library already exceeding 500 titles, we claim that we own the cultural conversation in Thailand. And this content doesn't only drive viewership, it anchors our data ecosystem and fuels our core connectivity businesses through various engagement activities, offerings and privileges across the TV products and across the mobile business and across the online business. Customer and network data allow us to move to much more granular operating model. And this is a big shift in the way we are going to do our business. And let me explain what I mean by a granular execution model. We want to shift from a traditional area management into a nanocluster execution model, where we are breaking up the country in more than 6,600 small areas, clusters and have an execution model around those 6,600. There are 3 main elements in that strategy. The first one is a data-led and local insight. So, we are using the data we had from our networks, from our point of sales, from our customers. And we leverage that deep local customer knowledge and network insights in actually making P&L per cluster to drive performance management. To do that, we need to empower local teams. We are going to assign clear nanocluster ownership with our people, with our teams and then to be dedicated to drive then faster decision and stronger accountabilities on the ground. And the last thing in this area is to target execution on each and one of those nanocluster areas to deploy highly targeted local plans per nanocluster, precision campaigning and optimize network utilization, where we are filling up the network where we have a spare capacity and we are taking down capacity where we have full capacity. That's going to be almost base station by base station. Our next focus area on the growth, big move, is on the enterprise and SMEs. We are deliberately now shifting our focus on the SME and the enterprise market from being today mainly a connectivity provider to becoming a trusted digital transformation partner. Today, our B2B business accounts for around 6% -- 7%, 8% of our overall service revenues. And if I compare that with regional benchmarks, it should be closer to 15% of our overall revenues. And we see this gap as a clear opportunity to grow by moving beyond stand-alone connectivity and into higher-value digital solutions. Customers in both enterprise and SME segments are no longer looking for only network connectivity. They are looking for integrated solutions that can combine connectivity, cloud, security, data and AI to solve real business problems. And that's where we see the growth coming in the B2B segment. And our approach is going to be focused and different. For SMEs, we want to make digital transformation simple, platform services accessible and through subscription-based, as-a-service offerings. For enterprises, we want to co-create industry-specific solutions that are tailor-made to our enterprise customers' needs. And to do that, we need partnerships. We don't want to do all those -- these servicing services and products alone. We want to do it in partnership. For example, we are closely working together with True IDC, our data center provider. We are working closely together with hyperscalers, being the Western hyperscalers, but also the Chinese hyperscalers to strengthen our data center and sovereign cloud capabilities. That will allow us to meet growing requirements both in data residency, security and regulatory compliance, especially for those customers that increasingly are asking for more trusted, locally hosted infrastructure solutions. And by combining our network strength, our digital platforms and our strategic partnerships, we want to build a scalable capability to be a leader in the B2B segment. Then let me move to the third big move, AI. We have already started, of course, to use AI in our business. Just a couple of examples on that. On the customer side, our conversational AI, Mari, as we call her, now offloads 96% of all messaging transactions that has been delivered and more than 45% of all the transactions is now happening through the AI tool compared with 2023. On the network side, AI-driven energy optimization has delivered already THB 367 million -- THB 370 million in savings since 2023 through using AI to identify low-risk, high-impact cell sites and applying intelligent sleep and wake automation in the network. We are also now working on customer value management. We're doing that together with some global consultancy help and also with some global AI players. And we are building a hyper-personalized AI engine powered by a unified customer data platform, where we are using more than 15 billion data points to reflect the true context of our customers. We are then using those 15 billion data points to understand their behaviors and preferences. We already see an ARPU effect -- positive effect coming out from these initiatives, but we have just started. Moving forward, we have established 3 key priorities on AI. The first one, it's AI for all. We want to democratize AI by upskilling our own people, but also our customers, accelerate the adoption and ensure responsible authentic AI across the organization. We want to use AI as a growth engine. And I already mentioned an example with using AI for hyper-personalized offers. And we want to use AI to power operation. We are building now autonomous, touch-free operations to improve efficiency and use that to scale performance. Our fourth and last big move is on people because none of what I'm talking about now is possible without the right capabilities, cultures and way of working. Organizational excellence, we will continue. We have done a lot of organizational efficiency already, and I talked about that earlier. We want to continue to modernize our organization to improve efficiency and improve productivity through using digital tools and process automation. AI and simplification are going to be cornerstones in this multi-year organizational efficiency program. Future-ready capabilities, AI capabilities becoming a core skill set. We are rolling now out a structured AI upskilling project and scholarships to ensure that all our employees can innovate and apply AI responsibly in their role. The ambition is that 100% of our employees will have necessary AI skills. And last but not least, performance-driven culture. We are now fostering a systematic performance-driven culture, combined with innovation to be able to both deliver on the financial ambition we have, but also to become the best place to work. Ultimately, these moves will help us to create an organization that is more agile, more capable and better at executing in this 3-year strategy. Let me close off with a slide on efficiency and what we plan to do to actually -- to deliver the profitability focus that Khun Nakul is going to talk about now in a second. Over the past 2 years, we have fundamentally reshaped our cost structure, driven by disciplined execution and full synergy realization. From '23 to '25, 2 years, our OpEx have reduced with 12%, driven by a 3% CAGR reduction in our revenue-generated OpEx. We are now splitting our OpEx in revenue generating and non-revenue generating. So, 3% reduction on the revenue-generating OpEx and a 13% reduction in the non-revenue-generating OpEx. This reduction of cost was mainly driven by realization of synergies, performance-based culture and benefits, of course, from the spectrum acquisition. But going forward, we will continue our focus on efficiency, leveraging on AI and synergies from scalability. And let me give you some examples of what we're going to do. Over the past years -- last 2 years, we have made significant network movements in making our network more autonomous, but we are still not there. The plan is to do -- to run the entire network in an autonomous model. This means smarter traffic steering, energy saving solutions and capabilities to reduce manual intervention in our network. We are simplifying our IT stacks by retiring legacy, moving to more modular architecture and standardizing the data pipelines while integration of AI can operate, also our IT infrastructure at scale. This will lead us to automate all the workflows end-to-end and accelerate time-to-market and also enable analytics in every decisions based on machines, not on human interactions. Our strategy on experience is a digital-first by design. We are empowering key steps in our customer journey by personalizing them with AI. Customers see fewer forms, faster resolution and offers that are relevant to their context, whenever they come through the app, web or contact center. And to sustain momentum, we are transforming how we work. Teams are being upskilled on AI, empowered with automation tools and measured by speed and outcomes. This cultural shift of tech plus talent is what turns today's efficiency into tomorrow's growth strategy. To then summarize, the 2025 marked a transition from, as I said, integration into execution for the 3 coming years. So, we are done with the integration, more or less done with integration. We are done with amalgamation. We are done with putting those 2 organizations together. Now for the coming 3 years, our focus is going to be on transforming the business through an execution. We enter '26 then on a strong network foundation, improved customer metrics, disciplined financial management and a clear growth engine across customer enterprise and AI-led transformation. And with the focus we have now on experience, growth, AI and people, I think we are well equipped to deliver on the guidance that Khun Nakul is now going through both for the 3 years and for 2026. Thank you. And over to you, Nakul. Nakul Sehgal: Thank you so much, Khun Sigve. Then I just have a couple of slides to walk you through the financial outlook for '26 to '28 and also deep diving a little bit on '26 itself. As you are aware, the EBITDA to service revenue, and I'm talking about the left to right, the purple bar that you see or the purple line that you see, we were at 54% in '23, and we had a commitment to you as capital markets to reach 63% by '25. Right now, as we finish '25, as you're already aware, we are at 64%, with Q4 '25 being 67.5%. We now show you the ambition for the period 2026, as well as until 2028 to reach up to 69% of EBITDA as a percentage to service revenue, which is a whopping 15 percentage point improvement since amalgamation. Focus, as usual, is going to be on the performance-driven culture as we continue to unlock the next phase of growth and also efficiency at the same time, with the core principle based on which we have always been working is the EBITDA growing faster than revenue. In year 2026, you're already aware, the spectrum savings are also going to play an important part, which has already been factored in these numbers. The second is on the CapEx to sales. You have seen that we have spoken about reduced CapEx intensity over a period. The network modernization is behind us now. We are sitting on a 5G network, which is at 94% population coverage. And as a consequence, even though the year '25, the CapEx to sales is a shade higher than what we had told you and the reason is what we have already mentioned is investment into the broadband business, this is going to continue to taper down as we go forward with approximately 13% to 14% until the year 2028, with 2026 in specific being roughly 14%. The disciplined CapEx management that we have spoken about is going to be the bedrock of how we invest into the business. Last but not the least is on the leverage. Let me first remind you, this is something that we are really proud of. We were 5.7x leverage on Q1 of '23. We ended the year '23 at about 5.2x. We had an ambition to be lower than 4.1x by year '25. We ended at about 4x. And now we continue to say that we will be improving the leverage going forward, reaching approximately 3.5 levels by '26 and approximately 3x levels by the year 2028. This is going to be followed by disciplined CapEx management, efficiency focus and also how we are going to improve the cash flows as we go forward as we've demonstrated in the past. I must remind you, 2026 as a year is going to be benefited significantly by the spectrum payments being much lower as compared to what was there in '25. Roughly THB 24 billion of savings in '26 alone is going to come from spectrum. I think most of you have already factored these in your numbers, but I just wanted to reiterate that for the rest of the audience. With this leverage, we've also considered a dividend of 70% of the consolidated net profit of the company. Then deep diving a little bit more into 2026. The service revenue, excluding interconnect, is expected to grow 2% to 3% for the year '26, which is higher than the expected growth in GDP from the Bank of Thailand of about 1.5%. The growth is on the fundamentals of the following. A lot of it has been explained by Khun Sigve, but there should be an ARPU growth in mobile, a subscriber growth in online. Growth in digital TV or media should be offsetting the degrowth that we have seen as a decline in PayTV. And last but not the least, we expect a higher contribution from B2B. Ambitions have already been shared by Khun Sigve already. The continuous EBITDA focus is going to be there for '26 as well, with EBITDA growth outpacing the growth in service revenue of about 7% to 9% and efficiencies, like I mentioned, is on the core of the DNA of this company. The CapEx is going to be tapered down. We ended the year '25, as you recall, at about THB 31 billion, with roughly 30%, 35% of the spends happening on network modernization. And as a consequence, now for the year '26, we're guiding CapEx levels to about THB 25 billion to THB 27 billion. Reiterate the dividend, which is going to be a semi-annual dividend consideration of at least 70% of the consolidated net profit. Of course, this is subject to the approval of the Board of Directors. With this, then I hand over to Khun Naureen to take over through the Q&A. Thank you so much. Naureen Quayum: Thank you, Khun Sigve, Khun Nakul. We can start with the questions from the room first. Khun Pisut? Unknown Analyst: Congratulations again on your record net profit this quarter. Pisut from Kasikorn Securities. I have 2 questions for this part. First, on the spectrum and network. If excluding the 1,500 megahertz band, still hold a spectrum advantage over AIS, if I'm correct and you have completed the network modernization over the past 3 years, is it fair to conclude that this allowed to structurally lower network CapEx, while competitors' AIS to be precise, may need to step up the spending as you may see? And with that in mind, can True not only defend the cellular revenue market share, but potentially regain some shares in the coming quarter that you lost over the last 1 to 2 years? And another question on this one is how can you monetize the 1,500 megahertz band so far? Do you -- have you seen any issues about the device compatibility in the market on this one? Sigve Brekke: Yes, I can start here. Yes, you are correct. We have a spectrum advantage. And I don't see that we have any problem now with delivering neither 5G or 4G increased capacity to the customers. I don't want to comment on AIS, but for our sake, we can fully leverage that and also then to refarm the 2.6 that we are sitting on, such that we can free up additional capacity. So, that is our plan. The CapEx we are talking about for ourselves now for 2026 is roughly around THB 50 billion, THB 55 billion, I think, going into network because we need to invest now in utilizing the 10 megahertz extra we have on the 2.3, the 10 megahertz extra we got in the auction and also the 1,500. And we are going to not use 1,500 to expand coverage. And to your question about do we see any limitation? Not really because all the new handsets now are coming with 1,500 also embedded in them. So, there is a significant number of existing customers that have 1,500. So then the other part of our CapEx for this year is going to be on online. We have not prioritized that in the past. Somehow we started to do that in the fourth quarter. Now, we're going to put more money into online. So, expect a 20% part of our CapEx going to online. The last part of it is going to IT and some other investments. IT, we need to continue to, what should I call it, simplify our IT infrastructure. We are still operating with 2 building systems, 2 CRM systems, 2 customer front systems. So, there will be investment going into that. But the majority on the network investment we already did. So, I'm quite pleased with the situation we are in now on the network side. Will we use that to -- in our competition? Yes, of course. But I said in every quarter that don't expect us to be price aggressive. We are rather focusing on customer experience. And if the customer experience we can deliver now, based on our premium spectrum position is better than our competitors, well, it's up to the customers to choose. But as I also said, it's not only about spectrum quality anymore or network quality. It's about the seamless experience that you have that it really works across regardless of which apps you are using. So, that's why I'm saying also that the focus we are having on the network side is shifting to seamless end-to-end customer experience, not only to make sure that the connectivity works where you are. Unknown Analyst: My second question is on your core revenue growth guidance, which is about 2% to 3% this year. Now it's almost 2 months past, right? Are you seeing momentum pick up already in this quarter because last quarter, you still lost the revenue by 1% year-on-year, right? Or is it more on the back-end loaded, which means that it's going to come in the second half rather than the first half in terms of the revenue growth that you target? And could you break down the expected growth by business unit like mobile, broadband and also the digital, as you mentioned, as Khun Nakul mentioned that the mobile growth has come from ARPU uplift and broadband from the subscriber growth. If you can explain a little bit more, it's going to be good. And also the key initiative that convert from the negative to the positive growth? What was your initiative that you already deployed? And lastly, on your big move strategy, Khun Sigve, how much -- should we expect all of them to be converted into the core revenue growth in the medium term? I think when you're talking about a big move, 2% to 3% doesn't seem big for me, right? And just want to hear from you. Sigve Brekke: Yes. I can take the last part of the question, and then you can take the first one. Well, the 2% to 3% is a 2026 guiding. How it's going to look like in '27 and '28? We will come back to it. And of course, it takes time to build those big moves into a growth momentum. The key initiatives, I will say, are as following. One, we will continue to focus on quality inflow to get customers in on a higher ARPU level and then with a lower churn. So that we will do on prepaid, that we will do on postpaid, that we will do on online. So the customer inflow part of -- also the effect that, that will have on the revenues is one part of it. The second part of it, as I said, it's the customer value management that we are running now where we are increasing ARPU with existing customers, get them over to packages, which are more suited to their needs. And we see effects coming out of that already. So, that's the second one. And then I will say the third one is to start to monetize services beyond connectivity and that especially, with convergence in the homes with all the IoT devices and this is in the B2B segment. Nakul Sehgal: Okay. Thank you for the question, Khun Pisut. Many subparts to one question. Sigve Brekke: He is smart enough. Nakul Sehgal: Yes. I know. On the core revenue guidance, the first thing -- and just to supplement what Khun Sigve mentioned, if you look at fourth quarter, annualize the fourth quarter, assuming there is no growth in '26, we are flat on a year-on-year basis. Unlike our competitor, they're sitting on a significant growth already because the momentum has been high for them. For us, we were going down and then we had a bump up in the fourth quarter. The way you should kind of project the numbers is keeping seasonality in mind. Of course, number of days plays a factor in Q1, but there should be a consistent growth in the businesses going forward. If there is a growth momentum coming on account of mobile, that momentum should continue, barring for the seasonalities that are there in the business. As far as broadband is concerned, online is concerned, yes, it is subscriber-led, but it will also be ARPU led as well. ARPU playing a slightly lower factor as compared to the growth in the subs. We're sitting at an ARPU of THB 498. Our competitor is sitting at THB 530. So, there is an opportunity for us to grow the ARPU as well with the plethora of services that Khun Sigve spoke about. I do not want to break the growth into each businesses. But what I can indicate, as I've always done in the past is growth in ARPU, especially in the mobile business is going to be around about the growth that you see in the GDP, 1.5-odd percent. The growth in online business has to be higher for the average to be sitting at 2% to 3% because the subscriber-led growth, coupled with the growth in the ARPU will obviously give us a better result as compared to the mobile growth only because the penetration in the mobile business is in the mid-40s or late 40s right now. And last but not the least, B2B is kind of an untapped opportunity. So, we will be working on it as we go forward. So yes, I mean, just keep in mind the Q4 numbers and then build the momentum on this going forward, keeping in consideration the seasonalities that are involved in the business as well. Naureen Quayum: Okay. Thank you, Khun Pisut. Let us move to one of the questions online first. We will come back to the room. Piyush from HSBC. Piyush Choudhary: Congratulations on great set of results. Two questions. Firstly, on capital allocation, you have raised the dividend payout ratio to at least 70%. I just want to understand like does it incorporate any future potential spectrum outflows, whether it is 2100 in 2027 or potential auction of 3500? Or would you kind of have flexibility to reduce the payout ratio if those needs arise? That is first. Secondly, on the management team side, Sigve, last time you mentioned you would like to retain the Telenor executives and move them to local contracts, whether it is Nakul, Sharad, Naureen or Head of Networks, if you can update us on the same. Sigve Brekke: I can take the second one. Yes, I'm in dialogue with these guys to actually have them on local contracts. And I think it's fair to assume that all of them will do that. So, I will retain the senior experts that are going from a Telenor expert contract into a local True employment contract. So, don't expect any change in the management team. Nakul Sehgal: Okay. Thanks for the question, Piyush. On the capital allocation, yes, we have raised the dividend payout ratio. And this is the confidence that we see in the performance in the fourth quarter as well as the bumper cash flows that you will see in the year '26 because of the spectrum savings, approximately THB 24 billion. Your question on whether it accounts for the renewal of 2100? The answer is yes. We have already factored in renewal of 2100. However, this does not include 3500 auction, because we do not have a visibility of 3500 yet. Naureen Quayum: Can we have Khun Gene next, please? Thitithep Nophaket: Thitithep from Kiatnakin PS. I have 3 questions. The first one, if you look at the mobile phone revenue growth, there's still quite a sizable gap, between [Technical Difficulty] U.S. growth and your competitor growth in the fourth quarter of the year. And we are already a few quarters after the network disruption. So, I would like to know your view, what is the main reason for the gap and how do you plan to narrow or close the gap in the next few years? Second question is on the guided CapEx to sales. You guided that the CapEx to sale was 17% last year, you would like to slash it to 13% to 14%. Now your competitor has guided 15% CapEx to sales in the next 3 years, not much different from you, it is 1% to 2% higher. But I think they did say that they would like to maintain 15% in order to widen the network quality gap. Do you think that would have any impact on your effort to close or to narrow revenue growth gap between the 2 firms? And then the last question, you target to grow EBITDA margin further by a few percentage points in the next few years. You did say that [Technical Difficulty] you can adopt the AI or make organization become simpler. But in terms of, which item of the cost are you looking to slash? Is it the network OpEx? Or is it depreciation expense? Or is it the SG&A? Sigve Brekke: Yes, I can take 1 and 2 and you take the third one. Now, the reason why AIS is still growing better than us in the fourth quarter, of course, they have a different speed into the quarter then we had. So, we came from a negative growth in the first 3 quarters, we came from a negative customer -- net customer growth into [Technical Difficulty] quarter where we then turned positive on customer acquisition, 500 million or so, and then we start to positive on growth. So, I would say that's a timing effect with kind of the speed that they came with. For us, it was -- fourth quarter was turning the curve. And that was what we promised also in the third quarter that we are bottoming out and coming back. So, I would say that's the main reason. And now we see that the churn is almost down to AIS level, still have a little bit way to go. We see that their offerings are more or less similar. But of course, we have lost customers over the last 3 years, that being the network incident or not being good enough for customer experience. So, going forward, we will both try to take our fair share of the net adds in the market and grow the number of subscribers, but also then grow the ARPU with the customers -- the subscribers that we have. On the CapEx to sale, I don't want to comment on what AIS plan to do. But what I can say is that the spectrum advantage that we now have, the single network that we built last year, I'm not going to give up on the network parity that we have with AIS now. I don't think that neither of us are ahead, neither on speed nor on coverage. And I'm not going to give that up. So, if AIS compete with us on getting the network experience better and better, so will we do. So, that's the plan. Nakul Sehgal: Yes. And then, your question on the EBITDA growth and which items of expense that we're looking at, I think the expense reduction is going to be broad-based. But primarily, AI is going to be the center point on how we're going to transform the organization. So, it will be more the SG&A that is going to reduce. The S part of the SG&A is going to increase in tandem with the increase in revenues because the revenue-generating OpEx is going to increase because we have to fuel the growth. But then the G&A part is going to be the ones that is going to be showing the improvement because of the upskilling that Khun Sigve spoke about, the IT transformation that we spoke about, the people efficiency that we spoke about as well. Additionally, there is going to be a reduction in the IT spend of the company as well. But IT as a percentage of total OpEx is relatively very small. So, the magnitude of that may not be very high. And last but not the least, the network as a cost is going to continue to be optimized. Of course, there is going to be certain expansion in the network that is always going to be there in case of a telco. But the autonomous network that Khun Sigve talked about, the efficiencies that Khun Sigve talked about of the scale, that is going to help us keep that expansion in check. So that's another efficiency area as well. Sigve Brekke: And that's why we talk about splitting up the OpEx between revenue-generating OpEx and non-revenue-generating OpEx. The revenue-generating OpEx is going to increase. And the revenue-generating OpEx should be similar to the revenue growth that you have because that is the OpEx you use for your sales, marketing efforts and so on and so forth, which means that the non-revenue generating OpEx has to go down. And I have said many times that going forward, we should have a 0 OpEx year-on-year, which means that the growth you have in revenue-generating OpEx will have to be balanced with the non-revenue generating OpEx. I don't see why with new technology, we shouldn't be able to have a flat OpEx year-on-year, based on actually a revenue growth. We may not be able to do that this year because it takes some time to get those transformative activities in place. But going forward, that is my ambition. Naureen Quayum: Thank you, Khun Gene. Can we move online to Arthur? Arthur Pineda: Yes, 2 questions, please. First, on the revenue growth guidance. Can you please run us through how you get to this? Because I understand you've anchored this to the 1.5% GDP growth, but Thailand just recently raised their targets just this week. I'm just wondering how that flows through. And related to this, how do you interpret the difference in growth outlook between yourself and AIS, where they're looking at 3% to 5% and you're looking at 2% to 3%? Second question I had is a bit more boring. But with regard to your tax rates for 2026, 2027, are you able to guide for that given that you do have some tax credits on board, which I assume are expiring? I'm just wondering how much of this can be consumed given that it does impact the dividend as well? Nakul Sehgal: Yes. Thanks for the question, Arthur. Let me take both of them. I think the one on revenue, we partly answered. That was, I think, Khun Gene, who asked about it. But let me just explain it in brief again. The reason why there is a difference in the outlook of our competitor and us is basically the momentum. And if you see -- if you are -- if you just do the math, if you're coming on a consecutive quarter of growth until Q4 of '25, if you do not even grow for the whole of '26, you're already sitting at a 3%-plus growth. Whereas on the other hand, if you're coming on a lower momentum for 3 quarters and a slight growth in fourth quarter, then you're kind of sitting on a flat on a year-on-year basis. So hence, the way you should look at our progress is, how the quarter-on-quarter we are performing versus the industry. I think I've already shared where the growth is going to come from, whether it's the mobile business, whether it's the broadband business, whether it's the PayTV, how we're going to make sure that we do not bleed on to the new business anymore and of course, the growth in the B2B and the digital as well. Then, to your boring question, I'll give an exciting answer. As far as the tax rates are concerned, yes, we have enough NOLs, net operating losses carryforward, which will enable us not to pay any significant tax outflow for the next couple of years. Naureen Quayum: Arthur, did you have a follow-up? Arthur Pineda: With regard to the tax loss carryforwards, which can be consumed, is it mostly this year? Or is it going to be split between this year and next year? Nakul Sehgal: Sorry, can you repeat that? I missed the first part. Arthur Pineda: Sorry. Any guidance in terms of how much is left and how it will be consumed between this year and next year? Nakul Sehgal: Yes. I think we have enough NOLs that can be absorbed in the next 2 years of profit. So, 2 years, yes, '26 and '27. Naureen Quayum: Thank you, Arthur. We can move on to the questions in the room. Khun Nuttapop first, yes. Nuttapop Prasitsuksant: Nuttapop from Thanachart Securities. Two questions, please. First one, you mentioned ARPU discrepancy from yourself and your competitor AIS as well. Do you think customer mix have a play in that? And would that lead to different contents that you may let out some -- you get something else on that? And just one other thing on ARPU is that, your average ARPU in both mobile and broadband seem to be at par or nearly below the -- if I'm not wrong, starting package prices of both mobile and broadband. Would that mean, again, customer mix? Or should we go another way around, in the positive side, that it means like some discounts given out like past 4, 5 years, I don't know, we will try to -- that should recover soon. That's the first one on ARPU. And the second one on impairments set, 2 sub-questions. Number one is, whether network CapEx impairment, if I may call, seems to still be high, like THB 1 billion, THB 2 billion in the fourth quarter, while your modernization things has completed. What happened? Or should we expect more in 2026, of course? And about the small investment in JVs, digital, smaller company, I think that those are the results from venture capital boom past few years back. How big is that now in your portfolio? And should we expect some kind of more impairment? Sigve Brekke: Yes, I can try to take the ARPU. I would say that on prepaid, the ARPU should be more or less the same between ourselves and AIS. However, we are probably sitting on some existing prepaid customers that came in on a more aggressive package than what AIS is sitting on. So, when those packages are expiring, of course, we will start migrating also prepaid customers over to packages, which is more or less the packages that you see sold in the market today. And the prepaid offers you see for new customers today are more or less the same. So that's -- it's a timing effect, I would say, where we will have very similar prepaid ARPU as AIS. So, I don't think the customer profile there is very different. n postpaid, it is. I think AIS is sitting on higher postpaid ARPU customers than we do. And that is basically also over the last 3 years where we did not deliver good enough experience for those customers. With now our focus on experience as a network parity and our focus on customer experience, I think over time, we also will take our fair share of those more high-value customers. On online, I think the network experience that we have had on online has not been good enough. And we have had quite some discounts for the inflow we have got on online over the last 2, 3 years. And those packages are also now starting to remove, and I don't expect us to be more price aggressive in the online segment than AIS is. So, I would say prepaid online, there should be more or less the same ARPU going forward. On the postpaid side, it will take some time. Nakul Sehgal: Thank you, Khun Nuttapop, for your question. Let me take the second one. But just -- I just wanted to add something on the prepaid ARPU. Even though the starting plans that you see in the market are THB 150, there is a certain section of customers who are receiving incoming calls. So, they obviously don't have that much of an ARPU. So just keep that in mind. That's same for us and for our competitor as well. Then on the impairment, yes, the network CapEx impairment is slightly higher. This does not only include the mobile side, it includes the online side as well. And as we are upgrading our online network, we identified areas where we need to clean up or in terms of impair, and that has been recorded in fourth quarter. So that explains why the 200 sites or 250 sites that we completed in Q4 is not leading to a similar impairment that you have seen in the previous period. As far as the other investments is concerned, we've recorded roughly THB 2.4 billion of impairment. This is on all the JV companies and the boom that you spoke about in the past, the investments that have been made there. I would say the net book value of these investments right now is not that significant anymore. So, there should not be a significant exposure coming on in account of this in future. Naureen Quayum: Thank you, Khun Nuttapop. Can we move on to Khun Wasu here? Wasu Mattanapotchanart: Wasu from Maybank Securities. I have 3 questions. The first one is about network quality and network perception. So, I'm aware that True will continue to spend on CapEx to improve quality. But how about on the perception side, are there any plans to boost the network perception for both the mobile and fixed broadband customers in the short to medium term? That's the first question. The second question is about the digital services. If I heard Khun Nakul correctly, you were saying that the digital services growth should offset the decline in PayTV revenue. So, what kind of digital services do you expect to boost the revenue growth going forward? That's the second question. And my final question is about the long-term EBITDA margin target. So, your original target, I think, in early 2025, you were targeting 67% EBITDA margin by 2027. Now you are targeting more aggressive 68% in this year. So, what led you to be more optimistic about the EBITDA margin target? Is it better expectation of revenue or cost savings or both? That's my last question. Sigve Brekke: Yes. Let me start with the first one. Yes, definitely. There is still a perception gap. The reality, I will say there is no gap between ourselves and AIS anymore. That's a claim, and that is what we see from our network studies also, but there is still a perception gap, and we are going to deal with that. We are going to run -- expect us to run both national campaigns, but more importantly, local campaigns to deal with that. So hopefully, during the year, we have also closed that perception gap with AIS on network. On the EBITDA -- guiding up on EBITDA, I think it's a mix of those 2 things. We see now that the revenue momentum that we came out from Q4 and taking into next year is good, but we also see that the transformational efficiency programs that we have really works. That's why we are more bullish on also continuing to cut costs going forward, which is not cost related to the synergies that we got from the amalgamation, but it's more cost related to a transformation of the business. Nakul Sehgal: Thanks for the question, Khun Wasu. I was thinking that you will come much earlier in the day for the questions, but it's okay. On the digital service versus PayTV, let me just correct you. What I mentioned was the decline in PayTV should be offset by the growth in digital media and not the digital services as such. So that's what we intend to do right now. Intention is because the digital -- sorry, the PayTV is declining roughly 4% on a quarter-on-quarter basis, we want to make sure that with the digital media, with the content that Khun Sigve spoke about, we are able to monetize it in a way that we are stemming the decline. Then just wanted to add on the EBITDA margin. In Q3, I remember you asked us a question that you're already sitting at 67% EBITDA margin. won't you upgrade your guidance for the year. And now that we have upgraded the guidance, now you're asking us why have you upgraded the guidance. So, Q4 '25, we are sitting at 67.5% already. So that's why we're talking about 68% in '26. Wasu Mattanapotchanart: So, when you're saying that you offset the growth from the digital media to offset the PayTV decline, does that mean when you look at the PayTV revenue in 2026, there should not be any significant decline anymore. Nakul Sehgal: Except to the extent where you're still going to compare year-on-year for EPL. That's it, yes. Otherwise, it should be normalized. Naureen Quayum: Thank you, Khun Wasu. We don't have any question -- Khun Kittisorn from InnovestX. Kittisorn Pruitipat: I have 2 questions. The first one is about the dividend payout target. Okay, you already mentioned that the policy is at least 70% of net profit. My question is, is there any target on the normalized profit? Because I mean, every quarter, we have like onetime expense. So, should we expect a similar level of normalized profit for the payout? That's my first question. The second question is about the transaction with Arise. I mean, when do you expect the transaction to be completed? That's my second question. Sigve Brekke: Yes. On the second question, I think we expect that transaction to be completed during March sometime. Nakul Sehgal: Yes. On the dividend payout target, let me first correct, the dividend policy has not changed. The dividend policy is still at least 50% of the payout on a normalized -- on a reported profit basis. However, in terms of our guidance, we have considered a 70% payout. And as far as is there a separate guidance for normalized, the answer is no. There is only one guidance on the reported profit because a bulk of the write-offs has already been done, network modernization is over. We have reviewed the investments that we have already. There should be a marginal difference between the normalized and the reported profit. That's why we are only going to guide on the reported profit going forward. Sigve Brekke: Let me also add on the dividend. And I think we also have said that the dividend policy is unchanged, but we also have a policy, have a progressive dividend, meaning an actual increase in payout year-by-year. So, we expect that also to happen. Naureen Quayum: Thank you, Khun Kittisorn. We have a question online. Can we unmute Izzati. Izzati Hakim: Just one question for me. Earlier in the presentation, I think I heard that we still are running on 2 billing systems and also CRM, even though majority of the network has been consolidated. What's the plans on the consolidation for the back-end systems? And if so, will there be implications to margins or some of the cost items or CapEx? Sigve Brekke: Yes, you are correct. We are running actually 4 different systems in parallel. And we haven't been prioritizing this because we want to have our network in place first. Now we are prioritizing that, and that is going to take us a couple of years to simplify and to modernize. But all this is in the plans that you have that we are guiding. This is more -- it's not big, big CapEx numbers if you think about what we invest in the network. It's more to make sure that there are no customer effects of it when you start migrating. We have started migrating some over to one billing system already, but we do this step by step. So, expect us -- and as Khun Nakul also said, there are not big, big cost savings out of this. This is more a customer simplicity and a customer journey effort. So, we are doing that as we speak, but it will take us a couple of years, but that is all included in the guidance that we have. Naureen Quayum: Thank you, Izzati. Any more questions from the room? Khun Nuttapop? Nuttapop Prasitsuksant: Sorry, Nuttapop, again. Just 2 quick follow-ups. The first one, I think when you mentioned progressive dividend, you mean payout, right? Not absolute, payout percentage will also increase also. Sigve Brekke: No, not the percentage. I'm talking about the actual payout, the amount. Nuttapop Prasitsuksant: Okay, the amount, alright. And the second one, you mentioned about more aggressive fixed broadband investment infrastructure. Should that lead to -- should we expect basically faster subscriber gain for you? And is that meaning you are entering into what I call new greenfield area? Or it's more like your untapped area, but there will be some tenants already there? Sigve Brekke: Yes. On the mobile -- on the online side, we are going to do 3 things with our investments. The first one is to improve the network quality of where we already are. And there are areas where we are not happy with the minute loss or with the outages we have in our online network. So that's the first one. And this is everything from modernizing the last mile in broadband to replacing batteries to also all those type of things that has not been prioritized the first 3 years. The second thing we do is to try to be utilizing the network we have built better and to the ports that we have around in the areas where we have coverage should be better utilized. So, we are trying then to pocket-wise, go in and actually do the -- connect the homes where we have past network already. So that's the second one. And the third one is to also gradually move into areas where nobody have a broadband offer. So, it's a combination of these 3 things. I think today, there are a little bit less than 10 million households in Thailand having a broadband connection. That's combining us and what AIS do. And there are 22 million households in Thailand. So, there's still a room to grow to connect those that still don't have a broadband connection. So those are the 3 things. But we -- again, don't expect us to be price aggressive to do this. Expect us to be actually very much focusing on the customers that we have and with a better experience and with that an upsell opportunity for existing customers to higher speed packages, better utilization of the network that we already have and then in what I call granular way, go into areas where we think that the customer should be served with a fixed solution. Naureen Quayum: Khun Wasu? Wasu Mattanapotchanart: Just one more question for Khun Sigve. So, you were saying that you expect the OpEx to be flat in the long term, but not this year. How long term are we talking about? Sigve Brekke: I don't have any guiding on that, but as soon as possible. And this, I have with me experience from my previous job that it's possible actually to grow revenues with a flat OpEx if you do it right. So -- and I said we may not -- I don't think it's realistic that we'll be able to do it this year. But you see already from the EBITDA guiding, which is significantly more than the revenue guiding. So, some of this is already in there. But in the coming years, in the strategy period then to close down to that, we should be able to deliver on that. Naureen Quayum: Thank you, Khun Wasu. Any further questions, both online and in the room? No? Okay then, thank you so much to everyone. And I hope you all had a happy Chinese New Year and also Ramadan Kareem to everybody celebrating. We will see you next time. Sigve Brekke: Thank you.
Operator: Ladies and gentlemen, welcome to the Umicore Full Year Results 2025 Conference Call. Your speaker for this call will be Bart Sap, CEO; and Wannes Peferoen, CFO. [Operator Instructions] I will now hand the conference over to the speakers. Please go ahead. Bart Sap: Good morning, everyone, and welcome to the full year results 2025 of Umicore. And as you can see here, of course, we have taken this picture, a beautiful gold nugget. And I think for the ones following us will understand why we have put that picture forward. And of course, I'll be coming back on that later when I look back on 2025. Now if you read our set of numbers, I would like to highlight again that we have adjusted during the CMD a new reporting structure, different segmentations in our business group. So please do have another good look at this slide because we will be reporting and commenting the numbers in the new structure. So Wannes is sitting here on the left with me, and he will also comment, of course, on the finance and some of the business trends as well as usual. And let's have a short look at the agenda. So nothing particular here. First of all, we go on the core strategy, the key numbers. We're going to go over the outlook ultimately for 2026 and then hopefully have an engaging Q&A at the end of the session. Yes, our core strategy. Now we launched our core strategy in March 2025, where we indeed had a different approach and not just chasing growth at any cost, much more towards that value recovery and battery materials, but also more value extraction in our foundation businesses. And roughly around the time that we were announcing our CMD, our new strategy, the world started to move violently, I would say. And the geopolitical landscape has been changing fundamentally. And therefore, also the markets as well as supply chains have been reshaped and continue to be influenced by new policies coming out. So the world is structurally different versus roughly a year ago. Volatility is, for the time being, the new normal, and we will continue to navigate and, of course, react and adjust according to the volatility that we see. Now if I zoom out and see what's happening in the world, it's clear that we have a much more fragmented world and that the world is waking up that if you want to be a technology leader, if you want to have a strong economy going forward, you need these critical raw materials. You need to have your own supply chains, and that's where Umicore's circular business model, which is multi-metal on the one hand, on the recycling refining side, but also on the materials that activate the world downstream, the applications downstream is more relevant than ever. So having a secure and sustainable supply chain in different parts of the world becomes a key element for society. And this is right up the alley of our strategy, and we [indiscernible] our business model with 4 key pillars: capital, performance, people and culture and partnerships. And let me now highlight some of the achievements that we had in these different segments over the years and some of the actions that we took. First of all, on the capital, and that was the first picture of the presentation. Obviously, we sold and had a subsequent lease-in of our permanent gold inventories. This has unlocked significant value. This also has helped further to deleverage the company, but also it transitions the price risk, the long-term prices of these inventories outside of Umicore. Now we also said at that time that lease rates for gold are typically stable. It's an alternative versus cash or pure money in the end. And even in that volatility and that frenzy, let's say, around PGMs at this point in time, also lease rates have -- for gold have remained stable at 0.5% to the 1% mark, well below typical financing rates that you would expect for normal debt. Now next to the gold, we also have been very disciplined on our CapEx. Remember, we guided at the start of the year more to EUR 400 million. In the end, we came in at EUR 310 million by making deliberate choices, but also being very strict on the execution of the projects that we are having. If I go to the performance pillar, there the full year results is in line with our latest upgraded guidance. So we said between EUR 790 million and EUR 840 million during the summer. We came out slightly above that EUR 840 million. So we're very satisfied with this set of numbers, a strong performance, I would say. And this was really, really also supported by the efficiencies, targets and the mindset that we are cultivating more and more within Umicore. And we promised EUR 100 million. We achieved that target, and Wannes will explain later on, of course, that has helped to offset the inflation, but also some FX headwinds that we had in2025. So I mentioned it already, we're driving the company much more to a performance culture where we take our accountability. We really focus on what is the essence. We do what we need to do in a very disciplined way, and this is showing results, and we will continue to push forward in that direction. On the partnerships, we also not have been sitting still, I would say. We had quite some action there as well. And we closed a partnership around our silicon anode materials with a Korean company, HS Hyosung Advanced Materials. And together with them, we will industrialize this really an interesting and exciting technology, and we found a way actually to bring that technology to the market without having to allocate excessive cash or very sizable amounts of cash for Umicore. Next to that, critical raw materials. We have been working on that trend, of course, already for quite a while. And we announced our partnership with STL, Societe du Terril de Lubumbashi. So basically, we have shared technologies, have upgraded installations in the DRC in order to recover germanium from old mining tailings. And this was really a support for the business going in '25 and beyond. Now let me go to the key figures. Wannes will go in more detail, so I'll stay pretty high level here. I would say we really had a strong performance in our foundation business. It was supported by group-wide operational excellence efforts and a favorable metal price environment. EBITDA up 11% to EUR 847 million, 24% EBITDA margin, a good free cash flow supported by the gold inventory sales of EUR 524 million and leverage of 1.6. I think we can all agree this is a very solid set of numbers in the current environment that we live in. So happy with that. Let me now go to the different business groups. Let's start off with Battery Materials Solutions. So for your reference, Battery Material Solutions now represents, on the one hand, Battery Cathode Materials and the battery recycling business. And before I go in the details of the different business units, I would like to have another glance at the Battery Cathode Materials and EV markets out there at this point in time. So at the CMD in March 2025, we said that this market is still taking shape and has inherent volatility. Well, that's what we have seen in 2025 and also what we continue to see in 2026. EV penetration around the globe is progressing, but at quite different speeds, China leading decisively. Europe is following more moderate and U.S., well, there, actually, we are quite behind. And of course, the policy change of the U.S. -- the new U.S. administration is not helping that. The CO2 tolerance is much higher than in previous administrations. That is clear. And that's why the policy is shifting and pivoting away, I even would have to say, from EVs to internal combustion engines, right? This clearly has an impact, and you have seen announcements that even battery makers in the U.S. are now focusing more on energy storage than pure EVs. And of course, quite a number of OEMs have had to make difficult announcements. If I look to Europe and China, that's really a -- and it's depicted here as well with an arrow. That's really an area where there's an interdependency. Today, we see that China still has overcapacity that a lot of OEMs are relying on China to import their batteries into Europe. Also for cathode material, we still see cathode material flowing into Europe at this point in time. So competition is fierce. I think that is fair to say. Now at the same time, we also see that there's a heightened risk of trade tensions of potential restrictions on exports of certain technologies by the Chinese government on the one hand, but also in Europe, a much stronger talk about these local Brazilian supply chains and local content requirements. So the next days, the EU is expected to come out with some policies. These will be important to monitor those and could really make a substantial difference in the European landscape. So in general, summarizing, the recent industry announcements are emphasizing that the growth in Europe is somewhat challenging, but it also highlights the increased importance of our take-or-pay contracts, and I'll get back to that. Now going to the numbers. So if we look in 2025 for Battery Cathode Materials, we did see a revenue growth, a revenue growth of roughly 11% versus 2024. Volumes -- actual deliveries were up versus last year. We did collect take-or-pay compensation for contractual volume shortfall. And there was a partial offset by lower refining income because of a weaker, more challenging cobalt environment on the pure refining side. And also, of course, the nickel price environment was not necessarily beneficial. Now the adjusted EBITDA as per our expectation came in around breakeven, which is a clear improvement versus last year, where the breakeven result was still containing a substantial one-off, a positive one-off in 2024. Now if you look at Battery Recycling Solutions, during the CMD, we said we would be roughly at minus EUR 25 million. We came in at minus EUR 21 million. Really also here, we continue to focus on optimizing our process and recycling technology. At the same time, we're also very diligent here on the execution and cost management. Overall, you can see a clear also improvement on the EBITDA level, '24 versus '25 despite that we did not have that one-off in there. All right. Let's go to the next business group, and that's Catalysis. In good tradition, we also always start with an overview of the internal combustion passenger car production numbers. And here, we see that '25 is slightly lower than '24. It's not a substantial drop actually. It's minus 0.7%. Europe was more down. At the same time, South America and China, these regions even further progressed. If I then look at the HDD segment, Europe, a slight decline, but a positive evolution in China of 7.1% growth, of course, starting from a relatively low base as the previous quarters -- or actually the last quarters in 2024 were not strong. Now looking at the numbers, a solid set of numbers. We see a sustained demand for our products throughout the business group in a volatile market, I would say, so in an overall challenging economic backdrop. At the same time, we also continue to focus on our operational excellence as we have been doing for the last years, and we're getting increasingly better at this year after year. Now if I look to the Auto Cat, our volumes in Auto Cat were strong. We outperformed the ICE, so the internal combustion engine light-duty vehicle market, which reflects our strong position. But also the focus, as I mentioned, of operational excellence and efficiency is really part of the DNA. We continue further footprint consolidation, amongst others in Asia, where we have taken decisions around our Japanese operations. Precious Metals Chemistry, that follows to a certain degree, of course, the Automotive Catalysts business with the inorganic chemicals. They're the supplier of the inorganic solutions to the Automotive Catalysts business. So also a strong performance there. A good set, of course, PGM price support helping this business also forward. Now our homogeneous catalyst business, which is selling typically in the broader chemical industry, we saw some softness in line with the overall chemical industry pain that we're all going through. Fuel Cell and Stationary Catalysts, the earnings clearly improved. We had higher deliveries for our fuel cell catalyst solutions. We also are on track with our proton exchange membrane fuel cell plant in China, expected to start production in the course of 2026. On the stationary catalyst side of things, we do see a strong demand for backup power solutions and exhaust for these backup power solutions, specifically for data centers in the context of the high demand of the AI companies, AI application. So Catalysis EBITDA margin, 27%. Recycling. Well, you cannot talk about recycling about -- unless you talk about the metal prices. And here, you can, of course, see that metal prices in 2025 are significantly higher than 2024. You know that Umicore that we decided to hedge quite a number of our -- quite an amount of our exposure forward. Why? It creates visibility. It stabilizes earnings profile and it also protects against downside risk. That means if the price environment rallies beyond the average hedge price, indeed, you have some opportunity loss. But still today, we're very happy with these hedges. Now on the remaining open exposure, of course, there's a positive upside of stronger PGM prices to the overall earnings of the business group segment. Now if we look at the overall set of numbers for the business group, we see an advancement in the revenues. At the same time, a stable EBITDA performance with a 39% EBITDA margin. So in Precious Metals Refining, our revenues were in line with previous years. The metal price environment was supportive. We had good volumes. There were -- of course, we had some average hedge rates decreasing year-on-year, which was a backdrop or actually a drag, let's say, on the results as such. The overall mix was somewhat less favorable, still a very strong set of numbers for Precious Metals Refining. We had some slight temporary process inefficiencies, which will no longer be there in 2026, but we were able to offset these by solid contributions from our operational excellence and cost-saving efforts also in this business unit. Jewellery and Industrial Metals, I mean, the central theme here is gold, gold recycling, gold processing. I mean, really a very strong market, strong revenue growth and also a good margin expansion. So this business is also doing really well on basically also the gold evolution and the gold focus, which is there in the market. Precious Metals Management, well, we've talked about already volatility in precious metals prices is an excellent market environment to trade and make trading gains. So this business unit also performed really strong. Next business group would be Specialty Materials. And Specialty Materials is maybe a business group which is sometimes a bit yes, underrepresented or underappreciated maybe by the markets or -- and maybe we should also further strengthen our communication on this business group because it has a couple of beautiful gems in there. If I look at the business group here, a 16% EBITDA growth in 2025, EBITDA margin approaching 20%. Cobalt and Specialty Materials, there was a support of a cobalt trend where we saw a better momentum for cobalt premium products, right? And also here, again, efficiency. You've understood by now that efficiency is really part of our overall performance, and that's why we continue to stress it. If I look at Electro-Optic Materials, there we have seen that China has taken a stronger stance on exports and not a lot of germanium has left China in the course of 2025. We have this joint venture with, for instance, Societe -- so with STL basically, which I highlighted earlier. And this allowed us also to continue to supply our customers in a very strong germanium price market, added by our closed-loop refining and recycling services that we have. So Electro-Optic Materials sees strong top line growth at the end of the year, and we continue -- we expect to continue to see that growth also in 2026. So one to watch going forward. Metal Deposition Solutions, I would say, overall, a good stable performance with a different mix between the business groups. But yes, also pretty good there. So I think this is where I would like to leave it at this point in time and hand the word to Wannes. Wannes Peferoen: Thank you, Bart, and good morning, everyone. Today, I will start with EBITDA before moving on to cash flow, net debt, the P&L and balance sheet. Adjusted EBITDA was up 11%, reaching EUR 847 million, driven by volume growth across all businesses and efficiency savings. This broad-based growth resulted in EUR 125 million of EBITDA contribution. We also delivered EUR 100 million of efficiency benefits, which more than offset inflation of EUR 68 million. Metal result declined by EUR 17 million due to favorable hedges rolling off. This was partially offset by increased prices for precious and platinum group metals as well as minor metals for the remaining open or unhedged position. There was a headwind from foreign exchange of around EUR 45 million, largely due to translational effects as the euro strengthened. Adjusted EBITDA margin improved from 22% to 24%, in line with our Capital Markets Day target of more than 23%. Now zooming in on our efficiency program. We delivered EUR 100 million of efficiency benefits, in line with our target. 25% came from top line growth, 20% was due to a reduction in cost of goods sold and 55% came from a reduction in SG&A and research and development, in particular, in Battery Material Solutions, Catalysis and Corporate. Headcount in the group reduced 3%. Turning to cash flow. Cash flow from operations before changes in working capital amounted to EUR 1.1 billion. This was supported by cash proceeds of EUR 525 million from the sale and subsequent lease-in of the permanent gold inventory in recycling. We finalized this transaction in October last year. It enabled us to unlock significant value, strengthen our balance sheet and reduce finance costs. Net working capital increased by EUR 298 million, mainly as a result of higher activity and to some extent, increased metal prices. The significant reduction in CapEx down to EUR 310 million demonstrates our capital discipline. This reduction is most prominent in Battery Cathode Materials, where we are leveraging footprint flexibility and phasing our spending. Free cash flow from operations was EUR 524 million. Moving to the net cash flow bridge and net debt. The free operating cash flow largely covered the EUR 250 million equity injection into our joint venture, IONWAY in January '25 as well as taxes, interest and dividends paid. In January this year, after the year-end, Umicore and PowerCo each contributed an additional EUR 175 million to the IONWAY joint venture. Net debt reduced slightly to EUR 1.4 billion, resulting in a leverage of 1.6x adjusted EBITDA, down from 1.9x at the end of '24. This is well below the anticipated peak of 2.5x as we focus on capital discipline and maintaining a solid balance sheet. Looking at the consolidated P&L. Adjusted EBIT improved by 21% to EUR 579 million. Adjusted net finance costs of EUR 173 million were up EUR 65 million, mostly due to lower interest income on cash as rates came down and a negative impact from foreign exchange. Adjusted tax charges were in line with the prior year. Pretax income was slightly up, but the adjusted effective tax rate came down from 29% to 26%. Adjusted net income of EUR 288 million was up EUR 33 million. And adjusted earnings per share were up 13% at EUR 1.2. We are proposing a dividend of EUR 0.50 per share, in line with last year and with our policy of a stable or rising dividend. And this represents a payout ratio of 42%. Adjustments to EBITDA amounted to EUR 365 million. As I said earlier, we optimized our business model in recycling by selling the permanent gold inventory and replacing it by revolving leases. This generates a pretax gain of EUR 486 million. This was partly offset by an impairment of our joint venture participation in Element 6 and provisions related to specific restructuring programs. Adjustments to net result include a derecognition of a previously recognized deferred tax asset and the tax impact of the gold inventory sale. Net income was EUR 385 million compared to minus EUR 1.5 billion in the prior year when there was an impairment charge for Battery Cathode Materials. There was a big improvement in return on capital employed from 12.3% to 15.7%. Now turning to the consolidated balance sheet. Our liquidity remains robust with cash of EUR 1.6 billion after repaying a EUR 500 million convertible bond in June. And as I said earlier, net debt was stable at EUR 1.4 billion, and the leverage ratio came down from 1.9 to 1.6 by the end of the year. Group equity improved to EUR 2.3 billion, corresponding to a net gearing ratio of 37%. We have hedged a substantial portion of our metal exposure for '26, '27 and '28, and we continue to look for opportunities to hedge further, in particular, for '29 and 2030, taking into account market interest and forward rates. So to sum up, we delivered a strong performance in '25 as a result of volume growth across the board and EUR 100 million of efficiency benefits. Adjusted EBITDA improved in every business, except recycling, where it was stable and CapEx was well below the prior year. Selling the permanent gold inventory has given us additional headroom while reducing future finance costs. And we continue to focus on driving cost efficiencies, controlling working capital and disciplined capital allocation in '26. I will now hand it back to Bart. Thank you. Bart Sap: Thank you, Wannes, for that overview. Very clear. Let's maybe have a look at the outlook for 2026. So the essence basically is that we entered the year on a stronger footing. And if I look at the different business groups, on Catalysis, we continue to have a very strong performance in this business group. We see that continue into 2026, and we are happy with the state in which it is, and that will continue going forward. And Recycling, I think the essence is that in the current favorable metal price environment that we'll be able to offset the negative impact of the average lower hedged metal prices as well as the shutdown, which is foreseen in 2026. So also moving on well there. Specialty Materials, continued strong performance. We do expect we continue -- we believe we continue to see the top line growth, amongst others, in the germanium products, but also a supportive cobalt price environment will help to further support the results. And in Battery Materials, we continue to pursue the midterm plan to recover value, while at the same time, we, of course, have to navigate a volatile and competitive market. So we continue to focus on rigorous capital allocation. We're going to continue to lever our customer contracts with our take-or-pay commitments on which we clearly say that the importance of the take-or-pay mechanisms is increasing given the volume development that we see. And in Battery Materials Solutions, we're going to continue to be disciplined in our spending broadly in line with 2025. On corporate costs, we expect a slight increase because we continue to invest in AI-driven solutions to further enhance and support our operational excellence. For capital expenditures, we are expected to increase versus 2025. And this is mainly driven by a selective growth initiatives in Recycling. So engineering that we do for the decision we need to take around the expansion in Hoboken in our precious metals recycling business that we will take in 2026, but also selective high-quality growth investments in Specialty Materials. So on CapEx, we do expect to be in a range between this year and last year guidance of EUR 400 million with, again, a very good focus on disciplined execution. So if I sum that up, I would say that we will not be providing a concrete guidance today and this is because the market is still very dynamic. And we will have to continue to navigate that environment. Yet based on what we see today, we would expect adjusted EBITDA to further progress into 2026. Now shortly wrapping up before we go into the Q&A. So -- and this is also a shout out to the teams. I think 2025 was really a pivotal year. And Umicore and the teams have shown great resilience. They have shown great discipline also to focus on what our core is and taking courageous actions to basically be able to deliver this strong set of numbers. It's fully in line with our core strategy execution. We're well on track. We're entering 2026 on a much stronger footing, and we will continue to build on the momentum of 2025 going into 2026. So really positive 2025 and with confidence we go into 2026. And with that, we go to the Q&A. Operator: [Operator Instructions] The first question that we have is coming from Wim Hoste from KBC Securities. Wim Hoste: Do you hear me? Bart Sap: Yes. Wim Hoste: I have 2, please. On metal price hedging, you indicated that hedge levels in '26 will be below '25. Can you maybe elaborate a little bit on the outlook of your hedge book? Is it fair to assume that the hedging price levels will increase probably materially as from '27 onwards? Can you maybe elaborate on that? And then also linked to metal price hedges, what are the limitations to hedging more and further into the future? I think you indicated that you're looking to increase the hedging for '29 and 2030. What is prohibitive in this case? Is it just availability of counterparties? Is it financing costs, which get increasingly expensive, extending the hedges into time? Can you maybe elaborate also a little bit on that? Those are the questions. Wannes Peferoen: Wim, Wannes here. I'll take those questions. So looking at the metal price levels of the hedges, that is something we don't communicate. But at the same time, we can also share that, I mean, moving from '25 into '26, there will be less support from the average hedge prices that we have looking at '26. At the same time, looking at the average hedges that have been locked in or the volume of hedges that we have locked in, looking at '26 and '27, this is where 70% on average of the exposure that has been locked in. So I think looking at the metal price exposure, this is where in the current favorable environment, there's still potential. There's still upward potential, but it's limited to that open exposure of, let's say, roughly 30%. Now we are looking into hedging further looking at '29, 2030, again, on the back of creating that visibility, creating that predictability of the earnings. But this is where looking at the market environment, on the one hand, we see a heavy backwardation, looking in particular at the PGM prices, but also limited market interest from counterparties to lock in those prices, hence, also the heavy backwardation. So this is something that we are monitoring closely in order to secure basically at the right time, the right price levels for those years, '29 and 2030. Operator: The next question is coming from Sebastian Bray from Berenberg. Wannes Peferoen: Sebastian, we don't hear you. Sebastian Bray: I have a few, please. The first is on the financing costs. Are there any one-off [Technical Difficulty] Operator: Sebastian, we lost you for a second. I will open your line again. Sebastian Bray: I think there's a lag on the mic, so I'm just going to speak. What would you provide as guidance for '26 financing costs? My second question is on the [Technical Difficulty] Bart Sap: Sorry, Sebastian, we really can't hear your questions. Sebastian Bray: What exactly -- why can't we go back by '28, '29 to a level of recycling earnings akin to what we had in '21, i.e. [Technical Difficulty] Bart Sap: So maybe let's see what we think we understood. So I think there's a question on the one hand around financing evolution... Sebastian Bray: And final one on the VW JV. Is there any chance [Technical Difficulty] Bart Sap: Maybe we go to... Caroline Kerremans: I think we have an issue with the line on your side, Sebastian. So I think it's difficult to receive your questions. If there is any opportunity to send them over the chat, that would maybe be helpful, and then we can move on for now to the next analyst, I believe, because it's difficult to take these as such. Gaia, can you move on to the next analyst, please? Operator: Yes. The next question is coming from Chetan Udeshi from JPMorgan. Chetan Udeshi: Can you hear me okay? Bart Sap: Yes, yes. Loud and clear, Chetan. Chetan Udeshi: Okay. Cool. So I had a few questions. First one, I appreciate you're not giving the guidance, even though you gave same point last year, some guidance for 2024, but I also remember Umicore historically never gave guidance at the start of the year. So I don't know if you are just going back to the old practice. But just based on all of the things that you mentioned, qualitative assessment, what you've seen so far, what is your feeling on the consensus that we have from [indiscernible] for 2026? Do you have a view on where the consensus is? And is that in the right ballpark? The second question, I was just curious on your take-or-pay contribution in the Battery Materials. I mean it's pretty clear right now that some of your customers like ACC, they publicly announced that they are scaling back the ramp-up plans. So I'm just curious, are you getting compensated 1:1 for the lost volumes? Or is it more a negotiation where you are still trying to be flexible if your customer can't take the volumes? And the third question, on Recycling, you mentioned some process inefficiencies. Can you quantify that? Is that a material drag last year, which shouldn't recur this year? Bart Sap: Okay. Wannes, you go on the guidance or I can go on the guidance, doesn't matter? Wannes Peferoen: Well, I think on the guidance, again, we highlighted it's too early to be very concrete. At the same time, looking at EBITDA, this is where we say, yes, we are confident on the year '26, and we expect to make some progress in '26. Looking at other elements of guidance. CapEx, we highlighted, we expect the CapEx to come in between EUR 300 million and EUR 400 million. We will continue to be diligent and disciplined. If you look at Battery Cathode Materials, we reduced the spend in '25 versus what we anticipated, and we anticipate to do the same for '26. At the same time, looking at the foundation business, this is where in Precious Metals Refining, we are working. We're engineering on that expansion of the flow sheet that will result in some step-up in CapEx. And in Specialty Materials, we see some very specific growth opportunities, which we want to support. So hence, the range of EUR 300 million to EUR 400 million. Now the favorable metal price environment is obviously -- can be supportive to the EBITDA, but it can also put pressure on the working capital. And this is something where we will diligently work on in order to make sure that we can offset to a maximum extent any upside pressure on working capital. I think those are key elements, I think we can guide on today. Bart Sap: Yes, that's right, Wannes. And last year, we decided to guide because of the specific circumstances around all the trade uncertainty and the tariffs, right? So we wanted to be clear also there where group was heading and to give you clarity because it was probably the biggest uncertainty out there in the market at that point in time. Now on your second question, the take-or-pay and the further progress. Well, first of all, I mean, I think we have been pretty transparent and clear that in 2025, there is indeed a portion of take-or-pay in the results for which we are financially covered. The ramp-up across contracts. I will not talk about specific contracts. I will never do that. But we see that across -- if I talk more broadly on the ramp-up, it is slower than what we would have wanted to see or what our best view was at the CMD in March. So the weight of take-or-pay in that trajectory that we shared is increasing. right? And this is something that I would like to highlight. At the same time, we continue to have strong confidence in the contracts, and we will continue to leverage these contracts as we have done in '25 and will go -- will also be doing going forward. On the Recycling, I forgot what exactly the question... Chetan Udeshi: The process inefficiencies. Bart Sap: The process inefficiencies. Yes. Wannes, if you want to. Wannes Peferoen: Yes. So I mean, looking at recycling, we highlighted that the volumes were up -- the volumes processed were up. At the same time, looking at the downstream, this is where we had some technical hiccups resulting in some additional costs, some additional rework, but not too material, but at the same time, we also wanted to highlight as it does impact the results. Bart Sap: That's right. And as I highlighted in my presentation, we did offset those with further efficiencies in other parts of the plant. We just want to be transparent and open around this. Again, for 2026, there's not going to be any effect of these operational inefficiencies, so not to be taken into account for you for 2026. Caroline Kerremans: Sorry, before we move on, we can maybe take the questions of Sebastian Bray that have come in through the chat. Bart Sap: Yes. Thank you, Chetan. Caroline Kerremans: So the first question is the financing costs in 2026. Could this be down versus 2025? The second question is, could Recycling return to levels of full year 2021? And then the final question is on the JV, the IONWAY JV. Could this be recut or renegotiated as Volkswagen is cutting back on that? Bart Sap: Maybe you take the first one. I'll take the 2 other ones. Wannes Peferoen: Yes. So looking at finance costs, obviously, very difficult to guide because there's 2 components which we don't have fully in control. One is basically the cash deposits and the interest rates we get on those cash deposits. And this is also where there has been a steep decline in '25 and hence, also less contribution to the finance income, I would say. The other element is the forward points, looking at the financing transactions in foreign currencies. This is where we also carry the forward points and again, hard to predict, I would say. At the same time, I think '25 seems rather exceptionally high looking at the financing costs. I think I would anticipate to have that lower going into '26. But again, hard to give guidance on. Bart Sap: Yes. And then on Recycling, well, I think it's true. I mean, it's a fact that actually your hedged exposure or unhedged exposure, let's say, in '29, 2030, the more we move out in that period, I think we're substantially less hedged in that time frame. Suppose that the current favorable metal environment remains for all the main metals such as platinum, palladium, rhodium and of course, some others as well. Clearly, there could be a substantial upside versus the EBITDA that we are reporting today. Hence, at the same time, these prices are not guaranteed. So it's impossible for us to guide on that. But in theory, there would be, of course, a higher upside possible. On the Volkswagen question, you understand I will not comment on that. We have clear contracts in place. We are going to continue to enforce these contracts. And at this point, I have nothing material to share with you on that point. Operator: [Operator Instructions] We have our final question at the moment coming from Mazahir Mammadli from Rothschild & Co Redburn. Mazahir Mammadli: One from me. So assuming that we have a favorable metals price environment going forward in the next couple of years, what would your priorities be in terms of allocating the excess free cash flow that you generate? Bart Sap: Yes. So basically, if I understood well, it's actually a cash flow allocation question, Wannes. But I mean, let me start off here as well. I think our focus today is still really on further being cash disciplined. It's really on that value recovery. And once the balance sheet continues to remain strong and solid, we will, of course, then decide what to do with the excess funds and will be coming out to the market. So we don't have a clear view on that at this point in time because we're still -- our focus is still on solidifying in a structural way, the balance sheet. So Wannes, I don't know if you would have any... Wannes Peferoen: No, completely right. I mean, looking at what we said in the CMD is that we look at landing at a leverage -- structural leverage between 1.5 and 2, let's say. And once we have that in place, once we see that recurring, that's the next topic that we will need to discuss. Operator: We will now take our final question from Stijn Demeester. Caroline Kerremans: I have received a message from Stijn. Sorry, I will read the message. Okay, you're in. Stijn Demeester: Yes, some difficulties here. So first one is on the SK On contract and the probability of renewal in '26. Second one, on the margins for take-or-pay versus actual volumes, can you say something there in terms of where they sit? And then the last one on the shutdown in Recycling, any view on when this will happen? These are my questions. Wannes Peferoen: Sorry, Stijn, can you repeat the last question? Caroline Kerremans: When the shutdown will happen. Stijn Demeester: On the shutdown in Recycling and when we should plan it in. Bart Sap: Yes. So okay. Thank you, Stijn. Very clear. On SK On, indeed, we said that there was a probability to extend the contract, and that did happen. So we continue to supply SK On in 2026. So that is definitely a positive. On the margin of the take-or-pay, there, I think what I said, I mean, the idea of the take-or-pay margins is to protect the investments that we have done. And as you have seen also when we were guiding for 2028, we had seen different scenarios of take-or-pay and actual volume delivery, and you saw that, that range, EUR 275 million, EUR 325 million, right, was rather muted. So you could, from that, of course, deduct that the margins indeed are sufficiently strong to cover volume shortfall margins. Now on the shutdown from Hoboken PMR, I mean, this is happening in -- yes, in the second half or later this month, actually. So we are preparing or entering, as we speak, the shutdown. Stijn Demeester: If I may... Caroline Kerremans: And then before we close -- go ahead, Stijn. Stijn Demeester: So is it a correct assumption that if you would fully lean on take-or-pay that you hit the EUR 275 million? Or is that a too positive take? Bart Sap: I mean, we have said during the CMD that indeed different scenarios of take-or-pay as well as volume -- real volume offtake would give that range of EUR 275 million, EUR 325 million. So the answer is yes. Stijn Demeester: Correct. Caroline Kerremans: Before we close it off, I still have an e-mail of Georgina from Goldman Sachs. I also want to highlight that we will look into the difficulty that people are having to connect to this call that this will not happen going forward. But so let me then phrase Georgina's questions here. How much CapEx investment needs still outstanding for Battery Materials? The next question is, is it increasingly in conflict with potential growth opportunities in recycling specialty materials in management's views? It feels to me like the opportunity cost is getting larger. Bart Sap: Okay. Very clear. Wannes, maybe you take 1, I'll take 2. Wannes Peferoen: Yes. So looking at Battery Cathode Materials, as I said, in '25, we reduced the CapEx spend as we are optimizing the -- or using basically the footprint flexibility in order to reduce and phase the CapEx. So looking at Battery Cathode Materials, what we shared with the market during the CMD is that on the one hand, we have the fully owned capacity where we would need to invest about EUR 350 million. This is where we expect to be able to reduce it with EUR 100 million looking at '25 and '26. Then what we also highlighted in the Capital Markets Day is that we have the capital injection into IONWAY, where we anticipated still to invest EUR 500 million between '25 and '26. This is where we invested in 2025, EUR 250 million and where at the start of this year, invested EUR 175 million. So bringing that to a total of EUR 425 million. We expect to stay within that budget of EUR 500 million in order to finalize basically IONWAY. Bart Sap: Yes. So I think that's correct, Wannes. So in other words, I mean, we're phasing our CapEx and function of the real underlying demand that we see, and we said that we would be disciplined. And for the time being, we're not spending those CapEx. As discussed earlier, the importance of take-or-pay is growing and that immediate need is not there. And that's transit in that question on the conflict versus Recycling. Well, I mean, I would say, first of all, we have a set of businesses that we have today, right, a very strong core foundation business in which we're going to continue to invest in selective growth initiatives. I've been highlighting in the germanium in the field of Electro-Optic Materials. We will decide on the investment in Hoboken in 2026. And I think the current evolution in Battery Materials is not holding us back to do that if we wanted to do that from a financial point of view. So no, there's not an immediate conflict. Of course, if you would think about really bold moves, then, of course, value recovery in Battery Materials would definitely be, yes, an important milestone to achieve. So no, I don't see that immediate conflict on the CapEx as we are keeping it to the lowest amount possible, and we continue to lean on our take-or-pay contracts. Caroline Kerremans: Okay. Then we still have questions from UBS as well. A small reminder that normally, we stick to one question per analyst but given the situation that we are in, I'm making some exceptions. So for UBS, the first question is, can you tell us what percentage of Battery Materials Solutions sales came from take-or-pay payments? The second question is, does the guidance for the CapEx includes the IONWAY payments? If not, what should we anticipate for? And then in the cost savings, could you give an indication for the cost savings in 2026? And then we still have a question on what do you expect you to do to protect the EV supply chain? And then a final one has Umicore been asked to join projects? Bart Sap: Well, it's growing the list. Caroline Kerremans: We will slowly start to close the call, but of course, IR will remain available to respond to your questions. And I'm now handing the floor back to Bart and Wannes to answer these final questions. Bart Sap: Yes. Thank you, Geoff, for the questions. Wannes, you take 1 and 2 or... Wannes Peferoen: Yes, so looking at take-or-pay in '26, I mean, as you have seen, looking at the revenues, top line and bottom line, we saw a step-up. I mean, looking at revenue, it's 11% up. Looking at the bottom line and excluding the one-off of '24, we also saw a significant step-up. This is driven by effective volume shipments, but also by take-or-pay. And that's also why we highlighted because it is a material contribution to the top line and bottom line. Now looking at CapEx guidance. So the guidance we gave, the EUR 300 million to EUR 400 million is excluding contributions to IONWAY. And this is where, as I highlighted earlier, in '26, we contributed already EUR 175 million, and we will stay within the budget that we shared in the Capital Markets Day. So meaning that for '26, we will not exceed EUR 250 million for IONWAY equity contributions. Then looking at the cost saving objective for 2026, this is where -- in line with what we shared with the market in March last year is where we are targeting to offset inflation, and we anticipate inflation to be EUR 50 million to EUR 75 million. So that's a target that we have put forward to the teams to at least generate savings in order to offset that anticipated inflation. Bart Sap: Yes. And then on the question on the EU EV supply chain. Well, I think I can only base myself, of course, on the information which is out there in the press and that you might also have seen, but which somehow also confirms the feeling that I had earlier is that the commission might be looking at indeed onshoring more battery production as well as battery materials production in the EU, right? The word on the street is that if you would want to get support from the EU in terms of CapEx or OpEx going forward that you would need to have a strong amount of local content, including for batteries and therefore, also cathode materials. So as mentioned in that one slide that I had, that could significantly change, of course, the equation of the European battery investments for battery materials investments, which are out there. So probably I'm as keen as you to learn what ultimately the commission will decide. On Project Vault, I mean, I would say that in general, we're talking to several regional, let's say, leaderships, not only in the EU, but of course, also in the U.S. In the meanwhile, I think the biggest impact of Project Vault, of course, is that the overall price environment for these metals is supportive. So whether a direct or an indirect fact that you have is basically that such stockpiling, which they are talking about is typically supportive for price trends at least in the shorter term. So with that, Caroline, I think we -- I don't know if there's any other questions outstanding. Caroline Kerremans: No, I think with this, we can indeed wrap it up and close the Q&A for today. Bart Sap: Well, first of all, I was looking for an engaging Q&A. The quality of the questions was definitely good. The quality of the line, definitely not. But I mean, we can rematch with most of you next week in London and really looking forward to that. Now in a summary, it will not be a surprise. We're really satisfied on how things evolved in 2025. It was a pivotal year. Where '24 was a year of crisis management, '24 -- '25 was a year of a clear new direction for the company with disciplined execution on which we delivered strongly. Our culture and the organization is moving in the right direction. We are focused on our goals, and we will continue to do so for 2026. So with that, I would like to thank you for your attendance and the ones that I see next week, looking forward to that and talk to you soon. Have a wonderful day. Operator: Thanks for participating to the call. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Telix Full Year 2025 Results and Investor Webcast. [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, Kyahn Williamson, SVP of Investor Relations and Corporate Communications. Please go ahead. Kyahn Williamson: Thank you, and thank you to everybody for joining us on this call this morning, this evening, wherever you are in the world. We launched our annual report and full year results on the ASX about 30 minutes ago. We also have the slides on the screen via webcast for you to see today. I'm just going to take you through a brief introduction and some disclaimer statements before handing over. If you just move to the Slide 2. Very pleased to have on the call with us today, Chris Behrenbruch, our CEO and Managing Director; Darren Smith, our CFO; and Kevin Richardson, our CEO of the Precision Medicine business. I should also mention that we have Dr. David Cade, our Chief Medical Officer, on the line for the Q&A session. We'll be running through today our strategy, financial results, and update on our Precision Medicine and Therapeutics business. If you can move to the next slide, please. I am required just to give you an excerpt from our forward-looking statement disclaimer statement. So please note that on today's presentation includes forward-looking statements, including within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to, among other things, anticipated future events, financial performance, plans, strategies, and business developments. These forward-looking statements are based on current information, assumptions and expectations of future events that are subject to change and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our filings with the ASX and SEC, including on our half year annual report. You are cautioned not to rely on forward-looking statements, which are made only as today's date, and the company disclaims any obligation to update such statements. Please refer to the disclaimer slide in the presentation for further information. With that, I'm very pleased to hand over to Chris to kick off the call. Christian Behrenbruch: Thanks very much, Kyahn, and I hope that my audio is nice and clear, and I certainly appreciate the introduction. Before Darren Smith, our Chief Financial Officer, goes into the numbers, I thought a bit of strategic framing would be useful for investors to understand where the company is heading and, of course, our key accomplishments in 2025. Next slide, please, Slide 5. Over the last 12 months, we started to put the depth and execution around what has been a multiyear corporate development strategy. It's useful to think of Telix as a platform with these 5 major segments, as illustrated on this slide. Moving from left to right, first up of key focus is our therapeutics pipeline, which has grown significantly and now features 3 programs in pivotal studies, as well as several high potential earlier-stage programs in rare diseases. I'm going to come back a little bit towards the end of the presentation on this topic. Because of the explosive growth of activity in the radiopharma landscape, we have also pivoted to some extent to an internal innovation model alongside our business development activities. Clearly, when big pharma is willing to pay $1 billion for an asset that has been in a few mice, there's clearly an incentive to do in-house innovation. And so we now have a significant set of technical and clinical capabilities around fundamental R&D and discovery technologies. In the middle of this vision and the engine room of the commercial business today is what we call the Precision Medicine business. This is far more than just an ATM machine that throws off a couple of hundred million of cash each year. It's a strategic validation of the targets we develop our therapeutic drugs for. It is more robust and streamlined clinical trials because we can see where our drug goes, and it's an early opportunity to build deep relationships with the physician stakeholders that underpin the future of the business. Fourth, one can obviously look at sales and a commercial team simply as SG&A. We view it as building a specialty sales organization that very few companies have. Selling nuclear medicine is not selling a vial or a blister pack. It involves selling complex clinical workflows. And as our product portfolio expands, this is a strategic differentiator because it enables us to build depth with key referral physicians and drive preference towards our product. It's also fair to note that in the major markets, this is a significant financial investment that most of our competition, both present and emerging, cannot afford to undertake. Lastly, you can develop all the great ideas you want and convince people to buy them, but if you can't deliver them reliably every single day, you aren't going to succeed. In most industries, vertical integration is probably wasteful and doesn't offer much of a moat. In radiopharmaceuticals, where you are dealing with products that have shelf life of hours to days at most, there's a huge amount of market share ownership dynamic, intellectual property, and customer differentiation in how you deliver. This is why we have invested over $0.5 billion in the last years to better control our destiny and pave the way for high-value therapeutic products. Next slide, please. To do all these things, you need cash, and we have a very high-growth business that made a step change this year, both through organic growth of our Precision Medicine business and through acquisition. We expect all of our revenue streams to continue to diversify and grow in 2026 and beyond, and Darren will cover this off on guidance later in this presentation. Kevin is also going to frame this in terms of the core growth of the Precision Medicine portfolio, which is extremely exciting. The key point is we have a hyper-growth business, and it generates the cash we need to aggressively expand, further diversify our revenue and dominate the field. Slide 7, please. This slide puts the whole strategy into perspective. As I've already said, to deliver on our bold vision for being the dominant player in radiopharma, we need a cash-generative business. We have one, and we grew it significantly this year with revenues exceeding USD 800 million or over AUD 1.2 billion for anyone that prefers their green back surge with shrimp on the barbie. Our margins have remained extremely stable despite competition, and this excellent commercial performance enabled us to invest $0.5 billion into growing our product pipeline, funding the best commercial team in the industry, and building our infrastructure and supply chain. Think about that. $0.5 billion to grow the future value of the company from earnings without shareholder dilution. Telix is a very unique and valuable story. Moving on to Slide 8, please. Before handing over to Darren, I thought it would be useful to give you a condensed view of our priorities for 2026. I get a lot of feedback that Telix is complicated, but it really isn't. This year is about doing three things and hopefully doing them better than we did last year. One, we are going to continue to grow our core business around our approved products. We actually did get a new and innovative product approved by the FDA last year in Gozellix that also leverages the ARTMS isotope production acquisition. The launch of Gozellix has been successful and is not only growing our ASP and market share, it will pave the way for many future products through both the RLS network and partner distributors with Zircaix being the next prime example of this technology platform. Two, we have 2 new products to launch, Pixclara, which is known as Pixlumi in Europe. This is for glioblastoma and Zircaix for renal cancer. We understand the disappointment that these did not get approved last year, but this is the price of being at the forefront of innovation in new technology areas. While people are well aware, it has been a tumultuous period within the FDA itself, we also made certain we took valuable learnings from the experience. We have made extensive changes to the management team. We boosted our regulatory affairs capabilities, and these programs are in good shape for resubmission and approval this year. They are highly anticipated products and will become significant revenue streams, and we have not taken our foot off the gas pedal in terms of market readiness for these products. We are preparing to launch, and I want to make that very clear. Last of all, we have several very high-value clinical programs. This is not an exhaustive list. In fact, we have over 30 sponsored and collaborative studies running from early stage to pivotal trials. But these are the ones that are going to generate the greatest commercial and financial inflection points this year and are the priority in terms of our resources and R&D investment. I note that 4 out of 5 of these studies are pivotal or Phase III studies. We have imminent data point coming out on ProstACT Global, which we will take to the FDA to gain clearance to commence Part 2 in the United States. I remind you that the study has already progressed to randomizing patients ex-U.S. for Part 2 of the study and talk a little bit about this later in the presentation. Our BiPASS biopsy study will complete enrollment this year, and we expect to generate significantly enhanced revenue in 2027 as a consequence of this Phase III study. Our current late-stage clinical studies pave the way to our first therapeutic commercial inflection point likely in 2028. So these are not distant thoughts. They are all near-term catalysts. And I will come back at the end of presentation to some of the broader sets of upcoming catalysts. Now Darren, over to you for the numbers. Darren Smith: Thank you very much, Chris. We have today reported a 56% growth in revenue to $804 million. This is in line with our revenue guidance. Notably it's our third consecutive year of double-digit revenue growth. Revenue from Precision Medicine business year-over-year. Can I just ask, I think that the... [Technical Difficulty] Operator: Please check your mute button. Darren Smith: This year -- sorry, can people hear me now? Operator: Yes, we can hear you. Darren Smith: So this is in line with our uplifted full year guidance. And notably, it's our third consecutive year of delivering double-digit growth -- revenue growth. Revenue from our Precision Medicine business increased 22% year-over-year with EBITDA improving 25% to $216 million, driven by strong demand of Illuccix and the launch of Gozellix. The Precision Medicine commercial performance permitted Telix to self-fund and derisk our investment into our R&D pipeline and commercial infrastructure to drive future growth. Further, 2025 was a year of significant investment, yet we maintained a solid cash balance of $142 million. We achieved this while exercising disciplined cost management. Next slide, please, which is Slide 11. Thank you. We've added this slide for our non-account investors. As at a glance, this slide presents the strength of our business model. The left side of the chart shows our revenue sources and their materiality. The middle of the graph highlights our gross margin in the green and that 94% of the GM is generated from our Precision Medicine business. That is approximately $400 million. As you can see, about half of the gross margin, the red flows om right are invested into our commercial sales and marketing capability, our global supply chain and our corporate functions. But more importantly, flowing right at the top half of the gross margin is approximately $200 million. That's 25% of revenue. And with this, we decide to either invest it in our development pipeline to create future value or recognize it as operating profit. So as business models go, a business that throws off 25% of revenue as operating profit to reinvest in value creation or the bank is pretty damn attractive. Now moving to our traditional P&L. I've spoken to most of the financial highlights on the previous slides, but will take some time to talk to further highlights. The group's gross margin of 53% remained consistent with the first half performance. We invested $157 million into product development, in line with 2025 guidance and mainly focused on our late-stage pipeline. General and administration expenses decreased to 12% of revenue from 17% last year, reflecting the efficiencies of scale achieved as the company continues its strong growth trajectory. As a result, we posted an adjusted EBITDA of $39.5 million, in line with market consensus. Now moving to our next slide. Telix Precision Medicine business is clearly our cash machine. Its financial metrics demonstrate its excellent performance. Precision Medicine delivered an additional $113 million in revenue, representing 22% year-on-year growth alongside a 28% increase in operating profit and a 25% increase in its EBITDA. This demonstrates the high-growth business with capacity to generate significant funds to invest in long-term value creation. Sales and marketing investments supported the launch of Gozellix, the geographic expansion of Illuccix and the launch readiness activities of Pixclara and Zircaix. As a side comment, if this was a stand-alone business growing at 20% plus per annum on an extrinsic value basis, it would be worth up to 8x revenue. This is a huge value creation for shareholders. Now moving to our next slide, in Telix Manufacturing Solutions or TMS. We've provided this level of detail on TMS in our half year results for two reasons. Firstly, to give investors and analysts clear visibility into the financial impact of the RLS acquisition; and secondly, to provide transparency into the cost base of the remaining TMS business, helping with financial modeling. As you can see, RLS delivered positive EBITDA for the first 11 months post-acquisition. At the remaining TMS facility, we increased investment compared to last year to permit us to advance operational activities facilitating clinical and commercial supply. As we now close out the full year of having RLS in the business, we will revert back to reporting TMS as one segment for commercial and competitive reasons. Now moving on to cash flow. As you can see in this cash bridge, Telix continued to generate strong operational cash flows, which we then invest into our pipeline. In 2025, Telix generated $206 million from operations, enabling the investment into progressing the R&D pipeline. Excluding our last contingent consideration earn-out payment of $52 million for Illuccix, we produced a net positive operating cash flow of $35 million. I reiterate that our investment into R&D is discretionary and can be flexed depending on our commercial performance, permitting us to effectively manage our cash position. Additionally, Telix utilized cash on hand to support targeted strategic investments such as RLS, ImaginAb, and in our FAP asset. As a result, we ended the year with a prudent cash position of $142 million. Next slide, please. As we prepare for our next phase of growth, we continue shifting allocation of R&D investment into our therapeutic pipeline. In 2026, R&D investment is planned to be in the range of $200 million to $240 million, with the largest allocation directed to the therapeutic development. This highlights our focus to transition to a high-value therapeutic business. I'd like to take the opportunity to reiterate our investment strategy. Over the next 2 to 3 years, we expect to grow revenues by advancing assets from clinical development to commercialization, expanding indications and geographic reach. We will invest the funds from this commercial growth into our portfolio and ensure that we have the capabilities, infrastructure, and readiness to deliver on our therapeutic programs. Our focus will remain on reinvesting revenues back into the business over the next couple of years rather than optimizing near-term earnings per share. We are committed to building long-term value. We believe prioritizing earnings too early can impede the strategic investments required to fully unlock the potential of our pipeline. Next slide, please. Telix has a disciplined capital allocation approach that is aligned to our corporate strategy, and it has matured a great deal over the last 12 months. We have previously spoken about our 4 areas of focus, and they are investing into our R&D, optimizing our commercial performance, strategic growth opportunities through M&A, and supply chain resilience and production capacity. We believe these 4 areas of focus will underpin our growth long term. We have continued to deliver on our strategy in a disciplined way, ensuring that we have a prudent cash buffer on the balance sheet. Next slide, please. Looking forward, we see strong momentum heading into 2026 with another year of roughly 20-plus percent revenue growth anticipated. Our full year 2026 revenue guidance is set at $950 million to $970 million, and this is based on current approved products in approved jurisdictions. This range does not include revenue contributions from pending product approvals, which will be incremental. This growth implies up to 25% growth in our Precision Medicine business and a full year of RLS revenue. Our corresponding R&D investment will be in the range of $200 million to $240 million and will be dependent on the achievement of certain clinical outcomes and development milestones. In conclusion, we delivered another year of double-digit revenue growth, made high-value strategic investments across the business, and maintained a prudent cash position. Looking ahead, 2026 is set to be an inflection year with numerous important milestones. Our revenue guidance reflects the confidence we have in the business, and we remain committed to disciplined financial management throughout 2026. I'll now hand you over to Kevin Richardson, Precision Medicine CEO. Thank you. Kevin Richardson: Thank you, Darren. My first slide, please. Last year, our Precision Medicine portfolio delivered $622 million in revenue, up 22% year-over-year. Importantly, we delivered sequential growth every single quarter. That includes Q3, our most challenging quarter, which was the first full quarter following the expiration of Illuccix transitional pass-through status and the transition to MUC, MUC or mean unit cost reimbursement for a subset of Medicare patients. Q3 allowed us to see the full impact of that change on the business. Even in that environment and despite ongoing competitive pressure, we still delivered 3% quarter-over-quarter dose growth and 1% sales growth. That performance speaks to our disciplined approach to business fundamentals and the strength of our customer-facing team. We continue to gain share based on clinical differentiation and operational reliability, our PSMA agents demonstrates fewer indeterminate bone lesions and higher inter-reader agreement compared to F-18 assets, driving confidence in clinical decision-making. We pair that clinical value with highly specialized commercial organization that engages customers every day and consistently differentiates Telix in the market. Our reputation as an innovator also positioned us for a successful launch of Gozellix. Gozellix was FDA approved in April of 2025, and transitional pass-through status became effective in October, enabling a transitional pass-through supported full launch in Q4 of 2025. We are very pleased with the early uptake and our 2026 full year guidance underscores our strong conviction in the growth outlook for our Precision Medicine portfolio. Today, we are the only company with 2 PSMA agents on the market. This dual product strategy is a competitive advantage, offering different types of customers meaningful choice across economics and scheduling flexibility while reinforcing our commitment to meeting diverse clinical and operational needs. In short, resilient growth, clinical differentiation, disciplined execution and a platform built for sustained growth. Next slide, please. What does it take to win in a maturing PSMA market? Winning in a mature PSMA market is no longer about being first. It's about executing at scale. Clinical credibility is nonnegotiable. Products must deliver consistently high image quality, strong inter-reader agreement and reliable detection at low PSA levels across all patient types. Incremental claims aren't enough. Confidence in clinical decision-making is what sustains adoption. Workflow integration matters. In a high-volume market, solutions must fit seamlessly into established clinical pathways, enable same-day imaging and support high patient throughput without disrupting nuclear medicine operations. Reimbursement sophistication is a competitive advantage. Success requires multiple product strategies that give customers economic flexibility while navigating complex and evolving reimbursement frameworks over extended period of times. Commercial infrastructure is a must. This is a contract-driven market that demands experienced field teams, market access expertise, compliance rigor, and long-standing customer relationships. These capabilities take a large investment in years, not quarters to build. Supply chain excellence separates winners from participants. Reliable, flexible dose production and delivery at scale, supported by high service nuclear pharmacy last mile experts is critical. There is no proven shortcut to mass market large volume coverage. Sustained investment fuels durability, indication expansion, life cycle management and camera technology advances all require ongoing clinical and operational investment to maintain leadership. In short, leadership in PSMA is earned through clinical trust, operational reliability, commercial scale and disciplined investment, not novelty. Next slide, please. We continue to execute our strategic plan to grow the Precision Medicine business by expanding our product offering, expand our indications on those products and expand the geographies where we market those products. Global expansion is a priority for Precision Medicine here at Telix. Illuccix is now available in 17 countries with reimbursement secured, and we hold marketing authorizations in more than 24 markets. In 2025, we focus on country-by-country access. In '26, we pivot to driving uptake, particularly across key markets, including the U.K., France, Germany, Italy, and Spain. In China, we delivered strong Phase III results with 94.8% positive predictive value, including patients with very low PSA levels. We submitted the NDA to the regulators with our partner, Grand Pharma. And with prostate cancer incidence rising and PET/CT infrastructure expanding rapidly, China represents a significant growth opportunity. While in Japan, our 105-patient Phase III study is progressing well with the first patient dose. This positions us well in the world's second largest pharmaceutical market where prostate cancer remains a leading cause of mortality. New products and new indications enhance our ability to take share and grow the market and Gozellix is off to a strong start, and we are focused on accelerating commercial momentum in 2026, and you can see that is reflected in our 2026 guidance. BiPASS is a Phase III study that represents the next wave of innovation, combining PSMA imaging, Illuccix or Gozellix with MRI to improve diagnostic accuracy and potentially reduce or eliminate invasive biopsies. This is about moving earlier in the care pathway, reducing patient risk, lowering system costs, and expanding the total addressable market to include frontline biopsy candidates. We believe moving to the front line where patients are diagnosed will give us a competitive advantage, both as the lead PSMA in diagnosis, but also in sequential scans that happen later on in the patient journey as physicians want to see consistency scan to scan. For Zircaix, we've completed 2 Type A meetings with the FDA and believe we have full alignment on key resubmission requirements. We are now focused on completing the agreed deliverables and documentation required for the resubmission. With breakthrough therapy designation, supportive ZIRCON-X data and the inclusion in major international guidelines, this remains a top priority for approval and launch this year. This is a really exciting and highly anticipated product. Moving on to our neuro platform. We are pursuing complementary submissions in both the EU and the U.S. TLX101-Tx was filed with the European regulators recently, and the U.S. submission will follow closely. As a reminder, the FDA has granted both orphan drug and fast track designation for Pixclara. Our commercial, medical, and supply chain teams are launch ready. Our expanded access programs serve patients and our customers very well, and they anticipate commercial use of Pixclara. In short, we built a global commercial platform, delivered successful launches, taken share, penetrated the available market and advanced multiple late-stage assets in high unmet needs markets. We are entering our next phase of growth with momentum and discipline. Next slide, please. So what does this strategy mean in terms of financial impact? Our current baseline business with some further life cycle management, which we've talked about, should be able to sustain a 15% to 20% annualized growth. This partially reflects the growth of the field overall, as well as our ability to continue to capture market share as the size of the market expands. The recent addition of Gozellix certainly derisked this. With indication expansion in prostate cancer alone, particularly a major opportunity in the BiPASS study, this growth over the 5 years can be closer to a 30% CAGR. And then when you add in Pixclara and Zircaix, this growth rate defensively looks more like 40% compounded annual growth, especially with metastatic indication expansions that further drive procedural volume. In short, our current product strategy, which is fully baked from a clinical perspective, just needs to clear a few more regulatory hurdles as it represents future upside for the company. It is a direct consequence of the market presence we are building, the depth of our pipeline and the quality of service we are able to deliver to the patients. This is really an exciting business with a bright future. The growth in Precision Medicine gives us the ability to finance the growth potential of our Therapeutics business. On that note, I'll hand it back over to Chris, to give you a bit of perspective on that. Christian Behrenbruch: Thanks very much, Kevin. Great update, and congratulations on all the success that your team had this year. It was a really remarkable year of accomplishment. So moving on to Slide 25, please. In a way, this slide is a simplified version of my opening slide, a highly profitable cash-generative business that would garner, as Darren said, a very healthy revenue multiple. It was a stand-alone business, but it's our engine room. And the future growth trajectory of the business will come from how that cash is invested. Kevin has already shown you very clearly, I think, how the Precision Medicine business alone can grow expansively over the next 5 years based on clinical, regulatory, and commercial inflection points that we expect to achieve this year. So again, I just want to reemphasize the point that the growth trajectory that Kevin has talked about comes from events that will be completed this year. I think it's also important to reinforce our commitment to manufacturing and supply chain. But in the context of our Therapeutics business, it's more than just reliable and on-time dose delivery. It's about R&D cost and efficiency and perhaps most importantly, intellectual property capture. We've learned over the last decade that when we use contract manufacturing organizations, do product scale up, that we simply educate the ecosystem in a way that potentially empowers competition, and we no longer wish to do that. So especially, as our therapeutics go into late-stage trials, this has become an important strategic objective of the company. To be clear, we still use CMOs, but where there's key IP around platforms, targeting agents and certain key isotopes, we are increasingly tackling this in-house or with selected partners. Moving on to the next slide, please. And this slide shows the reason why. As I've said, Kevin has already talked about what share of the Precision Medicine side of the business we think we can tackle over the next 5 years or so. And on a TAM basis, it's actually pretty conservative. But the therapeutics opportunity is about 3x or 4x bigger for the targets and indications that we are already pursuing. This doesn't even capture the potential for indication expansion into new disease areas that some of the pan-cancer targets we are developing, like carbonic anhydrase IX and FAP can potentially expand into. So it's a really bright future for the theranostics strategy. Moving on to Slide 27, please. Over the last 5 years, we've built a very strong pipeline with some key disease focus areas, and you're going to increasingly hear us talk about these disease areas as multiproduct concentration areas, frankly, much as we have done with Gozellix and Illuccix on the Precision Medicine side of the business. Indeed, to tackle some of these major unmet clinical needs, it's going to, in some cases, require a multi-asset approach at different stages in the clinical development or in the clinical patient journey. And so -- and also well-considered combination therapies with standard of care medical oncology. This is evident already, for example, in the design of the ProstACT GLOBAL and IPAX-BrIGHT studies. There are three particular attributes of our pipeline that I'd like to specifically comment on. Firstly, by taking a theranostic approach, we built a very deep relationship with the referral and prescribing physician in each of these disease areas. This is a competitive advantage, and this relationship depth has already started with our existing commercial product portfolio and will only intensify over the next 12 months. Investors often view the Precision Medicine and Therapeutics business areas as adjacent, but they are clearly not. Secondly, while we have some very high potential early-stage programs, and this has not exhausted this list because we have a pretty decent preclinical portfolio coming in behind, we have 3 late-stage programs in prostate, renal, and glioblastoma that will generate significant data over the next 12 months. Based on the current valuation of the company, these programs are essentially a free option, but we think that the data and clinical basis of these programs are very compelling. Most importantly, while 2026 and 2027 financials will reflect the commercial expansion of the Precision Medicine business, 2028 is our commercial launch year for our Therapeutics business. So it's not far away. This is why we have so much execution focus on the [Technical Difficulty] targets, learning about disease extend, exploring new patient populations and ultimately increasing the market size and market share. For the therapeutics, when they become available, the Precision Medicine business will pave the way. And so notwithstanding a few challenging but also educational regulatory speed bumps we've had, our commercial imaging gives us the skills and confidence that we can deliver on the therapeutic programs in the future. We've learned a lot this year, especially last year. Can you hear me, okay? All right. Moving on to the next slide, please. As I noted earlier, we have many different clinical studies running, some company-sponsored, some in collaboration with key opinion leaders around the globe. But the 4 major trials to watch this year are outlined here. I'm not going to go blow by blow on these because this is an earnings call, but I think it's important for shareholders to understand where the research priorities are and what the development goals and catalysts are. We are collecting a ton of patient data this year, and it's very exciting to have 3 programs in pivotal studies. This is important for patients and important for shareholders, and it's taken a lot of work and investment to get here. Moving on to Slide 29. Of course, front of mind for patients and shareholders alike is the ProstACT GLOBAL study. The study is now recruiting into Part 2 randomized part of the study ex-U.S. and is ramping up very nicely. Unlike Part 1, which is a safety dosimetry run-in study that the FDA required in order for us to include U.S. patients in the randomized part of the study, Part 2 is very streamlined and straightforward. Part 2 commenced recruitment last year following an independent data safety review that determined that Part 1 data met prespecified safety criteria to progress. We will be shortly releasing the details of the Part 1 study concurrent with our submission to the FDA to request approval to add U.S. patients into the study. We are looking forward to getting these results out into the market and to show the great progress we are making, particularly given the unique combination therapy design of the ProstACT GLOBAL study. To remind you, the data we will be putting out from Part 1 will be safety data on the 3 standard of care combinations in the global study, as well as comparative dosimetry data, which will be very interesting to see, particularly for the 2 different androgen deprivation therapies used in the study. So this is coming soon. Moving on to Slide 30. Before I wrap up with a summary of the catalysts, I thought I would share a montage of patient case studies to really tie together the company's strategy and to illustrate how integrated the Precision Medicine, Therapeutics, and Manufacturing businesses are. In short, why we are here. This slide illustrates 4 patients in 4 different cancers, all of which are advanced, extremely difficult-to-treat cases. Every day across the entire portfolio, we see examples of where our development and commercial pipeline changes lives. Sometimes it's a better understanding of the extent of disease. Sometimes it's a profound disease modification, such as the metastatic prostate and breast cancer examples on this slide. And at times, it's the glioblastoma or the kidney cancer patient that has stabilized disease or enough reduction in pain to be able to return to work. These are the real outcomes from our research, and they deliver profound and life-changing outcomes for patients. This is what motivates us and why we believe that investing our hard-earned cash into this future is so important. The technology works and will get better as we learn more and get more clinical experience. I'm also obliged to point out that for the most part, what you're seeing here are images created with the companion diagnostic imaging agents that we are also developing and highlights that this -- that not only is imaging technology critical for diagnosing and staging patients, but will play a fundamental role in predicting and measuring disease control as well. Moving to the last slide. To wrap up, this slide summarizes the year ahead. It is a big year with many inflection points across the entire business. I will not go line by line, but we have a lot to talk about in 2026, with the next 3 major catalysts being resubmission of Pixclara and of course, Zircaix and the release of the Part 1 global data. We are looking forward to delivering these important milestones to patients and shareholders as the year progresses. With that, I will pause and hand it over for questions. Operator: [Operator Instructions] Our first question comes from Laura Sutcliffe with Citi. Laura Sutcliffe: At the risk of potentially making myself a bit unpopular, I think we'd like to understand a bit more about when we might see some data for 591, the safety data. And perhaps given that you said you will disclose at the same time that you go to the FDA, whether the next steps are things that you need to do at Telix or whether you're waiting for the FDA to do something on their end to be able to get to that point? Christian Behrenbruch: Laura, thanks for your question. It's not a bad question or an unpopular question at all. So we have had an independent data safety review board that has under the clinical charter of the study has reviewed the data and progressed to randomization ex-U.S. However, in order for us to send the information to the FDA and disclose the information publicly, we need just to complete the clinical case report forms and formally close out and quality control and validate the data because that's obviously what the FDA wants to see. As soon as we have that data -- and I haven't seen it, I'm not privy to it. But as soon as it's available, we will simultaneously disclose it and submit it to the FDA. So we're not waiting on anything from the FDA. It's all on the company side, and you will not have long to wait. Operator: Our next question comes from Tara Bancroft with TD Cowen. Nicholas Lorusso: This is Nick on for Tara. Congrats on the progress and the strong guidance for 2026. We were hoping that you can dive in a little more on what you've seen in the early innings of the 2-product strategy for Illuccix and Gozellix and how you anticipate that will evolve this year to reach the 25% growth in the precision medicine revenue? Christian Behrenbruch: Yes. Thanks very much for the question. Kevin, do you want to pick this one up for your wheelhouse? Kevin Richardson: Sure. Yes. Thank you for the question. So the 2-product strategy is -- enables us to really manage the economic needs of HOPPS accounts and the way that they perceive and their preference for a reimbursed product over really a non-reimbursed product. As you know, MUC or Main Unit Cost has really kind of changed the environment and the reimbursement environment there as well as the way that the pricing happens in the HOPPS accounts. So being able to have a 2-product company enables us to manage that particular customer type and the self-standing -- or we call them IDTF group -- in a different way as we manage the preference they have for a reimbursement price or one that might be a little more price sensitive. So and then, of course, we have a longer view of the precision medicine business and PSMA specifically, as we think through what over time can happen and what will happen with CMS as they continue to evolve and change reimbursement. So that enables us to kind of manage the ASP, if you will, as the CMS may or look more towards the ASP reimbursement model. So it gives us options in the future without locking down a singular product on that. Operator: Our next question comes from Shane Storey with Canaccord Genuity. Shane Storey: Kevin, I'm going to stick with you, if that's okay. Question on Pixclara. Just maybe some descriptive piece, I guess, around the customer channel there. It's quite different from your PSMA urology presence. Is that potentially a first work example for how the Varian relationship might evolve? Just some thoughts on that, please. Christian Behrenbruch: Kevin, are you there? Kevin Richardson: Yes. So I'll take that first then, Chris. So Varian is -- we're really excited about the possibilities in that, a lot focused, of course, on PSMA and Illuccix, Gozellix. And so as we think about that from a commercial perspective, we have a -- what we call a Ninja team. As you know, there's not as many sites as there are that do PSMA prostate scanning as there are that are going to do neuro scanning. So we have a smaller team that's focused on the referral, the neurologist. And the idea behind that is we already have the relationship at the NucMed level. So we're able to drive those patients into the scanner, if you will. And then we have a team that already has the relationships at the other end of that where they're reading it. So the idea is it's a referral and then into the existing relationship we have at the nuclear medicine side. And of course, if that is not an Illuccix or Gozellix site, it gives us good access into those sites, and it's a real competitive advantage to be able to offer these more orphan drug type technologies because of that. Does that answer your question, Shane? Okay. Chris, anything to add? Christian Behrenbruch: All right. No, that's good. Operator: Our next question comes from David Stanton with Jefferies. David Stanton: I might be following a dead horse here, but I just want to make it clear and help you to make it clear. You'll be reinvesting earnings to get close to 0 NPAT for F '26, F '27 and F '28. Is that what the market should be thinking going forward, please? I ask because it's a question I get asked the most. Christian Behrenbruch: Yes, that's fine. No horse is flogged, David. Happy you asked the question. So we're not giving guidance beyond 2026, but it's a reasonable expectation that in 2026 and 2027 that we will be investing -- other than for risk management and for appropriate balance sheet management purposes, we'll be investing the majority of our earnings back into the company, okay? So that's in a number of different areas. That's in R&D. That's also in growing and developing our commercial team. And of course, we continue to also invest in infrastructure and capital works to support the business. So it's not all just R&D, but a profit objective for this year and next year is not the name of the game. Operator: Our next question comes from David... Christian Behrenbruch: Do you have a further comment, David, that you'd like to ask? All right. Well, we'll move on. This is a very challenging conferencing service, and I apologize to those that are participating. David Bailey: It's a follow-on from Dr. Stanton's question. Just from Darren, there was a clear comment there that I think that the investment in growth will consider the commercial performance. I think that was interesting from our perspective. Just as we look at the sales guidance for '26 and the R&D guidance for '26, should we think that if the commercial performance is at the upper and lower end of those ranges, the R&D will follow? As an extension of that, within the R&D spend, is the earlier stage clinical trials, are they the ones that would potentially be put on hold for a little bit to the extent that the commercial performance doesn't meet expectations? Christian Behrenbruch: I can start, Darren, and then maybe if you want to add anything. I mean -- so yes, we've focused -- we've chosen in this presentation to highlight the clinical studies that are the real priorities for the company. So that's the 5 studies, including the BiPASS study. We are obviously going to be investing in other clinical studies this year. And to the extent that we need to make adjustments -- it will be outside of that sort of ring-fenced 5 studies, the 4 therapeutic studies and the BiPASS study. We clearly expect that 2026 is going to be a strong year. We don't expect to have any difficulties in financing our R&D pipeline. But as you have noted, and as Darren, I think, made it very clear, generally, we take the view that our R&D investment is discretionary, and we can make adjustments as required. Darren, do you want to add anything? Okay. I'll take that as a no. Operator: Our next question comes from Craig Wong-Pan with RBC. Craig Wong-Pan: Just a question on the 25% growth in Precision Medicine. I was wondering how much growth was coming from markets outside of the U.S. Christian Behrenbruch: Sure. I'll answer that one and then maybe, Darren, if you want to chime in on anything that I've missed. Right now, because we only achieved our European reimbursements towards the back end of last year, it's a very small proportion of the revenue is currently ex-U.S. The majority of it is -- 95% of it is U.S.-based. We obviously expect that mix to change over the course of this year and also as we add in other markets, such as Japan, which has a high-value PET -- advanced PET procedure code that's quite internationally competitive. But for the moment, for the most part, the majority of our revenue is U.S.-based. Operator: Our next question is coming from Andy Hsieh with William Blair. Tsan-Yu Hsieh: Chris, I want to ask you about the recent collaboration with Atley and Stanford, focusing on astatine-211. So in your pipeline, you have 3 alpha emitters: Actinium-225, you have lead generator that's in progress, and then now astatine having a California supply chain. So I'm curious about your view on this isotope, another short half-life. Just wondering about how it fits into your product portfolio. Christian Behrenbruch: Yes. It's a bit of sort of outside of the major sort of activity area. But essentially, we do see value in alpha emitters. The majority of our late-stage programs, as you know, are beta-emitting isotopes. We think that they're going to be a workhorse for the foreseeable future, but we can see ALPHIX coming over the horizon. As you know, most of our clinical stage programs are with actinium. It's probably from a supply chain perspective, the lowest hanging fruit. We have one program, TLX102, which is with astatine that's in early clinical translation. We think that for applications where a targeting agent needs to cross the blood-brain barrier that radiohalogens are a better perhaps a more practical pathway than a radio metal with a chelator. So we are exploring astatine mostly in the CNS setting. Then we do, as you know, have a lead generator that we've developed. It's a very novel and very compelling generator design that we think can be rolled out for large-scale lead production. We currently today do not have any clinical programs using Lead-212, but we have a number of preclinical programs that we expect to take into patients by the end of this year that are not currently disclosed, and they have the potential to use Lead-212. We are exploring several different isotopes. But I think as a company, we've elected to put a proportion -- not a large proportion, but a modest proportion of our R&D expenditure into understanding the future landscape of alpha because we think it has some potential. I hope that answers your question. Operator: Our next question comes from David Dai with UBS. Xiaochuan Dai: Just on the gross margin for the business, it seems like it's remaining stable at 53%. But then the RLS business, the gross margin has been quite poor. So just thinking about the gross margin for RLS business moving forward, what are some of the key drivers of gross margin expansion for the RLS business that you can provide? Christian Behrenbruch: Well, I'll just make a comment, and then I'll invite Darren to chime in. So the RLS business -- so just to be clear, when we report the RLS segment, we report the RLS segment purely in terms of third-party products. So these are not Telix products. These are, for the most part, fairly generic nuclear medicine products. And RLS' operating cost is largely covered by delivering those third-party products. So a useful way to think about it is as a subsidized -- third-party subsidized manufacturing infrastructure. When we report the products that go through the RLS network that are Telix products, they are captured in the segmental reporting for precision medicine. So I just really want to make that very clear. So when you say the gross margins for RLS are not very good, it's got nothing to do with Telix's product portfolio. RLS margins -- because these are generic sort of fairly commoditized nuclear medicine products, they have a much, much lower margin. We provided an average margin last year, which I think frees a lot of people out because all of a sudden, we went from mid-60s margins down to mid-50s margins or low 50s margins. That was an average effect across all of the products in the group, including the RLS products. Does that make sense? Xiaochuan Dai: Yes, that makes sense. Yes. Christian Behrenbruch: So yes, so don't be sidetracked by RLS. The most important thing is that when we put our products through RLS, we -- that gross margin number, which we report faithfully for the Precision Medicine business as sort of mid-60%. That's our -- that above-the-line cost is our distributor margin, which clearly is different when we run a product through our own pharmacy network. Now it's critically important for us to maintain key distribution partnerships in key markets. So we obviously, do pay that above-the-line cost. But when we produce a product that goes through our nuclear pharmacy network, the gross margin is rather different. So you should expect to see, as we have a larger share of our product volume going through our in-house pharmacy network that, that gross margin number has the potential to improve and trend towards 70%. Operator: Our next question comes from Andrew Paine with CLSA. Andrew Paine: Maybe one for Kevin, but you mentioned winning in the PSMA is about executing at scale, and we've seen that in the growth and the challenges you've overcome in that market so far. You spent a bit of time talking about this, but how clear is it that moat -- how clear is that moat there for you given the potential competition on the horizon? And also, can you just dig into the changes in camera technology and how you see that as supportive to the sensitivity of PSMA imaging, which may not be fully appreciated? Christian Behrenbruch: Well, I think Kevin has done a great job of running through what the competitive barriers to entry, and there are multiple. I mean it's not just product, it's also clinical, it's also manufacturing and supply chain. So I'm not sure what competitor you're talking about that's coming immediately on the horizon. But nonetheless, we see those as, I mean, pretty well enumerated sort of barriers to entry for competition. On the topic of camera technology, generally speaking, we've seen a step change in sensitivity on PET cameras over the last 3 to 5 years because of the demand for PET imaging, not just in prostate cancer, but across a whole lot of indications, including neuro-oncology, neurodegeneration, cardiovascular disease. We're seeing a lot of camera installation going in and the next generation of scanners are in order of magnitude more sensitive. And so that just means that we have to keep abreast of it. We need to make sure that we're running clinical trials and clinical studies that demonstrate the improved utility. We are clearly detecting disease early and earlier. I mean, we have our most recent studies that were done in China, for example, with absolutely state-of-the-art scanners because they're brand-new scanners. We're seeing PSA levels down to fractions of a nanogram per ml. And so the camera technology is part of the complementary story to Tracer development that should not be forgotten about. I think I'll pause there in terms of that particular topic. There isn't too much more else to say. Is there another question? Operator: Our next question comes from Melissa Benson with Barrenjoey. Melissa Benson: So Kevin mentioned you had a full alignment on the agreed deliverables with the FDA for the... Christian Behrenbruch: Melissa, I'm sorry, I can't hear you. Now I can hear you. Go on. Melissa Benson: I'm sorry. So I think Kevin was mentioning there was alignment on the agreed deliverables with FDA, [ per the K ]. So I was just wondering if there's anything you can share regarding what those agreed deliverables are, but specifically, if there's any new clinical data required or if it's more preclinical analytical data only? Christian Behrenbruch: Yes. Most of the CMC remediation topics are around laboratory documentation, manufacturing documentation and process documentation. We do have a deliverable to the FDA around comparability between the research grade material that we used in the Phase III trial and the commercial scale-up material. But we have that data set well in hand, and it's not a material time delay to the resubmission. Operator: Our next question comes from Steve Wheen with Jarden. Steven Wheen: It's Steve here. So my question was just a bit of an extension of some of the others. But I guess for Kevin, I'm just trying to understand the European market with regards to Illuccix and Gozellix, I guess. Just they've been approved for some time. The launch in the U.S., obviously was incredibly rapid. And just trying to understand what's holding it back or slowing it to not really be much of a feature for your growth in the next 12 months? Christian Behrenbruch: Kevin, I can start and then maybe you can finish. I mean, it's not that it's not a feature. It's just that the European market has a very different reimbursement landscape. The U.S. has a much more immediacy between product approval and reimbursement, whereas in Europe, sometimes there can be as long as 9 or 12 months delay between product approval and reimbursement. And there's simply no material product sales until you have reimbursement. It's also not a class reimbursement. It's an individual product reimbursement in most countries. So until you have reimbursement, you simply don't have material sales. So for the -- what you would classify as the traditional EU 5 countries, we have only just received reimbursement in some of them. Kevin, I don't know if you want to add anything there? Kevin Richardson: Yes, there's very little other color to add in my prepared remarks, which was really 2025, the international team under that direction was really focused on gaining market access through reimbursement. And now we in that EU 5, the plans now are to execute those market launches. And so you'll see that as we continue to grow in 2026 as we execute against that launch. But Chris is right, in each country is different, each product is different. So it takes a bit to get that approved in the system and then begin the launch. So we're in the midst of that right now. Steven Wheen: Can I just ask an unrelated question just with regards to your R&D the expensing of Zircaix through the R&D line, is there a shelf life for that particular inventory just with regards to just noticed your comment that there is the potential once it's approved by the FDA that, that could then come back and be backed out of the P&L? Kevin Richardson: Yes, that's right. That's our expectation. And the shelf life goes far beyond the launch time of the product. Operator: Our next question is a follow-up from Shane Storey with Canaccord Genuity. Shane Storey: Sorry for extending the time, everyone. My question was going to come off the back of Melissa's question actually on Zircaix and except everything you've just said there. But just as far as how we should think about FDA's review phase once the resubmitted BLA is accepted, we've been sort of assuming 6 months. I just unsure how the breakthrough status and priority review might influence that, if at all? Christian Behrenbruch: Yes. We don't know yet for Zircaix. For Pixclara, we have a reasonable idea that it's going to be a rapid review also because it's a single a single issue CRL. We could imagine for the Zircaix review because there is a number of issues that it may take longer, but we haven't received guidance yet from the FDA on this topic. We will be engaging with the agency shortly on this topic as we are preparing to resubmit, but we won't know that information for a little bit when it comes to Zircaix. No worries. But I do note that it has a breakthrough designation. And I actually want to compliment the agency. They've been highly engaged, very helpful, very proactive. They gave us a lot of extra time around the Type A meeting that they really didn't need to do. So we feel like it's a pretty good collaboration, and we're working with the agency towards the drug approval and nothing less than that. Okay. I think I have a feeling that we're wrapping it up there. I don't know if there's any more questions coming through. Operator: We do have a final question, a follow-up from David Stanton with Jefferies. David Stanton: Saving the best for last. Chris, just I note that you've talked to a Part 2 interim analysis in calendar '26. I wonder if you could sort of give us any kind of timeline as to when that might be? Is it third quarter? Is it fourth quarter? What should we be thinking there? Christian Behrenbruch: Yes. Obviously, I get increasingly reluctant to estimate timelines on clinical trials because [Technical Difficulty] by like to the day or to the week rather than to the quarter. But right now, the Part 2 study is recruiting really nicely. We're seeing good site expansion and getting plenty of patients consented into the study. That interim analysis is based on about 80 or 90 events, I don't know the exact number, sometime -- somewhere around that. And we would expect that, that should lead based on the current recruitment trajectory for some time in Q4 of this year for that futility analysis to read out. So that's the reason why we have it sitting there in the calendar for this year. Well, I think that was the last question. I just want to apologize profusely to all the attendees for the audio challenges we've had today. It's a new conference provider. I'm not sure we'll be using it again in the future. But I just wanted to thank you for your questions and for your attention. Obviously, if there are follow-up questions, we'll be happy to receive them directly and follow up in due course. Thank you for your time today. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Hello, everyone, and thank you for joining the Megaport First Half FY '26 Results Webinar and Investor Briefing. We will begin with a presentation by Michael Reid, Chief Executive Officer; and Leticia Dorman, Chief Financial Officer, followed by a short Q&A session. [Operator Instructions] We have 60 minutes for today's call, so please keep questions short and to the point. Now I will hand over to the Megaport Chief Executive Officer, Michael Reid. Michael Reid: Well, thank you so much for the introduction, and welcome team. We've got an action-packed half year results for you. We've done a lot. So we're going to charge through it. This is the FY '26 half year results for Megaport. Now we're just going to open, we have not run this before, but we've got a bit of a slide key here. Obviously, in the half, we made 2 acquisitions. And as we present through the slide deck, what you'll see is each one of these will represent at the top right, you look at the top right of the screen, and you'll see if that's Megaport Network only, Latitude only, obviously, Megaport plus plus, et cetera, and this is the total group. So just remind all folks, look at the top right, think of this, and hopefully, it's pretty self-explanatory. So we'll be going through company highlights. financial results. Leticia is sitting next to me. We've got an acquisition and strategic update. We've combined the 2 of those, and we're actually going to spend a bit more time than what you normally would expect for a half year, given the 2 acquisitions that we've made. And we're also going to walk through how that aligns to the strategic view of the business moving forward and why we made those acquisitions. We're also going to spend a bit of time on guidance. Guidance has been a little bit trickier. Obviously, we've had movements in FX, but we've also got 2 other companies coming into the business. So we're going to give you a comparison of what we had with -- assuming there was no acquisition, and then we're going to break it down and finish the year with the acquisitions included for full transparency. If we look at the top right, what you'll see, just I won't keep drawing on about this, but in the top right you'll see that key. So this represents Megaport Latitude and Extreme, the 2 acquisitions inside the business. This is the Megaport Group annual recurring revenue. So we are a $338 million business, $263 million from Megaport, $68 million from Latitude and roughly $7 million in AUD ARR inside the business. We've broken 2 highlight pages, one being the Megaport Group highlights and the next will be the Megaport stand-alone, so we're giving you full transparency of the underlying business, and we have had an incredible run in that first half. Let's start with the group business. We said before, $338 million in annual recurring revenue. That's up 49%, $112 million year-on-year. And we closed, as you know, 2 acquisitions. We acquired -- we announced and closed in the half as we came to market in November, did the raise and actually announced both acquisitions. Latitude.sh, which is the $68 million of ARR, 22 locations, GPU, CPU-as-a-Service business and actually adding more and more innovation that I'm going to show you through a demo soon. We actually announced the acquisition of 40 -- a company in India that we didn't share the name, which was 40 data centers in India. That was for regulatory purposes. We acquired Extreme IX, which is the largest Internet exchange platform in India, something that we do in many, many countries. That gave us 40 different data centers with network, and we're going to talk through that further on, comes with $7 million in ARR and 400 customers. If we look at guidance, so let's -- there's a lot of -- we've spent a lot on 2 guidance slides, and we've also got a detailed guidance in the appendix, specifically covering FX and also the breakdown of each of the companies in there and how it's made up so that I think all analysts and investors can get their head around it. So Megaport Network original revenue guidance has been revised upwards. So the guidance that we gave at the start of the year, assuming no acquisition, we have revised the bottom end and tightened that range based on the success that we've seen through the business, and we're going to walk through that. And the Latitude.sh revenue guidance that we gave in November, we are reaffirming. So let's look at the highlights from a Megaport Network perspective. So this is, as you see, top right, the Megaport logo sitting there, $263.4 million in ARR. That's up 19% on a constant currency basis, $36.8 million year-on-year. There has been an FX headwind as the move between $0.65 to $0.70, which is why it showcases at 16%. The importance is that the underlying business has grown at 19% in constant currency, an incredible result from the team. And how about this? Net revenue retention by logo, 111%, up 3 percentage points year-on-year. Our net retention continues to grow. I'm going to talk about why we've seen that growth inside the business as we get through the deck. And also, let's talk about this customer lifetime. As we've changed the product mix and the types of services we offer customers, what we're seeing is customers taking longer-term commitments. And instead of just buying cloud connectivity, long-haul data center interconnect, complicated global WAN structures and you name it, and they're actually bringing all these new products, including Internet together. And our lifetime for the customer, this is a big deal. And this is -- for those who aren't aware, it's basically one divided by churn, has increased by 3 years. In effect, the churn is lower, and so our customer lifetime has increased. It's 13 years, which is outstanding. Now when you flow that number forward and you look at your lifetime value, your total lifetime value, which is a mixture of the lifetime and the average spend per customer and your margin wrapped into that, we're up 57%. That's a $2.5 billion total lifetime value, and we've got a slide to sort of share that, and we'll talk more about it. You can see our annual recurring revenue breakdown. Again, this is Megaport's stand-alone business or the Network business, excluding acquisitions. You can see we continue to grow that annual recurring revenue fast. You can see the breakdown of Americas, Asia Pacific and EMEA as always. Let me state this, the Americas and specifically the United States really is on fire. They're growing at 24% inside that business, and that's where we've been investing for a lot of growth. We're seeing an incredible opportunity for us there, and it's continuing to grow, and we're not even scratching the surface. And if you look here on the right, what we've shared is the net or the incremental ARR additions. And you can see this is the largest ever year-on-year ARR increase. This is astounding. You can see this just pushing up and up and up and to the right. So we are incredibly happy with how the team has performed, and we're going to go through more of those details. It's not just about expanding the existing base, and that it's super critical that you do that. But if you're not adding net new logos, you've fallen out of product market fit. And this is where we've seen that in sort of the full year, you saw that massive jump in new logos. We have actually had a 100% increase in new logo growth compared to the prior comparative period. That's important because seasonality rolls throughout the year, and this is a representation of the fact that this wasn't some lucky sort of H2. We're actually growing and continuing and year-on-year, we're up 100%. That is an incredible result from the go-to-market team, but it's a mixture of 2 things, products that actually resonate with the market and the go-to-market team that we've invested to take that out to market. And that crosses all areas, channel, frontline sales, STRs, customer success, you name it. So congratulations to the Megaport team there. This is a slide we've shared in the full year deck, and it's actually just continues to astound. It's actually, I think, what we've been hoping to see, but it highlights the fact that the investment in engineering talent and all of those products that you've heard us sort of constantly refer to bringing out in that period of time sort of FY '24 period, all of that has come to fruition and 30% of our ARR growth is now attributed to what is new products. The underlying business is still growing fast. But on top of that, you get this growth from new products, which just highlights the importance of continuing to invest in new products to add to the space. And I've got a slide in the strategy section that will sort of drum this one home, but you can see what a dramatic increase that has had in H1. So outstanding result from the engineering and product team and great job again from the sales team for taking that out. Total lifetime value, we shared that prior, and we highlighted the fact that customer lifetime has gone from 10 to 13 years. You can see that, that is a marketed shift upward. That is -- if you look at it, we made quite significant changes in the business in terms of how we offer contracted services, the types of services we take to market. We did some significant investments in the network and sort of -- I'll show you on the next slide, but we've sort of been going on about the investments that we've made in 400-gig backbones, 400-gig networks, so we can offer 100 gig just about everywhere on the planet as well as rolling out massive, massive speed in Internet. All of these things bring through significantly longer contracted business and also much higher ARR lands. And so that's why you've seen our ARR per customer of the 3,000 customers inside the Megaport business, this is excluding the acquisitions, is up 6% year-on-year. You couple that with that lifetime increasing and then you actually have this $2.5 billion increase. So again, testament to the health of the business in every metric you can think of going incredibly well. This is a bit of an eye chart. It's always astounding to sort of think that this isn't a full year. This is only 6 months of execution, but worth pointing out that we continue to execute against the strategy, which we will talk through further, but we break that down into build, innovate and invest. These provide the pillars to increase TAM and go-to-market. If you look at build, 51 data centers added. We're now -- we crossed in this half, actually, we forget because we celebrated in August, but we crossed 1,000 data centers globally. We're now at 1,034. We added 5 new IX locations. We've actually on-ramped in effect, 11 direct connects into Latitude to the compute platform that we now have. We've got 11 new cloud on-ramps to 344. It really is cooking with gas there. We added 2 Internet markets, Italy and Sweden. That's all the regulatory components coming off. We've got pretty much the majority now. We lifted Internet to 100 gig in 16 metros. In fact, when we first rolled out Internet, we weren't sure how successful it would be. It's been so successful, and we thought it would only ever be at sort of 10 gig levels. But for the last year or so, we've been rolling out big 400-gig machines. And so you can get 100 gig in 16 metros. And it's astounding to see how many enterprise customers are taking that up. So we're not stopping. We're continuing to build that out globally. 100 gig connectivity. So this is -- when I first joined Megaport, the fastest we could deliver was 10 gig anywhere. And then we had -- now if you look at it from 802 data centers, we can deliver 100 gig in 60 seconds, quite astounding. There really is nothing else like it. Let's talk about Innovate. Cam and the team have been working incredibly hard to deliver some pretty impressive enterprise-grade security features. We rolled out IPSec, which is encrypted tunnels on the MCR. Packet Filtering, which is like control list on that platform. We're going to continue to expand our investments into security, and you'll see that in the second half. We added console access for MVE. We added probably one of the most requested MVE images, which is Meraki. We've got Juniper and Anapaya, 36 countries, 7 languages. We added 400-gig ports, which is really interesting. If you remember, when we launched, we were always 10 gig and 1 gig. We added 400 gig ports and actually had immediate customer adoption. So the amount of utilization out there is quite astounding, and we'll talk through that even when we look at sort of what AI is providing from a tailwind, but just quite astounding now. What's important is that we continue to build to support that. Acquired 2 companies, we're going to go through that. we continue to invest in go-to-market. We're actually doing some pretty cool stuff with DWDM, which is like if you get your propeller and want to hear that spinning, we're looking at rolling out DWM for the first metro and then doing that across many. Cam tells me this is a really big deal. And then we've upgraded the backbone capacity to 400 gig to 8 countries. Now what does that mean? We're getting subsea connectivity at 100 gig. And this is where we get massive ARR for single VXCs, and that's really, really -- it's exciting. And the last thing, and I'll point this out just more broadly is people, I think, carry on that AI is changing all their business, and it's hard to know what I think some businesses is real and what is not. In our case, we're not someone that sort of just [ spruce ] this out there. We are seeing tremendous assistance like most companies for AI in the development space. So when you look at adding [ Claude ] into this, the efficiency of the development teams is phenomenal. But also what we're seeing, and this is more for everyone's kids out there, if you want to study something, I'd call it prompt engineering, AI prompt engineering. Folks that don't even know really what they're doing, but they know how to prompt the AI, we're seeing these folks come in and just do some incredible speed and change so many things inside the business very, very rapidly, particularly on the engineering front. All right. I'm going to pass it over to Tish, our fearless CFO, she's going to slide in here, and we'll go through the financial results. Leticia Dorman: Thank you, Michael. So financial results for the half. So I said it happening. We had 2 acquisitions as well as the underlying business of Megaport. So what we've highlighted here within the EBITDA is largely Megaport and the Latitude acquisition. Now Latitude, we acquired -- we announced, did a capital raise early November. On the 26th of November, we closed it. So you will see 1 month of results in here as well. So I did want to highlight that. Revenue, I know Michael has talked about that. However, it does come through in the numbers clearly. You've got the strong expansion with NRR with the continuing investment within the existing customer base. We've got the growth in new logo acquisitions, and those 2 combined results in strong revenue plus the inclusion of the compute revenue from Latitude. Partner commissions continues to stay relatively consistent at 11%. Direct network costs, now we've got IFRS 16 in there, which I know some of those on the call do enjoy talking to me about, so I'm always happy to talk about accounting standards with anyone. However, what we look at is across kind of a net-net basis of that regardless of accounting treatment because the focus of the business over the last 18 months has been that global backbone rollout to 400 gig, which has been led by North America in particular. So if you exclude IFRS 16 from both this half and last half, it's consistent. Employee costs, we've been -- I think we've hired quite a few folks. And so you will see in here that is continuing to be planned. You can see that rolling through in the numbers. And that is to support the accelerated revenue growth and then the related spend associated with those new folks coming on board. In terms of other operating expenses, you've got your sales and marketing event activities, which you can clearly see in there as well as travel and some IT costs associated. Now EBITDA is one thing to notice, great Tish, you've got an EBITDA margin of 26%. That does include the Latitude 1 month. And I just wanted to highlight that the exit margin for Megaport Network business of 21% is in line with guidance and really reflects that timing of our planned investment, which we'll talk about further in the guidance slide and happy to take any questions. However, I did want to highlight that as well. Now the cash flow, a lot of things happening in here. So I've tried to break it down clearly within the text, but I'll just go through it quickly. The operating cash inflows have increased. That is purely due to the higher customer revenues during the period and the 1 month of the compute or Latitude.sh results. The investing activities, you've got some acquisition payments and you've got also the CapEx payments, which are related to the planned delivery of equipment. Within the appendix, we've provided the breakdown for CapEx for the group. So you can clearly see what that has been on, and you will see that it is to do with the supporting the expansion plans and including the planned delivery. Financing activity inflows, you can clearly see that, that's largely driven by the capital raise that we provided earlier in the year -- late last year. One thing to highlight is the net cash flow was an outflow if you ignore all of the capital raising and acquisition activities, was an outflow of $10 million or under $10 million. Now that reflects the planned expansion, hiring of the go-to-market as well as the CapEx spend and the investment in the front ending of the ordering of equipment. So that is one thing I do want to highlight to the group. We've talked around headcount previously, particularly at the last year-end time that we came to talk to you. We've got here the sales and marketing continues to be a clear activity that we invest in, and that's moving upwards, continues to. Product and engineering is a big focus area, particularly with Cam hiring across the world, hiring the right talent. And G&A continues to stay steady as a percentage of revenue. So this is how we look at the investment of the business for headcount. And this is just Megaport stand-alone at this point. I'm going to hand back to Michael. I've done a quick snapshot of financials, but over to you. Michael Reid: Beautiful. Good job. Thank you, Tish. All right. So we're going to go through the acquisition and strategic update. So this is where we're going to look at some of the strategy around the business and also talk through a bit more detail on the acquisition. We're going to run a bit longer than normal just because there's a lot to go through. The first slide is something that I probably didn't expect to be adding to the deck, but this is a lot of inbound questions. These 2 questions have been coming certainly with the way markets have moved and sort of everyone is trying to wrap their head around, I think, are you a company that benefits from AI and are you a company that can be disrupted rapidly by AI. I just want to sort of draw this for all shareholders and anyone that's either new to Megaport or even knows us well. First question, I'm going to sort of just point this out, is AI benefiting Megaport? The answer is yes. And that is why you've seen such outstanding results in that first half, particularly driven in the United States. AI is very, very strong there and the rest of the world is sort of starting to catch up. But really in the U.S., it's cooking with gas. It is providing what is a very strong tailwind for us. So AI is driving significant movement of data. So if you think about it, there's huge amounts of data movements as you start to either send your data to AI, to models, whatever it may be. And the other piece is it requires large amounts of processing by compute and GPU. So the 2 parts of our business, both network and the compute and GPU businesses benefit strongly from AI. I think that's obvious, but it's just worthwhile sharing it. The other piece I want to share is that Megaport is a software-defined physical network and compute. We use software to automate physical things that live inside data centers all around the planet. The last one on this is you don't have to pick a winner. Megaport is never looking to pick the winner, and there's lots and lots of changes that we see all the time in terms of deals. We are the picks and shovels for AI. As often people would say, you're like the overnight success, but 13 years in the making. And so we've been building this platform for the past 13 years to land literally in the exact right place with the right platform at the right time, there's almost no one else in the planet that can do what we do and certainly no one that offers what we do on a global scale. So we are absolutely a beneficiary of that space. We built the cloud component and the AI piece, is actually playing out in a very similar way. So the second question, which is, well, hang on, can AI disrupt Megaport like these software-only providers. Now for a few years now, I've always said it would be always tough being a software-only CEO with all the disruption happening in AI. And it's why I'm a huge believer in Megaport's business because it is the beautiful mix of both software and hardware distributed at scale. So the answer is no, we won't be disrupted by AI because of one important fact, and that is we are physical. It's a bit of a sort of a lot of physical words here, but just to sort of drum that message home, we move data via networks and we process data via CPU and GPU. Both of those are physical. And to put that in perspective, we have a software layer that runs across this physical IT infrastructure, which can't be replaced by AI. AI is not so good with atoms, not yet anyway. And so if you look at it, we've got 320,000-plus routes of physical fiber, 320,000 physical routes. We have 3,000-plus physical network devices. They live in 1,000-plus different data centers. We now have 7,700-plus and growing fast physical compute servers and GPUs, and we deploy them in 30 physical countries, not just deployed by some SaaS platform that lives on AWS, but actually in the country. And then on top of that, we have all the telco regulations and licenses, which is not easy. All right, I think I've drawn that message home. I've shared this slide a lot. I won't labor it too much, but we -- I want to keep this -- keep reminding folks -- we make all strategic initiatives based upon these guiding principles. That includes innovation and product and acquisitions. We obviously made 2 acquisitions, but I'll just remind folks, this is the secret sauce that makes Megaport strong and so too with Latitude and any other business or product that we want to look at. And the answer is, let's start with automation. Automation is the key, and it's not easy to do. And that's the software automating physical infrastructure. You can automate it, you can make it instantaneous. If you can put it at a global scale, you can actually deliver a global service to customers. If you make it the most resilient and then on top of that, make it flexible. You can buy it monthly, hourly, whatever it may be, 60 months, you name it. If you then can make it self-service, but with a really cool GUI and make it really easy and then you provide the best support, the pricing is disruptive, and somehow you do all of that, you make it profitable, you have got an incredible company. And that is what Megaport is, and it's also exactly what Latitude is from an acquisition standpoint. The strategy from Megaport's perspective remains the same, and we constantly share these, I guess, the rings of total addressable market. So for those who have not seen this slide before, on the left, if you look at these rings, each ring represents a product set and a total addressable market that we can go after. And we started with cloud connectivity. We added Virtual Edge, then we added Global WAN, Data Center Interconnect, [ DC Ethernet ], NAT Gateway, security. That slide I showed you before about the growth in new products. These are the new products that are driving that. We just added 2 new rings. This unlocks significant TAM for all Compute-as-a-Service and GPU-as-a-Service, and we're going to continue to add rings in the second half as we announce new products and new innovations that we're going to bring. On the right, if you look at the pillars for growth, we talk about build, innovate and invest. Building is expanding a ring. It doesn't necessarily mean that we're adding a ring. So a great example is new data centers. Every time we add a new data center, we increase the TAM of all of those products. Every time we add a new market like India, it's the same component or when we added Brazil. And then we've got expand capacity by going, as I said before, from 10 to 100 gig to 400 gig and now we offer those services. That expands the TAM inside those rings. And then we're going to continue to expand compute and GPU offerings, so different types of SKUs and obviously, significantly more and distributed in all those different locations. Then we look at Innovate. We are going to constantly build and you saw the hiring that Tish shared around the innovation team inside both network. And I've shared also security being a big play for us. Those 2 sort of become hand-in-hand. And then if you look at the CPU and GPU innovation, in the demo coming up, I'm going to show you some of the really cool stuff that's already coming out, particularly in the AI innovation space. And then we look at Invest. We are expanding product and engineering. As I mentioned, we're investing in that space. We will continue to expand go-to-market, particularly as we service and take these products to market, which is why you're seeing so much great results in that side of the business. And we'll always explore strategic acquisitions. But always, those strategic acquisitions will line back up to what we shared on the previous slide, which is the strategy that we look at around the investments. So we're going to quickly go into the Latitude.sh acquisition. We shared this in November, but it was a quick session when we did the capital raise, very successful capital raise, and thank you for all your contributions. I think we had 30 minutes from memory to sort of bounce through this. So Latitude.sh is a Compute-as-a-Service business. It provides high-performance CPU and GPU in key markets worldwide. It's very simple to use. It's very API-driven, just like Megaport, incredibly predictable billing unlike what you would have in the cloud and flexibility to deploy workloads literally on demand, super important. Massive global scale, totally automated, rapidly growing and then have actually been very strong from a product-led perspective. All of this lands inside those -- the strategy that we had from a business perspective. If you look at the ARR, well, what does it look like? Where were they based and how does that play out? 10 countries and 20 locations when we acquired, I think they're at 22 today. We'll continue to grow. The U.S. represents the vast majority at 50%, Europe at 20%, Asia Pac at 17%, LatAm at 13%. It's at $45 million ARR as at 31st December '25. Okay, who does it service and what do these customer use cases look like? There's 2 parts of the business today. And actually, I'm going to show you how that will change in the future as well. But there's compute and then there's GPU. If you think of compute, what you need for a bare metal platform such as what Latitude has produced, high-performance compute is not something you get delivered inside a cloud, and it's hard to run and build yourself. So in the middle, we have these incredibly high-performance compute and very large network stacks, which deliver blockchain Web3 as an example. These are financial service rails as an example, using blockchain to transmit via Solana as an example, say foreign exchange for enterprises. And they use up huge amounts of compute and network, and it needs to be distributed globally. Enterprise applications that are not optimized for cloud cost a fortune in the cloud or don't perform how you need them to perform. And so what you have is an ability to run incredibly high-performative applications that don't sting you with all of the API calls and so forth in the cloud. And so then you've got SaaS applications that need high performance at the edge. If anyone has a kid who loves Fortnite or gaming, you'll know what latency is and the importance of having edge compute that process fast with very low latency for gaming. We've got some incredibly interesting gaming companies that actually spin up actual compute platforms for the gamer themselves, really interesting. And ad tech is, if you thought gaming required speed, ad tech is even faster. It needs to show the ad as fast as Michael Reid is looking at this website, he's interested in a new surfboard or whatever it may be. I'm not that good surfing to be clear, but let's just say a really long surfboard because he's not that good at surfing and they need to show that as quickly as possible. That's ad tech. And then we go into the streaming element as well. So that is some of the use cases that are really, really big in the CPU-as-a-Service. GPU is a big market. And so if we look at inference being how we access the AI, and that is like ChatGPT. When you access it, that is inference. When you train ChatGPT, that is the giant data centers that you're seeing build out to sort of the hyperscale and then you've got this fine-tuning element where you take a model and you fine-tune it for enterprise. I'm going to show you in the demo something really interesting. Let's jump into that because it's like, well, Latitude's had this history of product-led growth. And I shared that not only is the platform incredible, but you've got to be able to access it and make it simple. So we're going to play to the demo guides and so forth and just see if I can switch this machine over. And I'll see if I can -- all right. Steve is telling me to keep the demo short because he just -- he knows that I love it. Can this be seen? All right. First thing, you're welcome to the Megaport portal. You're used to this. You can see all these different locations in the U.S. Everyone represents a data center that we're in. This is cool. So we've now landed in India with that acquisition, so 40 different data centers live and you can start ordering there. Now if you jump out of that piece and you look at the top left of our portal, we can click on this particular piece. And now you can see the option between network and then compute. So Latitude.sh, we can click that component. And now we're in the Latitude.sh platform. And here is one I have prepared earlier. We look at projects. This is the portal that we look at. Here's a live demo to shareholders. So we'll go and click on to that project. And just like Megaport, it says quick click to create a server, and we've got some really interesting things down here. So we can create a server. Now when we acquired the business, there was bare metal, bare metal GPU and GPU VMs. But very recently, and I don't know if you've noticed, but we now have CPU VMs. This is virtual machines running across the infrastructure, a super important innovation inside the product. So you can actually click on the CPU VMs and bring down -- we only have a few locations today, and we'll roll these out to more. But you can choose a very tiny virtual machine at $0.07 per hour, which spins up a virtual machine with Ubuntu, run it for hourly at $0.07 and you can click deploy. And that is as hard as it is to run a virtual machine is staying to schedule there. I'll move back to the bare metal component and make it quick because Steve's on me. And this is my fun bit. So we'll go to the bare metal component. If we look at North America, South America, Europe and Asia Pac, these are all the different locations. We'll choose Ashburn where the clouds live. We have physically installed compute infrastructure that sits in all of these locations. They are available to deploy. There are different levels. There are entry-level core optimized, memory optimized, storage optimized, you name it. Let's choose a big guy. Roll down. What's amazing is the platform is constantly looking at what infrastructure is there and what is the likelihood of using a certain operating system. Remember, this is bare metal. So it is actually your entire server, and it will preload an operating system into the ones that are available or some, and then you can choose to deploy that. So we'll choose $3.52 per hour, no RAID, pick a name, blah, blah, blah. You click deploy, and it will roll up on the top right here, and you can start to see that being deployed. So that one is getting deployed. Now if we go back down here, you can see that's now on. So that's your 5 seconds of deployment. Last thing I want to show you. So what we've done is we've deployed a bare metal machine physical. We've deployed a virtual machine, which is now running over there. And we're going to go to this thing, which is so new that no one even knows it exists, and this is AI inference, but I did want to show the team what this thing looks like. So this is where we're actually deploying model as a service. And so if we click through to the different playgrounds and API -- create an API key in here. So what we want to do is create an API key. We then grab a model, an AI model, our own open source model, and we deploy it in our own physical infrastructure, so you've got total control over that. So you can go and create a key, we call it a test, grab that key. Which one was that? Okay. Now I've got a copy of this. It doesn't matter if you copy it from a security perspective, I'll be deleting it after for those worried. We go under the playground. And now what you can see is at the top left here, you choose the AI model you would like to run, your own private model that you control the data that's going into it and the compute that it runs on, so it cannot be taken. So let's choose [ LAMA ], for those of you familiar with that. We paste the API key in the top right. And you are all familiar with this. This is where we now write our question, write a launch e-mail for our new inference endpoint. You click enter and it will start generating. So what it's doing is it's asking this question to a LAMA agent that is -- so think of an -- look, it's already done. It's amazing. Think of an enterprise that wants to control the use of all your data and you want to upload that into a private instance that's sovereign that you have total control over and actually no one can steal that data. All right. Steve is telling me that's enough. There you go. I think that's really cool. I just want to show you one last piece. Ignore that. I'm going to delete these servers because this is the important part. We're deleting the server, you copy and paste is back in here. And what has it done? It goes through a process of wiping that server and making it available back in the pool for someone else to use, 100% autonomous, totally delivered via code and delivered via a portal like that. Very cool. All right. You can see we're excited about it. Now I'm going to get back to the presentation. And we're back. All right. So people are saying, why did this make sense? This is the next logical step for Megaport. We shared this in the presentation. The reality is -- can somebody fix my laser pointer. We were the kings of network and are the kings of network. What -- if you look at IT infrastructure, they're made up of 3 pieces of the puzzle. In fact, every application you have ever used, excluding ChatGPT or AI lives on network, storage and compute. The compute element comes with Latitude.sh. And you can see that we're missing a piece of this puzzle, and you can probably imagine that, that's something we're working hard to go and release as well to finish the trifecta of both -- of all the IT infrastructure. I won't go through the pieces on the right. We shared the 100-day plan. We're a few months into the acquisition as we are today, progressing as expected, and we're really, really thrilled to have the team come on. It's actually probably progressing better given what I've just shown you from an innovation standpoint, 2 major innovation releases between when we acquired and when we landed. So a big shout out to Gui and Eduardo and the entire Latitude team for bringing that. I won't go through this. We'll talk through it if you need on the call. The last piece was we made an acquisition into India, which is the Extreme acquisition. Why? Well, it's the fifth largest economy. It's the most populous country in the world. The real reason is we had massive demand from all of our global enterprise customers, 3,000 different customers asking for us to get into India. It's not easy to land regulatory purposes and actually run the network is difficult which is why we've acquired to land. It comes with $7 million in ARR. It's accretive to the business, 400 active customers, 40 data centers. Now we're rolling out infrastructure to retrofit all those sites with Megaport-grade infrastructure, and then we will offer all those services as soon as possible. We've shared this slide. The strategy has not changed. I won't go into too much detail, but you can see where we've landed. We're in the transform and reset phase. We've been rebuilding go-to-market at the full year, we announced that. We've done incredibly well against that. We're landing within what we've told the market from where Tish shared. You've seen the product. The net revenue retention hasn't stabilized. It actually increased. So we're doing well there. Revenue is up. We'll land at the end of FY '26 and into this accelerate revenue phase where we'll capitalize on that prior investment, continue to expand the TAM. We're going to grow the market share. We're going to continue to invest in revenue with revenue growing faster than costs that remains inside the business, and we're going to accelerate revenue through investment constantly. And then as we get to the future, it's going to be a fairly large. I mean we'll be at significant scale in FY '30 and beyond. We'll be a global leader in infrastructure as a service powered by software with 20% sustainable growth, highly profitable, converting scale into sustained profitability and free cash flow. All right. Guidance. Let's do it as quickly as we possibly can, even though there's -- it's a little bit complicated. What we've given you is 2 slides. This is the first one. As you see at the top right, Megaport Network only. This is the Megaport network updated guidance versus the original. Remember, there's an FX component, and we've also had 2 acquisitions. We've excluded the 2 acquisitions, and we've kept constant currency, so you can see how the underlying business is performing as we predicted. It's at $0.65. We originally had revenue at $260 million to $270 million. We've raised the lower end of revenue by $4 million based upon the success we're seeing inside the business. We've held EBITDA margin unchanged. We've held CapEx unchanged. And so why would we up the bottom end? Well, we've seen outstanding performance in ARR, up 24% in North America. We're seeing net retention up 3 percentage points, and we've got sustained growth when we look at new logos. It's pretty obvious, but that's why we've tightened the bottom end of the range, and we're confident there. As we said, there's 2 material changes being the AUD to USD and the 2 acquisitions. So then you're thinking, well, Michael, what does that mean for us? Great news. We've answered that test, too. And so we've gone, all right, let's give the combined group updated FY '26 guidance. We've got it at $0.70 AUD:USD. We're not saying that that's what it will be for the entire half. We don't know what it will be, but we're certainly telling you what it looks like as we see it right now. And we've also given sensitivities on FX. We've also given great detail, if you want to break down because we've added 2 companies and the 3 companies coming together in the appendix. So $302 million to $317 million in revenue, 21% to 24% of EBITDA -- of revenue -- EBITDA of revenue, $90 million to $100 million of CapEx. That includes the tightening of the raise of the bottom end of Megaport unchanged for compute for Latitude from what we shared in November, so no surprises there. We've added in about $3 million to $4 million for the Internet Exchange business we acquired in India. We've also included the CapEx to go and roll out that hardware. Worth highlighting that the maintenance CapEx on the combined group is actually less than 2%. And so if you look at it, pretty much all the CapEx we're deploying into these is growth CapEx. And lastly, just to point this out, the sensitivities, just to give you perspective, there is detail further on, is we're at $0.70. If you look at a $0.05 movement, that is a $9 million -- so when the U.S. dollar weakens, that is a $9 million reduction in revenue for the business. All right. We made it up to questions. Let's do it. Operator: [Operator Instructions] Our first question comes from Nick Harris. Nick Harris: Congrats. Great to see the core business, in particular, flying. I'm pretty excited to see that NRR continuing to lift. Just trying to unpack that. Could you help us maybe understand what's happening behind the hood or under the hood there. Specifically, are you lapping a really poor quarter 12 months ago? So it's just the mathematical average getting better? Or is the front of the -- like the Q2 FY '26 pulling the average up -- as in -- Michael Reid: Average in what? Nick Harris: It's a trailing 12-month NRR, right? So... Michael Reid: NRR, sorry, I missed that. Nick Harris: Got the keyword, NRR. Michael Reid: Yes, no, I was thinking which metric. It's good. Maybe you said it and I missed it. Okay. So NRR -- so back -- I think we've shared it a few times, but the net retention inside the business is lifting for a number of reasons. One, the U.S. really is on fire. So we've seen massive expansion inside the United States, in particular customers. Globally, we're strong, but the U.S. really is quite impressive. I'd say, again, back to that AI tailwind. We're selling services that are very different. So if you remember the journey we've been on, we used to be this tell story of like we're just a cloud connectivity company. And if you think of selling a connection to a cloud, that could be a $100 connection. We've seen million dollar single VXC connections. Think about that. You can either sell a single connection to a cloud at one connection for $100 or you can sell a single connection, subsea, long-haul Global WAN across the subsea, basically long haul at 100 gig, and you're looking at $1 million in ARR. I'm just giving you a perspective that by changing and adding these products, you will get your net retention expanding because you're selling much higher value services into the existing customer base. And the other piece is there's a tailwind around what companies are doing. So everyone is trying to innovate their businesses and move forward. And so people are making moves to spend things, but they're doing it at such massive scale. And that's why we've said like data center Internet is a really good example, such a simple product, but so important and actually helping us drive that. So what I would say is 2 things. It's the fact that we've now got a serious go-to-market team deployed and mature globally. We went to a -- I mean, we had an off-site in North America for the sales kickoff, there's 150 people that turned up. When I first came, there was 4 people and one customer success person. It's a really big change. And so when you've got that customer success team and new products and a market that makes sense, you get massive expansion. Europe is doing well for us as well. Asia Pac, I think, has been a little slower just because I think they're trying to figure out what's going on with AI, but we've still got growth in those areas. So if you sort of throw that through your lens, then you get the outcome. The U.S. for us will always be the largest growth and the largest opportunity, to be clear, which is why we're investing strong there. Operator: Our next question comes from Eric Choi. Eric Choi: Would it be possible to ask 2 number questions that are kind of related to Tish. Sorry, Michael. Just one on FY '26 and FY '27. Just on FY '26, just trying to unpick what's changed in EBITDA guidance. So can I just confirm if you took your comments in November and if you added 7 months of Latitude, we should have been getting about $73 million of EBITDA. And today, you're guiding to about $70 million. So it's really only a $3 million difference. And then of that, I think you can work out about $2 million is FX, and then there's another $1 million, which is just extra Latitude investment, but Latitude revenues are in line. That's the first one. The next one, Tish, or... Leticia Dorman: Yes. Eric, that's a good question. So we kind of -- we highlighted when we acquired Latitude around the 50% EBITDA margin. Now again, in terms of -- they didn't have a particularly large go-to-market team. And so part of that is investing across both to make sure that we are able and set up ready to sell the compute. That's really critical. So we've built in that. But don't -- the target is to -- particularly into FY '27 is to try to get to that back to -- well, we will get back to that margin. But in the meantime, we've got to invest to be able to grow. So similar story to Megaport. Eric Choi: Good stuff, Tish. Just on '27. Very helpful. Just if we extrapolate current trends for the core business, $111 million NRR, you're doing about 8% land. And then if you take the earnouts that you've got for Latitude, I just want to confirm that kind of suggests a $450 million revenue number, which would be above consensus. And then like in that scenario where you're getting earn-outs, should we assume you keep reinvesting, therefore, we shouldn't assume much margin expansion for each of the divisions into '27 besides Latitude. Leticia Dorman: I think just make sure you're not just taking the top end there, to make sure you're taking a midpoint. We want to. We will continue to drive forward to earn those -- to ensure that the Latitude founders earn out that because we earn that revenue. But just in terms of modeling, I never like to go too -- don't get too ahead of yourself just yet. Operator: Our next question comes from Andrew Gillies. Andrew Gillies: Really solid result. Great job. Just a quick one on Latitude, probably for you, Michael. Like that transaction has been presented ex synergies, but presumably, all of your network customers buy compute, particularly in North America, where you've had a really strong underlying revenue growth or ARR growth number. You've got those existing relationships with the telco service distributors. Like I appreciate you're not disclosing a number, but are there some low friction sales opportunities there that could help expand NRR? And then can you maybe touch on sort of Equinix Metal. I've noticed you've got a new section on the Latitude.sh website. There could be a direct opportunity there as well. Michael Reid: Yes. Great questions. We didn't model the business with synergies. I spent 6 years at Cisco acquiring a bunch of companies and synergies is a dangerous thing to just add into this. Sort of like you solve the equation with miraculous synergies. The way the acquisition with Latitude went down was actually they weren't looking for an acquisition. They were just looking for some investment into the company so that they could actually get some CapEx expenditure. And so they had a business plan that was related to them not being acquired and just running as a stand-alone company. And that business plan is what we've basically acquired them against, without any synergies built in, without -- and giving them a stretch ability if they go and succeed beyond a certain point to earn additional components beyond what their original planning was and then allowing them to get to that component. That is excluding synergies. So the point was, well, you need to build that business as it is today and continue to expand. The reality is it's up to us to go and take those synergies ideally and then leverage that across the business. So it should, in theory, be cream on top, if you think of it from that perspective. But what's important to call out is it takes time. So I'll give you an -- and we've been on this journey. We always say it's an 18 months. You start hiring enterprise sellers today. You start building the platform to deliver more enterprise style services. And then you start selling that, it's a 6- to 8-month -- I don't know, could be a 9-month ramp in terms of compute. We'll be finding that out. And then you end up revenue in it. So if you think about it, it's revenue that's in their targets, not ARR. And so it can be a delayed approach. That said, we've already hired, I think it's 5 or 6 frontline sellers. And if you look at -- if you sort of follow us on LinkedIn, you'll see that these are high-end Equinix bare metal sellers in North America and in Asia Pacific, including solution architects, customer success managers and frontline sellers. We landed those folks in December, which is astounding. So the team's worked incredibly fast. When we announced the platform, the acquisition, we actually had a huge amount of inbound. It turns out that bare metal and compute sellers are passionate about this space. A lot of them reached out and said, well, actually, to the Equinix bare metal when they've turned that off, they love the platform and could see how valuable it was and could see that Megaport was serious about it. And so we've actually got these folks coming in. So that said, they become an overlay sales force to the existing sellers at Megaport. And your point is totally true. The conversation is that Megaport connects folks that are connecting compute between data centers and the cloud. That's what we do today. So the next obvious question is, hey, did you know we had a compute platform, would you like to explore opportunities to either save money or get better performance or whatever it is. That becomes a sales motion, you push that through the machine. So that is the synergies that we would expect. But hard to model that in the short term. We need to build that out, and we're already building. I mean we move fast, if you haven't figured that out. So we -- I'm bullish on that space. Yes, the Equinix Metal piece, I think they've sunset that platform, but it's proving to be a great opportunity for us. So it's a good outcome, particularly with hiring and with customer opportunities. Operator: Our next question comes from Siraj Ahmed. Siraj Ahmed: Just maybe actually a follow-up to Andrew's question right now. Just the Latitude momentum, right? The ARR as of December looks like they only added $2 million in the quarter, so a bit slow, but you are guiding to revenue of $25 million to $30 million for the half. Just keen to hear what gives you confidence? Was it a bit delayed, right? Maybe it's the Equinix piece, et cetera, would love to think of the drivers for the Latitude. Michael Reid: The most important driver for Latitude is having access to compute that is available for customers to consume. That is the key. And Latitude is was -- if you looked at them, very much a start-up style business, capital constrained, went to market in, I think, I want to say, March, looking for capital. Obviously, we went through a transaction, and it takes a long time to get that through. So I would say it delayed their ability to procure infrastructure throughout that time. So it wasn't available during that quarter. So if you don't have product availability, you can't sell anything. So that is a pretty sort of an obvious but critical statement there. And since that, we've been ordering infrastructure to build out across all the sites, and we'll continue to expand sites. So that was easily to see and to understand why purely because of a compute -- hadn't deployed compute in that time. Hopefully that makes sense. Siraj Ahmed: So that's super helpful, Mike. But I think they got about 1,000 servers last month, right? So maybe you're already starting to see that come through. Is that fair? And should we be thinking maybe this half it's more towards the lower end and then it ramps into next year? Michael Reid: Yes. So there's a few factors, and we've shared this. There's a ramping period of time from when the servers are received, installed and then the software layer is added. So they're actually published into the platform. And so just because you've ordered something, it doesn't mean it's available for a customer to use. And just because it's available for a customer to use doesn't mean it's revenue and you need to obviously ramp that. And so that's why I think we shared there's a ramping profile from when infrastructure lands to when it gets deployed when it comes in for a customer to utilize it. And the tricky part is lining up -- when infrastructure is going to land is always tricky. Well, it's become more tricky at the moment just because of supply chain. So there is -- it's not clear to get exact date. So to predict an exact date when you're going to get something and then predict the exact ramp of utilization is tricky. So what we have is a range around that depending upon those factors. Some of those factors are out of -- obviously out of our control. The one thing we can control is what we order and order as soon as possible to get that built out, particularly given supply chain. Hopefully, this just gives you a perspective on it, which is why we have a range. Operator: Our next question comes from Tim Plumbe. Tim Plumbe: My question is just around the go-to-market hiring process. Mike, can you give us a bit of a sense in terms of how far through it you are? And then once those guys are up and running and at a mature level, is there a way for us to think about average ARR contribution per salesperson? Michael Reid: Can you say the first data market -- sorry. Leticia Dorman: Go-to market. Michael Reid: Go-to market. Tim Plumbe: The go-to market, like how are you... Michael Reid: Got it. No, got it. You said the data market, I was thinking what that is. Okay. So we're -- as I mentioned just before, if you follow us on LinkedIn, you'll see that we've just hired, I think, 5 frontline sales or maybe more, pretty strong, very experienced sellers, I think most of them from Equinix Metal. So very, very strong in this space. Understand the products, understand the market and so forth. And we've also got solution architects who are incredibly strong in that space. Now what's different about building a stand-alone business is you would need significantly more folks to take a business like that to market if you didn't have the existing frontline sellers inside Megaport. So what is unique is you have like a -- what you've created is an overlay sales force. So think about it, our existing sellers will be paid on anything that gets sold as compute, but they're going to only know so much about it. And they only need to know enough to be dangerous. And the conversation with the customer is literally, hey, have you considered, did you know we had this product? And they'll say, oh, I don't look after that or maybe it's this person. You said, do you mind introducing me to that person? And then they send in the specialist. So what's so different about those specialists is they're not out there punching the pavement sort of outbound hunting. We have a machine to do that for them, and they become the specialist in that space. So they will probably, over time, have a much higher dollar figure that they would bring per head because they have a machine beneath them, if that makes sense. So I wouldn't compare them to a traditional frontline seller. They are more of an overlay sales function. They have paid totally on compute, just to be clear. So it's not like some free kick, but it's going to be a lot easier to get into the 3,000 enterprise customers that we have versus cold calling. So you would -- we haven't landed on the exact productivity per head expectation from them. Remember, the tricky part here is that a vast majority of the existing business came from product-led growth. And as I said, we aren't disrupting that. And so this is really the cream on top to help build and scale the business. And as I said, there's probably an 18-month journey before that machine is actually working or at least showing through the revenues. We will see it work much sooner just like with Megaport, but in terms of the revenue contribution, it comes later. So it's going to be the core business against the business plan that we acquired them against. And they've got great opportunity to go and be successful on that. And it's a low risk in that. If it's not successful, it's not paid. If it is successful, it's paid. If they're really successful, we pay more. And every which way, it's good for shareholders. Does that make sense? Leticia Dorman: Tim, I think it's fundamentally applying the same principles as Megaport to the compute and then overlaying that with the India acquisition as a collective group. So that's kind of how we're starting to think about it into FY '27. Tim Plumbe: Yes. I mean sorry, Mike. My question was more around the core part of the business. Like you guys have flagged a material uplift in reinvestment back into the business. So how far through are you in terms of finding the headcount that you need for the core part of the business? Michael Reid: Should have stopped me. Tim Plumbe: I'm just a PR guy. Michael Reid: I was carrying on about Latitude. You're allowed to interrupt. Leticia Dorman: Sure, you can, Tim. Michael Reid: All right. Very simply, we hired all of those, I think, before we -- I think we were -- as we were coming at the start of the year, I think we'd shared that most of that sales force was in place, which is why you've seen like our expenditure where it is. Continue to add that the vast majority were added at the start of the year. You're also seeing probably the impacts of those already come through with significant new logo and all the net retention, all the expansion. And I think you're seeing the success of that already, frankly. Leticia Dorman: We'll continue hiring into the second half, though, Tim, kind of in a more steady cadence. But you'll see that that's kind of why we provided guidance on the stand-alone. Michael Reid: Yes. If you think about it, you've got to move fast for a year. The faster you move -- because obviously, if you hire in the last half, you only -- you're not actually making a much impact. So there's no impact almost because by the time you get them ramped, they're making no impact to the business. So we're very, very fast there as we've been incredibly fast with the Latitude folks as well. That's what we do. We hire wicked talent. And it's actually there's a lot of people that love to be at Megaport, and it's not hard to hire because we've got such a big machine of folks that recommend wicked talent to us. It's very rare. By the way, every single go-to-market hire in the end, and pretty much everyone that's coming through is coming from a recommendation from someone inside the business, makes it so much easier. Operator: Our next question comes from Bob Chen. Bob Chen: Just a question, a follow-up to your comment earlier around the biggest constraint being compute for the Latitude business. I mean there's been a lot of noise around shortages as well as price increases for DRAM and servers. Like how easy is it to pass on the price increases to your customers? And then what are you guys doing on the supply chain side to try and mitigate the shortages? Michael Reid: Yes. The good news is we've got choice in terms of the SKUs that we can procure and the vendors we can procure from. There's definitely been -- I mean, for those who don't know, there is a pretty significant memory challenge globally at the moment. I think memory price is up 300 or 400% in the last few months alone. I think it was OpenAI, I think, took out a big line. I think Western Digital has even said that they're not even taking orders. So there's definitely -- that's flowing through the entire industry. I think the scale at which hyperscalers are procuring this style of infrastructure is pretty large. Even though, I guess, it's a sizable CapEx for Megaport, it's still a very small component on the global scheme of things. And so there's plenty of different providers that we can leverage. I think there's 5 or 6 different parts we can procure. And we've been changing depending upon pricing and opportunity and who's willing to work with us and so forth. We also, you have to spend time escalating, unfortunately, when you end up in a position where everyone -- what happens is everyone tries to jump the queue and kind of the noisy wheel gets the oil, so to speak. And we've had that with some of our vendors where we've jumped in. They've sort of pushed out and delayed delivery and then we've jumped back in and they've actually pushed us back forward. So at the moment, we're in a very good position. A lot of ordering and infrastructure was prior to price rise as well, which is helpful. We will see how the pricing plays out in the market, but it's likely that ultimately, someone -- prices will typically get passed on to the consumers over time. You can't withhold those prices, and that will happen across the board. We don't need to do that for the short period where we're at, but at some point we will and all of that will get washed through the business. So it's a very -- you're constantly monitoring pricing in that game and making sure that you're competitive, it's returning a great margin and so forth. So what's probable is that you'll probably see -- it could -- these are the funny things. They're hard and sometimes they play in your favor because the rest of the world can't get access to something that you've got access to. And so you could see things change. But let's just see how it plays over the next 6 months. This space changes almost daily. Bob Chen: Great. And I guess it doesn't change the underlying business case on Latitude at this point in time, at least. Michael Reid: No. And if you think about it, when we went through this, it's kind of discretionary growth. If you grew too fast and you started to burn too much CapEx, you just slow down the CapEx you deploy if you ever got to that position. So it's kind of a discretionary business where you can control the inputs in terms of the CapEx that you're deploying and then you can monitor it with pricing in terms of -- to manage the utilization play. So you've got levers, if that makes sense. So it doesn't run away from you unless you choose for it to do that. Operator: Our next question comes from Roger Samuel. Roger Samuel: Just a quick one on your EBITDA margin. So you mentioned that the exit run rate was 21% for the half. Now given that you reported 26%, is there any possibility that you might go below the 21% to 24% range in the second half? Yes, or is that 21% is the floor for the second half? Leticia Dorman: Roger, I guess for us, it's more highlighting that that's 26%. You've got 1 month of Latitude in there, which is a higher-margin business, heavier CapEx, higher-margin business. The reason I've highlighted that from a Megaport underlying EBITDA exit margin is because we will continue to add costs in the second half. It will be a mix of recurring and nonrecurring spend. And so yes, that's why we provided guidance to the 18% to 20% mark for the... Roger Samuel: Right. Yes, I was just wondering if you may go below the 21% figure in the second half, given that you give a range of 21% to 24%. Leticia Dorman: No. You mean on the group? Yes, no. That's why we've given the range on collective. Yes. Sorry, just ensuring I understand the question. Roger Samuel: Even for the second half as well? Operator: Our next question comes from Siraj Ahmed. Siraj Ahmed: I think it's a good follow-up to Roger's question actually. So, Tish, one for you probably. I mean you did add, what, $10 million costs half-on-half in the core business, right? And the guidance, especially given exit rate is only it's 21%, but to get to 18% to 20%, actually has to go dip to sort of 15% in the second half, right? That's a big step-up in cost in the second half. But Michael just said that you did most of the hiring at the beginning of the half. So just confused... Leticia Dorman: So, don't forget, don't forget they don't start on 1 July. And so you add those costs throughout. So it's kind of -- it's exactly the same thing that we talked about last year, I think almost this time last year. And so it is that collective ramp. And again, that's why I kind of highlight that there is recurring and nonrecurring spend within the business. And that is part of -- you think about Megaport stand-alone, you've added 2 acquisitions. We do need to make sure that we've got collective marketing and activities built into the second half. And so that's why I really want to focus from an EBITDA standpoint on the collective group margin because it is the sum of components. So that's kind of why we've tried to provide some guidance on that at the collective group because I think that's really important. Siraj Ahmed: Okay. That's super helpful. And so just to clarify again, given your comment on recurring and nonrecurring, so maybe we shouldn't be using the second half margins as the -- for full year '27 because that's what I'm getting a lot of questions on because that sort of implies run rate in next year is much lower, right? But you're saying there's nonrecurring spend as well. So all of that doesn't carry into FY '27. Leticia Dorman: It's a mix. It's a mix. And so yes, I think you've got 2 very different margin businesses coming together, so -- and the India expansion. So there's just a sum of all the components. So we'll provide guidance for FY '27 at the full year. So -- but yes, you're kind of on the right track at least. Siraj Ahmed: Yes. And can I just follow up on one thing? The synergies question, which Michael was revenue. But on the cost side, I think what Latitude is now going to use your backbone or your network, right? So does that mean there's a bit of cost synergies for the business as well? I know it's not material, but at least Latitude benefits from that. Michael Reid: There is lots of benefits on that. So there's -- we talked about synergies in terms of just like go-to-market. There's synergies in terms of the platforms as well. Like if you think about it, we're in all these data centers. We've got these relationships in space, much easier to expand and scale. We can actually do some really cool stuff where we land smaller sites with leveraging the Megaport network so that there's a significant reduction -- not material, but enough to be a reduction in cost to land faster in more locations. So you'll probably see us expand the number of locations a lot easier because we can land a lot simpler and then we can scale from there. That's because of the Megaport backbone. A lot of the Megaport components cross in because you've got an ability to say, well, we could put 100-gig VXC, for example, straight into the Latitude business, and we have a choice as to how we can charge that to a customer or not or offer a differentiated service. So a lot of it comes through. There's a lot of differentiation that comes out of it. There's a lot of innovation that we're going to bring from an enterprise perspective. Think VPC, which is basically enterprise networking components into the compute stack, very similar to what you'd see with a cloud provider. We'll build that and integrate that into the platform and offer it. So the 2 businesses are pretty tightly aligned in many ways and benefit each other on both sides. Leticia Dorman: We got one more question. Operator: Our last question comes from Paul Mason. Paul Mason: I just wanted to ask a bit about the NRR and services numbers, like the services numbers have shot the lights out, right, a much bigger set of additions than previous halves. Just wondering if you could give any color on the contribution from the second half '25 cohort to that? Like is what's driving this big step-up like the relatively new customers that you had a big surge last half? Or is like the upselling more coming from just like a broad base at this point? And I suppose where that's leading is because you had a second half in a row of really good customer adds. Is this then going to reaccelerate those numbers like even more significantly because it's all coming from a much bigger set of new customers. Michael Reid: We've been on this journey for a while explaining the impact and drivers around net retention and also the impact for what's important for the company. The answer is both, of course, and that's why we keep sharing that, a, net retention. So we're selling more stuff to the existing customer base. And that's why they're taking up more services. They're much bigger services. There's more revenue associated to them. But also when you have more products, you land more logos because you can meet them at a different sales cycle for each component that you have. So this mission that we've been on, I don't know what it was, 2 years ago, and we said, hey, these are all the levers to fix the net retention. It wasn't just fixing net retention, but it was like adding new products will help you expand more, earn the right to sell more. But what's really interesting, and we kept sharing that is there was a period of time before sort of -- I can't remember what year it was, like '22 to '23, where new logos had declined. And new logos on the back of no sales force and lots of things. We won't go back down that path. But when you have really, really high lands of new logos, you typically follow -- that gives a positive tailwind to net retention as well because they expand faster than an old logo. So when you have -- it's like the perfect storm. We've got all those elements working at the moment. And then you've got a great market in the United States specifically demanding all of these services, and we have the platform that delivers it. So it's not really anyone else that can do what we do. So we're in that really, really great position, which is why you're seeing that come through in all the metrics. Like this is an outstanding performance from the underlying Megaport business. And on top of that, we've acquired some really cool acquisitions. One in particular, is going to take us to a really different company in the future. So yes, I'm glad you noticed it. Paul Mason: If it's all right, if I can sneak in one other quick one. I was just wondering, one of the things that you introduced when you joined as CEO was like the sort of solution selling and Global WAN was like something we hadn't heard out of Megaport before you arrived. Have you got any ideas on like something like that, that would bridge Megaport and Latitude, like actually a cross-platform solution sort of that could be a new go-to-market motion for you guys yet or anything like that? Michael Reid: Yes, yes, absolutely. Whilst they are different technologies, they serve the same function. Like if you think about it, if you ever -- I mean, you know this, but for folks on the call, if you look at IT infrastructure, there are only 3 things. It's network, compute and storage. They either live in a data center, they live in a cloud or they live on someone's on-premise literally. And so by stitching these 3 things together, so I say 3 because we will look to build out a storage business as well. When you stitch those 3 together, you solve the customer problem. The outcome is you want to run an application. And the application wants to be served up in a very high performative, low-cost, predictable manner. And that is what this solution delivers. And then you want to be able to make that resilient across multiple locations, time zones, countries, you name it in the network and all these things stick together. So it really is a beautiful combination of what will be these 3 businesses moving forward, at least the compute now and the network, and then we'll add the storage element to it. That is, couldn't be more like a solution selling discussion. But the cool part is you can always land a customer at any point. You could just land on a GPU that the customer wants to use and then you have the right to cross-sell into the network element, add compute, potentially add storage. We've got this 3,000 enterprise customers on the network side. They've got sort of close to 2,000 on the compute side, and we have this ability to sort of take both to both sides. So it's really exciting. It will take time to build that, but that is what the opportunity is ahead of us. It's really cool. All right. Operator: That brings our Q&A session to a close. I will now hand back to Michael for closing remarks. Michael Reid: I think we're done. That was a little longer. Thanks for those who hung in with us. It was longer because of the 2 acquisitions. This time next year, we'll keep it a lot tighter. We wanted to make sure everyone had an opportunity to understand the businesses, understand the changes around the guidance components, the strategy of why we acquired, what it looks like from a product perspective, give you some insight into some really cool innovation that we're already launching inside both businesses. And thank you for your support. It's an incredible opportunity for us, and we're just going after it. So yes, look forward to catching up on the roadshow. Leticia Dorman: Thank you.
Operator: Good afternoon, everyone, and welcome to AXT's Fourth Quarter 2025 Financial Conference Call. Leading the call today is Dr. Morris Young, Chief Executive Officer; and Gary Fischer, Chief Financial Officer. In addition, Tim Bettles, VP of Business Development, will be participating in the Q&A portion of the call. My name is Audra, and I will be your coordinator today. I would now like to turn the call over to Leslie Green, Investor Relations for AXT. Please go ahead. Leslie Green: Thank you, Audra, and good afternoon, everyone. Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the company, market conditions and trends, emerging applications using chips or devices fabricated on our substrates, our product mix, global economic and political conditions, including trade tariffs and import and export restrictions, ability to obtain China export permits, timing of receipt of export permits, our plan to list our subsidiary, Tongmei in China, our ability to increase orders in succeeding quarters to control costs and expenses, to improve manufacturing yields and efficiencies or to utilize our manufacturing capacity. We wish to caution you that such statements deal with future events, are based on management's current expectations and are subject to risks and uncertainties that could cause actual results or events to differ materially. In addition to the matters just listed, these uncertainties and risks include, but are not limited to, the financial performance of our partially owned supply chain companies and increased environmental regulations in China. In addition to the factors just mentioned or that may be discussed in this call, we refer you to the company's periodic reports filed with the Securities and Exchange Commission. These are available online by link from our website and contain additional information on risk factors that could cause actual results to differ materially from our current expectations. This conference call will be available on our website through February 19, 2027. Also, I want to note that shortly following the close of market today, we issued a press release reporting financial results for the fourth quarter of 2025. This information is available on the Investor Relations portion of our website. I would now like to turn the call over to Gary Fischer for a review of our fourth quarter results. Gary? Gary Fischer: Thank you, Leslie, and good afternoon to everyone. Revenue for the fourth quarter of 2025 was $23.0 million compared with $28.0 million in the third quarter of 2025 and $25.1 million in the fourth quarter of 2024. To break down our Q4 '25 revenue for you by product category, indium phosphide was $8.0 million, primarily from data center applications, gallium arsenide was $7.0 million, germanium substrates were $231,000. Finally, revenue from our consolidated raw material joint venture companies in Q4 was $7.6 million. In the fourth quarter of 2025, revenue from Asia Pacific was 81.5%, Europe was 17.5% and North America was 1%. The top 5 customers generated approximately 22.6% of total revenue and no customers were over the 10% level. Non-GAAP gross margin in the fourth quarter was 21.5%. For comparison, we reported 22.6% gross margin in Q3 of '25 and 18.0% gross margin in Q4 of last year. For those who prefer to track results on a GAAP basis, gross margin in the fourth quarter was 20.9% compared with 22.3% in Q3 of 2025 and 17.6% in Q4 of 2024. We continue to be highly focused on driving continued improvement, including further recovery in Q1. Moving to operating expenses. Our total non-GAAP operating expense in Q4 was $7.8 million, compared with $6.5 million in Q3 of 2025. As a reminder, Q3 included some favorable adjustments in R&D that brought our OpEx down to a lower-than-normal level. Non-GAAP OpEx in Q4 of '24 was $9.8 million. On a GAAP basis, total operating expense in Q4 '25 was $8.8 million compared with $7.3 million in Q3 and $10.6 million in Q4 of 2024. Our non-GAAP operating loss in the fourth quarter of 2025 was $2.6 million compared with a non-GAAP operating loss in Q3 of 2025 of $384,000 and a non-GAAP operating loss of $5.4 million in Q4 of 2024. For reference, our GAAP operating line for the fourth quarter of 2025 was a loss of $3.8 million compared with an operating loss of $1.1 million in Q3 of 2025 and an operating loss of $6.2 million in Q4 of 2024. Nonoperating other income and expense and other items below the operating line for the fourth quarter of 2025 was a net gain of $285,000. The details can be seen in the P&L included in our press release today. For Q4 of 2025, we had a non-GAAP net loss of $2.6 million or $0.06 per share compared with a non-GAAP net loss of $1.2 million or $0.02 per share in the third quarter of 2025. Non-GAAP net loss in Q4 of 2024 was $4.2 million or $0.10 per share. On a GAAP basis, net loss in Q4 was $3.6 million or $0.08 per share. By comparison, net loss was $1.9 million or $0.04 per share in the third quarter of 2025. GAAP net loss in Q4 of 2024 was $5.1 million or $0.12 per share. Weighted basic shares outstanding for the quarter was 44.7 million. Cash, cash equivalents and investments increased by $97.2 million to $128.4 million as of December 31. This is primarily the result of our public offering of common stock, which closed on December 30 and generated approximately $93.9 million. By comparison, at September 30, cash was $31.2 million and accounts receivable decreased in the quarter by $2.6 million. Depreciation and amortization in the fourth quarter was $2.3 million. Total stock comp was $1.3 million. Net inventory was up by approximately $4 million in the fourth quarter to $81.7 million. This continues to be a focus for us, and we expect to bring it down in coming quarters. This concludes our discussion or comments about the quarterly financials. Turning to our plan to list our subsidiary, Tongmei, in China on the STAR Market in Shanghai. We remain very interested in completing the IPO, particularly in light of the rapidly evolving AI infrastructure build-out in China, which is fueling increased China-based demand for indium phosphide substrates. We've continued to keep our IPO application current and Tongmei remains "in process" as part of much -- a more selective and smaller group of prospective listings than a few years ago. Though the current geopolitical environment is dynamic, Tongmei is considered a Chinese company and continues to be regarded in China as a good IPO candidate. We will keep you informed of any updates. With that, I'll now turn the call over to Dr. Morris Young for a review of our business and markets. Morris? Morris Young: Thank you, Gary. We were disappointed... Operator: Pardon me for interruption, this is the operator. We have lost our speakers. Give me one moment to reconnect. [Technical Difficulty] Morris Young: Hello? Am I back up? Operator: Yes, you are. Morris Young: Okay. Let me start on the beginning again, just in case I missed part of it. We were disappointed that we didn't receive as many export permits in Q4 as we had hoped based on the average processing time we had seen up to that point in October. The good news is now that we have received permits in Q1 and we are in a stronger position today than we were at the same time in the prior quarter. Gary will take you through our full quarter guidance in a few minutes. But we do expect to achieve sequential growth in revenue in Q1, driven primarily by growth in indium phosphide for data center build-out for AI. We're also very pleased to note that we are seeing a welcome expansion of our customer base for indium phosphide. We're beginning to support leading customers in the optical space that we have not -- we had limited exposure to prior to this time. This includes Tier 1 laser manufacturers and optical transceiver module makers both in China and around the world. We're excited to be able to demonstrate the technological advantage of our low EPD wafers as the market moves to optical devices with higher speed and greater sophistication for both scale-up and scale-out applications. In total, our backlog for indium phosphide wafers have reached a new high of over $60 million. As we mentioned last quarter, customers are planning for longer lead time by placing longer-term orders and giving us more visibility into their expected demand. As many of you know, the supply chain for optical transceiver is quite complex and highly globalized. We believe this geographical interdependence is providing both opportunity and incentives for the ecosystem to work together in new ways to solve global supply chain shortages. Beyond pluggable receivers, we are seeing a very large developing market for co-packaged optics for both scale-up and scale-out applications. We're actively engaging in discussions with our customers about their technical and timing requirements and believe this could be -- represent yet other inflection point in our business developing in late 2027 and beyond. From a geographic demand perspective, the massive AI infrastructure build-out and planned CapEx spending by cloud services and AI platform providers in the United States is the primary driver for EML and silicon photonic-based optical transceivers. We believe that today, our materials are being used in multiple U.S. hyperscale and we expect that end customers use will continue to broaden. In China, the data center build-out is early in its ramp. But we are seeing rapid growth as China moves to accelerate its data center expansion and AI capabilities. Our revenue related to the data center market in China are expected to grow by more than 60% in Q1 over Q4, highlighting both increased investment in these Tier 1 data centers as well as the strong desire for Chinese domestic suppliers to secure local stores at every level of the AI infrastructure supply chain. Given the strong demand environment, it is important to note that AXT is well positioned to handle increased demand for indium phosphide wafers. Since we have last reported to you in October, we have already added approximately 25% more capacity, and we are on track with our current plan to double our capacity from Q4 2025 level by the end of this year. Beyond our current plan for capacity expansion, we're working closely with our customer base to understand their long-term requirements and to align our plans globally. Our recent capital raise will be fundamental to our future expansion as we enter our next significant phase of growth. A major focus of this expansion will be an increased investment in our 6-inch indium phosphide product, and we are excited to work with our customers to meet the rigorous requirements of next-generation EML and silicon photonic-based devices. Now turning to gallium arsenide. We continue to see demand for semi-insulating wafers for wireless RF devices and believe that we have strong opportunity for market share expansion gated primarily by our ability to obtain export permits. In Q4, we saw an uptake in semiconducting wafers for both industrial laser applications and data center laser applications. VCSEL lasers a data center -- for data center applications typically do not require a lot of gallium arsenide material. As the devices are small, so they don't move the needle much as a growth driver for us. However, we are seeing increased demand for VCSEL for autonomous vehicles in China, Chinese automobile market, which is currently expanding rapidly. High-growth expansions in addition to our watching -- we are watching with interest and emerging application in robotics for VCSELs that increase the precision and dexterity of a modern robotic hand. Counter the VCSEL used in data center applications, machine vision VCSELs tend to be very large and use more gallium arsenide substrates. They also require high-quality material which we are very well positioned to supply. Again, demand is more today, primarily China-based and covers a diverse set of customers but the breadth of use case and the development is very exciting. Finally, our raw material business is -- was up in Q4 with growth from our subsidiary volume, which manufactures PBN crucibles used in manufacturing of indium phosphide crucibles. In addition, we're pleased to report that our subsidiary, JinMei, has begun to refine high-quality indium, which gave us now direct control of a guaranteed supply of yet another critical material for our indium phosphide substrates. Globally, there continues to be a greater awareness of the importance of various materials, and we are ahead of the curve in developing our unique integrated supply chain. In closing, this is a very dynamic and exciting time for our company as we enter into 2026. We're a fundamental supplier to the multiyear optical build-out in the AI infrastructure market. We have a broadening customer base of Tier 1 companies and a strong balance sheet to support our continued business expansion. And with growing backlog, the receipt of indium phosphide and gallium arsenide export license remains the single most significant gating factor for our growth. As such, we are highly focused on ensuring that we are proactive, organized and disciplined about managing the process on behalf of our customers. We also know that we must be laser-focused on running our business with the greatest efficiency. This includes our continued effort to drive gross margin improvement, OpEx discipline and inventory reduction. With strong ongoing market trends fueling the data center upgrade cycle, we believe that we have tremendous opportunity in 2026 to drive meaningful growth in our business and return to profitability. I would like to personally thank our employees for their dedication and tireless efforts during this singular moment in AXT history and I would also like to express my sincere gratitude to our customers, partners and shareholders for their ongoing support and believe that in the future, we are building together. We look forward to reporting to you on our progress. And with that, I will turn the call back to Gary for our fiscal quarter guidance. Gary Fischer: Thank you, Morris. To reiterate a couple of key points from Morris' commentary, we are seeing a strong increase in our indium phosphide wafer demand related to AI and the ongoing data center upgrade cycle. Given the geopolitical complexity surrounding this market trend, our customer base is diversifying and expanding and customers are placing longer-term orders and providing greater visibility into their needs. With all of these positive market and AXT-specific growth drivers, the most significant single factor to our growth in Q1 and beyond is the success and timing of getting export permits. Therefore, guiding for the future is somewhat tricky for us right now as we cannot predict future timing of permits or a success in obtaining them for any customer or individual order. . But drawing on what we know and what we've experienced thus far in the export permitting process, we can offer the following insight to our expectations for Q1. As of today, we have approximately $26 million in revenue that can be realized in Q1 across our substrate product lines and raw materials, for which we either have -- already have a permit to ship or for which an export permit is not required. We have a high degree of confidence in recognizing this revenue in Q1. We could see significant upside to this number in Q1 should we receive more permits for additional orders between now and the end of the quarter. But we want to stress that as we experienced in Q4, the timing for permit issuance is not predictable nor in our control and doesn't necessarily align with our quarterly reporting. As Morris mentioned, we continue to focus strongly on gross margin. Further improvement depends on a number of factors, including total revenue as it relates to absorption of fixed costs, revenue mix by product and our ability to continue to drive better manufacturing efficiency. With regards to OpEx, we expect that it will remain at approximately $9.0 million in Q1. With these factors in mind, we believe our non-GAAP net loss will be in the range of $0.02 to $0.04 and GAAP net loss will be in the range of $0.04 to $0.06. This represents substantial year-over-year progress towards our return to profitability. We estimate share count in Q1 will be approximately 53.2 million shares. Okay. This concludes our prepared comments. We'd be glad to answer your questions now. Audra? Operator? Operator: [Operator Instructions] We'll go first to Richard Shannon at Craig-Hallum. Richard Shannon: Gary, I'm going to do a quick request to give me the revenue number you gave for the quarter. It got -- my line got garbled here. I heard about '26 that you believe you can get -- highly likely to get. Was there a number to the upside there? Apologies for needing to ask this. Gary Fischer: No. We normally give you guys a range, but we discussed before the call today that we're very, very confident at the '26 number. We did say just a moment ago that we believe we could go higher if we get more permits, but we -- it wouldn't even -- it could even be more than just a normal range, which we usually have a $2 million or $3 million range for you guys. Morris Young: Well, let me try to add on to this point. That is our manufacturing are doing the manufacturing as if we can get a permit. So there is a lot of these so-called semifinished goods or finished good staging in our clean room ready to be shipped if we can get an actual permit. Gary Fischer: Yes. We are building to forecast and to the backlog, whether or not -- we're not building to permits. We're not waiting until we get a permit and then say, okay, let's get going. And so it's building and we're enthusiastic, we're excited and of course, yes, we're a little bit frustrated because it would be pretty big numbers if we can get some more of these permits. And we think that we will. We can comment more on this call, but we're hanging in there. We're not discouraged and giving up. So... Richard Shannon: Okay. I appreciate understanding your approach to the guidance and it certainly makes a lot of sense in this environment. Let me ask about the licensing process here. Last quarter, you said it was about a business day or a 3-month process here. And obviously, that didn't turn out as we saw from your pre-announcement, which is unfortunate, but we all know how governments can work from time to time here. Do you have any new insights as to how they're working here? And I guess, are there any permits that are being rejected that you don't think should be? Just more insights here on this licensing process. Timothy Bettles: Yes, I can answer that one. So this process is not transparent at all. And we're seeing quite a lot of variability. We started off in the end of Q3 by saying it was looking like we're seeing a fairly consistent 60 business day process cycle. We're now seeing a lot more variability as we go through there. And as I say, there's just no transparency to that. It's reasonable to assume that there's geopolitics playing into this as well. It's really hard to determine what and why. And it's difficult, therefore, to figure out which permits are coming in on time, which are taking longer. I'll answer the second question as well, which you asked whether there had been any permits that have been denied and why? We have actually received a couple of denials with the instructions that we can resubmit that application with more information. So this is the first time we've actually received denials on permits and we're not utterly sure why. Again, no transparency to this. We don't see any particular reason why any of these permits should not be approved. And it's a process that we're just working through. So these permits that have been denied, we've already resubmitted with MOFCOM and we're hopeful that we continue to talk to MOFCOM and they will get reviewed quickly and could potentially turn around fairly quickly. I could even make an impact on Q1 numbers if we can get a quick turnaround on them. Gary Fischer: And what does MOFCOM stand for? Timothy Bettles: That's the Ministry of Commerce in China. Morris Young: So let me add an optimistic viewpoint, the comment about that Tim just gave you. That is -- although there is a denial of an application, but they come with a specific instruction how to strengthen the application, which we think is a good indication. In other words, if they really want to deny this, one of -- they can just let it sit there. I mean the fact that they want more information about -- actually, I think it's a fixable permit application we have. And that means, hey, they are taking a very serious look at it. And hopefully, that will turn to be a permit. Richard Shannon: Okay. That is helpful. Second question here is kind of the backlog here and also following up on, Morris, your comments about customers booking further out. So we went from a backlog of $49 million to above $60 million here, and you also commented that people are -- customers are ordering further out. Could you suggest how far out they're going right now? And also, how far out are you hearing forecasts from these customers as well? Morris Young: Yes. Let me see how to answer that. Actually, let me first answer my part of the question, and I will turn it over to Tim. Well, the reason why that Tim really works with customers hearing what their demand is. Actually, one of the interesting comments we have was that we have important meetings with our customers this week, and they're telling us, Tim, at least in two occasions, people are saying, gee, our demand forecast increases every week. So that's the kind of level. I think -- I mean we know it is tight and we know it's going up. But I think people are upsizing their demand, and they're telling us what they want to do, whether they're going to go to 4-inch, how much they want to switch from 3 to 4 and 4 to 6, okay? And as far as how much inventory they are building, I think that depends upon customers. Some of the customers, we suspect they're buying into the inventory. But they also tell us, if you deliver, I'm going to take it all if you can deliver. Whereas others, I think they are telling us the real demand in the quarter because I think as of now, we cannot deliver enough of their demand. So they are giving us longer lead time to give us more incentive to build up the expansion plan and build the capacity for them. And also, I think the other thing is, Tim, you want to comment on long-term commitment that you're talking to a customer about? Timothy Bettles: Yes, I'll definitely -- I'll comment a little bit on that, and I'll also comment a little bit more on backlog and what we're seeing from this. So a lot of this backlog, remember, is scaled up based on the permit dynamics, right? So the permit dynamics, once we receive a permit to export material, we have a 6-month window to export. So a lot of backlog is built at the moment that permit comes in, we have a 6-month window maximum to deliver. And in many cases, that window, the window of which the customers are looking to receive material is a lot shorter than 6 months. So really and truthfully, this is all being gated by permits, as we mentioned during the discussion. In terms of what we're seeing in build-out for inventory, I think at this moment in time, people would like to keep more inventory. But as Morris mentioned, just about everybody we're talking to is telling us that the demand is growing literally on a weekly basis. So we just see the numbers expanding and expanding over and over. Now turning to forecast and what kind of visibility we have we are definitely talking about long-term supply agreements with a number of customers right now. And we're planning our business according to those long-term supply agreements. We're seeing forecasts out beyond 2030 for many of these customers, but of course, as I've just said, those numbers are increasing on a week-by-week basis. So it's difficult to keep track of things, but people are talking about minimum demand requirements. Moving forward for at least the next 2 to 3 years, given us forecast out beyond 2030. So all in all, I think this backlog is real. It's achievable, and it's kind of being limited by our permits at the moment. Richard Shannon: Makes sense. I'll ask one more question and jump out of line here, guys. This is on capacity additions. Just a few kind of multipart question here. I think I heard you say you're going to double your capacity from the end of '25 to the end of '26. If you could verify that? And if so, can you help us understand what level of CapEx is going to be requiring? And then looking beyond that, and Tim, you just mentioned forecast going out beyond 2030, which is interesting to hear, how much more capacity beyond that could you need? Let our minds wonder about what kind of scale an opportunity you're thinking about here? Morris Young: Yes. I think we just said we have increased our capacity by 25% now, and we do expect to double our capacity by the end of this year, okay? And how much budget would we need? It could be about $30 million, and that is sort of on the low end in a way because the first phase of the expansion, which is doubling our capacity mainly use brownfield. In other words, existing Tongmei facility, we already have a clean room available. We have the building there already and power supply and water. So I think that budget is lower. Looking beyond 2026, we are looking at possibly doubling it again in 2027. And that budget is lying somewhere around $100 million to $150 million depending upon how we want to build it because then we are talking about a greenfield. We need building, we need clean room, we need power, et cetera. Operator: We'll move next to Tim Savageaux at Northland Securities. Timothy Savageaux: Let's continue with that capacity discussion, but maybe try to put some numbers around it. If I look at where you've peaked historically, and I think we're talking exclusively about indium phosphide here, that's getting up towards $20 million a quarter in substrate revenue. And I imagine your capacity is now slightly above that given the increase you talked about in Q4. I guess question one, is that reasonable? And should we expect you to exit calendar '26 with revenue capacity roughly double those levels? And would you anticipate having the demand to fulfill that at that time or you're building maybe a little bit ahead? Morris Young: Let me first answer the question. The -- I think we calculated, I think it's approximately $35 million a quarter by the end of the year run rate, okay? It could be a little bit more -- given the price environment is dynamic as we -- the cost of indium are going up. And can we use up all this capacity? I think looking at the backlog, we can certainly do, but the problem is the gating factor is the permit. Timothy Bettles: I'll add something in here as well. Irrespective of permits, we mentioned we are seeing growth in this business in China as well. And looking at it quarter-to-quarter, Q4 was probably double revenue in China than Q1 in 2025. And we would expect -- we're looking at potentially doubling again through 2026. So we're definitely seeing growth there in China that warrants expansion as well as growth outside of China where we would need permits for. Morris Young: Tim, I agree with you, but then I don't want to minimize the importance of outside of China. I think the AI growth, the budget we're seeing is really fueling the demand for indium phosphide substrates. Gary Fischer: Yes, Tim, this is Gary. And I still speak conservative, but -- and I am. But I'm not sure you guys are getting the point is that every customer is worried about getting enough for their needs. There's a general concern. The meetings we've had this week, we're not meeting with the purchasing manager. We're meeting with CEOs and general managers. They all want to talk to Morris about capacity and about future growth. So there's a phenomenon going on here that all of -- it's unusual for -- no matter what we do for our jobs, including the analysts, this is very unique and unusual situation. I mean, I've been around the block a few times and Morris has, and this is very, very unusual. And it's actually intense. We're excited but we're scrambling, we're scrambling. And I don't see any into it near term. This is -- people are telling us that their demand is going to be going up 3, 4 or 5x over the next 4 or 5 years. And there's not how many suppliers are there. You know the answers to that, too, and we're one of them. Morris Young: Yes. I think let me add to that. I think the investor usually asks the CEO, the toughest question is what keeps you up at night? I think what's keeping us up at night is calculating how we're going to expand that capacity, how we're going to get that product to our customers and how to develop the technology that a customer wants. I mean it's very exciting but it's also very straining. We need to be very much aware of what the customer wants and satisfy their demand. Gary Fischer: Fortunately, we have recent experience at adding capacity. What -- it was almost about 10 years ago, when we learned that we needed to get gallium arsenide moved out of Beijing. And so we had 2017, '18 kind of time period where we did add capacity from green grass fields. So we have some strength here but it's going to tax us even though we are experienced. Morris Young: Yes. I do want to give the analyst point to ask the question, but I think we're talking to each other. Gary Fischer: We're too excited, yes. Morris Young: We're too excited, but I think it is a very good point. I think we -- prior to this, we probably overspent because the IPO preparation, we actually expand from one facility to three facilities. But now I think we're looking at a great demand for indium phosphide, which I think it's really meeting our challenge. And I think Gary is right. We are very well positioned to meet that demand. I think we are probably the best suited to increase capacity and also because the vertical integration we have in terms of supply chain, and we're in control of a lot of other material, which could ensure supply if indium phosphide substrate continue to grow like what we are talking about, and we have plans for that as well. Gary Fischer: A good example is our subsidiary, JinMei. JinMei makes the indium phosphide poly for Tongmei. So we have in -- our supply chain is supporting this growth process. Next question, Tim? Timothy Savageaux: I'm a little bit afraid now. But -- you actually highlighted -- you highlighted in the release even the increased presence with some big Tier 1 customers. I guess in the commentary, you mentioned maybe some in China, but elsewhere. In terms of what's going on there? Are we talking about orders with major new customers qualification? Any specific programs? And I'm not sure these 2 comments were related or not. But I'll ask if they were with regard to your increased investment in 6-inch indium phosphide, if you can maybe cover both of those points. Appreciate it. Timothy Bettles: Yes. I'll take a stab at that one, Tim. So yes, we are gaining more traction with customers, as we've said on previous calls as well that we've not been so prolific in. So we are gaining design in, we're gaining qualifications on existing products as well as new products as we move forward. And the customers are looking to expand on their demand for indium phosphide. As Morris mentioned in the call, there's already been a big move from 3-inch to 4-inch, so we've spent a lot of time and effort on scaling up our 4-inch business. . And we're also seeing a lot of interest now. And of course, we all know one customer that's really driving 6-inch demand. So we're really taking 6-inch very, very seriously. And we're expanding -- as we expand capacity both now and are doubling capacity through '26 and beyond, we're looking at adding significant 6-inch capacity in there during that expansion. And we're just plowing through the numbers right now to see what we need to drive 6-inch and how we scale 6-inch compared to 3, 4 and more of the traditional wafer sizes. Morris Young: Yes. I think -- sure, Tim. I think one part of it perhaps is the cooperative effort. Usually, when your customers don't go to me, they probably talk to the sales guy and give us orders. But I think now the dynamics is such that we sort of need to interact more to make sure that we're putting the right amount of attention to both in terms of development and capacity expansion to where they need it, okay. And then virtually also to convince us, this is the right investment we should have. Is that right? Timothy Bettles: That's correct. We're also getting a lot more customer buy-in with commitments, NRE, purchase orders to drive that business forward as well. Operator: We'll move next to Matt Bryson at Wedbush Securities. Matthew Bryson: Just can you talk a little bit about what might have been unfettered demand or shipments in Q4 or what you might be guiding to if you weren't restricted by permits? Gary Fischer: If we're not restricted by permits, then the basic question is our ability to manufacture high volume because there's no issue about demand or backlog. So the variable that you're really focusing on is manufacturing capability. Morris Young: Yes. I don't know whether the customers are telling us more demand than we can deliver. But I think we definitely have more orders than we can actually manufacture now. As we add the capacity, we're counting on who we can supply to, but of course, there's other leading factor, which is the permits. Matthew Bryson: Got it. So I mean hypothetically, assuming you could be manufacturing around $20 million of indium phosphide, you could ship it all if you could get permitted? Morris Young: Yes, correct. And that will -- we expect it to increase it to about $35 million a quarter by the end of the year. And then we are making sure every point along the supply chain receives equal attention in terms of poly, in terms of crucible furnaces, et cetera, et cetera. Matthew Bryson: Understood. And then -- so you're completely confident that of that $35 million in capacity, if you can bring it on and you can get permits that come to end of this year, you could possibly be shipping $30 million, $35 million in orders. I guess is there -- are there any customer commitments or LTAs or anything else that kind of solidifies that demand? Morris Young: What's that term you're saying? LTAs? Timothy Bettles: We've got a lot of purchase orders in that right now, and we're going through long-term agreements. Long-term agreements, I think in terms of locking up capacity are easy and we're talking to customers to lock that capacity up. The gating factor, and we've reiterated this a lot today and previously, gating factor with long-term agreements is how much can we actually ship out of the country? What can we get permits for? So we're trying to address that through LTAs. But for sure, we can definitely cover this kind of revenue volume with purchase orders and LTAs. Matthew Bryson: And then, Gary, I think the last one I have is for you. if you get to those numbers in terms of shipments for indium phosphide, so $30 million plus, can you give us some of the parameters we should be thinking about in terms of gross margins, what are the puts and takes? And hypothetically would you be able to get back to the kind of COVID era highs that you're reporting back in 2021, 2022? Gary Fischer: Yes. I mean we always like indium phosphide. And if you have to pick of our 3 substrate products that you want to see go through the ceiling in terms of volume and demand, it's the right one for us. I think getting somewhere at $40 million a quarter in aggregate, not just indium phosphide, but we should be getting hopefully somewhere close to 35% gross margin. Morris Young: I will add another point. I always describe AXT, it's a fairly unique company because we -- I describe our substrate business as the locomotive engine in the front, but we have a lot of cars in the back following us, such as indium, such as phosphorus, quartz, PBN crucibles, furnaces we make. So if our business is good, we're pulling these guys along, and that should help us. So what you're seeing here, I'm more optimistic and Gary said, I think that 35% is the normal substrate business. If we can pull those guys along, that should help us even further. Gary Fischer: Yes. Yes. Our internal goal is higher, Matt, but -- so that we don't overstate expectations from -- for your community, we want to be a little bit cautious. So we're very optimistic. So it's pretty exciting. Matthew Bryson: And just one quick follow-up. The shift to 4-inch and 6-inch, does that change the parameters on a gross margin perspective? Morris Young: I think normally the larger the size we go, the better the margin we will get. On the other hand, I'll be more cautious about 6 inches. We are still a little bit in development stage. So I think initially, looking at lower margin, but looking for ways to compensate that, right, Tim? Timothy Bettles: Right. And product mix is still very much geared towards 3-inch and 4-inch at the moment. And as Morris says, we're running 6-inch up. It is still a bit of a development project at the moment. It will be growing through this year. But again, remember, as we do that, 3-inch and 4-inch are still a big percentage of our business. Operator: And that concludes our Q&A session. I will now turn the conference back over to Leslie Green for closing remarks. Leslie Green: Thank you, Audra, and thank you all for participating in our conference call. We will be participating virtually in the Loop Capital Conference in March and hope to see many of you there. As always, feel free to contact us if you would like to set up a call, and we look forward to speaking with you soon. Thanks. Operator: And this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Q4 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today’s conference is being recorded. I would now like to turn the call over to the speaker for today, Julie S. Shaeff, Chief Accounting Officer. Please go ahead. Thanks, Lisa. Good morning. Julie S. Shaeff: Welcome to Comfort Systems USA, Inc.’s fourth quarter and full year 2025 earnings call. Our comments today, as well as our press releases, contain forward-looking statements within the meaning of the applicable securities laws and regulations. What we will say today is based upon the current plans and expectations of Comfort Systems USA, Inc. Those plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those in our comments. You can read a detailed listing and commentary concerning our specific risk factors in our most recent Form 10-Ks, as well as in our press release covering these earnings. A slide presentation is provided as a companion to our remarks and is posted on the Investor Relations section of the company’s website found at comfortsystemsusa.com. Joining me on the call today are Brian E. Lane, Chief Executive Officer, Trent T. McKenna, President and Chief Operating Officer, and William George, Chief Financial Officer. Operator: Brian will open our remarks. Brian E. Lane: Alright. Thanks, Julie. Good morning, everyone, and thank you for joining us today. Last night, we reported record earnings and backlog and exceptional cash flow thanks to best-in-class execution by our teams across the United States. Same-store revenue growth for the fourth quarter was 35% and our quarterly gross margin exceeded 25% for the first time in company history. We are reporting $9.37 per share this quarter, up 129% from last year and we earned $28.88 per share for the year compared to $14.60 in 2024. Backlog increased to a new all-time high of $12,000,000,000 thanks to fantastic bookings in the quarter. Backlog growth was especially strong with technology customers, but our bookings and pipelines are strong in practically every sector. 2025 operating cash flow is $1,200,000,000 laying a strong foundation for continued investment and net cash flow demonstrates strong trends in our execution, customer relationships, and prospects. Our modular capacity is currently around 3,000,000 square feet and we expect to increase this to approximately 4,000,000 square feet by the end of 2026 weighed more heavily to the first half of the year. Gross profit was $675,000,000 for 2025, a $241,000,000 increase compared to a year ago. Our gross profit percentage grew to 25.5% this quarter, as compared to 23.2% for 2024. This margin improvement was achieved through excellent execution within both of our segments. The quarterly gross profit percentage in our mechanical segment improved to 24.9% compared to 22.4% last year, and margins in our electrical segment continued to climb to 26.9%. Full-year gross profit increased by $719,000,000 and our annual gross profit margin was 24.1%, as compared to 21% in 2024. Our electrical margin was 26.7% for 2025 while mechanical was 23.6%. As we look to 2026, we are optimistic that gross profit margins will continue in the strong ranges that we have achieved over the last several quarters. Although we expect that, as usual, our margins will be seasonably lower in the first quarter compared to the full year. SG&A expense in the fourth quarter was $248,000,000, or 9.4% of revenue, compared to $208,000,000, 11.1% of revenue, in the same quarter of 2024. For the full year, SG&A expense as a percentage of revenue was 9.7%, down from 10.4% in 2024. In 2025, our SG&A increased by $153,000,000, as we invested to support our much higher activity levels. Quarterly operating income increased by 89% from $226,000,000 in 2024 to $427,000,000 for 2025. Thanks to the jump in gross profit margins, and good SG&A leverage, our quarterly operating income percentage increased to 16.1% from 12.1% in the prior year. For the full year, our operating income was $1,300,000,000, and we achieved a noteworthy operating income percentage of 14.4%. Our 2025 tax rate was 20.9%. Our effective tax rate was lower last year due to interest we received on a delayed refund for 2022, and we estimate that our tax rate in 2026 will be around 23%. After considering all these factors, net income for 2025 was $331,000,000 or $9.37 per share. This is a 129% improvement in quarterly earnings per share from last year. Our full-year earnings per share for 2025 were $28.88 as compared to $14.60 per share in the prior year. So our annual EPS grew by 98%. EBITDA increased 78% to $464,000,000 this quarter, from $261,000,000 in 2024. Same-store quarterly EBITDA increased by over 70%. Full-year 2025 EBITDA was $1,450,000,000 and our EBITDA margin was 16%. Full-year free cash flow was a record $1,000,000,000. CapEx in 2025 was $155,000,000, just over 1.7% of revenues. We continue to invest in our operations, expand our modular capacity, and purchase vehicles to support the growth in our service business. We increased our investment in share repurchases in 2025 and returned more than $200,000,000 to shareholders by purchasing over 440,000 shares at an average price of $489 per share. Since inception, our share purchase program has retired 10,900,000 shares at an average price of $50.15. We have returned more than $546,000,000 to you, our owners. That is all I have got, Trent. Thanks, Bill. I am now going to discuss our business and outlook. Julie S. Shaeff: Backlog at the end of the fourth quarter was $11,900,000,000, a same-store increase in both sequential and year-over-year backlog. Same-store sequential backlog increased $2,400,000,000, or 26%, driven by bookings within the technology sector in both traditional construction and modular. More than one-half our sequential backlog increase was new modular bookings and with the continuing increase in modular and larger project backlog, the duration of our backlog continues to extend. Since last year, our backlog has doubled with an increase of $6,000,000,000 on a same and on a same-store basis, our backlog is 93% higher than at this time last year. Our revenue mix continues to be led by the industrial sector, which includes technology, and industrial accounted for 67% of our volume in 2025. Technology, dominated by data center work, was 45% of our revenue, an increase from 33% the prior year. Industrial, and especially technology, is the largest driver of pipeline and backlog. Institutional markets, including education, health care, and government, are also strong and represent 21% of our revenue. Commercial service markets are active for us. However, our commercial construction is now a small portion of our overall construction business. Construction accounted for 86% of our revenue, with projects for new buildings representing 63% and existing building construction, 23%. We include modular in new building construction and year to date, modular was 18% of our revenue. Service revenue increased by 12% this year, but with faster growth in construction, service is now 14% of our total revenue. Our overall service business achieved a record $1,200,000,000 in revenue for 2025, and service continues to be a growing and reliable source of profit and cash flow. With unprecedented backlog and strong project pipelines, and given the confidence we feel in our best-in-class workforce, we expect continued strong performance in 2026. And we feel confident in our prospects. I want to take this opportunity to close by thanking our over 22,000 employees for their hard work and dedication. Our success is a direct result of the people that serve our customers every single day. I will now turn it back over to Lisa for questions. Thank you. Thank you. As a reminder, if you would like to ask a question, please press Operator: 11 on your telephone. To remove yourself from the queue, press 11 again. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. We will now open for questions. Our first question today will be coming from the line of Timothy Mulrooney of William Blair. Your line is open. Timothy Mulrooney: Yeah. Good morning, Brian, Bill, Trent. Thanks for taking my questions. Wanted to ask a clarification question on the backlog, and then I have one for Trent about labor. But first, on the backlog, I think folks are going to look at your backlog, and they see that growth accelerating there. They are curious what that is really based on. So could you talk a little bit more about how this all really works? Like, is your technology backlog today, is that reflective of the recent spike in CapEx that we have seen at the major hyperscalers recently, those announcements the last couple of weeks, or is your backlog today reflective of hyperscaler spending plans last year or two years ago? In other words, are you early cycle or later cycle on the CapEx announcements that we see? William George: Thanks, Tim. So if we put something into backlog, it means that we have the binding legal commitment, a price, and a scope. In order for us to meet those three requirements, a building has to have been planned a year or two ago. Right? We are not booking backlog for things that are being committed to today. The backlog we book is for stuff that is already—the holes have been dug, things are being built. So, you know, for a long time, people have thought of construction in a rubric of there are the early cycle players—that is mostly engineers and architects. There are the mid-cycle players—it is the people who start, you know, dig the hole, start the building—and then we are what is called a late-cycle player. So by the time we are booking backlog and especially by the time we are booking revenue, we are really working on things that came up at, you know, one to two and a half years ago. So for these gigantic projects, you know, I think as you were kind of implying, we will see whatever commitments they are making now, we will see that in 2027, 2028 in our revenue. Timothy Mulrooney: Okay. That is very clear, Bill. Thank you. That is exactly what I was asking about. So thank you for clarifying that. And then just shifting gears completely. I wanted to ask about the labor shortage situation because I have seen, you know, you have added more than 7,000 employees over the 24 months according to your SEC filings. So it is a lot. So I guess my question is, are you able to still source enough talent to fulfill all this demand? Or are you seeing more bottlenecks these days? And can you talk about the different things that you are doing as an organization to build and retain this critical talent pool? Thank you. Brian E. Lane: Yeah. Thanks, Tim, for that question. First, I think first and foremost, you know, our operating companies are really great places to work. They attract best-in-class craft professionals and leaders in the industry. And that is, you know, across the board, Comfort Systems companies, you know, all meet that description. And then, you know, one of the things that we have talked about in the past and we continue to invest in and grow is our in-house capacity to provide contract craft professionals on a traveling basis, and that is in Kodiak and Pivot. And, you know, Pivot brought to us also a technology stack that has really helped us grow that piece of what we are building to be able to meet the labor needs of our customers. And this, you know, really gives our business leaders at a local level greater flexibility to pursue work either in remote geographies or work that would otherwise have had too large of a peak staffing requirement for them to have previously, you know, gone after. So when you see those numbers, you know, one, it is an all-of-the-above approach to hire, and then two, it is a novel and new approach for us with regard to contract craft professionals. And we are currently, you know, approaching this demand environment where we have a lot of work to chase. Timothy Mulrooney: Understood. Thanks for that detail. And congrats on a nice quarter. Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Adam Robert Thalhimer of Thompson Davis. Your line is open. Adam Robert Thalhimer: Hey. Good morning, guys. Congrats on another wave of record results. Julie S. Shaeff: Thanks, Adam. Brent Edward Thielman: Hey. Similar question to Tim, but I was hoping you could give us more color on the bookings in Q4. What kind of projects are those? And when will those start construction? William George: So if you look at the enormous sequential increase of $2,600,000,000 in bookings, a little over half of that was new bookings in modular. So, in past years, we have sometimes had a lot of year-end purchase orders in modular. And as the business has scaled up, that has scaled up too. That work is—a huge proportion of the work that was actually booked this quarter is going to perform in 2027. Some of it will be in 2026 in the new buildings that we have committed to. And some of it actually goes into 2028. For the rest of the business, the well over a billion dollars of new construction project bookings—that is highly generally reflective of the most busy sectors, which is by far data centers, is the most busy of those sectors. Although there is really good activity in manufacturing, in pharma, and in other verticals such as food processing. But the projects are really big now. And so that means that they get into—they sit in backlog for a longer period of time. And I think some of what you saw with those bookings was people trying to get us signed up for their project as soon as possible because I think there is a general understanding with the demand right now for construction services in the United States. Not everybody who wants a building gets one. So it is a busy time and it is, you know, it is a great opportunity for us to really reward the people who are great partners for us. Brent Edward Thielman: Perfect. And then, I wanted to ask about the modular expansion, the 3,000,000 to 4,000,000 square feet. Does all of that come online at 2026, or does that kind of come online throughout 2026? You know, what is your ability to add square footage beyond that, and then how does that impact CapEx this year? William George: So the single biggest procurement of space will close at February. We will be doing something in that space within a month or two. But it will not be fully productive till the end of the year. So I would say it is more—it is a gradual addition over the course of the year. But I think some of that space will be productive, especially final assembly space. We can be productive in that very, very quickly. Brent Edward Thielman: And do you have a forecast for 2026 CapEx, Bill? William George: If I had to—so a lot of it will depend on whether we sign leases or purchase buildings. We are doing one very large building purchase in the first quarter. We are looking at both leasing and purchasing for another very big that we will probably be making in North Carolina. So I really do not. If I were forced to, I would say the 1.7% you just saw is kind of a baseline rate for us right now. And then, you know, if you buy a building and it is $60,000,000 or $70,000,000, that is going to move the meter, you know, a couple tenths of a percent. Brent Edward Thielman: You know? William George: So that is what I have got for you. Brent Edward Thielman: Got it. Okay. Hey. Congrats again. Thank you. See you. Thanks. Operator: Thank you. One moment for the next question. Our next question is coming from the line of Julio Romero of Sidoti & Company. Your line is open. Julio Romero: Thanks. Hey. Good morning, guys. My first question is on the same-store sales growth expectation of mid to high teens year over year in 2026, more weighted in the first half. Could you give us a sense of how much of the full-year contribution is weighted to that first half? In other words, are we looking at a particularly strong first and second quarter, where the same-store sales growth is similar to what you saw in Q1 2023 and Q4 2024 in that 30% growth range? Or how would you have us think about that growth in the first half? It is interesting. It is not so much that the growth is heavier in the first half as that the comparables last year are steeper in the second half of this year. So I think we are going to grow consistently through the year. But you saw—although the extra growth you saw third and fourth quarter of last year just makes it a steeper comparable. So, essentially, we looked at—we budget. Right? We just had our year-end budgeting process. We look really hard at what of the new backlog and of the existing backlog we think will come through. We think about our service business. We think about our modular capacity. And we come up with sort of a full-year revenue number. But then when you just say, okay. Well, yeah. And, you know, so that has a percentage, let us say, in the mid to high teens. Then when you look at that, you have to take into account that last year, the pattern was a pretty steep ramp up. And so the first two quarters just—you know, the number you are going to compare to is proportionately a little smaller. Super helpful there. And then you know, I had one other one about, you know, as data centers continue to increase in density, you are obviously seeing increase in scope and in project complexity. Can you maybe dive a little bit into how that improves the project economics for Comfort Systems. In other words, if scope is increasing three to four times versus five years ago, given the scarcity of skilled contractors that can kind of tackle that. Fair to assume your project economics are outpacing the increasing density of data centers? William George: Yeah. Well, it certainly has been doing that over the last several quarters, right, as evidenced by the results that we just demonstrated. We definitely have an opportunity to, you know, demand that we be rewarded for the risk and for the commitment of scarce resources to people. At Comfort, we do not price primarily based on, you know, gross profit per hour worked. We put a very, very heavy emphasis on work that will be good for our people, places where, you know, they can get to it without stressing their family. They can find a place to live. They can get lunch. The other contractors on the job who are their friends. So there is a—you know, when your workforce is as scarce as ours is, if you thought about it, I do not think it would surprise you to know that being good to your workforce is almost more important than making sure that you optimize something that is in a spreadsheet. Right? Because the spreadsheet is no good if the people are not there. Brian E. Lane: And, Julio, one more thing. I mean, even when they are getting bigger, which they are, getting a lot bigger. The work is still the same for us. Is this more of it? Julie S. Shaeff: And I really do think it helps with your productivity and your planning. At least the ones I have seen. So William George: I think it does help our economics in terms of how fast we can go as well. Julio Romero: Very helpful. I will pass it on. Thank you. Julie S. Shaeff: Thanks. Thanks, Julio. Operator: Thank you. One moment for the next question. Question comes from the line of Brent Edward Thielman of D.A. Davidson & Company. Your line is open. Brent Edward Thielman: Hey, y’all. Great quarter again. I guess just a question. I mean, it looks like you saw a measurable increase in modular contribution in the fourth quarter and happened to see pretty meaningful operating leverage here as well. SG&A as a percentage of revenue—Bill, I mean, I think it is the lowest I think you have ever seen for a fourth quarter that I can remember. Did the two go hand in hand? Anything else that you would say is driving that operating leverage that, you know, ultimately reflecting this benefit at the fixed overhead at Modular this quarter. William George: So I will start with the second one and say something brief about your first question, and then let us see if anybody else has anything they want to say. You know, that SG&A leverage—we increased our SG&A expenditures by $155,000,000—is a lot of money in the real world. That is a lot of human beings and computers and it is just that our revenue is growing so much faster that we are still getting leverage, and, you know, I think we just talked about pretty strong revenue growth next year. If we were to hit that revenue growth, I do not think our SG&A would grow quite as fast. So there is some of that still available to us. Now as far as the prior question goes, and, you know, if I do not answer it, I think it is pretty down-to-earth answer. It is, you know, it is execution. It is getting good pricing. It is just having an opportunity to go out and, you know, let our people do what they are great at. And having them have enough money in the job to account for the risks and to take care of, you know, take care of their people. I know. Maybe I did not answer your first question, but that is what I am thinking. Brian E. Lane: Okay. Well, to be continued there, Bill, I guess. Brent Edward Thielman: Maybe another question just on modular. You guys had a number of initial—I mean, even before talking about this 4,000,000 square footage, a lot of initiatives in terms of growing physical space, upgrading equipment, so I think all were intended to help you kind of debottleneck. Where would you say you are in terms of leveraging the investments you already made there at Modular? And are there still some of these things coming online through this year before the square footage increase that, you know, you maybe you have not fully realized the benefits of today? William George: I mean, yeah. I mean, we are on a fantastic journey. Right? One of the interesting things—you heard me talk about how we might be buying more buildings. One of the reasons we are looking at buying buildings rather than leasing them—you know, we do not want to be in the real estate business—is because the amount of money we are putting into these buildings in the form of robotics, and, you know, other optimizations using automation, makes it so that you really do not want to drop $30,000,000 into a $60,000,000 building you do not own. I think we are making great progress. I think that it is really—it is extraordinary to see what is being accomplished by those guys. The last thing I want to do is just come back to the beginning of your question. The other thing is, you know, modular grew precipitously. And if you look in the MD&A, you can see, you know, it grew precipitously on both revenue and the profitability side. But it is still only 18% of Comfort. The rest of Comfort is growing pretty much the same. Modular is an extraordinary, wonderful ingredient for our success, but it is one ingredient and everything else is doing great as well. Brian E. Lane: Yeah. If I could, I would like to just commend that team. You know, what the modular teams at Comfort Systems have been able to accomplish is really quite extraordinary with the expansion and also performance that they are continuing. Brent Edward Thielman: Yeah. For sure. One more if I could. Just, I mean, it looks like you saw, like, a $1,600,000,000 increase in backlog for your, I guess, non-modular Texas operations for the year. Could you just talk about markets outside of data center and Texas? Or should we just be talking about data center and Texas to the stick build operations? Just adds a few questions there. Brian E. Lane: Yeah. No. I mean, if you are talking about Texas, it is a combination of modular and stick build. William George: We are getting a lot of electrical work. As you know, we have the largest electrical contractor here in Texas for sure. We are going out more west—they are building in bigger, so we—you know, that has grown considerably. But, also, the other electricals we have are just doing—are outstanding as well throughout the country. So, you know, I know modular gets a lot of attention. But the stick build is still a very popular build—how people are building either data or other facilities. Brian E. Lane: Yeah. And, you know, like, advanced technology, which for us, at least in the last twelve months, is almost—it is overwhelmingly data center. That went from 33% of our revenue to, like, 45% of our revenue year over year. So the reality is it is a lot in Texas—data center is just coming and demanding the construction resources that we have. And, you know, the good partners are making it worth our while to dedicate the overwhelming majority of our resources to that vertical. William George: Yeah. I am just going to—the Texas situation is really probably unique in the country with the amount of build that they are going—West Texas, there is a lot of, obviously, energy, et cetera that is out there. Brian E. Lane: But the amount of opportunities we are looking at, you know, is really outstanding. Julie S. Shaeff: Yep. Alright. Thanks a lot. Appreciate it. Operator: Thank you. One moment for the next question, please. Our next question is coming from the line of Joshua K. Chan of UBS. Please go ahead. Joshua K. Chan: Hi. Good morning, Brian, Trent, Bill, Julie. Congrats on a really strong quarter. Thank you. Yeah. I guess, Brian, you have talked for a long time about, you know, not overcommitting to jobs. And so do you feel like your subsidiaries still understand that? Do you feel like there is any push from them to take more jobs than you are comfortable with? Just kind of how is that kind of progressing so far? Brian E. Lane: Yeah. Given—hey, Josh. That is a good question. You know, we have talked about this a long time. I think it is a great question. We remain very disciplined. You know, we go through, on the acquisition side of a job, a detailed process where we lay out our labor projections on our current work, in the future work we are looking at—when is it going to start, who is going to be available, how many are going to be available, the supervision for that work. So we are right now in a very good position to handle all our backlog and assess what is coming that we can do to make sure we keep our profitability up, productivity up, and keep everybody safe. So, no, we have not—people are not pushing over their skis. The work we have, we can handle. Joshua K. Chan: That is great to hear. Yeah. Thanks, Brian. And then, I guess, on your outlook, you did call out stronger growth in the first half. Obviously, there was an ice storm in a lot of the South and Southeast in Q1. So I just want to make sure that the operations kind of, you know, handled that well and that that is not a concern in the near term, I guess. William George: So we did have some of our biggest operations who had jobs shut down for multiple days in January. That is why we are seasonally lower. Right? That is why every year, we are seasonally lower. There is always something like that. So I do not think there is anything—you know, there are ice storms every year. It is just what you would normally see. You know? And while we are talking about this, you know, if you look at the weather, particularly up in the North with temperatures we had, really want to applaud our guys for working through it. They did a heck of a job, you know, in very challenging conditions for sure. Joshua K. Chan: Yeah. That is right. Okay. Yeah. Congrats on a good quarter and a strong outlook. Thanks. Operator: One moment for the next question. And our next question is coming from the line of Brian Daniel Brophy of Stifel. Your line is open. Brian Daniel Brophy: Congrats on a nice quarter. Right. Obviously, there was some discussion about a month ago on some potential changes to cooling requirements on next-generation chips. Just any color on how that may impact your business and any notable implications we should be thinking about. William George: I would say not at all. You know, the new chip stuff—they said, okay, we can use 45-degree water. Still needs pipe. Still needs water. Forty-five-degree water is not naturally occurring for 99% of the year, and 99% of the places. So I do not—you know, if you just talk to our smartest people, until they figure out how to run the servers without electricity, they are going to have heat. And, yeah, we just think people are going to need electricians and pipe fitters, honestly. Brian E. Lane: Far more impactful for the OEMs than for us. Brian Daniel Brophy: Noted. That is helpful. And then just wanted to ask about the M&A pipeline and cash deployment. You guys are obviously generating a lot of cash. A very large cash balance at this point. Seems like your cash generation may be outpacing your ability to deploy into M&A. Maybe that is true. Maybe that is not. But just big picture, how are you also thinking about other avenues on the capital deployment side? Thanks. William George: So the pipeline is good. But the cash flow is relentless. Sweet. You know, we like our pipeline. We will get some done. You might have noticed we spent a couple $100,000,000 buying shares this past year. You know, two consecutive $0.10 increases to our dividend is almost a 50% increase to our dividend. I know our stock price keeps running away from it. At the same time, proportionately, if you look at the cash that we have and at least project to have this year, given the M&A—we, you know, with, you know, the range of M&A we might do—we are not going to have an unprecedented amount of cash as compared to the size of Comfort Systems. There have been times in the past—when the financial crisis started, we had more cash proportionately than we think we are going to have in the next little while. And that is why we have some of the great companies we have today. So we are definitely of a mindset to continue to have very, very high demands for conviction when we do acquisitions. We are certainly paying more for companies than we ever have. Because they are worth more. You know, a company with hundreds of electricians that have worked together as a team for years, for decades, is worth more than it was in the past. But at some point, you know, we do actually think, you know, we are building for a multi-decade period. And just want to have people that come in and that are good peers to the amazing companies we have. You know? One of the reasons Comfort is so successful is we have so many companies that have—they have been building data centers for decades. Right? There is nobody on the planet that has, you know, a better pedigree than us in building data centers. And, you know, we want to keep the quality of our group of companies, you know, very high. And so with acquisitions, we have to choose between, you know, between conviction and sort of making spreadsheets happy—we are going to stick with conviction. It has done well for us in the past. Brian Daniel Brophy: Understood. That is helpful color. I will pass it on. Operator: Thank you. And the next question is coming from the line of Sangita Jain of KeyBanc. Your line is open. So I have a question on the backlog duration becoming longer, which is kind of a little bit different from what has been the case for you guys. Since we still have the supply chain and tariff uncertainties, are you having to contract for this longer-duration backlog a little bit differently so that you know you are protecting your return when you deliver them, let us say, in 2028? William George: You know, if you look across our cost—like, if you look at our cost of goods sold and you look across our cost—there really are not—we do not quote equipment or anything that is highly spec, which on this scale of work, it is all highly spec, without getting a quote from someone else. And so that really has not changed. We are actually being released, even on these long jobs, to purchase stuff very, very early. Sometimes being released to—we are being given enough of a commitment to purchase stuff before the work even goes into our backlog. The rest of our cost and where we take all of our risk is labor. You know, there is no such thing as, you know, sort of four-year price locks for labor. So what we rely on there is that we have the best people in the country at knowing that they are going to have to take care of their people and making sure that they put the money in the jobs that they are going to need to take care of their people. Trent T. McKenna: And, Sangita, Bill and I—this is Trent. Bill and I, as recovering attorneys, both appreciate how much our legal team does to make sure that we have the right contract terms to protect us as we go forward with all this work. And they do a really, really great job making sure that we are protected contractually. William George: They are doing better than they did when Trent and I were general counsel. Without a doubt. Trent T. McKenna: Without a doubt. I will certify that. William George: Possible we have a little more bargaining power. Sangita Jain: Got it. Let me ask one more on the modular capacity increase. Can you kind of walk us through your decision on going from 3,000,000 to 4,000,000? Is that a function of a specific customer coming and asking you for additional capacity? Or is it more you kind of seeing the runway ahead? William George: You know, it is primarily us taking steps to meet more of the demand from our two largest customers. They would buy more if they could, and we really want to do everything we can. They have been great partners for us. We want to be great partners for them. We have added a few customers, but none of them are at scale. And if you look at the new buildings, and you say, okay. What is going to be built in those buildings? The floor space right now is planned for those two large hyperscaler customers who have been so good to us. Sangita Jain: Appreciate that. Thank you. Julie S. Shaeff: Thanks. Operator: Thank you. I would now like to turn the call back over to Brian Lane for closing remarks. Please go ahead, Brian. Brian E. Lane: Alright. Thank you. In closing, I really want to thank our amazing employees again. They are truly outstanding. We had a great 2025. And we are really excited about 2026. Thanks for your interest in Comfort Systems USA, Inc. We look forward to seeing you on the road soon, and hope you all have a great weekend. Operator: This does conclude today’s conference call. You may all disconnect.
Operator: Ladies and gentlemen, welcome to the Umicore Full Year Results 2025 Conference Call. Your speaker for this call will be Bart Sap, CEO; and Wannes Peferoen, CFO. [Operator Instructions] I will now hand the conference over to the speakers. Please go ahead. Bart Sap: Good morning, everyone, and welcome to the full year results 2025 of Umicore. And as you can see here, of course, we have taken this picture, a beautiful gold nugget. And I think for the ones following us will understand why we have put that picture forward. And of course, I'll be coming back on that later when I look back on 2025. Now if you read our set of numbers, I would like to highlight again that we have adjusted during the CMD a new reporting structure, different segmentations in our business group. So please do have another good look at this slide because we will be reporting and commenting the numbers in the new structure. So Wannes is sitting here on the left with me, and he will also comment, of course, on the finance and some of the business trends as well as usual. And let's have a short look at the agenda. So nothing particular here. First of all, we go on the core strategy, the key numbers. We're going to go over the outlook ultimately for 2026 and then hopefully have an engaging Q&A at the end of the session. Yes, our core strategy. Now we launched our core strategy in March 2025, where we indeed had a different approach and not just chasing growth at any cost, much more towards that value recovery and battery materials, but also more value extraction in our foundation businesses. And roughly around the time that we were announcing our CMD, our new strategy, the world started to move violently, I would say. And the geopolitical landscape has been changing fundamentally. And therefore, also the markets as well as supply chains have been reshaped and continue to be influenced by new policies coming out. So the world is structurally different versus roughly a year ago. Volatility is, for the time being, the new normal, and we will continue to navigate and, of course, react and adjust according to the volatility that we see. Now if I zoom out and see what's happening in the world, it's clear that we have a much more fragmented world and that the world is waking up that if you want to be a technology leader, if you want to have a strong economy going forward, you need these critical raw materials. You need to have your own supply chains, and that's where Umicore's circular business model, which is multi-metal on the one hand, on the recycling refining side, but also on the materials that activate the world downstream, the applications downstream is more relevant than ever. So having a secure and sustainable supply chain in different parts of the world becomes a key element for society. And this is right up the alley of our strategy, and we [indiscernible] our business model with 4 key pillars: capital, performance, people and culture and partnerships. And let me now highlight some of the achievements that we had in these different segments over the years and some of the actions that we took. First of all, on the capital, and that was the first picture of the presentation. Obviously, we sold and had a subsequent lease-in of our permanent gold inventories. This has unlocked significant value. This also has helped further to deleverage the company, but also it transitions the price risk, the long-term prices of these inventories outside of Umicore. Now we also said at that time that lease rates for gold are typically stable. It's an alternative versus cash or pure money in the end. And even in that volatility and that frenzy, let's say, around PGMs at this point in time, also lease rates have -- for gold have remained stable at 0.5% to the 1% mark, well below typical financing rates that you would expect for normal debt. Now next to the gold, we also have been very disciplined on our CapEx. Remember, we guided at the start of the year more to EUR 400 million. In the end, we came in at EUR 310 million by making deliberate choices, but also being very strict on the execution of the projects that we are having. If I go to the performance pillar, there the full year results is in line with our latest upgraded guidance. So we said between EUR 790 million and EUR 840 million during the summer. We came out slightly above that EUR 840 million. So we're very satisfied with this set of numbers, a strong performance, I would say. And this was really, really also supported by the efficiencies, targets and the mindset that we are cultivating more and more within Umicore. And we promised EUR 100 million. We achieved that target, and Wannes will explain later on, of course, that has helped to offset the inflation, but also some FX headwinds that we had in2025. So I mentioned it already, we're driving the company much more to a performance culture where we take our accountability. We really focus on what is the essence. We do what we need to do in a very disciplined way, and this is showing results, and we will continue to push forward in that direction. On the partnerships, we also not have been sitting still, I would say. We had quite some action there as well. And we closed a partnership around our silicon anode materials with a Korean company, HS Hyosung Advanced Materials. And together with them, we will industrialize this really an interesting and exciting technology, and we found a way actually to bring that technology to the market without having to allocate excessive cash or very sizable amounts of cash for Umicore. Next to that, critical raw materials. We have been working on that trend, of course, already for quite a while. And we announced our partnership with STL, Societe du Terril de Lubumbashi. So basically, we have shared technologies, have upgraded installations in the DRC in order to recover germanium from old mining tailings. And this was really a support for the business going in '25 and beyond. Now let me go to the key figures. Wannes will go in more detail, so I'll stay pretty high level here. I would say we really had a strong performance in our foundation business. It was supported by group-wide operational excellence efforts and a favorable metal price environment. EBITDA up 11% to EUR 847 million, 24% EBITDA margin, a good free cash flow supported by the gold inventory sales of EUR 524 million and leverage of 1.6. I think we can all agree this is a very solid set of numbers in the current environment that we live in. So happy with that. Let me now go to the different business groups. Let's start off with Battery Materials Solutions. So for your reference, Battery Material Solutions now represents, on the one hand, Battery Cathode Materials and the battery recycling business. And before I go in the details of the different business units, I would like to have another glance at the Battery Cathode Materials and EV markets out there at this point in time. So at the CMD in March 2025, we said that this market is still taking shape and has inherent volatility. Well, that's what we have seen in 2025 and also what we continue to see in 2026. EV penetration around the globe is progressing, but at quite different speeds, China leading decisively. Europe is following more moderate and U.S., well, there, actually, we are quite behind. And of course, the policy change of the U.S. -- the new U.S. administration is not helping that. The CO2 tolerance is much higher than in previous administrations. That is clear. And that's why the policy is shifting and pivoting away, I even would have to say, from EVs to internal combustion engines, right? This clearly has an impact, and you have seen announcements that even battery makers in the U.S. are now focusing more on energy storage than pure EVs. And of course, quite a number of OEMs have had to make difficult announcements. If I look to Europe and China, that's really a -- and it's depicted here as well with an arrow. That's really an area where there's an interdependency. Today, we see that China still has overcapacity that a lot of OEMs are relying on China to import their batteries into Europe. Also for cathode material, we still see cathode material flowing into Europe at this point in time. So competition is fierce. I think that is fair to say. Now at the same time, we also see that there's a heightened risk of trade tensions of potential restrictions on exports of certain technologies by the Chinese government on the one hand, but also in Europe, a much stronger talk about these local Brazilian supply chains and local content requirements. So the next days, the EU is expected to come out with some policies. These will be important to monitor those and could really make a substantial difference in the European landscape. So in general, summarizing, the recent industry announcements are emphasizing that the growth in Europe is somewhat challenging, but it also highlights the increased importance of our take-or-pay contracts, and I'll get back to that. Now going to the numbers. So if we look in 2025 for Battery Cathode Materials, we did see a revenue growth, a revenue growth of roughly 11% versus 2024. Volumes -- actual deliveries were up versus last year. We did collect take-or-pay compensation for contractual volume shortfall. And there was a partial offset by lower refining income because of a weaker, more challenging cobalt environment on the pure refining side. And also, of course, the nickel price environment was not necessarily beneficial. Now the adjusted EBITDA as per our expectation came in around breakeven, which is a clear improvement versus last year, where the breakeven result was still containing a substantial one-off, a positive one-off in 2024. Now if you look at Battery Recycling Solutions, during the CMD, we said we would be roughly at minus EUR 25 million. We came in at minus EUR 21 million. Really also here, we continue to focus on optimizing our process and recycling technology. At the same time, we're also very diligent here on the execution and cost management. Overall, you can see a clear also improvement on the EBITDA level, '24 versus '25 despite that we did not have that one-off in there. All right. Let's go to the next business group, and that's Catalysis. In good tradition, we also always start with an overview of the internal combustion passenger car production numbers. And here, we see that '25 is slightly lower than '24. It's not a substantial drop actually. It's minus 0.7%. Europe was more down. At the same time, South America and China, these regions even further progressed. If I then look at the HDD segment, Europe, a slight decline, but a positive evolution in China of 7.1% growth, of course, starting from a relatively low base as the previous quarters -- or actually the last quarters in 2024 were not strong. Now looking at the numbers, a solid set of numbers. We see a sustained demand for our products throughout the business group in a volatile market, I would say, so in an overall challenging economic backdrop. At the same time, we also continue to focus on our operational excellence as we have been doing for the last years, and we're getting increasingly better at this year after year. Now if I look to the Auto Cat, our volumes in Auto Cat were strong. We outperformed the ICE, so the internal combustion engine light-duty vehicle market, which reflects our strong position. But also the focus, as I mentioned, of operational excellence and efficiency is really part of the DNA. We continue further footprint consolidation, amongst others in Asia, where we have taken decisions around our Japanese operations. Precious Metals Chemistry, that follows to a certain degree, of course, the Automotive Catalysts business with the inorganic chemicals. They're the supplier of the inorganic solutions to the Automotive Catalysts business. So also a strong performance there. A good set, of course, PGM price support helping this business also forward. Now our homogeneous catalyst business, which is selling typically in the broader chemical industry, we saw some softness in line with the overall chemical industry pain that we're all going through. Fuel Cell and Stationary Catalysts, the earnings clearly improved. We had higher deliveries for our fuel cell catalyst solutions. We also are on track with our proton exchange membrane fuel cell plant in China, expected to start production in the course of 2026. On the stationary catalyst side of things, we do see a strong demand for backup power solutions and exhaust for these backup power solutions, specifically for data centers in the context of the high demand of the AI companies, AI application. So Catalysis EBITDA margin, 27%. Recycling. Well, you cannot talk about recycling about -- unless you talk about the metal prices. And here, you can, of course, see that metal prices in 2025 are significantly higher than 2024. You know that Umicore that we decided to hedge quite a number of our -- quite an amount of our exposure forward. Why? It creates visibility. It stabilizes earnings profile and it also protects against downside risk. That means if the price environment rallies beyond the average hedge price, indeed, you have some opportunity loss. But still today, we're very happy with these hedges. Now on the remaining open exposure, of course, there's a positive upside of stronger PGM prices to the overall earnings of the business group segment. Now if we look at the overall set of numbers for the business group, we see an advancement in the revenues. At the same time, a stable EBITDA performance with a 39% EBITDA margin. So in Precious Metals Refining, our revenues were in line with previous years. The metal price environment was supportive. We had good volumes. There were -- of course, we had some average hedge rates decreasing year-on-year, which was a backdrop or actually a drag, let's say, on the results as such. The overall mix was somewhat less favorable, still a very strong set of numbers for Precious Metals Refining. We had some slight temporary process inefficiencies, which will no longer be there in 2026, but we were able to offset these by solid contributions from our operational excellence and cost-saving efforts also in this business unit. Jewellery and Industrial Metals, I mean, the central theme here is gold, gold recycling, gold processing. I mean, really a very strong market, strong revenue growth and also a good margin expansion. So this business is also doing really well on basically also the gold evolution and the gold focus, which is there in the market. Precious Metals Management, well, we've talked about already volatility in precious metals prices is an excellent market environment to trade and make trading gains. So this business unit also performed really strong. Next business group would be Specialty Materials. And Specialty Materials is maybe a business group which is sometimes a bit yes, underrepresented or underappreciated maybe by the markets or -- and maybe we should also further strengthen our communication on this business group because it has a couple of beautiful gems in there. If I look at the business group here, a 16% EBITDA growth in 2025, EBITDA margin approaching 20%. Cobalt and Specialty Materials, there was a support of a cobalt trend where we saw a better momentum for cobalt premium products, right? And also here, again, efficiency. You've understood by now that efficiency is really part of our overall performance, and that's why we continue to stress it. If I look at Electro-Optic Materials, there we have seen that China has taken a stronger stance on exports and not a lot of germanium has left China in the course of 2025. We have this joint venture with, for instance, Societe -- so with STL basically, which I highlighted earlier. And this allowed us also to continue to supply our customers in a very strong germanium price market, added by our closed-loop refining and recycling services that we have. So Electro-Optic Materials sees strong top line growth at the end of the year, and we continue -- we expect to continue to see that growth also in 2026. So one to watch going forward. Metal Deposition Solutions, I would say, overall, a good stable performance with a different mix between the business groups. But yes, also pretty good there. So I think this is where I would like to leave it at this point in time and hand the word to Wannes. Wannes Peferoen: Thank you, Bart, and good morning, everyone. Today, I will start with EBITDA before moving on to cash flow, net debt, the P&L and balance sheet. Adjusted EBITDA was up 11%, reaching EUR 847 million, driven by volume growth across all businesses and efficiency savings. This broad-based growth resulted in EUR 125 million of EBITDA contribution. We also delivered EUR 100 million of efficiency benefits, which more than offset inflation of EUR 68 million. Metal result declined by EUR 17 million due to favorable hedges rolling off. This was partially offset by increased prices for precious and platinum group metals as well as minor metals for the remaining open or unhedged position. There was a headwind from foreign exchange of around EUR 45 million, largely due to translational effects as the euro strengthened. Adjusted EBITDA margin improved from 22% to 24%, in line with our Capital Markets Day target of more than 23%. Now zooming in on our efficiency program. We delivered EUR 100 million of efficiency benefits, in line with our target. 25% came from top line growth, 20% was due to a reduction in cost of goods sold and 55% came from a reduction in SG&A and research and development, in particular, in Battery Material Solutions, Catalysis and Corporate. Headcount in the group reduced 3%. Turning to cash flow. Cash flow from operations before changes in working capital amounted to EUR 1.1 billion. This was supported by cash proceeds of EUR 525 million from the sale and subsequent lease-in of the permanent gold inventory in recycling. We finalized this transaction in October last year. It enabled us to unlock significant value, strengthen our balance sheet and reduce finance costs. Net working capital increased by EUR 298 million, mainly as a result of higher activity and to some extent, increased metal prices. The significant reduction in CapEx down to EUR 310 million demonstrates our capital discipline. This reduction is most prominent in Battery Cathode Materials, where we are leveraging footprint flexibility and phasing our spending. Free cash flow from operations was EUR 524 million. Moving to the net cash flow bridge and net debt. The free operating cash flow largely covered the EUR 250 million equity injection into our joint venture, IONWAY in January '25 as well as taxes, interest and dividends paid. In January this year, after the year-end, Umicore and PowerCo each contributed an additional EUR 175 million to the IONWAY joint venture. Net debt reduced slightly to EUR 1.4 billion, resulting in a leverage of 1.6x adjusted EBITDA, down from 1.9x at the end of '24. This is well below the anticipated peak of 2.5x as we focus on capital discipline and maintaining a solid balance sheet. Looking at the consolidated P&L. Adjusted EBIT improved by 21% to EUR 579 million. Adjusted net finance costs of EUR 173 million were up EUR 65 million, mostly due to lower interest income on cash as rates came down and a negative impact from foreign exchange. Adjusted tax charges were in line with the prior year. Pretax income was slightly up, but the adjusted effective tax rate came down from 29% to 26%. Adjusted net income of EUR 288 million was up EUR 33 million. And adjusted earnings per share were up 13% at EUR 1.2. We are proposing a dividend of EUR 0.50 per share, in line with last year and with our policy of a stable or rising dividend. And this represents a payout ratio of 42%. Adjustments to EBITDA amounted to EUR 365 million. As I said earlier, we optimized our business model in recycling by selling the permanent gold inventory and replacing it by revolving leases. This generates a pretax gain of EUR 486 million. This was partly offset by an impairment of our joint venture participation in Element 6 and provisions related to specific restructuring programs. Adjustments to net result include a derecognition of a previously recognized deferred tax asset and the tax impact of the gold inventory sale. Net income was EUR 385 million compared to minus EUR 1.5 billion in the prior year when there was an impairment charge for Battery Cathode Materials. There was a big improvement in return on capital employed from 12.3% to 15.7%. Now turning to the consolidated balance sheet. Our liquidity remains robust with cash of EUR 1.6 billion after repaying a EUR 500 million convertible bond in June. And as I said earlier, net debt was stable at EUR 1.4 billion, and the leverage ratio came down from 1.9 to 1.6 by the end of the year. Group equity improved to EUR 2.3 billion, corresponding to a net gearing ratio of 37%. We have hedged a substantial portion of our metal exposure for '26, '27 and '28, and we continue to look for opportunities to hedge further, in particular, for '29 and 2030, taking into account market interest and forward rates. So to sum up, we delivered a strong performance in '25 as a result of volume growth across the board and EUR 100 million of efficiency benefits. Adjusted EBITDA improved in every business, except recycling, where it was stable and CapEx was well below the prior year. Selling the permanent gold inventory has given us additional headroom while reducing future finance costs. And we continue to focus on driving cost efficiencies, controlling working capital and disciplined capital allocation in '26. I will now hand it back to Bart. Thank you. Bart Sap: Thank you, Wannes, for that overview. Very clear. Let's maybe have a look at the outlook for 2026. So the essence basically is that we entered the year on a stronger footing. And if I look at the different business groups, on Catalysis, we continue to have a very strong performance in this business group. We see that continue into 2026, and we are happy with the state in which it is, and that will continue going forward. And Recycling, I think the essence is that in the current favorable metal price environment that we'll be able to offset the negative impact of the average lower hedged metal prices as well as the shutdown, which is foreseen in 2026. So also moving on well there. Specialty Materials, continued strong performance. We do expect we continue -- we believe we continue to see the top line growth, amongst others, in the germanium products, but also a supportive cobalt price environment will help to further support the results. And in Battery Materials, we continue to pursue the midterm plan to recover value, while at the same time, we, of course, have to navigate a volatile and competitive market. So we continue to focus on rigorous capital allocation. We're going to continue to lever our customer contracts with our take-or-pay commitments on which we clearly say that the importance of the take-or-pay mechanisms is increasing given the volume development that we see. And in Battery Materials Solutions, we're going to continue to be disciplined in our spending broadly in line with 2025. On corporate costs, we expect a slight increase because we continue to invest in AI-driven solutions to further enhance and support our operational excellence. For capital expenditures, we are expected to increase versus 2025. And this is mainly driven by a selective growth initiatives in Recycling. So engineering that we do for the decision we need to take around the expansion in Hoboken in our precious metals recycling business that we will take in 2026, but also selective high-quality growth investments in Specialty Materials. So on CapEx, we do expect to be in a range between this year and last year guidance of EUR 400 million with, again, a very good focus on disciplined execution. So if I sum that up, I would say that we will not be providing a concrete guidance today and this is because the market is still very dynamic. And we will have to continue to navigate that environment. Yet based on what we see today, we would expect adjusted EBITDA to further progress into 2026. Now shortly wrapping up before we go into the Q&A. So -- and this is also a shout out to the teams. I think 2025 was really a pivotal year. And Umicore and the teams have shown great resilience. They have shown great discipline also to focus on what our core is and taking courageous actions to basically be able to deliver this strong set of numbers. It's fully in line with our core strategy execution. We're well on track. We're entering 2026 on a much stronger footing, and we will continue to build on the momentum of 2025 going into 2026. So really positive 2025 and with confidence we go into 2026. And with that, we go to the Q&A. Operator: [Operator Instructions] The first question that we have is coming from Wim Hoste from KBC Securities. Wim Hoste: Do you hear me? Bart Sap: Yes. Wim Hoste: I have 2, please. On metal price hedging, you indicated that hedge levels in '26 will be below '25. Can you maybe elaborate a little bit on the outlook of your hedge book? Is it fair to assume that the hedging price levels will increase probably materially as from '27 onwards? Can you maybe elaborate on that? And then also linked to metal price hedges, what are the limitations to hedging more and further into the future? I think you indicated that you're looking to increase the hedging for '29 and 2030. What is prohibitive in this case? Is it just availability of counterparties? Is it financing costs, which get increasingly expensive, extending the hedges into time? Can you maybe elaborate also a little bit on that? Those are the questions. Wannes Peferoen: Wim, Wannes here. I'll take those questions. So looking at the metal price levels of the hedges, that is something we don't communicate. But at the same time, we can also share that, I mean, moving from '25 into '26, there will be less support from the average hedge prices that we have looking at '26. At the same time, looking at the average hedges that have been locked in or the volume of hedges that we have locked in, looking at '26 and '27, this is where 70% on average of the exposure that has been locked in. So I think looking at the metal price exposure, this is where in the current favorable environment, there's still potential. There's still upward potential, but it's limited to that open exposure of, let's say, roughly 30%. Now we are looking into hedging further looking at '29, 2030, again, on the back of creating that visibility, creating that predictability of the earnings. But this is where looking at the market environment, on the one hand, we see a heavy backwardation, looking in particular at the PGM prices, but also limited market interest from counterparties to lock in those prices, hence, also the heavy backwardation. So this is something that we are monitoring closely in order to secure basically at the right time, the right price levels for those years, '29 and 2030. Operator: The next question is coming from Sebastian Bray from Berenberg. Wannes Peferoen: Sebastian, we don't hear you. Sebastian Bray: I have a few, please. The first is on the financing costs. Are there any one-off [Technical Difficulty] Operator: Sebastian, we lost you for a second. I will open your line again. Sebastian Bray: I think there's a lag on the mic, so I'm just going to speak. What would you provide as guidance for '26 financing costs? My second question is on the [Technical Difficulty] Bart Sap: Sorry, Sebastian, we really can't hear your questions. Sebastian Bray: What exactly -- why can't we go back by '28, '29 to a level of recycling earnings akin to what we had in '21, i.e. [Technical Difficulty] Bart Sap: So maybe let's see what we think we understood. So I think there's a question on the one hand around financing evolution... Sebastian Bray: And final one on the VW JV. Is there any chance [Technical Difficulty] Bart Sap: Maybe we go to... Caroline Kerremans: I think we have an issue with the line on your side, Sebastian. So I think it's difficult to receive your questions. If there is any opportunity to send them over the chat, that would maybe be helpful, and then we can move on for now to the next analyst, I believe, because it's difficult to take these as such. Gaia, can you move on to the next analyst, please? Operator: Yes. The next question is coming from Chetan Udeshi from JPMorgan. Chetan Udeshi: Can you hear me okay? Bart Sap: Yes, yes. Loud and clear, Chetan. Chetan Udeshi: Okay. Cool. So I had a few questions. First one, I appreciate you're not giving the guidance, even though you gave same point last year, some guidance for 2024, but I also remember Umicore historically never gave guidance at the start of the year. So I don't know if you are just going back to the old practice. But just based on all of the things that you mentioned, qualitative assessment, what you've seen so far, what is your feeling on the consensus that we have from [indiscernible] for 2026? Do you have a view on where the consensus is? And is that in the right ballpark? The second question, I was just curious on your take-or-pay contribution in the Battery Materials. I mean it's pretty clear right now that some of your customers like ACC, they publicly announced that they are scaling back the ramp-up plans. So I'm just curious, are you getting compensated 1:1 for the lost volumes? Or is it more a negotiation where you are still trying to be flexible if your customer can't take the volumes? And the third question, on Recycling, you mentioned some process inefficiencies. Can you quantify that? Is that a material drag last year, which shouldn't recur this year? Bart Sap: Okay. Wannes, you go on the guidance or I can go on the guidance, doesn't matter? Wannes Peferoen: Well, I think on the guidance, again, we highlighted it's too early to be very concrete. At the same time, looking at EBITDA, this is where we say, yes, we are confident on the year '26, and we expect to make some progress in '26. Looking at other elements of guidance. CapEx, we highlighted, we expect the CapEx to come in between EUR 300 million and EUR 400 million. We will continue to be diligent and disciplined. If you look at Battery Cathode Materials, we reduced the spend in '25 versus what we anticipated, and we anticipate to do the same for '26. At the same time, looking at the foundation business, this is where in Precious Metals Refining, we are working. We're engineering on that expansion of the flow sheet that will result in some step-up in CapEx. And in Specialty Materials, we see some very specific growth opportunities, which we want to support. So hence, the range of EUR 300 million to EUR 400 million. Now the favorable metal price environment is obviously -- can be supportive to the EBITDA, but it can also put pressure on the working capital. And this is something where we will diligently work on in order to make sure that we can offset to a maximum extent any upside pressure on working capital. I think those are key elements, I think we can guide on today. Bart Sap: Yes, that's right, Wannes. And last year, we decided to guide because of the specific circumstances around all the trade uncertainty and the tariffs, right? So we wanted to be clear also there where group was heading and to give you clarity because it was probably the biggest uncertainty out there in the market at that point in time. Now on your second question, the take-or-pay and the further progress. Well, first of all, I mean, I think we have been pretty transparent and clear that in 2025, there is indeed a portion of take-or-pay in the results for which we are financially covered. The ramp-up across contracts. I will not talk about specific contracts. I will never do that. But we see that across -- if I talk more broadly on the ramp-up, it is slower than what we would have wanted to see or what our best view was at the CMD in March. So the weight of take-or-pay in that trajectory that we shared is increasing. right? And this is something that I would like to highlight. At the same time, we continue to have strong confidence in the contracts, and we will continue to leverage these contracts as we have done in '25 and will go -- will also be doing going forward. On the Recycling, I forgot what exactly the question... Chetan Udeshi: The process inefficiencies. Bart Sap: The process inefficiencies. Yes. Wannes, if you want to. Wannes Peferoen: Yes. So I mean, looking at recycling, we highlighted that the volumes were up -- the volumes processed were up. At the same time, looking at the downstream, this is where we had some technical hiccups resulting in some additional costs, some additional rework, but not too material, but at the same time, we also wanted to highlight as it does impact the results. Bart Sap: That's right. And as I highlighted in my presentation, we did offset those with further efficiencies in other parts of the plant. We just want to be transparent and open around this. Again, for 2026, there's not going to be any effect of these operational inefficiencies, so not to be taken into account for you for 2026. Caroline Kerremans: Sorry, before we move on, we can maybe take the questions of Sebastian Bray that have come in through the chat. Bart Sap: Yes. Thank you, Chetan. Caroline Kerremans: So the first question is the financing costs in 2026. Could this be down versus 2025? The second question is, could Recycling return to levels of full year 2021? And then the final question is on the JV, the IONWAY JV. Could this be recut or renegotiated as Volkswagen is cutting back on that? Bart Sap: Maybe you take the first one. I'll take the 2 other ones. Wannes Peferoen: Yes. So looking at finance costs, obviously, very difficult to guide because there's 2 components which we don't have fully in control. One is basically the cash deposits and the interest rates we get on those cash deposits. And this is also where there has been a steep decline in '25 and hence, also less contribution to the finance income, I would say. The other element is the forward points, looking at the financing transactions in foreign currencies. This is where we also carry the forward points and again, hard to predict, I would say. At the same time, I think '25 seems rather exceptionally high looking at the financing costs. I think I would anticipate to have that lower going into '26. But again, hard to give guidance on. Bart Sap: Yes. And then on Recycling, well, I think it's true. I mean, it's a fact that actually your hedged exposure or unhedged exposure, let's say, in '29, 2030, the more we move out in that period, I think we're substantially less hedged in that time frame. Suppose that the current favorable metal environment remains for all the main metals such as platinum, palladium, rhodium and of course, some others as well. Clearly, there could be a substantial upside versus the EBITDA that we are reporting today. Hence, at the same time, these prices are not guaranteed. So it's impossible for us to guide on that. But in theory, there would be, of course, a higher upside possible. On the Volkswagen question, you understand I will not comment on that. We have clear contracts in place. We are going to continue to enforce these contracts. And at this point, I have nothing material to share with you on that point. Operator: [Operator Instructions] We have our final question at the moment coming from Mazahir Mammadli from Rothschild & Co Redburn. Mazahir Mammadli: One from me. So assuming that we have a favorable metals price environment going forward in the next couple of years, what would your priorities be in terms of allocating the excess free cash flow that you generate? Bart Sap: Yes. So basically, if I understood well, it's actually a cash flow allocation question, Wannes. But I mean, let me start off here as well. I think our focus today is still really on further being cash disciplined. It's really on that value recovery. And once the balance sheet continues to remain strong and solid, we will, of course, then decide what to do with the excess funds and will be coming out to the market. So we don't have a clear view on that at this point in time because we're still -- our focus is still on solidifying in a structural way, the balance sheet. So Wannes, I don't know if you would have any... Wannes Peferoen: No, completely right. I mean, looking at what we said in the CMD is that we look at landing at a leverage -- structural leverage between 1.5 and 2, let's say. And once we have that in place, once we see that recurring, that's the next topic that we will need to discuss. Operator: We will now take our final question from Stijn Demeester. Caroline Kerremans: I have received a message from Stijn. Sorry, I will read the message. Okay, you're in. Stijn Demeester: Yes, some difficulties here. So first one is on the SK On contract and the probability of renewal in '26. Second one, on the margins for take-or-pay versus actual volumes, can you say something there in terms of where they sit? And then the last one on the shutdown in Recycling, any view on when this will happen? These are my questions. Wannes Peferoen: Sorry, Stijn, can you repeat the last question? Caroline Kerremans: When the shutdown will happen. Stijn Demeester: On the shutdown in Recycling and when we should plan it in. Bart Sap: Yes. So okay. Thank you, Stijn. Very clear. On SK On, indeed, we said that there was a probability to extend the contract, and that did happen. So we continue to supply SK On in 2026. So that is definitely a positive. On the margin of the take-or-pay, there, I think what I said, I mean, the idea of the take-or-pay margins is to protect the investments that we have done. And as you have seen also when we were guiding for 2028, we had seen different scenarios of take-or-pay and actual volume delivery, and you saw that, that range, EUR 275 million, EUR 325 million, right, was rather muted. So you could, from that, of course, deduct that the margins indeed are sufficiently strong to cover volume shortfall margins. Now on the shutdown from Hoboken PMR, I mean, this is happening in -- yes, in the second half or later this month, actually. So we are preparing or entering, as we speak, the shutdown. Stijn Demeester: If I may... Caroline Kerremans: And then before we close -- go ahead, Stijn. Stijn Demeester: So is it a correct assumption that if you would fully lean on take-or-pay that you hit the EUR 275 million? Or is that a too positive take? Bart Sap: I mean, we have said during the CMD that indeed different scenarios of take-or-pay as well as volume -- real volume offtake would give that range of EUR 275 million, EUR 325 million. So the answer is yes. Stijn Demeester: Correct. Caroline Kerremans: Before we close it off, I still have an e-mail of Georgina from Goldman Sachs. I also want to highlight that we will look into the difficulty that people are having to connect to this call that this will not happen going forward. But so let me then phrase Georgina's questions here. How much CapEx investment needs still outstanding for Battery Materials? The next question is, is it increasingly in conflict with potential growth opportunities in recycling specialty materials in management's views? It feels to me like the opportunity cost is getting larger. Bart Sap: Okay. Very clear. Wannes, maybe you take 1, I'll take 2. Wannes Peferoen: Yes. So looking at Battery Cathode Materials, as I said, in '25, we reduced the CapEx spend as we are optimizing the -- or using basically the footprint flexibility in order to reduce and phase the CapEx. So looking at Battery Cathode Materials, what we shared with the market during the CMD is that on the one hand, we have the fully owned capacity where we would need to invest about EUR 350 million. This is where we expect to be able to reduce it with EUR 100 million looking at '25 and '26. Then what we also highlighted in the Capital Markets Day is that we have the capital injection into IONWAY, where we anticipated still to invest EUR 500 million between '25 and '26. This is where we invested in 2025, EUR 250 million and where at the start of this year, invested EUR 175 million. So bringing that to a total of EUR 425 million. We expect to stay within that budget of EUR 500 million in order to finalize basically IONWAY. Bart Sap: Yes. So I think that's correct, Wannes. So in other words, I mean, we're phasing our CapEx and function of the real underlying demand that we see, and we said that we would be disciplined. And for the time being, we're not spending those CapEx. As discussed earlier, the importance of take-or-pay is growing and that immediate need is not there. And that's transit in that question on the conflict versus Recycling. Well, I mean, I would say, first of all, we have a set of businesses that we have today, right, a very strong core foundation business in which we're going to continue to invest in selective growth initiatives. I've been highlighting in the germanium in the field of Electro-Optic Materials. We will decide on the investment in Hoboken in 2026. And I think the current evolution in Battery Materials is not holding us back to do that if we wanted to do that from a financial point of view. So no, there's not an immediate conflict. Of course, if you would think about really bold moves, then, of course, value recovery in Battery Materials would definitely be, yes, an important milestone to achieve. So no, I don't see that immediate conflict on the CapEx as we are keeping it to the lowest amount possible, and we continue to lean on our take-or-pay contracts. Caroline Kerremans: Okay. Then we still have questions from UBS as well. A small reminder that normally, we stick to one question per analyst but given the situation that we are in, I'm making some exceptions. So for UBS, the first question is, can you tell us what percentage of Battery Materials Solutions sales came from take-or-pay payments? The second question is, does the guidance for the CapEx includes the IONWAY payments? If not, what should we anticipate for? And then in the cost savings, could you give an indication for the cost savings in 2026? And then we still have a question on what do you expect you to do to protect the EV supply chain? And then a final one has Umicore been asked to join projects? Bart Sap: Well, it's growing the list. Caroline Kerremans: We will slowly start to close the call, but of course, IR will remain available to respond to your questions. And I'm now handing the floor back to Bart and Wannes to answer these final questions. Bart Sap: Yes. Thank you, Geoff, for the questions. Wannes, you take 1 and 2 or... Wannes Peferoen: Yes, so looking at take-or-pay in '26, I mean, as you have seen, looking at the revenues, top line and bottom line, we saw a step-up. I mean, looking at revenue, it's 11% up. Looking at the bottom line and excluding the one-off of '24, we also saw a significant step-up. This is driven by effective volume shipments, but also by take-or-pay. And that's also why we highlighted because it is a material contribution to the top line and bottom line. Now looking at CapEx guidance. So the guidance we gave, the EUR 300 million to EUR 400 million is excluding contributions to IONWAY. And this is where, as I highlighted earlier, in '26, we contributed already EUR 175 million, and we will stay within the budget that we shared in the Capital Markets Day. So meaning that for '26, we will not exceed EUR 250 million for IONWAY equity contributions. Then looking at the cost saving objective for 2026, this is where -- in line with what we shared with the market in March last year is where we are targeting to offset inflation, and we anticipate inflation to be EUR 50 million to EUR 75 million. So that's a target that we have put forward to the teams to at least generate savings in order to offset that anticipated inflation. Bart Sap: Yes. And then on the question on the EU EV supply chain. Well, I think I can only base myself, of course, on the information which is out there in the press and that you might also have seen, but which somehow also confirms the feeling that I had earlier is that the commission might be looking at indeed onshoring more battery production as well as battery materials production in the EU, right? The word on the street is that if you would want to get support from the EU in terms of CapEx or OpEx going forward that you would need to have a strong amount of local content, including for batteries and therefore, also cathode materials. So as mentioned in that one slide that I had, that could significantly change, of course, the equation of the European battery investments for battery materials investments, which are out there. So probably I'm as keen as you to learn what ultimately the commission will decide. On Project Vault, I mean, I would say that in general, we're talking to several regional, let's say, leaderships, not only in the EU, but of course, also in the U.S. In the meanwhile, I think the biggest impact of Project Vault, of course, is that the overall price environment for these metals is supportive. So whether a direct or an indirect fact that you have is basically that such stockpiling, which they are talking about is typically supportive for price trends at least in the shorter term. So with that, Caroline, I think we -- I don't know if there's any other questions outstanding. Caroline Kerremans: No, I think with this, we can indeed wrap it up and close the Q&A for today. Bart Sap: Well, first of all, I was looking for an engaging Q&A. The quality of the questions was definitely good. The quality of the line, definitely not. But I mean, we can rematch with most of you next week in London and really looking forward to that. Now in a summary, it will not be a surprise. We're really satisfied on how things evolved in 2025. It was a pivotal year. Where '24 was a year of crisis management, '24 -- '25 was a year of a clear new direction for the company with disciplined execution on which we delivered strongly. Our culture and the organization is moving in the right direction. We are focused on our goals, and we will continue to do so for 2026. So with that, I would like to thank you for your attendance and the ones that I see next week, looking forward to that and talk to you soon. Have a wonderful day. Operator: Thanks for participating to the call. You may now disconnect.
Operator: Good afternoon, and welcome to indie Semiconductor's Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I will now turn the call over to Ashish Gupta, Investor Relations. Mr. Gupta, please go ahead. Ashish Gupta: Thank you, operator. Good afternoon, and welcome to indie Semiconductor's Fourth Quarter 2025 Earnings Call. Joining me today are Don McClymont, indie's CEO and Co-Founder; Naixi Wu, indie's CFO; and Mark Tyndall, EVP of Corporate Development and Investor Relations. Don will provide opening remarks and discuss business highlights. Naixi will then provide a review of indie's Q4 results and business outlook. Please note that we'll be making forward-looking statements based on our current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representative of views as of any subsequent date. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For material risks and other important factors that could affect our financial results, please review our risk factors and annual report on Form 10-K for the fiscal year ended December 31, 2024, as supplemented by our quarterly reports on Form 10-Q as well as other public reports filed with the SEC. Finally, the results and guidance discussed today are based on consolidated non-GAAP financial measures such as non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share. For a complete reconciliation to GAAP and the definition of the non-GAAP reconciling items, please see our Q4 earnings press release in addition to a presentation summarizing our quarterly results and more details on our non-GAAP measures as posted on our website in advance of this call at www.indie.inc. I'll now turn the call over to Donald. Donald McClymont: Thanks, Ashish, and welcome, everybody. indie delivered a solid fourth quarter with revenue of $58 million, exceeding the midpoint of our outlook by $1 million and up 8% sequentially. Let me provide some context on the market environment before turning to our business achievements. First, on our markets, the automotive industry is entering a pivotal new phase as ADAS, or advanced driver assistance systems, and automated driving and safety functionality are rapidly maturing beyond optional or premium features and into standardization at L2 and above. OEMs across all vehicle classes are recognizing that consumers expect a baseline of active safety features, including lane assist, automatic emergency braking, blind spot detection and collision warnings. These trends reveal a market undergoing structural transformation where software-defined intelligence, regulatory readiness and scalable sensor technology are reshaping the competitive landscape. This continues to present a significant opportunity for indie to capitalize on by leveraging its technology investments for the readiness of these mass market ADAS segments. Additionally, the humanoid robotics market is rapidly transitioning from research labs to industrial and real-life applications. This creates exciting opportunities that we're actively pursuing today, and we plan to expand our activities here going forward. Our ADAS and automotive technologies align perfectly with humanoid sensing requirements by providing the robot eyes and ears. To that end, we are already seeing strong adoption of our radar, vision and even interface solutions by industry leaders, both in the U.S. and China. For example, our vision products have been deployed by companies, including Figure AI and Unitree amongst others. Powered by breakthrough advances in embodied AI, evolving workforce needs and decreasing manufacturing costs through shared automotive components, this dynamic industry is accelerating towards becoming a major global economic driver by the 2030s. Let me now turn to our recent business progress and key achievements during the past quarter. Beginning with radar, our Tier 1 partner, who launched their Gen 8 77-gigahertz radar solution in Q4, is rapidly gaining strong commercial traction with even more global OEMs, including car manufacturers from Northern and Central Europe, North America, Japan, China and India with models ranging from entry-level through mid-tier high-end passenger cars and all the way to high-value commercial vehicles. The indie-based solution delivers far superior performance and cost basis compared to competing and previous generation products, additionally earning a claim at CES this January. We began initial shipments to our Tier 1 partner in December as planned and are scaling production to fulfill the massive opportunity estimated at well above 50 million units annual demand once we are beyond the ramp-up phase. To support this ramp and mitigate allocation issues, we're expanding our production capabilities, including porting designs to second source foundries here in the U.S., satisfying local supply sourcing demands. We are also securing additional back end and test capacity at multiple suppliers to be prepared for the ramp. With these measures in place, indie will be well positioned to fulfill the growing demand. Looking ahead, we are now in the midst of the definition of our next-generation radar platforms, which will deliver further competitive advantage in performance, cost and functionality significantly beyond current levels. Overall, I'm extremely pleased with the progress of the current generation radar rollout and expect momentum to build through '26 and beyond. Within our vision portfolio, we see continued momentum with design wins for our industry-leading image signal processor SoCs, including our iND880 and our AI-based edge processor. Our DRAM-less architecture is creating new opportunities for us, as it allows our customers to overcome the current memory supply issues while reducing the bill of materials and lowering system resource demands on AI processors. With this technology, we have secured new design wins in e-mirror and camera mirror systems at leading Tier 1s across passenger vehicles and trucks with production beginning in late '26 and continuing for several years. Within the China market, we have recently secured a design win with the leading electric vehicle manufacturer with our iND880 for our camera mirror system, which is expected to start ramping towards the middle of 2026. This is a very critical design win for indie as we believe it will open more strategic opportunities going forward for our ADAS portfolio at this key customer. In Q4, indie completed the integration of emotion3D, creating a powerful ecosystem that unites AI-based perception algorithms with our hardware SoC capabilities, offering flexible stand-alone or integrated solutions within the cabin for driver and occupancy monitoring. Additionally, we have recently announced a strategic partnership with Mahindra, a leading Indian passenger and commercial vehicle manufacturer for the supply of our perception software for their Electric Origin SUV series, including XEV 93 and BE 6. From our photonics business unit, we were awarded a design win, including NRE for a distributed feedback laser for a LiDAR application outside of the automotive market, potentially opening new opportunities in diverse market applications where high-precision, high-speed 3D spatial information for real-time detection is critical. In addition, we have secured our largest booking of LXM lasers to date, supporting key customers in quantum communications and sensing as our success continues in this adjacent quantum market. Within our power group, the Qi 2.0 wireless charging platform production with Ford remains on track for the first half of 2026 with adoption from multiple subsequent OEMs expected to follow. indie is already gaining significant traction for our Qi 2.2 25-watt wireless charging solution, which offers seamless scalability via firmware upgrade. Moving to the Qi 2.2 solution enables faster power delivery, stronger magnetic alignment and broader device interoperability without replacing hardware, making this a highly attractive solution for customers and partners. This product is already demonstrating strength as evidenced by a leading Tier 1 wireless charging partner upscaling to our Qi 2.2 platform with another North American OEM. Recall on our previous call, we highlighted the shortage of package substrates prevalent in the industry caused by ever-increasing demand for AI chips. We are pleased to report we have made meaningful progress by qualifying second source package and substrate vendors. However, we expect the broader supply environment to remain constrained, and we will need to remain laser focused to manage the situation through 2026. I will now turn the call over to Naixi for a review of our Q4 results and business outlook. Naixi Wu: Thank you, Donald, and good afternoon, everyone. indie's fourth quarter revenue was $58 million, exceeding the midpoint of our outlook by $1 million, representing sequential growth of approximately 8% and flat compared to the prior year period, bringing our full year revenue to $217.4 million. The non-GAAP operating expenses during the quarter totaled $36.8 million, consistent with our outlook, thereby achieving our goal of $8 million to $10 million savings. As a result, our fourth quarter non-GAAP operating loss was $10.1 million compared to $11.3 million last quarter and $14.2 million a year ago, demonstrating our continued progress towards achieving profitability. With net interest expense of $2.3 million, our net loss was $12.4 million and loss per share was $0.07 on a base of 220.4 million shares. Please refer to the presentation located on our website for a more detailed breakdown of non-GAAP measures. Turning to the balance sheet. We exited the quarter with total cash and cash equivalents, including restricted cash of $155.7 million, a $15.5 million decrease versus the third quarter, of which $6.8 million was used for our semi-annual interest payment on the outstanding convertible notes. As you may recall, in the fourth quarter, we announced that indie had entered into a definitive agreement with United Faith Auto-Engineering Co., Ltd., UFA, a publicly listed company in China, to sell our entire outstanding equity interest in Wuxi indie Micro for gross proceeds of approximately $135 million, payable in cash upon closing, net of applicable taxes and fees. The transaction continues to progress towards closing. As part of the customary closing conditions, UFA obtained its requisite shareholder approval in late 2025. The transaction remains subject to regulatory approval in China, including both Shenzhen Stock Exchange and CSRC. While the timing of the closing remains uncertain, we continue to be optimistic that it will occur by the late 2026 time line we previously communicated. Moving to our outlook for the first quarter of 2026. We expect to deliver total revenues between $52 million to $58 million with $55 million at the midpoint. We anticipate a decline in first quarter revenue from Wuxi to $21 million due to a lower demand from reduced EV subsidies and the Chinese New Year shutdown. However, we expect our revenue from our core business to grow by an impressive 20% sequentially to $34 million at the midpoint. We expect our non-GAAP operating expenses to be $37 million for Q1, relatively flat to Q4 2025. Assuming a net interest expense of approximately $2.6 million with no tax expenses, we expect a $0.07 net loss per share based on 223 million shares at the midpoint of the revenue range. From a financial perspective, with our strong focus on managing operating expenses and our solid balance sheet, including anticipated proceeds from the sale of Wuxi, indie is financially well positioned to support our path to strong and profitable growth as design wins ramp through 2026. With that, I will turn the call back to Donald for closing remarks. Donald McClymont: Thank you, Naixi. Our core business remains solid as evidenced by strong fourth quarter results. Radar and vision programs remain firmly on track, highlighted by our Tier 1 partners' recent release of their advanced Gen 8 radar product, growing commercial adoption and our first radar chipset shipments late in the quarter. With the addition of high-growth adjacent markets such as quantum sensing and humanoid robotics, indie's technology leadership and expanding product portfolio positions us well to drive growth. We believe no other semiconductor company offers a product portfolio as well suited as indie's to meet the diverse sensing needs of these emerging markets. That concludes our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] Our first question is from Cody Acree with The Benchmark Company. Cody Grant Acree: Congrats on the progress. Naixi, just one point of clarification. Can you give me the Wuxi revenue for Q4? Naixi Wu: Yes, it was around $29.7 million. Cody Grant Acree: And could you just maybe go through the reasons again for the sequential decline? And then what do you expect that to do looking into Q2? Naixi Wu: The decline mostly has to do with the upcoming Chinese New Year shutdown and the reduced EV subsidies that the local people are getting. Cody Grant Acree: And any color on expected ramp into Q2? Donald McClymont: I mean we do expect it to recover in Q2. As of course, you know, we're in the process of selling that business, but yes, we do expect it to bounce a little bit in Q2. Cody Grant Acree: Okay. Great. And Donald, maybe can you just provide any further color on the slope of the ramp of your radar programs that you're expecting for the balance of '26? Donald McClymont: Well, I mean, since last we talked, we've made phenomenal progress together with the customer. We see the traction through the OEMs just getting ever stronger, so we feel absolutely phenomenal about where we are with the program. In fact, we're also really beginning now the discussions on what comes next for the next generation. But I mean, the OEM traction has just been off the charts, and it gives us a good problem to solve. We need to focus now on making sure that our supply chain is robust enough to support the ramp that we expect. But we feel we're in a really good spot right now. Cody Grant Acree: And just a follow-up there. The constraints that you're feeling still on substrates and packaging, what impact do you expect that to have in the first quarter? Donald McClymont: I mean it had a little bit of a trailing impact into the first quarter. I mean we -- the product portfolio basically, in the type of products that had substrate exposure, did have some risk mitigation, so some products that we had inventory of shipped. Probably there was maybe a little bit less than $1 million of demand that is still questionable that we might get or not based on supply, but we've made some significant progress versus Q4 where it affected around $5 million in that quarter. Operator: Our next question is from Suji Desilva with ROTH Capital Partners. Sujeeva De Silva: Congratulations on the progress here on the Tier 1. Donald, you've given us backlog numbers in the past. Any update there? Any new design wins to talk about? I know you have at least 2 big programs coming, but any color there would be helpful. Donald McClymont: Yes. I mean, as you know, we only really update our strategic backlog once a year. You can see from the script that we did make some progress on the sales side and add some new discrete designs out with the larger programs. We do expect that the sell-through into the OEMs from the large radar program also will increase over time, and we've seen a lot of momentum in that during the last quarter. But no quantifiable update right now. Sujeeva De Silva: Okay. All right. And then aside from Wuxi in China, can you talk about the progress there in terms of design wins and traction for your products for the core part of the business? Donald McClymont: Yes. I mean we're doing well in all regions. I mean, again, I mentioned in the script that we have exposure to OEMs based over all parts of Europe, also in Asia, China, even India actually as part of that. So I mean, we're feeling very good about where we are generally worldwide. Operator: Our next question is from Jon Tanwanteng with CJS Securities. Unknown Analyst: This is [ Will ] on for Jon. Is there any update on the size of the opportunity within robotics and drones or in the quantum space and if or when those can become significant contributors? Donald McClymont: Well, the robotics space is hard to call, but I mean, we are just seeing a phenomenal amount of activity in that space. And the products that we make for automotive are basically 100% compatible with the needs that these guys have for these applications. So we are very optimistic about it. We do feel that it can be a very material market as we progress through the rest of this decade. In terms of quantum, that's a little bit easier for us to quantify. We are beginning to make some significant traction in that space. We shipped about $1 million worth of optical products in that application in 2025, and we expect maybe around a trebling of that through 2026. So we are seeing increased momentum in that space also. Unknown Analyst: And in regards to the supply chain constraints, can you add some more color on how you're thinking about the time line to a full resolution? Donald McClymont: I mean it's -- the tightness is really driven by the uptick in AI demand, and so we don't see that really going away anytime soon. From our perspective, just operationally, we're expanding our supply base to make sure that we have significant mitigation for all of the programs that are key to us, and we made some pretty good progress in the last 90 days to address that. We are seeing signs that several suppliers are making investments to improve capacity, likely something that would begin to take effect in 2027. But I mean, at this point, we feel decent about where we are. We've -- as I said, we've made some good progress in bringing on new suppliers. And we hope that we can manage through this '26 year without really taking any bumps on our side while we get through to '27. But that's basically the best visibility we have right now. Operator: Our next question is from Anthony Stoss with Craig-Hallum. Anthony Stoss: Donald, in the past, I think you talked about the total range of expected radar revenue for you guys for 2026 to be somewhere between, I think it was $30 million to $50 million. Perhaps you can give us an update on that. And then also love to hear kind of thoughts on just OpEx for the rest of this year on a quarterly basis. Donald McClymont: Well, I mean, in terms of the radar volume, it's still in that same ZIP code. Nothing really has changed in the short term. What we are seeing is just gathering momentum with newer OEMs, which we hadn't really anticipated would be early adopters, and it turns out that they are going in that direction. That means that we will have like a steady and steep ramp over the course of '26, '27, '28 and '29 even as some of these design wins, of course, are for longer-term models, which are out in time. But I mean, generally speaking, the momentum has been strong behind the program. And I think you can assume on OpEx side that it's basically going to be about flat. Maybe a couple of lumps here and there as we invest in tooling, but no more than $1 million plus/minus. Anthony Stoss: Got you. And then if I could sneak in one more outside of the Wuxi Group just within your core business, what percentage of that core still remains in China? Donald McClymont: Probably in the 25% to 30% range, perhaps. Maybe not quite as high as that anymore, actually. I'm not sure. I -- yes, it's a little bit less than that now probably. Operator: Our next question is from Craig Ellis with B. Riley Securities. Craig Ellis: Donald, congratulations on the 20% core business growth in the first quarter. Can you just help us understand what the top 2 or 3 drivers are to that growth? And is radar on that list? Or are we in just smaller volumes in 1Q? Donald McClymont: I mean radar is still relatively small volume in the last quarter and this quarter. But in any design and any -- and especially in a program of this magnitude, the first products that you ship are very much the most important. It cleans the pipe and improves the existence that the designs are real and the products are working. We have seen continued progress also in our vision chips. Basically, the drivers are coming from the ADAS side. Our iND880 processor has been super successful. And now that we're beginning to bring to market a version of that chip, which also has an AI edge processor integrated in it, we're seeing continued momentum in that space also. Craig Ellis: And then a follow-up to the prior question just on the arc of radar through time, and it sounds like it just continues to scale from what could be $30 million to $50 million through 2029. But I think we've talked about this business being a $100 million business in the past on an annualized basis. Are you starting to get visibility on when we could get that? And would that be 2028? Or would it be potentially sooner or really when you get out to 2029? Donald McClymont: I mean, I think, the answer to your question is, yes, we are getting continued visibility improvement in this as we progress through the whole process of deployment. I mean we're -- it's probably a little early to call exactly when -- what date that we cross $100 million. But I mean, we are feeling increasingly confident and positive about where we're going with this right now. And I mean, it's kind of driving us crazy, the amount of support work that we're having to do and the amount of supply chain expansion that we're having to do in order to prepare for it. So I mean, if that gives you an indication of where we think we are, then I hope that's sufficient. Operator: Our next question is from Cody Acree with The Benchmark Company. Donald McClymont: I think Cody actually already asked his question. Cody Grant Acree: Yes. Yes. Actually, I just had a quick follow-up, Donald. Sorry, I was on mute. Just your comment lastly about increasing your supply side. Last quarter, you mentioned your efforts to double source for some of your customer requests. Can you just update us on the progress there? And just what are you looking forward to on spending for that? Donald McClymont: I mean from packaging side, we enabled a new substrate supplier and also a new packaging house. So basically, now we have 4 combinations of substrate and packaging house that we can use. We do expect that we will also, for some of the very large volume programs such as the radar program, bring on second source foundries, particularly as we need to have China for China, non-China for non-China supply base in that space. And I think -- and I mean, in answer to your question, the short term, we have had a little bit of increased OpEx, which we signaled in the last quarter in order to cover some of that, which has now run through the books. And at this point, we're basically seeing our OpEx remaining reasonably flat through '26. There may be a couple of bumps in the road as we spend on tooling, but it's -- each bump is probably, I mean, less than $1 million. Operator: There are no further questions at this time. I would like to hand the floor back over to Donald McClymont for any closing comments. Donald McClymont: Well, thanks, everybody, for attending, and I hope to see you at the conferences in the next few weeks. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good day, and welcome to the PPL Corporation Fourth Quarter and Full Year 2025 Earnings Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on the touch-tone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Andy Ludwig, Vice President, Investor Relations. Please go ahead. Andy Ludwig: Good morning, and thank you for joining the PPL Corporation Fourth Quarter and Full Year 2025 Earnings Call. We provided presentation materials on the Investors section of our website. This morning, you will hear from Vince Sorgi, PPL President and CEO, and Joe Bergstein, Chief Financial Officer. We will conclude with a Q&A session following our prepared remarks. Before we get started, please turn to Slide 2 for our cautionary statement. Today’s presentation contains forward-looking statements subject to risks and uncertainties. Actual results may differ materially. Please refer to our SEC filings and the appendix for additional information. We will also refer to non-GAAP measures including earnings from ongoing operations. Reconciliations to the corresponding GAAP measures are provided in the appendix. I will now turn the call over to Vince. Vince Sorgi: Thank you, Andy, and good morning, everyone. Let’s begin on Slide 4 with a look back at 2025. I am proud to report that we finished the year exactly where we said we would, delivering safe and reliable electricity and natural gas service to more than 3,500,000 customers and achieving our stated financial targets for investors. Operationally, our teams performed at an extremely high level across the company, directly resulting from years of intentional investment in our infrastructure combined with strong day-to-day execution by our workforce. We achieved first quartile or near first quartile T&D reliability in all of our jurisdictions and top decile generation performance in Kentucky. I will say first quartile T&D performance is trending worse overall for the industry as a result of more frequent and severe storms as well as more extreme weather events. This is causing utilities across the country to increase their capital investment plans significantly to combat Mother Nature, and the same applies here at PPL. During 2025, we continued to clearly focus on innovation as this will be a significant source of continued operating efficiency across our business in support of customer affordability. We are developing several digital solutions to improve customer service, including an agentic AI digital customer service agent and a recently released customer app at PPL Electric Utilities. We will expand the rollout of these and other digital solutions across our business in the coming years, and we are really excited about the digital future for utilities. From a financial perspective, we achieved ongoing earnings of $1.81 per share, 7.1% growth from our prior year results and in line with the midpoint of our forecast. From a capital investment standpoint, we executed $4,400,000,000 of planned investments focused on grid hardening and modernization, advanced metering, pipeline replacement in our natural gas businesses, and the initial stages of building new generation in Kentucky. These investments directly support reliability, resilience, and long-term affordability for our customers. On the cost efficiency front, we outperformed our O&M savings target by about $20,000,000, achieving approximately $170,000,000 in run-rate savings from our 2021 baseline, about a year ahead of our $175,000,000 target for 2026. Our O&M efficiency strategy has been a key component of our affordability strategy here at PPL, and that will continue to be the case as we move forward beyond 2026. Finally, we engaged extensively with a wide range of stakeholders to power economic development in our territories. These actions have supported the growth of our significant data center pipeline, while fueling some of the largest economic development projects our territories have seen, including the $3,500,000,000 advanced manufacturing investment by Eli Lilly, announced earlier this month right here in Allentown, Pennsylvania. In summary, this past year reflects what we strive for as a company: consistently high levels of execution, disciplined financial performance, a forward-looking strategy, and results that create value for both customers and shareowners. Let’s turn to Slide 5. Building off our strong year in 2025, today we announced an updated business plan that extends our growth outlook while keeping customer affordability and our strong credit profile front and center. For 2026, we are issuing ongoing earnings guidance of $1.90 to $1.98 per share, with a midpoint of $1.94 per share representing 7.2% growth from 2025. We are extending our 6% to 8% annual EPS growth target through at least 2029, expecting the EPS CAGR through 2029 to be near the top end of that range based off of our 2025 ongoing earnings. We are expecting stronger growth beginning in 2027 and continuing through 2029 compared to the midpoint of our 2026 growth range since the full-year impacts of our current rate cases do not kick in until next year. Importantly, beyond this strong base plan, we see several identifiable upside opportunities to further enhance or extend our earnings growth over time. These include earnings from competitive transmission projects, additional transmission and distribution investments to support the significant economic development that we are seeing in both Pennsylvania and Kentucky, and additional generation needs in Kentucky. It also includes earnings from our joint venture with Blackstone, which I will cover in more detail in a few slides. Our earnings growth is supported by our capital investment plan. We project capital investment needs of $23,000,000,000 from 2026 to 2029, up from $20,000,000,000 in our prior plan period. Our updated plan includes the critical investments that strengthen our networks against those more frequent and severe storms and other extreme weather impacts. These investments will accelerate our ability to restore power when storms do strike and deliver the new generation resources approved by the Kentucky Public Service Commission last year, ensuring we continue to deliver safe, reliable, and affordable energy for our customers. The result of these investments is an estimated rate base CAGR of about 10.3%, providing a strong foundation for predictable and durable earnings growth. Our updated plan supports PPL’s strong credit metrics, including 16% to 18% FFO to debt throughout the plan period. In support of our expected capital expenditures, the plan reflects total equity needs of about $3,000,000,000 from 2026 to 2029. Importantly, we already executed about $1,000,000,000 of that equity need last year, leaving about $2,000,000,000 of equity to be issued going forward in support of this updated plan. Finally, in connection with the updated capital needs, we modified our annual dividend growth rate target to 4% to 6% while we are issuing equity to fund our capital plan. Overall, our updated business plan balances growth, affordability, and financial discipline, while continuing to provide top-tier returns for shareowners relative to our peers. Turning to Slide 6 and an update on the final Kentucky rate case orders that were issued earlier this week. Overall, the outcome of these cases allows us to deliver on the business plan we have outlined for you today. The commission approved an aggregate increase of approximately $233,000,000 in annual electric and gas revenues, which is within $2,000,000 of the stipulation we had agreed upon with most intervenors in the case. In addition, the KPSC approved allowed ROEs of 9.775% for both utilities with 9.675% for our capital-related mechanisms. These ROEs are 35 and 32.5 basis points higher, respectively, than our previously approved levels. Importantly, the commission approved the pilot generation recovery mechanism, which enables recovery of and a return on investment associated with new generation and energy storage projects that were previously authorized by the commission. This mechanism supports improving reliability and resilience of our network as well as our ability to meet growing demand on the system. The mechanism also provides for the recovery of and uncertain costs related to keeping the Mill Creek Unit 2 plant online beyond its original retirement date, which was originally scheduled for 2027. We were also pleased to receive approval for our extremely high load factor tariff, which is designed to protect existing customers from the impacts of large data center loads. One element not approved was the proposed earnings sharing mechanism which had been tied to our agreement to stay out of rate cases through mid-2028. As a result, we are reassessing the timing of our next Kentucky rate case to ensure we continue to balance customer affordability and the capital required to support system needs. While we are disappointed that the commission modified a settlement that we and the intervening parties worked very hard to achieve, overall, the revenue requirement remained effectively unchanged from the stipulation. From here, we will move forward with implementing the new rates, issuing required refunds related to interim rates, and filing a motion for reconsideration with the KPSC on several items. Moving to Slide 7. We continue to advance progress on our ongoing rate case in Pennsylvania. Earlier this week, evidentiary hearings were held and concluded in one day. We are also actively working towards a settlement with intervenors. If we cannot agree to a settlement, we remain very confident in the strength of our case and are well prepared to fully litigate if necessary. Our case balances PPL Electric’s need to make critical distribution system and IT investments to maintain and improve reliability, customer service, and storm response while providing important customer protections and maintaining affordable rates for our customers. A decision is expected in June, with new rates effective on 07/01/2026. Continuing with Rhode Island regulatory updates on Slide 8, in the fourth quarter, Rhode Island Energy filed its first base rate request since 2017, seeking a two-year phased increase aligned with the cost of delivering safe, reliable energy while supporting critical infrastructure improvements and affordability programs. This includes a redesigned low-income rate offering deeper targeted support for those in greatest need, importantly, without raising costs for our other customers. The decision is expected this summer with new rates effective on 09/01/2026. We also filed our annual electric and gas ISR plans in late December totaling about $350,000,000, which primarily relates to capital investments to sustain and enhance the safety and reliability of our electric and gas distribution systems. We expect a PUC decision on the ISR filings by March. Finally, we remain committed to reaching a new hold harmless settlement in Rhode Island to provide meaningful near-term rate relief to our customers. As a reminder, the settlement that we reached with the Division last year provided for about $70 a month credit to combined electric and gas customers in the winter months of 2026 and 2027, so very meaningful credits in the months where energy bills tend to be the highest. We will be engaging with the Division and the PUC on a new settlement in parallel with the base rate case proceeding currently underway. Moving to Slide 9 and an update on our Pennsylvania data center pipeline. PPL Electric Utilities’ service territory continues to see rapid growth in data center interconnection requests. As of today’s update, projects in advanced stages, meaning they have executed agreements and have meaningful financial commitments attached to them, now total approximately 25.2 gigawatts, up another 23% since our last quarterly update. We now expect at least 10 gigawatts to be under ESAs by the end of the first. About 5 gigawatts remain under construction, which is consistent with our last update. That said, we believe all of the 25.2 gigawatts of projects have a high probability of completion, and our ESAs include strong customer protections, such as prepayments and credit support, as well as minimum load requirements for data center customers to pay approximately 80% of forecasted load until the costs incurred to extend service are fully recovered. So data center developers will bear the financial risk of a data center project not getting completed versus our existing customers. Turning our attention to Kentucky on Slide 10. Economic development overall remained strong. Our current pipeline reflects more than 9 gigawatts of potential new load through the early 2030s. Load related to data centers exceeds 8 gigawatts, and about 4 gigawatts of these requests are considered highly active with 500 megawatts under construction. The development pipeline also includes 1.1 gigawatts of advanced manufacturing and other non-data center requests, up about 150 megawatts from our prior update. We are continuing to see robust economic development with several major manufacturers announcing almost $500,000,000 new investments in our service territories, including Toyota, Foxconn, GE, and Antro Energy. Our probability-weighted demand growth projections remain at about 2.8 gigawatts, or about a gigawatt more than what was reflected in the load forecast in our 2025 CPCN. If this potential growth continues to materialize, additional generation resources will absolutely be required. In summary, continued strong interest from both data centers and manufacturing customers validates our long-term generation planning and the recent CPCN approval in Kentucky. Turning to Slide 11. As we have been discussing for several years now, affordability remains a core commitment across everything we do. It has been a foundational element of the new PPL strategy since 2022. Since that time, we have reduced O&M by nearly 3% annually, reaching $170,000,000 in run-rate savings by 2025. About $100,000,000 of those savings benefited our Kentucky customers alone and directly reduced the increases needed in our most recent Kentucky rate cases. In the end, residential bill increases were in the 5%–11% range after roughly five years without base rate increases. This is significantly below the level of inflation over the same period and reflects the tangible benefits of sustained cost discipline. The $170,000,000 of total O&M savings that we have achieved has helped to fund $1,400,000,000 of capital investment without incremental pressure on customer bills, enabling longer intervals between base rate cases. It has been ten years in Pennsylvania, eight years in Rhode Island, and, as I said, about five years in Kentucky without requesting base rate increases, a direct result of this strategy. Looking ahead, cost discipline will remain a critical component of our affordability strategy. In our updated plan, we project O&M growth of approximately 1% annually, well below inflation. We expect additional structural savings as we continue to harden the grid and deploy smart grid technologies and improve overall system efficiency. We also see AI as an incremental but meaningful driver of efficiency across customer service, grid operations, and back-office functions. Beyond cost control, continued economic development across our jurisdictions also supports customer affordability. Over time and under the tariff structures we have put in place, incremental load growth, including large-load data centers and smaller distribution-connected customers, improves system utilization and helps moderate costs for existing customers. We also continue to support targeted customer assistance programs to help our customers afford their energy bills. For example, PPL Electric’s Operation HELP leaned in during the 2025 government shutdown to support low-income customers when LIHEAP grants were unavailable. In addition to the low-income program I talked about as part of our Rhode Island Energy rate case, we have also created a new employee-funded assistance program that provides support to Rhode Island customers that meet various income thresholds. And as mentioned earlier, we remain committed to a solution on a hold harmless settlement in Rhode Island and to get those credits reflected in customer bills. In deregulated states like Pennsylvania and Rhode Island, we do not control every aspect of the customer bill. But we are focused on lowering those costs as well. So let’s move to Slide 12 and talk about what we are doing in this regard. As an example, more than half of the customer bill in Pennsylvania comes from costs we do not control, with energy supply costs being the largest component. For several years, we have been sounding the alarm on a worsening generation supply situation in PJM, which has been the primary driver of higher customer bills. Since December 2020, energy supply costs have increased by roughly 200%, and over that time, PPL Electric’s average monthly residential bill has increased by about $68, with approximately $50 of that increase coming from energy supply costs alone. The takeaway is straightforward: the single biggest driver of long-term affordability in PJM will be increasing generation supply. And with the scale of data center growth we are seeing, we absolutely need to build new reliable generation to meet that demand. The recent call by President Trump and the state governors in PJM for an emergency auction to spur construction of generation, that is a clear acknowledgment of what we have been saying for years. At PPL, we are focused on supporting the build-out of new generation in a number of ways. First, we formed a strategic partnership with Blackstone to build, own, and operate new electric generating stations to directly power data centers. Second, we are actively supporting legislation that has been proposed in Pennsylvania to allow regulated utilities to enter into long-term resource adequacy agreements with independent power producers. The legislation would also permit utilities, where appropriate, to build and own generation to support reliability and affordability. At the same time, we continue to invest in a robust transmission grid, capable of quickly connecting both new large-load customers and generation. At PPL, our grid will not be what stalls either new generation or data center development. I will note that even with the emergency auction envisioned by President Trump and the governors, a lot more generation will be needed. We estimate the auction, if it comes to fruition, could produce about 6 to 7 gigawatts. This, however, would not address the expected data center demand in PPL Electric’s service territory, let alone data center demand across all of PJM. What the auction does signal, however, is increased pressure on data centers to bring their own generation to market or at least pay for the new generation required to power their data centers. And building new generation will directly lower capacity prices in PJM by increasing supply, thus lowering customer bills over time. Bilateral arrangements to bring new generation online will continue to play a key role here as well, and our joint venture with Blackstone is perfectly positioned to enter those agreements now without needing to wait for future PJM reforms. And that brings me to an update on the joint venture on Slide 13. We have made meaningful progress over the past year as within the PJM market continues to build. Hyperscalers are increasingly seeking bring-your-own-generation solutions, and their sense of urgency is significantly higher now. We are extremely well positioned to support this need given our expertise in PJM and the significant generation fleet we operate and are building in Kentucky. Recent market developments are only increasing pressure on large-load customers to secure dedicated generation solutions, and we have uniquely positioned the JV to deliver speed to market at scale, which we all know is the number one priority for these customers. In support of this need, we have diligently executed contracts for several strategic land parcels over the past year and are securing natural gas capacity. We have also evolved our generation solutions in the past few months to meet hyperscalers’ changing needs. In addition to natural gas combined-cycle units that take about five years to come online, we now offer alternate generation solutions to enable new generation to come online more commensurate with the ramping requirements of data centers. While we do not have a hyperscaler agreement to announce on our call today, it is important to note that we have not embedded any earnings contributions or CapEx from the JV in our updated business plan. However, depending on the timing of executing these agreements and the generation mix selected by hyperscalers, we could see earnings contributions as early as the back end of our updated planning horizon. Taken together, the policy signals, the market response, the engagement we are seeing from hyperscalers and other data center developers, and all the legwork that we have done over the past year, our joint venture is perfectly positioned for this moment, and we look forward to providing you with more updates as contracts are finalized. I will now turn the call over to Joe for our financial update. Joe? Joe Bergstein: Thank you, Vince, and good morning, everyone. Let’s turn to Slide 15. On a full-year basis, our 2025 GAAP earnings were $1.59 per share compared to $1.20 per share in 2024. Excluding special items, our 2025 ongoing earnings were $1.81 per share, an improvement of $0.12 and in line with expectations. From an earnings quality perspective, the year-over-year growth was driven primarily by incremental returns on capital investments across our regulated businesses, supported by higher transmission revenues, rider recovery, and continued cost discipline resulting in lower O&M. Those benefits were partially offset by higher interest expense, reflecting the additional financing to support our CapEx plan. Kentucky results increased by $0.09 per share, driven by higher sales volumes, largely due to weather, higher earnings from additional CapEx, and lower O&M, partially offset by interest expense. Pennsylvania results increased by $0.04 per share led by higher transmission revenue and distribution rider recovery along with higher sales volumes and lower operating costs, partially offset by higher depreciation and interest expense. Rhode Island results decreased by $0.02 per share compared to 2024. This was due to higher operating costs and other factors that were not individually significant, partially offset by higher distribution revenue. When compared to our 2025 forecast, the Rhode Island segment decreased by $0.06 per share due to several true-ups and higher operating costs related to system costs, nonrecoverable storm costs, and several miscellaneous costs. We do not expect those items to reoccur and, therefore, do not expect these pressures to carry forward in the future periods. Finally, Corporate and Other was $0.01 better than last year, driven by lower income taxes and other factors, partially offset by higher interest expense. Turning to the ongoing segment drivers for the fourth quarter on Slide 16. Our Kentucky segment results increased by $0.02 per share compared to 2024, driven by higher sales volumes due to favorable weather and higher earnings from additional capital investments, partially offset by higher interest expense. Our Pennsylvania regulated segment increased by $0.01 compared to the same period a year ago, primarily driven by higher transmission revenues, higher distribution rider recovery, and lower operating costs, partially offset by higher interest expense and other factors. Our Rhode Island segment results increased by $0.01 per share compared to the same period a year ago, driven by higher distribution revenue. And finally, results at Corporate and Other increased by $0.03 per share compared to the same period a year ago due to lower interest expense and lower income taxes. Moving to Slide 17. We continue to execute a plan that has consistently delivered at least the midpoint of our 6% to 8% annual growth target since our strategic repositioning three years ago. Over that time period, we achieved a 7% EPS CAGR, and the plan we announced today further strengthens our growth outlook. Turning to Slide 18. We are extremely confident in the growth outlined in our updated plan. As Vince noted, we have extended our 6% to 8% annual EPS growth target through 2029, and we expect to deliver a compound annual growth rate near the top end of that range over the period, and we see several upside opportunities to bolster that growth even further. These include transmission investments. We continue to see potential investment needs to further guide reliability and support growth in large-load customers. While much of the material transmission upgrades to support our current data center pipeline are reflected in the plan, additional interconnections could enhance our outlook. We also see opportunities in competitive transmission. Last year, we were awarded almost $600,000,000 of competitive transmission projects in our PPL Electric service territory, and we believe we can be competitive more broadly in PJM and even in MISO. On the Kentucky generation side, should economic development continue to come to fruition as our pipeline would suggest, we will need to build even more generation in Kentucky to meet the increased demand, especially if it is data center demand. Depending on the type of resources needed to meet that demand, this could result in upside to our current plan or support capital spend and earnings beyond 2029. Finally, on the Blackstone JV, as we have said, we are not assuming any earnings contribution from the partnership in our updated plan. However, depending on the timing of when we sign agreements with hyperscalers and what type of generation they desire, we could see some upside in the back end of the plan. Importantly, most of these upsides do not necessarily drive customer bills higher, but could actually lower them over time. Overall, our updated plan supports a disciplined approach to capital deployment, providing safe, reliable, affordable service for our customers and a focus on delivering strong, sustainable growth for shareowners with a number of upside opportunities. Moving to Slide 19. We have provided a walk from our 2025 ongoing earnings results of $1.81 per share to our 2026 forecast midpoint of $1.94 per share. Across our business segments, we project this forecast midpoint to be primarily driven by improved rate recovery and higher revenues associated with ongoing capital investment programs. We expect these drivers to be partially offset by higher depreciation and higher interest expense. Taken together, these drivers underscore our continued ability to deliver steady, predictable earnings growth across our segments despite operating in a higher-cost environment. Turning to Slide 20. Our updated capital plan supports customer-focused investments of $23,000,000,000 over the next four years, a $3,000,000,000 increase in CapEx needs compared to our prior plan. Overall, the primary areas driving the increase relate to electric transmission and distribution investments. On the transmission side, we are projecting an increase of nearly $2,000,000,000, with nearly $1,300,000,000 supporting Pennsylvania’s data center development and reliability projects. The remaining $700,000,000 of that increase will support system hardening and smart grid deployment in our Kentucky service territory. We are also projecting an $800,000,000 increase in electric distribution investments, the majority of that focused on strengthening and modernizing the grid across Pennsylvania and Kentucky. And in Rhode Island, we have adjusted some of the timing of our prior plan spend, which lowers our capital expenditures throughout this time period. Turning to Slide 21. Our updated capital investment plan supports annual rate base growth of 10.3% from 2025 to 2029. As shown on this slide, two-thirds of our rate base relates to investments in our electric transmission and distribution networks, and about 80% of our expected generation rate base increase is based on projects that have already been approved by the KPSC. Moving to an update on PPL’s financing plan on Slide 22. We continue to believe that having one of the sector’s strongest balance sheets is a clear strategic advantage that provides the company with significant financial flexibility, benefiting both customers and shareholders. And our updated business plan maintains strong credit metrics throughout while supporting our updated earnings growth targets. This includes maintaining a 16% to 18% FFO to debt ratio and a holding company to total debt ratio below 25%. We have included a new funding sources chart outlining how we plan to finance approximately $23,000,000,000 of capital investment needs. We expect roughly half of the plan to be funded through cash flow from operations, which is net of common dividends, with approximately 40% financed through debt primarily at the utilities. This results in total equity needs of about $3,000,000,000 over the 2026 to 2029 period, including about $1,000,000,000 of forward equity transactions already executed in 2025. That leaves approximately $2,000,000,000 of equity that we will opportunistically execute through 2029. We expect to continue utilizing our established ATM program and may supplement it with other equity-like financing structures where they provide an efficient cost of capital, consistent with our approach in 2025. Moving to Slide 23. The dividend remains a key component of PPL’s total return proposition. As such, our board of directors declared a quarterly cash dividend of 28.5 cents per share to be paid on April 1 to shareowners of record as of March 10. This represents a nearly 5% increase from our previously issued quarterly dividend, resulting in an annualized dividend of $1.14 per share. The increase aligns with our updated dividend growth target of 4% to 6% per year. We expect the dividend payout ratio to remain within a 50% to 60% range over the plan period. The combination of PPL’s EPS growth and current dividend yield continues to provide investors with a top-tier total return proposition in the range of 10% to 12%. This concludes my prepared remarks. I will now turn the call back over to Vince. Vince Sorgi: Thank you, Joe. Let’s move to Slide 25. In closing, I will leave you with a few thoughts. First, 2025 was a year of delivery. We told you what we were going to do, and we did it—operationally, financially, and strategically. That consistency is the foundation of who we are as a company. Second, our long-term outlook has never been strong. The updated business plan we introduced today extends our growth trajectory, strengthens the predictability of our earnings, and does so with continued discipline around affordability and credit quality, keeping our customers front and center in everything we do. We are entering 2026 with a clear line of sight to the investments, cost structure, and regulatory frameworks that will support sustained, durable value creation. Third, the trends shaping our industry—data center growth, electrification, and the need for new generation—are all moving in our favor. The momentum we highlighted today across Pennsylvania and Kentucky and through our joint venture with Blackstone reinforces the central message you have heard from us for more than three years: the system needs new, reliable, dispatchable generation, and the market is now aligning around that reality. We are positioned exactly where we want to be as these forces accelerate and converge. And finally, none of this happens without our people. Our teams continue to deliver for our customers with professionalism, skill, and care. Whether it is restoring power and natural gas during severe weather, operating one of the nation’s most reliable grids, or advancing the technology and partnerships that will define the next decade of energy delivery, I cannot thank our electric, gas, and generation crews enough. They are the unsung heroes of our industry, as they work in some of the worst conditions possible to ensure our customers have the energy they need to power their lives and businesses. So we enter 2026 with confidence—confidence in our strategy, confidence in our execution, and confidence in the opportunities ahead of us. And we are focused on the long game. We are aligned around the right priorities, and we are committed to delivering value for both customers and shareowners. And for our shareowners, we offer you a top-tier 10% to 12% total return proposition, a return grounded in long-term earnings growth with expectations to achieve compound annual growth near the top end of our 6% to 8% target through at least 2029. That earnings growth is supplemented with a dividend that we have paid for every quarter over the past eighty years and expect to grow in the 4% to 6% range over the planning horizon. And this growth is driven by the rate base growth being generated by the critical investments we need to make to stay ahead of Mother Nature, resulting in a rate base growth of over 10%. But none of this is achievable if our customers cannot afford to pay their bills. And that is what sets PPL apart from our peers. We have been and will continue to be laser-focused on minimizing bill increases or even reducing overall bills for our customers. We will do that through our actions over those areas of the bill that we directly control and even attacking those parts of the bill that we do not. All of this creates the balance between customers and shareowners that we believe utility investors are focused on. We thank you for your continued interest and support of PPL. And operator, let’s open it up for questions. Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then 1, on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. At any time your question has been addressed and you would like to withdraw your question, please press star, then 2. The first question will come from Shahriar Pourreza with Wells Fargo. Please go ahead. Shahriar Pourreza: Good morning, Vince. Just first on Pennsylvania. I mean, there is lots of debates and theories with sort of the investment community around the process. Obviously, you guys do not want to front-run the process, but maybe just a bit more color around how the conversations are going. Are there any kind of sticky points here? And should we read into anything given the fact that the hearings were done in a day versus the expected three days? We just saw two black box settlements. So just maybe a little bit more color there would be great. Vince Sorgi: Sure. There is a lot there. Sure. Let’s see. Maybe we will start with the rate case and then maybe more broadly about Governor Shapiro’s comments. Does that work? Shahriar Pourreza: Perfect. Vince Sorgi: Okay. So on the rate case, you know, you asked what are the areas of focus, if you will. Look. Besides the usual suspects, I would say generally pretty light, Shar. So a lot of discussion around the impact of data centers on customer affordability. You mentioned the hearings, it was one day. Pretty much the entire hearing was on a data center load impact on customers, which, as you know, that is all connected to the transmission grid, so not really directly relevant to a distribution rate case. But that was the main focus of the hearing. So I would say that was positive. The other area is area of focus from the intervenors is really the proposed changes to the net metering rules that we have for non-load generators. These are the solar projects that are connecting to the distribution grid. In terms of settlement, as you know, no hard deadline there. I will say we are actively engaged with the parties, and we continue to be as I speak here right now. From an overall process standpoint, I think the case continues to advance. It is going as we would expect. Briefings are scheduled in March with a final order expected in June and then rates effective July 1. I will say, I think maybe there was some hope or expectation in the market that we would have had a settlement announcement before the hearings. I think if you look back at when those announcements generally happen in Pennsylvania, it is more around the main brief meeting and or deadline, not necessarily the initial hearings that we just had. So just FYI on that. But, look, we feel really good about underlying strength of our filing and the investments that are in there that are supported, particularly around improving the reliability of the system. As I talked about in my prepared remarks, we do have some affordability measures included in there, including memorializing what we have in our ESAs into a large-load tariff. But with all that said, I would say a constructive outcome really does not hinge on a settlement in our view. We are comfortable whether this resolves through settlement or a commission decision. So feeling good either way. And then more broadly, just on the Shapiro comments, look. I think the state remains incredibly constructive and supportive of its utilities, and I think they recognize the investments that are needed to not just ensure that we can continue to provide safe, reliable energy to our customers, but it is critical to help drive all this economic growth that we see coming to the state. And you may have heard Senator Yaw just recently made some comments, which we completely agree with, that the core issue around affordability and high prices is that generation has not kept pace with demand. And it is really the imbalance between supply and demand that is driving those pressures. Obviously, affordability is clearly a concern at the state level, but it is important to focus on really what is driving that and, as we said, about 50% of the energy bill or electricity bill is that energy supply cost. And those costs are up about 200% over the last five years. Represents $50 a month increase of the total $68 a month that we have seen over that time period. So we will continue to engage with the governor and his team just to make sure that he recognizes the importance of having strong utilities, that they are financially strong, and the role that we play in driving all of this economic development. So I think those conversations continue to be constructive. I think the state overall continues to be constructive despite some of the comments that we may have heard that might suggest otherwise. And from our perspective, Shar, we just keep doing the right thing for our customers as we have been doing over the last decade or more. Not because we are told to do it that way, but that is just how we operate. And so every dollar we have spent and will continue to spend is critical to ensure that we can deliver that safe and affordable, reliable energy but also drive that economic growth, and there is no question in my mind—none—that everything we have done is well justified. Shahriar Pourreza: Got it. Super comprehensive answers to my 25-part question. I appreciate it. I will pass it to someone else. Thanks. Operator: The next question will come from Jeremy Tonet with JPMorgan. Please go ahead. Jeremy Tonet: Hi, good morning. Vince Sorgi: Hey, Jeremy. Joe Bergstein: Morning, Jeremy. Jeremy Tonet: Just wanted to pivot over to Genco if I could. It sounds like contracts could be in the near term there. And so just wondering, is this something that you would wait for an earnings call to announce, or could something be communicated earlier than that if the deal comes together? Vince Sorgi: Yes. I do not think we would necessarily need to wait for an earnings call. No. I think that would be a significant event that we would do that off-cycle, for sure. Jeremy Tonet: Got it. Thanks for that. And for the JV, would the JV look to bid into the base residual auction? Or just wondering your thoughts around that. Vince Sorgi: Yes. So right now, we are still evaluating, Jeremy, whether that is something that we would participate in. The normal auction, I do not see the JV participating in that. The special auction that PJM might be holding for the backstop creation or incentivization of new generation, perhaps, but we really need to see the final structure, if that even comes to fruition, what that is going to look like. We have to see if it fits within the risk profile that we have set up here. You know, I have said all along that the joint venture with Blackstone, while that could be meaningful for us for sure, we are not looking to significantly modify the risk profile of the company with it, which is why we have talked about regulated-like structures of contracts, etcetera, etcetera. So really depends on what the details of that auction might look like, and we will have to determine if that fits the risk profile that we are looking for. Jeremy Tonet: Understood. That makes sense. And one quick one if I could. Just as regards the nature of the generation, when you are talking about the alternative generation solutions that could come online more commensurate with ramping requirements of data centers, if you could share a little bit more color on what that could look like. Vince Sorgi: Yes. I prefer not to talk about the actual types of technology that we are looking at. But just suffice it to say, these are technologies that we could get online more in kind of the 2028–2029 timeframe versus, call it, 2031–2032, like what we are seeing with the larger CCGTs. Jeremy Tonet: Got it. That makes sense. I will leave it there. Thank you. Vince Sorgi: Sure, Jeremy. Thanks. Operator: The next question will come from Steven Fleishman with Wolfe Research. Please go ahead. Steven Fleishman: Hi, good morning. Vince Sorgi: Morning, Vince. Steven Fleishman: Just a follow-up to that last one. Is it fair to say that it would be mainly other gas-fueled technologies, or would you even be looking at things like fuel—well, I guess, fuel cells, or I guess it is gas-fueled too—but fuel cells or storage? Vince Sorgi: Could be all of those, Steve. Steven Fleishman: Okay. And maybe switching gears back to your data center backlog. Could you just give some color on all these, you know, the 10 gigawatts that is supposed to come on by the end of the decade, or might even be more than that. Or the ones that are highly likely, like, what were these customers thinking they were going to get their generation from? Just, like, buy it off PJM market, or—I mean, obviously, Susquehanna one, but just—and I guess the second part of that is, what is the risk that they switch gears from the region if this does not get resolved soon, or are they pretty committed to come either way? Vince Sorgi: Yes. Sure. So, look. As we have talked about in the past, I think the key for the hyperscalers has been speed to getting connected to the grid. And that has been something that we have been able to deliver consistently since we have been talking about this. To your point, I am not sure they were that focused or concerned about where the actual generation was coming. We are in an RTO. We are in the PJM ISO. The market takes care of that. They did not really have to worry about it. You know, they have energy procurement parts of their business that procure the energy if they want to do that on a forward basis or as part of polar loads or just shopping, etcetera. So I think they were just thinking through the normal process there. Obviously, the heat has been turned up on just adequacy in PJM, the amount of load that is connecting here versus the lack of generation. Obviously, all of that is moving in our favor. So they are to the table, which is kind of where we thought they would be when it was apparent that they were going to have to worry about this, I would say, more pointedly than they had in the past. So the good news is they are. They are extremely focused on it. Our engagement with them is incredibly constructive. Their sense of urgency is much higher than it was, probably because of some of the political pressure now that is being put on them and the industry overall. But, yes, I think they were just planning on getting it from the market. Steven Fleishman: I think—oh, are they—it sounds like they are still willing to stick with it and not, like, divert—oh, yes. So pay you the money. We will pay you the money and then—but we are going elsewhere. Vince Sorgi: Yes. I mean, look. We are—yes, we are up another 23% this quarter versus last. I will tell you the interest is continuing to be there. So we are not seeing people pulling out as a result of the gen issue. We just see them engaging in a very different way to help solve it. I would even say I think Pennsylvania itself speed is starting to look better and better to the hyperscalers. They took notice during this latest cold spell that our transmission network performed flawlessly through that event. And Pennsylvania was the one that was generating and exporting the vast majority of the energy, including down to Virginia, which is where, obviously, current data center alley is. So what we have heard directly from some of the hyperscalers is they are actually very impressed with the reliability both on the gen and transmission side in PA. So if anything, I would say they are getting more comfortable staying here versus thinking about leaving. Operator: Thank you very much. The next question will come from Michael Ronigen with Barclays. Please go ahead. Michael Ronigen: Hi, thanks for taking my questions. You highlighted upside to your EPS forecast. You talked about competitive transmission projects, you know, additional T&D in Pennsylvania and Kentucky, more generation in Kentucky, and Blackstone JV. Was just wondering if you could talk about the potential size of the investment opportunity here, what it could maybe increase your EPS CAGR to, and, you know, what portion of the investment would be financed with equity? Joe Bergstein: Yes, thanks, Mike. It is Joe. Well, good job in recapping all of the drivers there. So, look, I am not going to quantify that today from either an EPS or a capital perspective. The intent there really was to show you what gives us confidence in our plan—right?—delivering the plan that we laid out today, and then where we see the upside potential coming from. So, look, we believe that all of these areas can certainly come through for us to some extent. Ultimately, the size and timing of that will depend on a number of factors. But they are all areas that we are active and successful in to date, and we think that they continue to provide more benefit as we go forward. As far as your funding question, look. All of that is dependent on what type of capital is—how we get recovery of that—rate cases and other things. I would say, though, if, you know, we added $3,000,000,000 of capital to the plan and we increased the equity amount by $1,000,000,000, I guess, generally speaking, that is a decent rule of thumb. But there are other factors that could influence that amount. Vince Sorgi: Yes, Mike, I would just add to that that those upside opportunities for both CapEx and EPS are not the type that necessarily will drive rates up for our customers, which is incredibly important. So obviously, the Blackstone JV new generation increases supply. That should put downward pressure on wholesale energy costs that flow back to the customers. On the transmission side, right, we have talked about every gigawatt that we connect on the transmission side—that continues to lower the bills for everybody else just because we are spreading fixed costs over more customers, and those large loads end up taking a big piece of that fixed cost. So that is good for our customers. So many of those areas are actually—while there are upsides to the earnings, they are not pressuring the bill, which is—in some cases, they could actually lower the bill. So really, really pleased with the makeup of those upsides. Michael Ronigen: Great. Thank you. And then secondly for me, you know, for the Blackstone JV, I know in the past you talked about having to secure turbines still. So just wondering if you could provide an update on where you stand in sourcing the supply chain, and I know you said you secured land parcels. I was just wondering if you could talk about more strategic advantages your JV has that you would highlight. Vince Sorgi: Yes. Sure. So, I mean, I am not going to talk about the size or where the land parcels are, obviously, for competitive reasons. But I will say that they are in Pennsylvania, and they can support multiple gigawatts of generation. And, obviously, we strategically locate those where transmission and natural gas can easily be interconnected. So making really good progress there. On securing turbines, a lot is happening on the turbine front, as you probably know. GE was certainly early on with their commitment to build new capacity for turbines. We are seeing the same now with Siemens and Mitsubishi. So while we have not formally locked in any reservation agreements with either of the three parties, we are very actively engaged with all three and actually feel pretty good about our ability to get turbines from either or all of those to meet the needs of the data centers. The bigger issue, right, is providing generation sooner for them that can kind of match the load forecast and the ramping schedule that they have, and we would not be using the combined cycles for those. And those are those other types of technologies, and supply chains look good for those. And again, we should be able to get some of that in, call it, late 2028–2029 timeframe. So we are focused on that as well for the near term, but we feel good about our ability to get the turbines that we need for that 2031–2032 timeframe for the big CCGTs. Michael Ronigen: Great. Thank you very much. Operator: The next question will come from David Arcaro with Morgan Stanley. Please go ahead. David Arcaro: Hey, good morning. Thanks so much. Hey, I was wondering if you could elaborate a little bit on the EPS growth trajectory. Excuse me. Sorry. It looks like growing, you know, seven-ish percent into 2026, and then looks like it accelerates beyond that point. Wondering if you could just kind of frame out, you know, does it go above the top end of the annual kind of growth rate at some point looking out through the forecast? And how does that shaping look? Joe Bergstein: Yes, Dave. It is Joe. Yes, you are right. It does increase, as we said, starting in 2027. It is not a back-end-loaded plan. I would say the growth between 2027 and 2029 is, generally speaking, pretty linear. So I think you can think of it in that regard. David Arcaro: Okay. Got it. And then maybe on O&M, you have had, you know, a very successful O&M cutting program here. And I guess as you look out to another 1% kind of inflationary rate, wondering if you could just talk to levers to manage that and look for more cost-cutting opportunities going forward within the plan? Joe Bergstein: Yes. There is certainly more in the plan that we will look to. As we deploy capital across the networks, continued deployment of smart grid technology can drive costs lower. We have seen that already. I think there is more to do there. IT system upgrades can certainly provide a benefit to us. And then we are looking at deployment of AI across O&M savings beyond what we are seeing. Some of those we have in the plan and get us to that 1%, but certainly others we will look to to improve upon that once we deploy the various forms of technology. David Arcaro: Okay. Got it. Great. Thanks so much. Operator: The next question will come from Paul Zimbardo with Jefferies. Please go ahead. Julian: Hey, good morning team. It is Julian on for Paul here. Thank you guys again. Appreciate it. Can you comment a little bit—how material could this JV be, right, by the end of the decade? I just want to make sure we are zeroing in. We are not either exaggerating it or, at the same time, the total opportunity here. Again, seems like you have multiple sites, potentially working with hyperscalers, which would imply a certain size and scale. But want to ask you directly, how material could this be and by when? And how many innings are you in to this contracting effort? Because, obviously, that can take some time at times. Vince Sorgi: Yes. I mean, we are—I would say we are many innings in. Obviously, we have been working the JV for about a year now, Julian, so a lot of work has gone into making sure that we can provide those solutions, whether it is land, natural gas supply, working with gas suppliers on extension leads, all of that. At the same time, we are working with the hyperscalers and data center developers as well. It is not just the hyperscalers. We are seeing data center developers also very interested in bringing BYOG solutions to their hyperscale clients as well. So pretty far along. Again, we have not given a date or a timing on our expectation of signing an ESA just because of the complexity and the time it takes, primarily to get, I would say, to the hyperscaler approval process. These are very large organizations that it just takes time, and they are complicated. So we certainly understand that. In terms of how big it can be, yes, it is a bit early for that, I would say. Obviously, our focus right now is getting these first deals over the goal line. But as I have said before—and, look, I think the joint venture can be meaningful for us for sure. That is why we are spending so much time and attention on it. But as I have said before, and from the beginning, we are not really looking to change the overall risk profile of the company with the joint venture. So that is why you heard us talk about things like regulated-light contracts and things like that. So you asked through the end of the decade, so through 2030. Clearly, given now that we are providing solutions that would have a generation ramp more commensurate with the load profile at the data center, I think we absolutely can see some earnings from the JV, maybe even the back end of this plan, which is 2029, certainly kicking into 2030. More materially, though, I think you will see it when those combined cycles start to come online, which is in the early 2030s. But I do think you will see from us, ultimately, some earnings contribution in the back end of this decade, more meaningful into next. Julian: Awesome. Excellent. Thank you, guys. And maybe if I can go back on the load forecast real quickly. On Pennsylvania, it seems like it came down on ’27 slightly even while you ramped up materially the longer dated. Can you comment on what you are seeing near term versus longer dated? And then separately, also, in Kentucky, you comment here about updated projections of 2.8 gigawatts of load by 2032. Is that fully in the plan? Because I think the plan is this 1.8. Can you comment a little bit about what is in your updated plan here in Kentucky and then also the dynamics in PA? Vince Sorgi: Yes. Sure. So PA is really just the data center developers and the hyperscalers taking longer to get their projects built and completed. So the projects are still all there. They are just getting pushed out a little bit. So we kind of suspected that that would happen. Again, a lot of the early discussions in the ESAs that we are signing with folks were to get that capacity signed up. That is competitive advantage for them. In some cases, I think the timeframe that they had given us was probably quicker than they physically were able to build out the capabilities. But overall, the projects are still there. So nothing really of concern in PA. And then in Kentucky, the 2.8 is 2.8 as well last quarter. This quarter’s 2.8 is not the same as last quarter’s 2.8. Normal business development stuff happening in Kentucky as well. We have a lot more projects in this 2.8 than the prior 2.8. We actually have close to 2.5 more gigawatts in this 2.8. It is just on a probability-weighted basis, the two happen to both be 2.8. So good news is we are getting more projects, more gigawatts in the queue. We are just early in some of those additions, which is why the overall position has not changed much. But to your point, what we have in the plan is basically the generation that is currently underway—the solar, the battery, and the combined-cycle plants—as well as the environmental remediation on the gen plant. So that is all in the plan. We did push out the 400 megawatt battery that we had in the original CPCN that got deferred—that is still in the plan, we just pushed it out from 2028 to 2030. So there is some capital spending in the through-2029 time period for an in-service in 2030. But that all supports just 1.8 gigawatts. So if the 2.8 were to happen—and there are some large projects in the 2.8 that might only be in there 50% probability—if some of those hit, we could blow through that 1.8 very quickly. So that is why we indicated we could potentially have a CPCN filing as early as this year to either go back in for the 400 megawatt battery or potentially even more than that. But most likely, what we would like to see is similar to the conversation we had on the Blackstone JV and trying to get smaller generation amounts online quicker. I think that is where you would see this type of a CPCN is trying to keep up with the ramp rates as opposed to the big projects in 2032 at this point. So that is why we are saying we could do that as early as ’26 with all of these things kind of moving in the direction of more versus less. Julian: Awesome. Hey. Thank you so much for the detailed response to this. So looks like ’26. We will see what you guys ultimately file for in Kentucky. Batteries or otherwise. Operator: Sounds good. The next question will come from Angie Storozynski with Seaport. Please go ahead. Angie Storozynski: Hey, thank you. In your prepared remarks, you talked about potential contracting with generation assets of IPPs in Pennsylvania—at least that is what it sounded like to me. And I am wondering if you are referring to existing assets or to new build, and what type of earnings benefit, if any, that would present for your Pennsylvania utility? Vince Sorgi: Sure. So this is all in the context of resource adequacy, Angie, and trying to get new generation built in Pennsylvania. So within the legislation that has been proposed, there are really two main components. There is this LTRAA, which are really long-term resource adequacy contracts that would be a contract between the utility and an IPP to build new generation. Again, it is not for existing generation. This is to promote getting new plants built. So it would be for new generation. And then the second piece, obviously, is the ability for utilities to own generation as a backstop or as directed by the commission for whatever reason. So, yes, that is the LTRAA component of the legislation. Angie Storozynski: And if you were to pursue one of those, do you think that this would be, for example, deducted against the capacity deficiency that would be procured in the backstop PJM capacity auction? I am just trying to figure out how that gets embedded in the PJM planning and those future capacity procurements. Vince Sorgi: Yes. So, generally, I think the way we are thinking about it right now—that, of course, that legislation is proposed and, hopefully, in the springtime, we will start to see some debate on those bills in the chambers. But we are still early innings, as you know, on that legislation. But the thinking now is that both the load and the generation would both be in the PJM auctions. A lot of the load is already in the PJM forecast, so any new generation coming on would just increase the supply part of the equation to basically help supply all of the load that we have in there. But as we kind of think about this going forward, I think the intention and, again, the pressure that we are seeing at the federal and state level is that when a hyperscaler or a data center developer brings a gigawatt, two gigawatts of load, they are also bringing the plan that they had to bring the commensurate amount of generation to offset that. And I think the way you need to think about that is in the calculation that PJM actually performs, which discounts the load significantly less than how they discount generation. So on a pure megawatt-per-megawatt basis, you actually need more generation than the load for that to balance out in the PJM auction process. And those are the conversations that we are having with BYOG solutions. Angie Storozynski: Okay. And then changing topics. The results in Rhode Island—you mentioned about a $0.06 drag on 2025 earnings in Rhode Island versus what you had expected or budgeted. And I understand it is a onetime issue, but is it a onetime issue because of the rate case that you just filed, meaning that some of those earnings deficiencies get remediated in this rate case? Or is it that those were just truly onetime in nature—earnings impact that will not repeat themselves regardless of the outcome of this pending rate case? Joe Bergstein: Yes. It is a little bit of both, Angie. There are certainly some that get remediated as part of the rate case, and then there were some true-ups, like I mentioned, on the transmission revenue true-up that was truly onetime in nature. But that is really why we do not think that these will continue, and we generally see positive earnings performance from here after we get through these true-ups and onetime items. Angie Storozynski: Okay. Okay. Thank you. Thanks, guys. Operator: The next question will come from Anthony Crowdell with Mizuho. Please go ahead. Anthony Crowdell: Appreciate you guys squeezing me in here. I will try not to clear my throat like everyone else. I guess first on the settlement discussions in Pennsylvania, it appears from Governor Shapiro’s remarks there is more of a—affordability is always important. There seems like there is more of a consumer focus in the state. Have you noticed parties may be more rigid or less flexible in these discussions than previously? And I have another follow-up. Vince Sorgi: No. I would say nothing out of the ordinary in terms of settlement discussions with the parties. I mean, there are various views of course with the different intervenors, and that is always the challenge in coming up with settlements, but that is normal. So no, I would not say I am seeing anything different as a result of our governor’s comments. Anthony Crowdell: Got it. And then Steve had a question when he asked about where did the hyperscalers think the power was coming from. And if I understand correctly, you said they believed just they would connect to the grid. My question is, when you have the discussions today, the political backdrop that is going on, when you have discussions today with these hyperscalers, is there a clear preference for new generation that would benefit the partnership? Or are they just like whatever I could sign, I will take whether it is existing or new? Vince Sorgi: No. There is a clear preference for new generation because that is what the White House is calling for. That is what our state governors are calling for. PJM, NERC, FERC, everyone is saying if you are going to bring a gigawatt or two of load, you need to bring new generation to supply that load. So, look. Will they still try to procure power from, say, the nuclear fleet for their clean energy goals and all of that? Perhaps you will continue to see that happen. But there is just a lot of pressure right now to build new, and that is what we are seeing. Now in particular with the joint venture, those are the conversations that we are having because that is the offering that we are providing. We are not providing connecting to existing generation, Anthony. So, clearly, that is the conversations we are having. Whether they are having conversations on existing assets I cannot necessarily comment on. But the conversations clearly are more urgent, more significant. They understand the issue, and they seem very committed to helping to resolve it. Anthony Crowdell: Great. Thanks for taking my questions, guys. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Vince Sorgi for any closing remarks. Vince Sorgi: Yes. Thanks for joining us today, everybody. Again, just real quick summary: the business plan, the business itself—I think it is stronger than it has ever been. We are excited about moving into 2026 and delivering this. Blackstone JV, tremendous opportunity there. Everything moving in the right direction. So look forward to seeing you all on the circuit in the next month or so. Thanks for joining us. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Strawberry Fields REIT LLC Fourth Quarter and Year End 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone keypad. I will now hand the call over to Jeff Bajtner, Chief Investment Officer. You may begin. Jeffrey Bajtner: Thank you, and welcome to Strawberry Fields REIT LLC’s Year End 2025 Earnings Call. I am the Chief Investment Officer, and joining me today on the call are Moishe Gubin, our Chairman and CEO, and Greg Flamion, our CFO. Yesterday, the company issued its Year End 2025 earnings results, which are available on the company’s investor relations website. Participants should be aware that this call is being recorded. Listeners are advised that any forward-looking statements made on today’s call are based on management’s current expectations, assumptions, and beliefs about Strawberry Fields REIT LLC’s business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and may or may not reference other matters affecting the company’s business or the businesses of its tenants, including factors that are beyond its control. Additionally, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page of our investor presentation. And now on to discussing Strawberry Fields REIT LLC and our 2025 performance. I want to start by sharing some key highlights for the year. Throughout 2025, the company collected 100% of its contractual rent. This is something we are very proud of as collecting our rents year in, year out shows our disciplined investment approach works. On 01/01/2025, the company retenanted its 10 Kentucky properties, formerly part of the Landmark master lease. The new tenant, Hill Valley, has a strong background in operating skilled nursing facilities and was a great fit for this portfolio. The new base rents are $23,300,000 a year and are subject to annual increases of 2.5%. The initial lease term is ten years with four five-year extension options. Also in January, the company entered the state of Kansas by acquiring six facilities consisting of 354 beds for $24,000,000. The company entered into a new triple-net master lease with Willie and Michelle Novotny of Advenicare for an initial ten-year term that included two five-year extension options. In June, the company issued 312,000,000 shekel in Series B bonds on the Tel Aviv Stock Exchange, which is approximately $89,500,000. The bonds are unsecured and were issued at par with a fixed interest rate of 6.7%. This was the company’s sixth series it completed on the Tel Aviv Stock Exchange since the company was founded in 2015. And we look forward to maintaining this long-standing relationship. These numbers reflect the success of the company’s disciplined investment approach and our ability to close on deals that are accretive to the balance sheet. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the year-end financials. Greg Flamion: Thank you, Jeff. Welcome everyone to the Strawberry Fields REIT LLC fourth quarter earnings call. Let’s begin with a look at our balance sheet. Total assets are $885,000,000, an increase of $97,900,000 or 12.4% compared to 12/31/2024. Our asset growth was driven by a couple of key factors. First is our recent real estate acquisitions. This includes $112,000,000 of acquisitions in 2025. Second is the retenanting of key leases, namely the Landmark master lease into the Kentucky master lease. On the liabilities and equity side, increases were driven by financing activity associated with our acquisitions along with the impact of foreign currency translation adjustments. Together, both of these factors contributed to the overall growth in our debt balances. Equity declined, reflecting lower other comprehensive income driven again by the foreign currency translation adjustments. Continuing now to the consolidated statement of income. 2025 revenue was $155,000,000, up $37,900,000 compared to 12/31/2024. This represents a 32.4% increase, which was driven by the timing integration of properties acquired in 2024 and 2025 and the Landmark to Kentucky master lease retenanting that began in January 2025. While we experienced higher revenues, the income growth was offset by higher depreciation, amortization, and interest expense, which is driven by new property acquisitions. This results in a year-to-date net income of $33,300,000 or $0.60 per share compared to $26,500,000 or $0.57 per share in 2024. Finally, I would like to end my presentation with some financial highlights. Our 2025 AFFO was $72,500,000. This is a growth of 29.8% versus 2024 and represents a 13.3% compound annual growth rate. The 2025 adjusted EBITDA is $125,300,000. This represents a 38.2% increase compared to 2024 and a 13.5% compound annual growth rate. Our net debt to net asset ratio currently sits at 49.5%. As of 12/31/2025, our dividend was $0.16 a share, representing a 4.9% yield and an AFFO payout of 46%. This concludes the financial portion of the earnings call presentation. I will now turn it back to Jeff who will walk us through additional portfolio highlights. Jeffrey Bajtner: Thank you, Greg. Our portfolio highlights are as follows. Currently, our portfolio has 143 facilities located in 10 states, which comprises 16,602 licensed beds. The total value of our portfolio acquisition is $1,100,000,000. But if you take the value of our portfolio based on the leases, that amount is closer to $1,500,000,000. There are 17 consultants advising our operators. Our weighted-average lease term is 7.2 years. I am happy to report that our tenants continue to do well, and our EBITDARM rent coverage as of November 30 was 2.07. Our net debt to EBITDA is 5.7. As I mentioned earlier, we continue to collect 100% of our rents. And as a final point, our acquisition pipeline remains strong at $250,000,000. As Moishe and I have mentioned in the past, for us to close on a deal it has to meet our disciplined investment approach, which is a 10 cap at acquisition. And with that, I pass it on to Moishe Gubin, our Chairman and CEO, to continue the presentation. Okay. Thank you. Thank you, Jeff. As Jeff mentioned, this was a great year for our Moishe Gubin: best year we have ever had, and it was a great year for our AFFO growth. We had a 13.3 which is the average growth rate over the last six years, probably from $38,000,000 to $72,000,000. These are really good numbers that we are very proud of. On the next slide, we have base rent. Again, 13.4% growth rate. Almost double like the last one, very similar numbers from $75 in 2020 to $142,000,000 six seventy five. These are good numbers that we are very happy with. And on the next slide, we talk about our stock price, which in December, we hit an all-time high. We got to $14 a share. And we are still way undervalued. We believe that our stock value was, you know, close to $18, $19, $20 a share. Our stock is still straggling behind our peers. But, you know, we figure we will keep doing what we are doing fundamentally. Strong business and, God willing, eventually, everything will get caught up, get caught up to us. You could see on the next slide how the AFFO multiples, for us, we are at the lowest of everybody at 9.5 times. And CareTrust, or even Sabra is at 12.8. And CareTrust is at almost 20 times. They are doing real good. We are happy for them. They are good people. The return on the stock, 30% return this year, that is pretty good. We are happy about that. Though we feel that when the market truly gets to where we are supposed to be, we will see a nicer pop than 30%. That being said, next slide, our AFFO payout ratio continues to be the lowest where we are paying out 47% of our AFFO, using the rest of the money to pay down debt as a placeholder but to be able to use it to buy more assets. Our dividend yield because we are still, you know, the pack—CareTrust, HI, and us—about 5%. And we feel that that is a good place to be. Especially when we are able to take the money, put the money out the door at a 10 cap. Where we could get to a blended return at this point, a blended return of about 17% to 18%, which is what it has been. And we are very happy about that. Really, it is a very calm portfolio, collecting our rents, doing what we are doing, growing when we can. We are still anticipating guidance of being able to grow $100,000,000 to $150,000,000 a year, hope to beat that, and we had a deal that fell through that we were going to announce, that $890,000,000 deal. I was so happy to go get that and get it out of the way earlier in the year. But that fell apart, unfortunately. But, God willing, we will be able to hit our targets of, you know, $100,000,000 to $150,000,000 this year. The next slide really just talks about how we are still the pure-play skilled nursing facility health care REIT. We were recently at a convention and we asked investors and others if they thought we were doing the right thing. And everybody across the board said, no. You keep doing what you are doing. As the pure play, people will gravitate towards you. So we feel like we are going to just keep sticking with our guns in how we do things and what we are buying, and we should be able to continue staying above 90% in skilled nursing facilities. The next slide really just talks about the coverage, our rent coverages. Over two times rent is pretty good. We are happy with that. And, hopefully, that will continue. Our AFFO per share growth, you could see, we are the highest. Proud of that as well. 12.8% over the last five years. It is good. We are running a nice clean business, as you guys know. And we expect things to be able to stay the same or improve going forward. On this slide 12, we are just showing how our debt maturity schedule is currently. In the next few weeks, me and the team are heading to Israel and at the same time, we should be announcing that we are entering into a term sheet with a bank for the unsecured line of credit and term loan, which we talked about over the last few years. So we expect in the next 45 to 60 days to be able to have most of our debt cleaned up and pushed off to have almost equal maturities over the next four or five years. And so we are really happy about that. I have been pushing that for a while. We will have a bunch of availability under our line of credit once it is done—over $100,000,000. So it will help us. Actually, the most important thing that it will probably help us with is that it will be able to tell potential investors that we have cash. We are able to get a deal done. If you are worried about our growth, besides looking at our previous history where we have been growing nicely year over year, they would be able to say, okay. They have the cash to be able to grow. I want to try to get rid of all these impediments so the stock will have less pressure to not improve. Slide 13 has become my favorite slide. This just shows how diversified we are by state, where the largest concentration is Indiana, which is our best state. Which is a good situation to be in. Everybody else is in the low double digits. And you see it is pretty evenly dispersed throughout the states and by consultants in the states. So this is good. Hopefully, this is the year we will add maybe one or two more states. And that will be great. And we will continue to diversify this pie graph. Lastly, for me, slide 14 just shows you—I am color blind, but I know that basically what we do is bring in regional operators, and the color should indicate that through all of our operators and portfolios, we are growing and we are staying in little pockets of each state. And, hopefully, that will continue. And things are going great. The bottom pie graph just continues to drive home the point of how we are the pure-play SNF health care REIT. And we are going to continue to stay the same way that we are. Okay. And with that, I will hand it back to the operator for any questions. I want to thank everybody again for joining us today. And I will answer whatever questions that anybody has. Operator: Thank you. As a reminder, to ask a question at this time, you will need to press *11. Please stand by while we compile the Q&A roster. First question will come from the line of Rich Anderson with Cantor Fitzgerald. Your line is now open. Rich Anderson: Hey, good morning, everyone. Great quarter. So if I could ask a sort of mathematical question first. The EBITDARM with an M coverage of 2.07 times, what does that equate to on a DAR basis in your mind? Moishe Gubin: So what do you guys want to answer? You want me to answer that? Jeffrey Bajtner: I could get you that in one second. You want to go to the next question? I will get that for you. Rich Anderson: Another mathematical one, and then I have a bigger picture one for Moishe. But with the very attractive payout ratio of 47%, what does that equate to from a free cash flow available to you after dividend, which is zero cost of capital essentially? And, you know, where do you see that sort of growing to over the course of time? And what are the pressures on you to have to raise the dividend to maintain some sort of REIT, you know, standard as it relates to dividend payout? Moishe Gubin: So the number is right around $40,000,000 after everything is said and done that we are stockpiling. But, you know, the pressure based on REIT rules—I mean, we are at about 100% of distribution. So, like, we have room if we wanted to hold back, but you know, as we make more money, we are trying to build up a following in the marketplace that says, okay. We could trust these guys that every year they pay the same or more. And so we want to have an annual increase every year. The bigger fights in the board meetings have been how much the increase should be, whether it be $0.01, $0.02, or more. And, again, I am actually the one who is pushing not to go crazy on the dividend from the point of view of because if, God forbid, we are not able to meet it one time, I do not want to be erratic and then lower it. And I want to be able to always be relied upon that you will know that the dividend, if you are investing in our company, you know you are going to get at least this or more going forward annually. And so that is what I have been protective of. And so far, we have been doing it exactly that way for four years at this point almost, I think. And it has been good. And so, you know, that $40,000,000 equates to being able to buy easily $80,000,000 and whatever else we need to supplement with, we could supplement. Well, first off, since we are paying down a bunch of debt every year, we could draw on the debt to keep our—because our leverage today is below 50% or right around 50%, and we could then still draw on those lines and ratchet back up to 50% and draw on that to be able to close deals. So I think I answered, and good to hear your voice, Rich. Yeah. Rich Anderson: And, Jeff, you have an answer for the DAR? Jeffrey Bajtner: Yes. Our EBITDAR coverage is 1.6. 1.6. Okay. And then last for me, Moishe, the news out there today on Medicare Advantage—sort of flat for next year. Wondering what your exposure is to MA in the portfolio and what concerns you might have that fee-for-service Medicare, to the extent you have any major exposure, is kind of a risk to the industry, if not necessarily directly at you. Thanks. Moishe Gubin: Yeah. So that is a good question. If you are talking about the context of Strawberry Fields REIT LLC, you know, we do not have any SHOP in our portfolio. We do not have any of our rents that are predicated on results of our tenants and our rent changing up or down as bonus rent or not bonus rent. So we do not suffer from that at all. And the fact that the coverage is a 1.6, like Jeff said, is an EBITDAR—and I would have thought it would have been a little bit lower. But, actually, I am happy that it is 1.6. 2.07 is the number we are actually looking at. But the point is that we do not have any of those risks in our portfolio. And because of the master leases, individual facilities that might be marginal—you know, the overall portfolio—our tenants are doing well. So, you know, a lot of these things are just—they happen one year, and then next year, they will raise the number for the increase, you know, to make up for the year before. So I am not too worried about it. You know, some of the other REITs that are out there, you know, they are more connected to the operator as far as operator results. And they will probably suffer a little bit, but in the grand scheme of things, it will bounce back. You know, this has been the way it has gone. You know? Even administration to administration. Year to year it is the same administration—that is gone. Because then they realize the operators cannot live. They rely on Medicare to help supplement the shortfall that Medicaid has. And, you know, as time has gone on, they have squeezed that the operator makes less. And the operators are okay with that, I guess, today where it is, but it is still—they work in tandem. And when the nursing homes get squeezed too much from the rate from the government, they are not, you know, which where it is short, right? They go back, and then the government fixes it. And so I am not too worried in the grand scheme of things. Again, you know, we are in an industry—we have talked about the silver tsunami. We are in an industry where we are a necessary business. The nursing homes need to take care of people, and people need to be taken care of. The nursing homes are the least expensive model to be able to take care of people. And we provide the role as the REIT to be the landlord and provide the capital so an operator does not have to put the money in and buy the real estate. And, you know, we have a very simple model that has been working so effectively for so many years. And that should hopefully continue. Rich Anderson: Great. Thanks very much. Operator: Thank you. Our next question coming from the line of Gaurav Mehta with Alliance Global Partners. Your line is now open. Gaurav Mehta: Yeah. Thank you. Good morning. I wanted to ask about the balance sheet for the 2026 debt maturing. What do you really expect the new rates to be compared with the maturing debt? Moishe Gubin: So we modeled out that the line of credit debt is going to come back in at SOFR plus 2.70—about SOFR plus 2.65 to 2.75, right around there—and that the bond debt is going to come in around 6.25%. So assuming we pay off the conventional that today is sitting at SOFR plus 3 to SOFR plus 3.25, let us say, as a blended—so that will go from SOFR plus 3 to 3.25 to, we will say, probably 50 basis points above that on that, like, $160,000,000 or so or whatever the number is. And then for the bond debt, we will see a savings of a drop. It is not going to be a big savings, but it will extend the maturity out four or five years, and nice and clean. And it also at this point will be helpful for refinancing that, because then I do not have to deal with the currency. Right now, the dollar is weak and the shekel is strong. And so I need to kick that can down the road so that I am not stuck using dollars to pay off shekel debt. And so because in the grand scheme of things, the shekel will drop at some point, and the dollar will strengthen. It is inevitable. And when that happens, we will make a bunch of money on the currency exchange too. Gaurav Mehta: Alright. That is great color. Second question on the April financials. In the G&A, were there any one-time items that you guys reported? And then going forward, is the run rate for AFFO per share in 4Q the right number? Moishe Gubin: Greg, you want to answer that? Greg Flamion: Sure. So, yeah. In the G&A, we did have, let us just say, a one-time item. We had some additional payroll that came through in Q4 due to additional executive compensation. So that was a little bit higher than what we were expecting to come in, I guess, from earlier on in the year. However, looking at the payroll going forward, we think that it is not going to be any further, right, increases going into 2026. So basically, Gaurav, what the one-time event is I finally got a raise. I have been paid $300,000 a year for the last fifteen years or something like that. They finally gave me—a compensation committee decided to give me—a raise to $700,000, which I think I am still way underpaid. Does not make a difference to me. But reality is that in Q4, they recorded somewhere between—and it went back—they did it retroactively to, like, eighteen months. So I think they recorded about $1,000,000 or $1,100,000 in a one-time thing. Our go forward—you know, we ended the year with an AFFO of $1.30. We should beat that easily in 2026. Gaurav Mehta: Alright. Thank you. That is all I had. Moishe Gubin: Thank you. Have a good weekend. Operator: Our next question coming from the line of Mark Smith with Lake Street. Your line is now open. Mark Smith: Hi, guys. I wanted to ask first about the acquisition pipeline. Have you seen any changes in this pipeline, either in volume or valuations? And, you know, is the only real potential impediment to continued growth through acquisitions really just access to capital, or any thoughts on kind of continued growth through acquisitions in your pipeline would be great. Moishe Gubin: So I will answer that, and then Jeff will add to it. Give him a little time to think because he is not as fast and as speedy as I am. So the starting point is we have never had an impediment as far as cash. We are confident, and we know that debt markets—and, you know, I do not want to sell equity at such a cheap price. But reality is we keep track of what our NAV is. And worst case scenario, if we had to sell equity above NAV, it is still accretive. It just does not feel right doing it, but the point is we could always do that. Over the years, we have stayed very disciplined, as you guys know. And, lately, the deals that I am seeing personally are sale-leaseback deals. Seems to be a ton of that. And so this year, likely, which will be a little bit different—it is the same math—but a little bit different of an operator, where it is going to be the same operator in a spot that we could tell you, we could tell somebody, this is what they are doing and this is how they are operating and see how much money they are making. Then we are going to rebalance them to, you know, a 1.25, which is how we underwrite to. And then, you know, as opposed to what we typically had done—not that we were adverse to sale-leasebacks—we typically were just buying and then retenanting. In this case, it is going to be a little bit easier on one side, and the fact that you will have people that have been the operators there for many years—that is what I am seeing. Jeff, you want to add to that? Jeffrey Bajtner: I mean, I think Moishe is dead on with his view on it. I mean, it is not an issue with access to capital. I mean, the deals are coming in day in, day out. I mean, they are coming in from across the country. But as we said in the past, we are in our 10 states. To add to our existing 10 states, it is very easy to grow the master lease. But finding a new state to go into, we may need a sizable acquisition. And valuation right now—prices have gone up significantly. I mean, especially—I would say last year I was on the East Coast. This year, we are seeing in the heartland of the country—you are seeing prices per bed go to their highest levels that they may have ever been. And for us, with our disciplined approach, we are sticking to our guns, and if a deal makes sense, a deal makes sense. I mean, Moishe has always said, if a deal pencils out, we are going to close it. So that has been the approach that we have been going at. I mean, since I have been with Moishe for about five years now, and there has not been a deal we have not closed. So we are always looking, and we are always looking at different ways we can grow, but it all goes back to the basics. It is a 10 cap acquisition, 1.25 coverage on day one. So as we enter 2026, we are excited to see what is going to come our way. The sale-leasebacks have been very front and center for us, and we look forward to seeing everyone next quarter, and we will hopefully have some deals to report then as well. Mark Smith: Perfect. The other question that I have was really around occupancy—sitting here, I think you guys said like 76%. Just kind of curious your comfort level at that rate and where you maybe see that moving and impact to the model as occupancy maybe moves up or down? Moishe Gubin: Yeah. So I will answer that. I mean, we have talked about this before. I know that there are REIT analysts and folks that look at a bunch of different, you know, multifamily and other things across the board. In the health care space, the occupancy is not a great gauge of how a portfolio is doing. You know, we are in states—and I have talked about this before—like we are in Oklahoma. In Oklahoma, the average occupancy for the whole state is like 50%. And, rightfully or wrongfully, they want in Oklahoma—they should have a nursing home local for every county, as an example. Similar to Indiana, same way. But Indiana, the average occupancy is like 70%, compared to 50% in Oklahoma. But they did it because they did not want people that wanted to visit their mother in a nursing home to be driving an hour every day to go visit mom. And so you have certain states. So we are in states in the Midwest that are known as low-occupancy places. Now Illinois occupancy averages like in the 90% and, you know, or high 80s. Same with Kentucky, 85%. But Arkansas is a low number. And our operators are doing great there. They are beating the trend and the state average. Indiana is right around how Indiana runs—maybe a little bit lower actually—and not we are in our tenants’ operations. So that being said, our—and, again, our revenue is not based on occupancy because in our case, you know, our we are showing 100% occupied because every building that we have has been leased out, and we get paid a rent no matter how full they are. But that is just the color I want to provide you. I do not know if that helps you or hurts you, but that is—you know, we expect our portfolio is now probably right around or the same or higher than it was before COVID. It has taken a bunch of years to recover. And we are okay with it. I mean, we are really looking more at rent coverage more than occupancy of the tenants. Jeffrey Bajtner: I would add to that as we are underwriting the portfolio, their occupancy may have been in the 60s, and now four or five years later, their occupancy has gone up, which is ultimately helping their bottom line, giving higher rent coverage. But as Moishe is saying, the likelihood of them being—in other, I would say, verticals of real estate—net lease, multifamily—100% is very important. In this particular case, it is a little less important. It is more just—it goes down to the operations. Mark Smith: It sounds like the big thing to look at is really the collected at 100%. And if you can continue to do that even at occupancy in some states as low as 50%. Jeffrey Bajtner: Yes. Yeah. Yeah. Because when we buy it, we are not buying it off of we are not buying it off of what could be. We are buying it off of today—where does the deal play out as far as coverage? And, you know, I guess that is the difference between us and maybe multifamily. Where multifamily—they want to charge market rents, and they are assuming something. And they are giving a vacancy rate of 5% or something, and then they are buying off of that. Then they have to build into that. We are not buying into that. We are charging the rent that is a mathematical formula off of what we are paying. And we are praying every day that our tenants do great and raise occupancy because the more coverage they have, the more certainty we have we will get our rent. The more certainty we have that we are going to get our rent, the more certain we are that we can pay a dividend and buy more assets. And the more we do that, the more we know that we are going to make more money. And, you know, wash, rinse, repeat—wash, rinse, repeat—and keep doing it. And that has been what we have done, and that has been effective and successful. And we want to keep doing that. Mark Smith: Excellent. And I know from your presentation, it seems like the demographic trends that you guys call out gives us a long runway. We do not need to really worry about occupancy dropping off because of just demographic trends and aging out. Moishe Gubin: Yeah. The transcript is not going to catch the fact that all three of us started bobbing our head. Yeah. Exactly. Exactly what you just said. I was going to silver tsunami. It is—you know, reality is if you are really a prognosticator, right, our tenants should—as long as the government does not decide to start being anti-geriatric folks—there is absolutely no reason why our tenants will not have coverages way in excess of, you know, two, three, four times. Because ten years from now, you know, we are still making our 10 cap return with, you know, annual inflationary increases, and they are going to be making—outside of the cost of labor, you know—but their cost of occupancy to be able to have the space to be able to run the nursing home, that is going to stay relatively flat other than small inflationary increases. But they should have their occupancy go up through the roof, certainly in bigger cities. You know? I do not know if Bardstown, Kentucky is going to—now, it happens to be that building is relatively—well, you know, that is maybe a bad example. Like, Elkhorn County—the place is full. But the other places where they are running 60%, 70%, 80%—or 50% in Oklahoma—you know, that number ratchets up to 70%, 80%, 90%. You know? Our coverage is going to be through the roof, and that is really what we want. We want the country to have nursing homes to take care of the residents and be able to take care of the residents when they make money. And for them to make money, they need a landlord that is not too onerous and buys properties effectively at the right pricing and gives them a rent that they could live with. And that is the model we have. Mark Smith: Excellent. That is helpful. Thank you, guys. Moishe Gubin: You are welcome. Operator: And I am showing no further questions in the Q&A queue at this time. I will now turn the call back over to Jeff for any closing comments. Jeffrey Bajtner: I would like to thank everyone for joining us on this call. We appreciate you joining us. We appreciate your support. If anybody has any questions or would like to reach out, send us an email at ir@sffreit.com. We look forward to seeing you again next quarter. Have a great weekend. Greg Flamion: Thank you. Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to Balchem Corporation’s fourth quarter and full year 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Carl Martin Bengtsson, Chief Financial Officer. Carl Martin, please go ahead. Carl Martin Bengtsson: Thank you, and good morning, everyone. Thank you for joining our conference call this morning to discuss the results of Balchem Corporation for the quarter ending December 31, 2025. My name is Carl Martin Bengtsson, Chief Financial Officer, and hosting this call with me is Ted Harris, our Chairman, President, and CEO. Following the advice of our counsel, auditors, and the SEC, at this time, I would like to read our forward-looking statement. Statements made in today’s call that are not historical facts are considered forward-looking statements. We can give no assurance that the expectations reflected in forward-looking statements will prove correct; various factors could cause actual results to differ materially from our expectations, including risks and factors identified in Balchem’s most recent Form 10-Ks, 10-Q, and 8-K reports. The company assumes no obligation to update these forward-looking statements. Today’s call and commentary include non-GAAP financial measures. Please refer to the reconciliations in our earnings release for further details. I will now turn the call over to Ted Harris, our Chairman, President, and CEO. Thank you, Carl Martin. Ted Harris: Good morning, and welcome to our conference call. We were very pleased with the financial results reported earlier this morning for 2025, which capped off another very strong year for Balchem. We delivered record fourth quarter consolidated sales, adjusted EBITDA, and adjusted net earnings. And I was particularly pleased that we delivered solid year-over-year sales and earnings growth in each of our three reporting segments. Before we get into more detail on the quarter, I would like to reflect for a few minutes on some of the significant accomplishments the Balchem team achieved over the past year. Overall, 2025 was another excellent year for Balchem. For the full year of 2025, we delivered record sales of $1,037,000,000, growing 8.8% compared to the prior year, and passing the $1,000,000,000 mark for the first time. And all three of our reporting segments contributed nicely to the strong growth of the company. We also delivered record earnings from operations of $209,000,000, an increase of 14.4%, and record adjusted EBITDA of $275,000,000, an increase of 9.8% from the prior year. In addition, we generated record free cash flow for the year of $174,000,000 while investing $43,000,000 in capital projects to support our continued growth, allowing us to further pay down our debt and reduce our leverage ratio on a net debt basis to 0.3 times. Financially, a very strong year, capped off with an excellent fourth quarter, and a continuation of Balchem’s consistency in performance. Q4 was our 26th consecutive quarter of year-over-year adjusted EBITDA growth. Throughout 2025, each of our business segments delivered solid growth on both the top and bottom lines each and every quarter. This consistency is a testament to our strategic focus, the excellent execution by our teams, and the resilience of our business model. 2025 turned out to be another eventful year from a macroeconomic and geopolitical perspective. We navigated a dynamic global trade and tariff environment in a disciplined and proactive way. And our intra-regional manufacturing and sales model with approximately 85% of products sold in the same region they are made, our global supply chain with minimal reliance on China, our robust U.S. manufacturing footprint, combined with our strong market positions have enabled us to maneuver through the current situation successfully. We offset tariff impacts through a combination of alternate supply chain options and pricing actions, and we have remained nimble as conditions evolved. At the same time, we have continued to invest in and advance our strategic growth priorities that will support our future success. We made meaningful progress expanding our sales and marketing reach both domestically and internationally, and in 2025, more than half of our sales growth came from markets outside the United States. Our marketing partnership with the New York Jets around our VitaCholine brand and our partnership with Bayern Munich women’s soccer team around our K2VITAL brand have both been successful initiatives in our Human Nutrition and Health segment, while our Real Science Exchange platform in the Animal Nutrition and Health segment continued to grow as an industry information and technology resource supported by clinical studies in various stages of completion, podcasts and symposiums across major streaming platforms, and was just recently recognized as the number one animal nutrition podcast by Million Podcasts. We also significantly advanced our scientific and clinical research pipeline. We continue to invest in the science behind brands such as VitaCholine, K2VITAL, OptiMSM, and Albion Minerals, and our current pipeline includes over 20 active clinical studies. Additionally, we continue to make progress on our 2030 sustainability goals to reduce both greenhouse gas emissions and water usage by 25%. Compared to our 2020 baseline, we have reduced greenhouse gas emissions by approximately 31%, surpassing our 2030 goal, and we have reduced water withdrawal by approximately 16%, showing substantial progress toward our water usage reduction objective. We also continue to invest in our future growth while returning capital to shareholders. We made important and significant new investments in plant and equipment in 2025, resulting in capacity additions for our human nutrition, animal nutrition, and plant nutrition businesses. Of particular note was the commencement of the construction process for our state-of-the-art food ingredient and nutraceutical microencapsulation manufacturing facility in New York State, which will further support our continued growth with this technology. We also repurchased shares under our stock repurchase program to both offset the dilution associated with our equity incentive plan and provide a return of capital to our shareholders. We repurchased approximately 685,000 shares at an average approximate cost of $158 per share. This stock repurchase program is one component of our overall capital deployment strategy that focuses primarily on investing in organic growth opportunities that provide an attractive return, augmenting our organic growth through strategic M&A where appropriate, paying down debt, and maintaining a strong balance sheet, and retaining and growing our dividend to our shareholders. And regarding the dividend, in December, we announced another increase to our annual dividend, taking the dividend from $0.87 to $0.96 per share, a 10% increase year over year. This most recent increase marked the 17th consecutive year of double-digit growth of our dividend, which once again reinforced our commitment to our long-standing dividend strategy. So overall, as we look back on the year, we are proud of the combination of strong financial performance and tangible progress on strategic initiatives, and we maintain a positive outlook as we look forward. I would like to thank all of our employees and stakeholders who contributed to our success throughout another excellent year. Thank you all. Now regarding the fourth quarter of 2025, this morning, we reported fourth quarter consolidated revenues of $264,000,000, which were 9.8% higher than the prior year quarter. GAAP earnings from operations for the fourth quarter were $52,000,000, higher by 10.2% versus the prior year, and we delivered quarterly adjusted EBITDA of $68,000,000, an increase of 8.1%. Consolidated net income closed the quarter at $39,000,000, an increase of 16.8%. This quarterly net income translated to diluted net earnings per share of $1.21 on a GAAP basis, up 17.5% compared to the prior year. On an adjusted basis, our fourth quarter adjusted net earnings were $42,000,000, an increase of 14.8% from the prior year, which translated to $1.31 per diluted share. From a market and demand perspective, we continue to see healthy demand across the vast majority of our end markets. In Human Nutrition and Health, performance remains strong, driven by healthy demand for our portfolio of minerals, vitamins, and nutrients, as well as our food ingredients and solutions. We continue to benefit from the broader consumer and customer shift toward nutrient-dense, high-protein, high-fiber, and low-sugar better-for-you foods, where our nutrition portfolio and formulations capabilities bring meaningful value. In Animal Nutrition and Health, the dairy market remains relatively healthy, particularly for dairy protein, and we continue to penetrate the market with our rumen protected precision release encapsulated nutrient portfolio, and we are seeing modest improvement in market conditions in Europe for our feed-grade choline business after the finalization of the European Commission’s antidumping duties on Chinese choline in late December. In Specialty Products, both our Performance Gases and Plant Nutrition businesses are performing well, supported by stronger demand and healthier market conditions with Performance Gases and continued progress in geographic expansion within Plant Nutrition. Overall, we continue to see healthy demand across all three of our business segments. I am now going to turn the call back over to Carl Martin to go through the fourth quarter consolidated financial results for the company and the results for each of our business segments in more detail. Carl Martin Bengtsson: Thank you, Ted. As Ted mentioned, overall, the fourth quarter was another very strong quarter for Balchem with strong growth in sales, earnings, and free cash flow. Our fourth quarter net sales of $264,000,000 were up 9.8%, driven by growth in all three segments, Human Nutrition and Health, Animal Nutrition and Health, and Specialty Products. Our fourth quarter gross margin dollars of $94,000,000 were up 8.8%, and our gross margin percentage was 35.6% of sales, down 40 basis points compared to prior year primarily due to certain higher manufacturing input costs. Consolidated operating expenses for the fourth quarter were $42,000,000, up 7% compared to the prior year. The increase was primarily due to higher compensation-related expenses. GAAP earnings from operations for the fourth quarter were $52,000,000, an increase of 10.2%. On an adjusted basis, as detailed in our earnings release this morning, non-GAAP earnings from operations of $57,000,000 were up 9.3% compared to the prior year. Adjusted EBITDA was $68,000,000, an increase of 8.1% compared to the prior year, with an adjusted EBITDA margin rate of 25.8%. Net interest expense was $2,000,000, a reduction of $1,000,000 compared to the prior year driven primarily by lower outstanding borrowings and lower interest rates. The effective tax rates for 2025 and 2024 were 21.6% and 24.5%, respectively. The decrease in the effective tax rate from the prior year was primarily due to a decrease in certain foreign taxes. Consolidated net income closed the quarter at $39,000,000, an increase of 16.8%. This quarterly net income translated into diluted net earnings per share of $1.21, an increase of $0.18 or 17.5% compared to the prior year. On an adjusted basis, our fourth quarter adjusted net earnings were $42,000,000, translating to $1.31 per diluted share, an increase of 15.9% from prior year. We continue to translate our earnings into cash, and fourth quarter cash flows from operations were $67,000,000, and we closed out the quarter with $75,000,000 of cash on the balance sheet. Our net debt decreased to $89,000,000 with an overall leverage ratio on a net debt basis of 0.3. As we look at the fourth quarter from a segment perspective, our Human Nutrition and Health segment generated sales of $166,000,000, an increase of 12.7% from the prior year. The increase was driven by higher sales within both the Nutrients business and the Food Ingredients and Solutions businesses. Our Human Nutrition and Health segment delivered quarterly earnings from operations of $37,000,000, an increase of 8.9%, primarily due to the aforementioned higher sales and a favorable mix, partially offset by certain higher manufacturing input costs and higher operating expenses. Adjusted earnings from operations for this segment were $40,000,000, an increase of 9.6%. We are very pleased with the strong performance of our Human Nutrition and Health segment, where demand continues to be robust for a differentiated portfolio of ingredients and solutions. As consumer preferences increasingly shift toward better-for-you ingredients and solutions, we see a compelling opportunity to further leverage our formulation capabilities, nutrient portfolio, and unique solutions to drive sustained growth in Human Nutrition and Health. Our Animal Nutrition and Health segment generated quarterly sales of $61,000,000, an increase of 4.9% compared to the prior year. The increase in sales was driven by higher sales in both the ruminant and monogastric species markets. Animal Nutrition and Health delivered earnings from operations of $6,000,000, an increase of 8.6%, primarily due to the aforementioned higher sales and a favorable mix partially offset by certain higher manufacturing input costs and higher operating expenses. Fourth quarter adjusted earnings from operations for this segment were $6,000,000, an increase of 9.2%. We are pleased to deliver another quarter of solid top and bottom line growth in our Animal Nutrition and Health segment. We continue to see increasing penetration of our rumen protected encapsulated nutrient solutions in the dairy market, and on the monogastric side, the U.S. market remains steady, while the European market has shown clear signs of improvement following the provisional antidumping duties on Chinese choline announced in the quarter and the final duties announced by the European Commission in December. Looking ahead, we are confident that Animal Nutrition and Health is well positioned to drive sustained long-term growth as adoption of our differentiated technologies continues to expand across key markets. Our Specialty Products segment delivered sales of $35,000,000, an increase of 6% compared to the prior year, due to higher sales in the Performance Gases business. Earnings from operations were $11,000,000, an increase of 5.5% versus the prior year. The increase was primarily driven by the aforementioned higher sales partially offset by higher operating expenses. Fourth quarter adjusted earnings from operations for this segment were $12,000,000, an increase of 6%. We are very pleased with the continued performance of our Specialty Products segment which delivered another quarter of solid growth across both sales and earnings, and as we look ahead, believe this segment is well positioned to continue delivering consistent, profitable growth. So overall, the fourth quarter was another very strong quarter for Balchem. I am now going to turn the call back over to Ted for some closing remarks. Ted Harris: Thank you, Carl Martin. We are extremely pleased with Balchem’s financial results reported earlier this morning for the fourth quarter and the full year of 2025. As an organization, we continue to demonstrate the ability to perform consistently across a wide range of market environments, supported by our strong competitive positions and differentiated value-added product portfolio. Again, we effectively navigated a dynamic macroeconomic backdrop with limited impact on our results. At the same time, our growth momentum has continued to build as we execute around our core strategic initiatives. I am excited about 2026, and I believe the company is well positioned to deliver continued top and bottom line growth on a full-year basis while further advancing our important growth initiatives. I will now hand the call back over to Carl Martin, who will open up the call for questions. Carl Martin Bengtsson: Thank you, Ted. This now concludes the formal portion of the conference. We will now open for questions. Operator: Press star, then the number one on your telephone keypad. To withdraw your question, simply press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Robert James Labick with CJS Securities. Please go ahead. Robert James Labick: Good morning. Congratulations on another record quarter and year. Thanks, Bob. Yeah. That was great. And so, Ted, you mentioned in your prepared remarks the New York Jets. And so I just wanted—have not talked about it in a couple of quarters. Can you discuss the partnership and really, you know, what has come from it? What have you learned? What are the benefits? Are you, you know, and what do you see in the future? Are there more partnerships like this to come? Do you renew? Or how are you thinking about it? What have you learned? Ted Harris: Yes. We certainly have learned a lot, and I think I talked about on one of the calls when we made the investment in the partnership with the Jets. We really viewed it as a, you know, a pilot investment that, based on the fact that we essentially have done it again with the Bayern Munich women’s team, suggests, you know, we viewed it as a successful venture. But the partnership with the Jets in particular relative to VitaCholine, what we hoped to get out of it and what we learned from it was that, you know, choline and our brand of choline, VitaCholine, was really primarily known for its importance in infant and child cognition. It has been long included in infant formula. We have been very successful in getting part of a typical prenatal vitamin regimen. But the discussion was largely around infant and child cognition. And this investment really has allowed us to change the dialogue because choline is really important for adult cognition, adult health, liver health, and so forth. And so it really has shined a light on the fact that this is also an important nutrient for adults. And I think that if that was the only thing we got out of it, that was worth doing from our perspective. But several brands have adopted VitaCholine in energy drinks and active nutrition formats, while others have decided to launch new SKUs that include choline in supplements. And this all came from the partnership with the Jets and our team being able to leverage that partnership. So financially, we can look back on it and say there was a very good ROI, but I think what was most important was it really gave us the ability to highlight the importance of VitaCholine and the nutrient, the essential nutrient choline, for adult health. And similarly, the investment with Bayern Munich Women’s Team is allowing us to do that with a very different product, the vitamin K2 and our brand K2VITAL, relative to the benefits of K2 in women’s health, in particular given that investment. So we really are pleased with that investment. And it comes, you know, on top of our rich science backing that supports the nutrients, and we need to continue to invest in that. But I think you will see us continue to push the bounds of marketing investment as well because we really have recognized it is an important part of the process. But we really are very pleased with both those investments despite, as you and I have joked, the Jets’ performance in 2025. But there is always the new year, and we are excited about how the Jets will do in the coming year. Robert James Labick: Absolutely. And we are in the off season, which is their best season. That is right. So I guess, just moving on, you mentioned the science basis for all of your marketing and things like that. Can you talk about, you know, I think on previous calls, you said you had something like 20 or so clinical trials running. Are any of those trials coming up for conclusion in 2026? And how, and assuming positive results, just for now, how would you leverage that information into new sales? Ted Harris: Yeah. So we do. We are really excited about the—you are right—the 20 studies that are currently underway. We actually had, you know, 18 publications in 2025, based on studies that have been done earlier. And I think that is just an indication of what do we do with these clinical findings. All of them that I have been associated with, you know, have been positive in one way or another. And getting those results out in front of the right audience, whether it is practitioners or influencers or important people within the industry so they understand the science behind their products, but also being able for us to offer claims to our customers who are ultimately selling the product. For example, in 2025, there were a few publications that allowed us to make a claim around vitamin K2, our K2 delta product, and it helps maintain a normal age-related calcification. And that is an important claim to be able to introduce. K2 has been a product that has typically been talked about relative to bone health, but we have long believed that it played an important role relative to cardiovascular health. And so these studies helped us bring that ability to make that claim to our customers. So that is what we do with these studies. And yes, in 2026, there are definitely a few studies that will come to fruition, hopefully be published in 2026. And I think maybe just to mention one that I am particularly excited about that we have talked about before on these calls, but it relates to MD Anderson, University of Texas, MIT clinical study around the effect of high doses of choline in older people with the gene APOE4 relative to Alzheimer’s and the ability for these high doses of choline to potentially impact the development of Alzheimer’s and delay it. So we are very interested in this study. We are excited about it. Obviously we do not have results. Hopefully the results will be positive. But if we could have a highly credible study from institutions such as those that could allow us to make a claim relative to choline and adult cognition, it could be very powerful. So that is one that is coming up in 2026 that we are quite excited about. Robert James Labick: Yeah. That sounds great. So, okay. Super. I will jump back in queue. Thank you very much. Operator: Alright. Thanks so much, Bob. Next question comes from the line of Raghuram Selvaraju with H.C. Wainwright. Please go ahead. Raghuram Selvaraju: Hi. Thanks very much for taking my questions. Sort of three categories here. Firstly, I was wondering if you could comment on planned sales and promotional activities in 2026 that represent a meaningful or marked evolution from 2025. In particular, you know, and this relates to what was asked about earlier already, the relationships with professional sports teams. I am particularly interested in soccer, but if there are other professional sports leagues that you plan to take a look at potentially aligning with, sponsoring, partnering with going forward in order to aid promotion and deployment of H&H products in particular, that would be very helpful to know and understand better. I was wondering if you could comment on what seems the only thing most people can talk about these days, which is the Supreme Court decision overturning the current administration’s tariff regime, and if there are any potential ways in which this could conceivably be disruptive, you know, what mitigation measures you already have in place. I think you alluded to those in your prepared remarks, that would effectively shield the company from organizational disruption. And finally, if you see any potential opportunities if tariffs are indeed rolled back on that. And then lastly, standard question for Carl Martin. You know, what should we be thinking about in terms of effective tax rate assumptions as we refine our projections going forward? Thank you. Ted Harris: Thanks, Ram. I will try to take a stab at the tariff one. Maybe we will do that one first. Obviously, that is hot off the press; we are all just trying to figure out exactly what it means. I would just start by saying that we were very pleased with how we managed through the disruption of Liberation Day, and the, you know, I would say the confusion and volatility and ups and downs. We feel like we are relatively well positioned from a manufacturing perspective, as I have talked about a few times relative to tariffs, with the fact that the majority of our products that we sell within a region are made in that region. I think that positions us well. But also our strong market positions allowed us, where we had to, to raise prices to offset any tariffs that we ended up having to pay. Obviously, as we think about this ruling, we think about a few things. One is, will there be immediate replacement of the current tariffs using some other section, whether it is 122 or 301 or 338? Will they just be replaced with some other tariff? Will there potentially be refunds that we might receive from some of our suppliers and or that some of our customers might need to receive from us? And I think what I would say about that is that at the end of the day, that is a manageable number. We talked about several calls ago that the theoretical impact of tariffs on us was about $20,000,000. So in the grand scheme of the company, it is a manageable number. Ultimately, that number came down to closer to $10,000,000 based on our efforts to find alternate supply chain solutions and so forth. So the magnitude of the impact was not significant, and I firmly believe that whatever ultimately happens, we will be able to manage through that as effectively as we managed through Liberation Day. But for sure, it is going to create some volatility and uncertainty and supply chain planning challenges and so forth, but we feel very good about our position. I do not necessarily see any significant opportunities coming from this, but again, I think it is hot off the press and we will just have to see. Going back to your first question around planned sales and promotion, I would just highlight that both the Jets and the Bayern Munich investments were multiyear investments. So I think it is important to lead with, you know, those will continue and we are excited to have those continue. They will be sort of our leading, I would say, public-type partnerships. But what we plan to do more of in support of those is a little bit more social media, digital marketing, influencer marketing to further enhance those kind of headline investments. So that is something that we will do. And we also are kind of next on our list of nutrients to invest in from a marketing perspective is MSM, which really is a product that is known for joint health but also has important sort of skin, hair, and nails benefit. And you will be seeing more from us relative to a beauty-from-within campaign, which is also a significant and important trend right now. And we feel like we have a product that fits perfectly into that trend, and we will be investing pretty significantly in that brand and a beauty-from-within campaign. So that will be something that you will see more of in the not too distant future. And I will hand it over to Carl Martin to answer your tax question. Carl Martin Bengtsson: Ram, I would use 23% for modeling purposes. We ended this year at 22.2% and last year at 22.8%. So we have been in that 22% to 23% range. If we just sort of look at the math of where we do business internationally and where we are making our money, the math would suggest somewhere in the 23% range for effective tax rate, and then it becomes what sort of discrete items that come up during the year and actions we can take to try to make that a little bit lower, but I would use 23% for modeling. Raghuram Selvaraju: Okay. And then just very quickly, with respect to FX potential headwinds or tailwinds, can you maybe talk about how, you know, potential additional decline, relatively speaking, in the value of the dollar might impact things for Balchem going forward, if you feel that you are reasonably well shielded from FX headwinds? And also, if you could just give us a sense of how you are prioritizing capital deployment at this time, you know, with respect to, in particular, debt repayment versus share repurchases? Thank you. Carl Martin Bengtsson: Sure, Ram. Maybe I will start on the FX one at least. For us, it is really the U.S. dollar–euro. That is the primary exposure we have that is of any sort of relevance. If we look at the impact on FX to us in 2025, it sort of had a 0.7% impact to growth. It benefited us by 0.7% on a full-year basis based on the movement between the U.S. dollar and the euro that we had in the year. If you were to do that same math on the fourth quarter, the impact was just over 1% sort of favorable to our growth from a stronger euro giving us more dollars when we translate it back. So it is there, and it is not insignificant, but nor is it sort of a really material driver for us. Obviously, as we continue to grow internationally, that will become bigger, and we have seen good growth internationally in 2025. So we keep an eye on it and manage it, and if need be, we will hedge that, but we do not do a lot of hedging at this point in time as the exposure has been very, very manageable to us from an FX perspective. From a capital deployment, I would say that our priorities remain consistent from the perspective that our organic growth is still our primary area where we deploy our cash, and we will continue to grow our dividend as you have seen in the past, and we will continue to focus on our M&A as a key area for deployment, and we will continue to pay down debt. At this point, though, our leverage is so low. So we have, as we have often said in the past, we will try to keep our share count flat and offset anti-dilution over time from equity issuance, etcetera. So we have done that. More recently, we have deployed more capital into share repurchases to catch up on some of those antidilutive purchases so that share count remains flat over time because our debt leverage is so low. So you could say that this is a better time for us and also sort of where we have been trading recently. It was a good time for us to deploy more capital in that space. But fundamentally, has anything changed in how we view capital deployment? No. It is still organic growth and M&A probably as the top two that we are focused on. Raghuram Selvaraju: Thank you so much. Ted Harris: Thanks, Ram. Operator: Your next question comes from the line of Artem Chubara with Rothschild & Co. Redburn. Please go ahead. Artem Chubara: Good morning, Ted and Carl Martin. Thanks for taking my question. I would like to ask first about the performance within segments, specifically in H&H and A&H. When I look at your H&H growth in the quarter, 13% was a very good result. It looks quite similar to Q3 on the run rate. If I look within the division at Nutrients or Food Ingredients, are we looking at the same dynamic, or have you seen any change there? And probably a similar question on A&H. Ruminants versus monogastric. Any color that would be very helpful. Thank you. Ted Harris: Artem, thanks, and thanks for joining the call. Focusing on H&H for a minute. I think the simple answer is no. There really has not been a significant shift over the last few quarters. I would say over the last year or so, there has been a more meaningful shift from lower growth in our Food Ingredients and Solutions area to higher growth in that business as the better-for-you trends have had a bigger impact on our business. So, you know, if we look back, you know, 2024, for example, you know, our Food Ingredients and Solutions business really was not growing significantly. And that has changed over time. But I would say certainly relative to the last quarter or so, the dynamic has been quite similar where we are seeing, you know, very significant growth in our minerals and nutrients business, as we call it. You know, clear double-digit growth last quarter, 30%, previous quarter something similar to that. And the reason that the H&H business has been growing faster overall is because the Food Ingredients and Solutions business has now been for the last few quarters growing at a higher rate, and, you know, this past quarter at around 4%, which we think is higher than what the market is growing, and it is importantly because of our focus on better-for-you. Relative to A&H, I think the answer is also somewhat similar in that the primary growth driver in that business over time has always been our ruminant business, and lower growth has come from the monogastric. And if we go back to 2024, we were seeing no growth in the monogastric business or even some negative growth in the monogastric business because of the situation in the European monogastric business that we have talked so much about over the last few years. And what we have seen is that that business has started to recover, started to deliver some growth while the ruminant business continues to grow. And so we are seeing higher growth in A&H because we have the historical ruminant growth now coupled with some improved growth in the monogastric business. So that has really been, I think, the story within A&H for the last few quarters. So nothing has really changed over the last few quarters. The change really has been over the last year or so. Artem Chubara: That is very helpful. Thank you. Ted Harris: Thanks, Artem. Operator: Your next question comes from the line of Daniel Scott Harriman with Sidoti. Please go ahead. Daniel Scott Harriman: Carl Martin. Hey. Ted. I am sorry. I was just lost for words there. Congrats on another great quarter and another great year. I have got a question for each of you. You called out in the opening remarks just the success that you are seeing with sales outside of the United States, and I know that has been a particular focus within Specialty Products. I was hoping to get an update there. And then within A&H in Europe, are you seeing any early impacts on the pricing dynamics or competitive conditions there after December’s announcement? Really appreciate it, guys. Thank you. Sure. Thank you, Daniel. Maybe I will take the first one, and I will ask Carl Martin to take the second one. But maybe why do you not start with that one? Carl Martin Bengtsson: Yeah. No. Absolutely. Thank you, Daniel. The short answer is yes. We are now starting to see the improvement in Europe where it is clearly a shift versus just sort of noise in the system. So with the final ruling in December and leading up to that ruling, which was highly anticipated, we have started to see improved volumes, and as we go forward here into Q1 and into Q2, we have also seen some firming up of the prices. So the short answer is yes. It is definitely improving. We will see how far it goes and how much share shift you see and what happens to the price structure, etcetera. I think we are still relatively early innings there. But it is clear that it is moving in a favorable direction, and I will take this opportunity maybe to call out a great win we had that we have not spoken much about in this area, and that is that it was a definition of sort of the country of origin, of how to view the country of origin, where it has really been defined as where the chemical reaction happens of choline, which means that you cannot just ship the choline to a different country, dry it there, and ship it into Europe and say that that intermediary country is the origin. And that is really a huge win for us in trying to sort of combat all the circumvention that we see happening out there and being able to really make it much harder for various suppliers to circumvent these dumping duties. So we are pretty excited about that, and we are starting to see improvements. So, yes, it is starting to move in a favorable direction. Ted Harris: And, Daniel, going back to the international growth, we did in the prepared remarks make a comment about half of the growth that we have seen recently has come from growth in international markets, and so we are very excited about that. And if you kind of step further back and we reflect on our strategic priorities as a company, and priorities that we sort of build our strategic plans around, driving growth through geographic expansion is an important one of those priorities. So we are very focused on doing that. Still, as a company, we are primarily a U.S. company; still approximately 75% of our sales come from the U.S. So we see a huge opportunity for us to grow internationally, and we think that our products and solutions fit well with international markets and needs. So we are very focused on it. We are working hard on it. And while you mentioned Specialty Products as an area that we are focused on geographic expansion, that is very true, I would say the majority of that differential growth that we have experienced recently internationally is really coming from our Human Nutrition and Health business, where we really are focused on adding people geographically in Asia and South America and Europe—really, I would say, doubling down on our team in Europe—and it is delivering results, and we are growing faster in international locations than we are domestically. And the really good thing about Balchem is our home market still is growing. We have significant growth opportunity in our home market, whether it is through just market growth or further market penetration. So we can drive healthy growth as a company domestically, but our international expansion efforts are delivering even faster growth. And Human Nutrition and Health is the biggest part of that, but our Animal Nutrition and Health business, if you put the European monogastric business aside, our ruminant business is growing very nicely, particularly in Europe, but also, I would say, in Asia and South America. And yes, our Specialty Products business, the Plant Nutrition business, and even the Performance Gases business is growing internationally. So it is an important strategic focus area and we are really having some success really across all three reporting segments. So we are excited about that opportunity for us going forward. Daniel Scott Harriman: That is really helpful, Ted. Thank you so much. Ted Harris: Great. Thank you, Daniel. Operator: That concludes our question and answer session. I will now turn the call back over to Ted Harris for closing remarks. Ted Harris: Thank you. And once again, thank you all very much for joining our call today. We really appreciate your support throughout the year as well as your time today, and we look forward to reporting out our Q1 2026 results in April. In the meantime, we will be participating in a couple of conferences: the JPMorgan Consumer Ingredients Conference in London on March 10 and the BNP Paribas Exane Consumer Ingredients and Chemicals Conference in London on March 11. So we hope to see some of you there. Again, thank you for joining. Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Thank you for standing by, and welcome to the PolyNovo First Half FY '26 Results Webcast. [Operator Instructions] I'd now like to hand the conference over to Mr. Leon Hoare, Chairman. Please go ahead. Leon Hoare: Welcome, everyone, to PolyNovo's half 1 results update for the 2026 financial year. My name is Leon Hoare, and I'm the Chair of PolyNovo. I'll provide a brief introduction before I then hand over to our CEO, Bruce Peatey, for his overview, and we will then have our CFO, Jan Gielen, provide the financial update for the half year, and then we'll take questions. I'm very pleased to introduce our new CEO. Bruce joined us in December, so it was about 10 weeks into the role. He joins us with a highly impressive background in med tech executive leadership roles across Australia, APAC and the U.S.A. And he has now engaged with the PolyNovo team around the world, including a U.S.A. visit and has met with key clinicians and customers. Impressively, Bruce has rapidly built a strong understanding of the business and has identified several areas to enhance and many opportunities to pursue. The Board are delighted to have Bruce leading the business. PolyNovo is a company already generating strong results. You will see the financial results. Suffice to say, our momentum is very positive. We've completed our new factory and expanded our R&D capability, and we have a highly talented group of professionals driving our growth. PolyNovo is focused on growth. We're broadening our global reach. We are adding to our clinical indications. We have a highly innovative NovoSorb platform technology that we've only begun to leverage. We have a pipeline of opportunities. And importantly, our products and technology in clinicians' hands provide excellent clinical outcomes. PolyNovo is at an exciting point in its journey and well positioned for strong growth going forward. I now have pleasure introducing our CEO, Bruce, over to you. Bruce Peatey: Thanks, Leon. Hello, everyone. Thank you for joining us today for our first half results, my first as CEO, and I'm extremely proud to be leading this great Australian company. Over the past few months, I've been impressed by the resilience and professionalism of the PolyNovo team during the leadership transition, and I want to acknowledge their efforts as well as the continued support of our shareholders. As PolyNovo moves into this next phase, you should expect to hear greater clarity, more consistent communication and decisive execution, things that ultimately shape long-term value. I'll start with an update on the executive leadership team. I'm genuinely impressed by the depth of experience across our management team. The balanced mix of tenure and fresh perspective gives me great confidence in our collective strength. We are delighted to welcome Amy Demediuk as our new Company Secretary and General Counsel. She joins PolyNovo this week after a stellar career at CSL, including a recent experience in Philadelphia U.S.A., but is now returning to her hometown of Melbourne. Reinforcing PolyNovo's commitment to quality, I would like to highlight that Allison Myers was recently promoted to the role of Chief Quality and Regulatory Affairs Officer. Allison joined PolyNovo last year after nearly 30 years with GSK, both in Australia and the U.K. Finally, we are progressing the recruitment of a Chief Scientific Officer for the organization. It's a critical role for PolyNovo's future to accelerate the pace of our core business expansion, pipeline productivity and strategic partnerships to fully unlock the value of the NovoSorb platform. To that end, we are building a global slate of candidates with the technical capabilities and leadership experience required to drive this next phase of growth. In the first half, group sales grew strongly to $68.2 million, up 26% year-on-year. The U.S. continues to be our key growth engine, delivering $51.7 million, an increase of 25.4%, reflecting strong execution and continued market penetration. The rest of the world delivered 28% growth. This is a good result and shows clear momentum across several markets, but I believe we have room to accelerate further. We see opportunities to strengthen execution to expand adoption and to better leverage our distribution footprint. Jan will walk through our profitability results shortly, including some timing-related and one-off items that we expect to normalize over the full year. Providing more color to the regional performance, APAC delivered an excellent first half with Australia executing well as we broadened adoption beyond traditional burn applications with both NovoSorb BTM and MTX. In India, while the team have faced a complex and slow-moving tender environment, the groundwork they've put in is beginning to pay off. We are seeing increased tender success and growing clinician adoption as more surgeons gain experience with NovoSorb products and share their results with their peers. Across North America, the U.S. continues to perform strongly, and Canada is contributing with solid growth, too. EMEA grew a respectable 22.9% with the U.K. demonstrating the versatility of our portfolio across multiple specialties. With MTX launching later this year, we are well positioned to build on this momentum. Outside the U.K., we've expanded our geographic footprint with several new distribution partners, and our focus is now on accelerating adoption in these newer markets. I'm pleased to report that we are now in the final stages of our PMA submission for an on-label indication for NovoSorb BTM in full-thickness burns. This has been a significant undertaking in partnership with BARDA, enabled by strong cross-functional collaboration across the organizations. Securing PMA approval will strengthen our position in the U.S. burns market and unlock access to other major markets such as Japan and China. The team remains on track to finalize the submission by financial year-end, and we are working diligently to ensure we deliver a robust submission. So I'd like to provide a brief update on the CMS policy changes in the U.S. outpatient market and what they mean for PolyNovo. First to note, the inpatient hospital market remains a strong growth engine for us, and it is unaffected by these policy changes. It's important to clarify that we are committed to maintaining current momentum as we build a disciplined strategic entry into the outpatient setting. Considering the reimbursement changes, we are prioritizing specific outpatient procedures where the provider economics align naturally with the NovoSorb portfolio. In anticipation of the need, we developed a NovoSorb bilayer SynPath brand, specifically for the outpatient environment. SynPath already has an existing HCPCS code, giving us the fastest pathway into the market, closely followed by NovoSorb SynPath monolayer matrix once the code is received later this year. We are currently building inventory in new product sizes appropriate for these procedures with availability expected within this half. And our U.S. commercial team is well positioned to execute across both inpatient and outpatient settings. Often the same surgeons operate in both environments, which gives us strong continuity and leverage with the existing relationships. We are also progressing discussions with office-based distributors and building the go-to-market model to accelerate entry into physician office settings as appropriate. To drive the strategy, we are strengthening market access capabilities. Already supported by an experienced consultant, recruitment is well advanced for a Market Access Director and a Senior Product Manager in the U.S., roles that will significantly enhance our competitiveness in the outpatient market. From a clinical evidence perspective, our evidence base is robust. We now have 348 peer-reviewed real-world evidence studies supporting the NovoSorb platform, giving us a high level of confidence in its clinical performance across a wide range of applications. Importantly, 65 of these studies directly translate into outpatient use, reinforcing the platform suitability across care settings. This includes 5 published studies in the diabetic limb salvage, an area where SynPath has strong potential. And we're expecting data from a randomized controlled trial in diabetic limb salvage out of Adelaide over the next 6 to 12 months, which will further strengthen our evidence base. Looking ahead, we do anticipate the need for a dedicated RCT to support CMS reimbursement in the office setting, particularly for diabetic foot ulcers and venous leg ulcers. We have a robust protocol developed to execute as the clinical evidence requirements become clearer. Our growth priorities are clear. We are focused on maximizing the value of the NovoSorb platform and accelerating the momentum already visible in our core business. NovoSorb BTM and MTX continue to deliver strong performance, and we see substantial runway ahead, both in the U.S. and internationally. In the U.S., our footprint now spans more than 800 hospitals, supported by a highly capable commercial team of over 80 representatives. Importantly, adoption is expanding well beyond burns with clinicians increasingly using our products across a range of reconstructive applications. At the same time, we are progressing the key catalysts that will underpin the next phase of growth. Disciplined execution in the outpatient opportunity, advancing the PMA submission, strengthening our presence in priority global markets and adding velocity to our pipeline through the appointment of a Chief Scientific Officer. Together, these initiatives will give us clear visibility into sustained growth, both in the second half and over the medium term as we fully leverage the versatility of the NovoSorb platform. Today, we're launching our upgraded online investor platform designed to give shareholders clear visibility of our strategy, performance and key milestones. This new hub centralizes all ASX announcements, reports, video content and insights in one place with the ability for investors to subscribe for regular updates. The platform enhances transparency and improves the cadence of communication, making it easier for investors to follow our progress and engage directly with PolyNovo. Over time, this will help us build stronger investor relationships, broaden reach and ensure the market better understands our growth trajectory. You can scan the QR code on the screen or visit investors.polynovo.com to sign up. I will now hand over to Jan to present the financial results. Thanks, Jan. Jan-Marcel Gielen: Great. Thanks, Bruce, and thanks again, everyone, for joining the webcast today. I'll start with our commercial sales performance. NovoSorb product sales were $68.2 million for the period, up 26%, which is an increase of $14.1 million. You can see from the graph presented in dollar terms, $14.1 million of growth achieved this half was greater than what was achieved at the same time last year being $11.9 million. This is a good indicator of the momentum in the business as we head into the second half. We experienced continued strong growth in the U.S., achieving sales of $51.7 million, up 25.3% on the prior period. This growth was driven by strong account acquisition, adding 95 new hospital accounts during the period and continued penetration of existing accounts. In regard to the rest of world results, we reported sales of $16.5 million, up 28.3%. This includes some exceptional results in a number of markets, some with growth rates of 50%, which I will highlight a bit later in the presentation. NovoSorb sales for the group was $6.2 million, up 195.2% with the majority of sales being in the U.S. Moving on to additional highlights for the U.S. As mentioned, the U.S. achieved 25.3% sales growth for the period. NovoSorb MTX sales in the U.S. were $6 million, up 193%. Surgeon adoption of NovoSorb MTX continues to grow and will accelerate across the customer base as more clinical evidence is generated and shared. NovoSorb MTX is now being used in over 240 accounts in the U.S. We recorded strong sales growth in our contracted U.S. networks with GPO sales up 37.8%, IDM sales up 34.1% and federal account sales up 87.2%. Contracted accounts represent 39.9% of total sales in the U.S., and these growth rates are an important indicator of the momentum in the U.S. business. The U.S. business is profitable and growing, generating strong cash flows, and we ended the period with over 800 customer accounts. Moving on to rest of world results. As mentioned, sales were up 28.3% on the prior period. We achieved some exceptional results with -- both in relatively new and well-established markets. In particular, Australia, our home market that we entered several years ago, grew by 52%, which is an excellent result. Other well-established markets such as Canada and Germany grew by 50.8% and 28.3%, respectively. These results are a good indicator of the adoption by surgeons using NovoSorb BTM, not just in large burns, but across a range of indications. Turkey's strong growth continued, up 91.3% for the period. In Turkey, they have reimbursement for NovoSorb BTM for the treatment of burns, but BTM is being increasingly used outside of burns without government reimbursement. This demonstrates the rapid seeding of BTM when we start with reimbursement in a market. India performed well, recording 49.1% growth in what was always going to be a challenging market to develop, but we are making progress. rest of world share of global sales now stands at 24%. We see significant opportunities for growth, particularly in Europe and the Middle East in the short term and new market entries such as Japan and China in the medium term. Moving on to cash flow and the balance sheet. We ended the period with $29.2 million cash on hand. Cash flow from operations of $9 million improved significantly compared to the prior period where a $12.5 million cash outflow from operations was recorded. We turned around the [ aging ] debtor days issue in the U.S. from over 90 days outstanding down to 56 days currently, which is a great result. The impact on cash flow is evident. We completed construction of the new manufacturing facility in Port Melbourne, with CapEx payments of $10.8 million for the period. $2.2 million in CapEx remains outstanding for the new facility and will be paid during the second half. It's obvious from the graph presented, aside from the one-off CapEx spend, the business would have generated free cash flow for the period. With only $2.2 million in CapEx remaining to be paid for the new manufacturing facility, we will be generating free cash flow in the second half, which will be an important milestone achievement for the business. We ended the half period with a strong balance sheet and cash flow, which will enable us to focus further investment on driving revenue growth. Moving on to the P&L. I want to start off by highlighting the underlying EBITDA performance for the period. After adjusting EBITDA for significant items being the impact of the R&D lab fire and unrealized ForEx impact on translation of the balance sheet due to the strong Australian dollar, adjusted EBITDA was $4.7 million, up 82% on the prior period. There are a number of one-off items impacting the reported net profit after tax result, which I'll now explain. BARDA revenue is down on the prior period as expected. The pivotal trial -- pivotal burns trial is near completion as we move closer to submission for premarket approval with the FDA. In connection with the BARDA pivotal trial nearing completion, the trial costs have reduced, which explains the lower R&D expense for the period. Other income includes a $4.6 million interim insurance claim related to the R&D lab fire. This offsets the $4.4 million asset write-off recorded further below in the P&L. Employee-related costs were up 12.2%, which includes $700,000 for restructuring costs in Australia. Employee headcount at the same time last year was 254, which then increased to 301 in June 2025. Since then, headcount has remained steady. Currently, we have 302 employees. Corporate admin and overhead expenses were up only 4.7% after excluding the unrealized ForEx movement on translation of the balance sheet. Due to the Australian dollar appreciating during the period, an unrealized ForEx loss of $761,000 was recorded for the period compared to a $4.6 million unrealized gain in the prior period. During the period, with inventory at comfortable levels after building them up during FY '25, we took the opportunity to bring forward attending to various tasks in our manufacturing facilities in preparation for the premarket approval submission and FDA audit that will follow later this year. To do so, we temporarily reduced manufacturing output, which in turn reduces production recovery to cover manufacturing overhead costs, resulting in an unfavorable manufacturing variance for the period of $3.7 million and gross margin of 88.8% for the half. With these activities now complete, manufacturing output in January has already ramped up without interruption and will improve our production recovery result in the second half. This will increase our gross margin back up to above 90-plus percent for the full year FY '26. And looking forward, we expect to achieve a much improved profit result in the second half. Now we're going to turn to questions. We've got covering analysts dialing in to ask questions, and then we'll move to the web platform for written questions from all our shareholders. So Operator, if you could please connect through the first caller. Thanks. Operator: [Operator Instructions] First question today comes from Shane Storey from Canaccord Genuity. Shane Storey: I'm going to start with Jan, please. Jan, when I back calculate and look at U.S. BTM sales over the period, you see that there's quite a bit of a reversion between after a very strong Q1 and it looked a little bit softer in Q2. And I suppose surgeons are telling us that November was quiet. So the first question was, was that just your general observation? And then I guess, looking ahead, how are you looking at sort of growth rates for BTM specifically over the next couple of years, please? Jan-Marcel Gielen: Sure. Thanks, Shane. Good to hear from you. So look, the second quarter this year was a little bit softer in the U.S. in November itself across a large number of accounts. We just didn't have as many large burn cases come through as we would on average. And also Thanksgiving. So generally, we see lower activity in that month. It bounced back though in December, and we had a solid result for the half, as you can see. Looking forward, I think BTM growth will continue. We still have a lot of growth left in large burns in the U.S. And when we get the PMA approval, that will assist further with penetrating that market and grabbing more market share. And with that, NovoSorb MTX, the release of that is actually assisting sales. It's not cannibalizing sales of BTM. It's enabling them to a large extent. So we've got surgeons now using BTM with MTX where before they wouldn't have used either because MTX wasn't available and the type of wound that they need to heal that needed some packing like 2 or 3 layers of MTX, they couldn't do that with BTM because it's got the temporizing film on it. So it's actually assisting our sales of BTM. So we're still bullish on sales of BTM in burn to an extent, but then we've seen great traction outside of burn. And Bruce will talk a couple of examples of that where we've got some reps are doing some outstanding sales results outside of burn in their territories. But hopefully, that answers your question, Shane. Shane Storey: Yes. I mean we were aware of that sort of adjunctive use of the 2 products together. I guess I'm pretty interested though, outside of that, maybe early observations as to what use cases or indications do you think it's winning, [indiscernible]? Jan-Marcel Gielen: Sure. And Bruce, just as with regards to MTX, you might want to jump in as well and add some color to that, but just where the product is being used. So we are seeing it being used in cases where there are large deficits and you need to stack the device. The idea of MTX as well without the temporizing film is it opens up wounds that can be treated in one step. So with BTM with the temporizing film, you need to go back into surgery after it's been applied to have the film removed. And that's why it's generally used in large burns because it temporizes the wound to the patient and gives the surgeons time to deal with other issues that the patient might have. With MTX, it opens up the opportunity to any type of wound. We know the product can heal a wound where you're missing a dermis. So now from skin cancer excisions to you falling off a motorcycle or whatever it may be, where a surgeon just wants to treat the patient and get them in and out in 1 day or overnight and not have to go back into surgery to have the film removed like with BTM. You don't have to do that with MTX. So it opens up a whole wide range of indications and basically anywhere where you've lost your dermis. We know our product works. MTX can be used. Bruce Peatey: And I'll add a couple of a words -- and I'll add a couple of words to that, Shane. The BTM in that burn space is already doing very well in terms of share and growing. But the opportunity to Jan's point, is that plastic and reconstruction space. And we're broadening into that and the trauma space as well. We're broadening into that, but that will -- that's a much bigger lateral journey for the team. And clearly, it's not as significant in individual patient experiences because you get smaller square centimeter areas of repair required, but there's a much higher volume of patients versus an acute burn. So the team is broadening into that and doing that gradually to put adjunct into our growth rate over and above major burns. If that answers your question. Shane Storey: It does. That's very clear. My last question, just if you could please remind us where the new manufacturing facility takes the business to in terms of the annual revenue demand that it could service. Jan-Marcel Gielen: You dropped out there a little bit, Shane. Is that something about manual processes or... Shane Storey: Yes, the new manufacturing facility, once that's embedded and operational, where does the whole business sort of get to in terms of the... Bruce Peatey: I think it gives us somewhere around 5x our previous capacity. Hopefully, Shane, we're using that over a journey at growing capacity. But it certainly allows us to scale our volume. That's correct, isn't it, Jan, about that sort of ratio? Jan-Marcel Gielen: Absolutely. And it just helps with the complexity as we bring in release different types of devices, different sizes, different SKUs. The modular setup of the new facility gives us a lot of flexibility in how we run shifts and how we make product. So there's that added benefit as well. Bruce Peatey: And we should have that operational in a building mode in the second half of this calendar year. Jan-Marcel Gielen: It's actually -- yes, it's complete, built. We're just going through validation and qualification activities. And July onwards is when we're looking to start firing up the facility. Operator: Your next question comes from Lyanne Harrison from Bank of America. Lyanne Harrison: Bruce, I might start with you. I know you've only been in the seat for 2 and a bit months now. But can you comment on where your 3 key focus areas might be for the next 12 months? Bruce Peatey: Okay. Yes. Thanks, Lyanne. Great to be here. I think like you say, just new in the role, clearly, working with the key stakeholders in the business, like I mentioned already or Leon mentioned, going to the U.S. was an important part of understanding the business with the majority of the revenue coming from there, but also making sure that we're getting -- building a high-performing executive leadership team is probably another focus area for me. I think there's definitely opportunity to sharpen our strategy. The strategy is working well. But as I mentioned previously, is that my focus really is on disciplined execution of the strategy and making sure that we've got a very clear path forward for the team. So really early days, very positive signs for me and what I'm seeing in the organization, but definitely some areas that we can tighten up and look forward to doing that. Lyanne Harrison: Okay. And with, I guess, the strategy outside of the United States, are you comfortable with the markets that PolyNovo is in and growing? Or is there any chance you might change or tweak that a little bit over the next few -- over the next 12 to 24 months? Bruce Peatey: Well, I think the team have done a good job expanding into markets. I think we're over 46 countries around the world now. Clearly, through my experience in Asia, I'm interested in what we can do in Asia, particularly the discussions around Japan and even China, moving forward. I think exploring that opportunity is important for me. But again, for me, it's not really a measure of how many countries we're in. It's how we're performing in those countries. So particularly the work that we've done in EMEA to expand the footprint, it's about making sure we're executing in those markets and supporting our third-party partners to help them grow the business like we've done successfully in our direct markets. Lyanne Harrison: And Jan, you talked about, I guess, some of the softness in November of last year. But can you comment on trading to date in this half, in particular, January and what you're seeing in February? Jan-Marcel Gielen: It's in line with the year-to-date result at the half. So we're trailing well, but we're only early into the second half, as you know. But I guess that should give you a good indication. Lyanne Harrison: And then if I could comment on just some of the rest of the world growth there. Australia, in particular, we saw some quite significant growth there. And you've been in Australia for a number of years now. So what's really changed to get that sort of momentum? And can we expect that to continue in the future? Bruce Peatey: I'll take that one. I think looking into the results in Australia, yes, very positive, and I'm very say, encouraged by what's possible in a market that we've been in for some time. Part of it is, it's a fluctuating type of business when you're in the burn space, of course, and that's, I think, well known. But clearly, I'm very impressed with what the team have been able to do expanding the footprint outside of burns, so into new indications, whether it's BTM or MTX, they've done an excellent job in that space. Operator: [Operator Instructions] Your next question comes from Andrew Paine from CLSA. Andrew Paine: Just coming back to the growth you're seeing in new markets outside the U.S. that you've listed in the presentation. Can you work through the outlook for some of these regions that you see as the key drivers of medium-term growth and really wanting to understand what the investment is or the required investment to ramp up these opportunities? Jan-Marcel Gielen: Bruce, do you want to take that? Bruce Peatey: Yes, I'll start with you, Jan, and I'll come in. Jan-Marcel Gielen: Yes, no problem. Yes. So Andrew, thanks for your question. Good to hear from you. Look, I think as I sort of outlined in one of the slides in the deck when we're covering rest of world. But in the short term, we still see a lot of opportunity in Europe, Middle East, to be quite honest. That's an area where I know Bruce, the chats we've been having since you've arrived that we really want to dig into and focus on. There's a lot of opportunity left in that region. In the regions we're already in and like the U.S. and markets like Australia, but particularly the U.S., and we've seen what we've done in the U.K. and Australia, there's so much more we can do outside of burn, and we're already doing it. And I'm going to steal Bruce's thunder, but we've got one rep in the U.S. who sold last year over $2 million worth of product outside of burn. He doesn't have a burn center in his territory. So that's an example of real success, expanding into indications outside of burns. So there's a lot more depth in left in the U.S. to go, enormous amount. There's -- in Europe, Middle East, there's a lot of that opportunity as well that we need to dig into with our distributor networks. And they're doing well, but there's more we can do. And then in the medium term, Japan, followed by China will be the 2 next big markets, but Japan particularly being one of the most advanced markets in terms of med tech, that's going to be really important for us. But Bruce, you want to add any color to that. Bruce Peatey: Thanks. The one thing I'd add to that is the example of the U.K., a majority of the revenue in the U.K. is outside of burns and the team has done a great job there as well. And it gives us really a best practice or a benchmark that we can work towards in the other markets. So for me, that gives us a lot of -- not just potential, but examples of where it's a reality in markets that we're already in. Andrew Paine: And just, I guess, progressing that a little bit in terms of the investment required for those opportunities. Is that -- is there any insights you can give us there? Just trying to understand the profile going forward? Bruce Peatey: Sorry, so early days. As we've leaned on distribution partners in the majority of the markets in Europe, now it's the time to look at how do we support them with maybe some direct presence, not to necessarily go direct in the market, but to make sure we've got the right support for those -- our distribution partners to help grow into these other areas with a specific level of expertise. So early days, but that's the initial thoughts. I'll be in Europe for the first time with this team next month, and that's when we start shaping the way forward. Leon Hoare: And Andrew, and in the medium term, as Bruce mentioned -- that's right. And Jan mentioned, we'll be looking at our investment requirements for our pathway to market in major countries like Japan. We await our PMA submission because that will be an important adjunct to how we sort of plan that journey, and that will require significant investment working out how we're going to actually enter that market. And longer term, that will be China as well. Andrew Paine: And just one other on FX. Can you just give us any insights of how that's moving at the moment and how that will affect the coming, let's say, 12 months? Jan-Marcel Gielen: Obviously, not helping us and a lot of other Australian, how I can I say, export. So if I had a crystal ball, I could tell you, Andrew. But at this point, with our forecast, we factored in a conservative approach. We allocate resources based on that to make sure we optimize our results, particularly for the full year coming up. So we'll see how things pan out, but we certainly keep it obviously front of mind because we do have a result we need to manage, and that's what we're focusing on. Operator: Your next question comes from [ David Naygan from AMP ]. Unknown Analyst: if you could please just follow up a little bit on some of the questions around the manufacturing variance that you talked about. I believe you said that inventory fell 14.5% to 11.9% in the result. Are you comfortable with the current stock levels to support H2 demand, particularly given the growth trajectory? And is there any risk of a supply constraint whilst this new facility is being validated? Jan-Marcel Gielen: Thanks, David, for your question. So look, no risk of any supply constraint, and it's all really well managed, and we plan everything with the intent of how it ends up coming out the numbers. So what happened for the half is we slowed down manufacturing after building up inventory levels last year, you would have noticed inventory levels got to a higher level than not where we'd normally keep them. But that was purposeful. We had to pause manufacturing and slow it down. We chose to do so in this half just to attend to some activities in preparation for the PMA submission and the FDA will follow later in the year. So we decided to bring that forward. So what that means is we just have less output than planned for the half. And when you have less output, you have less production recovery and less cost -- manufacturing overhead costs getting capitalized into inventory. So we ended up with this $3.6 million unfavorable manufacturing variance for the half. But what happens in the second half, we've ramped up production again. So already in January, it's fired up again, and the result is going to look a lot different for the full year. So for the half, gross margin was 88.8% as a result of that. But for the full year, we'll be up over 90% in line with our budget plan. So it was all premeditated but it is just, I guess, a timing issue. If we weren't reporting at the half, you would just be looking at the year-end number and gross margin will be well over 90%. So hopefully, that answers your question. Unknown Analyst: I might ask a couple more if it's all right. On the CMS output -- outpatient opportunity, -- so I know you've submitted your clinical evidence package already and waiting a response. Just curious if any feedback from the FDA on the timing -- sorry, from the CMS on the timing for the decision. And if there's any revenue contribution that you might have already assumed for your outpatient opportunity in your internal planning for, say, H2 or for FY '27? Bruce Peatey: Yes. So just on the response from the CMS, we're still waiting on that response. However, as I mentioned, we're moving forward quickly with the SynPath brand into the outpatient space. And that's going to be -- that's something that we have ready to go as far as the code is concerned. So now we're ramping up production of those specific sizes that you need for those smaller procedures that are linked to that outpatient setting. Jan, you can speak to potentially the forecasting. Jan-Marcel Gielen: Sure. With forecasting for outpatient, it's all upside to what we currently got in our plans. So there's a lot of opportunities, not just in DFU and so forth. There's a lot of opportunity for our product outside of the hospital arena and even outpatient within the hospital. But right now, we're sort of working through the sales team and the marketing team to sort of shore up our plans and then what that means in terms of sales and production, but it's definitely an upside to our current forecast. Unknown Analyst: Okay. We're treating as upside for now. Yes. Got it. And then last one for me is just on the PMA submission. Do you have any expectations for the FDA review? Is it standard review cycle, PMA review cycle? Or is there any indication that this could be expedited given BARDA's involvement? Bruce Peatey: We haven't had any indication that it had been expedited. We're anticipating a standard review process. Operator: Your next question comes from John Hester from Bell Potter. John Hester: So gents, obviously, the stock has significantly underperformed in the last 12 months or so, it's underperformed the ASX 200, and you've just recorded the weakest period of revenue growth in recent history. So my question is, you spent the last 20 minutes talking about the growth story, but it really hasn't delivered. And I'm just thinking, what are you actually going to do to get that growth rate back above 30%, which sort of is required to justify the premium that this stock has historically been rated at. Jan-Marcel Gielen: John, thanks for the question. Just from my perspective, you're right, we're talking about the growth potential in the U.S. looking into new indications, whether it's within BTM or MTX. We've spoken about the outpatient opportunity as well. And then most importantly, the rest of world, as I mentioned, even though growing at 28% is good. We think that there is opportunity to grow more in that space through that focused execution and partnership with our distribution partners. So whether it is in those new indications and then expanding MTX into the market as well in other markets outside of Australia and the U.S., that's where we see the potential. But ultimately, it's about execution, and that's what we'll focus on. Bruce Peatey: And John, I'd add to that, in the medium term, we see opportunities outside of purely BTM, MTX, SynPath that may or may not be in our hands. So we still see lots of platform and pipeline product development opportunities that will add to what Bruce has just described. Jan-Marcel Gielen: And I might add, Leon, to that. For the half, we added $14.1 million in sales and growth in dollar terms. I'm sure we're going off a lower base. But at the same time last year, it was $11.9 million. So there is a lot of momentum there. And last year was a challenging year. We've got a lot of focus in the business moving forward this year, particularly. And there's some real good examples of success. And like we talked about that rep before that selling product outside of burn $2 million worth a year one rep. So think about that and do the math. So the potential is there. We know what success looks like, and we're just going to -- with Bruce's help, make sure that we're all executing as we should be to make sure that happens. Operator: There are no further phone questions at this time. I'll now hand back for any webcast questions to be addressed. Jan-Marcel Gielen: Great. Thank you. We've got quite a few, and of that a few is complete. We've answered quite a few questions during the discussion so far. But bear with me while I scroll up. Some questions around India and just the prospects and how we've gone to date and what the future looks like there in terms of performance. Bruce Peatey: Yes. So look, as mentioned, with India, yes, we show a significant growth rate off a low base from what I've seen so far working with the India team or connecting with the leadership there. I say they're putting the building blocks in place. More than likely, it's taken longer than anticipated originally to get through that complex tender process. I'm very familiar with the Indian market, have been for many years and not that surprised that it's taking time to get through. The good news is we are starting to see more and more frequent approvals coming through from these tenders. So as I mentioned, the groundwork has been done. It's a very solid and experienced leader that we've got in place there that's built a team ready to execute. We've actually got the largest burn conference that's occurring next week. We've got, I think, what is it, the 33rd Annual Conference of the National Burns Academy. We were there last year with more and more, you could say, evidence being generated and shared on BTM last year. We're very enthusiastic to see how that has progressed over the course of the year. From what we know anecdotally and working with the team, we're seeing more and more cases where surgeons are working with BTM and sharing those results with their peers. So we're quite confident. On top of that, we've got one of our KOLs out of Australia is there in the week leading up to the [ Navacom ] meeting. And Associate Professor Marcus Wagstaff is there. Also, we have [ MJ Panderwal ] from the U.S., actually touring around the U.S. and sharing their experiences with key surgeons around the country. So it's like early days. We expect good things out of India, but in my experience, that will build over time. And from what I see, the building blocks are in place. Jan-Marcel Gielen: Great. Thanks, Bruce. I've got another question here just from -- regarding Beta Cell and just the progress of our relationship with Beta Cell. Bruce Peatey: Yes. So we -- again, we mentioned before, we're very supportive of the work that's being done at Beta Cell. [indiscernible] I met the leaders of Beta Cell last week in Adelaide and again, reiterate that support as we have done in the past, supplying product to help with the development of that really novel technology. So we intend to continue that partnership as we have in the past. Jan-Marcel Gielen: Great. Thanks, Bruce. We've got a question here around operating leverage, and I can take that one. If we look at the numbers themselves for the half, sales growth up 26%, corporate and admin costs, underlying up 4.7%. We removed that unrealized ForEx movement, which gets lumped in that category in the stat accounts and employees up only 12%. We did have some redundancy payouts and various things in the half, but headcount was steady at 302 employees. We had 301 employees at 30 June. So the leverage is there, and it hasn't come through, I guess, in the net profit after tax result because of that manufacturing recovery. But the adjusted EBITDA was $4.7 million for the half and was up 82%. So if you take that $4.7 million and if we didn't purposefully slow down manufacturing that we had to, to attempt certain things, you add on that $3.6 million and all of a sudden, it's over $8 million EBITDA for the half. So the second half is looking a lot more positive because of these one-offs that we don't have to deal with. But the operating leverage is there. And I think we'll see that coming through in the second half and next year as well as well as free cash flow, which would be an important achievement for the business. Just moving on. There's a question around the fire, and we probably should address that just on what caused the fire and if we can comment and if we can't, I think we can't. But maybe, Bruce, if you or Leon want to address that one. Bruce Peatey: Yes. So I think at this stage, investigations are ongoing. We are not in a position to comment on the actual cause of the fire at this point. But I think that's all we've got to say on that topic unless you want to add some more, Leon? Leon Hoare: Well, I mean, we're unhappy that it occurred. Clearly, the team and our insurers have done a thorough investigation. The teams are working through the rebuild project of what was the new R&D lab. The actual technical elements. We know where the focus was, but there are some technical investigations still ongoing by our insurers. On the other side, just to reinforce the point, we haven't compromised our R&D capability. All our projects are ongoing. We had our old lab that we hadn't done anything differently with. And so our team has been highly productive in the journey. We're a little frustrated that our brand-new R&D lab is now awaiting a minor rebuild, but that's where we're at. The good news is we're completely covered for those rebuild costs. Jan-Marcel Gielen: Great. Thanks, Leon. Some questions just around the R&D pipeline and what we've got planned, what's sort of on the horizon? Bruce Peatey: Yes. So it's early days. As I mentioned, I think there's a potential to accelerate our output from the R&D function. And clearly, the search for the Chief Scientific Officer and putting that critical role in place is going to help to that end. We've got a significant -- I think we've shared it before. The output from that R&D pipeline is there. We just need to get it -- say, get some more velocity into that pipeline and get that out into the market, whether it is through our commercial execution ourselves or through strategic partnerships. And that's another key decision to make to make sure that we're really maximizing the value we can extract from this wonderful NovoSorb platform. Jan-Marcel Gielen: Great. Thanks, Bruce. Some questions here around the outpatient market in the U.S. and the requirement for an RCT, whether that's needed for DFU or not? And is that only just for DFU or can we sell the product SynPath for other indications right now? Bruce Peatey: Yes. So we can sell SynPath for other indications right now. Actually, this year, we can sell it for DFU as well. The need for an RCT, we say, is anticipated, although we're still working to clarify the exact clinical evidence requirements with the CMS. So at this stage, we're anticipating it. Like I said, we've got a protocol that we've worked on to make that possible. And as we move forward, looking at how we could accelerate that as well, -- but right now, we can sell SynPath because we have the code into all of those care settings in the outpatient piece. Leon Hoare: Important, just if I can add to that before we close on that point. As Bruce mentioned in his presentation, we're working through the hospital outpatient element of that market opportunity, if you like. And that likely would be in our team's hands, but Bruce and the U.S. team are working through that. And the outside of hospital element where in probably the easiest description would be investigation mode. We're likely looking at partnerships to get SynPath to market there. CMS is still very much in flux in terms of the industry's understanding of all the outcomes, and we're learning that as we do more discovery. Jan-Marcel Gielen: Great. Thanks. Just 2 more questions. We're coming up on the hour. So let's run to the next one here. So a question on BARDA and just our relationship with BARDA and how that's going in light of the trial coming to an end and the support that we're getting from BARDA. Bruce Peatey: Well, excellent support from BARDA. I appreciated meeting the leadership there as well. We're on regular meetings with them as we go through the process to finalize the submission. They've been a wonderful partner and they continue to be. So yes, it's all very positive. Cf Thanks, Bruce. We'll make our last question given the timing. Just a question on guidance. This comes up quite often, but we're happy to answer it again. We don't provide guidance in the past, but do we intend to in the near future? Leon Hoare: I'll take that. I mean, at this stage, we're still very much a company on a rapid growth phase. As Bruce has said, we've got many opportunities in our growth going forward. We see very strong growth momentum. We see strong pipeline opportunities. We see strong market sector opportunities like CMS as one example. Medium term, we see other geographies like Japan. But near term, we're still also heavily exposed to the burn segment. and that's highly variable. So as we build a more predictable longer-term growth rate, and we'll consider guidance. But in the nearer term, we're not going to formally provide guidance for the period going forward. Jan-Marcel Gielen: Thanks, Leon. And before I hand back to Bruce, just to call out to Rachel Harwood from Macquarie. He's based in Dallas and it's quite late. But 4 questions I've got, we've answered quite well, but I appreciate you sending the questions Rachel. So with that, I'll hand back to Bruce to close. Bruce Peatey: Thanks, Jan, and thank you all for joining us today and for your continued support of PolyNovo. As you've heard, we are entering the second half with strong momentum, a clear strategy and a deep commitment to execution. Our focus remains on delivering meaningful clinical impact while scaling globally and unlocking the full value of the NovoSorb platform. I'm incredibly, incredibly proud of what the team has achieved and confident in the opportunities ahead. We look forward to updating you on our progress and appreciate your engagement today. Thanks, everyone. Leon Hoare: Thank you. Jan-Marcel Gielen: Thank you.
Operator: Hello, and welcome, everyone, to the Kingspan Preliminary Results 2025. My name is Becky, and I will be the operator today. [Operator Instructions] I will now hand over to your host, Gene Murtagh, CEO, to begin. Please go ahead. Gene Murtagh: Excellent. Good morning. Thank you, and welcome, everybody. I'm joined here by Geoff and Dave to take you through our 2025 results. If you could please just go to Slide 3 in the results deck titled 25 in summary. And just in brief, we saw revenue growth to EUR 9.2 billion, which was pre-currency growth of 9%. On the EBITDA, we were just over EUR 1.2 billion, which similarly was 9% up. And trading profit was just over EUR 955 million. And again, like-for-like growth or pre-currency growth of 8% which brought our EPS to EUR 3.70. And once again, on our continued emission reductions program right across the group, we've seen since 2020, a Scope 1 and 2 internal reductions of 70, 7-0 percent which is pretty extraordinary, and that continues to advance along the lines that we've discussed previously. Backing up those results clearly and exiting the year, the insulated panel order bank as part of the envelope was ahead 8%. And actually, the intake in the same product group is ahead 8% for the first 6 weeks of this year. And in the Advances business unit, the revenue was up 12% in the year, which obviously accelerated through the second half. The backlog at the end of the year was ahead 24% in that whole product group. And the order intake in the Advances product set is double prior year in the first 6 weeks, and we expect that growth rate to actually accelerate from this point forward. So all in all, it was a strong year given the circumstances. We entered this year with, I would say, very encouraging backlogs and activity right across the business. And notwithstanding the weather hampered start to the year, which won't surprise anybody, we do expect to see significant growth in 2026. So just for some more color on all that, I'd hand you over to Geoff now. Geoff Doherty: Thank you, Gene. I'm on Page 6, the financial highlights. Firstly, group revenue at EUR 9.2 billion, up 7% or 9% at constant exchange rates. The principal FX move year-on-year was U.S. dollar to euro. To be specific on that, the average translation rate from euro to U.S. dollar was 1.08 in 2024 versus 1.13 in 2025 in terms of our average translation rate. Group EBITDA, EUR 1.22 billion, up 7%. Trading profit, EUR 955 million, up 5% or 8% at constant exchange rates. Earnings per share at EUR 3.70. Our total dividend for the year, EUR 0.555, a payout ratio of 15%, which is our policy guide. Strong free cash flow of EUR 429 million, and I'll come to the components of that shortly. Trading margin at a headline down 10 basis points to 10.4%. But actually underlying pre-acquisition, we were actually ahead by 20 basis points to 10.7% year-on-year. Net debt, we ended the year at EUR 1.88 billion. And in terms of leverage, net debt-to-EBITDA of 1.65x. Turning to Page 7, just bridging revenue and trading profit year-on-year. Our 2024 revenues of EUR 8.6 billion. Clearly, the significant component of sales growth during the year was the EUR 707 million contributed by acquisitions year-over-year. And then we had the FX move of 2% or so, clipping sales by EUR 138 million. From a profit perspective, 2024 was EUR 906.7 million. Currency shaved EUR 21.4 million of that. It's worth highlighting that of that EUR 21.4 million, EUR 19.6 million of that occurred in the second half of the year because that's really when the pronounced exchange rate move actually happened. Acquisitions contributed EUR 49.5 million in the year, initially dilutive, but will kick on from here in terms of trading margin and underlying profitability up by EUR 20 million. The geographic profile of sales set out on Page 8, pretty consistent year-on-year. The Americas at 22% of the business. Rest of World, 8%. And Europe, all told across all territories, 70% of the business in both '24 and '25. Turning to free cash flow on Page 9. Naturally, the strongest component of free cash is the EBITDA of EUR 1.22 billion. Working capital, an outflow of EUR 151 million. Our working capital to sales ratio was 11.9%, which on a 5-year view, is an efficient performance. It happened to be up by 50 basis points on the very low level of December '24. And about half that move reflects the timing of acquisitions versus year-end. CapEx, EUR 325 million. And we're guiding EUR 350 million for this current year. The other significant cash flow item, tax of EUR 132.8 million, in line with our income statement charge with an effective tax rate of 16% in 2025 and our guidance for 2026 is an effective tax rate of 16.5%. So all of that combined to give us free cash flow of EUR 429 million. From a capital perspective, that's set out on Page 10 in terms of the reconciliation of opening and closing net debt. We reduced debt by the free cash. We deployed EUR 258 million in acquisitions and incurred EUR 168 million in deferred consideration. We also acquired 2.2 million shares during the year for a consideration of EUR 148.6 million. That's an average share price of EUR 67.58. Dividends paid of EUR 99.5 million during the year. So net debt ended the year at EUR 1.88 billion. A feature of the business for a long period of time has been the strength of our balance sheet, some commentary around that on Page 11. The group has significant liquidity. The principal strands of that are our undrawn EUR 800 million green revolving credit facility, which is fully committed to May 2028. We have cash balances on hand of approximately EUR 600 million. Our total gross debt is about EUR 2.2 billion or so between private placement and public bank. And the weighted average maturity of all of our drawn debt is a little over 4 years, and we have no significant maturities in the current financial year. So with that, I will hand back to Gene. Gene Murtagh: Thank you, Geoff. So just to look at the structural growth drivers of the business. Once again, a lot of you will be familiar with this. But just in summary, if we can go to Slide 14, which is titled multifaceted growth drivers for the insulated envelope. And again, we'll go through this in some more detail with Dave shortly, but the 3 primary strands here are growth and penetration, which continues even in European markets, not to mention North America, APAC and South America with very significant runway for us there into the long term. The continued geographic rollout of the business continues. Again, I would stress, even in Europe and all of the other regions that we've just mentioned. And the product portfolio within the envelope is expanding way beyond what it was 5, 10 years ago. Obviously, huge growth in the QuadCore business, but expansion into other technologies like wood fiber and the acoustic insulation sector, stonewool, not to mention, obviously, the roofing expansion, which is going on worldwide and most significantly in North America, where we have very large ambitions for our business there. And I'd say similarly on Slide 20, which is the growth drivers for Advances. And this clearly is quite extraordinary and won't come as a surprise to anybody. But the sector itself we're operating is demonstrating very strong double-digit growth in itself, which naturally we're in the middle of. The business is growing share as we go along as well. So just market share growth as we expand our product portfolio is a significant driver for us. And then the share of wallet is just way beyond what it was even 5 years ago, where per megawatt we had exposure of about $100,000 per meg, and that is now 5x that and growing. As we've expanded the product portfolio, got into water cooling and now obviously into air handling, that continues to grow. And that spread of business and share of wallet, we expect to continue to expand significantly into the future. David O'Brien: Thanks, Gene. If I could take you all to Slide 16 now, please. I think just as we enter a period where the macro backdrop looks like it's a little more stable than it's been for some time, it's probably worth reflecting on the markets that we faced over the last 5 to 6 years. And what the slide is showing you is look at a very challenged backdrop, particularly across Europe compared to 2019 on a volume basis, which if you look at the total footprint of the Kingspan markets, it looks like volumes in our addressable market down between 4% and 5% globally when we compare that to 2019. And over the same period, organically, insulated panel volumes have grown by nearly 14%. So it's been a very consistent 3% outperformance, which will become more evident as markets stabilize, with the conversion to more energy-efficient products has never been stronger. If I can bring you on then to Slide 23. Look, you've seen our global expansion map before and really in taking advantage of all of the opportunities that Gene has outlined across the data business, the roofing opportunity that we have started in Europe and are embarking upon in North America, alongside the structural growth of the vast array of our products. You can see the investments we are making across the globe now and over the next 2 to 3 years to unlock all of that potential. So we look to have projects in the pipeline that will require investment of about EUR 1.2 billion, which is nothing out of the ordinary in terms of capital allocation, but has the potential to unlock about EUR 2 billion of revenue over the fullness of time, which, again, if you flip on to Slide 24, will underpin that consistent long-term growth story that you've been familiar with Kingspan. With that, I'll hand it over to Gene. Gene Murtagh: Thank you, Dave. So just on Slide 25, which is the outlook and how we're feeling about the near-term future. We've -- as we said earlier, we've entered the year with very strong backlogs right across the business. They have continued to grow significantly through the first 6 weeks, although clearly, dispatches and deliveries have been hampered somewhat by weather, but we expect that to recover pretty swiftly through March, April and beyond that. And really just when we step back, the business clearly has grown consistently over the last forever. We reached our target for 2025. We expect growth of in or around 10% in earnings for the current year. And we would expect that rate of growth to accelerate beyond that into 2027 and '28. Difficult to be specific about that, but we're certainly seeing a pipe of longer-term activity and engagement that would give us a high degree of confidence to deliver what we've just expressed there now. So with that, we would be delighted to take your questions. Operator: [Operator Instructions] Our first question comes from Shane Carberry from Goodbody. Shane Carberry: The first one, maybe just to follow up on that last point you were making, Gene, about the kind of level of growth over the kind of medium term or out to the end of the decade. Can you just give us a little bit more color on exactly what you mean in terms of that trading profit growth exceeding what we've seen over the last couple of years would be helpful. And then the second is just thinking about the product evolution from a data perspective and how you kind of keep a pace with all the change that's happening in the industry. And are you still confident in terms of achieving a kind of EUR 600 million EBITDA number kind of over the next 4 to 5 years? Gene Murtagh: Okay. So on the first point, so we really have multi-stranded growth across the business. And it's actually very, very exciting, very encouraging. But if you look at our envelope for a start, like we've clearly got the evidence through the backlog and order intake in the insulated panel product strand. And obviously, our entry into roofing, which has been both acquired and now increasingly organic, predominantly in North America, which just hasn't kicked in at all, and that's something for second half of this year and into 2027 and beyond. And that's going to be significant. And as I say, clearly not evident just yet. We've got another dimension which is happening, and I think it's going to be significant and here to stay for some time, which is inflation. So there are all kinds of trade barriers coming up left, right and center. The result of that is that our big inputs like steel and chemicals are going to be subject to significant inflation in the current year, it's happening, and we see it happening consistently quarter-by-quarter into the future. And as odd as that sounds, that actually is a very positive dynamic for the group once you get past the lag phase. And that's going to be, I think, more and more materially evident as we go through even 2026. And then beyond that, which affects both Advances and the Envelope business is just this truly seismic transition that's going on in the tech sector and in particular, around the move towards AI. Like as a group, we are positioned right at the core of all that, and that's both internal and external. And just when you just piece all that together, and you consider the level of tangible engagement we've got with our client base, which is now much more long term because of the nature of these projects. The pipeline we're looking at is actually just really extraordinary. On the product evolution piece, we've obviously been able to keep at or above the pace of that moving from what was just a simple access floor, which was giving us exposure today to going back 20, 25 years, in fact, like now the product portfolio is just not comparable to that, and it continues to expand. So in terms of us being able to keep the pace of that, all I can say is the evidence of the past is that we have been able to do that. We're able to pivot and move with whatever the technology and the solutions have been going all along. And I'd be extremely confident that we continue to be at the forefront of that with our clients. And confidence around the EUR 600 million EBITDA, yes, we'd be at least as confident on delivering that as when we kind of mentioned it 3 or 4 months ago. And that's obviously whatever kind of 4- or 5-year target. But the trajectory towards that is very, very evident. Operator: Our next question comes from Cedar Ekblom from Morgan Stanley. Cedar Ekblom: I've got 2 questions. One quite simple one. On your free cash flow, you had quite a big swing in working capital in 2025. I wonder if you could just give us a little bit of commentary around the working capital investment there. Is that simply associated with new plants? Or is there something else that we need to think about there? And then how we think about that sort of working capital development into 2026. And then secondly, on your roofing portfolio, can you talk a little bit about your decision to invest beyond these 2 initial assets? I believe that recently, the commentary was around making a third investment in residential roofing. It would be good to just hear how you're thinking about that cadence. And then beyond maybe the next 2 years or so, can you talk to us about what your ambition is in the U.S. roofing space? You're a new entrant. There's a lot of concern around disruption to pricing, et cetera. And I'd just like to hear how you would like your business to be positioned towards the end of the decade? Geoff Doherty: Cedar, just to take the free cash flow question first. Over time, a highly efficient measure for us is a working capital to sales ratio less than 12%, and that's been the measure of efficiency over time. At the end of 2024, it was 11.4%, which was particularly low and particularly efficient for a number of reasons. It was 50 basis points higher at the end of December 2025 to 11.9%. That's our assumption as we go into 2026 in terms of average working capital levels. It can be -- it can vary for a whole number of reasons to within 50 or 60 basis points, but 11.9% is what we see the profile of the business. The -- specifically, about half the move during 2025 was associated with the timing of acquisitions and the working capital move between the date of acquisition to year-end. So that will naturally normalize as we move through 2026. Gene Murtagh: And then Cedar, on the roofing side, we've got the first 2, as you mentioned, Oklahoma and Maryland, they're happening as planned. On the commercial roofing side, we will be moving to a third facility as well in the not-too-distant future, more than likely in Utah. So that's going to give us really an ability to service the market pretty much nationally. And as you mentioned there, our intended entry into the resi side, that's kind of always been on our radar. It won't surprise you to know that we've been looking at acquisition opportunities on that side as well. It's a huge market. There are tens and tens of facilities around the country and us entering with one will hardly even be noticed. But obviously, we've got to step into it at some point. That clearly, just by the nature of the size of the project is more long term, probably more like a 3-year project. And as you know, that side of the roofing market is pretty challenged at the present time, but that's just a moment in time. So we just see it as part of the wider roofing portfolio longer term. How will be received or what our success rate will be, that's all TBC, but we haven't failed yet. In terms of disruption, market pricing, it's not something I'd be particularly concerned about. It's a huge market. It's a growing market on the commercial side. We would expect that certainly in the earlier years that our capacity additions will be readily absorbed by the general pace of growth in the market. And our previously stated ambition of getting to a 15% share of the addressable side, bearing in mind, we don't want any presence in the EPDM market or the bitumen market. That remains our ambition, and we have every confidence of succeeding in getting there. Operator: Our next question comes from the Florence O'Donoghue from Davy. Florence O'Donoghue: I have a couple of questions. I might just ask on Advances. First of all, just in terms of the order book, how much visibility that gives you when you talk about it being the intake levels doubling and just generally, the conversion of an order book, is there a long time lag, just the kind of dynamics of how that works. And then the second one I might ask is just -- you mentioned in the document about the boards business in Europe in terms of capacity management and actions you've been taking. Just a little bit more color on that would be very much appreciated. Gene Murtagh: Yes. So just on the Advances backlog floor, it's approximately 9 months, but it's actually becoming even longer. So it's getting larger and longer. And then we would have very solid engagement of work right through '27 and even into '28. Now that's obviously not -- they're not purchase orders. And so not entirely bankable. But on the basis of the type of engagement we've had with these end clients going back, we'd have a fair degree of comfort in that work coming through. And none of that will come as a surprise when you look at the general scale of investment into AI. It's only a tiny little bit around the edge that we're after. And in terms of the board capacity, we have been -- it's obviously not a huge part of the group any longer. It's become overpopulated, to be frank, particularly in Europe, largely granted by Brussels, which is completely daft, but that's the situation we've got. So it's become unattractive in many markets. We have invested in the -- probably the finest plant in the world in Winterswijk in the Netherlands, huge capacity. And what we're on course to do is to really kind of gear up on that facility and get out of lesser performing more niche manufacturing plants around. So Finland, we've exited. Sweden, we're in the process of. We have a facility in France that we're not starting up, and we're likely to take out of commission another facility somewhere in the middle of Europe. And like I say, really just gear up on one core plant in the Netherlands and just make that work hard. But importantly, we're going to be repurposing this capacity. It's not going in the bin or going to be growing cobwebs. So at least 2 of those lines I've just mentioned are going to be -- one of them is brand new in Rian in France that like I said, we're just -- it's not wise to start it up. It's going to be going into the roofing sphere in the U.S. and one other of the European facilities is likely to be Utah destined as well. So we just see a better future for those assets in that market, and that's kind of what we're about doing. Operator: Our next question comes from Arnaud Lehmann from Bank of America. Arnaud Lehmann: A couple of questions on my side. Firstly, on Advances, obviously, you decided not to IPO the business. Can you confirm that this is now a closed idea and that you're going to keep 100% of Advances and obviously keep the full consolidation of this high-growth business? And secondly, just a follow-up on U.S. roofing, as you know, there's been a decent amount of consolidation and M&A activity in the distribution side of it. Is that an opportunity for you in terms of the new owners of these assets are maybe more open-minded to take on your products? Or does that create new challenges. Gene Murtagh: Great. So Arnaud, yes, the Advances IPO idea is put to bed, that's it. We're retaining 100% and moving on. That is that. It was a fantastic exercise, very interesting for us as well. But that's where we've ended up. In terms of the U.S. roofing, yes, there's an awful lot of moving parts on the distribution side, which to be honest, it's neither positive nor negative for us because we're starting from 0. So it's opportunity one way or the other is the way I would characterize that. Bearing in mind, by the way, that we're obviously through our Insulated Panel business a direct-to-market model. So our relationships are with specifiers, delivering direct to site and invoicing contractors is our primary presence in North America. So we're going to be multi-stranded in terms of how we approach the market, which we're already doing. So distribution, we see as a route as opposed to the route. And it will take us a while to find our feet, but we have a blank page and we're looking forward to it. Operator: Our next question comes from Elodie Rall from JPMorgan. Elodie Rall: My first question is actually going back on Q4. If you could get us maybe a bit more color on the organic growth for both businesses, price volume, that would be helpful. And my second question is going back on U.S. roofing on '26 guidance, what do you have with regard to that part of your business? And how should we model start-up costs as the plants are ramping up, please? Geoff Doherty: Thanks, Elodie. I'll take those questions. Firstly, as it relates to Q4, I mean, as we've said before, we're -- our business ought to be judged over a 12-month period, you get ebbs and flows through various months and quarters. We guided in November that we would do approximately EUR 950 million of trading profit, and we came in at EUR 955 million. I think it would be fair to say as well that our intake in Q4 was strong, both within Envelopes and Advances such that we ended the year on the panels dimension to envelopes with the backlog 8% ahead. So that did build through Q4. And as we've highlighted previously, the intake in advances was strong as well, both in Q4 and beyond that. As regards to the components of the growth into this year and the 1050, since we gave the guidance of 1050 in November, the FX headwind has become steeper. Weather has been more acute in the early part of the year. Notwithstanding both of the factors, we're still -- we still have a lot of conviction around the 1050 given the momentum in the business. Specifically within that, there's about EUR 30 million of scope in terms of the run rate annually of acquisitions we've already made. So they're the constituents of that. Operator: Our next question comes from Yassine Touahri from On Field Investment Research. Yassine Touahri: I think the main question I would have is that what kind of sequence of organic growth do you see throughout 2026. I think the organic growth was very slow in 2025 in H1 and H2. I understand that the first quarter will be a little bit slow as well. Do you see an acceleration for the rest of the year? And it would be great if you could give us a little bit of more color on the element of the growth in trading profit. What is scope, what is organic, what is FX. Geoff Doherty: Yes. Just to deal with the last part of your question first, the scope is about 20 -- sorry, EUR 13 million in terms of acquisitions that we've already made and annualizing that through 2026. FX at current spot rates, so we can only assume what's out there at the moment is broadly a EUR 17 million or EUR 18 million headwind for '26 versus '25. Much of that is in the first half because the euro-dollar rate really moved in a pronounced way from the second quarter. So much of that is the first half. As we've highlighted, Q1 is likely to be soft enough for the early part due to weather. But we -- given the backlogs that we have, we see momentum picking up considerably from March onward. And it's always difficult for us to kind of trend things from quarter-to-quarter. But over the course of the year, we're absolutely poised for decent growth. Operator: Our next question comes from Pujarini Ghosh from Bernstein. Pujarini Ghosh: So going back to the roofing in the U.S. So could you talk about the progress on the build-out of the plants? And you just highlighted that potentially the contribution to the P&L in 2026 is not that material, but then how should we expect that to progress in 2027? And also regarding your approach to commercial roofing going greenfield and then potentially considering M&A for residential roofing that you just talked about. What is the difference that you see in the market, which informs the difference in the way you're considering entering the market in these 2 sides of roofing. And my second question is a little bit broader. Could you talk about your exposure to OpenAI and any potential opportunities or headwinds you see in the medium to long term? David O'Brien: Pujarini, thanks for the questions. Just on Roofing first, to be clear, we're leading out with an organic investment. We've said we're keeping our options open with regard to potential M&A. But at the moment, the investments in Oklahoma and Maryland are organic investments. Similarly, on commercial, when we move towards the West Coast, that will be organic as well. And as we appraise and go after the shingles market, that's again an organic investment. None of that precludes M&A, but we are leading out organic for the time being. Gene Murtagh: Yes. And as regards to the broader question of exposure to OpenAI, I guess, AI, never mind OpenAI, just AI itself. It's -- like what's going on is -- there's no other word for it, except extraordinary. And yes, our exposure to it is extremely significant. And honestly, like we've had -- we've seen exciting times in the past and growth in Kingspan, obviously, over the years. But in terms of what we're looking at for the next number of years, like who can see way beyond. We're kind of looking at activity levels just way beyond growth levels that we've ever experienced in the past. So our exposure to it is, yes, very significant. Pujarini Ghosh: And the Roofing profit contribution in 2027, if you have any indication? Geoff Doherty: I mean, we should see sales activity from the end of this year in Roofing and will ramp up through 2027. Trading margins in Roofing will still be single digits in 2027, but building out to group average rates into '28 and beyond, and that's assumed in our forward guidance. At this stage, we would expect sales in the U.S. in Roofing to be somewhere in the region of $150 million to $200 million in 2027 and building out to $300 million to '28. Operator: Our next question comes from Julian Radlinger from UBS. Julian Radlinger: Two from me. So first of all, the stronger or the very strong order intake in advances year-to-date, that's obviously similar to what we've seen from many other data center exposed players. I suppose why might that not lead to upside to the EBITDA guide for Advances for EUR 300 million that you gave a few months ago. Is that because you're basically sold out for 2026 already and that order intake translates more into 2027? Or what are the moving parts here? And then second question on inflation. So you called this out explicitly. Is that more steel or MDI that you're seeing just because I'm looking at MDI prices, they were actually -- I think they're actually down year-to-date in the U.S. So is it more about steel here? Gene Murtagh: Okay, Julian. So yes, just on the Advances EBITDA, so like that's progressed. If you say -- if you go '24, '25, '26 and it's largely organic, it's kind of EUR 180 million, EUR 230 million, EUR 300 million. So that's obviously pretty lively. So I guess in all of that, we were indicating that it was going to grow significantly, and I think that's kind of -- that qualifies as significant. But we're not going to hold the business back. And the EUR 300 million number for this year would be a minimum, actually, to be honest. So let's see how that progresses. And then in terms of the other point was inflation. So steel by far and away, like it's multiples of size and impact versus chemicals, not just MDI. So we do see it has been predominantly steel. It's largely as a result of protective measures all over the place, and it's starting to kind of jump ahead now. MDI, whatever MDI is doing in the U.S. just spot, I wouldn't be particularly -- like for a start, our consumption in the U.S. would be tiny by comparison to Europe. So -- and in Europe, it's definitely trending upwards. And if it's not, I'll just have to speak to the procurement guys because that's the message I've got. Operator: Our next question comes from Chase Coughlan from Van Lanschot Kempen. Chase Coughlan: Just 2 quick ones. Firstly, could you provide a bit more color around your pricing strategy for this year? I mean you just discussed raw material changes, but also in the context of potentially wage inflation, what sort of pricing measures you're taking throughout the course of '26. And then the second question going to Advances. Obviously, there was sort of somewhat of a rebrand over the last few months. I think it's likely to cause some more traction commercially. I'm just curious on what you're hearing from competitors, especially given the more modular solutions you're offering? I think Vertiv was quite bullish on this in their last results. So I'm just curious on what you're hearing there and how you're seeing that rebrand play out with customers. Gene Murtagh: Yes. So in terms of pricing, like our approach successfully at all times has been just to pass through. So whatever cost inflation we're seeing we have all always succeeded in getting it through to market. That's over decades. So we don't expect that to really be any different. From a wage inflation perspective, that's not a particular kind of dial mover for us. The materials would be much more significant and much more public and obvious in terms of our ability to actually pass it through as well. So that's kind of our approach to that. In terms of the positivity that Vertiv have been propagating, we clearly would agree with that. We see it. We're growing into it. We're coming from opposite ends of the spectrum, if you like. We're literally coming from the floor up through the white space into gray. I'd say predominantly, Vertiv is at the higher tech end, very deep in gray and to some extent, kind of moving south into the white. So I think yes, there's certainly enough for all. But I think, yes, we'll be looking -- our Advances business will be increasingly looking more like it, I'd say, more so than the other way around. Operator: Our next question comes from Priyal Woolf from Jefferies. Priyal Mulji: The first one, I guess, is just a clarification just on the U.S. residential roofing. I appreciate you talked about this being something that you're looking at more in the longer term. But in your usual slide on global expansion, you've talked about a plant in Georgia in 2028. So I just wanted to check, is that locked in? Or is that sort of still TBC? And then the second question is just in terms of capital allocation. You've reiterated that you're looking at the EUR 650 million share buyback in tandem with other growth opportunities. Should we interpret that as you potentially don't fully reach that EUR 650 million level if you see bigger or more interesting organic and M&A opportunities. Or you think you'll get there regardless and it's more just about the timing, which is the uncertainty. Gene Murtagh: Okay, Priyal. So just on the first point, that remains our ambition and our plan. Like that clearly can flex. It's not going to come forward, but it could push out. And that will depend largely around timing of machinery, plant construction, all that kind of stuff as well as market conditions. We clearly want to -- at whatever point we enter that site, we want conditions to be as favorable as possible. And naturally, right now, it's about as bad as it's been in recent years. So thankfully, it's not right now that we're entering because they're all under an awful lot of pressure, as you know. But 3 years from now or whatever, that's some time out. And on the buyback... Geoff Doherty: Just on the buyback and capital allocation, generally, as we've said previously, we, at all times, compare opportunities that are external to Kingspan versus buying ourselves in terms of the relative valuation of both. We're fortunate that we have a healthy pipeline of development opportunities within the business, both organic and inorganic. And we'll continue to get that balance right and assessment right as we move through the year. We've done about 23% of the announced program, and we'll just see how that evolves through 2026. . Operator: Our next question comes from Harry Goad from Berenberg. Harry Goad: Just a question on the Panels business, please. Can you give us a rough idea of what the annual increase in new capacity is? I appreciate you probably can't be too exact year-to-year, but in terms of the percentage number on average over the years, just to think about the sort of steady increase in contribution from that division. Geoff Doherty: I guess it's difficult to give a global answer to that in terms of capacity is pretty regional and localized. We're addressing different markets in different parts of the world. Naturally, we've seen very strong intake in a lot of the regions that we've entered over the last decade, in particular, like Latin America, APAC, all of those, we've put down a lot of capacity in recent years, but we're now seeing the fruits of that come through intake and orders. So as I say, it varies very significantly from one region to another and capacity is regional. David O'Brien: Rather than think about it as one lump sum, Harry, if you go back to that Slide 16, just think about the average construction cycle and the investments that we're making, that feeds the 3% outperformance very consistently. Operator: We currently have no further questions. This concludes today's call. Thank you all for joining. You may now disconnect your lines. Gene Murtagh: Great. Thanks. Fantastic. Thank you all for joining, and we'll be in touch over the coming days.
Operator: Good morning. This is the conference operator. Welcome, and thank you for joining the Imerys 2025 Annual Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Alessandro Dazza, Chief Executive Officer; and Pierre Lebreuil, Chief Financial Officer of Imerys. Please go ahead. Alessandro Dazza: Good morning to all of you. Thank you for joining us today to review Imerys Q4 and full year 2025 results. I think the first word is dedicated to Pierre Lebreuil, our CFO, next to me, our new CFO. Pierre is not new to Imerys. He has been with us for more than 20 years, new in his role. I'm very proud of this promotion because Pierre will bring strong leadership to the team, experience and will guarantee continuity in this business. Pierre, welcome. Pierre Lebreuil: Thank you, Alessandro. Alessandro Dazza: And as usual, let me start by giving you some highlights of the year we just closed. 2025 revenue amounted to EUR 3.385 billion, broadly in line with last year. Q4 at EUR 800 million, also broadly in line with last year, both on a like-for-like basis, reflecting, I would say, solid pricing in a market with subdued industrial activity and construction demand in North America and Europe still lacking. Full year 2025 adjusted EBITDA landed at EUR 546 million within our guidance despite currency headwinds impacting EBITDA for the full year for EUR 22 million, and this was particularly evident in Q4 given the devaluation of the U.S. dollar. Year-on-year performance, EBITDA-wise, was also broadly in line with last year at minus 0.4% at constant exchange rates and excluding, of course, perimeter and joint venture effects. So all in all, very resilient for our core business, supported by disciplined pricing and ongoing continuous cost management. Q4 '25, also very similar to the rest of the year. The group generated free operating cash flow for the year of EUR 127 million before strategic CapEx and expenses and around EUR 80 million as reported. Strategic CapEx in 2025 were relating only to our lithium projects, and I will return on the topic a bit later. Imerys structure remains sound, investment grade confirmed. Current net income was EUR 146 million, and the Board of Directors will propose an ordinary cash dividend of EUR 0.75 per share at the shareholders' meeting on May 12 of this year. The payout ratio is consistent with all last previous years. Last important topic, the group did a noncash goodwill impairment of the solution for Refractory, Abrasive & Construction business for an amount of EUR 467 million. We will return on this. This impairment has no impact on the group cash position or financing capacity. It purely reflects an accounting adjustment necessitated by changed market conditions and assumptions do not call into question the soundness of this business, and I will further elaborate on this. Here, we see a little bit our sales performance by geography for the full year and Q4. Europe, main markets posted a light recovery in Q4, which is -- gives us good hope for 2026, improving construction and improving industrial activity. Positive sign for the future. For the full year, however, as we see here, the business is still behind 2024, fundamentally due to low construction, industrial and automotive activity, partly only compensated by good and solid performance in consumer markets. North America, we had a very differentiated picture throughout the year, solid first part and a weaker Q3 and Q4, the trend that we have seen already in the last 6 months, fundamentally impacted by weak industrial construction. Should be noted that a further impact on this activity is the devaluation of the U.S. dollar, which is affecting sales in euro as we report of -- at the level of 5% compared to last year, so very significant. Asia sales continued to grow nicely, not only in India, but also in China, which remains quite dynamic, especially around new technology, electric vehicles and, I would say, strong exports. South America, after a strong first half, slowed down a bit in the second part of the year, partly in relation to U.S. tariffs on Brazilian products. Let's now look rapidly at our main underlying markets and their trends, which, of course, partly reflect already what I just described. But overall, I would say Q4 in line with Q3 in terms of trends, maybe with some signs of recovery in Europe and continuous strong growth of electric vehicles and energy storage. Construction was not a great year, especially in the U.S. In Europe, where we see, however, a reverse of this negative trend, so positive signs for the future. Consumers remains very resilient in all geographies. Automotive, poor in Europe, a bit more stable in the U.S. and a very strong China, very strong EVs as well. And industrial activity normally follows the other markets. So I would say, in line -- I would almost say in line with the average of the others. Imerys does not only rely on underlying markets, we proactively target growth. And in order to give you an idea of some solid avenues of future growth, you see on this slide some of the recent business developments of the group. We start, of course, with our conductive additives business. It's continued to grow, thanks to capacity expansion. You remember in the last 3 years in Belgium as well as in Switzerland, same for our investments, in China, in automotive, lightweighting on polymers in India for refractories and construction. And last example, which we have not publicized a lot, but also because it is still ongoing, a capacity increase for our high-purity diatomite filter aid called Celpure, which is used widely in the pharma business with strong growth, which we will accompany with new CapEx. Together, they are contributing more than EUR 30 million revenue in '25 with further growth ahead as we ramp up sales. Similarly, on innovation, launching new products takes time. That's why it's important to have a pipeline, but it is the basis for future growth. I will not enter into the many details. Here are only a few examples. There is a lot more. Some are already generating commercial sales, some are under qualification and will be the engine of future growth. The fact that specialty minerals have unique and varied properties, this creates new ideas, new applications every year on a continuous basis. And we know, as you know, Imerys has the widest portfolio of specialty minerals in the world. If you look at our -- the development of our EBITDA in this slide, you see the robustness of our business model. On the left side, you can see the evolution of the full year adjusted EBITDA year-on-year. We do have a significant impact of perimeter coming from the divestiture, as you remember, of our assets serving the paper market in July '24. Joint ventures, which did an exceptional year in '24, especially the first part of '24 and exchange rates, FX. If you remove these, let's say, external factors, what is most important, the core activity of Imerys delivered a very resilient EBITDA basically in line with last year despite what we all know was a challenging context in 2025. On the right side, you see the balance between price and costs, which highlights the good and continuous work done by the group, especially on cost reductions, first and foremost, but also on agility to react to market changes in terms of pricing when situation change. This remains and will continue to be a key factor for future success and profitability of this company. An important topic we mentioned today and we go in more detail, we already announced in October with our Q3 results, an improvement program. So here, finally, more details on it. We are launching a cost and performance improvement program named Project Horizon, which aims at restoring our targeted profitability, will consolidate the group's competitive edge, so our competitiveness, will drive efficiencies and facilitate the agility needed in this ever-changing environment. It focuses on simplifying and streamlining the organization of the group. Structurally is important because these savings are here to stay, structurally lowering our cost base, adjusting our industrial footprint and rationalizing our capacity worldwide when possible. The program is ongoing. It is subject, of course, to the completion of the required social and legal processes. On the financial side, on the right, Project Horizon targets annual cost savings of at least EUR 50 million to EUR 60 million run rate per year versus a starting point 2025 cost base. And we do expect to have benefits of at least 50% of the program already in 2026 with the rest coming in 2027. We expect the cash cost of implementing such a program at approximately 1 year of saving, which makes it particularly attractive. Let me now give you a short update on the 2 key -- other 2 key topics for the group, lithium. First, announcements have preceded this call. So you are aware on EMILI in February -- on February 11, we announced that the French state has acquired a minority stake in the project. It is a key milestone for the future of the project. It's an investment of EUR 50 million in the equity of the company, which will support and finance the EMILI project in finalizing the definitive feasibility study until the end of '26 and probably in early '27. As far as our second project, Imerys' British Lithium is concerned, the scoping study, which is the step before the pre-feasibility study, was concluded and finalized in early '26, confirming at the end, a high value and a strategic relevance of this project. However, the group has decided to place the project on maintenance and care. And consequently, there will be no further investments in this project in the nearby future. With regards to the Chapter 11 process of the North American Talc entities, another milestone, the confirmation hearing as planned, started on February 2 and was concluded on time on February 6 at the Court of Bankruptcy in Delaware. We anticipate the court to issue its ruling in the following weeks. The potential confirmation, if positive, will then need to be subject to -- or subject to an appeal will need to be reviewed and affirmed by the U.S. Federal District Court. We remain confident in a positive outcome of this process. Moving to our sustainability performance. I'm pleased to share that we have successfully completed our '23-'25 SustainAgility road map. You see here some indicators. Of course, I will not read them all, but 14 out of 16 have been overachieved. This demonstrates how deeply we have integrated sustainability in the core industrial strategy of this group. And knowing that it is a topic of particular interest, if we focus a bit more specifically on CO2 emissions and climate change, we can look at the next slide. Our Scope 1 and 2 emissions amounted in 2025 to 1.8 million tons of CO2 equivalent. This is a 28% reduction versus 2021, the starting point, which puts us well ahead of the pace required to reach 42% reduction by 2030. On Scope 3, we have already achieved 22% reduction against 2021 baseline, nearing our 2025 target for 2030. This performance is great and derives fundamentally from actions and investments in several areas, in particular, energy efficiency, heat recovery, switching to low-carbon energy. This achievement also confirms that we have met our sustainability performance targets for our 2021 sustainability-linked bond with a positive effect on the interest rate. We've done well in the past. We move on to the future, and we are launching our third road map to building on the experience of the last 8 years and this continuous progress. We've taken the opportunity to strengthen and simplify our midterm objectives and focus really on what stakeholders expect while being, of course, fully aligned with the latest CSRD guidelines. I will not go through the list, but I assure you that our targets are both ambitious but also reachable. I now hand over to Pierre for a detailed analysis of our financial results. Pierre Lebreuil: Thank you, Alessandro. Good morning, everyone. It is a pleasure to be there with you today for the first time. So let me recap some of the key aspects of our financial performance, starting with revenue. Group sales were EUR 3.4 billion for the full year 2025. This represents a 0.7% decrease at constant exchange rates and perimeter compared to last year with volumes slightly down and prices holding well. As a reminder, the perimeter effect includes a negative impact of EUR 165 million from the disposal of our assets serving the paper market in July '24. It is partly offset by the EUR 50 million of sales generated by the Chemviron business acquired at the beginning of 2025. Currency had a negative effect of EUR 82 million, mostly coming from a drop of the USD versus euro from the second quarter onwards. You can see Imerys performance for the fourth quarter at the bottom of the chart. Trends in sales volume and prices were similar to what we saw for the full year. The currency impact was, however, much more negative. It represented 4.2% of sales and was driven by impact of the weak USD. Let's now have a look more in detail at our 3 business segments. Beginning with Performance Minerals. This business generated EUR 2 billion of revenue in 2025, representing 60% of Imerys group sales. Overall, the business remains very resilient given market circumstances, showing just a slightly negative organic growth compared to last year at minus 1.3%. Full year 2025 revenue in the Americas was down by 1.3% at constant scope and exchange rates versus last year and stood at EUR 841 million. Sales were impacted by a weak residential market in the U.S., suffering from high interest rates, unsold housing inventory and by a soft consumer market. Prices held well. Full year 2025 revenue in the Europe, Middle East, Africa and Asia Pacific region decreased by 1.7% at constant scope and exchange rates compared to last year. Volume were down by 2.8%, driven by muted construction and automotive markets. This decline was partly compensated by a good level of activity in the consumer market. In Q4, the performance was in line with previous quarters. Despite lower volume, Performance Minerals adjusted EBITDA is above last year by 4% like-for-like, a strong achievement, driven by price discipline and cost management. The EBITDA margin was resilient at 17.8%. It is worth noting that performance on the Chemviron, the diatomite and perlite business acquired in January '25, was ahead of expectation, thanks to quick synergies implementation. Let's now look at our solution for Refractory, Abrasive & Construction business. Full year sales to the refractory market were impacted by the low industrial activity in Europe and in Asia, while the U.S. market resisted better. Pricing remained steady. It is worth flagging that organic growth was positive both in third and fourth quarter of 2025, driven by commercial actions and strong sales of advanced ceramic products. Full year 2025 adjusted EBITDA declined by 9.8% at constant scope and exchange rates due to lower volumes, which were partly offset by a positive price/cost balance and cost savings initiatives. Let's now have a look at Solution for Energy Transition to complete this segment review. Starting with Graphite & Carbon. Full year 2025 revenue increased by 11% like-for-like, driven by solid end market, primarily electric vehicles, along with new product launches and robust conductive polymers business. Fourth quarter revenue was stable as some external and temporary factors delayed sales by a few million euros. Full year 2025 adjusted EBITDA increased by 41.2% over the previous year. This substantial improvement is primarily attributable to significant volume increase. Adjusted EBITDA margin reached 25%, a gain of 5.5 percentage points. Let's now focus on TQC results. As a reminder, TQC is our 50% joint venture in high-purity Quartz business. Full year 2025 revenue amounted to EUR 167 million, a significant drop from a record-breaking previous year. Performance was affected by disrupted solar value chain, even if inventories are now at healthier levels. Revenue improved in H2 '25 at EUR 85 million, outperforming both H1 2025 and H2 '24. Full year 2025 net income dropped to EUR 35 million. TQC delivered for the full year a solid 36% EBITDA margin. Now let's look at the group's profitability. For the full year, adjusted EBITDA reached EUR 546 million, corresponding to a 16.1% margin. Looking at Imerys' direct operational performance highlighted in the box in gray color, you can see that EBITDA was very resilient with just a slight decrease of 0.7%, a great achievement given the economic context and supported by price discipline and cost management. On a reported basis, EBITDA decreased 19% in comparison to 2024. This reflects the lower contribution of joint ventures by EUR 74 million, perimeter changes for EUR 30 million and an unfavorable exchange rate effect of EUR 22 million. The picture is similar for the fourth quarter, where adjusted EBITDA matched prior year levels once adjusted for currency fluctuation, changes in perimeter and joint venture performance. Let's now move to the bottom of the P&L. Net income group share is a negative EUR 409 million. As detailed on this slide, it is impacted by other operating income and expenses amounting to EUR 555 million. This EUR 555 million are mostly related to 2 items. The first one is a noncash goodwill impairment charge of EUR 467 million related to the solutions for Refractory, Abrasive & Construction business. This impairment reflects a lower performance of the business plan than anticipated 1 year ago and the fact that antidumping measures on Fused Minerals import from China finally implemented by European Union are less protective than initially anticipated. It is important to flag that markets have eventually stabilized, and we do expect a progressive recovery of this business from 2026 onwards, as already noted in Q3 and Q4 '25 when RAC posted positive organic growth. Savings expected from the Project Horizon should further support recovery. The second items are noncash write-offs related to Project Horizon for EUR 41 million and to the decision to place Imerys British Lithium on maintenance and care for EUR 31 million. Let's now have a look at the cash flow generation. Current free operating cash flow amounted to EUR 78 million in 2025 or EUR 127 million before strategic CapEx. In comparison with 2024 year, free cash flow generation is primarily impacted by a decrease in dividend received from joint ventures, with no dividend received from TQC in comparison with approximately EUR 70 million received in 2024. You will note as well the EUR 26 million increase in working capital, primarily driven by higher inventory in the RAC business area, where we had anticipated a stronger impact on sales of antidumping measures in Europe, which finally did not materialize. Inventory and more generally working capital will definitely be an area of continued focus in 2026. Lastly, paid capital expenditures amounted EUR 317 million. New CapEx booked in 2025 amounted to EUR 297 million, including EUR 47 million related to our strategic investment in the lithium projects. The remaining EUR 250 million recurring CapEx were well below historical level of more than EUR 300 million and below our estimate provided in H1 2025. We do expect that capital expenditures in 2026 will continue to be limited and in the EUR 200 million to EUR 270 million range. This should allow us to achieve a robust cash generation in 2026. To conclude this financial review, let's now look at net debt. It slightly increased in 2025 as a result of strategic CapEx spend and dividend paid. I will highlight a couple of additional points. First, net financial debt went down in H2 2025, confirming the positive trajectory of our net cash generation. Second, we do not expect any significant strategic CapEx in 2026 as the financing of the definitive feasibility study for the EMILI Lithium project will benefit from the contribution of our partner in the project. I would also like to remind you that we successfully placed a EUR 600 million senior unsecured notes last November. The average maturity of our bonds is consequently extended to 4.3 years from 3.4 years at June 2025. Lastly, Imerys' investment grade was confirmed both by S&P and Moody's in second semester 2025. Net debt represents 2.5x the adjusted EBITDA, reflecting the solid financial structure of the group. On this positive note, I will now hand back to Alessandro for the outlook. Alessandro Dazza: Thank you, Pierre. So let me summarize this presentation by saying 2025 was a challenging year, but I think the group, especially in its core activity, did quite well. We have managed to keep sales flat, our overall EBITDA flat, excluding external factors, FX, perimeter, all JVs. Performance Minerals increased its profitability. Graphite & Carbon was exceptional. And RAC, which was negative compared to last year, posted growth in the second part of the year, which makes me quite optimistic for the future. How do we see '26 going forward? Don't expect a guidance as we -- as in the past, we will not do this. We release it typically after having seen the outcome of H1. Personally, I'm optimistic, but I've learned to be prudent as markets have been slow in recovery. Yes, we expect good construction in Europe, but we are still uncertain on the speed of recovery in the U.S. and automotive, which is a big market for the group, remains difficult to interpret. For sure, electric vehicles will continue to grow strongly in Europe as well as in China. So with this prudence, which is I think needed so early in the year, what I know is that the group will deliver what is in its hands, and I'm talking about our restructuring program, Project Horizon is ramping up capacities that we have built. So they are available. The markets are there. We don't need to invest further. We need to ramp it up as we showed in '25 and will continue, and we'll continue with our innovation efforts because we need to build the future. So thank you very much, and I would like now to open to Q&A. Operator: [Operator Instructions] First question is from Sven Edelfelt, ODDO. Sven Edelfelt: Yes. Welcome to Pierre. So I will have a couple of questions. Alessandro, I quite understand the usual view of not giving any guidance, but this year is a bit more complicated to understand because there is a cost cutting, construction of somehow improving in Europe. You mentioned that you managed to the core business, you managed to make it stable this year. So if you add up the number of EBITDA for '25 plus the cost cutting, it's probably a minimum. Hello? Alessandro Dazza: Yes, we hear you well, Sven. Sven Edelfelt: Okay. Sorry, I've got another call. And secondly, on asbestos, it seems that it's going extremely well since the last hearing. I see a lot of certificate of no objection being published. So there is a hearing on the 24. Can we consider a positive outcome as early as next week? And the last question is on CapEx. I think you mentioned EUR 250 million. Is it a maximum? And can we expect CapEx to be a little bit below this level? Alessandro Dazza: Thank you, Sven. Many questions. I'll try to address them all. As I said, we don't give a guidance. Therefore, I will not comment what '26 looks like. Yes, we will do the cost-cutting program because it's in our hands. I trust that construction will rebound, especially in Europe, but it's not in my hands. That's the market. And we know we have seen construction in the U.S. rather slowing down in the second part of '25. So we do need construction in the U.S. also to be solid before we can say, yes, it's going to be a good year. And that's why my prudence, which is really we are exposed to markets. If you remember a year ago in this room, I said '25 will be a good year, volumes will go up. And then we had tariffs and then we had interest rates that did not drop fast enough, and we ended up with a slightly negative volumes. So for me, prudence is the minimum that is required in this very challenging and rapidly challenging world. But we will deliver what is in our hands. And you mentioned CapEx. you've seen the agility of the group. Typically, we invest EUR 300-plus million. We saw that this year volumes are -- sorry, in '25, we saw volumes are not coming, so we could reduce rapidly our CapEx, and we ended up for, let's say, running rate for the core business with EUR 250 million. What will be '26? We will adjust. We will adjust as volumes grow. But I expect in a normal year to be maybe EUR 260 million. Don't forget, there are CO2 rights that now need to be booked as CapEx. So I think in the region, EUR 250 million, EUR 270 million could be a realistic number, and we will really adjust it based on what we need. We have good invested assets. I think it is the new normal to go down to these levels. The EUR 300 million plus is the past. And I remind you that, as Pierre mentioned, in '26, we will not have strategic CapEx because our strategic CapEx was the lithium projects. We have paused the U.K. We have found a partner that contributed capital in France. So for '26, there will be no further expenditures. And I can continue to comment on other cash items, but we'll do it later. Lastly, Chapter 11. We have always been confident. I think it was important to start this confirmation hearing and to conclude it. So it went on time. No surprises. We can remain confident. We shall remain confident, but now it's in the hands of the judge to issue the ruling. It's the final hearing, the confirmation hearing. So it will be a very comprehensive ruling. So I expect several tens of pages, maybe hundreds of pages. So it's something that will take time. I'm convinced because of the complexity of the case and the requirement of the law. Frankly, this 24 date, 24 that you have mentioned is not known to me. We have no outstanding deadline. It's really waiting for the issue of the ruling. So we remain confident, but we can only wait for the ruling. And I think I addressed all your questions, Sven. Operator: Next question is from Auguste Deryckx, Kepler. Auguste Deryckx Lienart: I have 2 questions. The first one is on the lithium project in the U.K. The decision to end this project contrast with the positive momentum on prices. What should we conclude from this? Is this project failing to achieve the targeted cash cost? Or is it linked to the French stake in the EMILI project? So basically, what are the reasons for this decision? And the second question is on the cost-cutting plan. A large part of it is for 2026, but there is also costs associated with this plan. So should we expect a net impact close to 0 for 2026? Alessandro Dazza: Thank you, Auguste, for the questions. The lithium project in the U.K., so British Lithium is a good project. We have finished the scoping. So we know roughly the potential of the deposit, the cost of the CapEx and the cash cost of production tomorrow. It's a good project. Of course, scoping means you have less certainty on these numbers than you have when you do a pre-feasibility study, which is complete in France and/or a definitive feasibility study, which is exactly what we are doing in France. So the project is good and it's not ended. It's paused. Maintenance care means you have something, it's of great value, but at the moment, you decide not to pursue. So we paused it. So we could restart it. It will depend on several things. One of them is do we find investors that join us. I always said we need investors to join us. These projects are too big in size for Imerys alone. So we need investors to join us. So -- and secondly, the project in France is way more advanced. We are at least a year, 1.5 years more advanced in terms of studying engineering pilot plant. So we prefer to go full steam on this one today and focus all our resources on this one and accelerating rather than running 2 in parallel, which would have been complicated. So this is the analysis. Lithium prices, you're absolutely right, jumped. In December, November, when we spoke last time, they were around $10. They are today around $20 per kilo. So they doubled. I remind you, as we always said, we believe the mid-, long-term price of lithium should be between USD 20 and USD 25. That's what all expert studies show. At that price, EMILI Lithium project is more than EUR 1 billion NPV. So we are talking about a fantastic project. Yes, this level of price will raise new interest of investors. So we do expect to receive and we are in discussion to further consider partnering, first of all, as I said, for France, and we will see in the future for the U.K. On the cost cutting, I think your analysis is roughly okay. Costs will go -- cost of implementation -- cash cost of implementation will go with savings. Typically, you will have social plans, redundancy. So the moment you exit people, you will have -- you will incur the cost, but you will have the savings. So I would say, if we manage to achieve at least half of the savings in '26 and a full scale in '27, we will probably have a bigger part of costs in the first year and a bit less in the second year since the overall cost, which I think at 1 year of savings max is very competitive, I would say, because I think we will manage well this cost spending. I think cash-wise, yes, you might be more or less at 0 in year '26. I think it's a fair assumption, whereas we will have the full benefit then recurring from '27 without costs. Operator: Next question is from Sebastian Bray, Berenberg. Sebastian Bray: I have 2, please. One is on the level of interest charge. Is the full year '25 level now recorded a good proxy for what to expect in future years? I appreciate that there was a step-up in the cost of interest because of the successful bond refinancing, but I suspect there might be 1 or 2 one-offs in the '25 interest charges. Are we now at a stable good level as we look forward? And my second question is on the Quartz company. It looks like things are getting better. Can you talk a little about the pricing and volume trends as we've moved into the half year of '25 and into '26? Is this business returning to positive pricing territory or is the improvement simply the result of better volumes? Alessandro Dazza: Thank you, Sebastian. I'll let Pierre comment on the expectation of '26 financial charges compared to '25. Pierre Lebreuil: Sebastian, so as you rightly pointed out, and as you know, we refinanced in last November, a EUR 600 million bond. Basically, the coupon for the new bond is 4%. Where the coupon for the bond we refinanced was around 1.5%. So it's easy to do the math, as you can see, just mechanically you can expect in 2026, a finance charge increasing by roughly EUR 15 million, all other things being the same. Alessandro Dazza: And on the Quartz company, your comment is correct, the business is stabilizing and returning to a more regular path of progressive -- slow progressive recovery growth. Inventories are stabilizing in the value chain. Of course, the competitive pressure is there when volumes are lower. So there is more competition that has caused a reduction in pricing in the market. We don't comment specifically on volumes nor on future prices because it's a very small market and therefore, we should be extremely careful. But I would say, overall, a positive -- gradual positive trend to be noticed going forward. Sebastian Bray: Helpful. Just to clarify on the finance costs. There are no one-off items or anything else in the interest charges for '25, that would mean that the actual level is different to what was reported. Pierre Lebreuil: That's correct. Nothing worth mentioning here. Operator: Next question is from Ebrahim Homani, CIC. Ebrahim Homani: Pierre, congrats for you new position. I have 2 questions, if I may. The first one is on the Q1. The comparison basis will be a bit more challenging. Do you expect the continuing improvement of the organic growth sequentially in the Q1 2026? And my second question is on the impairment. Could you give us more details behind this impairment? And on the EUR 1.3 billion of goodwill in the balance sheet, are there still elements at risk? Alessandro Dazza: Ebrahim, sequential for me is Q1 on Q4. Typically, Q1 is stronger than Q4. So sequentially, yes, there will be an improvement. If you compare to last year, too early to say because we only saw January. As I said, markets are not rebounding rapidly, as I stated in my outlook. So difficult today to guess. What is for sure still there in Q1 is an FX impact. So the dollar was in Q1 last year, 104. So a very strong dollar a year ago. Then from Q4 -- sorry, from Q2 onwards, similar to where we are today. So we will still have an FX impact in Q1 of 2026 compared to last year, and then it will basically fade away because we will be more closer to current levels with last year levels. Other than that, too early to say. I said, some market share recovery, Construction Europe, paint, others are still in the middle. Automotive, for sure, we will see growth in EVs and battery materials in general. U.S. for me remains still a question mark, so to be seen. On the impairments, it's very simple. The business RAC carries a goodwill, which derives from old acquisition. And the assessment of today's market conditions, and we can discuss basically is an acknowledgment that there is a new normal, especially in Europe after the energy crisis and increased competition from Asia. The value in the books did not -- the goodwill did not represent the real value. So we took this accounting entry. As I said, it's noncash. It has no impact on the company itself. It's a correction. It's an exercise you do every year at the end of the year, which automatically means for all other businesses, we see no need for this. Otherwise, we would have done it. And I think what is important to note is that the business, which suffered in '24 and in '25, as you have seen, if you look back at our previous communication, finally stabilized and even is starting to recover. We had organic growth in Q3 and in Q4. The antidumping measures are in place. They were temporary before. They are in place. Yes, they are less than we expected because there are free quotas for some volumes, but they will bring some relief to this industry in Europe in the future. So I think this business remains solid and should probably post some positive news going forward. I think we addressed... Pierre Lebreuil: Let me add as well, the RAC business area in addition, as our other business area will benefit from the horizon plan, which you need as well to factor in Europe. Alessandro Dazza: Absolutely. Competitiveness of the group will be improved, thanks to our cost and performance improvement program, so that will give us an extra competitive lever going forward. Operator: Next question is a follow up from Sven Edelfelt, ODDO. Sven Edelfelt: Yes. It's me again. Sorry to come back. I want to better understand this question for Ebrahim on the goodwill. So this EUR 467 million is coming from Kerneos. But I don't think actually Kerneos profit is lower than 10 years ago. I know you bought it in 2017, but I'm not sure Kerneos profit is lower than 10 years ago because of the current EU-ETS on the clinker price surge across Europe. So is it because the Kerneos goodwill has been spread across the RAC business unit? Or is it because Kerneos exposure to China? Just to clarify. And then I would have a follow-up on the lithium project. I'm a bit surprised by the valuation of the project, EUR 150 million or EUR 160 million, if you take into account how much the French state has invested. So is there a commitment from the state to fund more of the project in the coming year? Can you perhaps elaborate on this optionality? Alessandro Dazza: Sven, I'll let Pierre comment on the concept of goodwill on the business. Pierre Lebreuil: Yes. Indeed, as you rightly pointed out, goodwill are tested only at business area level, so at RAC level. So the fact that we are now booking an impairment for RAC, you are correct when stating that this goodwill originated from Kerneos acquisition in 2017. But still, we are testing globally the goodwill for RAC. And it does not mean whatsoever that this goodwill impairment is related to a weak Kerneos business. As you understood and as previously mentioned, we are far more suffering from Chinese competition in our Fused Minerals business than in our cement business. Alessandro Dazza: Correct. Thank you, Pierre. And the -- let's say, the acknowledgment of this change in market condition is really after the spike in energy in Europe, which did not happen in Asia. So the market has changed in competitive terms between Europe and Asia, and that's mostly the high energy intensity products like Fused Minerals. On EMILI, we did not disclose any value, and so I do not comment on the value. And I can confirm that there is no commitment in any form of any of the partners to continue, just a will to work together to develop this project, and we will take decisions when they come. Maybe, Sven, what you correctly noticed is I believe the state today enters or entered at a time where lithium prices were very low and therefore, probably did a good deal joining the project in early stages. Today, I think our project has a higher value. So we will try to find new partners because we want to rapidly ramp it up and do it. So we will need new partners, as we always said. But I am convinced that the cost of joining the project will change given the much better expectations that the market has developed. And you see also in the value of companies producing and selling lithium that have really increased significantly over the last few months. So -- but we will, with our partner, go step by step as we have decided. Sven Edelfelt: Okay. So -- but can you confirm that the EUR 150 million price roughly is based on the lithium price of $20, not $10? Alessandro Dazza: No, no, because I don't confirm neither the value nor -- betting on future prices is complicated. So everybody can do his own guess. So there is -- but a deal closed now started for sure, several months ago. And therefore, the starting point was a lower lithium price for sure. That's why I'm saying going forward from now on, I believe the EMILI project has a much higher value because people believe in $20 today. When you are at $10, it's difficult to -- I always believed in $20 per kilo because I think that's the price that the world needs to allow projects to start, to be profitable. Not too expensive, it cannot be $50, $100 or $80 as it was because then cars, batteries will become too expensive, but you need a minimum price to allow projects to exist, to be profitable and therefore investors to invest. And for me, it's anything between $20 and $30. So that's where we are now. It's good for the future. And based on this, we will value the projects going forward. Operator: [Operator Instructions] Gentlemen, we have no more questions registered at this time. Alessandro Dazza: Thank you. I see on the screen, we have a question on cash generation for '26. I'll answer it quickly. I would like to compare rather to '25. I believe '25, we had an alignment of events that were fundamentally negative or impacted negatively our cash generation. We spent more than EUR 50 million on the lithium projects on strategic -- what we call strategic CapEx. It will not recur in '26. As we just said, one project is paused. The other one is financed to move forward. We had an increase in working capital, EUR 26 million, as Pierre showed in the previous -- in one of the previous slides, mostly because we expected a strong sales development in RAC when the duties were introduced, the antidumping duties. It didn't come. So we will reduce this inventory. So first, there will be no growth of inventories. On the contrary, this effect should even reverse because we will adjust to the new market, and therefore, it will help significantly '26 cash generations. We did not receive dividends from our main joint venture. I remind you that TQC invested in capacity expansion in '24 and '25 in the U.S. first and in Norway afterwards. As said, therefore, we decided with our partner in 2025 to pause dividends. But the capacity is concluded. The capacity expansion is concluded. Ahead of us, we have a business that will continue to deliver solid net income, solid EBITDA above 30% as we have seen in '26 -- in '25, sorry. So there will be solid cash generation and therefore, pending, of course, agreement with our joint venture partners, but I do believe there will be room to restart paying dividends from this fantastic business. We will pay a lower dividend in '26 compared to '25, which again will generate cash generation for the group. And as you have seen and somebody of you asked, CapEx -- running CapEx day-to-day are under control, and I do not expect a significant increase next year. Therefore, in terms of paid, we will see this level coming down to a more what we book you pay, whereas we are still coming from higher booking and therefore, higher paying than booking. So in general, I think we will see a significant positive improvement in 2026. And I hope I have addressed the question. If there are no further questions, we will close. Let's allow our room to confirm, please. Operator: We have no further questions registered at this time. Alessandro Dazza: Thank you very much. Then thank you again for dedicating this hour to Imerys, and we wish you all a good day. Thank you. Pierre Lebreuil: Have a good day.
Operator: Thank you for standing by, and welcome to Mineral Resources FY '26 Half Year Results Briefing. Your hosts today are Malcolm Bundey, Independent Non-Executive Chair; Chris Ellison, Managing Director; and Mark Wilson, Chief Financial Officer. We will start with 15 minutes of prerecorded opening remarks before we move into live Q&A. [Operator Instructions] This call is being recorded with a written transcript being uploaded to the MinRes website later today. I will now hand over to Chris Ellison, Managing Director. Christopher Ellison: Good morning, everyone, and thanks for joining us. This is the MinRes FY '26 half year results announcement. I'm Chris Ellison, Managing Director. I'm joined today by our Chair, Mal Bundey; and our CFO, Mark Wilson, and Mark is going to run you through the financials when I get through this section. Before we begin, I want to acknowledge the tragic loss of our colleague and friend, Tim Picton, who sadly passed on the 19th of January. As our Strategy Director, Tim's brilliant strategic mind and extraordinary work has left a long-lasting legacy to our company. Last month in Federal Parliament, the Prime Minister paid a fitting tribute to Tim, which detailed the many extraordinary achievements he had made in just 36 years on the planet. He's deeply missed by his colleagues. He's missed by his MinRes family. He's missed right across Australia by a lot of people, and our thoughts remain with his family. This morning, I'm proud to report the first half of FY '26 has been our strongest 6 months ever. We delivered record underlying EBITDA of $1.2 billion for the half based on revenue of $3.1 billion with nearly $300 million in free cash flow. Over recent years, MinRes has seen periods when iron ore prices have been over $220 a tonne and spodumene up beyond $8,000 a tonne. Remarkably, this half outperformed them all and despite much softer commodity prices. Iron ore had an average of around 100 tonnes during this period, less than half the historic highs. And while lithium prices have rebounded in recent months, the September quarter only averaged $849 a tonne and the first half sat at around $972 per tonne. This first half result was the result of 3 main areas. Firstly, outstanding operational performance. Onslow hit nameplate in August. And we improved performance in the lithium mines, which resulted in recent guidance upgrades. Secondly, record mining services earnings, which was up 29% on the prior year. And finally, cost discipline. The Onslow Iron FOB cost of $52 a tonne and costs at Wodgina and Mt. Marion both track to the bottom end of guidance. Let me just reiterate what Onslow Iron means to MinRes because it's central to the quality and the strength of our earnings. At $100 a tonne iron ore price, Onslow Iron will generate over $1 billion of annual EBITDA. That's demonstrated by Onslow Iron having contributed just over $500 million in the past 6 months. This result validates the key strategic decisions made over recent years. Many of those decisions related to the investment, planning, construction and ramp-up of Onslow Iron. It's worth remembering that many thought this project couldn't be done without building a costly rail line and a deepwater port. We saw opportunity where others didn't and put our in-house expertise and world-class innovation to work, which prompted some to question our capability to deliver. Despite this and some early challenges, we stayed the course and we delivered in record time. As a result, we entered FY '26 with plenty of momentum and achieved several key milestones. We safely ramped up production to nameplate capacity in August. We completely finished the upgrades to the haul road in September. And most importantly, we've sustained nameplate production, and we've proved the quality of our innovative supply chain from the jumbo road trains to the transhippers. Importantly, Onslow Iron also showcases the scale, innovation and executional excellence of our Mining Services business. In the half, Mining Services delivered record volumes of 166 million tonnes and generated EBITDA of $488 million, up 29% on the prior year. The division is firmly on track to generate almost $1 billion in annualized EBITDA. Our Mining Services capability is world-class and fundamentally different from traditional listed peers who focus largely on civil and mining work. The Engineering and Construction division has decades of experience and a reputation of delivering lump sum fixed price projects. We're the only organization I know of in Australia that can do these feats, and we've done them for over 20 years. We design, we build and we operate, and we do it faster and more cost effectively than anyone in the industry. That integral capability gives us a clear competitive advantage and highlights the unique service we bring to our clients and JV partners. After the success of Onslow Iron, interest has increased from potential clients looking to similar integrated solutions. We were awarded 2 new contracts and renewed 3 contracts during the period, and the long-term outlook for the mining services remains strong. We expect to continue growing volumes and earnings into the future. Let's talk a little bit about lithium. In June last year, we sold cargoes for around USD 600 a tonne. We averaged around $970 a tonne during the half and prices continue to rise. We sold a cargo for $2,500 in recent weeks and the supply-demand curve certainly is changing significantly. We stayed disciplined through the weaker price environment. We cut costs. We drove efficiency improvements. We made tough decisions but necessary to ensure that we could capture the upside as the lithium demand increases. Wodgina achieved processing recovery rates of around 70% in the December quarter, a key milestone. We expect recoveries to improve further as we access more fresh ore and we go deeper into the pit towards the end of this calendar year. Marion also saw some great gains with higher feed tonnes, improved recoveries, and we're continuing to progress the study around the flow plant and the underground. The POSCO transaction was announced in November. It reflects our track record monetizing assets with world-class partners. The JV will materially strengthen our balance sheet while ensuring we retain significant exposure to the lithium market, and we retain our mining services contracts. We're also assessing further growth options in lithium, including the potential restart of Bald Hill. These studies are ongoing and we'll update the market when appropriate. I'll now briefly touch on the balance sheet. When we committed to Onslow Iron, I described it as a transformational project that would generate significant cash flow and drive the deleveraging of our balance sheet. That vision is now a reality. The project's earnings power has significantly improved our balance sheet. In 6 months alone, our net debt balance fell almost $0.5 billion to below $4.9 billion and our leverage more than halved. Our liquidity has strengthened to over $1.4 billion, and the POSCO transaction is expected to be completed in the first half of calendar '26. MinRes will receive approximately $1.1 billion in additional proceeds. With 2 more transhippers coming online from the middle of this year, we expect to lift Onslow Iron capacity towards 40 million tonnes run rate. This will support stronger cash generation and it will further assist our deleveraging trajectory. Looking ahead, we're focused on more of the same, operating safely, delivering on our guidance, optimizing our existing assets and continuing to strengthen our balance sheet. There's still a lot of work to be done, but let's remember, the past few years have been the best growth and development period in our history. This has included bringing Onslow Iron from concept to full production in 3 short years, responding quickly to the changing lithium market. We exited the hydroxide business. We idled the mines. We optimized the hard rock deposits and improved the recoveries. We've grown our Mining Services business. In short, from '23 to '26, we've doubled it. And we've not just doubled it, the earnings are sustainable for decades and decades to come. They're a high-quality income stream. We're recycling $3.3 billion in capital through world-class partnerships through the iron ore, lithium and the gas businesses. We sold down on the haul road. We were in the process right now of concluding a deal with POSCO on our lithium business. And we sold down on the gas and brought Hancock in as a long-term JV partner on the exploration assets that we have in both the Perth and Carnarvon basins. And look, finally, I want to acknowledge the most important part of our business. We've got over 7,000 men and women in our business that tirelessly work every day. They underpin our success. I'm proud of everything they've achieved, and I'm excited about what's to come in the months and years ahead. I also want to acknowledge Mal Bundey, our new Chairman. Mal come on board in April, and he has just been a powerhouse. He's done a huge amount of work right across the business, including refreshing the Board who again have worked tirelessly, and they continue to strengthen our governance and our framework and in step with the operational and financial performance the business is driving. Finally, I want to thank all of our shareholders and our partners, our JV partners and our clients for their unrelenting ongoing support. Thanks, and I'll hand over to Mark. Mark Wilson: Thank you, Chris, and good morning, everyone. I'm pleased to present MinRes' financial performance for first half fiscal '26. It's a strong result that reflects the fundamental transformation of our business now underway. As Chris outlined, we delivered record underlying EBITDA of approximately $1.2 billion on revenue of $3.1 billion for the half year. This was the strongest 6-month period in the company's history. What makes this result particularly significant is the quality of the earnings. This wasn't the result of commodity price luck. Rather, it was built on operational excellence, volume growth, cost discipline and the successful commissioning of Onslow Iron at its nameplate capacity, driven by our Mining Services business. This performance reflects the strength of our diversified business model and the repositioning of our portfolio to transition to higher-quality assets, along with increasing recurring Mining Services earnings. Mining Services continues to be the bedrock of the business and delivered a record underlying EBITDA of $488 million. This was driven by record production volumes and an EBITDA per tonne margin of $2.10. It also included a significant contribution from the Onslow Iron Road Trust, which is an infrastructure-like cash flow annuity stream that is inflation indexed. It's important to note sustaining CapEx for Mining Services was only $24 million, highlighting the strong free cash flow generation of that business. In iron ore, underlying EBITDA was $573 million. And of this, $519 million was from Onslow Iron, demonstrating the substantial positive cash flows from this long-life project. In lithium, we reported an average SC6 equivalent price of USD 972 a tonne, which delivered underlying EBITDA of $167 million. Importantly, balance sheet deleveraging has clearly commenced. We generated free cash flow of $293 million in the 6 months after CapEx of $600 million with net debt declining by almost $0.5 billion to approximately $4.9 billion. Liquidity strengthened to over $1.4 billion, consisting of more than $600 million in cash and a fully undrawn $800 million revolving credit facility. In October, we successfully refinanced our USD 700 million bond, pushing the maturity out to April 2031 at our lowest ever coupon rate of 7%. That offer attracted significant demand and was a clear vote of confidence from the debt capital markets, both in MinRes and in our strategy. Completion of the POSCO partnership, which is expected in the first half of this calendar year, will bring in $1.1 billion and put us on a clear path to be below our 2x net leverage target by June. At our AGM last November, we outlined an updated capital allocation framework and financial policies following extensive Board review. This framework provides clear discipline and transparency around how we allocate capital and manage the balance sheet. First, liquidity. We significantly raised our liquidity buffer from a minimum of $400 million to $1 billion at all times, including at least $400 million in cash. This ensures we have a substantial buffer to withstand commodity price volatility and take advantage of potential opportunities. Second, leverage. We've amended our target to below 2x net debt to EBITDA through the cycle, allowing only temporary exceptions during major capital projects, provided there's a clear path back to target within 12 to 18 months. The amendment from a prior gross leverage target better aligns with market practice and does not penalize the business for holding elevated levels of cash on the balance sheet, and we believe this is a prudent measure in a cyclical industry. Third, dividends. Our discretionary dividend policy of paying out up to 50% of underlying NPAT remains in place. However, dividends will now only be paid if our liquidity and leverage thresholds are met or there's a clear line of sight to meeting them within 12 months. And ultimately, any dividend decision will be weighed against the growth opportunities available at the time. Right now, however, the Board has taken the prudent decision not to declare an interim dividend as we focus on fortifying the balance sheet. Finally, growth investment. All growth decisions must satisfy high return thresholds of 20% return on invested capital post tax and remain firmly aligned with this refreshed capital allocation framework. In summary, first half of fiscal '26 demonstrates that we're delivering on our commitments, record earnings driven by operational performance rather than extraordinary commodity prices, a strengthened financial position with increasing free cash flow generation and a clear framework for disciplined capital allocation that will drive sustainable returns for our shareholders moving forward. Thank you. We're now happy to take your questions. Operator: [Operator Instructions] Our first question today comes from Lachlan Shaw from UBS. Lachlan Shaw: 2 from me today. Maybe can I start just at Onslow. So obviously, transhippers 6 and 7 coming in shortly, getting your notional capacity towards 38, but you are flagging sort of pushing towards 40. How do we think about that in terms of -- is that just a case of sweating the chain overall? Is there sort of incremental capital to come there? How do we think about that? And then I'll come back with my second question. Christopher Ellison: Yes. I think, look, I've said that a couple of times, much to my team's dismay, but they like call it, call out 38, and 38 is a safe number. We should get there fairly simply. I mean, we're running 35 now. Transhipper #6 will get us to 38. Given time, with the crews bedding in, getting the channel passing and all of those incremental things happening, we've got a bit of dredging to do that'll give us a bit more weight on board, over the next few months. So my expectation is I want to drive them towards sweating the assets up to around $40 million. Operator: Lachlan, did you have your second question? Okay, our next... Lachlan Shaw: Yes, I do. Operator: Sorry, go ahead. Lachlan Shaw: Should we think -- be thinking about 40 million tonnes in FY '28? Christopher Ellison: No, no. Think about 38. Transhipper 6 and 7 rock up around about May, June. We'll be trying to get 6 in action, so it will probably kick into life about late July. It will start performing. Transhipper $7 will be there to sort of support them on the maintenance and kick in a few tonnes as well. That really won't come to life until about October, so we already lose those tons going into the first year. If you want to go out a year beyond that, you can be a bit more hopeful. Lachlan Shaw: Got it. And then just my second question then. So just in terms of Wodgina, we've seen a few of your peers start to talk about restarting capacity, latent capacity, but also some potential new operations and DSO coming in as well, maybe in the second half. Obviously, you're still talking to getting on top of the strip by the end of this calendar year. And then likely having the mine capacity, the fresh ore feed to support 3 trains from the start of calendar '27. Can you just help us understand, is that -- what's driving that? Is that a sort of purposeful decision to target margin? And just the context here, I suppose, is just a really good performance in terms of recovery uplift there, and potentially more to come once you get more fresh ore feed coming into the concentrators. Christopher Ellison: Yes. No, look, that's all about the strip. I mean, we were going a lot quicker, going back 18 months ago when the price turned down. We pulled back on a lot of the mining equipment just to make sure we could control the spend. But we expect to have most of that rock off by the end of this year. And once we've done that, we'll have a clear run on those 3 trains, and the actual feed going into the plant, the grade increases a little bit as well, so another kicker for it. So come start of next calendar year, Wodgina will be in a truly good place. Operator: Our next question comes from Adam Martin from E&P. Adam Martin: I suppose first question, just on the sort of deleveraging. Clearly you've had to slow spending. I'm just wondering whether that's sort of held the organization back in any way, thinking maybe about Mining Services, whether there's sort of more opportunities to delever, but maybe you could just comment on that, please? Christopher Ellison: Yes. No, I wouldn't say that holds us back in Mining Services. We take advantage of every mining services opportunity. That's the expectation from our clients. We always make sure we're there to deliver for them, as if we own the ore ourselves. We've certainly, it's probably a once-in-a-generational event to build an iron ore project. I mean, Rio done it once, BHP done it once, FMG did it once. It takes a lot of capital. We had a window of opportunity to do that. And I think that there's no doubt now our shareholders are going to see the benefits in spades. So we're still out there looking around at other opportunities, but at the same time, I mean, carefully managing the balance sheet as we've set out that we would. Adam Martin: Just a second question, just on gas. It looks like you're sort of ramping up exploration. You've got a few wells there in the Perth Basin and one or two in the Carnarvon Basin. Is that -- just to sort of refresh on the strategy there, you're sort of building up resources to get in production. Just talk us through, what the strategy there is, please? Christopher Ellison: Yes. Well, look, we've got a couple of areas in both the Perth Basin and the Carnarvon Basin that look very promising. And what we'd like to be able to do is we'd like to be self-sufficient in gas for the long term, at least for the next sort of 10-15 years out. It's all about -- in our business, it's really all about controlling the costs that you can control, so energy, transport, shipping, all of those sort of things, we work hard to control. Exchange rate, commodity prices are out of our control, but the more we control, the more we can reduce that bottom line. Operator: Our next question today comes from Rahul Anand from Morgan Stanley. Rahul Anand: Chris, indeed, a good set of numbers and obviously a business really starting to hum along now. Look, I've got 2 questions on the Mining Services business. First one is around the Mining Services EBITDA margin realized at about $2.0. Quite a good result there, and I think perhaps a bit higher than I think where your guidance was, I guess, just sub-$2 I think from Mark. So I guess, where do you see that trajectory going forward as Onslow continues the ramp up or is fully ramped up, and then you're kind of looking at a mix of contractor trucks coming off in your system? That's the first one. I'll come back with a second. Christopher Ellison: Okay. Look, that's a little bit higher than what we expected, but I mean, we overperformed at Onslow Iron. We got the contractor trucks out quickly, got the road repairs done, got all our trucks back on the road. So we got back to a normal, steady state of operation. And we were sitting in there on ramp-up rates, which were higher than the steady state rates. So that really sort of was the kicker that that give us that little bit extra. It wasn't intended that way, it's just that we got super-efficient and we over-earned on the mining services. Rahul Anand: Just to clarify then, Chris. Are all the contractor trucks now off then? Christopher Ellison: Yes, yes. So we're 100% on the main haul road. And we only have the big jumbo trucks running there. We're not mixing any other trucks with them. They've been gone for a number of months now. Rahul Anand: Brilliant. Okay, look, my second question is around the order book in the Mining Services business. I guess, how are you seeing the order activity currently in the market? And then also, in terms of the new contracts that you're looking at, is that primarily going to be in the crushing space that your focus is given how good the margins are? Or would you also consider to kind of pick-up projects where there's an opportunity to build, followed by crushing, so to speak, just because the way the contracts are being given out, given construction can have pretty variable margins as well? And then, how are you thinking about the book in terms of domestic and international as well? Christopher Ellison: Yes, we're mainly sticking to domestic right here, right now. We have been -- as you know, we've been looking further afield, but I've been waiting to get some resources off the Onslow Iron build so that I could use them. We've got one fairly large construction team, probably I rate it the best in Australia. We've had them together for we got members in there that have been around for 30 years. So that's part of our Mining Services business. We can actually go out and build a project on a lump sum number. So that allows us to be able to deliver high quality, build, own, operate, crushing and processing plants, so we know what that number is. We can build it for a lesser cost than almost anyone in the industry, that helps us with the margin. Going forward, there's going to be a mix of Mining Services. The big trucks, the jumbo road trains are proving fairly popular. We've got a number of them out to third parties. We're also looking across the board to use that combined skill and currency we've got. So we go out there and we'll go and build a processing plant or a total mine site where we can operate it for a period of time. It may end up down the track that we pass it over, and they write us a check, but there's a whole combination of things that we're offering our clients, where we can sort of satisfy their needs. We're getting a lot of inquiries around that. We've been able to prove that we can still do what we do through building Onslow Iron. And it's awfully tough out there in Australia right now with the industrial relations and a range of other things, the costs. I'm going to say in the last 5 to 6 years, the cost of building a mine in Australia has all but doubled and the time to get them built has even grown as much. So it's getting to a point where it's really tough to get a return on these big commodity mines. Operator: Our next question comes from Mitch Ryan from Jefferies. Mitch Ryan: First one, just with regards to sustaining capital, obviously relatively low in the half. I'm trying to get a feel if it's been suppressed to aid in deleveraging or what you think a steady state number will look like going forward? Mark Wilson: Mitch, it's Mark. We're still thinking in terms of about $500 million a year. Recognize it might have been a little bit lower in the first half, but yes, still holding the $500 million that we've talked about previously. Mitch Ryan: Okay. And then my second one, can you just provide a timeline of when we can expect capital numbers for each of your lithium projects or growth projects that you're thinking about, such as Wodgina Train 4, Mt. Marion [ float ] and underground and Bald Hill? Can you just remind me of when we should expect that? Christopher Ellison: Yes. Haven't got a fixed time on that. As we've said, we're looking at a few of those brownfield opportunities and the returns on them are fairly significant at -- even at reduced values of lithium. We'll probably look -- as soon as we get through them, we're looking at, obviously float and going underground down at Marion. We're halfway underground now. That's almost a no-brainer to get that sort of moving, but again, we're trying to be cautious. We want to make sure that we deliver on the balance sheet. So we're not going to jump the gun on that, and I want to make sure before I go spend any money on those sort of areas around the lithium, that we got something sustainable going forward in terms of the value of, selling the spot. It's feeling good at the moment. It certainly feels like the supply has got a deficit in it. It's pushed the prices up and it pushed them up dramatically. But look, we need just a little more time. I mean, to be comfortable, I want to get to the end of this financial year and be able to have a look at the leverage on our balance sheet and go that we've delivered and now we're in a position where we can go out and start developing the business. Operator: Our next question comes from Kaan Peker from RBC. Kaan Peker: 2 questions from me. One, what is the maximum growth CapEx range MIN is willing to spend while the leverage is still remaining above that 2x? Is there a hard cap on group CapEx until this metric is achieved? I'll circle back with the second. Christopher Ellison: Yes. Look, the Board has done a lot of work around the balance sheet. As you know, we've been really vocal about it over the last 6 or so months. There's been a lot of work done around that. So we've got a Strategy Day coming up in for all of the management, the Board are getting together and trying to have a look at where we're going. And look, I think post that, we'll be able to make some statements. But look, at the moment, pretty hard and fast on just sitting here and doing as we said, just keep growing the balance sheet, keep delivering, making sure that the tonnes are coming out of Onslow Iron. Let's see how the lithium settles down. I mean, we're just really not going to go out and do too much. The one thing I might consider doing over the next few weeks, we're just doing a lot of work around the Bald Hill mine, and it kind of makes sense to bring that back online. But again, we just want a bit more evidence that the demand out there is sustainable. I don't want to go turning that on and keeping it running for a short period of time. Kaan Peker: And on Onslow, I noticed that you talked about dredging, but given that transshipping is the bottleneck, what's the tipping point or the trade-off with capacity transshipping, particularly around the channel passing and dredging costs? I mean, can you materially move above 40 million tonnes without additional CapEx on the fleet? Christopher Ellison: The jury is out on that at the moment. Look, all of the stuff that we've got, the transhippers and everything, they're the first in the world. And I mean, there's no doubt they are operating above expectations and what we hoped we would get out of them. Same with the road and the haulage. But right at the moment, we're right in the middle of cyclone season. We bring those other 2 transhippers in. We've got a lot more control over our planned maintenance. The weather, we're always at the beck and call of the weather up there. We're in the middle. We've just had a cyclone go across. That cost us 5 days. But we expect probably 10x that sort of downtime per annum. We've allowed for it in our run rates. But it's sort of a wait and see. In terms of the channel, look, we had a bit of silt that's come into the channel from the cyclone, and down in the turning basin, down to our Perth, the bow thrusters have stirred up the bottom a lot and we've got some uneven ground down there. In the next few weeks, we're going to drag a bar across it with one of our tugs and sort of smooth that out. And then down the track, April, May, we'll bring in a little suction dredge and we'll hoover that bit of silt out of the channel. So there's no real restrictions on that. But look, we're just going to keep doing what we're doing. We're saying 38 million tonnes, the number you can hang your hat on at the moment, but we'll incrementally keep working our way at all of those efficiencies and 18 months from now, I hope I'm telling you even better news. Operator: Our next question comes from Ben Lyons from Jarden Securities. Ben Lyons: Maybe just following on that line of thinking, Chris, please. You mentioned the Tropical Cyclone Mitchell. More interested, I guess, in how the haul road held up. Can you just enlighten us to how much water was on the ground? Whether you observed any sort of superficial damage? Whether you had water across that sort of estuarine section near the port loadout facilities, et cetera? Christopher Ellison: Ben, it was about -- it was only about 1/3 of the rain that we had going back a year ago. And when you get 3x the volume, I mean, we had all that pooling up there and it was brand new. I mean, we thought we got it right. We got it 95% right. And I mean, it was good you went up and saw the road and there was nowhere near the damage I don't think that MinRes was expecting. There's been zero damage to the road, is the answer. That new surface that we put on and taking the asphalt right out to the edges and not letting the water ingress down into the base has worked 100%. So yeah, really happy with that. We pretty much -- as soon as the cyclone was gone and the roads were open, we had the trucks straight back on the road. And there was no concern about it getting spongy or anyone. I mean, it's going like a treat. I mean -- and as you know, we put a fair bit of concrete down inside the base of the road and just paid dividends. So we're getting everything that we expected. Ben Lyons: Second question's on the POSCO lithium transaction. Just obviously, you've seen a very sharp recovery in prices. Just wondering if there's a bit of seller's remorse, having struck the deal at lower prices. I guess, historically, we've been somewhat habituated to expect a renegotiation of previously agreed contractual terms, about sort of watching our sell downs in and out of downstream processing, et cetera. So just in light of that robust recovery in lithium prices, just wondering whether there's any CPs that might possibly work in your favor to extract some more favorable terms on that sell down? Christopher Ellison: No. Look, Ben, when you -- we're sort of traders. We buy and sell a lot around assets. And you always look back and wonder if you've done the right thing. But look, I've got no doubt. I'm happy with the deal that we've done with POSCO. They were fairly generous on the day. They were looking at the next 30 or so years out when they set the number. And we get that equal value. So we'll take that capital, we'll be able to reduce debt and we're going to have some capital left out of that to take some of these brownfield opportunities we got both at Wodgina and down at Marion. So by the time we do those upgrades, the flotation plant at Marion and Wodgina, we'll actually have more attributable ore to MinRes than we've actually got now. So it's really positive. So we'll end up with more spod coming out of the ground that we can sell. We'll have that capital to put into the projects. And of course, don't forget, we're going to have Bald Hill sitting down there. It's 100% owned by MIN. Look, I expect not too far down the track when we can afford it and when it sort of fits in the jigsaw puzzle, we'll probably be able to grow that place. I mean, it's a great ore body and very large crystals. It separates incredibly well, so the recoveries down there are great. So yeah, look, just great opportunity in front of us, but the POSCO capital is going to make that work really well for us. Operator: [Operator Instructions] Our next question today comes from Rob Stein from Macquarie. Robert Stein: Chris and team, a quick one regarding commercial structures of lithium offtake. You've seen some of your competitors strike some deals with floor pricing to protect downsides. Is that something that you guys are willing to entertain at this point in the cycle, noting prices are well above some of those floor terms, just to secure baseline returns for some of these capital decisions you're potentially going to make in the future? And I've got a follow-up. Christopher Ellison: The answer to that is no. We wouldn't put those in place. Those sort of deals take an average of about 5 indexes, and typically on a rising market over the last 3 months. We're typically getting above the top index on all of the cargoes that we've been selling. So no, we have no need to do that. Robert Stein: No problems. And then a follow-up, just on your capital allocation framework. If we project at spot going forward, looks like you could be paying a dividend next year or even at the end of this year. How do you think about that in terms of incremental sources of capital and returns? You've obviously got the 20% return hurdle, but is there internal tension on some of those projects that you're progressing to try to get back on the dividend-paying machine? Christopher Ellison: Yes. Look, I can certainly tell you, the largest shareholder is not opposed to dividends. But in saying that, too, I mean, we've got to balance, I mean, and we have a look at what the opportunities are sitting in front of us. I mean, if we can go and invest, for example, in some of that brownfield stuff or if something comes along that looks like it's got those 20%-30% ROICs, we're going to weigh that up with where the best value is for our shareholders, and sometimes that capital growth is a much better option. But it just depends on the day. Again, I mean, there's a lot of work being done around that. And when we go through our week on strategy, we'll be looking at all those sort of things. Operator: Our next question comes from Paul Young from Goldman Sachs. Paul Young: Chris, it's been a pretty good last 6 months, but it's been a pretty tough couple of years. And I might be getting ahead of myself here a bit, but I know you're always thinking about sort of what's next. I mean, Ashburton has transformed the business. So I'm just curious around when the leverage is below 2x, have you been thinking about adding any new sort of Tier 1 greenfield mining projects to the portfolio or is the focus more around the Mining Services growth? Christopher Ellison: Look, the answer is, I mean, we never stop looking. We've always got our BD people always out there in the market looking. We never turned down a Mining Services contract. Look, there's a range of opportunities sitting out there and there's no doubt. Well, I think we've got to start looking a little bit offshore as well. And again, good opportunities out there. One of the strengths that we've got is that we've got a long history with a lot of the bigger mining companies. And there's always opportunities out there to be able to partner up with those mining companies that, for example, they may have deposits in different parts of the world, but they don't have the skill set or the in-house capability of being able to get that thing built at a predetermined number, where they know they're going to get the right return, and we can bring that to the table. So yes, look, well, the answer is, I mean, we've never stopped looking at opportunities. And again, over the next few months, we're really going to start having a look at what's available to us, because as you know too, it takes a bit of time to get an Onslow Iron permitted and to get everyone on board. Paul Young: Maybe just the second question on Mining Services again. You said I think you won 2 contracts in the half and your CapEx was $31 million, so pretty looks like 2 modest contracts in the half, but good to see some growth coming through. Just domestically, looking at the opportunities, are the opportunities really in the Pilbara still and maybe up in Weipa? Just the capability of the team, like, how much volume and new projects can you actually add? What are the capabilities of the team? When do they actually start getting stretched? Christopher Ellison: Again, we can handle 2 or 3 of those sorts of projects at any given time. It's rare that that happens. You mainly get 1, sometimes 2 coming along. But there is -- look, certainly, in the top half of Australia, there's some amazing opportunities sitting out there over the next 4 or 5 years, and I'm going to go, I said this a couple of years ago, it's probably the best I've ever seen, but I think it's even looking better now. And a lot of that compounds what I just said, that all of the construction companies in Australia have basically disappeared over the last 20 or 25 years. We have that capability in-house and it's kind of rare. So we'll give them a fixed number and go out and deliver. That gives us that really good partnership opportunity. We bring real value to our clients. Operator: Our next question today comes from Ben Lyons from Jarden Securities. Ben Lyons: Not sure if it's one for you, Chris, or possibly Mark, but just a question on iron ore spreads. Still recently early days for Onslow and we've seen a bit of fluctuation in the price realization over the journey so far. Just looking at some various price reporting agencies that we track, and we can see, like, a lot of variance between the 61% FE and the 58% and lower grade iron ore spreads. So just wondering if you can possibly comment on what your commercial team might be seeing at present, just in terms of realizations or discounts versus the benchmark? Christopher Ellison: The discount has been, in terms of us as a seller, it's been very good over the last 6 or so months. We've got another advantage too, Ben, is that, the Onslow Iron product, I mean, 3/4 of the MinRes product goes to Baowu. Baowu have spent in excess of USD 500 million, putting a couple of yards up in China, blending yards, and the Onslow Iron ore is going to get blended with the Simandou ore. So that's a big help to us. There's no doubt there's a bit of a drive on with this China Mineral Resources Group. And they've been in discussion with a number of the big miners. And I have no doubt that's all around trying to manage the pricing going forward. But look, certainly, I mean, we still see good demand. I mean, I keep reading in the paper the stockpiles are up or something's expected to downturn, but we seem to be sitting in there around that sort of $95 to $105 range, and it feels like it's going to hang in there for some time to come. We do try and put about 1/3 of our product out that we sell it, forward sell it, to make sure we have that locked away, but we try and keep a balance with that as well, because it's not always smart to -- sometimes you can outsmart yourself on that. Ben Lyons: Yes, okay. Maybe just a two-parter, Mark, just on housekeeping, just to make sure I can squeeze it in. The first part is, obviously, Aussie inflation's been running a bit hot recently, so just wondering what that calendar year, haul road charge has reset to versus the $8.27 last calendar year, please? And the second part, it looks like you've stopped capitalizing interest, which is great in terms of quality in the financial statements, but we didn't get a note to the accounts for the interest expense. So I just wanted to clarify that there is no capitalization of interest in this interim result? Mark Wilson: Ben, it's $8.54. And in terms of the capitalization of interest, it's almost negligible. There was a tiny bit at the start, carrying over from July, at the start of July, but not of any significance. Operator: Our next question comes from Lachlan Shaw from UBS. Lachlan Shaw: Great. I just wanted to go to Mt. Marion and just to understand, you're signaling capacity there, about 500,000 tonnes of SC6 versus rough sort of guidance around 390 at midpoint, for the [ BFY ]. What's in that capacity? So is that inclusive of the float circuit? And what's the expected sort of upstream there? Is that inclusive of the underground that needs a bit more work? Obviously, you've got more pit work happening, but just keen to understand sort of how that comes together. Christopher Ellison: No, the 500,000 tonnes is based on current steady state. That does not include the extra recoveries we're going to get out of the float plant and there's no feed there coming from underground. So it's just moving forward as is. Operator: Excellent. Thank you very much. There are no further questions. That concludes today's call. Thanks for your time, and have a great day. Please reach out to the MinRes team if you have any follow-up questions. You may now disconnect.