加载中...
共找到 17,846 条相关资讯
Conversation: Unknown Executive: Good morning, everyone. Welcome to Thai Union's Analyst Meeting for the Fiscal Year of 2025 Results Announcement. My name is [ Malanyali Jadulong ] and I will be your MC today. First of all, I would like to introduce our management. First Khun Thiraphong Chansiri, President and CEO; Khun Ludovic Regis Garnier, our Group CFO; and Khun Pinyada Saengsakdaharn, Head of Investor Relations. Today's session will take around 1.5 hours, including Q&A session, and then followed by a 10-minute break before we begin the TFM Analyst Meeting. Without further ado, I would like to invite Khun Thiraphong to begin the presentation. Thiraphong Chansiri: Good morning to all the analysts and the executives from financial institutions joining us today. Today, we're going to share our performance results with you for the fourth quarter of last year as well as for the full year of 2025. 2025 was a year that is very memorable for us because we have so many stories, important stories, whether it's in terms of the reciprocal tariffs, which was something quite new for us, and also the exchange rate for the Thai baht, which has strengthened. The appreciation of the Thai baht is one issue, but what is important is that our neighbors, their currencies have weakened. And this is a challenge -- this was a challenge that we faced in the past year. Nonetheless, I believe that thanks to our adjustments, and which we have continued to adjust, we've been continuously adjusting. Over the past 2 years, we have put in place our Sonar program, our transformation initiatives, our Tailwind program for [ item ] to improve our PetCare profitability, and this has helped us achieve or be able to manage our costs in terms of productions and SG&A as well in the past year. Thus, in the past year, we have prepared for growth in 2026. If we take a look at our transformation program, you will see that we have our Sonar program where the goal is to achieve savings at USD 25 million, and our Tailwind project, where we want to have an operating profit of USD 20 million. And these 2 projects, we are on track. In terms of cost resetting, we have a target to reduce our cost by USD 118 million by the year 2027. And in the past year, we have had refinancing worth THB 24 billion. And this led to a decrease in our interest expenses significantly. And we also have our portfolio focus where we have adjusted our portfolio to emphasize on higher profit margin products. Innovation is also extremely important for us. Every business unit of ours, we have launched new products, whether it's our Ambient branded in America and in Europe. In the pipeline, the products in our pipeline that we're seeing significant achievement in that area. We have our innovation hub in Netherlands -- in the Netherlands. In the PetCare business, innovation is also extremely important as a key driver for the sales growth for ITL. In our Frozen business and the culinary-ready meals, this is something that we have seen major development in the past year. If we take a look at the full year results, you can see that in terms of Thai baht, the sales went down by 4.1%. But what is positive is that our volume has returned to growth at 2.5%. The overall volume that we have produced and exported is at 900,000 tonnes and the demand is very positive for Frozen feed and PetCare products. And with the feed, this is another business of ours where we have achieved a new record high in terms of market share and sales and profitability. And later on, Thai and Pinyada will present their performance results for you. And we also have PetCare positive results. So we've done very well in the past year in that regard. Our gross profit margin is at a high level, although it is below our target. With 19%, the drop is because of the foreign exchange impact. Another issue that I believe is something that is a highlight for us is despite our net income decreasing year-on-year, our earnings per share, or EPS, has grown compared to -- comparing year-on-year, it's gone up 7.2%. And this has enabled us to pay dividends, higher dividends. And on the next page, you can see that our EPS has grown from THB 1.8 to -- THB 1.08 to THB 1.16. And our adjusted net profit has gone down by 3.1% despite that. And this is something that we are very happy with. We are able to provide that earnings to our shareholders, and it continues to remain at a constant rate, more or less constant rate. And on the next page, you can see that our sales is at THB 35 billion. The advantages here are if we do not include the foreign exchange impact, our sales have gone 0.7%, which is a strong momentum in the fourth quarter. Our gross profit is at 18.3%. This is mostly due to the tariffs -- the increase in tariffs as well as the higher selling prices in the fourth quarter in Europe. Our adjusted net profit is at THB -- adjusted operating profit is THB 1.65 billion. Operating profit margin is 4.7%, and our adjusted net profit has gone down 22.7% in the fourth quarter. And on the next page, we'd like to point out our track record in terms of consistent dividend payouts. Ever since we founded the company, we have been able to provide dividends, and our policy has been no less than 50%, and we have paid at this high level, ever since the founding of the company. From 2023 onwards, 2024, you can see that we have -- can pay -- continue to pay out higher and higher dividends. And in 2024, it was 0.66 and in 2025, it is 0.7. And in this year, we have already paid TWD 0.35 per share. And in the second half of this year, we will pay TWD 0.35 per share as well. The ex-dividend date is on the 2nd of March and the record date is on the 4th of March and the payment date is on the 24th of April. And that's all of the details regarding dividends. And the reason for our higher EPS is our share repurchase program, which today, we have repurchased about 10%, most recently, at the beginning on the 8th of January, we lowered our shares by 200 million shares. We have 400 million shares remaining. That is our last program, and we will be implementing that plan in the future. And here, you can see, as always, we continue to be awarded and receive recognition from various organizations. And we received the leadership award from the Thai government and also from the Stock Exchange of Thailand. And also our products have been recognized, whether it's ECOTWIST that we launched in the U.K., we received an award. It's a Packaging award in the past year that we are proud of. And another recent news that we're very proud of is our sustainability recognition. We have received ranking in the top 1% globally by S&P Global. So we're included in the S&P Global Sustainability Yearbook for 2026. And this is something that we continue to be a pioneer and leader in. We have been upgraded in terms of our ESG ratings by FTSE Russell ESG. The climate disclosure, we have been upgraded from B to A. And from the SET, Exchange of Thailand, we have been -- our rating has improved to AA in Agro & Food. And there are other awards and recognitions that you can see from the presentation. And as for the financial performance for the fourth quarter 2025, I would like to hand things over to LUDO to share those details with you. Ludovic Garnier: Thank you, Khun Thiraphong. Good morning, everyone. Very happy to be with you. I will start with our usual 5 years picture on the sales and the GP margin. The few takeaways for you are, we are extremely proud this year to achieve our best performance ever in terms of GP margin for the whole year, just below 19%. We're expecting to reach 19%. We are just below for the whole year. And you can see achieving this performance in such a volatile environment with the U.S. tariff and the FX playing against us, I think we can be very happy about that. Of course, we don't want to deny that over the past 2 quarters, we have been under pressure because of the U.S. tariff. You can clearly see that in our numbers. However, the full year performance is very encouraging, and I think this is something we have to acknowledge. The second one is, please have a look at the sales development quarter after quarter. For you to remember, we started Q1 with a decrease by 10%, mostly because of the FX, and then in Q2, minus 5%; Q3, minus 1% and almost stable in Q4. We are very close to be flat or even back to growth. But I think all of these are very encouraging KPI that we are looking for. If I deep dive on the FX impact, and you know the FX has been a very strong impact for us. You can see here, we have a small table. In Q4 alone, the USD versus Thai baht has been deteriorating by 5%. The same for the GBP by 2%. Euro has been the opposite way by 3%. So it's partially offsetting this impact. So we are facing even in Q4, some very strong FX impact compared to last year. And this is something we have to keep in mind, even if we do a lot of hedging, of course, we have our U.S. operations, which are affected by this one. And Khun Thiraphong mentioned this one. One of the issue is all our competitors in the countries around Thailand have been -- have not seen such an increase of their own local currency. okay? So we are one of the only one where the local currency has been strengthening so much versus USD over the year. So here a few things. What is important for me is the dark blue, okay? The dark blue is the organic growth. You can see now it's 2 quarters where the organic growth is positive. I think this is encouraging. If you look at the light blue also, this is the FX impact. And the good news is the FX impact is reducing quarter after quarter, okay? You can see in Q1, it was significant Q2 also, Q3 dropping a bit, and then Q4 now, it's almost nothing, but it's offsetting our organic growth in Q4. One good takeaway also from this slide is our volume growth, okay? We told you when we've been facing with the U.S. tariff in Q2, we have been facing one of the key question mark will be the reaction on the demand in the U.S. You can see here, we have been generating some volume growth consistently every quarter, every quarter. Of course, we have different pictures depending on the category, and Khun Kuan will elaborate on this one, but I think this is also a very encouraging signal for all of us. Next slide, you can see our raw material prices. I think, overall, it has been under control. This year, we have been facing a bit of inflation. You can see in Q4, we had $1,573 for Skipjack, increasing a bit compared to last year, but overall, within our comfort zone of $1,400 to $1,700. Shrimps also has been increasing overall quarter-on-quarter, but still an acceptable range. And the salmon also, I think, is also more steady compared to where it had been the years before. So I think we have been quite happy with the salmon development. You have also, for each of these raw materials, our assumption in terms of budget for the year '26, of course, what we provide is always the average for the whole year. You can have some ups and downs during the year depending on the quarters. But overall, we don't plan for very significant changes in terms of raw materials next year. In tuna, the same in salmon, the same in shrimps, okay? We do expect a bit of inflation, but nothing dramatic for the business. So next one is regarding the FX. And I think this is the most important slide that we do have. Of course, the deterioration of the USD versus Thai baht. I mentioned this one has been impacting our business. You can see in Q4, we are 32.2%. In Q1, it is deteriorating a bit further on this one. This is one of the key components of the performance, and it was quite far away from our budget assumptions for the year '25, which was much higher than this level. Euro, there were some ups and downs. Euro has been increasing over the past 2 quarters. So I think we're in a better shape here. GBP also has been deteriorating versus Thai baht. Japanese yen, I don't need to comment. We know it's very weak versus all currencies. If I now move to our net debt bridge, '24, '25. The first thing is our net debt has been increasing in '25 from THB 53 billion at the end of '24 to THB 61 billion, okay? Let me walk you through the key components of this one. First of all, the EBITDA, I think the EBITDA is quite aligned with our expectation, THB 12 billion, THB 13 billion. This is where we are usually. But then next to the EBITDA, you can see we have a big box, which is net working capital, increasing by THB 6 billion. That was kind of a surprise for us, especially in Q4. Our inventories, our AR have been increasing in Q4. A few drivers for that. First of all, the U.S. tariff now are inflating our inventories in the U.S. on average by 20%, 25%. In the U.S., we import a lot of product coming from Thailand, from Indonesia, but also from India. The average tariff rate that we have is something close between 20% to 25%, depending on the mix country. So this is one of the reasons. We have been facing also some good issues, a lot of orders in our U.S. Frozen business at the end of the year. So we built up a lot of inventories at the end of the year to face with this situation. Also, our sales in December were high. So our AR are also higher compared to what we have usually, okay? So the impact of all of this THB 26 billion over the full year. CapEx are under control. For you to remember, at the beginning of the year, the guidance for '25 was THB 4.5 billion to THB 5 billion. When we have been facing with the tariff, we have been reducing our guidance, we say we want to keep under control. And then after we have been loosening a bit the CapEx, okay? But still, we have been spending below our guidance for the full year. And you will see when Khun Thiraphong will talk about our guidance '26 for the CapEx, we are catching up a bit of CapEx, which have been delayed from '25 to the year '26. All the rest, tax, dividend is kind of normal. You can see, of course, on the right, we have also one box, which is very unusual, which is our treasury share buyback for THB 4.3 billion, which is the last program we have been doing in the year '25. So the consequence is our net debt to equity has been increasing. It was below 1 at the end of '24. It's 118, 118 at the end of 2025. There is one good news. The cost of debt has been decreasing, okay? It was 3.65% last year. In '25, it was 3.31%. Here, you can see the impact of the interest rates gradually reducing in the world. We have a clear action plan for '26. We are not happy with our cash performance in the year '25. So we have a clear action plan to improve and to generate more cash in '26 and especially to reduce our net working capital across all our locations, okay? I think we can understand '25 with the tariff, we had to build up a lot of inventories, but now the tariffs are becoming part of the routine. We have also some good news. You heard that India, the tariff for India are reducing from 50% to 19%. We do have a lot of inventories in the U.S. coming from India. So that will help us to decrease also our level of inventories next year. So you can see here the impact in terms of ratio, the inventory days. You can see here clearly the inventories in terms of absolute amount have been increasing by THB 4 billion. In terms of inventories, inventory days, we have been gaining 3 days, and the same roughly for our net working capital, okay? In terms of ratio, net debt-to-EBITDA, we are exceeding 5x, okay? We are not happy with that. And again, I mentioned to you that we have an action plan. The goal for us will be to reduce our net debt, and our net working capital during the year '26. We want to get back very close to 1.1, okay, by the end of 2026. And also in terms of net debt to EBITDA, right now, we are at 5. We want to go more in the territories of 4.5, 4.4x at the end of 2026. Very strong actions are expecting next year on that part. Now I move to the transformation program. You know about Sonar. You know about Tailwind. You know this is the end of the Sonar program. We told you it was a 2-year program, '24, '25. I think we are on track. We are slightly exceeding our target in terms of savings for the year 2025. We did achieve $20 million versus a target of $15 million. For you to remember, next year, we are planning to have even more savings because we have the full year annualized savings coming from this one. We did give you here some few initiatives we have been doing in Sonar, okay? One of the most important one for us was to move to one global non-fish procurement organization, okay? For you to remember before, our procurement organization was very fragmented by regions or even by companies or even by factories. Here, we moved to one global one, and we have been consolidating a lot of our purchase, okay, especially in terms of fees, in terms of olive oil. Now we are doing some purchases for the whole group. And of course, our bargaining power is much stronger. So we had some very interesting savings coming from that. You can see especially the impact in our Feed business, okay? Please stay for the TFM Analyst Meeting right after this meeting. There are a lot of good and exciting news to share with you. But you can see the performance has been really improving in '25. And clearly, Sonar is one component of that. For you to remember, our Feed business, the lead time is very short, okay? We have all our operations in Thailand. We are selling in Thailand. So you see directly the impact in our P&L. This is different for our Ambient and Frozen product where our factories are quite far away from our market. So we have very often 6 months lead time between the production, the transportation to the market, and then the sale to our customers. You have also a few examples of initiatives we've been doing in terms of production. We have been shifting some SKU across the factories from the U.S. to Africa. It's the first time that we have some -- our factories in Africa producing for the U.S. So we are becoming more agile, okay? And of course, we did all of this when we were facing the risk of 38%. Now that we're at 19%, of course, we don't need to do dramatic changes in our supply chain. However, I do believe that we became much more agile this year, okay? Our factories in Africa, especially at PFC in Ghana, they can source for the U.S. So for us, it's more one more interesting sourcing. We want to stay ready. Of course, the tariff situation is extremely volatile. Every morning, we are watching the news about what did they say in the U.S. There could be some positive news also, but we are careful also on that. Tailwind, Tailwind is a 3 years program. So there is one more year in 2026. Again, I think in terms of pure savings, we are on track. We slightly over deliver compared to our expectations. For you to remember, there is 3 work streams in this one, the commercial, the operation and the procurement. Also in this one, we are happy about the results, okay? Of course, for you to remember, we told you in '24, the combination of the 2 program will be a net negative, okay? The costs were higher than the savings in '24. In '25, we told you it's kind of a wash. We have kind of the same amount between the cost and the savings. '26, we would expect a different situation because, of course, the cost related to Sonar will almost disappear, but then all the savings will be here. So it will turn to be positive in '26, but we will still have some costs on the tailwind program. And then '27, we don't have any more all the transformation costs. And then we expect that we will maximize the profit on this one. Of course, all these savings are partially being offset by the inflation, okay? So you don't expect to see the savings directly floating in our bottom line. We have some inflation, the tariff also here. So you can see directly the $20 million in our bottom line. But overall, I think we are moving in the right direction. We told you also since last quarter that we did launch the cost reset program. And in fact, the cost reset is just a transition from Sonar, which was a very specific 2 years window to a continuous improvement. okay? Cost reset is some initiatives we have been launching on the COGS and on the SG&A. We started in the middle of the year to face with the U.S. tariff. And the idea is also to continue to slash our cost and to reduce our commercial cost, and our cost in the factories. We put here some few initiatives. Again, the cost reset is applicable across all our categories within the business. The target for '26 is around $60 million, 6-0. There is a part which is duplicated with Tailwind, okay? So we have $50 million, which is also in Tailwind. So if you want to focus only in -- on the cost reset, it's more in the range of $45 million. Again, that will help us to face with the inflation to face with the impact of the U.S. tariff. I think we have a lot of good initiatives going on right now for this one. This program, very clearly, we are capitalizing on Sonar, okay? I think through Sonar, we have been learning a methodology, which is not applicable for the whole group. And we just want to transition now to continuous improvement. We don't have any more the support from the consulting firm. We do it by ourselves, but we take it very seriously. And clearly, this is one of the key initiatives that the GLT is following within the group. I wanted to share also with you just one slide on the impact of tariff. So you can see here, of course, all our operations in the U.S. are being impacted by the tariff. Also, our operations in Thailand are also impacted because we do export a lot in the U.S. Pricing, we told you from the beginning, the strategy for us is to transfer the impact of the tariff to our customers and to the consumers. So far, we can see we could not do it across all our category, okay? Why? Because we have to watch out what our competitors are doing. We are not the only one, of course, in this market. Depending on the competitors, depending on the category, we are facing different situation. We are also monitoring what is happening in the other proteins, okay? So here, we cannot say the tariff go up by 20%. We just increased our prices by 20%. That will be too easy, okay? So we do some gradual increase. We did a bit in '25. We'll continue to do more in '26, but it will be gradual, okay? Quarter after quarter, we increase the prices to finally, at the end of the day, push everything to the consumers. One thing also you need to have in mind, and maybe it's not clear for everyone, the vast majority of our business in the U.S. is FOB, okay, meaning the buyer will take care of all the tariff impact. There is one exception, which is in our Frozen Thailand business, okay? In our Frozen Thailand business, we are DDP, okay, meaning we take care of the tariff basically, okay? So the impact for us, it will trigger an increase of our SG&A because of the tariff impact. And of course, we increase our prices, so our sales will increase, okay? So you will see that our GP margin is being inflated by the tariff impact in our Frozen business. That's why Khun Kuan will comment after a record high GP margin for our Frozen business. But our SG&A are also increasing coming from that, okay? So it's almost a wash in our OP margin, but you have a bit of inflation for these two. And of course, in the Ambient in the PetCare, as long as we are not able to transfer all the impact of the tariff to the customers, our GP margin is a bit under pressure. We have been trying to estimate just an estimate the negative impact on our OP for the full year '25, we estimate it's around THB 350 million, okay? It's not a small amount for you to remember, it's mostly Q4 and Q3. There was nothing before that time. That is a hit for us of around THB 350 million. Again, it's an estimate. It's very complex to have a detailed calculation, but it provides a good overview, I think, about where we are. One more thing also, and I think maybe we were not vocal enough during the year. We told you since the past 5 years that we have been very active now in our portfolio management. And we continue to do that in '25. And here, we -- I just wanted to give you an overview about a few divestments we have been doing in '25. We did not really talk about this one because the impact are very small. These were small businesses and very often, we sell very close to net book value. So you don't have any large gain or loss in our P&L. But we sold our shares in our factory we have in PNG in Papua, New Guinea. We sold our shares also in our supplement business in Q3. And the same for a small joint venture, who we are having in Thailand together with Interpharma. And finally, you heard the Feed business saying that they sold their factory in Pakistan. These are small things, but we told you from the past few years that now we are clearly addressing all the loss-making businesses, okay? There was one common point to all these businesses, they were all loss-making. Okay? So clearly, we are fixing them. We have less and less loss-making businesses within the group. I think it's a good thing, it's a good sign. We still have a few of them to be focused on, and we are working very actively on this one. But I think it's a good, it also avoids some distraction, okay? Even if sometimes the business are very small, it always creates some distractions of business, and we want to focus on what is having some impact. Finally, the last part for me. We just wanted to give you a heads-up regarding the top-up tax. It was a lot of triggering a lot of questions from your side all along the year. We told you last time the impact will be between THB 100 million and THB 150 million. Finally, it's THB 91 million, THB 91 million for the whole year. For you to remember, the impact for us is only in Thailand, okay? In Thailand, we have an effective tax rate, which is close to 10%, 10.5%. So we have to bridge the 15%. So we have a top-up tax, which is between 4% to 5%. And this is THB 91 million, you can see here. However, you can see that for '26, we expect the impact to be higher. And here, we expect the top of ETR impact to be around 1% to 2% and the amount to be again back in the range of THB 100 million and THB 150 million, okay? For you to remember, we are still waiting for some compensation from the Thai authorities. We know they are working on that. It takes time. At that stage, we have no visibility about when they will release anything, but we do expect at one stage, they will get back with some compensation measures, especially for the exporters business like we are. And now, I will give the head to Khun Kuan to go through the business performance. Pinyada Saengsakdaharn: Hello, everyone. For our business performance, as always, we're looking at it by category. In 2025, the company had sales of about THB 132.7 billion. This is mostly impacted by foreign exchange. And if we take a look in specific areas, just our sales volume, as Mr. Thiraphong told you earlier, we have a sales volume that has increased by 2.5%. And in the graph on the bottom slide, you can see our sales volume. They are driven by our Frozen and PetCare categories. In our gross profit margin numbers, this year, we have a record high gross profit margin at 19.8%. And in every category, we have gross profit margin numbers that are in line with our guidance that we provided earlier. Let's begin with a look at the fourth quarter in the Ambient category, our sales is at THB 15.67 billion going down around 2% year-on-year, and this is mostly due to the negative FX impact that led to lower average selling prices. However, if we take a look at the bottom left, you can see the sales volume in the fourth quarter for the Ambient category increased by 1.7% year-on-year. This is mostly because of increasing demand in Europe and the Americas and in Thailand. In terms of gross profit margin, it is at 18.4%, going down by 2.2% year-on-year. The reason -- the primary reason for the decline is the U.S. tariffs, which have led to increasing cost for us, while the prices -- our selling prices were not adjusted to cover those costs. And we were also impacted by the raw material prices for tuna, which increased by about 3% year-on-year. We have plans in place to deal with this risk because we have increased our prices for products in America and the American continent since the third quarter of last year. And in January of 2026, we also increased product prices to mitigate that risk that has led to a lowering margin. And for the full year for Ambient, our sales have gone down 6% year-on-year, and this is mainly due to the FX impact. The sales volume also went down by 2% year-on-year. In 2025, the company we -- our customers in the U.S. were waiting to see the situation regarding U.S. tariffs. Taking a look at our gross profit margin, you can see that our gross profit margin was able to achieve a level of 19.8%, and this is very close to our target range that we provided in our guidance of 20% to 22%. In the fourth quarter for the Frozen business, our sales was at about THB 12 billion, increasing 3.4% year-on-year, and this is due to sales volume increasing by 5.6%. Our sales volume that has increased is from the Feed business for the most part. And Thai Union Feed Mill will be providing more information on their business operations that have led to an all-time high. And the sales volume for the U.S., you can see that it is still soft due to the U.S. tariff impact. Nonetheless, we have a gross profit margin for the Frozen business that is the best ever. It's an all-time high, quarterly high at 14.5%. And this is thanks to our increasing selling prices in the U.S. and the costs were relatively stable. As our executive shared with you, the Frozen Thailand exports to the U.S., we have increasing SG&As because of the inco terms or the logistics terms, which are delivery, duty paid or DDP, where we had to absorb those freight costs. Our margins, however, continue to expand, and our Feed business has provided support in this regard. For the full year, in the past 5 years, we have had low range sales, but we have plans to remove the low-margin businesses as well as those companies that are not generating any profit. We informed you last year that our new baseline for the Frozen business will be at around THB 42 billion. And this year, we have a drop by about 2.5% due to the FX impact. Our sales volume for the Frozen business for the entire year increased by 7.6% year-on-year. And this is mostly due to the volume from the Feed business, which increased gross profit margin has also improved to an all-time high of 13.2%. As for our PetCare business, you can see that in the fourth quarter, we had sales at about THB 4.69 billion, increasing 1.4% year-on-year. If we take a look at the sales volume, it increased by 2.8% year-on-year. And the lowering sales opposed to the increasing volume is a result of the FX impact as well. In U.S. dollar terms alone, our sales have increased by 6.7% year-on-year, and this is due to improving volume in the market in the U.S. and in Europe. And the gross profit margin for the PetCare business is at 26.3%. And this is, we have exceeded the range that was provided 3 quarters in a row. And this is a reflection of strong operations. The PetCare results for the full year, our sales went up 2.8% year-on-year, driven by the increase in sales volume. If we take a look at the -- take a look at this in USD terms, PetCare increased by 9.2%, while the gross profit margin continued to be in line with the target range of 23% to 25%. And lastly, as for the sales for value-added in the fourth quarter, sales dropped by 9.2%. And this is mostly a result of demand in the U.S. market. Under the value-added category, the various products, there's a big mix, which include Ambient and Frozen value-added products as well as packaging ingredients, byproducts and also other products. When our sales decreased, it was mostly due to the value-added in Frozen sales, which reflected lowering demand in the U.S. Our gross profit margin for value-added went down to 21.8% and the full year performance for the value-added business went down by 9.5% year-on-year. It went down in every category, as I explained earlier, but the ingredient business has done quite well. And the gross profit margin for the value-added was also favorable at 25.4% for gross profit margin. This is higher than our market range. It's above the target guidance of 25%. I'd like to return the presentation to Mr. Thiraphong now. Thiraphong Chansiri: In 2025, we have reset our baseline, and it was a year for us where our sales went down. But in 2026, we expect to see growth -- a return to growth. And we had set a target for sales at 3% to 4%, and we expect growth in every category, especially high growth in the PetCare for ITL and also our Feed business from TFM. The sales growth will be mainly driven by higher volumes, not just the prices. And our assumption that we're using in 2026, the FX rate is at THB 32.5. This is based on the financial institutions, and we have not adjusted that number so far. Our gross profit margin, the guidance, we are committed to improving the gross profit margin to a level of about 20%. Our guidance is 19% to 20% for this year, and we expect that the margin will increase in the Ambient and Frozen and PetCare value-added. SG&A is at 13.5% to 14.5%. I feel that this is an appropriate level because we are at our branded businesses -- we've included our branded businesses, and we have our lower transformation costs, and we will not -- not in the transformation cost, in the Sonar function. CapEx is at THB 5.5 billion [indiscernible]. This is primarily due to increases primarily due to our projects that continue on from last year. We had a lower CapEx for last year, lower than our target. In addition, we are investing in other areas, such as the Feed Mill in Ecuador, which we have been recognizing CapEx numbers this year. We have an automated warehouse for PetCare as well, which has been completed, and we will see CapEx numbers regarding that as well. We have a new facility for Packaging, whether it's cans, Asia Pacific can, that's one of the businesses and also our printed materials, graphics, where we continue to invest. Our dividend policy remains at least 50% twice a year. And that is the guidance for 2026. Unknown Executive: Thank you very much for joining us today. We will now take a 10-minute break before TFM session again. Thank you very much. [Break] Unknown Executive: The Sonar cost which almost disappear, okay? And we expect roughly transformation cost to decrease by half. However, we do expect this positive impact to be offset by the negative impact coming from the full year impact of the U.S. tariff in the U.S. in our frozen business. That's why when you saw the guidance provided by Konrapong, it's almost a wash, okay? We keep the guidance quite close compared to what we have been doing in '25, decrease of our transformation cost, increase of the tariff impact. We want also to increase further our marketing expenses in our P&L. And that's why you see our guidance. We don't see any drastic improvement of our SG&A to sales compared to what we have been doing in '25. Pinyada Saengsakdaharn: Okay. Now we will have only one question from the online. Regarding the 400 million share repurchase in the first half of 2025, does management still intend to proceed with the planned capital reduction? Or is there any possibility of the reselling and treasury share to help reduce debt to equity in the range? Thiraphong Chansiri: Still have plans to reduce our cost. Nothing has changed. We still have 400 million more shares. If we're going to make any changes, we will inform you, of course. But at this moment, there is nothing -- no changes in our plans. Pinyada Saengsakdaharn: As there are no further questions, we will conclude today's session today. Thank you very much for joining us today. We will now take a 10-minute break before our TFM session again. Thank you very much. [Break] Pinyada Saengsakdaharn: And welcome to everyone for the results [indiscernible] the executives who are joining us today. Our CEO; and our CFO. And without further ado, I would like to ask our to go ahead and share the details of our performance results. Thiraphong Chansiri: Hello to all of the analysts and the investors joining us today. I would like to begin with our meeting. Slide shows that even though the Aquaculture industry in Thailand in the past has faced many challenges many areas, whether it's outbreak in shrimp raw material prices and the global economic uncertainty. The company have been able to maintain strong growth we have delivered performance that have are the best ever best of business too and at the business and we have been able to increase our market share and shrimp feed and fish feed was seen growth in Thailand and in our exports consists strategies in the past TM. We have adjusted in our strategy to include a [indiscernible] of 51% stake and AMG-TFM, which [indiscernible] area that has been Pakistan resulting in our [indiscernible] and this allows TFM to focus on our resources on main businesses and strong markets and to take advantage of PetCare growth [indiscernible] One of the symptoms that are commitment to ESG and sustainability TFM [indiscernible] and managing news to everyone. We have many projects in the lower carbon shrimp project, which helps farmers -- shrimp farmers to reduce their costs and to lower their greenhouse gas emissions from the farms. This is to improve the farming efficiency and effectiveness and to bolster their long-term competitiveness as well. TFM is the first animal feed producer in Asia that has been certified by ASC. It's the ASC Feed Standard [indiscernible] high level. And this reflects our leadership in sustainability and [indiscernible] feed. In addition, to this we had innovation it prevents which are [indiscernible] feed almost to have remain to reduce the last [indiscernible] and the [indiscernible] breaking apart. [indiscernible] sustainability and regain to receive the [indiscernible] in 2025 and it was a year 2025 was a great year for us and this re-emphasizes that TFM in the past with past ex-sustainability in a core front [indiscernible]. In the next line, we tried to talk [indiscernible] for 2025 [indiscernible] increased 4.5% fishes in business except for [indiscernible] animal feed [indiscernible] 16.2% [indiscernible] increasing 33.4% [indiscernible] 22.2%, which is higher than 2022, 18.7% and this is the result of shrimp cage [indiscernible] strong profitability [indiscernible] and raw materials management as well. Since the result on 2025 we had [indiscernible] which is 19% compared to last year. [indiscernible] to our strong business operation. [indiscernible] we have done a track record for gross profit and net profit in the past 2 years and they [indiscernible] gross margin and high-level of [indiscernible] and our net margin of 11.5% [indiscernible] in our business operation that continue on [indiscernible] trade industry and [indiscernible] TFM, were our shrimp feed on 2025 has increased from the [indiscernible] market share including OEM products this in '25, 7% to 8% [indiscernible] exports in Indonesia growing by 25.6% from the [indiscernible] and this is thanks to our increasing share [indiscernible] on shrimp feed -- quality shrimp feed together with providing technical support to the farmers sharing that with them. And this has allowed shrimp farmers to be more successful in the operations and lower costs. On the next slide, you can see the overall operations for the country. In Thailand, we are now going very well, been able to capture more market share in shrimp feed and fish feed. Thanks to our sales team and our technical support team. In Indonesia we faced [indiscernible] pricing in the fourth quarter. We, it was also, the issue of [indiscernible] activity and the shrimp and there also FX in the U.S. market and in the fourth quarter we had sales affecting our value chain and the strong business in Pakistan. We still have sales producing due to the [indiscernible] business model to OEM [indiscernible] 2024. Overall it is now [indiscernible] because it's the small business size [indiscernible] shares in AMG-TFM to throw the partners. In terms to exports to other countries, we are seeing increasing from the [indiscernible] and this is one of the main targets. We have a target [indiscernible] on our portfolio, [indiscernible] we also have new partners in other countries share that with you in the Q&A session. Our exports, we still see a lot of room for growth and a lot of opportunity for sales. Unknown Executive: This is about the dividend payout in the second half of the year for 2025. We announced THB 0.30 per share dividend has to be approved by the Annual Shareholders meeting first. The dividend pay is at 81.8%, which is higher than our policy guideline of no less than 50%. Record date is the 27th of February, and the payment date is the 21st of April. [indiscernible] and update on the employees that we have received in the past [indiscernible] our outstanding innovative. There was nothing innovative company [indiscernible]. This project that we were awarded from and something that we had shared [indiscernible] ever since 2024. We started that end of the year. We have been able to create [indiscernible] small sized [indiscernible] for young shrimp and this small is called [indiscernible] very small and we are the very first organization in Thailand to be able to do this. And this product helps both the production cost and the farming for the shrimp farmers pollution environment -- and this has led to us receiving this outstanding innovative company award. Let's take a look at the details in our performance for the fourth quarter, beginning with sales. Our sales is at THB 1.6 billion, growing year-on-year by 14.3%. You can remember right that this time last year, we said that in the fourth quarter of 2024, there was unusual season with low season 2024 instead of being a low season, that fourth quarter was a high season due to the prices of shrimp, which are very, very high, very, very strong. And even though we have that baseline in 2024, the high baseline, we're still growing 14.3% more. And this is mostly due to the results in Thailand and our exports because our Srilankan products recovered from flooding and we also have new customers from other countries as well. This growth is mostly from the shrimp feed together with the seabass feed. And our gross profit margin is at 22.3% and this has grown year-on-year as well and this is due to many reasons, whether it's raw material prices or the product mix has changed, this had the increasing shrimp feed contribution and SG&A. [indiscernible] has gone up [indiscernible] we have been able to [indiscernible] compared to last year, which was at 10.2%. And for the entire year, you can see, which we have been able to control our cost of sales. Usually, we take our customers -- if they achieve the targets, we take them for a trip and that increases our sales. But overall for the entire year, we have done quite well. There is one special item, which is the sales [indiscernible] TFM in the third quarter, we reported that impairment and in the fourth quarter, the actual sales took place, we had recorded another loss. Despite this doubtful debt due to the shrimp situation, whether it's outbreak. This is outbreak or radio activity in Indonesia to a high level of doubtful debt in the fourth quarter. Nonetheless, our profit margin reached the level of 11.2%, growing 22.1% year-on-year. If you wait and see the contribution from the different fields, shrimp feed has had 65.5% and increasing from [indiscernible] and shrimp feed goes to product [indiscernible] and this is the main source at the [indiscernible]. Once take a look at details on the different products of shrimp feed you can see and we have grown relatively well especially here in Thailand. The volume in Thailand, increasing volume in the fourth quarter by 26%. 26% thanks to the technical support and other measures we have taken. Shrimp prices are also at the level that the farmers are very happy with and you share after they have recovered in the third quarter from the disease outbreak in the first half of the year. They didn't had radiation issues and that led to a quick capture of shrimp, which affected their exports to America, which is their major export market. [indiscernible] month of last year, there was disruption in the value chain for Indonesia and the situation gradually improved. But the farmers they held back on shrimp raising and that led to an impact on our shrimp feed for Indonesia in the fourth quarter, but the situation is improving. In terms of our gross profit compared to last year, it improved and this is thanks to the raw material prices that have improved, especially in terms of soybean meal and fish meal, though the price has increased significantly in quarter 4. On to fish feed, we have seen growth in this respect as well. It's increased year-on-year by 6.7%. This is mainly due to the Seabass, which has grown 26.1% year-on-year. We have been #1 for Seabass feed for quite some time now, but we continue to grow and this -- for this feed compared to our competitiveness. And we are seeing -- and we have consistent quality and for other fish feed, the categories have declined a bit due to many reasons that gourami fish had disease outbreak and the market size decreased. This too working with the farmers to deal with this issue. And we have someapnea fish also risk for [indiscernible] for different kinds of fish and these are reasons credit concerns and this is reason for a decline in that fish feed other fish feed. We continue to work in this area. We've been working for several years now, but we are happy with the formulation and we're going to implement sales promotions to hopefully lead to increasing sales in other fish feed. And our livestock feed, this is a small contribution to our sales, but if you take a look at the volume, volume has increased and this is because of the lowering sales price. This is in line with the raw material prices. The margin is still at a very satisfactory level, and we will continue with this here, the net profit bridge, we've seen an improvement from THB 151 million in the fourth quarter, THB 151 million in the fourth quarter of 2024 have a stronger since we have a stronger margin due to many reasons. So, SG&A in absolute terms increased, but we have been able to control our costs quite well. And there are a few problems with the doubtful debt. And in Indonesia, they are working on resolving that issue. They are following up on debt that resulted from the radiation and disease outbreak. And AMG-TFG had disposals with feed. We also had that and we have taxes, which have improved and thanks to the [indiscernible] benefits, which we regained in the end of August and this is the summary of [indiscernible] this year that's very similar to the year before. We have been able to have a greater [indiscernible] that is strong and we [indiscernible] and the majority that you see here is that [indiscernible] projects and we renowned shrimp the factory and then [indiscernible] factory and also [indiscernible] dividend payment, which doesn't improved the addition that is [indiscernible] per share. We have a low debt level. These ratios are the cash conversion ratio. And we are very happy with the numbers. The cash conversion cycle is at about 35%, dropping a bit from the quarter before and interest-bearing debt to equity is still at a very low level at 0.09. And I'd like to hand this back to Mr. Peerasak. Peerasak Boonmechote: As for the outlook for this year, we expect sales and we expect continuous growth at 8% to 10% and be main driver for be this [indiscernible] in Shrimp feed and fish feed here in Thailand who see a lot of [indiscernible] and who see a lot of in [indiscernible] opportunities. This profit is at 18% to 20% and this is thanks to our [indiscernible] to maintain quality production and our portfolio on fish focuses on [indiscernible] products. SG&A remains the same [indiscernible] CapEx is [indiscernible] and this is from our new [indiscernible] Ecuador. Hence will be informed the [indiscernible] for operational developments going on [indiscernible] Indonesia. Thank you to our executives, we are at the presentation and has anyone has questions [indiscernible] participants. Unknown Analyst: I like to ask about Ecuador. First of all, Ecuador in the Group, are they important to certain producers? Ecuador has a very large shrimp market and one of the biggest in the world. Our entrance into that market, is it due to the fact that we already have customers or have we been invited into the market? Because I understand that the market there is quite large. You're investing THB 680 million and the capacity you would increase 80%. Is it going to be a construction phase by phase or will be all at once? Peerasak Boonmechote: Let's take it question by question. Of course, the investment in Ecuador is in accordance with our road map. If the analysts and investors would be remembering, if you've been following at the news we shared our road map all the way to 2030. The organic growth, we're expecting organic growth of 8% to 10% yearly and joint ventures to up to THB 10 billion in the past few years. That's we have been sharing with you and the road map that we've made for ourselves, we are on track. In terms of opportunity while we looking at Ecuador -- it's because of the market size and the production yield. Ecuador has a 1.5 million tonnes shrimp farmings. They are growing over 10% every year and if we apply with the conversion rate -- conversion ratio, the numbers are very large. And that is why TFM was looking at this market as a great potential of opportunity. At the investment size is about the same that we had been driven 80% is for the production that can grow end to end and [indiscernible] continue to produce at 80% of the market. Second question is about relationship with partners. There are opportunities and risks, of course we're looking at is the partners. It's just like our investment with [indiscernible] in India. Our partners in Ecuador have great networks. And our partner has not just the network, but also the volume, the value. I don't want to share too much detail yet. But we do have a partner that is directly involved in the industry and also has a supply chain network that is very strong. And I think that's all I can share with you about that. In Ecuador, the shrimp farmers, you have your ASC certification. In Ecuador, they are certified as well because their largest export market is the U.S. And the shrimp that they export is world class at a world-class level. Its players to America or China or Europe, and they have tax benefits, benefit in terms of various barriers. They have all the certification. Unknown Analyst: And the margin compared to us -- the gross margin, the average is not different? Peerasak Boonmechote: Not that different, it depends on the situation. The margin was affected by many different things. It's the portfolio, the product mix, the raw material costs, the factory management, the debt that we believe is quite similar. Unknown Analyst: You said 18% to 20% for the gross profit margin in your guidance compared to last year. I know that last year was a special year. The assumption that you're using, what's the assumption for fish meal and the soybean meal? Why are you able to achieve 18% to 20% for gross profit margin? Peerasak Boonmechote: The first quarter is a low season. We adjust our guidance every quarter, but this is standard and it depends on the real-time performance as long. Some raw materials increase prices, some raw materials decrease, they offset one another. So our costs are relatively stable [indiscernible] in the first quarter, it's a low season and will peak in the second and third and fourth quarters. Unknown Analyst: That means that the margin is according to your guidance, right? In the second third and fourth quarter, you'll adjust -- so how -- what is the outlook for the first quarter. Peerasak Boonmechote: For the first quarter will be a low season relative to the [indiscernible] end of the year to the gross profit. There's a small volume. The volume increases in the following quarters, the gross profit will increase. The main variable is the prices of the fish meal, which is on an upward trend. It may not increase as high as in the fourth quarter as we saw earlier. Other raw material prices are not changing that much. Unknown Analyst: You look at low season, right? We're looking at a decrease in the prices the profit for the first quarter year-on-year, what do you expect? Peerasak Boonmechote: We expect growth in line with our guidance. Pinyada Saengsakdaharn: Are there any other questions? Unknown Analyst: Look at production [indiscernible] what percentage do you expect total capacity in Ecuador. Peerasak Boonmechote: Looking at 8% to 10% [Technical Difficulty] would like to update as the [indiscernible] 2026. The strategies for this year was indicated before we are looking at 8% to 10% growth. Last year was an average of 12% to 15%. We will continue to grow this year as well. We will grow in the high margin products. Our shrimp feed share in Thailand production is not increasing towards 250,000, that's flat. Since this year to be about 250,000 as well. We're looking at about 320,000 [indiscernible] for our shrimp [indiscernible] market share, means we have to increase our shrimp feed with care. Despite the fact that shrimp feed is not increasing overall. We will capture more of the market share. Seabass feed is about [indiscernible] we will continue to [indiscernible] to achieve in that area. We will include our market share and seafood, Seabass feed and we want 10% to 15% and is our final destination and for exports. There are many things for us to consider and we will talk more about that in the second quarter. We will be able to provide a better picture for the [indiscernible] we have many countries. [indiscernible] portfolio whether shrimp feed or fish feed, [indiscernible] every portfolio for us is growing. We are looking to move to focus on sustainability and on innovation in line with our scientific and our world class businesses [indiscernible] the entire group, so that our globe rate [indiscernible]. More concerned about our sustainability [indiscernible] communication to farmers and [indiscernible]. In the next quarter and we are taking more action [indiscernible] with the farmers and we are working [indiscernible] demand, the supply chain and we are wondering well our [indiscernible] in the various reasons and to help the farmers and [indiscernible] we work closer with the farmers. That is our key pillar because we want the farmers to be confident in us to help them build the market. If the farmers can grow and the exports can grow, the supply chain can grow. Therefore, we have to make sure that everything in terms of the farmers in the country are strong. This will support our portfolio. And our investors in Ecuador [indiscernible] is another pillar for us. This is depending with SKUs for abroad looking at risk management. Everything is according to our road map. We are still on track, [indiscernible] the road map that we shared with you a few years before. We want to achieve our 2030 targets, and that is our game plan. Unknown Analyst: In the past 2 years, your dividend payout was quite high. It was 100% and then 80%. And after this, you have projects where you will be using -- you need a lot of funding. So how will -- what will your dividend payout look like? Thiraphong Chansiri: We'll have to balance investment and dividend payout, of course, but we will not be lowering our dividends lower than 50%. Of course, it will not be lower than 50%, even though we're going to be investing for the future. We will continue to follow our policy of no less than 50% dividend payout. Unknown Analyst: I'd like to ask about the target market share, especially for the market share for the shrimp business for 2024 and 2025, 2026, [indiscernible] Seabass for 2024, which are 38%, 45% is still in 2025 [indiscernible]? Peerasak Boonmechote: [indiscernible] in 2024 was only 7%, [indiscernible] expect growth every year. The size and the productivity in Thailand is not increasing and for shrimp feed we continue to see growth in the past few years, we had that. In 2024, the market share was about 27%, if I remember correctly. Have 16% [indiscernible] A challenge to increase to 120,000 tonnes overall sea sales in Thailand is 250,000 tonnes. We want to provide about 120,000 tonnes that [indiscernible] that's how we're going to drive the margin for our seabass feed and shrimp feed together with our portfolio management for our foreign investments or for our foreign clients and our exports and we will continue to engage with the farmers. We had our BOI investment last year. The game plan for this year is to use our production capacity and we will increase production without having to invest more in production. We already did so in the year before. If we have a product mix -- a favorable product mix, and we can continue to grow in shrimp feed and fish feed, we will have more volume in the freshwater fish. Our capacity will be able to maximize the utilization of our capacity. So overhead, of course, will go down. And the overall cost will reduce. The keyword for us is to maintain the level of SG&A. Selling prices are not changing and this will allow us to achieve our target. That is the game plan that I like to share with you. Pinyada Saengsakdaharn: Are there any other questions? We have no aligned question. [indiscernible] for 2026, this will transfer the prices. Raw material prices, as we indicated before, the fish price is increasing. We continue to monitor weekly and [indiscernible] soybean meal and wheat flour prices are stable, and we also continue to keep an eye on these two. We try to lock in the prices 3 to 6 months in advance so that we can control raw material costs at a manageable level. We're not hoping to buy at the cheapest price, but at a price that is acceptable to our operations. As there are no further questions, this is [indiscernible] for 2025 and 2026. So for today, we would like to conclude this session. Thank you for joining us. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Greetings, ladies and gentlemen. Welcome to the Vesta Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce your host, Fernanda Bettinger, Investor Relations Officer. Please go ahead. Fernanda Bettinger: Good morning, everyone, and welcome to our review of the fourth quarter 2025 earnings results. Presenting today with me is Lorenzo Dominique Berho, Chief Executive Officer; and Juan Sottil, our Chief Financial Officer. The earnings release detailing our fourth quarter 2025 results was released yesterday after market closed and is available on Vesta's IR website, along with our supplemental package. It's important to note that on today's call, management remarks and answers to your questions may contain forward-looking statements. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ. For more information on these risk factors, please review our public filings. Vesta assumes no obligation to update any forward-looking statements in the future. Additionally, note that all figures were prepared in accordance with IFRS, which differs in certain significant respects from U.S. GAAP. All information should be read in conjunction with and is qualified in its entirety by reference to our financial statements, including the notes thereto and are stated in U.S. dollars, unless otherwise noted. I'll now turn the call over to Lorenzo Berho. Lorenzo Dominique Berho Carranza: Good morning, everyone, and thank you for joining us. 2025 was a year of disciplined execution and strategic positioning for Vesta. We strengthened our platform advance, Route 2030 on schedule and made decisive decisions, which enabled Vesta to capture what we believe will be a powerful demand cycle beginning in 2026 and accelerating into 2027. Early in the year, uncertainty slowed decision-making, but we stayed focused on operational discipline. During the year, our conviction to opportunistically deepen Vesta's presence in Mexico's most dynamic markets, specifically Mexico City, Guadalajara and Monterrey has proven decisive. The strategic steps we implemented throughout 2025 have materially strengthened Vesta's portfolio and positioned us to outperform. Throughout this transition, our focus did not change. We remain disciplined in capital allocation, selective in development and stay close to our clients while adapting with agility to capture unique opportunities as market conditions evolve. This defines Vesta, long-term strategic clarity with the operational flexibility required to perform across cycles. We're not building for 1 quarter. We're building for the long term. And in 2025, we set our sights on the next cycle with improved visibility by the end of 2025. We're seeing momentum return, particularly in the second half when leasing activity accelerated. We saw roughly 1.4 million square feet in new leasing during the second half of the year compared to 0.5 million square feet during the first semester. This reinforces our view that the market has likely reached a turning point. Vesta also delivered solid financial results for the full year 2025, which Juan will touch upon in more detail. We exceeded guidance with rental revenues increasing 11.8% to reach $274 million, while adjusted full year 2025 NOI margin reached 94.8% and adjusted EBITDA margin reached 84.4%. Vesta FFO totaled $174.9 million in 2025, a 9.2% year-on-year increase. Let me share an overview of leasing and portfolio fundamentals in 2025. As I noted, leasing activity strengthened substantially in the second half of the year. Full year leasing activity reached 6.9 million square feet with a weighted average lease term of 7 years, which includes 1.9 million square feet in new leases and $5.0 million in lease renewals, representing the highest level of renewals recorded over the last 3 years. During 2025, renewals and re-leasing activity reached 5.4 million square feet with a trailing 12-month weighted average leasing spread of 10.8%. Importantly, manufacturing returned with conviction in 2025. 86% of Vesta's new leases were manufacturing-related with electronics leading this activity. I have commented previously that Mexico has overtaken China as the largest exporter of electrical and electronic equipment to the United States. And we are seeing that reflected directly in our leasing pipeline. This represents a notable shift from prior years when e-commerce was the dominant driver. Today, we're benefiting from dual engines of demand, the resilient logistics and e-commerce space, combined with a powerful resurgence in advanced manufacturing. AI-driven infrastructure is becoming an important structural demand driver for Vesta. Data center expansions in the U.S. has translated into real manufacturing demand for related peripheral equipment. This includes producers of HVAC systems, racking, tabling and microchip-related assembly. Guadalajara continues to benefit from these structural trends with sustained demand from global manufacturing tenants. Existing clients, including Foxconn, are actively expanding their footprint, reinforcing the market strategic importance within our portfolio. From a development standpoint, we invested approximately $330 million in projects during the year on a cash flow basis. These investments are directly aligned with our Route 2030 strategy and our focus on high conviction markets where we see sustained absorption. Turning to our fourth quarter results. Leasing activity reached 1.9 million square feet, including 770,000 square feet of new leases with both existing and new Vesta tenants across the electronics, aerospace and automotive sectors, reflecting the improving market dynamics I discussed. Lease renewals totaled 1.2 million square feet with a weighted average lease term of approximately 5 years. Total portfolio occupancy stood at 89.7% at quarter end, while stabilized and same-store occupancy reached 93.6% and 95%, respectively. We began construction on 2 new buildings during the quarter, one inventory building in Guadalajara and one build-to-suit in Queretaro. We ended the quarter with 800,000 square feet under construction with an estimated investment of approximately $60 million and an expected yield on cost of 9.9%. Let me walk you through leasing momentum and share insight on market dynamics across our regions. Occupancy moderated in certain submarkets due to normal tenant rotation and isolated shutdowns during the year. This is not a structural shift. It's part of the normal rotation of tenants in a dynamic market. Vacancy levels remain healthy, and we're already seeing strong backfill activity, including assets with multiple bidders. The Monterrey market continues to stand out with leasing momentum building in this high demand market, and we expect a continued increase during 2026. Vesta Park Apodaca, which was completed in the third quarter of this year, is now in active marketing. Three state-of-the-art buildings are drawing strong interest, particularly from advanced manufacturing and logistics tenants. And as a related update, the Vesta Park Apodaca Building 8 was awarded first place in the GRI Global Awards 2025 Industrial & Logistics Project of the Year category. The award is considered one of the global real estate industry's highest distinctions, recognizing the most visionary projects and companies worldwide for excellence in design, sustainability, innovation and contribution to the urban environment. Also in Monterrey, infrastructure is scheduled to begin in the first half of 2026 on the 330 acres we acquired in the high-demand Airport Highway corridor as announced in October. Ciudad Juarez reached what we described last quarter as an inflection point. Activity has strengthened, interest from electronics and supply chain integration tenants is robust. This market experienced the cyclical adjustments throughout 2025 that I described, but the fundamentals remain intact. Tijuana has stabilized, and we are seeing constructive tenant dialogue, including notable leasing activity with global companies during the fourth quarter. It's important to mention we continue seeing rents increasing across our markets, supported by disciplined supply. Guadalajara remains a structural leader for Vesta, and we are seeing a growing number of high-tech electronics companies seeking large-scale projects. Many are leveraging the strong ecosystem that has developed in the region, including specialized talent, established supply chains and existing industry clusters. This continued momentum reinforces Guadalajara's position as the leading technology and advanced manufacturing hub in Mexico, often referred to as the Silicon Valley of Mexico. Guadalajara also benefits from the manufacturing support data centers and AI demand, which I have described. Mexico City continues to benefit from its scale, consumption base and logistics importance. We're actively engaged in discussions with major players, particularly in the logistics sector. Our project in the Vesta Park Punta Norte ramp up to become the largest cross-docking operation in Latin America of all e-commerce players in the region. Turning to capital allocation. In 2025, we secured strategic land positions at attractive terms during periods of market uncertainty in 2025. These acquisitions will support the next 4 years of Route 2030 execution. We are 2 years into our 6-year Route 2030 plan and are ahead of schedule in terms of capital deployment. That said, Vesta's growth will continue to be prudent and measured. As always, our development pace in 2026 will be calibrated carefully to demand and absorption levels in each market. We're clearly optimistic, but we remain disciplined. Protecting long-term returns is not negotiable. Our balance sheet remains strong, liquidity is solid and leverage metrics are trending as expected. In closing, 2025 marked a transition year. While the environment required patience early on, the broader macro backdrop is increasingly constructive as we look toward a renewed acceleration in demand. Mexico's fundamentals remain compelling. According to preliminary data from INEGI, exports grew 7.6% year-over-year to approximately $664.8 billion, marking a second consecutive year in which trade served as a key engine of economic growth. Meanwhile, imports also reached record levels, rising 4.4% to over $664 billion. These figures underscore the scale, depth and resilience of Mexico's integration within North American supply chains. Despite uncertainty, this integration into North American trade flows supports sustained export momentum into the U.S., validating Mexico's role as a strategic manufacturing and logistics hub. Top-tier global companies continue to view Mexico as a critical platform for serving North American demand. Foreign direct investment and exports reached record levels in 2025, while cumulative foreign direct investment inflows through the third quarter running 10.9% above full year 2024, reinforcing the structural drivers of growth that underpin Mexico in general and Vesta's market in particular. Setting our Route 2030 strategy in 2024 and executing with precision in 2025 has been fundamental to positioning Vesta for 2026 and beyond. We're beginning to see the benefits of those decisions translate into stronger fundamentals, and we are confident that this momentum will continue to drive growth, underpinned by structural tailwinds, reinforcing our confidence in the long-term opportunity ahead. Our optimism is grounded in discipline. Even in the context of high occupancy and solid demand, we remain rigorous in how we allocate capital and underwrite new developments. We are closely monitoring supply pipelines and vacancy trends in each of our core markets, ensuring that growth remains balanced and value accretive. With that, let me pass the conversation to Juan. Juan Felipe Sottil Achuttegui: Thank you, Lorenzo. Good day, everyone. Vesta closed the year with very solid financial results, as Lorenzo noted. Our total rental income increased to $283.2 million, while rental revenues reached $273.6 million, an 11.8% year-on-year increase and exceeding the upper end of our full year revenue guidance of 10% to 11%. Adjusted NOI margin exceeded our revised guidance of 94.5%, reaching 94.8%, while adjusted EBITDA margin was in line with our guidance at 84.4%. Vesta's FFO ended 2025 at $174.9 million, a 9.2% increase compared to $160.1 million in 2024. Now let me walk you through our fourth quarter results. Starting with our top line, total revenues were up 17.2% year-over-year, reaching $76.4 million, primarily driven by rental income from new leases and inflationary adjustments across our rental portfolio. As for our current mix, 89.9% of our fourth quarter 2025 rental revenues were denominated in U.S. dollars, up from 88.7% in the fourth quarter 2024. Turning to profitability. Adjusted net operating income increased 17.2% to $69.4 million. Our adjusted NOI margin remained strong at 94.6%, up 88 basis points from the prior year, reflecting higher revenue growth with stable cost. Adjusted EBITDA totaled $61.1 million, an 18.2% increase year-over-year with a margin expansion of 155 basis points to 83.3%, driven by a lower proportion of administrative expenses relative to revenue during the fourth quarter 2025. Vesta FFO excluding current tax was $39.3 million compared to $41.1 million in the fourth quarter 2024. The decrease was primarily due to higher interest expense in the fourth quarter of 2025 compared to the same period of 2024. We closed the quarter with pretax income of $98.5 million compared to $81.2 million in 2024. This increase was primarily due to higher gains on revaluation of investment properties as well as a positive variance in exchange gains and higher interest income. This was partially offset by higher interest expense, reflecting the increase in debt balance during the period. Turning to our capital structure and balance sheet. We ended the year with $337 million in cash and cash equivalents and total debt of $1.28 billion. Net debt-to-EBITDA was 4.4x, and our loan-to-value ratio was 28.1%. Subsequent to quarter's end on February, we prepaid the remaining Metlife III facility of $118 million. This repayment leaves us with no secured debt, enhancing our financial flexibility and completing our transition to a fully unsecured capital structure. In terms of capital allocation, during 2025, we strengthened our land reserves, positioning us well to capture future development opportunity, as Lauren discussed. Looking ahead, we will maintain our disciplined investment approach, deploying capital selectively in markets where we see strong demand fundamentals. Our share repurchase program also remains a key pillar of our capital allocation strategy. We will continue to execute opportunistically as we have done successfully in the past with the objective of maximizing long-term shareholder value. Moreover, consistent with our balanced capital allocation approach on January 15, 2026, we paid a cash dividend for the fourth quarter of $0.38 per ordinary share. Finally, I would like to discuss the outlook for the year. We are expecting to increase rental revenues between 10% to 11% year-on-year, while we expect to achieve 93.5% adjusted NOI margin and 83% adjusted EBITDA margin for the full year 2026. This concludes our fourth quarter 2025 review. Operator, could you please open the floor for questions. Operator: [Operator Instructions] Your first question comes from the line of Juan Ponce of Bradesco BBI. Juan Ponce: It was interesting to see that 86% of 2025 leases were manufacturing related, which seems to be imperative. So in a scenario where the USMCA review does not reach an agreement in 2026 and transitions into annual reviews, how resilient is your current development pipeline under that environment? And specifically, how confident are you in leasing ongoing projects in Guadalajara and Queretaro if trade visibility becomes more limited? Lorenzo Dominique Berho Carranza: Juan, thank you very much for being on today's call. Well, we have experienced uncertainty regarding trade for the last years. And that has been not only seen in industries like -- in markets -- in industry like ours, but also other corporates, in other industries and even in other regions of the world are facing similar challenges, whereas the manufacturing footprint -- the global manufacturing footprint is adjusting and adapting. We believe that Mexico has invested for many years, maybe since NAFTA to establish a more integrated supply chain in North America together with U.S., Canada. But in the end, I think that, that will continue thriving on top of whatever negotiations might take place regarding revisions of the USMCA, different scenarios. I think it's more about the strong supplier base that Mexico has actually very -- for different manufacturing industries and how important and how well linked it is to the U.S. Guadalajara is an excellent example of how the electronics sector has evolved, has been growing rapidly, and it's actually a good signal how the global manufacturing footprint for electronics is moving. And I think for that reason, we are very optimistic. That's why we started new buildings. We have a strong pipeline building up in Guadalajara. And eventually, actually, we have acquired more land for future projects. So we're very optimistic. We think these are long-term investments. Many of these global companies continue to have strong bets on Mexico. And for that reason, we see a positive trend. Very similar to Queretaro where actually we have seen, in this case, the auto sector very active in renewals and also very active in looking for new space, pipeline building up. Aerospace sector, a similar case where many European companies have established long-term operations. We just expanded another operation with the Safran Group out of France. And this is another important case and good signal how committed global companies are to Mexico. Maybe just on the lease-up stage, we're confident that there's a stronger pipeline. We have available space that has been currently -- recently developed in Monterrey, for example, where we have -- where we developed the last buildings of the Apodaca project and pipeline is building up well in different industries, logistics, e-commerce, manufacturing. So I'm pretty sure that 2026 is going to be a very successful year and leasing will continue the same trend that we have seen, particularly in the last half of 2025. Operator: Next question comes from the line of Andre Mazini. André Mazini: Two questions. The first one on leasing in recently completed development projects. How much was executed in the quarter and in the year? And how much is baked into 2026? So another way of asking, what's the occupancy of the stuff to deliver in 2025 you expect in 2026? Maybe that's another way of asking that. And the second one is about the huge land bank acquisition in Monterrey. Almost no land there last quarter. Now it's the biggest single region, right, in which you guys have land. Is that land all paid in cash? Is it paid in cash and land swaps as well in which the landowners end up having a portion of the project? So how is kind of the payment, the consideration there for this huge land bank acquisition that you guys had in Monterrey? And congrats for that acquisition. Lorenzo Dominique Berho Carranza: [Foreign Language] Andre, and thank you very much for being on the call. I will start with your second question. Yes, last quarter, we were able to buy after a long negotiation, a strategic land parcel. This is in Apodaca corridor right next to the airport. The initial phase is 330 acres. So this matches perfectly to our long-term strategy in what we -- in the largest industrial market in Mexico where we will continue to grow. We will have -- the most part of the capital deployment towards 2030 will be Monterrey, and this is going to be a cornerstone project for the 2030 Route. The Apodaca corridor has been fantastic for companies in the e-commerce sector. It's a great logistic corridor, but also manufacturing continues to expand in the area. The area has good access to the main corridors towards the U.S., good access to the city. It actually has a good infrastructure in terms of energy, which is very helpful. And maybe just -- the only thing we can say about the transaction is that the payment was not done all at once. We got seller financing, which is helpful for a development project and for the whole -- for the development process. And eventually, we also have conditions to extend the land for a second phase. So we're very excited, and we will be more than happy to welcome you soon when we kick off the construction of this new site. Regarding your first question on leasing, well, current -- remember that our main focus is stabilized portfolio occupancy, which currently stands at 93.8%, I believe, a little bit lower than 95%. Definitely, the occupancy number is a little bit lower than before. We were coming from record high numbers. But what we feel confident is that most of our buildings are actually brand new, and we have seen that demand interest coming from outstanding companies. So we're very happy that the buildings are there and the demand is coming along. So I'm pretty sure that Queretaro and Monterrey will be very successful projects, and we're confident that this will lease up well throughout 2026. Remember that another important thing is that we grow with existing clients. So we're in close contact with them in order to be able to grow with them. So hopefully, we can continue expanding our relationships. But more importantly is that we will continue with the discipline of having outstanding companies. strong credit rating companies, long-term leases, well balanced between e-commerce, logistics, manufacturing sectors. So that discipline will prevail. And hopefully, we can start getting some good results soon. Thank you, Andre. Operator: Question comes from the line of Jorel Guilloty of Goldman Sachs. Wilfredo Jorel Guilloty: I have 2. So first one on your guidance. I just wanted to get a sense of what the occupancy expectations are embedded in this guidance. And also if it envisions any more development launches going forward? And then the second question, I'm sorry if you answered this earlier, I wanted to get a sense of the income tax expense for the quarter. It was around $36 million or so if I remember correctly. I wanted to understand what drove this and what we should expect tax-wise going forward? Juan Felipe Sottil Achuttegui: Sure. Let me answer the second one briefly. It is related to the appreciation of the peso. As you know, that generates some significant profit from our debt, which is incurred in dollars, and that accounts for most of the income tax impact that we saw on the income statement. As the peso stabilizes, starting with a very low peso-dollar exchange rate closed at the end of the year, I think that will be eliminated in 2026. As for the first question? Lorenzo Dominique Berho Carranza: Sure. We don't give any guidance on occupancy numbers, Jorel. However, if you see the trend on the occupancy towards the last quarter's years and having an understanding on the lease-up activity, we definitely think that even that it's a lower number, we are confident that, that number will somehow pick up throughout the year. We think it's a healthy number and understanding that we're a development company, we have a strong stabilized portfolio that generates important income. But also we have anticipated with good buildings on a spec basis that I'm pretty sure that we will continue to lease up throughout the year and that occupancy will improve. We have been in cycles like this one, and we have outperformed and benefited from anticipating through -- on the development front. So we're confident that being proactive on the asset management part is going to help us. Secondly, we think even that last year was started as a slower leasing activity, we have seen rents actually have increased in the year, some markets more than others. However, all of them with positive trends. So as long as we continue to see demand excelling throughout 2026, and we see that rents continue to be increasing, I think that we will benefit from that and take advantage and eventually be able to have better occupancy, better rental revenue and also have a positive impact in our -- eventually net asset value from having good tenants inside of our buildings. Wilfredo Jorel Guilloty: And a quick follow-up on the guidance, does it envision more launches, more developments going forward? Or is it just envisioning your company as it is today? Lorenzo Dominique Berho Carranza: That's a good point, Jorel, regarding development. Well, again, without the guidance, we don't give guidance specific on CapEx as well as development and other numbers. But what we can say is that we prepare -- we presented the 2030 Route in 2024, which we have been executing successfully. We -- 2025 was very important to secure land as the one I mentioned in Monterrey, but also in Mexico City, but also in Guadalajara and in other markets. So that land has to be still developed. We think that as long as we continue to see in a disciplined way, more demand in certain markets and where we can start leasing up, we will definitely like to start construction soon. So 2025 -- 2026 will be a year where we will start construction on the land that we have acquired and follow through our 2030 Route. And hopefully, we can be able to develop build-to-suit, spec buildings and eventually be able to replicate the success that we have had in Vesta Park projects such as the ones in Guadalajara, in Apodaca, Tijuana, Ciudad Juarez, Mexico City. So it's another cycle. We're entering a different stage. We're optimistic on 2026 and 2027. For that reason, I think that CapEx will continue to be important as well as development starts. Operator: Your next question comes from the line of Enrique Cantu of GBM. Enrique Cantu Garza: Congrats on the results. I just have one question on your revenue growth guidance. What are the main drivers behind that outlook? Is it primarily additional GLA from developments, rent increases or higher occupancy from leasing vacant space? Juan Felipe Sottil Achuttegui: Look, the guidance -- as you know, guidance, we make the guidance very carefully. We are assuming taking into account the buildings that we leased up until December that will begin paying rent on the -- beginning in the first months of 2026 as well as the stabilization of the buildings that we have unoccupied where we have a strong pipeline, and I think there were significant tenants coming up on -- starting on the first quarter. So taking that into account, we feel confident to give you the guidance that we give you now. I think that 2026 is a promising year. I think that we have a strong pipeline. I think that we're well advanced in talking to potential clients, and we are very optimistic indeed. Enrique Cantu Garza: Perfect. Lorenzo Dominique Berho Carranza: I would add that we have also been able to renew leases and get mark-to-market rents that has been on the existing portfolio that has been -- we have been very successful. So the existing portfolio is not only the mark-to-market on renewals, but also year-over-year. Remember that our leases are indexed to inflation. So the combination of existing leases at each anniversary indexed to inflation plus mark-to-market on certain contracts, plus our ability to lease up vacant building together with new development, all combined is part of how we forecast revenue growth and therefore, guidance. Operator: Your next question comes from line of Gordon Lee. Gordon Lee: A question a little bit more on the operating side, Lorenzo. I was wondering, if you look at some of the northern markets, right, thinking of Tijuana, Ciudad Juarez, Monterrey, it's -- I've been surprised, I think it's been remarkable how stable rents have been even as vacancy numbers have increased for the market as a whole. I was wondering what do you attribute that to? And do you see any risk of that changing for the worse in the quarters to come? Lorenzo Dominique Berho Carranza: Can you repeat the question, please just -- I think you broke up a bit. Gordon Lee: Okay. No, I was just -- my question was, if you look at some -- if you look at Monterrey, Ciudad Juarez, what I think has been really interesting is market rents have stayed pretty stable even with rising vacancies. So I was wondering what do you attribute that to and whether you see a risk to that going forward? Lorenzo Dominique Berho Carranza: That's -- okay. I got it. Thank you, Gordon. That's a good question. So we believe that what we experienced last year was a little bit somehow unexpected where we saw a slowdown at the beginning of the year. And you might remember January, U.S. President taking office, liberation date and the high uncertainty that we experienced made a lot of companies not making any decisions and not making any -- not leasing any space. Normally, in an environment where you have a slower demand, normally, you could see a reduction in rents. However, in this case, there was the market was just stout. So there was not even a need to reduce rents by any of our competitors. So for that reason, what we think is that demand started coming up back, and it was not a matter of supply and demand. It was just a matter that there were no leases at the beginning. And suddenly, when they came back, we think that vacancy is actually not that high. And that's why we continue to see that replacement costs of several buildings continue to be high and returns have to be expected. Developers have been disciplined and the vacancy and occupancy and vacancies among most of the markets are at healthy numbers, even that they are somehow higher than before, but we were at record low levels -- but if you look at a longer period of time, we are still in a good numbers. Going forward, I think that we will start to see more demand. We think that rents -- I don't see a major risk regarding rents, frankly. I think that rents will hold up well or maybe even increase. But in the end, I think that over the long term, we think that rents are still competitive. Companies are in Mexico for its competitive advantage, particularly on manufacturing. And in terms of logistics, these are cities that continue growing. Consumer habits are still changing and more consumers are adapting to e-commerce to logistics, more demand. So we're very optimistic and positive on most of the markets. So we don't see any potential risks on rents. Operator: Your next question comes from the line of Pablo Ricalde of Itau. Pablo Ricalde Martinez: I have a question on the development pipeline. So we finally see you like coming back into the build-to-suit projects with the Safran building. So maybe going forward, how should we think about the development pipeline of mix between build-to-suit and spec-to-suit building? Lorenzo Dominique Berho Carranza: Great. Thank you, Pablo. So we will continue to see build-to-suits and spec buildings well balanced. We -- I think that what is more important is that now that we believe we are hitting a pivotal moment where we will continue to see more demand. We will continue our strategy on spec buildings. It has paid off well to have spec buildings and then turn them into somehow build-to-suit, we call them spec-to-suit because we're able to pre-lease the buildings and in the meantime, make final adjustments for the tenants. But importantly is that we are able to kick off or to start the buildings in advance and anticipate to potential demand. However, we currently have some buildings in the market. So we have -- we want to have discipline. So as long as we continue to see demand and leasing coming up, I'm pretty sure that we will start with some other spec buildings. And build-to-suits, we are constantly looking for them. We recently closed an expansion with Safran. That's a good example. So I think that being close to our clients, close in the markets with the real estate community and broker community, I think that we're going to be able to continue to do both, particularly because the land acquisitions that we recently did is so well located that I'm sure that there's going to be many companies that would like to establish their operations in high-quality parks with great infrastructure with access to energy. And I think that will be a huge benefit for companies going forward. This year will be very important to focus on the development execution, particularly to get all the infrastructure and organization of the land that we acquired in place and try to get ready so that when demand and projects continue to kick in, we have a -- we're already a step forward and take advantage of those opportunities. And I think that's what makes Vesta different. We are an institutional portfolio manager, asset manager of industrial assets, but also we like to take advantage and capture the growth opportunities on the development front where we can continue to see returns at 10% or even higher return on cost and that vis-a-vis acquisition cap rates in the 6% range are -- we think that there's a lot of spread that we can capture on the development front on new buildings. And I think that's a huge benefit for companies wanting to establish operations in Mexico. Operator: Our next question comes from Pablo Monsivais of Barclays. Pablo Monsivais: Just a question on Aguascalientes. There's been some news that Nissan is planning to sell the COMPAS plant in Aguascalientes. And since you have big operations there and a considerable land bank, what's your take in this? And that divestment could impact a little bit the dynamics in that region or probably not if the taker is a company that is growing? Just want to pick your brain on that news flow. Lorenzo Dominique Berho Carranza: Thank you, Pablo, for being on the call, and thank you for your question. Yes, there's a lot of speculation on what might happen with that particular COMPASS plant. I think that whatever happens, it's going to be very positive for the sector, particularly because it's a -- that plant, it's, I would say, brand new or state-of-the-art. It was developed together between Mercedes-Benz and Nissan. So it has a combination on German technology and Japanese innovation. So I think it was a fantastic project, which for whatever reason, didn't work out. However, I think that, that's why it has a lot of interest from different players. So again, without getting too much into the speculation, we think that Aguascalientes is a fantastic city where companies have been successful. And I think that understanding that Mexico continues to be an attractive manufacturing front, I think that definitely somebody will benefit from that plant. And actually, we think that eventually that will bring new suppliers from a new company and Vesta will continue to be there. I think that for Vesta, Aguascalientes is becoming every time a less relevant market. However, we think -- we believe in long-term relationships. We have good relationships with several suppliers in the auto industry. And for that reason, we think that there could be some good upside to the new plant -- or I'm sorry, to a potential buyer of the new plant. Pablo Monsivais: Okay. And if I can squeeze another question there. Just want to understand, it is my understanding that your guidance for 2026 has a slightly lower margin versus 2025. What's the reason for that? Juan Felipe Sottil Achuttegui: Pablo, this is Juan Sottil. As you know, the peso-dollar exchange rate is -- well, it's a little bit punitive to the company given the fact that we sell everything in dollars and all of our expenses mostly are in pesos, basically our employee cost. So it's going to be a difficult year. It's a year where we will continue a very strong discipline on cost control. We're very successful doing that last year. And we will continue to focus on cost control and being very mindful of the operation needs in terms of people and the location of those people. So it is a challenging year in terms of operating costs, but we will keep the discipline. Operator: Next question comes from the line of Abraham Fuentes of Santander. Abraham Fuentes Salinas: So I wonder if -- are you considering any asset recycling during 2026? And the second 1 will be what could we expect in terms of dividends also for this year. Juan Felipe Sottil Achuttegui: This is Juan Sottil again. Thank you for the question. Look, asset recycle is something that we will continue to do. It is an opportunity that we will garner in our portfolio. We'll keep on the lookout. We scope our portfolio. We believe that we are in the best regions in Mexico. We believe that we have very successful buildings. But we also believe that recycling older buildings or buildings that have accrued a good stabilization status they represent an opportunity to sell them. There's other players that like to buy those type of stabilized assets, and we will take advantage of that. So we will be on the lookout to sell buildings. That's an integral part of our development plan, of our growth plan, and we will be on the lookout. Regarding dividends, dividend is a part of our compensation to shareholders. We believe in total relative -- in total return. Total return implies our effort to grow the company so that the market recognizes that in terms of appreciation of the stock price. And dividends are just an integral part of that total return. We will continue to pay dividends. We will continue to grow judiciously the dividend flow for the incoming year. You will see our dividend policy as soon as we have our shareholder meeting in the next month or so. So that's very much. I think you should consider. Lorenzo Dominique Berho Carranza: If I may add, I think it's consistency on what we have done in the past, and that consistency will continue to be there going forward for dividends as well as for asset recycling. Operator: Your next question comes from the line of David Soto of Scotiabank. David Soto Soto: Just 2 quick ones. The first is related to your vacant buildings. Could you provide more detail about the marketing efforts and the current status of ongoing negotiations of those buildings? And what kind of tenants are interested on such assets? And the second question is related to your leasing spreads. During 2025, you reported double-digit leasing spreads. Is it reasonable to assume that this could be maintained during 2026 and which regions could have this double-digit leasing spreads? Lorenzo Dominique Berho Carranza: Thank you, David, for your question. Maybe on the second one, I think that definitely, we will continue to see the upward trend on the leasing spreads, particularly because this is a bit of a -- it will continue to be an opportunity in the upcoming years as some of the leases continue to hit their maturities, and that's when we have the ability to catch up. So that's something that has happened last year, will continue this year and maybe even the upcoming years as long as some of these long-term leases that were done some years ago hit their maturity stages. And we think that, that's a great opportunity to -- and we've been very, very active on that front. And then on your second question -- on your first question regarding vacant buildings, well, we are very confident that the pipeline is building up. We are very happy with the projects that we have developed. Just as mentioned before, just to give you an example, we have been getting awards on the Vesta Park Apodaca project, particularly in one building, Building 8, we got awarded the GRI Global Award of Industrial & Logistics Project of the Year. And I think that competing with other countries, with other developers across the globe, this is a very, very nice recognition and award. And so we do our best to develop the best projects. And I think that eventually will turn out into having a higher benefit with companies that want to be in the best projects in the most dynamic markets. The buildings that we develop on top of the certain specifications on design, sustainability, innovation, these are very flexible buildings. So we can accommodate e-commerce clients as well as logistics as well as light manufacturing. So I think that strategy on spec buildings will be very helpful where we can be competitive in terms of cost in markets where we can have good access to labor, where we can have good infrastructure. So we -- for that reason, we are confident that the vacant buildings we have today are great buildings that will be leased up eventually. Operator: Question comes from the line of Felipe Barragan. Unknown Analyst: So it's been a year -- a little over a year now that Claudia is in office. She announced an infrastructure program a few weeks ago. So I just want to get your sense if there's -- I mean comparing two years ago to where we're at today, what strides have you guys seen that are tangible on sort of getting permitting, electricity and whatnot for developments? Lorenzo Dominique Berho Carranza: Great. Thank you for your question. We -- frankly, I think that there has been a lot of very proactiveness towards our industry and our business coming from the Claudia Sheinbaum administration. As you know, Claudia Sheinbaum has been the only President or the first President to include industrial parks as part of a long-term infrastructure plan. She has considered 100 projects to be developed. Well, many of those are actually Vesta's projects. And we have been having great access to some of their economic development councils as well as corresponding secretaries to have the best permitting and licensing and support in order to make these projects work. I think that she has a very good understanding on the opportunity that Mexico has to develop together with the private sector, good industrial infrastructure that creates better jobs, better paid jobs, which is very important for her as for the welfare and in terms of support for the people. So in the end, I think that there's a strong alignment, there's good support. And I think that for them having companies that are institutional and well organized like Vesta is also a good recognition to our sector. Through the Mexican Association of Industrial Parks which I happen to be at the Board, and I was previously a President, we have also a very close contact and very good access to the government agencies so that the presidency is successful, the country is successful and we developers contribute a lot to that success. Operator: Your next question comes from the line of [indiscernible] of GBM. Unknown Analyst: Congratulations on your results. I just have one question. How are you thinking about the pace of developments in 2026, given the current occupancy levels and broader market uncertainty? Lorenzo Dominique Berho Carranza: Thank you for your question, Pablo. Well, I think that Vesta will continue monitoring the markets and defining where we can start projects. I think a good example for that is Guadalajara, where we recently started 2 spec buildings end of last year. The reason of that being that we have leased up our existing buildings. We see -- we continue to see strong demand, and we want to anticipate to that particular demand. So we have -- in order to how do we -- the way we monitor it is through the real estate community, the broker community as well as our existing clients. So I think that, that same example will be used for the rest of the market. We think that there are some good success stories in Juarez, in Tijuana, where we were able to lease up the second half of last year. That's going to be helpful in order to eventually start new buildings. And the same for Monterrey. Well, Monterrey, we did that large acquisition on the Apodaca on the new land next to the airport in the Apodaca corridor. So we will kick start with the infrastructure. And eventually, when we see leasing -- some closings on the leasing front on the current project, we will pick up with new projects. So we are definitely going to be more active than 2025, but we would like to continue being cautious and disciplined and in line to whatever we see a potential demand and not being oversupplying the market. And actually, as you know, development front and development cycles are long. I think that being able to acquire land last year and this year focus on infrastructure and some new buildings will put us in a great spot for 2027 to start generating income on those projects. And eventually, our main focus will continue to be the 2030 Route. So we're optimistic. We see the market positively, and we think we have the capabilities to pick up some good development projects throughout the year. Operator: Your next question comes from the line of Federico [indiscernible]. Unknown Analyst: Congrats for the results. Two questions in particular. For [indiscernible] in capital allocation, you used the buyback last year. I assume that you will cancel that this year and extend the maturity of the debt, et cetera. But thinking in the long-term strategic book of 2030, what do you find in terms of acquisition of land development, et cetera, et cetera, not on consolidated basis, is thinking more in regional basis. That are the 2 questions. Sorry, and the last one, Juan, what is the Mexican peso that are using for the budget and the guidance for this year? Juan Felipe Sottil Achuttegui: Well, look, the Mexican peso is surprisingly strong. So we made our forecast at MXN 17.50, but we have been -- that has been proving a little bit too short. Again, the theme of the year in terms of the administration is cost control. And we will be keen on continuing to do that as the peso is very strong compared to the previous years. Now in terms of capital allocation, look, I think that we have acquired about 90% of the land that the plan requires. So I don't think that this year, we will -- I mean, there's always opportunistic acquisitions. Mexico is one an important market where we will continue to look for important land. But the bulk of the land we have, this is a year of, as Lorenzo has said, infrastructure investments. These great plots of land need to be made shovel-ready, and we are prepared to do that. We have to be ready for the upcoming demand, which we can see on our pipeline. So capital allocation will be mostly focused on making the land shovel-ready, opportunistic investments in land in places like Mexico City. And as I said before, if there's opportunities to sell part of the portfolio, we will. So that's just keeping Vesta running as a smooth company and taking every opportunity to provide good results that the market will recognize. Unknown Analyst: Congrats again for the results. Juan Felipe Sottil Achuttegui: Thank you. Operator: There are no further questions. I'd now like to turn the call back over to Mr. Berho for his concluding remarks. Please go ahead, sir. Lorenzo Dominique Berho Carranza: Thank you, everyone, for joining us today. As we look ahead, we are confident in the opportunity and equally confident in our ability to execute with prudence across cycles. If the next strong economic phase accelerates into 2027, as we believe it will, Vesta is uniquely positioned to capture that growth responsibly and at scale as supply has moderated and pipeline conversations point to improving visibility over the next 12 to 24 months. Thank you all, and have a nice day. Operator: Thank you for attending today's call. You may now disconnect. Goodbye.
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hudbay Fourth Quarter 2025 Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, February 20, at 11:00 a.m. Eastern Time. I would now like to turn the conference over to Candace Brule, Vice President, Capital Markets and Corporate Affairs. Please go ahead. Candace Brule: Thank you, operator. Good morning, and welcome to Hudbay's Fourth Quarter and Full Year 2025 Results Conference Call. Hudbay's financial results were issued this morning and are available on our website at www.hudbay.com. A corresponding PowerPoint presentation is available in the Investor Events section of our website, and we encourage you to refer to it during this call. Our presenters today are Peter Kukielski, Hudbay's President and Chief Executive Officer; and Eugene Lei, our Chief Financial Officer. Accompanying Peter and Eugene for the Q&A portion of the call will be Andre Lauzon, our Chief Operating Officer. Please note that comments made on today's call may contain forward-looking information, and this information, by its nature, is subject to risks and uncertainties, and as such, actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please consult the company's relevant filings on SEDAR+ and EDGAR. These documents are also available on our website. As a reminder, all amounts discussed on today's call are in U.S. dollars unless otherwise noted. And now I'll pass the call over to Peter Kukielski. Peter Gerald Kukielski: Thank you, Candace. Good morning, everyone, and thank you for joining us for today's call. 2025 was a transformative year for Hudbay as we achieved the third consecutive year of record financial performance. We delivered record annual revenues of more than $2 billion, record annual adjusted EBITDA of over $1 billion and record annual free cash flow generation of more than $380 million. Our diversified operating platform demonstrated resilience and enabled us to deliver our 11th consecutive year of achieving copper production guidance and fifth consecutive year of achieving gold production guidance. We also outperformed our twice improved consolidated cash cost guidance, demonstrating industry-leading cost performance. These achievements are even more remarkable considering the significant challenges we had to overcome with wildfire evacuations in Manitoba and social unrest in Peru last year. We are delighted to have secured Mitsubishi as a premier long-term partner for our Copper World project in a precedent-setting joint venture transaction. This transaction enables us to unlock significant value in our copper growth pipeline, further solidifies our financial strength and significantly reduces our share of future equity contributions for the development of Copper World. Our prudent strategic financial planning and execution has enabled us to achieve our balance sheet deleveraging goals ahead of schedule and lowered our cost of capital. We now have the financial flexibility to sanction Copper World in 2026, embark on generational investments in our operating portfolio and commence increases in shareholder returns with our first-ever dividend increase as part of our holistic capital allocation framework. This will allow us to continue to deliver attractive growth and maximize long-term risk-adjusted returns for our stakeholders. Slide 4 provides an overview of our fourth quarter operational and financial performance. The fourth quarter underscored our commitment to operational excellence with standout performance in Peru, driven by high-grade Pampacancha ore, record monthly throughput achieved at the New Britannia mill in Manitoba and the successful completion of the SAG mill feed system in British Columbia. We achieved $733 million in record revenues and $386 million in record adjusted EBITDA during the fourth quarter. We produced 33,000 tonnes of copper and 84,000 ounces of gold in the quarter despite an 8-day power outage in Manitoba and lower throughput levels in British Columbia. Our operations in Peru had a strong finish to the year with a final quarter of Pampacancha mining activities. Fourth quarter net earnings were $128 million or $0.32 per share, reflecting strong gross margins as a result of higher metal prices and $25 million received for business interruption insurance from the mandatory wildfire evacuations in Manitoba. After adjusting for the insurance proceeds and other noncash items, fourth quarter adjusted earnings was $0.22 per share. We continue to demonstrate industry-leading cost performance in the fourth quarter with consolidated cash costs of negative $0.63 per pound and consolidated sustaining cash cost of $0.94 per pound. These costs significantly improved compared to the third quarter, primarily as a result of higher copper production and higher gold byproduct credits. Turning to Slide 5. Hudbay's unique diversification in copper and gold, coupled with our relentless commitment to cost control, enables us to maintain industry-leading margins and deliver strong and reliable cash flows. Operating cash flow before change in noncash working capital was $337 million in the quarter, a meaningful increase compared to the third quarter, reflecting higher copper and gold sales volumes from normalized operations after the temporary interruptions and higher metal prices. After accounting for the capital investments to sustain production, we generated $228 million in free cash flow during the quarter, bringing annual free cash flow to $388 million in 2025 and achieving new quarterly and annual record levels. While the majority of revenues continue to be derived from copper, revenue from gold continues to represent a growing portion of total revenues with 41% of gold revenues in the fourth quarter. Our deleveraging efforts continued in the fourth quarter as we repurchased and retired an additional $39 million of senior unsecured notes through open market purchases at a discount to par. We are proud to say that since the end of 2024, we have reduced our long-term debt by $185 million, bringing our total debt levels to $1 billion today. We ended the quarter with total liquidity of $994 million, including $569 million in cash and cash equivalents and undrawn availability of $425 million under our revolving credit facilities. Our net debt-to-EBITDA ratio further improved to 0.4x at the end of December. After year-end, our cash and cash equivalents balance increased to $992 million with the closing of the Copper World joint venture transaction in early January. This increases our adjusted total liquidity to over $1.4 billion and further lowers our net leverage ratio to 0x. This financial transformation demonstrates the benefits of our diversified operating platform, industry-leading costs and prudent balance sheet management. We are extremely well positioned to prudently reinvest in our portfolio of attractive, high-return brownfield and greenfield opportunities to drive production growth and long-term value creation. In Peru, we exceeded the top end of the annual gold production guidance range and achieved the copper production guidance range despite the impact of a temporary operational interruption due to social unrest as shown on Slide 6. Our Peru operations had the strongest quarter of the year in the fourth quarter as we continued to see strong copper and gold grades from Pampacancha, and we processed less ore from low-grade stockpiles compared to the prior quarter. We continue to optimize the mine plan with more ore mined from Pampacancha during the quarter than previously expected, resulting in the accelerated depletion of Pampacancha in late December as opposed to early 2026. The operations produced 25,000 tonnes of copper, 33,000 ounces of gold, 731,000 ounces of silver and 325 tonnes of molybdenum during the quarter. Production of copper, gold and silver increased by 38%, 25% and 27%, respectively, compared to the third quarter due to higher ore milled as the third quarter was impacted by the temporary operational interruption. Mill throughput increased to 7.6 million tonnes in the quarter due to higher mill availability than the third quarter, partially offset by the scheduled semiannual mill maintenance shutdown in the fourth quarter. Milled copper grades increased by 26% compared to the third quarter with higher grades from Pampacancha and less ore processed from stockpiles. Milled gold grades also increased with a strong gold contribution from Pampacancha. Mill recoveries were in line with our metallurgical models based on the ore being processed. Fourth quarter cash costs in Peru were $0.57 per pound of copper, decreasing by 56% compared to the third quarter with the benefit of higher gold byproduct credits, partially offsetting higher profit sharing. Full year cash costs in Peru outperformed the low end of the guidance range and improved by 8% from 2024 due to lower treatment and refining charges and higher by-product credits. Fourth quarter metal sold was higher than the prior quarter as some copper concentrate sales in the third quarter were impacted by ocean swells and were deferred to the fourth quarter. While copper concentrate inventory levels normalized at the end of last year, there were elevated levels of precious metals contained in the inventory concentrate due to a higher portion of Pampacancha production in the second half of the year, resulting in a shift of some precious metal sales from December 2025 to 2026. We continue to advance the installation of pebble crushers in Peru to increase mill throughput rates starting in the second half of 2026, which will allow Constancia to deliver steady annual copper production despite lower grades from the depletion of Pampacancha. These efforts align with the Peru Ministry of Energy and Mines regulatory change to allow mining companies to operate up to 10% above permitted levels. Turning to Slide 7. Our Manitoba operations were previously tracking within the 2025 guidance ranges despite the wildfire impacts. However, as a result of the weather-related power outage in October and the subsequent ramp-up period required to restore full operations, gold and zinc production fell below the low end of the respective ranges. That said, we successfully achieved guidance for copper and silver despite these interruptions. Performance in the fourth quarter demonstrates that our Manitoba operations have normalized following the significant wildfire disruptions. Our Manitoba operations produced 47,000 ounces of gold, 3,000 tonnes of copper, 6,000 tonnes of zinc and 214,000 ounces of silver in the quarter. Full year production in Manitoba was lower than the prior year as a result of production deferrals from the wildfires, the weather-related power outage and associated ramp-up to restore full operations. However, we continue to focus on safety and achieved a 15% reduction in total recordable injury frequency in 2025. At the Lalor mine, the focus was on stabilizing production after resuming operations. Lalor averaged over 4,200 tonnes per operating day in the quarter, strategically prioritizing mining from the gold zones to ensure feed for the New Britannia mill. Gold grades slightly increased compared to the third quarter as we continue to improve ore quality and focus on prioritizing gold zones at Lalor. Consistent with our strategy of allocating more Lalor ore feeds to New Britannia to maximize gold recoveries, the New Britannia mill achieved average throughput of approximately 2,300 tonnes per day in December, reaching a new monthly throughput record. Stall mill continued to focus on process optimization and enhancing gold recovery initiatives, which resulted in achieving over 70% gold recovery from our base metal ore stream. The Stall mill processed significantly less ore in 2025 compared to 2024 in alignment with our strategy to allocate more Lalor ore feed to New Britannia. The 1901 deposit delivered 6,600 tonnes of development ore in 2025 as the project progresses towards full production in 2027. During the year, the team focused on establishing 1901 underground infrastructure and haulage and exploration drifts. Manitoba sales volumes in the fourth quarter reflect a rebuild of inventory levels as operations normalized. Manitoba Gold cash costs in the fourth quarter were $705 per ounce, increasing compared to the third quarter, primarily due to higher overall costs in the quarter as operations normalized. Despite the production headwinds in 2025, full year gold cash costs were $549 per ounce, a 9% improvement from 2024 and outperforming the lower end of the cash cost guidance range. The strong cost performance was supported by the prioritization of high-margin gold production over byproduct zinc production. In British Columbia, we continue to focus on advancing our multi-year optimization plan centered on ramping up mining activities and implementing standardized operating practices as shown on Slide 8. We produced 4,700 tonnes of copper, 4,000 ounces of gold and 57,000 ounces of silver in British Columbia in the fourth quarter. Production was lower compared to the prior quarter, primarily reflecting reduced mill throughput caused by unplanned maintenance on the primary SAG mill. Full year production achieved the guidance range for gold and silver, while copper production fell below the low end of the guidance range because of the impact of the primary SAG mill unplanned maintenance and a higher amount of low-grade stockpiled ore processed throughout the year. Mining activities continue to focus on executing a 3-year accelerated stripping program to unlock higher-grade ore starting in 2027. Total ore mined in the fourth quarter was 2.4 million tonnes, a 32% increase from the third quarter as we optimized the mining sequence and enhanced maintenance practices, which increased mining rates to a targeted 300,000 tonnes per day in December. To sustain this momentum, a new production loader was commissioned in January 2026, and the new shovel is currently scheduled for deployment in March. Mill enhancement initiatives continued in the fourth quarter with the successful completion of the permanent feeder for the second SAG mill in December. The second SAG mill continued to demonstrate positive contributions to overall throughput in the fourth quarter. The mill processed 27% less ore in the fourth quarter compared to the third as a result of unplanned maintenance on the primary SAG mill to address localized damage to the feed and head. Operations were further constrained by elevated clay content in the ore and the planned decrease in feed pile to accommodate the construction and tie-ins for the second SAG expansion project. The team implemented several additional initiatives in 2025 to mitigate further challenges and build long-term mill reliability, including completing crushing circuit chute modifications, installing advanced grinding control instrumentation and a redesigned SAG liner package. Despite throughput constraints, fourth quarter milled copper grades were 18% higher than the third quarter, driven by higher grades in ore mined. Copper recoveries improved to 78% and gold recoveries saw a 7% increase over the third quarter. While the primary SAG mill continues to operate under a reduced load, it is being rigorously monitored ahead of a feed and head replacement in mid-2026. The mill remains on track to achieve its permitted capacity of 50,000 tonnes per day in the second half of 2026. British Columbia cash costs and sustaining cash costs were higher than the prior quarter, largely driven by the ramp-up of mining activities advancing the accelerated stripping program, combined with the impact of lower production and byproduct credits due to the lower mill availability. Despite the headwinds in the second half of 2025, the business unit demonstrated strong cost discipline, enabling the operations to achieve the full year cash cost guidance range. I'm now going to turn it over to Eugene Lei to introduce our capital allocation framework. Eugene? Chi-Yen Lei: Thank you, Peter. Turning to Slide 9. Hudbay has a proven track record of prudently allocating capital to high-return brownfield investments such as New Britannia gold mill refurbishment project and the development of the high-grade Pampacancha satellite deposit. Both these investments have delivered significant free cash flows and contributed to our recent deleveraging efforts. These deleveraging achievements have been part of our financial transformation over the past 3 years. Hudbay has moved from being overleveraged and capital constrained to a preferred position where we can strategically allocate capital across the portfolio to maximize value and generate the highest risk-adjusted returns, creating long-term sustainable value for all our stakeholders. Three years ago, when I became CFO, we put in place our 3 prerequisites plan known as the 3P plan, outlining financial criteria needed to be achieved prior to sanctioning Copper World. We have successfully executed all of the financial elements of the 3P plan and with prudent strategic financial planning over the last few years, we have completed the deleveraging of our balance sheet. We are proud to have the strongest balance sheet in more than a decade and are one of the lowest debt leverage companies in our peer group. Together with the strategic investment by Mitsubishi, Hudbay is very well positioned to both sanction the Copper World project and embark on generational investments in our operating portfolio in 2026. These investments include allocating capital to high-return brownfields projects at our 3 operating mines and advancing our world-class development and exploration pipeline. To provide transparency and continued financial discipline, we have implemented an enhanced capital allocation framework to provide a holistic approach around capital allocation decisions. This includes growth capital reinvestments in the business through near-term brownfields projects, long-term greenfield projects, strategic investments and exploration, while also considering debt repurchases, share buybacks and dividends. Our capital allocation framework is embedded in our annual financial planning cycle. The framework assesses capital allocation opportunities against key elements such as preserving a strong balance sheet, strategic fit for growth and diversification, accretion across key financial metrics, performing a rigorous risk assessment and applying accountable investment governance practices. Consistent with our capital allocation framework and our recent financial transformation, we are now in a position to commence increases in shareholder returns in the form of a quarterly dividend. We are pleased to introduce a new quarterly dividend of $0.01 per share, which represents an annual increase of 100% over our former semi-annual $0.01 dividend. This increases our total annual dividend amount to $0.04 per share. Thanks, and I'll hand it back to Peter for our 2026 strategic objectives. Peter Gerald Kukielski: Thank you, Eugene. Our key company objectives for 2026 are summarized on Slide 10. We continue to focus on operational excellence, advancing organic growth opportunities and prudently allocating capital to deliver attractive high-return growth. At the core, we intend to demonstrate continued operational excellence to enable substantial free cash flow generation while maintaining industry-leading cost performance. We plan to achieve this by investing in high-return brownfield growth opportunities across our operating platform, such as the mill throughput enhancement projects. We plan to prudently invest in our attractive organic growth pipeline to deliver long-term production increases. This includes completing the Copper World definitive feasibility study, progressing the New Ingerbelle permitting and development, advancing studies on our regional satellite properties in Snow Lake, executing our large Snow Lake exploration program to look for new anchor deposits, initiating a pre-feasibility study at Mason, advancing Flin Flon tailings reprocessing project analysis and preparing for Maria Reyna and Caballito exploration to provide significant long-term upside potential in Peru. With a strengthened balance sheet and our first ever dividend increase, we entered the year with unmatched financial flexibility. In 2026, we intend to maintain strong financial discipline by implementing our capital allocation framework to maximize returns. This will be achieved by continuing to reduce total debt, sourcing efficient project level financing for Copper World and evaluating all types of capital redeployment opportunities to generate the highest risk-adjusted returns. Turning to Slide 11. As I mentioned earlier, 2025 represents the 11th consecutive year in which Hudbay achieved its annual consolidated copper production guidance, which includes every year since Constancia declared commercial production. 2025 also represents the fifth consecutive year achieving our annual consolidated gold production guidance since establishing stand-alone gold production guidance after Snow Lake became a primary gold-producing operation. In 2026, consolidated copper production is expected to increase by 5% to 124,000 tonnes using the midpoint of the guidance range. This is driven by higher expected production in British Columbia as a result of mill throughput ramping up to the target 50,000 tonnes per day in the second half of the year, partially offset by the depletion of Pampacancha in December 2025. Consolidated gold production in 2026 is expected to decrease by 9% to 244,500 ounces as a result of the depletion of Pampacancha. However, unstreamed gold production is expected to increase in 2026 with higher gold production in Manitoba as operations normalize following the wildfires, and we continued to achieve strong performance at the New Britannia mill. In Peru, 2026 copper production is expected to be relatively consistent year-over-year at 82,500 tonnes as higher mill throughput is expected to largely offset the grade decline with the depletion of Pampacancha. Peru gold production is expected to decline to 17,500 ounces with the depletion of Pampacancha. The short-term mine plan changes in 2025 to optimize the mine plan during the period of social unrest resulted in reduced stripping activities in 2025, which has caused some grade resequencing in 2026, but we expected higher copper production in Peru in 2027 and 2028. In Manitoba, 2026 gold production is expected to be 200,000 ounces, reflecting a 15% year-over-year increase as the operations normalize after the unprecedented wildfires. We expect to see continued strong mill throughput at New Britannia continue to operate above 2,000 tonnes per day in 2026, far exceeding its original design capacity of 1,500 tonnes per day. In British Columbia, 2026 copper production is expected to be 30,000 tonnes, representing a 26% increase from 2025 production levels. This increase will be driven by the throughput improvements in the second half of the year. We expect to release an updated 3-year production outlook with our annual mineral reserve and resource update in late March. Slide 12 summarizes our cost guidance. 2026 consolidated cash costs are expected to remain at historically low levels within a range of negative $0.30 to negative $0.10 per pound of copper. Cash costs this year will continue to benefit from higher gold production as a byproduct and our continued focus on maintaining strong operating cost control across the business. Sustaining cash cost guidance for 2026 is expected to be within $1.70 to $2.10 per pound of copper, benefiting from higher copper production and higher byproduct credits, offset by higher expected sustaining capital expenditures. In Peru, 2026 copper cash costs are expected to be between $1.70 and $2.10 per pound, reflecting steady unit operating cost performance, offset by lower byproduct credits with the depletion of Pampacancha. Peru cash costs will benefit positively from lower treatment and refining charges and lower electricity rates with a new renewable power contract in effect. In Manitoba, gold cash costs are expected to be between $500 and $800 per ounce in 2026, remaining at industry low levels, driving strong margins at current gold prices. In British Columbia, copper cash costs are expected to decrease in 2026 to a range of $1.50 to $2.50 per pound. The decrease will be driven by higher copper production, higher by-product credits and higher capitalized stripping related to the accelerated stripping activities. Capital expenditures in 2026 include approximately $96 million of capital deferrals from 2025, higher growth capital spending as we reinvest in several high-return growth projects and onetime sustaining capital expenditures. Total sustaining capital expenditures are expected to be $435 million and total growth capital expenditures at the operations are expected to be $140 million, excluding Copper World joint venture spending. The growth capital for Copper World is expected to be $135 million. In Peru, 2026 sustaining capital is expected to be maintained at $140 million, which includes about $20 million of deferrals from last year and $18 million in onetime heavy civil work projects, offset by lower spending on tailings dam raises. Growth capital in Peru of $40 million relates to the installation of 2 pebble crushers to increase mill throughput starting in the second half of 2026 and includes $13 million of capital deferrals from 2025. In Manitoba, sustaining capital expenditures are expected to temporarily increase to $105 million in 2026, including $5 million of deferred capital, $20 million in onetime expenditures related to a project at New Britannia to lower nitrogen levels and $12 million for an accelerated 1-year construction project for a dam raise at our Anderson tailings facility. Underground capitalized development at Lalor is expected to return to normal levels after reduced levels in 2025 from the wildfires. Manitoba growth capital is expected to be $15 million this year related primarily to the development of exploration platforms and haulage drifts at the 1901 deposit. In British Columbia, 2026 sustaining capital expenditures are expected to be $60 million, an increase compared to 2025, including a $5 million onetime expenditure for the replacement of the feed and head of the primary SAG mill as well as $13 million in capital deferrals from 2025. We expect to incur $130 million of capitalized stripping costs in 2026 related to the continued accelerated stripping program. BC growth capital expenditures are expected to increase to $85 million, including $10 million in capital deferrals with the remaining capital related to early works and infrastructure development for New Ingerbelle. As we continue to advance Copper World towards a sanction decision, we expect capital expenditures to be $135 million, excluding post-sanctioning construction costs. This growth capital has been largely funded by the proceeds from the Mitsubishi joint venture received in January 2026 and relates to feasibility study costs and continued derisking until a sanctioning decision. It includes $35 million of capital deferrals from 2025 and approximately $60 million for accelerated long lead items and derisking activities. Post-sanctioned construction costs will be updated at the time of project sanction. Looking at exploration expenditures in 2026, we expect an increase in spending to $60 million as we continue to execute the multi-year extensive geophysics and drilling program in Snow Lake as well as spending allocated to New Ingerbelle inferred resource conversion efforts. As part of our long-term growth pipeline, Slide 13 summarizes the threefold strategy we are executing in Snow Lake as part of the largest exploration program in the company's history in Manitoba. The first objective is to execute near-mine exploration, including underground and surface drilling at Lalor. This past year's significant progress was made with the completion of the initial exploration drift at the 1901 deposit, which saw positive step-out drilling and delivered some zinc development ore to the Stall mill. Underground drilling is planned for 1901 from the new exploration drift to upgrade and expand the mineral reserve and resource estimates. Activities at 1901 over the next 2 years will focus on exploration, definition drilling, ore body access and establishing critical infrastructure for full production in 2027. We also plan to complete underground and surface drilling at Lalor to continue expanding mineral resource and reserve estimates. The second strategic focus area is on testing regional satellite deposits within trucking distance of the Snow Lake processing infrastructure to identify potential additional ore feed to fully utilize the available processing capacity. In 2026, we plan to advance activities at many of our satellite deposits, including Talbot, New Britannia and Rail, testing for both base metal and gold potential. We will touch more on Talbot, a highly prospective target on the next slide. And the third strategic focus area is on exploring our large land package for a new potential anchor deposit to significantly extend the mine life of our Snow Lake operations. In 2026, we will continue the ground electromagnetic survey and extensive airborne geophysics survey. In early January, we announced the signing of an amended option agreement with JOGMEC and Marubeni to expand the Flin Flon exploration partnership for 3 projects in the Flin Flon region, including Cuprus-White Lake, West Arm and North Star. Turning to Slide 14. In July, we commenced an extensive summer drill program at the copper-gold-zinc Talbot deposit focused on expanding the known mineralization at depth. Talbot is located within trucking distance of the Snow Lake processing facilities, making it an ideal deposit to potentially provide supplemental feed to our mills. As part of the initial drilling program in 2025, Hudbay drilled 6 holes to test the continuity of the Talbot deposit at depth with all the holes yielding positive results and 4 of them returning mineralized intercepts with economic potential. The image shows a 3D view of the deep holes drilled at Talbot confirming continuation of the mineralization at depth. As shown in the image on the slide, the drill results indicate that the mineralized footprint of Talbot has doubled. We have commenced the 2026 drilling program in January with 6 drill rigs turning, including 1 rig focused on continuing to expand the footprint of the deposit at depth. An additional hole provided a significant intercept of visible copper mineralization over approximately 20 meters and assays are pending. This year, we plan to progress a PFS and prepare an updated mineral resource estimate utilizing our standard method that has a high reserve conversion rate. Turning to Slide 15. Our Copper World project in Arizona continues to achieve key milestones to progress towards sanctioning later this year. The closing of the strategic joint venture partnership with Mitsubishi validates the attractive long-term value of Copper World as a top-tier copper asset and endorses the strong technical capabilities of Hudbay. Together, we will continue to advance this high-quality copper project and unlock significant value for all of our stakeholders. With the closing of the transaction, Mitsubishi's initial cash inflow of $420 million will be used to fund the remaining feasibility study and pre-sanctioned spending in addition to initial project development costs for Copper World once we sanction. Mitsubishi will also contribute the remaining $180 million within 18 months to complete its initial 30% stake and will continue to fund its pro rata 30% share of future capital contributions. Copper World feasibility activities are underway, and we are on track for the completion of a definitive feasibility study in mid-2026. We have allocated growth capital expenditures in 2026 for accelerated detailed engineering, certain long lead items and other derisking activities, and we continue to expect to make a sanction decision in 2026. We are very well positioned to build one of the next major copper mines in the United States while continuing to maintain a strong balance sheet and reinvesting in other growth opportunities across our portfolio. Before we conclude, I want to take a moment to highlight the New Ingerbelle expansion permits at our Copper Mountain Mine just received and announced. This is a very exciting milestone for the British Columbia team as we expand growth optionality for Copper Mountain. The receipt of these permits is an important step to enhance the copper and gold production profile at Copper Mountain. It secures a longer mine life, preserves more than 800 jobs and ensures continued economic benefits and long-term financial stability for the region. We received the amended Mines Act and Environmental Management Act permits through the coordinated authorizations process managed by the British Columbia Major Mines Office. Throughout the permitting process, we proactively engaged with the local communities and the upper and lower Similkameen Indian band to ensure transparency. We recently finalized refreshed participation agreements with the bands, reinforcing our commitment to strong Indigenous partnerships. The New Ingerbelle permit ensures that we'll be able to advance this BC major project and extend our partnership with the local communities to facilitate additional growth investments at Copper Mountain and further add to our 99 years of successful operations in Canada. Concluding on Slide 16. 2025 demonstrated the benefits of Hudbay's diversified operating base, our unique copper and gold exposure and our operating resilience. I'm extremely proud of the performance we were able to achieve despite the many operational interruptions. Our continued focus on cost control enables us to maintain industry-leading margins and deliver strong and stable cash flows. Once Copper World is in production, we expect our annual copper production to grow by more than 50% from current levels. This will reinforce our position as one of the largest Americas-focused copper producers with a well-balanced and geographically diversified portfolio of assets. Our expected production will be weighted approximately one-third each in Canada, the United States and Peru and further enhanced Hudbay's exposure to copper, representing more than 70% of consolidated production and revenue. I have no doubt that we will continue to see more transformations as we execute on our growth strategy and prudently invest in our world-class pipeline to deliver the highest risk-adjusted returns for our stakeholders. And with that, we're pleased to take your questions. Operator: [Operator Instructions] The first question is from Ralph Profiti with Stifel Financial. Ralph Profiti: Peter and Eugene, this capital allocation framework is coming at a time when we're seeing the biggest spread between actual metal prices and spot metal prices and consensus metal prices. And when you talk a little bit about some of the commodity price scenarios, I'm just wondering how would you characterize your approach versus the past on some of the scenario analysis that you do? And how are you going to balance crowding out opportunities versus metal prices being used versus buy versus build context? I'd like a little bit on that, please. Chi-Yen Lei: Thanks for your question. And I think this is an ideal time to unveil this capital allocation framework because of the volatile markets that you described. So as you know, we have a proven track record of allocating capital to high-return opportunities. That's what netted us the New Brit gold mill and then the Pampacancha investment, and that's achieved 25% IRRs over the past few years and helped us deleverage our balance sheet. Now with Mitsubishi on board, that really essentially helps us fully fund the Copper World project. And so we're going to be able to go into the end of this decade, having delevered the company, funded and built Copper World and now have the opportunity to fund greenfield projects and brownfield high-return projects at each of our operating sites. When we run and to best determine how to allocate that capital, running this process allows us to run various scenarios, use varying prices and even opportunities to finance some of this growth. And so when we use this holistic approach, we are able to balance the growth aspects and prudently fund them, but while also keeping an eye to capital returns. And so we're ramping into the first dividend increase in our company's history. It's nominal, but it's a start. And as you saw last year, when we implemented the NCIB, these options or opportunities are on the board to be compared with reinvestment in our portfolio. So we're going to test these as these opportunities as they come. As you know, we have a very skilled technical services team and our operations are always looking for ways to enhance production and enhance mine life, and we'll weigh those opportunities at varying prices to the balance sheet and have an opportunity to increase returns to shareholders once we've determined the optimal structure. Ralph Profiti: Helpful. I appreciate the descriptive answer. And if I can just switch more to a technical question. Peter, what is Q3 going to look like in British Columbia on the SAG rehabilitation work? What does downtime look like? How does it -- what is tie-in time required? And I'm just wondering what happens to sort of throughput in that scenario in that quarter. Peter Gerald Kukielski: Thanks, I mean, great question. I think that as I mentioned in the comments that the planned replacement of the feed head will be early in the third quarter. So we continue to operate pretty carefully in the interim. But we still expect the operations to stabilize and improve progressively through that period. There will be a project period of, I imagine, several weeks during which we replace that head. But I don't expect there to be anything abnormal that's not provided for in our guidance. But Andre, do you want to perhaps elaborate on it a little bit? Andre Lauzon: Sure, sure. So the team is doing an excellent job. The parts are procured. So we've cast 4 sections, 2 have passed QA/QC, and we have a team over there inspecting there as we speak. Tentatively, as Peter mentioned, it's about a month of work. We'll be able to continue to run our SAG2 at the same time, and the teams are working through the details of that. It's scheduled, like you said at the beginning of Q3, which is probably straddling around July, August. We're looking for opportunities to pull that forward. We don't know exactly what that is right now. It's still they're inspecting, looking at shipping and all of the details of getting that in place. And so as we get to report next quarter, I think we'll definitely have a lot more clarity on the timing of that is like the opportunity of pulling it forward if we're able to do that is obviously ramping up the higher throughput sooner, which will improve our -- what we're forecasting for the year. But right now, it's scheduled on that end. But right now, as it stands, the back end of the year is probably about, call it, 20-ish percent higher than what the front half is of the year on a total metal. So if you want to give that sort of cadence, but the improvement, if we can pull it forward a bit as we know, then that will be a positive to the year. Operator: The next question is from George Eadie with UBS. George Eadie: Can I ask at Manitoba, just clarifying the updated 3-year production guide, that won't include any new drilling, will it? And secondly, just when we -- when exactly in the year will we get the next tech report for Manitoba, potentially bringing in Talbot and some other satellites? Peter Gerald Kukielski: Thanks for the question. So we haven't decided that we're producing a tech report for Manitoba this year. A lot of what we're doing, I mean, the current technical report is still valid in terms of production at Lalor. And our thinking with respect to another revised technical report at some point would be in order to bring in some of the other -- the results of other drilling that we're performing in the region, but it's not determined yet when that would be. Andre, perhaps you could elaborate. Andre Lauzon: Yes, sure. So it's a great question. I'd say is there's so much going on in Manitoba right now. And it's on all fronts. So we've seen some positive success with drilling 17 zone, the high-grade gold down plunge of Lalor. We now know the plunge direction. And so we'll be targeting an exploration drift to do this year to get to that area. The Talbot area is very exciting. There are 6 drills going at site right now. About 5 of them are doing definition drilling to prepare to be able to have that, call it, maiden Hudbay reserve for that. So the teams are working actively on pre-feasibility studies to be able to understand how we're going to mine it, ramp versus shaft, all of those details in optimizing it. And to date, the drilling as indicated, like Peter had mentioned, doubling the footprint of what we know, and it's open in many directions still. So that's also very exciting. The gold, there's a ton of optimization going on right now around New Britannia. We're looking at improving our flash flotation. And what that allows us to do, like although we have a permit at 2,500 tonnes per day, we're seeing some really high copper grades, which is great. And what we have to do is slow down the mill a little bit during when we're seeing those really high grades. And so the teams are looking on optimization there at New Britannia. We have a SART plant coming in at the end of the year, and that's also going to reduce our costs with reduction in cyanide, but also improvements on recoveries. We have some additional things we're looking at Stall. And if I complicate it even more, New Brit mill is sitting on top of New Brit mine. And that mine for close to 20 years, about 1.5 million ounces. And we -- since with the real run-up in gold prices, probably wasn't on our radar for a number of years. And so now we have teams actively looking at putting together a plan is like what do we actually have and what's the potential? And there'll be a lot more to come on New Britannia mine. So that's quite exciting. So why I say all of that is there's so many moving parts on how do you fit all of that into a technical report. And so it's just around how -- what's the timing to do that? And so I think we'll be able to give snippets later this year around what does it starts to look like. But to put all that in, we're very, very confident on sustaining about 185,000 ounces per year profile at a really good all-in sustaining, probably less than $1,200 an ounce long into the future. And I didn't mention as well as we're looking at optimization of cut-off within the mine as well. And that also has the potential to bring low-cost capital good grade ounces that were on the cusp before at $2,000 or so an ounce now at much higher prices. So we're looking at a lot of things. And so hold tight, I guess, is what I'd say is there's going to be some really good stuff coming. Chi-Yen Lei: If I could add with some comments in terms of catalysts, the 3-year guidance will be released along with our reserve and resource update at the end of March, and that will show this extension of this higher gold production at Lalor and Snow Lake that Andre speaks of at 185,000 ounces, well beyond kind of what was contemplated in the technical report. As Peter highlighted, we're looking at ways to daylight what would be the longer-term profile and with all the opportunities that Andre highlighted, we hope by the end of the year that we'll be able to catalyze many of those projects and be able to provide the market with this 5- to 10-year outlook at these new levels, and we think they'll be very value creating for Manitoba and Hudbay. George Eadie: Yes. No, that's super detailed and helpful, guys. Thanks very much. And maybe just one more, if I can sneak in kind of similar, but Mason, like the comments about that in the release, the PFS, like when could that be completed? And will we see the outcomes, I guess? And any updates on a potential partner even there? Peter Gerald Kukielski: Sure. So we're currently starting to work on Mason. We're building the team. We're kicking into pre-feasibility study work. I would expect that we would complete a pre-feasibility study in Mason later on next year. For sure, we would not contemplate partnering Mason at this early stage. But as we progress through the pre-feasibility study, we would look at opportunities to do that based on the work that we do. But partnering is not something that we're contemplating there right now. Andre Lauzon: Yes. It's the right time. It's the right time right now. Eugene mentioned about our capital allocation framework and investing in different opportunities. It was somewhat parked for 2 reasons. One, because our availability of capital to spend on doing that because we have to do geotechnical drilling, hydrology, getting all of the key things to really put a robust pre-feasibility together. And we are waiting for some clarity with the federal government around the placing waste rock and tails on federal land. That has now been resolved. And so with both of those in our back right now is we are ramping up like as what Peter said, and building the team to accelerate that project because it is the next to copper world, like it's the next largest undeveloped copper deposit there in the U.S. It's a great project. Operator: The next question is from Fahad Tariq with Jefferies. Fahad Tariq: Maybe just on Peru, can you let us know what the latest is on the Maria Reyna and Caballito permits and what's happening there? Peter Gerald Kukielski: Yes, absolutely, for sure. It's -- there's been no change to the remaining steps for the drill programs, which includes the government's prior consultation process with the local community. And given the environment in Peru right now, I think this process is likely delayed. Remember that this is an election year coming up. We've had a change in President. So the time lines are quite difficult to predict as we've learned from Pampacancha several years ago. I think that predicting -- although we can't predict the permitting time lines, I think let's get through the elections. We're confident we will get the permit. I just can't tell you when it will be. But I am extremely confident that Maria Reyna and Caballito play a big part in value creation at Peru in the future. But at the moment, I can't provide you with an accurate time line. Fahad Tariq: Okay. I understand. And then maybe just switching gears to Copper World. I know we're still waiting for the feasibility study, but just thoughts around the copper price assumption that you might be using or how we should be thinking about CapEx relative to the $1.3 billion, which is the current estimate? Chi-Yen Lei: I can address the copper price assumption. And as you saw in the PFS, this is a very robust project. It generated close to 20% IRR at $3.75 copper. It is the highest-grade undeveloped copper deposit in the Americas. And as we update the pricing for the feasibility study, we'll be moving toward consensus prices, which is today moved from -- moved in the area of $4.50 to $4.75 per pound of copper. We'll obviously do various pricing scenario analysis around those prices, but I would expect that it would be in that range at this moment. Peter Gerald Kukielski: And on the CapEx side, I would say, recall that the PFS was issued in October of '23, so 2.5 years have passed. So of course, there's going to be a little bit of escalation. There's been some tariffs introduced on key equipment that might be procured from outside the country. So we expect there to be some escalation, but we don't expect it to be material. Andre Lauzon: Yes. And different than the response from Maria Reyna with the government, like this is fully in our control to deliver the feasibility and the team is doing an excellent job. Like we're within 1.5% of our schedule. So we're tracking right now at about 67% out of about 68%. And so the team is doing an excellent job building a world-class feasibility. And so we expect it to come to FID at the times that we had forecast. Chi-Yen Lei: And the collaboration with our JV partner, Mitsubishi has been excellent. We've had our first JV Board meeting. They're on site with all of the decisions and have contributed. And so for those that were worried that this would delay the DFS, it does not, as Andre said, we're right on schedule. Peter Gerald Kukielski: Sorry, I'll just go back to the Maria Reyna and Caballito question. I think I was saying I can't predict when it's going to be. It's going to happen for sure. It's going to happen, but it may not be this year, but it's coming. And what I can say is that our communities and our partners are incredibly eager to get going on it. It's just a process that's got to be followed. And we know how Peru goes, especially during an election year. It's still a great copper destination, will continue to be. So just hold tight it's going to happen. Andre Lauzon: Yes. And we've refreshed the team, too, right? So brand-new minted Vice President down there in South America, very familiar with the area, coming out of some of the challenges that we had through the summer with some of the communities. We refreshed the team for Uchucarcco and Chilloroya. And so those are the people that will carry this through to the final. Operator: The next question is from Orest Wowkodaw with Scotiabank. Orest Wowkodaw: A couple of follow-ups. Your CapEx guidance for this year at Copper World, $135 million, should we anticipate that, that could increase if you FID the project in the second half of the year? Or will that just start in '27? Chi-Yen Lei: The CapEx guidance that we provided of $135 million is basically the feasibility study plus the early works we need to continue to keep schedule for potential first production in early 2029. With the FID, we'll provide sort of the rest of the spend for the year, but I do not expect that to exceed the $420 million that we've already received from Mitsubishi. So if you think about sort of the funding, I would say that we would expect Copper World to be cash flow positive from a Hudbay consolidated perspective this year. The $420 million contribution obviously came in January. We're going to spend about $135 million leading into the FID decision. On FID, the Wheaton payment becomes due, the first $180 million. And so we expect to be in a very good position from a funding perspective. So that's why one of the reasons we carved out the Copper World JV spending from the growth CapEx of the company because it's more than fully funded. Orest Wowkodaw: So that $135 million, that's basically all pre-FID. Chi-Yen Lei: It would be -- it will be all pre-FID, but it's -- some of the spend would have been post FID. So it's basically ensuring that we move the project along as soon as possible, and we have the endorsement with Mitsubishi to proceed in this manner. Orest Wowkodaw: Okay. And then just shifting gears, I just wanted to clarify something you said earlier. Did I hear correct that you're suggesting that you can maintain 185,000 ounces of gold in Manitoba for the next 5 to 10 years? Chi-Yen Lei: That's the goal. And we'll be able to tell you that number for the next 3 years with our 3-year guidance. And the opportunity this year is to pull all of the projects that Andre speaks of and put them in buckets so that we can talk about the long-term production horizon of Snow Lake, which is targeted to be at that level for the next 5 to 10 years. Orest Wowkodaw: Okay. And the end of March then update will just be the 3-year guide, and then we'll have to wait for the rest after. Is that right? Peter Gerald Kukielski: More to come. Operator: The next question is from Emerson [indiscernible] with Goldman Sachs. Unknown Analyst: So I have 2 questions here. First one, just trying to understand, I mean, what is the pecking order of the projects that the company have right now? I mean there are a lot of stuff going on. So Copper World is obviously a priority, but then you have Ingerbelle expansion, 1901 development deposits, Mason project right now. And also -- so just trying to understand here what is the priorities apart from Copper World? And also on Copper World, just trying to understand here if you guys could bring forward the concentrator leach facility that was expected by 2032. Just because, I mean, you have been seeing U.S. administration putting copper as a critical mineral. So I think could make sense, right, to bring that project forward so you can sell copper cathode domestically? And just a final question on Manitoba. Just trying to understand here how could the asset's economics profile change with this ramp-up in production coming from 1901, Talbot, et cetera. So would we still see the same level of all-in cash cost for the asset or that could change in light of this new ore coming from those deposits? Peter Gerald Kukielski: These are great questions, thank you. So in terms of priorities, you're absolutely right. So Copper World is just such a transformational project for our company that it is. So it's a clear priority in terms of the activities that are underway by the U.S. business unit. And of course, it occupies a lot of attention from corporate management, from our Board, et cetera. But it is a U.S. business unit priority and a company priority. That said, as Eugene described in his words about capital allocation, given the company's situation balance sheet-wise, the strength of our balance sheet going into this year, we do have capital available for the lowest risk-adjusted return projects at each business unit, and we want each business unit to push projects forward for consideration in that pecking order. So yes, you spoke about New Ingerbelle. We're super excited to have received the New Ingerbelle permit yesterday. And of course, that will be a priority in British Columbia once the SAG mill 2 and second SAG mill project has been completed fully and ramped up, it will become a priority there. In Peru, of course, the priority is getting the pebble crushing circuit done and then looking forward towards getting permits whereby we could further expand production over there. Manitoba, of course, you've heard about what our priorities there is that we're growing that whole asset up into something pretty amazing. So in terms of your question with respect to the economic profile there, we would target and expect that the economic profile or all-in sustaining costs would remain roughly of the same order of, let's say, $1,200 or so an ounce because we don't have to develop any new infrastructure. Everything is close to infrastructure. And then with your question with respect to Copper World and concentrate leaching and bringing that forward, we certainly would consider bringing it forward, but we don't want to start construction of that facility while we're still building the Copper World mine itself because we don't want to divert the attention of the project team. But it may make sense as we progress through construction that we look at bringing it forward so that we can actually continue to utilize the same team that's actually building the mine out itself. So I would say more to come on that. So Andre, would you -- anything that you would add? Andre Lauzon: I think you characterized it really well. It just feels like a $15 billion company. There's a lot of things going on in all areas and lots of growth going on in each different business unit. And so it's not -- they're all competing for capital. But the way, as Eugene set it up earlier on is we set ourselves up so that we can invest in all of the different areas. We have great projects in each of the different areas. And so it's just a really exciting time. And yes, there's a lot going on. Chi-Yen Lei: Maybe to summarize, Emerson, the budget for 2026 and the guidance for 2026 for growth capital includes funding for all of these projects already. And so they have been -- they've gone through the process. These are the best projects that are in each of the business units, and they're accounted for. So for example, there's $80 million of growth capital for British Columbia allocated to advance New Ingerbelle. For example, there's $40 million of growth capital allocated to Peru for the pebble crusher and $50 million to $60 million of exploration and development work in Manitoba for 1901 and exploration. So we are going to be able to build Copper World and fund advancements and increases in throughput and high-return projects at each of our business units to be able to come out of the decade with not only a new mine, but also refreshed and improved mines at 3 of our existing sites. Operator: The next question is from Craig Hutchison with TD Cowen. Craig Hutchison: I just want to follow back on Eugene's comments and Orest's question on Manitoba. The extension of the production and grade profile for gold for the next 5 to 10 years, is that being driven by resource conversion? Is it more just the exploration step out? Or do you also include some mill throughput expansions there? Andre Lauzon: All of those. All of those. So there's -- we've been drilling and exploring around Lalor mine for the last couple of years, right? And we've been pretty silent on what we've been finding, but we've been getting success. And so part of that is conversion of resource to reserve. Some of it is some new discovery. We talked about the satellites. So Talbot would be considered a satellite. There's a number of other ones in our portfolio. The real unknown is obviously New Britannia mine, right? So the best place to find is right in the shadow of a headframe and like that itself is a company maker. And so if you take all of that and then what you said is around the improvements. So we're challenging recovery. We're up over 70% recovery at Stall. We're looking at it with, like I said, the SART process at New Britannia, which is in our project for the end of the year. Hot tails as we look at the opportunity to get even more from Stall and even precious metal reprocessing from the tailings there. And then the Flin Flon one that someone mentioned earlier on that we didn't talk about, we're into the depths of pre-feas. We're working on and we're in the final stages of solving how to get the precious metals out of the zinc plant residue. And that is like the solution for the back end of the Flin Flon tails and the team is working on a really unique, but it's a process to convert pyrite to pyrrhotite and run it through our autoclaves and then use the solution that we have for the zinc plant. So that's moving along quite well, too. And so yes, no, we have a lot of -- there's a lot of gold to add to our portfolio from new discovery all the way through to getting better at recovering it and bringing new deposits online. So yes, it's an exciting few years ahead of us for sure. Craig Hutchison: Great, guys. And just maybe on New Ingerbelle, now that you guys have the permit in hand. Is that something that could positively impact your production in, say, 2028? Is there much capital to bring that project into play? Andre Lauzon: You're talking New Ingerbelle mine or the mill. Craig Hutchison: New Ingerbelle, the permits. Andre Lauzon: New Ingerbelle, sorry, and still on goal. Peter Gerald Kukielski: You're still in Manitoba. Andre Lauzon: I'm still in Manitoba. So -- yes, new Ingerbelle, yes, absolutely. So we have about 2 years of construction we have to do. It's very straightforward, haul roads, East haul road, West haul road, build the bridge, some ponds to build and then we'll be into it. And what's really neat about it, and we alluded in the press release is it's pretty much if you look at the long term, the copper grade is a little bit lower, but it's very close. But it's almost 60% to 100% higher gold grade. It's a really, really big improvement in grade. And the stripping is like we're running at almost like a 5:1 strip right now, it's about 3x less. And so from a profitability standpoint, not only are we increasing the gold through that increased throughput, but we're going to be spending a lot less on stripping. So it's -- New Ingerbelle is -- will be transformational for Copper Mountain in the 2028 range. Peter Gerald Kukielski: And there's also exploration upside at New Ingerbelle too. So we could... Andre Lauzon: $20 million of drilling going on, and we're exploring at Ingerbelle for upside potential to expand that high-grade gold, copper resource and -- as well as there's some targets on the Copper Mountain side as well, too. So yes. Craig Hutchison: So it sounds like that something could come into 2028 time frame based on the 2-year build. Andre Lauzon: That would be the plan, I would think, is where we'd be, yes. Craig Hutchison: And just one last question for me. Just on costs. It looks like you guys are using pretty conservative metal prices for your C1 calculations. Can you tell us what you're using for your TCRC costs just to get a sense of whether there's some potential upside there from a C1 cost perspective? Chi-Yen Lei: They didn't seem that conservative at the beginning of the year, but they are today. So we're definitely enjoying the benefits of the higher prices. On the TCRC front, we're -- our assumption is 0. So again, we're entering into deals that are lower -- that are below 0. So again, there could be a little bit of upside there. Operator: The next question is from Anita Soni with CIBC World Markets. Anita Soni: Most of them have been asked and answered, but I just want to clarify on BC. With the tie-in in the second half of the year, do you expect there'll be any impact into 2027 from the, I guess, the delay in that tie-in? Andre Lauzon: No, not at all. No, it's scheduled to ramp up, like there's -- like right now, even with the reduced mill capacity, we're seeing upwards sometimes above 40,000 tonnes per day at the current -- with the current restrictions that we placed on it. And so all of our processes are all being prepared right now for that ramp-up once we have that new feed-in shell in place. So we don't anticipate anything that's really problematic. Like -- there's no new feeders, nothing. It's just changing it and running at a heavier loading rate in the mill. So right now, we're being conservative on the bearing pressure in terms of the amount that we actually feed into the mill, but it's literally turning up the dial. And the mine itself has made some really, really great strides to increasing their production rate. So we're seeing averaging around 280,000 tonnes per day, which is unlocking high-grade copper coming in, in the mid part of the year as well, too. Anita Soni: Okay. So then on Jan 1, 2027, what's the throughput rate we should be using? Andre Lauzon: We should be using 50,000 tonnes a day. That's where we anticipate to be. Operator: And our last question is from Martin Pradier with Veritas Investment Research. I'm sorry, Martin, we're unable to hear you. It's a very corrupted line. Are you speaking directly into your microphone? Okay. Unfortunately, I think we're going to have to move on. So I would like to hand the conference back over to Candace Brule for closing remarks. Candace Brule: Thank you, operator. And Martin, please feel free to e-mail us your questions given the technical difficulties there. But thank you, everyone, for joining us today. If you have any further questions, please feel free to contact our Investor Relations team. Thank you and have a great day. Operator: This concludes the conference call for today. You may now disconnect your lines. Thank you for participating and have a pleasant day.
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.
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: Welcome to the Fourth Quarter 2025 WillScot Earnings Conference Call. My name is Sherry, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Charlie Wohlhuter. Charlie, you may begin. Charles Wohlhuter: All right. Thank you, Sherry, and good afternoon, everyone, and welcome to our fourth quarter and year-end 2025 earnings call. With me in the room today are Worthing Jackman, Executive Chairman; Tim Boswell, President and Chief Executive Officer; and Matt Jacobsen, Chief Financial Officer. Today's presentation materials may be found in our Investor Relations website at investors.willscot.com. Before we begin, I'd like to direct your attention to Slide #2, containing our safe harbor statements. We will be making forward-looking statements during the presentation and our Q&A session. Our business and operations are subject to a variety of risks and uncertainties, many of which are beyond our control. As a result, our actual results may differ materially from comments made on today's call. For more comprehensive review of the factors that could cause actual results to differ and other possible risks, please refer to the safe harbor statements in our presentation and our filings with the SEC. And now it's my pleasure to turn the call over to our President and new Chief Executive Officer, Tim Boswell. Timothy Boswell: Thank you, Charlie, and good afternoon, everybody. We appreciate you joining us on today's call for a discussion of the operating environment, our strategic priorities, our fourth quarter 2025 results and our outlook for 2026. I'd like to begin by saying that I'm grateful for and humbled by the opportunity to lead and support this remarkable company and its people on our next chapter of evolution. After spending considerable time across our operations in 2025 and as I approach my 14th anniversary with the company, I'm very excited about how we're positioned in the market, our talent level, the alignment of our team around priorities and our culture and values that define how we show up every day for our customers and for one another. Today, our business is emerging from a period of rapid transformation with an opportunity to set a new standard of performance in our industry through focused execution of our strategy. As we will discuss today, we are beginning to see momentum from our commercial initiatives to improve local market execution, develop our enterprise accounts and industry verticals and expand our more differentiated value-added offerings. We're backing this up with the strongest operational capabilities in the industry. Dependable execution is at the core of our right from the start value proposition, and we are executing a multiyear continuous improvement road map to further improve both our customer experience and our margins. This is a simple formula that builds upon the already outstanding financial characteristics of our business that include industry-leading free cash flow conversion and strong returns on capital. And while we have not assumed any turnaround for purposes of our guidance, we do see encouraging signs of progress across the business and the entire organization is aligned to drive a return to growth and shareholder value creation. This obviously starts with stabilizing the top line. Matt will cover the details of our Q4 results. The total revenue was down 2% year-over-year in the quarter, excluding write-offs, with the decline nearly all attributable to lower seasonal storage demand from one customer. Revenue from modular products was effectively flat year-over-year. So the lease portfolio is stabilizing as a result of our initiatives despite the continued contraction of nonresidential square footage starts in Q4. Adjusted EBITDA of $250 million in the quarter was right on top of our guidance, although the 44% margin was a bit lower driven by the revenue mix and some SG&A items. Cash generation remains strong with $91 million of adjusted free cash flow in the quarter, and we returned $30 million to shareholders through share repurchases and our quarterly cash dividend, while reducing $41 million of debt balances. Capital allocation was balanced as we leverage -- as we manage leverage prudently and prioritize opportunities with the strongest returns. And overall, there were no surprises in the quarter from my perspective, which is important as our team focuses on getting back to more consistent and dependable execution for shareholders. Looking ahead to 2026. Our initial guidance is intentionally conservative consistent with the approach that we articulated after the third quarter and does not assume any improvement in business trends. Our internal plans and compensation targets comfortably exceed this outlook, although the market backdrop remains mixed, and we think the conservatism is prudent given our recent trends. That said, our top priority is returning the business to steady organic growth, and we believe there is a path to deliver positive organic revenue growth inflection in the second half of the year. And we're seeing early results from our initiatives that if sustained, would get us there. First, entering 2026, sales staffing is up 13% year-over-year and with greater tenure, stronger sentiment and lower turnover across the sales organization. In Q4, we strengthened our regional sales management layer so that we have consistent oversight and accountability at the local level, clearly aligned incentives, and improved sales enablement systems. We absolutely have a productivity tailwind from this team, and I'm very happy with the changes that we've implemented. Second, enterprise accounts is accelerating with our focus on developing existing accounts and underpenetrated industry verticals. Enterprise account revenue was up 7% year-over-year for the full year in 2025 and up 10% year-over-year in Q4 excluding one large seasonal container customer. We expect to carry this momentum through 2026, delivering mid- to high single-digit revenue growth from the enterprise portfolio. And third, our expanded offering and focus on the customer experience absolutely complement these efforts, giving us more ways to win on every opportunity and in some cases, opening new opportunities that we may not have pursued historically. This is all consistent with what we shared in Q3, although we are a bit further along with the implementation and with clear visibility into the impact on our leading indicators. From an order perspective, our modular pending order book is up 17% year-over-year, with a significant impact from large RFP wins in the enterprise accounts portfolio, which are often tied to large project demand such as data centers, power generation and large-scale manufacturing. This excludes demand related to the upcoming World Cup, which we expect will be an additional 2,000 units of demand in Q2 and Q3, albeit on short duration. If we exclude all enterprise account activity, modular pending orders are up 5% year-over-year, so we are seeing increasing order volumes across customer segments and across all product lines within our modular offering. This is on the heels of 3% year-over-year activation growth in the fourth quarter on our modular products and with strong order growth continuing into January and February. We've also seen order rates on our portable storage product lines, up 11% year-over-year over the last 13 weeks, with that growth all coming from RFP wins within enterprise accounts, including some shorter-duration retail store remodels. So it is good to see growth in the storage order rates, but it is not yet as broad-based as we are seeing in modular. So it is early in the year, though our commercial team is well organized and with the significant order backlog, we are increasingly focused on operational readiness to support demand and have 3 key initiatives in flight across our field and centralized operations. First, as Matt will discuss, we are advancing our network optimization plan, following approval by the Board of Directors in December. This will allow us to exit surplus real estate positions and idle fleet while maintaining full service and coverage capabilities in all markets that we serve. Second, heading into Q2, we will be rolling out our enhanced scheduling and route optimization platform, which we expect will improve our dispatch function and transportation margins as well as customer service. And third, we're continuing to make improvements across our support center operations, resulting in accelerated cash collections, reduced days sales outstanding and significant improvements in Net Promoter Scores related to our invoicing and customer service functions. We prioritized each of these initiatives to improve efficiency and the customer experience. And these will be sources of operating leverage when activity levels pick up across the network and reasons we're confident in our longer-term target range for EBITDA margins. Before I turn the floor over to Matt, I'd like to thank the entire WillScot team again for their support through our recent leadership transition. Over the last several months, we have worked hard and collaboratively to align on our strategic priorities. And we have a shared understanding that our success will be defined by disciplined execution that delivers consistent, repeatable results across the organization. The initiatives we have in motion from strengthening our go-to-market strategy, to continuous improvement of our operations, create a pathway back to sustainable organic growth and shareholder value creation, which is our focus. Matt? Matthew Jacobsen: Thanks, Tim. I'll get it in the details shortly, but overall, results at the end of the year were in line or better than we had guided. In the fourth quarter, total revenue was $566 million and adjusted EBITDA was $250 million representing a margin of 44.2%. Revenues in the quarter came in a bit better than we had expected, but were down $38 million or 6% versus the prior year quarter. Excluding the cleanup of out-of-period AR that we discussed last quarter, revenues were down approximately $12 million or 2% year-over-year, the majority of which was driven by the reduction in our seasonal retail container volumes with one customer. While higher sales and delivery and return activity supported revenue performance above our guide, the shift in revenue mix weighed on consolidated margins by about 50 basis points versus our expectations. We also incurred elevated levels of health insurance costs in the fourth quarter, which compressed margins by another 60 basis points and reduced the favorability to our guide from an EBITDA perspective. For the full year 2025, total revenue was $2.28 billion and adjusted EBITDA was $971 million at a margin of 42.6%. So overall, we ended up the year a little better than we had guided and are focused on operational discipline and cost control as we position the business to support a growing order book in early 2026. If we look a little bit closer at our leasing revenue on Slide 5, we can see the underlying stability in our leasing revenues. Here, you can see our performance with and without write-off activity. Write-off activity within leasing revenue was flat sequentially at approximately $25 million, but up approximately $19 million versus the prior year quarter. However, our modular space leasing revenues in the quarter were essentially flat to prior year, which when combined with improved activity levels and the growing order book, as Tim highlighted, indicates lease revenue stabilization in our largest product class and the opportunity to drive revenue inflection in the second half of 2026. Portable storage leasing revenue was down approximately $10 million from the prior year as expected driven by lower volumes and end-of-year seasonal storage business, partially offset by a modest sequential increase driven by our climate controlled storage offering. And VAPS revenue in the quarter was essentially flat in absolute dollars, both year-over-year and sequentially with increasing VAPS penetration, which was up by 100 basis points year-over-year to 17.8% of total revenue or 17.4% for fiscal year 2025. Turning to Slide 6. In the fourth quarter, adjusted free cash flow was $91 million, representing a 16.1% margin and $0.50 per share. For the full year 2025, adjusted free cash flow totaled $489 million and exceeded our guidance of $475 million, representing a 21.4% margin and $2.70 per share. Consistent free cash flow conversion continues to be a unique strength of our business and has demonstrated remarkable resilience as the lease portfolio positions for inflection. As shown on Slide 7, for the full year, net CapEx totaled $273 million, up 17% compared to fiscal year 2024. While we estimate approximately $200 million of our CapEx is for maintenance CapEx, we've been investing above maintenance levels to service large project demand with our FLEX product, additional complexes and also in our newer product categories to support growth where customer demand is strong. We will continue to prioritize demand-driven investments in the more differentiated, higher-value products. We also opportunistically allocated $145 million towards acquisitions, paid down $146 million in borrowings and returned $151 million to shareholders through both repurchases and our quarterly dividend distribution program in 2025. We will continue to take a balanced approach to allocating capital by managing leverage while being opportunistic with share repurchases and potential acquisitions. Moving to Slide 8. We ended 2025 with total debt of under $3.6 billion with a leverage ratio of 3.6x. During the quarter, we amended and extended the maturity of our ABL credit facility to October of 2030 and use some of our availability to redeem $50 million of our 2031 notes, which carry the highest interest rate in our debt stack. Our next maturity is not for another 2.5 years, and we have sufficient flexibility and liquidity to fund our capital allocation priorities. Slide 9 is new and provides an overview of our network optimization plan, which was approved by the Board of Directors on December 18. As leases expire over the next 4 years, and we exit approximately 25% of our leased acreage, we expect to realize between $25 million and $30 million of annual real estate cost savings. Said another way, the annual growth rate of our occupancy costs should decline to a mid-single-digit average growth rate over the period. versus the 10% plus that we've been seeing over the last several years, helping support achievement of our EBITDA margin target range. As part of this plan, we recognized a noncash restructuring charge of $302 million from accelerated depreciation on our rental equipment in the fourth quarter that reduced the net book value on approximately 53,000 units to salvage value, which is approximately $10 million. The move aligns with our strategy of shifting the portfolio towards higher-value offerings as presented at our Investor Day last March. In turn, stronger unit economics of our overall portfolio will support improved margins and ROIC, while still preserving sufficient capital to meet demand in all product categories. With regards to the optics of our utilization rates, the average size of our entire fleet over the quarter does not fully reflect the network optimization plan since we recognized the accelerated depreciation on the units in December. Therefore, you will not see the entire impact on our utilization until the first quarter of 2026, but we have provided a pro forma view in the appendix, which shows that our utilization for both modular space and portable storage products increases by over 700 basis points after removing these units from the fleet. As we ramp up our network optimization initiative, we will also begin to incur cash costs related to rental equipment disposals and fleet relocation costs totaling about $60 million over the next several years with an estimated $35 million in 2026. From a presentation perspective, fleet disposal costs will be included in restructuring expense and both fleet disposal costs and fleet relocation expenses will be added back as we present adjusted EBITDA, adjusted net income and adjusted free cash flow. The related salvage value for recycling containers and estimated real estate proceeds in future years will partially offset these cash implementation costs, but will have limited impact on earnings. And finally, on Slide 10 is our 2026 outlook for revenue of approximately $2.175 billion and adjusted EBITDA of $900 million. As we spoke about in the third quarter, relative to the $971 million of adjusted EBITDA in 2025, we're entering the year with an approximately $50 million headwind in our traditional storage business. Our outlook of $900 million is a conservative view relative to our current run rate beginning the year and does not include benefits from ongoing internal initiatives that, if sustained, could drive year-over-year leasing revenue growth at some point in the second half of the year, and place us on a growth trajectory into 2027. As Tim mentioned, we're driving internal plans and compensation targets that would inflect revenue in the second half of the year and comfortably exceed the revenue and EBITDA guidance. For modeling purposes, the first quarter is the slowest period of the year for activations, and we will incur increased variable rental costs for the spring activation period as seen in the sequential progression of our adjusted EBITDA margins. Based on where we're starting the year, we would guide to approximately $515 million of revenue for the first quarter and adjusted EBITDA of approximately $200 million. Beyond the first quarter, we anticipate revenue to increase sequentially by 7% or 8% into Q2 as we support our highest logistics activity quarter, including the beginning of the World Cup. For net CapEx, we expect to invest about $275 million in 2026. Our net CapEx plan maintains the same strategic approach, prioritizing high-value and differentiated product categories and will be slightly front-half weighted to support demand. Approximately 70% of our net CapEx will be split evenly between normal modular refurbishments and new fleet purchases of differentiated product categories such as FLEX and complexes to support large project requirements. 25% directed towards continued VAPS investment and the remaining 5% towards infrastructure. Clearly, the $275 million net CapEx guide implies that we're investing into growth opportunities that are not fully reflected in our revenue and EBITDA guidance. As we progress through the year, we will adjust investment levels to reflect the demand environment. Though based on what we're seeing right now, we expect to invest at this annualized level in the first half of the year. Further down the P&L, we expect total depreciation and amortization to be approximately $400 million for 2026 or approximately $100 million per quarter. About $310 million related to rental equipment and the remaining $90 million includes approximately $40 million of amortization expense and $50 million of other depreciation related to infrastructure. Based on current debt balances, we would expect interest expense to be approximately $215 million for 2026 including approximately $9 million of noncash expense. And just as a reminder, the cash timing of bond interest payments is concentrated more in Q2 and Q4. And finally, regarding taxes. Our effective tax rate remains approximately 26%, but cash taxes will remain isolated to state and local levels as they were in 2025 as we do expect our NOLs to shield [indiscernible] the federal level in 2026. Based on current projections, we expect to become a full federal cash taxpayer in 2027. So in summary, the end of 2025 finished up as expected, and our outlook for '26 as we sit here today, is a conservative view relative to our run rate entering the year. If the positive commercial momentum that we're seeing today continues, we believe we could see year-over-year leasing revenue growth at some point in the second half of the year, which would drive us comfortably above our current outlook. Our internal team is fully aligned on inflecting revenue in the business and returning to growth. Back to you, Tim. Timothy Boswell: Thank you, Matt, and thanks again to our entire team who are aligned and focused on delivering results and delivering them in the right way, consistent with our values. WillScot is uniquely positioned in the marketplace with opportunities for growth that only we can execute, given our differentiated capabilities and without constraints given our outstanding financial profile. I'm incredibly excited about our prospects in 2026 and beyond. And I see clear alignment between the strength of our culture, the execution of our strategy, the growth of our business and long-term shareholder value creation. This concludes our prepared remarks. I will now turn it back to the operator to open the line for Q&A. Operator: [Operator Instructions] Our first question will come from the line of Andrew Wittmann with Baird. Andrew J. Wittmann: So I guess I just wanted to kind of check in on the order book. I mean, Tim, you gave some pretty decent stats here about orders kind of returning. You kind of hedged the comment that it's kind of early here. You got to see if this holds. Are you seeing anything seasonally that maybe accelerated some of the orders that maybe they're running above trend? Or what are some of the other factors, I guess, that would lead you to believe that maybe this is good, but maybe it's not sustainable here because obviously, the guidance is much lower. So I thought maybe you could just elaborate on that, please. Timothy Boswell: Yes. As you know, Andy and good to talk to you, the seasonal activity usually picks up as we move deeper into Q1 and early Q2. So in a normal year, we still wouldn't have seen kind of the typical impact of that seasonal increase in construction activity in the lower 48 states in particular. What I did call out is a number of larger RFP wins in our enterprise accounts portfolio. And that is a very big driver here of the momentum we're seeing in the business. As you will recall, we reorganized that team back in Q2 of last year, added some leadership depth across the team and organized it across 5 key industry verticals, and we're seeing traction really across all of those with construction being the greatest. If I unpack what's going on in the construction vertical, data centers, not surprisingly, are popping up all over the United States, and we are present on many of those. And as we look at data center activity, specifically in contractual written revenue, we expect that subvertical could be up 50% year-over-year in 2026. So we don't see that slowing down. So overall, the modular book is building earlier in the year than we would typically see and with a strong bias towards enterprise accounts. We do have the World Cup coming up. We try to keep that separate from the stats that we gave you just because that will be kind of a one and done deal at least this year until we get to the Olympics, but really encouraged by what we're seeing through the enterprise account team. And then the other important commercial strategy has been on dialing in our local market execution. And we made a number of structural changes through the second half of last year that I'm very pleased with. I think we're getting good momentum across the local sales org as well. We're seeing that in some of the more transactional product lines within Modular, which are also up from an order standpoint, not so much yet in storage, but those changes are fairly recent and the early trends are encouraging. So a little too soon to extrapolate all of that across the rest of the year, especially not knowing how the typical construction season is going to build, but I'm happy with the progress year-to-date. Andrew J. Wittmann: Got it. That's helpful. I guess for my follow-up, I wanted to ask about VAPS as well. To me, I mean you've talked about kind of trying to go to market a little bit differently there that maybe the last year or 2 wasn't totally up to your standards. It looks like there's a little bit better momentum coming out here. I guess my question is, is that true? Have you made changes? And do you believe that they're benefiting on the VAPS? Or obviously, you're still not to your target levels, but just starting to get a little momentum there. So I just -- I wanted to give you an opportunity to talk about that and let us know what you're doing there and seeing there on that initiative? Timothy Boswell: You're right that the penetration levels is measured in terms of percentage of revenue of the lease revenue book are slightly increasing. I'd say that's more of a function of the mix shift and the traction that we're seeing in the modular portfolio than it is improvement in terms of penetration on a per unit basis, which as you'll recall, is how we used to look at it. I still think we have some opportunity and work to do there. And as I think about our commercial initiatives in the first half of 2026, we made some changes to the regional sales leadership structure at the local level across the network and modular VAPS penetration in furniture, in particular, is a very high priority for that team as we kind of get back to the best practices that we know we're working a couple of years ago. So I still put that in the opportunity column, Andy, and the only other thing I'd add there is the offering is continuing to expand. Fencing and perimeter solutions is set for a nationwide rollout this year. So we are going to have a tailwind across that solution set in addition to the traditional offering where we've got a further penetration opportunity just across all the volume that we're delivering. Operator: One moment for our next question. And that will come from the line of Angel Castillo with Morgan Stanley. Angel Castillo Malpica: Tim, I appreciate all the color. I guess, just trying to make sure I understand this because as we think about maybe a second half inflection point here, I guess I'm not entirely following why we're seeing modular orders on the non-enterprise build or rise 5% year-over-year, but you're also talking about, I think, some perhaps maybe you're seeing some backlog build that's a little further out or earlier than normal. But why wouldn't we see some of this reflect itself at least in 2Q and see more of a ramp up there? Is it just -- is this a factor of more mega project than local? Or why wouldn't we see that, I guess, that non-enterprise piece as well showing up earlier? Timothy Boswell: Well, as you look at the pending order book that we have today, we do expect a sizable portion of that to convert in the first half of the year. What we're not doing is extrapolating these activity levels deep into Q2 and the second half of the year, just given it's early in that traditional construction season when activity would typically build. So the early signs are indeed encouraging. The majority of that order book activity should deliver in the first half. Lead times have not changed dramatically as I look across the portfolio. There is a heavy mix of mega project activity, as I mentioned, data center, power gen, manufacturing, really across all geographies, but we're just not prepared today to extrapolate that into the second half of the year. Angel Castillo Malpica: Understood. And then sorry if I missed this, but I guess did you say what your 2026 free cash flow guidance? And just curious if you didn't, what that is and what the free cash flow margin kind of implied, -- just help us bridge the puts and takes as we think about next year's or I guess, this year's free cash flow versus last year? Matthew Jacobsen: Yes. Angel, I can take that one. I mean we've kind of included most of the most of the components there. But our math would say around $415 million of adjusted free cash flow. So just one thing to note there, we do expect, like I said, to incur roughly $35 million to implement our network optimization plan. That would be excluded from that $415 million. So think of that as kind of an adjustment to get back to an adjusted free cash flow -- but really, between interest and the different pieces there, that's about where we're ending up. So pretty resilient, honestly, and kind of looking at how the business has performed over the last few years in a macro decline. And as we start to get to that inflection point, the free cash flow has been really resilient. Timothy Boswell: Only thing I'd add to that is just the CapEx guide, given the activity levels that we're seeing right now in the first half of the year, we do expect to be investing at that $275 million net CapEx annualized level. We'll, of course, revisit that weekly is kind of our practice based on the demand that we're seeing. If we see these levels continuing. I expect we hit that $275 level for the year. If things slow down, we'll obviously pull it back and you'd see that free cash flow margin pop back up north of 20% versus where it sits in the current guidance. So we'll continue to take a demand-driven approach to the net CapEx. Operator: One moment for our next question. And that will come from the line of Steven Ramsey with Thompson Research Group. Steven Ramsey: I wanted to see if you could parse out the enterprise forecast of the mid-single to high single-digit growth for 2026. And if the pricing contribution in enterprise is similar to the modular segment displayed in 2025, that points to volume being an equal contributor to the enterprise revenue growth. So maybe you can parse just the drivers of enterprise revenue. Timothy Boswell: Steven, I think this is an easy one. It's really volume driven, right? We don't see significant pricing differences as we segment across enterprise and other customers. We take a dynamic approach to pricing. We look at customer characteristics and project characteristics and all those good things. But at the end of the day, you don't see significant price or VAPS penetration differences between the enterprise accounts, especially in modular versus other customer segments. So the growth in that segment is volume-driven, and that's a function of going deeper with customers where we already have relationships, but maybe didn't have as robust of an account strategy as well as the vertical business development strategy. And as you know, we touch every sector within the North American economy. Historically, we've been very organized around construction and we're taking that same focused approach and applying it to 4 or 5 other key industry verticals that we talked about at the Investor Day, where we know we've got great marquee accounts, great value proposition and opportunities to grow with our existing offering. Steven Ramsey: Okay. That's helpful color. And then I wanted to think about the sales staffing and the measurements you gave on numbers of better tenure, maturation, et cetera, and how that connects to the better order and activation trends coming in on a lag. How much of the activation in order growth is the maturing staffing and seeing more and capturing more opportunities versus the mega projects being better? Timothy Boswell: I'd say it's earlier in terms of the impact of the field sales organization. Some of the changes that we put in place at the end of 2025 are just kind of taking hold now. We've completed our first month of the year from a commission standpoint and exceeded the targets that we had deployed across the field sales organization. So that's a good start for the year and bodes well for earning potential across our sales organization. So that's a good thing. As I look at the objective metrics, staffing up 13%, turnover is -- or at least voluntary turnover is half of what it would have been back in the middle of 2024 when we were experiencing peak disruption from the field reorganization we measure employee sentiment across all categories quarterly, and that is a driver of performance, whether you're in a sales role or any other role, and we're seeing improvements there. So all of those are either quantitative or qualitative indicators that tell me we've got tailwinds across that team. We have made systematic improvements from a sales enablement standpoint in our sales HQ. This is our CRM system where we're taking a more prescriptive approach to prioritizing opportunities and next best actions for sales reps through our CRM as well as through phone routing and other things. So sitting here today, we really don't have any other changes that we're contemplating for the field sales organization. I feel like that work is done. The team is in place. The leadership is in line. The incentives are consistent across really all sales roles, which has been a long time coming. And I'm happy with the positioning and it's time to let them run. Operator: One moment for our next question and that will come from the line of Kyle Menges with Citigroup. Kyle Menges: I was hoping if you could just talk about the positive rate you're seeing in portable storage. So and just maybe what's driving some of that? And talk a little bit about how you're balancing rate versus market share within portable storage? Timothy Boswell: Okay, I'll start. Matt, I'll probably miss some details, so you can jump in. If you look at the as reported average rate up 9% year-over-year that we report in the investor presentation that is almost entirely mix driven by rapid growth within our cold storage offering. If I think about traditional storage, those spot rates have bottomed over the last couple of quarters, it feels like and are off significantly from where they would have been back at the peak in the middle of 2023. So I think we've digested that headwind, and that's included in the $50 million revenue headwind that Matt referenced for the traditional storage business. So I think that is behind us at this point. The favorable mix shift is driving that growth in AMR. Our order book related to cold storage sitting here right now is up 105% year-over-year. So that's performing quite well and has an added benefit of taking us into sectors and customers where we really didn't have a hook previously. A good example of that would be third-party logistics, warehousing and distribution. We've had customers in that sector forever, but not with a targeted strategy. The flexible cold storage offering is really attractive across those 3PLs, warehousing and distribution and retail. And it's allowing us to then pull other more traditional parts of our offering into those types of customers. So really happy with how that's performing. It's a good example of how we're repositioning the portfolio towards higher value-added solutions. Higher value-added solutions allow us to capture that value and pricing, and that's what you're seeing in the storage AMR. Matthew Jacobsen: Yes. Not much to add there other than the containers, if you look at them, by themselves are up about 1% year-over-year. So we're continuing to get impact of all the different pricing levers that we have, but it's been relatively -- it's been very stable, which is not a bad thing, but makes contributing to the overall increase. Kyle Menges: Helpful. And then a follow-up question on AI and just how you're leveraging AI internally. And in your prepared remarks, I think you said that efforts you're making around minimizing logistics costs, I think, some efforts around collections as well. I mean you seem like areas that would be ripe for AI implementation. So curious what you're doing today and if you're exploring just any use cases for AI internally in the future? Timothy Boswell: We are indeed, first and foremost. We hope everybody just keeps spending on AI and building data centers. It's probably the most impactful thing that we see in the business right now. We've been stepping into this area for a couple of years now. We started with AI tools in our branches and video monitoring of movements within our branches for safety purposes. Our pricing optimization platform is AI-based. Internally, we have developed a sales call coaching model that is AI-enabled. And just to dig in on that one a little bit. This is a tool that can review all of our sales call transcripts. It's got a scoring rubric, whereby it can identify sales calls that could have been improved in some way. It helps our sales coaches, diagnose very quickly, which reps need coaching on what topics and be a lot more efficient with how we spend that sales manager resources time right. So there are a host of ways that we can deploy these tools in the back office. That said, we don't need to jump straight to being cutting edge on all things, right? There's still a lot of basic blocking and tackling in the back office, where we're seeing traction on collections and customer service, the old-fashioned way, which I think can drive real margin improvement in the business. But I completely agree with you. There are aspects of our sales model, aspects of our customer service model, employee training, where AI is very relevant, and we are very open to those opportunities. Operator: And one moment for our next question. That will come from the line of Tim Mulrooney with William Blair. Benjamin Luke McFadden: This is Luke McFadden on for Tim. Can you provide some insight into how conversations with your local customer set have been trending recently? I know things like interest rates, tariffs, building costs were headwinds for that customer cohort this past year is sentiment or confidence in the outlook for 2026 improving at all with that customer set? Timothy Boswell: The best barometer there is the feedback that we're getting from our local general managers and our local sales team. And going back to November when we had those teams in for budgeting and I've been out on the road recently, meeting with the teams for early updates in 2026. And that sentiment and that energy level is notably improved relative to where we would have been last year. I can't say that's all customer or market driven. A lot of that is being better organized internally and with better structure and accountability in place relative to how we entered last year. So I think that's probably the bigger driver of the two. Benjamin Luke McFadden: That's helpful color. And as my follow-up, I know one of your ongoing commercial priorities has been to do improve and do a better job winning subcontracted business. And the large projects where you work closely with the prime GC. Can you provide an update on your progress there around winning that subcontractor work? Timothy Boswell: Yes. This is pretty exciting, actually. Back in -- it was early Q4, we introduced a kind of a rewards program and referral program for our larger general contractors. And this is a way to partner with our largest contractors and provide our customers with an incentive to help bundle more of that subcontractor activity with us. It has huge benefits to the primary general contractors because they get more control and visibility and uniformity, frankly, across all of the subs coming on to the job site. And from our perspective, obviously, it's almost like an indirect sales channel that allows us to capture that activity more efficiently than targeting every subcontractor individually. So very encouraged with the early performance of that program. And if you think about our focus on local sales market execution, one thing that we had gotten away from over the last couple of years is having true account ownership at the local level. So what we've done is gone across every territory in North America. Obviously, every ZIP code rolls into one of our territory sales reps. And within those ZIP codes, we've got top accounts for which that territory sales rep is personally accountable for. So I think historically, we've done a good job targeting construction project activity through our various systems. What we got away from was just that ongoing account management and relationship development at the local level. And we've absolutely reemphasized that later in Q4 and going into 2026. And I think that's a really important ingredient for the effectiveness of the local sales organization. And it mimics that account focus in that account strategy that we've put in place at the enterprise level. So we're trying to do it at both ends of the spectrum. Operator: One moment for our next question. And that will come from the line of Manav Patnaik with Barclays. John Ronan Kennedy: This is Ronan Kennedy on for Manav. Are you helping with the underlying volume and price assumptions for the respective segments for 1Q and/or full year '26. And can you comment on if and how conservatism such as I think what was discussed in Andy and others question as to not extrapolating order book conversion or not including any impact of commercial initiatives is specifically impacting those assumptions and the opportunity for upside there? Matthew Jacobsen: Ronan, thanks for the question. I'll try and capture that here. I mean I think as we look at our pricing and volume assumptions and kind of what's in our guide and what we think is opportunity kind of above our guide if the trends continue. Is that kind of what you were kind of trying to get after? John Ronan Kennedy: Yes, yes. And if you're able to help with how to think fundamentally about volume and price, where that's been taken back, respectively, by conservatism and the potential upside? Matthew Jacobsen: Yes. No, I think as we look at our guide and we think about volume and price, I mean, you -- as we said in our opening comments, the guide that we've provided is kind of a continuation of recent trends, right? And those trends have been having some volume pressures, obviously, on the storage side of the business, we're starting the year with about a $50 million kind of headwinds. So we're not assuming that, that picks up and starts to reverse. On the modular side, that's been a bit more stable, right? We showed modular leasing revenues were basically flat year-over-year, and we're kind of starting from a standpoint of that being the starting point for -- at least from a revenue perspective, not volume, but revenue starting point for the year and that kind of continuing forward. And if these trends that we're seeing recently are sustained for a couple of quarters, you start to then get to a point where you're getting closer and closer to some potential volume inflection. That won't happen in 2 quarters, but you're moving in that direction. And that's ultimately what we're all focused on is driving internal volume growth, doing that smartly, not at the expensive price, but driving consistency there as well. So we're just -- we're being conservative in the guide because it's only 1.5 months in. And this is what we know today, but we know that can also change as things go forward, and we'll be watching it closely and give you guys an update here in a few months. John Ronan Kennedy: Got it. And if I may, as a follow-up, can I ask -- are you helping with how to think about -- and I know, Matt, you just alluded to, it's only so far into the year, cognizant of that time frame. But going back to last March and the strategic -- or the initiatives and the targets rolled out for the 3- to 5-year horizon. I would say things haven't necessarily played out as anticipated, certainly from a market demand dynamic standpoint, then you had the 325 introduction of further strategic initiatives, prioritization of some optimization initiative and a fundamental shift to the more conservative approach to forecasting and guiding. Is there a way to think about the 3- to 5-year targets in light of all that? Or is it -- look, they're 3 to 5 years and there's still plenty of time, and that's why it was 3 to 5 years? Or just interested in your thoughts on that, please. Timothy Boswell: Ronan, I'll take this one. And I think you ended in pretty much the right place. Obviously, we didn't finish 2025 where we would have hoped back in March of 2025. And so you can think of the starting point to get to those longer-term revenue and EBITDA targets is obviously lower. And the implication there is it may take more time to get there. So look at the outer end of that range. In terms of our strategic initiatives, the only thing that's new relative to where we were in March is the network optimization initiative. And that was a function of, hey, we see the market bottoming in a place that's lower than we anticipated, which means we've got an opportunity to optimize both fleet and real estate. So that's a -- that was a new 1 relative to where we would have been not quite a year ago, but the focus on local market execution has -- in terms of the changes that we've implemented has played out very much with what I -- how I would have planned about a year ago. Enterprise accounts, the same. The focus on the value-added offering, the same. I mentioned in my prepared remarks, the focus operationally on route optimization and scheduling. We talked about that in March a year ago. We talked about optimization of back-office processes, and we're making progress across all those things. The reality is you can't really see the impact of that -- those margin-oriented initiatives because they're being offset in 2025 by the natural negative operating leverage in the business in this environment. So in my prepared remarks, I alluded to the fact that these are structural improvements to the business and the margin profile and margin potential in the business that we expect will manifest themselves when we get volume back -- flowing back through all the branches. I like what I see sitting here in mid-February from a volume standpoint, but in order to get that impact, it has to be sustained and that's why we're taking a cautious approach to the guidance. Operator: One moment for our next question. And that will come from the line of Faiza Alwy with Deutsche Bank. Faiza Alwy: I wanted to follow up first just on the conservatism comments again. I just want to make sure I'm understanding -- so as you're talking about revenue inflection in the back half, is that included in the guide as of right now? Or are you essentially saying that if current trends sustain then that's where we will be? Matthew Jacobsen: It's more the latter there, Faiza. Thanks for the question. I think we're seeing some good commercial indicators right now. But don't know that those will sustain themselves to get us to a point where we would see second half inflection for sure. So our conservative guide is based on the run rate coming out of last year based on kind of where that would play out. So if we do see a sustained consistent year-over-year improvement in the commercial activity, that would be above our current guide. And that's where we see that there could be a potential for inflection in the second half of the year, but that's not included in our guidance. Faiza Alwy: Perfect. And then I have to ask about data center since we've been sounding so positive on that for good reason, I'm sure. Maybe help us think through like what percentage of the business is that vertical at this point. I suspect it's small, but maybe you can give us some background on like what's that RFP process like as you think about those RFPs, like what has been your win rates there? And what -- essentially, I'm trying to figure out what the competitive dynamics are there? Because I think a lot of us believe in that, that activity continuing. So any additional perspective there would be helpful. Timothy Boswell: Yes, I'm not going to have a precise quantification of this for you, Faiza, but I'll give you maybe a way to think about it. And first and foremost, I'd say, from our perspective, this activity is picking up, not slowing down, at least that's been our experience here from Q4 coming into Q1. And as I said in either in response to an earlier question, we measure the new contractual revenue that we write in any given period. This is number of units times the price, times the duration is the total project value. And we think that the data center sub-vertical could increase by 50% or so on that metric in 2026. So that's a meaningful increase, but you're talking about less than 5% of our overall revenue at the end of the day. So it's a very important and kind of unique change in the demand environment. We are absolutely taking advantage of it. I can think of data center projects from Des Moines to Milwaukee, Lubbock and Abilene, Texas, Indianapolis, Jackson, Mississippi, Chicago, Reno is on fire, Northern Virginia. So it's everywhere, right? I can't quote you the win rate off the top of my head, but we're on all of those projects. There are situations I'm thinking about Micron, not a data center, but related to that supply chain where we'll have hundreds of units, but actually can't supply the entire demand across that project, and it's fundamentally changing the nature of the Boise market for the next 10 years probably. So this is a very significant change as I reflect back to other changes like this in the business, like when the business was bottoming coming out of the GFC, we had a very significant increase in oil and gas activity in 2011, '12, '13, which really led the reinflection of the nonres market coming out of the GFC. This feels a little similar to that, but I haven't seen anything quite like this since that time. Operator: One moment for our next question. And that will come from the line of Philip Ng with Jefferies. Philip Ng: I think in your prepared remarks, you talked about nonres square footage starts were down about 6% in '25 and about 12% for the quarter. Is there a good way to think about the typical lag of that number to your units on rent because you're calling out pretty encouraging orders. I know it's very early to start the year. So just curious what kind of end market assumptions are you kind of baking into your outlook for this year? Timothy Boswell: It's a good question, Phil. This is Tim. And our activation volumes typically align with project starts, right? So the encouraging thing from my perspective is we're seeing meaningful activation and order growth in a declining starts environment. And that's a bit unusual in our business. To me, that means 2 things. We're outperforming that metric as an organization I think that's got a couple of pieces to it. One, the local sales organization is better organized today than it would have been a year ago; two, the enterprise efforts and the mix of that activity is working in our favor because we are disproportionately well positioned to serve the needs of these larger industrial projects. In the case of some of these things like this large soccer tournament that's coming up, I'm not sure anybody could do exactly what we're doing for the customer. That's just a function of our unique capabilities and our unique value proposition. And I think the way we're organized right now, we're better positioned to take advantage of that. Philip Ng: That's helpful, Tim. I guess, kind of dig a little deeper on that. Can you remind us like what percent of your business is actually tied to backlogs. I'm not as clear how good of a leading indicator is that in terms of leasing revenue, just overall, it just would be helpful to kind of get a little more color on that. And have you seen your units on rent, I guess, inflect like your order book, at least through early February? Timothy Boswell: Yes. On that latter point, I mean, we had a modest increase in modular unit on rent in January, which is seasonally unusual. We haven't seen that in storage. So it is activations lead to orders or orders lead to activations. It's the basic sales funnel and the order book that we see right now supports activation growth leading into Q2. And if that's sustained, typically for a couple of quarters, you get unit on rent inflection, and that's been the goal here for some time. And we're not making that assumption in the guidance to Faiza's question a minute ago, but if sustained these activation levels and order levels would support it later in the year. Operator: [Operator Instructions] Our next question will come from the line of Scott Schneeberger with Oppenheimer. Daniel Hultberg: It's Daniel on for Scott. Could you please provide the bridge from the EBITDA in 2025 to the guide for 2026. I know you have the storage headwind, but the other components are you able to quantify that? Timothy Boswell: Yes, Daniel, that is the biggest component. It's really a $50 million kind of headwind that we're facing. And then if everything else, we've provided some conservatism to that point, which then brings us down to the $900 million. Really that's the main thing, right? So if -- obviously, if our commercial activity sustains like we've seen recently, we would go -- we would do better than that. And that's what we're driving to internally as a team. That's what all of our compensation is based on. But that's really the main brick in the bridge. Daniel Hultberg: Okay. So there's a lot of real swing factors in that range that could put you higher and lower? Matthew Jacobsen: I mean there's obviously other opportunities and risks, but it really does boil down to that storage headwind. Daniel Hultberg: And on M&A, last year in the second quarter '25, you had a pretty big M&A spend. Will there be a trickle through to EBITDA growth in '26 from that? And the level of M&A spend you had in '25 and in '24, is that a good way to think about it going forward? Timothy Boswell: It's a good question. You can assume that the impact of those acquisitions are fully in our run rate exiting 2025. So I don't expect anything incremental for purposes of 2026 that we haven't already talked about. I think it's a reasonable M&A level to assume, but we don't really give M&A guidance given it's difficult to predict the timing and probability of those transactions. I would just point you back to the capital allocation framework. And over time, I think we've demonstrated that we have been able to deploy that roughly 25% of our available capital into tuck-in acquisitions. Nothing imminent to announce sitting here today. But over time, I think that's been a reliable capital allocation framework. Operator: We have now reached the end of today's Q&A. I would now like to turn the call back over to Mr. Tim Boswell for any closing remarks. Timothy Boswell: Thanks, Sherry, and thanks again to the entire WillScot team for your focus and dedication. Thanks to everyone on the phone for attending and for your interest in WillScot. We look forward to following up with many of you here in the coming days and weeks and providing another update after we conclude the first quarter. Thanks very much. Operator: Thank you, ladies and gentlemen. This concludes today's conference. You may now disconnect.
Operator: Good day, and welcome to the ICU Medical, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I'd like to now turn the conference over to John Mills. Please go ahead, sir. John Mills: Good afternoon, everyone. Thank you for joining us to discuss ICU Medical's financial results for the fourth quarter and full year of 2025. On the call today representing ICU Medical is Vivek Jain, Chief Executive Officer and Chairman; and Brian Bonnell, Chief Financial Officer. We wanted to let everyone know that we have a presentation accompanying today's prepared remarks. To view the presentation, please go to our Investor page and click on the Events Calendar and it will be under the fourth quarter 2025 events. Before we start our prepared remarks, I want to touch upon any forward-looking statements made during the call, including beliefs and expectations about the company's future results. Please be aware they are based on the best available information to management and assumptions that are reasonable. Such statements are not intended to be a representation of future results and are subject to risks and uncertainties. Future results may differ materially from management's current expectations. We refer all of you to the company's SEC filings for more detailed information on the risks and uncertainties that have a direct bearing on operating results and financial position. Please note that during today's call, we will also discuss non-GAAP financial measures, including results on an adjusted basis. We believe these financial measures can facilitate a more complete analysis and greater transparency in ICU Medical's ongoing results of operations, particularly when comparing underlying results from period to period. We've also included a reconciliation of these non-GAAP measures in today's release and provided as much detail as possible on any addendums that are added back. And with that, it is my pleasure to turn the call over to Vivek. Vivek Jain: Thanks, John, and good afternoon, everyone. We are glad the call is earlier after year-end as the systems and processes have become more integrated within the company. I'll walk through our high-level revenue and earnings performance, provide some important housekeeping and operational updates and comment a bit on our near-term outlook. Then I'll turn it over to Brian to recap the full Q4 results and provide our complete 2026 guidance. After that, I'll offer a few thoughts on our longer-term outlook, capital allocation strategy and where we are in our mission of creating a comprehensive infusion therapy company. Revenue for Q4 was $536 million for total company growth of 2% on an organic basis or minus 14% reported, and we finished with 5% organic growth for the company for full year 2025. Gross margins were again 40% -- above 40% and we delivered EBITDA of $98 million and EPS of $1.91. As a reminder, the reported results are impacted by the mid-2025 creation of the Otsuka ICU Medical JV and resulting deconsolidation of IV solutions from our income statement. Both our consumables and systems businesses delivered record revenue quarters operationally, and Brian will explain the year-over-year decrease in EBITDA due to the deconsolidation and tariffs. Cash generation was again strong as we repaid additional principal and net debt is currently just below $1 billion. The broader demand and utilization environment in Q4 continued to be attractive across almost every geography with the U.S. having a sharper and faster flu spike towards the end of the year, which has normalized now. The capital environment is status quo, and it does appear investments that customers need to get done are getting done. On currency, while the weaker dollar does help revenues in our selling geographies, we are monitoring the Mexican peso, which is at its strongest point in the last year. Getting into our businesses more specifically, our consumables business in Q4 grew 6% reported and 5% organic. It was a record quarter operationally as Q3 had some revenue benefit from the Italian tax settlement. For the year, consumables grew 7% reported and 6% organic. Going into a bit more detail about how the business has performed over the year. Three of the product lines, infusion consumables, oncology and tracheostomy were all at high single-digit levels. And we believe going forward, we have both the operational stability and innovation to improve our performance in Vascular Access. Reflecting on our performance in consumables over the last few years, we grew organically 7% in 2024, 6% in 2025, and we continue to believe that mid-single digits is a good assumption for the medium term. Our IV systems business grew 3% reported and 1% organic and was again the best quarter in pumps even with some installations being pulled into Q3. As a reminder, Q4 2024 was a very large quarter for pumps, hence, why we foreshadowed the growth rate here a bit on the prior call. Going into more detail about how the product families performed over the year, LVPs were low double digits for the year, syringe pumps were high single digits, and these were offset by negativity in the ambulatory line, which was 100% due to a single OEM customer that's been decreasing for the last few years and will finally fully exit in 2026. Reflecting on our performance in this segment over the last few years, systems grew organically 7% in 2024, 5% in 2025, and we continue to believe that mid-single digits is a good assumption for this segment for the near term, and I'll comment on the product road map shortly. Just wrapping up the businesses, Vital Care decreased 6% on an organic basis and decreased 35% reported due to the deconsolidation of IV solutions and was essentially flat both sequentially and for the year. As Vital Care now makes an impact on the overall company growth rates, we'll give a little bit of background on what we've been doing with these businesses. There are a limited number of low or negative profit SKUs within Vital Care, and we've essentially been harvesting those as they have positive cash flow and a finite life or we've been discontinuing the loss-making SKUs in accordance with various customer contractual or regulatory requirements. Most of that work should wrap up over the next few months with the biggest year-over-year impacts to be felt in Q1. Mathematically, we believe the right revenue assumption for the near term for these businesses is flat to slightly down in the face of our decisions to improve profitability. We do have some important housekeeping and operational updates that have transpired over the last 90 days, all of which dovetailed with our priorities from late 2024 and 2025. First, we've received official closure of the broad FDA warning letter received by Smiths Medical just prior to us closing the acquisition. In addition to validating the work we've done, we believe when combined with the profit and growth improvements within Vital Care, we should have more strategic choices available to us. Second, we continue to make progress in the pursuit of our new 510(k)s for Medfusion 5000 syringe pumps and CADD ambulatory pumps and the related LifeShield safety software. This work is important as it underpins the core tenet of our systems business to have the most modern infusion hardware devices all connected on a single software solution for customers. And this work is important also because we believe it addresses the primary concern of the warning letter we received in early 2025. Third, we've generally finished the manufacturing integration of 2 large legacy Smiths Medical manufacturing sites and will begin to reap the benefits as bridge inventory is depleted towards the end of this year. And lastly, a bit in real time, we've gone live this quarter with a full order to cash conversion for Europe, and it's proceeding smoothly and the entire company, except for a limited amount of legacy Smiths Medical Asia Pacific regions are on a single instance of a modern ERP that will lead to future synergies in logistics and customer service. Over the last 6 quarters or so, we've been outlining our medium-term goals on these calls, which started with the overall commentary about a belief that we were under-earning and describing the actions we needed to pursue to improve. In our view, the medium term we were describing has become the near term of the back half of this 2026 calendar year. I'll try to explain how the list of items I just went through make their way into the financial statements in the back half of this year. The first item for revenues is that we will lap the creation of the solutions JV in May, which, while just optics, does require significant explanation around the large reported negative revenue growth rates. Second, the vast majority of pump unit growth in the back half will be from Plum Duo and Solo products, which carry higher ASPs that are more meaningful to revenue growth. The gross margin line, which has been steadily improving, should benefit from manufacturing and logistics optimization. Even though the manufacturing integrations are largely completed as of today, it still takes several months to sell out the existing pre-costed inventory. The work around the quality remediations, IT system integrations, plant closures and logistics consolidations have consumed significant cash, and that should materially change after the second quarter, leading to improved free cash flow in the back half. We know it's taken time to get this work done and appreciate investors' patience but believe it is now within the near-term horizon. With that, I'll turn it over to Brian. Brian Bonnell: Thanks, Vivek, and good afternoon, everyone. Since Vivek covered the Q4 revenue for each of the businesses, I'll focus my remarks on recapping the Q4 performance for the remainder of the P&L, along with the Q4 balance sheet and cash flow and then provide guidance on our expectations for 2026. As you can see from the GAAP to non-GAAP reconciliation in the press release, adjusted gross margin for the fourth quarter was 40.5%, which was in line with the guidance we provided on the Q3 call of 40% to 41%. Unlike the third quarter, there were not any discrete items worth calling out in Q4 other than tariffs, where we recognized $11 million of expense, which represents a sequential increase of $2 million compared to Q3. And the Q4 gross margin rate continued to benefit from the deconsolidation of the IV Solutions business and the ongoing capture of integration synergies. Adjusted SG&A expense was $113 million in Q4 and adjusted R&D was $21 million. Total adjusted operating expenses were $134 million and represented 25% of revenue, which is 0.5 percentage point lower than the previously provided guidance of 25.5%, driven mostly by deferred spending and general cost controls. Similar to gross margin, Q4 was mostly a clean quarter for operating expenses, and we didn't have some of the unique items that we called out for Q3. Restructuring, integration and strategic transaction expenses were $20 million in the fourth quarter and related primarily to our IT systems integration and manufacturing plant consolidation projects where both the level of activity and the amount of spend peaked in Q4 as we approach completion of several of these projects in the early part of 2026. Adjusted EBITDA for Q4 was $98 million, a decrease of 7% from $106 million last year. The year-over-year decline of $8 million was driven by 2 items. The first is the deconsolidation of the IV Solutions business, which contributed higher-than-normal earnings in Q4 2024 due to additional volumes from the U.S. market shortage. And the second item is the impact from current year tariffs. Combined, these 2 items had a year-over-year impact on adjusted EBITDA for the fourth quarter of approximately $25 million. And finally, adjusted diluted earnings per share for the quarter was $1.91 compared to $2.11 last year, which is a decline of 9%. The current quarter results reflect adjusted net interest expense of $18 million, an adjusted effective tax rate of 23% and diluted shares outstanding of 25.2 million. Now moving on to cash flow and the balance sheet. For the quarter, free cash flow was $44 million, and it was another solid free cash flow quarter, especially when taking into consideration the cash impact from higher tariffs. During the quarter, we invested $17 million of cash spend for quality system and product-related remediation activities, $20 million on restructuring and integration and $25 million on CapEx for general maintenance and capacity expansion at our facilities as well as placement of revenue-generating infusion pumps with customers outside the U.S. And just to wrap up on the balance sheet, we finished the quarter with $1.3 billion of debt and $308 million of cash. During the quarter, we paid down $30 million of principal on our Term Loan B, bringing total debt principal payments for the full year to $303 million. Moving forward to the 2026 outlook and beginning with adjusted revenue, we expect full year 2026 consolidated organic revenue growth in the low to mid-single-digit range, and we expect the organic growth rates for each of the underlying business units to generally be in line with the longer-term outlook that we've provided the last several years, which is mid-single digits for both consumables and infusion systems and flat to down slightly for Vital Care. Consumables growth is expected to be driven mostly by volume increases from continued share gain in our core infusion lines and the benefit of higher growth markets for oncology and other niche categories. Historically, the consumables business has experienced a sequential step down in absolute revenue dollars from Q4 to Q1 each year. And given the higher demand we experienced in late December from the strong but short-lived flu season, we would not expect this year to be any different. The Infusion Systems guidance reflects accelerated growth in our LVP line driven by implementations of Plum Duo and Solo from competitive wins, which will be more weighted towards the back half of the year. This will be somewhat offset by lower volumes in the ambulatory line from the wind down of an expiring OEM arrangement. Based on current foreign exchange rates, we expect currency to be favorable to reported revenue growth rate in the first quarter of '26 and closer to neutral for the remainder of the year. In terms of calendarization, we would expect the quarterly growth rates at a consolidated level to be higher in the back half of the year due to the IV systems implementation schedule. Moving further down the P&L, we expect adjusted gross margin for the full year to be around 41%. The 41% gross margin reflects the benefit from continued synergy capture being partially offset by higher manufacturing costs from inflation and the recent strengthening of the Mexican peso. It also assumes tariff expense of approximately 2% of revenue based on tariff rates and available exemptions that are in place today. We expect the gross margin rate to improve throughout the year as we complete the manufacturing consolidation and supply chain integration projects and begin to realize the benefits with the gross margin rate as we exit the year higher than the 41% average. We are planning for adjusted operating expenses as a percentage of revenue to be approximately 25% for 2026, consisting of 21% for SG&A and 4% for R&D. The SG&A rate of 21% is a slight decrease compared to Q4 of 2025 and reflects integration savings offsetting the negative impacts from inflation and currency. The R&D spend of 4% of revenue represents a modest increase to fund various initiatives expected to drive long-term revenue growth. Net interest expense is expected to be approximately $70 million based on current interest rates as well as the roll-off of a portion of our interest rate swaps. The adjusted tax rate should be around 25% and diluted shares outstanding are estimated to average 25.3 million during the year. Bringing these components together results in a 2026 adjusted EBITDA range of $400 million to $430 million and adjusted EPS in the range of $7.75 to $8.45 per share. It's worth noting that the 2026 EBITDA range reflects the impact from the annualization of 2 items. The first is the full year of tariff impact and the second is the deconsolidation of the IV Solutions business and associated earnings, which combined are worth approximately $25 million. Now on to cash flow. We ended 2025 with $100 million of free cash flow for the year, which was slightly better than our original 2025 guidance after considering the unplanned cash flow impact from tariffs. For 2026, we expect free cash flow to improve relative to 2025, driven by the combination of higher earnings and reduced spending for restructuring and integration and product-related remediation. In terms of calendarization, we expect free cash flow generation to be weighted towards the back half of the year, consistent with earnings and also reflecting the reduction in integration spending as we complete a number of the manufacturing and supply chain projects over the course of the year. In terms of capital allocation, after paying down over $300 million of debt over the course of 2025, we ended the year with $1 billion of net debt and a net leverage ratio of just under 2.5x. Any free cash flow generated during 2026 will continue to be prioritized towards debt paydown. And we've stated previously that our long-term leverage target is 2x. And once we reach that level, any free cash flow will then be available for share repurchases. Our expectation is that we should reach our targeted leverage by the beginning of 2027 based solely on organic cash flows with the possibility to accelerate this timing from proceeds of any potential transactions. To wrap up, we're pleased with the business performance during 2025. The improvements we've made over the past several years brought us back to more predictable and consistent revenue growth and improved profitability, which are reflected in the 2025 results. For 2026 and beyond, we're focused on continuing to deliver at or above our long-term revenue targets, expanding our margins by capturing some of the remaining 2 percentage points of opportunity that we've discussed and improving free cash flow generation. At the same -- at the time of the Smiths Medical acquisition 4 years ago, we anticipated the combined organization would generate $500 million in EBITDA after the integration was completed. Certainly, the integration has been bumpier and taken longer than we expected. And while our 2026 EBITDA guidance is still short of the $500 million target, the difference of $70 million when compared to the top end of the 2026 EBITDA guidance range can be attributed to the $25 million of earnings related to the IV Solutions divestiture, along with $40 million to $50 million in unanticipated tariffs. So we feel the underlying business performance is now within reach of our original goals at the time of the acquisition, but tariffs do present another hurdle that we are focused on overcoming to achieve those original targets. And with that, I'll hand the call back over to Vivek to discuss some of the initiatives to get us there. Vivek Jain: Okay. Thanks, Brian. That was straightforward. And we hope it's obvious that this year's revenue guidance is the same as the last few years with a better track record in our ability to deliver more predictable revenues. And we hope the math on where we are relative to our original transaction targets is clear. While we have achieved healthy revenue growth in our differentiated core product lines for the last few years, sustained revenue growth is about consistent execution combined with consistent innovation to refresh the portfolio. Strategically, our goal has been to build the most comprehensive and innovative infusion therapy-focused company. Throughout the last few years, we did not skimp on R&D nor innovation nor capital investments into the manufacturing assets of our consumables and systems businesses. And we found a win-win with Otsuka in the JV that will modernize the IV Solutions business. As a result, we believe in IV systems, we have a complete platform solution that will anchor the segment for the next 10-plus years as the product life cycles are incredibly long. In infusion consumables, we have scale underpinned by leading brands with great clinical data that will be supported with more innovation in the core and adjacencies of this business. We believe these investments alongside good commercial execution will allow us to continue the revenue trends longer term. Specifically, over the long term, we expect our Infusion Systems business to have opportunities both in competitive situations and as we begin a long-term refresh of our own pump installed base in earnest in 2027. We expect our offerings at some point this year to include each device, Plum Duo, Plum Solo, Medfusion 5000 syringe and CADD ambulatory to be the most recently FDA-cleared pumps and the most modernized from a design perspective, each with their own unique clinical advantages and all connected via a single software solution where we're working to add features every day. That portfolio has us on the best footing we've ever had, and we believe it offers incremental value to our existing installed base customers. In our consumables business, we'll continue to create the niche markets that have powered us along with expanded capacities in our core business, all supplemented by incremental innovation around the core that will be more visible over the next few quarters. And for customers, this will be economically combined when commercially relevant with a more reliable and more innovative IV solutions business where our partner brings tremendous value. While it's nice now that we can pro forma bridge back clearly to our original transaction estimates, tariffs and higher interest rates are all real, and therefore, we are not still quite at the targets we expected in real dollars. We're describing the long-term revenue sustainability to illustrate that there is more than enough opportunity to jump over the tariffs -- the tariff headwinds over time. And that will be supplemented by the annualization of the operations and logistics cost savings into 2027 and additional margin opportunities that Brian described and more time to mitigate the tariffs via pricing and operational decisions. The balance sheet and the overall portfolio construction do play a role in maximizing revenue growth and EPS. As Brian said, our goal has always been to be 2x or less levered, which feels appropriate for a mid-single-digit growing manufacturing company. We're now within half a turn of that and we can get there the old-fashioned way via organic cash flow generation this year or via any strategic moves. It's obvious that Vital Care is less synergistic to our core lines of business, dilutive to our overall growth rate, and our team has shown the ability to be creative in finding the most logical strategic outcomes. And independent of that, we're working to improve the organic profile of that business with the safest balance sheet we've had in recent history. Since our time here, we've tried to protect the share base with the only meaningful equity dilution resulting from the shares used in the Hospira and Smiths transactions. We know returning capital can be attractive on a thin share base, and our external M&A needs are minimal as we have enough organic innovation in-house. So it's pretty obvious to us what we should be doing. Of course, there are wildcards with tariffs and interest rates, but we feel like we've weathered those issues. All in all, it's a good place to be with our best businesses growing. Both will again reach record revenues in 2026, and we can see a vast number of projects nearing completion. We expect our consumables and systems businesses to be reliable growers with an industry acceptable profit margin, the tightest and most optimized manufacturing network and each with a multiyear innovation portfolio. And ultimately, our goal is to transfer value from debt to equity. There's no confusion within the company in the pursuit of these goals, and we don't really have any frivolous activities here. We produce essential items that require significant clinical training, hold manufacturing barriers and in general, items that customers do not -- or items that customers do not want to switch unless they must. The market needs ICU Medical to be an innovative, reliable supplier and our company is stronger from all the events of the last few years. thanks to all our team members and customers as we improve each day. And with that, we'll open it up to questions. Thanks, Stephanie. Operator: [Operator Instructions] And we'll take our first question from Jayson Bedford with Raymond James. Jayson Bedford: Maybe a few questions. Just start with systems. Double-digit LVP growth, very strong for the year. Are customers -- can you talk about the environment out there today? Are customers -- it sounds like it, but are customers actively making decisions today? Or is there any pausing in the environment at all? Vivek Jain: I think from a capital perspective, Jayson, the words have been the exact same, I think, the last 6 quarters, which is the capital environment has been very stable, nothing different than historical behavior. Deals are getting done. I think the industry challenges historically are well known, and there was some backup in refresh cycles. And I think it's coming to fruition. I'm not sure I'd call it accelerated. But again, we were starting from a place where our share base after Hospira had gone backwards, from here was very low. And so these improvements are very meaningful to our P&L. Jayson Bedford: Okay. And just the comment on second half, can we assume that the vast majority of pump business you're doing today on the LVP side is Duo and Solo? Vivek Jain: Domestically, in the United States for the U.S. portion of our business, absolutely. Internationally, 60 continues to be placed. Jayson Bedford: Okay. Just on the syringe and ambulatory side, are the pending clearances having an impact on infusion system sales, meaning is there a pause there as folks may wait for the newer approved products? Vivek Jain: No. I mean syringe of the 4 years that we've owned the syringe business last year was pretty close to the top. And any customer who is serious about the platform is very interested in what the future road map looks like and wants to engage on it and it hasn't been slowing anything down. Jayson Bedford: Okay. And just timing on the clearances, is it safe to assume 2Q midyear? Vivek Jain: I mean I think we would leave it as, one, we are incredibly pleased that we have seen no change in the regulatory response in this time. Responses are just as prompt as ever, and the quality of the dialogue is just as good as ever. We received a first pass review on the Plum Duo. We felt these were high-quality filings. It's never over until it's over, and there's the normal back and forth going on. So we're doing our part, and I think they're doing their part the best they can. Jayson Bedford: Okay. Maybe just one last one for me, and then I'll let someone else jump in. But just congrats on closing out the warning letter. Just along that vein, you mentioned it would open up some strategic choices, I think was the word you used. Can you just comment on the appetite for these type of products out there? Vivek Jain: I mean I think we all read the same newspapers and see the same things happening from a transactional perspective. I think there's capital we put to work in some situations. For us, some of the assets that we've beaten around the bushes that we'd love to figure out what to do with have been the exact assets that were either covered under the open warning letter or we're in the midst of being integrated via their manufacturing sites were moving or their IT systems that ran were moving. And a lot of that work is behind us now. So we just feel like we're in a better place to explore some of those opportunities. Operator: We'll now move on to Brett Fishbin with KeyBanc Capital Markets. Brett Fishbin: Maybe just one on consumables since systems was just touched on. So I think for this year, you're pointing to mid-single-digit growth, which is pretty in line with what you've seen in the last couple of years, maybe 100 bps or so lower. But I'm just curious kind of like what you're seeing from an underlying volume standpoint across hospitals and your other end markets 6 weeks into the year. I think we've picked up on some signs that maybe baseline hospital utilization volumes might be decelerating a little bit. So just curious if you've seen anything like that and just like how you're thinking about that as it pertains to the guidance for '26. Vivek Jain: It's a good question, Brett. I think just as the first point of clarification, our guidance for consumables independent of the results that were put up is exactly the same as the last 2 years, right? So our mid-single-digit sentence is the party line and what we certainly have been sticking to. In terms of what we are seeing out there, I think the comments we made in the back half of the year are the same to say, which is in the back half of the year, it was a very different -- it was a lower growth rate than we had seen the year before. I think that trends continue. For us, it still feels like it's positive, may not be at the same rates. But when we look at our underlying demand, we haven't seen any impact along the line of utilization on anything right now. There's a little bit of a seasonality point Brian was talking about in the script on the flu stuff and just the normal seasonality we have in the consumables business, but I don't think there's anything related to underlying demand. We were talking about or I wouldn't have made the normal comments in the third paragraph. Brett Fishbin: All right. Perfect. Perfect. And then just one follow-up. And I think I know we're all kind of ready to move past this tariff topic. But just to start the year, just thinking about the guidance, I think giving the 2% metric as a percent of sales makes a lot of sense. But just wanted to ask if there's any changes in how we should be thinking about exposures geographically? And then just what you can tell us about any mitigation efforts that you've undertaken since the last call in November. Vivek Jain: Sure. Brian, do you want to grab that one? Brian Bonnell: Yes. I mean I don't know if there's really much in terms of changes in terms of exposure and things like that. We'll kind of see what happens here in the near future, if anything, and who knows what could result from that. But I think we have done some things structurally to try to mitigate the tariffs as much as we can. We saw a little bit of that favorability Brett, in Q4 coming in a little bit less than our previous guidance around some expense there. So I think that helps, and that kind of gets back to the point as to why Vivek was saying earlier in '25, don't annualize what we were seeing at that point in time. So yes, I think there's still a little bit more work to be done on tariffs, but maybe those benefits won't come until a little bit later in the year because some of those are, let's say, heavier in terms of lift. Operator: We'll take our next question from Mike Matson with Needham & Company. Michael Matson: So when I look at your slide and kind of the bar chart in there for the Infusion System business. It looks like the syringe pumps are a pretty small slice of that business. So is that really just because the overall market is smaller. Or is it a sign that your share is maybe lower in that category? And does that mean there's maybe more opportunity to take some share when you launch the new syringe pump? Vivek Jain: Yes. Mike, we'll start with the market sizing. It's a much, much smaller market than the LVP in terms of actually units pumping. Maybe 10% to 15% of the size of the overall LVP market, max 20, if we had a debate about it depending on whose system we were using. So first, the market size is much smaller. And it's the inverse of where we are in LVPs. Our share is actually higher on syringe, certainly very high and freestanding syringe than we have in LVP. So I think for us, it goes back to the roots of why we took on the pain of the last transaction was it was a gap that is -- even though it's only 10%, 15%, 20% of the market, it's still important to customers to have that integrated view. It drives more safety to have it in an integrated fashion, and we had to get a foothold there, which is why we did what we did. So there's -- syringe is a small portion of the segment, you're right, but it is important to customers. Michael Matson: Yes. Okay. That makes sense. And then just Vital Care, given the commentary around potential sale at some point of that business, and I can't remember if you disclosed this in your filings or not, but can you tell us what maybe the EBIT or EBITDA margins are in that business or kind of the portion of your corporate earnings that are coming from it, just so we can maybe start to do some math around like what the potential trade-off would be between loss of earnings versus share repurchases and things like that. I know it depends on the price, but -- and I know it may or may not actually happen. Vivek Jain: Yes. I mean I think we're not quite -- if it was easy to do, all of this will be done already, right? We haven't -- the infrastructure is deeply co-mingled in spots, which is why this is tricky to work your way through. And until you really get it on its own organized IT, its own organized manufacturing, it's been hard to assess that with super precision. I think what we would say as it relates to the general direction of the question you're asking, one, it is likely that most of Vital Care is probably below the corporate gross margin. I think that's a safe assumption. And the second one is, I think if you look at our track record of most of the situations, right, we've tried to thread the needle in the right way in the solutions JV, we found a way to improve our revenue growth rate, improve our gross margins and do something that was EPS breakeven, so to speak, right? That would still be the target. I'm not saying that's achievable, but it's easy to give things away, but it's value destructive. So you have to be patient and get them in the right order in the right form to make sure you don't hurt yourself doing it. Michael Matson: Okay. All right. Got it. So you'd be aiming ideally for something that's at least kind of neutral to earnings? Vivek Jain: I don't think we want to be that firm that, again, there's puts and not every business is created equal necessarily in there, but I think directionally, that would be the goal we'd aspire to, right? Operator: We'll now move on to Jason Bednar with Piper Sandler. Jason Bednar: Congrats on the quarter here and on the Smiths warning letter being lifted. Vivek, I wanted to go back to the systems business where the other Jason started. I'll ask a few here. So you did mid-singles for the full year of '25. You're guiding to something similar for '26. I guess I wanted to ask, maybe it's just being prudent to start the year, but you do have a competitor deal with challenges with their pump system. You have a new product cycle you can take advantage of maybe some early contribution from the replacement cycle opportunity with those old Hospira pumps. So I know you're saying that's maybe more of a '27 event. What's the good case scenario here for this year? If '25 was a normal year at mid-singles, couldn't '26 be a bit stronger just given some of those factors I mentioned. And then maybe just in the response, if you could help us quantify the impact of that OEM wind down that was referenced in the prepared remarks. Vivek Jain: Sure. There was a lot in there. I guess I'd start by saying right now, starting this year, we feel good about what we think of almost as our backlog, our transactions that we've contracted for and a large portion of our revenue growth assumptions here is just making sure the installations happen. And so upside to that was if we actually could sign more and install more in the same year. So I think from a place of safety, I think we feel we're starting in a better spot. As it relates to competitive stuff, the second part of your question, as I've said before, we all live in a glass house. This whole industry has been ripe for challenges. We've essentially worked at 2 out of 3 players. I think we'd be cautious on making assumptions about how other people get their house in order. We've all been through it. And then on the OEM piece, that is a piece of business that has been declining for the last 2 years. So the good growth of 7 and 5 in LVPs has been jumping over that anyway, right? We never really wanted to speak about it so transparently because we didn't want anybody to feel that bump. I don't think they really felt it in '25, and we think we have the ability to grow through it again in '26. I don't think we want to be precise on exactly how many points of headwind, but it was certainly a headwind to the business in the last 2 years, and the business still did well. Jason Bednar: Okay. That's helpful. I appreciate that. And then I know you highlighted the stronger ASPs on Solo and Duo. I think that's helping the growth rate or should help the growth rate here in systems, maybe more in the second half of the year. What kind of ASP contribution or uplift should we be thinking about from those? Is it material? Vivek Jain: I think the challenge and the opportunity for this industry, right, a lot of value is created if you can -- there's 3 components of value in the pump business, maybe there's 4 components of value, right? The first is obviously the razor and razor blade, the dedicated sets. The second is software and service. The third is if you can drag adjacencies like we do with regular consumables. And the fourth is the hardware itself. And we thought we were pretty well positioned on the first, second and third, certainly, the new products position us better in software than the historical products. But I think the challenge for our pump business historically is that we weren't generating enough margin on the hardware. We believe this piece of technology has enough -- the new pumps have enough technology embedded in them and enough features that we can begin to have a more interesting positive gross margin on the hardware makes a big difference for us. It will make a big difference for us over time. Jason Bednar: Okay. So safe to assume that it's improving gross margin and it's material enough on the revenue line, too. Vivek Jain: Correct. Jason Bednar: Okay. Perfect. Last one for me. Just I thought it was pretty clear just from a lot of comments, even how you started the call that operations for the business are just in a much better state today than where we've been in the last few years. A lot of confidence around cash flow, seeing benefits from some of the common systems, facility consolidations, et cetera, that you've been going down. Maybe if you could or Brian, to jump in, if you can unpack that a bit more. Does that show up? Do we see that across gross margin and SG&A lines. Is that a dynamic that just builds throughout the year? Just any more color there would be helpful. Brian Bonnell: Yes. I mean I think I think we talked about kind of those areas of improvement, whether it's gross margin or free cash flow that those were opportunities that would probably take a few years to fully capture the full value of the opportunity where -- whether it's gross margin or free cash flow, those benefit from the projects that are underway, whether it's the IT system integration or the manufacturing plant and supply chain network consolidation. A lot of that work is wrapping up this year and projects are being completed and we'll continue to realize benefits. And I think our goal is to really exit next year. So by the time we get to the end of '27, we're kind of more at a steady run rate where whether it's gross margin or free cash flow, it's kind of closer to those targets that we've been talking about. Vivek Jain: So to be specific, Jason, there was a slide in the IR deck, which showed the target gross margin level and then the adjustment for tariffs, right? That's what we're talking about to where we get to. And basically, what happened, it was a spiral downwards in the first year or 2 as results weren't coming through and the business wasn't as healthy as we thought. We just get more value, we had to consolidate more, integrate harder that consumed capital. And those projects became big projects. We're finally coming out of them. Therefore, capital isn't consumed and things get back to normal. So it's kind of a spiral down and then the spiral back up, and we're at least on the better side of it now. Jason Bednar: Right. Very clear. Congrats again. Operator: [Operator Instructions] We'll move now to Larry Solow with CJS Securities. Lawrence Solow: Just a couple of follow-ups. Most of my questions have been answered, actually. So on the margin improvement question, so the consolidation initiatives themselves, which I guess is just part of that 200 bps or so of opportunity and probably maybe the biggest part by itself. But it sounds like that activity is done and we'll at least get that benefit, not the full year's worth, but maybe by the end of this year, that run rate will be in the numbers already on the consolidation piece or most of it. Is that fair to say? Vivek Jain: I think, Larry, thanks for the question. I think what we were trying to say, again, it can drift month-to-month. But in general, once the inventory that was made at the old factory leaves, we get the benefit of the manufacturing synergization. And we have a number of logistics consolidations also rolling in. We expect a lot of that to be in the run rate by the end of this year, and then that will annualize into next year, which is another benefit. And the components of the 2 points of margin, the missing still 2 points relative to our new targets are really those activities being fully implemented. The previous question, the benefit of better margin on hardware sales, overall pricing, et cetera, those all go into components of margin. And as the consumable business grows, that helps margins too. So there's a lot of things in the mix for both this year and next year that are all good. Lawrence Solow: And when does the cash outlay, right? So you've been -- I think it feels like you spent more than $100 million this year. But on the remediation, integration, restructuring combined, it sounds like you spent $37 million this quarter. So I think it was over $100 million again for the full year, and it's averaged over $100 million for 3 years. So -- and you've been averaging or at least run rate close to $100 million free cash flow. So fair to say that in 18 months, even if the business just improves a little bit at the core, by just getting rid of all these excess expenses, you should be doing well north of $200 million in free cash flow, right, unless my math is... Vivek Jain: Thank you for the vivid recollection of our shared experience. Yes, it was painful. That is the exact amounts that we've been putting at it. I think we were trying to say in the call, it's this year, it needs to end and hopefully by the middle of this year. There will always be some stuff on regular remediations that are happening, et cetera, but a materially different number in the back half. So that's the way free cash flow moves around and then growth long term on top of that. Lawrence Solow: Got it. If I could just sneak one more, just more just systems, a lot of questions on this one. But there's still, I guess, a lot of business up for grabs, right? I don't know if you can just kind of characterize where we stand without mentioning the competitors' name, but I know there was a lot of business up for grabs there. How are you doing in that? And just your comfort level on the refresh cycle because to me, that feels like competitive new business wins are great, but when you have all these in-house installed base that can just flip over to the new line, that should be a much greater opportunity for you. So just your confidence level that we could start to see your customers will want to switch or would be anxious to switch as we look out? I know it's still a little bit of ways, but any color on that would be great. Vivek Jain: Sure. I mean, first, on the competitive piece, again, from a safety perspective, we feel like we have enough contracts in hand. As long as we can manage the installation schedule, we feel like what we see in the near term is pretty good. And there's plenty of competitive activity, just in normal course competitive activity that can keep us busy. In terms of the refresh of our own installed base, I mean, our journey here we went through some dark days where people had left the infusion hardware category, Abbott, Hospira, what we became at very different market shares historically. We stabilized that, clawed some back. And truthfully, that many of the customers that stayed, stayed because they believed in the core technology. And the pieces of that core technology have been conserved into this modern package of Plum Duo, Plum Solo and now enhanced with a syringe and CADD, all in the same software. And so I would argue that these customers went through some tough times, still were committed to the technology, and we believe we have a better offering for them today, and that's independent from the economic wrapper around the other accessories and solutions and other things that may or may not be part of any given conversation. So we think we're well positioned for that conversation, too. Operator: At this time, there are no further questions in queue. I will now turn the meeting back to our presenters for any additional or closing remarks. Vivek Jain: Thanks again for your interest in ICU Medical. We're glad a number of our projects are reaching completion, and we look forward to updating everybody on our Q1 call later this year. Thanks. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
D. Sleath: Okay. Good morning, everybody. And great to see so many people here on a Friday in half term week. So whether you are here in the room with us or joining us online, we're absolutely delighted to have you with us as we present SEGRO's 2025 full year results. I'm joined here by a number of my executive colleagues, and I'd particularly like to welcome Susanne Schroeter, who is presenting her first set of results after joining us only in December. Before getting into the detail, what I'd like to do is share some key messages with you, set the scene as it were and explain why we are confident about the future. And I should just mention, our presentation is going to run a little bit longer than normal today because there's a lot we want to talk about, particularly to give more color on our data center strategy and set out the -- what we think is a really exceptional opportunity for this part of our business. So 2025 actually turned out to be a very strong year for SEGRO, both operationally and in financial terms as well despite the rather challenging macro. We signed a record GBP 99 million of new headline rent, including GBP 33 million of development signings. Within our existing portfolio, we delivered GBP 37 million of reversion uplifts from lease renewals and rent reviews, which itself was a key driver of our 6% growth in like-for-like net rental income. All of this translated into a 6% increase in adjusted earnings per share and a 2% growth in adjusted NAV per share. So a strong set of financial outcomes. But what pleased me most about 2025 was the improving occupier sentiment and a pickup in deal activity in the second half of the year as the structural drivers underpinning demand for our assets began to reassert themselves. That momentum has continued into 2026. Inquiry levels right now are strong. Occupiers are starting to progress their investment plans, and we have an active pipeline of discussions both on existing space and for new pre-lets. We know that deals can take a long time to convert from active interest into actual signed deals. And no one quite knows how 2026 will turn out in terms of geopolitics. But we're really pleased and very well positioned right now, and it feels much more encouraging here today than it has at any time for at least the last 2 years. Those results added to our long-term track record of delivering compounding annual growth driven by disciplined capital allocation, operational excellence and an efficient capital structure. Since 2016, we've delivered an average 8% growth in earnings, dividends and net asset values despite the more challenging environment of the last couple of years. And we anticipate that improving market fundamentals and the exceptional opportunities in front of us will enable us to move back towards those longer-term averages. Onside our financial and operational achievements in 2025, we progressed our responsible SEGRO strategy. We continue to champion low-carbon growth, reducing our carbon intensity significantly and have refreshed our net zero targets, which have been approved by the science-based targets initiative. We added to our community investment plan framework. We achieved record levels of volunteering by our employees, customers and stakeholders, and we delivered 54 community projects. We also continued investing in our people to further strengthen our market-leading operating platform through our nurturing talent strategy. These initiatives are a really important part of how we sustain high performance across the business and ensure that we continue building for the future. So let's now get into some detail. We'll start with our strong financial performance presented by Susanne. Then we'll talk about the strong operating performance behind these results. James Craddock and Marco Simonetti will address the U.K. and the Continental European markets, respectively, after which I'll bring it all together to give you a group overview. And then we'll finish by looking at the future opportunity for SEGRO, which I'll address in 2 parts. Firstly, the multiple levers we have to drive growth within our industrial and logistics business. And then secondly, the compelling opportunity that we have within our exceptional data center pipeline. So now I'm delighted to hand over to Susanne. Susanne Schroeter-Crossan: Thank you, David, and good morning also from my side. I had a fantastic start to SEGRO so far. The team has been extremely welcoming and supportive. And I've also already had the chance to visit a number of the offices and assets across London, Midlands, Germany, Netherlands and France. And I must say what I've seen so far has really impressed me both in terms of the quality of the assets and the strength of the team. So I'm very excited about the opportunities ahead and as I continue to get to know the business better. About 2025. While I can't take credit for the excellent performance the team has delivered in 2025, I'm very happy to talk you through the key numbers. 2025 was defined by strong operational execution across the portfolio. We also continued with our balance sheet discipline, and we saw improving momentum in our key markets. This was reflected in the key financial metrics. Adjusted earnings per share increased by 6.1%, and this was driven by higher net rental income and continued cost discipline. We have chosen to pay a full year dividend of 31.1p, which also represents a 6.1% increase year-on-year. Portfolio valuation grew by 1% on a like-for-like basis, and this was the first year that both the U.K. and Continental Europe have been positive since the start of 2022. Adjusted NAV per share increased by 2%, and that reflects the like-for-like valuation uplift and additions we made to the portfolio throughout the year. Our balance sheet remains strong. Loan-to-value ended the year at 31% and net debt-to-EBITDA reduced from 8.6 to 8.4x over the course of the year. Let us now turn to the income statement. Net rental income grew by 8.6%. I will tell you more about this on the next slide. Net interest costs were stable year-on-year. Lower gross interest was offset by lower capitalized interest. And the reduction in gross interest came from lower interest rates, particularly Euribor, which offset the higher net debt figure. Our EPRA cost ratio improved slightly in 2025, and this was also helped by a EUR 3 million reduction in administrative expenses. Operational efficiency will remain a focus going forward. Adjusted profit before tax increased by 8.3%. And to summarize, this performance demonstrates the resilience of our operating model and the quality of our portfolio. Let's now look at net rental income in more detail. We delivered EUR 47 million of net rental income growth, and that was driven by 4 factors: number one, the 6% like-for-like rental growth, which was strong both in the U.K. and Continental Europe. The U.K. performance was driven by capture of reversion at the 5 yearly rent reviews and Continental Europe benefited from increased occupancy and asset management initiatives. Number two, development completions. These contributed EUR 31 million last year. Number three, acquisitions and disposals. The impact of those 2 was neutral due to the sales we did in 2025 and the full year effect of the 2024 disposals. Number four, the other items, these include mainly takebacks for redevelopment, surrender premiums and also some FX impact. We expect like-for-like rental growth to remain strong as we continue to capture reversion to lease vacant space and that we continue our active asset management. As I said before, 2025 was the first year since the pandemic where both the U.K. and Continental Europe saw positive valuation movements and the total portfolio value increased by 1% on a like-for-like basis. Yields were broadly stable during that period. ERV growth for the group was 2.3%. It was stronger in the U.K. at 3.1%, driven by a standout performance from our West London portfolio, which delivered 4.7% growth. In Continental Europe, it was 1% overall. Spain and Germany outperformed and delivered the strongest growth at 3.2% and 2.4%, respectively. The portfolio now stands at EUR 19 billion at share, including our development assets and land holdings. The equivalent yield is 5.5%. Our balance sheet remains strong. The LTV is at 31%, which is a level that we are currently comfortable with. Net debt-to-EBITDA stands at 8.4x, down from 8.6x last year, and that reflects higher EBITDA and disciplined capital management. We continue to benefit from a diverse and long-term debt structure. Our average maturity is 6 years. We have undrawn RCFs and term loans of circa EUR 1.9 billion and ongoing access to attractive financing through the euro and sterling bond markets, also the private placement and bank markets. Our EUR 650 million bond maturity in March will be refinanced through an undrawn term loan that we have signed in the second half of 2025 and the residual amount will be drawn from our RCF. This robust financing position gives us the flexibility to invest through the cycle and capture future opportunities. Now let us talk about capital allocation. Our capital allocation framework remains clear, disciplined and aligned to long-term shareholder value. Development on existing land remains our most accretive use of capital. It yields 7% to 8% on total costs and 10% or more based on additional capital required. We expect 2026 development CapEx to be in the EUR 450 million to EUR 550 million range. And the final number will depend on the level of new projects we start in the next few months. Our CapEx guidance includes about EUR 150 million of infrastructure investment to support the long-term growth from our logistics parks in the U.K. and for power upgrades for our data center pipeline. We will remain very selective on acquisitions. We focus only on the most compelling opportunities in core markets that provide wider portfolio benefits and attractive returns. We do consider additional distributions to shareholders such as share buybacks, but only when we believe that we have material surplus capital and the lack of compelling development and acquisition opportunities. This is currently not the case, especially given the momentum building in our development pipeline. We continue to take an active approach to capital recycling, and we have an annual planning process to identify assets where we have optimized returns. With the current cost of capital, we continue to be very disciplined when it comes to capital deployment for new investments, but also for the assets that we retain. We, therefore, expect disposals this year to be at or above the upper end of our longer-term run rate of 1% to 2% of our portfolio. These disposals will generate proceeds that we can invest into opportunities with higher risk-adjusted returns. In addition to disposals, we are regularly considering options to fund our growth pipeline. We also have a successful track record of working with partners to share capital intensity, for example, within our SELP joint venture and now also with Pure on our first fully fitted data center joint venture. This capital allocation framework work continues to support both the near-term delivery and our long-term returns. To summarize this section, in 2025, we delivered a strong 6% like-for-like rental growth, contributing to 6% earnings and dividend growth. We have a strong balance sheet and a clear disciplined capital allocation strategy aligned to long-term shareholder value creation. Let's now turn to the operational performance of the business, and I'm delighted to hand it over to James, who will start with the U.K. James Craddock: Thank you, Susanne, and good morning, everyone. So let me start by talking about the broader U.K. market. So 2025 was the strongest year for logistics take-up since the pandemic. There was about 33 million square feet of logistics occupational activity. Pre-let activity did remain low, however, and take-up was driven more by immediate needs of customers rather than the more strategically planned decision-making. On the supply side, we've seen things stabilize, and there are encouraging signs of positive net absorption in some markets, which is resulting in vacancy nudging down, and we've seen this in our own portfolio, both in the urban and in the big box markets. In terms of overall logistics supply in the U.K., it's important to note that about 2/3 of the supply is of second-hand or poorer quality stock. So this continues to favor owners of prime, modern, well-located portfolios like our own. New speculative development starts have fallen materially. They're running at roughly half the long-term averages, and 3PLs are reporting low levels of gray space within their portfolio, both of which are supportive factors as we look ahead. That said, the market is far from uniform. There were areas of real strength and other areas that remained weaker in 2025. If we turn now to our own portfolio, pre-let levels were low, but we were able to sign a fantastic deal for development on our food campus at SEGRO SmartParc in Derby. We also leased 1 of our 2 speculatively developed sheds at SEGRO Park Coventry, which helped to improve our U.K. occupancy by 50 basis points to 93.1%. We've also been doing some selective speculative development, which included the development -- redevelopment on the Slough Trading Estate, which has been leasing well. For me, however, the highlight of the year was the standout asset management performance and standing stock leasings with the teams completing on over 250 individual transactions across leasing, rent reviews and lease renewals. Our key urban markets, especially the highly established Heathrow and Park Royal, which together make up 40% of our U.K. portfolio continue to perform well. This is driven by good demand and the depth of our customer relationships. Transactions have included setting new headline rents to customer segments, including food and beverage, 3PL and pharmaceuticals in these submarkets. This activity demonstrates the continued attraction of prime urban markets for occupiers who are providing value-add goods and services who need to remain located within prime M25 locations to service their end customers and to attract labor. A major focus for us in 2025 was also preparing our very special U.K. logistics sites for future development, which included hitting key milestones with the groundworks and the strategic rail freight interchange development at SEGRO Park Radlett. We, therefore, now have 3 sites in construction-ready status and the first plots at Radlett will also be ready in the early part of next year. Between them, these can deliver over 9 million square feet of the very best modern logistics space in the U.K., ensuring that we can respond quickly as occupier demand continues to build. On that topic, over the past 2 to 3 months, inquiry levels have improved materially across both logistics and urban, and we are seeing more activity across a broader mix of occupiers. This is largely being driven by the structural drivers which support our business. Retailers, food, e-commerce and general distribution are particularly active, seeking efficiencies through supply chain optimization, which is driving decision-making. Taken together, these trends give us confidence in the outlook for the U.K. business and the pickup in inquiry levels and leasing activity since the budget, both on standing stock and for pre-let opportunities provides a solid foundation for 2026. I'll now hand over to Marco, who will talk you through the performance in Continental Europe. Marco Simonetti: Thank you, James, and good morning all. Let's move now to Continental Europe. And I would like to cover 4 points: share some key highlights on the overall occupational market, then cover the performance of our existing portfolio, then move into the development pipeline and finally touch on that outlook for 2026. Starting with the overall occupational market. Leasing activity in 2025 has outperformed the pre-pandemic average. In fact, Q4 was the strongest quarter of take-up in 3 years. Vacancy rates now have stabilized with early indication of a modest downward trend and new speculative development are limited to a few prime locations. Similar to the U.K., the European market is in uniform and some countries and some regions within countries have performed better than others. Our exposure to the best-performing markets has contributed to a strong performance with a clear momentum in the second part of the year, both on the existing portfolio and on the development side. Our existing portfolio has performed extremely well. We signed over 180 deals. We had a strong letting activity and high customer retention, bringing occupancy to 98% across the continent with some countries fully occupied. We completed several notable letting transaction above 30,000 square meters like ID Logistics in South of France, GD.com in Germany, GXO in Milan or H&M in Poland. Moving now to the development side. Structural trends, including urbanization, e-commerce growth and the supply chain organization led to an exceptional quarter 3 and quarter 4 from a development side. In fact, H2 2025 was the best half year ever in Continental Europe for SEGRO, outperforming even the pandemic years. We saw the return of large pre-lets. We signed 9 deals equating to over 300,000 square meters of space, a pre-let to GXO in the south of Paris, a fulfillment center for e-commerce player in Germany, the new distribution facility for Primark in Italy as well as multiple smaller deals across Germany, Italy, Spain and Poland. The leasing activity was strong on our speculative program as well with our schemes in Germany, in Spain and Poland, all hitting a high level of occupancy before completion. And in the case of Warsaw, we have been able to fully let the space even before starting construction. So in summary, 2025 was a strong year for SEGRO in Continental Europe. Now looking forward, we enter the year in a stronger position than this time last year. Many of our 2026 lease events have already been secured. We have a healthy development pipeline, partially pre-let and partially spec with some projects in the near-term pipeline already signed in Spain, in France and in Poland, waiting just for the building permit. And we continue to see a good progress in our speculative German urban schemes. And with that, I will hand back to David. D. Sleath: Thank you very much, Marco and James, and indeed, Susanne. So as you heard, actually 2025 was a very strong year of deal execution for SEGRO. In total, we signed GBP 99 million of new headline rent, which is the highest in our history and even, as you can see, slightly higher than the pandemic peak of 2022. So this reflects strong performance across both existing assets, which is the part shown in red, led by the U.K. and with our development program, which is shown in salmon pink, which is led by the continent. As Marco and James both commented, though, activity levels strengthened noticeably in the second half of the year, and that momentum has continued into 2026. It was an excellent year for reversion capture, demonstrating the quality of our portfolio, the strength of our diverse customer base and the impressive skills of our leasing and asset management teams. Overall, we achieved a 36% uplift on rent reviews and renewals, which was 46% on average in the U.K. Despite these higher rents, we also maintained a high 82% customer retention at break or lease expiry, and we increased our overall occupancy by 90 basis points to 94.9%, driven mostly by Continental Europe, but also with some progress in the U.K. We continue to take a disciplined approach to capital allocation, as Susanne highlighted earlier. Whilst capital deployment into development is our priority, we always remain alert to opportunities to acquire good quality assets that offer attractive returns in our high conviction markets. Such was the case in Germany and the Netherlands with the acquisition by our SELP JV of some excellent assets formerly owned by Tritax EuroBox and in the case of a smaller logistics park close to Prague. Following a big year of disposals in 2024, we carried out fewer asset sales in '25, whilst investment markets remained quite subdued. But we were pleased to make a number of target disposals at prices above book of smaller non-core assets, including an older estate and a budget hotel in London as well as some small residual land plots. As Susanne mentioned earlier, our rigorous portfolio review process subjects every single asset and land position to a thorough assessment of future returns and risks, and this directly feeds into our disposal planning. Everything we hold has to justify its place in the portfolio compared to our cost of capital and the expected returns from other opportunities. So 2026 is likely to see an increased level of disposal activity subject to market conditions, but we think those are also starting to improve. Development offers our most compelling immediate and medium-term return on capital. We invested GBP 413 million into it in 2025. GBP 387 million of it was on development CapEx, including infrastructure and GBP 26 million was on land acquisitions. That was all a little bit lower than our original expectations due to the slower pre-let market in the first half. That, in turn, fed into lower completions in the year with space equivalent to GBP 29 million of headline rent being delivered. The average development yield of 8.2% was above our normal range as it included a powered shell delivered in Slough -- powered shell data center delivered in Slough, I should say. And despite a lower proportion of pre-lets in the mix, the space we delivered was actually over 90% leased by year-end, suggesting that we picked the right submarkets in which to launch selective, speculative developments. All of the projects were rated BREEAM excellent or better. At the half year, we did point to an expectation of a recovery in occupier sentiment in the second half, which is indeed what happened with a strong run of pre-let signings, particularly in Continental Europe. So as a result, our on-site development program is now returning to more normal levels. Currently, it represents GBP 53 million of potential headline rent, of which 47% is already leased. And we have a further set of pre-let projects at advanced stages of negotiation, representing another GBP 9 million of rent plus an encouraging set of potential projects behind these, including in the U.K. So moving on, I'd now like to talk about the attractive growth potential in the coming years. Before covering data centers, what I want to talk about is the significant opportunity within our industrial and logistics business. As you know, we've positioned our portfolio and our business to benefit from a number of enduring structural trends. These have become somewhat muted over much of 2024 and '25, but now appear to be reasserting themselves. Digitalization, urbanization, supply chain optimization and a continued focus on sustainability once again are prompting occupiers to search for modern, well-located and energy-efficient space. At the same time, securing planning consents for new greenfield sites is increasingly difficult and urban brownfield land is continuing to be lost to competing uses such as residential and now data centers. For landlords and developers with the right assets, land, operational capabilities and balance sheet strength, this creates a supportive backdrop for future performance, which are exactly the things that SEGRO has. We've built a fantastic portfolio across Europe's most attractive markets. 2/3 of it is in dynamic high-growth and supply-constrained cities like London and Paris, where demand is diverse and long-term rental growth is expected to outperform. Plus, we have one of the best, most modern logistics portfolios and an exceptional land bank for development. And our market-leading operating platform with deep local capabilities across the U.K. and the continent, means we really know our markets, and we're well placed to spot new opportunities and drive further performance. There's a GBP 152 million of growth opportunity in the existing portfolio alone, including GBP 99 million of reversionary potential, 1/3 of which is available to capture with lease events due this year. There's a further GBP 53 million of opportunity in vacant space, much of which is recently developed or refurbished space that is well located and occupier ready to lease in 2026. Capturing these opportunities will continue to drive strong like-for-like growth and unlocking it requires very limited capital expenditure. On top of that, we believe that improving occupier demand and constrained supply will also support further rental growth, which we continue to believe will be in the range of 2% to 4% for Big Box logistics and 3% to 6% for Urban assets over the medium term. Beyond the existing portfolio, our land bank leaves us well positioned to deliver substantial development-led profit growth. The current pipeline plus near-term projects under advanced negotiation represents GBP 62 million of potential rent. The rest of the land bank offers a further GBP 346 million of opportunity at current market rents. Development yields remain attractive at between 7% and 8% with a greater than 10% yield on new CapEx. As James mentioned earlier, our teams have made great progress to have our super prime U.K. logistics sites construction ready, so we are brilliantly placed to capture improving demand. Combining all of these opportunities together, we set out our updated rental bridge chart. This is based on today's rents, so it doesn't capture any further ERV growth or indexation uplifts. And you can see that on top of today's GBP 755 million, we can generate another GBP 800 million of new rental income. Almost 1/3 of it comes from our existing portfolio as we lease our vacant space and capture reversion. 2/3 of it comes from our land bank as we complete schemes under construction and develop out the future pipeline. This only factors in powered shell developments in terms of data centers. But in fact, the data center opportunity is much greater than this. And this takes me on to the next part of the presentation. Demand for data centers in Europe is predicted to grow significantly in the coming years, led primarily by cloud adoption as businesses and individuals move more activity online and by inference AI, which is where the end users interface with the AI models. Most of this demand is being satisfied by hyperscalers who prefer building out their data center capacity in close proximity to major population centers and financial hubs within established availability zones in the so-called FLAP-D markets. This is because most of the applications running in these systems require low latency and high resilience to meet customer demands. Capacity constraints and demand growth are now pushing development into some newer availability zones such as in Berlin, Marseille and Warsaw. And by contrast, latency insensitive AI facilities for training in some of the inference workloads that don't require low latency, these can be located in secondary and tertiary locations where land and power are less constrained and energy is cheaper. These are the locations that are of no interest to us because we simply do not like the real estate fundamentals. Rather, our focus is firmly anchored on serving demand in supply-constrained and established and emerging European availability zones, markets that overlap with our existing portfolio of prime industrial assets and where our local platform and expertise provide a competitive advantage. Our ability to benefit from all of this future growth is underpinned by an exceptional bank of powered land across key European availability zones, which now totals more than 2.5 gigawatts. In addition to the 0.5 gigawatt of operational capacity mainly in Slough, we have a clear route to another 1.1 gigawatt, which can be pre-leased over the next 3 years and a further defined 900 megawatts of power supply in process supporting medium-term growth thereafter and with additional long-term multi-gigawatt opportunities being pursued over and above these amounts. Our sites are well positioned to secure the necessary planning approvals. And the simplified planning zone in Slough provides a unique advantage with data center development already preapproved and with an additional 0.4 gigawatts of capacity due in 2029, making it, we think, the largest holding of powered land with a live planning consent within any of the London availability zones. All of this puts us at the front of the queue in a number of markets and best placed to address data center customers' key criteria, which is essentially speed of deployment. We've delivered excellent progress in our 2025 strategy for data centers. We strengthened our specialist in-house data center and energy team. We formed a joint venture with Pure data centers, giving us access to the technical expertise needed to deliver fully fitted data centers. On the ground, we completed a powered shell for Iron Mountain on the Slough Trading Estate. We secured a building permit for our first French data center and submitted the planning application for the Park Royal joint venture project, which is expected to be determined in the first half of this year. From a power perspective, we initiated infrastructure works to support the power upgrades in Slough, and we secured a separate 190 MVA power offer in West London. We maintain the strategic flexibility across our portfolio, choosing the optimal route for each project based upon the site-specific characteristics, local market conditions and the expected returns. And while we expect to deploy capital through all 3 strategies, we are now increasingly focused on fully fitted projects. We believe that on certain sites, this model can generate development profits for SEGRO of up to 3x greater than for the equivalent powered shells, and we believe we can effectively manage the additional risks and complexity involved. And for the avoidance of doubt, this approach does not expose us to the obsolescence risks associated with innovations in chip technology because we will not be investing in the racks or in any of the compute capacity. Our fully fitted approach is designed to be capital efficient and operationally low risk. We will develop only within key availability zones on the basis of pre-let agreements to major hyperscalers before construction starts. We'll be targeting long-term net leases to avoid operational exposure, and they'll be delivered through JV structures that combine specialist expertise with strong governance. Project level financing and SEGRO's contribution in most cases of powered land will keep our cash equity requirements limited. In fact, broadly in line with, if not lower than the equivalent powered shell developments delivered on balance sheet. And although we have capacity to fund several fully fitted projects from existing resources, we expect to actively recycle capital from stabilized assets through a range of potential exit routes, recycling capital into other opportunities. Based on our assessment of the exceptional sites in our pipeline, we expect to bring forward 1 or 2 data centers per year for the next several years with a mixture of some powered shells, but mostly fully fitted data centers. We'll be carefully sequencing the delivery and monitoring the overall evolution of the European data center market to ensure that we manage our overall exposure to fully fitted data centers and to joint venture structures. So in summary on this piece, our data center platform represents a substantial incremental and value -- income and value creation opportunity. It's underpinned by unmatched European land and power positions, the capabilities to deliver both powered shells and fully fitted data centers as well as powered land sales, a disciplined approach to capital management and the strength of the SEGRO operating platform, including local market insights, planning expertise, energy capabilities and robust governance. This strategy gives us exposure to one of Europe's strongest structural growth markets and adds significant upside to the growth drivers already embedded within our industrial and logistics business. So let me conclude by bringing all of this together. 2025 was a strong year of operational and financial performance for SEGRO. Momentum that started building across our occupier markets in the second half of the year has continued to grow and become more widespread in 2026, and we are primed for significant growth in the coming years, thanks to our high-quality reversionary potential supporting strong like-for-like growth, upside from industrial and logistics development and a compelling opportunity with data centers, underpinned by a clear strategy, strong balance sheet and a market-leading operating platform. With that, I thank you for your attention, and we'll now turn to questions. Susanne, James and Marco, if you'd like to come and join me on the stage, so we can do that. And also Andrew Pilsworth, who's leading on data centers, he's going to join for this part as well. D. Sleath: Okay. Thank you. We're going to start taking questions in the room. [Operator Instructions] John, yes. Thank you. John Cahill: It's John Cahill from Stifel. Thanks for the presentation. Really good to hear a U.K. REIT, both positive looking backwards and forwards. With regard to the data center business, you're clearly backing the right horse here, and this will no doubt be a great success, I'm sure, in the future. But there's one of the big change that's happening in terms of European and U.K. industrial space, which is obviously the investment in defense manufacturing capabilities. Your contemporary at Sirius have obviously gone in that direction and the market has clearly liked that. Is that something you would perhaps seek to look to become more involved in, particularly in Germany. It sounded at the Munich Security Conference that there's going to be an awful lot of investment in that space. Would you be looking to go that way, notwithstanding the data center route? D. Sleath: Yes. I mean I'll give -- maybe just make an overall comment and then Marco specifically can add a Continental and a German flavor to it. I think what I'd say is, so far, it's -- I think it's a small thing in terms of impact on a business like ours. There may be some significant investment in some large defense capabilities around Europe. But generally, they're going to be in locations where governments want to encourage investment and the creation of jobs and not in prime locations where we want to keep our capital invested. Having said that, undoubtedly, there will be some spin-off. There will be some particularly logistics needs to actually move goods and services and support capabilities around. So it's something we are looking at. But I don't -- right now, I mean, it's a very helpful additional demand driver at the margin. I don't think it's going to have the same impact that, for example, e-commerce had over the last decade. But Marco, do you want to add anything in terms of what we're actually seeing? Marco Simonetti: Yes, I think you covered that well. So it's clearly a sector that we are monitoring. But at the moment, what we see that in terms of location are more bespoke locations. So those locations are not -- do not match with our strategy. But it's an additional demand and there will be some opportunities. So clearly, we are monitoring that across all the European countries where we are active. Maxwell Nimmo: Max Nimmo at Deutsche Numis. And -- just 2 questions, if I can. One on London. It feels like you feel a little bit more confident around kind of Western corridors, A40. Perhaps if you could just talk a little bit about the wider London market, North, South London, how are you seeing supply in that market? And then secondly, just on the data centers, I fully appreciate that you're not exposed to the kind of the chip risk. But just in terms of the build-out requirements, hearing lots in terms of the progression on liquid cooling, things like that. Where are the risks for what you're doing in the fully fit-out space? D. Sleath: Two good questions, Max. So obviously, the first one, James can make some comments on. And Andrew, maybe you can pick up on the depreciation and the obsolescence risk, which are slightly different things, but yes, do that. So James, do you want to do U.K. James Craddock: I think you're right. I mean, London is not one thing, and our urban markets are not one thing. And actually, the markets have quite different characteristics at the moment. So we were super pleased with the results we saw in terms of West London. It's a very mature market. There's a huge depth of number of customers. We've got a very good level of customer relationships in those markets. So that performed exceptionally well. And if you take Park Royal, you take Heathrow and you take Slough as our kind of urban markets, 70% of our U.K. portfolio is in those, and we're very confident about those and they're not particularly high vacancy markets. If you look at perhaps South and East, these are markets which are a little bit more fragile in terms of occupier -- in terms of vacancy. But again, we have seen a tick up in inquiries as we talked about as part of the presentation since probably, well, the back end of last year. So we are more confident in those markets, but it's definitely right to not see London and the urban markets as one thing. So as I say, we feel confident and look forward. D. Sleath: Andrew, data centers? Andrew Pilsworth: Yes. on data centers, yes, as you say, we are -- our end customers will be investing in the servers, the racking and as David mentioned, the GPU chips where we see that having the highest level of obsolescence risk. And actually, if you look at what we are investing in, we're investing in long-term power-enabled cooling technology. So it's all the mechanical and electrical equipment, which we think has long-term intrinsic values in those very attractive markets that we're investing in. So we think there's very -- they have a very long economic life and certainly longer than the leases that we're investing in. So on -- one of the risks is definitely obsolescence, but we feel that's covered off by that point. As David said, a slightly different issue on the depreciation. We are targeting a net lease structure to SEGRO, so very similar to what we do in the rest of our business. And the exact accounting treatment will depend on the structure of the lease, but certainly, the advice we've got that by targeting a net lease, that will be treated as investment property in a similar way to the rest of our portfolio. And indeed, if you look at other asset classes, offices where there's fit out and therefore, treated investment lease and no depreciation. D. Sleath: And I think on the point around the risk of obsolescence of technology moving on, I mean, clearly, it does -- it has evolved. The cooling technology has changed. I mean there was a big thing about water usage when water cooling was introduced a couple of years ago. Now the latest technology is basically it's a closed-loop system. So it's a bit like a car radiator, you put water in at the start and you don't need a huge amount of water then to run it thereafter. These things do change. But actually, if you go back and look at when we started 20 years ago with data centers in Slough, the first-generation data centers we built, they don't have the latest cooling technology and the latest engineering, but they're still fully used and fully occupational because, frankly, the growth of demand and the growth of need for data storage and processing capacity just outstrips the ability to build more. So it's very rare that people are going to just strip out the old stuff and say, we've got to write that off. This stuff seems to -- it's all additive. But each data center we build will have the latest technology, but the fundamental fabric of the building and the main cooling isn't going to change that dramatically. Yes, Zach. Zachary Gauge: It's Zachary Gauge from UBS. A few questions sort of all tied into each other. Firstly, just starting on the 7% yield on cost on the current pipeline. I appreciate that's ex data centers, which aren't under construction at the moment. But am I right in thinking that for sort of logistics space, 7% is kind of the run rate yield on cost now and to get up towards 8% plus, you need the higher-yielding data centers to sort of get that blended yield on cost higher? The second question is on the 300 megawatts of immediately available power. I think we sort of know about Park Royal and some power available in Slough. Is sort of the residual power in that the new opportunity in Paris? If so, that's a very large amount. And could you touch on what the plan is for that in terms of whether it's going to be fully fitted powered shell and whether you'll obviously bring in a JV partner if it is fully fitted? And then sort of lastly, on the wider data center strategy, I mean, it feels like a bit of a change in tone leaning towards more fully fitted. Obviously, the CapEx on that is going to be substantially more. I think for the Pure DC, we're looking at almost GBP 400 million for one project alone. You obviously guided to the 1% to 2% recycling, saying it might be slightly above that this year. Just how do we think about how this potential pipeline gets funded if it is successful and hyperscalers are there to take it? Because obviously, the CapEx numbers will go up very, very quickly. The income won't catch up as quickly. And would -- should we expect to see just an increased level of recycling well above the 2%? Or is equity raise potentially on the table if this is a success and you have the demand there to build them out? D. Sleath: Okay. I should have said at the beginning, one question, please. So we can keep up. But there's quite a few -- just briefly on -- and I'll throw the data center piece back to Andrew and maybe Susanne can comment on the capital side of it. In terms of development yields, we've always said that we should be shooting for between 150 to 200 basis points premium for a development yield over and above the equivalent investment yield of a prime product. Now if you think that equivalent yields now around -- somewhere around the 5%, 5% to 5.25%, something like that, maybe 5.5%, then in most markets, getting a development yield around 7% is actually a pretty good outcome and very profitable. Now we've said there's a range of 7% to 8% because we've got a mix of geographies. We've got a mix of, frankly, land holding costs or land values on the books. And we've got some markets where there's going to be some projects where we're going to do much better than that even in core industrial and logistics. So the reality is there's a range. But I think broadly, if we can be getting 7% to 7.5% on our industrial and logistics and closer to 8% when you blend in some powered shells, that's a very attractive overall development yield, but it will vary by geography and by product. Data center power, Andrew? Andrew Pilsworth: So that 0.3 gigawatts, we're not going to give details on individual sites and what we might pursue on them. However, what I can say that the 0.3 gigawatts that you referred to, Zach, that's spread across a number of opportunities, both in Slough. We do have some immediately available power in Slough, and we're in advanced negotiations with the customer on that power. But also within that 0.3 gigawatts, that's spread across a number of projects, not only in Slough and the U.K., but also across the markets in which we're present in Continental Europe as well. And as I said, I won't comment on the route we will pursue on individual sites, but we are likely to go for a fully fitted route with a JV partner to get the capability to utilize the capability on fully fitted -- their capability on fully fitted, and we're likely to pursue fully fitted in the strongest and most attractive markets. D. Sleath: Okay. Susanne, do you want to talk about CapEx? Susanne Schroeter-Crossan: Yes. Very happy to. So first of all, you are right that we are leaning towards more fully fitted data centers on suitable sites. So the best sites in our portfolio are suitable for that, and we are looking for joint venture partners to work on those fully fitted data center opportunities. What does that mean? So first of all, in terms of the equity contribution to the joint venture, we don't foresee this to be substantially higher than an investment that we would make into a powered shell because we are obviously contributing powered land to the joint venture. So that is as a starting point for us a favorable outcome. And then the CapEx financing for these projects is planned to be in the joint venture, meaning it's going to be project debt that is raised together with the joint venture partner at the joint venture level. This will initially have a relatively high loan-to-cost, but these longer data center projects will see a valuation uplift as we complete the phases of the construction, meaning that naturally, the leverage will come down as a result of it. Project debt is available at the moment. We have already a lot of discussions with interested providers. So we feel that this is a good strategy to fund the CapEx needs. And based on that approach, the currently envisaged strategy would not require an equity raise. D. Sleath: And maybe just to add to that, I mean, even if we've obviously -- we've got a view we've modeled out. We're not quite ready to share the detail of the forecast with the market. But we've modeled out what it will look like if we build -- I alluded to 1 or 2 per year. They won't all be fully fitted, but I think probably an increasing number will become fully fitted. We've modeled out what that looks like over the next several years. And frankly, even if you do it on a look-through basis, the impact on our LTV and indeed, the impact on our proportion of assets in data centers is very manageable. As long as we continue to actively recycle broadly across the whole portfolio, this is all very doable. So we think we've got plenty of capital to pursue this. And they're going to be 1 or 2 at a time or 1 or 2 a year. They're not going to be 5 in 1 year that would put an unnecessary strain on the balance sheet. Tom? Thomas Musson: Tom Musson at Berenberg. Just a question on Europe. I appreciate countries like Spain and Germany performed well. Can you just give a bit more color on the market dynamics in Poland and the Czech Republic, in particular, I think those are the 2 markets where asset values fell and rent growth was sort of flat there. D. Sleath: Yes, sure, Tom. Marco, do you want to comment on Czech and Poland? Marco Simonetti: Yes. So starting from rental growth, and we have 1% across Continental Europe. As Susanne said, a few countries that performed well, like Spain and Germany. Eastern Europe is a little behind in terms of rental growth. What we have seen, as I mentioned in my presentation, is that there was a recovery of the activity in the second part of the year, especially from September to December. And even in Poland, we had some spec development in Warsaw that has been fully let even before starting completion. We have done some major lettings like H&M in Central Poland. So there is a recovery of the market there. We don't see that yet in ERV growth because it was in -- those letting and pre-let have been finalized in the second part of the year. And so our values need a little more time in order to factor that in ERVs. But we are confident in our guidance that we give between the 2% and 4% on Big Box logistics, so we think that as soon as the occupational market is going to recover even more, we will see those level again. And in terms of rental growth, when we look to the performance of the European portfolio, I think that we have not to focus too much on just 1-year number because if you look to the 3-year rolling average in Continental Europe, ERV growth is above 3% and the average over the past 10 years is above 3% as well. So yes, it's just a matter of time. D. Sleath: But I think generally, in terms of Poland and Czech, in terms of places to invest, I mean, we -- Poland -- Czech has been an amazing success story for a long time. In Poland, I think GDP growth was 4% last year, expected to be top performing in Europe -- in the EU country this year or thereabouts, above 4%. So I think we've got very -- clearly, there's a lot of issues around geopolitics and what happens in Ukraine. But we've got -- we've got long-term conviction over Poland as a place to do business. So I think we'll continue to invest. Marco Simonetti: In terms of location, we are very selective in this market. And there are some markets like if you take the example of Czech Republic, we are just investing in Prague. We've done an acquisition last year, and Prague has been historically a strong market and benefit of the proximity to the German border. So we are just investing in selected location in Czech and in Poland as well. D. Sleath: Any more... Marios Pastou: Marios Pastou here from Bernstein. So I got a couple of questions from my side. So firstly, we obviously saw an improvement in the occupancy levels overall. I think there was a more mild improvement in the urban occupancy levels, both in the U.K. and on Continental Europe. Just in terms of the supply levels, the discussions you're having on that urban portfolio and your urban exposures. What are your expectations in terms of the trajectory ahead for a recovery in occupancy in those markets towards more normalized levels? And then secondly, you were talking about the use of third-party capital. And obviously, you've got some quite large schemes in the U.K. You mentioned the 9 million square foot of potential space. And just any thoughts around whether you could utilize third-party capital there and how that structure could potentially look? D. Sleath: Sure. I mean, James has already sort of covered a bit about the U.K. market. So I won't repeat all of that. But I mean, for us, most of our urban vacancy is in London. We actually -- the bulk of our exposure is to West London in Heathrow and Park Royal and indeed Slough. That's a pretty strong market. In fact, in Heathrow, there's a real shortage of good space right now. There's not much supply in any of these markets. Where there is a bit more vacancy for us and in the market is in the East and the South, in particular, to Croydon and Barking and Dagenham area. We don't have a huge amount of space in those markets, but there has been more supply, particularly going out east because land is a bit more available. So that's one to watch. And I think we need to see a bit of a recovery in the London economy before that's going to pick up. But we're optimistic about North London. It's a pretty tight market around Enfield. We've got a bit of vacancy there, but -- and they're good units, but optimistic that will improve this year and further performance to come in West London as well. I think Croydon and East London, we've got a bit of interest. We'll see if it all actually crystallizes, but those are the stickier markets right now in terms of our whole portfolio. Urban elsewhere in SEGRO. We're building speculatively in Germany. It's leasing up really well ahead of expectations, quite often leased before we get to completion. So that's that. In terms of funding, third-party capital, as we said in the presentation, we keep that option open. We've had some success clearly over a long period of time with our SELP vehicle in Continental Europe. We do have a new JV model for working on data centers, which is partly around access to skills and capabilities and partly around share and capital intensity. And as we look at the significant opportunities we've got ahead of us in all parts of our business, including in the U.K. logistics piece, we're thinking about, is it best to do it ourselves on balance sheet? Is it best to do it in partnership. And we're having, as you'd expect, conversations on those, but nothing is sufficiently far advanced that we can say any more about that other than nothing is off the table, and we're always looking at these things. Suraj Goyal: Suraj Goyal from Green Street. Just one quick question. So there's mention of positive demand from e-commerce players returning to the market, including sort of Asian players. Big picture, what are your sort of thoughts on where the U.K. e-commerce penetration rate could land in the next 5 years, particularly with the potential boost from Agentic commerce? And then what do you think that sort of means for your expected market rent growth over the next sort of 5 years? D. Sleath: The U.K. question, particularly, was it? James, why don't you comment on what we're seeing on e-commerce and where you think it's going? James Craddock: Yes, you're right. So in e-commerce, we are seeing the return of a couple of big players who've been out of the market for a period of time, which obviously is good in driving the market. We've also seen some of the Chinese players also come into the U.K. market, in our own portfolio. We've seen that more in the last mile piece around London and our urban markets. In terms of a look forward, as I say, there's a couple of things that make us feel quite confident. I think that the absorption of gray space, which I mentioned in the presentation, is an important factor because -- and that should drive more pre-let activity as we look forward in those markets. And then on the supply side, the ability to find sites in specific locations, which can deliver large boxes is very challenging actually. And there's a theme around consolidation in the U.K. market. So customers who are looking to drive efficiencies, consolidating into more efficient facilities, which are generally larger, we've seen an uptick in the demand for larger buildings. So again, that favors companies like SEGRO who do own those sites in those right locations. And on a look-forward basis, again, if you look back on a long-run average for the U.K. Big Box, we delivered over 4% ERV growth over the past 10 years. So again, no reason to adjust that look-through guidance of 2% to 4% on a look-forward basis. D. Sleath: I think the other thing about e-commerce, I mean, clearly, there was a time back in the pandemic when there was a bit of a narrative around we're only ever going to shop online from here. Clearly, there was a massive expansion. That's now slowed down. There's been a lot of consolidation over the last 2 or 3 years. But our expectation -- our firm view is clearly, physical retail will continue to play a very important part in how consumers want to buy stuff. But there's no doubt that the amount of shopping that's done online will continue to increase as a proportion. Where it gets to, I don't know, but it's definitely on the up. And as James says, people need to invest in better facilities, better distribution networks to do that, and that goes to both the big logistics units for fulfillment, but also last mile. The real battleground continues to be in the major cities like London and Paris around delivery of last mile, getting the product to the consumer faster and more sustainably. And to do that, you need to have the right last mile facilities as well. So we feel really positive that after the boom and the quiet period post pandemic, e-commerce is going to continue to be a factor. It's not going to be the whole thing, but it's going to be a factor. I think we probably -- unless any more in the room, we ought to go to the conference line. So if the operator is listening, could you please take some calls -- take some questions from those online, please. Operator: [Operator Instructions] We have our first question from Frederic Renard from Kepler. Frederic Renard: I have 2, if I may. The first one is on the CapEx range, which has been around EUR 500 million over the last few years at the start of the year for quite some year now. But you mentioned delivering between 1 and 2 DC assets from here. I was wondering what would be then the CapEx on a run rate basis and on a true basis, if you consider that? That would be my first question. And then I would like to come back on the third-party capital. And you look quite enthusiastic there. Of course, there was an article also in the press in January mentioning potentially opening the U.K. Big Box business to a partner. How do you evaluate the trade-off between short-term earnings, potential decline and long-term value creation? D. Sleath: Well, that's a very good question on the latter one, and that's exactly what we're thinking about as we decide how to fund our development opportunities going forward. So I'm not really going to try and answer that now other than to say that's exactly what we're thinking about is what's the impact on near-term and longer-term performance for us. And also how does -- if we were to create another vehicle, how does that fit with the overall capital stack and the way we're funding the whole business. So unfortunately, we just have to wait and see on that one. In terms of the capital expenditure, the run rate about GBP 500 million per annum historically, if you sort of average it out, we've guided to GBP 450 million to GBP 550 million this year, which, as Susanne said, will depend on the rate of pre-lets. There -- that does not yet include any fully fitted data centers. The first fully fitted data center, if we -- assuming we get planning, will probably be in Park Royal this year or next year. I mean they're very big projects. We'll get planning, I'm sure, this year, whether we sign a pre-let. If we do this year, it will be back end of the year. So I don't think it will have a dramatic impact on this year's CapEx. But going forward, if one of the 1 to 2 data centers turns out to be fully fitted, then as Susanne said, the actual -- in fact, I did it in my bit of the presentation, the actual cash impact for us is going to be similar. If we do it in a JV off balance sheet, the cash is going to be similar. So somewhere around GBP 75 million or GBP 100 million of cash equity contribution is typically what we'd expect. But if you do it on a look-through basis, I mean, the CapEx on these things is about GBP 800 million, something of that order. So you're going to be taking half of GBP 400 million, but that would be spread over a couple of years or so. Operator: We have our next question from Paul May from Barclays. Paul May: Just I got 3 quick ones, hopefully. First one for Susanne, just a quick question on the old bug there around capitalized interest. Just wondered coming in from the outside, what were your views on the policy and the assumptions behind it? And can you just confirm what the main sort of assumptions are, the financing cost that's used? What is actually interest capitalized on? Is this just current developments? Is there any future developments, land infrastructure, et cetera, within there? Should I ask them one by one or... D. Sleath: Yes. Well, why don't you give all 3 and then we -- and then we can deal with them. The 3 quick ones, Paul. Paul May: Yes. The second one, given the subdued investment market, as you mentioned, and I think if you look around, there's been relatively limited capital raising for warehouse or logistics funds. Just wonder what gives you the confidence that you're going to sell more? And what yields would you be willing to sell at? And then on the London market, what we've heard is that rental levels or ERVs have become not necessarily unaffordable, but not affordable for many tenants, I think, is the comment that we've had. Does this go some way to explain the higher vacancy in that market and the comment in the report that tenants remain more discerning in London and Paris. D. Sleath: Okay. Right. So I think Susanne is going to talk about capitalized interest. Maybe I'll pick up on the investment market and what we're seeing in terms of yields and pricing and volumes. And then James, back to you on London ERV. So Susanne. Susanne Schroeter-Crossan: Okay. So on capitalized interest, Paul, we do capitalize interest, of course, on developments, but also on land where we are doing significant infrastructure or preparatory work to get the sites to a construction-ready state. And we have larger sites, as you are probably aware, across the U.K. that do require infrastructure investment, and this is also part of the capitalized interest that we apply. In terms of the cost or the interest that we are using to calculate, we are using where available, the specific funding rate that is related to where the source of capital comes from for those works that we are doing and where there is no such specific rate available, we would use the marginal cost of funding. In my view, this approach is the most realistic approach that we can find to match with what is actually ongoing. And if you also look at, for example, the 2025 numbers, we have GBP 63 million in total of capitalized interest and the vast majority was capitalized at the specific rate. Only about GBP 2.5 million of that were done on the marginal rate. So it's a very minor portion where we don't have the specific rates. The approach we take is, of course, fully aligned with accounting standards and also discussed with our auditors. So I feel comfortable with that approach. D. Sleath: Okay. Investment markets, I think you're asking what gives us confidence [indiscernible] that we're going to be able to trade more in these markets. Well, we are talking to the market, talking to our advisers and sources of capital. And I would say there's more capital coming into real estate generally and within real estate, industrial logistics and residential, the 2 favored sectors other than data centers. Time will tell, but there's definitely more signs that investors are willing to start putting money to work in the early weeks of this year, Paul. But we -- time will tell, but I think people have been sitting on the sidelines long enough. And I think given the relatively attractive outlook and the improving occupier fundamentals that we were chatting about, I think there's a very good chance that a lot of that capital will be put to work this year. We'll see. London ERVs, James. James Craddock: Yes. Look, I mean, of course, there are customers who continue to feel cost pressures. And there are customers that don't choose to be in London and can't afford to be in London. But for every customer that can't afford to be in London, there are multiple customers that do need to be in London and can afford London because of the nature of services they're providing, which typically the higher-value goods and services. And look, I don't think you can ignore what the portfolio is telling us. We have seen a nudge down in vacancy from an urban standpoint from 9.6% to 9.4% during the course of 2025. And also our ability to continue to capture reversion, drive ERV growth, see low insolvencies in that market, again, points to a relatively favorable position. The other thing I'd say is there is a narrower discount now between prime home counties in London. So again, on a look-forward basis, I think that drives really positive retention rates for our London markets. And if you look at our highest rental market, which is Park Royal and West London, our in-place ERV is actually only GBP 23 per square foot and you compare that to the top rents that are achieved in the market of GBP 32 to GBP 35 per square foot. So we see plenty of room for growth in those markets and a resilient occupier base. D. Sleath: I think maybe one more question on the phone line. Operator: We have our next question from Marc Mozzi from Bank of America. Marc Louis Mozzi: I have some follow-up questions on your data centers, if I may. And the first one would be, could you please quantify the quantum of CapEx we should expect over the next 3 to 5 years related to data centers? And the second related question to that is, when do you think we should start to forecast any rental income or any income coming into your P&L on which yield basis, knowing that it's going to be a blend between powered shell and fully fitted data centers? D. Sleath: Yes. You're not going to like this, Marc, but we're not really going to answer those questions just yet. I mean we've talked already about the scale of some of these projects and the likely CapEx, whether done on balance sheet for powered shell or off balance sheet fully fitted. I think when we've signed some deals, we will share some updates to our CapEx expectations, and that will also enable us to talk about timing of rental flow. So unfortunately, we're going to have to hold fire on that one for now. Sorry. Marc Louis Mozzi: Fair enough. And I have another question, which is related to your infra CapEx, which is going to be GBP 300 million, if I'm correct, from last year and this year. Is that a non-yielding asset or non-yielding CapEx on the year of deployment of the project? And is that part of the yield on cost of 7% you're mentioning? Or is it something which is going to drive the yield lower 1, 2 and then it's going to ramp up? D. Sleath: So is the GBP 300 million of infra spent last year and this year, is that accretive? Is it -- and how is it accounted for in our development yield guidance? The answer is, it is obviously enabling works that will allow those projects to go ahead, including the power upgrades in Slough. And so when we give our guidance on development yields, that's with each project taking its proportionate share of that infrastructure spend. So it's not an additional non-yielding part of capital. It's factored into our development yield guidance. Thanks a lot, Marc. We've got just a couple of questions maybe coming through the webcast, and Claire is going to read them out. Claire Mogford: Yes, we have. A couple on data centers to start with. How much of the 1.1 gigawatts of land or power available to lease by 2028 is secured and within your control? D. Sleath: All of it. Claire Mogford: And then we had a question on the simplified planning zone in Slough. That needs regular renewing. When is the next renewal date? D. Sleath: Of these SPZ. We've got -- it was just renewed at the end of 2024. So the SPZ, it runs for 10 years. This is the fourth iteration. We've had 3-year renewals. So it's got 9 years to go before we have to renew again. It's a big process to get that renewed, and we never take it for granted, but we have a very good working relationship with Slough Borough Council, and I think they see the benefits that the SPZ has brought. So 9 years for, every expectation that it will continue thereafter as well. Claire Mogford: And then another one on power. Grid connections are difficult and subject to queue management issues. Have you ever lost a place in a queue? D. Sleath: No. We -- no, we haven't. And particularly in West London, what we're able to do is lock things in early. We've been planning for the upgrade Uxbridge Moor Power Station for quite a while. So in fact, our position in that is kind of clear of any NESO review of the queue process. And we're bringing it through elsewhere as well. So no, we haven't lost a position. Claire Mogford: And then the last one on data centers. Can you remind us of the income recognition differences between powered shell and fully fitted? And when will we -- but more importantly, when do we start to expect to see the income? D. Sleath: Well, the -- yes, I mean, in theory, the data center, whether we lease the powered shell or we build fully fitted, it is going to become active and operational at the same time. If we do a powered shell, it's quite possible that with a rent-free period in there that the income for us in P&L terms at least can start earlier because we would typically build the shell, might take 12 or 15 months to build it, then we would hand over the keys, rent-free starts and we start accounting for the income at that point. Whereas if we do a fully fitted data center, the income is going to take another probably 18 months to 2 years because of the extra fit-out time, so really 3 years in total. So there is an 18-month or 2-year lag between income recognition on powered shell versus fully fitted in broad terms. But we think it's worth the wait. Claire Mogford: A question on capital allocation. Your comment on assets having to justify their place in their portfolio and increase target disposals. Does that mean you think assets generate less -- do you think less assets generate sufficient returns relative to your cost of capital right now? D. Sleath: What we're saying is we rank all our assets according to return expectations and risk profile. And given that we have a lot of high returning opportunities ahead of us, we want to accelerate and increase the volume of disposals we do so we can self-fund a lot more of that capital investment. And therefore, the -- if you like, the line below which assets that fall under -- become disposal candidates has raised throwing up more opportunities or more situations where we think, you know what we should -- it's done very well for us. It's performed well over the years. Now it's time to take our money out and put it into new opportunities. Thank you very much. I think we're done. I'm sorry, it's been a long session. Hopefully, interesting, and thanks all very much for your questions and your attention. Have a great day.
D. Sleath: Okay. Good morning, everybody. And great to see so many people here on a Friday in half term week. So whether you are here in the room with us or joining us online, we're absolutely delighted to have you with us as we present SEGRO's 2025 full year results. I'm joined here by a number of my executive colleagues, and I'd particularly like to welcome Susanne Schroeter, who is presenting her first set of results after joining us only in December. Before getting into the detail, what I'd like to do is share some key messages with you, set the scene as it were and explain why we are confident about the future. And I should just mention, our presentation is going to run a little bit longer than normal today because there's a lot we want to talk about, particularly to give more color on our data center strategy and set out the -- what we think is a really exceptional opportunity for this part of our business. So 2025 actually turned out to be a very strong year for SEGRO, both operationally and in financial terms as well despite the rather challenging macro. We signed a record GBP 99 million of new headline rent, including GBP 33 million of development signings. Within our existing portfolio, we delivered GBP 37 million of reversion uplifts from lease renewals and rent reviews, which itself was a key driver of our 6% growth in like-for-like net rental income. All of this translated into a 6% increase in adjusted earnings per share and a 2% growth in adjusted NAV per share. So a strong set of financial outcomes. But what pleased me most about 2025 was the improving occupier sentiment and a pickup in deal activity in the second half of the year as the structural drivers underpinning demand for our assets began to reassert themselves. That momentum has continued into 2026. Inquiry levels right now are strong. Occupiers are starting to progress their investment plans, and we have an active pipeline of discussions both on existing space and for new pre-lets. We know that deals can take a long time to convert from active interest into actual signed deals. And no one quite knows how 2026 will turn out in terms of geopolitics. But we're really pleased and very well positioned right now, and it feels much more encouraging here today than it has at any time for at least the last 2 years. Those results added to our long-term track record of delivering compounding annual growth driven by disciplined capital allocation, operational excellence and an efficient capital structure. Since 2016, we've delivered an average 8% growth in earnings, dividends and net asset values despite the more challenging environment of the last couple of years. And we anticipate that improving market fundamentals and the exceptional opportunities in front of us will enable us to move back towards those longer-term averages. Onside our financial and operational achievements in 2025, we progressed our responsible SEGRO strategy. We continue to champion low-carbon growth, reducing our carbon intensity significantly and have refreshed our net zero targets, which have been approved by the science-based targets initiative. We added to our community investment plan framework. We achieved record levels of volunteering by our employees, customers and stakeholders, and we delivered 54 community projects. We also continued investing in our people to further strengthen our market-leading operating platform through our nurturing talent strategy. These initiatives are a really important part of how we sustain high performance across the business and ensure that we continue building for the future. So let's now get into some detail. We'll start with our strong financial performance presented by Susanne. Then we'll talk about the strong operating performance behind these results. James Craddock and Marco Simonetti will address the U.K. and the Continental European markets, respectively, after which I'll bring it all together to give you a group overview. And then we'll finish by looking at the future opportunity for SEGRO, which I'll address in 2 parts. Firstly, the multiple levers we have to drive growth within our industrial and logistics business. And then secondly, the compelling opportunity that we have within our exceptional data center pipeline. So now I'm delighted to hand over to Susanne. Susanne Schroeter-Crossan: Thank you, David, and good morning also from my side. I had a fantastic start to SEGRO so far. The team has been extremely welcoming and supportive. And I've also already had the chance to visit a number of the offices and assets across London, Midlands, Germany, Netherlands and France. And I must say what I've seen so far has really impressed me both in terms of the quality of the assets and the strength of the team. So I'm very excited about the opportunities ahead and as I continue to get to know the business better. About 2025. While I can't take credit for the excellent performance the team has delivered in 2025, I'm very happy to talk you through the key numbers. 2025 was defined by strong operational execution across the portfolio. We also continued with our balance sheet discipline, and we saw improving momentum in our key markets. This was reflected in the key financial metrics. Adjusted earnings per share increased by 6.1%, and this was driven by higher net rental income and continued cost discipline. We have chosen to pay a full year dividend of 31.1p, which also represents a 6.1% increase year-on-year. Portfolio valuation grew by 1% on a like-for-like basis, and this was the first year that both the U.K. and Continental Europe have been positive since the start of 2022. Adjusted NAV per share increased by 2%, and that reflects the like-for-like valuation uplift and additions we made to the portfolio throughout the year. Our balance sheet remains strong. Loan-to-value ended the year at 31% and net debt-to-EBITDA reduced from 8.6 to 8.4x over the course of the year. Let us now turn to the income statement. Net rental income grew by 8.6%. I will tell you more about this on the next slide. Net interest costs were stable year-on-year. Lower gross interest was offset by lower capitalized interest. And the reduction in gross interest came from lower interest rates, particularly Euribor, which offset the higher net debt figure. Our EPRA cost ratio improved slightly in 2025, and this was also helped by a EUR 3 million reduction in administrative expenses. Operational efficiency will remain a focus going forward. Adjusted profit before tax increased by 8.3%. And to summarize, this performance demonstrates the resilience of our operating model and the quality of our portfolio. Let's now look at net rental income in more detail. We delivered EUR 47 million of net rental income growth, and that was driven by 4 factors: number one, the 6% like-for-like rental growth, which was strong both in the U.K. and Continental Europe. The U.K. performance was driven by capture of reversion at the 5 yearly rent reviews and Continental Europe benefited from increased occupancy and asset management initiatives. Number two, development completions. These contributed EUR 31 million last year. Number three, acquisitions and disposals. The impact of those 2 was neutral due to the sales we did in 2025 and the full year effect of the 2024 disposals. Number four, the other items, these include mainly takebacks for redevelopment, surrender premiums and also some FX impact. We expect like-for-like rental growth to remain strong as we continue to capture reversion to lease vacant space and that we continue our active asset management. As I said before, 2025 was the first year since the pandemic where both the U.K. and Continental Europe saw positive valuation movements and the total portfolio value increased by 1% on a like-for-like basis. Yields were broadly stable during that period. ERV growth for the group was 2.3%. It was stronger in the U.K. at 3.1%, driven by a standout performance from our West London portfolio, which delivered 4.7% growth. In Continental Europe, it was 1% overall. Spain and Germany outperformed and delivered the strongest growth at 3.2% and 2.4%, respectively. The portfolio now stands at EUR 19 billion at share, including our development assets and land holdings. The equivalent yield is 5.5%. Our balance sheet remains strong. The LTV is at 31%, which is a level that we are currently comfortable with. Net debt-to-EBITDA stands at 8.4x, down from 8.6x last year, and that reflects higher EBITDA and disciplined capital management. We continue to benefit from a diverse and long-term debt structure. Our average maturity is 6 years. We have undrawn RCFs and term loans of circa EUR 1.9 billion and ongoing access to attractive financing through the euro and sterling bond markets, also the private placement and bank markets. Our EUR 650 million bond maturity in March will be refinanced through an undrawn term loan that we have signed in the second half of 2025 and the residual amount will be drawn from our RCF. This robust financing position gives us the flexibility to invest through the cycle and capture future opportunities. Now let us talk about capital allocation. Our capital allocation framework remains clear, disciplined and aligned to long-term shareholder value. Development on existing land remains our most accretive use of capital. It yields 7% to 8% on total costs and 10% or more based on additional capital required. We expect 2026 development CapEx to be in the EUR 450 million to EUR 550 million range. And the final number will depend on the level of new projects we start in the next few months. Our CapEx guidance includes about EUR 150 million of infrastructure investment to support the long-term growth from our logistics parks in the U.K. and for power upgrades for our data center pipeline. We will remain very selective on acquisitions. We focus only on the most compelling opportunities in core markets that provide wider portfolio benefits and attractive returns. We do consider additional distributions to shareholders such as share buybacks, but only when we believe that we have material surplus capital and the lack of compelling development and acquisition opportunities. This is currently not the case, especially given the momentum building in our development pipeline. We continue to take an active approach to capital recycling, and we have an annual planning process to identify assets where we have optimized returns. With the current cost of capital, we continue to be very disciplined when it comes to capital deployment for new investments, but also for the assets that we retain. We, therefore, expect disposals this year to be at or above the upper end of our longer-term run rate of 1% to 2% of our portfolio. These disposals will generate proceeds that we can invest into opportunities with higher risk-adjusted returns. In addition to disposals, we are regularly considering options to fund our growth pipeline. We also have a successful track record of working with partners to share capital intensity, for example, within our SELP joint venture and now also with Pure on our first fully fitted data center joint venture. This capital allocation framework work continues to support both the near-term delivery and our long-term returns. To summarize this section, in 2025, we delivered a strong 6% like-for-like rental growth, contributing to 6% earnings and dividend growth. We have a strong balance sheet and a clear disciplined capital allocation strategy aligned to long-term shareholder value creation. Let's now turn to the operational performance of the business, and I'm delighted to hand it over to James, who will start with the U.K. James Craddock: Thank you, Susanne, and good morning, everyone. So let me start by talking about the broader U.K. market. So 2025 was the strongest year for logistics take-up since the pandemic. There was about 33 million square feet of logistics occupational activity. Pre-let activity did remain low, however, and take-up was driven more by immediate needs of customers rather than the more strategically planned decision-making. On the supply side, we've seen things stabilize, and there are encouraging signs of positive net absorption in some markets, which is resulting in vacancy nudging down, and we've seen this in our own portfolio, both in the urban and in the big box markets. In terms of overall logistics supply in the U.K., it's important to note that about 2/3 of the supply is of second-hand or poorer quality stock. So this continues to favor owners of prime, modern, well-located portfolios like our own. New speculative development starts have fallen materially. They're running at roughly half the long-term averages, and 3PLs are reporting low levels of gray space within their portfolio, both of which are supportive factors as we look ahead. That said, the market is far from uniform. There were areas of real strength and other areas that remained weaker in 2025. If we turn now to our own portfolio, pre-let levels were low, but we were able to sign a fantastic deal for development on our food campus at SEGRO SmartParc in Derby. We also leased 1 of our 2 speculatively developed sheds at SEGRO Park Coventry, which helped to improve our U.K. occupancy by 50 basis points to 93.1%. We've also been doing some selective speculative development, which included the development -- redevelopment on the Slough Trading Estate, which has been leasing well. For me, however, the highlight of the year was the standout asset management performance and standing stock leasings with the teams completing on over 250 individual transactions across leasing, rent reviews and lease renewals. Our key urban markets, especially the highly established Heathrow and Park Royal, which together make up 40% of our U.K. portfolio continue to perform well. This is driven by good demand and the depth of our customer relationships. Transactions have included setting new headline rents to customer segments, including food and beverage, 3PL and pharmaceuticals in these submarkets. This activity demonstrates the continued attraction of prime urban markets for occupiers who are providing value-add goods and services who need to remain located within prime M25 locations to service their end customers and to attract labor. A major focus for us in 2025 was also preparing our very special U.K. logistics sites for future development, which included hitting key milestones with the groundworks and the strategic rail freight interchange development at SEGRO Park Radlett. We, therefore, now have 3 sites in construction-ready status and the first plots at Radlett will also be ready in the early part of next year. Between them, these can deliver over 9 million square feet of the very best modern logistics space in the U.K., ensuring that we can respond quickly as occupier demand continues to build. On that topic, over the past 2 to 3 months, inquiry levels have improved materially across both logistics and urban, and we are seeing more activity across a broader mix of occupiers. This is largely being driven by the structural drivers which support our business. Retailers, food, e-commerce and general distribution are particularly active, seeking efficiencies through supply chain optimization, which is driving decision-making. Taken together, these trends give us confidence in the outlook for the U.K. business and the pickup in inquiry levels and leasing activity since the budget, both on standing stock and for pre-let opportunities provides a solid foundation for 2026. I'll now hand over to Marco, who will talk you through the performance in Continental Europe. Marco Simonetti: Thank you, James, and good morning all. Let's move now to Continental Europe. And I would like to cover 4 points: share some key highlights on the overall occupational market, then cover the performance of our existing portfolio, then move into the development pipeline and finally touch on that outlook for 2026. Starting with the overall occupational market. Leasing activity in 2025 has outperformed the pre-pandemic average. In fact, Q4 was the strongest quarter of take-up in 3 years. Vacancy rates now have stabilized with early indication of a modest downward trend and new speculative development are limited to a few prime locations. Similar to the U.K., the European market is in uniform and some countries and some regions within countries have performed better than others. Our exposure to the best-performing markets has contributed to a strong performance with a clear momentum in the second part of the year, both on the existing portfolio and on the development side. Our existing portfolio has performed extremely well. We signed over 180 deals. We had a strong letting activity and high customer retention, bringing occupancy to 98% across the continent with some countries fully occupied. We completed several notable letting transaction above 30,000 square meters like ID Logistics in South of France, GD.com in Germany, GXO in Milan or H&M in Poland. Moving now to the development side. Structural trends, including urbanization, e-commerce growth and the supply chain organization led to an exceptional quarter 3 and quarter 4 from a development side. In fact, H2 2025 was the best half year ever in Continental Europe for SEGRO, outperforming even the pandemic years. We saw the return of large pre-lets. We signed 9 deals equating to over 300,000 square meters of space, a pre-let to GXO in the south of Paris, a fulfillment center for e-commerce player in Germany, the new distribution facility for Primark in Italy as well as multiple smaller deals across Germany, Italy, Spain and Poland. The leasing activity was strong on our speculative program as well with our schemes in Germany, in Spain and Poland, all hitting a high level of occupancy before completion. And in the case of Warsaw, we have been able to fully let the space even before starting construction. So in summary, 2025 was a strong year for SEGRO in Continental Europe. Now looking forward, we enter the year in a stronger position than this time last year. Many of our 2026 lease events have already been secured. We have a healthy development pipeline, partially pre-let and partially spec with some projects in the near-term pipeline already signed in Spain, in France and in Poland, waiting just for the building permit. And we continue to see a good progress in our speculative German urban schemes. And with that, I will hand back to David. D. Sleath: Thank you very much, Marco and James, and indeed, Susanne. So as you heard, actually 2025 was a very strong year of deal execution for SEGRO. In total, we signed GBP 99 million of new headline rent, which is the highest in our history and even, as you can see, slightly higher than the pandemic peak of 2022. So this reflects strong performance across both existing assets, which is the part shown in red, led by the U.K. and with our development program, which is shown in salmon pink, which is led by the continent. As Marco and James both commented, though, activity levels strengthened noticeably in the second half of the year, and that momentum has continued into 2026. It was an excellent year for reversion capture, demonstrating the quality of our portfolio, the strength of our diverse customer base and the impressive skills of our leasing and asset management teams. Overall, we achieved a 36% uplift on rent reviews and renewals, which was 46% on average in the U.K. Despite these higher rents, we also maintained a high 82% customer retention at break or lease expiry, and we increased our overall occupancy by 90 basis points to 94.9%, driven mostly by Continental Europe, but also with some progress in the U.K. We continue to take a disciplined approach to capital allocation, as Susanne highlighted earlier. Whilst capital deployment into development is our priority, we always remain alert to opportunities to acquire good quality assets that offer attractive returns in our high conviction markets. Such was the case in Germany and the Netherlands with the acquisition by our SELP JV of some excellent assets formerly owned by Tritax EuroBox and in the case of a smaller logistics park close to Prague. Following a big year of disposals in 2024, we carried out fewer asset sales in '25, whilst investment markets remained quite subdued. But we were pleased to make a number of target disposals at prices above book of smaller non-core assets, including an older estate and a budget hotel in London as well as some small residual land plots. As Susanne mentioned earlier, our rigorous portfolio review process subjects every single asset and land position to a thorough assessment of future returns and risks, and this directly feeds into our disposal planning. Everything we hold has to justify its place in the portfolio compared to our cost of capital and the expected returns from other opportunities. So 2026 is likely to see an increased level of disposal activity subject to market conditions, but we think those are also starting to improve. Development offers our most compelling immediate and medium-term return on capital. We invested GBP 413 million into it in 2025. GBP 387 million of it was on development CapEx, including infrastructure and GBP 26 million was on land acquisitions. That was all a little bit lower than our original expectations due to the slower pre-let market in the first half. That, in turn, fed into lower completions in the year with space equivalent to GBP 29 million of headline rent being delivered. The average development yield of 8.2% was above our normal range as it included a powered shell delivered in Slough -- powered shell data center delivered in Slough, I should say. And despite a lower proportion of pre-lets in the mix, the space we delivered was actually over 90% leased by year-end, suggesting that we picked the right submarkets in which to launch selective, speculative developments. All of the projects were rated BREEAM excellent or better. At the half year, we did point to an expectation of a recovery in occupier sentiment in the second half, which is indeed what happened with a strong run of pre-let signings, particularly in Continental Europe. So as a result, our on-site development program is now returning to more normal levels. Currently, it represents GBP 53 million of potential headline rent, of which 47% is already leased. And we have a further set of pre-let projects at advanced stages of negotiation, representing another GBP 9 million of rent plus an encouraging set of potential projects behind these, including in the U.K. So moving on, I'd now like to talk about the attractive growth potential in the coming years. Before covering data centers, what I want to talk about is the significant opportunity within our industrial and logistics business. As you know, we've positioned our portfolio and our business to benefit from a number of enduring structural trends. These have become somewhat muted over much of 2024 and '25, but now appear to be reasserting themselves. Digitalization, urbanization, supply chain optimization and a continued focus on sustainability once again are prompting occupiers to search for modern, well-located and energy-efficient space. At the same time, securing planning consents for new greenfield sites is increasingly difficult and urban brownfield land is continuing to be lost to competing uses such as residential and now data centers. For landlords and developers with the right assets, land, operational capabilities and balance sheet strength, this creates a supportive backdrop for future performance, which are exactly the things that SEGRO has. We've built a fantastic portfolio across Europe's most attractive markets. 2/3 of it is in dynamic high-growth and supply-constrained cities like London and Paris, where demand is diverse and long-term rental growth is expected to outperform. Plus, we have one of the best, most modern logistics portfolios and an exceptional land bank for development. And our market-leading operating platform with deep local capabilities across the U.K. and the continent, means we really know our markets, and we're well placed to spot new opportunities and drive further performance. There's a GBP 152 million of growth opportunity in the existing portfolio alone, including GBP 99 million of reversionary potential, 1/3 of which is available to capture with lease events due this year. There's a further GBP 53 million of opportunity in vacant space, much of which is recently developed or refurbished space that is well located and occupier ready to lease in 2026. Capturing these opportunities will continue to drive strong like-for-like growth and unlocking it requires very limited capital expenditure. On top of that, we believe that improving occupier demand and constrained supply will also support further rental growth, which we continue to believe will be in the range of 2% to 4% for Big Box logistics and 3% to 6% for Urban assets over the medium term. Beyond the existing portfolio, our land bank leaves us well positioned to deliver substantial development-led profit growth. The current pipeline plus near-term projects under advanced negotiation represents GBP 62 million of potential rent. The rest of the land bank offers a further GBP 346 million of opportunity at current market rents. Development yields remain attractive at between 7% and 8% with a greater than 10% yield on new CapEx. As James mentioned earlier, our teams have made great progress to have our super prime U.K. logistics sites construction ready, so we are brilliantly placed to capture improving demand. Combining all of these opportunities together, we set out our updated rental bridge chart. This is based on today's rents, so it doesn't capture any further ERV growth or indexation uplifts. And you can see that on top of today's GBP 755 million, we can generate another GBP 800 million of new rental income. Almost 1/3 of it comes from our existing portfolio as we lease our vacant space and capture reversion. 2/3 of it comes from our land bank as we complete schemes under construction and develop out the future pipeline. This only factors in powered shell developments in terms of data centers. But in fact, the data center opportunity is much greater than this. And this takes me on to the next part of the presentation. Demand for data centers in Europe is predicted to grow significantly in the coming years, led primarily by cloud adoption as businesses and individuals move more activity online and by inference AI, which is where the end users interface with the AI models. Most of this demand is being satisfied by hyperscalers who prefer building out their data center capacity in close proximity to major population centers and financial hubs within established availability zones in the so-called FLAP-D markets. This is because most of the applications running in these systems require low latency and high resilience to meet customer demands. Capacity constraints and demand growth are now pushing development into some newer availability zones such as in Berlin, Marseille and Warsaw. And by contrast, latency insensitive AI facilities for training in some of the inference workloads that don't require low latency, these can be located in secondary and tertiary locations where land and power are less constrained and energy is cheaper. These are the locations that are of no interest to us because we simply do not like the real estate fundamentals. Rather, our focus is firmly anchored on serving demand in supply-constrained and established and emerging European availability zones, markets that overlap with our existing portfolio of prime industrial assets and where our local platform and expertise provide a competitive advantage. Our ability to benefit from all of this future growth is underpinned by an exceptional bank of powered land across key European availability zones, which now totals more than 2.5 gigawatts. In addition to the 0.5 gigawatt of operational capacity mainly in Slough, we have a clear route to another 1.1 gigawatt, which can be pre-leased over the next 3 years and a further defined 900 megawatts of power supply in process supporting medium-term growth thereafter and with additional long-term multi-gigawatt opportunities being pursued over and above these amounts. Our sites are well positioned to secure the necessary planning approvals. And the simplified planning zone in Slough provides a unique advantage with data center development already preapproved and with an additional 0.4 gigawatts of capacity due in 2029, making it, we think, the largest holding of powered land with a live planning consent within any of the London availability zones. All of this puts us at the front of the queue in a number of markets and best placed to address data center customers' key criteria, which is essentially speed of deployment. We've delivered excellent progress in our 2025 strategy for data centers. We strengthened our specialist in-house data center and energy team. We formed a joint venture with Pure data centers, giving us access to the technical expertise needed to deliver fully fitted data centers. On the ground, we completed a powered shell for Iron Mountain on the Slough Trading Estate. We secured a building permit for our first French data center and submitted the planning application for the Park Royal joint venture project, which is expected to be determined in the first half of this year. From a power perspective, we initiated infrastructure works to support the power upgrades in Slough, and we secured a separate 190 MVA power offer in West London. We maintain the strategic flexibility across our portfolio, choosing the optimal route for each project based upon the site-specific characteristics, local market conditions and the expected returns. And while we expect to deploy capital through all 3 strategies, we are now increasingly focused on fully fitted projects. We believe that on certain sites, this model can generate development profits for SEGRO of up to 3x greater than for the equivalent powered shells, and we believe we can effectively manage the additional risks and complexity involved. And for the avoidance of doubt, this approach does not expose us to the obsolescence risks associated with innovations in chip technology because we will not be investing in the racks or in any of the compute capacity. Our fully fitted approach is designed to be capital efficient and operationally low risk. We will develop only within key availability zones on the basis of pre-let agreements to major hyperscalers before construction starts. We'll be targeting long-term net leases to avoid operational exposure, and they'll be delivered through JV structures that combine specialist expertise with strong governance. Project level financing and SEGRO's contribution in most cases of powered land will keep our cash equity requirements limited. In fact, broadly in line with, if not lower than the equivalent powered shell developments delivered on balance sheet. And although we have capacity to fund several fully fitted projects from existing resources, we expect to actively recycle capital from stabilized assets through a range of potential exit routes, recycling capital into other opportunities. Based on our assessment of the exceptional sites in our pipeline, we expect to bring forward 1 or 2 data centers per year for the next several years with a mixture of some powered shells, but mostly fully fitted data centers. We'll be carefully sequencing the delivery and monitoring the overall evolution of the European data center market to ensure that we manage our overall exposure to fully fitted data centers and to joint venture structures. So in summary on this piece, our data center platform represents a substantial incremental and value -- income and value creation opportunity. It's underpinned by unmatched European land and power positions, the capabilities to deliver both powered shells and fully fitted data centers as well as powered land sales, a disciplined approach to capital management and the strength of the SEGRO operating platform, including local market insights, planning expertise, energy capabilities and robust governance. This strategy gives us exposure to one of Europe's strongest structural growth markets and adds significant upside to the growth drivers already embedded within our industrial and logistics business. So let me conclude by bringing all of this together. 2025 was a strong year of operational and financial performance for SEGRO. Momentum that started building across our occupier markets in the second half of the year has continued to grow and become more widespread in 2026, and we are primed for significant growth in the coming years, thanks to our high-quality reversionary potential supporting strong like-for-like growth, upside from industrial and logistics development and a compelling opportunity with data centers, underpinned by a clear strategy, strong balance sheet and a market-leading operating platform. With that, I thank you for your attention, and we'll now turn to questions. Susanne, James and Marco, if you'd like to come and join me on the stage, so we can do that. And also Andrew Pilsworth, who's leading on data centers, he's going to join for this part as well. D. Sleath: Okay. Thank you. We're going to start taking questions in the room. [Operator Instructions] John, yes. Thank you. John Cahill: It's John Cahill from Stifel. Thanks for the presentation. Really good to hear a U.K. REIT, both positive looking backwards and forwards. With regard to the data center business, you're clearly backing the right horse here, and this will no doubt be a great success, I'm sure, in the future. But there's one of the big change that's happening in terms of European and U.K. industrial space, which is obviously the investment in defense manufacturing capabilities. Your contemporary at Sirius have obviously gone in that direction and the market has clearly liked that. Is that something you would perhaps seek to look to become more involved in, particularly in Germany. It sounded at the Munich Security Conference that there's going to be an awful lot of investment in that space. Would you be looking to go that way, notwithstanding the data center route? D. Sleath: Yes. I mean I'll give -- maybe just make an overall comment and then Marco specifically can add a Continental and a German flavor to it. I think what I'd say is, so far, it's -- I think it's a small thing in terms of impact on a business like ours. There may be some significant investment in some large defense capabilities around Europe. But generally, they're going to be in locations where governments want to encourage investment and the creation of jobs and not in prime locations where we want to keep our capital invested. Having said that, undoubtedly, there will be some spin-off. There will be some particularly logistics needs to actually move goods and services and support capabilities around. So it's something we are looking at. But I don't -- right now, I mean, it's a very helpful additional demand driver at the margin. I don't think it's going to have the same impact that, for example, e-commerce had over the last decade. But Marco, do you want to add anything in terms of what we're actually seeing? Marco Simonetti: Yes, I think you covered that well. So it's clearly a sector that we are monitoring. But at the moment, what we see that in terms of location are more bespoke locations. So those locations are not -- do not match with our strategy. But it's an additional demand and there will be some opportunities. So clearly, we are monitoring that across all the European countries where we are active. Maxwell Nimmo: Max Nimmo at Deutsche Numis. And -- just 2 questions, if I can. One on London. It feels like you feel a little bit more confident around kind of Western corridors, A40. Perhaps if you could just talk a little bit about the wider London market, North, South London, how are you seeing supply in that market? And then secondly, just on the data centers, I fully appreciate that you're not exposed to the kind of the chip risk. But just in terms of the build-out requirements, hearing lots in terms of the progression on liquid cooling, things like that. Where are the risks for what you're doing in the fully fit-out space? D. Sleath: Two good questions, Max. So obviously, the first one, James can make some comments on. And Andrew, maybe you can pick up on the depreciation and the obsolescence risk, which are slightly different things, but yes, do that. So James, do you want to do U.K. James Craddock: I think you're right. I mean, London is not one thing, and our urban markets are not one thing. And actually, the markets have quite different characteristics at the moment. So we were super pleased with the results we saw in terms of West London. It's a very mature market. There's a huge depth of number of customers. We've got a very good level of customer relationships in those markets. So that performed exceptionally well. And if you take Park Royal, you take Heathrow and you take Slough as our kind of urban markets, 70% of our U.K. portfolio is in those, and we're very confident about those and they're not particularly high vacancy markets. If you look at perhaps South and East, these are markets which are a little bit more fragile in terms of occupier -- in terms of vacancy. But again, we have seen a tick up in inquiries as we talked about as part of the presentation since probably, well, the back end of last year. So we are more confident in those markets, but it's definitely right to not see London and the urban markets as one thing. So as I say, we feel confident and look forward. D. Sleath: Andrew, data centers? Andrew Pilsworth: Yes. on data centers, yes, as you say, we are -- our end customers will be investing in the servers, the racking and as David mentioned, the GPU chips where we see that having the highest level of obsolescence risk. And actually, if you look at what we are investing in, we're investing in long-term power-enabled cooling technology. So it's all the mechanical and electrical equipment, which we think has long-term intrinsic values in those very attractive markets that we're investing in. So we think there's very -- they have a very long economic life and certainly longer than the leases that we're investing in. So on -- one of the risks is definitely obsolescence, but we feel that's covered off by that point. As David said, a slightly different issue on the depreciation. We are targeting a net lease structure to SEGRO, so very similar to what we do in the rest of our business. And the exact accounting treatment will depend on the structure of the lease, but certainly, the advice we've got that by targeting a net lease, that will be treated as investment property in a similar way to the rest of our portfolio. And indeed, if you look at other asset classes, offices where there's fit out and therefore, treated investment lease and no depreciation. D. Sleath: And I think on the point around the risk of obsolescence of technology moving on, I mean, clearly, it does -- it has evolved. The cooling technology has changed. I mean there was a big thing about water usage when water cooling was introduced a couple of years ago. Now the latest technology is basically it's a closed-loop system. So it's a bit like a car radiator, you put water in at the start and you don't need a huge amount of water then to run it thereafter. These things do change. But actually, if you go back and look at when we started 20 years ago with data centers in Slough, the first-generation data centers we built, they don't have the latest cooling technology and the latest engineering, but they're still fully used and fully occupational because, frankly, the growth of demand and the growth of need for data storage and processing capacity just outstrips the ability to build more. So it's very rare that people are going to just strip out the old stuff and say, we've got to write that off. This stuff seems to -- it's all additive. But each data center we build will have the latest technology, but the fundamental fabric of the building and the main cooling isn't going to change that dramatically. Yes, Zach. Zachary Gauge: It's Zachary Gauge from UBS. A few questions sort of all tied into each other. Firstly, just starting on the 7% yield on cost on the current pipeline. I appreciate that's ex data centers, which aren't under construction at the moment. But am I right in thinking that for sort of logistics space, 7% is kind of the run rate yield on cost now and to get up towards 8% plus, you need the higher-yielding data centers to sort of get that blended yield on cost higher? The second question is on the 300 megawatts of immediately available power. I think we sort of know about Park Royal and some power available in Slough. Is sort of the residual power in that the new opportunity in Paris? If so, that's a very large amount. And could you touch on what the plan is for that in terms of whether it's going to be fully fitted powered shell and whether you'll obviously bring in a JV partner if it is fully fitted? And then sort of lastly, on the wider data center strategy, I mean, it feels like a bit of a change in tone leaning towards more fully fitted. Obviously, the CapEx on that is going to be substantially more. I think for the Pure DC, we're looking at almost GBP 400 million for one project alone. You obviously guided to the 1% to 2% recycling, saying it might be slightly above that this year. Just how do we think about how this potential pipeline gets funded if it is successful and hyperscalers are there to take it? Because obviously, the CapEx numbers will go up very, very quickly. The income won't catch up as quickly. And would -- should we expect to see just an increased level of recycling well above the 2%? Or is equity raise potentially on the table if this is a success and you have the demand there to build them out? D. Sleath: Okay. I should have said at the beginning, one question, please. So we can keep up. But there's quite a few -- just briefly on -- and I'll throw the data center piece back to Andrew and maybe Susanne can comment on the capital side of it. In terms of development yields, we've always said that we should be shooting for between 150 to 200 basis points premium for a development yield over and above the equivalent investment yield of a prime product. Now if you think that equivalent yields now around -- somewhere around the 5%, 5% to 5.25%, something like that, maybe 5.5%, then in most markets, getting a development yield around 7% is actually a pretty good outcome and very profitable. Now we've said there's a range of 7% to 8% because we've got a mix of geographies. We've got a mix of, frankly, land holding costs or land values on the books. And we've got some markets where there's going to be some projects where we're going to do much better than that even in core industrial and logistics. So the reality is there's a range. But I think broadly, if we can be getting 7% to 7.5% on our industrial and logistics and closer to 8% when you blend in some powered shells, that's a very attractive overall development yield, but it will vary by geography and by product. Data center power, Andrew? Andrew Pilsworth: So that 0.3 gigawatts, we're not going to give details on individual sites and what we might pursue on them. However, what I can say that the 0.3 gigawatts that you referred to, Zach, that's spread across a number of opportunities, both in Slough. We do have some immediately available power in Slough, and we're in advanced negotiations with the customer on that power. But also within that 0.3 gigawatts, that's spread across a number of projects, not only in Slough and the U.K., but also across the markets in which we're present in Continental Europe as well. And as I said, I won't comment on the route we will pursue on individual sites, but we are likely to go for a fully fitted route with a JV partner to get the capability to utilize the capability on fully fitted -- their capability on fully fitted, and we're likely to pursue fully fitted in the strongest and most attractive markets. D. Sleath: Okay. Susanne, do you want to talk about CapEx? Susanne Schroeter-Crossan: Yes. Very happy to. So first of all, you are right that we are leaning towards more fully fitted data centers on suitable sites. So the best sites in our portfolio are suitable for that, and we are looking for joint venture partners to work on those fully fitted data center opportunities. What does that mean? So first of all, in terms of the equity contribution to the joint venture, we don't foresee this to be substantially higher than an investment that we would make into a powered shell because we are obviously contributing powered land to the joint venture. So that is as a starting point for us a favorable outcome. And then the CapEx financing for these projects is planned to be in the joint venture, meaning it's going to be project debt that is raised together with the joint venture partner at the joint venture level. This will initially have a relatively high loan-to-cost, but these longer data center projects will see a valuation uplift as we complete the phases of the construction, meaning that naturally, the leverage will come down as a result of it. Project debt is available at the moment. We have already a lot of discussions with interested providers. So we feel that this is a good strategy to fund the CapEx needs. And based on that approach, the currently envisaged strategy would not require an equity raise. D. Sleath: And maybe just to add to that, I mean, even if we've obviously -- we've got a view we've modeled out. We're not quite ready to share the detail of the forecast with the market. But we've modeled out what it will look like if we build -- I alluded to 1 or 2 per year. They won't all be fully fitted, but I think probably an increasing number will become fully fitted. We've modeled out what that looks like over the next several years. And frankly, even if you do it on a look-through basis, the impact on our LTV and indeed, the impact on our proportion of assets in data centers is very manageable. As long as we continue to actively recycle broadly across the whole portfolio, this is all very doable. So we think we've got plenty of capital to pursue this. And they're going to be 1 or 2 at a time or 1 or 2 a year. They're not going to be 5 in 1 year that would put an unnecessary strain on the balance sheet. Tom? Thomas Musson: Tom Musson at Berenberg. Just a question on Europe. I appreciate countries like Spain and Germany performed well. Can you just give a bit more color on the market dynamics in Poland and the Czech Republic, in particular, I think those are the 2 markets where asset values fell and rent growth was sort of flat there. D. Sleath: Yes, sure, Tom. Marco, do you want to comment on Czech and Poland? Marco Simonetti: Yes. So starting from rental growth, and we have 1% across Continental Europe. As Susanne said, a few countries that performed well, like Spain and Germany. Eastern Europe is a little behind in terms of rental growth. What we have seen, as I mentioned in my presentation, is that there was a recovery of the activity in the second part of the year, especially from September to December. And even in Poland, we had some spec development in Warsaw that has been fully let even before starting completion. We have done some major lettings like H&M in Central Poland. So there is a recovery of the market there. We don't see that yet in ERV growth because it was in -- those letting and pre-let have been finalized in the second part of the year. And so our values need a little more time in order to factor that in ERVs. But we are confident in our guidance that we give between the 2% and 4% on Big Box logistics, so we think that as soon as the occupational market is going to recover even more, we will see those level again. And in terms of rental growth, when we look to the performance of the European portfolio, I think that we have not to focus too much on just 1-year number because if you look to the 3-year rolling average in Continental Europe, ERV growth is above 3% and the average over the past 10 years is above 3% as well. So yes, it's just a matter of time. D. Sleath: But I think generally, in terms of Poland and Czech, in terms of places to invest, I mean, we -- Poland -- Czech has been an amazing success story for a long time. In Poland, I think GDP growth was 4% last year, expected to be top performing in Europe -- in the EU country this year or thereabouts, above 4%. So I think we've got very -- clearly, there's a lot of issues around geopolitics and what happens in Ukraine. But we've got -- we've got long-term conviction over Poland as a place to do business. So I think we'll continue to invest. Marco Simonetti: In terms of location, we are very selective in this market. And there are some markets like if you take the example of Czech Republic, we are just investing in Prague. We've done an acquisition last year, and Prague has been historically a strong market and benefit of the proximity to the German border. So we are just investing in selected location in Czech and in Poland as well. D. Sleath: Any more... Marios Pastou: Marios Pastou here from Bernstein. So I got a couple of questions from my side. So firstly, we obviously saw an improvement in the occupancy levels overall. I think there was a more mild improvement in the urban occupancy levels, both in the U.K. and on Continental Europe. Just in terms of the supply levels, the discussions you're having on that urban portfolio and your urban exposures. What are your expectations in terms of the trajectory ahead for a recovery in occupancy in those markets towards more normalized levels? And then secondly, you were talking about the use of third-party capital. And obviously, you've got some quite large schemes in the U.K. You mentioned the 9 million square foot of potential space. And just any thoughts around whether you could utilize third-party capital there and how that structure could potentially look? D. Sleath: Sure. I mean, James has already sort of covered a bit about the U.K. market. So I won't repeat all of that. But I mean, for us, most of our urban vacancy is in London. We actually -- the bulk of our exposure is to West London in Heathrow and Park Royal and indeed Slough. That's a pretty strong market. In fact, in Heathrow, there's a real shortage of good space right now. There's not much supply in any of these markets. Where there is a bit more vacancy for us and in the market is in the East and the South, in particular, to Croydon and Barking and Dagenham area. We don't have a huge amount of space in those markets, but there has been more supply, particularly going out east because land is a bit more available. So that's one to watch. And I think we need to see a bit of a recovery in the London economy before that's going to pick up. But we're optimistic about North London. It's a pretty tight market around Enfield. We've got a bit of vacancy there, but -- and they're good units, but optimistic that will improve this year and further performance to come in West London as well. I think Croydon and East London, we've got a bit of interest. We'll see if it all actually crystallizes, but those are the stickier markets right now in terms of our whole portfolio. Urban elsewhere in SEGRO. We're building speculatively in Germany. It's leasing up really well ahead of expectations, quite often leased before we get to completion. So that's that. In terms of funding, third-party capital, as we said in the presentation, we keep that option open. We've had some success clearly over a long period of time with our SELP vehicle in Continental Europe. We do have a new JV model for working on data centers, which is partly around access to skills and capabilities and partly around share and capital intensity. And as we look at the significant opportunities we've got ahead of us in all parts of our business, including in the U.K. logistics piece, we're thinking about, is it best to do it ourselves on balance sheet? Is it best to do it in partnership. And we're having, as you'd expect, conversations on those, but nothing is sufficiently far advanced that we can say any more about that other than nothing is off the table, and we're always looking at these things. Suraj Goyal: Suraj Goyal from Green Street. Just one quick question. So there's mention of positive demand from e-commerce players returning to the market, including sort of Asian players. Big picture, what are your sort of thoughts on where the U.K. e-commerce penetration rate could land in the next 5 years, particularly with the potential boost from Agentic commerce? And then what do you think that sort of means for your expected market rent growth over the next sort of 5 years? D. Sleath: The U.K. question, particularly, was it? James, why don't you comment on what we're seeing on e-commerce and where you think it's going? James Craddock: Yes, you're right. So in e-commerce, we are seeing the return of a couple of big players who've been out of the market for a period of time, which obviously is good in driving the market. We've also seen some of the Chinese players also come into the U.K. market, in our own portfolio. We've seen that more in the last mile piece around London and our urban markets. In terms of a look forward, as I say, there's a couple of things that make us feel quite confident. I think that the absorption of gray space, which I mentioned in the presentation, is an important factor because -- and that should drive more pre-let activity as we look forward in those markets. And then on the supply side, the ability to find sites in specific locations, which can deliver large boxes is very challenging actually. And there's a theme around consolidation in the U.K. market. So customers who are looking to drive efficiencies, consolidating into more efficient facilities, which are generally larger, we've seen an uptick in the demand for larger buildings. So again, that favors companies like SEGRO who do own those sites in those right locations. And on a look-forward basis, again, if you look back on a long-run average for the U.K. Big Box, we delivered over 4% ERV growth over the past 10 years. So again, no reason to adjust that look-through guidance of 2% to 4% on a look-forward basis. D. Sleath: I think the other thing about e-commerce, I mean, clearly, there was a time back in the pandemic when there was a bit of a narrative around we're only ever going to shop online from here. Clearly, there was a massive expansion. That's now slowed down. There's been a lot of consolidation over the last 2 or 3 years. But our expectation -- our firm view is clearly, physical retail will continue to play a very important part in how consumers want to buy stuff. But there's no doubt that the amount of shopping that's done online will continue to increase as a proportion. Where it gets to, I don't know, but it's definitely on the up. And as James says, people need to invest in better facilities, better distribution networks to do that, and that goes to both the big logistics units for fulfillment, but also last mile. The real battleground continues to be in the major cities like London and Paris around delivery of last mile, getting the product to the consumer faster and more sustainably. And to do that, you need to have the right last mile facilities as well. So we feel really positive that after the boom and the quiet period post pandemic, e-commerce is going to continue to be a factor. It's not going to be the whole thing, but it's going to be a factor. I think we probably -- unless any more in the room, we ought to go to the conference line. So if the operator is listening, could you please take some calls -- take some questions from those online, please. Operator: [Operator Instructions] We have our first question from Frederic Renard from Kepler. Frederic Renard: I have 2, if I may. The first one is on the CapEx range, which has been around EUR 500 million over the last few years at the start of the year for quite some year now. But you mentioned delivering between 1 and 2 DC assets from here. I was wondering what would be then the CapEx on a run rate basis and on a true basis, if you consider that? That would be my first question. And then I would like to come back on the third-party capital. And you look quite enthusiastic there. Of course, there was an article also in the press in January mentioning potentially opening the U.K. Big Box business to a partner. How do you evaluate the trade-off between short-term earnings, potential decline and long-term value creation? D. Sleath: Well, that's a very good question on the latter one, and that's exactly what we're thinking about as we decide how to fund our development opportunities going forward. So I'm not really going to try and answer that now other than to say that's exactly what we're thinking about is what's the impact on near-term and longer-term performance for us. And also how does -- if we were to create another vehicle, how does that fit with the overall capital stack and the way we're funding the whole business. So unfortunately, we just have to wait and see on that one. In terms of the capital expenditure, the run rate about GBP 500 million per annum historically, if you sort of average it out, we've guided to GBP 450 million to GBP 550 million this year, which, as Susanne said, will depend on the rate of pre-lets. There -- that does not yet include any fully fitted data centers. The first fully fitted data center, if we -- assuming we get planning, will probably be in Park Royal this year or next year. I mean they're very big projects. We'll get planning, I'm sure, this year, whether we sign a pre-let. If we do this year, it will be back end of the year. So I don't think it will have a dramatic impact on this year's CapEx. But going forward, if one of the 1 to 2 data centers turns out to be fully fitted, then as Susanne said, the actual -- in fact, I did it in my bit of the presentation, the actual cash impact for us is going to be similar. If we do it in a JV off balance sheet, the cash is going to be similar. So somewhere around GBP 75 million or GBP 100 million of cash equity contribution is typically what we'd expect. But if you do it on a look-through basis, I mean, the CapEx on these things is about GBP 800 million, something of that order. So you're going to be taking half of GBP 400 million, but that would be spread over a couple of years or so. Operator: We have our next question from Paul May from Barclays. Paul May: Just I got 3 quick ones, hopefully. First one for Susanne, just a quick question on the old bug there around capitalized interest. Just wondered coming in from the outside, what were your views on the policy and the assumptions behind it? And can you just confirm what the main sort of assumptions are, the financing cost that's used? What is actually interest capitalized on? Is this just current developments? Is there any future developments, land infrastructure, et cetera, within there? Should I ask them one by one or... D. Sleath: Yes. Well, why don't you give all 3 and then we -- and then we can deal with them. The 3 quick ones, Paul. Paul May: Yes. The second one, given the subdued investment market, as you mentioned, and I think if you look around, there's been relatively limited capital raising for warehouse or logistics funds. Just wonder what gives you the confidence that you're going to sell more? And what yields would you be willing to sell at? And then on the London market, what we've heard is that rental levels or ERVs have become not necessarily unaffordable, but not affordable for many tenants, I think, is the comment that we've had. Does this go some way to explain the higher vacancy in that market and the comment in the report that tenants remain more discerning in London and Paris. D. Sleath: Okay. Right. So I think Susanne is going to talk about capitalized interest. Maybe I'll pick up on the investment market and what we're seeing in terms of yields and pricing and volumes. And then James, back to you on London ERV. So Susanne. Susanne Schroeter-Crossan: Okay. So on capitalized interest, Paul, we do capitalize interest, of course, on developments, but also on land where we are doing significant infrastructure or preparatory work to get the sites to a construction-ready state. And we have larger sites, as you are probably aware, across the U.K. that do require infrastructure investment, and this is also part of the capitalized interest that we apply. In terms of the cost or the interest that we are using to calculate, we are using where available, the specific funding rate that is related to where the source of capital comes from for those works that we are doing and where there is no such specific rate available, we would use the marginal cost of funding. In my view, this approach is the most realistic approach that we can find to match with what is actually ongoing. And if you also look at, for example, the 2025 numbers, we have GBP 63 million in total of capitalized interest and the vast majority was capitalized at the specific rate. Only about GBP 2.5 million of that were done on the marginal rate. So it's a very minor portion where we don't have the specific rates. The approach we take is, of course, fully aligned with accounting standards and also discussed with our auditors. So I feel comfortable with that approach. D. Sleath: Okay. Investment markets, I think you're asking what gives us confidence [indiscernible] that we're going to be able to trade more in these markets. Well, we are talking to the market, talking to our advisers and sources of capital. And I would say there's more capital coming into real estate generally and within real estate, industrial logistics and residential, the 2 favored sectors other than data centers. Time will tell, but there's definitely more signs that investors are willing to start putting money to work in the early weeks of this year, Paul. But we -- time will tell, but I think people have been sitting on the sidelines long enough. And I think given the relatively attractive outlook and the improving occupier fundamentals that we were chatting about, I think there's a very good chance that a lot of that capital will be put to work this year. We'll see. London ERVs, James. James Craddock: Yes. Look, I mean, of course, there are customers who continue to feel cost pressures. And there are customers that don't choose to be in London and can't afford to be in London. But for every customer that can't afford to be in London, there are multiple customers that do need to be in London and can afford London because of the nature of services they're providing, which typically the higher-value goods and services. And look, I don't think you can ignore what the portfolio is telling us. We have seen a nudge down in vacancy from an urban standpoint from 9.6% to 9.4% during the course of 2025. And also our ability to continue to capture reversion, drive ERV growth, see low insolvencies in that market, again, points to a relatively favorable position. The other thing I'd say is there is a narrower discount now between prime home counties in London. So again, on a look-forward basis, I think that drives really positive retention rates for our London markets. And if you look at our highest rental market, which is Park Royal and West London, our in-place ERV is actually only GBP 23 per square foot and you compare that to the top rents that are achieved in the market of GBP 32 to GBP 35 per square foot. So we see plenty of room for growth in those markets and a resilient occupier base. D. Sleath: I think maybe one more question on the phone line. Operator: We have our next question from Marc Mozzi from Bank of America. Marc Louis Mozzi: I have some follow-up questions on your data centers, if I may. And the first one would be, could you please quantify the quantum of CapEx we should expect over the next 3 to 5 years related to data centers? And the second related question to that is, when do you think we should start to forecast any rental income or any income coming into your P&L on which yield basis, knowing that it's going to be a blend between powered shell and fully fitted data centers? D. Sleath: Yes. You're not going to like this, Marc, but we're not really going to answer those questions just yet. I mean we've talked already about the scale of some of these projects and the likely CapEx, whether done on balance sheet for powered shell or off balance sheet fully fitted. I think when we've signed some deals, we will share some updates to our CapEx expectations, and that will also enable us to talk about timing of rental flow. So unfortunately, we're going to have to hold fire on that one for now. Sorry. Marc Louis Mozzi: Fair enough. And I have another question, which is related to your infra CapEx, which is going to be GBP 300 million, if I'm correct, from last year and this year. Is that a non-yielding asset or non-yielding CapEx on the year of deployment of the project? And is that part of the yield on cost of 7% you're mentioning? Or is it something which is going to drive the yield lower 1, 2 and then it's going to ramp up? D. Sleath: So is the GBP 300 million of infra spent last year and this year, is that accretive? Is it -- and how is it accounted for in our development yield guidance? The answer is, it is obviously enabling works that will allow those projects to go ahead, including the power upgrades in Slough. And so when we give our guidance on development yields, that's with each project taking its proportionate share of that infrastructure spend. So it's not an additional non-yielding part of capital. It's factored into our development yield guidance. Thanks a lot, Marc. We've got just a couple of questions maybe coming through the webcast, and Claire is going to read them out. Claire Mogford: Yes, we have. A couple on data centers to start with. How much of the 1.1 gigawatts of land or power available to lease by 2028 is secured and within your control? D. Sleath: All of it. Claire Mogford: And then we had a question on the simplified planning zone in Slough. That needs regular renewing. When is the next renewal date? D. Sleath: Of these SPZ. We've got -- it was just renewed at the end of 2024. So the SPZ, it runs for 10 years. This is the fourth iteration. We've had 3-year renewals. So it's got 9 years to go before we have to renew again. It's a big process to get that renewed, and we never take it for granted, but we have a very good working relationship with Slough Borough Council, and I think they see the benefits that the SPZ has brought. So 9 years for, every expectation that it will continue thereafter as well. Claire Mogford: And then another one on power. Grid connections are difficult and subject to queue management issues. Have you ever lost a place in a queue? D. Sleath: No. We -- no, we haven't. And particularly in West London, what we're able to do is lock things in early. We've been planning for the upgrade Uxbridge Moor Power Station for quite a while. So in fact, our position in that is kind of clear of any NESO review of the queue process. And we're bringing it through elsewhere as well. So no, we haven't lost a position. Claire Mogford: And then the last one on data centers. Can you remind us of the income recognition differences between powered shell and fully fitted? And when will we -- but more importantly, when do we start to expect to see the income? D. Sleath: Well, the -- yes, I mean, in theory, the data center, whether we lease the powered shell or we build fully fitted, it is going to become active and operational at the same time. If we do a powered shell, it's quite possible that with a rent-free period in there that the income for us in P&L terms at least can start earlier because we would typically build the shell, might take 12 or 15 months to build it, then we would hand over the keys, rent-free starts and we start accounting for the income at that point. Whereas if we do a fully fitted data center, the income is going to take another probably 18 months to 2 years because of the extra fit-out time, so really 3 years in total. So there is an 18-month or 2-year lag between income recognition on powered shell versus fully fitted in broad terms. But we think it's worth the wait. Claire Mogford: A question on capital allocation. Your comment on assets having to justify their place in their portfolio and increase target disposals. Does that mean you think assets generate less -- do you think less assets generate sufficient returns relative to your cost of capital right now? D. Sleath: What we're saying is we rank all our assets according to return expectations and risk profile. And given that we have a lot of high returning opportunities ahead of us, we want to accelerate and increase the volume of disposals we do so we can self-fund a lot more of that capital investment. And therefore, the -- if you like, the line below which assets that fall under -- become disposal candidates has raised throwing up more opportunities or more situations where we think, you know what we should -- it's done very well for us. It's performed well over the years. Now it's time to take our money out and put it into new opportunities. Thank you very much. I think we're done. I'm sorry, it's been a long session. Hopefully, interesting, and thanks all very much for your questions and your attention. Have a great day.
Operator: Greetings, and welcome to the Park Hotels & Resorts Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Press star-zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ian Weissman, Senior Vice President, Corporate Strategy. Please go ahead. Ian Weissman: Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts Inc. Fourth Quarter and Full Year 2025 earnings call. Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Park Hotels & Resorts Inc. with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information, such as Adjusted FFO and Adjusted EBITDA. You can find this information together with reconciliations to the most directly comparable GAAP financial measure in yesterday's earnings release as well as in our 8-Ks filed with the SEC and the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results will be presented on a comparable hotel basis. This morning, Thomas Jeremiah Baltimore, our Chairman and Chief Executive Officer, will update on our strategic initiatives, review Park Hotels & Resorts Inc.'s fourth quarter and full year performance, and provide an outlook for 2026, while Sean M. Dell'Orto, our Chief Operating Officer and Chief Financial Officer, will provide additional color on fourth quarter and full year results, our plan to address our upcoming debt maturities later this year, and further details on guidance. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Thomas Jeremiah Baltimore. Thomas Jeremiah Baltimore: Thanks, Ian. And welcome, everyone. 2025 was another very productive year for Park Hotels & Resorts Inc., one marked by meaningful progress against our strategic priorities and continued execution across the core portfolio. Throughout the year, we remained laser-focused on reshaping and upgrading the portfolio and reinvesting in our highest-quality hotels, all with the goal of positioning the company for sustained long-term success. Our strategy has been both consistent and deliberate, concentrating our ownership in 21 core hotels with superior growth prospects, aggressively exiting non-core assets, and allocating capital toward high-impact redevelopment projects with the potential to unlock meaningful embedded value across the core portfolio with ROI opportunities exceeding $1,000,000,000. In 2025, we executed more than $120,000,000 in non-core sales at a blended multiple of 21 times. These transactions included the sale of the Hyatt Centric Fisherman's Wharf and our 25% joint venture interest in the Capital Hilton as well as exiting three hotels sitting on expiring ground leases that produced no earnings on a combined basis. As we entered 2026, we continue to make steady progress toward completing our remaining non-core asset dispositions. In January, we closed on the sale of the 193-room Hilton Checkers in Downtown Los Angeles for approximately $13,000,000, representing over 17 times 2025 EBITDA. We have established a strong track record of successfully recycling capital, having sold or disposed of 51 hotels for over $3,000,000,000 over the past nine years, and despite a challenging transaction environment, we have sold or disposed of 13 hotels since 2023, increasing portfolio-wide nominal RevPAR by nearly 8% and hotel Adjusted EBITDA margins by over 275 basis points. While the timing of non-core dispositions may be uneven, we remain firmly committed to materially reducing our exposure to our non-core portfolio by year-end. Active workstreams are currently underway across all remaining non-core properties as we continue to advance this objective. Additionally, building on the success of our development team, we launched our sixth major redevelopment in seven years, the $108,000,000 transformation of the Royal Palm South Beach, while making significant progress on enhancing the overall quality of our Hawaii and New Orleans properties through extensive guest room renovations. Together, these projects reinforce our conviction that reinvesting in the core portfolio remains the highest use of capital, which will best position Park Hotels & Resorts Inc. to deliver outsized earnings growth and enhanced shareholder value over time. Turning to operations. I remain encouraged by the relative outperformance of our core portfolio, which delivered a solid 3.2% increase in RevPAR during the fourth quarter, or 5.7% excluding the Royal Palm, representing nearly 1,500 basis points of outperformance versus our non-core portfolio. That trend was consistent throughout much of the year, with RevPAR growth from our core portfolio outperforming the non-core hotels by an average of 480 basis points in 2025, further reinforcing our stated strategy. During the fourth quarter, group performance stood out, supported by convention demand in Hawaii and New York, and solid corporate group activity in Orlando. Fourth quarter group revenue for our core portfolio increased 13% year over year, complemented by double-digit growth in banquet and catering revenues across several key markets, including Hawaii, Chicago, Orlando, and Denver, reflecting broad-based strength across key markets. Among our core hotels, Hilton Hawaiian Village was one of our strongest performers during the fourth quarter, generating 22% RevPAR growth, benefiting from easier year-over-year comparisons following last year's labor disruption. We are increasingly encouraged by the outlook for both properties following the completion of the Rainbow Tower renovation at Hilton Hawaiian Village and the Palace Tower at Waikoloa Village. Following the renovation, both resorts will be operating with significantly upgraded product and should be well positioned for a step-up in performance as demand trends are forecasted to improve and we lap an otherwise challenged 2025, which our resorts were meaningfully impacted by the disruption from Liberation Day and the government shutdown, the continued softness in Canadian demand, and renovation displacement. As we look ahead, we expect a multiyear recovery towards prior peak levels in Hawaii. We are beginning to see that recovery take shape, with momentum building into the second quarter. As Hawaii continues to normalize, we expect it to be one of the most meaningful contributors to earnings growth across the portfolio. Additional standouts in the portfolio include Orlando, which delivered exceptional results, with our Bonnet Creek complex generating a record fourth quarter RevPAR, up nearly 9% year over year, driven by a 15% increase in group revenues as the complex continues to benefit from its expanded meeting platform and renovated room product. I am also pleased to share that the Waldorf Astoria Bonnet Creek has been named the number one hotel in Orlando by U.S. News & World Report. The property was also ranked number eight in Florida and within the top 100 of all hotels nationally, reflecting meaningful improvements over last year's ranking. I want to acknowledge the entire Bonnet Creek team for this achievement, which further highlights the quality and benefits of unlocking embedded value within our core portfolio. New York remained another top performer, delivering its highest fourth quarter group revenue in hotel history, up over 8% year over year, while the Hilton Chicago hotel posted a nearly 4% increase in group revenue despite a challenging citywide calendar supported by improved short-term pickup strategies and in-house group. Turning to our Royal Palm renovation. We continue to make meaningful progress on this transformational project with more than half of the guest rooms complete, and key public areas such as the lobby lounge, event terrace, and pool deck taking shape. Our best-in-class design and construction team is working hard to deliver the hotel by June, and we are laser-focused on achieving that goal. Overall, Miami remains one of the strongest hotel markets in the country, and I am incredibly excited about the long-term outlook for this asset. We continue to expect to realize a 15% to 20% return on our invested capital, with the hotel forecasted to more than double its EBITDA from $14,000,000 to nearly $28,000,000 once stabilized. We look forward to hosting many of you at the property during next month's Citi conference to showcase this world-class asset and the remarkable transformation underway. Looking ahead to 2026, we see several factors that could support an improving lodging environment. From a macro perspective, the U.S. economy remains on relatively firm footing with modestly higher growth expectations, easing inflation, and ongoing fiscal stimulus, all of which should provide incremental support to the U.S. consumer. In addition, easier year-over-year comparisons as we lap last year's government demand disruptions, together with the anticipated lift from major events such as the World Cup, and the America 250 celebrations in New York, Boston, and Washington, D.C., are expected to benefit demand across several of our core markets. Furthermore, new hotel construction remains muted, keeping supply growth at historical lows, and supporting healthy operating fundamentals for the next several years. While we remain optimistic about the setup for the year, with easier year-over-year comparisons and major event-driven demand, our guidance remains cautious, with the potential for geopolitical or macroeconomic volatility continuing to drive uncertainty around booking decisions and impacting short-term group pickup trends and international inbound demand, particularly from Canada. Sean will provide additional detail on earnings guidance later in the call. In summary, 2025 was another year of meaningful progress for Park Hotels & Resorts Inc., one in which we advanced our strategic priorities, continued to reshape the portfolio, and strengthened the foundation for long-term growth. Our disciplined approach to capital allocation by accelerating non-core dispositions or reinvesting in our highest-quality assets continues to unlock embedded value across the core portfolio. The transformation underway at Royal Palm, the substantial renovation work at our two iconic Hawaiian resorts and New Orleans, and a broader base momentum across several of our core markets further reinforce our conviction in the earnings power of our core portfolio. As we move into 2026, we remain laser-focused on completing our transition to a streamlined portfolio of 21 high-quality hotels located in premium gateway cities and resort markets, and we are confident in the long-term growth opportunities for Park Hotels & Resorts Inc. And with that, I will turn the call over to Sean M. Dell'Orto. Sean M. Dell'Orto: Thanks, Tom. For the fourth quarter, RevPAR was approximately $182, representing a nearly 1% year-over-year increase, nearly 3% when excluding Royal Palm. The core portfolio excluding Royal Palm continued to demonstrate meaningful operational strength, delivering a RevPAR increase of 6% to nearly $216, or nearly 1,500 basis points higher than our non-core portfolio, underscoring the resilience of our highest-quality assets. Core hotel Adjusted EBITDA margin also improved materially, expanding 230 basis points to 30%, in sharp contrast to the non-core portfolio, which recorded a 280 basis point contraction to 10%. Overall, core hotel Adjusted EBITDA increased 13%, or nearly $18,000,000 over the prior-year period, despite an over $4,000,000 headwind from Royal Palm being closed, while the non-core portfolio declined 28%, creating an approximately $4,000,000 drag on quarterly earnings. These results underscore the strength and durability of our core portfolio and highlight the value-accretive nature of our portfolio reshaping initiative. For the full year, RevPAR came in slightly ahead of expectations, declining 2% versus 2024, while hotel Adjusted EBITDA margin was 26.5%, reflecting a 130 basis point reduction from the prior year. As expected, the Royal Palm renovation remained the primary headwind, contributing a 110 basis point drag to full year RevPAR growth and approximately 15 basis points of margin pressure. From a CapEx standpoint, in 2025, we invested nearly $300,000,000 across the portfolio, including roughly $110,000,000 during the fourth quarter. Earlier in the year, we completed nearly $75,000,000 of guest room renovations that began in 2024 at our two Hawaiian properties, the Rainbow Tower at Hilton Hawaiian Village and the Palace Tower at Hilton Waikoloa Village. The second and final phase of guest room renovations for the Rainbow Tower, which commenced in Q3 of last year, is expected to be completed in a few weeks, while the final phase for the Palace Tower, which also commenced in Q3 last year, delivered last month, bringing the total investment to the second phase across both Hawaii properties to approximately $85,000,000. In addition, we completed the second of three renovation phases totaling more than $30,000,000 at the Hilton New Orleans Riverside last month, with the third and final phase scheduled for completion in December. Looking ahead, we expect a lower level of capital investment for 2026, with $230,000,000 to $260,000,000 of spend planned, which includes completing the $108,000,000 comprehensive redevelopment of the Royal Palm. In addition, we are excited to launch a full-scale renovation of the Ali'i Tower at Hilton Hawaiian Village, expected to encompass all 348 guest rooms, the tower lobby, its private pool, and the addition of three new keys. Total investment for the project is expected to be approximately $96,000,000. To expedite the construction schedule, we plan to suspend operations in the self-contained tower beginning in the third quarter of this year, with a reopening planned for the middle of next year. Overall, we expect renovation-related disruption at Hilton Hawaiian Village to be $1,000,000 to $2,000,000 in 2026, representing a 10 basis point impact to portfolio RevPAR. Once completed, nearly 80% of the resort’s nearly 2,900 rooms will have been newly renovated, materially enhancing the long-term competitiveness of our iconic resort. Turning to the balance sheet, as of year-end 2025, our liquidity was approximately $2,000,000,000, including $200,000,000 of cash, $1,000,000,000 of available capacity under our revolver, and $800,000,000 of an undrawn delayed-draw term loan. As we noted last quarter, we continue to make meaningful progress towards strengthening our balance sheet. While our long-term focus remains on further reducing leverage, as we execute non-core asset sales, proceeds are expected to be used to pay down debt, while organic growth from our core portfolio is expected to further reduce leverage toward our targeted goal of below five times over the next couple of years. With respect to our 2026 maturities, we intend to draw on the delayed-draw term loan to fully repay the $121,000,000 mortgage loan secured by the Hyatt Regency Boston in June, and then draw the remaining capacity in September in combination with proceeds from a planned mortgage financing for our Bonnet Creek complex in order to fully repay the $1,275,000,000 CMBS financing on Hilton Hawaiian Village which matures in early November. We are currently in active discussions to originate a $650,000,000 floating-rate delayed-draw mortgage for our Bonnet Creek complex, including both the Signia and Waldorf Astoria properties, and expect closing to occur later this quarter. We expect the blended spread over SOFR between the Bonnet Creek mortgage loan and the term loan to be approximately 220 to 225 basis points. Turning to guidance, as Tom noted, we are establishing a full-year 2026 RevPAR growth range of flat to up 2%, with expense growth expected to be low single digits for the full year. With respect to earnings, Adjusted EBITDA is forecast to be $580,000,000 to $610,000,000, and Adjusted FFO per share is expected to be in the range of $1.73 to $1.89. We expect Q1 to be the most challenging quarter of the year due to difficult year-over-year comparisons. New Orleans, due to lapping the Super Bowl last year, and Miami together represent an expected 450 basis point drag on RevPAR during the quarter, translating to an approximate $12,000,000 headwind to earnings relative to last year. Partially offsetting this pressure, we expect double-digit RevPAR growth at Bonnet Creek, Puerto Rico, and San Francisco, supported by strong group pace for each along with the Super Bowl in the Bay Area, as well as low single-digit growth at both of our Hawaii hotels driven by improving leisure transient demand following their extensive room renovations. There are also a few key assumptions embedded in our guidance that are worth highlighting. First, with respect to the Royal Palm reopening and its impact on 2026 results, as Tom mentioned earlier, we are working diligently toward a targeted grand opening in early June. However, given the challenges associated with securing advanced bookings without absolute certainty to opening ahead of the World Cup matches beginning in mid-June, our guidance does not assume any material benefit from World Cup-related demand at the hotel. Overall, we expect Royal Palm to generate approximately $3,000,000 to $4,000,000 of hotel Adjusted EBITDA this year compared to the nearly $28,000,000 expected at stabilization, and approximately $5,000,000 reported in 2025 when the hotel was opened during high season prior to its closure in May. Second, with respect to asset sales, our guidance excludes any impact from potential non-core dispositions in 2026 outside of what we have already closed. While we remain fully committed to selling the majority of our non-core hotels during the year, the timing of transactions remains uncertain, making the earnings impact difficult to estimate. For context, the remaining 13 non-core hotels generated approximately $60,000,000 of hotel Adjusted EBITDA in 2025, or just 9% of total hotel Adjusted EBITDA. Finally, Adjusted FFO guidance reflects the successful refinancing of approximately $1,400,000,000 of debt during the back half of the year at a blended interest rate of approximately 5.5%. On an annualized basis, this refinancing is expected to increase interest expense by roughly $20,000,000, of which $9,000,000 is included in our guidance given the anticipated timing of the refinancing. Finally, in 2025, we returned a total of $245,000,000 of capital between $200,000,000 of dividends and $45,000,000 of share repurchases. And over the past three years, we have returned $1,300,000,000 of capital, including stock repurchases of over 12% of total outstanding shares. With respect to this year's first quarter dividend, on February 13, we declared a cash dividend of $0.25 per share to be paid on April 15 to stockholders of record as of March 31. At current trading levels, this quarterly fixed dividend translates to an annual yield of over 8.5%. This concludes our prepared remarks. We will now open the line for questions. Operator, may we have the first question, please? Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Our first question comes from the line of Smedes Rose with Citi. Please proceed. Smedes Rose: Hi. Good morning. Or good afternoon rather. I wanted to ask you just a little bit more about how you think earnings could roll out over the course of the year at your Hawaii properties? I know, obviously, the fourth quarter was a pretty easy comp. But just in terms of how you're looking at group pace, given, I think, the convention center is closed in Honolulu. Just kind of what are you seeing on the trajectory? And the real question is what do you think those properties can contribute this year in terms of EBITDA? Sean M. Dell'Orto: Yes, Smedes. So this is Sean. You know, yes, certainly had a good comp in Q4 for Hawaii. With the convention center closed, that is about 50,000 room nights typically that the property gets from citywide commission-related business. We have probably done a good job, though, of replacing that as best possible with about 60% of that lost or at least ultimately converted into in-house group, as well as about 20,000 room nights booked through crew business, contract business. They have done a good job to kind of replace that for this year. You know, in the end, I think Hawaii, both Hawaiian Village and Waikoloa combined, should be kind of on the higher end of our guide of RevPAR growth, the 2% range. You know, again, with the convention center being out, and kind of some early disruption from the ending of phase two at Hawaiian Village, I think you will see some rate growth, but not tremendous, again, just given the mix change there. I think you will see certainly some decent growth overall at the EBITDA level, kind of in the mid-single digits or so growth combined for the properties. Waikoloa certainly has an easier comp, certainly had challenges last year, and we certainly expect to see that materialize into probably low double-digit growth on the EBITDA level for Waikoloa overall. Blended together, again, kind of a top-line top of the end of the range, 2% growth plus or minus on the RevPAR, translating into kind of mid-single digit growth for the combined properties. Thomas Jeremiah Baltimore: It is Thomas Jeremiah Baltimore. Agree with everything that Sean just outlined. If I could just add a comment about Japanese visitation, obviously, relatively flat last year. But we are seeing some green shoots and certainly believe that we will be in kind of mid-single digit growth in terms of visitation, perhaps somewhere in the 750,000 visitors to Hawaii, which is certainly continued progress. Obviously, we would like for that to accelerate as much as possible, but we are seeing green shoots there. And as we sort of look at and get the data on various forecasts, it looks like that continues at 5% to 6% into 2027 as well. So we see both of those as certainly encouraging tailwinds as well. Smedes Rose: Great. And then, Tom, could you maybe just comment portfolio-wise, just kind of like what you are seeing on the pace of group revenues for this year? Thomas Jeremiah Baltimore: Portfolio-wide, if you exclude, obviously, Miami and Hilton Hawaiian Village and obviously a tough comp in New Orleans, up about 3% for the year in 2026. And then if you look out to 2027, just our core portfolio alone, we are about 4%, 4.5%. So very encouraging from that standpoint. Smedes Rose: Okay. Thank you. Appreciate it. Operator: The next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please proceed. Duane Pfennigwerth: Hey. Thanks. Good morning. And sorry if I am making you repeat anything. But just on the sequential for Hilton Hawaiian Village, I think we are going from, like, a plus 20 to a low single. So can you just speak to what would be driving that specifically for March? Sean M. Dell'Orto: For the Q1, Duane? Duane Pfennigwerth: Yes. Aren't we pacing at a very high rate in 4Q to a low single-digit rate? So just why the change sequentially? Sean M. Dell'Orto: You have a group pace down in Hawaiian Village. Again, speaking to while they have replaced business here and there from the convention center, but pace down 37% in Hawaiian Village for Q1, certainly a big driver there for kind of how, even though it certainly is lapping Q1's performance, it is roughly kind of in that flattish range for the quarter. Duane Pfennigwerth: Okay. That is helpful. And then just on Miami, can you talk about any refinement to your estimate on when that will be up and running? And how do you think about capturing some of the World Cup demand just given you may reopen kind of close to that time frame. In other words, it is probably hard to commit to that now. But maybe, you know, as you gain confidence in the reopening, just how you think about that from a positioning and revenue management perspective? Thomas Jeremiah Baltimore: Yes. A couple things, Duane. I have been down to Miami quite a bit and toured the property, and I—obviously, I say this with humility, but also with great confidence. I think we have demonstrated a track record really second to none in our sector in terms of being able to handle these types of very complex projects. If you think about Bonnet Creek and the success and the complexity of that, this really mirrors that. Carl Mayfield, who heads our design and construction team, is personally on-site at least two or three days a week. We have got somewhere between 275 and 325 construction workers working six days a week, one to two shifts, and they are very confident doing everything humanly possible to get done in that June time frame. I will be down there this weekend and touring again Monday morning. So as Sean said in his prepared remarks, as you think about us opening in early June plus or minus, then obviously the World Cup. You know, the ability to be able to sell and commit, that makes it a little more challenging, just given the amount of demand expected and how well, I think, we all believe Miami will do. With the World Cup, we think, obviously, getting open, we will be able to capture and certainly be able to capture at very attractive rates. So very, very bullish. Very excited about the project. And as Sean also noted, I mean, we are not being overly ambitious in terms of the impact that this hotel will have on the overall performance for the year. So if anything, we have been conservative. That is intentional. And we are certainly hoping that we can exceed that. But, again, remain enthusiastically excited about this transformation. We cannot wait to host many of you next weekend as you can see for yourself the progress and the real-time work that is underway there. And we are, you know, a hundred days plus or minus from completion, and doing everything we can to make that happen. Duane Pfennigwerth: Okay. Thank you. Operator: The next question comes from the line of Rich Hightower with Barclays. Please proceed. Rich Hightower: Hey, good afternoon, guys. Good afternoon. Good to be on the Park Hotels & Resorts Inc. call again. So, Sean, I know that you kind of laid out a little bit of the color on the first quarter specifically with respect to the cadence of growth in 2026. And then obviously, there was some color on Hawaii specifically. But if you guys would not mind, maybe just help us understand how that works kind of, you know, broadly for the portfolio over the course of all the different quarters of the year within the context of that flat to 2% RevPAR guide. Sean M. Dell'Orto: Sure, Rich, and welcome back. Great to hear your voice on the call here. Yes, with respect to kind of the quarterly cadence, as you think about, you know, Q1 is certainly one where we think it is the weaker quarter of the year where it is probably performing a little bit better than expected, but certainly came in the year with a kind of a belief that it would be down slightly. Maybe it ultimately gets to flat. We will see, but it is certainly in the bottom end of the range. As we think about, it certainly should pick up. You are lapping some of this Q1. Q2 and Q3 disruption from last year’s, you know, policy initiatives, whether it is tariff-related, Doge, obviously, the Canadians and their kind of decline in travel into the states. You know, you start to see those impacts of that in Q2 and Q3. And so while lapping that on top of a World Cup that we believe, you know, our exposure in New York and Boston particularly, could probably drive about 30 to 35 basis points for the year. So certainly, it is some positive impact we are thinking of as well. So those should ultimately drive towards, in kind of Q2 into Q3, you know, the higher end of the range, I should say, for the year. And then Q4 is one where we have got group pace down 8%. So as Tom mentioned, you know, if you exclude a couple of properties, you know, we are certainly up, but I would say overall portfolio is down slightly. The big driver for that is Q4. And so while there is work to be done and there is certainly some potential upside in terms of pickup, in-the-year, for-the-year pickup, I think that is kind of where our conservatism comes in as well. We certainly think we have got about $20,000,000 or so of revenue more pickup than last year. And so when we have seen kind of last couple of years how things have gone, we certainly want to take a little bit more cautious tone to that, looking at the pace being down about 8% for group in Q4. So that ends up, you know, making Q4 a little bit more closer, we think, to the bottom of the range for sure. Rich Hightower: That is great color. Thank you. And I guess my follow-up is a follow-up on the expense side of it. So you have got a 2% to 3% kind of total OpEx guidance for the year. I think we heard earlier in the week that, you know, labor, you know, could run around four to five. And so just how do you feel about the potential flex on that guidance range? And also, think within the context of a union renegotiation in New York later this year. Thanks. Sean M. Dell'Orto: Yes, you are right. We are in that low single-digit kind of growth. And certainly, with the CBAs that have been renewed or ultimately upcoming, we certainly see something in the mid-single digits type growth as you talk about with labor. But offsetting that, you have got, again, if you are kind of looking at top line and revenue-based type of fees and everything else, you are going to see lower end of the range there. We talked about doing deep dives at our properties last year. A lot of that came through multiple, you know, kind of the back half of the year, and so we certainly get the benefit of the full-year impact of that this year. So that is a nice little offset, we think, as well, to the labor growth, as well as, I think, fixed costs will continue to be one where we see certainly below inflationary type growth. Insurance, you know, another good year. You know, no big claims certainly from us, but, you know, I think across the board there, with events from hurricanes and the like. Absent the fires in LA in the beginning of the year, but ultimately, it is not to a point where I think, you know, underwriters will need to kind of look to grow their premiums. I think it will certainly be a favorable market. We certainly expect to see continued improvement there as well along with, you know, with taxes, we think would ultimately, while it can be choppy at times, you know, ultimately be in check for the year. So those are, I think, sort of some of the offsets that get us down to what we are talking about. Rich Hightower: That is great. And congrats on the big promotion, by the way. Sean M. Dell'Orto: Thank you. Appreciate that. Operator: The next question comes from the line of Ari Klein with BMO Capital Markets. Please proceed. Ari Klein: Thanks and good afternoon. Just a little on the non-core asset sales, what is the level of interest you are seeing in those assets? And how quickly do you think you can move there? And then obviously, focus is on selling those non-core hotels. But is there or could there be some consideration to selling any of the core hotels if an opportunity arose? Thomas Jeremiah Baltimore: Ari, a lot to unpack there. Let me try to frame it a little bit for you. We have been laser-focused, as we said, I think, a couple times in the prepared remarks, in continuing to really reshape the portfolio. I think it is important to remind listeners, you know, the core hotels account for 90% of the EBITDA in the company and 90% of the value. If you take sort of RevPAR, the core RevPAR is around $215 to $218. That is about 69% plus or minus higher than the non-core. The core hotels generate about $40,000 in EBITDA per key and 30% EBITDA margins, whereas non-core RevPAR of approximately $129 plus or minus, and about 14% margins and about $10,000 in EBITDA per key. So, I mean, a really stark contrast, hence the reason that we are so aggressively working, and we have been working. I think it is also important to note, you know, we have sold or disposed of 51 assets. And I think people sometimes forget that includes 14 international joint ventures in Dublin, in Brazil, two in Germany, The Netherlands, South Africa, many complex assets here in the U.S. So the team is skilled. The team is experienced. We have done it in the worst of times. We were selling during the pandemic. We have been selling post-pandemic. There are buyers. I think everybody knows that we are a net seller. And so in some situations, some of the assets have short-term ground leases or joint ventures or low tax basis. So, you know, every single one has a story. But we have got aggressive workstreams underway. Our investments team and our legal team are working incredibly hard. And we are confident that we are going to get it solved. We have made significant progress before. We can handle this. And the goal is to get as many of them, if not all of them, done this year. We do have a few that are involved in a dispute, obviously. So those will probably lag. But the other 10 hotels, we are aggressively working every day late into the evenings, and multiple discussions are underway. And we look forward to keeping investors informed, and we look for, most importantly, closing them, using those proceeds to pay down debt, and really reinvest back into the core portfolio where we are confident we can generate outsized returns. We believe, obviously, that we can generate higher yields from development projects than we can from acquisition projects at this time. Ari Klein: Thanks for that color. And then maybe just a follow-up on Miami and the Royal Palm. How quickly or how much in front of the actual opening can you actually start to take bookings? Especially in front of a massive event like the World Cup? And then just the pathway towards getting to those stabilized EBITDA levels. How long do you think it takes to get there? Is it 2027, 2028, or beyond, I suppose? Thomas Jeremiah Baltimore: Yes. Well, we are, I guess, first, we are confident obviously in being able to take what was $14,000,000 in EBITDA from a tired and certainly an asset that needed really a transformational renovation to $28,000,000 on a stabilized basis. We certainly would think a couple of years is not unreasonable, just given the extraordinary amount of development and activity occurring, and I do not need to tell anyone on this phone not only from a business standpoint, but the number of people relocating to the region as well. And proximate to us is probably $4,000,000,000 of development activity, not all of that hotels, but other asset classes as well. So we remain very, very bullish on Miami as we look out. Regarding your question, obviously, as to how quickly we can get open, we are in frequent contact, obviously, with both planning, both the approval process from the regulators, and as soon as we are ready and as soon as we get the signal, we will be up and running. We have kept, obviously, our general manager who is on every day. We have kept, obviously, the key leadership team of the operating group. So we will be able to pivot and move very quickly. And, again, as Sean noted in his prepared remarks, you know, north of 50% of the guest rooms are already complete. So we are making great progress and are working around the clock and going to do everything we can to make that date. Operator: The next question comes from the line of David Brian Katz with Jefferies. Please proceed. David Brian Katz: Morning or afternoon. Thanks for taking my question. If we are laying out a 2026 where you are likely to be successful getting divested of your non-core hotels, my expectation is those earnings levels are such where they would be meaningfully delevering events for Park Hotels & Resorts Inc. Do you think—without getting ahead of ourselves—2027 could be a year of potentially playing offense and maybe getting ready to buy something? Thomas Jeremiah Baltimore: Nothing, David, would make me and this team more excited than to be able to make that pivot from playing defense to offense. And I think you really hit the nail on the head. We have been working our tails off, and as you know, you have been along the journey with us. And you have watched the effort. And I think there are a few doubters out there, but I think you can remind people through the pen of just the hard work and the heavy lifting and the complexity of work that we have done in reshaping, not only the 51 hotels that we have sold, but also keep in mind, we were self-operating five hotels, and we also had three laundry facilities that have subsequently been closed. So the team is tested. It is experienced. We share that belief. And the sooner we can substantially reduce the non-core so that it is no longer not only an overhang but even a discussion point, gives us the opportunity, I think, for consideration for rerating of the company, hopefully our multiple, and allows us to go on offense. There are a lot of interesting opportunities that I think are out there today, and I think there will be more in the future. And I think getting down to low twenties in terms of our core portfolio gives us a lot of optionality. The other thing to keep in mind is, you think about some of our core assets in Bonnet Creek and the two iconic resorts in Hawaii and all the capital that we are putting—I think about also what we are doing in Miami—we own all of that fee simple. Very rare. And all of that, we think, is also going to be advantageous for Park Hotels & Resorts Inc. and gives us a lot of optionality as we can think about where it makes sense to continue to grow and, in some cases, to monetize, if that makes sense. David Brian Katz: It does. And it sounds like a couple of the assets are in some form of dispute, but is it reasonable to expect that most of the assets that are non-core are going to get done within 2026? Thomas Jeremiah Baltimore: Yes. Yes. That is the goal. That is the mission. We know what is at stake, and we are working as hard as we can. Obviously, there are things that happen beyond our control, David, but I think you have seen the effort. You and others have witnessed the amount of work that we have done in this respect. And it has not been easy, but we are up to the task. David Brian Katz: Got it. Thank you. Operator: The next question comes from the line of Chris Jon Woronka with Deutsche Bank. Please proceed. Chris Jon Woronka: Hey, good afternoon, guys. Thanks for taking the question. Maybe just to double-click back to the asset sales. I guess, Tom, is there a way—you are really talking about 10 hotels if we exclude the three leases. Is there a way you could maybe bucket the type of buyers that you are working with or characterize them? We see headlines about isolated struggles on the private side, and investors are wondering whether any of that is a roadblock to moving any of those assets. Thomas Jeremiah Baltimore: Yes, Chris, it is a great question. I would say one thing globally. There is plenty of equity capital. That is the first comment. The second, there is plenty of debt capital and private credit. So there is no issue there. There are also interested buyers, whether they be small family offices, owner-operators, or deep value entrepreneurs. And look, some of the buyers tend to have a little sharper elbows in this kind of situation because they realize in some cases these are deeper turns and some reposition opportunities. But there is more than an adequate buyer pool out there. Some markets are a little tougher. I would say, obviously, Chicago and LA are a little tougher than San Francisco right now for all the obvious reasons. But there are buyers. Not our first rodeo. It is up to us to figure it out and solve it. You do not want to hear excuses. Our investors do not want to hear excuses. And we know what is required to do. And at the same time, we have got to make sure that we are getting fair value and that we are executing as quickly and as efficiently as we can. But there are workstreams underway on all of them. There are some that have short-term ground leases or low tax basis. It is a little bit of all of that. But that is no different than what we experienced candidly within the 51 assets that we have sold, particularly some of those more complicated international assets that we sold a few years ago. Chris Jon Woronka: Fair enough. Thanks, Tom. Then as a follow-up, obviously, you have the New York labor contract coming up. I think, Tom, you might have mentioned in the past that once you get through that and you kind of understand what the new math looks like, you might consider a longer-term plan there. That could include a lot of different things, maybe conversation with Hilton. Is there anything you could add to that at this point, as we move closer to the union reset? Thomas Jeremiah Baltimore: Yes. Obviously, I am going to be careful here, Chris. You can imagine. I would make a couple of observations. We have got an excellent operating team on-site. You saw the results that we delivered last year. New York was incredibly strong. Record fourth quarter, up, you know, 5% to 7% for the year. We are encouraged as we sort of look out here in 2026. I do not think it is in anybody's best interest across the city for protracted negotiations or any kind of strike. We are one seat at the table. There are a lot of other owners also involved in this. You have also got, obviously, the World Cup, and we are going to be on the world stage. And I think, you know, as we think about tailwinds for us, being the largest hotel in the city, there is probably a little bit of upside opportunity there from a demand standpoint. So we are encouraged. We think it will get done. We have assumptions in our guidance as to what we think that impact will be. And obviously, we are not going to negotiate publicly, but we think we have got it covered from that. And as we think about the hotel, we are doing some modernization work on the infrastructure. We will then huddle with Hilton. We will look internally as to what we think makes the most sense. But no doubt, when you think about you have only got really two big boxes in New York that can handle large groups, we think that gives us a unique positioning and a unique opportunity for us over the intermediate and long term. And, again, we had an outstanding year in 2025, and we are very, very encouraged as we look out 2026 for the New York Midtown. Chris Jon Woronka: Very good. Appreciate all that color. Thanks. Operator: The next question comes from the line of Daniel Brian Politzer with JPMorgan. Please proceed. Daniel Brian Politzer: Hey, good afternoon, everyone, and thanks for taking my questions. First, I just want to touch on the RevPAR range. It came in a little bit lower than we were expecting. It sounds like there is a fair degree of conservatism in there. You are baking in the possibility of macro and political uncertainty. But perhaps you could paint a picture of the areas of conservatism in the guide, specifically as it relates to some of the properties or markets where you are most excited. Sean M. Dell'Orto: Certainly. Look, I think again, I will start with just from a macro standpoint in terms of—I talked about the quarterly cadence with Rich earlier and just kind of what that and it being down 8% means. When you think about Q4, that is kind of where a good point of conservatism would be. You think about where we see some of that softness in Q4. It is back to Hawaiian Village. It is down about 50% on pace in Q4. Midtown, while it has got a good setup for the year overall, down 6% for the year in pace. Its weakest quarter is Q4. So I think going into that, that is where we kind of feel—they are obviously bigger impact hotels. We continue to find a way to make sure that we use caution against some of the near-term in-the-year, for-the-year pickup trends as we get through the rest of the year. But, yes, there is certainly a case to be made that things could be better. Ultimately, based on what we have seen in the past, those are the time period and markets we are a little bit more hesitant on right now. Thomas Jeremiah Baltimore: I would also add, if you sort of step back, you can paint a rosier picture. The tailwinds for 2026 are encouraging. We all expect a more accommodative Fed and perhaps lower interest rates. We are lapping Doge, Liberation Day, government shutdown. You have got the major events, obviously, World Cup. You have got America 250 celebrations. Deregulation, fiscal stimulus, that is all encouraging. We have got the massive AI investment cycle, and what we all hope and expect will be productivity gains at some point. Easing inflation—did not show quite that way today in the PCE report—but there are also risks out there. You have got geopolitical, inflationary pressures are still there. International travel really has not rebounded yet. We are seeing some green shoots, but we are certainly still down pre-pandemic. And the consumer is cautious, and we have got a K-shaped economy right now. So we think it was prudent to be conservative and cautious for all the reasons that Sean outlined, particularly quarter by quarter, and the macro. Yes, you should think about tailwinds, but there are some headwinds out there. And if you think about what has happened the last few years in the sector, the first quarter came out to be pretty good. And then, for many of us, if not all of us, we saw somewhat of a downward trend. So we think right now it makes sense to just be a little more measured, a little more cautious coming out of the box. But we are crystal clear as to the business priorities for Park Hotels & Resorts Inc., what we are focused on: selling non-core, investing in our core portfolio, paying down debt, looking for all of the operational efficiencies we can, and really outperforming. We would rather have a lower bar and outperform. And we are aligned as a management team there and really focused on continuing to deliver for shareholders. Daniel Brian Politzer: Got it. Thank you. That is helpful. And then just for my follow-up, on capital allocation and leverage. Sean, you mentioned the target of five times in the next couple of years. How do you think about the near-term allocation of capital between project and investment opportunities, share repurchases, or even the dividend? Sean M. Dell'Orto: Well, I think as we sell the non-core, we have been focused on redeploying that capital towards deleveraging. So that is the main focus and certainly helps bring us to that target. With that, the investments we made already and that we continue to make with things like Royal Palm and some other projects we have lined up, we think those drive nice returns for us, and over the next couple of years as those ramp up along with a longer recovery in Hawaii back to kind of where we were, achieving EBITDA levels in 2023. Those are the things that we think organically get the growth to help bring us towards that five times target. Daniel Brian Politzer: Got it. Thanks so much. Operator: The next question comes from the line of Cooper R. Clark with Wells Fargo. Please proceed. Cooper R. Clark: Great. Thanks for taking the question. Curious if you could speak to the RevPAR uplift from the World Cup and America 250 celebration that is currently embedded in guide and if, on the World Cup, that uplift is mainly just coming from the Hilton Midtown asset? Sean M. Dell'Orto: Yes. I think for the full year, for the portfolio, the impact, we estimate somewhere in that 30 to 35 basis points. Probably about 20 of that or so would come from New York, another, call it, 10 from Boston and five from kind of other markets that are not as big for us but that ultimately obviously have matches going on there. Cooper R. Clark: Great. Thanks. And then appreciate some of the earlier color on individual projects and puts and takes, but curious if you could talk about the total RevPAR disruption and EBITDA disruption from renovations this year. How that compares to 2025? And then maybe how we should be thinking about potential tailwinds from renovation in 2027 as you look out? Sean M. Dell'Orto: Yes. Certainly. I mean, obviously, Royal Palm is the big one. It is certainly a big benefit. It certainly helps the portfolio in the back half of the year after it opens up. In the first part of the year, you are talking about 300 basis points of RevPAR impact within the quarters. Altogether, though, if you kind of remove Miami, it just has about a 30 basis point impact to the full-year guide. So it is a little bit of first half, second half there. Other projects are not nearly as disruptive to the portfolio, maybe to the tune of 20 to 30 basis points of impact. Certainly, going forward, clearly, Miami will continue to have an outsized impact to the portfolio. We certainly expect to see that in kind of 100-plus basis point positive impact to the portfolio going forward as it ramps back up. And I think certainly we expect to see some nice recovery in the Hawaiian assets from the investments we made, and New Orleans already is getting good reception for meeting planners, winning business based on the product we have there. We certainly expect that to be a nice tailwind for us over the next year or two. Cooper R. Clark: Great. Thank you. Operator: The next question comes from the line of Robin Margaret Farley with UBS. Please proceed. Robin Margaret Farley: Great. Thanks. I just wanted to get a little more color around the new project in Hawaii, the renovation. You mentioned $1,000,000 to $2,000,000 of disruption in 2026. So I think that starts midyear. If we think about what that tower specifically generates in EBITDA, would that mean sort of $3,000,000 to $4,000,000? And where do you think that goes after the renovation? And then, if I remember at Hilton Hawaiian Village, there is an underdeveloped parcel there. If there were stores or something on it that I think you have talked about as being a site for potential future development. Does the additional renovation here in Hawaii suggest more investment going forward in Hawaii? Thomas Jeremiah Baltimore: Yes, Robin, lots to unpack there. Listen, I think the big message is we are absolutely committed to Hawaii, particularly Hilton Hawaiian Village. Twenty-three acres, fee simple, iconic. We have obviously renovated the Tapa Tower, 1,100 keys. We have just finished Rainbow Tower, north of 800 keys, plus or minus. Ali'i Tower, as Sean mentioned, 351 keys. We think we can add another three keys there. It is self-contained, so it is a higher-end product on the campus at the village there. And so we really think that this is the window to renovate that. Obviously, there is a gym, a self-contained restaurant. So we really believe that the window that we have identified, that the disruption will be minor, the couple million dollars that we mentioned, and that this is the window to get it done. So excited about it. Thrilled about it. It is really separate from the AMB Tower. The AMB Tower is more opportunistic. We wanted to grab that last site. We are still finishing up the final entitlements. We have no intention of proceeding with that project at any time soon until, obviously, demand has fully recovered. We think that is a long-term, and I emphasize long-term, play at a future date. We have no intention of proceeding with that at this point. But Ali'i Tower, we think, is prudent. We think that is going to continue to really give not only tailwind but significant lift and a way to distinguish the property even further from its competitive set. So we are excited about getting that done. And as Sean noted in his prepared remarks, north of 80% of the rooms at what is already a 2,900-room campus and village would be completed and fully renovated, which we think really helps us as we look to 2027 and beyond. So, hopefully, that gives you a good framework. Robin Margaret Farley: Very helpful. Thank you. Just one quick follow-up on the Ali'i Tower. If I remember, it has its own entrance and pool area. Is there a thought or potential for that to be a different brand or like a different price point after the renovation, a hotel within a hotel? Thomas Jeremiah Baltimore: Yes. It is certainly something that we have looked at from time to time. No doubt it will have an elevated price point. Whether or not it is a hotel within a hotel is something that the asset management team here at Park Hotels & Resorts Inc. and our operating partners at Hilton will look at. We have studied that from time to time. It clearly is the most elevated product, and we are going to take it to the next level. And I am really, really excited about the work that is going to commence there and get done, certainly by 2027. Robin Margaret Farley: Great. Thank you. Operator: The next question comes from the line of Jay Kornreich with Cantor Fitzgerald. Please proceed. Jay Kornreich: Hey, thanks so much. Obviously, a lot of ground already covered here, but just curious on the out-of-room F&B spend, which has been quite strong. What are you seeing from customers and groups there and how much revenue growth could there be from the out-of-room spend this year? Sean M. Dell'Orto: Yes. Sure. I mean, you are right. It has been very strong. I would say on total, it is probably about 40 to 50 basis points above where our RevPAR is, translating to total RevPAR. And we think the same this year as we think about the guide as well. Big drivers: in-house group as well as even SMERF will help to drive banquet and catering a decent amount this year. Outlet spend in the resorts has been strong, headlined by our Dorada restaurant, for example, in Casa Marina, which we opened up last year and drove outlet spend up 40% in that property. It is now fully open for the high season this year. So we expect to see continued growth in those areas. Other things are a little bit more in line—single-digit, low single-digit type growth—whether it is parking and other fees. But for the most part, it is banquet and catering. The groups continue to spend. We do not see much pressure from that, as well as in the resorts—certainly the higher-end properties—you see the benefits of the higher-income guests who are spending in the outlets. Jay Kornreich: Okay. Great. I appreciate the color. I will leave it there. Thank you. Operator: This concludes the question-and-answer session. I would like to turn the call back over to Thomas Jeremiah Baltimore for closing remarks. Thomas Jeremiah Baltimore: Well, I appreciate all of you taking time today. I look forward to seeing many of you at the Citi Conference in another week or so. And I also just want to take a moment to congratulate my partner, Sean Dell’Orto, on his promotion. Well deserved. Sean has been just an extraordinary CFO, a great business partner, great leader. I know that I speak for the Board and myself. We are thrilled that Sean is taking on the COO title in addition to the CFO title. I look forward to working with him for many years to come. So congratulations, Sean. And I look forward to seeing all of you in the near future. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, ladies and gentlemen. Welcome to the Forum Energy Technologies, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Gigi, and I will be your coordinator for today's call. There is a process for entering the question-and-answer queue. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. A link with instructions can be found on the company's Investor Relations under the Events section. All lines have been placed on mute to prevent any background noise. This conference call is being recorded for replay purposes and will be available on the company's website. I will now turn the conference over to Rob Kukla, Director of Investor Relations. Please proceed, sir. Thank you, Gigi. Good morning, everyone. Rob Kukla: And welcome to Forum Energy Technologies, Inc.'s fourth quarter and full year 2025 Earnings Conference Call. With me today are Neal A. Lux, our President and Chief Executive Officer, and David Lyle Williams, our Chief Financial Officer. Yesterday, we issued our earnings release, which is available on our website. We are relying on federal safe harbor protections for forward-looking statements. Listeners are cautioned that our remarks today will contain information other than historical information. These remarks should be considered in the context of all factors that affect our business, including those disclosed in Forum Energy Technologies, Inc.'s Form 10-Ks and other SEC filings. Finally, management's statements may include non-GAAP financial measures. For reconciliations of these measures, please refer to our earnings release and website. During today's call, all statements related to EBITDA refer to adjusted EBITDA. And unless otherwise noted, all comparisons are fourth quarter 2025 to third quarter 2025. I will now turn the call over to Neal A. Lux. Thank you, Rob, and good morning, everyone. Our fourth quarter and full year results once again display why Forum Energy Technologies, Inc. is a great business and a compelling long-term investment. Despite a challenging backdrop, including lower global drilling activity, tariffs and geopolitical uncertainty. Our teams executed with discipline and focus. I am extremely proud of what we achieved in 2025. And we are on the right track to realize our strategic vision FET 2030. Let me discuss some of the highlights from last year, starting with market share gains. We continued to execute our beat the market strategy. Through customer engagement, product innovation, and geographic expansion. Since the strategy's inception in 2022, revenue per global rig has grown 20%. In 2025, we increased it again despite a sizable decline in global rig count. These gains reflect disciplined commercial execution, a product portfolio that continues to resonate with customers and the benefits of our global footprint. Our commercial teams delivered a full year book to bill of 113%, with orders well diversified across products, end markets, and geographies. The Subsea product line performed exceptionally well, with a nearly 190% book to bill, supported by awards in the energy and defense markets. Also, capital equipment orders for drilling products increased internationally while we saw continued strength in wireline, coil tubing, and sand and flow control products. As a result, we enter 2026 with our highest year-end backlog in eleven years, up 46% since the start of 2025. Providing both visibility and resilience. A key driver of our market share gains and backlog growth is innovation. New product development remains central to our ability to beat the market and expand our addressable markets. During 2025, we commercialized 10 new products by collaborating with our customers to address specific operational challenges and improve their efficiencies. One innovative example is our Secura Series stage collars, which helped us rapidly grow share in the Middle East with one of the largest oil companies in the world. We are expanding on that line with SecuraSlim, the smallest diameter stage collar in the industry, designed for complex wells. With SecuraSlim, our customers can eliminate a casing string, significantly reducing costs and improving efficiency while maintaining well integrity. Another important product launch was DuraCoil 95, a differentiated coil tubing solution for improved performance in corrosive environments. Developed with Middle East applications in mind, DuraCoil 95 expands our portfolio and supports continued international share gains. The last example I will provide is our DuraLine manifold system, which allows operators and service companies to rig up significantly faster and more safely with far fewer man-hours. This is made possible by proprietary DuraLock connectors, high-pressure hoses, and patent-pending crane systems. We recently commissioned a system for shale development in Argentina and have line of sight for additional sales. Collectively, these innovations strengthen our technology pipeline and support future growth. In addition to our focus on growth, we are maintaining our margin and cost discipline. During the year, our teams mitigated trade and tariff policy impacts through pricing actions, supply chain optimization, and leveraging our global manufacturing footprint. In parallel, we executed significant structural cost reductions and consolidated four manufacturing plants into two. These actions deliver approximately $15,000,000 of ongoing annualized savings. The combination of market share gains, innovation, and cost discipline have translated directly into strong financial results. Free cash flow generation was a defining strength in 2025. Over the course of the year, we delivered $80,000,000 of free cash flow, the top end of our increased guidance range. This performance enables disciplined execution of our capital returns framework. We reduced net debt by 28% and repurchased approximately 11% of our shares outstanding. This is an incredible result for our investors. Looking to the future, we remain confident in our bullish long-term outlook. Over the next five years, oil demand is expected to increase along with global economic growth. And natural gas demand is forecast to grow rapidly through LNG exports and AI-driven electricity demand. The energy industry must supply these needs while also overcoming rapid declines in existing production. To meet this enormous challenge, our customers need to be significantly more efficient while also adding new capacity. Under this scenario, Forum Energy Technologies, Inc.'s addressable markets would expand by more than 50%. This expansion combined with our targeted market share gains could double revenue in five years. And with our strong operating leverage and capital-light business model, our EBITDA and free cash flow would grow significantly. The next step in this exciting journey starts now. While the general consensus for our industry is relatively flat activity, we expect to beat the market through share gains, strong backlog conversion, and benefits from structural cost reductions. We are forecasting revenue growth of 6% and EBITDA to increase by 16%. For full year 2026, we are guiding revenue between $808,880,000 and EBITDA of $90,000,000 to $110,000,000. For adjusted net income, we are guiding between $18,000,000 and $38,000,000. In addition, we expect to convert 65% of EBITDA into free cash flow, or between $55,000,000 and $75,000,000. This is a great start to executing FET 2030. To provide more detail on our fourth quarter results and near-term outlook, I will now turn the call over to David Lyle Williams. Thank you, Neal. David Lyle Williams: I will begin today with a review of our fourth quarter results, and first quarter guidance. Then shift to a discussion of cash flow and our capital allocation strategy. Fourth quarter revenue of $202,000,000 exceeded the top end of our guidance range and increased 3% sequentially. This performance outpaced a flat global rig count and reflects continued strength in offshore and international markets where our revenue increased 78%, respectively. This is the second consecutive quarter when international exceeded U.S. revenue, which declined 2% due to project timing, and softer demand for valves and artificial lift products. Adjusted EBITDA for the quarter reached the top end of our guidance range at $23,000,000. Higher revenue and cost reduction overcame less favorable product mix and modest increases in healthcare costs and professional fees. Also, income tax expense in the quarter includes $3,000,000 of a foreign tax settlement related to tax years 2017 through 2020. The majority of the expense is from a noncash reduction in deferred tax assets. Fourth quarter book to bill was 93%, primarily reflecting order timing in the Drilling and Completion segment following two exceptionally strong quarters for subsea and international drilling-related equipment. Let me continue with additional color on our segment results. Drilling and Completion revenue was $127,000,000, up 8%. The Subsea product line increased 25% as we recognized revenue on ROV projects and the sizable rescue submarine order announced in June. Coiled tubing revenue was up 13% with strong tubing sales in North America, as well as continued momentum for coiled line pipe. Drilling product line revenue increased 11% supported by international capital equipment demand. Segment EBITDA was essentially flat as cost savings offset unfavorable product mix. Artificial Lift and Downhole delivered a fourth quarter book to bill of 107% driven by large orders for natural gas processing units. And segment revenue was $75,000,000, down 4% sequentially on lower shipments by the Production Equipment product line. Downhole and Valve Solutions revenues were relatively stable, and segment EBITDA was flat, with margin improvement of approximately 90 basis points supported by favorable mix and cost reductions. Free cash flow remained strong in the fourth quarter, totaling $22,000,000 and resulting in full year free cash flow of $80,000,000. Through the year, our teams generated cash of nearly $34,000,000 from working capital efficiencies. We also completed two real estate sale-leaseback transactions that generated another $15,000,000 in net cash proceeds. Excluding this $15,000,000, our 2025 free cash flow conversion would have been an impressive 76%, and a yield of nearly 15% on our year-ending market capitalization. We ended the year with net debt of $107,000,000 and a net leverage ratio of 1.2x. Liquidity of $108,000,000 remains strong, with $73,000,000 available under our revolving credit facility. Subsequent to quarter end, we extended our credit facility maturity to February 2031, with improved pricing and increased letters of credit capacity. The credit facility tenor, plus commitments totaling $250,000,000 provides significant flexibility for Forum Energy Technologies, Inc. to fund strategic initiatives, including long-term debt retirement, organic growth, and acquisitions. We appreciate the long, continued support of our bank group. With this flexible financing structure and our fortified balance sheet, we are well positioned for the future. Looking ahead to the first quarter, we expect activity to remain relatively stable with the fourth quarter. Therefore, our guidance for revenue is $190,000,000 to $210,000,000 and EBITDA is $21,000,000 to $25,000,000. The midpoint of our EBITDA guidance is up about 15% on a year-over-year basis despite a projected 5% decline in global rig count. We are also guiding adjusted net income of between $5,000,000 and $9,000,000. We expect to generate positive free cash flow this quarter. I would like to remind investors that our first quarter is seasonally lower due to annual incentive compensation and property tax payments. Now let me turn to 2026 free cash flow and capital allocation expectations. Our 2026 free cash flow guidance is consistent with our FET 2030 target and reflective of our capital-light operating model. We forecast interest and cash taxes of $35,000,000, capital expenditures of $10,000,000, and a further net working capital reduction of $10,000,000, for full year free cash flow of $55,000,000 to $75,000,000. On a comparable basis to 2025, excluding net working capital and sale-leaseback proceeds, the midpoint of our 2026 cash flow guidance is about 75% higher. Let me provide a bit more color on uses of our free cash flow. The capital returns framework followed in 2025 was incredibly successful. During the year, we returned $35,000,000 to shareholders by repurchasing nearly 1,400,000 shares, 11% of shares outstanding at the beginning of the year. We repurchased these shares at an average price under $25, less than half of the current Forum Energy Technologies, Inc. share price. And we reduced our net debt by $42,000,000, or 28% through the year. Because our balance sheet is in such great shape, we believe any further net leverage reduction should be viewed as dry powder for incremental strategic investments. In fact, with our balance sheet flexibility and capacity, we have the ability to increase net leverage modestly to fund the right acquisition. Forum Energy Technologies, Inc. has a long history of increasing our addressable market through acquisitions. Our criteria identifies companies with differentiated products that compete in targeted markets and would be accretive to Forum Energy Technologies, Inc. per-share metrics. We evaluate these investments in comparison to repurchasing Forum Energy Technologies, Inc. shares. This year, our bonds allow repurchases of around $30,000,000 as long as our net leverage remains below 1.5x. We believe Forum Energy Technologies, Inc., with a forward free cash flow yield around 10%, remains a compelling investment. In summary, 2026 builds upon the success we demonstrated in 2025. Market share gains supporting EBITDA and meaningful free cash flow enabling exciting opportunities for outsized returns. With that, I will now turn the call back to Neal A. Lux for closing remarks. Neal A. Lux: Thank you, Lyle. To conclude, I want to reiterate how proud I am of the team's execution in 2025. They delivered strong operational performance, meaningful free cash flow, and disciplined capital allocation, positioning Forum Energy Technologies, Inc. with momentum as we enter 2026. While near-term market conditions remain dynamic, our backlog, market share gains, and structural cost savings give us confidence in the year ahead. More importantly, our long-term vision remains unchanged. With our beat the market strategy and FET 2030 as our North Star, the next five years have the potential to be truly special for Forum Energy Technologies, Inc. and its investors. Thank you for joining us today. Gigi, please take the first question. Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone, and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Jeffrey Woolf Robertson from Water Tower Research. Jeffrey Woolf Robertson: Thank you. Good morning. Neal, can you talk about the trajectory that you see in 2026 and 2027 in the Subsea business? And then, secondly, in terms of products, if you see more unconventional oil or gas development globally, where do you see the biggest benefit for Forum Energy Technologies, Inc.? Neal A. Lux: Yeah. Great, great question. So, you know, with Subsea, you know, we have had a, you know, great bookings here in the last year. So, you know, I think in 2025, we had a 190% book to bill. And we are executing on our, you know, multiyear submarine program. You know, this is a strategic growth area for us, and, you know, we expect strong demand, you know, energy and defense. So, you know, as we look ahead, you know, 2026 will be a year where we are going to convert a lot of our backlog and look to add on for 2027 and beyond. Thinking about international, you know, unconventionals, you know, we mentioned in our call the delivery of our DuraLine system to Argentina. So this is unconventional work where they are adopting really the latest technology that, quite frankly, even the U.S. guys have not quite gotten yet. So we are delivering the newest and greatest to Argentina. I think another area will be Saudi Arabia for the unconventional gas projects there. Both areas where we have, you know, continued to export our technology. And as we think, you know, ultimately about the trajectory of 2030, where we are going to get the most gains is by attacking our growth markets and getting the adoption of the solutions that we have had in the U.S. and have those adopted internationally. I have talked about this example a lot, but I think it just it means so much that we think about our artificial lift product line. We have high share in the U.S., and the value proposition is, you know, more oil at lower cost. Well, I think that value proposition resonates internationally as well. And, you know, it is going to be a time to get there, but I think that is probably a fantastic opportunity and one we will continue to push. Jeffrey Woolf Robertson: With respect to acquisitions, are there any product lines or just maybe any other areas that have industrial logic to Forum Energy Technologies, Inc. currently that make the most sense to target from an acquisition or maybe even an adjacent industry? Neal A. Lux: You know, our last acquisition was Veraperm. You know, great, great buy. Right? We were able to acquire it, you know, at under four times with high margins, incredibly accretive. I think another downhole-type business would be interesting. I think for us, the main criteria, though, is, is it a great business? Are we adding something to us that, you know, has differentiated solutions that is targeted market, you know, be accretive to Forum Energy Technologies, Inc. without, you know, you know, stressing the balance sheet. Right? So that is where our focus is. If we can find that adjacent where there is good industrial logic or if we can expand an existing product line, if it hits those criteria, we are really interested. Thank you. Operator: Thank you. One moment for our next question. Our next question comes from the line of Stephen Michael Ferazani from Sidoti. Good morning, everyone. Appreciate all the detail on the call this morning. Stephen Michael Ferazani: Neal, I just wanted to ask, you came in at the very high end of the guidance range. Where were the pluses and the minuses in the quarter? What came in better than you were expecting? Neal A. Lux: Yeah. I think it was just I will, I mean, I will start and let Lyle add in. You know, I think the team is just really solidly. You know, coming into Q4, you know, we are always concerned about just the holidays and a slowdown. And we really did not have that impact this year. So I do not know if it is kind of the plus or minuses of what came in. I think it was really we just did not have that end-of-the-year slowdown, you know, around Christmas, call it frac holiday in years past. We did not see that. David Lyle Williams: Yeah, Steve. I agree with Neal on that comment. And, you know, really good revenue growth in the Subsea product line that we saw, that 25% increase. So executing on backlog. And remember that most of our Subsea revenue is percentage-of-completion accounting, so based on how much we can execute during the quarter, that can move that number around a bit. So a little bit of maybe ahead of the game on Subsea projects, which was positive. And we had really good flow-through in terms of profitability in Artificial Lift and Downhole segment with good favorable mix. Really benefited us. So I think, as Neal mentioned, we did not see quite the activity drop-off that we might have been afraid of, but also did see some good execution by all of our teams. Stephen Michael Ferazani: That is great. In terms of the Q1 guide, very strong given probably Q1 is probably going to be the worst year-over-year change in rig count. Maybe 2Q is a little bit worse. Where is the 15% growth? We are so far into the quarter, you already know timing of deliveries. How are you outperforming by this much, the change in rig count in Q1 specifically? Neal A. Lux: I think it is a continuation, right, of our beat the market strategy. We are gaining share and expanding on that. And thinking about the overall guide for 2026, we have backlog coming in in the year. That gives us benefit. We also have the structural cost savings that we executed the back half of last year. And so that is helpful as well. Stephen Michael Ferazani: I think the last thing, have you fully realized that at this point? Have we seen the full realization? There is more— Neal A. Lux: Not quite. Not quite, Steve, but I think the back half of the year will have 100%. But we are about two-thirds of the way. Stephen Michael Ferazani: Got it. On the strong free cash flow guidance, clearly, part of the benefit you have had last two years has been your really significant actions on working capital. Easier to do in a declining or flat market; in a growth market, maintaining, you know, constraining working capital is a lot more challenging. I am just trying to think about the pieces because that is pretty strong free cash flow guidance for next year. I am assuming CapEx remains around this level. Can you just walk through a little bit of how you get to that really good number? David Lyle Williams: I appreciate the comments on the number, but also on the working capital challenge as we grow. So maybe key components that we talked about in the script, just as a reminder, walking from EBITDA down, $35,000,000 of cash taxes and interest, then $10,000,000 of CapEx. So really in line with what we have done the last few years, and a $10,000,000 release or source of cash from working capital. So good job by our teams to continue to do that with revenue growth. I think a lot of that focus is around the area of inventory. If you look at last year, we released about $34,000,000 of cash from working capital. Great moves in the area of DSOs and receivables, also good on inventory. So I think next year is a continuation of that. And, really, as we think about that cash flow, one of the ways that we have done that is by looking at year-over-year comparison excluding the sale-leasebacks that we had in 2025 and also excluding net working capital benefit in both years. If you do that, then on a comparable basis, the 2026 number is 75% more cash flow than the 2025 number. So as you mentioned, pretty strong, pretty strong growth there, and confident in our team's ability to squeeze some more value out of working capital. Stephen Michael Ferazani: If I can get one last quick one in. We just looked at the average share count; it did not really move much in 4Q. Can you talk about the timing of the buyback in 4Q? And then how we are thinking about timing in 2026? Typically, cash flow is better in the second half; reasonable to think that is the more likely period you might execute? David Lyle Williams: Steve, I think you are on there. We did repurchase about 400,000 shares, just over 400,000 shares in the fourth quarter, and we did that. I think as we think about our buyback strategy and how we have that in place, if you remember last year, we were trying to buy about use about half of our cash for share repurchases. We wanted to see that cash flow come in. So while we are really confident in this 2026 number, I think a more back-end weighted, like we did in 2025, might be appropriate. One of the things that is different this year than last is the 1.5x net leverage ratio constraint. So at the beginning of 2025, we were limited on share buybacks because we had leverage. We have effectively pulled that down to 1.2x at the end of 2025. So a little more of an open window there. But, yeah, I would think that buybacks may be a little more back-end loaded this year. Stephen Michael Ferazani: Got it. Thanks, everyone. Thank you. Operator: Thank you. One moment for our next question. Our next question comes from the line of Daniel Ray Pickering from Pickering Energy Partners. Daniel Ray Pickering: Hey, thanks for taking my question. What do you expect kind of your largest growth avenues to be here over the next few years inside of your D&C business and kind of artificial lift and in your downhole tools as well. Neal A. Lux: Yeah. You know, I think, you know, over several quarters, right, we have talked about Subsea. I think that is, you know, as part of our Drilling and Completion segment. You know, again, we have had meaningful bookings. You know, it has a little bit more diversity outside of oil and gas too. You know, we had our large defense booking last year. So I think there is some good runway there. Then you also mentioned the artificial lift. Again, what is exciting for us is these products, you know, extend the life of downhole pumps, you know, and, you know, reducing costs and increasing production. So our strong share in the U.S., where we have, you know, a solid value proposition, solid market share. I think that also resonates, you know, internationally. So I think we have a bigger opportunity international, so it is taking that value prop, taking our equipment, our products, and then utilizing our global footprint to really get national oil companies to adopt the technology that has proven itself in the U.S. So I think that is a big, big part of where we want to go. We also, this, kind of finish that thought too. You know, in our last couple calls, we talked about our, you know, our kind of our the aggregation of our market. So we have looked at our growth markets and we have identified areas where, again, bigger than, you know, our leadership markets, but one where we have lower share. Again, this is maybe, you know, newer adoption or regional. We think over that time, we can double our share in our growth markets, and that is going to be a big driver of future revenue growth and ultimately, you know, free cash flow and EBITDA. Daniel Ray Pickering: Yeah. That is awesome. Very helpful. And then my follow-up on that is just, you know, you guys have had some pretty significant orders here over the last year. Are you still seeing margin improvement on those new orders that are coming in? And then, in relation to orders as well, what is the average lead time for different orders that you receive? Like, what is the time from when you get an order to whenever it shows up in the business and revenue? Neal A. Lux: Yeah. It really split it out. So I think, you know, about 75% of our revenue is activity-based consumables. So that when we receive that order, we are going to turn that quick. We are going to turn that very quickly. So that could be a day to, you know, let us call it three to four months. That is quick-turn. On the capital side, the other quarter of our revenue, that will vary. You know, in general, I would say it is a six-month from book to deliver on that. I think as we get more volume generally, we are going to see we are going to get more incremental margin. So our goal is a 30% incremental EBITDA margin. One, let us just say, there. On the Subsea side, as we have been growing that, their mix is not quite as strong on the margin side because of some of the pass-through items. However, by the, I think, the amount of bookings that we have received in Subsea, we already get some good economies of scale in our facilities and hopefully overcome that a little bit. So, you know, again, manufacturing, you know, we have good operating leverage. So the more volume we get through our plants, you know, overall, the better. And again, our goal is to have a 30% incremental EBITDA margin on the revenue we add. Daniel Ray Pickering: I will turn it back. That is very helpful. Thanks for taking my questions. Neal A. Lux: Thanks, Dan. Operator: Thank you. One moment for our next question. Our next question comes from the line of John Daniel from Daniel Energy Partners. John Daniel: Hey, guys. Thanks for including me. First, just a congratulations on the tremendous improvement in the stock price. Impressive. Was hoping you could elaborate a little bit on just the opportunities that you guys are seeing for M&A opportunities and maybe valuation expectations on the part of sellers today? David Lyle Williams: Hey, John. Lyle, thanks for calling in, and thanks for that question. Really, over the past few quarters, we have seen an increase in the number of companies being marketed for sale. So the opportunity set is getting larger. And several of those are really interesting and fit the acquisition criteria that we talked about, and Neal elaborated on earlier. So we are looking at those and evaluating those. I think as we look for those great investments, we want to make sure that they fit with our strategy. And with our forward free cash flow yield that we talked about. That is a compelling alternative to M&A. Maybe think about expectations. As you mentioned, we have seen some lift in seller expectations. Primarily, they have seen public company stock multiples increase. So that has increased some expectation there as well. So I would not be surprised to see some deals get done at a little bit of a higher margin. For us, I think discipline around our balance sheet is really key. So we will keep looking at what is a pretty good opportunity set and be cautious and targeted in what we move on. John Daniel: Okay. And that preference offshore versus land, international, North America, any color there would be it. That is all for me. Thank you. Neal A. Lux: Yeah. No. I think, again, earlier, just find the best business possible, John. Okay. And whether it is land, offshore, or, you know, it really fits our mix. K. Thanks for including me, guys. David Lyle Williams: Thanks, John. Operator: One moment for our next question. Our next question comes from the line of Eric Carlson. Eric Carlson: Morning. I guess maybe start, did not spend a lot of time on U.S., but when you think about, I mean, you have basically proven in the market that you have diversified and kind of right-sized the business to be a very good performer, kind of despite what we have seen in the rig count over the past few years. I think U.S. rig count down 30%, frac spread down about 50% from kind of peak late 2022, early 2023. And can you just maybe describe the torque available in just if the U.S. rebounds even marginally? I mean, what is the significance that the business— Neal A. Lux: Yeah. Yeah. I think in the U.S., our revenue per rig is significantly higher than international. So if there is a rebound in U.S. rig count, it will be a tremendous torque for us. You know? Obviously, high service intensity. I think as you were laying out kind of the historical trend there, Eric, I think it is interesting to note that, you know, rig count down, frac fleets down, but I think total footage drilled, you know, let us call it the length of the wells, is maybe up, and stages completed is up. So I think that is the service intensity. And as we think about that, we view that increased service intensity as more demand for activity-based consumables. So I think that is a bonus there. I think maybe the other part that adds on to that for U.S. land is the equipment is getting older. Right? You know, Lyle and I were talking the other day about when is the last time we have delivered a catwalk for U.S. land, and he has been here longer than me, and he had to scratch his head to try to remember. So it has been probably over ten years. So what we are starting to see from our customers, though, is interest in upgrading their capital, you know, whether it is drilling rigs or frac fleets. And I think for those who are not as familiar with our story, you know, we do not build entire drilling rigs or build entire frac fleets. We provide, you know, kind of the key components for them. So as the customer base in the U.S. continues to increase the intensity of the assets they have, they are going to need to upgrade and add, you know, add our equipment. A great example is our FR120, you know, the iron roughneck, which, for those that follow the show Landman, they were able to see it on the season two, episode six. You know, the roughnecks of Amtex Oil called our product the future. So that was good to see. Eric Carlson: Yeah. I appreciate that. And, yeah, I did catch that. And then maybe just when you think about kind of the core OFS equipment business versus some of these newer opportunities, whether it is kind of Subsea, not directly related to oil and gas, or maybe kind of one of the recent conversations I had was with kind of a large data center real estate investor, and they said, I mean, people are moving and just trying to find mobile power generation to kind of bridge the gap, kind of as they wait for kind of firm baseload to be delivered by the utility. And I know you guys offer, like, some, whether it is kind of the radiators or whatever it might be. Can you talk about some of maybe just the markets that are non-oil-and-gas-related and kind of are those early stages? Is there a really big opportunity there? Is it, I mean, marginally better? Just provide some feedback there. Be interesting. Neal A. Lux: Yeah. You mentioned Subsea. I will just start, but think the data center one is obviously very interesting too. But, you know, on Subsea defense, you know, we think that is a long-term growth opportunity. Right? We provide key equipment. We were already in that business. I think as other countries around the world rearm and look to avoid satellite detection, working underwater is incredible. So it is a key part of their defense capabilities. So I think that is a long-term growth area, and I think it is a great opportunity. The data center side, you mentioned mobile power. So we do provide key heat exchangers, radiators, for that market. Again, we have taken the lead, or the great product we had for heat exchangers in mobile frac, and those customers are now adopting that for mobile power generation. You know, we also see the fixed radiator possibility as a huge market, and it is one that we are looking at developing products for. I think it is early on. We want to see if it fits our engineering and supply chain manufacturing wheelhouse. But that would be a key area for us as well. And then, you know, maybe last area would be a good example is coiled line pipe. You know, we have talked about that in prior calls, but we are providing that product into non-oil-and-gas applications, you know, renewable natural gas, you know, opportunities like that. So that has been a good add to our nontraditional base. But, you know, overall, thinking about the data center opportunity, kind of view it as more of a second-derivative growth for us. I think the increase in gas demand overall, whether it is LNG, data centers, that is going to drive U.S. Drilling and Completion. And I think that is where we are going to really see the benefit as well. Eric Carlson: Great. And then maybe shift to the capital returns framework, which you kind of laid out. I mean, when you guys look at acquisitions, I mean, are things still trading around that 3x to 5x EBITDA multiple? Like, if someone is holding something privately or you can carve something out of someone else who is public that wants to shed a legacy business or a private equity firm that has been holding a business for the last dozen years that needs an exit. I mean, do you have any sense of, like, what are multiples looking like on either EBITDA or cash flow or both? I am just curious if you are kind of looking at your pipeline. David Lyle Williams: No, Eric. Great question. And like I mentioned earlier, we have seen deals getting done with a little bit more of an elevated enterprise value to EBITDA multiple. And, you know, we are seeing that. I think relative to public company comps, those are still lower. But we have seen some move up from where they are. It is very situational as to what that deal is. And you mentioned some of the kinds of sellers that are out there, whether it is family-owned businesses, whether it is some carve-outs, or it is private equity owners that have been long in the tooth making the sale. So definitely a good opportunity set out there as far as technology would fit well within our portfolio and that we think we could leverage and would be incremental to our story. And that is what we are looking for, but we are also going to be careful and make sure we do not get out over our skis on any deal. Eric Carlson: Right. Then maybe in that lens, I mean, I have looked at it, and I have heard you present kind of the FET 2030 story and the potential there. I mean, obviously, buying stock back today is not the same as buying it at $25, and we can argue you should ever have that opportunity or not. But when you think about I can buy my stock today, invest in my own organic growth, and just let the story play out through 2030. If I am buying today, that looks like a pretty good investment longer term. I mean, like, is there a hurdle rate where you say, like, I mean, buying our own stock, we know our own business. It costs us nothing to integrate. We do not have the risk of getting over-levered versus going out and trying to buy somebody. Like, how do you guys think about the risk-reward there? Like, how much better does acquiring somebody have to be versus just saying, we will just buy our own stock and we could return cash in a multitude of ways in the future as we kind of build this base towards the 2030 growth plan. Neal A. Lux: Yeah. Again, we have started that FET 2030 growth plan really from the bottoms up, right? Looking at all of our businesses, what we could do organically. I think about an acquisition and adding on to that as a way to really supercharge that as well. So can we add somebody that we have, you know, revenue synergies? Can we have some cost synergies? And, you know, by having this type of product, could we then, you know, grow faster our existing organic story? So I think there are definitely opportunities out there like that. And I think you have to look at them on an individual basis. You know, we have our criteria that I think we have talked about a lot. You know, it has got to be differentiated. You know, it has got to be a targeted market. And we want to have it accretive to our financial measures. So you are right, though. The story, you know, buying our own stock, has played out really well. It has been a good use of capital. And, you know, our investors have taken notice. But I think it is one part of our capital allocation strategy. I think M&A is another. I think overall, as long as the acquisition hits the criteria and adds to our FET 2030 story, we will take a serious look at it. Eric Carlson: Great. That is helpful. Okay. I have two more questions, then I will shut up. When you think about, I mean, so Veraperm, heavy oil sands in Canada primarily. There are obviously international indications to that. I mean, and this is very early stages, but, like, is Veraperm something that can be used in Venezuela eventually or something like that if a market like that would open up? Neal A. Lux: Yeah. Yeah. That is a great question. They have, Veraperm has sold their products into Latin America for heavy oil applications in the past. So I think there is an application. I guess we, as Venezuela develops, we will learn more about, you know, whether they will, you know, go more towards a product development like we would have. I think maybe, on a bigger picture of Venezuela, you know, there has been a lot of public company commentary, you know, some of our biggest customers have been saying how enthusiastic they are. When they deploy equipment down there, they are going to need our consumables to run. Again, that is coil tubing, wireline, casing hardware, artificial lift products. I want to say even just this week, you know, we received legal approval to book a coil tubing order for Venezuela. So I think that opportunity is starting to move, and a great way for us to participate in it is with our customer base who is going to deploy their equipment down there. Eric Carlson: Interesting. And then last question would be two parts. So just, I mean, think about the tariff ruling today. What do you think is the net impact to that? And then also kind of on the financial side, I mean, projecting positive net income in a pretty meaningful way this year and, obviously, large deferred tax assets. I am no expert in that. But when you think about those on a go-forward basis, I mean, what is the incremental benefit of some of those if you can either write them up or, I mean, maybe explain to me that a little bit as well. Neal A. Lux: I will start with the tariffs and let Lyle take the tax part. Yeah. So the ruling today, so we really kind of, let us call it, three categories of tariffs. We have the Section 232, Section 301, and what is referred to as the IEPA tariffs. The Supreme Court decision this morning just struck down the IEPA tariffs. So the 232s and 301s are going to remain in place. So for us, those are the more impactful ones. We have had those in place, though, since, I think, 2017, and they have impacted more of our steel, so steel supply. So we still have a good amount of tariffs still in place. Again, we have done what we can to mitigate those. David Lyle Williams: Yeah. Let me talk about taxes a little bit. Eric, definitely something that we are focused on as we have grown our profitability, especially outside the U.S. That is where we pay taxes. And so our tax bill is getting bigger as we do that and have that success. A lot of our tax assets, deferred tax assets, sit in the U.S. And so we have a lot of tax shield here. Kind of put all that together, it makes a really wonky tax rate, and you think about our tax. We are paying tax outside the U.S., and we are not here in the U.S. So as we look to the future and look at increasing our taxable income in different countries, then it is about how could we optimize where that comes from, whether that is in the U.S., which would be more of an advantage for us, or in other countries as we grow. So something that is on our radar screen and definitely focused on as we look ahead and make sure we are doing appropriate execution. But also now that we are paying taxes in countries, making sure that we are maintaining good compliance and keeping up with all the rules as they change around the world. Eric Carlson: That is helpful. Alright. Great. Thanks. Operator: Thank you. At this time, I would now like to turn the conference back over to Neal A. Lux for closing remarks. Neal A. Lux: Alright. Well, thank you for your support and participation on today's call. We look forward to our next meeting in May to discuss Forum Energy Technologies, Inc.'s first quarter 2026 results. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Tandem Diabetes Care Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Morrison, Executive Vice President and Chief Administrative Officer. Please go ahead. Susan Morrison: Hello, and welcome to Tandem's Fourth Quarter and Year-end 2025 Earnings Call. Today's discussion will include forward-looking statements. These statements reflect management's expectations about future events, our product pipeline, development time lines and financial performance and operating plans and speak only as of today's date. There are risks and uncertainties that could cause actual results to differ materially from those anticipated or projected in our forward-looking statements, which are described in our press release issued earlier today and under the Risk Factors portion of our most recent annual report on Form 10-K. Today's discussion will also include references to both GAAP and non-GAAP financial measures. Please refer to our earnings release issued today and available on the Investor Center portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure and other information regarding our use of non-GAAP financial measures. John Sheridan, Tandem's President and CEO, will be leading today's call, and he'll be joined by Leigh Vosseller, Executive Vice President and Chief Financial Officer. Following their prepared remarks, the operator will open the call up for questions. Thanks in advance for limiting yourself to one question before getting back into the queue. I'll now turn the call over to John. John Sheridan: Thanks, Susan, and welcome, everyone. 2025 was a defining year for Tandem, where we surpassed the milestone of $1 billion in sales while delivering on our mission to provide new innovations, improved outcomes and a revolutionary experience to nearly 0.5 million customers worldwide. Momentum built across the year and culminated in Q4 results where we set multiple records while delivering double-digit growth and improved profitability. Seeing the dedicated efforts and strategic focus of our entire team makes me both proud of what we've accomplished and excited for what lies ahead. In addition to our financial performance, I'm equally proud of our execution against the 3 key initiatives we prioritized at the beginning of the year, which were modernizing our commercial operations, delivering new technology and shaping our business model. Together, these changes are transformational for our company and set a strong foundation for Tandem to drive sustainable growth and profitability in 2026 and beyond. In my prepared remarks today, I'll be speaking to each of these key initiatives, starting with the modernization of our commercial organization, which positions us for strengthened execution worldwide. In the United States, we expanded our sales team and updated our sales processes. We also began implementing new systems during 2025 that will provide significant efficiencies and benefits to our sales team in 2026. In addition, we began expanding our dedicated commercial efforts for people living with type 2 diabetes. Turning to our international business. We delivered a strong performance in 2025, setting record sales once again. This accomplishment is even more impressive as we did so while preparing for direct commercial operations in the U.K., Switzerland and Austria. The transition activities went exceptionally well as our team hired talent in these countries while smoothly coordinating the distributor separations and implementing the necessary back-end infrastructure. As a result, I am proud to share that we are now live and beginning to serve customers through our direct operations in Europe. Our learnings from going direct in these countries will serve as a playbook to further expand our direct operations internationally in '26 and '27, which provides us the opportunity to deepen relationships with the diabetes community while improving both price and margins. Complementing our commercial efforts was the second key initiative for 2025, delivering new technology across our portfolio. Early in the year, we launched Control-IQ+, our next-generation automated insulin delivery algorithm that is indicated for people living with type 1 diabetes down to age 2 and for adults with type 2 diabetes, which doubles our addressable market. It's designed for easy onboarding and use. We also generated clinical evidence that allows us to use training to simplify the carb counting experience. We ended 2025 launching 2 highly sought-after pump features in the U.S., which was the launch of FreeStyle Libre 3 Plus for t:slim and Android Control for Mobi. Early response to both of these offerings has been positive and contributed to our growth in the fourth quarter. We plan to build on this momentum in 2026 and have multiple new products either imminently launching, awaiting regulatory clearance or reaching key milestones in the development path. We'll have 3 new product launches in the second quarter, which include a scaled launch of Mobi internationally, a launch of Mobi integration with the FreeStyle Libre 3 Plus beginning in the U.S. and Dexcom's 15-day sensor integration on both pumps and platforms globally. We also recently submitted a 510(k) with the FDA for a pregnancy indication for Control-IQ+ technology. Tandem is a company founded on innovation. And in 2026, we plan to uphold the ongoing commitment to redefining pump wearability with the launch of Mobi Tubeless. This will be Tandem's first patch pump offering and the world's first patch pump with extended wear technology. As a reminder, Mobi Tubeless is our novel infusion site option with the existing Mobi pump that transforms it into a tubeless patch device, allowing for interchangeability between tube and tubeless wear on one platform. We plan to file our 510(k) submission in the second quarter and are preparing for its launch in the second half of the year. In addition, our pipeline also includes SteadiSet, our extended wear infusion set technology, our next-generation Mobi featuring further miniaturization from our Sigi technology, software features such as dual glucose ketone sensor integration and our pursuit of offering the world's most robust fully closed-loop AID system. Tandem's leadership in AID has been evident since we first launched Control-IQ in 2020. We are committed to maintaining this position and plan to begin a pivotal trial for the fully closed-loop algorithm later this year in support of FDA filing in 2027. As you can see, our innovations across Tandem's pump systems, applications and insights continue to define why our pipeline is the most exciting in diabetes. Finally, our third main initiative in 2025 centered on reshaping our business model, which is expected to be one of the most impactful levers to deliver both market growth and profitability. We took significant steps to advance our pharmacy strategy across United States. Pharmacy access is widely associated with the significant advantages to offering customers with lower average out-of-pocket cost and easier onboarding. It also provides benefits to health care providers through a streamlined prescription process and a benefit to payers by providing access to technology that improves member outcomes with enhanced data visibility. As a result, manufacturers like Tandem typically receive greater economic reimbursement when serving customers through the pharmacy channel. Our first year of experience with pharmacy access proved these assumptions to be true. Therefore, in 2026, we are accelerating our efforts to increase pharmacy coverage for both t:slim X2 and Mobi platforms and plan to drive utilization of the pharmacy benefit for all our customers. A key aspect of this acceleration is our decision to adopt a pay-as-you-go reimbursement structure, which creates a near-term offset to sales while significantly strengthening our business model over time. Our business is distinctly advantaged in making this sort of a transition as we have more than 300,000 existing customers, regular ordering supplies in the U.S. By transitioning these customers to pharmacy, it provides them the channel benefits faster while helping mitigate Tandem's near-term impact to revenue. We considered a PayGo business model when we first launched into the pharmacy channel in 2025. And based on the experience we gained in payer interactions throughout the year, have decided it is strategically the right move for our business now to drive market expansion and profitability. With the addition of PayGo, Tandem will be best-in-class in all ways with products, outcomes, service, affordability and accessibility. I'd now like to ask Leigh to provide additional detail on the 2025 results and expectations for the year ahead. Leigh? Leigh Vosseller: Thanks, John. 2025 was a record year for Tandem, which is highlighted by our milestone achievement of more than $1 billion in worldwide sales and multiple records in Q4, including our highest sales, gross margin and pump shipments. In 2025, worldwide sales grew 12%, our second year in a row of double-digit sales growth based on a 10% increase in the U.S. to $707 million and 15% internationally to $308 million. Focusing on the fourth quarter, our record worldwide sales of $290 million represented 15% year-over-year growth. This is the strongest sales quarter in our company's history and is of particular significance as it was achieved during a period of commercial transformation. In the U.S., our Q4 sales increased 14% to $210 million. This growth was driven by more than 27,000 pump shipments, our highest quarterly achievement. Renewals from our loyal customers made up more than half of the shipments and MDI conversions represented approximately 2/3 of customers new to Tandem, consistent with trends across the year. We also benefited from a greater portion of our supply sales through the pharmacy channel. In all, sales through the pharmacy channel nearly doubled from Q3, growing to $16 million or 7% of total U.S. sales this quarter. Only a few percent of our total installed base ordered supplies through pharmacy in Q4, creating a meaningful opportunity as we expand awareness and accessibility for our large existing base of over 300,000 customers. Internationally, we grew 17% year-over-year in the fourth quarter, delivering $80 million in sales and 11,000 pump shipments. This marks our strongest Q4 performance to date, driven by growth in both pump and supply shipments. We also realized benefit from favorable FX, offset by $4 million associated with our transition to direct operations, primarily impacting pump sales. For the full year, the total distributor destocking and inventory buyback impact was approximately $7 million, slightly lower than the $10 million we had estimated due to a partial delay in timing from 2025 to the first quarter of 2026. Turning to margins. We delivered on our commitment to improving profitability in a meaningful way. We expanded gross margin by 3 percentage points to 54% for the full year and reported our highest quarterly margin ever at 58%. This achievement stems from success in reducing product costs, driving manufacturing efficiency and executing on our pricing and channel initiatives. We managed our Q4 operating expenses well as they were essentially flat year-over-year and sequentially. This reflected investments in SG&A to support our commercial initiatives, offset by planned efficiencies throughout the organization. As a result, adjusted EBITDA was 11% of sales in the fourth quarter, a 10 percentage point improvement over the prior year. Additionally, we generated our first positive operating margin since 2021 at 3% of sales in Q4, which is an improvement of 15 percentage points over the prior year. One key contributor to this leverage was a reduction in noncash stock-based compensation to a reduced quarterly run rate of approximately $20 million. We exited the year with nearly $300 million in total cash and investments, generating free cash flow in both Q3 and Q4. We have great conviction that the combination of our differentiated portfolio of products and business model changes provide us the ability to achieve our long-term objectives of accelerated sales growth with a gross margin of at least 65% and an operating margin of 25%. Demonstration of this momentum was evident as we exited 2025. As John discussed, we are entering 2026 in the U.S. with a new value proposition as we transition to a pay-as-you-go reimbursement model in the pharmacy channel. PayGo can be a key driver for accelerated pump adoption as it eliminates the upfront payment at time of pump purchase, which has historically been one of the top barriers for adoption. A PayGo business model also lends to a more predictable revenue stream as customers purchase supplies over time, unconstrained by renewal cycles. In transition from a model where revenue is typically recognized upfront, 2026 sales growth may be more moderated. We have the added benefit that can come from shifting our sizable existing installed base into pharmacy to lessen the near-term impact to sales. In all, this transition positions us well for meaningful long-term value creation. Our new PayGo contracts are expected to be effective beginning late in the first quarter. Importantly, in 2026, pump shipments will be the key indicator of our progress in growing the market while expanding margins. Pump shipments in the U.S. are expected to increase 10% to 11% year-over-year, returning to new pump growth led by MDI conversions. Renewal pumps are expected to comprise more than half of total shipments. The catalysts enabling this growth are new technology in expanded markets and pharmacy channel access, building off last quarter's momentum and scaling across the year. Contribution from Mobi Tubeless is not included at this time as its benefit will depend on FDA clearance and launch timing. We will be providing additional metrics this year for greater visibility into the pay-as-you-go transition, which we will discuss at a high level on today's call. More details on our assumptions are provided in the earnings call slide deck posted in the Investor Center portion of our website. Starting with pumps. We anticipate that pump orders through the DME channel will still make up approximately 80% of our shipments in 2026, while we scale pharmacy access. Over the course of 2 to 3 years, we expect the ratio between the channels to flip and the majority of our shipments will be through pharmacy. When serving a customer through pharmacy, there will be no upfront reimbursement for the pump. Sales will be recognized consistent with recurring supply purchases, which are anticipated to be reimbursed at a premium of more than 4x DME, pricing in line with what is seen in the market today. The sales impact of this transition between the channels is anticipated to be the most pronounced in 2026 while we build up the percent of our installed base ordering supplies through pharmacy. Exiting 2025, our U.S. installed base was approximately 325,000 with a low single-digit percent ordering supplies through pharmacy. As a result, our 2026 U.S. sales are expected to be in the range of $730 million to $745 million based on growth in pump shipments of 10% to 11% year-over-year. This incorporates $70 million to $80 million of pricing headwinds, reflecting our adoption of a pay-as-you-go model. Pharmacy sales are expected to be approximately 15% of total U.S. sales in 2026, up from 4% in 2025. In the long term, sales through pharmacy are expected to make up more than 70%. When thinking about the cadence of U.S. sales across 2026, total pump shipments are expected to follow a seasonal curve similar to 2025. For example, in Q1 of 2025, we saw a nearly 30% decline from Q4 of 2024 due to DME deductible resets on January 1. The pharmacy penetration rate is expected to start low in the first quarter, similar to levels we saw exiting 2025 and scale linearly across the year. Turning to our international business. We began direct commercial operations in Switzerland, U.K. and Austria in the first quarter of 2026. Sales productivity in these countries is expected to scale across the year. In the fourth quarter, we plan to transition to a direct model in additional key European markets. In the direct model, ASP premiums will vary by geography, expected to be at least 30% higher than our current pricing in the individual markets. These ASP gains will partially offset an anticipated $15 million associated with distributor destocking and inventory buybacks. As a result, our 2026 international sales are expected to be in the range of $335 million to $340 million for the year. Direct sales represented approximately 5% of total international sales in 2025 and are expected to be similar in the first quarter of 2026 as we scale our direct launches. For the full year of 2026, we expect direct sales will be approximately 15% of total international sales. Overall, worldwide sales for 2026 are expected to be in the range of $1.065 billion to $1.085 billion. This incorporates $85 million to $95 million in total sales headwinds associated with our strategic business model changes. Worldwide sales are expected to be in the range of $236 million to $240 million in the first quarter. This includes approximately $10 million of headwinds split between the U.S. and international. Our clearest indicator of success in 2026 will be market expansion as measured by pump shipments and will not be evident in our sales growth expectations as we progress towards a more predictable and profitable revenue stream. We also maintain our commitment to delivering meaningful margin expansion, reflecting benefit from our pricing strategies, a focus on product cost reduction and continued spending rigor. Gross margin is expected to step up to a range of 56% to 57%, scaling from nearly 54% in the first quarter to 60% in the fourth quarter. Adjusted EBITDA is also expected to demonstrate leverage in the range of 5% to 6% for the full year of 2026. We anticipate adjusted EBITDA to be negative 2% to negative 1% of sales in Q1 due primarily to U.S. seasonality returning to positive in Q2. In summary, we now have multiple levers that can grow the business independent of new product cycles. In combination with our expansive product portfolio, we believe these business model initiatives provide the opportunity for us to deliver accelerated growth in 2027 and beyond. John Sheridan: Thanks, Leigh. As you can see, 2025 was a year full of tremendous accomplishments that position Tandem for increasing success. Our ongoing dedication to innovation and improving our customers' lives continues to motivate us to reach new milestones. I want to thank every member of the Tandem team for your steadfast pursuit of excellence, collaboration and adherence to our shared mission. Your contributions have driven our success and will propel us to another year of meaningful progress, impact and growth. This is an important and exciting time in Tandem's journey. We are well positioned to deliver best-in-class technology to our customers in a more streamlined and cost-effective way while advancing our global business model and creating meaningful long-term value for our shareholders. Thank you, everyone, for joining us today, and I look forward to updating you as the company continues to progress. Operator: [Operator Instructions] Our first question comes from the line of Matt Miksic from Barclays. Matthew Miksic: Congrats on a really strong finish here, both top line and on the EBITDA line. So I think you're going to get a lot of questions here around the new model. I appreciate all the information in the slide deck, kind of spelling it out and laying it out. And it's certainly not -- it's certainly something that folks have talked about and thought about just in diabetes generally that's moving in this direction, particularly for automated insulin delivery systems. One question, I guess, is you gave pretty good guidance on Q1, which was clear for the full year in the U.S. The OUS growth with the $15 million headwind is sort of like a 9% to 10% underlying -- is the right way to think about that kind of in the mid-teens. And so I guess you have like low double-digit U.S. shipments, mid-teens OUS kind of underlying growth to get to sort of like a low double-digit underlying sort of performance metric for next year, absent the PayGo changes? John Sheridan: I think that's correct, Matt. I think if you look at the overall revenue growth or shipment growth for the year, it's going to be in the line of 10% to 11%. So it's going to be double-digit growth in shipments. And we also expect to see a return to growth in new shipments. I would say that, that is the best indication of our performance next year, including the profitability because when you look at the revenue numbers, the revenue numbers are impacted by the headwinds from the pricing that comes along with PayGo. So this is a very impactful change in the business. We're very excited about it. I think when you look at it, I mean, basically, we double or more than double the revenue, the lifetime revenue from a patient, and that's a substantial change while at the same time, we are going to substantially reduce their out-of-pocket and improve the experience. So that's a real win in both sides. And like I said, we're very excited about this. It's going to be impactful. And I think when you look at the impact on the P&L, I mean, certainly, there's a revenue hit from the pricing headwind. But when you look at the gross margin, you look at adjusted EBITDA, we do show solid performance there. And as I said, shipment growth is the real numbers to look at in 2026 for us. Operator: Our next question comes from the line of Mathew Blackman from TD Cowen. Mathew Blackman: Great. A lot to chew on a lot to ask. I guess I'll ask the expectation of 20% -- roughly 20% of pumps in 2026 going through the pharmacy. Can you give us some context on where you are from today on a coverage and contracting standpoint and where you'd expect to be exiting the year? Just trying to reconcile the 20% mix versus maybe where you are on the contracting side, what progress you've made there? Leigh Vosseller: Sure. Happy to. So I would say there are 2 ways to think about coverage for us. I mean we do have contracts with all of the major PBMs, the top 3, which gets you about 80% of covered lives under contract. But what we're really focused on is the formulary access where we have roughly 1/3 of lives covered today. And think about that as just the beginning as we're launching into this -- the pharmacy with the pay-as-you-go model, which those contracts will be effective late in the first quarter. So at the very beginning here, I would expect low volume, but it will continue to scale up across the year to average to that 20% point that we -- that you mentioned in terms of pump shipments going out the door with a $0 upfront payment. That's a little bit separate or different from the amount of our installed base that we expect to be ordering through the channel. So think about this as a complement, while we have that headwind on the upfront piece, we have the ability to mitigate some of those headwinds by transitioning or shifting more of our current DME customers into the pharmacy channel. And similarly, that percentage will start low. We came out of the fourth quarter with less than 5% ordering through the pharmacy channel, and we expect that to scale up across the year as well. So on average for the year, you can think about that as roughly 10% of our customers across the year that will be ordering their supplies through the pharmacy channel. Operator: Our next question comes from the line of Larry Biegelsen from Wells Fargo. Larry Biegelsen: Congrats on a nice quarter here and on the bold move here. And as Matt Miksic said upfront, this has been, I guess, talked about for a long time, John, this pay-as-you-go model. So my questions are really why now? Why is this the right time? And the long-term pharmacy goals, why is 80% the right number in 2 to 3 years? I assume that excludes Medicare fee-for-service. And how are you thinking about attrition changing with the pay-as-you-go model? John Sheridan: Well, we have been thinking about this for a while. And I think in the fourth quarter, we gained a lot of experience just in our pharmacy business. We've had conversations with a number of payers. And we think it's very doable. We've been looking at -- we've talked about pharmacy for a while now. And I think it's absolutely the right time to make this transition. We've got a number of other things that are very positive when it comes to the business. So as I said, this is a very impactful decision for us, but it's the right one, and we're very excited about it. Leigh Vosseller: I'll take the question about the goals and your question on attrition. So as we think about the goals, this is just the beginning, and we're working to build up additional formulary access and as well as within the formularies that we have to build up attachment from the downstream payer plans. And so what we see is over the 2 to 3 years is what it will take for us to build up to optimal coverage, if you want to call it that, where at that point, we probably will have at least 70% of our sales going through the pharmacy channel. So that's a complete flip of our business model, obviously, from where it is today. And attrition is a question that we're often asked as we think about pharmacy channel at all, where people don't necessarily have what you would call lock-in periods like they have in DME. And what we've seen in our experience in the DME channel is that even though people stay with us for 4 years because of that warranty period, we see people staying well beyond the 4 years, whether it's through another pump purchase or just staying on the pump outside of warranty because high quality of the pump, it just keeps working, so there's no need to transition. And so we feel comfortable that when people try out our technology, they stick with it. And even in this model where maybe they won't have the same sort of dynamics in terms of restrictions from switching from one to another, we think they'll stick with us. Operator: Our next question comes from the line of Chris Pasquale from Nephron Research. Christopher Pasquale: I appreciate all the additional info and the different metrics this quarter is going to be helpful to track these initiatives as they go forward. John, I wanted to ask about the international transition. When you first sort of talked about this, it seemed like it was largely going to be a 2025 headwind. But now it sounds like it's going to have a significant impact on 2026 and possibly even beyond depending on sort of what other countries you're getting into late this year. Can you talk about why it's such a protracted process? And how do we think about the point at which you completed this transition to direct? John Sheridan: Well, I think that, first of all, I think our team did an amazing job this year. When you think about it, we made the transition from the distributors. We actually began to hire sales force in the new markets that we're going into. And then we built and installed the infrastructure that will enable us to actually ship a product and bill for it. All of those are major tasks. And I think that it's -- we're biting off a significant amount of operations when we go into these new countries this year. Of course, we're going to 3 this year. And I think that trying to do it all at once would be just too risky. And so I think that putting it into a 2-year period is the right way to do it. As we did progress this year, we essentially got all of that done. We are now live in those 3 countries and we installed all of the infrastructure to do that. We're basically using that as a playbook now, and we're going to do the exact same thing this year for the next countries that come in 2027. So I think that we feel good about it. I think it's staged properly. And I think that when we get to 2027, I think that that's the majority of the transition that we plan to make. I think sort of in the long term, we intend to have a hybrid model where we do have direct business, and we intend to continue to work with many of the fantastic distributors that we have in the international markets. But it's gone very well, and I think it's going to go just as smoothly in '26 and '27. Operator: Our next question comes from the line of Danielle Antalffy from UBS. Danielle Antalffy: Really congrats on a good quarter and for making this move here. I guess, Leigh, just on the leverage, that was really nice to see in the quarter. Good to see in the guidance and the commitment to that. I'm just curious what the different levers are here. Obviously, ultimately, pricing in the pharmacy and the significantly higher ASP there is helping. But maybe talk a little bit about the levers going forward in '26 but also as you think over the next few years. Leigh Vosseller: Sure. Thanks for the question, Danielle. You named probably one of the biggest levers we have right now, which is pricing. As we look at the value that can come from this transition that we're making in the pay-as-you-go model, that will continue to bear great fruit for us in the next couple of years in terms of a growth perspective on revenue and profitability. But also so important to remind that we do have a number of product cost reduction initiatives in place. One of them really comes from Mobi as we continue to build and scale that part of the business. In the long term, Mobi, and we're getting very close with the pumps to being at scale. The manufacturing cost of a Mobi versus the t:slim is 10% to 15% lower. So that's one piece of it. And then as we continue to build up the cartridges and think about that contribution, that will be 20% or lower or higher, I should say, reduction in cost versus the t:slim. So as Mobi continues to grow in scale, that will continue to drive gross margin benefit, too. And then you can just take that forward and think about any new product that we launch. Part of our design principles in the R&D process are to consider that new products need to have a better margin profile than the products that we have in the market today and continue to improve upon the products that we have in the market today. And so I would say between pricing and our initiatives within the manufacturing and R&D areas, that's really what's going to drive that leverage in gross margin. And then they get a little further down the P&L to the operating margin. Similarly, we continue to look at our infrastructure and think about what's the best way, how to be most efficient. And we're constantly looking for opportunities and ways to reduce the need to hire more people in the future and just better serve our customers with a lower headcount base going forward. Operator: Our next question comes from the line of Mathew O'Brien from Piper Sandler. Matthew O'Brien: I'd love to talk about the acceleration that you're expecting on the new pump shipment side here in '26. It's one of the better numbers we've seen over the last several years. And I know you have Mobi coming out with Libre 3 Plus and then the 15-day, but you're not assuming any benefit from Tubeless here in '26. So why the confidence in the ability to do that without especially that patch kind of product here in '26 and maybe deconstruct how you get there to see that kind of acceleration? John Sheridan: I would say that while we don't have Mobi in the revenue plan, that's typically the way we've done it in the past, a little bit more conservative when it comes to uncertainty. I would say that we have high confidence we're going to get this thing approved this year. And when you consider Mobi, we'll now have -- it will have multiple sensors integration. It will have Android and it will have iOS and then it will also have a Tubeless implementation. There's nothing else like that on the market. I think as you look at the buildup, just to get to the Tubeless product, we are adding a great deal of functionality to these products. We're also expanding Mobi into the OUS markets, and we're expanding FreeStyle Libre 3 into the OUS markets as well, which has been a point of competition. I think when both those products are there, it's going to be a completely different picture. And so I think the pipeline is certainly a big piece of it. I would say that a lot of the work that we've done with the sales force in terms of improving their productivity, as we mentioned, we have a brand-new system coming online here next month, basically. That's going to substantially improve their efficiency and productivity. So we expect to see that contribute to the new starts. And then finally, I think that pharmacy, pharmacy is something that we think is going to have an impact on our business this year. So I think when you look at that, really, it's the new technology, it's the sales organization, the improvements that happened there last year. And then it's also pharmacy. I think the combination of those will drive the growth that we're going to see in 2026. Operator: Our next question comes from the line of Mike Kratky from Leerink Partners. Michael Kratky: Congrats on the great quarter. Maybe to start, just wanted to circle back on some of the Tubeless Mobi commentary. Did I have that right, you said planning on submitting the 510(k) submission in the second quarter of this year is the first part? John Sheridan: That's correct. Yes, we plan on submitting in the second quarter. We have had a great deal of very responsive support from the FDA. And so we do feel highly confident that we'll get it approved in the second half of the year. Operator: Our next question comes from the line of Matt Taylor from Jefferies. Matthew Taylor: I get your comments on pharmacy shift and going to flip in a few years. Can you talk about at a high level, how that's going to impact the P&L and sales growth in '27 and '28 in more detail. It's a little bit confusing as you're going to continue to have that shift through the next few years. Leigh Vosseller: Sure. Happy to. So when you think about -- we're talking about the headwinds this year. This year is where we expect that to be more pronounced as we're just launching into it. And we don't yet have what I would call the cover for it coming from the supply sales or the reimbursement on supplies. So you can see, first of all, for every PayGo customer we get into the model, we're going to be getting reimbursement on supplies more than 4x what we get in DME today. So as you build up that base of customers who benefit from getting a pump with no cost upfront, that's going to be a tailwind on revenue in the coming -- in the next couple of years. And then add to it that we do have over 300,000 t:slim Mobi customers today in our existing installed base and the opportunity to shift those people from the DME to the pharmacy channel will also create a tailwind, and that's immediate benefit from one day when they're ordering in DME to the next day when they're ordering in pharmacy, you would immediately see that appreciation. And so I think what's really important this year is even though this is a near-term headwind and it does have a moderation effect on revenue growth, we're still demonstrating margin expansion at the same time. So it's showing the power of what this shift can look like in this first year and just you can imagine how much better it gets in the coming years. Operator: Our next question comes from the line of Shagun Singh from RBC Capital Markets. Shagun Singh Chadha: I was wondering if you can shed some light on cadence through the year. So the $70 million to $80 million revenue headwind, how do we see it through the year? I think you indicated that this will be effective, I believe you said in late Q1 '26. So anything you can share on cadence on sales and margins, that would be helpful. Leigh Vosseller: Sure. So I think the way to think about it is, obviously, in this first quarter, it's going to be a very low percent of our shipment volumes that will have this effect from the PayGo reimbursement. So the bulk of those headwinds are probably going to be hitting more in the last couple of quarters of the year. And so think about it as low single-digit percentage scaling up to a number that averages to 20% for the year. And margins also, so as we have the same opportunity to transition our supply customers, similar to what we've seen in years past, margins will start lowest in the first quarter. So call it, nearly 54%, getting up to about 60% in the fourth quarter of the year. So you can think about that scaling pretty linearly across the quarters this year. I should add that in the first quarter, in particular, we factored in about $10 million of headwinds worldwide. And you can think about that as roughly split between our international operations and the transition to going direct and between the headwinds that we could see in the first quarter for the PayGo transition. Operator: Our next question comes from the line of John Block from Stifel. Jonathan Block: I'll pivot to international. And maybe, Leigh, you can talk to some of those moving parts. It seems like you've got, call it 3% revenue growth from the extra 30% price on an incremental 10% of volumes. I'm guessing your FX tailwind, I don't know, is 4%, 5%. Then you got this headwind from the move to direct. So maybe you can just flesh it out what's the underlying growth. It seems like it might be 7%, 8%, high single digits and compare that to how you exited the year, which seems on a really, really good trajectory of mid- to high teens. Leigh Vosseller: Thanks for the question, John. You're right. There are a lot of moving parts. I think at the highest level, I'll just start with the fact that we are actually very strong in the international markets and continuing to expand the market. Majority of our shipments today still come from new customers, and we're just beginning to see a more meaningful contribution from the renewal opportunities there. And then you take some of these structural pieces and you think about it. So as you come into 2026, we have the benefit from those markets that are going direct already that are going to provide that price appreciation. And so this year, you're not going to see the full effect of that 30% that you mentioned. That's the way to think about long term. Any market that goes direct, we should see a premium of approximately 30% in any given year. The pricing, when you blend it this year, direct to distribution, it's probably mid-single to high single-digit price increase building up across the year as we transition into those markets. That is, if you will, it's funding the headwinds that we're going to see in the additional markets that are going to go direct this year. So as we think about that headwind, we've sized that at about $15 million and thinking about, as I just mentioned, roughly $5 million-ish in the first quarter. And the rest of it, majority will be hitting in the back part of the year, probably the fourth quarter. But underlying all of this, we're very confident and excited about the opportunity we have in the market. Part of the reason for going direct in these markets is this puts us closer to the customer, better able to sell and the benefits of our technology and bring more people over to Tandem. Operator: Our next question comes from the line of Travis Steed from Bank of America Securities. Travis Steed: I wanted to ask about the quote in the press release you're talking about accelerating sales growth in 2027 and beyond. It's been a while since I've seen you guys talk about a year ahead. I just want to see what kind of is driving that visibility and confidence, how much of that is pay-as-you-go versus Mobi and as you kind of look forward and plan ahead? John Sheridan: I think the most impactful element is going to be the ongoing implementation of pay-as-you-go. We do have the headwinds this year, but we are going to be making substantial progress. And as we move and get more and more of our installed base, more and more of our new customers into the pay-as-you-go model, the revenue impact of that is substantial. And so that's going to grow in time. And so I think most impactful is certainly going to be the transition to pay-as-you-go -- and as Leigh mentioned, in addition to the pumps and the supplies that come along with the new pumps, there's also the opportunity to convert the 325,000 people who are existing customers to pharmacy as well. Both of those are meaningful. We also have a very exciting pipeline. We have a lot of technology coming to the market this year. We will have the first extended wear patch in the market, and that's going to be meaningful. I think that right now, there's nobody competing with our patch competitor. And so we will have a device that has the same form factor. It will be in the pharmacy channel and has a better algorithm. So we expect that to do quite well. So -- and then beyond that, we've got a very exciting pipeline that's going to continue to come, including our move to a fully closed loop system with -- hopefully, we see that in the market in 2027 or 2028. So I think all of these things add up to our confidence as a management team that we will see growth going forward in '27 and beyond. Operator: Our next question comes from the line of Jeff Johnson from Baird. Jeffrey Johnson: I am on a train. So if I break up here, I'll just jump back in queue. But Leigh, you mentioned that the pharmacy pricing is going to be consistent with what others are out there on a tubed pump side in the pharmacy channel. Just to put a number on that for modeling purposes, $450 a month, is that a reasonable price to dump into our model as we try to build this out? And you talked about some of your installed base maybe starting to get their supplies in the pharmacy channel. I think from your comments, it sounded like they get that same price for their supplies, but ostensibly that higher supply price is also supposed to include some amortization of the pump. So if I'm a current user that jumps into the pharmacy channel, am I also going to get that $450 a month or whatever the right number is there? Just help out. Leigh Vosseller: Yes. A lot of good commentary and questions there, Jeff. So the way I'm asking people to think about it this year is we're just getting going with this, right? So we're launching into the market with these new contracts effective here late in the first quarter. And there's a mix of contract terms, I would say, within the contracts that we have. And so think about the dynamics could be whether we have preferred or nonpreferred access, which influences what the rebate looks like, how much co-pay assistance we use. So long story short, what I'm suggesting to start with this year, at least from a modeling perspective is to think about it as about $350 per month per customer. And that's going to give us the starting point as we take the time to monitor the trends to see what is the real utilization and mix across the contracts that we have and further inform you in the future for how to think about where that average state could be. But I would say that's a really good starting point. And that alone is a really great benefit versus the DME pricing that we see today. And so -- and when you think about this, asking about what does this mean for people who already bought a pump versus people who are getting a pump for the first time, it's almost like a reset, if you will. And so basically, going forward, the whole business will be structured, I would say, agnostic to whether they're getting a pump today or not, and it will be consistent pricing across the customers, if that makes sense. And so again, I would start with about $350 per month as a modeling point, and we'll continue to inform you along the way as we get more information. Operator: Our next question comes from the line of Jayson Bedford from Raymond James & Associates. Elaine Cui: This is Elaine on for Jason. I wanted to ask a question on type 2. So could you please give us some color on the progress there? There was also an update to the ADA guidelines recently on C-peptide testing. How does this new guideline help with your discussions with CMS? And can this lead to an inflection in type 2 new starts? John Sheridan: Right. So I mean, we're excited about the type 2 market. It doubles the size of our addressable market in both the U.S. and OUS. In 2025, we obviously got the indication. We ran the pilot, and we went to full commercial availability in the fourth quarter. We learned a great deal in the pilot, and we actually saw a pretty significant bump in starts between the third and fourth quarter, the quarter that we actually had the full organization working on this. As we look at 2026, it's basically a core that we intend to focus on type 2 and invest in marketing and also some research relative to PCP and OUS markets. I think we've got tailwinds as we enter the market with FreeStyle Libre 3 and Mobi implementation. Obviously, Mobi Tubeless and pharmacy channel is also going to drive uptick. And relative to the C-peptide decision, it's also a potential positive for us as the Senate has asked CMS to review the NCD and make a decision in August of '26, which is not that far away. And certainly, having that go away will substantially improve Medicare's access. So we have 1 quarter with the data, and it's very positive. And I think that we're looking forward to seeing good growth in 2026 based on everything that we've got going on. Operator: Our next question comes from the line of Richard Newitter from Truist. Felipe Lamar: This is Felipe on for Rich. Just in the context of renewal pump shipments, we get a lot of questions about a potential drop-off in 2027, considering the prior 4-year drop-off in new patient starts. I'm just wondering if you could help give us some context on how you're thinking about, I guess, out-year pump shipments and how that fits into your strategy with pharmacy and maybe any potential offset you can get in pharmacy if there is a potential drop-off in pump shipments in 2027? Leigh Vosseller: Sure. It's a great thing that I'd like to highlight. So as you do think about it, I think people have looked at our model and see that when you look back 4 years ago, the number of opportunities will decline here in the coming years a little bit from what we've seen before where we were on an uptick. And so this year, in particular, we still expect renewal shipments based on the normal model and the normal -- the waterfall that comes with it, that renewal shipments will still grow double digits year-over-year. So we have that tail of opportunities even though new opportunities in 2026 are flat versus what came to market in 2025. But I think it's a great tie-in to pharmacy. As we look ahead and think about this model, it greatly reduces the reliance on renewals as a driver for the business. It's important that we retain our customers, and we have really great retention rates, but we don't have to worry about going out every 4 years. And if a patient is comfortable with the pump they're on and it's working just fine, trying to convince them that they should buy their next pump or worrying about insurance cycles that come with it. And so I think for us, it's really important to transition these folks into the pharmacy channel where for them, it's a lower out-of-pocket. It's easier for physicians to prescribe and there's none of this worry about when I get my next pump. And so as we look ahead, where the opportunities in the U.S. at least will start to decline, that won't be a concern about our ability to grow the business. You didn't ask about international. It has nothing to do with pharmacy, but I just want to underscore our renewal opportunity outside the U.S. is growing and becoming a more meaningful contributor there, and there's a lot of room to benefit from that in the coming years. Operator: Our next question comes from the line of David Roman from Goldman Sachs. Philip Coover: This is -- it's Phil on for David. Probably directed at Leigh, I wanted to double-click on the gross margin trajectory, a lot of emphasis and fairly so on sales and sales cadence moving forward. But logically, there's a headwind to gross margin this year with the sales transition. Can you talk about sort of the trajectory or the exit rate from maybe this year or when things normalize in '27 for underlying gross margins and help quantify what the headwind is maybe this year that's going to lift next year or beyond? Leigh Vosseller: Sure. So maybe I'll just start with the fact that in 2025, before we even had a meaningful pharmacy opportunity, we already stepped up gross margins substantially year-over-year by 3 points on an annual basis. And in 2026, I think important to understand that even with this moderated sales growth rate, we can still expand margins another 2 to 3 points. And so we expect to exit this year at about a 60% rate. And you make a good point about the headwinds, putting a little bit of pressure on margins. So that just means that it gives us more opportunity to expand those faster in the future. And so we're very focused on driving that. I mean it's a very important part of our business with everyone. We've always been focused on sales growth, but what we want to show is that we have the ability to drive margins like you see at competitive levels across the market. Operator: Our next question comes from the line of Joanne Wuensch from Citi. Joanne Wuensch: There's a lot going on in 2026, both in the U.S. and outside the United States. You've sort of addressed sort of how to think about the first quarter, but can you help me understand revenue and, I guess, gross margins, the progression throughout the year? I mean, not to give specific second, third or fourth quarter guidance, but maybe ratios or something just to sort of lay the groundwork so we set the models up correctly. Leigh Vosseller: Sure. I'm happy to help with that. So I'll start with the U.S. I think that's where you see probably where you're trying to untangle all the parts and pieces and how they might influence the year. From the perspective of U.S. shipments, let's start with that. And remembering that still 80% of our shipments will be through DME this year. I would expect the same seasonal curve on pump shipments. So you think about the lowest point in Q1, the highest point in Q4. And that has a heavy influence on gross margins. And I would say the way our margins have been structured historically. And so where we've always seen that pumps have the highest gross margin and supplies are or meaningfully lower than that. And so that's why you can expect a similar trajectory of gross margin across the year, starting at about 54%, scaling up to 60%. And when I say scaling up, I mean measurably stepping up across each quarter of the year because even though we have these headwinds, if you will, on the pump price with the pump going out the door at $0, we have that opportunity to continue to fuel margin expansion with the pricing benefit that will come from the supplies and the supplies we shift into the pharmacy channel. We also have the OUS business to help there. So we're going to be scaling up our direct business across the year, and that is also positive and beneficial to gross margins despite those headwinds that we expect to see there. And so I would say when you think about the revenue models and the margin models, this year, not yet too dissimilar from what you've seen from years past. But we do expect, as we look ahead, as pharmacy becomes a bigger piece of our business, it will start to level out those seasonal curves to some extent. But for now, I think I would start with similar assumptions to what you've seen before. Operator: Our next question comes from the line of William Plovanic from Canaccord Genuity. William Plovanic: So I was just -- if you can help us out with this transition on the PayGo model, how many months to breakeven on that in your models? And then I don't think you talked about free cash flow in 2026. Do you expect free cash flow positive in '26? How should we think of the quarter cadence of the cash burn? Typically, Q1 is a heavy cash burn quarter. So just so there's no surprises. Can you help us with that? Leigh Vosseller: Absolutely. I'll start with the breakeven question. There actually a number of ways to answer that question, but maybe one way that I can help you think about the impact on the business is when you think about a PayGo customer, there's a breakeven point for an individual customer as we offer the $0 pump, and it takes a number of months in order to cover that with the supply sales for that customer. But because we have this opportunity to shift our existing customer base, you can think about it as one PayGo customer plus 2 existing customers, you break even within -- pays back within a handful of months. And so it doesn't take too long in order to pay back or to cover this headwind that we would see. And that also dovetails a little bit into the cash question. We did exit 2025 free cash flow positive. And to your point, we usually see a dip in the first quarter of the year as we pay out annual incentives, compensation and that sort of thing. This year, on an annual basis, taking all this into consideration as we make the transition, we expect to be free cash flow neutral this year. And by the end of the year, starting to ramp up back to a positive position as we move forward into 2027. We're, obviously, as we make this transition going to be very mindful of our cash balance, but I think that's a good way to think about it across the year. John Sheridan: Leigh, I wanted to make another point about the move to PayGo that it may not be as clear as I've spoken about it a moment ago. But as we move to PayGo, we eliminate a significant number of the barriers that we have with DME. And I think if you think about DME today, it's a problem for the physician to prescribe it. This [indiscernible] has to go and jump through hoops to provide information to justify the purchase. It's troublesome for the patient because they've got to go back and forth, provide information. It takes time. The other thing, too, is one of the most significant challenges, I think, for people these days in the DME channel is it's a large out-of-pocket. And so starting now, I mean, some people might have to pay their full deductible. And that can be $1,000 or more. And so the benefit of the pharmacy channel is that it eliminates the friction. It's easy. It's easy for the patient, and it's also very easy for the physician and their staff. And it eliminates that large upfront payment. And so the monthly payments are also -- they can be lower. And so it's a -- again, it really does address the problems that we have in DME. And I think that it does explain, I think, why we expect to see the pharmacy drive uptick in new patients, and that's going to benefit the business. Operator: Our next question comes from the line of Suraj Kalia from Oppenheimer & Company. Shaymus Contorno: This is Shaymus on for Suraj. Can you just talk about what you need to do to move patients from the DME to the pharmacy? Anything that you can do to, I guess, make that faster -- move that faster through that channel to that channel? And then with pay-as-you-go, as you move towards pharma, do you have to account for anything as a percent of bad debt or uncollectible as you switch to those contracts? Leigh Vosseller: Thanks for the question. So I'll answer the last one. Nothing particular to think about in terms of unusual accounting treatment, I would say, in that regard. Think about it as a normal revenue stream as supplies are purchased over time. And the question about how to move patients. So the first thing we do is we share with them how much better the benefit can be for them from an out-of-pocket perspective. And so when you compare to DME supplies, they often have to be deductibles at the beginning of the year. So it can be a heavier out-of-pocket then. Maybe it's best at the beginning of the year. But on pharmacy, it can be more consistent and we actually have the ability ourselves to help buy down or subsidize, if you will, that co-pay. And so the main thing is helping them to understand the benefit and how much better it can be for them financially. We also -- people tell us about how much they love our customer service and they fear this change might take away that relationship they have with us, and we're reassuring them that this is good, good for you financially, and we will still maintain the same level of customer service that we have today. The only other, I would call, a small friction piece, if you will, is it does take another prescription from the physician. So we do need to get the physicians involved to write a new prescription for that patient within the pharmacy channel. None of these are insurmountable in terms of moving people over. They're just work and so that's why it's not an overnight change. It's something we have to work on over time. But we feel very confident in our ability to be able to ship those customers. And especially as we build more and more access, it can be a broader offering across the whole market. Operator: Our next question comes from the line of Mike Kratky from Leerink Partners. John Sheridan: Mike sorry, you got cut off the last time. Michael Kratky: No, no worries. I should have asked both upfront. So that's on me. But thank you for circling back. So I wanted to ask about the U.S. renewal opportunities. I think in 2025, it was up around 18% just for the opportunities, if I have my numbers right, and renewal shipments was up closer to around 10%. So if renewal opportunities is effectively flat for 2026, what's giving you confidence that you can really grow that double digits this year? And is there any kind of risk around that? Leigh Vosseller: Great question. So first, I'll just maybe give a little more direction on the shipments in 2025. They were up well above 10%. So we did see a higher growth rate on renewal shipments. And when you think about 2026, the number of opportunities are flat compared to 2025. So that's one calculation. The growth comes from the fact that we have a tail of customers from years past. And so remembering how our renewal model works, when warranties expire over the course of about 18 months, we get to a 70% or better capture rate of people buying that next pump outside of warranty. And so what we have are still a fair amount of people from 2025, especially if you think about the people in the fourth quarter whose warranties expire that we've hardly even talked to yet. So there's still a fair number of -- a nice sizable opportunity base coming from '25 and some even left over from '24. So that's going to fuel the growth so we can still grow renewal shipments double digits in 2026. And then just wrapping it up with that concept again about pharmacy and the ability to shift people or transition them to pharmacy supplies, it will take away that reliance on driving those renewal purchases of a pump, and we can just keep them on their supplies as long as they would like without having to worry about that timing of when renewals come to market. So we're very excited, if you haven't taken that away from today about this pharmacy opportunity for us as a business. This year is going to be a great year of transition for it, and I think you're going to really see some really exciting outcomes in the coming years. And so we look forward to demonstrating those in the coming quarters. Operator: Thank you. At this time, I am showing no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Howard Hughes Holdings Inc. Fourth Quarter 2025 Earnings Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that I would now like to hand the conference over to your speaker today, John Saxon, VP, Corporate Strategy. Please go ahead. Good morning, and welcome to the Howard Hughes Holdings Inc. Fourth Quarter 2025 Earnings Call. With me today are William Albert Ackman, Executive Chairman; David R. O'Reilly, Chief Executive Officer; Ryan Michael Israel, Chief Investment Officer; and Carlos A. Olea, Chief Financial Officer. Before we begin, I would like to direct you to our website, www.howardhughes.com. John Saxon: Where you can download both our fourth quarter earnings press release and our supplemental package. The earnings release and supplemental package include reconciliations of non-GAAP financial measures that will be discussed today in relation to their most directly comparable GAAP financial measures. Certain statements made today that are not in the present tense that discuss the company are forward-looking statements within the meaning of the federal securities laws. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved. Please see the forward-looking statement disclaimer in our fourth quarter earnings press release and the risk factors in our SEC filings for factors that could cause material differences between forward-looking statements and actual results. We are not under any duty to update forward-looking statements unless required by law. I will now turn the call over to our Executive Chairman, William Albert Ackman. Thank you very much, John. And let me just add one addition to the room, Jill Chapman. Jill was formerly head of IR for Hilton, and we are very pleased William Albert Ackman: to announce that we brought her on in an IR capacity at Pershing Square, and she is also going to help, of course, with our investment in Howard Hughes Holdings Inc. While we are on the topic of IR, I just thought it would be useful as this business kind of transforms from a pure play real estate and real estate development company into a diversified holding company, led by our recent announcement to acquire Vantage Holdings. A good question and some question I have received from shareholders is how should we think about this business, what are the metrics that we should follow? And I think Howard Hughes Holdings Inc. over time also suffered a bit from shareholders trying to figure out how do I think about this business. In the conventional public company there is usually a certain amount of GAAP earnings or a number or a free cash flow number, and people want a simple rubric for thinking about it. What multiple do I put on this number, how do I track this number over time? And the multiple is determined based on the persistency and the growth of those kinds of earnings over time. And when you think about the Howard Hughes Holdings Inc. business, it is very challenging in our view. And, actually, it is hard to get to a proper indication of value using a conventional approach. I think you have to think about the business according to its different components. But the easiest place to begin, of course, is with stabilized income-producing real estate assets, apartments, retail, etcetera. Obviously, these are relatively easy to manage. There are plenty of comparables you can look at, and I think the only complexity at Howard Hughes Holdings Inc. is thinking about as we lease up assets, assets that are 95% rented, fully stabilized, it is easy, but we always have some amount of development, some amount of lease-up in the portfolio. But still, that is a pretty easy place to begin. Then there is our condominium business, and we have kind of a pipeline of product under contract. You get pretty good estimates of what the margins are on those sales. As those properties get delivered, I think a DCF is a pretty straightforward way to think about what those assets are worth. And because we really do not start building until we have sold a substantial majority of the units in these projects, and we have got a very good track record delivering them on time and on budget, it is a very low-risk business. Compared to what people normally think about a condominium business where you are highly speculative, you have to build as soon as you can because you levered up to buy a piece of property. Here, of course, we own the real estate outright. We can pick our moment, and we do not start construction until we know this is going to be a successful product with a lot of demand. And, today, we have got, how many million square feet left of product without, when we start there, just Hawaii. Well, just in Hawaii alone, we unlocked another 3,000,000 to 4,000,000 of entitlements this past year. Okay. So the pipe, so the 3,000,000 to 4,000,000 plus? Plus the existing pipeline that is in the today that is largely presales as you noted, Bill. Okay. So you can think about that. It is a bit like drilling oil. There is a finite amount of it. However, we have an incredibly talented team in Hawaii. We have built a real franchise and brand in Hawaii, and if you are a major landowner in Hawaii and you want a partner to deliver, turn that land into valuable condominium product, there is no better place to turn than Howard Hughes Holdings Inc. So I expect that what is today a 3,000,000 to 4,000,000 square foot pipeline of new product is going to grow over time as we either buy other land or we joint venture other property in Hawaii because of the franchise we have built. So there is an existing pipeline you can value on a DCF basis, and there is an option on the franchise, if you will, and our ability to develop other assets. And, of course, there is the MPC business. And I think, again, people are looking to put a, how do I come up with a metric, profits from MPCs, and it has kind of grown over time. And so can I, what is the right multiple and how do I think about it? And that is where I would say I do not think a multiple is the right way to look at it. We are stewards, if you will, for 21,000 acres of potential residential land. And we set that land up to be sold by generally building out infrastructure so these lots can be sold ultimately to homebuilders who in turn will build homes and sell them to customers. But we are very judicious in the way that we bring that property to market in that we have a finite supply. We want to optimize between price and volume. We want to make sure that our homebuilders never end up with too much inventory. And as a result, in the way we have managed it, we have been able to, if you look at the compound annual growth rate in our residential land values on a per-acre basis in our various MPCs, it has been, I would say, quite extraordinary. And we care, obviously, about the cash we generate from any one year’s lot sales, but we care more about making sure we do this in a manner where our remaining 21,000 acres continues to increase in value over time. And we help that value grow by being a good developer, by being a good manager of these small cities or these large, very large-scale MPCs, making sure that we are delivering the right product and we are doing it in a way where the market is never saturated with excess supply. And it is a really great business, but it is not one where, sometimes you are going to be opportunistic. A buyer comes along and wants to buy a large pad in Summerlin, and we make the economic decision that this is a smart thing for us to do today. A year later, we could decide, you know what, we are not going to do any such large sales. In that kind of world, I think trying to value the MPC business on a multiple of any one year’s profit is really not the right way to think about it. So how should one think about the real estate business? And I think the way we think about it is we come up with an intrinsic NAV or other assessment of the value of the existing assets. And we look to grow that over time. Some amount of it converts into cash every year, NOI from the stabilized assets, profit from our existing MPCs. And as we sell off residential land, it is, if you will, gone forever. But one of the things that we have been able to accomplish as a company is while we have a finite supply of land, we have been able to drive price per acre on a very significant basis. Which makes that finite supply on a present value basis actually continue to grow in value. So I think the metrics you should think about when you are trying to assess the value of your real estate company is some capitalized value for our stabilized income-producing assets, maybe a present value calculation for our condominium development. And then I think a similar kind of present value metric for valuing the MPC business, bearing in mind that if we choose not to sell land today, it is going to be worth more in the future. We are just making a decision. Is it better to monetize a piece of residential land today, or are we going to do better holding it for the next year or two years and allowing it to appreciate in value. So maybe not the, again, this is not a company that is going to be a simple, you get one number every quarter and you can put a multiple on it or you can annualize and get to a value. It is a business where we are going to do our best, and we will work with Jill, we will work with the team in coming up with some kind of good KPIs you can track on a quarterly basis to see how much progress we are making. But the places where I would focus is the growth in the per-acre value of the finished lots that we deliver on each of those communities, how quickly is that growing? That gives you some sense of the value of our remaining land assets, and then the progress we are making in terms of delivering condominium and the margins that we are generating, and then our ability to continue to extend that franchise. So that is real estate. We expect to close our Vantage Holdings transaction. We remain confident we can get it done by the upcoming quarter, let us say by June. That process requires certain approvals. We have had the various meetings and some more to come in the relatively short term, but I see no reason why we will not meet our expectations. Now with the addition of a $2,100,000,000 insurance asset, again, coming up with some kind of consolidated earnings number is really not the right way to think about this business going forward. And we are going to want to point you to growth in the book value of the insurer and the returns that we are earning on that book value as key indicators of our progress in building a valuable insurance company. I would say most insurance companies today are valued based on precisely that. If they can earn high returns on capital, they are deserving of a higher multiple of book value. If they earn lower returns, they are deserving of a lower multiple. As we have kind of ramped up the investment portfolio from a pure play fixed income portfolio that is externally managed by BlackRock and Goldman Sachs to one managed by Pershing Square with greater emphasis on higher-return common stock investments, and as we grow the insurer with a focus on profitability, we expect to be able to build a very profitable high-ROE insurer over time. And we will do our best to give you metrics to track or come up with your own assessment of intrinsic value of the overall company, keeping you informed on the real estate side, keeping you obviously closely informed on the insurance side. But this is a business that you should think of based on compound annual growth in intrinsic value, as opposed to any straightforward earnings metric. I am sorry it is not as easy as a widget company where you look at how many widgets you made and what the incremental margin that you generate from each widget sale. But we do think the ultimate long-term outcome will be one that you are happy about. The last point I would make is we will spend some time on this topic at the upcoming next quarter meeting, I do not think, maybe before the closing of Vantage, but just provide enough time for us to help the market come up with some KPIs to think about big business progress. With that, I will turn it over to Ryan Michael Israel. Go ahead, Ryan. Thanks, Bill. Ryan Michael Israel: As Bill touched on, just wanted to really explain to people again why we are so excited to have the upcoming closing of Vantage as the first transaction to really help transform Howard Hughes Holdings Inc. into a diversified holding company. And as we talked about in December, we think that the insurance business itself is a very good business, and we really think the platform Vantage has created is incredibly valuable and will nurture Howard Hughes Holdings Inc. and Howard Hughes Holdings Inc. shareholders’ benefits. Vantage itself is actually a very diversified insurance platform across its more than two dozen lines of business, both in the specialty insurance and the reinsurance segments. It has got a great and highly experienced management team. CEO Greg Hendrick has been in the business for more than thirty years and has a very strong reputation. I also think one of the things that is unique about Vantage is that it has very limited risk to its existing reserves. The company was founded in 2020, and so one of the nice benefits is that a lot of the problems in the insurance industry today in terms of reserving exist because companies wrote business in the 2015 to 2019 time frame for which they are effectively under-reserved. And so Vantage has really sidestepped any of these problems because of how recent it is. And that made it, increased our confidence in doing diligence. The company’s book value is very strong, its reserves were appropriate. Naturally, the company has the appropriate licenses and credit ratings that we think are great, and ultimately, we think what we are doing, that the capital that we are putting in and the umbrella from Howard Hughes Holdings Inc. will be able to enhance those credit ratings over time. And then importantly for an insurer, one of the key components for insurers is writing profitably, as Bill mentioned. But the other side, and you could argue perhaps even the more important side for the highest-returning insurers over time, is actually the investment returns that they can earn on their portfolio. Every insurance company has float that they generate for claims, in that they are receiving cash in today for premiums, and then claims will be paid out later to generate float. At the same time, they have a large capital base. And so the combination of those two factors really leads to their overall invested asset portfolio. As Bill mentioned, Vantage has been invested in fixed income, which has a lower, although we have outlined in December why we think fixed income products actually can have a fair amount of risk as well in a variety of ways. What we plan to do is leverage the investment expertise of Pershing Square in order to really help improve the investment asset returns over time and naturally then also the returns on equity by allocating a meaningful portion of that investment portfolio towards common stocks. And based on Pershing Square’s more than two-decade track record, we think that could be very additive to Vantage’s returns on equity and ultimately shareholder returns. So the way that we think about Vantage overall is that this business can be a higher return and faster-growing business that we can ultimately use to meaningfully enhance Howard Hughes Holdings Inc.’s overall growth profile while at the same time providing a very valuable diversification of its earnings streams as it provides a type of profile other than the real estate business. As Bill mentioned earlier, and David and Carlos will also touch on, we believe that Howard Hughes Holdings Inc.’s real estate business is going to generate a meaningful amount of excess cash beyond what it needs for reinvestment, particularly over the coming next few years. And that provides a valuable source of opportunity to be reinvesting in Vantage first in order to pay down ultimately the financing, primarily the Pershing Holdings preferred stock. But also over time, we think the ability to put in more capital into Vantage, which is earning a very high return according to the strategy we think we will be able to implement, could be a good use of capital along with looking for other control-oriented businesses in different business lines over time. And with that, I will turn it over to David. David R. O’Reilly: Thank you, Ryan. Look. Against that backdrop of the Pershing investment and our announced acquisition of Vantage, 2025 was both transformative strategically, it was also one of the strongest operating years in our history. And in 2025, I think I just want to highlight that 100% of what I am going to talk about in our earnings and cash flow were generated by the real estate platform. Our evolution into a diversified holding company is being funded by a real estate engine that continues to perform at a very high level. And I want to talk about each one of those segments now starting with master planned communities. MPC EBT hit a record this year of $476,000,000 driven by selling 621 residential acres at an average price per acre of $890,000. Demand was strong in both Summerlin and Bridgeland where pricing and margin expectations really exceeded the levels that we had predicted at the beginning of the year. Excluding the bulk sale of undeveloped land in Summerlin, finished residential land sold at a record price of $1,700,000 per acre, really demonstrating the strength of our entitled and developed product and the embedded value within our communities. Strategically within our MPC segment, I would like to think that we are not just selling land. But we are really harvesting scarcity. As our communities mature and remaining acreage declines, pricing power, not acreage volume, becomes a primary driver of long-term profitability. We make deliberate decisions each year regarding how much land to monetize versus hold, based on supply-demand dynamics and long-term value creation. We also reached a major milestone this year with the grand opening of Terra Vallis. In Phoenix’s West Valley. Spanning 37,000 acres and entitled for up to 100,000 homes over time, Terra Vallis represents one of the most significant long-duration growth engines in our portfolio and remains in the early stages of monetization. Shifting now to our operating assets. Within the operating portfolio, we also had a record year, delivering full-year NOI of $276,000,000, up 8% year over year. I think this increase was highlighted by same-store office NOI increasing 11% and multifamily increasing 6%. This really reflects the strong leasing momentum and the disciplined asset management executed throughout the year. Occupancy across our stabilized portfolio remains healthy. Importantly, and as Bill highlighted earlier, this segment is our cash flow engine. Unlike MPCs, which generate episodic quarterly earnings tied to land sales, operating assets produce durable recurring cash flow that provides stability to the enterprise, supporting both development and capital allocation flexibility. In the fourth quarter, we completed One Regal Row along The Woodlands Waterway. Leasing has begun ahead of expectations, and we anticipate this asset will contribute meaningfully to NOI growth as it stabilizes. Over time, we expect the operating asset portfolio and the NOI associated with it to represent an increasing share of the recurring cash flow of the company. Now on the strategic development and specifically our condominium platform, our condominium platform continues to serve as a powerful internally generated capital engine. During 2025, we contracted $1,600,000,000 of future condo revenue, the strongest year in the company’s history. Multiple projects remain substantially presold, including The Park Ward Village at 97% and Ko‘ula at 93%. While condominium earnings are tied to completion timing and can be lumpy, particularly within Hawaii where Ward Village is home to our highest-value developments. Our approach has evolved to significantly de-risk execution. We require substantial presales prior to vertical construction, utilize approximately 60% nonrecourse loan-to-cost financing. Buyer deposits and this financing make these projects largely self-financed, and our presales materially reduce refinancing risk. These developments are expected to generate significant cash flow upon closing, providing capital that can be redeployed across our communities and increasingly across platforms. We view this condo platform as not speculative development, but disciplined capital recycling. Finally, last week, we announced Toro District, an 83-acre sports and entertainment development in Bridgeland anchored by the Houston Texans’ new global headquarters and training facility. Toro District exemplifies the value embedded in our land positions and our ability to activate them through thoughtful public-private partnerships. This project enhances long-term recurring revenue potential, increases the value of the surrounding land, and reinforces the power of our master planned community model. Importantly, projects of this scale are strengthened, not constrained, by our broader capital base as a holding company. Overall, 2025 demonstrated both the durability of our real estate engine and the strategically planned evolution of our company. With that, I am going to hand it off to Carlos A. Olea to talk about 2026 guidance and our financial results. Carlos A. Olea: Thank you, David, and good morning, everyone. 2025 results exceeded our guidance. As we look ahead to 2026, I think it is important to provide a framework that reflects normalization and transition. As we transition into a diversified holding company, our reporting framework will evolve accordingly as you heard Bill say. However, because the Vantage acquisition has not yet closed, and because 2025 included an outsized bulk land sale in Summerlin, we believe it is appropriate to provide 2026 guidance to help normalize expectations. We expect adjusted operating cash flow in the range of $415,000,000 to $465,000,000. We believe this metric remains the most appropriate consolidated metric as it captures the performance of our operating engines and aligns with how we evaluate capital generation. For MPC, we expect EBT to be in the range of $343,000,000 to $391,000,000. Importantly, the expected year-over-year decline is almost entirely attributable to the absence of the Summerlin bulk sale. Excluding that transaction, our 2026 guidance is essentially flat relative to 2025 on a comparable basis. MPC earnings will remain inherently lumpy due to acreage timing and monetization decisions. Longer term, we view profitability as driven by pricing power and capital rather than linear acreage volume. While remaining acreage declines over time, we expect price per acre to increase as communities mature, supply tightens, and underlying land value appreciates. We believe 2026 guidance reflects a sustainable run-rate level of MPC earnings absent large one-time transactions. Our objective in the MPC business is not to maximize any single year’s MPC, but to optimize long-term per-acre value and reinvest internally generated capital at attractive risk-adjusted returns. Moving on to operating assets. NOI is expected to range between $279,000,000 and $290,000,000, including our share of NOI from our JV assets. This is an implied increase of 1% to 5% compared to our 2025 results. Longer term, we target annual NOI growth in the 3% to 5% range driven by same-store rent growth and development stabilization. While individual years may fluctuate depending on timing of lease-up and development deliveries, we believe the underlying trajectory remains durable and predictable. Moving on to condominiums. Condominiums under construction and in predevelopment, which are substantially presold, represent approximately $5,000,000,000 of remaining expected gross revenue over their life, resulting in an estimated $1,300,000,000 in profits at a 25% margin. We expect to recognize approximately 40% of these revenues between 2026 and 2027, with the remaining 60% recognized between 2028 and 2030. Our newest towers, Melia and Lima, are expected to close in 2030 and represent 41% of these future revenues with margins exceeding 25%. For 2026 specifically, we expect condominium gross revenue of approximately $720,000,000 to $750,000,000 with estimated profit of $108,000,000 to $128,000,000 at margins of 15% to 17%. This is driven primarily by closings at The Park Ward Village. These margins were impacted by infrastructure work primarily related to electrical work needed to support future development. However, this cost will benefit our future towers, and we expect to see cash margins in the mid-twenties, except, as I mentioned, for Melia and Lima, which we expect to be in the high-twenties when they close in 2030. This backlog provides meaningful visibility in near-term cash generation, which we expect to redeploy across our portfolio and increasingly across platforms. Turning to G&A. For 2026, we expect cash G&A to range between $82,000,000 and $92,000,000, with a midpoint of approximately $87,000,000. This includes assumed inflation growth compared to last year as well as a shift in the mix of compensation from non-cash to cash. Please note that this range includes the $15,000,000 in annual base fees paid to Pershing Square but excludes the variable fees, which are based on quarter-end stock prices that could be volatile and difficult to predict. Looking forward, we view approximately $87,000,000 as an appropriate operating baseline for the current scale of the organization. We would expect that baseline to grow modestly over time, generally in line with inflation and incremental scale, excluding stock-based compensation. Now let me spend a moment on refinancing and capital structure. We recently refinanced and upsized our 2028 $750,000,000 senior notes with $1,000,000,000 of new notes due in 2032 and 2034. This refinancing occurred following the announcement of the Vantage acquisition and provides an important external validation of our capital structure and strategy. Both tranches achieved the tightest credit spreads in the company’s history, 191 basis points for the 6.25-year tranche and 198 basis points for the eight-year tranche, significantly tighter than the prior best spread of 295 basis points achieved in 2017. Both tranches traded at or slightly above par following issuance and continued to trade around par with active secondary participation, reflecting balanced execution and constructive market reception. We also received a modest upgrade from S&P, reinforcing third-party recognition of our balance sheet strength even as we expand the company’s platform. With respect to the Vantage acquisition specifically, we approached the financing conservatively. We model cash flows under a range of downside scenarios to ensure that the transaction would not impair our ability to finance or the flexibility of our real estate operations. The additional Pershing preferred investment of up to $1,000,000,000 carries a 0% coupon and represents permanent capital with no fixed cash cost and provides HHH the optionality to redeem when liquidity and capital allocation priorities make it appropriate. It adds meaningful equity support to the balance sheet without increasing cash obligations. We believe this structure enhances flexibility and positions the company to grow while maintaining prudent leverage parameters. And speaking of leverage, let us spend a moment on our leverage philosophy. We do not manage the business to a fixed net debt to EBITDA target. Given the lumpiness of real estate earnings, that metric can be misleading. Instead, we finance each segment based on asset characteristics while maintaining meaningful liquidity to complete projects and withstand severe downturn scenarios. Operating assets typically carry 60% to 65% loan-to-value property-level debt, balanced with a meaningful pool of unencumbered assets. MPC land remains unencumbered except for short-term reimbursable infrastructure facilities. Condominium projects utilize approximately 60% nonrecourse loan-to-cost financing and are substantially presold, significantly reducing maturity risk. We believe that our pro forma leverage following Vantage will be supported by incremental earnings capacity, enhanced diversification, and asset backing. As operating assets grow and recurring NOI increases, leverage may rise modestly, parallel with asset value and cash flow, not through incremental development risk. Across all segments, our objective remains a conservative, flexible balance sheet supporting long-term value creation. We will now open for questions. Operator, please open the line. Operator: Thank you. William Albert Ackman: And to be clear, we will take questions both from analysts and from individual investors. So it is an open Q&A. Operator: Our first question comes from John P. Kim with BMO Capital. Your line is open. John P. Kim: Thank you. I wanted to ask on the condo margin at The Park Ward Village, related to infrastructure work. Was that unexpected, those costs? And maybe if you could talk about cost pressures overall in development. I think you mentioned mid-twenties margins on the remaining towers versus I think it is a little bit lower than what you achieved at Victoria Place. Thanks, John. David R. O’Reilly: I appreciate the question. And it is one that we are focused on closely, obviously. The infrastructure costs that are going into Ward Village, including the upgrade of water, sewer, and electric that Carlos mentioned in his prepared remarks, were all anticipated. Given the location of The Park Ward Village and the size of The Park Ward Village, it has a slightly disproportionate share allocated to it. But that will benefit future towers as they will have a smaller amount allocated to it. And this is one of those rare towers where the GAAP margin that Carlos provided guidance on and the cash margin are slightly disconnected as a result. Couple of other things are impacting the margin at The Park Ward Village. One, it is the second-row tower, so it clearly should not have the same margins as Victoria Place, which was a front-row tower. And two, it has a slightly greater amount of retail than most of the towers that we have built in the past. That retail square footage, obviously, we do not sell. So the cost to build it is still there, and the revenue associated with it is future NOI, not sale price per square foot. You know, if you compare another comparable tower, a second-row tower like Anaha, which we sold at about $1,100 a foot at a 25% margin, versus The Park Ward Village at $1,500 a foot and a 17% to 19% margin. That price per foot profitability is almost on top of each other and does not take into account the incremental NOI we will generate from 10,000 additional feet of retail space. John P. Kim: Okay. And my second question, maybe for Bill, is you talked about how to value Howard Hughes Holdings Inc. going forward. It sounds like from your commentary, you plan to maintain ownership of the commercial real estate portfolio. But given this is a high-margin but probably a lower return on invested capital business, would you consider changing your strategy and monetizing the commercial portfolio, maybe if you can comment on the 30 acres sold on your commercial portfolio on commercial land in The Woodlands? William Albert Ackman: So we take a very long-term view with respect to commercial real estate holdings in our core MPCs. We think that one of the things that has kept occupancy high and rental growth growing during very challenging periods, like COVID and other economic downturns, is the fact that we do not have the same kind of competitive dynamics that you would if you had multiple owners of your assets. Over time, we have considered, do we bring in a partner, sell a 49% interest in certain assets? That is, of course, something we could always consider in the future, but we do think there is a lot of value taking the long-term view in controlling our destiny and really limiting the competition that would be afforded by someone being a major owner of commercial assets within our communities. And then with respect to the 30 acres, David could speak to it, but we generally do not like selling commercial land ever. But there are times when there is, for example, a user or an anchor that we think is going to bring a lot of value to the surrounding property, and their mandate is they have to be an owner because they are planning to be there forever, and we struggle with that, but we ultimately have made some sales. Those were not driven by return on capital decisions. They were driven by the fact that the user insisted, if they are going to move the Chevron headquarters, for example, to our part of town, they want to own the asset outright as opposed to have a lease. But, David, anything further there? David R. O’Reilly: Yeah. The only thing I would add is the 30 acres that were sold this year, this quarter were really on the edges of The Woodlands. It was not the commercial land that we own in the city center. We consider that land incredibly valuable. Some of this out on the periphery that was sold to educational and healthcare users are adding to the community, but it was not what we would call some of our highest-value commercial land for future development. It will create outsized risk-adjusted returns and recurring NOI. John P. Kim: Great. Thank you. Operator: One moment for our next question. Next question comes from Alexander David Goldfarb with Piper Sandler. Your line is open. Alexander David Goldfarb: Bill, just following up on Vantage. You know, had a chance to touch base with our insurance analyst and just going over the combined ratio as, you know, a real estate guy learns about property and casualty. And the combined ratio at Vantage seems a bit higher than where the peer average would be. And I believe last time on the call, you spoke about the profitability improvement. So as we look to that platform and Vantage’s overall profitability, what is the sort of timeline that you would think we would see that? Is that a year? Is that five years? Is that two years? How should we think about profitability improvement at Vantage once you guys consummate the deal? William Albert Ackman: Sure. So I would start with saying that Vantage is a brand-new insurer, and they are really in the process of getting to scale. They built the infrastructure for a much larger company. And as they grow their insurance business, they can amortize those costs over a bigger base of revenues. 2026 is really the first starting-to-be more meaningfully profitable year for the company. And I think you should continue to see the benefits of the scale economies, if you will, or the operating leverage inherent to growth. I think on top of that, beginning later this year, we are going to be making changes to the way the portfolio is being managed and, if we do a good job as I expect we will, I expect we will be able to earn higher returns on assets, which will lead to an overall more profitable insurer. But Vantage is going according to their original business plan, I would say, and the plan, the owners took a long-term view. They made the necessary investments, infrastructure, people, and otherwise, for this to be a very successful multiline specialty insurer. And as they get to scale, they will naturally become more profitable. Ryan Michael Israel: Yeah. And I would just add two quick things to that. First of all, we put out some materials on this over the fall and winter last year, but I would say well-run insurance companies that have beaten some of the lines Vantage participates in often have combined ratios that are in the low nineties. And the way we like to look at it is you can disaggregate the combined ratio into two key components. One would be your loss ratio, which is just literally what is the profitability or the losses that you have on the insurance itself, and then one is your SG&A ratio. And typically, an insurer that would be operating at this lower nineties combined ratio would have a loss ratio on the insurance of something in the low sixties. And then they would typically have an SG&A ratio around 30%, maybe plus or minus a few points. And the way we think about it is Vantage is very well on the path historically already to having a loss ratio that is consistent with what you would want to see for a well-run insurer. It is really that the SG&A has been high because they had made a lot of investments to get the platform up to scale before the business actually achieved the scale. So they were building ahead for the future. They have really grown the business now to a level at which we believe that they are going to be benefiting from all of the investments that they have made previously, and therefore, going forward, we think they are really going to be able to get that SG&A ratio down to something that we think would be more fitting for a company of its size and scale going forward. And that is one of the things we are excited by. So we like the fact that they have a good history of having what we think is a very strong loss ratio given their lines of business, and that we think the SG&A ratio will have some embedded operating leverage, if you will, because they have really built this business going forward. So I would say we feel very good about the path from here to getting Vantage in line with where we think a lot of well-run insurers will be, just naturally based upon the business plan that the company has implemented and already achieved. Second thing I would point out though is Vantage actually is currently profitable both in terms of the combined ratio that they are achieving today and what we think they will achieve going forward. And then as Bill mentioned, we think we will further benefit the growth in net income or book value based upon shifting the portfolio to what we think will be a higher-return strategy going forward as well. Alexander David Goldfarb: Okay. Thank you, Ryan. And then second question is, affordability is clearly a big topic today. There is the whole SFR, well, I do not want to say debate, but executive order out there. But there is also a build-to-rent that seems to be something that is looked favorably on. You guys have created a lot of value in terms of what people see in terms of living at your MPCs. But is there more opportunity that you guys can do on the affordability front with build-to-rent or other initiatives to sort of broaden out the number of people who can buy homes? Or your view is, hey, when you look at the mix that your MPCs provide, you are hitting all the different price points and all the different income levels that would be appropriate for residential within your submarkets? David R. O’Reilly: Great question, Alex. Thanks. I would tell you that we focus intently across all of our MPCs because, as you know, when we sell land to homebuilders, we are dictating the size of the homes, the setback of the homes, the design of the homes, and the implication is really the price of the homes. So as we are selling dirt to homebuilders, we are trying to hit the broadest range of home prices out there so that we can attract the widest swath of buyers. With the most diverse backgrounds and incomes. Single-family for rent has been a modest part of our portfolio. We have done one small community in Bridgeland, and it was really to fit a need that we saw within that community. I think that our traditional kind of more dense multifamily product, it is part of that need as well. And as you know, we are always developing to meet the deepest pockets of demand within our communities. So I would tell you that we work hard to try to address the affordability to try to hit price points at all places within the spectrum to attract buyers, and, you know, I think SFR is a strategy. I think it is a very small one for us, as there is a lot of inventory in communities like Summerlin, like Bridgeland, like The Woodlands, where there is that non-institutionally owned but shadow market of homes for rent. Operator: One moment for our next question. Our next question comes from Eli Desha, who is an individual investor. Your line is open. Eli Desha: Thanks for taking my question. As the company moves towards a diversified holding company model, how are you thinking about priorities for extra cash, acquisitions, paying down debt, or buying back shares. Thank you. William Albert Ackman: Sure. So we think our first priority for excess cash that is generated, I define excess cash as cash not needed to be reinvested in our communities at Howard Hughes Holdings Inc. We expect, over the next several years, to generate a fair amount of excess cash and that number to grow materially over time. But the first priority is, you know, when we close the Vantage transaction, Howard Hughes Holdings Inc. will own a majority economically of the company; we will own 100% of it legally. But as Pershing Square is providing a substantial portion of basically bridge equity to enable the transaction, I think the first priority should be for Howard Hughes Holdings Inc. to own 100% of the insurer. So depending upon how much of the preferred is outstanding, as much as a billion dollars, that will be the first use of excess cash. Once the insurer is 100% owned by Howard Hughes Holdings Inc., then incremental excess cash would be used principally to make other operating investments, investments in other operating companies. Potentially, we could put more capital into the insurer, but we could also invest in other businesses. Operator: And I am not showing any further questions at this time. I would like to turn the call back over to William Albert Ackman for any further remarks. William Albert Ackman: Sure. So, look, our original thesis on helping transform Howard Hughes Holdings Inc. into a diversified holding company was based on the fact that while management has done an excellent job with the company, we really built a focused, very successful MPC condominium business in the company. It has not gotten the recognition we argue it deserves as a public company. And a big part of that, in our view, was that the market assigns too high a cost of capital to the core real estate development and land ownership business. So I am pleased, in some sense, that in a relatively short period of time, about seven or eight months, I think there is pretty good evidence that our cost of capital is coming down. A 120 basis point tighter execution on a bond issue is a very good, that is a massive, it is about a 40% reduction in our cost of debt capital on a spread basis. Our stock price is up about 20% or so from the time that the transaction was announced. I still think the stock is super cheap. We have got more progress to make. I think we need to do a better job helping investors understand the business. I think there continues to be some turnover in the shareholder base from, I would say, more traditional pure play real estate investors to investors that are open to investing in a diversified holding company. And, yes, while we have entered into a transaction to acquire Vantage, we have not closed; that is upcoming. But I am very pleased with the progress we have made over the past seven, eight months. And the company itself, the real estate operation, is really running on all cylinders. And we are in a world where, I would say, unfortunately, some of the more blue states, particularly one that the city I am living in today, is operating in a way to actually encourage people to move to places like Texas and Arizona and Las Vegas and Hawaii, and I guess I am hedged because I live in New York, but we benefit as people leave the city and move to communities like the ones that are managed by Howard Hughes Holdings Inc. But appreciate your participation on the call. Look forward to being back to you in a few months. Thanks so much. Operator: Thank you, ladies and gentlemen. This does conclude today’s presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.
Jennifer K. Beeman: Thank you for standing by, and welcome to the Metallus Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Press star one on your telephone keypad to ask a question. To withdraw your question, press star one again. Thank you. I would now like to turn the call over to Jennifer K. Beeman. You may begin. Good morning, and welcome to Metallus Inc.’s fourth quarter and full year 2025 conference call. I am Jennifer K. Beeman, Director of Communications and Investor Relations for Metallus Inc. Jennifer K. Beeman: Joining me today are Michael S. Williams, Chief Executive Officer; Kristopher R. Westbrooks, President and Chief Operating Officer; John M. Zaranec, Executive Vice President and Chief Financial Officer; and Kevin Rakicich, Executive Vice President and Chief Commercial Officer. You should have received a copy of our press release, which was issued last night. During today’s conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday’s release. Please refer to our SEC filings, including our most recent Form 10-Q and our Form 10-Ks, which will be filed later today, and the list of factors included in our earnings release, all of which are available on the Metallus website. Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are included in the earnings release and the earnings presentation available on the Investors page at metallus.com. With that, I would like to turn the call over to Michael S. Williams. Michael? Michael S. Williams: Good morning, and thank you for joining us today. In 2025, our specialty steel and multimetal solutions saw commercial recovery after market headwinds in the prior year. Demand improved across our end markets, and a supportive fair trade environment reinforced the importance of domestically produced steel. On a year-over-year basis, shipments improved by 14%. Throughout the year, we expanded our aerospace and defense presence, including multiple new product offerings and strong growth in vacuum arc remelt, or VAR, steel. On downstream processing, with an increased focus and the support of supplier partnerships, we met higher VAR demand and secured new A&D and industrial customers. Bar sales totaled approximately $28,000,000 last year, almost doubling from 2024. Additionally, we maintained our intense focus on safety, with initiatives like zero-incident planning, crew safety meetings, and our Stand Up for Safety program actively involving more than 1,000 employees. Results included zero serious injuries, a 35% reduction in days-away or restricted cases, and our injury frequency improved 11% year over year. A focus on strong leading indicators underscores a more proactive, prevention-focused safety culture. Furthermore, we received industry recognition for our commitment to safety, earning the Safety Culture Improvement Award from the Metals Service Center Institute. We will continue investing in safety training, prioritizing injury prevention through targeted programs such as cranes, riggings, and fall protection. We also continue to invest in our people by building the skills we need for a changing industry. Over the year, we strengthened both jobs-specific and leadership skills, and expanded our co-op and apprenticeship programs. To meet increased demand, we are actively increasing hourly staffing levels in targeted areas such as seamless mechanical tube production. In parallel, we made organizational leadership changes to better align strategic priorities and support our growing order book across our Canton-based assets. In February, we reached a new four-year contract with our local United Steelworkers Union. This contract reflects our shared commitment to safety, innovation, and long-term competitiveness. It reinforces our strategic priorities and aligns with our disciplined focus on strong cash generation and sustained profitability across all market cycles. The contract offers our Canton-based bargaining unit employees annual increases to base wages for the duration of the contract, competitive health care and retirement benefits for all members, and a continued focus on employee well-being. We are pleased with the collaborative outcome of these negotiations and thank the United Steelworkers and our Canton-based employees for their constructive engagement. Moving to operations, we made significant progress in advancing our manufacturing capabilities and supporting our long-term growth strategy by completing the ramp-up for the new automated grinding line. Utilizing robotic technology, this new asset supports growing demand from our customers for high-quality SBQ products. We remain on track for the scheduled commissioning of the new Bloom reheat furnace roller hearth furnace, and automated saw lines in 2026. These state-of-the-art assets will strengthen our ability to serve all our customers with high-quality specialty metals, enhanced production capability, and improved first-time quality. Turning to our fourth quarter financial results, shipments declined by 15,100 tons, or 9% sequentially. As expected, seasonality was a factor behind decreased volumes, with lower shipments across all end markets. Adjusted EBITDA for the fourth quarter was $2,400,000 below expectation due to lower volumes in addition to compressed raw material spread. Results were also negatively affected by a slower ramp-up following our annual maintenance shutdown. While we are not satisfied with our fourth quarter performance, we acted decisively throughout the quarter and into early 2026 to strengthen our operational foundation and position the business for improved execution going forward. During the planned shutdown period, we accelerated several long-term operational improvements, including extending select outages to ensure our facilities are prepared to ramp efficiently in 2026 with minimal disruption. These actions support our ability to meet the growing demand reflected in our expanding order book. We also implemented targeted organizational and leadership changes to better align strategic priorities and sharpen our operational focus across all assets. In addition, we are increasing hourly staffing levels in the areas experiencing the most accelerated demand increases. Finally, we are continuing to invest in the next stage of our operational capabilities through a standardized efficiency initiative supported by an external expert partner aimed at enhancing throughput and improving high-quality steel output. These steps collectively position us to execute with greater consistency, capture growth opportunities, and we expect to deliver stronger performance in the year ahead. Our lead times have extended, reaching into mid-second quarter for VARs and mid-third quarter for seamless mechanical tubing, and our order book has increased more than 50% year over year. This underscores the growing demand for domestic steel and serves as a clear indicator of improved momentum we expect to carry throughout 2026. Turning to performance across our key markets, while industrial markets remain soft, the global trade environment is creating new opportunities as our customers reevaluate supply chains. Our distribution partners are also signaling concern about supply availability as inventories remain low, an environment that we believe will generate additional demand for reliable domestic suppliers like Metallus Inc. We believe we will continue to take market share in 2026. As we enter 2026, auto sales and production are both expected to be down slightly, and pricing pressure persists as OEMs prioritize margins and pass along tariff costs. Although affordability challenges, interest rates, tight credit, and an EV slowdown could impact demand, our order book remains strong. This is supported by our solid position in light truck and SUV transmission programs, which have remained stable despite macroeconomic headwinds. Energy shipments remain at a lower level sequentially, though we are beginning to see signs of improvement. Favorable trade-related tailwinds are helping us offset continued softness in drilling activity, creating opportunities for incremental sales. Aerospace and defense outlook continues to be robust, with strong growth expected through 2026, driven both by expansion of existing programs and new platforms. We will remain focused on safety, outstanding customer service, product development in aerospace and defense, and completing our ongoing government-funded capital investments. These priorities support our strategy for sustainable growth as we expect a much more robust 2026. I will now turn the call over to John M. Zaranec, who will provide more details on our financial performance and outlook. Thanks, Mike. During 2025, our team delivered year-over-year improvements in shipments, net sales, and melt utilization. We also advanced our transformative capital investments safely, on time, and on budget, allowing us to continue to expand upon our strong foundation to drive further profitable growth while maintaining a healthy balance sheet. Despite fourth quarter results coming in below expectations, as Mike mentioned, were temporary. During the last few months, we took decisive actions to implement operational enhancements, the underlying headwinds that lay a solid foundation for 2026. From a top-line revenue perspective, fourth quarter net sales totaled $267,300,000, a sequential decrease of $38,600,000 mainly driven by normal seasonality but also impacted by a slower-than-expected ramp-up following annual shutdown maintenance. The fourth quarter GAAP net loss was $14,300,000, or a loss of $0.34 per diluted share. On an adjusted basis, the net loss was $7,700,000, or a loss of $0.18 per diluted share in the quarter. Adjusted EBITDA was $2,400,000 in the fourth quarter, primarily impacted by higher manufacturing costs due to a $10,000,000 sequential increase in annual shutdown costs and lower fixed-cost leverage, as expected due to planned shutdown exercises during the fourth quarter. Shipments were lower than our expectations by around 10,000 tons due to several factors, including customers managing year-end inventory, certain customer logistics challenges, and a slower ramp-up following our annual maintenance shutdown, which included accelerating several long-term operational improvements. In addition, as a result of compressed scrap market prices, we experienced lower raw material surcharge revenue than expected of approximately $4,000,000. At the end of the fourth quarter, the company’s cash and cash equivalents balance was $156,700,000. During 2025, we generated $16,000,000 of operating cash flow, and when excluding pension contributions, operations produced $80,000,000 in cash in 2025. This marks the second consecutive year in which operational cash generation exceeded $80,000,000 on this basis. These results provide compelling evidence of the structural transformation of Metallus Inc., demonstrating our ability to consistently deliver strong cash flows through the cycle. In the fourth quarter, capital expenditures totaled $35,300,000, including approximately $30,000,000 of fourth quarter CapEx related to government expenditures. Planned capital expenditures for the full year 2026 are expected to be approximately $70,000,000, inclusive of approximately $35,000,000 of government-related capital expenditures, of which we are contributing approximately $15,000,000 to $20,000,000 of our own money as part of the collaborative partnership. As it relates to government funding, during the fourth quarter, the company received $4,100,000 of cash from the government as part of the previously announced nearly $100,000,000 funding arrangement in support of the U.S. Army’s mission of increasing munitions production. To date, through December, the company has received $85,600,000 of government funding, of which $32,100,000 was received in 2025. Additional payments of approximately $17,000,000 are expected to be received in 2026, contingent on the achievement of mutually agreed upon milestones. As a reminder, this funding has substantially paid for both the new Bloom reheat furnace at the company’s Faircrest facility as well as a new roller furnace at the Gambrinus facility. Now switching to pensions. In the fourth quarter, the company made a required pension contribution of $3,500,000 related to the U.S. bargaining plan, as previously guided. During 2026, the company expects to make required pension contributions of approximately $15,000,000 to $18,000,000 related to the U.S. bargaining plan, a significant reduction compared to 2025. Full year 2026 required pension contributions are expected to total approximately $27,000,000, representing a nearly 60% reduction from 2025 total pension contribution. We continue to actively manage the pension within our balanced capital allocation approach and will provide further updates as available. In terms of shareholder return activities, in the fourth quarter, the company repurchased approximately 71,000 shares of common stock for $1,200,000. At December, a balance of $89,700,000 remained under our share repurchase authorization. Since the inception of common share repurchases in early 2022, combined with the convertible note settlement activities, we have reduced diluted shares outstanding by a significant 25%, or 13,500,000 shares, compared to 2021. These actions reflect the strength of the company’s balance sheet and confidence in through-cycle cash flow generation. As it relates to liquidity, total liquidity remains strong at $389,000,000 as of 12/31/2025, with no outstanding borrowings. We do expect a slight usage of free cash flow during 2026, which is consistent with historical seasonality, as the first quarter normally requires a larger amount of pension and bonus funding. Additionally, this year, our CapEx spend to complete the government projects is the highest in Q1 and ramps down throughout 2026. After the first quarter, we expect quarterly free cash flow to be positive for the remainder of 2026. As we look to the near-term business outlook, commercially, first quarter shipments are expected to increase by approximately 10% compared with the fourth quarter, primarily due to strength in the order book and a step-up in operational performance after the fourth quarter shutdown set us up for a strong start to 2026. As Mike mentioned, our order book continues to build; it is up 50% compared to the same time last year. Annual price agreement negotiations, which cover approximately 70% of the order book, are substantially complete. Average base price per ton is anticipated to increase slightly year over year, mix-dependent. The company recently implemented spot price increases on both bar and seamless mechanical tubing products not covered by an annual pricing agreement. These increases are effective throughout the second quarter and early third quarter, product-dependent. Based on lead times, pricing benefit, and product mix improvements, are expected to ramp each 2026. From an operational perspective, the company anticipates a sequential increase in its average melt utilization rate, supported by limited planned shutdown activity during the first quarter, greater stability and reliability across key assets, along with steady customer demand. As a result, manufacturing costs are expected to sequentially improve by approximately $10,000,000 in the first quarter, following the completion of planned shutdown maintenance in the fourth quarter and improved cost absorption from higher first quarter melt utilization. Additionally, as Mike just mentioned, United Steelworkers recently ratified a new four-year labor agreement with Metallus Inc. The new labor agreement provides an increase in wages of 5% per year, as well as additional premiums for specialized roles, which allows us to attract the right talent for our growing business demand. The agreement also adds flexibility to manage future pension obligations, while offering competitive defined contribution plan alternatives. As part of the agreement, a one-time payment of approximately $2,000,000 will be paid in the first quarter. Taking these factors into account, we expect first quarter adjusted EBITDA to be above fourth quarter levels, reflecting our typical seasonality and supported by a solid order book. For the full year, we expect continued market demand for our solutions, flat depreciation and amortization expense, and a low single-digit increase in SG&A expense. While we remain mindful of external variables, we currently anticipate delivering year-over-year adjusted EBITDA growth in each quarter of 2026. To wrap up, thank you to all of our employees, customers, and suppliers for their support. We are firmly positioned as a high-quality U.S. specialty metals producer serving critical end markets. As we head into 2026 with a growing order book, our focus is on safe execution to meet rising customer demand. We remain committed to delivering shareholder value through disciplined capital allocation and sustained profitable growth. As always, thank you for your interest in Metallus Inc. We will now open for questions. Operator: Thank you. We will now begin the question-and-answer session. Your first question comes from the line of John Edward Franzreb from Sidoti & Company. Your line is open. John Edward Franzreb: Good morning, everyone, and thanks for taking the questions. I would like to start in the fourth quarter. There was an expectation of $3,000,000 to $5,000,000 of cost going to the P&L from labor negotiations. Curious how much you incurred in not only the fourth quarter, but have already incurred into 2026. Michael S. Williams: Morning, John. We did not really incur any additional cost from the outcome of the labor negotiations because the agreement was not settled until early February. However, there is the payment due, which John outlined, for about $2,000,000 this quarter, plus they are starting to get the new wage increase that was agreed to in the first year of the contract. So we will see higher labor costs going forward compared to 2025. And then there is that one payment that they earned throughout the negotiation process. John Edward Franzreb: Got it. And that $2,000,000 reference for Q1 could have been timing-impacted in Q4, but it did not happen. Honestly, we would have had the contract settled last year, but it was not. Right. So that $2,000,000 is still going to flow through the P&L. It is not going to be a one-time item. Correct? Michael S. Williams: Well, it is a one-time item, but it will flow through the P&L in Q1. John Edward Franzreb: Right. Got it. Understood. And regarding your expectations of melt utilization improving through the balance of the year, is that solely volume-dependent, or are you baking in any expectations from that third-party advisory program into that expectation? Michael S. Williams: We are relying on both. We have a much stronger order book entering 2026 than we had last year, and everything we are hearing from our customers, with our annual contract negotiations pretty much settled, things look fairly robust and continue to build throughout 2026, both from a demand volume perspective and our execution. John Edward Franzreb: That is actually a perfect segue into my next question. I was just curious about, with the order book up 50% year over year, how would you characterize the 2026 demand relative to what you thought it was going to be, say, three months ago? Michael S. Williams: Well, we got signals as we went through the three- to four-month process of annual negotiations that there were, separate from the A&D—the A&D is just going to continue to grow throughout the year, and I will give you a little color on that—but, you know, the automotive programs that we are on, really around our transmission offerings and the platforms that we are on, we see our auto business being steady compared to 2025 throughout 2026 at this point. We are seeing some increased demand compared to last year in, I would say, on a certain isolated, focused basis in the industrial end markets. I think we just have to see how the overall economic activity for the United States develops throughout the year, and we do expect isolated improvements in demand on some of our very large industrial customers throughout 2026. John Edward Franzreb: Energy, Michael S. Williams: really, as we said in our opening comments, a favorable fair-trade environment is driving some opportunity in the energy space. Even though the drilling activity, which is a majority of where our applications go, is not increasing—it has been fairly stable—it is really the A&D that is going to drive a lot of the growth for us in 2026. A number of our larger A&D OEMs have already placed four-year POs with us, and so we can see the future horizon of that demand. However, there is some dependency, particularly in the munitions side, where our OEM customers have made major investments to increase their capacity. That capacity has to ramp up. All the signaling we are getting is that is going to happen, but it is about a year and a half, two years late. John Edward Franzreb: So we do expect it Michael S. Williams: see that. That is going to drive further demand growth throughout 2026 in our A&D, with that dependency on that capacity ramping up to take our product offerings. And then thirdly, in the A&D space, we have gotten over half a dozen new customers in the fourth quarter for programs in 2026. The majority of that is the VAR material that we spoke about earlier in our comments, but we are also continuing to work on getting new platforms and working with new customers. So we are pretty excited about where we are positioning, how we are positioning, the successes that we have had in getting new programs, and how that is going to help drive profitability growth for us in 2026. John Edward Franzreb: Just a follow-up to what you said. Is there any change in your expectations in the A&D contributions in 2026 versus your initial expectations? Michael S. Williams: No. I think we are assuming where our A&D pricing has been is going to continue to roll forward, but the higher mix influence of that in our sales revenue will drive improved profitability growth for us in 2026. John Edward Franzreb: Okay. Thank you for taking my questions. I will get back into the queue. Alright. Thanks, John. Operator: Your next question comes from the line of Philip Gibbs from KeyBanc Capital Markets. Your line is open. Philip Gibbs: Hey, Mike and team. Just curious on where you expect A&D sales in 2026? I know prior, you thought you would be above a $250,000,000 run rate on sales by mid-2026, and then also the status of your key capital investments and when those are going to be commissioned and deployed. Michael S. Williams: Sure. So, it is early in the year, but, like I said to John earlier, we have already gotten several POs from our largest A&D OEM customers, so we see their full-year demand. We still are believing that we are going to hit that run rate, but it is dependent on the new capacity ramping up for the munitions manufacturing downstream from us. So as that ramps up, which we are being signaled is going to continue to ramp up throughout this year, we still expect to hit that at some time, either early second half. It could move based on their ramp-up success, but we still believe we are on target to hit that $250,000,000 run rate at this point in the year. Philip Gibbs: And then just regarding the status of your key capital investments and when those are going to be commissioned and deployed. Michael S. Williams: Things are going pretty good there. We did have some weather delays between late in the fourth quarter and early this quarter, but we are pretty much on target. The Bloom reheat furnace—we have lit the furnace. We have cycled and simulated pushing blooms through the furnace. We expect to start to put that in operation in the next five to six weeks. We will start to ramp that up throughout the remainder of the first quarter and early second quarter. The roller hearth furnace—we are on time with that. We expect to light that furnace up towards the end of the first quarter, early second quarter. We expect to have both assets up and ramped up to production by late second quarter, early third quarter. Philip Gibbs: And then a question for John. Just on the share count and also the D&A. On the diluted share count, it looked like they were down about over a million shares quarter on quarter. I know buybacks were limited, so anything that would have driven that over that buyback number? So just curious in terms of what we should be using moving forward. And then also on the D&A, you said flattish year over year, but you do have commissioning of new assets. So just curious why that would be flat and not increasing as you are putting more assets to use? Thank you. John M. Zaranec: Yes, good questions, Phil. So on the dilutive shares impact, it will be up a little bit, maybe about 1,000,000 or so in 2026 because of the net loss position on the U.S. GAAP basis. The number to use would be a little bit if you are looking at GAAP versus non-GAAP. But we do plan to continue to do share buybacks to offset equity comp dilution, so it would be fairly flat if you are using that adjusted basis. But our GAAP net loss sometimes makes that a little bit interesting to look at our diluted shares. As far as the depreciation and amortization, recall it is only $15,000,000 to $20,000,000 of our own money, and so that is actually hitting our depreciation. The depreciation and amortization for the government funding—there is none. There is no depreciation and amortization. So as we have some assets falling off every year, the new capital spend for our base business, which is pretty consistent, will just replace that. So that is basically why D&A will stay flat. Thank you. Operator: Your next question comes from the line of David Joseph Storms from Stonegate. Your line is open. David Joseph Storms: Morning and thank you for taking my questions. Good morning. I want to go back to some of the customer growth you have seen in bar. Is there anything more you can tell us about maybe the types of customers here? With them being new customers, is there a potential to expand within their operations? Just anything more you can give us there. Michael S. Williams: Well, if you look at the VAR, the majority of the VAR goes into a variety of aerospace and defense—more defense than aircraft, let us say—but it is a variety, and it is a growing product line for us. So we really cannot talk about the customers themselves or the end application on the variety of weapon systems and military technologies that these products are going into due to the confidentiality requirements, but we are pretty excited about it. We have also won some new customers and applications with VAR in the industrial space. These are high-end equipment applications that the VAR material is specifically designed for, and we are pretty excited that now we are expanding outside of the A&D with this product offering. We just expect it is going to continue to grow. We have a great supplier partner, and we are building a very credible customer base with some pretty exciting end applications. David Joseph Storms: Understood. I appreciate that color. And then just one more on lead times. It looks like about three to six months on lead times right now, maybe a little bit longer. Would you expect that to come in as you ramp the new assets as you just laid out? And is there a potential then to increase sales and maybe get those lead times to stay the same? Thank you. Michael S. Williams: Yes. If you look at our seamless mechanical tubing, that is the one that is out the furthest. That is early August. We are adding an additional crew, and we are making some investments in some of the key assets involved with our tube-making process. And so as those investments ramp up and the additional shift comes on here in early March, we do expect to bring those lead times in because our availability of product to customers will increase. The bar is what it is. We have seen a pretty good increase in demand, and we are going to try to keep our lead times as competitive as possible. We do believe the new assets are going to help with better quality right the first time, higher efficiency, and throughput. And as those assets ramp up, we specifically believe that that will also make sure that we have competitive lead times. Right now, as we see a much larger order book, it allows us to be more efficient with our planning and scheduling across our key bottleneck assets. So things are looking very positive for us, and we expect to deliver, as I said, much better results throughout 2026. Operator: And that concludes our question-and-answer session. I will now turn the call back over to Jennifer K. Beeman for closing remarks. Jennifer K. Beeman: Thank you all for joining us today. We look forward to updating you in the future, and that concludes our call. Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, and thank you for joining us today for Select Medical Holdings Corporation earnings conference call to discuss the fourth quarter and full year 2025 results and the company's business outlook. Presenting today are the company's Chief Executive Officer, Thomas Mullen, and the company's Executive Vice President and Chief Financial Officer, Michael Malatesta. Also on the conference line is the company's Senior Vice President, Controller and Chief Accounting Officer, Christopher Wiegel. Samantha will give you an overview of the quarter and then open the call for your questions. Before we get started, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company, including, without limitation, statements regarding operating results, growth opportunities, and other statements that refer to Select Medical plans, expectations, strategies, intentions, and beliefs. These forward-looking statements are based on the information available to management of Select Medical today, and the company assumes no obligation to update these statements as circumstances change. At this time, I will turn the conference call over to Mr. Thomas Mullen. Thomas Mullen: Thank you, Operator, and good morning, everyone. Welcome to Select Medical's fourth quarter 2025 earnings call. I would like to begin our call by taking a moment to address the take-private proposal that was recently submitted by our Executive Chairman. On November 24, we received a nonbinding indication of interest to acquire all outstanding shares of Select Medical. A special committee of the Board of Directors is in the process of carefully reviewing and evaluating the proposal. This process is ongoing, and the special committee will determine the appropriate steps based on what it believes is in the best interest of the company and all of our stockholders. With that update, let me now transition to our development activity, where we continue to focus on the expansion of our inpatient rehabilitation business. In the fourth quarter, we added 150 beds through a combination of hospital openings and acquisitions. These include a new 32-bed hospital with the Cleveland Clinic, a 32-bed acute rehab unit in Orlando, Florida, a 10-bed expansion at our rehab hospital with Riverside Health in Virginia, and, finally, the acquisition of a 76-bed rehabilitation hospital in partnership with Vibra Healthcare in Southern Kentucky. For the full year 2025, we added 212 rehab beds: 202 beds from three new hospitals, three acute rehab units, and one neuro-transitional unit, with the remaining 10 beds coming from an expansion at an existing facility. We also added 10 beds during the fourth quarter in Savannah, Georgia, in our critical illness recovery hospital division, through the acquisition of a hospital in that market. Across 2026 and 2027, we expect to add 399 beds, which includes the 166 beds we have added so far this year. In January, we opened our fifth rehabilitation hospital with Baylor Scott & White Health in Temple, Texas, operating 45 beds, and a 63-bed hospital with CoxHealth in Ozark, Missouri. Earlier this month, a 58-bed hospital with Banner Health in Tucson, Arizona, the fourth within the joint venture. Some upcoming projects include a 60-bed hospital with AtlantiCare in Southern New Jersey, which we expect to open in 2026, as well as two acute rehab units in Florida and two neuro units scheduled to open throughout the second quarter of 2026. In the first quarter of 2027, we expect to open a 76-bed rehab hospital in Jersey City and plan to expand one of our Banner rehabilitation hospitals by 20 beds. Beyond these projects, additional opportunities are progressing through various stages of development and positioning us for long-term growth. Before we move into our financial performance, I would like to provide a brief update on capital allocation. Our Board of Directors approved a cash dividend of $0.0625 per share payable on 03/12/2026 to stockholders of record as of 03/02/2026. Now shifting to our consolidated financial performance, all three divisions exceeded prior-year revenue in the fourth quarter, with total revenue growing more than 6% year over year. Adjusted EBITDA declined 10% to $104.7 million from $116.0 million in the prior year. A contributing factor to the decline in adjusted EBITDA was an increase in health insurance expense year over year driven by elevated health-related costs, including higher-cost claimants, increased utilization of medical and pharmacy benefits, and cost escalation. Earnings per common share from continuing operations was $0.16 versus a diluted loss per common share of $0.19 per share in the prior year. Adjusted earnings per common share from continuing operations was $0.16 compared to $0.18 last year. As a reminder, adjusted EPS in the prior-year period excluded costs associated with the separation of Concentra, including accelerated stock-based compensation expense and a loss on early retirement of debt. For the full year, revenue grew more than 5%. Adjusted EBITDA was $493.2 million with a 9% margin, compared to $510.4 million and a 9.8% margin in 2024. Earnings per common share from continuing operations was $1.16, up from $0.51 last year. Adjusted earnings per share from continuing operations was $1.00 compared to $0.94 in the prior year. Now turning to our segment performance. Beginning with the inpatient rehab hospital division, revenue increased over 15% year over year to $339.2 million and adjusted EBITDA rose 11% to $69.2 million. Revenue per patient day increased over 6%, and our average daily census grew nearly 10%. Occupancy improved to 82% from 81% with same-store occupancy rising to 86% from 85%. Our adjusted EBITDA margin was 20.4% compared to 21.2% in the prior year. In our critical illness recovery hospital division, revenue increased nearly 5% to $629.7 million while adjusted EBITDA grew 5% to $66.4 million from $63.1 million in the prior year. Our adjusted EBITDA margin was consistent with the prior year at 10.5%. Our occupancy rate also remained steady at 67%, our admissions rising by 3%. Finally, in our outpatient rehab division, revenue increased to $324.6 million from $319.6 million in the prior year. This was driven by nearly 5% growth in patient visits. Net revenue per visit declined to $98 from $102 compared to the same quarter last year, and is reflective of a reduction in Medicare reimbursement, an unfavorable shift in payer mix, and an increase in variable discounts. Adjusted EBITDA was $11.2 million compared to $26.6 million last year, with margin declining to 3.4%. This decrease is primarily due to lower net revenue per visit and, as noted earlier, higher health insurance expense. That concludes my remarks. I will now turn the call over to Michael Malatesta for additional financial details before we open up the call for questions. Michael Malatesta: Thank you, Tom, and hello, everyone. At the end of the quarter, we had $1.8 billion of debt outstanding and $26.5 million of cash on the balance sheet. Our debt at quarter end includes $1.04 billion in term loans, $100 million in revolving loans, $550 million in 6.25% senior notes due 2032, and $155 million of other miscellaneous debt. We ended the quarter with net leverage of 3.67x under our senior secured credit agreement, and $469.1 million of availability on our revolving loans. Our term loan carries an interest rate of SOFR plus 200 basis points, and matures on 12/03/2031. Interest expense for the quarter was $28.9 million compared to $28.6 million in the same quarter last year. For the quarter, cash flow from operating activities was $64.3 million. Our days sales outstanding, or DSO, from continuing operations was 57 days at 12/31/2025, compared to 58 days at 12/31/2024 and 56 days at 09/30/2025. Investing activities used $66.9 million, which includes $59.1 million used for purchases of property and equipment and $9.1 million in acquisition and investment activity. Financing activities used $31.0 million, including $50.0 million in net repayments on our revolving line of credit, $38.1 million in net distributions to noncontrolling interests, $7.8 million in dividends, and $2.6 million in term loan repayments. We also received $51.3 million of net proceeds from other debt issuances during the quarter. We are issuing our business outlook for 2026 and expect revenue to be in the range of $5.6 billion to $5.8 billion. Adjusted EBITDA is expected to be in the range of $520 million to $540 million, and fully diluted earnings per common share is expected to fall in the range of $1.22 to $1.32. Lastly, capital expenditures are expected to be in the range of $200 million to $220 million. This concludes our prepared remarks. At this time, we would like to turn the call back to the Operator to open the line for questions. Operator: Thank you. Press 1-1. If your question has been answered and you would like to move yourself in the queue, please press 1-1 again. Our first question comes from Ben Hendrix with RBC Capital Markets. Your line is open. Ben Hendrix: Great. Thank you very much. I was wondering if we could parse through some of the income statement items, particularly the higher health costs that you saw, just the total amount of that, and then just the impact on the outpatient rehab business in particular. I am looking at the 3.4% margin and the weakness you saw. I just want to parse that out between the variable discount, the Medicare rate, mix pressure, and the health cost. Thanks. Hi, Ben. It is Mike. Michael Malatesta: In regards to health insurance expense, for the outpatient division, the impact was approximately $5 million for the quarter. The impact for variable discount was approximately $6 million. So both added together is around $11 million, and the remainder of the delta is related to, as we noted, shift in payer mix and softness in some markets. Ben Hendrix: Thank you. And as we think about the guidance going forward, can you talk about the puts and takes and how you are thinking about forecasting? Do we have this mix pressure continuing in the outlook? And then what are your base assumptions for some of the other segments? Thanks. Michael Malatesta: Well, I think we are very, very confident and pleased with the performance of our inpatient rehab division. It is Tom commented earlier, we have a very robust pipeline, so we are set up well for 2026. Ben Hendrix: Outpatient we did, you know, we are cautiously optimistic on outpatient for improvement. Michael Malatesta: We believe that the $11 million that we just alluded to were truly one-timers. And then for critical illness, you know, the fourth quarter, we basically are right in plan or maybe even a little better than we expected. And for critical illness, again, I would say cautiously optimistic for next year. But, again, there is always, just with all the puts and takes in that division, it is a little more subject to variability. Operator: Thank you. Our next question comes from Justin D. Bowers with Deutsche Bank. Hi. Good morning. Appreciate the update on the special committee and was curious if you are able to expand upon that, maybe around some of the other potential strategic alternatives? And then any timing goalposts, to the extent that you can? Michael Malatesta: Hey, Justin. It is Mike. We are really not able to comment on the process that is taking place right now, other than what we commented on at the beginning of the call. Justin D. Bowers: Understood. And then there has been some weather in the first quarter across the country. I am presuming the guidance incorporates that, but is there any callouts there in any of the segments? And then any differences in days this year, 1Q versus 1Q of last year, we should consider? Michael Malatesta: Justin, there really was not a large impact, or any impact at all of material, on our inpatient divisions for critical illness and inpatient rehab. There was an impact, though, for outpatient. And, again, some of that you are able to recover through the course of the quarter. But there was an impact in some areas and states related to the weather that we experienced in the beginning of 2026. Justin D. Bowers: Okay. Thank you, Mike. Michael Malatesta: Thank you. Operator: Our next question comes from Ann Kathleen Hynes with Mizuho. Your line is open. Ann Kathleen Hynes: Thanks. Just a little bit more detail on the outpatient issues. Why would the health insurance only impact the outpatient division? I am assuming you are self-funded for your entire company. Is it just the population? I am just kind of confused why it would impact just that division. And can we just have a little bit more detail on what you mean by the $6 million variable discounts? You are just taking higher managed care discounts than you, in guidance? Michael Malatesta: Hi, Ann. In regards to health insurance, that impacted the entire company. But it stuck out a little bit more in outpatient just because of the size of outpatient. Softness we had in some certain areas. So, overall, it was approximately a $15 million impact in the fourth quarter for all Select Medical that we did not anticipate coming into the fourth quarter. In regards to variable discount, that is related to some of our older receivables that we made the decision to write off after we thought all collection efforts were exhausted, and we are talking all the receivables. I would say they are falling over the two-year period of receivables. So I do not know if that answers your question, if you have a follow-up. Yeah. Ann Kathleen Hynes: And then you mentioned some softness in markets. Is that due to competitive issues? Are they big markets? Any more detail you can provide on that, that would be great just because the miss on outpatient was much bigger than, you know, obviously, people thought. Michael Malatesta: Yeah. I mean, there are some certain markets that we are evaluating and put a focus on in 2026. We are investigating why the why was a little softer than we anticipated. Tom, I do not know if you want to add any color to that. Thomas Mullen: I think that we are looking at rate in some of these markets, and then some of the markets where we are having some challenges right now revolve around staffing. And we are focusing on the recruitment of therapists in those markets. And that is some of the softness that we are experiencing currently that we expect to overcome in the coming months. Ann Kathleen Hynes: Great. And just directionally, your EBITDA guidance, can you provide detail from a segment level? Can outpatient, I am sure that weakness in the second half has to anniversary in early 2026, can you expect that segment to rebound to growth? And then any additional detail you can give on expectations for growth for critical illness and inpatient rehab, that would be helpful. Michael Malatesta: Yeah. So, Ann, we historically have not provided guidance at the segment level, but some color that I could add is for critical illness, I would say cautiously optimistic, but it is somewhat in line with where we performed our projection for 2025. Kind of kept it relatively flat. For inpatient rehab, that is where we, again, as we experienced over the last few years, are seeing the majority of our growth. And for outpatient, we do expect it to improve and grow year over year, but both what we saw in Q3 and Q4, the last half of the year, we did taper those expectations within our guidance. Ann Kathleen Hynes: Okay. Thank you. Operator: Thank you. Our next question comes from Joanna Gajuk with Bank of America. Joanna Gajuk: Hi. Good morning. So a couple of follow-ups. Maybe first on the outpatient rehab segment commentary. I appreciate quantifying the costs and discounts, or this receivable write-off, and then payer mix. So last quarter you talked about it. I want to check whether the same issues or different issues popped up because it is, you know, I guess the pricing sounds like it was impacted by the discount, but I was trying to assess the payment situation or the headwind because you still called it out. Michael Malatesta: Hi. Hi. So, Joanna, I guess on the variable discount, I did not understand your first part of the question. Can you repeat that? Joanna Gajuk: I was asking about the payer mix issues because on the third quarter call, when you called it out, you said you think this is temporary in nature. And with the fourth quarter now, you are saying that there is obviously the bigger issue around the cost and discounts, but the payer mix is also mentioned there. So I want to check whether you have the same payer mix issues you had in the third quarter or there is something new? Michael Malatesta: So we have seen within the division in the fourth quarter, we did have an uptick in our managed Medicare population. So that caused some headwinds. And that is something that we have been dealing with throughout this fiscal year. Workers’ comp was slightly down when I compare it year over year. And so, with a company our size too, it is not sometimes just within the classifications. It also sometimes can be the mix within the mix, within certain payers within a market within managed care commercial. And with our volume, those dollars can add up easily. So, again, what we saw was just a slight deterioration in our payer mix, which impacted our net rev per visit. I would say it is probably about a dollar of the impact. The variable discount was approximately $2 of the impact on the year-over-year net rev per visit. And, Joanna, it is Tom. I would add that going into 2026, with the regulatory changes that we have on the horizon from January forward, we are seeing a 2% increase on Medicare for the first time in many years. So we are going to see somewhat of a rate increase as a result of the regulatory change on Medicare and Medicare Advantage for 2026. Joanna Gajuk: I was going to ask you a second question. I know you do not give specific guidance by segment for the year, because my question was around the Medicare rate increase. ’26. How much it is going to help? And should we assume the margins will improve? It was 7% for the full year, but the second half of the year was much worse. I am trying to figure out how to think about directionally the progression in margin in that segment. Michael Malatesta: Yes. You should expect the margins to improve year over year in the outpatient division. Joanna Gajuk: Okay. And if I may, on the consolidated numbers, when we look at the fourth quarter, the EBITDA of $105 million is about, call it, almost $30 million below what was implied by your original guidance at the midpoint. You quantified a couple of these things to $15 million for the cost, and there is the discount in the outpatient, but there is still something missing. That has to be the payer mix. Anything else to call out? It sounds like the critical illness was in line and maybe the IRFs were better. So I wonder what else was a part of the shortfall. Michael Malatesta: Joanna, I think we are probably a little off of what you said the midpoint of our guidance was heading into the fourth quarter. I think our midpoint heading in was probably $520 million, so we are right around $25 million. I mean, it is all significant miss, but $15 million of it is health insurance right off the bat. We did have some timing issues with inpatient rehab. We were expecting inpatient to even do that much better year over year. But, again, these are just timing issues of when certain of our development activities have taken place. So, in the long run, we are still very bullish on the inpatient rehab division. And then, again, on top of the health insurance, and maybe a few million dollars in inpatient rehab, where we thought we would exceed a little bit more, it was just the softness we had in the outpatient division in the fourth quarter. Joanna Gajuk: Alright. Thank you. That was my other follow-up on the IRF segment. The margins there declined year over year and quarter over quarter. It sounds like there are some timing issues. Maybe you can help us quantify some of the startup losses in the segment, and how should we think about that for 2026? Thank you. Michael Malatesta: So the margin, the same-store margin, was still in excess of 23%, Joanna. So we still feel very comfortable. The deterioration in the margin down to a little north of 20% is related to startup loss. So, again, these are just timing issues. Nothing with the long-term viability of that segment. Joanna Gajuk: Alright. Thank you so much. Michael Malatesta: Thank you. Operator: And our next question comes from Albert Rice with UBS. Your line is open. Albert Rice: Thanks. Hi, everyone. Just a couple of questions. One thing that has created a little bit of volatility in the LTACH business over the last few years has been the high-cost outlier threshold movement. I know it is still early in the year, but are you seeing anything there that gives you pause that maybe it is going to be more or less impactful, the year-to-year change, than you thought? Thomas Mullen: Year over year, AJ, this is Tom. We are seeing the high-cost outlier threshold only increase by—it is pretty flat to prior year. It is $1,888 in total. So we are not going to expect any major shifts like we saw this past year. We are doing a nice job of moving patients into our inpatient rehab hospitals timely, our shared markets, and that is starting to help us drive down some of that high-cost outlier percentages so that we have less high-cost outliers as a proportionate share of all of our LTACH patients. So I do not think that we are going to see any major headwinds as it relates to high-cost outlier this year. And we will be looking for the proposed rule early summer to see what to expect for 10/01/2026 forward. Albert Rice: Right. Okay. There have certainly been some questions mainly around the IRFs, but broadly, I will ask you on this CMS TEAM demo. What are your thoughts on that and how that might impact your business, if at all? Thomas Mullen: We have a small proportion of our rehab hospitals where we are in partner with partner systems that will be impacted by the TEAM implementation. The only area that we are really seeing that may have somewhat of a minor impact on us is spinal fusion surgeries—some of the spinal cord patients that we treat. We have been talking to our partners about this new initiative and the bundling, and think that it is going to be a minor adjustment in those markets at best. Albert Rice: Okay. And then my last question on the share repurchase. There was not much done in the fourth quarter. When we think about 2026, any comments on capital deployment? Any changes in priority? Any thoughts on share repurchases for 2026? I know you have got the pending review, so maybe that puts everything on hold. But I just wondered what your thoughts were about share repurchases. Michael Malatesta: AJ, your last comment when you said we are under the review or evaluating the process, you are correct. That puts everything on hold. It is really applicable. Albert Rice: Alright. And then on capital, does it make any changes on CapEx? Any thoughts around that? Thomas Mullen: No. Right now, it is business as usual as we are running our business. Again, I think we have been very open that our focus is growing inpatient rehab—our primary focus is growing our inpatient rehab division. So I think you will see more on the inpatient rehab hospital space, some new rehab units, as well as our neuro-transitional center, continuing to grow over the course of this year. Albert Rice: It does not jump off the page to me, but we are asking this for almost all the provider companies. Any applications for AI that you find particularly useful that you are focused on? Michael Malatesta: Yeah. We are evaluating employing AI. One thing that we are evaluating is some of our back-end processes in our billing office where we think there is opportunity. I will let Tom speak a little more because we are evaluating across all lines of business. Thomas Mullen: We are looking at it to help with our outpatient collections, and we have engaged a group who is piloting that initiative with us, as well as we are looking at the possibility of some clinical initiatives around virtual sitters and potentially telemetry monitoring in the future in the AI space. Albert Rice: Interesting. Okay. Thanks a lot. Operator: Thank you. Our next question comes from William Sutherland with Benchmark Stonex. William Sutherland: Thank you. Actually, AJ took care of most of my questions. I am thinking the only labor question we did not really address was in critical illness, which I know you focused on a lot in the past couple of years. Is that settling in and kind of a good mix? And I am seeing all the union activity in the health systems on the acute care side. Any issues there for you guys going forward? Michael Malatesta: In regards to labor, Bill, we are very pleasantly surprised where the agency rate has settled into post the difficulties we experienced with agency costs in 2022—really the fourth quarter 2021 through 2023. That has come into line, and we are really focused on settling more on the allocation of 70% full-time, 15% PRN, and 15% agency, and it has hovered right around that percentage of 15%. So I think it is just continued improvement. We have kind of reached where I think we are at, with a little improvement year over year on our margin for SW&B. Tom, if you have anything to add to that. Thomas Mullen: No. Our labor margin is running just above 56%, and that is in line with where we were projecting to be and want to be. And then as far as labor union activity, there are always some systems that are dealing with labor union activity. We have not, in the past year, had any significant threats we have had to deal with, and there is nothing on the horizon right now for us in any of our locations. William Sutherland: That is good to hear. And, Tom, did you address—or Mike—the startup expense for IRF? Will it be in line this year and not impact margins? Michael Malatesta: Yes. It is going to be relatively consistent year over year. There is a little timing, but for total spend, I would expect around $15 million, a little south of $15 million of losses for 2026. William Sutherland: Okay. Which is in line with this year. Michael Malatesta: Yeah. Yeah. Yeah. Great. Thanks. Operator: Thank you. I am showing no further questions at this time. I would like to turn the call back over to Tom Mullen for closing remarks. Thomas Mullen: Thank you, Operator. We have no further comments. We will look forward to updating the group next quarter. Thank you for your participation. This does conclude the program. You may now disconnect. Operator: Everyone, have a great day.
Operator: Good morning. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the DNOW Fourth Quarter and Full Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to withdraw your question, press 1 again. Thank you. Mr. Brad Wise, Vice President of Digital Strategy and Investor Relations, you may begin your conference. Brad Wise: Thank you, Jeannie, and good morning, and welcome to DNOW's Fourth Quarter and Full Year 2025 earnings conference call. We appreciate you joining us, and thank you for your interest in DNOW. With me today is David Cherechinsky, President and Chief Executive Officer, and Mark Johnson, Senior Vice President and Chief Financial Officer. We operate under the DNOW brand, which is also our New York Stock Exchange ticker symbol. Please note that some of the statements we make during this call, including responses to your questions, may contain forecasts, projections, estimates, including, but not limited to, comments about our outlook for the company's business. These are forward-looking statements within the meaning of the U.S. federal securities laws based on limited information as of today, 02/20/2026, which is subject to change. They are subject to risks and uncertainties, and actual results may differ materially. No one should assume that these forward-looking statements remain valid later in the quarter or later in the year. We do not undertake any obligation to publicly update or revise any forward-looking statements for any reason. In addition, this conference call contains time-sensitive information that reflects management's best judgment at the time of the live call. I refer you to the latest Forms 10-K and 10-Q that DNOW has on file with the U.S. Securities and Exchange Commission for a more detailed discussion of the major risk factors affecting our business. Further information, as well as supplemental financial and operating information, may be found within our earnings release on our website at ir.dnow.com or in our filings with the SEC. To supplement the information provided to investors under GAAP, we present certain non-GAAP financial measures. We encourage you to review our earnings release and securities filings for further details on our use of these non-GAAP metrics and for reconciliations to the most directly comparable GAAP measures; these documents are also available on our website. Unless we specifically state otherwise, references in this call to EBITDA refer to adjusted EBITDA; earnings per share, or EPS, refer to adjusted diluted EPS; and net income refers to adjusted net income. Please be advised that we have enhanced our reporting across all three geographic reporting segments by disclosing revenues for each of the four reporting sectors: upstream, midstream, gas utilities, and downstream and industrial. Also note that the references for legacy DNOW pertain to the business excluding contributions from MRC Global, while consolidated DNOW figures include contributions from MRC Global during the stub period. As of this morning, the investor relations section of our website contains a presentation covering our results and key takeaways for the fourth quarter and full year of 2025. We expect to file our Form 10-K in the coming week and it will also be available on our website. A replay of today's call will be available on our site for the next 30 days. I will now turn the call over to David Cherechinsky. Thank you, Brad, and good morning, everyone. David Cherechinsky: I want to begin this morning with what matters to me most—our people—and the strength of the team we are building. On November 6, we completed the merger with MRC Global. Today, we are operating as one company, united by shared values, complementary strengths, and a common ambition to win in the market. I want to extend a warm and enthusiastic welcome to our new fellow team members as we begin this next chapter. Both MRC Global and DNOW have built strong, respected, well-established franchises shaped by years of hard work, resilience, and winning in our respective markets. In some areas, we have spent decades competing, pushing each other to be better. But in 2026, that changes. We are now together, building our strengths, talent, and collective ambitions under one roof. And what we will achieve together will be far greater than anything we have accomplished apart. Without a doubt, we are better together. One thing I noticed right away as I visit with our new team members is the relentless passion our people share serving our customers and winning in the market. I am impressed with the deep technical expertise and integrated solutions MRC Global brings to the market, especially in gas utility, downstream industrial sectors, and the valve powerhouse of its international business. It is clear we start off with a strong cultural alignment immediately around the importance of the people who differentiate us in the market, how we care for, advance, and promote our top talent, and how we singularly organize to delight our customers and win their business. Our new team excels by fanatically focusing on our customers. I am honored to work with the leadership and team members from MRC Global. Their style is growth-oriented, with a strong forward-leaning sales posture. Our new family members are a great addition to and clearly in the same league as our heritage DNOW team who have just delivered DNOW's standalone best four years ever from 2022 through 2025, since we became a public company nearly 12 years ago. Mark will be discussing the financial performance of the business, but I would like to close out 2025 with some pointed comments acknowledging our heritage DNOW business. As a preview, in 2025, legacy DNOW achieved a record full-year EBITDA of $199,000,000, establishing a new annual record for EBITDA results. Our teams around the world performed well, but most notably at WIPCO, FlexFlow, and Trojan brands and businesses, who produced in record-level territory, making for legacy DNOW's best year yet. This is a tremendous achievement by our team, given that U.S. upstream market activity has contracted. I want to take a moment to express my appreciation and celebrate this achievement in the face of challenging market dynamics. For the full year, legacy DNOW EBITDA as a percentage of revenue reached 8.2%, eclipsing our guided target approaching 8%. The outstanding performance by our teams was driven by the execution of our strategy, centered on our strong commitment to service dependability and customer relationships, coupled with our reliable and differentiated service models that our customers have come to value. Equally significant, this achievement boosts our confidence for long-term success as we move forward with the next stage of our strategy. Beyond these record-breaking results, 2025 was headlined by the completion of the merger with MRC Global in November. The merger significantly increases our scale, diversifying our sector reach, expanding our addressable market, while solidifying our position as the premier distributor of energy, industrial products, solutions. The merger strengthens DNOW competitive position across upstream, midstream, gas utilities, downstream, and industrial markets, while also expanding our geographic footprint and product offering. I am excited about the long-term value the combination with MRC Global will provide. Just as importantly, the combined company is well positioned to generate stronger and more consistent cash flow over the long term. Our increased scale, improved purchasing power, future operational efficiencies, and a more balanced mix of end markets enhance our value creation through the cycle. On our merger announcement conference call on June 26, 2025, we established a goal to generate value through cost synergies between the two companies. We said we could achieve $70,000,000 in cost savings within three years of closing. We are on track to achieve year one cost synergies faster than planned and now expect to reach $23,000,000 in cost savings by the end of the first year, compared to the $17,000,000 we said we would achieve for 2026. And now shifting to comments about the MRC Global U.S. ERP project, which is fair to characterize as an obstacle. Prior to the merger, previous MRC Global management had disclosed that they had encountered challenges that adversely impacted the third quarter revenues, profitability, and cash flows. They had guided fourth quarter sequential revenue growth in the mid- to high-single-digit percentage range in their third quarter earnings release. However, the fourth quarter actuals declined due to persistent ERP challenges. For context, U.S. MRC Global represents about 40% of DNOW's business. Conversely, 60% of our business is not affected by ERP challenges, including the legacy MRC Global International business, nor any of the legacy DNOW businesses. While we have been making progress bringing together DNOW and MRC Global, including with our people, customers, and suppliers, we have identified the ERP challenges to be a much heavier lift than previously known. Design architecture is resulting in inefficiencies for certain core processes, continuing negative operating and financial impacts. Observed limitations across the system are that it is slow, impedes customer service, requires more resources, increases safety stock, and difficulty in processing orders. I am encouraged by the teamwork occurring around the clock as we collaborate on resolving the issues. We have targeted actions to address the impact of ERP implementation. The heritage DNOW IT and operational excellence teams are mobilized to execute a comprehensive remediation plan to capture and resolve the most critical obstacles. These teams have extensive operations knowledge and experience implementing ERP systems, as DNOW has concluded more than two dozen acquisitions since spin, with a solid understanding of end-to-end business processes and solutioning customer requirements. In collaboration with the heritage MRC Global implementation team and our external service providers, our immediate focus is the normalization of all remaining critical processes. By focusing our efforts on hypercare and stabilization now, we are working to remove these obstacles to better support our customers. We sincerely appreciate our customers' patience and our team's relentless dedication. We have seized this opportunity to accelerate integration efforts as we pursue operational improvements towards our sector strategy, including branch footprint optimization, investments in inventory, systems, and how we better service our customers to enhance service levels. Where appropriate, we are now actively servicing select legacy MRC Global customers through DNOW systems. And we are managing larger projects, where possible, through legacy DNOW operating systems to maximize transaction flows from order to payment. One of the most compelling advantages of this merger is the meaningful expansion and diversification of our business across four core sectors, strengthening our resilience through the cycle and positioning us for sustained growth. In upstream markets, customer spending is increasingly focused on the preservation of existing production and reduced lifting costs rather than growth-oriented expansion. Activities centered on maintenance, workovers, and reliability initiatives designed to offset natural production declines, consistent with industry expectations for a largely flattish production environment. Capital discipline remains firmly intact, with operators prioritizing efficiency, uptime, and cash flow durability over incremental volume growth. While upstream activity is expected to remain flat to down, this dynamic is balanced by growth opportunities across other parts of DNOW's portfolio. The midstream sector continues to benefit from structural growth drivers, including natural gas infrastructure expansion, LNG, and power generation-related development. These markets are supported by longer-cycle projects, providing improved visibility and a more durable demand profile. Gas utility system modernization is set to continue, and we expect the gas utilities market to grow in 2026. Our Emtek gas meter solution, which began pilot testing last year, aims to increase customer wallet share and accelerate adoption with our gas utility clients. Furthermore, we are pursuing revenue synergy with MRC Global's gas products portfolio, leveraging our footprint and existing gas utility customers, where DNOW itself has historically provided only steel pipe products. Data centers continue to represent an attractive growth opportunity. We entered this market in January 2025 with no prior data center experience and have made meaningful progress in a short period of time. We are now supplying our core product offerings—pumps, pipe, valves, fittings, and flanges—to 11 new customers across four key data center markets. And we are also proactively entering additional markets. Importantly, our success in data centers has also led to incremental opportunities within the broader industrial market. Since completing the merger, we have begun realizing revenue synergies across multiple channels. These early benefits include incremental orders driven by improved access to core product inventory, as well as better product margins resulting from expanded in-house capabilities and access to a broader customer base and contract portfolio. Near-term revenue synergy initiatives include cross-selling newly available offerings, including the process solutions portfolio into downstream and gas utility sectors; leveraging the company's expanded geographic footprint to support new customer wins in these markets; and using combined purchasing scale to improve win rates and margin performance. Further, we are leveraging DNOW regional supercenters and legacy MRC Global regional distribution centers to support larger fast-turn project requirements. We are seeing areas of improved win rates driven by enhanced inventory access; in several cases, opportunities would not have been viable without the combined inventory position. DNOW having access to MRC Global in-house valve automation capabilities is enabling faster turnaround times and can improve margins. Reduced lead times contributed directly to successful customer awards. Process solutions businesses, including Odessa Pumps and Power Service, are actively engaged and have identified target opportunities across refining, chemical, and mining markets. Initial engagement with downstream customers is underway to establish key points of contact and to coordinate execution with process solutions teams. Early-stage assessment of opportunities within the gas utility market is in progress, leveraging the combined footprint to support gas utility and downstream growth. Midstream growth opportunities are enhanced in the areas of large-bore valves, larger outside diameter pipe, measurement and instrumentation, valve actuation, and automation. We are also pursuing cross-selling opportunities across the combined customer base. Many customers expect activity to improve as 2026 progresses, with momentum building into the back half of the year. In the chemical sector, market conditions have softened as customers postpone project expenditures. Conversely, downstream refining is preparing for an active turnaround and maintenance season in 2026, which is expected to drive demand for valves, fittings, flow control equipment, and other reliability-oriented MRO products. We continue to see upside from data center-related infrastructure investment, particularly where it intersects with power generation and gas infrastructure. Investments in this growing sector represent an incremental tailwind alongside our core focus on midstream gas feed infrastructure demand and industrial PVF and pumps demand within the four walls of the data centers. Turning to capital allocation. We will continue to pursue our long-term priorities, enabled by our focused and disciplined approach to cash flow generation. First, we will continue to invest in our business as we integrate with MRC Global, while supporting organic investment in areas of growing sectors like water management solutions, midstream, gas utilities, and data centers. Second, we will focus on deleveraging and reducing the debt incurred in connection with the MRC Global merger, working towards a net cash position. Third, we will continue to pursue strategic M&A by continuing fortification of our pumps production and process solutions business, in addition to foraging opportunities in gas utilities, downstream sectors, and international. Lastly, with a commitment to delivering value to our shareholders, we will opportunistically repurchase shares under our reactivated $160,000,000 share repurchase program. I will now turn the call over to Mark Johnson for the financial results. Mark Johnson: Thank you, Dave, and good morning, everyone. Revenue for the 2025 was $959,000,000, up 51% or $325,000,000 from the 2025, driven by $388,000,000 of MRC Global contribution from the close date of November 6 through the year-end 2025, referred to as the stub period. On a full-year basis, total 2025 revenue was $2,800,000,000, up $447,000,000, or 19%, from 2024. With and without the contribution from MRC Global, this marks DNOW's fifth consecutive year of growth. Adjusted EBITDA, or EBITDA, for the fourth quarter was $61,000,000, or 6.4% of revenue. On a full-year basis, total 2025 EBITDA was $209,000,000, or 7.4% of revenue. U.S. revenue for the 2025 totaled $765,000,000, with MRC Global contributing $298,000,000 in revenue during the stub period. In the U.S., legacy DNOW fourth quarter revenue was $47,000,000, down approximately 10% sequentially. And when looking at MRC Global U.S. activity in the period, it was down similarly, as all sectors historically contract in the fourth quarter with seasonality. Now moving to Canada. Revenue was $51,000,000 for the fourth quarter, down $2,000,000, or 4%, sequentially. For the full year 2025, Canadian revenue was $200,000,000. Although revenue growth faced challenges from low commodity prices, tariff uncertainties, and customer consolidations, our Canadian operations protected margins by exercising rigorous cost management, as customer budgets recalibrate and measures are made for improved profitability. For consolidated DNOW International, revenue was $143,000,000 in the fourth quarter and $312,000,000 for the full year, with approximately $90,000,000 contributed by MRC Global in the stub period. For the legacy DNOW International segment, fourth quarter revenue was $53,000,000, down $1,000,000 sequentially. For the full year 2025, legacy DNOW International revenue was $222,000,000, down 7.5% on a year-over-year basis, primarily due to a combination of fewer projects and the exit of certain countries in our previously discussed cost restructuring activities and service location optimization to improve long-term profitability. In conjunction with the merger of MRC Global during 2025, legacy DNOW changed its inventory valuation method for U.S. inventories from the moving average cost method to the last-in, first-out, or LIFO, method. This change was applied retrospectively beginning in the fiscal year 2023, and the financials will reflect the revised figures where appropriate. The company determined that LIFO is preferable under ASC 250 because it better reflects the current cost of inventory and cost of goods sold, given the commodity-like nature of DNOW's products and the frequent price fluctuations driven by pricing pressure, global supply dynamics, tariffs, and inflation. LIFO inventory benefits or charges are adjusted in the non-GAAP reconciliation tables to arrive at adjusted gross profit, net income, EPS, and EBITDA. Cost of products in the fourth quarter includes $135,000,000 of acquisition-related costs from the partial burn-off of inventory that was stepped up to fair value as part of the MRC Global merger purchase accounting, and also includes LIFO charges of $9,000,000 for the fourth quarter and $27,000,000 in the full year 2025. Overall, DNOW adjusted gross profit for the fourth quarter was $217,000,000, or 22.6%, compared to $147,000,000, or 23.2%, in the 2025. The variance in adjusted gross profit percentage is primarily due to the contribution from MRC Global in the 2025. Selling, general and administrative, or SG&A, expense for the quarter was $226,000,000, up $114,000,000 sequentially from the third quarter. Approximately $75,000,000 of the increase is attributable to the partial period activity of MRC Global, paired with approximately $50,000,000 of transaction-related expenses, partially offset by favorable asset sales of approximately $5,000,000 in the quarter. In the fourth quarter, we reported $20,000,000 depreciation and amortization expense, and considering a full period of MRC Global, we anticipate the first quarter depreciation and amortization to be approximately $25,000,000. As part of our previously announced international restructuring activities, in the fourth quarter, the International segment recorded a $12,000,000 non-cash charge related to the liquidation of a foreign entity. This charge reflects the reclassification of cumulative foreign currency translation losses from accumulated other comprehensive income and loss, or CTA, to the P&L in the quarter. This charge is presented within the impairment and other charges line of our income statement. Moving to interest expense for the quarter was $4,000,000. And now to income taxes. In the 2025, DNOW's income tax benefit was $29,000,000, and our effective tax rate, as computed on the face of the income statement, was 16.5%. When reconciling our tax rate in the fourth quarter, standalone and year-to-date, to our projected 27% effective tax rate for 2025, or even to the U.S. statutory rate of 21%, you have to consider that due to the transaction-related costs, both periods are in an overall loss position. In the fourth quarter, we incurred transaction-related costs and foreign currency translation adjustments that are not deductible for tax purposes. The disallowed expenses, losses, erode that expected tax benefit as a percentage of our pretax loss when reconciling the U.S. statutory rate of 21%. Reducing our effective tax rate for the periods reported as 16.5% benefit. A few additional comments on the MRC Global merger. The merger was structured as a tax-free transaction, and as a result, DNOW received a carryover tax basis in all assets and liabilities of the company. The U.S. GAAP purchase accounting rules require DNOW to recognize the deferred tax asset, deferred tax liability for book-tax basis differences on assets that were stepped up to fair value for financial reporting purposes. DNOW also acquired certain legacy tax attributes from MRC Global, including tax loss carryforwards in the U.S. and international. While MRC Global's net operating losses in the U.S. are likely going to be subject to limitation going forward, DNOW does not expect any limitation to have a material impact on its financial results. For modeling purposes, we expect DNOW's effective tax rate to be approximately 26% to 27% for the full year 2026. Net loss in the fourth quarter was $147,000,000 and was unfavorably impacted by the fourth quarter merger-related costs, including approximately $50,000,000 of transaction-related costs, $12,000,000 in CTA reclassification charges, and $135,000,000 in inventory step-up to fair value amortization related to the MRC Global merger. We estimate the remaining $41,000,000 in inventory step-up charges will be recorded in the first quarter. Our adjusted net income for the fourth quarter attributable to DNOW Inc. on an average cost basis, normalizing for LIFO adjustments and other items, was $23,000,000, or $0.15 per fully diluted share, compared to $28,000,000, or $0.26 per fully diluted share, in the third quarter 2025. Moving to liquidity and capital structure. Our balance sheet remains healthy with ample liquidity of $588,000,000, including $424,000,000 in availability on our credit facility and $164,000,000 of cash at the end of the fourth quarter. Our leverage ratio, based on net debt of $247,000,000, was 1.2 times, and our total debt balance was $411,000,000 at year-end 2025. We continue to target deleveraging by year-end while also executing on select M&A and being opportunistic on our share buyback program. Our existing $850,000,000 revolving credit facility extends into November 2028. Accounts receivable was $174,000,000 at the end of the fourth quarter, with days sales outstanding, or DSO, of 83 days, impacted by the incongruent contribution between the full balance sheet of the acquired accounts receivable and only a partial quarter of sales contribution. DSOs for the legacy DNOW business were relatively flat at 63 days in 2025. Inventory was $1,192,000,000 at the end of the fourth quarter, up $833,000,000 from the 2025 based on the contribution from MRC Global, with 4Q annualized turn rates of three times. Accounts payable was $603,000,000 at the end of the fourth quarter, an increase of $348,000,000 from the third quarter, impacted by the acquired payables. And for 2025, working capital excluding cash as a percentage of annualized fourth quarter revenue was 29.7%, which is higher due to the partial period impact of MRC Global revenue compared with the ending balance sheet. Without MRC Global activity and working capital contribution, legacy working capital as a percentage of revenue was approximately 15% to 15.8%, consistent with prior quarters and also represents the average of April 2025. As we look forward to 2026, we model working capital as a percentage of revenue to approach 25%. In 2025, we generated $83,000,000 cash from operating activities and invested $7,000,000 for capital expenditures to support growth initiatives, primarily in process solutions and midstream areas, paired with investments to support MRC Global. On a full-year basis, cash flows provided by operating activities was $155,000,000 with $25,000,000 in capital expenditures. Considering the transaction-related cash charges paid in the fourth quarter, cash flow was negatively impacted by approximately $30,000,000. In the fourth quarter, under our previously approved share repurchase program, we repurchased $10,000,000 of common stock. As of December 31, our cumulative repurchases under our $100,000,000 authorized share repurchase program totaled $37,000,000. I will now turn the call back to David Cherechinsky. David Cherechinsky: Thank you, Mark. Before I close, I would like to highlight legacy MRC Global's international business, which has delivered its fourth consecutive year of growth, averaging 10% annual growth over the four years ended 12/31/2025. This group achieved its strongest year since 2018 for revenue, marking the best year ever for profitability. Worth noting, 2025 benefited from strong MRC Global International project execution, contributing approximately $35,000,000 of DNOW revenue in the fourth quarter, not repeating at the same level in 1Q 2026. Longer term, we see strategic benefits from our expanded international platform. The combination of MRC Global's international business strengthened our global footprint and technical capabilities, while the April 2025 acquisition of Natron International in Singapore enhances our exposure to electrical and data center-related opportunities, positioning us well for growth. In closing, I have confidence that our team will overcome the obstacles and resolve U.S. MRC Global ERP system issues in this transition year. Our priorities will center on integration execution, aligning commercial strategies, consolidating systems, optimizing the supply chain, and capturing identified cost synergies while maintaining a strong focus on serving customers to minimize further disruption. Before talking about the rest of the year, I want to close our pre-MRC Global chapter by citing results which represent standalone DNOW figures in all instances. 2025 represents our fifth consecutive year of growth, where our core markets actually contracted in each of the last three years. This is DNOW defying gravity. In 2025, we delivered our most profitable year ever since going public 11 and a half years ago. These last four years, from 2022 to 2025, have been our best years ever in terms of absolute dollar EBITDA performance. 2021 was our business transformation period, coming out of COVID, where we developed and executed on a strategy for growth, sustained profitability, and strong cash generation. In these last four years, we produced 81% of the EBITDA DNOW has delivered over these last 11 and a half years since going public. EBITDA averaged better than 7.9% over these last four years, with 2025 EBITDA above that at 8.2%. After this consistent, stellar, and contrary to the way the wind was blowing performance, we had zero debt and plenty of cash for growth. I want to thank my team for these results and this track record. I say this to convey what has been done and what is possible with this team of leaders and add that it will now be a better team with the additional MRC Global leadership who will help us take our company to the next level. Finally, we have decided to delay sequential and full-year guidance, exercising a disciplined approach given persistent challenges related to our ERP implementation within legacy MRC Global U.S. operations, while we are simultaneously operating in a critical phase of integration following this recent business combination. The relative newness of the combined organization limits our ability to produce forecasts with the level of confidence we expect to provide to investors. Importantly, we are taking decisive actions to address these challenges and are executing against a stabilization roadmap. We will reinstate guidance when we have greater operational stability and predictability in MRC Global U.S. operations once we have more clarity. We did not pursue this merger to stay the same. We did so to become meaningfully better. The integration and systems work in front of us are real, but so is this opportunity to unlock scale, innovation, and performance that neither organization could achieve on its own. Our teams are aligned. Our strategy is clear. And our ambition is high. We are ready for what comes next, and we are glad to have our new team members with us on this journey. We will now open for questions. Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. Operator: Your first question comes from the line of Adam Farley with Stifel. Please go ahead. Adam Michael Farley: Good morning, everyone. Let me start in first on a little bit more color on MRC's ERP transition. What was the impact in 4Q from the transition? Any color on when we should expect these headwinds to resolve going into 2026? You know, were these issues broad-based across MRC's business in the U.S., or was it specific to certain sectors? David Cherechinsky: Okay. In terms of the impact, let me give some timing on a quarterly basis. Again, as I mentioned in my prepared remarks, the ERP issues are limited to U.S. MRC only, not the international MRC business. And of course, the ERP impacts do not affect the legacy business for DNOW. In terms of the impact from the second quarter, the system was implemented 08/06/2025. And the revenue decline from the second to third quarter was—was pronounced. And MRC issued a press release when they announced their earnings and talked about that significant sequential decline. They also talked about the notable recovery in revenues in September and October, and they forecasted growth going into the fourth quarter in the mid- to high-single-digit range. I think what we have experienced in reality was, you know, it was a decline in revenues going into the fourth quarter. So there has been revenue loss attributable fully to the ERP implementation, both in the third and fourth quarters, so that impact is notable. In terms of the resolution for the system issues, we have all hands on deck to resolve the core infrastructure issues with Oracle for MRC Global U.S. We are not really sure when the resolution happens, but here is what we are doing to mitigate it in the short term. So we have immediately—we have DNOW systems focused on handling projects, especially bulky projects with a lot of deliveries that are cumbersome to move through the Oracle system at MRC. We are trying to push projects to the DNOW system to eliminate those snags that happened in Oracle. We have stood up—we have added over 200 personnel in the field to maximize customer service, to mitigate customer frustration, and to get products out the door and improve how we service our customers. We have stood up a help desk solely focused on handling issues as they emerge in the field, while we have a parallel team working on resolving matters with our external partners. And we have now taken the DNOW IT and operational excellence teams, who have integrated 24 companies over the acquisitions we have made since we have spun—we have put every company we bought on SAP or Syteline except two—except all—for all 24 companies, we have migrated them. We are very good at this. That team is now playing a major role in mitigating the disruptions and rectifying the problems we are experiencing there. In terms of how broad-based, interestingly, we are seeing stable revenues in the gas utility space. I think the prior management at MRC Global pointed that out in the third quarter earnings release. Very stable revenues there. Those are probably the stickiest relationships we have in our business. We are integrated with many of these customers. We are one of the bigger suppliers in gas utilities distribution, and we have been able to mitigate much of the disruption there. Where we are seeing the biggest negative impacts are in upstream and downstream. Now, you know, I am very comfortable about the recoverability in the upstream space because that is DNOW's sweet spot. You know, MRC's legacy strength has been in gas utilities and downstream, and certainly in their international business. But in the upstream space, we have a plan to migrate 20 locations onto SAP, off Oracle onto SAP. That process has begun. Again, we are handling projects in the SAP environment. And, you know, so we are doing all these things to maximize our revenue recovery as we move forward. But that is some color on your questions, Adam. Thank you. Adam Michael Farley: Thank you, Dave. That is really helpful. You know, turning to 2026 growth expectations, I understand the delay in issuing guidance, but can you maybe just help frame how you are thinking about, you know, maybe organic growth for the year, either by sector or for legacy DNOW? David Cherechinsky: Okay. Well, I will give some kind of some market assessments that we have kind of made, and then I will see if I am answering your question. But in terms of the upstream space, we expect upstream generally to be flat to down, like we have experienced for the last three years. And we have managed our response to that reality very well. We do expect some water management and disposal growth in upstream. That will be a positive, and we are seizing that. We have a real strong FlexFlow Trojan team that is focused on seizing market share there and pursuing growth, and they are primarily focused on upstream, but generally upstream will be flat to down. The midstream space, you know, we focused on midstream for the last three years. The WITCO acquisition from early 2024 really leapfrogged us in that space. Combining with MRC now, you know, we are a real powerhouse in that area. We should see midstream growth, especially in natural—the market itself, and we should be able to take advantage of that as well. I am sorry, natural gas infrastructure, feed gas for data centers, for example, LNG feed gas, et cetera. Gas utilities—our customers will be growing, and we see that as an opportunity, especially as we relieve the issues we are experiencing with Oracle. We have MTech solution meters that we are promoting in the market. We expect to take more wallet share from our customers, and we are pursuing revenue synergies like I talked about on the call for gas utilities. Downstream industrial—we think downstream will have a real strong turnaround a couple of quarters coming up. We expect chemicals to be down a little bit. But in terms of end market opportunities, we see some real strength, except for the midstream space, which represents about 40% to 50% of our business going forward. So that is kind of some end market focus. Again, in the U.S., MRC Global's arena, you know, where we—like prior MRC Global management, and we are saying today—we have lost some revenue momentum there. But I am confident we will get it back, especially as we alleviate the issues we are experiencing today. Adam Michael Farley: Alright. Thank you. And then if we look at the cost synergy target, you know, and some expected acceleration in year one, what are the main drivers driving that improved cost synergy target in 2026? And if we look further out, I mean, do you expect the total cost synergy target to move up over time? Thank you. David Cherechinsky: Yeah. Let me address the first half of the question in terms of what is driven the improvement in the expected realized savings in the first year. That is primarily due to—this is one of the positive offshoots of having had issues with the ERP implementation in U.S. MRC Global—there is a real urgency to be able to take care of our customers through a system that can accommodate normal activity. So, for the first time in my career, I have seen locations clamoring to get on SAP—for example, the DNOW standard for communicating commerce in the business. So we are going to fast-track—you know, I wanted to take, you know, kind of a longer extended period to migrate movement in the upstream space, but we are going to be able to fast-track that. And with that, we will see cost synergies. We will see the relief of revenue leakage that came from the implementation of the system, and we are seeing real closeness between our leadership in the field, our sales talent, and the folks from both sides, from MRC Global and DNOW. So I think that is the main thing: we are on a faster track; we are seeing some of the realization of those cost savings coming from a fast on bringing those organizations, primarily in upstream, together. In terms of long term, what the opportunities are—you know, we said, you know, over three years, we would get to $70,000,000 in savings. You know, I am not prepared to say we will surpass that. My instinct is there are opportunities to do so. You know, one of the things that—the reason why most of the savings in our original projections would happen in the third year is we need to decide how we are going to manage the business holistically going forward from a systems perspective. You know, it is possible that that gets ironed out earlier than expected. So, you know, I think we will see real strength in the momentum with cost savings. But I have said from the beginning, since our first call in June, that the real promise here is in growth, and focusing on what we bring to our customers—what we bring to our customers as they consolidate; how we become uniquely suited to service our customers as they grow and as they grow from an M&A perspective. So I think that is where we are at on that front, Adam. Adam Michael Farley: Alright. Thank you. I will leave it there. David Cherechinsky: Okay. Thanks for your questions. Operator: Your next question comes from the line of Alex Rygiel with Texas Capital. Please go ahead. Alex Rygiel: Thank you, and good morning, gentlemen. Good morning, Alex. David, I appreciate your decision regarding guidance. But maybe I could ask it a different way. Can you maybe talk about, strategically, your longer term vision for sort of revenue growth for the consolidated company and profit margins? And, you know, maybe if you are not yet ready for that, maybe if you could kind of give us some directional guidance on maybe just the DNOW business for 2026 and how you are thinking about revenue growth and margins in just that core business? David Cherechinsky: Well, let me try this. You know, we kind of gamed out how we would answer a question like this. You know, we are going to give, you know, select guidance on parts of the business. I really do not want to do that. But let me just give you some color on how we saw movement into the new year, whether we have these disruptions or not. Generally, we see our overall business with kind of a flattish revenue. That is how I saw going into 2026—flattish revenue. Very little revenue change organically. We saw the opportunities around cost synergies, integration of the businesses, revenue synergies that come from us working closer together and using each other's inventories and locations where one entity did not have geographic coverage but the other does. So we saw revenue upside to mitigate some of that overall revenue flatness. I gave some color on the end markets. DNOW is a very acquisitive company. We will do deals this year. And that would augment and kind of excite some of the bottom line implications. But that has been deferred a bit, you know, given what we are seeing with the ERP issues. Long term, the real benefits from DNOW and MRC coming together are these things. If you look at—you know, we are a distributor. Our relationships with our customers are almost—I mean, are, you know, rivaling in importance with our suppliers. In many cases, especially with the top manufacturers, DNOW or MRC was the number one or number two distributor in the supply chain. Or sometimes DNOW was number 12 and MRC was number one. We are going to take advantage of that. Our ability to be competitive—and we have numerous competition everywhere we operate, and—but sometimes our competition is very specialized. On a product line, on the manufacturer. We are going to be able to better compete, and with the cost synergies, we will be able to pull up costs and, you know, further improve our competition. So I think the long game is a better situation—better situated with our top—the top manufacturers our customers demand. A lot more volume, exciting suppliers about seeing a DNOW—combined DNOW, MRC Global—as the main source of pushing their products into the market. So better buying, better product availability, standardization, customers clamoring for access to products to grow the end markets. All that is going to conspire to, long term, enable together what we could not have done separately. So I think that is the main plan: volume, better costing, better competitiveness, and then earnings ultimately in that 8% EBITDA range where DNOW has, you know, has enjoyed over the last four years, but bringing the whole organization up over the next several years. Alex Rygiel: That is helpful. And then in the past, you have discussed the importance of the people at DNOW and the people at MRC, and how important it is to give them a lot of attention. So can you speak with regard on your activities to retain and incentivize these key employees during this time of kind of ERP headwinds? David Cherechinsky: Yeah. That is a good question. So as you would expect with any merger of equals, there will be some turnover, and then in a situation where there is a disruption like this, there is a heightened sense of concern over that. So we have been very intentional about making sure our top talent is rewarded from a financial perspective and with various forms of tools used to do so, but also from a long-term perspective of making sure we put the top—the best people, the best salespeople, the best sales talent, the best IT talent—in the leadership positions to drive the future. So in terms of incentives, the things that are going to drive—enable us to keep our people is to show them long term we are going to pay bigger bonuses, bigger commissions. We are going to be more important to suppliers. We are going to have better leverage with them. The customers will benefit from how we manage the supply chain, and our personnel will as well. So with a mix of financial remuneration, challenging our folks, rewarding them, making them part of our solutions, including them in our decision making, I think all that long term has got us where we are today and will get us where we are going. We brought on some top leadership, sales and ops talent from MRC Global, and they have the same mentality we do. And we are deploying all the arrows in our quiver to make sure we excite, retain, grow our top talent and win in the market because of that organization. Operator: Press star then the number 1 on your telephone keypad. And your next question comes from the line of Chuck Minervino from Susquehanna. Please go ahead. Chuck Minervino: Hi. Good morning. Hi, Chuck. If you could touch on the ERP issues a little bit more. Can you tell us, do you feel like you have kind of hit the the worst of it and are working your way past that? Or is the worst of it still in front of you? Just trying to gauge kind of what you know right now. How long this lingers through 2026, at least— David Cherechinsky: Yeah. You know, I think—and this may not be the best way to answer the question—but I think we are an organization very good at coping. We have hard chargers working overtime, taking care of our customers, to really conceal the imperfections in the system. So how we have coped is through hard work, and that is helping. We—you know, things are better. I have visited several of our locations, several of our U.S. MRC Global locations, talked to a lot of the leadership, a lot of the people in the warehouses. Warehouse activities are hard to push through the system right now. But just sheer force is how we are, you know, working to overcome some of this stuff. In the meantime, in the background, we are working with our external partners to fix some of the snags that slow things down. But we still have issues where it takes—where there are old invoices from earlier in the implementation where it takes 20 minutes to process paying one invoice for a supplier. Those are some older activities that we believe—that stuff has been resolved on a go-forward basis, but there are still some lingering effects that still slow us down. So in terms of when this gets resolved, you know, we will probably have our next earnings call in the next 80 days, Chuck, and I will have a better feel for it. In the meantime, we are doing things to simply bypass the obstacle that this implementation presents. And I talked a little bit about it—handling more transactions through SAP. We are sitting down—we have an MRC Global inside salesperson sitting next to the DNOW salesperson entering orders in SAP to take care of their customers, to reverse the revenue losses we have experienced in the first few quarters after go-live. So we are, you know, coping. We are cleaning up old problems. We are fast-tracking solutions to improve process flow in the system. And we have stood up a help desk to help with, you know, anecdotal one-off kind of problems. So we have triaged the situation. We are working it hard. And I will be able to talk more about it in the next 80 days or so. Chuck Minervino: And then just, my other question is on free cash flow. Can you talk a little bit about free cash flow in 2026? Maybe if you are not quite ready to talk about numbers there, just some of the puts and takes as well. David Cherechinsky: Yeah. I think I will say this. We are going to generate cash in the $100,000,000 to $200,000,000 range. Could be better. We have, you know, pent-up inventory, uncollected receivables. Both, to me, I see those as in-the-moment, near-term problems. Near-term problems, but those are opportunities too. We are going to level our inventory as we stabilize the system. We are going to collect those bills. I think from a cash flow perspective, it is going to be a good year for us. So, you know, that is how I answer that question. I think it is going to be a good year for us. And we will try to give more color on our next call if we can. Hoping to, of course. Operator: Thank you for your questions. That concludes the question-and-answer session of today's call. Mr. Brad Wise, I turn the call back over to you for final remarks. Brad Wise: Well, thank you for joining us today and your interest in DNOW. We look forward to discussing our first quarter 2026 results on our next conference call in May.
Adam Kressel: Good day, and welcome to the AdvanSix Inc. Q4 2025 Earnings Conference Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Adam Kressel, Vice President of Investor Relations and Treasurer. Please go ahead, Adam. Thank you, Bailey. Good morning, and welcome to AdvanSix Inc.'s Fourth Quarter 2025 Earnings Conference Call. With me here today are President and CEO, Erin N. Kane and Interim CFO, Christopher Gramm. This call and webcast, including any non-GAAP reconciliations, are available on our website at investors.advansix.com. Note that elements of this presentation contain forward-looking statements that are based on our best view of the world and of our business as we see it today. Those elements can change, and the actual results could differ materially from those projected, and we ask that you consider them in that light. We refer you to the forward-looking statements included in our press release and earnings presentation. In addition, we identify the principal risks and uncertainties that affect our performance in our SEC filings, including our Annual Report on Form 10-K as further updated in subsequent filings with the SEC. This morning, we will review our financial results for the fourth quarter and full year 2025 and share our outlook for our key product lines and end markets. Finally, we will leave time for your questions at the end. I will now turn the call over to AdvanSix Inc.'s President and CEO, Erin N. Kane. Erin N. Kane: Thanks, Adam, and good morning, everyone. We appreciate you joining us here today for our quarterly call. As you saw in our press release, the AdvanSix Inc. team executed well to close out 2025. A great thanks to our organization for remaining focused on safely optimizing operational and commercial performance. We delivered full year adjusted EBITDA of $157,000,000 and generated $6,000,000 of free cash flow, in a year characterized by continued cyclical trough market conditions for Nylon Solutions, robust plant nutrient supply and demand fundamentals amid an increasing input cost environment, and mixed chemical intermediates industry conditions with lower acetone net pricing as anticipated. While the macro environment has been challenging, there were a number of highlights over the past year to recognize. We successfully executed our planned turnarounds at the low end of target spend range. We delivered record annual production across both of our key ammonia and sulfuric acid unit operations. We invested $116,000,000 in CapEx funding key growth and enterprise initiatives, including our Sustained Growth Program. We progressed tax strategies, claiming additional 45Q carbon tax credits, received the final $26,000,000 settlement proceeds in the first quarter 2025 related to the 2019 PES supplier shutdown claim, and we preserved our competitive dividend while maintaining conservative debt leverage levels and ample liquidity. At the end of the year, we also welcomed Jeffrey Bird to our Board of Directors. Jeff's breadth of experience and deep financial and operational leadership in complex industries will further strengthen our Board's strategic oversight. As we look ahead to 2026, the end market environment remains mixed overall. We anticipate continued strength in plant nutrient supply-demand fundamentals and expect acetone margins to remain near cycle averages while nylon remains plateaued in its trough. Now there have been several recent industry announcements pointing to capacity rationalization in the nylon chain and lower operating rates in China, which we believe should lead to more favorable supply and demand conditions over time. Raw material input costs are expected to be a headwind, particularly in the first half of the year, on meaningfully higher sulfur and natural gas prices. As many well know, we recently navigated a significant winter storm across the country and Mid-Atlantic. We are proud that we were successful in safely and continuously running our operations through these extreme temperature, ice and snow conditions. Everyone at our operating sites came together to deliver this result. We did have to contend with natural gas restrictions, additional maintenance costs, and we elected to moderate operating rates, which was a necessary impact to maintain safe operations. In total, we anticipate roughly an $8,000,000 to $10,000,000 unfavorable earnings impact in the first quarter, which we do intend to fully offset as we progress through the year. In this environment, we remain focused on controllable levers to support through-cycle profitability and cash conversion. This includes optimizing production output and sales volume mix, driving fixed cost reductions and productivity, maintaining a disciplined approach to cash management, and taking a risk-based approach to capital investment and plant turnaround scoping. Our strategic initiatives, unique combination of assets, and business model are core to our durable competitive advantage and long-term positioning. With that, I will now turn it to Christopher Gramm to discuss the financials. Christopher Gramm: Thanks, Erin. I am now on Slide 4 to discuss our results for the quarter. Sales of $360,000,000 in the quarter increased by approximately 9% versus the prior year. Sales volume increased approximately 11%, driven primarily by the prior year impact of the Q4 2024 extended planned turnaround. Market-based pricing was favorable by approximately 2%, driven by the continued strength in plant nutrients, reflecting favorable North American ammonium sulfate supply and demand conditions, partially offset by lower acetone prices as anticipated. Raw material pass-through pricing was down 4% following a cost decrease in benzene, which is a major input to cumene, our largest raw material and key feedstock to our products. Adjusted EBITDA was $25,000,000, up $15,000,000 from last year, while adjusted EBITDA margin was 6.9%. The improvement in earnings versus last year was primarily driven by the favorable year-over-year sales volume and lower cost impact of plant turnarounds, partially offset by a decline in chemical intermediates pricing net of raw material costs. On a sequential basis compared to the third quarter, earnings were roughly flat as higher plant nutrient pricing was offset by increased sulfur and natural gas input costs, as well as the impact of the previously disclosed unplanned Chesterfield electrical outage and planned Hopewell turnaround. Now let us turn to Slide 5. On this slide, we are detailing our quarterly sales contributions by product line, as well as price and volume indicators, both year-over-year and sequentially. This provides better insight into our commercial sales performance. In Nylon Solutions, volumes declined sequentially as we moderated caprolactam and resin production rates to manage inventory in a softer demand environment. Domestic market-based pricing held relatively steady, while raw material pass-through pricing saw declines on lower benzene input prices. Plant nutrients continue to perform exceptionally well, with strength in volume, pricing, and mix. Granular ammonium sulfate volumes increased year-over-year, supported by the resiliency of sulfur nutrition demand and continued progress of our Sustained Growth Program. And lastly, chemical intermediates pricing was stable sequentially, but lower year-over-year consistent with expectations as acetone pricing moderated from the multi-year highs experienced in 2024. I am now on Slide 6, where we have summarized our full year 2025 financial results. Sales were roughly flat year-over-year, while we delivered full year adjusted EBITDA of $157,000,000 and 90 basis points of margin expansion to 10.3%. Strong plant nutrients pricing and volume performance, in part supported by our Sustained Growth Program, helped to overcome higher natural gas and sulfur feedstock cost, continued trough market conditions for Nylon Solutions, and lower acetone pricing over raws. I would also highlight that the strong fourth quarter performance supported positive free cash flow generation for the full year 2025. On the bottom right portion of the slide, we have included a snapshot of our plant utilization across our three major facilities. At Hopewell, operating rates were roughly flat in 2025 on a year-over-year basis. As Erin mentioned earlier, we delivered record annual production across both of our key ammonia and sulfuric acid unit operations at our Hopewell site, while continuing to optimize granular ammonium sulfate production. At our Frankford phenol and acetone plant, utilization rate was up on improved performance year-over-year. At Chesterfield, operating rates were down high single digits. This reflects the strategic choice to moderate production and manage inventory levels, as well as the site-wide electrical outage and fire. Erin N. Kane: Thanks, Chris. I am now on Slide 7 to discuss our end market exposure and what we are seeing across our major product lines. Our diversified end market exposure continues to be a strategic advantage, providing resiliency across cycles. Agriculture and fertilizer remains our largest end market. Overall, we continue to see favorable ammonium sulfate supply and demand fundamentals, with sulfur nutrition demand growing approximately 3% to 4%. There is caution around crop prices and sensitivity to declining farmer profitability, in addition to higher sulfur input costs which are impacting fertilizer margins. Sulfur prices settled at nearly $500 per long ton in 2026. That compares to $165 per ton in 2025 and $310 per ton last quarter, so a meaningful increase that the industry is experiencing. There continues to be robust acceptance of the sulfur value proposition, with growers seeking to maximize crop yields. In the first seven months of this fertilizer year, granular sales volume is up 10%. We continue to build upon last year's success and are on pace for another record year of sales growth. As the value chain has been preparing for the upcoming planting in spring, we are seeing inventory fill up in the channel, particularly with the impact of weather-related delays. We are now seeing our first half order book shift more into the second quarter when fertilizer typically moves very quickly through the chain to the fields. While there is risk to our first quarter planned volume, we also view this as an opportunity to place more tons in the second quarter when we traditionally see the highest in-season pricing. To put this into historical context, at this point in the year, we are typically sold out several months in advance, meaning that pricing for the first quarter shipments is based on the back half of the prior year, and the second quarter shipments largely reflect first quarter pricing. This year, given the considerations around anticipated acceleration of input costs, expectations for corn acres planted, and tight domestic fertilizer supply, we engaged in a more limited pre-buy program and have taken a more cautious and patient approach to the order book. By not selling forward, our average price in the order book is above last year's pricing and much closer to current published pricing without the historical lag. Moving to building and construction, dynamics here remain largely unchanged. We have direct and indirect exposure across nylon and chemical intermediates through flooring, oriented strand board, and paints and coatings, to name a few. Our view is that latent demand will build and begin to recover through 2026, assuming moderating interest rates going forward. Third-party estimates indicate approximately 3% commercial construction growth anticipated in 2026. For nylon fiber and filament, in particular, we see a stronger presence in commercial applications such as office, hospitality, and leisure. Broadly across Nylon Solutions, the industry remains in an extended trough. Pricing has stabilized domestically with margins supported by lower benzene input costs. However, demand remains muted across construction, automotive, food packaging, and broader industrial applications. As I mentioned earlier, encouragingly, we are seeing increased evidence of capacity rationalization in Europe and lower operating rates in China, which again should support more balanced supply and demand conditions over time. In chemical intermediates, phenol demand remains weak, driving lower global operating rates and supporting more balanced acetone supply and demand dynamics. While acetone margins have moderated, they remain near cycle averages. Downstream MMA demand is improving following planned and unplanned downtime in 2025. In addition, we note that the refinery grade propylene pricing marker is being discontinued in 2026, and the industry is moving to buying cumene on a polymer grade propylene-minus pricing construct. Lastly, as of January, the Commerce Department and International Trade Commission made final determinations to renew the antidumping duties for acetone into the U.S. for another five years. Let us move to Slide 8. As we look ahead to the remainder of 2026, our strategic priorities remain clear. We are focused on bolstering sustainable cash flow generation through risk-based prioritization of capital investments, cost productivity, tax optimization, and commercial and operational execution. Our balance sheet is positioned to provide optionality and the ability to weather the challenging macro environment, with leverage exiting 2025 at approximately 1.2 times net debt to adjusted EBITDA. Now starting with CapEx, we are expecting to spend in the range of $75,000,000 to $95,000,000 in 2026, compared to $116,000,000 in 2025. This reduction reflects a rigorous evaluation and risk-based assessment of base investments and enterprise programs, with continued progression of growth projects, including our Sustained Growth Program. We anticipate a similar range of investment in 2027 as well. We prioritize capital based on compliance, risk and reliability assessments, and efficiency improvements. We have also taken a refined risk-based approach to our planned turnaround schedule in 2026. While it is an ammonia turnaround year at Hopewell, we reduced the scope of these activities, focusing on critical maintenance and compliance areas. In total, we now anticipate the pretax income impact of plant turnarounds to be in the range of $20,000,000 to $25,000,000. The majority of the spend will be in the second quarter this year as we necessarily aligned our work with planned natural gas pipeline maintenance already scheduled by our vendor partners. As we previewed on our last earnings call, we are embarking on a non-manpower fixed cost takeout initiative which is expected to support margin resilience. Supported by our recent ERP upgrades and enhanced management tools and data analytics, this multiyear productivity program targets approximately $30,000,000 of annual run-rate cost savings. From an execution perspective, we remain focused on optimizing production output, inventories, and sales volume mix while remaining nimble to capture market opportunity in the areas that are most profitable. We are also actively managing our cash tax rate, which we anticipate being below 10% this year. Lastly, all of these contributing items support expected meaningful improvement in free cash flow for the year. As a reminder, our linearity, consistent with past years, will represent a first-half use of cash, primarily due to the unwinding of cash advances, the run-rate of cash payments on CapEx, and timing of annual payments. Conversely, we anticipate the second half to be a source of cash to achieve our full-year expectations. Let us turn to Slide 9 before moving to Q&A. We believe that AdvanSix Inc. offers a compelling investment thesis, with several value drivers supporting through-cycle profitability and sustainable performance. Our leading U.S.-based position, advantaged value chain, and business model provide inherent competitive advantages. We are aligned to a diverse set of end market applications, including roughly 40% of our revenue tied to underlying strong agricultural fundamentals. Our ammonia-sulfuric acid platform integration coupled with leading granular crystallization technology underpins our ammonium sulfate growth and how we win in plant nutrients. These capabilities, combined with our asset utilization agility and product mix, position us to navigate cycles and capitalize on emerging opportunities. With disciplined capital allocation, a healthy balance sheet, and a keen focus on productivity and free cash flow generation, we believe we have the flexibility and resilience to navigate current market conditions and create long-term shareholder value. With that, Adam, let us move to Q&A. Adam Kressel: Thanks, Erin. Bailey, can you please open the line for questions? Operator: We will now begin the question and answer session. Our first question comes from David Silver with Freedom Capital Markets. Please go ahead. David Silver: Yes. Hi, good morning. Thank you. Good morning. A number of questions. I guess I would like to start with a couple on the nylon, your nylon outlook. And in particular, you did use the term that there have been a string of industry announcements. So I am aware of the one closure in Europe by Fibrant. I am just wondering if you could recap, have there been other capacity closure announcements? And secondly, where would you expect the reduced capacity or operating rate to be most prominent? In other words, what end markets do you anticipate production capacity or production cutbacks to, where would that show up most prominently in your view? Erin N. Kane: Sure. Yeah. So let us touch on Europe because I think that certainly is the area where, as you mentioned, Fibrant has already reported their intention to shut down. Europe remains structurally long relative to its demand, and utilization has been hovering 50–60% type. And so there is a Fibrant announcement. Domo is also operating in insolvency, and so while not announced, I think there is a watch-out there in the consideration on their long-term prospects. To put it in perspective, if they both were to exit operating in Europe on a caprolactam perspective, utilization would certainly move up into the 80s range, albeit on lower output relative to the full regional capacity, but much more in line from a structured supply-demand fundamental that would, ultimately, support pricing. We think by a couple hundred dollars per metric ton. So that is Europe. In China, there are also reports that they are managing their operating rate, if you will, in the country. And so we have seen their rates come down in the fourth quarter, operating anywhere from the high-60s to mid-70s range, which certainly goes a long way to the global oversupply, if you will. And we actually see that reported in constrained ammonium sulfate coming out of the country as well. So at the end of the day, there are things that are pointing to that direction because, obviously, the monomer caprolactam is the key starting point for the nylon chain. And so when you think about the overall health of the end markets, it is hard to say certainly on a global basis. Building and construction in North America continues to be a challenge here; that impacts fiber and filament into carpet. Globally, automotive would be a contributor to engineering plastics challenges in its demand. And then in the U.S. on packaging, again, just a little bit more challenged. Main applications here in meat and cheese protective packaging, and you still see some inflationary pressures on red meat that are impacting some demand there. So, again, pointing in the right direction. We are always looking for these green shoots, if you will, and I think certainly it appears that perhaps we are at an inflection point for this movement. David Silver: Okay. Thank you for all that detail. I would also just like to follow that with a question about your outlook on sulfur market dynamics. So just personally, my view is sulfur is probably one of the least predictable large-volume products to kind of get a real handle on supply and demand drivers at any given point. And of course, there has been upward pricing momentum for several quarters now. Just from your perspective, maybe if you could give us a sense of, firstly, is the key driver to the more recent larger lift in pricing? In other words, is it more supply-driven or demand-driven, or are there other factors you would point to? And then secondly, what are your expectations for where sulfur might be by the end of the year? In other words, do your folks see a plateauing or a moderation in the pace of increases here? Or just anyway, your company’s view on the market dynamics for sulfur right now would be very helpful. Erin N. Kane: Yes. Certainly, Dave, we are sitting at nearly 20-year highs for sulfur prices right now too. So to your point, perhaps they are predictable until they are not predictable, or non-interesting until they become interesting. And a similar type surge has happened twice before, 2008 and 2022, and in both times, prices dropped precipitously in the following sort of six months. And we will note that the first-quarter settlement was delayed, I think, as negotiations were extended in a response to perhaps the bid-ask on a global pricing basis. Relative to supply-demand, I think they both contribute to the current level of pricing. The industry has seen stronger demand in ag and global mining, right? But we have also seen supply constraints in the U.S. Gulf and lower output in other regions that is certainly contributing to the global prices. So that international market, we will watch the spot prices that sustained $500-plus sulfur since Q4 of 2025. But I would note at these levels, certainly, we do not participate in this space, noticing that there is mentioning now of phosphate demand destruction in the industry, which would also, again, in just the supply-demand consideration, contribute to the expectation that we would see sulfur, I believe, come off across 2026. But as you know, it is hard to predict the exact timing there. David Silver: And maybe just to briefly, but leaving the pricing dynamic aside, are you confident that you will have available supply? In other words, your overall operations do rely to a certain large extent on a continuous supply of sulfur. Again, leaving aside the cost, do you have any concerns about the availability of product in the amounts and on a timely basis that you require? Erin N. Kane: No. We contract with a number of suppliers to make sure that we have ample access, and so at this point, we do not have any concern in that regard. David Silver: Okay. Great. I wanted to swing over to the Section 45Q carbon credits please. So two questions, I will ask them both here. But firstly, could you talk about the size and the timing of the Section 45Q credits that you expect to be recognized or claimed in 2026? And then secondly, about a week ago, the federal government did issue a ruling, and a little too complicated for me to repeat, but basically their new policy is that CO2 is no longer considered a pollutant. And in light of that, I am kind of wondering whether you see any impact from that ruling on your ability to claim and ultimately receive Section 45Q credits, in the amount, I guess, of $100,000,000 to $120,000,000 through 2029 or so. Is that still your view? Is there any impact on the magnitude or the timing of your plans to participate in carbon credits available to you? Christopher Gramm: Yes. Thanks for the question, Dave. I would say, obviously, we keep an important eye on what is happening in the 45Q credits arena because they are collectively worth $100,000,000-plus to us over the next several years. So let me take your two questions sequentially here. On the endangerment finding, does that have an impact on the 45Q? I think the simple answer there is no. What is probably helpful is to think about it in two frameworks. One is the EPA framework and the other is the tax law framework. The endangerment finding from an EPA perspective defines what types of air emissions are subject to the EPA’s oversight, and the endangerment finding here would have an impact on the EPA around air permits and air emissions itself, whereas the 45Q is based in tax law. So in fact these things are generally separate. In fact, 45Q predates the endangerment finding, and 45Q has had strong bipartisan support since its creation. In fact, recently in the One Big Beautiful Bill Act, there is strong support for the 45Q, particularly around utilization, and we saw that, with the credit rate was actually increased and is now on par with permanent sequestration. So the answer there is that we still see the 45Q carbon credits being available to us moving forward, and we do not see a lot of risk with that. In terms of what we think we can expect, just as a reminder, we have to go through a process where we get approval on the life cycle assessments from the Department of Energy, and then once that is approved, we can go ahead and claim the credits. As a reminder, we have already been approved and have claimed the credits for years 2018 through 2020. For 2021 life cycle assessment, we filed that with the Department of Energy in August 2025, and we have been working with them to answer their questions and sort of help them through the application. Upon approval of that credit, those approvals are typically good for a three-year cycle, and we would expect that each of those three years is worth about $6,000,000 or so. And as we sort of continue to work through this process and catch up to sort of the real time, we would expect that we would be able to book those three years, so an $18,000,000 impact for 2026, once again subject to the Department of Energy’s approval of our life cycle. But we are confident in our position and we are working with them on the claim and the approval. David Silver: That is great. And I am going to be stealing your phrase about endangerment ruling, so I needed to thank you. Just one quick follow-up. But regarding the carbon credits that you claimed in 2025, first half of the year, have those been received by your company to this point? Are they in the Q4 results or anything? Or, sorry, your December 31 balance sheet? Christopher Gramm: Yes. No. It is a good question. So the record is in the P&L across 2024–2025. We are still, in order to receive the refund, we have to work through the audits, and the audits for those particular years have started. It is obviously subject a bit to the IRS’s resource and workload, but we are working through it with them. Once we get through the audits, obviously, there is a bit of an approval process that has to happen. So we have available resources to support the audit and answer all the questions, but it is a bit of a process that is a little bit out of our control. But I think we have the resources committed to make this process move as expeditiously as possible. We have not received them yet, but I do believe we would expect them this year. David Silver: Okay. So another factor in figuring out your boosting maybe your free cash flow outlook for 2026? Okay. Maybe one last question. I did take note in the prepared remarks about record ammonia and sulfuric acid production in 2025. And I was kind of scratching my head, given the age and the seasoning of those facilities, it is notable that you are achieving record production at this point. Should we think about the nameplate capacity for ammonia and sulfuric acid, should we think about that being kind of permanently increased either due to debottlenecking or process improvements or things like that? Or would you say the record production rate over the past year was more, I do not know, just due to shorter-term operating performance variables that might be better next year, might be a little worse? But does the record production rate at some of your basic facilities, does that point to kind of a permanent increase in production potential going forward? Erin N. Kane: And I appreciate the question. The callouts, obviously, are two critical assets that are key to our platform integration. The rates and the performance in these assets have continued to improve over time. We have had a keen focus, and I think this is a demonstrative proof point to how we have put forth our repair maintenance capital investments and our preventative maintenance programs overall that is contributing to uptime and output. We certainly have also had plans to continue an ongoing effort to identify what I would call more incremental debottlenecking areas that are definitely contributing as well to these two key assets in our footprint. I would say our currently disclosed capacities are still great to use as a reference point. We will continue to assess if we need to update those. But I would also say part of our opportunity sets and differentiation is we have the ability to monetize additional profitable volumes off of these assets that do not move down into the caprolactam process. That continues to be a key focus for us as well. So all of that contributed to, certainly in this environment, our core strategic effort is to place molecules into the most profitable areas of opportunity. And the plants did a great job, those teams, to reach these records and, importantly, stopped it in a turnaround year. So great kudos to them. David Silver: Okay. Great. I will stop there. Thank you very much for all the detail, all the color. Erin N. Kane: Great. Thanks, David. Operator: Our next question comes from Pete Oesterlin with Truist Securities. Please go ahead. Pete Oesterlin: Good morning. Thanks for taking the questions. First, I just wanted to— Adam Kressel: Good morning. I just wanted to start by following up on the conversation around the input cost pressure you are seeing right now, particularly for natural gas and sulfur. I guess just based on the assumptions you are baking in right now for the first quarter, about how much of an earnings headwind do you expect that pricing versus raw materials will represent in the first quarter versus fourth quarter? Christopher Gramm: Yeah. So I think we are seeing pretty significant increases, with sulfur almost at $500 a ton and natural gas also going up, kind of that $3.00/Dth range. We are implementing a number of price increases across really the entire portfolio. What we are sensitive to is in, I think, the ammonium sulfate space, there is a bit of probably a gap in terms of the net raw material price impact, probably in the $5 to $6 per ton range. And then similarly in nylon, I think the pricing there is probably stronger correlated with benzene, so we are moving prices up there as well. But we are seeing a bit of margin compression versus natural gas. So overall, we are probably seeing sequentially some margin challenges, probably in the $10,000,000 to $15,000,000 range. Pete Oesterlin: Okay. Great. Thanks. And then you touched on this, but I guess just given the elevated input cost pressure, is there potential for that to support a higher degree of pricing power than what has historically been typical for ammonium sulfate as you look kind of beyond first quarter later in the year? Or I guess, if you are competing with alternatives that are not under as much pressure, those specific materials, does that limit the pricing power at all? Erin N. Kane: Yeah. So we go back to the fundamentals on ammonium sulfate. Certainly, we have the nitrogen baseline. So to that extent, the entire nitrogen market is experiencing the increase in natural gas prices, and so that nutrient value, as you probably have seen in other spaces, urea has continued to move up as well, particularly as we head into the season. So that sets the base. And then, obviously, we have to price for the premium of sulfur, and certainly we are seeing industry prices move up mostly in line with sulfur. If you think about our posting and latest pricing, moved up $50 several weeks ago, another $10 more recently. So again, trying to work in lockstep where we can accordingly. Again, the largest sort of fertilizer that takes sulfur is phosphate, and certainly that, as I mentioned before, has some consideration relative to their outlook. But we are trying to take all things into consideration. Lots comes into play as to what pricing power is: future crop prices, farmer profitability, acres planted, ultimately how the weather is going to allow the planting season to take off. But we are doing everything that we do in our playbook relative to positioning material into the chain and getting ready for the season. Pete Oesterlin: Great. That is very helpful. Just lastly, I wanted to ask about your guidance for your planned turnaround activity this year. Just historically, in years where you are doing maintenance on the ammonia unit, the expense has been meaningfully higher than what you are guiding to for 2026. So just wondering what maintenance activities are you forgoing this year? And when do you expect, or I guess do you expect, you will need to catch up on this in future years? Erin N. Kane: Yeah. No. No. We recognize that it probably looks different than historically. As we mentioned, we have our natural gas pipeline that comes into the plant requiring some maintenance inspections by our vendors, so we necessarily had to align. Ideally, we would align to the timing of which that takes place. So it allowed us to come back through and risk-prioritize, again focusing on key compliance considerations and the necessary preventative maintenance. And so that is kind of the real drivers here. Overall, we are taking a look in general at our global turnaround strategies and what that really entails. Obviously, we have talked a lot about the importance of the ammonia plant and the sulfuric acid plant, key to our integration. But I think there are potentially some opportunities to look at those in a different light as we go forward. So we will have to come back and share as we go forward. But we are really not forgoing anything that we believe is critical at this time to sustain our operations. Pete Oesterlin: Great. I will leave it there. Thanks for the color this morning. Operator: This concludes our question and answer session. I would like to turn the call back over to Erin N. Kane for any closing remarks. Erin N. Kane: Thank you all again for your time and interest this morning. We are confident in our demonstrated ability to perform through a multitude of environments and are positioning the enterprise to win long term. This is supported by our integrated business model, durable competitive advantage, healthy balance sheet, and continued risk-adjusted investment decisions to drive through-cycle performance. With that, we look forward to speaking with you again next quarter. Stay safe and be well. Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
Operator: Good morning, and welcome, everyone, to the fourth quarter 2025 earnings call for Employers Holdings, Inc. Today's call is being recorded and webcast from the Investors section of our website, where a replay will be available following the call. Statements made during this conference call that are not based on historical facts are considered forward-looking statements. These statements are made in reliance on the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations expressed in our forward-looking statements are reasonable, risks and uncertainties could cause actual results to be materially different from our expectations, including the risks set forth in our filings with the Securities and Exchange Commission. All remarks made during the call are current only at the time of the call and will not be updated to reflect subsequent developments. The company also uses its website as a means of disclosing material nonpublic information and for complying with disclosure obligations under the SEC’s Regulation FD. Such disclosures will be included in the Investors section of our website. Accordingly, investors should monitor that portion of our website in addition to following our press releases, SEC filings, public conference calls, and webcasts. In our earnings press release, and in our remarks or responses to questions, we may use non-GAAP financial measures. Reconciliations of these non-GAAP measures to our GAAP results are included in our financial supplement as an attachment to our earnings press release, our investor presentation, and any other materials available in the Investors section of our website. I will now turn the call over to Katherine Holt Antonello, our Chief Executive Officer. Katherine Holt Antonello: Good morning, everyone, and welcome to our fourth quarter 2025 earnings call. Joining me is Michael Aldo Pedraja, our Chief Financial Officer. During today's call, I will begin by providing highlights of our fourth quarter 2025 results and then hand it over to Michael for more details on our financials. Before our Q&A, I will come back to you with some additional thoughts. I would like to begin with how we are actively addressing the elevated frequency of California cumulative trauma claims. To be clear, this remains a California-specific issue. Claim frequency in our other states and within non-CT claims in California continues to trend favorably. We recognized early that the CT environment was creating a hard market in California, and we moved decisively, have implemented rate increases, and tightened underwriting on several classes of business. We are not waiting for legislative reform, though we do believe the growing impact on California businesses and public budgets will make the case for reform increasingly difficult to ignore. While we are confident that these California pricing and underwriting actions, along with the steps we are taking across the country, will strengthen our underwriting profitability, they are also likely to reduce written premium in 2026. It is worth highlighting that our small commercial franchise maintained strong retention rates throughout 2025, a clear sign the investments we have made in automation and ease of use are genuinely resonating. I am also pleased to report that our standard fourth quarter full actuarial assessment concluded that no additional reserve strengthening or adjustments to our current accident year loss and LAE ratio was necessary. In addition to our internal analysis, we engaged a market-leading actuarial firm to independently assess our estimated ultimate loss, and they concluded that our carried reserves were well within the range of reasonable estimates. We believe the outcome of these two analyses confirms the actions we took in the third quarter adequately addressed recent workers’ compensation trends. I am excited to discuss our new workers’ compensation product, which represents a strategic expansion of our capabilities. By leveraging our core workers’ compensation expertise into the excess layer, we are creating new growth avenues while diversifying our risk profile. Our aggressive adoption of AI tools has accelerated the product’s development, and I am pleased to report that we are now accepting submissions. The early market response has been strong, and we expect this product will deepen our distribution partner relationships while expanding our addressable market. We continued to execute on our commitment to returning capital to stockholders by delivering $215,000,000 of share repurchases and regular quarterly dividends in 2025. In January, we completed the $125,000,000 capital recapitalization plan that we announced in the third quarter. These capital management steps reflect our continued confidence in our financial position and our commitment to delivering value to shareholders. Along with our operational performance, these actions increased our book value per share, including the gain, by 11% to $51.31. We believe our focus on disciplined underwriting, prudent risk management, and strategic investments continues to position us strongly in the workers’ compensation insurance market, which is evidenced by A.M. Best’s recent reaffirmation of our insurance companies’ financial strength rating of A. With that, Michael will now provide a deeper dive into our fourth quarter financial results, and then I will return to provide my closing remarks. Michael? Michael Aldo Pedraja: Thank you, Katherine. Gross premiums written were $156,800,000 compared to $176,300,000 for the prior-year quarter, a decrease of 11% due primarily to a decrease in new business writings and lower final audit premiums, partially offset by higher renewal business premium. Our losses and LAE were $134,400,000 versus $113,200,000 a year ago, an increase of 18.7% due primarily to an increase in the accident year 2025 selected loss and LAE ratio and the absence of favorable developments in the fourth quarter of this year. Commission expense was $25,800,000 for the quarter versus $24,400,000 for the prior year, an increase of 5.7% driven by nonrecurring adjustments. Underwriting expenses were $39,800,000 for the quarter versus $44,200,000 for the prior year, a decrease of 10%. The improvement in underwriting expenses for the fourth quarter was due primarily to continued expense management efforts, including reduced personnel costs and other variable costs, such as policyholder dividends and bad debt. Net investment income was $31,400,000 for the quarter compared to $26,700,000 for the prior year, an increase of 17.6%, due mostly to private equity investment return distributions and an overall higher book yield on our fixed income portfolio. As Katherine mentioned, we executed an investment rebalancing to address several strategic goals, including reducing our equity investment allocation to target levels and increasing our overall portfolio yield. Our equity investments, like most in the market, have appreciated very nicely and reached 16% of our investment portfolio versus a target allocation of approximately 10%. As part of the investment rebalancing, we also sold low-yielding fixed income securities to offset the associated equity gains and redeploy the proceeds into higher-yielding fixed income investments. The investment rebalancing accomplished several goals, including reducing our equity investments to target allocation, increasing our overall investment portfolio yield by a net 40 basis points, extracting an estimated net present value gain of $16,000,000, and reducing our required capital. The sale of fixed income investments produced an after-tax realized loss of $40,000,000, which reduced net income and adjusted book value per share during the quarter. Our stockholders’ equity and book value per share were not impacted by the investment rebalancing. Our fixed maturities maintain a modified duration of 4.4 with strong average credit quality of A+. Aided by our investment rebalancing, our weighted average book yield increased to 4.9% at quarter end compared to 4.5% for the prior year. Our adjusted net income, which excludes net realized and unrealized investment gains and losses and the benefit of our LPT deferred gain amortization, was $14,500,000 for the quarter, compared to $28,700,000 last year. During the fourth quarter, we repurchased almost 2,400,000 shares of our common stock at an average price of $40.94 per share, or $97,000,000. The average repurchase price represented a 20% discount to our book value per share, including the deferred gain, and adjusted book value per share. During the period from January 1 through February 18 of this year, the company repurchased a further 898,594 shares of its common stock at an average price of $44.28 per share. Our remaining share repurchase authorization is $53,100,000. As we have highlighted, we aim to be good stewards of our shareholders’ capital. At current price levels, we are convinced that the Employers Holdings, Inc. stock is meaningfully undervalued, and executing share repurchases at these price levels produces a significant return on investment and generates significant value for our continuing shareholders. I will now turn the call back to Katherine. Katherine Holt Antonello: Thank you, Michael. Yesterday, our Board of Directors declared a first quarter 2026 quarterly dividend of $0.32 per share. The dividend is payable on March 18 to stockholders of record on March 4. As evidenced by the recapitalization plan, we remain confident in Employers Holdings, Inc.’s financial strength and financial prospects and will continue to manage our capital strategically. We returned $104,100,000 to our stockholders in the fourth quarter through a combination of regular quarterly dividends and share repurchases at an average price that was highly accretive to our book value per share. Our focus on operational excellence is unwavering. In 2025, we drove our expense ratio down 180 basis points to 21.7%, and we believe it will continue to decline with our wide deployment of AI. In addition to our new excess workers’ compensation risk management tools, which are comprised of dozens of specialized AI agents, AI has helped us internally develop a significant claims platform enhancement and other new claim capabilities backed by our agentic ecosystem. Our mindset around the adoption of AI is not just about efficiency; it is also about creating a sustainable competitive advantage for the company. As we look ahead, we are confident that we are operating from a position of strength: solid reserves validated by independent analysis, improving expense ratios, expanding product capabilities, and a solid balance sheet. We believe we are making deliberate strategic choices to position Employers Holdings, Inc. for the future, and we are executing with discipline and urgency. We are absolutely confident in the path that we are on. Before we take questions, I want to take a moment to thank the entire Employers Holdings, Inc. team. This was a demanding year, and the way this team rose to meet it speaks volumes about who we are as a company. From our underwriting and claims teams navigating the challenging California market, to the technology teams whose AI initiatives are already delivering measurable results, to our finance, operations, and support teams who keep us running efficiently every day, none of what we have accomplished would be possible without you. We will now open for questions. Operator: Thank you. Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Our first question comes from Mark Douglas Hughes of Truist. Your line is open. Mark Douglas Hughes: Yes, thank you. Good morning. Katherine, anything about the trajectory of CT claims seems like once the lawyers get a new shiny object in front of them, they just keep piling in. Are you seeing any further acceleration? Has it is it on a relatively even keel? Katherine Holt Antonello: That is a great question, Mark. We are seeing throughout 2025 that the acceleration of the frequency that we saw in early 2025 and throughout 2024 as those accident years emerged late, we are seeing that acceleration slow down and flatten quite a bit. So that has been good news. Having said that, CT claims as a percentage of overall claims is still quite elevated relative to what we have seen in the past. But what we are seeing now—I am not ready to claim victory yet—is that the acceleration of the frequency has flattened. Mark Douglas Hughes: And you mentioned in 2026, likely to see reduced written premium. You talked about a hardening market, which implies that others are recognizing the issue, but it seems like there are still competitors taking share. Could you maybe just talk about that dynamic again, kind of hardening market, but you are still being cautious about it? Katherine Holt Antonello: When I talk about a hardening market, I think it is specific mostly to California, where the bureau took a rate increase. We saw a significant increase that was also filed in Nevada. So most of it is happening in the West. But I would characterize the California market as hardening. Generally speaking, though, across the country, the environment is still fairly competitive. We are seeing pockets, though, carriers that are exiting certain states or certain classes of business, definitely seeing tightening of risk selection, especially in states where you do not have a lot of flexibility in pricing like Florida. I would not characterize it as a major trend. I do not believe all companies are as forward-looking as we are in some of these aspects. But we have decided we are just not going to play in some of the areas where we feel like pricing margins have become too thin. I can give you just some high-level numbers of what we are seeing in our book. Countrywide in the fourth quarter, payrolls were basically flat for our renewal book, but we are seeing an average rate on renewal increase a little over 5% for our entire book. Mark Douglas Hughes: How is that California versus non-California? Katherine Holt Antonello: California is driving quite a bit of that. But we are seeing, like I said, certain states that are pushing rate higher. I mentioned Nevada earlier, but there are other states where we are more focused on risk selection than on pricing being the lever that we are pulling. Mark Douglas Hughes: What is your view on buybacks for 2026? We still have quite a bit left in our share repurchase authority that we did quite a bit in the ’25. And as we just mentioned in our prepared remarks, in January and early February. Katherine Holt Antonello: I do expect it will return to a normal level of repurchase authority in 2026, absent some change. But we are trying to be very opportunistic in terms of when we buy our shares back. Mark Douglas Hughes: And then your expense ratio, if top line is down in 2026, can you still get improvement in the expense ratio? Katherine Holt Antonello: We are hoping to still get improvement. As I mentioned, we have a lot of AI initiatives that are underway. We put an AI roadmap in place in 2025 and are setting the stage to get all of our data into Databricks. We started utilizing AI a couple of years ago when we embedded a large language model in our new digital first notice of loss tool. We are rolling out Anthropic’s Claude to the entire organization. Our developers are enhancing their productivity by using AI code assistance. We have started with the claims area, where we are incorporating AI into over 40 to 50 identified use cases, but I would say our latest achievement is definitely our excess workers’ compensation product that we just rolled out. We used voice transcription that was ingested by Claude to build the tool, and it iterated daily for about four weeks, and we were ready to launch months earlier than we initially expected. Results were truly remarkable. We have more tools going in place in the first quarter that are more claims-focused: a caseload summary tool for our claims adjusters that is going to provide better continuity of care when an injured worker’s claim gets passed from one adjuster to another. We have an agentic assistant that we are hoping to put into production for our premium auditors. All of these things we feel like are going to help our expense ratio in the long run. These are real. These are not just tests that we have going on behind the scenes, and that is where we are hopeful we are going to get more expense savings. Mark Douglas Hughes: Very good. Thank you. Katherine Holt Antonello: Thanks, Mark. Our next question comes from Robert Edward Farnam at Green Capital. Your line is open. Good morning, Robert. Some more a couple more questions on the excess workers’ comp. Can you still hear me? Robert Edward Farnam: Yes. Okay. So, obviously, there are competitors that are already entrenched in this business. How do you expect to win business? Is it more the fact that you can do it more efficiently because of the use of AI, or are there other factors you think that can be successful for you? Katherine Holt Antonello: We do feel like there are areas that we are going to focus on within the product that are not provided by other carriers in an efficient way. In talking about loss control, the ingestion of the data, we do feel like we are going to be able to provide quotes in a faster manner because of the AI tool that we are going to be using to ingest all of the data when we get a submission and to process the loss runs that can go back 10 to 15 years on excess workers’ comp. This is part of our diversification effort. We have been researching new products for about a year. In excess, we felt like it was the right place to start. Because of our extensive expertise in workers’ comp, we felt like it was just a natural extension of what we do now. We do feel like while there are carriers that are entrenched in the space, there are not a lot of carriers that do it on a significant basis—that it is a significant amount of their portfolio. So we felt like there was room for another carrier to enter the market, and we do feel like we are going to make a difference that is going to put us ahead of the pack. Robert Edward Farnam: Okay. Obviously, you have done a lot of research on this. So what type of performance does this product perform, I should say? In terms of combined ratio, and is there a difference between the expense ratio component and loss ratio? In other words, is it more of a higher expense ratio or lower loss ratio type product? And just to get a feel for going forward—not necessarily in 2026, but when it gets up to full speed—what type of impact that might have relative to your traditional book? Katherine Holt Antonello: Relative to the guaranteed cost business that we have written for forever, the excess comp space, while it is a bit, what I would say, lumpier, overall, we feel like it is going to perform in the mid-80s in terms of a combined ratio. The way we built it and the way that we are using AI to underwrite it, we do feel like our expense ratio will be strong and competitive in the space. And then the loss ratio is just typically less than what you would see in the guaranteed cost space. Robert Edward Farnam: And it is still driven by state loss costs and, you know, the same way that the primary workers’ comp system is? Is it still priced the same way? Katherine Holt Antonello: The pricing is a little bit different. The underlying pricing, you still start with the state loss cost like you do with guaranteed cost, but because the self-insured retention can be anywhere from $500,000 to $2,000,000, you are eliminating a lot of the frequency that comes along with the guaranteed cost book of business, so it is more severity-driven than frequency-driven. We think that is one of the things that is a nice play to put excess along with the guaranteed cost. It is very similar to large deductible. Robert Edward Farnam: Right. Right. Okay. And last one for me. You may not be able to give any specification here, but once a few years down the road when this is kind of up to speed, what do you envision in terms of the proportion of your total premium that could be coming from excess versus the primary book? Katherine Holt Antonello: It is a good question. We do not give guidance, as you know, but we would love to see this be 10% of our overall written premium over the next, you know, four to seven years, say, and I know I am being very broad in my projection there. Robert Edward Farnam: I expect nothing but broad right now. Katherine Holt Antonello: So, yes, that is kind of what we are hoping for. We will obviously keep everyone apprised of our progress there. Robert Edward Farnam: That is it for me. Thanks. Katherine Holt Antonello: Thanks, Robert. Operator: There are no further questions at this time. I would now like to turn the call back to Katherine Holt Antonello for closing remarks. Katherine Holt Antonello: Thank you all for joining us this morning. We very much look forward to meeting with you again in April. This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Good morning, and welcome to Fidelity National Financial, Inc.'s Fourth Quarter and Full Year 2025 Earnings Call. During today's presentation, all callers will be placed in listen-only mode. Following management's prepared remarks, the conference will be opened for questions with instructions to follow at that time. I would now like to turn the call over to Lisa Foxworthy-Parker, Senior Vice President, Investor and External Relations. Please go ahead. Lisa Foxworthy-Parker: Thanks, operator, and welcome, everyone. I am joined today by Mike Nolan, CEO, and Anthony Park, CFO. We look forward to addressing your questions following our prepared remarks. F&G's management team, including Christopher Blunt, CEO, and Conor Murphy, President and CFO, will also be available for Q&A. Today's earnings call may include forward-looking statements and projections under the Private Securities Litigation Reform Act, which do not guarantee future events or performance. We do not undertake any duty to revise or update such statements to reflect new information, subsequent events, or changes in strategy. Please refer to our most recent quarterly and annual reports and other SEC filings for details on important factors that could cause actual results to differ materially from those expressed or implied. This morning's discussion also includes non-GAAP measures, which management believes are relevant in assessing the financial performance of the business. Non-GAAP measures have been reconciled to GAAP where required and in accordance with SEC rules within our earnings materials available on the company's investor website. Please note that today's call is being recorded and will be available for webcast replay. I will now turn the call over to Mike Nolan. Mike Nolan: Thank you, Lisa, and good morning. The fourth quarter results rounded out an excellent year for our Title and F&G business both in terms of results and execution. Our Title business delivered outstanding results in the current environment. We had adjusted pretax Title earnings of $401,000,000 in the fourth quarter and $1,400,000,000 for the full year. This generated industry-leading adjusted pretax Title margins of 17.5% in the fourth quarter and 15.9% for the full year. Our fourth quarter results reflect strong performance across the business highlighted by exceptional strength in our direct commercial business. Additionally, our disciplined expense management drove strong incremental margins. Our achievements are a testament to our employees, the best Title professionals in the industry. I would like to extend a profound thanks for all that they do to consistently deliver industry-leading results, provide innovative solutions to our customers, and ensure secure and efficient real estate transactions. Mike Nolan: We have transformed our business through decades of pioneering technology solutions and investments in the business, driving efficiencies, and helping Fidelity National Financial, Inc. maintain a competitive edge. As a result, we have expanded our margins over the last three years and significantly outperformed prior cyclical lows. 2025 was no exception, and we are excited to further enhance our industry-leading technology capabilities, which I will speak to further in a few minutes. Looking at our Title results more closely, on the purchase front, we are successfully navigating the low transactional environment, with purchase orders opened of 3,200 per day in the fourth quarter, in line with 2024 and reflecting normal seasonality. For the month of January, our daily purchase orders opened were up 1% versus the prior year and up 31% versus December. On the refinance front, volumes continue to be responsive as 30-year mortgage rates decreased during the fourth quarter. This generated refinance orders opened of 1,700 per day in the fourth quarter, up from 1,600 in the sequential quarter. Our refinance orders opened per day were up 38% over 2024, up 75% for the month of January versus the prior year, and up 28% for the month of January versus December. On the commercial front, we delivered direct commercial revenue of nearly $1,500,000,000 for the full year, which was our third-best year on record, trailing only the exceptional markets of 2021 and 2022. For the fourth quarter, direct commercial revenue was $479,000,000, a 27% increase over 2024. This was driven by a 33% increase in national revenues and a 20% increase in local revenues. National daily orders opened were up 9% over 2024, and local market daily orders opened were up 8% over 2024. Total commercial orders opened were 815 per day, up 8% over 2024, and up 11% for the month of January versus the prior year. We continue to see growth in commercial activity driven by a broad set of asset classes including industrial, multifamily, affordable housing, retail, and energy. This year's performance is especially notable given minimal contribution from the office sector, which remains subdued but is showing signs of improvement. We have also seen a 21% increase in commercial refinance orders opened for the full year 2025 over the prior year. Looking ahead, we have entered 2026 with a strong inventory of commercial deals to close, and the office sector is a potential added element as we move throughout the year. Overall, total orders opened averaged 5,300 per day in the fourth quarter, with October at 5,700, November at 5,600, and December at 4,600. For the month of January, total orders opened were 5,900 per day, up 29% over December. Our Title business is performing extremely well in what is still a low transactional environment. The National Association of Realtors, or NAR, has ranked 2025 home sales among the lowest levels since 1995 due to high mortgage rates and a housing shortage. Notably, the U.S. population has grown by over 70,000,000 people over the last three decades. According to NAR, home sales have been close to 4,000,000 per year since 2023, well short of the 5,100,000 average over the last thirty years. Over the next few years, we anticipate home sales will trend back toward the historical average. We are well positioned for the current market and poised to benefit from a potential turn in the housing market should mortgage rates drop further in 2026 and beyond. We remain bullish on the long-term prospects for the Title insurance business even in the current environment. Our disciplined operating model is centered on managing our business to the trend in open orders to deliver industry-leading results. Over the long term, this discipline has generated a steady level of free cash flow, allowing us to continuously invest in our business through attractive acquisitions and technology initiatives. We had a number of accomplishments in 2025, advancing our technology and innovation. To provide a few highlights, our inHere digital transaction platform has scaled to a fully deployed enterprise solution, engaging 80% of our residential sale transactions and reaching nearly 2,800,000 unique users throughout 2025, demonstrating deep integration into daily workflows. This foundational technology drives efficiency, transparency, and a superior customer experience in the escrow closing process with built-in compliance and enhanced fraud protection. We also expanded our identity verification processes and technology to streamline and secure customer authentication, helping combat the rise in impersonation and wire fraud in property sales. We rolled out AI tools enterprise-wide in 2025, deploying practical tools to enhance productivity and margin efficiency. We have made significant progress in building AI literacy across the company, and teams are using AI to streamline workflows, increase efficiency, and unlock new ways to better serve our customers. Finally, our curated data and technology touched over 90% of our total volume, supported by our proprietary title plans and patented title automation that is integrated into our centralized workflows. Our approach of leveraging title automation tools and data at scale has led to significant productivity improvements and been an important driver of our technology strategy. These successful investments in technology have played a critical role in our ability to maintain our industry-leading position for adjusted pretax Title margin. Over time, we believe that our ongoing investment in technology, combined with our robust curated data, will lead to increased efficiency and productivity in our operations that will continue to support our market-leading pretax Title margin. Turning now to our F&G segment. F&G's assets under management before flow reinsurance have grown to $73,100,000,000 at year end, up 12% over the prior year. On a stand-alone basis, F&G reported GAAP equity excluding AOCI of $6,000,000,000 at year end and has grown its book value per share excluding AOCI to $44.43, up 62% since the 2020 acquisition. On December 31, Fidelity National Financial, Inc. completed the distribution of approximately 12% of the outstanding shares of F&G's common stock to Fidelity National Financial, Inc. shareholders, returning approximately $500,000,000 of tangible value to Fidelity National Financial, Inc. shareholders. Following the distribution, Fidelity National Financial, Inc. retains control and majority ownership with approximately 70% of the outstanding shares in F&G. This has increased F&G's public float from approximately 18% to approximately 30% after the distribution, strengthening F&G's positioning within the equity markets and facilitating greater institutional ownership. This distribution reflects our confidence in F&G's long-term prospects and is intended to unlock shareholder value by enhancing market liquidity and broadening investor access to F&G's shares. F&G has increased its quarterly common stock dividend by 14% in the fourth quarter, supported by its strong and growing cash generation as it transitions to be more fee-based, higher margin, and less capital intensive. Going forward, expect F&G to be a meaningful source of capital to Fidelity National Financial, Inc. through its $112,000,000 annual common and preferred dividends, at the 70% ownership level, which indirectly benefits Fidelity National Financial, Inc. shareholders. With that, let me now turn the call over to Anthony Park to review Fidelity National Financial, Inc.'s fourth quarter and full-year financial performance and provide additional insights. Anthony Park: Thank you, Mike. Starting with our consolidated results, we generated fourth quarter total revenue of $4,100,000,000. Excluding net recognized gains and losses, our total revenue was $4,100,000,000 as compared with $4,000,000,000 in 2024. The net recognized gains and losses in each period are primarily due to mark-to-market accounting treatment of equity and preferred stock securities, whether the securities were disposed of in the quarter or continue to be held in our investment portfolio. We reported a fourth quarter net loss of $117,000,000 including net recognized losses of $47,000,000 compared with net earnings of $450,000,000 including net recognized losses of $373,000,000 in 2024. Fourth quarter results include a $471,000,000 noncash deferred income tax charge resulting from our year-end distribution of F&G shares to Fidelity National Financial, Inc. shareholders, which reduced our ownership of F&G below 80%. This distribution triggered an accounting requirement to recognize a deferred tax liability on the accumulated difference between our book and tax basis in F&G. This noncash charge has no impact on our current cash position, operations, or liquidity and represents a potential future tax obligation that would arise only if we were to sell or distribute additional shares of F&G in the future. This item is excluded from adjusted net earnings, along with other mark-to-market effects and nonrecurring items. Adjusted net earnings were $382,000,000, or $1.41 per diluted share, compared with $366,000,000, or $1.34 per share, for 2024. The Title segment contributed $306,000,000, the F&G segment contributed $104,000,000, and the Corporate segment contributed $4,000,000 before eliminating $32,000,000 of dividend income from F&G in the consolidated financial statements. For the full year 2025, we saw strong performance for both the Title segment and the F&G segment, which together generated solid profitability. Total revenue, excluding gains and losses, was $500,000,000 in the full year 2025, and reflects a 7% increase over the full year 2024. We delivered $1,400,000,000 in adjusted net earnings, an increase of 7% over $1,300,000,000 in full year 2024. The Title segment contributed over $1,000,000,000, the F&G segment contributed $412,000,000, and the Corporate segment contributed $3,000,000 before eliminating $117,000,000 of dividend income from F&G in the consolidated financial statements. Turning to fourth quarter financial highlights specific to the Title segment, our Title segment generated $2,300,000,000 in total revenue in the fourth quarter, excluding net recognized losses of $58,000,000, compared with $2,100,000,000 in 2024. Direct premiums increased 21% over the prior year, agency premiums increased 7%, and escrow, title-related and other fees increased 9%. Personnel costs increased 12%, and other operating expenses increased 9%. All in, the Title business generated adjusted pretax Title earnings of $401,000,000 compared with $343,000,000 for 2024, and a 17.5% adjusted pretax Title margin for the quarter versus 16.6% in the prior-year quarter. As Mike said earlier, these results were driven by strong performance across the business as well as disciplined expense management. Our Title and Corporate investment portfolio totaled $4,900,000,000 at December 31. Interest and investment income in the Title and Corporate segments was $102,000,000, excluding income from F&G dividends to the holding company. This was down 6% from the prior-year quarter due to the impact of the Fed funds rate cuts throughout 2024 and 2025. Looking ahead, we expect a range of $95,000,000 to $100,000,000 in interest and investment income per quarter during 2026, assuming two 25 basis-point Fed rate cuts during the year. In addition, we expect approximately $112,000,000 of annual common and preferred dividend income from F&G to the Corporate segment. Our Title claims paid of $80,000,000 were $8,000,000 higher than our provision of $72,000,000 for the fourth quarter. The carried reserve for Title claim losses is approximately $34,000,000, or 2% above the 4.5% of total Title premiums. Next, turning to financial highlights specific to the F&G segment. Since F&G hosted its earnings call earlier this morning and provided a thorough update, I will provide a few key highlights. F&G's AUM before flow reinsurance increased to $73,100,000,000 at December 31, up 12% over the prior year. This includes retained assets under management of $57,600,000,000, up 7% over the prior year. F&G reported gross sales of $14,600,000,000 for the full year, including $3,400,000,000 in the fourth quarter. This marks one of our best sales years in history, driven by favorable market conditions and strong demand for retirement savings. F&G generated core sales of $9,000,000,000 for the full year, which includes indexed annuities, indexed life, and pension risk transfer, and had $5,600,000,000 of funding agreements and multiyear guaranteed annuities, two products we view as opportunistic depending on economics and market opportunity. F&G's net sales were $10,000,000,000 for the full year, including $2,300,000,000 in the fourth quarter. This reflects flow reinsurance at varying ceded amounts in line with capital targets for multiyear guaranteed annuities and fixed indexed annuities. Adjusted net earnings for the F&G segment were $412,000,000 for the full year. This included $104,000,000 of adjusted net earnings in 2025. F&G's operating performance from their underlying spread-based and fee-based businesses continues to be strong. F&G continues to provide an important complement to our Title business. The F&G segment contributed 30% of Fidelity National Financial, Inc.'s adjusted net earnings for the full year 2025, as compared to 38% in 2024, 30% in 2023, and 23% in 2022. From a capital and liquidity perspective, Fidelity National Financial, Inc. continues to maintain a strong balance sheet and balanced capital allocation strategy. Fidelity National Financial, Inc. has returned approximately $800,000,000 of capital to shareholders during the full year 2025. This reflects common dividends of $546,000,000 for the full year, including $140,000,000 in the fourth quarter, as well as share repurchases of $251,000,000 for the full year, including $30,000,000 in the fourth quarter. In November, our Board of Directors approved a 4% increase in the quarterly cash dividend to $0.52 per common share. From a capital allocation perspective, we ended 2024 with $786,000,000 in cash and short-term liquid investments at the holding company. During 2025, the business generated cash to fund our $550,000,000 common dividend, paid $75,000,000 of holding company interest expense, $150,000,000 investment in the F&G common equity raise, and $250,000,000 in share repurchases, all while keeping pace with wage inflation and funding the continued higher spend in risk and technology required in today's landscape. We ended the year with $659,000,000 in cash and short-term liquid investments at the holding company, which is about 85% of the amount held at year-end 2024. This concludes our prepared remarks, and let me now turn the call back to our operator for questions. Operator: Thank you. And at this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press 2 if you would like to remove your question from the queue. One moment while we poll for questions. Our first question comes from Bose Thomas George with KBW. Please state your question. Bose Thomas George: The first question is just on the margin. You guys did a great 15.9% margin this year. You know, as you look into 2026, how do you see the margin trending? It looks like your guidance on interest income suggests that will not be really much of a headwind in this, given what you are seeing in commercial and residential. Just thoughts on the margin as we enter '26? Mike Nolan: Sure, Bose. It is Mike, and good morning. I think our outlook on '26 is certainly more optimistic than when we came into '25. You know, the base case coming into '25 was pretty much like '24, and then we got outperformance in commercial and a little bit in refi, and good expense management to drive a nice beat over the prior year. The positive here is we are entering a year now where rates are in the low six or even six. I think I saw a headline today that said we are at the lowest rates we have had in the last three or four years, and I think that should drive more volume in purchase, which was flat in '25 over '24. So we would expect to see an uptick there. I think MBA and Fannie Mae are estimating about 10% more existing home sales in '26, and then the refi opportunity should be much better in '26 as well. And commercial should be as good or better. I think we have a lot of momentum still in commercial with orders up in the fourth quarter, up in January, and a nice pipeline as we go through the year. Bose Thomas George: Okay. Perfect. Thanks. And then actually, on the agent split, it looks like it went up a little bit this quarter or, I guess, declined in favor of the agents. So did that just reflect, like, a geographic mix, or was there something else to call out there? Mike Nolan: Yeah. I do not think it moved too much. It was probably just geography there. We have been you know, we watch that pretty closely and actually have been very consistent for several years now. You might note that our agency premiums were not up as much as our direct premiums, and that is really more a function of the mix of business, the fact that we have a very strong commercial presence on the direct side. And we do on the agency side as well. But that delta, if you will, between, I do not know, a 21% increase in direct premiums and a 7% increase in agency is primarily related to commercial. Bose Thomas George: Okay. Great. That is helpful. Thanks a lot. Mike Nolan: Thanks. Operator: Your next question comes from Mark Douglas Hughes with Truist Securities. Please state your question. Mark Douglas Hughes: Yeah. Thank you. Good afternoon. Good morning. In the commercial fee per file in '26 that you described, do you think it is as good or better overall for the coming year? Anything about the deal size that you are seeing in the pipeline that gives you some indication about fee per file? Mike Nolan: Yeah, Mark. It is Mike. I would say that certainly in the fourth quarter, we saw bigger transactions that closed maybe vis-à-vis, you know, the fourth quarter of last year, and our national commercial fee per file was up significantly, as you know. I would say we still have nice deals in the pipeline that should generate strong fee per files. I did not I do not think I said that I expect the commercial fee per file in '26 to be as good or better. I think I said that that is a bit more of the wild card because you do not really know the mix. But there are a lot of good deals in the pipeline. Mark Douglas Hughes: Yeah. Understood. I was referring to I think your overall guidance was as good or better in terms of the commercial volume. The inHere platform, you talked about, I think, 80% engagement. That has been I think last quarter, you might have said 85%, but assuming kind of relatively stable, do you think the engagement has kind of stabilized? Anything structural around those engagement numbers we should look for to hold steady or increase? Mike Nolan: Yeah. Good question. I would expect them to increase. The engagement has been great. The goal is really to be over 90%. And the reason the numbers change around a bit, we were still migrating operations to the SoftPro platform as we went through the year, even through into the fourth quarter. And so as new operations get on, their engagement levels are lower, and then they build up over time. So in the operations that are a bit more mature on the platform, we are getting engagement plus 90%. Mark Douglas Hughes: Yeah. Very good. And then finally, anything new on the regulatory front? On the pilot program or anything from the FHFA that you would throw out? Mike Nolan: I would say it has been quiet. The pilot still exists. I have not heard a lot about what the plans are. It is my understanding it is set to expire in May, maybe gets extended. I do not think we know. But it just does not really seem to have impacted our deal flow, I would say, on the refi side. Mark Douglas Hughes: Thank you very much. Mike Nolan: Thanks, Mark. Operator: To remove your question from the queue, you can press 2. Next question comes from Geoffrey Dunn with Deutsche Bank. Please state your question. Geoffrey Dunn: Just wanted to follow up on Bose's question. Hey. On the Title margin, you know, just given you ended the year so strong, do you still feel like that 15% to 20% normalized range is the right range, even with the AI efficiencies and the technology piece? Then sounds like just given the recent trends, you still think that '26 should continue moving closer towards the midpoint of that range if we assume Fannie and MBA forecast. Is that right? Mike Nolan: Yeah, Mike. It is Mike. So, I would say long term, as we see the impacts of more efficiencies in AI and things like that, we might consider maybe not even long term, but we might consider changing the range. Right now, it still seems appropriate because even though we expect the year to be better, it is still a very volatile environment, I think, as we all know. And we are still at existing home sales at 30-year lows for the last three years. So you have got that as a backdrop. With improvement in volumes like the Fannie Mae and MBA forecast and more refi, I do think we could move into that more to that middle range of margin. But remember, we have got to get through the first quarter, and that is the historically soft quarter for the industry, and that always presents a little bit of a challenge around just where you can get on your full-year margin. Geoffrey Dunn: Got it. Thanks. And then I just wanted to check in on capital real quick. I know you and F&G both raised the dividend towards the end of the year. Could you just check back in on how you are thinking about capital allocation going forward and the types of businesses you might regularly be looking at from an M&A perspective? Anthony Park: Sure, Mike. This is Tony. I will start, Mike can pitch in. I mean, capital is pretty consistent in terms of what our normal capital allocation would be, which is the dividend, which to your point, we raised it in the fourth quarter as we typically do, and we expect to spend probably $560,000,000 or so in cash to pay our common dividend. Our interest expense runs about $75,000,000, so very modest there. Obviously, we are reinvesting in the business on a regular basis and continue to do that on the technology side and the efficiency side, and that really occurs before we even upstream anything to the holding company. And then beyond that, it becomes more opportunistic. We look at acquisitions, to your question, we look at stock buybacks. I expect us to be active in both of those areas. I think you will see more acquisition activity in '26 versus what we have seen in the last few years. I think that our cash flow has been strong. I think there are probably more opportunities in the title agent space and possibly some other areas as well. And then on the buyback front, we like to have a consistent cadence of buybacks as we work our way through the year when we are not blacked out. But we are also opportunistic, and to the extent we see weakness in the share price, I expect us to be more aggressive like we were back in the second quarter. I think overall, I think I mentioned earlier, we returned about $800,000,000 to shareholders in the form of dividends and buybacks in 2025. And I would expect another very strong cash flow generation year in 2026. Mike, I do not know if you wanted to touch on M&A at all, or are we good? Mike Nolan: I would just agree. I think there will be more opportunities in the M&A space as we go into '26 and beyond. It has been fairly quiet for the past few years. So we are excited about some opportunities there. Operator: Your next question comes from Jeffrey Dunn with Dowling & Partners. Please state your question. Jeffrey Dunn: Good morning. Good morning. Tony, what are your expectations for dividends up from operations in '26, both from regulated and unregulated? Anthony Park: The regulated number is probably in the $400,000,000 to $450,000,000 range. That one, because it is related to the prior-year results on a statutory basis, that one is certainly easier to estimate. The other operations is much more difficult. I think last year it was somewhere in the $600,000,000 or $650,000,000 range, and I would not be surprised to see that number or better in 2026. But, again, that is on real-time results, which obviously we would have to project that out. Jeffrey Dunn: Got it. And then just following up on M&A. Curious if there are any tech initiatives in the market that stand out as a need or opportunity and more attractive to buy than build. Mike Nolan: Good question, Jeff. I would say from a tech stack standpoint, we feel comfortable about where we are at. We will be investing more in our SoftPro platform as we go forward, and obviously we have got the inHere really rolled out well. But if we saw things certainly in the tech space that would be helpful, we would buy it. Jeffrey Dunn: Does anything particular stand out on the back end? In terms of any need, I mean, for example, I think you have been renting your online notary services. You know, anything like that that makes more sense to bring in-house? Mike Nolan: I do not really think so on the notary side. You have got various plug-ins there that we can take advantage of, and to own a notary company I do not think adds a lot of value, and then you are in some notary businesses typically that are not title-related, and you have got to think about whether you want to do that. So no. I think we are good in that space. Jeffrey Dunn: Okay. Thanks. Mike Nolan: Thanks. Operator: And this will conclude our question-and-answer session. I will now turn the conference back over to CEO Mike Nolan for closing remarks. Mike Nolan: Thanks for joining our call this morning. We have delivered outstanding performance in 2025, with our complementary businesses executing well in the current market. The Title segment is performing well in what is still a low transactional environment and is capitalizing on stronger commercial activity. We are well positioned for the current market and remain poised to benefit from a potential turn in the housing market should mortgage rates drop further in 2026 and beyond. We remain bullish and continue to invest in the business for the long term while delivering industry-leading margins. Likewise, F&G is executing on its strategy that is focused on balancing continued growth in its spread-based business alongside the fee-based flow reinsurance, middle-market life insurance, and owned distribution strategies, as they focus on delivering long-term shareholder value. Thanks for your time this morning. We appreciate your interest in Fidelity National Financial, Inc., and look forward to updating you on our first quarter earnings call. Operator: Thank you for attending today's presentation. The conference call has concluded. You may now disconnect.
Operator: Hello, and welcome to Inseego Corp.'s Fourth Quarter 2025 Financial Results Conference Call. Please note that today's event is being recorded. [Operator Instructions] On the call today are Juho Sarvikas, Chief Executive Officer; and Steven Gatoff, Chief Financial Officer. During this call, certain non-GAAP financial measures will be discussed. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the Investors section of the company's website. An audio replay of this call will also be archived there. Please also be advised that today's discussion will contain forward-looking statements. These forward-looking statements are not historical facts, but rather are based on the company's current expectations and beliefs. For a discussion on factors that could cause actual results to differ materially from the expectations, please refer to the risk factors described in the company's Form 10-K, 10-Q and other SEC filings, which are available on the company's website. Please also refer to the cautionary note regarding forward-looking statements section contained in today's press release. With that, I'd like to turn the call over to Juho Sarvikas, Chief Executive Officer. Please go ahead. Juho Sarvikas: Good afternoon, everyone, and thank you for joining us today. Q4 2025 was another strong quarter for Inseego. We generated revenue of $48.4 million and adjusted EBITDA of $6 million, both above our guidance and marking our third consecutive quarter of sequential growth in each metric. These results capped a year of steady, disciplined execution. We exited 2025 with a meaningfully higher quality and more diversified revenue base driven by broader product breadth and increased customer diversity. Shortly after year-end, we further strengthened our operating momentum by improving our capital structure by retiring all preferred stock. We accomplished this at a meaningful discount, enhancing the company's long-term flexibility and are pleased to welcome Mubadala Capital as a significant common stockholder. Steven will walk through the financials and outlook in more detail later in the call. I'd like to step back and discuss how our performance in 2025 and our trajectory going into 2026 demonstrates that the strategy I outlined when I stepped into the CEO role a year ago is working. To frame that discussion, let me briefly revisit our strategy. We are building an enterprise wireless broadband platform that combines cellular-first connectivity with intelligence, manageability and scalability at the wireless edge. That strategy has remained consistent throughout 2025 and is grounded on 5 clear strategic priorities. First, scaling carrier revenue to a broader enterprise-focused Fixed Wireless Access and mobile portfolio. Second, accelerating Inseego's evolution into a solutions company by creating a platform that includes industry-leading wireless hardware, network and device management and subscriber life cycle management. Third, expanding and diversifying our routes to market and customer base. Fourth, maintaining financial discipline and strengthening our capital structure. And fifth, building a world-class management team and Board of Directors to drive long-term growth and scale. Our fourth quarter results and 2025 full year progress are consistent proof points of execution against these strategic priorities. With that context, I want to do 3 things on today's call. First, I'll walk through how we executed in the fourth quarter. Second, discuss what we delivered across the full year in 2025. And third, share how that execution positions Inseego for its next phase of expansion as we move into 2026. With that, let me now turn to my first topic, how we executed in Q4. Starting with our core business of cloud-managed FWA and mobile solutions. We continue to see strong performance from our FX4100 FWA product with T-Mobile during the quarter, reflecting ongoing enterprise demand and solid sell-through. During Q4, we significantly expanded our Tier 1 carrier footprint for Fixed Wireless Access. As we shared on our last call, we meaningfully broadened our reach and customer diversification by securing an FX4200 FWA award with AT&T. Equally importantly, we just announced this Tuesday that we also signed Verizon for the FX4200. Both AT&T and Verizon have placed initial stocking orders, and we expect commercial sales to begin ramping up in earnest in the first half of 2026 as these programs come online. With the addition of Verizon, all 3 U.S. Tier 1 carriers have now chosen Inseego to support their enterprise FWA offerings. This marks an important inflection point for our business. As carriers increasingly position FWA as a primary connectivity solution for businesses, alignment across all 3 Tier 1 carriers validates our strategy, reinforces our position as a partner of choice as enterprise adoption accelerates and establishes a clear foundation for meaningful growth in 2026. Turning to mobile. Our hotspot portfolio delivered its strongest quarter of 2025 with revenue increasing 27% sequentially to $20.4 million. Mobile represents roughly 40% of total company's revenue in Q4, underscoring the increasingly diversified mix of our platforms across mobile, FWA and software and services. Growth was driven by higher carrier stock volumes and solid channel activity as enterprises expand their use of mobile connectivity. With all 3 carriers committed to Inseego as a key part of their mobile portfolio, we see mobile as a durable and important pillar of our enterprise wireless platform. Continuing with our fourth quarter execution, we've made strong progress in evolving into a solutions company and advancing our platform strategy. In Q3, we shared that we have delivered a major release of Inseego Connect, our network orchestration SaaS offering, expanding its functionality and usability. In Q4, we began to see an impact from that investment. For the first time, Inseego Connect is being taken to market alongside our FWA solutions by all 3 Tier 1 U.S. carriers, each through their own commercial models and routes to market. This represents an important milestone. The combined offering of the FX4200, FX4100 and Inseego Connect reflects a clear shift from device-led selling to solution-led selling and establishes Connect as a foundational element of our enterprise wireless edge platform. As we continue to expand, this solution-based approach is an important source of differentiation for Inseego. We also continue to invest in our subscriber life cycle management platform, Inseego Subscribe, building out the leadership team and platform capabilities. Subscribe is a strategic investment area and an important component of our long-term software and solutions growth strategy. Turning to revenue diversity. With our fourth quarter execution, we broadened our revenue base to initial FX4200 orders from both AT&T and Verizon and delivered a strong quarter in our channel business. Importantly, channel growth was driven by traction across multiple areas rather than a single large transaction, reflecting healthier and more diversified demand. I'd like to take a step back now and review what we delivered over the full year of 2025. At the start of last year, when I arrived at the company, we set out clear execution-focused objectives, execute and scale our FWA and MiFi business, strengthen our two-pronged go-to-market strategy and increase our investment in software. And throughout the year, we've not only stayed tightly aligned with these priorities, we've delivered against them. We meaningfully expanded our enterprise wireless broadband footprint by doing exactly what we said we would do. I reset the product strategy when I joined a year ago, and those products are now launching. Not only that, but I also focused on diversification of our customer base. So those new products are now launching across the broadest customer base the company has ever had. It took a year, but we got there. Throughout 2025, we continued elevating software and platform integration as core elements of our value proposition. Inseego Connect increasingly became positioned as the management, intelligence and control layer of the wireless edge. We made progress towards more integrated hardware and software solutions and took steps towards greater differentiation at the platform level. This laid out the groundwork for deeper software attach and solution-led selling as our portfolio and routes to market continue to expand. To highlight the scale of this growth, we entered 2025 with 3 products offered to 2 carriers. And entering 2026, we are now in the middle of expanding to 6 products across all 3 carriers. In parallel, we've broadened our go-to-market approach in 2025. Along with the expanding and diversifying carrier base, we laid the groundwork for VARs, MSPs, SSPs and MSOs and built the product, commercial and operational capability required to support broader enterprise engagement. All of this execution was delivered with continued financial discipline. We maintained strong double-digit adjusted EBITDA margins through a transition year, managed costs carefully while funding growth investments and strengthened our capital structure. This demonstrates our ability to invest in growth while maintaining profitability and operating rigor. And finally, 2025 was a year of further strengthening the organization. We significantly up-leveled the management team and Board of Directors, added operating depth across product, technology, sales, operations and supply chain from the C level down and built the infrastructure required to support the next phase of growth. That brings us to 2026. 2025 was a year of building the foundation for long-term growth through disciplined execution of our revised strategy that requires significant product investment. In 2026, we're continuing to make product investments in the first half of the year to drive growth. This also includes increased spend in go-to-market capabilities to ensure the success of new products and platforms we're bringing to market. This is a deliberate need to scale the business. Looking ahead to 2026, the market backdrop continues to strengthen and expand our opportunity. Enterprises are increasingly prioritizing resilience, always on connectivity with Fixed Wireless Access emerging as a primary connectivity solution. That shift is reinforced by carrier commitments as all major U.S. carriers continue scaling enterprise FWA programs. Industry forecasts reflect this momentum with ABI Research projecting North America enterprise FWA service revenue to grow at a 37% compound annual rate through 2030, expanding from roughly $2 billion to more than $11 billion. We see similar momentum in federal, state and local government, where cellular is supporting distributed operations, public safety and mission-critical connectivity and where security concerns have made U.S. designs an important consideration. At the same time, AI-driven workloads and accelerating mobile data traffic are increasing network complexity and raising the importance of performance, visibility and centralized management. As enterprises and governments expand their use of cellular, managing cost, usage and performance becomes as critical as connectivity. Taken together, these dynamics, including the growing convergence of cellular and satellite and continued advances in cloud technologies are elevating the importance of wireless edge and driving demand for integrated platforms that combine connectivity with management and control. This environment aligns directly with Inseego's platform strategy and positions us for our next phase of growth in 2026. Against this backdrop, our core priorities remain consistent. What changes in 2026 is the scale and intensity of execution. Compared to 2025, this is a much more front-loaded year with a higher concentration of carrier launches and product introductions in the first half, specifically in Q1. With that in mind, we're entering 2026 focused on 5 key areas. First, we will continue to scale enterprise wireless broadband across FWA and mobile. With all 3 U.S. Tier 1 carriers now aligned with Inseego, 2026 begins with multiple carrier launches in Q1 and ramps as operations get underway. That requires increased investment early in the year, but the result is a higher carrier-driven revenue run rate, broader channel participation and continued expansion opportunities as we move into the second half. Second, we will accelerate portfolio expansion. In the first half alone, we expect to introduce 4 new products. This includes the rollout of 3 new MiFi products across all major carriers, the introduction of a new entry tier enterprise FWA offering and expansion into additional verticals. This represents the most comprehensive enterprise wireless portfolio in the company's history with all products managed through a common software interface rather than a stand-alone hardware. Third, we will deepen the software and platform layer. Inseego Connect continues to evolve as the management and intelligence layer of the wireless edge. And in 2026, we will expand its role as our installed base grows rapidly. This allows us to introduce additional services, increase software attach and offer more value to customers and partners through a single integrated management experience. Fourth, we will broaden routes to market. The investments we've made in products and platforms are already opening doors with new VARs, MSPs, MVNOs and service providers. We are encouraged by early momentum, including progress with MSOs, and we expect partner-led activity to increase meaningfully as new products come to market. More of our growth going forward will be informed by this new expanding partner ecosystem. Fifth, we will advance our subscriber life cycle management capabilities within Inseego Subscribe. Finally, we will continue to execute with discipline. As we accelerate investment to support carrier ramps, product launches and go-to-market expansion, we remain focused on balancing growth with profitability and long-term margin expansion. Before I get to Q1, I want to briefly address the current memory market dynamic. Overall, as you've all seen, there's a lot of discussion on price increases and supply shortages as the suppliers have pivoted towards AI and data center. We have done a huge job in securing supply, and I do not see any meaningful impact on our deployments. When it comes to pricing, we've acted early, and we have been able to lock in modest price increases for products in the first part of the year. In addition to this, we're working with our large customers on price increases and cost sharing. Let's now talk about Q1. Overall, I'm bullish on 2026. We have more products going to more customers than this company has ever had. Q1 is a transition quarter, and there are several moving parts as we introduce a new mobile product generation and work with new large customers to develop joint go-to-market for FWA. While we still expect Q1 to grow year-over-year, there are 3 reasons for lower sequential Q1 revenue. First, we have had engineering delays in delivering our new mobile products that have pushed revenue to Q2. Second, one of our large Tier 1 FWA carrier customers has higher than initially expected inventory that they're selling out in Q1. And third, that same Tier 1 carrier recently changed their go-to-market strategy to address a broader set of customers, but causing a short-term disruption on selling logistics. In summary, 2025 was about implementing the strategy I laid out when I joined a year ago and building the foundation for growth. Now 2026 is about execution and scale. We're launching more products, ramping more Tier 1 carrier programs, expanding our software platform and broadening our partner ecosystem across MSOs, VARs and MSPs. This is positioning us to drive significant growth as the year progresses and scale Inseego at the enterprise wireless edge. We are energized by the trajectory of the business that we see exiting Q1 and confident in delivering the year. With that, I'll turn over to Steven to walk through the financial results and our outlook in more detail. Steven Gatoff: Thank you, Juho. Hi, everyone. Thank you for joining us. I'd like to cover 3 topics today. First, I'll take you through some details on the Q4 and full year 2025 financial results. Second, I'll provide an update on a material improvement in our capital structure that is adding to stockholder value. And third, I'll share some color on the financial profile of the business and provide guidance for Q1 and look at the full year 2026. As we always do, we'll wrap up the call by opening up to your questions. In 2025, we delivered 3 consecutive quarters of sequential revenue growth, culminating in a strong Q4 that exceeded guidance and paired with strong gross margins and disciplined spending resulted in solid profitability in the form of adjusted EBITDA that was the second highest on an apples-to-apples basis in more than a decade. On the top line, total revenue for Q4 was $48.4 million, driven by higher mobile volumes, increased channel activity, continued strength in FWA and a consistent contribution from our Inseego Connect and Inseego Subscribe SaaS offerings. As expected, mobile revenue was strong in Q4 2025 and was driven by a more broad carrier adoption and ordering cadence. While FWA revenue declined sequentially from the record Q3 2025, which benefited from new product rollouts at a carrier customer that we discussed last call, FWA revenue in Q4 was up 50% year-over-year and was driven by the diversification of our carrier customer base and solid channel activity. Software services revenue was $12 million in Q4, consistent and again providing a stable high-margin contribution to results. For the full year 2025, total revenue was $166.2 million, reflecting sequential quarterly momentum throughout the year. Moving through the P&L. Non-GAAP gross margin in Q4 2025 was 43%, up 75 basis points sequentially and driven by sales of some high-margin mobile products and the continued contribution from our high-margin SaaS services. For the full year 2025, non-GAAP gross margin was also 43%, reflecting an overall strong FWA business and our software services contribution and also the highest level of gross margin has been on an apples-to-apples basis in more than a decade. Non-GAAP operating expenses for Q4 were $17 million or 35% of revenue, reflecting the targeted investments in sales and marketing and R&D to support Tier 1 execution and new product launches that we talked about last quarter. As we also talked about and we'll review in a few minutes, we're continuing to make those investments in Q1 2026 to drive both revenue growth and scale as we move through 2026. For 2025, non-GAAP operating expenses were $59.4 million or 35.7% of total revenue. Adjusted EBITDA in Q4 2025 came in at $6 million, a 12.4% margin, among the highest dollars and margin percentage also in more than a decade. About $1 million plus of benefit was from the timing of R&D spend that pushed out of Q4 into Q1 2026 that I'll get to in a moment. For the full year 2025, adjusted EBITDA came in at $20.1 million, representing a 12.1% margin. We see this as an important overall proof point in our ability to invest in growth in the short term while maintaining profitability over the long term. Turning to the balance sheet. We ended Q4 with $24.9 million in cash, a very manageable debt balance of $41 million or approximately 2x LTM adjusted EBITDA. The strong cash finish to the year was a function of a combination of favorable outcomes on customer payments, inventory dynamics and strong working capital management by the team. Overall, the balance sheet strength underpins how we run the business and leads directly to my second topic, our capital structure. Last month, on January 14, we retired 100% of our outstanding preferred stock. It had a liquidation preference of $42 million as of December 31, 2025, and we exchanged it for $26 million of aggregate consideration, representing a 38% discount that immediately accrued to common stockholders. Total consideration consisted of $10 million in cash, $8 million in additional senior secured notes and approximately 767,000 shares of common stock. The cash is paid in 3 equal installments, 1/3 or $3.3 million was paid at closing, 1/3 will be paid 6 months following closing and the remaining 1/3 will be paid 12 months after closing. This transaction represents another purposeful initiative to simplify and strengthen our capital structure. By retiring the preferred at a meaningful discount to its liquidation preference, we reduced long-term obligations, improved balance sheet quality and immediately enhanced common stockholder value. The preferred stock was held by an affiliate of Mubadala Capital. And so as a result of the exchange, they now hold the position in our common stock. We're pleased to have them in the value creation going forward as a long-term common shareholder. With that context on our capital structure, let's now turn to our thoughts on the business and financial guidance for Q1 and the full year 2026. As we discussed on the last call, we started investing meaningfully going into Q4 2025 in new product development and go-to-market capabilities to drive revenue growth in 2026. We're committed to and expect to deliver that revenue growth outcome. We also talked on the last call how 2026 would be front-loaded with spend in the first few months impacting profitability to similarly support carrier ramps, multiple product launches and overall portfolio expansion. Importantly, with the now expanded carrier customer base, that spend positions us to scale the business, drive operating leverage and deliver profitability improvement in the second half of the year. To add more color on the revenue profile, as we've seen historically, Q1 has been a baseline quarter for the year from a revenue perspective, where Q1 has been down from Q4 for 3 of the last 4 years. We see this dynamic for Q1 and 2026, albeit for 3 specific factors. First, the second half of 2025 benefited nicely and particularly from a strong ramp of our new FX4100 FWA product with a Tier 1 carrier and from elevated mobile volumes driven by carrier promotions. Second, we have a Tier 1 FWA customer who went through a sizable company reorg and business realignment, as Juho mentioned, that impacted Q1 volumes and timing. And third, our new MiFi portfolio is set to launch late in Q1 2026, delayed from our initial target date, but that's setting up to drive a meaningful contribution beginning in Q2. And so while Q1 2026 revenue is lighter than desired on new product rollouts and transitions, we remain very positive on the outlook for both mobile and FWA in 2026 as we execute with our Tier 1 carriers and continue expanding our routes to market through SSPs and VARs. Looking at non-GAAP gross margin, we expect Q1 to reflect a lower mobile revenue margin, partially offset by a return to solid gross margin contribution on FWA and consistent software services. Total non-GAAP operating expense dollars are expected to increase modestly sequentially in Q1 2026 on the P&L and more so in total dollar spend in Q1 due to 2 drivers. First, as I mentioned, R&D spend originally planned for Q4 2025 shifted out to Q1 2026 on adjustments in product delivery timing. That shift out in spend resulted in more than $1 million of higher adjusted EBITDA in Q4 2025 and a corresponding higher spend level, therefore, now in Q1 2026. This funding of new product build-outs will also be seen in higher levels of capitalized R&D in the quarter as we've discussed. The second dynamic driving higher current spend in Q1 is the investments in sales and marketing that we've been talking about as part of the 2026 growth driver investment. Pulling this all together, we're providing the following guidance for Q1 2026. Total revenue in a range of $33 million to $36 million and adjusted EBITDA in a range of $1 million to $2 million. Overall, looking back at 2025, we see a similar dynamic for 2026 of growth and profitability coming off of Q1, growing in Q2, growing in Q3 and growing in Q4, with the important difference that there's now a foundation of a more diversified customer base and product portfolio, along with a rightsized balance sheet that provides important flexibility. And so on that strong foundation, we're also providing guidance for the full year 2026 for total revenue of approximately $190 million. With that, we appreciate your time and support and are glad to open the call for questions. Operator? Operator: [Operator Instructions] And the first question will come from Scott Searle with ROTH Capital. Scott Searle: Nice job on the fourth quarter and really nice to see the diversified customer base and product portfolio building over the course of '26. Maybe just to start, Steven, I wanted to dive in quickly on the memory front. I know you had some comments in terms of your opening monologue, but it sounds like you guys are managing that pretty well. I'm wondering if you could detail that a little bit more in the first half of this year. It sounds like it's going to be a shared burden with your MNO customers going forward. And then as it relates to the 2026 guidance, certainly implies things ramping up over the course of the year, as you articulated, it averages out to like $50 million a quarter. So that's a pretty big step up. I'm wondering, given the expected time lines and product introductions, what the comfort level and visibility that you have to that? And a lot of moving parts from an OpEx standpoint and gross margin standpoint, Steven, I'm wondering if you could give us a little bit of guidance about how we should be thinking about adjusted gross margins -- excuse me, adjusted EBITDA margins in the second half of the year. Steven Gatoff: Yes, sure. In a sense -- I will tag team. Juho and I on a good chunk because certainly on the memory part that Juho was talking about. And the short answer on the first part, Scott, is that on memory, we're pretty well locked in for Q1 certainly and really most of the first half of the year, and we'll get to that if you want to... Juho Sarvikas: Maybe the big thing, Scott, on the memory -- and thanks for the great question really is that we have so much new exciting products and customers ramping in first half. And I wanted to make sure that we have sufficient buffer to also capture upside, channel fill, all of that good stuff. So from a memory standpoint of view, as we were doing that, we realized somewhere around 6 months ago that the memory market is going to get tight. So we took the appropriate actions. So I feel good about the first half inventory situation as well as the pricing environment. Steven Gatoff: Awesome. And then good question, Scott, quite a few of them on the dynamic guidance. But the crux of what you're saying in our view is that, yes, things ramp quite quickly so that the Q2 -- we gave guidance, obviously, for the year, but the math, if you just sit there pretty back of the envelope, you would see that Q2 ramps to the high 4s, and then you would expect Q3 and 4 to have a 5 handle on it. Like yes, like that's how -- that's the math that gets you to $190 million. And so we get that. And so you -- in our view, you're thinking about it, right? And a similar dynamic, which is consistent with what we've talked about probably for the last 1.5 quarters which is EBITDA is the lightest in Q1 and then starts to grow and scale as we go into Q2 and then certainly in Q3 and Q4, where we said the average for the year doesn't really exist in nature, right? The first half of the year is at a lower rate and then the second half of the year is at a much higher rate, and we're exiting the year at a nice dollar amount of EBITDA and margin percentage. Let me pause there. Does that hit up what you were asking about? Scott Searle: That's perfect. And if I could just quickly tack on. Juho, there's been a lot of dynamic changes within the industry, I think, from a competitive standpoint. I'm wondering if you could give us some thoughts in terms of how you see your share shifting over the course of 2026. A lot of moving currents, I think, competitively in the mobile hotspot market. But then also, if you can provide a little bit of color in terms of some of the new product portfolio. Is that mostly going to be MiFi? Are there some other products that we should be expecting to see in new categories potentially taking us in international markets in the second half of the year? Juho Sarvikas: Scott, excellent questions. So I'll start with the mobile part. What I'm super excited is that we'll have now all 3 large carriers launching our new mobile generation. And like we discussed in the prepared remarks, we were hoping to see that earlier in Q1, but it will now take place towards the latter part of Q1. But the thing with mobile is that it's a predictable run rate business. Think of it like a light switch. Once you launch the product, you get the share in the category. All 3 of them are also positioned in a higher volume segment than where you've seen us historically. So I feel really good about the MiFi volume. And I think I've been fairly open about it. Look, I think in mobile or in hotspot, our job really is to go and consolidate the market. And these 3 across all 3 is a huge, huge milestone. I also see opportunity towards the latter part of the year or going forward in expanding a hotspot. There's also a value segment. And I also believe there's a great opportunity in the premium segment. So mobile, we innovate the category. We're huge fans of, and we look forward to continuing investing and growing, growing in that. I believe your second question was then on the portfolio. So I already described the mobile part of the story. Like you know, in FWA, today, we have, if you think good, better, best. We have the better with the FX4100 that we launched about 9, 10 months ago. We recently introduced FX4200, which is the best. And now what we're going to roll out during the first half is an entry-level, yet enterprise grade, same manageability, everything you know us for, but a lower tier router. So we'll complete this good, better, best for SMB, enterprise, call it, carpeted environments. And then, of course, there's a lot of other attractive verticals. So that would be my summary on the immediate portfolio expansion. Operator: The next question will come from Tyler Burmeister with Lake Street. Tyler Burmeister: So as we think about the 2026 guide across your mobile and your FWA businesses, the FWA side of the business continues to gain momentum and you kind of highlighted the mobile side of the business as being stable. Just wondering with the new customer ramping this year and mobile coming off a softer '25 and different dynamics, should we still expect the Fixed Wireless Access side to be a relatively larger contribution to growth this year? Steven Gatoff: Awesome. Thanks, Tyler. We'll tag team as usual. So we expect mobile and FWA both to grow on a revenue basis in 2026 for albeit different reasons, right? Fixed pie, if you will, on mobile, growing pie on FWA. So you all share all the thoughts on that. And on both the revenue and customer base. So short -- just to make sure you said flat, but it's a growth driver, both of them. Juho Sarvikas: Yes. The one thing I would add here or highlight is that, like I mentioned when I was answering Scott's earlier question, there's plenty of room to grow in mobile, and we're going to go as fast as we can, and that pony will do extremely well. At the same time, FWA on the back of the portfolio expansion, the customer expansion is going to be also a great story in 2026. So if you look at 2026, we'll see which one of these 2 categories ends up running faster. But if you take the long-term view, the FWA TAM for mobile. Also, now with these product introductions, our share in mobile will significantly grow. So if you take a longer-term view, it will be in -- the mix will be in favor of FWA. Tyler Burmeister: That's great. And then we talked maybe a little bit less about the MSO and the distribution channel opportunities on this call. So I was just wondering, as we look out this year, could we possibly hear some announcements or start seeing maybe some more meaningful contributions from those customer groups this year? Is that maybe a little bit further out opportunity for you guys? Juho Sarvikas: Thanks, Tyler. I think that's a fantastic question. So -- and I'm sure you're asking because I've been mentioning in my remarks, and I have been talking about it a little bit already. Look, to me, the MSOs, whether it's cable or fiber, many of these guys actually have cellular assets as well, right? They're kind of like a carrier. So like I would even put them in the same bucket as the large -- 3 large carriers, and there's brilliant FWA use cases with the MSOs, starting with failover, day 1, all of that. And we've done massive investment in both products where the FX4200 is actually the ideal, I'll call it, router platform for that use case, but also in our cloud with deep understanding of those use cases. So MSO is definitely something where I expect that we'll have great discussions as the year progresses. The VAR and the managed service provider, let's call this the channel, this is a different type of an animal. Now you have a fairly fragmented set of partners. By the way, I did mention or I should mention that the 3 large value-added resellers, CDW, Insight, and I can't believe I'm flagging on a third one now, are all going to launch -- we've already introduced programs. They're all stocking the FX4200 as of late last year. That is going to be a steady ramp. It's a little bit like the FWA. So these large guys, whether they are the carriers or the MSOs, they will drive big immediate volume uplift. The VARs and the MSPs in the long term become significant growth driver for us, but will be a slower burn. The third large value reason, of course, is SHI. Did I answer your question? Tyler Burmeister: Yes. That's great. Operator: The next question will come from Christian Schwab with Craig-Hallum Capital Group. Christian Schwab: Good quarter, and congrats on all the deals. As we look at the software business, you have one customer who's a material percentage of that software and services revenue. Is there an opportunity with the other 2 customers to deploy a similar program as your historical leading customer? Juho Sarvikas: Christian, thanks for joining us. Actually, I'll answer both aspects of the software business. Let me start with the Inseego Connect, which is our device management platform, orchestration platform. One of the really important things that we've implemented now, especially with the FX4200, but much broader is that since we've made that investment over 2025, in creating a world-class device management platform with great differentiation capability. Our go-to-market motion has really changed on the routers. It really is a solution first sale attach rate, but also the value capture is growing. The installed base, of course, takes time to grow. But again, here, if you take a multiyear view, Inseego Connect is a really important part of our story. It also provides other service opportunities for us where we can expand, as you might imagine. If you look at the subscriber life cycle management platform, yes, for sure. We've done significant investment here as well, and we're looking at from a business development standpoint of view, expansion opportunities. It really does have a unique feature set, especially if you go into the Fed and government space where you have a lot of compliance, a lot of complexity in terms of how you manage those customers, and there are significant benefits for carriers, broadly speaking, to leverage that platform. Christian Schwab: Great. I guess my second question, with the broadening base out of all 3 carriers, there seems to be a greater industry focus on enterprise class Fixed Wireless Access versus just residential. From a bigger picture standpoint, do you believe any of this has to do with Industry 4.0 initiatives or greater acceleration finally of private 5G networks by the carriers and their thoughts? Juho Sarvikas: So there was an immediate gold rush in FWA when 5G merged to consumer. The problem with consumer is the ARPU and the consumption profile. Very, very data demanding, massive consumption profile and you're competing against cable and other value props for the consumer. Enterprise, on the other hand, has a very rich ARPU profile. And if you think about it, the usage profile is completely the opposite of the consumer because you'll be working through the day, you maybe should not be streaming Netflix at the office. So just like from the basic dynamic standpoint of view, very favorable from a carrier P&L standpoint of view. There has been a significant constraint on the industry, and it really has been spectrum. So C-band when the auction happened, launched a massive wave of FWA expansion. There was a recent acquisition that one of the carriers made that you're very much familiar with. And all of a sudden, FWA and especially the business or enterprise segment became top of mind because now you have the capacity to go there, and it has the highest ARPU. So one of the really foundational things that we believe in is that cellular will take over the world in 2 ways. One, 5G performance is now broadband like as opposed to 4G. 6G is yet again another 10x faster. So you could make the case where now cellular should become the primary and there shouldn't be a discussion around it. It will also release massive amounts of spectrum, massive amounts of capacity when you can utilize higher on auction spectrum assets that are still out there yet to be deployed. And then look from an enterprise end customer standpoint of view, super easy to deploy, single management interface. You don't need to worry which of your location to get fiber or cable or how do you patch all of that together. So I think there's a lot of benefits that will continue to accelerate enterprise FWA. And that was one of the data points I was sharing is this 30 -- high 30s CAGR on service provider revenue increase in the enterprise FWA. Operator: The next question will come from Lance Vitanza with TD Cowen. Lance Vitanza: I've got a couple, if I could. The first is it's good to have Verizon back in the fold. That said, I do wonder what this means, if anything, for the variability of results going forward. I'm just wondering beyond the initial rollout, just looking ahead here, do you expect this to -- I mean will your visibility be better or worse off for having Verizon back in the mix relative to working with AT&T and T-Mobile? Juho Sarvikas: That's an FWA question. I'll take it, Lance. So the way to look at it is that I kind of go back to my previous answer, there's a strong economic incentive. All 3 players have made the statement that they're investing in FWA for enterprise, where we got with our existing large customer, it took a couple of product generations, and it took some time to develop the co-selling motion and to be able to drive that kind of volume uplift. So at this early stage, I can't really tell you like how fast each of these opportunities will grow. But I think we have very reasonable expectations, reasonable expectations that inform the guide for 2026 that Steven was sharing. Lance Vitanza: Okay. Great. And then -- so just to sort of go back to Scott's question about the full year EBITDA outlook. If I'm doing the math right, I think you put up about a 12.1% EBITDA margin for 2025. Should we be thinking about 2026 as kind of being in and around the same ZIP code? Or could there be upside or potential downside maybe for investment spend and so forth? How should we think about that relative to margin profile year-over-year on the EBITDA line? Steven Gatoff: Good question. Similar outcome, Lance. And so far as the answer for the year doesn't really exist in nature because we would expect to exit 2026 at those levels you're saying, at the higher levels, kind of where we are now-ish. But the first part of the year is going to be a bit lower. So the average for the year is somewhere in between that's not really existing. So if it's -- you can see the math for Q1, right? So if the first half of the year is single digits and the second half of the year is getting into a decent double digit, you'll do the math on the average. But the short answer is the rates that we're at, we would expect to be seeing in the second half and exiting the year for sure. Lance Vitanza: Perfect. Understood. And maybe just one last one for me. And just sort of thinking a little bit longer term, is double-digit revenue growth sort of sustainable over the next few years, do we think? Or should we be sort of thinking I'm not expecting guidance here. I'm not expecting that '27 will necessarily look as robust as 2026. But will those years -- will we continue to see robust growth, do you imagine? Or does 2026 sort of bring us back to kind of more of a new plateau level would you expect? Steven Gatoff: Of total revenue growth? You're saying, hey, can you grow total revenue at double digits in the next couple of years? Lance Vitanza: Yes. Steven Gatoff: Yes, we can. I think we said that at the end of last year as we're setting up for this year. And candidly, the growth profile for 2026 is a nice double digit with a pretty low week lane we might say internally, Q1. And so if we're pulling that off in a year where we're ramping a whole bunch of new products and transitioning, right, we're going from a company that was one product, one customer to many products, all 3 carriers, and we're doing that all this quarter. So like that's a big deal. And once that gets up and running, like that's a really nice model. And so a little probably long-winded, but the short answer is yes, we do believe that's a double-digit growth for the next several years. Operator: This concludes our question-and-answer session. I would like to turn the call back over to management for any closing remarks. Juho Sarvikas: Thank you for the great questions and for joining us today. Steven and I will be at the ROTH Conference next month, and we hope to see many of you there. I also wanted to thank our awesome employees for their hard work and dedication and our shareholders for your continued support and confidence in our vision. We are excited to have you with us on this journey. Thank you again for your time, and we look forward to catching up soon. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.