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Operator: Hello, and thank you for standing by. At this time, I would like to welcome everyone to the Q4 2025 Pediatrix Medical Group, Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. I would now like to turn the conference over to Mary Ann Moore, Chief Administrative Officer and General Counsel. You may begin. Thank you, operator, and good morning. Certain statements and information during this call may be deemed to be forward looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward looking statements are based on assumptions and assessments made by Pediatrix management in light of their experience and assessment of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward looking statements made during this call are made as of today, and Pediatrix undertakes no duty to update or revise any such statements as a result of new information, future events, or otherwise. Important factors that could cause actual results, developments, and business decisions to differ materially from forward looking statements are described in the company's filings with the SEC, including the sections entitled Risk Factors. In today's remarks by management, we will be discussing non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in this morning's earnings press release, our quarterly and annual report, and on our website at www.pediatrix.com. With that, I will turn the call over to Mark Ordan, our Chief Executive Officer. Thanks, Mary Ann, and good morning, everyone. Mark Ordan: Also with me today is Kasandra H. Rossi, our Chief Financial Officer. Our fourth quarter results were quite strong and capped an equally strong 2025. Our adjusted EBITDA of $66,000,000 was in line with our upwardly adjusted guidance. Throughout 2025, including in fourth quarter, strong volume, acuity, and payer mix combined with strong financial control gave rise to these results. During this time, we welcomed new leaders in key areas of the company, all of whom are dedicated in some way to focusing on care quality, which, of course, is the very essence of pediatrics. With these investments and record practice bonuses, our full year adjusted EBITDA was a very strong $276,000,000. We expect our results in 2026 to be in the range of $280,000,000 to $300,000,000, which at its midpoint, of course, is 5% above 2025. This projection assumes steady metrics including volume, acuity, and payer mix. And reasons, though early results support this outlook. Despite these steady metrics on our top line, we have several operational initiatives which we believe will flow favorably to our adjusted EBITDA. We have said that we assumed that there was some payer mix benefit in 2025 from ACA subsidies. If those continue to lapse with no effective remedy, we would expect some effect. And as we have said before, this is very difficult to quantify such an effect because there are many possible outcomes. Kasandra will now provide some additional details on the quarter and preliminary outlook for 2026. Kasandra H. Rossi: Thanks, Mark, and good morning, everyone. Our consolidated revenue decrease was driven by net non-same unit activity of $26,000,000, including a decrease in revenue from our portfolio restructuring, partially offset by an increase in revenue from acquisition and organic growth. This decrease was partially offset by same unit growth of 4%, with same unit pricing up just under 7% and overall patient service volumes down just under 3%. Pricing was driven by solid RCM cash collections, favorable payer mix, increased patient acuity in neonatology, and an increase in contract administrative fees. And while we saw volume declines across all our service lines during the quarter, including NICU days down about 2%, we were up against a tough comp. Practice-level S,W and B expenses declined slightly year over year, reflecting our portfolio restructuring activity, partially offset by same unit increases. On a same unit basis, we saw increases in variable incentive compensation and salary and benefits. Salary growth for the fourth quarter was modestly below the ranges that we have seen for the prior six quarters. Those averaged around 3%. Our G&A expense increased year over year driven by a modest increase in salary expense as well as some travel expenses. D&A expense decreased year over year resulting from lower overall CapEx, and an increase in fully depreciated assets. Other non-operating expense decreased year over year driven by higher interest income on cash balances, and a decrease in interest expense on modestly lower average borrowings at slightly lower rates. Moving on to cash flow. We generated $115,000,000 in operating cash flow in the fourth quarter compared to $135,000,000 in the prior year, primarily related to decreases in cash flow from AP and accrued and other liabilities. We also deployed $64,000,000 of capital during the quarter to buy 2,900,000 shares of our stock, leaving us with just about 83,000,000 shares outstanding. We ended the quarter with cash of $375,000,000 and net debt of just over $220,000,000. This reflects net leverage of just under 1x. Our AR DSO at December 31 of 42.8 days were down slightly from September 30 but were down almost five days year over year, driven by improved cash collections at our existing units. Moving on to our preliminary 2026 outlook that Mark noted earlier, this outlook contemplates full year revenue of approximately $1,900,000,000, in line with 2025. It also contemplates full year G&A expense in the range of $230,000,000 to $240,000,000 compared to our 2025 G&A of $241,000,000. Achieving the middle of the range would put it down about 20 basis points as a percent of revenue. I will also note the normal seasonality of our quarterly results. Within our expectations of full year adjusted EBITDA, we anticipate that our first quarter 2026 adjusted EBITDA will represent about 17% to 19% of that annual expected range. Historically, the first quarter adjusted EBITDA has ranged from 17% to 21% of the full year. We have also not factored any contribution to our results from M&A in 2026 and would plan to update you on the timing and magnitude of any potential additions. I will now turn the call back over to Mark. Mark Ordan: Thanks, Kasandra. Our very strong balance sheet and cash flow enable us to invest in quality and clinical support and to attract and retain the finest clinicians in each of our areas of concentration. In the fourth quarter, we introduced two new programs to further align our physicians at Pediatrix. The first program provides a portion of the physician's cash bonus in a stock price tracking element that is paid out over multiple years. This program is a first step for us toward creating greater alignment across the entire organization, and we hope to expand it in the future. More than 500 physicians are participating in this program in its first year, and we expect this to create greater awareness of and responsibility for our collaborative role in delivering best-in-class care. We are also excited to announce Pediatrix Partners. This is a group of 46 physicians from across our specialties who have received a stock price tracking grant to recognize their leadership role along with future efforts to help guide our decisions in quality, hospital relations, recruiting and retention, and growth. We anticipate annually adding positions to this inaugural class. Looking into 2026 and beyond, we see many areas of potential opportunity. Without great physical footprint, we have the ability to leverage advanced telemedicine. This can provide vital assistance and care to people are currently out of reach, can be a bridge to our national in-person care presence. As we speak, we are looking at additional growth opportunities in our physical core both in NICUs and maternal fetal medicine, along with OBH. On OBH, we have a very strong presence in OB hospital medicine, and we see very strong demand for us to really increase our presence here. Remember, our long-established hospital relations thanks to our NICU, PICU, and MFN practices, provide an obvious entree here. And given our existing physical presence and dedicated overhead already, we believe we could provide a cost advantage to our hospital partners. We love the space we are in and we enjoy our leadership positions. We are also very aware of opportunities outside of our pediatrics and obstetric space. We assure you that we will guard our balance sheet strength carefully and only consider other opportunities that do not dilute our great strength in pediatrics and obstetrics. And in our core areas, pediatrics and obstetrics, we see many viable growth avenues. We are uniquely positioned, have the financial strength and discipline to accomplish this, and we are determined to do all we can to achieve smart growth. Operator, I would like to now turn the call over to questions. Operator: Thank you. As a reminder, to ask a question, you will need to press star then the number one on your telephone keypad. And if you would like to withdraw your question, press star 1 again. Your first question comes from the line of Ryan Daniels with William Blair. Your line is open. Mark Ordan: Hello. This is Matthew Margulies on for Ryan Daniels. Thank you so much for taking my question. And I know in your prepared remarks, you said full year revenue of $1,900,000,000 for 2026. Could you kind of give us the drivers of that revenue growth? Any color into the expectations for facility volume growth or pricing expectations for the 2026 year would be great to hear about. Kasandra H. Rossi: Hey, Matthew. So, really, this overall assumes that we are going to be flat both in volume and in pricing. While there will be some kind of ups and downs within the components that are part of pricing, overall, we do expect those to be pretty flat. Mark Ordan: Great. Okay. Thank you for that. And then with the negative patient volume year over year this quarter, is there anything you could call out regarding Kasandra H. Rossi: kinda what happened there? And I know you previously mentioned it is difficult to call out one exact factor or one reason why. But kinda with the strong volume we have seen the past couple of quarters, is there any color we could hear about with what happened this quarter? Thanks. Mary Ann Moore: No. It really that is about the comp. And so we tried to mention that the volume being down this quarter was really because the comp was fairly tough from the fourth quarter of last year. Mark Ordan: Great. Kasandra H. Rossi: Thank you so much for all those insights. Mary Ann Moore: You are welcome, Matthew. Thanks. Operator: Your next question comes from the line of Jack Slevin with Jefferies. Your line is open. Mark Ordan: Hey, good morning. Thanks for taking the question. Benjamin Whitman Mayo: Want to drill in a little bit on probably the quarter and the guidance as well. Maybe slightly different start on the quarter, the variable comp expense, I think we saw this in 2020 where you had a really strong year and then variable comp sort of spiked higher. I know you sort of gave a little bit of a hint at it with the wide guidance range heading into the quarter. Is there any way to quantify or talk about sort of what that was in the quarter? And how that drove earnings? And then the second piece, Mark, hearing your commentary on some of the changes to some of the physician or stock-based comp structures, should we think about that as something that might have a smoothing effect for the same sort of dynamic in future years? Mark Ordan: Well, so two things. One is there were a variety of factors that led to our fourth quarter operations going into and into 2026. So there is no, really, no better parsing that I could provide. In terms of alignment, I would say that is really the key driver of this. It is not to achieve a smoothing effect. It is really just to make sure that over time, our doctors who have an enormous role in our hospital relations, quality, recruiting and retention, really feel a strong tie to the company and that we have a mutual bond to each other. So that is the driver of this. Benjamin Whitman Mayo: Okay. Understood. Appreciate that. And then just thinking about the guidance, hearing your commentary and it has been consistent over a decent period about how it is hard to quantify or for you all to parse out exchange impact or subsidy impact on your overall volumes, but I guess trying to think about the guidance, like is there any way to understand what could possibly be embedded in the guidance for that factor? And then hearing a little bit of your commentary, it sounds like you might have said early in the year, have indications that that sort of things are consistent. Should I take that as, like, payer mix, other sort of early indicators on this specific issue would tell you that not really seeing a change yet. That is big Mark Ordan: exactly right. But, you know, we are not seeing a change yet, but the government has not yet figured out what the changes are in enrollment. You do not know yet whether people who said they are going to enroll are going to pay. We do not know yet what the government might do in terms of the stop gap. And then the question is, you know, what do people do? Are people going on to commercial insurance? There are so many variables Kasandra H. Rossi: that make this up. So we are, you know, Mark Ordan: obviously, our antenna is up. And I probably look twice a day and see what the government is up to. So it is just very hard to quantify. But in our guidance, we assume that we have the same metrics that we had during 2025. Benjamin Whitman Mayo: Okay. And maybe just one follow-up, Mark or Kasandra, on that. Just like to think about pricing, really strong. There really was not that much payer mix movement in 2025. So if I think about that flat pricing assumption, is it fair to say that like in the way you have built that some of the trends on hospital, you know, hospital contract admin fees or core pricing or acuity might be balancing against, you know, some sort of implicit downside protection for an issue on exchanges. Is that a fair way to about how you have structured that pricing assumption? Mary Ann Moore: No. So it is not really tied to anything with the exchanges, but we did actually see some incremental favorable payer mix in 2025, although, of course, the start of the shift within 2024. So we did see that. So, really, we are just saying that we expect everything to remain pretty steady in 2026, really an average of what we saw in 2025. That is where the guidance is based on. Benjamin Whitman Mayo: Okay. Understood. Appreciate that. As you know, there are many Mark Ordan: there are many components of it, you know, from volume, acuity, basic payer mix, Kasandra H. Rossi: so Mark Ordan: we are assuming all the factors that were in 2025. We have no reason to think that any of those will change for 2026. So that is why our forecast is as it is. Benjamin Whitman Mayo: Understood. Appreciate all the color, guys. Operator: Once again, if you would like to ask a question, press star then 1 to join the queue. Question comes from the line of A.J. Rice with UBS. Your line is open. Kasandra H. Rossi: Hi, everybody. Benjamin Whitman Mayo: So your EBITDA Kasandra H. Rossi: at the midpoint is supposed to grow about $14,000,000 year to year in 2026. And it looks like you have got some assumptions about G&A A.J. Rice: cost reduction in there, maybe other cost reduction. Can you just flush out a little bit more what is embedded in guidance with respect to the cost or expense side of the equation? Mark Ordan: It is really just that. We do call out, I think Kasandra called out, likely expense reduction, small scale. And that is really it. We are overall forecasting much the same kind of results that we had in 2025 carrying into 2026. And just because of normal operations changes, you know, quarter to quarter, that is where we fall out. Benjamin Whitman Mayo: We are, and as I said in my comments, there are many things that we are working on Mark Ordan: that could affect us going forward, but nothing that we could call out specifically at this time. A.J. Rice: Yeah. I was just thinking, usually, people would assume you get some kind of inflationary update in G&A, and you are actually forecasting about a $6,000,000 decline year to year, which I do not know. I did not I thought there might be something specific behind that. On the comments about capital deployment, you said no M&A is embedded in the guidance. Obviously, you are doing share repurchase. Can you just give us a little flavor for how much share repurchase anticipated in the current guidance? And then on if you did M&A, I know you said you got the opportunity to grow in the NICU, you got the opportunity with internal fetal medicine. Is it that type of thing, or those are just you would, you know, potentially bid on contracts, recruit individual doctors? Is there any place where you are looking for M&A that might be a little bigger and chunkier that you would potentially consider? Mark Ordan: Well, on the first part of your question, we assume in our guidance a small, much smaller amount of stock buyback, depending on, you know, we will be opportunistic about that. But probably, we do not anticipate at the same scale as we did in 2025. In terms of growth opportunities, yeah, there are really many. They range from physical practices to telemedicine within our space. I mentioned OB hospitalist, which is a very important program nationwide in many hospitals. And we have real strength in that. And as I said earlier, because of our NICU relationships, internal fetal medicine relationships, PICU relationships across the nation, we are uniquely positioned to do that and do it in a cost efficient way. And then, you know, and then A.J., yes. There are lots of companies out there, many that are private equity owned that are looking for a new home, and I think there are a lot of people out there that are aware of our balance sheet and A.J. Rice: and Mark Ordan: you know, my team and I have certainly done deals like that over time, so we get a lot of inbound interest. We want to balance that inbound interest with the strength of our core, make sure that we do not do anything that can take away from our core. But this is a time when it is good to have strong cash flow, strong balance sheet, great relationship with hospitals, and be opportunistic if there is something out there that we can do. A.J. Rice: Okay. Alright. Thanks so much. Mark Ordan: Thanks, A.J. Operator: Next question comes from the line of Ann Hynes with Mizuho. Your line is open. Kasandra H. Rossi: Great. Good morning, and thank you. Can we just talk about pricing? I mean, it seemed very strong in the quarter, up around over 9%, and this is versus the 7% in Q3. And I know you talked about acuity and other drivers, but it still seems very high. Can you tell us what is happening the acuity shift, and payer mix? Just more detail on just that strength over the past couple of quarters and how sustainable you think it is, that would be great. Thank you. Mary Ann Moore: Yes. So for the quarter, it was actually up just under 7%. And it is really the same things we have seen for the past couple of quarters. We really have strong RCM collection coming through, which, you know, was related to all the stabilization efforts that we undertook in 2025 with our revenue cycle management transition. And then we did have some favorable impact from payer mix that we have talked a little bit about. Acuity was also strong again, and we did have contract administrative fees that were a bit. So it is really the same things we have seen. And then what we anticipate is that is going to stay, you know, kind of steady as we move into 2026. And, of course, in 2026, the comps are going to be tougher. Mark Ordan: You know, on Achilles, A.J. Rice: yeah. With, you know, with advanced, you know, our hospitals Mark Ordan: are known because of our NICUs to be able to handle patients that in the past you could never have handled. So I think there is certainly something that favors us. We are the leader in level three and level four NICUs around the country. And, as Kasandra said, there had, you know, there has just been a real strengthening in that part of the business. Thank you. Operator: There are no further questions at this time. I will turn the call back over to Mark Ordan, CEO, for closing remarks. Mark Ordan: Great. Thank you all very much, and have a great day. Operator: That concludes today's call. Thank you all for joining, and you may now disconnect.
Operator: Good day, and welcome to the ARMOUR Residential REIT, Inc.'s Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Scott Ulm, CEO. Please go ahead. Scott Ulm: Good morning, and welcome to ARMOUR Residential REIT, Inc. Fourth Quarter 2025 Conference Call. This morning, I am joined by our Chief Financial Officer, Gordon Mackay Harper, as well as our Co-Chief Investment Officers, Sergey Losyev and Desmond E. Macauley. I will now turn the call over to Gordon to run through the financial results. Gordon Mackay Harper: Thank you, Scott. By now, everyone has access to ARMOUR Residential REIT, Inc.'s earnings release, which can be found on ARMOUR Residential REIT, Inc.'s website investors.armourreit.com. This conference call includes forward-looking statements, which are intended to be subject to the Safe Harbor protection provided by the Private Securities Litigation Reform Act of 1995. The risk factors section of ARMOUR Residential REIT, Inc.'s periodic reports filed with the Securities and Exchange Commission describe certain factors beyond ARMOUR Residential REIT, Inc.'s control that could cause actual results to differ materially from those expressed in or implied by these forward-looking statements. Those periodic filings can be found on the SEC's website www.sec.gov. All of today's forward-looking statements are subject to change without notice. We disclaim any obligation to update them unless required by law. Also, today's discussion refers to certain non-GAAP measures. These measures are reconciled with comparable GAAP measures in our earnings release. An online replay of this conference call will be available on ARMOUR Residential REIT, Inc.'s website shortly and will continue for one year. Gordon Mackay Harper: Q4 was a strong quarter for ARMOUR Residential REIT, Inc., with a total economic return of 10.63% for the quarter as we benefited from MBS spreads tightening, lower MBS volatility, and a lower interest rate environment. The market momentum we saw in Q4 has continued so far into Q1. ARMOUR Residential REIT, Inc.'s Q4 GAAP net income available to common stockholders was $28.7 million, or $1.86 per share. Net interest income was $50.4 million. Distributable earnings available to common stockholders was $79.8 million, or $0.71 per common share. This non-GAAP measure is defined as net interest income plus TBA drop income, adjusted for interest income or expense on our interest rate swaps and futures contracts minus net operating expenses. Gordon Mackay Harper: Q4 book value was $18.63 per common share, up 6.5% from September 30. Our most recent current available estimate of book value as of Tuesday, February 17, 2026, was $18.37 per common share, which reflects the payment of our January dividend of $0.24 and the accrual of the entire February common dividend payable on 02/27/2026, again, of $0.24 per common share. During Q4, ARMOUR Residential REIT, Inc. raised approximately $3.8 million of capital by issuing approximately 183,000 shares of preferred stock through an at-the-market offering program. Through 02/11/2026, we have raised approximately $138 million of capital under our common at-the-market program by issuing approximately 7.5 million shares of common stock, which is mildly dilutive. We also issued $4.8 million of capital from the issuance of 230,000 shares of preferred stock under our preferred at-the-market program. Gordon Mackay Harper: ARMOUR Residential REIT, Inc. paid monthly common dividends per share of $0.24 per common share per month for a total of $0.72 for the quarter. As we have stated previously, we aim to pay an attractive dividend that is appropriate in context and stable over the medium term. On January 29, 2026, we paid a cash dividend of $0.24 per outstanding common share to the holders of record at 01/15/2026. We have also declared cash dividends of $0.24 per outstanding common share, payable on February 27, 2026, and 03/30/2026 to holders of record of February 17 and March 16, respectively. I will now turn the call back over to CEO Scott Ulm to discuss ARMOUR Residential REIT, Inc.'s portfolio position and current strategy. Scott Ulm: Thank you, Gordon. ARMOUR Residential REIT, Inc. delivered a robust fourth quarter, marking a 6.5% increase in book value. Strong growth extended to our balance sheet. The portfolio grew for a second consecutive quarter, increasing by more than 10% from the end of 2025, driven by roughly 22 basis points of spread tightening while maintaining moderate leverage throughout the quarter. ARMOUR Residential REIT, Inc.'s mortgage assets now total over $20 billion, supported by a strong capital liquidity position of 54% of total shareholders' equity as of January. Scott Ulm: We viewed Agency MBS as a high-conviction opportunity from the onset of the Fed's easing cycle in 2024, and the backdrop for 2026 has now turned materially more supportive. Despite spreads tightening meaningfully so far in 2026, the market's appeal remains anchored in declining rate volatility and easing funding costs supported by the Fed's efforts to lower rates and maintain ample banking liquidity. While prepayments have moved off their cyclical lows of recent years, they remain contained with primary mortgage rates still anchored around 6%. Add in a steeper yield curve, and the result is a market that we expect to continue to favor MBS with compelling returns relative to returns in corporate credit where spreads are trading at historically tight valuations. Scott Ulm: Technical supply and demand dynamics are now working with us, not against us. The administration's focus on lowering mortgage spreads reinforces a clear north star for a stable mortgage market, an objective we expect Fannie Mae and Freddie Mac to support through FHFA's $200 billion MBS purchase mandate. The GSEs have posted strong monthly purchases of mortgage assets throughout last year, while net issuance of conventional MBS remained negative in the fourth quarter. The imbalance has revived attractive returns in the TBA roll market, creating a liquid carry environment and expanding the buyer base for agency MBS. I will now turn it over to Desmond E. Macauley for more detail on our portfolio. Desmond E. Macauley: Thanks, Scott. ARMOUR Residential REIT, Inc.'s most recent net balance sheet duration stands at 0.14 years, with a modest positive bias to the front end of the curve, consistent with easing monetary policy. Implied leverage excluding treasury loans is 7.9 turns, a balanced posture that reflects tighter spreads and the lower volatility backdrop versus the prior year. The portfolio remains nearly 100% agency MBS, agency CMBS or DUS, and U.S. Treasuries to target specific U-curve exposures. Consistent with our balance sheet growth, we added over $3 billion of MBS pools and DUS across the fourth quarter and early first quarter. And our purchase mix has evolved as recent spreads have moved. Desmond E. Macauley: Early in the fourth quarter, we determined it was most attractive to overweight premium dollar MBS, which offered the most attractive spreads and yields. Anticipating that GSE purchases would most likely concentrate in near-par coupons where the impact on primary mortgage rates is most direct, we added over $1 billion of 4.5% and 5% coupon MBS ahead of the GSE announcement in early January. As belly coupons tightened to historically rich levels, to near single-digit OAS, we shifted toward lower coupons and seasoned collateral where affordability initiatives aimed at unfreezing the housing market could drive higher turnover speeds while preserving higher yields in deeper discount MBS. Within premium bonds, we focused more on call protection in higher-tier maximum loan size pools while keeping payoff targets at 24 ticks or lower. Desmond E. Macauley: In agency CMBS, our five-year DUS position experienced extreme spread tightening. On a relative value basis, ten-year DUS bonds now screen more attractive, particularly when hedged with longer-dated SOFR swaps, with pay-fixed rates still cheaper than Treasury hedges. Roughly 86% of our hedges are in OIS and SOFR PPA swaps, with the balance in Treasury futures. The benchmark ten-year SOFR swap spread has normalized back to its pre-LIBOR-ation day average of approximately negative 37 basis points, and we anticipate further gains will likely hinge on the path of policy debate around the Fed's desired balance sheet size and banking deregulation. Desmond E. Macauley: Aggregate portfolio prepayments averaged 11.1 CPR through Q4 2025 and Q1 2026 to date, versus 8.1 CPR in Q3 2025, stable but running at a somewhat higher level versus the prior year. Despite tighter mortgage spreads, the thirty-year mortgage rate has remained in a tight 6% to 6.3% band, though it has recently shifted toward the low end of that range. The administration's push for affordability without sacrificing home price appreciation leaves mortgage rates and spreads as the two primary levers to accomplish that. However, the easy work has already been done. The mortgage rate spread to the ten-year Treasury is now below its fifteen-year average. Further declines in mortgage rates will therefore require lower long-end Treasury yields, which have not declined in sync with front-end rate cuts since the start of the easing cycle in 2024. Desmond E. Macauley: Still, we remain mindful that many originators have built significant capacity to ramp up refinancing, which could be triggered by a sustained move below 6% and may accelerate speeds in par and premium coupons in coming quarters. Refi activity has proven to be highly sensitive to marginal mortgage rate declines, keeping prepayment risk in TBAs and the generic premium MBS elevated. Coupon selection and specified collateral remain the key to containing the prepayment risk. We are positioned accordingly. Nearly 30% of assets are in prepayment-protected agency CMBS pools and discount MBS. While specified MBS pools with some form of prepayment protection comprise over 92% of ARMOUR Residential REIT, Inc.'s portfolio. Desmond E. Macauley: Funding markets have also turned a corner. In 2026 repo conditions have improved materially versus last year. Markets are liquid, and financing levels have eased with repo rates averaging roughly SOFR plus 15 basis points. The SOFR to Fed Funds spread has also normalized to near flat. As repo rates backed up in late 2025, the Fed moved quickly to contain intra-month funding pressures tied to falling reserves and elevated T-bill supply. Scott Ulm: First, Desmond E. Macauley: the Fed continues to implement a policy of easing the overnight Fed Funds rate. Second, it has shifted its reinvestments by directing paydowns of Treasury and MBS holdings back into the Treasury market. Third, it initiated outright purchases of up to $40 billion per month in Treasury bills and other short-dated Treasuries to stabilize reserve balances and maintain ample system liquidity. This response reinforces the systemic importance of repo markets as the foundation for liquid financial conditions and underscores the Fed's low tolerance for a repeat of the September 2019 episode when reserve scarcity and balance sheet frictions contributed to a sharp dislocation in secured funding. While the incoming Chair has signaled an appetite for a smaller Fed footprint and a reduced balance sheet over time, we expect the central bank's focus on orderly funding markets to remain the highest priority with a willingness to respond preemptively ahead of any emerging stress. As of today, we finance the portfolio across 23 active repo counterparties. Approximately 80% of our repo principal is financed at a 3% haircut or lower, and the weighted average haircut across the repo book is approximately 2.75%. Buckner securities accounts for roughly 40% to 60% of our repo financing. Back to you, Scott. Scott Ulm: Thanks, Desmond. We continue to set our dividend with a medium-term outlook. While acknowledging relatively tighter spreads versus the prior year, we expect the backdrop of a steeper yield curve and lower volatility to remain supportive for a consistent and predictable return profile for our assets. Our approach remains unchanged: stress test our liquidity, buy systematic hedging, and deploy capital when opportunities present themselves. Overall, we are confident in our positioning, our strategy, and our ability to deliver value for shareholders in 2026. We will now open for questions. We would also like to highlight that we have launched a new investor presentation now available on ARMOUR Residential REIT, Inc.'s website. It provides additional insight for investors, including how our portfolio has transformed over time. Thank you for joining today's call and for your continued interest in our Operator: We will now begin the question and answer session. The first question comes from Timothy D'Agostino with B. Riley Securities. Please go ahead. Scott Ulm: I was wondering on the portfolio interest-bearing assets, Timothy D'Agostino: by my estimates, increased year-over-year around 49%. I was wondering the outlook in 2026. Do you see potential for similar growth or maybe a little bit less given the increase in 2025? Thank you. Scott Ulm: There are a couple of elements there, but certainly one of the most important is capital raising. And when we see an opportunity to raise capital combined with investment opportunities we like, we will execute on it. But we discriminate a fair amount in terms of what we know, what is going to be attractive or not. So I am afraid I have to tell you it depends on how the market behaves, both on the investment side and the equity side, whether we will be similar or smaller or in some other relationship to what we were able to do last year. Timothy D'Agostino: Okay. Great. Thank you so much. And then just to confirm, book value as of Tuesday was $18.37 per share? Scott Ulm: Correct. And that is after the accrual of our full February dividend and the payment of our January dividend. Timothy D'Agostino: Alright. Perfect. Thank you so much. Operator: The next question comes from Trevor John Cranston with Citizens. Please go ahead. Desmond E. Macauley: Hey, thanks. Good morning. Scott Ulm: Can you guys talk about where you are seeing incremental returns on new investment today given the spread tightening that has occurred and how you view that incremental level of return compared to the dividend you are currently paying? Thanks. Desmond E. Macauley: Yes. Hi, Trevor. This is Desmond E. Macauley. So on a priori basis, Scott Ulm: the levered yield on thirty-year 5s, which Desmond E. Macauley: is currently production coupon, is around the mid-teens, let us say, about 15%. This assumes eight turns of leverage, Scott Ulm: hedged to 0.5 Desmond E. Macauley: duration using swap hedges, and it is a static framework over a period of just about three months. It does not assume any more spread tightening. Now we think, at least in the medium term, we could see a bit more spread tightening. So let us say we get another 10 basis points of OAS tightening; that adds about 4% Scott Ulm: to that return. Desmond E. Macauley: And also the curve would steepen some more. So if we see another 50 basis points in curve steepening, particularly led by the front end through more Fed cuts, as we anticipate, that can also add about another 1% or so. So those are all parts of the full total return framework. Some of that would accrue to our book value. Now in terms of marginal capital raise, we see that hurdle rate is about 16%. So that would be dividend yield to common, and the management fee is just 75 basis points on new equity. So you add that together, that is roughly about 16%. So you can see that for production coupon, the base case returns are close to that level already, and with just a little bit more steepener, and if we see more tightening, it would surpass that by a couple more points. Does that answer your question? Scott Ulm: Yeah. That is very helpful. Thank you. And then, in general, can you guys talk about how you are thinking about the likelihood of further actions driven by the government to attempt to lower mortgage rates, such as increasing the GSE portfolio limits further or potentially doing other things like lowering G-fees, etc.? Thanks. Sergey Losyev: Hey, Trevor, this is Sergey. Timothy D'Agostino: Yes. So around the week in Davos, we were Sergey Losyev: expecting maybe a few more announcements on Desmond E. Macauley: affordability push that the administration has announced with the GSE purchases. We have not gotten anything. It feels to us that maybe the lowest hanging fruit has been picked in terms of pressuring spreads and mortgage rates lower but without affecting home prices. I think the next steps kind of have both positives and negatives for that push. In terms of G-fee cuts for the GSEs, you take away some of the profitability, make them less a private, profitable enterprise, and more a policy tool. It will introduce negative convexity to investors, who may demand wider spreads. So some of the further steps may work counter to what the administration has called the north star in terms of keeping mortgage spreads nice and stable. We do expect more announcements. Obviously, there have been announcements on portability, assumability of mortgage loans. Fifty-year loans have been taken off the table. So there are a lot of announcements that have been made, but once you get to the implementation stage of it, things have been quite slow. Having said that, we definitely expect in the midterm year for these announcements to be quite active. Scott Ulm: Okay. Appreciate the comments. Thank you. Operator: The next question comes from Dave Storms with Stonegate Capital. Please go ahead. Desmond E. Macauley: Good morning, and thanks for taking my questions. I wanted to start with just asking for a little more Gordon Mackay Harper: thoughts on your current liquidity. It looks like quarter-over-quarter, you put a little more to work, but then it looks like it is back up as of last month-end. How do you think about this in the near term? Operator: So Desmond E. Macauley: hi, Dave. So, yeah, I think our liquidity, we mentioned, is about 54% of the total equity at the month-end. It is a really good spot. It reflects our moderate leverage, kind of where we have been steady in terms of liquidity. So we do not foresee any sharp changes given our current position and the portfolio. Understood. Thank you. Gordon Mackay Harper: And then I also know you mentioned in prepared remarks that about maybe 30% of your portfolio is prepayment protected. With mortgage rates hovering around 6%, I know the market likes nice round numbers. Do you see any risk of a tipping point, or more maybe a linear situation as mortgage rates maybe continue to tick lower? Desmond E. Macauley: Yes. I mean, look, prepayments have, so far in Q1—we noted it in our script—definitely increased from Q4 toward the lower range of the mortgage rates that we have been over the last couple of years. February prevailing mortgage rate will be lower after the GSE announcements as well. So the risk of faster prepayments has increased, and I think in sync with that, our portfolio has morphed over the last couple of quarters to protect us more from lower mortgage rates. Thirty percent in discounts, and thus, specified pools make up 92%. Within the 92%, almost 40% is in the loan balance stories; others are credit and geo stories. So we feel like faster refinances are in the future, but we have built our portfolio for that environment. Scott Ulm: Understood. Thank you. Operator: Again, if you have a question, next question comes from Eric J. Hagen with BTIG. Please go ahead. Scott Ulm: Hey, thanks. Good morning. Eric J. Hagen: I think you guys mentioned in the opening remarks haircuts for MBS have come down. It was a bit of an interesting comment. Can you maybe frame where that level is relative to the historical levels? If the GSEs are helping reduce volatility in the market, could we see that haircut level come down even further, potentially? We would hope so. I mean, a lot of Desmond E. Macauley: guidance on the haircuts comes from FICC. But in terms of our bilateral haircuts, we have worked with a lot of our counterparties to bring down the maximum haircuts closer to our weighted average of 2.75%. I think almost 80% of our repo book is closer to 3%. Eric J. Hagen: Okay. Following up on the conversation around just where you are in the coupon stack, you mentioned originators have been able to leverage some of their tools to be aggressive on refi. How does that drive the appetite for the current coupon specifically? And the OAS that is in the current coupon, how do you compare that to some of the lower coupons and where you feel comfortable taking prepayment risk? Desmond E. Macauley: We have been looking away from current coupon because that is where the biggest impact from the announcement has been really all throughout Q4. We did add in Q4 a little over $1.04 billion in 4.5s and 5s. But since then, we are more looking at the wings: deeper discount coupons where we can see some of the housing activity perhaps reignite with any of these affordability measures. In terms of premium coupons, they are still our core holding. If you look at the OAS spread difference between a 102 price and current coupon MBS, we are at close to two standard deviations on that spread historically speaking. So a lot of the fears in prepayments and G-fee cuts have already been priced into the premiums. So it is really looking at a kind of barbell approach in the coupon stack at this point. But even within the belly of the coupon stack, you can find stories which pick OAS versus TBA specifically, maybe like seasoned collateral, things like that. Eric J. Hagen: How many Fed cuts do you feel like are currently priced into the mortgage basis? It is a very—I mean, it is fair enough. Yeah. Sergey Losyev: How many Fed cuts? Eric J. Hagen: For the rest of this year do you think are priced into the Sergey Losyev: mortgage basis? The market is expecting by December a little bit over two cuts. And from our perspective, we think it is reasonable. We think that normalization will Desmond E. Macauley: continue this year. Sergey Losyev: It looks like when we get to around June, the probability is getting close to 100%. And that will be a very good environment for the MBS market and mortgage spreads. We think that the curve has already steepened. If we do see more cuts, then funding costs will come down. The curve would steepen even more, and that makes the entire space more attractive, and it adds to overall Scott Ulm: total return. Eric J. Hagen: Right. Thank you guys so much. Appreciate your comments. Operator: This concludes our question and answer session. I would like to turn the conference back over to Scott Ulm for any closing remarks. Scott Ulm: Thank you very much for your interest in ARMOUR Residential REIT, Inc. If there are follow-up questions, do not hesitate to call the office, and we will get back to you as soon as we can. Thanks so much, and good morning to you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and welcome to the Bandwidth Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. And to withdraw your question, please press star then 2. Please note today's event is being recorded. I would now like to turn the conference over to Sarah Walas, Vice President, Investor Relations. Please go ahead. Good morning. I am joined today by David Morken, our CEO, and Daryl Raiford, our CFO. Sarah Walas: They will begin with prepared remarks, and then we will open up the call for Q&A. Our earnings press release was issued earlier today. The press release and an earnings presentation with historical financial highlights and a reconciliation of GAAP to non-GAAP financial results can be found on the investor relations page at investors.bandwidth.com. During the call, we will make statements related to our business that may be considered forward-looking. We caution you not to put undue reliance on these forward-looking statements as they may involve risks and uncertainties that could cause actual results to vary materially from any future results or outcomes expressed or implied by the forward-looking statements. Any forward-looking statements made on this call and in the presentation slides reflect our analysis as of today, and we have no plans or obligation to update them. For a discussion of material risks and other important factors that could affect our actual results, please refer to those contained in our latest 10-K filing as updated by other SEC filings. With that, let me turn the discussion over to David. Thank you. David Morken: Welcome, everyone. We are pleased to report a solid fourth quarter, capping off a year defined by sustained business performance and strengthening fundamentals. Throughout 2025, we delivered steady progress across revenue, profitability, and free cash flow. A primary highlight of the year was our success in the large enterprise space. We closed a record number of million-dollar-plus deals, including two significant wins in the fourth quarter alone. We also continued to invest in high-margin innovation. We are seeing tangible results from our AI voice tools, our trust portfolio, our global communications cloud, and our Maestro orchestration software. Entering 2026, we are confident in the upward trajectory of our business. When we reported 2022 results, we set ambitious four-year goals extending through 2026: a 15% to 20% revenue compound annual growth rate, a five percentage point increase in gross margin to 60%, a 20% EBITDA margin, a 15% free cash flow margin, and $125,000,000 in cumulative free cash flow. While market dynamics, particularly in messaging, will almost certainly keep us short of our multiyear revenue CAGR target, our 2026 outlook is fully on track to achieve our goals for gross margin, EBITDA margin, and free cash flow margin. Furthermore, we will significantly exceed our 2026 cumulative free cash flow objective, having already surpassed $125,000,000 by 2025. Daryl will walk through our full 2026 guidance in more detail shortly. But at a high level, our 2026 outlook reflects healthy demand across both voice and messaging, along with continued solid execution, giving us confidence in the direction of our business and our financial model. Earlier today, we also announced the authorization of our inaugural share repurchase program. This reflects our confidence in the durability of our business model and our ability to generate cash while simultaneously investing in our future. I want to thank our customers for their continued trust in Bandwidth. I also want to thank our Bandmates for their tireless commitment to excellence and I thank God for the blessing of another year filled with opportunities for our team to learn and Operator: grow. David Morken: Over two years ago, we identified AI voice as the next frontier. Since then, we have helped customers move from AI voice experimentation into real-world production. From an AI voice concierge for a global hospitality brand to an AI-powered voice ordering system for food venues nationwide, enterprises are trusting Bandwidth to launch new AI-driven customer experience use cases. Our AI investments are paying off. The Bandwidth Communications Cloud and Maestro are purpose-built to integrate and manage AI voice across diverse environments, with the quality, reliability, ultra-low latency, and scale that global businesses require to support multichannel AI-driven customer conversations. Our enterprise momentum validates this net-centric approach. Our role as a foundational platform for AI, deeply embedded in the global communications network, becomes even more critical as enterprises manage constant change across shifting AI models and application platforms. Simply put, our communications cloud and orchestration software are essential to enabling AI in enterprise production environments. We are seeing AI-driven voice adoption across both new enterprise wins and expanding deployments within our existing customer base. A good illustration comes from a major household-name U.S. insurance group, which selected Bandwidth to replace their legacy provider in a million-dollar-plus deal. They cited our AI-enabling features and seamless integration with their complex Cisco environment. Bandwidth will power a new cloud-based customer experience stack for claims and customer quoting functions utilizing inbound voice calling alongside Google conversational AI. This is a blueprint for how we serve large global enterprises, achieving rapid value capture for our customers through low-risk cloud adoption while enabling new AI voice capabilities. Our other million-dollar-plus deal in Q4 is with a top-10 U.S. bank serving millions of customers nationwide. They selected Bandwidth’s resilient toll-free solution to modernize and protect their contact center infrastructure to enhance customer experience. This win was driven by our differentiated failover architecture and open integration strategy. A similar dynamic resulted in another win in financial services: the U.S. consumer financing arm for a top-five global carmaker. In this case, Bandwidth was selected to launch AI-enabled communications for their Genesys contact center. This win came through our channel and reflects our ability to align with partner ecosystems while serving the customer directly. By moving to Bandwidth, the customer gained greater flexibility and freed up cost savings, which supported their investments in new AI services. The transition has been seamless, thanks to the longstanding partnership and technical alignment between Bandwidth and Genesys. It is a strong example of our Maestro orchestration platform enabling enterprise customers to modernize on their terms. We also saw momentum in our messaging business, winning an ecommerce platform that supports high-volume, time-sensitive communications for top brands. This customer chose Bandwidth over our largest CPaaS competitor, citing our superior deliverability, scalable capacity, and operational support during high-demand retail seasons like Black Friday. A particularly strong example of our progress in RCS messaging is highlighted by a longtime customer that supports hundreds of enterprise brands on their Operator: platform. David Morken: Our customer trusted us to power their first production RCS campaigns for several of their well-known consumer brands across retail, home furnishings, and hospitality. The decision followed a broader evaluation of messaging providers and was driven by Bandwidth’s ability to ensure consistent deliverability, scalable throughput, and operational reliability as RCS grows from early trials toward broader enterprise use. Taken together, these wins share a common theme. Customers need an open, scalable, reliable global platform to support their most mission-critical communications, both for today’s customer experience and the AI-driven conversations now being deployed. The majority of these wins also follow our broader path of large enterprise wins in 2025: multilocation rollouts, deep integration into existing infrastructure, and clear line-of-business value realization within the first 90 to 180 days of launch. Perhaps most exciting is the validation we are seeing from the AI developer community. The number of third-party conversational AI developers building on our platform has more than quadrupled over the past six months. While this cohort does not yet contribute materially to revenue, the momentum is a powerful leading indicator. Developers are choosing Bandwidth for our low latency, quality, and predictable economics. Bandwidth enters 2026 at the exciting confluence of enterprise communications and AI, with the global infrastructure software platform and the vibrant ecosystem to lead this next wave of innovation. I will now turn it over to Daryl to walk through the financial details of the last quarter. Thank you, David, and good morning, everyone. Daryl Raiford: I will begin with a brief update on the fourth quarter, then touch on the full year 2025 before spending the majority of my time on our outlook for 2026 and the fundamentals of Bandwidth’s business model. In 2025, strong execution drove solid revenue and record levels of profitability and free cash flow. Total revenue saw a 12% year-over-year increase on an organic basis. This organic growth metric excludes the cyclical revenue generated from political campaign messaging in 2024, providing a clearer view of our core business strength. Both our voice and messaging segments were key contributors, each achieving healthy double-digit growth. In voice, our 11% year-over-year growth was fueled by increased voice usage, rising adoption of voice-based AI applications, and growing contributions from software services revenue. Messaging organic growth of 12% year-over-year was driven by robust holiday messaging demand. EBITDA margin reached 17%, reflecting improved pricing and mix, and continued progress on profitability, providing a strong close to the year. Looking at the full year 2025, we delivered another year of disciplined performance where we generated total revenue of $754,000,000, up 10% organically year-over-year, non-GAAP gross margin of 58%, adjusted EBITDA of $93,000,000, and free cash flow of $57,000,000. Durable customer relationships drove accelerated growth in our largest voice customer category, Global Voice Plans, where 8% revenue growth more than doubled compared to 2024. Our enterprise voice customer category also delivered strong full-year results, growing 21%, supported by a record number of million-dollar-plus deals. While large enterprise customers typically have extended onboarding cycles, these customers are experiencing a faster time to value realization after launching on Bandwidth’s communications cloud. In fact, the enterprise cohort of customers added in 2025 already represents 15% of total enterprise revenue, making it the second-highest contributing annual cohort in our history. Notably, more than 40% of 2025 enterprise voice growth came from accounts added in the past three years, one of the strongest proof points that our enterprise cohort expansion continues to compound over time. Programmable messaging achieved 7% organic year-over-year growth, in line with our expectations. Beyond the numbers, 2025 reinforced critical themes: the durability of our customer relationships, growing deal sizes, and improving profitability driven by operating leverage and an expanding mix of higher value software services. As we look ahead, we expect 2026 to be a year of continued growth and margin expansion. First, we expect continued accelerating revenue growth in voice, supported by higher usage demand, including usage influenced by AI-driven call flows, large deal activity, increasing software services contribution, and geographic expansion. Second, we remain focused on operating leverage and platform investments, which we expect will continue to support margin expansion and profit growth. Based on these factors, our 2026 full-year guidance shows total revenue growth of approximately 16% year-over-year, including cloud communications growth of approximately 10%, adjusted EBITDA improvement of nearly 30% year-over-year in line with our aim to achieve a 20% full-year adjusted EBITDA margin, and non-GAAP earnings per share of approximately $1.66 to $1.74, representing growth of approximately 19%. We are excited that our execution and investments position us now to achieve our three-year goals around gross margin, adjusted EBITDA margin, and cash flow goals. And beyond 2026, we anticipate delivering sustained double-digit growth in cloud communications revenue independent of the political campaign cycle while driving further growth in gross margin, EBITDA, and free cash flow. Now I want to spend time on what we believe is the most important point: the quality of Bandwidth’s business model. Our view is simple. Bandwidth is a durable cloud communications platform with software-like expansion economics. There are five principal reasons we believe this is true. First, our customer relationships are highly durable. We set the industry standard for customer satisfaction rates. We see the direct outcome of that with ultra-low customer churn and strong retention across customer categories. Our customer name retention rate remains above 99%, and our organic net retention of 107% reflects ongoing expansion as customers grow their usage with us over time. Our top 20 accounts have a median tenure of twelve years. Within enterprise voice, we again, in 2025, realized a 100% customer name retention, which means zero churn. In fact, we recognized a 98% customer retention rate from our enterprise voice customer cohort of three years ago, a remarkable demonstration of outstanding customer durability. In addition, our average annual revenue per customer continues to increase, driven by larger deployments, deeper integrations, and expanding use cases. We ended 2025 with average annual customer revenue of $232,000, a record and up from $171,000 three years ago. All these metrics underscore the long-term value of our customer base and the mission-critical role our platform plays. Second, Bandwidth owns and operates a scaled infrastructure-based global cloud communications platform. In contrast to others, we do not market a thin application layer underpinned by reselling commodity third-party carrier access. Bandwidth’s ownership model supports structurally higher margins that expand with usage and create durable operating leverage over time. Our margin performance is fueled by scale, voice AI adoption, growing software services contribution, global coverage, and operational efficiencies. Our incremental gross profit yield of 82% in 2025 demonstrates that each incremental cloud communications revenue dollar converts highly attractive economics. This is the foundation of our operating leverage, driving long-term profitability and creating a meaningful competitive advantage for large enterprises that require consistent quality at scale. Third, we continue to see strong traction in large deals. In 2025, we closed a record number of $1,000,000-plus deals. These larger deals not only contribute to near-term growth, but also create long-term expansion opportunities as customers increase usage and adopt additional services. Fourth, we see a growing opportunity to expand relationships through upsell and cross-sell. Software services are becoming a more meaningful part of our value proposition and our financial model. These solutions complement our communications cloud, deepen customer engagement, increase platform stickiness, and support continued progress toward margin expansion over time. We exited fourth quarter 2025 with software services revenue at an approximate $15,000,000 annualized run rate, driven by solutions that are increasingly attached to core voice usage such as Maestro, CallAssure, and our trust services offerings. Our year-end annualized run rate was meaningfully ahead of the $10,000,000 expectation that we expressed a few months ago. Notably, software is now attached to all million-dollar-plus deals. These solutions are embedded into customers’ communication stacks, producing recurring high-margin revenue streams that scale with usage. Finally, our model is designed to grow profitably. We are focused on scaling the business in a disciplined way, balancing growth with operating leverage, margin expansion, and cash generation. As we continue to execute, we believe Bandwidth is positioned to deliver sustainable revenue growth, expanding margins, and increasing long-term value creation. Regarding capital allocation, our business is strong and set to generate continued meaningful free cash flow. After focusing since 2023 on reaching the 2026 margin metrics we previously outlined, we are pleased to announce, as David mentioned, that our board of directors has authorized an inaugural share repurchase program of up to $80,000,000 in common stock. Our balanced capital strategy involves both this new share repurchase program and our largest investment in research and development in company history this year to accelerate innovation across our AI portfolio. This dual approach gives Bandwidth the flexibility to capitalize on market when they arise while actively managing dilution to enhance shareholder value. In closing, we believe our performance in 2025 and our outlook for 2026 demonstrate the strength and durability of Bandwidth’s business. We are encouraged by continued voice growth, the incremental usage driven by AI-enabled applications, and the expanding contribution from software and services, all supported by the strength of our business model and sustained operational performance. We are also proud of how we are embracing AI across our business. Recently, Bandwidth was honored to be recognized by Gartner as a first mover in the deployment of AI for investor relations. We believe this mindset, combining innovation with operational excellence, positions Bandwidth well for the future. With that, I will turn the call back to the operator for questions. Operator: Thank you. We will now open for questions. To ask a question, please press star then 1. To withdraw your question, please press star then 2. Our first question today comes from Arjun Bhatia with William Blair. Please go ahead. Yes. Perfect. Good morning, and thank you. Maybe if I can start off first, just Arjun Bhatia: want to touch on the enterprise voice segment. It seems like you know, you are clearly signaling you are getting good enterprise demand there, and software services as a part of that is also ticking up. I was hoping you could just touch a little bit on what you saw in terms of Q4 trends and the growth rate. I think if I am backing into some sort of an implied Q4 growth rate for enterprise voice specifically, there was a little bit of a tick down. So I was hoping you could address that and then talk about outlook in 2026 as well, especially with those large deals starting to contribute. How much of a bump and tailwind could that be next year? Daryl Raiford: So let me start with and I am grateful for that. Let me start with the growth rates in terms of enterprise for the fourth quarter. We did have an acceleration last year with some deployments customers. So we had a little bit of a lapping and tougher compare. We, for a quarter, are real pleased with the annual rate of 21%. We, again, are with a record number of million-plus deals, you know, we see that deployment and ramping into 2026 driving the growth that we have called for for enterprise. So we are projecting very healthy growth again in enterprise going forward into the new year. In terms of software services contribution, absolutely. As we said, each of the $1,000,000-plus deals and really nearly every deal includes software services now as an upsell, cross-sell add-in feature. We think that it is becoming critical for the customer in terms of the value that it provides. The value proposition is just dramatically clear to them. The benefits that we accrue as a company are as I articulated previously, which is around stickiness as well as durability, and as well as allowing us to continue to expand and cross-sell and upsell. So did I capture the bulk of your questions, Arjun? Is there something that I might have missed? Arjun Bhatia: Yeah. No. That is super helpful. You touched on all of it. Thank you. And then, actually, Daryl, a follow-up for you just in terms of 2026. Can you just help us understand how you are thinking through contribution and should we comp that to 2022? Or what is the right cadence? Yeah. I am glad you asked. Daryl Raiford: We are, you know, we have guided to 15% revenue growth, 10% cloud communications growth. The midterm elections are different from the presidential elections in the sense that the presidential elections, the caucuses, and the early primaries would have started two years ago, and we would have more visibility. The midterms are more state, local. They do not really have the presidential primaries. They start later in the season, say, midsummer-ish time frame is where we may see benefit. Based on what we are seeing and speaking and hearing from our customers, we think that the political campaign contribution this year will be roughly 2.5% of cloud communications revenue. And we will keep monitoring that. We do not really expect to experience anything in the first half of the year, but we will keep monitoring that. You know, it is good to say that two years, four years ago, we were making the remark that our political campaign customers were beginning to diversify. That they were not really just appearing for like a cicada and then going back into the ground, that they were beginning to diversify their business most. Four years on, they truly have. So these customers are really durable for us in terms of civic engagement and other commercial types of messaging business, as well as they scale up and down for the political content. So we are really happy with that. And we will see maybe about 2.5%, but we will update you again next quarter as we get better visibility into the year. Operator: And our next question comes from Eric Sepager with B. Riley Securities. Please go ahead. Yeah. Thanks for taking the question. First, could you just discuss or give us some context around the dynamics between the cloud communication growth outlook for 10% and the total revenue growth of 15%? Why is there a significant difference between those two? Daryl Raiford: Well, that would be the difference is surcharge growth rate from carrier messaging surcharges. Last year, you will have noticed in our reported results that surcharge growth was relatively tame, very, very moderate. It was dampened by the carrier pricing environment where there was really only one noticeable price increase by a carrier on surcharges last year. So surcharge growth last year for us on a reported basis was simply due to our continued messaging volume growth. This year, just one note, think this is David. Sorry to interrupt, Daryl. I think you mentioned David Morken: Top line total growth at 15%. It is actually 16%. Daryl Raiford: Yeah. Oh, okay. Sorry. Sorry. Yeah. Yeah. Correct that. Sixteen and ten. Sixteen and ten. This year, preceding our guide that we just released, we have had two carriers, I will not go to the effort to name them, but two major carriers have already announced price increases that have gone into effect and will be going into effect in the next month or so. So we have taken those price increases into account in our guide. And just critically, those are pass-through surcharges. So they are not margin important at all for us. And CloudComms importantly has become, as Daryl mentioned, so durable that we are projecting forward to achieve double-digit cloud communications growth irrespective of political seasons altogether. Okay. Operator: Second question, Twilio had noted a significant increase in their voice traffic. I am wondering if you are seeing evidence of them getting more competitive on the voice side of the CPaaS market. Daryl Raiford: You know, we are not. The customer examples we cited in our script were win-aways from Verizon in two of the cases, from AT&T in one of the cases, and from a smaller carrier in the final case. And none of those was David Morken: Twilio relevant. Very good. Thank you. Thank you. Operator: Our next question today comes from Patrick D. Walravens at Citizens. Please go ahead. Oh, great. And congratulations to you guys. Daryl Raiford: Hey, Dave. Can you Operator: actually have two hi. Hi. I actually have two questions with the first one is, you talk a little bit more about the insurance example that you gave us? And you said that you are working with Google Conversational AI on that. Can you just explain what exactly they were doing, what you do, and what the potential is to do more of those kinds of deals with Google. David Morken: So absolutely. The most important aspect of that customer case is the complex preexisting Cisco environment for their contact center and the need that this very large household-name insurance company had to integrate Google’s AI solution within that environment. And so orchestration among chosen best-of-breed AI solutions is vital, was vital for them, and Maestro from us is perfect. And that is what facilitated that opportunity. And in the other cases, if some of our other customers chose differently to go with Google or to go with someone else, again, Maestro is ideally situated to give flexibility at scale for these enterprise customers to navigate what is the most fluid and dynamic changing AI environment Operator: imaginable. Alright. Great. Patrick D. Walravens: Thank you. And my second question is, you know, for every stock that we cover, really, it has become all about David Morken: is the incredibly rapid increase Patrick D. Walravens: in AI good or bad for this business? And what are the moats that the business has to prevent larger, new AI companies from coming in and somehow disrupting their business. How would you explain that to shareholders? What are your moats? Daryl Raiford: So the David Morken: first part of your question is interesting, and I will get to moats. As to the relevance of Operator: AI David Morken: for Bandwidth as a tailwind, we are deeply convicted that the need for intelligent voice agents to communicate across every imaginable channel with the empathy and intelligence to answer questions of all kinds means that for us, and we are already seeing this in our voice growth and acceleration, for us, it is an amazing moment. It may not manifest as fast as the work-from-home dynamic that occurred back in the early 2020s, but will ultimately be far more durable and persistent as the next billion users of the global PSTN that we have a footprint for are voice agents acting on our behalf in wonderful, delightful ways. What kind of a moat do we have? We have a moat that is a mile wide, filled with oil, and lit on fire. Very difficult to cross because you have to cross it at the speed of government across 80-plus countries. We have interconnections with all the global incumbents necessary to provide immediate footprint again to the next billion voice agents. We own and operate this infrastructure. It is across the globe. That gives us a structural margin and cost advantage, which is why we have grown gross margins from 47% to now 60% during the time that we have been a public company. Our ARPU per customer is exploding because of their adoption of our different software services. And again, we are focused on the enterprise and the agents that are lining up to be able to engage globally in use cases that are awesome. Patrick D. Walravens: Fantastic. Thank you. David Morken: Thank you, Pat. Operator: And our next question comes from Joshua Christopher Reilly at Needham. Please go ahead. Yes. Thanks for taking my questions. How we think about the pipeline for voice AI relative to other voice opportunities here heading into ’26? And does that remain a relatively low overall mix of voice revenue today? And is 2026 maybe kind of the inflection point where voice AI use cases are ramping and the Daryl Raiford: marketplace. And your overall revenue base. David Morken: It is a really good question, Josh. AI is a component of all enterprise conversations, with Maestro attaching to almost, to actually to every enterprise deal. So it is really a degree question. It is not whether or not AI is germane to these enterprise conversations. It is to what extent does the revenue of Operator: that David Morken: motion manifest? And your primary question is when is the inflection point in voice growth driven by AI, disproportionately or more heavily. And what we believe, having for two years been focused on this moment, what we believe is that we are seeing, whether it is the developer channel that has quadrupled as we talked about in our script, or the enterprise use cases that are proliferating, this year is a vital year to watch and observe and see the results from AI adoption in voice hit the top and bottom line. That is the year that we are in. We have captured that in our projection for 16% top-line growth and 10% cloud communications growth. Again, we are disciplined as a team, so 20% EBITDA margins render our overall business plan, I think, very strong. But we think this is a vital year for AI adoption to go from experimenting to real scale and deployment. Joshua Christopher Reilly: Got it. Very helpful. And then you mentioned reaching a record number of million-plus deals. I think that was for the year of 2025, not the quarter. Correct me if I am wrong there. Daryl Raiford: You just share a bit more about the composition of some of these newer Global 2000 deals? Is there functionality that they are asking for today that they were not a couple years ago? And maybe is that one of the key reasons that is helping you win against some of the legacy telcos? David Morken: Terrific question. We closed more million-dollar-plus deals in all of ’25 than we did in ’23 and ’24 combined precisely for the reason that you are asking about. The product portfolio has expanded to really answer the key questions on value. And we have got here with us our Chief Product Officer, John Bell, and I will just invite him to add to my answer. Yeah. But the Maestro have been very, had a strong enterprise value proposition around integrations, supporting move to the cloud. In all of these conversations we have with enterprises, it is really about now the move to AI. And so the move to AI is reinforcing the value proposition and showing up in these customer conversations. Daryl Raiford: Awesome. Thank you, guys. Operator: And that concludes today’s question and answer session and today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.
Kaarlo Airaxin: [Foreign Language] Luis, nice to see you again. How are things? Luis Gomes: Nice to see you, Kaarlo. Things are going well, with normal challenges, but with a good outlook for the year. Kaarlo Airaxin: Yes. So Luis, a busy year, one might ask. So please walk us through the highlights and what the future might hold. Luis Gomes: Surely. So the year 2025 was a year that did not meet our expectations. We were -- I was personally disappointed with the outcome of the year. But at the same time, quite encouraged by some of what we achieved and some of what we have actually prepared for the future. So our net sales were below what we expected. They were below what we had reforecast, mostly down to 2 programs, one which is delayed in terms of being started and the other one, which has a few issues that are external to us, but that has actually affected our net sales quite substantially. Despite this, we were still able to deliver a positive EBITDA, that was one of our objectives for the year, even if the other objective originally, that was to actually have a positive operational cash flow, could not be fulfilled, mostly because of that delay in the start of a very large project, and that has affected us in terms of our cash flows. But as I say, it's a year of mixed results, disappointing in terms of our growth, but we still managed to actually deliver positive EBITDA, showing that we could adapt to the fact that we had lower-than-expected revenues. And particularly, there are some interesting aspects. And one important aspect for us is that our Data & Services business, something that we have been investing in and we have been growing over the last few years, is actually performing quite well. So it grew year-on-year about 78.5%. And that was good to see. It's not just in terms of the increase in net sales, but it's also the fact that this is a high EBITDA part of the business. And as such, it has actually delivered the kind of growth, the kind of expansion that we wanted and expected. But of course, the reverse of that is our Products & Missions had some challenges. And as I mentioned, that comes down to the fact that we had delays on an existing project that delayed our revenue recognition. Now this is not revenue that disappeared, it's revenue that has been moved into 2026. And then also one large program, EPS-Sterna that we expected 6 months ago. That is delayed in its start. We already expected to have some revenue in the year, but we didn't. So that has affected our mission and products business line. We still expect those -- we expect it to improve in 2026 quite substantially. But 2025, we did have some challenges there, and those affected our overall performance. Now in terms of our business, as I say, this is why I'm encouraged by what we have done in 2025. So we brought in a new important large investor, long-term investor for our stock. It is Bonnier Capital. It is great to have them on board, not only because it allows us to actually do the developments we want to do, but also because they are an important investor. And as I say, with a long-term strategy to invest in us. And that is a good feeling. It's a feeling that the investment community is looking at us and saying, our strategy is appealing. At the same time, we started also building Sedna 3 and 4. These are our next satellites for the maritime business. They will be launched early next year. VIREON 1 and 2 for our Earth Observation business, for our land monitoring business are now on their way to the launch sites. They might already be there today, getting ready for a launch in the end of March, which is quite an exciting period for the company. And this will be quite an important tool for us to expand our Data & Services business. And we are already building #3 and #4 for launch later this year, beginning of next year. And over the next 6 months, it's a number that I find interesting. It's important for us to say this. We are expecting to launch or there to be launches of 15 satellites built by AAC Clyde Space. Some are for ourselves like the VIREONs, others are for our customers. So this will be quite a lot of new AAC Clyde Space designed satellites in orbit. It will be good to see an expansion of the number of satellites that we have built that we have put in orbit. And then, of course, we have INFLECION Phase 2 program coming online. So we are now just in the last aspects of closing Phase 1. And we are just in discussions with the European Space Agency on Phase 2. And that is going well. Those discussions are going well. We're just going through all those aspects. It is going to be very important for us to actually start that Phase 2, so that we keep to the time line of having a constellation late '27, '28 of new maritime services -- satellites for new maritime services. And then, of course, probably the biggest thing, the biggest focus for the company over the last few months is getting ready for EPS-Sterna. And the project, as it's well known and well documented, has been delayed. EUMETSAT had some delays internally in terms of approvals. But on the 12th of January, EUMETSAT got the green light and the go-ahead to start the project. And on the 27th of January, they actually signed their contract, the agreement with the European Space Agency to start the procurement. And we are now going through that phase of final negotiations, discussions, and we expect to actually start working on this project quite soon. So that is quite a positive development. And as such, and this is why I remain very optimistic for 2026. I think it is a year that is shaping up to be very good for us, and it has the right ingredients. Even if 2025 was a bit of a disappointment, 2026 has the ingredients to be a great year for us. Thank you. We'll take some questions now if there are some. Kaarlo Airaxin: Excellent. I think we lost you there for a minute here. I think you already gave the indication of when you expect the EPS-Sterna orders to come in. That was probably on the last slide. But we have another question here. What is the reason for the lower EBITDA margins in the Data segment? Luis Gomes: We are expanding that side of the business. So we are doing investments there. We are expanding the number of people we have on sales, for instance. We are expanding the number of people we have to manage the data flows in preparation for the new satellites coming on board. And as such, we will see a reduction on EBITDA levels now until those satellites are online. But we have to prepare the work. We have to invest. We have to get more people, as I say, both on the sales and on the data management, distribution side and processing side of the business. So we will see that happening now. But when the satellites are online, when the data flows are going to the customers, we expect those numbers to improve again. Kaarlo Airaxin: And as you mentioned, you're in a good position for 2026, but looking at the 2025 numbers, there are some disappointments in the market, and we have one comment here on the generally lower level of order intake during 2025. What's the main drivers behind that? Is there one main driver? Would there be any lessons learned? Or what can you -- could you elaborate a little bit on that? Luis Gomes: I would say the lesson learned is that working with governmental organizations sometimes is a bit more challenging than we would like to be. I think the main point in terms of order intake is that we have a very large order in the form of EPS-Sterna. And that is one we have focused quite a lot. So we have focused our effort internally in capturing that. And a lot of our work -- a lot of our backlog is dependent on that. So when that comes in, that will actually change things quite dramatically. And because we have been waiting for that, it's also not like we can just go and replace start new orders. We have to actually choose and we have to focus on a certain number of orders. And that probably will have actually meant that our order backlog, because of the delays on that project, actually was reducing. But in general, I think this will be a very different situation. We'll see a very different reality once that project comes in. In terms of 2025 in general, yes, it was disappointing, and it was very disappointing for ourselves, because we expected a better year. And as I say, there are the delays on EPS-Sterna, but we also have another project where, due to external circumstances to us, there is a technical disagreement between one of the suppliers and the customer. And that has led to some delays in terms of recognition of revenue, because there are some work that we can't do until they actually agree. But this is something that is being resolved. And as I say, moved from '25 to '26. And it is something that we really couldn't control. Kaarlo Airaxin: And if we're looking forward here, guidance and long-term outlook, what shall we expect? And will there be a full year guidance? Luis Gomes: Once the situation with Sterna is all resolved and everything is done, we will give guidance to the market. Until then, it would be premature just because the impact is so big on our finances for the year. So we will give that guidance once everything is settled. Kaarlo Airaxin: And we have a viewer question here. Should the additional Sterna launches be considered a constellation expansion or a renewal? Luis Gomes: Both. So our objective is to expand our maritime constellation. We want to do that. But of course, we also have old satellites in the fleet. So some of those will start reentering, they will stop working. And the new ones are needed to both replace them, but also to expand. So our objective is to have a net positive in the expansion of the fleet in terms of the amount of satellites and data that we deliver to customers. So that's what we are working towards. But it's a mix of both. Kaarlo Airaxin: And you mentioned earlier the 15 satellites that will be launched in the next 6 months. And we have a question. If you could tell us which ones they are, if we can get some more granular information. Luis Gomes: So I can just mention the 2 VIREONs that we own ourselves. The other ones are customer satellites, and we are not in a position to discuss those. But it's just to give the number of satellites, but we can talk about the ones we own. The other ones are for our customers. Kaarlo Airaxin: Okay. And what is a reasonable time line for the VIREONs constellation to start earning revenues? And now we're moving into forward-looking statements. Luis Gomes: So after they are launched, we expect a commissioning phase of about 3 months. That is where we are, verifying, checking, putting the satellites in the right place, because they will still take a while to actually place in the right place. It can take a little bit longer, can be a bit quicker. But after that phase, we will be in a position to start delivering data to customers and to start making revenue out of them. Kaarlo Airaxin: Thank you. And we have some questions here on INFLECION. What is the current form? And how much is in your hand now vis-a-vis the third party? And as I said, it takes 2 to tango, but here apparently, it takes 3 to tango. Luis Gomes: Yes. In this specific case, I would say 3 is the right number. And as you can imagine, that's quite a difficult tango. What we have right now is most of the proposals, most of the plan is all arranged. There is one outstanding item to be discussed. It involves another partner. And as such, we still have to finalize that. But I think we are in a pretty good position to go ahead. But ultimately, as I said, we have to agree together with the European Space Agency and the other partner. We have to agree all the details. But it's something that I expect to have a fairly quick solution. Kaarlo Airaxin: And we have a viewer question connecting to that and that is a statement. There hasn't been any updates. Is that due to, well, let's say, the third party or other party. So you are somewhat stifled in what you can communicate. And the next question is, would you say that these projects are moving forward as expected with what you know? Luis Gomes: Starting by the end, yes, I think they are moving forward as we expected, maybe with a little bit of a delay. We expected to have closed this December, January. So there is a little bit of delay. But nevertheless, projects are still working as we expected. And yes, I cannot disclose details about the ongoing discussions, because as I say, it involves other parties. So we can't give updates on that. But in general, we are still seeing an evolution. Things are, as we expected, as I say, with a little bit of a delay. Kaarlo Airaxin: Okay. And is the SKAO progressing again, or is there still a problem with the suppliers? Is there a problem with the suppliers? Luis Gomes: So I won't talk specifically about any details on the program. I'll just say, the program is moving, but we do have some delays there. But the program is moving, not as quickly as we would like. Kaarlo Airaxin: And so bearing in mind that you're not discussing particular targets here, but there is a viewer question. In Q4, you communicated SEK 32 million in the SKAO will shift from 2025 to 2026. This is only SEK 2 million more than in Q3. What is the main factor that the net sales came in SEK 22 million lower than your estimates from November? What is the factor here? And I believe, in the beginning, you said sales may be postponed. Luis Gomes: We expected to recover some of the movement on that revenue on quarter 4 still. We had some expectation that we would still recover some of that. We also had some expectations that Sterna will come earlier, and so we could actually recognize some revenue, because we've already done some of the work, particularly preparation with subcontractors and so. So there were a few things that we expected towards the end of the year that didn't happen. They moved into 2026. So that's the main cause, the main reason. Kaarlo Airaxin: And I have a question from someone mailing it in. You press released that VIREON 1 and 2 have been shipped to launch and launch is end of March. But if I understand correctly, exact launch date is not set. So why is that? And how will we know in the market? Luis Gomes: You might want to go and ask Mr. Musk why that is. So SpaceX has changed the date of the launch a little bit over the last few weeks. Now we have a nominal date, but we don't want to commit to it because it has shifted a little bit over, as I say. And so we prefer to say it's the end of March. And as we get closer, we will know better exact dates for the launch. Kaarlo Airaxin: And I will expose my ignorance here, but a launch, is that the same as being operational? Or how many steps would there be before you are operational? Luis Gomes: No. So that is the first step in operational and the spacecraft being operational. The spacecraft will then separate. We will have to stabilize it, get it pointing in the right direction, get solar panels deployed, so that we have enough power for the spacecraft. We will have to start communication, series of sequences of checks that we will do that's called early operations. And then once all of that is done, we'll get into the commissioning phase. That's where we will then start actually testing in detail every single subsystem on the satellite. We'll verify all the communication chains, from taking a picture, all the way to download it to the ground station. We'll iron out any bugs on the software, any issues that we observe. We will optimize the operation of the spacecraft. So that period is commissioning. That will take about 3 months. So all in all, from launch to a fully operational satellite, usually, we'll be looking at around 3 months. Sometimes it takes a bit longer, sometimes it takes less. It depends on how things go, how many issues we might find during the duration. So it's a period. As I said, we can make it quicker sometimes, but we also want to make sure that the satellite is safe. We don't want to do anything that might damage the satellite. So we also like to take our time. Kaarlo Airaxin: Makes sense there. And if we continue on the time line here, customer conversion, would you have a number? Could you give us a feel for customer conversion? And also the time frame between, let's say, discussion to an actual order. So 2 questions in one. Luis Gomes: Yes. Customer conversion in the space industry is always a difficult subject in the sense that many conversations are very top level at the beginning. You have many conversations. At which point that becomes a serious conversation is always difficult to actually decide. In some cases, for instance, in the more institutional side, that is when we are talking about big programs like Sterna, that's a conversation that started many years ago, went through everything. And basically there, the conversion -- for that kind of programs, the conversion is almost 100% once the conversation starts to be serious. Of course, in the more commodity side of the market, it is products, data, conversion rates vary very much depending on what you are doing. But you could [Audio Gap] with customers. On the satellite side, on the mission side, you probably have a similar conversion rate. But then the time lines that you have between starting a conversation and actually having a contract is very variable. Again, looking at the more commodity side of our business, that is where we sell products and data, readymade data, let's call it, that time lines are fairly short. You're talking about a few months from first contact to actually having an order. When it comes to satellites, or more specific products like Sterna, then you are talking probably 1 year, 2 years from having a first conversation to actually having a contract. When we are talking about large data delivery, secure data deliveries, for instance, exclusive, again, that is a few years of discussions and contract negotiations. So it's very dependent. The market is very different. And as I say, going back to the conversion rate, it's very difficult to actually from -- we have many conversations, many discussions with potential customers, but many of those are very top level, very initial. At some point in there, they become serious. So it's very difficult to actually have a proper assessment of conversion ratios. But the numbers I gave are reasonable. But it tends to be a long process in some parts of our business to actually get from first discussions to converting to a contract. Kaarlo Airaxin: And we have a question here on COMCUBE-S, and it's a statement here. It's a significant project and the questionnaire or the person writing the question has read the study, and it seems to have been successful. Would you give us some insight in this project? Luis Gomes: So that's a very large project, as stated, and it's very large, but it's still dependent on being approved by the European Space Agency by being approved and financed by countries, by member states of the European Space Agency. So we have done what we can that is to do a good job with our partner and lead partner on this project. But there are still many milestones that need to be achieved before it becomes a real project. So it's something that we continue to work on. But as I say, it's a big governmental project, and it will require quite a lot of steps. So it's something that might happen. And if it happens, it will be great in its full format. But at this stage, we are not able to comment further than that. Kaarlo Airaxin: Okay. And when we look at the defense sector, you have ongoing discussions, I take it. So how much can you tell us? Or is it the same thing here when you're having, let's say, a third party that everything is classified? Luis Gomes: So we can't actually discuss and we can't disclose most of the work we do or the discussions we are having, not until the other parties decide they want to make that public, if they want to make it public. We're having several discussions. We are working on several things with some defense organizations around the world that ranges from supplying equipment for satellites to actually work on potential missions to look at service-based activities. There are many ongoing discussions. There are many ongoing studies and work, but I can't say much more than that. But of course, it's a sector that is growing. It's part of the things that governments are paying a lot of attention to. And so we are participating and benefiting from that dynamic right now. Kaarlo Airaxin: And we have another question here, and I believe you touched upon it when it comes to the maritime data, but DNB Carnegie, who back on the EPS-Sterna green lighting from EUMETSAT, recently raised the target price to between SEK 107 and SEK 138. And obviously, you can't comment on the share price. However, they are expecting maritime data offering and thus revenue in the second half of 2027 in this report. Would you say that that's a fair assumption? Luis Gomes: I believe that was for data from Sterna or for revenue from Sterna. Kaarlo Airaxin: Yes. Luis Gomes: So I would say that, that would be a pessimistic view. It would be a pessimistic view in my opinion. It will be a pessimistic view of how things will evolve. In terms of maritime, yes, we will increase -- next year, we expect to increase our maritime revenue. But when it comes into revenues from Sterna, I would say that's a pessimistic view. Kaarlo Airaxin: So if one were to summarize here, the 2025, particularly on sales, disappointing, but the sales may have been pushed forward. And you seem to be quite satisfied with the order pipeline. Is that a fair assumption? Luis Gomes: Yes, it is a fair assumption. So we have built quite a large order pipeline and we expect to start converting that this year. And so from that perspective, we are very comfortable with what we have been doing and preparing, and at the same time, our investments in new data services is going ahead as planned, and that opens other opportunities in terms of pipeline and growing our pipeline for the coming years. So yes, all in all, I would say that 2026 is shaping up to be a good year, more or less. Kaarlo Airaxin: And I just received another question here, so I'll just read it off the printer here. You mentioned last year that you had early discussions about possible new VDS constellation. Any progress within this area? Luis Gomes: So we are working -- this is a more generic aspect in terms of maritime. So we are working several opportunities right now. We are having several discussions, both on just AIS and VDS. And so yes, there are plenty of opportunities there. There are things we are progressing with customers. In some cases, it's data and services. In other cases, is hardware sales. So we are in discussions right now on that. And yes, we expect that continue to grow is an area where there is a lot of interest. I don't have specifics to tell you right now, but just we are in discussions and we are in planning phase for our own data services, but also in discussions with potential customers for constellations of that type. Kaarlo Airaxin: So you're leaving a rather busy year and you're entering perhaps an even more busy year, if I interpret it correctly. Well, thank you, Luis. Educational, interesting. And if people have any more questions, they should contact yourself and the company, I take it? Luis Gomes: Yes. First point of contact usually will be Hakan Tribell, but he will then direct the questions to the appropriate person to answer. So first point of contact, please feel free to contact Hakan. Kaarlo Airaxin: Right. Thank you so much. It's been a pleasure. [Foreign Language]. Keep up the good work.
Operator: Ladies and gentlemen, welcome to the Cembra Full Year 2025 Results Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Holger Laubenthal, CEO. Please go ahead, sir. Holger Laubenthal: Thank you, Sandra, and good morning, everyone. Great to be here for the presentation of our full year results for 2025. As usual, here with our CFO, Pascal Perritaz, our CRO, Volker Gloe and look forward to walking you through the presentation, and then as always, we'll take your questions. We start with the key messages we have for you this morning. First, with continued focus on delivering on our transformation and executing our strategic programs, we have yet again been able to increase an income to -- for the year to CHF 180 million. Second, our efficiency drive continues to deliver with CHF 19 million of cost savings. We're at the upper end of the guidance that we provided. In a volatile global economy and interest rate climate and a somewhat less predictable macro environment, we have successfully defended our net interest margin, [Technical Difficulty] and loss performance with well-calibrated volume price risk management across our product lines. This active portfolio management has led to selective growth across our products, as you know, we're optimizing for profitability. The slowdown in personal loans has largely been offset through growth with a bias towards secured assets in less risky segments. Given this overall strong performance in capitalization, we're pleased to announce the proposed dividend increase of 8% to CHF 4.60, and extraordinary dividend of CHF 1. Finally, with revenue growth expected in line with GDP and further significant cost savings, we continue to pace towards our financial targets and expect a 2026 ROE of around 15%. Let me give you the highlights of last year's performance. Net income, up 5%, as explained with net revenues and net financing receivables lower, reflecting focus on profitability. Further significant improvements in cost income ratio to 45.2% and 43% in the second half. Loss performance came in at 1.1%, in line with the guidance and ROE at 13.7%. This resulted in very strong Tier 1 capital ratio of 17.6%. And with that, the proposal of an ordinary dividend of CHF 4.60 and extraordinary dividend of CHF 1. If we zoom in and the specific segments in the market, as already mentioned, lending in 2025 reflected the continued shift into more secured business and payments, followed with growth in credit card assets. By product, this means in personal loans, we continued our approach with growth on better performing, more profitable segments and degrowth in less performing segments. This approach is delivering as planned with very solid [indiscernible] risk metrics and more on this later from Volker. We have also held our market share in a contracting market in the second half. Auto continued to grow nicely. Our new leasing platform has further strengthened our proposition and net financing receivables were up 3%. Cards assets also up slightly driven by our own proposition and co-brand partnerships and buy now pay later core activities were up, as you see in financing volumes, billing volumes down to -- due to the portfolio consolidations we already explained and articulated. So overall, and in the mix across products with a bias towards secured assets, we continue to hold very solid positions in our markets. A few items to highlight operationally aligned with our dual transformation objectives. As you know, both efficiency as well as generating increased customer value. On the business and operating model simplification, we've aligned our distribution network into regional centers, consolidating our presence and enabling full-service capabilities in high-visibility locations across the country. We've also driven infrastructure consolidation forward meaningfully. It is an important element of our efficiency programs, retiring and decommissioning numerous major systems and apps and in-sourcing others to drive further simplification and business model resilience. We discussed the auto platform in the summer. We're extremely pleased here with significant tangible efficiency increases, higher automation as well as faster and simpler processing for our partners. Our app with now over 600,000 enrollments evolves increasingly into a comprehensive integrated platform for our users. We now serve card, auto and loan customers through this app and continue to launch value-added services and products on a regular basis. We're also excited about our new and enhanced loyalty proposition for the Certo! credit card family. This is a unique program in Switzerland with a comprehensive loyalty ecosystem that allows merchants to connect with targeted customer segments and offers enhanced and seamlessly accessible and visible benefits for our customers. We've already signed up over 30 retail partners and plan to add more as we go along. So with that, let me hand over to Pascal to go through the financials in more detail. Pascal Perritaz: Thank you, Holger, and good morning, everyone. I'm pleased to report a strong financial performance for the full year 2025. The net income increased by 5% to CHF 179.6 million, demonstrates the resilience of our business model and the continued benefits of our transformation program. With that, let me go through the P&L. The increase in net income was primarily driven by lower operating expense and continued solid risk performance. The net revenue decreased by 2% to CHF 542 million, reflecting the selective growth in receivables in lending and lower interest income in cards following the regulatory change in maximum interest rates. The net interest income decreased slightly by 2% with the impact of this lower pricing and assets as well as reduced interest income from cash and securities, partially offset by lower interest expense. We successfully defended our net interest margin at 5.5%. Commission and fees income amounted to CHF 170 million and remained broadly stable across all revenue streams. The consolidations of the BNPL portfolio and the runoff of the Cumulus credit card migrations portfolio were both successfully completed in 2025. Provisions for losses remained stable at CHF 74 million, resulting in a loss ratio of 1.1%, and Volker will further comment soon. Operating expense decreased by 7% to CHF 245 million, and this is mainly driven by the efficiency gains from our strategic transformation, including the completed infrastructure consolidations and continued progress automation. As a result of this decrease in operating expense, the cost income improved by 2.9 percentage points to 45.2%, compared to 48.1% in 2024. Let's now talk about the net financing receivables and the yield development. The net financing receivable declined slightly by 1%, precisely 0.6% to CHF 6.6 billion, and this is reflecting our active portfolio management and the focus on our high-quality assets as part of our Cembra DNA. The auto lease and loans mainly secured business grew by 3%, supported by the increased used car penetration and the successful rollout of our new leasing platform. The personal loans declined by 6% due to the selective underwriting and pricing to maintain risk-adjusted returns. Credit cards grew by 1% with stable customer engagement and a continued rollout digital features like Scan2Pay, InstallmentPay or newly launched loyalty program. Risk-adjusted pricing across auto and personal loans contributed positively to yield stability through the year in lending. Cards yield was impacted mainly by the change in maximum interest rates. Let's now talk provisions for losses, and I would like to hand over to Volker, our Chief Risk Officer. Volker Gloe: Yes. Thank you, Pascal. Loss provisions for '25 came in at CHF 73.6 million. The loss rate stayed stable at 1.1%. So very much comparable with a long-term trend in line with our expectations and also the guidance that we provided for 2025, when we have been speaking about a loss rate of around 1%. Numbers in '25 continued to be impacted by the past changes in accounting estimates. We've been explaining the need to synchronize collections and write-off procedures before and its purpose to allow for more collections activities to finalize before writing off an asset. As expected, the effect -- so the positive effect on losses have been more prominent in the first half of the year than the second half. It has also influenced the portfolio quality metrics throughout the year, as shown in the numbers on the 30+ delinquencies and NPL. A computation of how normalized numbers look, you can see on the upper right of this page. While reported NPL numbers are going up, they are mainly driven by this aforementioned synchronization effect and its mechanics. When taking out these effects, numbers are about stable, though, there are certainly some product-specific variations. As this synchronization effect now is tapering off, we expect going forward, more stability in reported numbers and not only in the adjusted figures. Generally, we stayed very prudent in our risk taking in '25 and have been selective in what areas we wanted to grow and where we, in the current environment rather stay cautious. And we continue to calibrate our strategies in this triangle of risk price volumes for hitting the right balance for optimizing profitability. This is then also reflected in our new business quality where the portion of good quality CR1 and CR2 volumes, especially CR1, is increasing. Our deliberate focus on leasing volumes is impacting this development was specifically on personal loans, we kept our cautious approach for ensuring an overall strong portfolio quality. As we feel comfortable with the current risk reward level, we started to adapt our policies to allow for more, though, obviously, still controls growth going forward. We do that through data analytics, more granular segmentation and it allows us to reenter segments that we deliberately excluded before. This seems justified when looking into the vintage write off performance where we see that the recent changes and prudent policies are paying off as illustrated on the bottom left where the latest vintage, the very short curve, is certainly among the best ones. When it comes to outlook, I mean, the current environment might create some difficulties to come with the exact predictions for the future. Nonetheless, currently, we would not see any reason why loss performance for '26 would materially deviate from '25. In other words, so simpler words, our expectation is that losses for 2026 would again come in at around 1% loss rate level. And with that, I hand it then back to Pascal. Pascal Perritaz: Thank you, Volker. Let's talk about operating expense. As mentioned before, the operating expense decreased by 7%, and this is reflecting our strong cost discipline and the benefits from the efficiency initiatives. 10% reductions in personnel costs, compensations and benefits and this is supported by the continued FTE optimizations, mainly due to the automation initiatives and the optimization of our operating models. Lower depreciation driven by completions of amortization of some intangible assets related to past acquisitions and other legacy assets. And we have seen as well as some lower marketing and professional services expense due to the tighter spending discipline. This effect resulted in a cost income ratio, as mentioned before, 45.2%, and particularly pleased with the second half of the year, a cost/income ratio below 43% precisely 42.9% On the next page, the ongoing technology initiatives including the infrastructure consolidation, automation, reduced amortization of further legacy assets and continued discipline expense management will contribute to the 2026 OpEx reductions between CHF 15 million to CHF 20 million. With the expense trend and the actions triggered over the last 2 years, it puts us firmly on track to reduce our cost base by this amount, CHF 15 million to CHF 20 million in 2026 reaching 39% to 41% for the full year 2026, respectively, further improvements towards the 39% target cost-income ratio. Balance sheet. Our balance sheet remains robust. Net financing receivables slightly lower at 6.6% with the portfolio quality improving with the continued shift towards secured and higher quality assets, as mentioned earlier. Funding increased modestly, driven by continued growth in retail deposits. The shareholder equity increased by 5%, reflecting the net income, partially offset by CHF 125 million dividend. Funding. We further strengthened and diversified our funding base. The retail deposit continued to grow following the successful product redesign, savings product. In 2025, we successfully launched two auto cover bonds issuance of each CHF 150 million, and this is adding a low-cost and flexible funding tools to our funding mix and the end of period, the funding cost improved to 1.33%, continuing the trend of lower funding expense supported by the easing of the interest rates and environment. Liquidity metrics remained strong with LCR at 744% and NSFR at 116%. Let's talk capital. Our capital position remained strong with a Tier 1 capital ratio of 17.6%, above our midterm target of 17%. The risk-weighted assets increased by 3%. This is mainly due to the adoption of the FINMA Basel III final standards, reducing the Tier 1 by 0.6 percentage points as we communicated as of previously. Reflecting both on one side on the strong financial performance and the confidence in our future earnings power, we will propose an increased ordinary dividend of 8% to CHF 4.60 per share and an extra dividend or a special dividend of 1% (sic) [ CHF 1 ] per share, leading to the 17.61% capital ratio mentioned before. Our capital policy remains unchanged. Balancing organic growth, disciplined accretion on M&A and the return of excess capital to shareholders. We expect the Tier 1 ratio -- Tier 1 capital ratio to be at around 17% by year-end 2026 and dividend growing at least in line with sustainable earnings growth. With a consistent strategy execution, disciplined risk management and strong operational delivery, we entered 2026 with solid momentum. With that, I would like to hand over to you, Holger. Holger Laubenthal: Great, Pascal. Thank you. So let me walk you through our strategy execution scorecard here on this next page. As you know, four strategic programs built on our DNA. Some of these I had mentioned already, but prudent risk management continues to deliver, particularly against a less predictable market environment. Our funding position is strong with an extended toolkit, as Pascal just explained. We're pleased with our progress and operational excellence, leading to continued improvement in the cost-to-income ratio on the back of almost CHF 20 million cost reduction in 2025. On the commercial side, we're accelerating product and service innovation. We're excited about the new loyalty proposition as explained. We've added new partners, and we see good growth in our partnership with TWINT. Last, not least, we're proud of the work our teams do every day and the recognition such as being recognized by Great Place to Work as one of the best workplaces. You can see the KPI we track on the right, both for 2025 and also for the strategic cycle to date, as we're now in the final year, of course, of that cycle and really mostly on track across growth, capital, cost income loss and others and continued trend towards the target corridor such as an ROE. So let me bring this together in our outlook for the last year of this cycle, again, along our defined programs. First, you can expect us to continue our careful calibration of risk, volume, price as it relates to originations mix between secured and unsecured business, balance sheet, nonbalance sheet income as well as growth across our products. It's a proven concept for us. Second, we will continue to drive automation simplification across the company, with a focus on personal loans and continued consistent decommissioning of legacy systems, we've mentioned the related cost reductions for the year. Commercially, we're looking to leverage the cashgate expansion and product initiatives such as embedded finance and personal loans and continued benefits from our auto platform for profitable growth in the lending business and the range of new services launched the new loyalty program and partnership penetration to drive growth in payments, mostly through commission and fees. On our culture side, we're driving the organization alignment with the new customer and growth division to embed customer centricity, even deeper in our operating model to deliver against these initiatives mentioned. Last, we're excited about defining the strategy and key programs for the coming strategic cycle as we take Cembra into its next chapter. And we're planning to have an update for you on this towards the end of the year in the fourth quarter. What this implies for 2026, we expect continued resilient performance with net revenues growing in line with GDP, stable net interest margin for the significant improvement in the cost income ratio, stable loss performance and strong capital overall delivering an ROE of around 15%. This implies substantially all KPIs we set out around 4 years ago to land at or within range of the objectives we communicated at the time, including cumulative EPS growth before we head into the next strategic cycle, including further performance improvements going forward. Now a few words about the change in our management board. And it is with sincere appreciation that we mark the conclusion of Pascal's tenure here at Cembra. Over the past 8 years, he's played a pivotal role and strengthened our financial position, reinforcing our capital discipline, supporting the consistent execution of our strategy. On a personal note, I have greatly valued our partnership and the trustful collaboration that we've built. Together with this outstanding team, we've achieved a great deal since we've worked together. Pascal leaves Cembra in a strong position and his contribution will have a lasting impact. I'd like to thank him sincerely for his commitment and leadership and wish him, of course, all the best for the future. At the same time, I'm very pleased to welcome Christoph Glaser as our new CFO effective March 1. Christoph brings more than 2 decades of experience in finance, risk and operations across international and listed organizations with deep expertise in consumer finance and lending. He combines strong and broad technical competence with leadership experience and strategic perspective. Given this, he is a strong addition to our leadership team as we continue to execute our strategy and drive the next phase of Cembra's development. With that, thank you for listening to the presentation, and we look forward to your questions now. Operator: [Operator Instructions] Our first question comes from Máté Nemes from UBS. Mate Nemes: I have three questions, please. The first one is on risk. We are seeing a quite clear material inferior swing in the loss rate first half around 0.9%, second half about 1.25%. Could you elaborate what drove this or confirm better, my understanding is correct? Is this mainly related to the synchronization of collection and write-off procedures? And if so, is the second half loss rate indicative of what we can expect on a run rate basis, without any further management i.e. how do we get back to the 1% -- roughly 1% level from here onwards? That's the first question. The second question is costs. Clearly, another round of ambitious cost savings planned for 2026, CHF 15 million to CHF 20 million. And it seems like the bulk of that is coming from strategic initiatives benefits. If you could elaborate on what exactly is included here? That would be helpful. And the last question is on NII and more specifically, the margin. I think you're expecting a stable margin. We can clearly see a decline in funding costs, but at the same time, on the asset side, the now lower interest rate cap clearly means you have to reprice some of your personal loans. Could you give us an approximate bridge in 2026 as to the margin and if you could also highlight how much of your personal loan portfolio is currently at rates above the regulatory limit? Holger Laubenthal: Thanks, Máté, and good morning, and let me hand over to Volker for the first question, and Pascal will take the next two. Volker Gloe: Yes, yes, Máté, you're absolutely right in your observation. So first half loss rate was at 0.9% and second half at 1.2%. And this difference between first half and second half is driven by the synchronization effect. That's an activity that we started to execute in Q4 '24 already, and that has been benefiting the first half more than the second half because we have now reached the kind of new equilibrium basically. What I want to add to that is that we also in the past have been seeing always it kind of [ tends ] a bit of seasonality between the first half and the second half. So typically, the second half is slightly worse than the first half, which is -- probably comes a bit on top. And I think generally, obviously, when it comes now to looking ahead, we do not manage the loss rate in isolation. We manage in this triangle for profitability. I mean, we are now guiding for a loss rate in '26 of around 1% level. And I think we can get there. We will get there by actually managing this triangle. Holger Laubenthal: Pascal? Pascal Perritaz: Thank you, Máté. Second question is related to cost and ultimately, as the continued expected reductions of operating expense of CHF 15 million to CHF 20 million in 2026. And this is basically as a result of four specific activities, I would say, three of them are highly strategic. The first one is obviously lower personnel costs expecting -- resulting from the work we have done now over the last 1 to 2 years, meaning particularly as the automation. So we have achieved in some of our processes and continued optimization of our operating models and service deliveries. The second one is we clearly expect in 2026 further efficiency gains in IT. So we have done a lot of work related to IT consolidation, decommissioning of infrastructure, which we also still continue to do in 2026. And we'll have a bit of less funding costs related to strategic initiatives. Obviously, we'll start in 2027, this new strategic program for 2026, it's more the end of the strategy cycle. The third one is we will start to see a bit certainly less than what we have seen this year, but continued reductions in depreciation and amortization expense from some software and tangible assets reaching the end of life in 2026. And the last one is, I think what we have demonstrated is now for almost decades this very disciplined approach on expense management, depending on how revenue was developed, although we clearly have proactively managed any discretionary costs. So with that, and particularly as the initiatives which are being implemented, what we have achieved in 2025, although we are -- we firmly believe that the CHF 15 million to CHF 20 million is achievable. The last question around the NIM, so we expect for 2026, a stable NIM around the level that we have been as in 2025. And given as the strategy, as we have implemented the last 1 to 2 years in the personal loans, so we have more focus on high-quality assets by default, although we have limited exposure now to contracts, which are today priced at the max level. Mate Nemes: That is very helpful. And Pascal, I just wanted to thank you for the years of constructive collaboration and discussions we had on earnings calls and other venues. I wish you the best in the next stage of your career. We'll clearly miss you dearly. Operator: The next question comes from Daniel Regli from ZKB. Daniel Regli: Yes. And obviously, I first would like to follow, Máté. Also from my side, thanks a lot, Pascal, for the years of collaboration and working together was always a pleasure. To my questions. First, quickly on the personal loans book. And obviously, we have seen another decline in H2, which was not that unexpected due to more restrictive lending. Can you maybe talk a little bit about how you have kind of released your lending policy again early this year and whether there was some kind of connection to the U.S. tariffs and expected short time work in certain segments of Switzerland? And then secondly, a follow-up on the net interest margin. Can you maybe give us a little bit of guidance on the cost of financing side and how far you expect the cost of financing to go down this year? Holger Laubenthal: Thanks, Daniel, as well. Let me just start on the P loan side and then, Volker, over to you and Pascal on the NIM question. So the second half, there's a couple of dynamics here, right, Daniel. So firstly, as I mentioned, we held the share in the second half, which implies that the market sort of moved in a similar direction, right? I think this is something that you've seen from us frequently as a leader in the market. We typically set the tone in pricing. We set the tone in risk management and others in the market end up following in a way. That's just to give you some context. Let me hand over to Volker indeed for the questions on the policy and the impact of what we see in the market. Volker Gloe: Yes, Daniel, the -- I mean, it's part actually of regular risk management to optimize underwriting procedures and adjust it to the macro environment that we are currently seeing. With that said, I mean, macro in Switzerland is obviously very resilient. So even if there would be swings, we wouldn't be hit by that immediately, that would take some time to kind of eat into the portfolios. I mean, when it comes to the releasing lending policies, the kind of adjustments that we have been doing, it's actually also part of regular risk management. We have been identifying segments that we have been exiting before because we wanted to be cautious. And now currently, also with more granular segmentation, we feel comfortable that we can reenter these segments. And by that support the growth, given that this is profitable growth. And that's kind of -- again, back to this triangle, where we try to find the right balance between risk, between the pricing and also the volumes to support growth in the business. Pascal Perritaz: On the NIM and particularly on the cost of funding or interest expense, first of all, I would like to reiterate the approach we have around first managing the net interest margin. So we have certainly some volatility in swap rates. We have implemented a very clear dynamic pricing and depending on how these interest rates develop, although we can -- we go up or down with the pricing, with the target to calibrate the net interest margin around stable. If I look at now the interest expense, how they developed '24 to '25, 153% in '24, now 133%, we would expect a slightly reduction in 2026 as well. Operator: [Operator Instructions] Gentlemen, there are no further questions. Mr. Laubenthal, back over to you for any closing remarks. Holger Laubenthal: Excellent. Thank you. Well, look, thanks for dialing in, everyone this morning and listening to our webcast here in terms of the earnings. I think good results. Income at CHF 180 million. I think we're delivering on the key controllables in terms of cost loss. I think a good outlook for the remainder of the year, and we look forward to continuing to discuss this with you. Thank you very much for listening in this morning. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Good day, and welcome to the Medallion Financial Corp. Fourth Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To ask a question, you may press star then 1 on a touch-tone phone. Please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Val Ferraro, Investor Relations. Please go ahead. Thank you, and good morning. Val Ferraro: Welcome to Medallion Financial Corp.'s fourth quarter and full year 2025 earnings call. Joining me today are Andrew Murstein, President and Chief Executive Officer, and Anthony N. Cutrone, Executive Vice President and Chief Financial Officer. Certain statements made during the call today constitute forward-looking statements. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued yesterday and in our filings with the SEC. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements. In addition to our earnings press release, you can find our fourth quarter supplemental presentation on our website by visiting medallion.com and clicking Investor Relations. The presentation is near the top of the page. With that, I will turn it over to Andrew. Thank you, and good morning, everyone. 2025 marked a record year for Medallion Financial Corp., with solid performance across our core financial metrics and operating segments. As compared to the fourth quarter and full year 2024, we reported increases in net interest income, net income, originations, and portfolio size, reflecting the strength of our platform and consistent execution across our business line. Loan demand remained healthy, credit performance was solid, and our results Andrew Murstein: demonstrate our ability to continue scaling the business profitably while maintaining discipline. Across the portfolio, we continue to execute effectively with meaningful contributions from our recreation, home improvement, and commercial lending line. Total loans reached $2,567,000,000 and total originations came in at $421,000,000 for the fourth quarter and $1,500,000,000 for the full year, increases from both the same quarter last year and year over year. These results reflect a focused operating approach and our ongoing commitment to prudent growth across the platform, which I will now walk through in further detail. I will start with consumer lending, our largest and most profitable business line, which continues to anchor our performance with interest income of $74,500,000 for the quarter and $289,900,000 for the year, growing 5% as compared to the same period of last year and 8% year over year. Within the consumer lending segments, direct loan book grew 5% to $1,600,000,000 at 12/31/2025, representing 63% of our total loans. Originations for the quarter grew to $97,200,000 compared to $72,200,000 a year ago, and interest income rose 6% to $54,200,000. Delinquencies of 90-plus days were just 0.82% of gross recreational loans and the allowance for credit losses is 5.32% to reflect expected seasonal and economic dynamics as compared to 5% a year ago. The home improvement loan book stood at $810,200,000 at 12/31/2025, representing 32% of our total loans. Originations for the quarter were $61,700,000 versus $82,500,000 last year. Delinquencies of 90-plus days were just 0.16% of gross home improvement loans, and the allowance for credit losses was 2.41% compared to 2.48% a year ago. Importantly, we are originating loans to individuals in these niches that have strong credit quality with average FICOs on new originations now 688 for recreational and 779 for home improvement. The vast majority of our book falls within super prime to near prime, which has moved up over the years. Moving on to our commercial segment, which continued to deliver meaningful equity gains, we had new originations of $4,100,000 during the quarter compared to $7,300,000 the same quarter a year ago. However, for the year, total originations were $40,600,000 compared to $14,300,000 in 2024. The portfolio increased to $123,100,000 from $111,300,000 last year with an average interest rate of 14.22% compared to 12.97% a year ago. Additionally, as of December 31, we had more than two dozen equity investments with a book value of just $8,100,000 on our balance sheet. These equity components are a result of our long-term strategic investments, and while the timing of exits is inherently unpredictable, we remain confident in our pipeline. During the quarter, gains from equity investments were strong, generating $8,800,000 of income. For the year, gains from equity investments generated $24,600,000. Our strategic partnership program, whereby we earn an origination fee and about three to five days of interest on holding loans before selling them back to the partner, had its second straight quarter of over $200,000,000 of originations, reaching a record level of $258,300,000 this quarter. Total loans held as of quarter end under the strategic partnership program were $15,100,000. Most of these loans outside of rec and home improvement are mostly offered as employee benefits by large employers on loans for unplanned or elective medical procedures. Although this program represents a small part of fees and interest generated from Medallion Financial Corp., it has produced approximately $1,800,000 in income this quarter and $5,400,000 for the year. It has more than doubled from the prior year, and it has expanded each quarter, representing a further diversification of our income sources. We continue to work on our growing pipeline of new partner prospects and expect to add new partners over time. Furthermore, we are taking a very methodical approach to growth to ensure we continue to do it the right way. Lastly, regarding our legacy taxi medallion business, we collected $2,500,000 of cash during the quarter, which resulted in net recoveries and gains of $1,400,000. For the full year, we collected $13,600,000 of cash, which resulted in net recoveries and gains of $4,600,000. Net taxi medallion assets declined to just $4,300,000 and now represent less than two-tenths of a percent of our total assets. From a capital allocation perspective, we remain committed to our shareholders. During the quarter, we paid a quarterly dividend of $0.12 per share and continue to allocate a large portion of our earnings to growth. We continue to prioritize a disciplined origination strategy, prudent balance sheet management, and effective capital deployment while expanding our portfolio. Our approach is highly analytical and data-driven, supported by advanced digital tools that help optimize Val Ferraro: writing Andrew Murstein: origination, servicing, and overall portfolio visibility. These capabilities allow us to assess risk with precision and maintain consistently strong performance across operating environments. And ending the year with positive momentum and solid execution across our business lines, we believe we are well positioned to build on this performance and continue delivering consistent favorable risk-adjusted returns for our shareholders. One last item I wanted to touch on before turning the call over to Anthony is my transition into the CEO role, which took effect on January 31. As I step into this new role, I would like to have a few minutes to discuss our 2026 strategy. Our focus for 2026 is to build upon the strong foundation established over the past thirty-plus years while further refining our strategic priorities. We aim to continue to grow our core business lines by targeting sustained growth in our recreation segment. In addition, we believe there is significant growth potential within our home improvement line. As a result, in recent months, we added experienced talent to support increased growth and originations in this line, with the goal of continuing to expand the portfolio. Our commercial lending segment also remains a strong contributor to earnings, with the average interest rates increasing to 14.22% this year. At the same time, our strategic partnership program continues to be a rapidly growing component of our business. While per-loan origination fees and interest income associated with this business remain modest due to the short term the loans remain on our books, originations continue to expand meaningfully quarter over quarter, and we see great potential in this business over the next several years. We remain thoughtful and disciplined in evaluating new business lines and growth opportunities. We will continue to assess adjacent markets where we believe we can expand the business in an accretive manner consistent with our standards and return objectives. Looking ahead, I am proud of where the company stands today and confident in the foundation we have built together. While we recognize that market conditions may evolve, our strategy remains clear and consistent: execute with discipline, allocate capital thoughtfully, and maintain a long-term perspective focused on sustainable value creation. Our proven business model, diversified portfolio, and experienced management team provide both resilience and flexibility. We continue to evaluate opportunities to optimize our returns, improve margins, and pursue strategic initiatives that align with our core competencies. At the same time, we remain committed to prudent risk management and maintaining a strong balance sheet to support future investments. I believe the company is well positioned to perform well in the years ahead. We are confident in our ability to navigate changing environments and deliver consistent, attractive returns for our shareholders. With that, I will now turn it over to Anthony, who will provide some additional insight into our quarter. Anthony N. Cutrone: Thank you, Andrew. For the fourth quarter, net interest income grew 8% to $56,400,000 from $52,000,000 in the same quarter a year ago Andrew Murstein: and was up 1% over the most recent prior quarter. Anthony N. Cutrone: For the year, net interest income increased 7% to $216,900,000 from $202,500,000 in 2024. Our net interest margin was 8.04% during the quarter, up 20 basis points from a year ago. For the year, Mike Grondahl: our net interest margin was 8.06% compared to 8.05% in 2024. Our total interest yield for the quarter increased 16 basis points from a year ago to 11.7% with our average cost of borrowings in the quarter being 4.24% compared to 4.12% a year ago. As of the 2025, the average interest rate on our deposits at Medallion Bank stood at 3.87% compared to 3.71% a year ago. During the fourth quarter, we originated $97,200,000 of recreation loans, $61,700,000 of home improvement loans, with the weighted average coupon in those portfolios being 15.17% and 9.87% as of December 31. In January, we originated recreation loans at rates averaging around 14.5% and originated home improvement loans at rates averaging around 10%. For the full year, we originated $468,500,000 of recreation loans and $224,500,000 of home improvement loans. Our total loan portfolio reached a value of $2,567,000,000 at December 31, up 3% from a year ago. Total loans included $1,600,000,000 of recreation loans, $810,000,000 of home improvement loans, and $123,000,000 of commercial loans. For the quarter, the average yield on our total loan portfolio increased to 12.26% from 12.01% a year ago. Consumer loans more than ninety days past due were $14,200,000, or 0.6% of total consumer loans, as compared to $11,400,000, or 0.5% a year ago. Our provision for credit loss was $27,700,000 for the quarter, an increase from $18,600,000 in the third quarter and $20,600,000 in the prior-year quarter. During the quarter, we increased allowance for credit loss in the recreation portfolio by $7,100,000, which accounted for growth in the portfolio and included the recharacterization of certain loans held for sale to held for investment, and reflected the higher allowance coverage of 5.32% at the end of the quarter compared to 5.1% a quarter ago. Provision for credit loss was $1,600,000 on commercial loans and reflected an additional $1,400,000 of credit allowance on these loans. Val Ferraro: Additionally, Mike Grondahl: the current quarter provision included a $200,000 benefit related to taxi medallion loans. The total net benefit related to taxi medallion assets during the quarter was $1,400,000. Net charge-offs in the recreation portfolio during the quarter were $17,900,000, or 4.41% on the total average recreation portfolio and 4.53% on the average held for investment recreation portfolio, and were $2,200,000, or 1.07% of the average home improvement portfolio. Turning to expenses, operating costs totaled $22,200,000 during the quarter, up from $17,200,000 in the prior-year quarter. The increase over the prior year was largely due to realization of insurance benefits in the prior year totaling $5,500,000, which reduced costs, as well as, to a lesser extent, higher employee costs in the current year. As we continue to expand our platforms, grow our businesses, and look to becoming a sizably larger enterprise over the next several years, we anticipate higher non-interest operating costs. We expect in the long term that the growth in our net interest income will outpace any growth we experience in operating. Over the past five years, our loan book has more than doubled and our annual net interest income has grown 96%, while our non-interest operating expenses have increased by roughly 50%. More importantly, over the last five years, we have seen our book value per share increase 88%, while our tax-adjusted tangible book value has quadrupled. There is a cost to growing, and we will continue to experience that. However, we continue to believe that it is in the best long-term interest of our businesses and our shareholders. For the quarter, net income attributable to our shareholders was $12,200,000, or $0.50 per diluted share, an increase of $2,100,000, or $0.07 per share, over the prior-year quarter. For the full year, net income attributable to shareholders was $43,000,000, or $1.78 per share, an increase of $7,200,000, or $0.26 per share, from 2024. Our net book value per share as of December 31 was $17.53, up from $17.07 a quarter ago and $16 a share a year ago. Our adjusted tangible book value per share, which excludes the value of goodwill, intangible assets, and the deferred tax liability associated with both, was $12.12 at the end of the quarter, up from $11.64 a quarter ago and $10.50 a year ago. That covers our fourth quarter and full year results. Andrew and I are now happy to take your questions. Operator: We will now begin the question and answer session. To ask a question, if you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble the roster. The first question comes from Mike Grondahl with Northland Securities. Please go ahead. Mike Grondahl: Hey, guys. Good morning too. Operator: First question, the provision expense, the $27,000,000, or $27,700,000. How would you characterize that? It was up from the $18,000,000 in 3Q. Is there a little catch up there? And then what would you think is sort of a normalized provision Mike Grondahl: quarterly in 2026? Anthony N. Cutrone: Hey, Mike. How are you doing? Yeah. That is a good question. Just looking at the numbers, it seems Mike Grondahl: like a pretty sizable increase. But there are a couple of things going on there. One, in Q4, we took the remaining rec loans that we had as held for sale. We moved them back into held for investment. So that was about a $2,200,000 provision hit we had to book the allowance. If we go back a year when we moved these loans, it was actually about $100,000,000 we moved out to held for sale when we were contemplating a sale and speaking to potential buyers. We had about a $4,000,000 gain or benefit. So between the two of them, that swing—one is a provision in this year, and the other is a benefit last year—that was a $6,000,000 swing. That is part of that $7,000,000. In addition to that, on a $1,600,000,000 book, our allowance coverage went from 5% last year to 5.32%. So there is a step up in allowance that runs through the provision because of that. And then, on top of that, we took commercial provisions of about a million and a half, a little over a million and a half in Q4, and it was just about $100,000 a year ago. That plus— Anthony N. Cutrone: that plus the taxi medallion benefits, what kind of like that ran through provision this year. This year was only about $200,000. Last year was $1,700,000. There is a whole list of things that reconcile that difference. Going forward, we would not expect it to be the $27,700,000. It should be something less than that. But when we think about growth, we are looking at mid-teens growth looking in 2026 across our loan book. There will be a fair amount of put-on costs with booking allowances as we grow. Anthony N. Cutrone: Got it. That is helpful. Operator: And then there were a couple gains, and I know you guys Christopher Nolan: record these from time to time coming out of the commercial book or coming out of the taxi cab business. Could you just maybe go over a couple of those, the nature of those, the $8,700,000—you know, was that one portfolio company? Was it a couple? And then there is—I think in other, there was like $2,900,000. If you could, a couple of those, the nature of those gains. Mike Grondahl: Yeah. So in the equity gains, there was a little more than a half a dozen changes and gains that we recognized throughout the quarter with our equity holdings. And, again, that is the $8,000,000 or so that is on our balance sheet. Operator: Two were actual equity gains. So the three of them total about that $8,500,000. And then some small items that reconcile to the full amount that is net on the income statement. And those other equity gains, one of them was actually our oldest portfolio company. We originally made this loan just about eighteen years ago. I had a lot more hair back then, and the other one was originated four or five years ago. Got it. And then that $2,900,000 in Anthony N. Cutrone: and I think it was other income, what was that? Operator: Yeah. So that is—there is a whole host of things there, but the biggest piece of that and the biggest component of that is we had an—and it is somewhat abnormal—income related to our CRA investments at Medallion Bank. Abnormal. We usually do not see it this large. We had—that was approximately $2,700,000. That is in that number. We would not expect to see numbers that large on a regular basis. And that is just part of the investing we do to get CRA credit. We have got a fair amount of investments in these funds that give us the credit. And over time, they do generate a nice return. An added bonus in Q4. Anthony N. Cutrone: Great. Great. And then Andrew, a question for you. When you were talking about 2026, you seemed to emphasize home improvement a little bit more. That portfolio has sort of been $800,000,000, I think, the last five quarters, give or take a little bit. But you mentioned you had added some talent there. Can you just talk about your growth outlook for home improvement? And did you add some salespeople? How many? That would be helpful. Sure. There was a group Operator: that used to be at EnerBank, and they moved over when they were sold to Regions Bank. Andrew Murstein: And I have been tracking how well they have been doing through the years. So we approached them and brought them in. I think Medallion Bank put out a release in the last thirty days or so with the person’s name. And we are excited about the growth opportunities there. We think we are going to grow mid-teens, which is substantially above where we have been, as you pointed out, the last year or two. This portfolio is tremendous credit. It is 780 or so FICO scores, which is AA-plus quality. So it is nice to continue to strengthen our portfolio. That is one of the reasons why we have an investment-grade rating on it. This portfolio continues to perform extremely well, great margins, and I am happy it is going to be a big part of our growth this year. Operator: Yeah. And the thing that I would add also, Mike, is that, unlike rec, where we have got a lot more ability to ramp up originations or slow them down because we are dealing with smaller borrowers, the relationships we have with these home improvement contractors and dealers and brokers, it is a little bit different. So there is a lot of lead time involved in preparing for the origination volume that is to come down the line. So if we go back a year ago, we had to temper expectations with our third parties on what we would be able to do throughout the year just given where capital stood. We have gotten past that hurdle. We were able to raise additional capital at Medallion Bank throughout the year. So now, in addition to what Andrew said, bringing in this talent, we are able to go back to these partners and say, okay, for 2026, we are committed, and we could fund certain levels. The last thing we wanted to do last year was say, yeah, we could originate at a certain level and not be able to do it because of capital constraints. So it was kind of just a decision to keep that book somewhat flat throughout the year. Anthony N. Cutrone: Got it. Okay. Hey. Thanks, guys. Andrew Murstein: Thank you, Mike. Anthony N. Cutrone: The next question is from Christopher Nolan with Ladenburg Thalmann. Please go ahead. Operator: Hey, guys. Andrew, congratulations on the step up. Andrew Murstein: And Anthony N. Cutrone: Anthony, I cannot believe that you had more hair in the past. Anyhow, was the reserve increase driven by CECL, or did you guys have some discretion on that? Operator: Yeah. It is CECL, right? So there are economic factors that go into it, as well as our historical charge-off experience. Charge-offs—Q4 charge-offs—are always higher than most other quarters. So that has an impact on it. And it is a different product. We have seen the loss experience start to come down on the home improvement, and we are happy with that. It is still elevated in rec. So it is just—I think over time, we will start to see that settle. But right now, we are not seeing that turn the way we have in home improvement. Mike Grondahl: Great. And to follow up on the previous line of questions, should we be seeing a growth in the reserve ratio in 2026, percentage of loans? Operator: I would not expect anything significant, although the—obviously—the allowance is going to grow as we grow the book. The overall economy and how we continue to see these borrowers perform going through Q1 and into Q2, that will drive how we think about that allowance coverage ratio. Mike Grondahl: Gotcha. And for the fourth quarter, what were the charge-offs—net charge-offs? I did not see the quarterly investor presentation. Maybe I missed it. Operator: Sure. So on the home improvement, I think we spoke about this a few minutes ago. But on home improvement, net charge-offs for Q4 were 1.07%. On the rec portfolio, if we just base it upon loans held for investment, it was 4.53%. If you look at the total portfolio—those that are held for sale and those held for investment—it was 4.41%. Andrew Murstein: Right. Mike Grondahl: And given the increase in ninety days past due for rec, should we be seeing a slowdown in the rec originations? And what is causing the erosion of asset quality in the rec portfolio? Operator: Yeah. Look, we are compensated for the risk, and we understand that. We have been doing this type of lending for a long time. So I do not think we are that concerned, but I think what we are seeing—and, as I said, we have committed a whole lot of resources in terms of manpower, technology, and capital to building out our systems over the past several years. We are going to continue to do that. One of those investments is on a data analytics team that looks at the performance of our portfolio—current, past, and what we expect it to be going forward. And one of the things that we are trying to do—and we see that in where we are originating in January—is maybe we were outside of the market in terms of rate, a little too high. By bringing that down—January originated at 14.5%—maybe by bringing that down, we think that that is going to generate better credit performance. We are still getting—on paper—we are still getting the same borrower. But we think that they are actually going to perform better based upon all the data that we have. Mike Grondahl: We should see net interest margin coming a little bit, right? Operator: Yeah. It will have an impact on net interest margin. So we will see that maybe—it will probably drop below the 8%. But when you look at the credit-adjusted yield, we think that that long term is going to be better than what we are seeing now. Mike Grondahl: Great. Final question for Andrew. Thank you for all the strategic commentary that you made. Does this put on the table potential for acquisitions and or a sale of the company? And have you gotten any signals from regulators indicating that they would be receptive to that. Andrew Murstein: Nothing top of mind. The nice thing is that the ILC charters seem to be more acceptable now from the government agencies. Several of them have been approved for the first time in many years. So the potential for a change of control, I would say, exists today. I do not see us really buying any businesses in the near term. I think there is just so much growth potential in the ones that we have. In terms of sale, again, nothing comes to mind, but I mentioned EnerBank before. And EnerBank is a bank that sold for roughly two to three times book value and 20 to 25 times earnings. So if we ever got that price, I think we would pull the trigger, which is a significant premium. But I do not see us really doing anything now. I want to continue to do—mean, the last five years, we have made more than we have in the first eighty-five combined. So things are flowing really well for us today. Dividends have been going up. Buybacks should continue to go up. Earnings have been going up. So I think we are on a great course right now. Mike Grondahl: Sounds good. Okay. Thanks, guys. Anthony N. Cutrone: Thanks, Chris. This concludes the question and answer session. Christopher Nolan: I would like to turn the conference back over to Andrew Murstein for closing remarks. Andrew Murstein: Thank you. And before closing the call, I would just like to reaffirm my strong commitments to Medallion Financial Corp. in my expanded role as CEO. As I mentioned earlier, my priority is to build upon the strong foundation we have established while thoughtfully expanding our capabilities and market presence in a disciplined manner. Having served as President for many years, I have been deeply involved in shaping our direction over the past few decades, and this transition represents a continuation of the leadership principles and long-term approach that have guided us successfully over the years. We will remain focused on disciplined growth, operational excellence across our business lines, and prudent capital allocation. I am very proud of what our team has accomplished and even more confident in what we can achieve together going forward. Our commitment to our shareholders remains strong, evidenced by our consistent earnings, our strategic buybacks, and our dividend. I just want to thank our employees, partners, and shareholders for your continued trust and support. We look forward to updating you on our progress next quarter. I hope you all have a great rest of your day. Thank you again. Christopher Nolan: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Thank you for standing by, and welcome to the IPH Limited Half Year 2026 Results Presentation. [Operator Instructions]. I would now like to hand the conference over to Dr. Andrew Blattman, Managing Director and Chief Executive Officer. Please go ahead, sir. Andrew Blattman: Thank you. Good morning, and welcome to the IPH results presentation for the half year ended 31 December, 2025. My name is Andrew Blattman, and I am CEO and Managing Director of IPH. With me today is Brendan York, our CFO. Thank you for joining us for today's presentation and your interest in IPH. Before we get started, I would like to thank the broader IPH team across all our regions for their efforts and contribution to our results for first half FY '26. In terms of how we'll play today, I'll provide an overview of the operational and strategic highlights. Brendan will discuss the financial results in detail. I'll then provide an update on the performance of our 3 segments, Canada, Asia, Australia and New Zealand before concluding with a summary of our priorities for the full year. As always, we are very happy to answer your questions at the end. So moving to Slide 3 about IPH. A quick reminder of the continued growth in the diversity and scale of IPH. We have 7 brands and over 1,700 employees servicing some 26 IP jurisdictions. We have a #1 patent group in Australia and Canada, Singapore and New Zealand. More recently, we're informed by the Indonesian patent office that we are the #1 filer in that country, a testament to the strength of our network across the Asian region. And I'm told we're also giving the leaderboard a good scare in the Philippines as well, which is great. I'll talk more about the benefits of our global network and scale shortly. Moving on to Slide 4 and #5 in terms of the highlights. IPH delivered a solid result for the first half. Despite the ongoing challenges of lower U.S. patent filings in Australia and New Zealand, group underlying EBITDA increased by 6.6% with reported net profit up 10.5%. We had a very strong turnaround in our Canadian business with organic revenue growth, acquisition synergies and cost discipline, driving an 18.9% increase in like-for-like earnings. While the CIPO issues -- CIPO is for your benefit, is the Canadian Intellectual Property Office, so I'll refer to it as CIPO going forward. CIPO issues eased somewhat in this half. There has been no meaningful clearance of the workflow backlog caused by the systems upgrade they did in July 2024. Hopefully, we'll see some of that backlog unwind with associated revenue this calendar year. We also had a very pleasing return to growth in our Asian business. Filings ex Singapore were up 7.3%, continuing the improvement from last year, and that's resulted in a lift in like-for-like revenue and in earnings. IPH remains a highly cash-generative business, and that continued in the first half with cash conversion remaining above 100%. Combined with our strong balance sheet, this strong cash flow has enabled 11.8% lift in the interim dividend to $0.19 per share. The next slide talks about our scale and diversity. And as I mentioned earlier, IPH is truly a global leader with an extensive network and reach across IP secondary markets. This global scale provides resilience and diversity to our earnings base as we benefit from our exposure to an increasing number of IP jurisdictions around the world. This diversity also mitigates any periodic fluctuations in filings in certain markets. While the ANZ market has been impacted by the recent decline in U.S. filings, it's important to note that nearly 60% of IPH group earnings now come from outside ANZ. Our strategy has been consistent for a number of years, to create the leading IP services group in secondary IP markets. Our decision to enter the Canadian market in 2022 was absolutely consistent with that strategy. In just over 3 years, we have built a market-leading IP business in Canada, which now accounts for over 1/3 of our earnings. Just to put that into context, based on our half year results, Canada's annualized run rate is $323 million revenue and EBITDA of over $83 million with annualized patent filings of over 10,000 patent applications. We have achieved acquisition synergies in line with targets. We're delivering organic growth despite the continued CIPO backlog, and we are generating client referrals across the group, which delivers revenue across IPH and particularly into our Asian business. That additional scale has enabled the group to manage the current challenges facing our domestic business in ANZ and still deliver improved earnings and dividends to shareholders. But it also provided an enhanced opportunity to deliver further earnings growth as the CIPO backlog ultimately unwinds and as we continue to leverage our market-leading position to drive organic growth. Moving on to Slide 7. While we have continued to face some market headwinds, including the CIPO backlog in Canada and the decline in U.S. volumes in ANZ, we are responding directly to these challenges. In Canada, we are focused on leveraging our integrated platform for organic revenue growth and cost discipline is laser-focused and is delivering earnings improvement. In Asia, we will capitalize on our market-leading network and unique client proposition to build on the recent increase in filings to deliver revenue and earnings growth. That includes business development activities targeting international corporate clients and also seek to continue our success in garnering case transfers, which provide future revenue events. In ANZ, given the weakness in U.S. PCTs, our member firms are responding with new business efforts deliberately targeting primary IP markets outside of the U.S., including Western Europe, Japan, South Korea and in particular, Chinese incoming filings. At a group level, our focus remains on driving operational efficiencies by leveraging the scale and capability across IPH. We have realigned our cost base in FY '25 and operational efficiencies have reduced our corporate costs by $2.5 million in the first half, which contribute to an increased underlying EBITDA margin. We continue to focus on leveraging our global presence to boost client referrals across our network. We have delivered almost 1,200 cumulative client referrals between IPH Canada and our Asia Pacific offices since we first entered the Canadian market in 2022. In fact, in the last 12 months, we've almost doubled the referral volume. In fact, just in the last week, we secured a further 100 patent case transfer into Southeast Asia, China and Australia from an IPH Canadian firm. Finally, we are further embedding AI into our core operations with the patent drafting and prosecution to administrative functions, thereby streamlining workflows and reducing costs. We're building on the automation we already have with the AI, which now helps us to automate decisions. As we bring in more advanced agent-based AI, we are able to triage instructions, analyze documents, streamline docketing, support lodgements and renewals, giving us more end-to-end automation with less special effort. So that's an introduction. I'll now hand over to Brendan, who will discuss the financial results in more detail. Brendan York: Thanks, Andrew, and good morning, everyone. Looking first at an overview of the financial results and key metrics. Revenue of $363.9 million was up 6.5%, including an increased 3 months incremental revenue from the Bereskin & Parr acquisition and organic growth in Canada and Asia, partially offset by decline in [ United States ]. Underlying EBITDA increased 6.6% to $107.1 million, primarily reflecting improved earnings in Canada, including the acquisition impact, growth in Asia as well as cost discipline across all segments and corporate. As always, there is a foreign exchange element to our underlying results. The group recognized a net foreign exchange loss of $0.2 million compared to a $1.3 million gain in the prior corresponding half. This was primarily driven by the appreciation of the AUD against the USD and other key currencies at 31 December, 2025 relative to 30 June, 2025. A slide detailing FX impacts is included in the appendix to the investor presentation. Underlying NPATA, which is underlying NPAT adjusted to exclude the income tax affected non-cash amortization of acquired intangible assets, increased by 2.6% to $62.6 million. Underlying basic EPSA increased by 3.9% from the prior corresponding half. That reflects the improved financial performance and also the 1.5% decrease in the weighted average number of shares on issue following the share buyback conducted in FY '25. Statutory net profit after tax was up 10.5%, driven by increased underlying earnings, a reduction in the non-underlying costs compared to the prior corresponding period, partially offset by the increased effective tax rate. Statutory basic EPS was up 12.1%. The company continues to generate strong cash flow with a gross operating cash flow to EBITDA conversion ratio of 101%. This has supported an increase in the interim dividend, which was up 11.8% on the prior corresponding half. The interim dividend of $0.19 per share will be paid on the 24th of March. Looking at the financials in a little bit more detail. The 6.5% increase in revenue included the incremental 3 months contribution in half FY '26 from the Bereskin & Parr acquisition, which we acquired in September 2024. Improved organic revenue growth in Canada and Asia was partially offset by a decline in ANZ. While agent fee expenses increased, these are offset by increases in the recoverable disbursements, which are included in revenue. The 6.8% increase in employee benefits expense primarily reflects the impact of the acquisition, while the benefit of the FY '25 cost reduction program has offset any inflationary cost increases. Underlying EBITDA was up 6.6% to $107.1 million, reflecting the improved earnings in Canada, including acquisition impact, a return to growth in Asia, a reduction in corporate costs and ongoing cost discipline. The underlying EBITDA margin lifted by 0.1 percentage points reflecting improved performance in Canada and Asia, the reduction in those corporate costs, however, tempered by the margin reduction in ANZ. The slight increase in depreciation and amortization relates to the increased expense from the Bereskin & Parr acquisition, offset by property synergies achieved in late 2025. Half year '26 non-underlying expenses, net of income tax impacts were $2.8 million compared to $4.8 million in the prior corresponding period and primarily related to transformation project costs and IT implementation costs. These are also detailed in the appendix. The effective tax rate, excluding the income tax impact of non-underlying expenses, increased from 20.4% to 26.2%. This reflects a normalization of the underlying effective tax rate post the Canadian acquisition activity. We expect this effective tax rate going forward based on our geographic earnings mix. On to our balance sheet. IPH maintains a strong balance sheet. Trade and other receivables decreased by $12.1 million from 30 June, 2025, representing improved collections and an overall improvement in the receivables aging profile. The decrease was offset slightly by an increase in contract assets, which is our work in progress of $6.3 million. The decrease in intangible assets reflects the foreign exchange translation impacts of approximately $19.1 million and amortization of the acquired intangible relationships and other intangible assets of $26.9 million. The key movement in equity was the foreign currency translation reserve, which reduced by $14.1 million from the translation of overseas subsidiaries into AUD, which strengthened this period. On to our cash flow and working capital. The group continues to generate strong cash flows with a cash conversion of 101% and free cash flow up 32% for the half. We maintain a strong focus on working capital management with a $5.9 million reduction in working capital balances. Working capital management will continue to be a focus for the group to unlock further cash. IPH continues to be a capital-light business with CapEx of just $1.5 million for the first half of the year, which was significantly below the prior corresponding period of $6.1 million. CapEx for the first half of this year related to leasehold improvements in Asia and including a new Philippines office. Turning now to capital management. Net debt at 31 December, 2025 was down 6.5% or $27 million from 30 June, 2025. The leverage ratio at 31 December was 1.8x, slightly down from the 1.9x at 30 June, 2025 and remains within the company's maximum target ratio of up to 2x. In December '25, the group refinanced $210 million of its syndicated debt facility agreement on improved pricing terms. Maturity dates for all facilities are in FY '28 and FY '29. The group had a total undrawn financing facilities of $111 million as at 31 December, '25. The interim dividend of $0.19 per share, franked 20% at the corporate tax rate represents a payout ratio of 81% of cash adjusted NPAT. Separately, we have also announced today an on-market buyback program with a maximum capacity of 12.2 million shares. The buyback will commence on 9 March, 2026 and remain in place for 12 months. The buyback provides flexibility as part of the group's capital management program and will not impact the company's existing dividend policy. Turning to the segment like-for-like performance. The like-for-like basis eliminates the impact of acquisitions and foreign exchange movements, which would create a lot of variability in the IPH reported results. I will not spend too much time on this slide as Andrew will provide further analysis on each of the segments in the next section. Looking at Canada first, this represents a strong turnaround in performance with organic revenue growth assisted by acquisition synergies and cost discipline, driving an 18.9% increase in like-for-like underlying EBITDA. Like-for-like revenue and earnings also increased in Asia as this segment returned to growth. As we called out at the AGM in November, the ANZ business continues to be impacted by the decline of the U.S. PCTs being filed with IPH member firms, disproportionately affected by our larger exposure to U.S. applicants relative to the market. Despite the challenges of the lower filing -- U.S. filings into the U.S. and at a group level, like-for-like revenue was up 0.7% and with a 3.2% increase in like-for-like underlying EBITDA on an improved like-for-like EBITDA margin of 0.7 percentage points. I'll now hand over to Andrew to discuss the segments in more detail. Andrew Blattman: Well, thanks, Brendan. Over the next few slides, I'll provide an update on our 3 operating segments. And the first one, Slide 16, will be Canada. As Brendan mentioned, we delivered a very strong turnaround in the business despite no real recovery in the workflow backlog caused by the CIPO systems upgrade. This has to come at some point and hopefully, this calendar year. But certainly, the turnaround was absent any workflow backlog release. As Brendan mentioned, the underlying results for half year '26 included an incremental 3 months' contribution from Bereskin & Parr compared to the prior corresponding period. And as Brendan also mentioned, like-for-like basis, like-for-like revenue was up 7.3%, reflecting organic growth during the period. As I just mentioned, the CIPO disruption eased somewhat in the first half, volumes in some office actions remain lower than before the CIPO upgrade with no meaningful recovery in the workflow backlog. I'll give some more detail on this in the next slide. One of the hallmarks of our success over the last 10 years has been our ability to integrate acquired member firms into our wider network, uplift revenue, deliver cost synergies and enhance our client offering. The successful integration of Bereskin & Parr is another positive example of this strategy. The synergies we achieved from the Bereskin & Parr acquisition and integration of Smart & Biggar, together with ongoing cost discipline delivered an 18.9% uplift in like-for-like underlying EBITDA, as Brendan mentioned, a strong result. That's also reflected in a significant uplift in the like-for-like underlying EBITDA margin in Canada, which is up 2.6 percentage points. Now the CIPO issues, as you can see on the chart, the CIPO service levels for the current processing work have stabilized after a period of significant volatility. But as I mentioned earlier, we've not seen any meaningful recovery in the workflow backlog from the issues caused by the launch of the new filing system in July '24. So this backlog represents significant stored value or delayed revenue. And as the backlog clears, we expect a flow of revenue generating activity to move through the pipeline. And as the #1 patent filer in Canada, Smart & Biggar and proportionately, our other brand, ROBIC, remain well positioned to capture that increased CIPO work as the backlog clears. Now moving to Slide 18, which is our Asia slide. Look, I'm firstly, very pleased to see a return to growth in our Asian business for the half. Like-for-like underlying revenue was 3.5% ahead of the prior corresponding period with underlying EBITDA up 1.5%. IPH Asian filings ex Singapore increased by 7.3% for the half building on the growth from the prior year, which is starting to yield revenue and earnings uplift. More specifically, we had double-digit growth in 4 countries, including a 37% increase in patent filings in Hong Kong. Vietnam was up 21%. Philippines up 26%. That's good momentum in the Philippines because you might recall, in the August results, we indicated an 82% increase in the second half of '25. And one more country there we don't often hear about, Brunei up 57%, albeit I'd say, off a low base. In addition, we secured more than 2,200 case transfers into the Asian business, including cases registered in renewal phase and in prosecution. These included more than 1,500 trademarks, over 500 patents and 200 designs. Many of these transfers consolidate client portfolios within IPH and of course, support further revenue. The overall Singapore patent filing market declined by 8.6% in half year '26 year-to-date November. There's always a lag in Singapore getting the data, as you might recall, with IPH filings down 13.9% for the same period. One of our largest filers in Singapore and the client that those of you who have followed us for a while has a tendency to go up and down a little bit, which is an ongoing client and significantly reduced filings over the period. And when we normalize for this one client, the market declined by 7.4% with IPH down 10%. IPH maintained our #1 patent market position in half year '26 in Singapore, and as I say, became #1 in Indonesia. And I think we're hitting, hopefully, up the leaderboard in the Philippines, as I said earlier. And we continue to act for a number of the most significant filings in the market. Slide 19 refers to the ANZ segment. And our ANZ business continues to be impacted by the ongoing decline in U.S. PCTs with IPH member firms disproportionately affected by a larger explosion of U.S. clients relative to the market. As foreshadowed at the AGM, the like-like revenue was 6.1% below the prior corresponding half with underlying EBITDA down 10.6%. Given the prevailing market conditions, we continue to align our business to market conditions with a focus on rightsizing and ongoing cost discipline, including a 1.4% reduction in employee expenses during the half. We secured over 2,700 case transfers during the period, including cases registered in prosecution, over 2,400 trademarks, in addition to over 190 patents and over 50 designs which, of course, always support future revenue. And pleasingly, we continue to win significant portfolio transfers in the first months of calendar year 2026. In terms of filings, the Australian patent market decreased by 12.9% for the half, while IPH filings were down by 5.4%. However, as we called out at the AGM, the increase in overall market filings included a large proportion of self-filed and we think AI-generated provisional patent applications. Excluding these applications, which do not represent our client base, the Australian patent market increased by 1.9% for the half with IPH declining by 4.8% for the same period. This represents an improvement from the filing update we provided at the AGM for year-to-date October numbers, where IPH filings again, ex those self-filed cases for July to October were down 7.1% compared to market growth of 3.5% in the first quarter. Notwithstanding the decline in filings for U.S. applicants, U.S. remains the top country of origin for filings, makes up around 30% to 35% of the total market in Australia. Moreover, IPH remains the market leader in Australia with combined market group market share on a normalized basis of 31.5%. Pleasingly, we've also seen our Australian patent filings improve in the last 2 months of Q2 and this continues into Q3. Moreover, in the last month alone, we've also secured an approximately 500 patent case transfer into one of the domestic businesses, a big portfolio win for our ANZ segment. Finally, we've recently seen a slight improvement in the trajectory of U.S. PCT applications. Filings rose in U.S. PCT, our source market -- filings rose from 4,136 in August to 4,500 in September and reached 4,800 in October last year. This improvement over the period provides some optimism for national phase entry volumes in the coming year. So the priorities for FY '26, we continue to build towards our vision of being the leading IP services group in secondary IP markets. Our key priorities in FY '26: to support that vision, include optimizing our network of member firms, targeting organic growth and operational efficiencies. Our focus in Canada is to leverage our integrated platform to drive further growth. We continue to expect improvements in CIPO workflow. And I would say that the timing remains unclear, but I think it's a calendar year 2026 story. In Asia, we aim to capitalize on our market-leading network and unique client proposition to build on the recent increased filings to deliver revenue and earnings growth. That includes business development activities and targeting international corporate clients entering the Southeast Asian market and focus on maintaining our momentum with ongoing case transfers, which provide good future revenue events. Given the ongoing decline of U.S. PCTs in the ANZ, we have refocused our business development initiatives, i.e., the primary IP markets outside the U.S., including Western Europe, Japan, South Korea, as I said earlier, also a significant focus on Chinese incoming filings. As I mentioned earlier, our patent filing performance relative to the market improved in the second quarter. Across the group, we have realigned our cost base and we remain focused on cost discipline to drive further operational efficiency. We are further embedding AI into our core operations to streamline workflows, reduce costs and enhance client services. Of course, underpinning these initiatives is our strong balance sheet with continued high cash generation. Our focus remains on delivering improved returns to shareholders with a flexible capital management plan, including the share buyback we announced today. In closing, I'd like to again acknowledge the hard work and contribution of all our people across the IPH group. Despite some short-term headwinds, and medium-term fundamentals for this business remain supportive for growth. Many thanks to all of you for your continued interest and support. And over to our moderator, where Brendan and I are happy to take some questions. Operator: [Operator Instructions] And the first question today will come from Apoorv Sehgal with Jarden. Apoorv Sehgal: First question, just on the like-for-like revenue performance. It looks like in the last 2 months of the half ANZ and Canada improved a bit versus the first 4 months. Could you comment on any specific drivers for that, please? Brendan York: Yes, they did improve a little bit. So they both went -- there's no sort of specific driver that changed. It's just a little bit of improved filing performance and improved revenue. So yes, we take the good news as it comes. And yes, we've got good momentum into the second half. Apoorv Sehgal: Okay. Let's -- into the second half then, let's touch on that. So if we sort of start with ANZ, I mean, you were down 6% for the first half, but improved a little bit into November, December. ANZ is cycling a bit of an easier comparable in the PCP as well. So I'm just wondering versus that minus 6% in the first half, do you think you can kind of pare back that negative a bit and recover a little bit in the second half of '26? Brendan York: Look, we're going to do our very best, and we hope we can. But obviously, we're not committing to a forecast here. But yes, we think the momentum is in a better space in ANZ going forward. As Andrew said, a really nice case transfer win in January. We think there's some more to come. So yes, we're pedaling really hard to close that gap. Operator: [Operator Instructions] And our next question will come from Damen Kloeckner with CLSA. Damen Kloeckner: Just a couple of questions from me. Just on your business development efforts in ANZ, is the intention to neutralize exposure to U.S. [Technical Difficulty] 30% to 35% of your filings? Andrew Blattman: Sorry, Damen, I'm having a lot of trouble hearing you on your phone there. But look, I think we don't resolve from the U.S. It's still the largest segment that generates work coming into Australia. But I think -- so we've got, in fact, one of our team in the U.S. as we speak. But what we have also done is broaden the approach, particularly into the Chinese market. We had the MD of one of the other Australian businesses just came back from China a week ago. He wants to go back in April because I think he had some good traction, which is good. We'll keep him getting his laundry done, he can go back out again. And so that's certainly a focus. But no, I wouldn't say we're walking away from the U.S. That's the biggest market we have. But we just have to do more. And what we're seeing is some good leverage from our Asian business, which is a strong Chinese filing space, and we're trying to leverage that as an entry point for the ANZ business. Damen Kloeckner: Okay. And then just in terms of the self-filed filings in ANZ, is there any opportunity to win work in this space? Or is it just too low margin and commoditized? How do you see it? Andrew Blattman: Yes. Well, obviously, you probably could, but I don't think they may pay a bill. That's the only problem. But we've seen this before. It's not the same issue, but it's reminiscent of what we had a couple of years ago of the innovation patent that was never our market base or client base rather. We can't see what these things are, because they don't get published for 18 months. But based on some of the titles and the nature of the title, we think it's an AI-generating type of application. So I'm not sure they're anyone's client at this stage and possibly in the future, if they completed applications, there might be some -- there's some opportunity. But I think we're better off broadening our horizon in China and elsewhere. Operator: The next question will come from Sam Haddad with Petra Capital. Sam Haddad: Just looking sat your FX sensitivity of 2.8, that's a bit less than the 3.0, 6 months ago. What's -- is that just sort of mix -- as you sort of mix away or diversify away from U.S. clients? Just can you talk us through what's changed there? Brendan York: Look, it's a pretty small difference, Sam, a couple of hundred grand. It's really -- it's just as the Canada acquisition embeds into the mix, you get a slight sort of push up towards more on CAD where they'll build their clients in CAD terms. So that's really all it is. Sam Haddad: Okay. Is there anything -- you remain sort of passive in terms of how you're managing currency. I sort of missed some of your presentation, apologies. Just how are you thinking about currency and managing that given where the spot rate is today? Brendan York: Yes. Obviously, it's been a pretty volatile movement even from December to now. We have some forwards in place for USD to AUD to -- our exposure obviously risks off the USD billings and then the USD receivables that sit on our balance sheet. So we've got some forward cover hedges in place, and we'll just follow that policy. And that's probably as much as we can really do. Our model works the way it does, and we're not going to change that, but we'll manage the currency through forwards. Sam Haddad: Okay. And just on Canada legal pipeline, that was pretty soft, I think, it was pretty patchy through the last 6, 12 months from memory. Is that -- are you seeing a better pipeline in terms of cases in Canada? Andrew Blattman: Yes. Canada is probably the space the legal pipeline has more impact. And I will say, given that the Bereskin business and the Ridout business had a smaller legal component as they came into Smart & Biggar, the overall -- our overall exposure to legal revenue is less than what it was when you had Smart & Biggar stand-alone. But even notwithstanding that, I think the pipeline is quite healthy in Canada at the moment. Now you never know until they -- till get to the courthouse, Sam, because these things have a tendency to suffer from worldwide settlements, but nothing is implying settlement yet. And I think the Canadian litigation should be okay this year, but let's just see. It is a variable business. Sam Haddad: Okay. And just finally, just on China again, how do you feel about progress there in terms of trying to get build share in terms of outbound work into -- across Asia and into other areas? Andrew Blattman: Yes. No, it's -- we're seeing certainly good traction of China into all the businesses. I've asked all the business units to have a China strategy to execute, and they are executing. I guess we probably see the most momentum coming into Southeast Asia, where we have a large number of Chinese corporates that filed directly with us and probably more than what we see in ANZ. And certainly, there's some R&D from Chinese corporates done in Canada, which we also do quite a bit of original drafting for, that's a lower-margin business, but it's quite a substantial business. But no, I think every business unit has to have a China focus. And at the same time, we're also getting a good, healthy inflow of work into our own Chinese operations. So whether it be through the network of agents that we have in IPH or corporates coming in, mainly corporates coming in directly into China for us and also, as I say, our own particularly the Canadian business into China, which has been very good for. That number I gave, the 1,200 cumulative referrals -- business referrals, that's certainly seen great momentum in the last 12 months, probably on the back of the Bereskin & Parr acquisition, particularly, which had a strong domestic client base. And I must say that business now Smart & Biggar and leadership team there have been able to segue a lot of that work into our China offering, which is terrific. Brendan York: Yes, those referrals have doubled in the last 12 months. So it's really good momentum. Operator: The next question is a follow-up from Apoorv Sehgal with Jarden. Apoorv Sehgal: I wanted to ask about kind of AI and Damen's question before about the self-filers that have seen a bit of a surge in applications using AI software. Just Andrew, could you just unpack sort of what kind of risk does that present to the industry? Like if this becomes a bit more of an ongoing trend, does that eat away a bit at that upfront revenue pool? I know that examination works to the cream for you guys, but that sort of upfront filing revenue, do you think that comes under a bit of pressure if self-filing as a trend sort of picks up? Andrew Blattman: Yes, fair question, the IP, but I don't think it's a big issue for us as that we're a secondary player. So drafting original applications is part of what we do, of course, but it's a small part of what we do, whether it's AI or the hard -- the [ efforts ] of the individual, it's still a small part of what we do. We -- the biggest -- I think it's our domestic revenue proportionately across the group as a whole would be 20%, maybe 22%. And that's a combination of trademarks through to litigation for domestic clients. But I think for us, look, the AI story for us is certainly the technology underpinning AI, which generates more patent applications to protect the AI technology, particularly out of China now. I think 70% of the filings in AI are the Chinese applicants in more recent times. And how we utilize AI ourselves, whether it's -- we have 3 or 4 offerings at the moment going through the business. And it's so dynamic that you never want to pick and stick too closely because you've just got to see who wins this race. So we've got to be fairly nimble on it. But we're certainly putting a lot of effort into it, whether it's how we streamline our own operating process, how we draft our own patent applications and how we do our own patent prosecution, particularly. All of it can be looked through our AI lens, and that's probably the most exciting opportunity in the whole business at present. Apoorv Sehgal: And actually, on the maybe the benefit side, my understanding is some of that upfront kind of drafting sort of work is often done by like administrative staff, like not necessarily like your actual patent attorneys. Does that -- if you're kind of using more AI and more automated sort of software internally, does that present some sort of cost efficiency opportunity for some of that sort of upfront kind of work? And are you seeing that already? Andrew Blattman: I will say on that, the drafting work is -- can't be done by anyone other than patent attorneys or trainee patent attorneys under the supervision of a qualified attorney. It's just too difficult and it's too risky. So it is -- it does involve the professional. It is a labor-intensive process, and it's -- I've done enough myself over 30 years and it is a tough process. So I think there's certainly an assistance of AI to get a first draft, maybe even a second draft. But ultimately, it's going to come out under the name of the patent attorney. But I think, sure, it's useful in that we can have less labor involved in generating the first draft. But I think the biggest impact, given the fact that we are a secondary market and so that by a receiver of application and the patent prosecution process is how we use AI in receiving instructions, how we use AI to update our database, how we use AI to actually undertake the patent prosecution process. That's where the real value lies for us, and that's where our focus is. Apoorv Sehgal: Okay. And just one more if I can on AI, just a topic of interest these days. The translation work you've done historically in Asia, just remind me, was that kind of translation work you're doing being disrupted by some of the competing AI products that were coming out of the market? And can you just remind like how big was that translation work you're doing in EBITDA terms? Brendan York: We don't break up by that in EBITDA terms. It's not a significant proportion of the earnings of the group or revenue, to be honest. Andrew Blattman: Look, for us, we don't have translators -- direct translators in the Asian business. So we use third-party translation across the region. What we do, do is have a quality control within each office within Southeast Asia. There's only 4 countries that have translation in our space, that's China, Indonesia, Thailand and Vietnam. And we rely on our internal people to do quality control and check. And of course, there's a margin attached to what they bring to that. So we don't actually do the translation ourselves in that context. I expect AI will have a role in translation. Of course, it will. But we're not doing that first phase anyway. Apoorv Sehgal: Okay. And if I could have one last question, if I may. Just switching quickly to Canada. When you -- just remind me, Andrew, when you bought Smart & Biggar late 2022, I think the partners had sort of 4-year minimum term agreements which was... Andrew Blattman: That's correct. You're correct. You're correct. That's right. So October '26 would be their 4-year roll-off term. And look, our Managing Director there in Smart & Biggar called Stuart Wood, you may have met over the years, stays pretty close to that principal group. And I expect some will retire given their profiles. But we also pleased to say a number of asked to continue, which is fantastic. So I'm not -- I don't expect a massive rush out the door in the context of those principal. They enjoy what they do. They're good professionals, and we love to have them stay on. And I think the indication generally is that there's a large proportion will. Apoorv Sehgal: And of those who are deciding to step on, does that sort of come with a bit of a step-up in compensation to keep them? Andrew Blattman: We don't talk about the [ integration ]. It's performance-based remuneration now, I think for all of us. So the more better we perform, the better we get remunerated, which is good for everyone. So that's the nature of the world we live in now. Operator: And this concludes our question-and-answer session. I would like to turn the conference back over to Dr. Blattman for any closing remarks. Andrew Blattman: Well, many thanks, everyone, for your interest and support. I'm pleased to see the result. Canadian story is fantastic. Asia returning to growth. It's always -- I've been a very soft spot for Asia for a long time, and it's great to see it coming. I was in our Philippines office last week as we opened a new service office there. Also KL there new office because we're getting more people there. Great momentum coming through, and I have high hopes and confidence in the ANZ business will return. So that's where we are. And we'll speak during the week, I'm sure. Thank you. Operator: This concludes our conference call for today. Thank you for your participation. You may now disconnect.
Christel Bories: Good morning, everyone, and welcome to Eramet's annual results presentation. I know most of you from my past as Chair and CEO of Eramet in the last 8 years. And as you know, I have resumed the role of CEO on an interim basis at the request of the Board. It was not part of my personal plan. One year ago, I decided to not to seek a third mandate for personal reason, and I have not changed my mind. However, when the Board asked me to step in, I felt the responsibility towards the group, towards its stakeholders and above all, towards its teams. I know this company extremely well. I know its strengths, and I know what it takes to navigate a difficult cycle. And I want to see the group succeed. So, this is a temporary mission. A search for the new CEO is underway. But I will stay as long as needed to ensure continuity and stability for the group, and I will hand over once a successor will be appointed. In the meantime, I'm fully engaged and fully accountable. And as you will see today, I have a strong team with me. So, operational and financial continuity is fully ensured at Eramet. So, the agenda of today is the following. I will do an introduction. Then we will go through our 2025 financial results, and it will be presented by our acting CFO, Simon Henochsberg has been in Eramet for a few years now. He is our Head of Strategy. He is coming with a strong financial background and experience in banking. And he is today in charge of Treasury, Financing and Investor Relations. Then, we will focus on our operating and financial performance by activity and on the group performance improvement plan. And this will be presented by Charles Nouel. Charles Nouel is our COO. He has been in Eramet for 20 years. He has been in the COO position for 3 years now. And Charles is also in charge of the implementation of the ReSolution program. And then, we will move to our funding plan. And you have seen in the communique that we have announced today a comprehensive funding plan. And so, Simon will present it, and I will come back for the conclusion. So, let's start with introduction. Clearly, 2025 was a very difficult year that stretched our balance sheet. We faced strong external headwinds with cyclical lows almost across most of our commodities, combined with a weakening dollar, which is a rare and particularly adverse combination in our industry. We also encountered permit restriction in Indonesia and operational challenges in our manganese logistics in Gabon. We emerged from this period with a stretched balance sheet, and this required decisive actions that we have decided, with the full support of our Board, to restore a sustainable capital structure and provide solid foundations for the future. We will obviously come back to that in a minute in the presentation. At the same time, we have also achieved major milestones in our strategic road map. And we are particularly proud of the ramp-up of our Centenario plant in Argentina, which progressed successfully and which is really a great achievement and position us very favorably for the future. And in Grande Cote in Senegal, we are also very proud to have achieved the IRMA 50 certification. As you know, IRMA is a very demanding international standard in terms of sustainable mining. And we are one of the few mines in the world being able to achieve this level of certification. So, despite the big difficulties of the cycle, we progressed strategically on our road map, and I think it is a very important point. So, let's start now with safety. As you know, safety remains an unconditional priority at Eramet. Our incident rate stands at 0.8, which is a good standard in the world, and it is below our target of 1. As you remember, 9 years ago, when I joined the group, the safety performance was at a totally different level, and I think that the progress that we achieved over the past years is something that we can collectively be proud of. However, the situation at Weda Bay Nickel is deeply concerning. We recorded 3 fatal contractor accidents in 2025, and we had an additional one in January also with contractors. This is totally unacceptable, and corrective measures have been implemented. The contractor management has been strengthened. We have taken measures on road safety and operational controls have been reinforced. And we are also taking measure on lightning prevention and protection measures because we have had issues with lightning strikes. Safety is a fundamental priority of Eramet, and this is the first pillar of our ReSolution plan. And our target is clear. It's 0 injuries and 0 high potential incidents. So, let me now come to the broader macroeconomic environment. 2025 was marked by historically low commodity prices and unfavorable FX evolution. The macroeconomic environment and particularly the slowdown in China has weighted heavily on industrial demand. For our basket of commodities, and this is what you see on the right side, the pricing environment was comparable to 2015, which is the lowest level in the decade. And that has been compounded with a strong adverse dollar effect, which, as I said, is a particularly rare combination in the industry. So, these sharp declines had a significant negative impact on our results, which amounted to nearly EUR 300 million in 2025. These external headwinds, combined with the permit restriction in Indonesia led to a very deteriorated adjusted EBITDA, which reached EUR 372 million in 2025. It is down 54% year-over-year. You remember that we were over EUR 800 million in 2024. The intrinsic performance is also below expectation, notably in manganese logistics and because of the cost of the lithium ramp-up phase. So, you see that basically out of the -- I mean, the huge decrease of the adjusted EBITDA, 80%, roughly speaking, was coming from the external factors and 20% from disappointing operating performance within Eramet. As a result of this much lower EBITDA and tails off CapEx, notably in lithium and Gabon, the adjusted free cash flow was negative at EUR 481 million. And the net debt reached EUR 1.9 billion, and the adjusted leverage stood at 5.5x. The gearing reached 125% under the covenant definition, but we obtained a waiver for the December '25 covenant test date. So given the context, no dividend will be proposed for this year, and you will see also for next year. So, clearly, the balance sheet is stretched, but liquidity has been preserved and as we will see, remains solid at the end of December and access to financing remains secure. So, in response to this difficult situation, we have implemented a comprehensive funding and performance plan approved by the Board. It relies on 3 pillars that you can see here on the slide. The first one is, of course, the performance improvement and cash generation at the level of Eramet, driven by the ReSolution program. It covers more than 50 initiatives already underway, and Charles will detail these initiatives later on. The second pillar is a strategic asset review, exploring partial monetization options with the objectives of generating cash in 2026. The third pillar is equity strengthening, with a planned capital increase of around EUR 500 million in 2026, the [ principle ] of which has been agreed with our reference shareholders. The priority of this plan is clearly deleveraging, in order to secure a stronger and more sustainable future for the group. Simon will give you more details later on, but I think it's a very important step going forward to reinforce the balance sheet of the group. With the strengthened balance sheet, we will be in a position in the future to fully leverage the quality of our asset base. Just 2 examples here. We operate the largest and one of the highest-grade manganese ore mine in the world, as you know. The debottlenecking of the logistics and the rail infrastructure in Gabon is starting to deliver results. And so, this is positioning us very well for the future. In lithium, Centenario, as I said, is successfully ramping up. We are several years ahead of most competitors in direct lithium extraction at industrial scale. The asset is first quartile, scalable and long life in a structurally attractive industry. We think that our first quartile low-cost asset base will secure profitability and support cash generation as the commodity prices emerge from the low point of the cycle. Let me now zoom 1 minute on this first-class lithium asset. The plant, as you know, has started beginning of 2025; in fact, very end of 2024. Our plant has reached close to 75% of nameplate capacity in December last year after overcoming the problem caused by a faulty equipment, the fourth evaporator that was delivered by one of our supplier in the first half that has delayed the start of the plant for about 4 months. But the ramp-up trajectory in the second half was very good, was steep, benchmark in the industry and in line with our revised plan. Our proprietary Direct Lithium Extraction technology is now operating at industrial scale, and we have demonstrated that it's working. In 2026, as you have seen in our guidance, we target a production between 17,000 and 20,000 tonnes of lithium carbonate, reaching close to 100% capacity by year-end. And at the same time, we are focusing on cash cost optimization, particularly through improved reagent consumption and process efficiency. Longer term, the salar, as you know has a great potential of exceeding 75,000 tonnes of lithium carbonate per year with options for low capital intensity expansion short term. But we will do this expansion in a very disciplined manner and involving partnership. And just to finish this introduction, I would like to talk about CSR. As you know, I put CSR as a central pillar of our strategy 8 years ago. CSR remains central to our model and our act for positive mining road map continues to structure all our actions and we progress on it as planned. Achieving the IRMA 50 at Grande Cote in Senegal is a significant milestone. It positions us among the most advanced mining group globally in terms of responsible mining and transparency. And we continue to see top-tier recognition of our commitments from different CSR rating agencies. And we put here the example of our CDP rates on water that moved from B to A-, which is a very, very good level in our industry and the recognition of this continuous improvement journey towards excellence in CSR. So now, I will hand over to Simon for the financial results. Unknown Executive: Good morning to everyone. Thank you, Christel, for the introduction. I will start by commenting our 2025 financial results, and I will comment later on the funding plan that was announced yesterday. So, regarding our financial results. First, as Christel mentioned, we need to come back to the market situation that we experienced in 2025. Across all of our commodities, we had lower prices combined with a U.S. weakening, which is quite rare for us, which had a double impact on our financials. Regarding prices, the impact on manganese ore was minus 18% in 2025 compared to 2024. This is due to excess supply coming from South Africa, and it's also due to an Australian high-grade ore producer that came back on the market during the year. Regarding demand, steel production remains stable. On nickel, we also experienced a downgrade -- a decrease in prices by 10%. We managed to keep the prices of nickel ore stable in Indonesia, thanks to the premium we were able to get because of the permitting tension that we saw during 2025. But overall, on a global scale, we were in an oversupply situation, both on Class I and Class II nickel. In mineral sands, we've seen a structurally oversupplied situation emerging. This has been putting pressure on prices, and I will come back to that. This explains the impairment that we had to pass on our asset in Senegal. On lithium, the prices were low in 2025. We've seen the prices recover recently in the past few weeks. We had indeed a temporarily oversupplied market in '25 despite the very sustained demand that comes from both EV and ESS. But again, we are starting to see a rebalancing on that market in recent weeks. Coming to our financials. Our turnover for the year decreased to EUR 3.2 billion. So this is 7% below what we had in 2024. So this is mainly due to price impacts, and we did have some extra volumes with the start of our production of lithium in Argentina. Regarding adjusted EBITDA, as you know, we adjust our EBITDA with the share of Weda Bay Nickel. We also retreat the losses of SLN as this operation is fully funded by the French state and does not impact economically Eramet. So, on adjusted EBITDA, it decreased from EUR 814 million last year in 2024 to EUR 372 million in 2025. This is a decrease of minus 54%. This decrease in EBITDA translated into a lower net income for the year at minus EUR 370 million. This is also due to the impairment that we had to pass on our assets in Senegal, an impairment of EUR 171 million. This is the reflection of this persistent oversupply that we are seeing in this market and the downward pressure on prices. The adjusted free cash flow for the year landed at minus EUR 481 million, so lower than what we had in 2024. The impact on free cash flow is less important than what we see on EBITDA, first of all, because we were able to reduce CapEx in '25 and because we implemented a cash boost plan during the year. Due to this cash consumption, we saw our net debt increase from EUR 1.3 billion to EUR 1.9 billion. Our shareholder equity decreased as well. I'd like to mention on shareholder equity that there is the impact of the net income, but there is also the impact of the FX rate, which is very adverse as we have a lot of assets that are denominated in dollars. As a result, our credit ratios landed at 5.5% for the net leverage and gearing at 125%. As Christel mentioned, we asked for a waiver from our banks for the test date of December 2025 that was granted unanimously. Regarding the usual EBITDA bridge, I think the picture is quite clear. The external impact on our EBITDA was substantial in 2025 by minus EUR 359 million. This is 80% of the decrease in EBITDA came from external factors. In those factors, the 3 main drivers, again, are quite clear on this graph. The price impact was nearly EUR 200 million. The FX impact was nearly EUR 100 million. Taken together, you have nearly EUR 300 million that are linked to price and FX. And we had the permitting situation in Weda Bay with a new permitting constraint during the year that forced us to revise our mining plan with a higher cash cost, lower grades and a product mixed with more limonite on which we have lower margins. We also had CO2 quota sales on manganese alloys that brought EUR 46 million. And on the intrinsic, we had some positive impact on grades mainly in Senegal, and we had in 2025, the cost linked to the ramp-up of lithium. Regarding CapEx, we were able to reduce CapEx in '25 compared to '24, in line with the guidance we had provided to the market. Sustaining CapEx remained constant year-over-year. But with now the new addition of sustaining CapEx from Centenario as now we have this plant is in operation, which led to a sustaining CapEx of EUR 26 million. On non-sustaining CapEx, we kept investing in Comilog. This is to debottleneck the loading in Moanda and the ship loading at the port. We kept investing in Setrag to revamp the railway to allow for organic growth. And we kept investing in Senegal, where we are debottlenecking our plants and where we are also investing into a decarbonization project. We had some remaining greenfield CapEx linked to our plant in Argentina with the end of the construction. This amounted to EUR 96 million for the year, leading to a total CapEx of EUR 412 million. Regarding net debt, this is the result of what we described. The net debt increased from EUR 1.4 billion to EUR 2 billion. This is the result of a low EBITDA, still high CapEx as we were still investing. Taxes paid, with EUR 137 million of taxes paid, of which EUR 80 million in Gabon, which includes a settlement of a tax audit which is a one-off payment. We distributed some dividends, including EUR 56 million to minorities, which is mainly in Gabon. Regarding our liquidity position, our group financial liquidity stands at EUR 1.5 billion at year-end 2025. This includes our RCF. In January this year, this RCF was fully drawn for precautionary reasons. It provides the group with ample liquidity, especially as we have very manageable debt maturities in '26 and '28. The decision to draw this RCF in full was made by the previous management. We are currently evaluating the adequate level of cash we want to maintain going forward. Regarding our debt maturity profile, the bulk of our maturities are in '28 and '29 with the 2 bonds that are due that year. With that, we have an average maturity of our debt that stands at 2.8 years. With that, I will hand over to Charles to describe the operations. Charles Nouel: Thank you, Simon. Hello, everyone. So, 2025 operating performance and financials. In terms of operating performance, we've had mixed results. Disappointing in manganese ore. We had a low base on the -- in 2024, and we didn't manage to do more. I'll come back to that. Basically, it's around the logistics challenge being on the railway, but also on the terminal operations. In terms of manganese alloys, we were constrained by the market, by the ability to sell our products. We have a production capacity that is a lot higher than what you see there and what we actually produced. On the positive side, 42 million at Weda Bay when we received in July the additional RKAB when we managed, in the last part of the year, to produce so much is a very positive operational performance. Again, I'll come back to that because it has some negative impacts as well. Mineral sands, it's a record production. Mineral sands used to be around 600,000 or 700,000 tonnes. We gradually increased to 800,000 and now nearly 1 million tonnes. And the lithium started with difficulties with the Forced Evaporator. But in the second part of the year, the ramp-up that we achieved going to 75% in December and it's continuing currently to increase is extremely positive and is a real success. Now, commenting the manganese performance, the main driver to explain the difference between '24 and '25 is around the price and the exchange rate. On the -- that's for the manganese ore. On manganese alloys, it's about the prices, yet we have been able to compensate that through CO2 quota sales. Regarding the free cash flow, we have, of course, the EBITDA. But on top of that, we continue to invest in Gabon on the train line, but also on the infrastructure of the mine. This is coming to an end, that part. And we paid heavy taxes, as Simon has mentioned. On the positive side, it's the free cash flow of the manganese alloys that is much higher than the previous years. And again, this business delivered some significant free cash flow. In Weda Bay, the main difference is about the grade and the quality of the material that we sold compared to the previous years. This was heavily impacted by the permitting. Permitting is about the famous RKAB permit, which is the permit to produce and to sell, but also the forestry permit. And both these permits were delivered extremely late, and we had to redo our mine plan continuously through the year. And in the end, we had a very unoptimized mining plan. This is why the grade went down because we had to sell some low-grade saprolite. We had to sell a lot of limonite as well because the second part of the RKAB that we received was exclusively limonite. And that had a very big impact on our operation and our sales. The second part also is that, when you have a suboptimal mining plan, you have increased haulage distances as well as increased strip ratio, and that impacts our productivity. Regarding mineral sands, it's a record production, as I explained, yet the prices dropped to very low levels, and that impacted our EBITDA. And on the free cash flow side, we still have CapEx, CapEx of expansion, CapEx of decarbonation. And those will finish in Q1 with start-up in early Q2 this year. So, expect some small amount of -- smaller amount of CapEx last year and finishing end of Q1, beginning of Q2. Lithium, we started. The first semester issues with the Forced Evaporator impacted our cost. Our cost of ramp-up were higher than anticipated. We also had the end of the CapEx for the construction and also some VAT losses due to foreign exchange. So, that's it for our operations. The teams have fought hard through the year to compensate all the difficulties that we had. I'm actually quite proud of the teams, especially in lithium, and I'll come back to it also on the railway. GCO in Senegal delivered excellent production. So, although it's mixed results, we are seeing some real improvements in terms of operational performance. And this will be -- is what we will build on, on the operational performance plan. We have 3 pillars. The first one was explained by Christel largely. Our goal is to get to 0 injuries and 0 high potential incidents. We are launching some coaching of our first-line managers on site. We are -- we have reviewed all our production system to embed safety deeper into the routines of our personnel. In terms of operational and commercial improvement, we are targeting EUR 130 million to EUR 170 million EBITDA. I'll come back to that. This improvement is the uplift that we must deliver within 2 years. CapEx, as Simon showed you, the amount of CapEx that we've spent in previous years, EUR 496 million in 2024, EUR 412 million in 2025. We are now going to spend between EUR 250 million and EUR 290 million. That's a very significant drop. This drop is due to some growth CapEx that are now finalized, but also a much more disciplined approach regarding sustaining CapEx. Overall, this is a 30% to 40% reduction in the amount of CapEx that we will spend. The operational improvement plan is spanning on all our businesses, manganese ore, manganese alloys, mineral sands, lithium, Weda Bay as well and also commercial. We're looking at volumes and the volume part is the majority part of this EBITDA uplift, but we're also looking at productivity and especially in mature businesses like manganese alloys as well as costs in manganese alloys and mineral sands. We're also, of course, looking at cost in lithium to reduce our specific reagent consumption. That is the #1 driver for our cash cost. Looking into more details regarding manganese ore. As I said, we've had disappointing results in 2025, not managing to produce more than the previous year. But in late 2024, we started a comprehensive plan to work on the basics, on the fundamentals in Gabon. We started early 2025 with a mindset and behavior plan on both operations in Comilog and in Setrag, and we are seeing the improvements. We are seeing, for example, a sharp drop in the number of accidents, showing more discipline, more drive of the managers. The second part that is absolutely key over there is asset management. We've had issues in all parts of our assets in terms of maintenance and reliability. We've launched programs, and we talk usually a lot about the track maintenance, the track renewal. But what we are seeing late Q3, early Q4 is an inflection in some of the leading indicators. We had less rain breaks. We had better reliability of our rolling stock. And last year, we did a record replacement of the track, 84 kilometers for sleepers, 58 kilometers for rail. So that's -- these are the leading indicators that we follow. The lagging indicators are -- have started to improve late Q4 last year and are continuing to improve. This is the kilometers, the running distance of all our trains that is slowly but surely improving. These are all the things that we're working on, the track renewal, the track maintenance, the traffic management, the rolling stock reliability, the reliability also of our terminal operations. This is what we're working on. This is why we are confident because we have this inflection on the leading indicators and this improvement of the lagging indicators, we are confident that we will deliver 6.4 million to 6.8 million tonnes this year. Regarding lithium, we've talked about it several times already. 75% is what we delivered in December. We are continuing to improve. And with this improvement, that should lead to 100% capacity, close to 100% capacity by the end of the year. We are reducing our cash cost mechanically. But on top of that, we are reducing our specific reagent consumption. And the target for our cash cost is now at 5.4 to 5.8 in 2025 terms. Remember that the 5,000 was in 2024 terms. PT Weda Bay Nickel, this is a bit of a complicated slide. Basically, the message is IWIP has 73 RKEF production lines and 12 MHP production lines. The percentage of ore that was delivered by Weda Bay Nickel mine to the IWIP Industrial Park was around 40%. With the current permit, we only have 10%. Remember that last year, we got an improvement in our RKAB, and we will request an increase as soon as possible. Longer term, our AMDAL and feasibility study is still valid. It's still at 60 million tonnes, and this is our target to deliver 60 million tonnes. And now, I will give the floor -- leave the floor back to Simon for the funding plan. Thank you very much. Unknown Executive: Thank you, Charles. I will now comment the funding plan that we have announced. So, we have built, with the support of our Board, a 3-pillar comprehensive funding plan to strengthen our balance sheet. This plan is based on 3 pillars. The first one is the performance improvement plans that Charles just described. This includes the ReSolution initiatives, and this is already underway. The second pillar is a strategic review of assets. We are targeting a sizable asset monetization in 2026, and various options are being considered. The third pillar is the equity base strengthening. The project is to launch a capital increase of around EUR 500 million in 2026. While we implement this plan, we are adapting our capital allocation policy. The priority is given to deleveraging. We are limiting investments, as you've seen on CapEx for 2026, and we are suspending dividends for the next 2 years. Regarding liquidity, while we implement our plan, we will preserve liquidity and maintain our RCF. We have obtained, in that regard, a waiver from banks in December '25. We will be seeking to obtain another waiver from banks to cover 2026 as we implement our plan. In that regard, we have had very constructive discussion with our banks in the recent weeks and are confident about this process. A bit more detail on the third pillar, the equity base strengthening. This plan was approved by the Board of Directors of Eramet yesterday. Reference shareholders have approved the principle of a capital increase of around EUR 500 million in '26. The appropriate resolutions will be proposed to the May 2026 AGM and reference shareholders are committing to voting these resolutions. Overall, with this funding plan, this will enable Eramet to normalize credit ratios, both the gearing and the net leverage and improve our financial liquidity. Regarding the implementation time line, the first pillar, the performance improvement plan is something that is already underway and is fully embedded in the budget for 2026. The second pillar, asset monetization requires some preparatory work while we evaluate all the options. The targeted execution window is to the back end of the year around Q4. Regarding capital base strengthening, the resolution will be published end of March or beginning of April for an AGM taking place in May. This will enable an execution during the second part of the year. I will now cover the outlook and guidance. In 2026, we are seeing a more favorable environment. We've seen prices increase recently. All the spot prices are much higher in January than where it were in 2025. This is already reflected in the consensus price for the year. We are seeing in manganese ore an increase in price. This is confirmed in the sales we have done in January, and this is also consistent with the low level of inventory of high-grade ore we are seeing in China today. On nickel, we have also seen an increase in prices. This is in part due to the permitting situation in Indonesia, which is creating a supply gap and putting pressure on the ore price. On lithium, the market is rebalancing, and we have continued to see extraordinary growth in both EV and ESS applications that keeps pulling demand and that contributed to an increase in prices. And the spot prices we are seeing today are above the consensus that we show here. Regarding the FX rates, we are using $1.20. This is the consensus, but this is also the rate at which we have conducted the hedging operation in January. We have decided to hedge 2/3 of our exposure on the dollar, and this was conducted end of January. Regarding our guidance for 2026. On manganese ore transported volumes, we are seeing -- expecting an uplift from 6.1 Mt last year to 6.4 Mt to 6.8 Mt. This is not translated into lower cash cost, unfortunately, because the FX rate impacts negatively the cash cost. For nickel ore, the RKAB is on 12 million tonnes, but we will request an upward revision as early as possible. Regarding mineral sands, we are expecting a stable production. This is the reflection of the increased throughput that we have with the investment that we've made, but also lower grades that are expected in 2026. For lithium, we are targeting a ramp-up to the nameplate capacity during the year. This will allow us to increase the volumes to something between 17,000 and 20,000 tonnes of lithium carbonate equivalent. For CapEx, we target a sharp decrease to between EUR 250 million to EUR 290 million. This is mostly sustaining CapEx and -- but we still have in 2026, some debottlenecking CapEx, EUR 70 million in Gabon to debottleneck the logistics and EUR 30 million in Senegal, which is the end of the investments that we have already started. Thank you. I will hand over to Christel for the conclusion. Christel Bories: Thank you, Simon. Just a quick conclusion before we move to the Q&A. Clearly, 2026 will be a pivotal year. It's all about execution. It's execution in safety, reinforcing the safety standards with a specific focus on Weda Bay; it's execution on the group operational improvement plan that Charles has presented, delivering, I mean, all the initiatives with, as you have understood, a specific focus on the full ramp-up of lithium, which will generate a lot of value and the debottlenecking of the logistic chain in Gabon; it's execution on the funding plan and especially protecting the cash flow, strengthening the balance sheet and so advancing the asset monetization in 2026 and preparing the capital increase. Above all, it's about restoring the financial flexibility of the group and rebuilding the value creation capacity for the next cycle. I'm convinced that we will be successful. We have great assets. We have a very committed team, and I can tell you that I have found back a team that is very committed to deliver for the future. And we have, as you have seen, the full support of our Board. So, I trust that altogether, we will be successful on this plan. So, thank you very much. And now we will move to the Q&A session. Christel Bories: For this Q&A session, so the team will be here to help me answering your question. So the one who have presented already, so Simon Henochsberg and Charles Nouel, but also Maria Lodkina. And Maria is the Head of the Controlling department. She is co-managing today the finance department covering controlling and accounting. Maria, if you can join and team is here for -- so Sandrine, please, on the question. Sandrine Nourry-Dabi: Okay. So, we will start with the questions from the audience, and then we will take the questions from the webcast. So, okay, first question? Christel Bories: So, I can't see you with the spot, but... Sandrine Nourry-Dabi: If you could introduce yourself as well, so [ Auguste ]? Maxime Kogge: It's Maxime Kogge from ODDO BHF. So, I have a first question on the capital increase. So, am I right to assume that the full capital increase will be at the Eramet level? Or could it also involve some disposals of minority shares in the subsidiaries? I'm thinking about lithium, for example. And related to that, if I do the math, so you have 5.5x of net leverage right now with EUR 500 million of capital increase that leads us to, on my calculation, around 2.5x net leverage by the end of next year. And we are still quite far away from the 1x net leverage long-term target. So, can you give us a sense here of when you could achieve that long-term target? Christel Bories: So, I will answer the first question and let Simon answer the second one. Just on the capital increase that we have shown in the third pillar of the funding plan is at the group level. So, the EUR 500 million is at a group level. And as we have said, there will be resolutions proposed to the general assembly and our reference shareholders have committed to vote those resolutions to be able to deliver this capital increase by the end of the year. On -- it does not mean that we could not sell a minority shareholding in our subsidiaries, and it is part exactly of what we call the asset monetization, I mean, process that we are -- we have launched, in fact, because we have already selected some -- have selected some assets, have some ideas, started some discussions so that we could be able to deliver this also in 2026. So -- but this will be in the second pillar, which is part of the -- what we call the asset monetization in 2026. Maxime Kogge: And regarding the pathway to the 1x of net leverage, that is your long-term target? Unknown Executive: On that question, so, indeed, our capital allocation policy for the coming 2 years has been adapted to -- as we face the situation, we've have a net leverage of 5.5x at the end of 2025. The way we have sized our funding plan is, first, this improvement program, which is designed to generate cash and increase the EBITDA level, which is a big component of a decrease in the net leverage. The second part, the asset monetization, which is not necessarily the biggest lever to decrease leverage and the third pillar, which is the equity increase. Coming back to 1x in 1 year is not feasible in our view, depending, again, on prices, EBITDA may increase to a level that allows to go back straight to that level. It would be interesting to -- if you remember what happened in 2015 and 2017, where Eramet leverage went up very fast. It also came back very fast in the year afterwards as prices were increasing. But in any case, to answer your question, the capital policy allocation has been adapted for the next 2 years to face this special situation and the target of 1x can only be resumed after we pass that period. Maxime Kogge: Okay. I have a second question and last one, I have to leave the floor to my colleagues. It's about lithium. So, lithium prices are currently quite high and remain to stay so for long, given the strong tailwinds. You have an operation that is running now quite smoothly. So, now it could be the perfect time to launch the Phase 2 of this project. It could have been perhaps the case already in '23, '24 when you had plans already to launch it because you would have benefited now from these very high prices. So how should we think about this expansion there? You have huge potential, but it seems that you're very much constrained. So, could the capital increase perhaps include a path to fund this project? Or is it something that will come a lot later? Christel Bories: It's a very good question. As I said in the presentation earlier, we have huge potential. And the first one is a very low capital intensity expansion of the existing plant. We have some debottlenecking potential within the existing plant, which can increase, quite significantly, the production with a relatively low CapEx intensity. So, this will be the first step before we build a second plant which is also part of the long-term growth plan for lithium in Argentina. On this first one, as I said, we will be very disciplined. And part -- it can be done with partnership, bringing a partner that could allow us, without stretching further our balance sheet and spending too much CapEx to accelerate this expansion phase, bringing a partner in this assets, in the joint venture. It's part of the things that we are considering in order to leverage the growth potential of these assets at the right time in the market. Auguste Deryckx Lienart: Auguste Deryckx, Kepler Cheuvreux. I have 2 questions. The first one is on the capital increase because reference shareholders supports this operation. Should we assume that they will participate at least to the extent of their stake in Eramet? And the second question is on divestments. Is it fair to say that the easiest asset to sell are a minority stake in the lithium mine and mineral sands? Christel Bories: Again, on the second question, I will not comment on the assets. We don't want to sell at discounted value. That's why we are considering several options that are all in line with our strategy. We don't want to sell things that would, I mean, endanger our long-term strategy in critical raw materials, and we don't want to sell at a low value. So, we are taking all this in consideration. But we think that with all these constraints, we still have options and will not comment further as you can -- and you can understand why at this stage on which asset is targeted. On your first question, I cannot comment for my shareholders. The only thing I can tell you is that both shareholders have approved the funding plan in the Board, and it was -- this funding plan was approved unanimously at the Board level that they have committed, as we said, to vote the resolution in the AGM that will allow the Board to execute this capital increase, so -- which means that they are supportive of this concept and project of capital increase. Now the modalities of the capital increase and who is participating to what will be detailed later on, and I cannot comment further at this stage. Unknown Analyst: [indiscernible] It's a pleasure to see you back, but that was not the plan. Can you comment on what happened? It was really -- it came as a surprise to us all. So that's my first question. A couple of years back, that's my second question. You mentioned that of all the things that would hamper your operations would be a naval blockade. Does the present level of geopolitical tension seems to you as moving towards this kind of risk for the group? Or do you think we're really cool for the coming, at least for 2026 as far as you can see? Christel Bories: Just so, I think we have already commented, I mean, through our communique and in the press, I mean, the reason for the dismissal of the previous CEO. It was really a question of divergence in the way decisions were made, the level of transparency, the way of working, especially with the Board. So -- but also with the teams. So, I think it's nothing to do with financial issues, nothing -- no fraud, no ethical issues. It's really the way decisions were made, lack of transparency, lack of alignment, divergence in the way of functioning. So, at this level, we need -- and it's also the culture and the values at Eramet, we need collaboration. We need consultation. We need transparency. And when those things are happening at this level, we have to make decisions. So, I'm back, as I said at the beginning, for an interim period. But in that period that will take the time it will take. I'm fully committed and accountable to lead the group. And of course, I will step down as soon as we'll have found a new CEO. The plan remains the same mid-term. On your second question, I'm not sure I got exactly what you meant, but I think that it's -- again, in terms of strategy, and maybe you can precise the question, but on strategy for Eramet, we continue to have a good momentum, and it's also part of the answer to other questions. Eramet is really a strategic company exposed to critical metals necessary to secure the Western value chain and enable the energy transition. And we think that with all what has happened in the world in the past months, we are even more critical for Europe and for the Western world in terms of producers of critical raw materials. Unknown Analyst: Well, very specifically, what happens in the Middle East with this buildup between Iran on one side, the U.S. on the other side and their respective allies, you think what everybody is saying, it's going to be okay. But if it's not okay and if these people start fighting, what happens to your relationship with China and whatever you have to deliver there? That's my point, especially from Indonesia. Christel Bories: Yes. And again, as you know, in the world of today, it's difficult, I mean, to navigate. We have to be agile. We have to be flexible. Today, that's true that we do quite a lot of our sales in China because China is a big consumer of raw materials and metals in the world. But we have developed, as a contingency, I would say, in the last months and years, we have developed ourselves elsewhere, especially we have grown a lot in India, for example. So, today, we need to be agile. We need to continue to observe what's going on in the world. But -- and that's why I said that I think we are well positioned in countries today that are remaining quite independent from those blocks. And I think that in Indonesia, that's true that what we see in Indonesia and what we see in many countries in the world today is the increase of nationalism and more and more political decisions, and we have to deal with those change in our countries. So, I cannot comment more than that today. Jean-Luc Romain: Jean-Luc Romain, CIC. I have a question regarding your RKAB, which was allowed by the Indonesian government, which is much lower than last year and probably much lower than you expected. Given the ability and what you mentioned in your press release to ask for higher RKAB, what kind of level do you think you could achieve? That's a difficult question. And -- well, should we expect a big drop in volumes this year compared to last year? Christel Bories: It's really very difficult to answer this question. Obviously, as we are -- we have been surprised by this level of cut. You may remember that part of the national -- I mean, strategy of Indonesia was to rationalize the level of allocation of RKAB in order to decrease the potential oversupply of nickel on the market and have the price increase in the coming months and years. What they have announced is that they would like to cut the RKAB overall by, let's say, 20%, they say, 20% to 30%. We have been cut by 70%. So, I'm not saying that we will come back to 20%, I don't know, but it's obvious that the level we are today is much lower than the average volume they want to decrease in terms of production. So just as -- we will resubmit, of course, request, I mean, to be in line with what we had last year, and we will see. Last year, just as a reference, we got EUR 10 million additional -- I mean, RKAB during the year. So, I don't see why we should not get at least this, this year, but we hope that it could be more. because we had RKAB of EUR 42 million last year. So, EUR 42 million, minus 20% to 30% is not EUR 12 million. Any other questions in the room? If there is no other -- there is one. Unknown Analyst: [ Bernard Vatier ] from [indiscernible]. Can I ask a follow-up question on Weda Bay. Considering current permitting you got, should we assume that you will hardly receive any dividend from Weda Bay in your free cash flow forecast for FY '26? And second question, maybe on the asset disposal plan or monetizing of assets. So, we've mentioned various optionalities. What about Weda Bay? Can you give us more color about your partnership with Tsingshan because you bought back their share in Centenario. Could you consider selling them the stake in Weda Bay or given current circumstances, it's difficult? Christel Bories: So, on the dividends, I will let Simon precise that, but we are not expecting no dividends because the consequence of having such a low RKAB, if it were staying at the same level, would be a significant increase in price. Already last year, when they started to cut the RKAB, you have seen that the premiums on nickel ore in Indonesia over the formula that is official in Indonesia have increased significantly. And at some stage, the premium were higher even than the price -- the formula price itself. So, we have a kind of -- of course, it does not offset everything, but we have kind of offsets coming from the prices. So, the impact on the cash and on the EBITDA is not as big as it could look like when you look at the absolute number. That being said, we will have a negative impact. So, on dividends, of course, it will depend on what we get at the end. And one thing that is for sure is that we don't expect to have dividends in the first half of the year. It will be more on the second half of the year once we have a better view of what will be the RKAB for the full year in Weda Bay. Simon, do you want to add something or Maria? Unknown Executive: Yes. Just a small precision on the dividend amount. We cannot give the very exact number. But in any case, we expect a significant increase versus '25. First, December was a brilliant performance of Weda Bay team, meaning that the big cash is in the second half of 2026, which will convert in dividend distribution. The amount will be, of course, dependent on the RKAB situation. But as can be seen from our financial statements, the 2025 level was very low, and it will be compensated in '26. And as Christel mentioned, the very significant part of the compensation is coming from the high premiums, and it's already clear from what we can see now in the market. Christel Bories: Just on Weda Bay, again, I will not answer directly your question. What we are seeing is that, we are reviewing different options on different assets. So, it's not the same setup and on the different assets. So, we -- I won't tell you more at this stage, but we look at different options, obviously. Are there some other questions? Nicolas Delmas: Yes, please. Nicolas Delmas, Portzamparc. Just 2 questions on my side, maybe. One, could you quickly comment on the ongoing negotiations in Gabon regarding local ore transformation? And second one, could you also give some more information regarding asset impairments in Senegal? Christel Bories: Maybe you want to comment on the second question. Asset impairment, Maria? Unknown Executive: Yes, impairment in Senegal, as Simon presented before, most of the effect is due to the depressed market and the price assumptions used in the evaluation. It has been done in accordance with the IFRS rules and purely linked to the current projections for the long-term prices. Unknown Executive: And to add a comment on the prices, we are seeing this market change structurally. There's a lot of HMC imports in China from new sources from Southern Africa notably. So, this is -- there's a lot of new supply that is coming on the market, and we see a high level of stock. This has already been reflected in the prices, which have decreased quite significantly. And we are seeing this as a structurally oversupplied market, which is the reason why we have taken this impairment. By the way, our competitors in mineral sands, Kenmare and Iluka took impairments as well this year for the same reasons. Christel Bories: Maybe one word on Gabon. As you know, on the -- I mean, the request of Gabon to transform locally the ore. It was a highly political decision. So, I mean, it's -- we respect the decision of the state. We are -- of course, we have been discussing with them since then, and we continue the discussion. We have been partners, as you know, with the state of Gabon for now more than 20 years. They are -- they have a significant share in Comilog, our subsidiary in Gabon because they have close to 30% and 29% share in Gabon. And it's a significant part today of the revenue of the states in terms of tax, dividends, et cetera. So, we are discussing on the best way, I mean, to answer this political request without, I mean, impacting the economics neither of Eramet or Gabon overall as we are altogether, I mean, really relying on the success of the present model in Gabon. So, discussion is ongoing. And of course, it will take -- still take some time, and we will keep you, obviously, informed if there is any, I mean, further decisions on this side. So, yes, Jean-Luc Romain? Jean-Luc Romain: Jean-Luc Romain, Sorry, I have another question regarding the grade of the ores you were able to sell from Weda Bay. You mentioned, Charles, that this was saprolites and other less rich ores. In your concession, do you have higher grade ores that you could sell in the future, which would improve the economics? Or should we expect, over the long term, a reduction of the grade of ores? Charles Nouel: We do have many different deposits. It's a very large concession. And of course, we have deposits that are richer than others. A good mine plan is a mine plan where you start with the higher grades. So, over the life of a deposit, you always see if it's well managed, the grade going down. Now, what happened last year was a bit of this, but also, as I explained, a suboptimal mining plan due to the permits received late. So, what we're trying to do every year is to compensate the lower grade of geological grade by a better mining plan. That's what I can say. Every year is -- you have to fight, you have to improve your productivity, you have to improve also the dilution that you have on the mine and you have to improve your product mix between the different types of material that you mine, i.e., some -- the high-grade saprolite, low-grade saprolite, limonite. The #1 effect at Weda Bay is the split between saprolite and limonite. And last year, we had 42. The extra 10 was 100% limonite. Limonite is around 1.1 in grade, where saprolite is, say, around 1.5, 1.6. This is what we have in the deposit. So, the average is 2/3, 1/3. That's what the deposit gives you. And then, you have to work on this. When the RKAB goes down, we try to reduce the amount of limonite and increase the amount of saprolite that we sell. And when it's going down as low as 12 million, we try to do 100% high-grade saprolite, yet the geology is what it is. And to get to the high-grade saprolite, sometimes you have to move some limonite and sometimes it makes sense to sell this limonite. It's an economic decision every time. It's not geology or mining. It's about optimizing with the set of geology and mining that you have, how do you maximize your revenue -- sorry, your EBITDA. Christel Bories: Other questions from the room? No. We will move to the... Unknown Executive: Yes, we'll take question from the webcast. Many have already been answered, but I will take the additional ones. Can you give us an update on the situation of your CFO? And regarding the search of a new CEO, can you give also an update as well as the progress for this search? Christel Bories: On the CEO, I mean, the -- as you know, the dismissal happened on the 1st of February. So, we are at the very beginning. So, it's -- we are starting. So, I cannot give you any specific details -- further details. We are just starting. The situation of the CFO, I think we -- it's clear. We have made a communique on that. We had an internal alert coming from several people within the organization, especially on the management of the finance department. And serious enough so that we have decided to suspend, I mean, its activities. So, for the time being, for the time for an investigation, an external investigation that will take place in the coming weeks. So, as these investigations are taking some time and it takes several weeks, we will take the time for a proper investigation and then see what really the reality is and make the appropriate decisions afterwards. Unknown Executive: Coming back to the asset monetization, do you have already identified some candidate or some possible partner? How much amount do you expect from this monetization? And do you consider only minority stake? Or could you consider selling a majority stake or even a full asset? Christel Bories: We are considering minority stakes. That being said, Weda Bay was mentioned, we are already in a minority position in Weda Bay. So, it can be a lower minority stake. So, it's -- but today, there has been no decision to exit -- to fully exit one of our key critical metals. It's a way of answering this question. Maybe on the size, Simon, you want to -- you will not give any number, as you can imagine. It's -- we said sizable, it means several hundred millions. Unknown Executive: Coming back to the capital increase, why don't you organize an extraordinary general meeting to be able to have the authorization earlier and do the operation earlier? And is it already fully underwritten? Christel Bories: I think I already answered the second question, second part of the question. On the first part, we have the Board that will vote on the resolution of the general assembly mid-March. So, it's coming very soon now. We need to work on the modalities of this capital increase. We will propose to the Board the resolution. Then the resolution will be proposed to the AGM that will take place in May. So, we thought the time it takes, I mean, to prepare also such an operation, we think that, I mean, having the resolution voted and so all the authorization ready in May is an appropriate calendar for the time being. Unknown Executive: Regarding financing, can you explain why you draw all the RCF beginning of the year? What was the rationale behind this decision? Christel Bories: Simon, do you want to answer this one? Unknown Executive: Yes. So, indeed, the RCF was fully drawn end of January. This decision was made by the previous management. We are -- as you've seen, the amount of liquidity that we had at the end of the year is EUR 1.5 billion, which gives ample room to maneuver in the coming years, especially as the debt repayments in 2026 are quite manageable. And -- but on the same time, on the free cash flow, as you've seen with our guidance and our outlook, we have a consensus price that is improving. We are guiding on an increase in volumes. We are stopping -- the investments in lithium are done now, and we have free cash flow that will be generated from that operation. So, all of that is positive for the free cash flow generation of the group. All in all, we are evaluating -- we are also in a business that is quite volatile. So we have to have enough precaution. That being said, having the entirety of the RCF drawn is not necessary in our view. We will refine the analysis in the coming weeks, and we have already engaged discussion with banks in that regard. Unknown Executive: A small final question regarding the dividend to make sure we understood correctly. When you mentioned the 2-year suspension, it's a dividend for 2025, which would have been paid in 2026 and the dividend for 2026? Christel Bories: Yes, that's the case. Unknown Executive: Okay. Thank you very much. Christel Bories: So, if there is no other question, again, thank you very much for your attention, for your attendance today. Again, it has been a challenging year, a very challenging year for Eramet. But I think we are really taking the necessary and decisive actions to bring it back to a sustainable capital structure and to be ready with solid foundations for the future. So, thank you for your support. Thanks.
Operator: Good day, and thank you for standing by. Welcome to the Upbound Group, Inc. Fourth Quarter 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You 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 this conference is being recorded. I would now like to hand the conference over to your speaker today, Steven Kost of Mountain Investor Relations. Please go ahead. Good morning, and thank you all for joining us to discuss the company's performance for the fourth quarter and full year of 2025 and our outlook for 2026. We issued our earnings release this morning before the market opened. Steven Kost: The release and all related materials, including a link to the live webcast, are available on our website at investors.upbound.com. On the call today from Upbound Group, Inc., we have Sami B. Sulaiman, our Chief Executive Officer, and Hal Khouri, our Chief Financial Officer. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's Form 10-Ks and other SEC filings. Upbound Group, Inc. undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures. Finally, Upbound Group, Inc. is not responsible for and does not edit or guarantee the accuracy of our earnings release teleconference transcripts provided by third parties. Please refer to our website for the only authorized webcast. With that, I will now turn the call over to Sami. Sami B. Sulaiman: Thank you, Steven, and good morning, everyone. Sami B. Sulaiman: I will begin with a review of key highlights from 2025, then I will hand it off to Hal for a more detailed review of our financial results and our financial outlook. Sami B. Sulaiman: After that, we will take some questions. As we reflect on the past year, it is clear that 2025 marked a period of significant progress for Upbound Group, Inc. as we execute against our strategic priorities. Since taking on the CEO role in June, following my tenure as CFO, I have been eager to build upon our recent momentum and to steer Upbound through our ongoing transformation into a leading digital and data-driven platform of financial solutions for underserved consumers. In 2025, across all of our brands, we served over 3,500,000 customers. Over the past eight months, my optimism about what is possible and the opportunity in front of us has only grown. Our team's dedication and shared vision have driven key achievements that we believe strongly position Upbound for continued success and long-term growth. During 2025, we expanded our business by adding a new segment, Bridget. Sami B. Sulaiman: A leading subscription-based financial health technology company, further diversifying our complementary offerings and strengthening our ability to serve our core customer. In addition, we welcomed two accomplished executives to our leadership team. I will start with Hal, our new CFO, who is on his first Upbound earnings Sami B. Sulaiman: call with us this morning. Hal brings extensive experience to the CFO role and is a member of our executive team, including over 30 years in consumer-based banking, financial services, leasing, retail, consulting, and government service. I will let Hal introduce himself shortly, but I will add that his insights and strategic vision Sami B. Sulaiman: have already proven valuable to our organization. Sami B. Sulaiman: We also welcomed Rebecca Wooters as our Chief Growth Officer. Sami B. Sulaiman: A newly created role for Upbound. Sami B. Sulaiman: As mentioned during our last earnings call, Rebecca's role integrates Sami B. Sulaiman: one team key strategic functions for our organization. Sami B. Sulaiman: Rebecca will lead digital transformation and initiatives Sami B. Sulaiman: and implement data-driven solutions across all three major segments of the company, promoting growth, innovation, and synergy within our omnichannel model. We have confidence in Rebecca and her team to deliver both short-term and long-term value as we continue to invest in digital products, personalized marketing, customer experience, and leveraging data as intelligence throughout our organization. Sami B. Sulaiman: Adding these experienced leaders to our already strong management Sami B. Sulaiman: team with years of operating experience inside of our brands I believe is a powerful combination that positions Upbound for long-term value creation. While these key additions help to build the foundation for growth in the years ahead, we also delivered strong operational and financial performance last year, achieving results within our expectations that we shared at the beginning of 2025. Let us dive deeper into some of the achievements across the enterprise that made 2025 successful. We are proud of the progress we have made executing on our focus areas during the year as we continue to invest in serving our customers with innovative solutions. In January 2025, we welcomed a new high growth business into our through the successful closing of the Bridget acquisition. This milestone marked the beginning of an exciting combination whose value became increasingly evident throughout the year. From our very first conversations with Bridget, we were impressed by the team's vision, culture, and technical expertise for developing relevant digital financial products that help users build a brighter financial future. Sami B. Sulaiman: A mission that closely aligns with Upbound. Sami B. Sulaiman: With a relatively small team, Bridget has already achieved remarkable growth and delivered significant value to its users. Sami B. Sulaiman: As we evaluated the acquisition, Sami B. Sulaiman: confidence grew in the potential to unlock even greater value by combining Bridget's technology and rapidly expanding user base with Upbound's scale, and similar target consumer to meet a wider range of financial needs for underserved consumers and evolve our business in a changing competitive landscape. I am pleased that in 2025, Bridget's performance validated our enthusiasm for the growth opportunities from the transaction. Sami B. Sulaiman: When introducing Bridget in 2025, we outlined three strategic priorities for the year: maintaining growth momentum, Sami B. Sulaiman: launching new products, and cross marketing collaboration with our Upbound brands that already serve millions of customers each year. Sami B. Sulaiman: Bridget demonstrated momentum throughout the year with Sami B. Sulaiman: sequential improvements in year-over-year revenue growth each quarter. Top line performance was fueled by an increase in new users, and higher average revenue per user stemming from greater expedited transfer revenue for our earned wage access product, deeper engagement with Bridget Marketplace offers, Sami B. Sulaiman: and continued upsell from Bridget's Plus membership to its premium tier membership, Sami B. Sulaiman: demonstrating the value provided to customers by Bridget's range of products and price points. Bridget also made strides in developing new products, notably piloting a line of credit offering in late 2025. This product leverages Bridget's powerful cash flow underwriting capabilities to provide qualified consumers with up to $500 of liquidity for recent or upcoming purchases, bridging the gap between smaller ticket BNPL offerings and larger ticket lease-to-own solutions. The pilot has yielded promising preliminary results and we are planning a broader rollout in 2026. Finally, Bridget launched a number of cross selling initiatives, marketing its product to Acima and Rent-A-Center customers. These efforts included targeted email campaigns and in-store promotional material at Rent-A-Center and Acima staffed locations. Expanded throughout the year and have shown promising early results. Now let us turn to Acima. Our strategic priorities for 2025 included driving repeat business through an even greater focus on the customer and leveraging digital advancements to grow merchant relationships. In 2025, the team successfully delivered on these priorities, which resulted in revenue and adjusted EBITDA growing low double digits, and adjusted EBITDA margins improving 10 basis points year over year Sami B. Sulaiman: despite Sami B. Sulaiman: a tougher macro environment that saw demand pressure and elevated losses in the half of the year. Acima demonstrated the power of its customer focus through the expansion of its direct-to-consumer marketplace, marketplace. Sami B. Sulaiman: Over the years, Acima has built connections with millions of Sami B. Sulaiman: by facilitating transactions at more than 35,000 merchants locations nationwide. Increasingly, and especially over the past year, Acima's innovative team is leveraging these relationships and data to empower its customers with additional choice and flexibility. Through its direct-to-consumer channels, Acima enables customers to start new leasing experiences with top national retailers, but or at virtually any durable goods retailer across the country using the Acima virtual lease card. At the beginning of 2025, Acima's direct-to-consumer market small but promising addition to Acima's established channels. By the end of 2025, the marketplace had experienced substantial growth with GMV growing more than 100% year over year in 2025. Sami B. Sulaiman: The marketplace now accounts for nearly 10% of Acima's GMV Sami B. Sulaiman: and continues to be a strategic focus as we enter 2026. Its ability to strengthen relationships with existing customers and to provide the ability to shop at a broader range of top retailers including those without integrated lease-to-own solutions, Sami B. Sulaiman: makes the marketplace a valuable asset for driving repeat business, increasing the lifetime value of Acima customers, and Sami B. Sulaiman: driving incremental revenue opportunities for our retailers. Moving on to Rent-A-Center. Throughout 2025, the segment concentrated on digital evolution and disciplined underwriting. Sami B. Sulaiman: The segment made significant progress in elevating the customer Sami B. Sulaiman: experience and strengthening its digital presence. Sami B. Sulaiman: Including upgrading the infrastructure of the rentacenter.com website Sami B. Sulaiman: to improve its scalability and reliability as the segment continues focus on growing its e-commerce channel. In addition, the Rent-A-Center team developed new tools to improve the approval process Sami B. Sulaiman: for certain applicants who might not meet our more stringent online underwriting criteria. The website now invites these select online applicants Sami B. Sulaiman: who may previously have been declined to visit their nearest store to complete the process in person. This approach exemplifies Rent-A-Center's ability to harness both the Sami B. Sulaiman: expanding digital channels and its robust retail footprint Sami B. Sulaiman: to drive customer acquisition. By balancing digital innovation with the strength of its physical locations, Rent-A-Center is well positioned to identify and capitalize on further synergies between channels, which will be critical to the segment's growth moving forward. Enhancements to Rent-A-Center's refer-a-friend campaign, the revitalization of its loyalty reward program, and successful marketing efforts that drove strong customer demand in the second half of the year all provided additional support to top line performance. Sami B. Sulaiman: Reinforcing Rent-A-Center's commitment to new customer acquisition, customer engagement, and retention. As a result of these efforts, Rent-A-Center's Sami B. Sulaiman: trends improved through the second half of the year and the segment finished 2025 with year-over-year same-store sales growth in the fourth quarter of 80 basis points, improving 40 basis points sequentially, paving the way for a sustainable path as we enter the new year. Sami B. Sulaiman: Now let us go to slides five and six and recap how these achievements across our enterprise drove strong consolidated financial results. Sami B. Sulaiman: I am pleased to share that our full-year financial results exceeded the midpoint for Sami B. Sulaiman: each of the figures we provided on our third quarter call. Our revenue grew 8.7% to approximately $4.7 billion, representing the highest full-year revenue on record for Upbound. Surpassing the previous record in fiscal year 2021 which, of course, benefited from stimulus and the pandemic-related pull forward in the furniture sector. Adjusted EBITDA for the year was nearly $510 million, which was up 7.5% from the prior year. Sami B. Sulaiman: Our non-GAAP diluted EPS was $4.13 compared to $3.83 in 2024. Sami B. Sulaiman: A 7.8% improvement and near the high end of our guidance last quarter. Sami B. Sulaiman: Finally, our cash flow generation was particularly strong in 2025 with free cash flow of $180 million, increasing over $130 million year over year, and net cash provided by operating activities increasing over $200 million to approximately $306 million, the highest full-year figure since 2022. Sami B. Sulaiman: Year-over-year improvement was due in part to the benefits associated with tax legislation allowing for accelerated recognition of tax depreciation. Turning to the fourth quarter on slide seven. Consolidated revenue was $1.2 billion, a 10.9% increase from a year-ago period, Sami B. Sulaiman: driven primarily by the addition of the Bridget segment Sami B. Sulaiman: in addition to 8.6% year-over-year revenue growth at Acima. Upbound delivered $126 million of adjusted EBITDA, which was a lift of 2.6% year over year and adjusted EBITDA margins of 10.5%, down 90 basis points from last year. Sami B. Sulaiman: Non-GAAP diluted EPS was $1.01, down 4% from the year-ago quarter. Sami B. Sulaiman: Overall, I am pleased with the financial and operational performance that our team delivered in 2025. Sami B. Sulaiman: Throughout the year, in addition to completing a transformational acquisition, Sami B. Sulaiman: the company executed on key priorities while also proactively implementing targeted risk management adjustments for the increasing pressures that our consumers face. Our core consumer continues to navigate a challenging environment, including the cumulative effects of inflation and elevated prices for essentials like groceries, rent, and utilities, which weigh on their purchasing power, and wages that have not kept up pace with their cost of living. Both of our lease-to-own segments took actions to reflect the evolving macroeconomic landscape, Sami B. Sulaiman: and we are pleased with the outcome of these efforts and the health of our portfolio entering 2026. Sami B. Sulaiman: At Bridget, as I mentioned, the segment's growth in 2025 has further demonstrated the growth potential we anticipated when we acquired the business a little over a year ago. And its opportunities for additional expansion make us excited for the future. On that note, as we look ahead to 2026, our priorities remain focused on positioning Upbound for sustainable, profitable growth as we continue to execute our strategic transformation. We will continue investing in our people, Sami B. Sulaiman: data, and technology, including advanced analytics and AI capabilities, to better serve our customers and merchants while strengthening our competitive advantages. By leveraging our proprietary data more effectively, Sami B. Sulaiman: we aim to deepen customer personalization, improve satisfaction and retention, drive repeat business, and realize the full benefits of our scale while pursuing increased cross-sell opportunities across our platform of brands. These efforts will also support continued enhancements to underwriting allowing us to optimize risk-adjusted returns against our targets. Sami B. Sulaiman: We also remain focused on operational excellence by leveraging Sami B. Sulaiman: technology in the core competencies of each of our brands, taking proven best practices and scaling them across the organization. In parallel, we are driving targeted efficiency and cost initiatives including enhancing coworker efficiency across store operations and customer service while simplifying processes to favorably impact the overall cost of doing business. We believe these efforts will improve execution, scalability, and discipline across the enterprise while supporting margin and long-term value creation. Sami B. Sulaiman: Over the last few months, as I have transitioned into my new role, Sami B. Sulaiman: I have had the opportunity to assess our business across various key aspects focused on serving our customers, growth opportunities, risk management, and synergies between the brands. While our overall strategic vision and focus areas will remain fairly consistent, we are in the early stages of our transformation and must continue to evolve to the ever-changing business environment. I am excited about the opportunities in front of us, and together with our new and existing leaders, I am even more confident in our ability to execute on our strategic goals. Sami B. Sulaiman: Our goals for the long term are clear: deliver responsible and profitable growth, Sami B. Sulaiman: through disciplined risk management while pursuing operational excellence through data and technology and effectively manage capital to ensure appropriate Sami B. Sulaiman: returns. Sami B. Sulaiman: With that, I will hand it over to Hal to cover the financials in more detail. Thank you, and good morning, everyone. Before reviewing segment results, I would like to start by expressing how excited I am to be joining the Upbound organization as the company's CFO and the opportunity to be part of its future success. I joined Upbound in November drawn by the company's durable foundation and scale, paired with its compelling growth profile. I am confident that together we are poised for exceptional times ahead. Let us now turn to a review of the segment results and then discuss our outlook for FY 2026, after which we will take questions. Starting on slide nine, Acima recorded another quarter of GMV growth in the fourth quarter, an increase of approximately 40 basis points year over year. At nearly $550 million, fourth quarter GMV was the highest it has been since we added Acima five years ago. Acima's continued growth is due to a few factors, including the performance of its marketplace, as Sami mentioned earlier, in addition to its exceptional sales force continuously onboarding new retailers and servicing existing retailers. Furthermore, we continue to diversify our product lineup with furniture, our largest product category, representing approximately 40% of rental revenue in the fourth quarter, compared to 43% in the prior-year period. Acima revenue grew 8.6% year over year, which was its ninth consecutive quarter of revenue growth, and adjusted EBITDA of $87 million was up 7.3% from a year ago. EBITDA margins were down 10 basis points from 2024, however, they were up 180 basis points compared to the prior quarter. Acima's loss rate of 10.1% for the fourth quarter was up 110 basis points year over year and up 40 basis points sequentially. While Acima's losses finished the year elevated relative to recent levels, in our targeted longer-term range, our fourth quarter loss rate was consistent with the guidance we had shared during our third quarter call. We discussed how certain challenging vintages underwritten earlier in 2025 would temporarily impact Acima losses as they flowed through the portfolio. Key performance indicators, including early payment and delinquency trends, give us confidence that the adjustments we have made will drive loss-rate improvements from here. I will cover expectations for 2026 in more detail shortly. Let us move to slide 10 and review Bridget's results for the fourth quarter. Bridget finished the quarter with approximately 1,600,000 paid subscribers, which was a nearly 30% increase from the year-ago period and a 7.4% increase sequentially. Hal Khouri: ARPU, or average revenue per user, was $14.15 on a monthly basis, Hal Khouri: a nearly 10% increase from the fourth quarter in 2024 and a 3% lift sequentially. Bridget originated approximately $45 million in cash advances in the fourth quarter. That is up 19% year over year and nearly 4% sequentially, reflecting the value that consumers are discovering with not only the product offerings, but also the transparent subscription-based pricing model. For the fourth quarter, Bridget's instant cash loss rate was 3.5%, which was up 70 basis points from the year-ago period, primarily due to expansion into new profitable user segments and the impact of a consumer that remains under pressure. Bridget recorded $64.6 million of revenue for the fourth quarter, which represents an increase of 41.5% from the year-ago quarter. Subscriptions were 68% of Bridget's fourth quarter revenue, with expedited transfer fees and marketplace income representing the balance. Bridget adjusted EBITDA was $11.1 million for the fourth quarter, representing an adjusted EBITDA margin of 17.2%, an increase of 110 basis points sequentially. Let us move to the Rent-A-Center results starting on page 11. As you will recall, in late 2024, Rent-A-Center tightened underwriting standards while strategically limiting certain product categories that typically experience higher risk metrics in challenging environments. While these changes weighed on top-line performance in 2025, especially in the first half of the year, the segment proved its resiliency and the success of these adjustments in the second half of the year. In the third quarter, we guided that same-store sales would return to flat to positive in the fourth quarter, and we are pleased that the team achieved this goal. Same-store sales increased 80 basis points in the fourth quarter, which was the first positive quarter of same-store sales since 2024. Rent-A-Center recorded nearly $480 million of revenue in the fourth quarter, which was flat compared to the year-ago quarter, an improvement from a 4.7% year-over-year decrease in the third quarter. Ultimately, those adjustments from late 2024 helped manage Rent-A-Center's loss rate, which improved year over year in both the third and the fourth quarters as the portfolio flowed through. The loss rate for the fourth quarter finished at 4.9%, down 10 basis points from the year-ago period, in line with the guidance given on our prior call. Rent-A-Center's adjusted EBITDA was $69.2 million, down approximately 13% from 2024, while Rent-A-Center's adjusted EBITDA margin was 14.4%, down 230 basis points year over year, due primarily to the impact of certain expense benefits that positively impacted operating expenses in the prior-year period. For Rent-A-Center, 2025 represented a year of stabilization that sets the segment on a promising path moving forward. Next, let us cover our liquidity and capital allocation priorities on slide 12. Our business has a proven and long track record Hal Khouri: Our cash flow generation trended closer to historic, finishing the year with approximately $180 million of free cash, Hal Khouri: above the midpoint of our guidance. This represents an increase of $132 million year over year and exceeds even 2023 levels by over $30 million. Net cash provided by operating activities was approximately $306 million, an increase of over $200 million year over year and due in part to benefits associated with the bonus depreciation provision tax legislation last year. I will say more about our expectations for 2026 in a moment. But we anticipate cash flow to continue to improve in the year ahead. Regarding liquidity, as you will recall, the company leveraged its balance sheet to address the upfront cash portion of the consideration for the Bridget acquisition in January 2025. This decreased the company's ABL availability and resulted in approximately $312 million of liquidity at the end of the first quarter. We are pleased that liquidity improved by year end, reflecting in part the company's refinancing of its Term Loan B in the third quarter. As of December 31, between our cash on hand and revolver availability, liquidity was $358 million. Next, let us take a moment to reiterate our capital allocation priorities, which include reinvesting in the business and funding organic growth, delevering debt on the balance sheet, and supporting our shareholder dividend distributions. The company will also consider executing opportunistic share buybacks based on market conditions and funding constraints. And while we continue to remain open to strategic corporate development opportunities as they arise, our current expectation is to focus on organic growth in the near term through our expanded portfolio of products and services across the enterprise. These remain our main priorities entering the new year, and I will now expand on our approach to each. First, in 2025, we made investments that bolster our ability to serve our millions of customers efficiently at an increasing scale, representing a meaningful growth engine for our business. This included approximately $67 million of CapEx, reflecting investment in our technological infrastructure, data modernization initiatives, and improvements to our omnichannel customer experience. As we look ahead towards 2026, we expect to continue deploying capital towards investments in our enterprise technology and digital capabilities across segments. Additionally, Upbound's robust free cash flow allows us to sustain a strong dividend alongside other business priorities. Our dividend remains integral to our strategy for returning capital to shareholders. Turning to leverage, at year end, our net leverage ratio was approximately 2.9 times, above our leverage ratio of 2.7 times at the end of the prior year due to the acquisition of Bridget in January 2025, but slightly below our recent peak of 3 times at the end of the second quarter. With higher free cash flow and adjusted EBITDA growth expected in 2026, as well as consistent focus on deleveraging, we are targeting a leverage ratio in the 2 times range over the long term, with additional progress expected throughout 2026. We are also frequently asked about share repurchases, especially given our strong cash position, free cash flow generation, and recent trading levels. Our team has evaluated share repurchases over the past few months and while compelling, we have to date opted to prioritize our commitment to leverage reduction. That said, we will continue to evaluate opportunistic share repurchases in the year ahead. And it is worth noting that our expectations for leverage ratio improvement over the coming quarters should enhance the company's ability to return additional capital to shareholders depending on other opportunities to deploy that capital. And finally, following the Bridget acquisition and our focus on integration, we do not currently have any near-term plans for M&A. Our capital structure is flexible and we will be ready if the right combination of value and strategic fit arises. Before turning to 2026 guidance, I would like to provide an update on the progress we have made regarding a number of our legal and regulatory matters. At year end 2025, our estimated legal accrual on the balance sheet was $72 million. This accrual is primarily tied to previously disclosed matters we are now expecting a near-term resolution and reflects what we believe are the ultimate cash amounts that we expect to pay as part of the settlement of those matters. The McBurney class action is awaiting a final court approval on the settlement. And for the multistate attorneys general matter that has been ongoing since 2021, we believe we are nearing a nonbinding agreement in principle with the Executive Committee regarding the primary monetary and injunctive terms of potential settlement. We are actively engaged in discussions with the objective of finalizing the multistate settlement agreement in the near term, although any final binding settlement cannot be assured. Our 10-Ks filing will provide more details on both matters. Let us shift to our financial outlook. In this external operating environment, we expect the near- to mid-term horizon will continue to be challenging and characterized by continued evolving domestic economic and monetary policies. Uneven macro factors that pressure our core consumer discretionary income and demand levels, but also tend to make our range of flexible financial solutions even more relevant to these consumers. This outlook also assumes a normalized tax season and maintaining our conservative underwriting posture throughout the year. At Acima, we expect continued growth and opportunity. Our team is committed to profitably expanding GMV through several avenues, including by acquiring new retail accounts through a robust business development pipeline, as well as enhancing productivity amongst our existing merchant base. Acima will also focus on leveraging its customer relationships and data to deepen connections while boosting engagement and lifetime value. We will do this by expanding our direct-to-consumer marketplace and our virtual lease card as Sami described earlier. Finally, Acima's loss rate is expected to benefit from continued disciplined and targeted underwriting and the flow-through of those challenging 2025 customer vintages I mentioned earlier. Taken together, we expect 2026 GMV and revenue to increase mid-single digits year over year, while adjusted EBITDA margins should remain in line with 2025 and losses stabilizing in the 9.5% area for the year. Turning to Bridget, we expect the segment to maintain a strong growth trajectory in the new year. Bridget's value proposition is especially relevant in today's economy, with more consumers appreciating the flexibility and value of Bridget's instant cash products and its other financial wellness tools. That is why the segment remains focused on refining its marketing efforts and rolling out new products and features that further meet the evolving needs of its users. Through continued innovation in financial health and liquidity tools, Bridget aims to serve its customers more frequently and with even more relevance, strengthening the business' long-term competitive positioning while reinforcing the segment's role as a high-growth engine in Upbound's portfolio. As a result of these efforts, we expect Bridget to deliver annualized revenue growth of over 30% in the $265 million to $285 million range and an adjusted EBITDA in the $50 million to $60 million range. Although the figures are trailing our initial estimates from the 2024 acquisition, this variance is impacted by the extended timeline required for launching new products and obtaining necessary underwriting and product insights for iteration and improving in a challenging macroeconomic environment. Despite these factors, we remain optimistic about Bridget's future financial performance. We continue to support product design, marketing, and infrastructure development to drive growth. Bridget is committed to ongoing product innovation and to prudently manage the scale and timing of new rollouts to navigate the current economic uncertainties, while testing additional marketing initiatives to showcase the anticipated levels of economic performance of the portfolio. At Rent-A-Center, 2026 priorities will include a focus on customer-driven growth, as well as improvements that modernize and unify the digital customer experience. The business will leverage the force of its expanded digital presence and its national store footprint to focus on driving productivity, all while continuing to focus on capital efficiency and disciplined cost management. As a result of the Rent-A-Center team's efforts over the past year, we believe that trends have stabilized and the business is poised for modest top-line growth in the coming year, with full-year 2026 revenue expected to be flat to positive relative to 2025 and with adjusted EBITDA margins in line with 2025. At the Upbound level, our corporate costs are expected to be roughly flat to 2025 as a percentage of revenue, at approximately 4%. We expect the tax rate to be slightly higher than 2025, in the 26% range, with an average diluted share count for the year of approximately 59,400,000 shares. Taken together, our consolidated outlook for 2026 includes a revenue range of $4.7 billion to $4.95 billion, an adjusted EBITDA range of $500 million to $535 million, and fully diluted non-GAAP earnings per share of $4.10 to $4.35. The company expects to increase free cash flow to approximately $200 million in 2026. This growth is expected to be primarily driven by enhanced profitability and the accelerated tax depreciation benefits from the One Big Beautiful Bill Act, projected to augment the company's cash flow by around $100 million. This guidance is inclusive of a payment outflow of $72 million in non-ordinary course legal and regulatory settlements as previously discussed, including the largest portion of that amount for the multistate matter. And it assumes relatively flat CapEx spend to support business growth initiatives. These factors position Upbound favorably to advance its capital allocation priorities as we focus on delivering compelling and sustainable returns for shareholders. In regards to the first quarter, each of our segments will navigate seasonal and macro factors including the start of a tax season. Based on what we have seen to this point, we expect consolidated revenue to be $1.16 billion to $1.26 billion and adjusted EBITDA to be $120 million to $130 million. We expect non-GAAP EPS to range from $1.05 to $1.15 compared to $1.00 a year ago. With respect to loss rates, we expect Rent-A-Center's lease charge-off rate to remain flat to slightly higher sequentially. Acima's lease charge-offs should improve sequentially, finishing the first quarter in the mid-9% area and remaining in that range over the course of the year, while first quarter GMV should be relatively flat to the prior year, reflecting the tightening we have undertaken to keep lease charge-offs in our target range. Bridget's net advance loss ratio remained in the 3% to 3.5% range in the first quarter. Now as we wrap up, I would like to emphasize a couple of points that Sami mentioned earlier. In 2025, we made substantial progress on our key strategic priorities. For over five decades, we have provided accessible and flexible lease-to-own solutions to millions of underserved consumers. In 2021, we added further scale by significantly expanding into higher growth digital, technology-driven lease-to-own channels through our Acima acquisition. Now with Bridget, we have added in-demand scalable digital financial health and liquidity tools that expand our growth opportunities even further, and our ability to support our core customer when and where they need us most. These expanding complementary products and capabilities make our platform even more relevant. Especially in today's economy, when consumers are looking for innovative solutions that improve their financial lives. Our consumers' needs and expectations are always evolving, and in 2025, we enhanced our ability to meet those needs today and in the future. In 2026, we will continue to prudently introduce relevant solutions with scalable growth opportunities, both online through expanded digital capabilities and in store at our over 2,200 retail locations across the United States and Mexico. For our stakeholders, we remain committed to creating long-term sustainable value by building off of our strong financial foundation, allocating capital thoughtfully, and responsibly growing our business through our platform of connected financial products and services. We look forward to delivering on our goals again in 2026 and continuing the momentum we have built across our brands. Thank you for your time this morning. Operator, you may now open the line for questions. Thank you. If your question has been answered, and you wish Operator: to remove yourself from the queue, please press *11 again. Our first question comes from Robert Kenneth Griffin with Raymond James. Your line is open. Robert Kenneth Griffin: Good morning, guys. Thank you for taking my question. I guess, first, part of the question is just trying to unpack maybe the guidance a little differently or look at it Robert Kenneth Griffin: a little differently and understand it. If you take the 1Q guidance midpoint, you are up in, you know, call it 10% EPS, but then the year is only up 1% at the midpoint. So what is happening from, like, the seasonality of the year or something that is driving that? There are some cost pressures developing, or I am just trying to figure out kind of how the year is playing out. Does that make sense? Sami B. Sulaiman: Good morning, Bobby. Yes. Thanks for the question. It makes sense. First thing I would say is you have a full benefit of a full quarter of Bridget being in the numbers. So that is last year in 2025. Recall, we closed the acquisition at the end of January, and so you only had two-thirds of the quarter with Bridget on our books. So that is first and foremost. And then, yes, the benefit of coming into the year with a stronger portfolio, both on the Rent-A-Center side and still growing on the Acima side, should flow into our EBITDA numbers for the first quarter. So nothing that I really want to point to in second, third, fourth quarter that we would say is surprising from a or unusual, I guess, for the rest of the year. But the big thing is for the first quarter, I think, is the Bridget acquisition being for the full three months. So that would— Hal Khouri: Yes. No worries. It is Hal here. Just to also tack on there a little bit as well. So, you know, we have got some seasonality happening through the course of the full year. So, you know, Q1 is typically a bit stronger, and then Q2, Q3, you know, we have got some seasonality that brings that down a little bit. So just a little bit of movement there at play. Robert Kenneth Griffin: Okay. And then, and then, Sami, to dive into the second part, you know, it is a good callout on the one month to Bridget, but, like, the strong portfolio momentum coming into the year, I mean, do you see anything today from the customer base or something that would, you know, imply that that would not continue to build? Or you would not continue to be successful? And I understand the idea of keeping some conservatism baked in the guide, and I truly appreciate that. But just, you know, I am trying to gauge between the strong momentum entering the year and then something slowed. It does not seem like something has slowed for that part of the equation to actually not be as powerful in the remaining nine months. Hal Khouri: Yes. Hey, hey, Bobby. Maybe I will play in to Sami here. So, you know, we did, as you might recall, tighten up credit prudently towards the back half of the year. You know, one, just kind of given experience that we were undertaking there. Prominently in our Acima business, I would say, as well as what we are seeing in terms of broader macroeconomic environment. So that credit tightening likely will manifest itself through the first quarter or two of this year. And then, you know, subject to, you know, environmental conditions at that time, you know, loosening up the portfolio towards the back end of the year as some of that credit tightening would have allowed itself to kind of flow through the business in the earlier part of the year. Notwithstanding the jump-off point that you are referencing? Robert Kenneth Griffin: Okay. Makes sense. I appreciate it. Sorry to be so granular, but it was just the shape was giving me some questions. I guess, secondly for me, it is just on Bridget. You know, you kind of trimmed a little bit of the outlook Robert Kenneth Griffin: from original expectations, talked about the delay in new products. Can you maybe just expand on that? And kind of what is driving that? Has stuff changed regulatory wise? Is it just, you know, just something that maybe we did not quite fully understand or get fully taken into account originally? And then the second part of it on Bridget is just the deposit side has been kind of the underwriting and how that is different from your core business. And I have asked this before, but just curious on, you know, that integration and where that can go and, you know, when you can start seeing that kind of benefits across the enterprise more? Sami B. Sulaiman: Yes. Bobby, this is Sami. I will touch on Bridget generally and try to touch on both of your questions. First and foremost, obviously, pleased with the performance throughout the year. As we have highlighted really every quarter this year and including in the fourth quarter, we expanded revenue by 41% year over year, subscriber growth of 29%, and then ARPU up almost 10% in the quarter. And for the year, coming in above our expectations really from an EBITDA contribution standpoint. So really strong performance. And as I said in our prepared remarks, we are still very excited about the future with Bridget. As far as the guide for 2026, revenue of $265 to $285, there are a couple things that are driving that. First, I would highlight just lower year-end subscribers kind of coming into the year, you know, as we saw that little softness in the fourth quarter, so we kind of bled that through the forecast. We talked about a little bit of a delay in some of our new products that we rolled out, started late 2025. We were hoping to get that out sooner in the year and by now have that kind of fully launched into 2026. So we are a little bit delayed on the new product front, as well as our marketing dollars did not stretch as far as we had hoped to stretch in the fourth quarter. And then as we also said, the macro uncertainty—let me touch on the macro piece of it—that uncertain market landscape or the macro landscape did give us some pause and does give us some pause to really aggressively roll out some of these new products or our existing products to new audiences. We want to be very cautious just like we are in Rent-A-Center and Acima around our loss profile and kind of judging where the consumer is. And so really focused around being very disciplined and profitable in our growth objectives for 2026 across the board. We would love to maximize EBITDA dollars. We are focused on maximizing EBITDA dollars on all of our segments. But at the same time, we are really focused around, you know, profitable and responsible growth. So, you know, on the new product side, as I have mentioned, line of credit, we were hoping to have it rolled out a little bit faster. You know, we had some back and forth around getting our bank partner to approve the product. I think, you know, it has been well documented last year around some of the very public bankruptcy around bank partners, and, you know, our bank partner, even though that was not who we were dealing with, it is not our bank partner, but there was a domino effect across the industry and really around fintechs generally around slowdown of new products rollouts, just given some of that uncertainty with the bank partners. So the good news is we rolled it out. We have been able to put in some new features in December and in January, and now that product line of credit product, you know, because it is a little bit longer tenured product than our instant cash product, six to nine months, now it is a matter of just seeing how performance comes in, tweaking it, and then making sure that we are ready for the rollout. So a combination of things that has caused us to slow down, but it is a shift, I would say, from 2026 to 2027. The opportunity is still very much in front of us. We still see a lot of opportunity with the cash flow underwriting, and maybe that is a good segue into your other question around where we are from integration standpoint. I would point you back to, you know, at the beginning of when we announced the acquisition, we said that we were going to have a pretty light touch around integration, and that has been the case. We bought Bridget for their innovation, for their product roadmap, and their pipeline of new product rollouts. And the last thing we wanted to do was slow them down through the acquisition. And so that is still the case. We have done some things around, you know, cross selling around some of the marketing and some of the email campaigns and some of the text campaigns, but I would say it has been fairly light touch. We have not done any of the data integrations that we plan to do. We have not really done any system integrations outside of some accounting things. And so all that is on the come. None of that is in our forecast for 2026. We will start making real plans for that by the end of the year to hopefully kind of build that foundation for growth in 2027. So I would say very early stages, but an intentional integration plan. Robert Kenneth Griffin: Thank you. Robert Kenneth Griffin: Appreciate it. Best of luck here on 2026. Sami B. Sulaiman: Thanks, Bobby. Thanks, One moment for our next question. Our next question comes from Vincent Albert Caintic with BTIG. Your line is open. Vincent Albert Caintic: Hey, good morning. Thank you for taking my questions. A lot of great detail already. First, I wanted to focus on Acima. So appreciate the guidance for, I think, full-year GMV, mid-single year-over-year growth. And I think the first quarter is flat— Vincent Albert Caintic: I am sort of wondering if you could maybe help us with the cadence of growth. It sounds like maybe the second half of the year, we should be expecting that you can— Vincent Albert Caintic: greater acceleration. And then if you can talk about if I remember correctly, it was a particular cohort of GMV that you had to tighten up on. Is there any sense that you could give us if you were to exclude that cohort where you Vincent Albert Caintic: where underlying GMV has been growing so far? Thank you. Sami B. Sulaiman: Vincent, thanks for the questions. I will start and Hal is welcome to chime in. As far as the GMV trends, let me answer your question directly, then I want to take a step back and highlight a couple of things that we saw really throughout the year and then in the quarter. But I think as far as the cadence goes for GMV, I think the first half of the year will be relatively flat, consistent with what we guided for the first quarter. And then we kind of get back to Acima's norm as we lap some of the changes that we made in the second half of the year, and that kind of evens out into the mid-single digits for the year. So from a cadence standpoint, I think we will lap the changes we made sometime in the third quarter and then obviously in the fourth quarter. So you will see an uptick and hopefully return back to the low double-digit growth in the second half of the year, but that is how you get to kind of the mid-single digits for the year. As far as just maybe some highlights go for Acima, I want to point out two things around GMV that were really fantastic developments. One, we talked about, which was direct-to-consumer channel for us. When we talked about some of the strategic objectives coming into 2025, we talked about shifting and adding focus into the customer, not just merchants are always going to be part of our bread and butter strategy with Acima, but we also wanted to take a look at the consumer and make sure that we viewed it kind of from both lenses. And growing the direct-to-consumer channel by 100% this year, fantastic, leveraging our AI leasability engine, and getting it to be 10% of our GMV in the fourth quarter. With still plenty of room for upside there. We are just now getting started with our virtual lease card program. We are in pilot phases there, and that should continue to benefit us going forward. And then returning customers, you know, as we talked about focusing on the customer and the direct-to-consumer channel is a returning-customer channel for us. Our returning customers are up to 45% of GMV in the fourth quarter, which is up from kind of the mid-thirties last year. So we are able to generate more GMV from customers that we know well. GMV per customer in the calendar year 2025 was up 5.5%. And the number of transactions that our returning customers interacted with us was up 15%. So the direct-to-consumer channel really gives us a lot of LTV, a lifetime value for our consumers, and should really help us continue to grow as we add more and more merchants to the lineup. As far as normalizing for underwriting changes, that is a tough one to answer, Vincent. We are constantly making changes to underwriting day in, day out. Obviously, what we did through the second, third quarter last year was a little bit more broad based than what we typically would do. But it is hard to quantify how much of the guide is because of the changes that we made just given mix shifts, consumer mix shifts, and uncertainty in the market. But as you can tell, I mean, we have been on a really good run with Acima growing GMV. And being growing in the fourth quarter, but at a different clip, is a big function of the underwriting changes as well as just consumer deterioration and continued consumer stress. So hard to really normalize for the changes that we made. Hal Khouri: And maybe I will just bolt on here, Vincent. So we continue to invest overall in the business. But, you know, as it relates to Acima in particular, as Sami had referenced, continue to put dollars into digital technology and transformation and enhancing that customer and merchant experience. So, certainly, those are going to be key initiatives for us in 2026 as well. Vincent Albert Caintic: Okay. That is very helpful detail. Thank you. Switching to Bridget. So you are at your one-year anniversary of acquisition. You talked about product rollout and so forth, what you are expecting in 2026. I am sort of wondering, you know, from that initial 2025 when you put the deck out on your expectations, kind of where are we in terms of the roadmap of what you are expecting from Bridget? How much more can you do? You say you have a light touch in terms of the integration. Perhaps, you know, where could you see that over time? Maybe not putting it necessarily just on 2026, but your kind of the evolution of your views for the long term. Thank you. Sami B. Sulaiman: Sure, Vincent. Yes. Look, as I said, everything that we talked about when we made the acquisition in December 2024 and everything that we highlighted since then is still very much part of the plan. And us integrating their data insights, their technology, even just their process—you know, some of the things that we are doing now with our growth organization really mimics a lot of the Bridget model and how we go around thinking about innovation. But the cash flow underwriting attributes that they generate and they look at are going to be game changing for Rent-A-Center and Acima at the appropriate time. You know, we are doing things to—again, light touch—but we are doing things to try to learn as best we can on how do we approve more customers, how do we market to our customers more effectively, given some of the insights that we have, and we think about what we are trying to do really across all of our segments around personalization. I mean, that is going to be the future for us is to really be smart around personalizing our offers, personalizing our inventory purchases on RAC, and putting those promos in front of the right customers at the right time. And I think a lot of the data insights that we get from the Bridget model are going to allow us to do that. So, you know, even though the product rollout and the pipeline is a little bit delayed given the things that I mentioned earlier, they are still on the come. You know, the line of credit product, as we said, is in pilot phase. There is a lot of demand for that product. We just want to make sure that we do not overextend on losses, and we understand kind of the performance of that product before we really launch it. So a little bit delayed, but still very much excited about the opportunity. If you think about the midpoint of the revenue guidance that we just gave, you are up 25% on a full-year basis, up 30% from a contribution standpoint. So—and generating, you know, high teens to low 20% EBITDA margin. So the business is definitely performing. Some of the higher growth items are shifted between 2026 and 2027, but we are building a foundation for long-term growth and we are still very excited about the acquisition. Vincent Albert Caintic: Perfect. Very helpful. Thank you. Operator: One moment for our next question. Operator: Our next question comes from Kyle Joseph with Stephens. Your line is open. Kyle Joseph: Hey, good morning, guys. Thanks for taking my questions. Kyle Joseph: Just want to Kyle Joseph: kind of walk through tax refund expectations. I know it is Kyle Joseph: early in the season. We have seen a lot of headlines about refunds being elevated this year, but kind of walk us through the assumptions you have for first quarter, really on the Acima and Bridget side of things. Obviously, we know well how that, how tax refunds and potentially an outsized refund season impact RAC and Acima, but kind of walk us through your assumptions on Bridget for the first quarter in particular. Sami B. Sulaiman: Sure. Happy to, Kyle. Thanks for the question. So as you said, still very early on tax season. They are a little bit delayed, I would say, from typical years. But they are right around the corner. So the guide assumes more of a normalized tax season. As you referenced, the range of people have said that they are going to be up 10% to, I have seen, 30% range. And I think if they are in the lower end of that, 5%, 10% increase, it will have some impact but not a lot. But if it is, you know, up 30% or so, then I do think it will have a meaningful impact to us and really across the board between all three segments. Generally speaking, when you put more cash in our consumers' pockets, it is going to be a good thing for all of us. But in the short term, what I would say is if we do see that big tax refund, you will see higher revenue in the first quarter for both Rent-A-Center and Acima. But it will come at a lower gross profit margin. So even though you definitely will clean up credit and will be positive, you will have to replenish that, and so it puts a little bit more pressure on us to make sure that we convert some of those payouts into new leases. But generally speaking, you will see higher revenue and lower gross profit impact. And with Bridget, you know, typically in the first quarter, just seasonally speaking, you will have lower subscriber growth given people are with cash. You will see higher profitability levels in the first quarter and lower losses. So very similar from that standpoint. And then kind of post tax season, you will start seeing a ramp-up both in subscriber growth as well as our marketing spend to kind of match the seasonality there. So early on, but look. If it ends up being a lot higher than what we guided to, then that is great for our consumers, and we will be ready to market to them on getting their second, third, and fourth leases. Kyle Joseph: Great. Really helpful. And then just the follow-up for me in terms of the outlook for RAC, we understand that the second half benefited, obviously, lapped some underwriting changes. And it sounds like, you know, some successful marketing efforts. You know, but talk about some of the macro puts and takes on the RAC business and how that is influencing your outlook into 2026 and beyond? Thanks. Sami B. Sulaiman: Thanks, Kyle. Yes. Look, Rent-A-Center has had a really strong end to the year from a pretty volatile first half of the year. If you think about the sequence in same-store sales being down 4% in the second quarter, down 3.6% in the third quarter, and then really challenging the team to make it flat, and they end up growing the portfolio and grew the same-store sales by 80 basis points. So quite a turnaround from the first half of the year, and we feel like, you know, on a same-store sales basis, we are poised to be flat to slightly positive in 2026. And we were able to do that with losses coming in slightly better year over year, down 10 basis points. Delinquencies are stable under 3.5%. EBITDA margins normalized in the fourth quarter this year compared to where they were last year, but still hit our 15%, our mid-teens number for the year, and we expect that to continue into 2026. So very pleased with the team's execution in a very difficult environment. We talked about, you know, the consumer and kind of where that is. But we feel really, really good about where we are from an inventory standpoint, from a supply chain standpoint, from an e-commerce standpoint. We have got a lot of things in the works with the growth organization around being smarter about how we interact with our customers. They are all in the future. We feel really good about that segment. It really turned the business around throughout 2025. And if you look at the portfolio value ending the year, it was up almost 11% year over year. So again, a really strong fourth quarter, really strong execution on the Rent-A-Center side. Kyle Joseph: Great. Thanks for taking my questions. Operator: Thanks, Operator: One moment for our next question. Our next question comes from Bradley Bingham Thomas with KeyBanc Capital Markets. Bradley Bingham Thomas: Good morning. Thanks for taking my question. I wanted to follow up on the Acima parts of the business and the GMV outlook. And, Sami, just wondering if you could talk a little bit more about Bradley Bingham Thomas: category performance, how much that has played a role. And how do you think about the opportunity ahead to continue to add new merchants going forward? Bradley Bingham Thomas: Thanks. Sami B. Sulaiman: Morning, Brad. Thanks for the question. So, yes, I kind of take a step back and look at, you know, Acima's performance. You know, I think it is important to kind of maybe look back to 2024. You know, we grew that business percent that year. And on top of that, now we are growing at low double digits this year. So really strong performance across the board over the last two years. And in 2025, you know, applications were up 9%. Our approval rate was down 120 basis points. Average ticket was relatively flat. Our customers were up, as I mentioned before. We interacted with 1.3 million customers throughout the year. So very, very pleased in a pretty challenging environment with Acima's performance as well. As far as the categories go, I would say furniture, which is still our largest category, is still very much under pressure. Looking at it, really, all year has been flat to slightly down year over year. And so offsetting that, we have done a really great job of diversifying where the GMV comes from. We talked a little bit earlier around the direct-to-consumer channel, but as I look at just the broader categories, you know, jewelry was up over 20%. The auto business in wheel and tire was up mid-single digits. Now jewelry, we talked about last quarter around some of these cohorts that were underperforming. Fourth quarter was actually flat in jewelry, but still a strong year in 2025 that positions us for growth next year. And as far as the pipeline goes, look, very bullish around our ability to continuously add merchants and locations into our network. We have done really, really well in the small- and medium-sized businesses throughout the year. We do have some RFPs in the works that we hope that we win our fair share as we always do on the regional side throughout the year. So yes, very confident in our sales team's and our business development team's execution around continuously adding to our network and continuously diversifying where the GMV comes from. Bradley Bingham Thomas: That is really helpful. And if I could just squeeze in a follow-up regarding AI, you did touch on it in your prepared remarks, and I know there are going to be a number of opportunities. Bradley Bingham Thomas: But at this stage, if you tried to maybe rank where you think it can first be Bradley Bingham Thomas: you know, most impactful for you, is it what you are seeing on the revenue or new customer side of things, or the efficiency side, or the underwriting discipline? Where do you see the biggest bright spots for the impact of AI for you all? Sami B. Sulaiman: Brad, so it is all of the above. I think you touched on it almost in the right order, I think. We are—the biggest thing that I can point to is the leasability engine at Acima. I mean, we talked about the direct-to-consumer channel. What unlocked that GMV for us would be being able to basically in real time determine if the product that is in the cart is lease eligible or not. And AI is the feature to do that. So very much integrated in our innovation strategy. The core of our innovation strategy, we are trying to do it around the consumer, and we are already doing that both through the Rent-A-Center business and the Acima business, and Bridget for that matter, just through, you know, generative and the GenAI. We are, you know, establishing different tests and pilots and use cases around how do we interact with customers, how do we understand where the customers are shopping and what they are interested in? And so as we think about kind of rank ordering where it is, it is around growth, revenue growth and customer interactions. Then, you know, underwriting. I think we are already doing a lot in the machine learning space and talked a little bit about integrating what Bridget is doing into our other business. So that will also be, you know, driven by AI functionality and automation. And then probably last in that order is probably around efficiency. We are rolling that out to all of our coworkers and dabbling with that, but it probably starts with revenue growth and then ends with the efficiency piece. Bradley Bingham Thomas: Very helpful. Thanks so much. Operator: One moment for our next question. Next question comes from Hoang Manh Nguyen with TD Cowen. Your line is open. Hoang Manh Nguyen: Thanks, guys. I just have a question on Hoang Manh Nguyen: Bridget. So I think at the beginning, when you guys announced the deal, Hoang Manh Nguyen: you guys were calling for an acceleration in revenue growth this year versus 2025. Given some of the delays that you mentioned as well as, I guess, maybe subscribers coming in a little bit below what you had previously expected. Can we sort of expect Bridget to accelerate this year, and if so, what would be the cadence throughout the year as you guys continue with your cross-sell efforts? And then one of your competitors also recently launched a, I guess, cash advance feature as well. It seems a success. But how do we think about the competitive landscape for Bridget's offering at this moment? Thank you. Sami B. Sulaiman: Hoang, you broke up a little bit. Who did you say launched a product? Hoang Manh Nguyen: Oh, one of your competitors. I read yesterday. New cash app. So— Sami B. Sulaiman: Yes. I will just touch a little bit around just the competitive landscape, I guess, first, and then I will move over to the revenue and subscriber growth for 2026. Yes. Look. I think there are people who are announcing different versions of EWA products and instant cash- Sami B. Sulaiman: like Sami B. Sulaiman: products. And honestly, I am not surprised by that. There is a lot of demand for the product. People are seeing the same thing that we are seeing, that consumers, especially in this environment, need liquidity solutions. And it is not surprising that others are jumping along developing or acquiring similar products like Bridget, like we saw, you know, all the same rationale and merits that we saw. Others are seeing the same thing. So what we need to do is make sure that we continue to differentiate our products and to add value to our bundle to make sure that we retain the customers that we get from Bridget. And I think we have done that. And we will continue to do that with the product roadmap and the line of credit and the other things that we have talked about, really giving consumers more choice around the different pricing and different tiers that we have. That is the way that we will be able to differentiate Bridget and hopefully maintain the growth that we expect. As far as the cadence goes for 2026, as I mentioned, still very healthy top-line growth year over year. We are delayed on some of the new products. And again, being very cautious from a, you know, new audience and new product rollout given the uncertainty in the market. I think the acceleration seasonally is generally subscriber growth is going to be back-end loaded. I think the faster we are able to roll out the new line of credit will also have big impact on subscriber growth, and all those things are kind of pointed to the second half of the year as we get performance data around that product. Hoang Manh Nguyen: Got it. Thank you. Operator: One moment for our next question. Our next question comes from Eunice Sun with Jefferies. Your line is open. Eunice Sun: Hello. Thank you for taking my question. And congratulations, Hal, on joining the team. Eunice Sun: My question was around the margin across the segment. You mentioned there was some comp effect in the fourth quarter 2024. Eunice Sun: But looking at the gross margin per segment, it is Eunice Sun: still trending downward compared to past quarters and fourth quarter 2024 in RAC segment. And could you give a little color around if that is driven by any changes in product mix shift, consumer behavior, or is it more so on the inventory side? Any color will be great. Thank you. Hal Khouri: Yes. Sure. It is Hal here. Maybe I can touch on that. You know, in terms of the first piece of that, we did actually in Q4 of last year experience some in-period benefits on the labor cost lines associated with our worker compensation numbers. So that was an in-period benefit last year. And as we look at the comp year over year, obviously, this year, we would not have realized some of those in-period benefits. In terms of the margins overall, certainly, the competitive landscape, I think, is putting pressure across the board on margins on the top-line perspective. But also, if you think about our gross profit margins, certainly the cost of goods as well. You know, we are experiencing some cost shifts there, you know, with tariffs certainly playing into the equation as well. Our furniture category has been impacted by that as well. And so, you know, those in concert—you know, selectively top-line pressure competitively, us trying to garner additional volume, and being competitive with our pricing—tightening up on the credit side as well, I would say. So on the margin, you know, perhaps reducing some of the customer that would have been a bit higher in terms of the overall margin contribution as well on a top-line perspective. That and the overall cost of goods actually increasing period over period. So, you know, all of that being said, as we think about the outlook going into 2026, as Sami had mentioned, generally positive outlook in that respect, being more efficient, I would say, in terms of how we operate, looking at areas as some of those historical vintages flow through. We would expect, you know, some improvement through the back end of the year and expansion in overall margin and contribution there as well. Eunice Sun: Great. Eunice Sun: Really helpful. And in regards to some of the tightening actions throughout 2025, how should we think about the cadence of that unfolding in terms of credit or growth throughout 2026? Thank you. Sami B. Sulaiman: So, yes, I think we answered some of this as far as the cadence goes from a GMV standpoint. But look, on the underwriting side, losses—and Hal touched on it a little bit earlier—you know, delinquencies on both Rent-A-Center and Acima are in line with years past and at a very acceptable level. The changes that we made at Acima seem to be working as intended. The early performance indicators of the more recent vintages are much more in line with historical years. And so that is why we felt confident in guiding the first quarter and really the year for Acima to be in that 9.5% range. And so we feel good about peaking like we said we would in the fourth quarter at 10% and coming back into a more normalized range really throughout the year. Now it does come at a cost of GMV growth, and that will be impacting GMV for the first half of the year, then hopefully we rebound into more normalized levels in the second half of the year. And with Rent-A-Center, I think the same thing, pretty stable environment from our consumer standpoint. You know, no major changes that we see on the horizon from an underwriting standpoint other than our normal, you know, push-pull on some of the levers that we would do, and it has been stable. We are very comfortable operating in that 4.5% to 5% ZIP code from a loss perspective and generating mid-teens margin on that business. And with Acima, kind of the low- to mid-teens EBITDA margin. So losses seem to be stable, obviously, a very uncertain macro that we are dealing with here. But for now, we feel really good about our portfolio and the health of the portfolio coming into the year. Operator: One moment for our next question. Our next question comes from Anthony Chinonye Chukumba with Loop Capital Markets. Your line is open. Anthony Chinonye Chukumba: Good morning. I will keep this short, so you guys Anthony Chinonye Chukumba: get back to actually managing your business. Anthony Chinonye Chukumba: You have touched on this a few times, but I just wanted to clarify. The slowdown in Acima GMV, was that solely due to the credit tightening, or was there, you know, were there any other factors, like, any kind of slowdown in underlying demand for Anthony Chinonye Chukumba: furniture and appliances? Thank you. Sami B. Sulaiman: Morning, Anthony. Thanks for the question. Yes, I would say the majority of it was probably just intentional from our underwriting standards. There was some softness in demand going into the year—or sorry, into the fourth quarter, I should say—in the holiday season. So there is a part of it that is the macro. There is no doubt that furniture continues to be under pressure. I do not think that is unique to us at all, either Rent-A-Center or Acima. And I think that did, you know, have some headwinds in the fourth quarter. But as I said, we are very optimistic about our ability to continue to add merchants and add locations on the Acima side. And when furniture does come back, you know, we will still have all of those furniture retailers on our network. We will have all the diversification that we talked about, and we can then, you know, use that to feed the marketplace and direct-to-consumer channels. So, you know, right now we are managing losses the best we can, managing the underwriting in a pretty difficult environment, also through demand pressures, especially in our largest category. But once all that kind of clears, we will be in a really good position to have a lot of tailwinds, especially when you think about our ability to generate repeat business on the Acima side that I went through earlier on the call. That gives us a lot of confidence to continue to grow GMV. Anthony Chinonye Chukumba: Got it. Thanks so much. Operator: And I am not showing any further questions. I would like to turn the call back over to Sami for any further remarks. Sami B. Sulaiman: Thanks, Kevin. Thank you, everyone, who joined us today for an update on our Q4 performance and our outlook for 2026. I am thankful for the collective efforts of our exceptionally talented and dedicated coworkers and our merchants who helped us deliver 2025 strong results while setting us up for another transformational year ahead. We are grateful for your interest and support. We look forward to updating you all again next quarter on our continued progress. Have a great day, everyone. Operator: Ladies and gentlemen, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.
Operator: Good day, everyone. My name is Kehaylani, and I will be your conference operator today. At this time, I would like to welcome you to the EPAM Systems, Inc. fourth quarter and full year 2025 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, and if you have joined via the webinar, please use the raise hand icon now, which can be found at the bottom of your webinar application. At this time, I would like to turn the call over to Mike Rowshandel, Head of Investor Relations. Good morning, everyone. Mike Rowshandel: And thank you for joining us today on our fourth quarter and full year 2025 earnings call. As the operator just mentioned, I am Mike Rowshandel, Head of Investor Relations. We hope you have had an opportunity to review our earnings release we issued earlier today. If you have not, copies are available on epam.com in the Investors section. With me on today’s call are Balazs Fejes, CEO and President, and Jason Peterson, Chief Financial Officer. I would like to remind those listening that some of the comments made on today’s call may contain forward-looking statements. These statements are subject to risks and uncertainties as described in the company’s earnings release and SEC filings. Additionally, all references to reported results that are non-GAAP measures have been reconciled to the comparable GAAP measures and are available in our quarterly earnings materials located in the Investors section of our website. With that said, I will now turn the call over to Balazs Fejes. Thank you, Mike, and good morning, everyone. Balazs Fejes: It is a pleasure to be here with you all, and I look forward to seeing many of you again in just a few weeks at our Investor Day in Boston. Today, we are pleased to share another quarter of strong results as we close out a very successful 2025 and continue to execute our long-term growth strategy, further positioning ourselves to win in the AI-native era. We are confident of our unique differentiation and look forward to building on the momentum we created throughout 2025. At the start of last year, we noted that for us, it was going to be a year of transition. In fact, today marks my second earnings call and my very first year-end report, underscoring the fast pace at which we continue to operate and adapt to conditions both externally and operationally here at EPAM Systems, Inc. As we look ahead to 2026, we see a year of AI momentum marked by our clients’ ongoing shift in spending towards AI investments and strategic deployments. Importantly, we are expect to build on our growing momentum in AI-native services supported by our AI foundational services that enable clients to scale AI across their enterprises. These offerings are becoming a more substantial piece of our total services mix, illustrating our ability to capture higher volume and more strategic opportunities as AI investments accelerate across the market. Let me share why we believe EPAM Systems, Inc. is positioned to win this new AI-native services category. While we are seeing measurable productivity gains at scale, we are also seeing complexity dramatically increase at faster pace than we have seen in prior cycles. Clients are facing growing pressure to continue to invest in AI, and that means platform modernization, data, and cloud foundations, security, and critical AI-native upskilling. As a result, AI presents a favorable opportunity for EPAM Systems, Inc. within the build versus buy volume proposition. EPAM Systems, Inc. continues to be positioned in this sweet spot as we believe we are entering an age of building. With our internal AI-native engineering transformation nearly complete, we are now shifting to develop more verticalized AI-native business offerings and consultancies. This positions us to deliver AI strategy and execution to clients simultaneously, helping them build their own AI-native businesses and platforms. Before getting into details, I would like to quickly reflect on a few themes from the past year, which highlight our differentiated position and underpin our confidence as we continue to grow our revenue and improve our bottom line trajectory over the long term. First, we believe we have clearly demonstrated, and we are continuing to that we position to win in the AI-native engineering category. Our advantage comes from our highly differentiated engineering and AI-native talent, along with the tooling and workflows that enable us to deliver production-grade AI at scale. Notably, in Q4, we generated more than $105,000,000 in pure AI-native revenues, where we continue to see solid momentum and strong sequential growth. As a reminder, our AI-native revenues are defined across two groupings: number one, AI-native IP products, platforms, and solutions where AI was the core of the solution versus simple work accelerated by the use of AI tools; and number two, AI-led transformation initiative across the entire enterprise. Importantly, our definition excludes all the AI foundational services along with any AI-assisted work performed by EPAM Systems, Inc. employees within the software delivery life cycle. Looking ahead, we continue to see robust demand for our AI-native services and expect to scale these revenues in excess of $600,000,000 in 2026. Second, our developers and builders’ DNA, forged by over thirty years of experience in software product and platform engineering, prepare us incredibly well for this new super cycle. To stay ahead of the curve, we expanded our three-year AI readiness mandate to keep pace with advancing technology, new agentic delivery and new commercial models that help us meet our clients where they are, to enable their unique AI journeys. Even under extreme geopolitical and macroeconomic adversary have persisted or business model and brand of very high quality and execution and today give us a leading edge on AI strategy and delivery. Mike Rowshandel: At scale. Balazs Fejes: Third, we are supercharging our client-zero mentality by extending AI capabilities across our entire business. We have been pioneers, builders, and change agents in transforming the software delivery life cycle and advancing the AI maturity model with talent, IP, and the ways of working. Now we are adopting our go-to-market approach for a more AI-centric environment, focusing on industry and verticalized expertise and innovating engagement and commercial models to adopt new and emerging trends. We are transforming the way we engage with existing and new buyers, expanding our market growth opportunities across all regions and buyers’ personas. Our most recent announcement of Empathy Lab expansions demonstrate this AI-native momentum with our proven AI-native agency now expanding to help CMOs across North America become the growth architects for their businesses. We are bringing AI-powered creative talent, accelerators, and innovation frameworks to the business of marketing. We will be sharing much more on this at our upcoming Investor Day in March. Finally, our strategy is being validated by the market and our partners in significant way that underscores our unique AI-native capabilities. With Microsoft, we are thrilled to be named the 2025 Microsoft Innovate with Azure AI Platform Partner of the Year. With AWS, we were recognized as 2025 AWS Global Innovation Partner of the Year. With Google Cloud, we launched several advanced AI agents on Google Cloud Marketplace. Most recently, we announced a strategic partnership with Coursera to build and scale AI-native teams global enterprises. Beyond partnerships, our technical acumen is recognized by independent benchmarks. EPAM Systems, Inc.’s AIRON developer agent was recently ranked in the top five on SW Bench verified leaderboard, an industry-leading benchmark designed to evaluate large language models and AI agents on real-world software engineering tasks. Furthermore, Gartner has positioned us as a Leader in the Emerging Market Quadrant for Generative AI Consulting and Implementation Services, further solidifying our standing as a trusted guide in this complex landscape. Now let us turn to some Q4 highlights. Our fourth quarter results came in better than expected, marking another quarter of outperformance. In Q4, we delivered double-digit revenue growth including solid year-over-year organic revenue growth of 5.6%. Our underlying growth momentum remains broadly intact, with five of the six verticals growing year over year and four out of the six verticals growing organically. Notable standouts included financial services, emerging verticals, and software and high-tech. Across geographies, EMEA delivered strong year-over-year growth followed by the Americas and APAC. We continue to add talent across all key geographies. Now turning to the demand environment. Overall, the client sentiment remains intact with no material change over the past ninety days. AI continues to trigger both incremental and sustained demand and is driving positives in our pipeline. Based on our current visibility, we expect client budgets to remain relatively intact in 2026, compared to 2025, with a continued shift in spending towards scaled AI deployment. Even with the progression of AI towards larger programs, there is a growing emphasis on ROI and the need for scalable enterprise-grade solutions. While these larger programs naturally introduce a more mature procurement process, including RFPs, and the modest extension of sales cycle, it also represents a large opportunity for EPAM Systems, Inc. to deliver even greater value through bigger and more strategic, higher-impact initiatives—something we are observing in our sales pipeline today. Now turning to our AI progress. EPAM Systems, Inc. is uniquely positioned to guide clients through the market towards AI-native transformation. We continue to invest in people, accelerators, and advanced tooling to capitalize on our expanding growth opportunities. As a part of evolution to a pure play AI-native company, last quarter, we launched our AI Run Transform Playbook and frameworks, along with our AI-native business transformation offering. Together, AIRun for SDLCs and AIRun Transform are the building blocks for our IP-enabled go-to-market strategy, and I am pleased to say both are picking up early adoption in 2026. These frameworks and tools support the hundreds of AI-native projects we had active in Q4. In line with last quarter, between 60% to 70% have expanded from initial proof of concept into larger programs, a clear indicator of our ability to revenue. scale AI-native solution into production and convert early wins into more meaningful incremental. And highly connected to our AI-native services is our AI foundational services, which encompasses the critical AI readiness and preparation work where our clients are undertaking. Demand for these services remain quite strong and the size of this portfolio is already significantly larger than our pure AI-native revenue base. Once again, in Q4, we saw outsized growth in both our data and cloud practices compared to the rest of the business. Now turning to some client examples to illustrate the impact we are making. EPAM Systems, Inc. partnered with EBSCO Information Services to enhance software development processes using the AIRun Transform framework. EPAM Systems, Inc. played a critical role by providing AI guidance, helping to establish governance framework, and building an AI adoption dashboard to measure real-time performance metrics. Through each phase of the rollout, EPAM Systems, Inc. and EBSCO maintained a strong emphasis on measurable outcomes—code review lead time—using the dashboard to track metrics such as velocity, cycle time, AI impact, and productivity gains. In addition to measurable productivity gains, EBSCO also established a robust foundation for future continuous improvement in the use of AI development tooling. Bayer partnered with EPAM Systems, Inc. to develop an AI-powered pricing tool that optimized pricing strategies across 35 countries. Leveraging machine learning, the tool delivered €20,000,000 to €30,000,000 in incremental yearly profit, reduced analytics time by 10x, and provided advanced scenario planning capabilities. This collaboration transformed Bayer’s pricing processes, enabling smarter, data-driven decisions. We are also seeing compounding value of our long-term trusted partnerships with our clients like Zalando, where we are driving impact across data, analytics, AI, and cloud transformation. Our collaboration has yielded three significant outcomes. First, we have developed the pilot for a Gen AI powered stylist solution giving mobile users an interactive, highly personalized shopping experience. Second, leveraging our proprietary MigWiser tool, we rapidly migrated their mass data warehouse platform, which fuels their business intelligence, to Amazon Redshift. Finally, we built a sophisticated machine learning solution that combines automated tagging with intelligent oversight to solve the complex challenge of managing extended producer responsibility compliance. Lastly, we are also incredibly proud to announce a new multiyear partnership with National Geographic Society where EPAM Systems, Inc. has been designated as NatGeo’s preferred digital transformation partner. This collaboration is about far more than modernization. It is about utilizing innovative technologies to inspire the next generation of explorers and solution seekers. By leveraging our engineering DNA to modernize their nonprofit infrastructure, we are also helping NatGeo to engage global audiences through distinctive experiences that bridge the physical and digital worlds. Our efforts to lead in the age of AI and digital transformation are also being consistently recognized by the industry’s top analyst firms, validating our strategy and quality of our execution. Throughout 2025, we have been honored to receive several key leadership distinctions. For example, EPAM Systems, Inc. has been named the top IT vendor in Europe for application services and general satisfaction by Whitelane Research, for the third consecutive year, which included expanded coverage across categories, ranking first across multiple categories including application services general satisfaction, innovation, and service delivery quality. The report highlights EPAM Systems, Inc.’s commitment to delivering high-quality services and innovative solutions. This milestone reflects the trust and partnership of our clients and the dedication of our teams. Gartner recognized EPAM Systems, Inc. as a Leader in the Magic Quadrant custom software engineering, a testament to our deep-rooted engineering DNA. Furthermore, Gartner also named us a Leader in the Emerging Market Quadrant for Generative AI Consulting and Implementation Services, highlighting our early and impactful entry into this transformative space. Forrester positioned EPAM Systems, Inc. as a Leader in the Forrester Wave for modern application development services, reinforcing our strength in helping clients to modernize and innovate across their technology stacks. IDC MarketScape acknowledged our end-to-end capabilities by naming us a Leader in two critical areas: our third year in a row of recognition, CX Design Services and CX Build Services. This underscores our unique ability to not only envision, but also deliver world-class customer experiences. These recognitions spanning engineering, generative AI, customer experience, and application development affirm our position as a trusted partner for enterprises navigating complex transformations. They reflect the hard work and dedication of our global teams and unwavering commitment to delivering tangible, high-value outcomes for our clients. We see this as a strong validation that our integrated approach—from strategy and design to engineering and AI-native delivery—is what the market needs today. To close, our operating momentum exiting 2025 is strong as AI continues to be the net growth driver for our business. We are encouraged by our progress transforming our company, our go-to-market capabilities, and our offerings. The EPAM Systems, Inc. foundation we have built over the past several years—diversifying our global delivery model, enabling our entire organization with AI, and bringing meaningful solutions to market with our AIRun playbooks and underlining IP—position us to continue delivering sustainable revenue growth while also expanding profitability. Jason, over to you. Jason Peterson: Thank you, Balazs, and good morning, everyone. In the fourth quarter, EPAM Systems, Inc. generated over $1,400,000,000 in revenues, a year-over-year increase of 12.8% on a reported basis, exceeding the high end of our Q4 revenue outlook. On an organic constant currency basis, revenue grew 5.6% compared to 2024. We delivered another quarter of very solid year-over-year organic constant currency growth, reflecting our steady and focused execution throughout 2025. As Balazs mentioned, we continue to benefit from the momentum we have created across our AI-native and AI foundational services. One thing is clear. Clients need help in their AI transformation journeys, and our advanced engineering capabilities, AI assets, and strong delivery execution are helping clients address their most complex business challenges. Our growth this quarter was well balanced, reflecting our relevance and agility across our major geographic regions. Moving to our Q4 vertical performance, five of our six industry verticals posted year-over-year growth. As highlighted last quarter, Neoris and First Derivative revenues moved from inorganic to organic in November and December 2025, respectively. Financial services once again delivered very strong growth, up 19.8% year over year on a reported basis with 5% organic growth in constant currency. Growth was mostly driven by ongoing strength in insurance, banking, and asset management. Software and high-tech grew 18.1% year over year, driven by strong execution and broad improvement across large clients. Consumer goods, retail, and travel delivered 10.9% year-over-year growth, notably driven by retail and consumer goods. Life sciences and healthcare increased 2% on a year-over-year basis. Revenue growth in the vertical continues to be driven primarily by clients in life sciences and med tech. Business information and media delivered flat year-over-year revenue performance. Our emerging verticals delivered another quarter of strong year-over-year growth of 0.1%. On an organic constant currency basis, growth was 9.7%, primarily driven by ongoing strength in energy and telecommunications. From a geographic perspective, the Americas, our largest region representing 58% of our Q4 revenues, grew 7.6% year over year on a reported basis and 2.2% in organic constant currency. EMEA, comprising 40% of our Q4 revenues, grew 21.8% year over year and 11.7% in organic constant currency. And finally, APAC, making up 2% of our revenues, grew 0.6% year over year, and declined 4.3% in organic constant currency. Lastly, in Q4, revenues from our top 20 clients grew 7.3% year over year, while revenues from clients outside our top 20 increased 15.5%. Moving down the income statement, our GAAP gross margin for the quarter was 30.1%, compared to 30.4% in Q4 of last year. Non-GAAP gross margin for the quarter was 31.7%, compared to 32.2% for the same quarter last year. Relative to Q4 2024, gross margin in Q4 2025 was negatively impacted by higher variable compensation expense driven by our stronger second half performance. GAAP SG&A was 17.3% of revenue, compared to 17.4% in Q4 of last year. Non-GAAP SG&A came in at 14.5% of revenue, compared to 14.4% in the same period last year. GAAP income from operations was $149,000,000, or 10.6% of revenue in the quarter, compared to $137,000,000, or 10.9% of revenues in Q4 of last year. Non-GAAP income from operations was $230,000,000, or 16.3% of revenue in the quarter, compared to $208,000,000, or 16.7% of revenue in Q4 of last year. Our GAAP effective tax rate for the quarter came in at 24%, and our non-GAAP effective tax rate was 22.9%. Diluted earnings per share on a GAAP basis was $1.98. Our non-GAAP diluted EPS was $3.26, reflecting an increase of $0.42, or 14.8%, compared to the same quarter in 2024. In Q4, there were approximately 55,300,000 diluted shares outstanding. Turning to our cash flow and balance sheet. Cash flow from operations for Q4 was $283,000,000, compared to $130,000,000 in the same quarter of 2024. Free cash flow was $268,000,000, compared to free cash flow of $115,000,000 in the same quarter last year. We ended the quarter with approximately $1,300,000,000 in cash and cash equivalents. At the end of Q4, DSO was 72 days, compared to 75 days in Q3 2025 and 70 days in the same quarter last year. Share repurchases in the fourth quarter were approximately 1,200,000 shares, or $224,000,000, at an average price of $192.33 per share. Moving on to a few operational metrics from the quarter. We ended Q4 with more than 56,600 consultants, designers, engineers, trainers, and architects, reflecting total growth of 2.7% and organic growth of 2.2% compared to Q4 2024. In the quarter, we added approximately 500 delivery professionals. Our total headcount at quarter end was more than 62,850 employees. Utilization was 75.4%, compared to 76.2% in Q4 of last year and 76.5% in Q3 2025. Q4 2025 utilization was impacted by higher levels of vacation driven by the shift in delivery locations, as well as the introduction of juniors, who initially operate at lower levels of utilization. The addition of juniors is intended to improve our seniority index in 2026. Turning to our 2025 full year results, revenues for the year were $5,460,000,000, up 15.4% on a reported basis year over year. On an organic constant currency basis, revenues were up 4.9% year over year. GAAP income from operations was $520,000,000, a decrease of 4.5% year over year, and represented 9.5% of revenue. Our non-GAAP income from operations was $831,000,000, a growth of 6.7% compared to the prior year, and represented 15.2% of revenue. Our GAAP effective tax rate for the year was 25.3%. Our non-GAAP effective tax rate was 23.5%. Diluted earnings per share on a GAAP basis was $6.72. Non-GAAP EPS was $11.50, reflecting a 5.9% increase over 2024. In 2025, there were approximately 56,000,000 weighted average diluted shares outstanding. Cash flow from operations was $655,000,000, compared to $559,000,000 for 2024. And free cash flow was $613,000,000, reflecting a 94.7% adjusted net income conversion. And finally, share repurchases in 2025 were approximately 3,500,000 shares for $661,000,000 at an average price of $186.67 per share. Let us turn to guidance. Before moving to the specifics of our 2026 and Q1 outlook, I would like to provide some thoughts to help frame our guidance. We are encouraged by the underlying momentum of our business and the steady outperformance delivered throughout 2025. We step into 2026 with higher confidence in our long-term strategy and growth trajectory, supported by healthy client sentiment, a solid pipeline, and strong momentum in AI-native and AI foundational services. We see relative stability in overall client budgets, with a continued shift in spending towards build and strategic AI programs. Similar to last year, we are seeing some slowness in decision-making at the start of 2026, as clients finalize budgets and establish priorities for the year. Our organic constant currency revenues now include Neoris and First Derivative. As we noted throughout 2025, Neoris’ largest client headquartered in Mexico has been significantly impacted by a challenging economic environment, including the impact of U.S. tariffs. Revenues from this client will decline sequentially from Q4 2025 to Q1 2026, and then are expected to stabilize throughout the remainder of the year. The full year 2026 revenues from this client will decrease relative to 2025, and this decrease is expected to have a negative 1% impact on EPAM Systems, Inc.’s 2026 organic constant currency growth rate. In 2026, we remain committed to improving overall profitability, and specifically gross margin. Our guidance assumes that we will be able to continue to deliver from our Ukraine delivery centers at productivity levels similar to those achieved in 2025. Now starting with a full year outlook. Revenue growth will be in the range of 4.5% to 7.5%. Foreign exchange is expected to have a positive impact of 1.5%. Therefore, the organic constant currency growth rate is expected to be in the range of 3% to 6%. We expect GAAP income from operations to be in the range of 10% to 11%, and non-GAAP income from operations to be in the range of 15% to 16%. We expect our GAAP effective tax rate to be approximately 26%. Our non-GAAP effective tax rate will be approximately 24%. For earnings per share, we expect that GAAP diluted EPS will be in the range of $7.95 to $8.25 for the full year, and non-GAAP diluted EPS will be in the range of $12.60 to $12.90 for the full year. We expect weighted average share count of 54,400,000 diluted shares outstanding. For Q1 2026, we expect revenue to be in the range of $1,385,000,000 to $1,400,000,000, producing year-over-year growth of 7% at the midpoint of the range. Our guidance reflects a negligible inorganic contribution and estimated 4% positive FX impact during the quarter, producing an approximately 3% organic constant currency growth rate at the midpoint of the range. For the first quarter, we expect GAAP income from operations to be in the range of 7% to 8%, and non-GAAP income from operations to be in the range of 13.5% to 14.5%. Our Q1 income from operations guide reflects the impact of resetting Social Security caps, slightly softer revenues in the month of January as clients in certain verticals finalized budgets, as well as the negative foreign exchange impact. We expect our GAAP effective tax rate to be approximately 30%, and our non-GAAP effective tax rate, which excludes tax shortfall related to the stock-based compensation, to be approximately 24%. For earnings per share, we expect GAAP diluted EPS to be in the range of $1.32 to $1.40 for the quarter, and non-GAAP diluted EPS to be in the range of $2.70 to $2.78 for the quarter. We expect a weighted average share count of 54,700,000 diluted shares outstanding. Finally, a few key assumptions that support our GAAP to non-GAAP measurements for 2026. Stock-based compensation expense is expected to be approximately $202,000,000, with $53,000,000 in Q1, $53,000,000 in Q2, $48,000,000 in Q3, and $47,000,000 in Q4. Amortization of intangibles is expected to be approximately $69,000,000 for the year, with approximately $18,000,000 in Q1 and $17,000,000 in each remaining quarter. The impact of foreign exchange is expected to be an approximate $3,000,000 loss each quarter. Tax-effective non-GAAP adjustments are expected to be approximately $70,000,000 for the year, with $19,000,000 in Q1, $19,000,000 in Q2, $16,000,000 in Q3, and $15,000,000 in Q4. We expect tax shortfall upon vesting or exercise of stock awards to be around $4,000,000 for the full year, with an approximate $4,000,000 shortfall in Q1 and minimal excess tax benefits or shortfalls in the remaining quarters. Expenses associated with the 2025 cost optimization program are expected to be $14,000,000 in Q1 and $11,000,000 in Q2. And one more assumption outside of our GAAP to non-GAAP items. We expect interest and other income to be $12,000,000 for the 2026 full year, with $3,000,000 in Q1, $2,000,000 in Q2, $3,000,000 in Q3, and $4,000,000 in Q4. My thanks to all the EPAMers who made 2025 a successful year and will help us drive growth throughout 2026. Operator, let us open the call up for questions. Operator: We will now move to our question and answer session. As a reminder, if you have joined via the webinar, please use the raise hand icon which can be found at the bottom of your webinar application. When you are called on, please unmute your line and ask your question. We will now pause a moment to assemble the queue. Please limit your inquiry to one question and one related follow-up. Your first question comes from the line of Margaret Nolan with William Blair. Please unmute and ask your question. Hi. Can you hear me okay? Jason Peterson: We can, Maggie. Operator: Great. Thank you. I wanted to ask about the first quarter guidance Margaret Nolan: at the midpoint. It is a little bit lower than the full year organic revenue and margin guidance. So do you expect the year to build? And how is the visibility when we think about the larger deals ramping, bookings, pipeline, those types of factors? Jason Peterson: Okay. Let me talk a little bit about Q1, and then I will hand it to Balazs to talk about the remainder of the year. So I think probably the incremental piece of information that we received between our last earnings call and the one, obviously, we are doing today is that the Neoris’ largest customer was going to ramp down business between Q4 and Q1. Now we have met with them in their headquarters in Mexico, and we do think it stabilizes from this point forward. But we have kind of a mid-single-digit decline in their business between Q4 and Q1, and that probably is the biggest kind of incremental factor. Even with that, if we can run closer to the high end of the range, we are talking about a 3% or maybe somewhat better organic currency growth rate in the quarter. Balazs Fejes: Margaret, hi. This is Balazs. For the remaining quarters, I mean, I think we already have a very nicely built pipeline. And as we are seeing the opportunities arriving, we are actually seeing how that would be converting from it. We see very good traction in the European and the Middle East markets, which we feel that is going to be allow us to deliver on the year. Margaret Nolan: Okay. Great. Thank you. And then, Balazs, you had made a comment on wanting to bolster the vertical industry expertise. Are there investments that you need to make in sales or delivery in order to achieve this? And are those going to be material to the P&L? Maybe a few comments on how that will impact your competitive positioning as well. Balazs Fejes: So I think our current P&L reflects, or the guidance reflects, the investments which we are planning to make in 2026. Yes. We are prioritizing investment into business development and prioritizing developing, besides just AI, which is our biggest investment area, building out our industry capabilities and vertical accelerators and expertise themselves. Jason Peterson: Thank you. Operator: Your next question comes from Jonathan Lee with Guggenheim Partners. Please unmute and ask your question. Jonathan Lee: Great. Thanks for taking my questions. You know, last quarter, you called out an expectation of 2026 organic growth being faster than that of 2025. With that in mind, can you help us reconcile that commentary to the 2026 outlook that, at the midpoint on organic constant currency basis, is slower than what you delivered in 2025? Is that due to Neoris’ largest client? Are there any other factors there? Jason Peterson: Yeah. Jonathan, thanks for the question, and it is certainly a good one. And so you are right. I think we had 4.9% organic constant currency growth in 2025. The midpoint of the range would produce 4.5%. Since the last time we talked, as I told Maggie, we did get incremental information on the Neoris largest client. As I called out in my fixed remarks, we expect the decline on a year-over-year basis will have a negative 100 basis point impact on growth. So you have got the 4.5% at the midpoint of our range. Obviously, it would be 100 basis points higher on the rest of the business. I think the other thing that we are trying to do from a guidance standpoint is to make certain that we guide to what we can see today. We are not assuming improvement in environment. Clearly, we have got some opportunities that we talked about throughout the remainder of the year. And so we are clearly going to work to drive towards better, and we will update you on our progress throughout the year. Jonathan Lee: Understood. With that in mind, across the low end and the high end, can you help us walk through what is contemplated? How much go-get is still needed? And are there any verticals that you would expect to accelerate versus decelerate in the near to medium term? Balazs Fejes: Let me start with the verticals. We continue seeing very strong demand in financial services and energy. We also forecast, or expect, our life science and healthcare to gain momentum later part of the year, which is typically very much calendar dependent. So that is very, and clearly, high-tech and software and high-tech continues to be a growth area for us. In terms of between the low end and the high end, I think we are not contemplating anything like changing macro environment in order to achieve the high end of the range. Just like this year, we are expecting that we are going to winning the deals and some of the clients start accelerating expenditure in later quarters. Mike Rowshandel: Appreciate that color. Operator: Your next question comes from James Schneider with Wells Fargo. Please unmute and ask your question. Jason Peterson: Hi, guys. Thank you. So I wanted to come back to James Schneider: some of the commentary around the elongated sales cycles and then I think, Jason, you mentioned some client indecision at the outset of the year. So are those dynamics impacting the full year guide or just the shape of the year, i.e., the Q1 outlook? So putting Neoris’ largest client on the side, I just wanted to understand those broader dynamics that you both alluded to in prepared remarks. Jason Peterson: Thanks. Balazs Fejes: So I think as the year started, it is starting similarly to last year. We actually do have better visibility in 2026 than what we had in 2025. But it is starting in the same way in terms of shape of the revenue decision-making process. At the same time, as clients are now really decided to actually embark on large AI transformation programs, that naturally drives them towards a more stringent, let us call it slower, process, which involves procurement, which is naturally going to slow down the decision-making process itself. But I think this just makes things bigger. And it is actually because the programs are bigger now and more substantial, this just makes a little bit of a delay. And that is going to be realized on those project starts will become in the later part of the year. But I think it is more natural to the shift what we are experiencing. James Schneider: Okay. Okay. So it sounds like those dynamics did not really impact how you guided the full year. It is just more about the shape of the year. Is that right? Yes. Balazs Fejes: That is correct. Okay. James Schneider: Okay. And then, Jason, just real quick, anything you can give us on gross margin and free cash flow expectations for this year? Thanks, guys. Jason Peterson: Yeah. So that is great. So we had, obviously, really strong free cash flow in 2025. The only thing I would say is as we look ahead towards 2026, we did come out of 2025 above our traditional 80% to 90% conversion guide, and to think that we will continue to do that, I think that we should operate within the 80% to 90% range. And then from a gross margin standpoint, and this also would answer one of Maggie’s questions, is we do intend to continue to make investments in business development and partnership programs to drive top-line revenue growth. With that said, I do not expect as much benefit from productivity and efficiency in SG&A, again because we are going to recycle some of those benefits into investments in business development. So most of the improvement will come from gross margin. What we are seeing is better execution in some of our expanding geographies, like Western and Central Europe and India, as we have talked about, and the profitability in each of those geographies continues to improve on a year-over-year basis. Plus, we are getting a little bit of price as we enter the year. And so all those things give us confidence that we can improve our gross margin between 2025 and 2026. James Schneider: Thanks. Operator: Your next question comes from the line of Bryan C. Bergin with TD Cowen. Please unmute and ask your question. Jason Peterson: Hi, guys. Good morning. Thank you. First on the growth guidance, Bryan C. Bergin: Jason, on the large client, I think I heard you said you expect that to be down, I think, sequentially mid single digits. What does that translate to as a headwind to year-over-year growth for the first quarter? Also, for the first quarter growth guide, are there any bill day dynamics to consider? Jason Peterson: Yeah. So it is a 100 basis points approximately for the full year, and it is also about a 100 basis points impact on the Q1 number. And so, again, you could do the same thing. You could add 100 basis points to our guide for organic constant currency, and that would be our book of business excluding that one large customer. The bill day impact: you have fewer bill days, so that clearly has some impact on both profitability and on revenues as you go from Q4 to Q1. You probably will have lower vacation, though. So maybe there is a kind of a net-net on that when I think about the revenue from Q4 to Q1. Bryan C. Bergin: Okay. And then as it relates to the workforce, can you give us an update on pyramid and global delivery optimization, kind of the effort and progress there? And your expectations around billable engineering resource additions for 2026? Jason Peterson: Yeah. The interesting thing is in Q4, we actually did see better utilization Q3 to Q4 if you adjust for vacation. As I hinted in my prepared remarks, we finally have gotten to that shift where we do have more people taking their year-end holiday around December 25 rather than January 7. And so what we did see is lower bench. We continue to focus on that through our cost optimization program. We are getting, I would say, better cost outcomes and great execution in Western and Central Europe, Eastern Europe, and India. And at the same time, we are moving to make certain that we are cost efficient in those geographies. So we are seeing improving profitability in each of those more rapidly growing geographies, and we continue to work on utilization improvements throughout the year. Balazs Fejes: In addition to that, throughout 2026, we will continue working and optimizing our pyramid. And that is why we started to onboard the juniors already in Q4 in 2025. So that is very much going to play out throughout the year, and we will continue working on it as we talked about it in previous quarters, on optimizing our delivery organization or delivery pyramid itself to actually go back to shape which is more healthy and more sustainable on a going-forward basis. Bryan C. Bergin: Understood. Thank you. Operator: Your next question comes from David Michael Grossman with Stifel. Please unmute and ask your question. Jason Peterson: Thank you. Good morning. Jonathan Lee: So, Jason, you did a good job of explaining the impact of the acquisitions on growth in 2026. I am just curious, maybe you could do the same and help characterize what impact pricing is having, either positive or negative year over year in 2026, and also whether there is any kind of mix shift dynamics that may still be impacting revenue growth. And I am speaking specifically of mix shift to India. Jason Peterson: Yeah. That is fair. Thank you. So we did get a little bit of price improvement in 2025. And what we are seeing as we enter 2026 is a quite significant number of clients in both Europe and North America are giving us at least low single-digit rate increases. And so it is not the way it would have been, let us say, four or five years ago. But it is definitely a somewhat improving pricing environment relative to the last couple years. I think, to your point with India, we continue to execute successfully across the broad range of geographies. India is growing faster than the other geographies. We are still priced at a premium there, and the profitability in India continues to expand beyond our average. So last year, I said, India is operating at profitability higher than EPAM Systems, Inc. average. This year, we expect it will operate at an even higher level of profitability, getting closer to our most mature geographies. But India still obviously prices at a somewhat lower rate on a dollars-per-hour basis. So there is probably some impact there, but, again, we continue to feel that it is actually positive or margin accretive—any expansion that we see in that geography. David Michael Grossman: Great. Thanks for that. And then I think there was some commentary in the prepared remarks about, and I think Balazs said this again in the Q&A, about decision-making slowing. However, the deals are getting larger. I think the industry has been talking about this for the past twelve to eighteen months. When does that dam have to break? At some point, when does the spending have to accelerate despite uncertainty? Balazs Fejes: I wish I would have a crystal ball for that, but I think we are seeing more and more larger programs, which makes me optimistic that we are getting close to that point. So I think right now there are clearly, in certain industries—financial services, for example, in Europe—people are no longer able to hold back transformation and the nondiscretionary CapEx expenditure. Plus, in certain other industries, we are already seeing people are no longer able to delay their decision-making around AI investments, and that is triggering larger programs. But as larger programs are being requested or being executed, clearly, governance around the selection process, the procurement, actually becomes a little bit more bureaucratic, and when all the enterprises that are making larger decisions, the selection process naturally slows down. David Michael Grossman: Yeah. Are there any data points you can share that would kind of help us understand the momentum that may be building or accelerating in terms of conversion? Balazs Fejes: I think in AI, Dave, we are definitely going to start sharing one. But I think the data point which also was part of my opening remarks is that the scale of the AI-native revenues we expect to reach $600,000,000 in 2026 for EPAM Systems, Inc. So it is actually scaling up, growing really rapidly. But it is still a smaller part of our business. Jason Peterson: Great. David Michael Grossman: Alright. Thank you. Jason Peterson: Hey. Thank you. Operator: Your next question comes from Jamie Friedman with Susquehanna. Please unmute and ask your question. David Michael Grossman: Hi. Good morning. Thanks for the opportunity. I had a couple of Jamie Friedman: more quantitative questions. By my math, the revenue per utilized head year over year grew about 10, almost 11%. And because pricing conversations can be quite subjective, that we think of as price. So I am just wondering if you would react to that. Is that revenue per utilized head reflecting better pricing environment? And then I have one quick Jason Peterson: Yeah. I think as we have talked about over the years, the revenue per head calculation is not one that we usually do internally because there is just an awful lot of noise. But I know it is something that people do externally. Just to remind people of the noise, foreign exchange can have an impact. Obviously, price can have an impact. Utilization can have an impact. And then there are different kind of revenue recognition elements that can also have an impact where you might have done work earlier in the year and then recognize revenue later in the year. So all those things can kind of impact that number. The other thing that I do want to remind people of is that we are reporting numbers that are employees only. We do have some contractors. If the contractors grow, they obviously would generate revenue, but it would not necessarily be in the denominator in that head count figure. So with all those things said, Jamie, I would do the same math that you would do, and I would see that the revenue has improved. I would say some of that is foreign exchange based. Some of that is price. And then we did have a specific one or two revenue recognition items where the work was done earlier that was recognized in Q4. So all those things contributed somewhat to that beat. And at the same time, even if I adjusted out any of those benefits, we still had a Jamie Friedman: the Jason Peterson: beat relative to our original guidance for Q4. Jamie Friedman: Okay. And then just to follow-up with that, Jason, the other thing that makes the math, that limits the math, is the shift to fixed price. And you had a 150 basis point increase in fixed price as a percentage of total revenue to 20.2%, and I would imagine that since it is not time and materials, it is not gated by headcount. But at the same time, your free cash flow is really good and your DSO was good. So, anyway, in terms of the journey to fixed price, which you have been talking about for a while and it clearly evolved last year quite a bit, how should we be thinking about that as the impact on, say, free cash flow, because we do not see unbilled revenue, and it is hard for us to get other details. So any comment about how the fixed price transaction impacts free cash flow? And I am sorry. Someone asked me to ask you about the implications of that for repurchase would be helpful. Free cash flow, repurchase. Thank you. Jason Peterson: Excellent. Excellent. There are a lot of questions in that. So let me just unpack that. Yep. Jamie Friedman: Thank you. That is fine. Jason Peterson: Okay. So you are correct that we are seeing an evolution towards more fixed fee. Yes. I think I have said in my prepared remarks that I do think that there, at least in the past, it does give us an opportunity to improve pricing as we introduce, let us say, somewhat different commercial models in response to the changing mix of AI-native and AI foundational revenues. And so I think you will continue to see an increasing mix of fixed fee. Again, we do not think it goes from 20% to 50% in 2026, but I would suspect it will continue to increase throughout the year. From a cash flow standpoint, I think it is hard for me to say exactly how the fixed fee impacts that because there are different types of fixed fee. So some do have a monthly fixed kind of element associated with them, and that would have a very similar feel to T&M in terms of how we get paid. There might be some opportunities to have milestone payments that maybe occur before revenue recognition, which would give you an increase in deferred revenue, and at the same time, allow you to collect cash in advance of revenue recognition. But I think I would take us back to what I said earlier, which is I would really think, as we look ahead, that we will operate in the 80s, not in the 90s the way we did in 2025, from a free cash flow conversion. And then just quickly to fork in that share repurchase: clearly with the share price where it is today, you will continue to see us reasonably active in terms of share repurchases, particularly in 2026. James Schneider: Thank you. Operator: Your next question comes from the line of Bryan Keane with Citi. Please unmute and ask your question. Jason Peterson: Hi, guys. Bryan Keane: Good morning. I wanted to ask just on the big debate going on with AI eating software and potential implications for the IT services market. Obviously, software stocks have sold off and as a result, we have seen the IT services stocks also under pressure. So how do you think about, Balazs, especially the AI pressure potentially from Anthropic and OpenAI as some of their modules get pushed out. David Michael Grossman: So I Balazs Fejes: Bryan, thank you very much for the question. I think we are actually very, very bullish and optimistic. This is going to open up a tremendous opportunity for EPAM Systems, Inc. It is going to flip the buy versus build question. And EPAM Systems, Inc. is a builder. We are going to build much, much more software. There is no limit how much software people would like to build. Yes, the coding part of the activity will be automated. But this opens up the potential for all the high-end work what EPAM Systems, Inc. is famous and known for. It is going to make us stand out because we can use these tools. We can bring our engineering capabilities to it, and we can deliver the solutions our clients are looking for. So actually, I am much more on the side of AI will enable building more software, more capability. We are a builder. We are not maintaining software. We are not running business processes. We are not input—what people call it—we are not input limited. We are what we want to build. There is a tremendous appetite out there, and if you listen carefully to the comments from Anthropic, comments from OpenAI and a couple of podcasters, they all talk about how much more software people want to build. And right now, because building software becomes easier per unit, people are going to build more. That is what I think about. And that is how I see the situation. I think the market is a little bit confused. It is very hard to decipher all the signals. But in the long run, we are optimistic and actually very, very bullish about what this is going to mean for us. Bryan Keane: Got it. Got it. And we see the pure AI revenues growing significantly Surinder Singh Thind: Yes. Bryan Keane: for you guys now. I guess the flip side of that, is there any AI pressure as a result of some of the productivity and pricing that gets passed on to the consumer? Do you see some pressure also in addition to the pure actual revenue growth that you see from the AI revenue? Jason Peterson: Yeah. I think the one thing I would say is, just to echo Balazs, we do not have BPO. We do not have application maintenance that probably is more likely, or really large testing practices that might be more impacted. The other thing I just need to make certain that it is communicated is we are not seeing a pressure on our pricing due to AI. Again, most of the pricing that we have is time and materials. As I talked about earlier with some of the earlier questions, we did see rate improvement in 2025 and are seeing rate improvement again here in 2026. So I certainly understand that if you have got a large book of multiyear fixed fee business, that might be subject to pressure in certain types of revenue streams. But with the build work that we have historically done and this more advanced AI work, we are not seeing bill rate compression associated with that. Bryan Keane: Okay. Thanks so much. Operator: Your last question comes from Jim Schneider with Goldman Sachs. Please unmute and ask your question. Bryan C. Bergin: Good morning. Thanks for taking my question. Jim Schneider: Relative to what was just referenced in terms of the pressure on the software stocks and the services stocks, maybe share with us your thoughts on capital allocation. What are you thinking? What is the board thinking in terms of the desire to potentially do more inorganic actions versus potentially be significantly more aggressive with the buyback? Balazs Fejes: Jim, thanks for the question. I think we continue to focus on the share buybacks, which as Jason also already communicated, we announced the share buyback plan earlier, the previous quarter. And in the next couple of quarters, at least definitely in the first half year, we are going to continue to make acquisitions as appropriate and repurchase shares. And especially, what we really want to execute is small tokens. But that is our plans at this point of time. And once we stabilized our previous acquisition, that is when we look for other opportunities. Jason Peterson: Yeah. So, Jim, in the near term, you probably still have a focus on share repurchase, and then over time, I think we would be more open to kind of scaled M&A activity. Jim Schneider: Fair enough. And then just one question on the AI-native revenue that you called out in the quarter. By my math, it kind of gets you to, for the full year, sort of an 80% increase in the run rate of AI-native revenues as we exit Q4. Can you maybe comment on whether that is directionally correct? And then, more importantly, can you talk about how you believe that maybe your AI-native revenue is different from some of the AI revenue or bookings numbers being reported by your peers? Thank you. Jason Peterson: Yeah. So I would say kind of directionally correct. So very high rates of growth on a year-over-year basis. And we talked about the fact that we were seeing strong sequential growth throughout the year and expect to continue to see solid sequential growth in the quarters going forward. I think our definition is very tight. I think Balazs did pick that up during his prepared remarks. If you want to provide some more color, Balazs? Balazs Fejes: So I think it is very important that our definition of AI-native revenue is super tight, which means that we are not including a lot of things which probably some of our competitors do include. So just a reminder, we basically include type one, which is new types of solution where the center of it is AI itself, and the AI model is making it possible. We are not including anything in this which is AI-assisted, i.e., you are delivering with AI. The solutions, what you need to be—we got which we are delivering—has to be built on top of AI. Number two is when somebody embarks on an end-to-end or enterprise transformation, which we call AI 360, that is what we include in the second type. We are not including in the second number any kind of work which is what we call a data or AI foundational element. Actually, those revenues are much, much larger for us than our AI-native revenues in that Surinder Singh Thind: Thank you. Operator: This concludes the time allotted for Q&A. I would now like to turn the call over to Balazs Fejes for closing remarks. Surinder Singh Thind: Thank you so much. Balazs Fejes: I would like to thank all EPAMers who made 2025 a successful year and who will make us deliver throughout 2026. And thank you all for attending the call. I am looking forward to seeing many of you on our March Investor Analyst Day in Boston. Thank you very much.
Operator: Welcome to the 2025 full year results. [Operator Instructions] Now I will hand the conference over to the speakers, Julien Hueber, CEO; and Vincent Piquet, CFO. Please go ahead. Julien Hueber: Thank you. So good morning, everyone, and thank you for joining us today for Nexans' Full Year 2025 Results Call. This is Julien speaking. So let's start, as usual, in Slide 2, a short disclaimer noting that this presentation contains forward-looking statements subject to the usual risks and uncertainties. Moving to Slide 3. So before diving into the presentation, I would like to officially welcome and introduce Vincent Piquet, who, as you know, recently joined Nexans, our CFO. Nexans (sic) [ Vincent ] brings a wealth of experience from the automotive and industrial sectors and was previously CFO of Ampere at Renault Group. So I am very pleased and we are all very pleased to have him on board. He's fully already engaged with the teams and deeply involved in the preparation of its results and our outlook. You will, of course, have a chance to hear from him in a moment. So before we move into the results, just a brief technical clarification. So in compliance with IFRS 5, the Industry & Solutions businesses are now classified as discontinued operation in the 2025 consolidated financial statements. This is reflected both in 2025 and in the comparative 2024 figures. Let me now walk you through the key highlights of our 2025 performance. Let's move to the results slides. Yes. So 2025 was a pivotal year for Nexans marked with an excellent financial performance. We have reached a major step in our portfolio rotation, fully refocusing the group on electrification, and we delivered a strong set of results across all key metrics. The group standard sales, if I start by this, reached EUR 6.1 billion with an organic growth of plus 8.3% year-on-year, well above our midterm guidelines and demonstrating strong momentum across all our electrification businesses. The adjusted EBITDA amounted to EUR 728 million, representing an adjusted EBITDA margin of 11.9% of standard sales. Excluding other activities, which mainly consist of metallurgy, our electrification organic growth and EBITDA margin were even stronger with 11.6% organic growth and a 13.3% adjusted EBITDA margin. The cash generation was also very solid in 2025 with a cash conversion ratio of 47%, underlying the quality of earnings and strong cash discipline across the board. From a capital efficiency standpoint, ROCE reached 21.3%, confirming value creation power of our business model. And finally, we ended the year with a sound balance sheet with a leverage ratio of 0.36x. Vincent will come back on that later on. And at the same time, we continue our M&A activities with 2 major acquisitions, the one in Canada, Electro Cables, that we concluded in December last year and the one in Spain, that we also -- RCT, that we also concluded in June midyear 2025. Moving to Page 7. So this slide illustrates the consistency of Nexans' performance over time. The adjusted EBITDA has increased steadily, reaching EUR 728 million in '25, with a margin of 11%, as I just explained, compared to 10.3% in 2024. This result illustrates the group's strategic focus on operational excellence, selectivity and value growth driver. The free cash flow reached EUR 344 million, with a cash conversion ratio of 47%, up significantly compared to previous years and higher compared to our midterm guidelines. A strong performance that illustrates the cash generative nature of Nexans' business model as well as the strong cash discipline across all business units and the working capital favorable evolution. The ROCE also continued to improve, reaching 21.3% in 2025, compared to an 18% in '24 and reflecting disciplined capital allocation and a strong operational execution. In a consistent manner over the years, Nexans' transformation is delivering sustainable growth, improving profitability and strong cash generation year after year. Now moving to Page 8. So as a reminder, during our Capital Market Day in November 2024, we clearly stated our ambitions to become a global electrification pure player, fully focused on our 3 core businesses: Transmission, Grid and Connect. In '25, this year, marked the final step of our portfolio rotation. And as announced, we have entered into exclusive negotiation for the disposal of the last part of non-electrification, which is Autoelectric, our automotive wire harnesses activity. This transaction is expected to close midyear 2026. With this transaction, Nexans complete its strategic refocus and now is fully dedicated to electrification with a simpler, more focused and more resilient business profile. Moving to Page 9. So alongside with the divestment we just explained and you've seen in 2025, we continue to pursue targeted acquisition to strengthen our electrification footprint. In 2025, we completed 2 acquisitions, representing around EUR 260 million of cumulative full year sales. The first acquisition, Electro Cables in Canada, reinforced our positioning in low-voltage cable and high added solution. It brings attractive growth, a robust profitability profile and supported by a strong industrial footprint in Canada. This acquisition fits very well with our Connect strategy and offer clear opportunities to deploy our operational discipline. The second acquisition, RCT in Spain in Saragossa area, strengthens our expertise in flexible fire safety solutions, especially in data center and critical buildings, 2 fast-growing and high value-added segments that we are targeting. The newly industrial capacity that was announced at the time of the acquisition is now up and running and delivering profitable growth. And we are very proud and satisfied with the new team that have effectively put in place this new machine and capacity increase. What is critical in both cases, is not only the asset acquired, but how value is created after closing. In line with our approach, synergies are being deployed through the rollout of our proprietary SHIFT program, ensuring smooth integration, execution discipline and value creation. Taken together, this acquisition illustrates how Nexans used M&A to reinforce its electrification pure player positioning, expand selectivity in key geographies and replicate its value creation model in a disciplined and repeatable way. Now moving to Slide 10 regarding the sustainability. So let me focus on sustainability, which is fully embedded in Nexans' operating model and group strategy. In 2025, and especially on our decarbonization trajectory, Nexans pursued the same trend and exceeded its midterm target for Scope 1 and 2 with minus 49% of CO2 emissions, mainly driven by energy efficiency solutions implemented on site and significant level of renewable energy usage. In the meantime, the current performance on Scope 3 was reached following low carbon product innovations and circular material integration for our initiative like CableLoop that was launched in France and Spain with our platinum customers, enable us to reach 880 tonnes of cable collection during the year. We will explain in the deep dive session how we will expand these solutions. Through these initiatives, combined with the metallurgy project in Lens that will be commissioned in 2027 or another example on the partnership with RTE, the French TSO, where we have launched the first European closed-loop recycling system for aluminum, we are not only reducing our environmental footprint, but we are also reinforcing supply security and reinforcing a structural competitive advantage on the energy sector. Let's move to Slide 12 and go now deeper in the business overview regarding the year 2025 performance. So first, let me first focus on the fourth quarter, which was particularly strong. In Q4 2025, the group delivered an organic growth of 11.8% or even 18% excluding other activities, reflecting an exceptional high level of activity, notably in Transmission and in Power Connect. This Q4 performance was well above our normalized run rate, supported by a combination of strong demand, high project execution intensity and a favorable phasing effect. Of course, we anticipate a normalization of the first quarter 2026, reflecting a more balanced phasing of projects. Beyond Q4 dynamics, the strong finish of the year further supports the structural improvement of profitability with the group adjusted EBITDA margin reaching 11.9% and 13.3% excluding other activities, which was mostly driven by Power Transmission and Power Grid and supported by our selective approach on quality of execution. Overall, 2025 clearly demonstrates Nexans' ability to translate long-term electrification trends into profitable growth. Now let's now move business by business, and I will start by Power Transmission, which delivered an exceptional level of organic growth in 2025. Indeed, organic growth reached plus 29.8%, so almost 30% for the full year, accelerating at the 40% rate in the fourth quarter of 2025, reflecting a very high level of activity and a strong execution. Bear in mind that the last 2 years, we have registered an unusual high level of organic growth, thanks to capacity increase, and we should go now back to a normalized level in 2026. The standard sales of Transmission amounted to EUR 1.6 billion compared to EUR 1.2 billion in 2024. The adjusted EBITDA reached EUR 203 million, EUR 203 million with an adjusted EBITDA margin of 12.3%, up from 11% compared to the year before. This margin improvement was mainly driven by quality execution on projects and increased efficiency following the full year operations at the expanded plant in Halden in Norway. Finally, the adjusted backlog stood at EUR 7.7 billion at year-end and including EUR 1.2 billion of the GSI project still in phase of rescheduling with our customers. This adjusted backlog provides us a good visibility until 2028. Now moving to the Power Grid part. Our Grid business delivered a growth of 5.5% in 2025, in line with our midterm guidelines and confirming a favorable momentum. In the fourth quarter, organic growth was plus 3.5%, reflecting seasonal softness, particularly in winter sensitive activities and project phasing. Standard sales amounted to EUR 1.3 billion compared to the EUR 1.2 billion in 2024. The adjusted EBITDA increased to EUR 217 million, which is up by 19% year-on-year with an adjusted EBITDA margin of plus -- sorry, of an EBITDA margin of 16.4%, which is an improvement of 226 bps points. This strong performance reflects our focus on operational excellence with the continued strength of our accessories activities, increased selectivity in high demand environment as well as some one-off effect linked to some European renewable projects that we had in the last part of the year -- this strong performance reflects our focus on operational excellence, the continued strength of our accessories activity and increased selectivity in a high-demand inventory as well as some one-off effect linked to some European. Importantly, the business benefits with strong visibility supported by multiple long-term frame agreement wins with recent contracts such as Enedis, providing increased visibility going forward. And if you remember, we have communicated the wins in the contract of Enedis for coming 7 years. Now let's move to Slide 15. Finally, the Power Connect business, which grew organically by 3.6% year-on-year in line with our midterm guidelines. In the fourth quarter, organic growth accelerated by a plus 10.9% driven by delivery of large infrastructure and data center-related projects. Standard sales reached EUR 2.3 billion, which compared to EUR 2 billion in 2024. The adjusted EBITDA amounted to EUR 289 million compared to EUR 271 million in '24, and it stood at 12.3% compared to 13.1% last year. Margin performance reflects strong profitability in advanced offer on platinum customers, while the more conventional part of the business remained under pressure, particularly in Asia Pacific and in Oceania. Finally, the integration of La Triveneta Cavi in Italy and the rollout of the SHIFT program continue as planned, with a strong focus on operational and industrial excellence. Again, let me remind you that Power Connect is a contrasted segment where we have some very strong performer, both in top line and margin, and our objective is to make all business units catch up with the best-in-class. We will now move to the key financials, and Vincent, welcome on board, and over to you now for the financial part. Vincent Piquet: Thank you, Julien, and good morning, everyone. Before going into the details, let me take just a brief moment to say that I'm honored to be here today. I want to thank Julien and the Board for their trust. I've now been working closely with the teams for a few weeks, and I'm very excited about the fundamentals of the business and the road ahead. With that, let's start with the 2025 revenue bridge. As you can see, group standard sales increased by 10.1% year-on-year, reaching nearly EUR 6.1 billion. Growth was primarily organic with a strong 8.3% increase, reflecting a solid underlying momentum across the group. Scope effects contributed a further 5.1%, illustrating the growing contribution from our recent acquisitions over the year, mainly RCT and LTC full year contribution. These positive drivers were partly offset by an unfavorable foreign exchange impact of 3.3%, mainly related to the Turkish lira and the Canadian dollar. On the profitability side, adjusted EBITDA increased by 27.3% year-on-year, reaching EUR 728 million in 2025, with the margin improving from 10.3% to 11.9% of standard sales. This evolution reflects the contribution of our electrification businesses supported by growth and margin improvement. First, Transmission delivered both growth and higher profitability, making it a strong contributor to the group's EBITDA improvement last year. Grid also recorded a positive year with strong improvement in profitability year-on-year. And in Connect, performance was more contrasted across regions and business units as described by Julien. Asia Pacific and the Nordics were slower, and the process of improving LTC's performance is ongoing, and we also have the impact of the full year versus a few months in 2024. That said, we are confident in our ability to bring LTC up to Nexans' standards. Overall, within Connect, our structural drivers performed well, while we remain focused on enhancing the profitability of the rest of the portfolio. The Connect segment includes EUR 26 million of scope effect in the full year of LTC and only 7 months -- sorry, the full year of LTC versus only 7 months in 2024 and RCT with a 7-month contribution. In other activities, the variance is mostly driven by negative one-offs recorded in 2024. As expected, metallurgy was impacted by the U.S. tariffs effect in H2 after a strong H1 and accounts for a negative EUR 6 million of impact on a full year basis. Overall, this bridge illustrates strong operational leverage in 2025 with EBITDA growth clearly outpacing sales growth and translating into a meaningful margin expansion. Moving on to net income. As we've just seen, the starting point of the net income progression in 2025 is a very strong increase in adjusted EBITDA from EUR 571 million in 2024 to EUR 728 million in 2025, an increase of 27.3%, well above the 10.1% of growth of our top line and demonstrating our strong operational leverage. This EBITDA progression is also the main driver of the increase in net income from continuing operations, which reached EUR 219 million, up 31.1% compared to last year. Beyond EBITDA, a few additional elements are worth highlighting. First, financial expenses decreased significantly, mainly linked to hedging effects, in particular, the evolution of the forward spread on the Norwegian kroner. At the same time, depreciation and amortization increased to EUR 253 million in 2025 compared to EUR 175 million in 2024, mainly reflecting investments in our Norway transmission plant in Halden. Net income from discontinued operations increased to EUR 138 million, reflecting gains on disposals linked to AmerCable and Lynxeo as well as the operations -- operating performance of Industry & Solutions, partially offset by an impairment on Autoelectric as we moved it to discontinued operations. Overall, group net income reached EUR 358 million in 2025, up 26.6% year-on-year, illustrating the strong earnings conversion of the group's operational performance. Moving now to cash flow and net debt. 2025 was another year of solid free cash flow generation, which reached EUR 344 million compared to a restated amount of EUR 177 million in 2024, translating into a 47% cash conversion rate above our midterm guidelines. This level reflects, first, the strong performance of adjusted EBITDA, but also a strict cash discipline as shown by our working capital evolution and also helped by above-average down payments in Power Transmission. CapEx amounted to EUR 383 million, mainly driven by Power Transmission as we continue to execute on the capacity expansions decided in prior years in both Norway and Charleroi in Belgium. Dividend and others includes the cash impact of our employee share buyback program on top of the dividend payment. And the M&A column mainly reflects the contribution from the closed acquisitions of Electro Cables and RCT. It does not include the impact of Autoelectric as the closing of this transaction is expected mid-2026. Change in discontinued activities relates to the divestments of Lynxeo and AmerCable as well as the reclassification of our automotive activity under discontinued operations in compliance with IFRS 5 standards. As a result of these transactions, combined with strong cash generation, net debt decreased significantly from EUR 681 million at the end of 2024 to EUR 266 million at the end of 2025. As you can see, overall, the company is in great financial shape. Let me now spend a moment on our financial structure. At the end of 2025, Nexans benefits from a very solid liquidity position. We have significant cash on hand, complemented by committed and largely undrawn credit facilities. This gives the group ample headroom to operate comfortably. Our debt structure is well diversified and fully fixed rate, which protects us from interest rate volatility and provides good visibility on financing costs. And importantly, we have no material debt maturity before 2027. From a leverage perspective, Nexans remains very conservatively positioned with a low financial leverage ratio of 0.36x. This strength is also reflected in our credit profile with an S&P BB+ rating with stable outlook. It confirms that the group has the financial firepower to pursue targeted M&A, growth CapEx and continue to deliver shareholder returns. In fact, shareholder return is a core component of our value creation model. Over the past 3 years, Nexans has delivered a total shareholder return of 59% and 215% over the past 6 years. This performance reflects the consistency of our execution over time. As shown here, the dividend per share has increased steadily over the past years, reaching a proposed EUR 2.9 per share for 2025, an increase of 11.5% compared to 2024 and another historical record. This dividend growth is anchored in the group's improved profitability, strong cash generation and disciplined capital allocation. Our approach remains very clear. We aim to reward shareholders while preserving flexibility to invest in our growth and maintain a sound balance sheet. Looking ahead, this discipline remains a key area of focus. Our dividend policy is fully aligned with our financial trajectory with a target payout ratio of at least 30% by 2028, while remaining consistent with our leverage and investment priorities. And with that, I now hand over back to Julien. Julien Hueber: Thank you, Vincent. So let me now turn to outlook for 2026. So we expect the -- for 2026, the adjusted EBITDA for the full year to be between EUR 730 million to EUR 810 million and for our free cash flow to range between EUR 210 million and EUR 310 million. We expect the first half of 2026 to be softer than the second half, mainly due to project phasing across different segments. This guidance excludes the contribution of a non-complete acquisition and does not assume the execution of a GSI project in 2026. Overall and in conclusion, I think that you can see that from the combination of our '26 guidance and the dynamic nature of divisional overview that we are excited for the future. We have successfully transformed into a high-return business with a robust balance sheet focused on electrification as a global pure player. Nexans will continue to operate with a disciplined financial framework for the benefit of its shareholders, employees and the broader economy. So before moving to the Q&A, I would like also to remind you that we will host our business deep dive sessions today shortly after this session at 10:30 Paris time. We will go deeper into our value creation model, market and strategic priorities. We will provide you an additional insight into how we are executing on roadmap. So with that, thank you all for your attention. And with Vincent, we'll now be happy to take your questions. Operator: [Operator Instructions] The next question comes from Daniela Costa from Goldman Sachs. Daniela Costa: I was hoping to ask 2 related things. But the first one, just can you clarify in the guidance on EBITDA between the bottom and the top end, you're very clear that you've taken off GSI from it. But do you have any contract mitigating the under-capacity that you would potentially have from not executing that? How much is included in the bottom end and in the top end of guidance? I'll start there, and then I'll ask the follow-up. Julien Hueber: Daniela, thank you for your question. So clearly, yes, GSI is not included into our guidance, even though we are -- as we have communicated early January that because this project is rescheduled, that we are at the same time launching specific actions, both industrially speaking, but as well commercially in order to offset partly the GSI element. So we are actually quoting different projects on MI on a part of it. Of course, I cannot display precisely because we are still quoting and we don't know precisely when it will start, but a part of it is inside the guidance. Daniela Costa: So just to be very clear, on the EUR 730 million at the bottom end of guidance, that includes part mitigation on things that are not yet in the backlog but in tendering? Julien Hueber: Exactly right. We are still quoting on some MI projects on those. We have considered that some of them, we have a good chance to succeed. But the timing element is not yet clear. So we will -- we have included some of it but not fully. Daniela Costa: And the top end of the guidance is the full compensation of GSI or not -- also not fully? Julien Hueber: So the guidance is not only about Transmission. It's also about different elements. Typically, the restart of the European business that you know has been relatively soft in 2025. We consider some elements of the restart of the activity, specifically in H2, softer in H1, stronger in H2 for the restart of the business, and that's mostly impacting the Connect business. Daniela Costa: Okay. Got it. And then just a follow-up also in Transmission. You mentioned that you will have, I guess, 2 other things, normalized level. Just wanted to clarify what should we interpret it as normalized? Do you think transmission business top line-wise can be up or given taking off GSI? And also, can you clarify your comment on the first half versus second half EBITDA? Do you -- how should we think about the first half margin for Transmission given that's potentially the mitigations, I would imagine if you're still tendering, fall more into the second half, what type of profitability should we think about for the -- between the 2 halves? Julien Hueber: Okay. So overall, we foresee an improvement of our EBITDA during the year 2026 in Transmission with indeed a stronger increase in second half due to the reason we just explained about, still quoting for the MI part. That's basically why we see a softer in H1, stronger in H2. That's basically -- and maybe Vincent, I don't know if you want to add anything? Vincent Piquet: No, I agree that the timing of the quoting makes it a bit second half loaded. And beyond transmission, also the other businesses, we feel very good about Grid and Connect is, as Julien mentioned, a bit dependent on the improvements of the European market, and we're being cautious in terms of what will happen in the second half. And then finally, I'll mention in terms of explaining the range of the guidance, there's a metallurgy, which is quite impacted potentially by tariffs volatility in the U.S. And so we're trying to take that into account in the range we're proposing today. Daniela Costa: Okay. And you can't comment on Transmission first half versus the second half of '25, for example, just to help us understand how much is underutilization in the first half could mean? Vincent Piquet: In '26, you mean? The underutilization of the MI line will be manageable in H1 as we're basically working to do some cost actions. And then in the second half, we are planning on winning a number of short orders and new orders that will fill the line. Operator: The next question comes from Akash Gupta from JPMorgan. Akash Gupta: I have a few as well. The first one is on your cash flow bridge. So when I look at your full year cash flow bridge, you have minus EUR 371 million for M&A and disposals. And if I compare it with H1, you had EUR 613 million in inflows from divestments. So I wanted to ask this EUR 370 million -- EUR 371 million is only what you paid for 2 deals and not the disposals? So now the disposals have accounted separately? So that's the first one to ask what that EUR 371 million in the cash flow bridge is? Vincent Piquet: You got it right. We've separated the disposals from the acquisitions, and the way you explain it is the correct way. Akash Gupta: And then my second one is on M&A. Clearly, you have been quite vocal about your M&A ambition in the press release, but I wanted to ask what are the area of focus? Maybe you can talk about the regions and business areas. And can you also talk about the hurdle because some of the growth business could be quite expensive compared to where you trade. So do you have any hurdle rate that you would like to highlight on which acquisition you want to go ahead and which you will not? Julien Hueber: So we will deep dive a lot on the M&A on the second part in the deep dive session just after. But basically, our strategy remains very aligned to what we said end of last year. So there is -- it's based on 3 elements. One part -- pillar of the M&A strategy is linked to midsized companies -- small to midsized company in country where we already here to create industrial synergies in some markets we are already present. Second pillar of the strategy is based on slightly bigger size of M&As in new geographies. And the third one is based on, let's say, adjacent to cable, so basically could be anything like accessories. So that's our strategy, and we are fully in line with. This doesn't change. It's the same strategy. Having said that today, we are looking specifically some geographies like the North America, the example of Electro we did in December, is a good example. But we are looking for other type of target in North America as well as other part of the world, could be Middle East or the other parts. Akash Gupta: And lastly, a housekeeping question. Depreciation and amortization last year was EUR 253 million, and I believe it might be including some one-off there. It was EUR 175 million in 2024. Can you tell us what shall we expect in 2026 for D&A? Vincent Piquet: Yes, it will stay in line. We're continuing to see the impact of the investment we've made in Norway, especially, and that's hitting our P&L. And from a cash standpoint, the major outlays on par -- in line roughly with what we've had in 2025, are driven by the third vessel as well as the investments in Charleroi in Belgium, the land cable plant. Akash Gupta: So roughly EUR 250 million D&A in 2026? Vincent Piquet: Roughly. Operator: The next question comes from Lucas Ferhani from Jefferies. Lucas Ferhani: The first one will be on the free cash flow. Just can you give us an idea of what do you expect the conversion could get to? You're still investing quite a bit in '26, '27, and it's running at 30% plus at the moment. But what could you get to the EBITDA conversion of free cash flow in the next few years as the CapEx kind of comes down a little bit? And the second question was just on the grid margin. Obviously, it's very, very strong in the second half. Can you give us an idea of maybe what's the normalized level? You do talk about some kind of pull-forward of activity or some one-off effects in there. Kind of how should we think about that margin going forward? Is 17% something you can do again in H2 next year or maybe that should normalize a bit? Vincent Piquet: So thank you, Lucas, for your question. I'll take the first one on free cash flow conversion. So free cash flow conversion in general is improving on the flow businesses, but the Transmission business, as you can see, is obviously big and lumpy, and it depends a lot on down payments. So we had a bit of a strong year in 2025. We will continue to improve progressively as we grow all of our businesses, but it's a bit dependent on the down payments we'll get from the different deals in the Transmission business. And so we're committed to our 2028 guidance on the cash conversion, and we'll continue to drive that in '26 and '27 as well. And Julien? Julien Hueber: Regarding your second question, yes, indeed, you have seen the jump in the margin for Grid moving 2 points up 14% to 16% EBITDA margin. We are very pleased with this business. The demand is very strong. We expect to -- let's say, at the first stage to maintain this level of margin. And it's driven by innovation, driven by accessories that is still growing and at a higher margin even. So in order to continue to push, we need to continue to develop specific verticals. And I will explain at the deep dive just after the importance of data center, that are a big driver of margin increase for the Grid parts. But I would say, let's say, in the coming months, we should be at, let's say, similar level of margin before we acquire new capacity, and we are working on it currently in order to continue to grow and develop this business. But it's a very solid, resilient business and a big part of the result of Nexans. Operator: The next question comes from Sean McLoughlin from HSBC. Sean McLoughlin: Firstly, Vincent, taking maybe a fresh look at the margin progression in Transmission, how confident are you on the journey to high teens margins by 2027, 2028? And what in your view are the key steps to reaching that level? That's the first question. Vincent Piquet: Yes. Thank you, Sean. It's a very important question. It's something we spend a lot of time on with the team. We see significant improvement. You saw it between '24 and '25, and we're still committed to the direction we've given historically of continuous improvement. It's driven by a few things. First, much better quality of execution. We've invested a lot in the team to drive that quality of execution and not have bad surprises during the execution phase of the project. And we are seeing that investment pay off in 2025. The margin improvement is driven by this better quality of execution. Second thing, the selectivity we've applied to the deals that we've taken into the backlog is paying off as well. We're continuing to execute on historical bad cholesterol, if I can say, deals that are hurting our profitability. The new deals we see ahead of us, the ones we're starting to execute on now, are much better in terms of margin accretion, and that gives us very much strong confidence in our ability to get to the high teens in terms of profitability for the Transmission business. Sean McLoughlin: If I could touch also on Connect. You've talked about need for recovery in Europe. You've also talked down Asia Pac in Q4. Again, can you maybe just walk us through what are the main components of improvement in profitability in Connect in '26? Julien Hueber: Connect? Then I will take this question. So Connect, indeed, you've seen a lower margin in second half. It's -- I mean, we understand very clearly, and we are working on it precisely, it's coming from a few elements. First one is indeed pressure on price in Oceania, specifically in Australia, second half of the year. That has impacted us negatively, and we are currently changing things to come back to a normalized level of profitability in this part of the world. Second is that one of the high contributor of margin in Connect is the Nordics in the Northern Europe. I mentioned that in Q3, but it remains in Q3, the same, that the market there has been softer. So we have had less volume, not -- we didn't lose any market share. In fact, we even win market share, but the overall market has been very soft in this part of the world. And we expect to see hopefully an improvement, let's say, midyear second -- Q2 or midyear 2026. And the third element is, you know that our strategy, what we did in the M&A, is clearly to buy, make some acquisitions at a low multiple. And therefore, the margin level of the company that we bought are lower than our average. They are not yet at the maturity in terms of innovations, technology, verticalization. And when you -- on all our job is to transform them into a much higher level of profitability. In the case of 2025, specifically second half, we had a full year effect of LTC, which is not yet at the level we expect from them. They are working very hard. We're very satisfied what we do, but the size of this LTC business has an impact on the overall margin of Connect. Having said that, all the other -- and you know that we are clustering our businesses, different cluster, innovation drivers, profit drivers. This business, the top-end of our business, which is a large part of our Connect business, is doing very well, both in margin level, both in growth. Operator: The next question comes from Scott Humphreys from Berenberg. Scott Humphreys: I have 2 actually. I'll ask them one at a time. The first one on the high-voltage demand through the next decade. How have recent U.K. offshore wind auction results and some stronger pledges from the North Sea companies around offshore wind influence your view of supply and demand in high voltage into the next decade? That would be the first question. Julien Hueber: Okay. So I will start. So I guess you have seen in Hamburg a month ago, a big meeting with the politics, energy ministers from 7 countries, highlighting the need and the importance to deploy offshore wind businesses in -- from -- basically from 2030 to 2040, with an increase of capacity of offshore wind of 15 gigawatts per year for the coming 10 years. So the demand is there, and it's supported by the, let's say, different states in North of Europe. So we see that this business will continue to grow. So 15 giga per year, it's huge, because you need to keep in mind that currently in -- we have 34 gigawatts already installed. So the ramp-up of this business will be extremely important. Second, interconnections. Here again, there has been a very supportive, European Commission, to accelerate the interconnection links between countries, funded by the European Commissions, and they have committed if you -- I don't know if you have seen this but in December. So basically, both businesses, of our submarine, both wind offshore and interconnections are basically positive in the outlook in the next 10 years. Scott Humphreys: Great. And moving over to the metallurgy business in other activities. How is the continued rise in metal prices influence your view on kind of the pros and cons of vertical integration in bulk production? And maybe as a follow-up to that, why don't you think peers -- or why do you think peers might not be following your footsteps in this regard? Vincent Piquet: Yes. Thanks, Scott, for the question. The metallurgy business is strategic to us. We see a lot of advantages of this integration. It's security of supply, which is key. It's recyclability. We control prices much more. We have long-term agreements with mining firms that gives us a lot of stability in our supply. So we clearly think that strategically, it's really important for us to keep this metallurgy business, and we're driving it. And it's obviously quite impacted short term by the movements in the tariffs. It's adapted well. As I mentioned, after a very strong H1, it had a tough H2. But net-net, overall, it's been quite neutral. And so we're managing it strongly and investing in that business. We think it's very important for us. The rise in the copper price is obviously having an impact. We're quite protected. It actually -- we transmit that increase in price to our customers. We're protecting ourselves and protecting the financials very strictly. And we see maybe a long-term impact in terms of copper demand and evolution. But in total, for us, in the midterm and short term, it's really, really strategic, and having that integrated business actually gives us more levers to react and to adapt to the current volatility in the price and the tariffs. Julien Hueber: And I will add one point. If you remember that 4 years ago, Nexans has clearly mentioned that by '26, '27, there will be some kind of scarcity of copper supply. And now you start to see the impact on the basically tons of copper reaching $13,000 a ton. So we anticipate that a few years ago. That's why we have massively invested in our metallurgy and Rod Breakdown in Lens because it gives us a capability to recycle scrap of copper. This project is well ongoing. It should be in operation by 2027. And we will have access to the ability of scrap copper -- scrap cables already on site in Europe. So it will also give us an additional security of supply. Operator: The next question comes from Chris Leonard from UBS. Christopher Leonard: Could I maybe go with 2 questions to start with? And the first is digging in again on the Connect business. And maybe it would be helpful if you could give us, as you have previously, what the divisional margin might have been for 2025, if you were to exclude LTC. I believe you commented on that in first half results. And equally, could you also help us dig into how big the Asia exposure is or Oceania, which you commented on being weak? When we're trying to judge how the margin in the second half of the year, was 11%, so the weakest since 2021. Just trying to get a read if this is an aberration in the short term. And then the second question, actually, I'll wait for the second question. Julien Hueber: Okay. So for sure, if you exclude the M&A on LTC -- but, yes, it is the same, by the way, because it's just taking -- we are taking over this business. If you exclude the newly acquired businesses, which are ongoing in the transformation, the average of EBITDA would be much above, and we will not see any decrease of the percentage of EBITDA. So that's why we are putting a lot of effort and focus in order to, I'd say, the transformation of this business. We have launched in Q3 and Q4 some innovations for the Italian market with a brand Klaro and so on. So we are on the way to transform the business. But clearly, it has an impact on the overall businesses. On your second question regarding the businesses in Oceania, it's an important business for us, but it's not -- let's say, it's less than 10% of our overall activities in Connect. Vincent Piquet: And maybe I would say, Chris, also, if you take the -- a bit of a step back, we've taken the profitability of that business from mid-single-digit levels to strongly above in the double digits. And there are some ups and downs. We're integrating, as Julien mentioned, businesses that were improving as we're bringing them up to the Nexans level. So if you take a step back and look at the trend over time, clearly, it's very positive, and we know how to do this. We've done it in the past, and we'll continue to do it. Julien Hueber: And we will present to you just to this next session, an example of Reka, which basically we acquired 2.5 years ago, which is very -- exactly at the level we expect, above the average of Nexans in terms of profitability. Christopher Leonard: That's helpful. And the second question, Julien, is maybe related as well. But just looking at the 2028 EBITDA guidance range, that's remained unchanged. And I know that you guys are focusing industrially here and maybe there could be some further synergies that come through. And I just wonder, on your look at the portfolio, if there's been any view as to where you think the possibilities are on the industrial angle for you guys looking into 2028? And then as a follow-up, could you also comment as to how much of the GSI contract is currently factored into that 2028 EBITDA guidance for the group? Julien Hueber: Okay. So yes, you are a little bit on the industrial part. Already at the second session that I will describe just after. But basically, you're right. It's important for us. Our DNA, we are industrial people. Our DNA is industries. We will -- and we have launched already several actions on the industrial excellence and the operational excellence that will provide us some competitiveness in order to help our business to grow and to continue to grow our EBITDA margin. And that's -- Connect is clearly one element in this. Regarding the guidance for 2028, indeed, we maintain the same guidance of EBITDA, no change in this. We are clear that we will achieve these targets. We have in this guidance 2028, some utilization of the MI line, of course. So either it will be GSI if this project resume and we have good hope that it will come back or we will use unless other ongoing large projects to come in MI, as I think we have explained also recently, that could also replace. But we have the possibility to do either GSI or another one, but it's included in our numbers for 2028. Christopher Leonard: And just to clarify on that in terms of other projects you're looking at, should we view this as a sort of previously discussed plan B for GSI? Or should we view this more as like sort of the Malta-Sicily contract that you signed last year as a small extension and a book to ship within a year or within 12 months? How should we kind of look at these projects you're looking to sign currently for the Transmission business? Julien Hueber: So regarding MI specifically, it's nothing to do on the plan B, is in all, let's say, deepwater project requires MI technology. There are some project queuing today that we will be able to quote. Now that we have announced, and this is why basically I have taken a decision to make this communication early January, was to officialize the fact that we have an MI line available, and that triggered some opportunity and discussion with some customers that know that we have now this line available for some time. And therefore, we are now discussing with them to basically quote and win this project of MI. So MI will be loaded by 2028. I don't see any problem on that. Operator: The next question comes from Nabil Najeeb from Deutsche Bank. Nabil Najeeb: Just staying with GSI for a little bit. First off, and sorry if I didn't catch this, but what is the current status of GSI exactly? Is the rescheduling now done? And if so, what's the ultimate time line that you have settled on? And is the cable that has already been manufactured going to be stored until the customer then decides to restart work? And is there any compensation that Nexans gets for the idle capacity in such cases? Julien Hueber: Okay. So the situation -- again GSI is the same as what we have communicated early January, meaning that there's a rescheduling ongoing with customers. So we have some very close discussion with customers about a different date to restart the project. So this is what we call rescheduling. So there's not a date specific because there are things ongoing. And I'm sure you understand this discussion are more at a political level that I will not describe. What is for sure is that all the cable that we have produced on store today belongs to the customers. So Nexans has no financial impact on this matter. So today, we are talking with customers, [ the site meeting ]. So this is basically it. But there's been no specific news since the communication we did early January. Vincent Piquet: Yes. Just to be -- all the cable produced has been paid for. So financially, we're completely covered. It's being stored. The customer is obviously working through its own processes and decisions, and we're working with them and to see when it can be installed. But financially for us, it's fully neutral now. Nabil Najeeb: Got it. And my second question is on the mitigation measures. I wonder if you could give us a bit more color on the various mitigation measures that you're considering? Specifically, which, if any, projects are you hoping to bring forward from the backlog? And I realize you have started some discussions on new projects, but are there any specific new projects that you are looking to win? And finally, how would the margin profiles for repair work differ from those 4 large interconnected projects? Julien Hueber: So I would say the mitigation measure, they have 3 type of categories. The first one are purely industrial. So we are relocating the workforce. We are reducing some expenses. We are doing what needs to be done in the plant when you have a line which is basically not running. So that's done. That's ongoing and we are -- the reactivity of our teams in Norway has been at a great level. Second is that we have already win some small orders for repairs because the line is available. It's an important business of doing the repair. And what matters when you do repair is the speed. So you need first to have a cable available to do reparation as well as the vessel available. So we are setting in place an organization to be able to both produce, and we are producing some cable for repairs with our customers, basically, they own the cable. So this is ongoing. And we are, let's say, setting an organization in order to be extremely reactive in case a cut of cable appears under the sea. And third is the commercial activities. So we are -- I'm not going to give you a name of a project because I guess some of my competitors could hear what I'm saying. But indeed, we are currently quoting for some projects on MI, and we expect to have some answers during ahead of Q2 or during Q2 in order to see and hopefully win some of these projects. Nabil Najeeb: Understood. If I could squeeze in a short one. Just on the MI workshop that you have in Futtsu in Japan, what's the plan for that? Julien Hueber: We have communicated, if you remember, I think it was September, October, the fact that we have basically sold this workshop to a company. We can use it, but it does not cost anything. So when it's idle, when the loads are not -- when the machines are not loaded, it doesn't cost anything to us. It's -- we sold the land, the building on the machine, but we are -- it's available to us as soon as we have some load to do. So no cost for us in Futtsu. Operator: The next question comes from Eric Lemarie from CIC CIB. Eric Lemarié: I've got 2 small questions. Precision first, you mentioned -- when you talk about backlog, you mentioned an adjusted backlog in your press release. And I was wondering what kind of adjustment are you talking about here? And when I look to the backlog, should I consider that the projects within the backlog are 100% secured? Is there anything specific to know here? And the second question about the project you mentioned, you mentioned you are quoting on some new projects to mitigate GSI. Are you talking about similar -- are you talking about wind offshore or interconnection project or similar project in terms of profitability or the larger project you are currently quoting? Just to have an idea of the profitability difference between this potential new project and GSI profitability? Vincent Piquet: Thank you, Eric. I'll take the first one. So the adjusted backlog is basically due to the nature of the type of contracts we enter into the Transmission business. Everything that's in the backlog is executable. So it will convert into cash. That's why we put it into the backlog. But the time line and the exact call-offs by the customers in terms of when it happens have different levels of certainty. And so there are things that are extremely firm and certain. There are things where the time line can move a bit more, which is why we use this notion of adjusted backlog. But overall, what we report as adjusted backlog is, unless there's a major cancellation and change in contract, obviously, but it's convertible into cash in the future to drive our cash and profitability. Julien Hueber: And by the way, it's the same definition of the backlog like we always did, so there will be no change on that. I will take the second question regarding the, let's say, other MI projects. So to answer your question, it is interconnection type of projects. So specific to MI technology, so meaning deepwater type of projects. And in terms of profit, of course, we are quoting, so difficult for me to tell you a number, but we are in the similar type of profitability as GSI, yes, same technology, same type of margin. Eric Lemarié: Very clear. And regarding the backlog, how much is -- could be considered as extremely firm project within the backlog? Vincent Piquet: We don't really communicate on that. We just communicate on adjusted backlog. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Julien Hueber: Okay. So thank you all for your questions and for the discussion we had together. So we now look forward to continue this conversation with you in just a few minutes during our business deep dive, where together with Vincent Piquet and Vincent Dessale, we will go deeper into our value creation model, our markets and how we are intensifying execution across the group. Thank you again, and hope to see you very shortly. Vincent Piquet: Thank you.
Operator: Good morning, ladies and gentlemen, and welcome to Tronox Holdings plc Q4 2025 Earnings Call. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please thank you, and welcome to our fourth quarter and full year 2025 conference call and webcast. Jennifer Guenther: Turning to Slide 2. On our call today are John D. Romano, Chief Executive Officer, and D. John Srivisal, Senior Vice President and Chief Financial Officer. We will be using slides as we move through today's call. You can access the presentation on our website at investors.tronox.com. Moving to Slide 3. A friendly reminder that comments made on this call and the information provided in our presentation and on our website include certain statements that are forward-looking and subject to various risks and uncertainties, including but not limited to the specific factors summarized in our SEC filings. This information represents our best judgment based on what we know today; however, actual results may vary based on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements. During the conference call, we will refer to certain non-U.S. GAAP financial terms that we use in the management of our business and believe are useful to investors in evaluating the company's performance. Reconciliations to their nearest U.S. GAAP terms are provided in our earnings release and in the appendix of the accompanying presentation. Additionally, please note that all financial comparisons made during the call are on a year-over-year basis unless otherwise noted. It is now my pleasure to turn the call over to John D. Romano. John? John D. Romano: Thanks, Jennifer, and good morning, everyone. We will begin this morning on Slide 4 with some key messages from the quarter and the full year. Tronox Holdings plc delivered a stronger finish to 2025 than anticipated by remaining focused on the things we can control and influence. Safety continues to be one of our core values and remains our number one priority across the company. In a year marked by challenges, volatility, and inevitable distractions, maintaining that focus has never been more important. Despite that environment, I am pleased to report that in 2025 we delivered our best safety performance in more than a decade, achieving our lowest overall injury rate for the period. This is a reflection of our team's discipline, diligence, and unwavering commitment to keeping one another safe. From a financial perspective, we concluded the year with stronger volumes than anticipated and executed on actions to drive cash flow and improve our long-term cost position. TiO2 volumes in the fourth quarter reached their highest point of the year, a pattern that was previously only observed during the COVID period in 2020. This notable trend underscores how antidumping duties have positively influenced the relative market. Our gains in India and other protected regions show increased market share and suggest a structural change in the global TiO2 trade flows. As anticipated, TiO2 prices were lower in the quarter; mix was an incremental headwind due to higher sales in Asia. However, we are now implementing price increases that are beginning to show results in the first quarter. Early indications show positive momentum, and with a shift toward higher-price regions, market dynamics are gradually moving in a favorable direction. Zircon volumes concluded the year positively, supported by customers restocking and resuming normal buying patterns. Zircon pricing was a headwind in the quarter, compounded by unfavorable mix. That being said, we have announced price increases and are optimistic that they will be implemented in the second quarter. From an operational standpoint, we maintained a disciplined approach to cash preservation and inventory management. While certain measures impacted EBITDA for the quarter, they reinforced working capital discipline, resulting in $53 million of free cash flow, a notable achievement given the challenging environment. We also executed on an opportunistic $400 million senior secured note offering in September, proactively increasing liquidity. In addition, we took the necessary actions on our footprint to position the business for the long term, including announcing the closures of two of our pigment plants. The decision to close the Fuzhou plant in China, as announced last month, was driven by prolonged market downturn, weak domestic demand, overcapacity, and unsustainable pricing levels in China. Combined with the Botlek closure, which we announced in March, these actions streamline our footprint and improve our cost structure over the long term, while ensuring we can continue to reliably serve customers through a more efficient global network. We thank our Botlek and Fuzhou teams for their unwavering commitment to safety and their contributions to Tronox Holdings plc over the years. Transitioning to our sustainable cost improvement program, we continue to make significant progress. We exited 2025 with more than $90 million of run-rate savings, three times our original target, and we remain on pace for the high end of our $125 million to $175 million run-rate target at the exit of 2026. We are now tracking more than 2,000 initiatives; more than 500 of them are already delivering savings, and another 250 are moving to the planning and execution stage. The largest benefits came from fixed cost reductions, including the work we have actioned across labor, contractors, and outside services, along with SG&A reductions that came in ahead of plan. These savings are helping us offset a number of headwinds this year and continue to structurally lower our costs for the long term. We also raised key milestones on our mining projects in South Africa last year. We commenced mining at Fairbreeze and began the commissioning of East OFS. We also advanced our rare earth strategy with the announcement in December of the conditional nonbinding financing with EFA and Ex-Im Bank for the building out of a cracking and leaching facility in Australia. We are progressing our work on a definitive feasibility study and continue to evaluate adding refining capacity to the value chain. As we look ahead, we are cautiously optimistic, and that optimism is grounded in facts and execution. Market dynamics are starting to change. TiO2 prices are improving as a result of price increase announcements that are starting to take effect in the first quarter, and we expect favorable mix benefit from selling more into higher-price regions. At the same time, our actions on inventory, cost, and portfolio rationalization are designed to counterbalance near-term headwinds and support cash generation. As pricing and costs improve from actions already underway, I expect free cash flow to be positive in 2026. Taken together, these developments position us for a step change in earnings power as the market fundamentals continue to improve. I will speak to 2026 in more detail later in the call, but for now, I will turn the call over to John for a review of our financials from 2025 in more detail. John? Operator: Thank you, John. John D. Romano: Turning to Slide 5. For the full year 2025, we generated revenue of $2.9 billion. The year-over-year decline was driven by unfavorable pricing and mix, D. John Srivisal: and lower volumes in both TiO2 and zircon. Loss from operations was $253 million, and net loss attributable to Tronox Holdings plc was $470 million. These results include $233 million of restructuring and other charges, net of taxes, primarily related to the closures of Botlek and Fuzhou. While our loss before tax was $458 million, our tax expense was $15 million, primarily driven by not recognizing tax benefits in jurisdictions with losses. Adjusted diluted earnings per share was a loss of $1.50. Adjusted EBITDA was $336 million, and our adjusted EBITDA margin was 11.6%. Free cash flow for the year was a use of $281 million, including $341 million of capital expenditures. Since we covered our key fourth quarter figures in the January 26 pre-release, I will not spend time on the financial overview, but will instead move to the next slide to review the highlights on our commercial performance. As John mentioned, volumes were stronger than anticipated across both TiO2 and zircon, partially offset by continued pricing and mix headwinds. Sequentially, TiO2 revenues increased 5%, driven by a 9% increase in volumes partially offset by a 4% decline in price including mix. Volumes exceeded our guidance of up 3% to 5%, reflecting continued market share gains in India, Latin America, and the Middle East supported by antidumping measures. North America and Europe were lower, consistent with normal fourth quarter demand patterns. Pricing was in line with expectations, down 2%, and mix accounted for an additional 2% headwind, primarily due to stronger growth in regions with lower margins and seasonally lower demand in our higher-margin markets. Zircon revenues increased 32% sequentially, driven by a 42% increase in volumes. This exceeded our guidance of 15% to 20%. Zircon price was down 7% quarter to quarter, or 10% total including mix. Revenue from other products increased 10% compared to the prior year, mainly driven by higher pig iron volumes. Sequentially, revenue from other products decreased 17% due to higher sales of heavy mineral concentrate tailings in the third quarter. Turning to the next slide, I will now review our operating performance for the quarter. Our adjusted EBITDA of $57 million represented a 56% decline year on year as a result of unfavorable pricing including mix, higher production costs, and higher freight costs, partially offset by the increase in sales volumes, exchange rate tailwinds, and SG&A savings. Year on year, production costs were higher by $39 million as a result of actions taken to improve cash generation. These actions were deliberate and temporary. Bringing forward maintenance, lower pigment and mining operating rates, idling assets, and additional downtime at Stallingborough and Bonneville drove unfavorable fixed cost absorption and higher idle and LCM charges. These were partially offset by savings from our cost improvement program as John outlined earlier. Sequentially, adjusted EBITDA declined 23%. Unfavorable pricing including mix was partially offset by improved production costs, favorable sales volumes, and lower freight costs. Turning to the next slide. We ended the year with total debt of $3.2 billion and net debt of $3.0 billion. Our weighted average interest rate in Q4 was approximately 6%, and we maintain swaps such that approximately 77% of our interest rates are fixed through 2028. Importantly, our next significant debt maturity is not until 2029. We do not have any financial covenants on our term loans or bonds. We have one springing financial covenant on our U.S. revolver that we do not expect to trigger. Liquidity as of December 31 increased to $674 million, including $199 million in cash and cash equivalents that are well distributed across the globe that we are able to move around with little to no frictional cost. Working capital was a use of approximately $26 million for the year excluding $76 million of restructuring payments related to the closure of our Botlek site. Fourth quarter working capital was a source of $133 million excluding $19 million of restructuring payments, exceeding our expectations. This was driven by targeted working capital initiatives including reducing inventory levels. This discipline around working capital will continue into 2026. Our capital expenditures totaled $341 million for the year, approximately 60% allocated to maintenance and safety and 40% almost exclusively dedicated to the mining extensions in South Africa to sustain our integrated cost advantage. We returned $48 million to shareholders in the form of dividends paid in 2025. And as a reminder, Q1 is typically a seasonal use of cash due to timing of payments and the seasonal build of working capital. However, I remain confident in our ability to generate positive free cash flow for the full year 2026. Jennifer Guenther: With that, D. John Srivisal: I will hand it back to John to review our capital allocation priorities. John? John D. Romano: Thanks, John. Turning to Slide 9. Our capital allocation priorities remain unchanged and focused on cash generation. We continue investing to maintain our assets, our vertical integration, and projects critical to furthering our strategy, including rare earths. With Fairbreeze and East OFS mining spend largely behind us, we are able to reduce our capital expenditures further in 2026. While we have some catch-up capital from delayed projects in 2025, we expect CapEx to be approximately $260 million in the year. We continue to focus on preserving liquidity, and we have plenty of liquidity to manage the business and endure market fluctuations. As the market recovers, we will resume debt paydown targeting long-term net leverage of less than 3x. We will do that the same way we navigated this downturn: by staying focused on what we can control and influence, reinforcing the business through cost reduction and cash improvement actions. While prioritizing cash has been a near-term trade-off to EBITDA, these actions strengthen the foundation of the company. With that, I would like to turn to our 2026 guidance and walk through the cash assumptions that will drive performance this year. Turning to Slide 10. For 2026, we expect TiO2 volumes to be relatively flat sequentially on the back of a very strong fourth quarter. We are experiencing growth in all regions with the exception of Asia, predominantly influenced by India, our second-largest market. This is due to customers shifting a portion of their volumes back to China following the temporary halt of the collection of duties in late December following a court ruling. We expect this to be a short-term event as we believe there will be favorable resolution on duties in the coming weeks, which would shift volumes back to local and Western suppliers, including Tronox Holdings plc. We also expect TiO2 pricing to be up approximately 2% to 4% sequentially, reflecting the price increases that went into effect at the beginning of the year and the continued shift in mix towards higher-value regions. We expect zircon volumes to mirror the solid performance we had in the fourth quarter. Zircon pricing has stabilized in Q1 and we are optimistic that the price increases we have announced for Q2 will be implemented. As we stated earlier, we are focused on generating cash while balancing the impact to EBITDA. We made decisions to keep the West mine down and one of our furnaces down longer than originally planned, and we also dialed back some production in Australia on the mining side of our business. These decisions reduced near-term EBITDA, but they are focused on our goal of improving working capital and generating positive free cash flow. We are also managing FX volatility on the Australian dollar and South African rand. At the current rates, this translates to a $10 million headwind in Q1 versus Q4 average rates, which has been factored into our guide. As we have done in the past, we are actively evaluating opportunities to utilize financial hedges to manage that volatility. Partially offsetting these pressures are the savings from our sustainable cost improvement plan, which continues to gain traction and will build through the year. Taking all this into consideration, we expect Q1 2026 EBITDA to be in the range of $55 million to $65 million. Incorporated in our positive free cash flow guide for the year are the following assumptions on cash: net cash interest of approximately $185 million, net cash taxes of less than $10 million, capital expenditures of approximately $260 million, and we expect working capital to be a source of cash in excess of $100 million. Turning to Slide 11. From a broader perspective, our first quarter guidance does not fully reflect the underlying earnings potential of our business. In recent quarters, we have implemented several initiatives to enhance our cost structure, streamline operations, optimize mix, and enable improved pricing. As these measures are realized in our P&L, we will generate significant benefits and establish a solid foundation for earnings growth as the recovery progresses. We believe we are at an inflection point for both TiO2 and zircon price. Additionally, we have outlined a number of actions we have taken over the last year to prioritize cash generation that are temporarily reducing EBITDA. One notable example is how reduced asset utilization affects absorption. As these headwinds subside and as the market continues to recover, we will realize an improvement in our cost structure. As the most geographically diverse TiO2 producer, Tronox Holdings plc is well positioned to capitalize on the opportunity created by the rebalancing of the market evidenced by the effective antidumping duties and supply rationalizations in the industry. These factors establish the foundation for a meaningful step change in earnings potential. Turning to the next slide, I will provide a brief update on our Rare Earths initiative. We continued to advance our rare earth strategy during the quarter, reflecting our objective to move further downstream into separated rare earth oxides over time, while maintaining capital discipline. We made meaningful progress toward a definitive feasibility study and are evaluating development pathways to prioritize returns and limit incremental leverage on our balance sheet. Concurrently, we are engaging widely with stakeholders, including potential customers, partners, and funding sources to identify the most viable and responsible path forward. Our approach remains dedicated to generating long-term shareholder value and balancing strategic opportunities with prudent financial management. We believe that our rare earths present a promising growth platform for Tronox Holdings plc, leveraging our existing mining footprint and expertise in hydrometallurgical and chemical operations. That will conclude the prepared remarks. I will now move to the Q&A portion of the call, so I hand the call back over to the operator to facilitate. Operator? Operator: Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by 1 on your touch-tone phone. You will then hear a prompt that your hand has been raised. To remove yourself from the question queue, please press star followed by 2. And if you speak at phone, you will need to lift the handset first before pressing any keys. Please go ahead and press star 1 now if you have any questions. Thank you. First question will be from Joshua David Spector at UBS. Please go ahead. D. John Srivisal: I wanted to ask if I go through your free cash flow guidance Joshua Spector: I guess to get to breakeven, you probably need about $350 million in EBITDA roughly. I guess one D. John Srivisal: is that Joshua Spector: how you are thinking about it? And two, just given where you are starting in Q1, and some of the timing lags that it takes on some of the mining costs to flow through with the lower utilizations, how do you see yourself getting to that level from here? John D. Romano: Yes. So maybe, Josh, thanks for the question. I will start, and I will let John add some color. So again, we provided a guide for the year. We have not provided guidance for the full year. You can get to that math. So we are not providing a guide because there are still lots of variables with regards to how we are running the business. Our costs are going to be largely dependent upon how long we keep the assets down. On the last call, I made reference that we were going to keep our assets down and focus on cash until we got a couple of good quarters under our belt, and we felt confident that the recovery was underway. And we got another quarter, so we are still progressing in that direction. But we have made some decisions to pull back on one of our furnaces a little bit longer. We have made some other decisions on mining. But, again, we are targeting a $100 million free working capital improvement. And, John, you can add some more color on it. Yes. No. I think, you know, obviously, we D. John Srivisal: from looking at where we guided Q1 to the rest of the year, we do see, I am sorry, EBITDA expanding to get to that positive free cash flow, if not more significant than that. Some of it will be driven by earnings. As John mentioned, we do see the sustainable cost improvement program which we have only seen, you know, about $10 million or so in 2025 hitting, but that was a run rate at the end of the year of $90 million. So we would expect to see that benefit flow throughout the year. Additionally, as you know, we did shut down Botlek and Fuzhou. And as we see our sites, with volumes even being flat, we will see that cost come through from a fixed cost leverage improvement throughout the year. And, you know, obviously, our focus on controlling our costs throughout the year as well. So we do see a path to higher earnings in the second half of the year. Obviously, a big driver of that is price. As John mentioned, we are seeing an inflection point in both TiO2 and zircon Q1 to Q2. So that will help us as we move across the year. John D. Romano: And Josh, we referenced that, I think even on the last call, on the zircon side of the business. We had a lot of customers that were starting to get back to normal buying patterns, and we saw that actually reflected in our sales in the fourth quarter. We are seeing that in the first quarter of this year. We talked about a price increase that we have some confidence in. But both on zircon and on TiO2, to get a price increase in the first quarter is, I would say, not normal. So we are cautiously optimistic that the momentum we are seeing on price is going to continue to translate into additional momentum next year. The price increases on TiO2, we have announced everywhere. So globally, there have been announcements made. And, again, the implementation on those increases will be different in every region, but we feel pretty confident right now, with cautious optimism, that we are starting to see that recovery that we talked about last quarter. Joshua Spector: Great. And if I could just follow up quickly on the cost side. So sequentially in fourth quarter, your production costs were actually a slight positive. I think in your answer then, you talked about taking down some additional furnaces. I guess if we look at your production cost bridge into first quarter, is that a positive because of some of the cost actions? Or is that a negative because of some of the mining actions? What should we expect there? John D. Romano: Let me make one quick comment, and then I will let John answer that. So we did not take down an additional furnace. We have made a decision to keep one of the furnaces down longer than what we had originally planned. So now we are planning to keep that furnace down until midyear. And, again, we have taken some other actions on the mining side of the business. We pulled back on our mining production in Australia. The West mine in South Africa is now down. So I just want to be clear. It is more mining, not necessarily on the smelting side. John? D. John Srivisal: Yes. No. But we do expect improvement in our operations from Q4 to Q1, a pretty significant improvement. As we mentioned, Stallingborough was down in Q4. It is up and running pretty well in Q1, so we will see some benefit. And just overall, see more efficiencies and improvements throughout our portfolio. I think the one thing if you are looking at the Q4 to Q1 bridge item, we have, and we direct you to currency. So if you look at the average rates that were in Q4 versus Q1, as we mentioned, looking at spot rates, that is about a $10 million hurt for us Q4 to Q1. Joshua Spector: Okay. Got it. Thank you both. John D. Romano: Thank you. Operator: Next question is from David L. Begleiter at Deutsche Bank. Thank you. Good morning. John D. Romano: John, just to go back to the prior question. Looking at the two of the key bridge elements for this year, sustainable cost improvement and the mining costs. What are the tailwinds, the actual tailwinds you are expecting now in 2026 versus 2025 for those two bridge items for this year? John D. Romano: Yes. So I will start on the continuous cost improvement program. Again, John kind of gave some indication on how much of that continuous cost improvement actually resulted in EBITDA. D. John Srivisal: Again, John D. Romano: we have got very good visibility into the projects that we are working on to continue that work. A lot of it has been fixed cost, but there is a lot of work going on across the entire company, and we feel confident that this $125 million to $175 million target will be at the high end of that range. There are things that are continuing, FX issues. Right? So we will be looking at hedging. But right now, that is a headwind in the first quarter. There is also, again, the cost associated with running the assets at lower rates that is a headwind. John, you want to add to that? D. John Srivisal: Yes. No. I think if, David, if you recall, we did shut down Botlek in the first part of the year, first quarter, as well as Fuzhou, which we have announced early this year. But, you know, by bringing down those plants, obviously, you know our chain is pretty leverageable and integrated, and so we were able to ramp up our other facilities, and so that is providing a good cost improvement year over year from that fixed cost leverage. John D. Romano: And I would say we made this comment last time, I think, on the call: when we start thinking about when does the industry typically start to get pricing leverage, those two plants that are down, we have actually kept a lot of the customers from where we were selling them. So, you know, we are north of 85% capacity utilization now. And normally, when the industry gets there—I cannot speak to the industry, I can speak to where we are—you start to get leverage on price. So running our pigment business at lower rates has—we have talked about what that impact is on EBITDA. It is not as significant on the mining side. And the pigment business is running at much higher rates. Understood. And just on rare earth, I know there have been some meetings over the last few weeks establishing maybe a framework for some pricing support in the U.S. for these minerals, which would be what you need to move forward with refinery. What has happened from your perspective, and what is potential for this pricing support going forward? Thank you. John D. Romano: Yes. Look, that was, I think, a very positive result. Right? It is not only the pricing support, but it is the vault that was announced. So the strategic stockpiling. There is still some work to be done on getting finalized on what that actually will look like, and that will come with time. But we are also—I think to be clear—we are working in multiple jurisdictions on our rare earth opportunity. We have got assets in Australia and the U.S. So we are working across a lot of jurisdictions to try to come up with what is the best opportunity for Tronox Holdings plc. We are engaging with partners. We have talked about Ex-Im and EFA around the potential financing network we could have to fund the acid leaching cracking facility in Australia, but we are making very good progress. I am not at liberty to talk about who those partners are at this particular stage because we have got nondisclosure agreements. We are making good progress. We are staffing up that group. And we do feel that this is an opportunity that we are going to turn into another, I would say, pillar of our strategy in the long term. Thank you. Operator: Next question will be from Duffy Fischer at Goldman Sachs. John D. Romano: Yes. Good morning. You mentioned that at the pigment level your D. John Srivisal: operating rates are north of 85%. What is the plan on the mining operations this year? What operating rate do you think you will run at there? John D. Romano: And then relative to the benefit D. John Srivisal: that you get from purchasing, you have always kind of talked about a couple hundred dollars there. How much lower will that be this year because of that lower operating rate in mining? John D. Romano: Sure. So I will start that one, Duffy. We have typically said $200 to $400 a ton advantage of vertical integration on feedstock, and I would say we are on the lower end of that range right now. We have four furnaces in South Africa. We are running three. The SR kiln that we have in Australia, we are continuing to run that at capacity. We pulled back on our mining operations. Again, we do not need as much ilmenite to feed four furnaces when we are only running three. So we will make the decision to start the West mine back up, increase our capacity in Australia again when we feel confident that the positive momentum that we are seeing now turns into more of a solid recovery. And I would say that from the standpoint of where we are as far as vertical integration, I think the power of the vertical integration is still something that we believe in. But our objective this year is to generate free cash flow. And all the actions that we are taking right now are to bring our working capital down. The closer we get to capacity on the TiO2 side, we are going to need some of that feedstock. But right now, what we are doing with the slag that we are producing is drawing down the inventory. We are drawing down the ilmenite. We are drawing down zircon inventory. Quite frankly, on the zircon side of the equation, our inventory is getting to the point where it is tight. So, as we start to think about how we are allocating volumes and we talk a little bit about price increase opportunities in zircon, a lot of that is being driven by the market, from our perspective, starting to tighten up. That is going to give us an opportunity to have more confidence in those price increases in Q2. Duffy Fischer: Great. Thanks. And then maybe just two quick ones on cash flow. If you get to your positive free cash flow this year, how would that look first half versus second half? I am assuming you will eat working capital in the first half and be free cash flow negative and then release it in the second half. But roughly how big a delta will that be Q1 to Q2? And then what is the run-rate spend on the rare earths project currently? D. John Srivisal: Yes. So if you look at our working capital and free cash flow progression across the quarters, we expect this year Q1 to be roughly the size and scope of, you know, what we would have done in the past several years. So a pretty significant use of it. And then we do claw back, you know, going across the year. And so, you know, significant use—most of the use, if not all of the use—in Q1, and then free cash flow positive for the rest of the year. John D. Romano: And then on the rare earths, I mean, again, you look at our capital projection for this year, $260 million, which is significantly lower than it was last year. There is not a lot of CapEx at this particular stage that is in that forecast. So, again, we are looking at a variety of funding sources for that. Working on the definitive feasibility study. We have added some people into that group to continue to progress that work forward. But as of right now, there is not a significant amount of capital on that rare earths piece yet. Duffy Fischer: Great. Thank you, guys. Operator: Thank you. Next question is from Jeff Zekauskas at JPMorgan. Please go ahead. Joshua Spector: Thanks very much. Can you remind us what the volume change was D. John Srivisal: in TiO2 for the year for Tronox Holdings plc? Were you down about a couple of percent? Joshua Spector: And in that context, did the global TiO2 industry D. John Srivisal: contract a little bit in 2025, and if it did, by how much, in your opinion? John D. Romano: Yes. Thanks, Jeff. Your estimates on volumes Operator: Q3 2024 to 2025 are pretty close. John D. Romano: And I would say probably the market was somewhat similar to that. Again, it was, I would say, maybe a little bit more of a tale of what happened in the first and second quarter versus what happened in the third and fourth quarter. And, again, the fourth quarter, we saw a significant increase. I think we were targeting a 3% to 5% increase in volumes. We were up 9%. A significant amount of that was actually coming from volumes that came in Asia, predominantly in India. And a lot of that came from a shift in market share as a result of the antidumping duties. So we picked up volume in the Middle East, specifically in Saudi Arabia. We picked up volume in Brazil. And we picked up volume in India. And I made reference on the call about the shift in the first quarter. So in the fourth quarter, the duties were stayed, but they were still being collected. In December, a court ruling came which eliminated the requirement for those duties to be collected. So now you have got a shift of customers in India that are starting to buy more from China. We are still selling in India, but the volume between Q4 and Q1 is down. But we would expect that the antidumping duties are going to be reinstated, Duffy Fischer: and John D. Romano: once that happens, we will see that shift back to, you know, local producers, Western producers, including Tronox Holdings plc. Duffy Fischer: Okay. Joshua Spector: You have spoken of TiO2 prices as being at an inflection point. And D. John Srivisal: when you look at the global coatings industry in Europe, China, and the United States, Joshua Spector: it does not seem as though there is D. John Srivisal: much volume growth. You know, maybe it is up a tiny bit or down a tiny bit or flat. Operator: So what is it that makes Joshua Spector: us at an inflection point in TiO2 Justin Timothy Pellegrino: given a soft demand background. John D. Romano: Well, I think one thing you have got to reference is that since 2023, you have had 1.1 million tons of capacity go away. So any movement towards a regular buying pattern, where people were driving down inventories, created a significant shift. And then you have got the antidumping duties, which are also helping that. So I would not disagree with you that there has not been a move in demand. A lot of this has been structural shifts based on a lot of the proactive work that we have been doing as an industry to try to get the business in a profitable Duffy Fischer: place. John D. Romano: That being said, when we look into the first quarter, we are seeing volume growth in every region except Duffy Fischer: Asia—specifically India, as I just mentioned. And we are starting to see, you know, coating season, John D. Romano: which is normalized. Again, I made this point on the last call. If you think about the duty-affected areas at the peak of export from China into those areas—so Europe, Brazil, India, and Saudi Arabia—that is about 800,000 tons of exports from China. And, again, I made this comment last time. Use the U.S. as a proxy when the Trump 301 tariffs went into place back in 2018. In a 900,000-ton-per-year market where only 20,000 tons of TiO2 is being exported from China. So I am not assuming it is going to go to that. But if you think about—let us just say that there is half of that volume, half of that 800,000 tons gets distributed to other suppliers. Reasonable to assume that we would get at least 25% of that? That is 100,000 tons. And at that rate, we are sold out. We are selling more than we are making with our new footprint. And we have redistributed our products so that we can continue to service the customers that came out of Botlek, probably not so much in China, because we exited that market because it just was not profitable. Duffy Fischer: Okay. Great. D. John Srivisal: Thank you very much. John D. Romano: Thank you. Next question will be from John McNulty at BMO Capital Markets. Operator: This is Caleb Bonnellien on for John. So I have a couple of quick follow-ups. So to, I think it was Josh's question earlier on the production cost quarter over quarter. Joshua Spector: Do you expect that benefit to grow sequentially throughout the year, D. John Srivisal: or did I kind of, like, misconstrue what you were saying earlier? D. John Srivisal: Yes. I think it is—so some of it related to, you know, some improvements in our operating sites, which were challenged in Q4, as we have mentioned, from a Stallingborough perspective. So we do see our sites operating at a decent clip in Q1. So you should not see a huge increase from operating well or at higher rates. We are ramping up some plants a bit more, so you will see some of that. But a big driver is the sustainable cost improvement program that we will see get larger throughout the year. John D. Romano: Yes. So from Q4 to Q1, it had a lot to do with the higher costs rolling into, you know, our balance sheet from the outages that we had. But when you think about, on the TiO2 basis—I will not share a budget with you—but our costs were relatively flat throughout the year. With the forecast that we currently have, with running our mining operation at lower rates in the first half of the year than we are in the second half of the year, if we start to ramp up in the second half of the year, costs will go down on the mining side of the business. D. John Srivisal: Gotcha. Okay. That is helpful. And then what exactly are you thinking for, like, the base case for U.S. and China and the Chinese housing markets for this year that is embedded in kind of your free cash flow guide for the year? John D. Romano: Yes. Look. It is a great question. And I know a lot of the customers that we sell to are companies that you follow. I think a lot of it in the U.S. is going to depend on interest rates. So what I can say is that our volumes that we are forecasting right now for the year do not assume a significant swing up on the construction side of the business. Volumes are being driven a lot by the activities that were put in place for the shift on antidumping. There is some growth. We are seeing, you know, a seasonal improvement in Europe and in North America this year, similar to what we saw last year in the first quarter. And last year in the first quarter, we had a pretty good bump up on our sales. The reason it is not bumping up this quarter is because we are coming off of a very strong fourth quarter. So, you know, there has been a lot of investment in Germany. Germany is spending a lot of time trying to figure out how they can reengage that economy. So we are hopeful that the economy is going to pick up, we will see a swing in the construction market. But we are not planning on that being a crutch to lean on all year long. D. John Srivisal: Okay. That is helpful. Thank you. I will turn it over. Joshua Spector: Thank you. Operator: Next question will be for Peter Osterland at Truist Securities. Please go ahead. John D. Romano: Hey. Good morning. Thanks for taking the questions. D. John Srivisal: For TiO2, what are the dynamics around mix that you are expecting in the first quarter? On a year-over-year basis, is mix expected to be a headwind? And what are the major drivers there? John D. Romano: Well, Q4 to Q1, mix will be a tailwind on price. So as I mentioned, Asia—we sold a lot more in Asia, and there are some lower-margin sales in Asia in the fourth quarter. India sales in the first quarter are down for reasons that I explained. And we are seeing a seasonal build in Europe and in the U.S., which typically yields higher margins. So when I referenced first quarter, we are implementing price increases. We estimate those price increases to be 2% to 4%. That is a mix between actual price increases and the positive mix that we are getting from selling into higher-priced markets. Peter Osterland: Very helpful. Thank you. And then just as a follow-up, on the potential for higher zircon pricing beginning in the second quarter, could you just size approximately the price increase that you are targeting? And are you seeing market dynamics that are favorable enough to potentially support continued price recovery beyond the second quarter? John D. Romano: So we are negotiating with a lot of different customers. I cannot provide you with specifics on price, but I can say that I have got a high level of confidence based on what we are seeing right now that the increases that we are working on for Q2 will start to be implemented. And if the market continues Duffy Fischer: to John D. Romano: be tight—and, again, I made reference that our inventory is getting lower. We had a strong fourth quarter. Again, first quarter is going to be a mirror image of that. So I would expect that the industry is going to continue to get tight. We are also starting to see buying patterns from customers where they had destocked; they are restocking, getting back to normal buying patterns. We have seen—I think on the last call, I said we have started to see some positives on the zircon side of the business everywhere except China. Now we are starting to see some positive moves on the Chinese consumption. So it is a bit early for me to give you an annual guide, but I have confidence that, for lots of reasons, price momentum will continue beyond Q2. But it is still a bit early to call that definitively. D. John Srivisal: Great. Thanks a lot. John D. Romano: Thank you. Operator: Next question will be from Frank Mitsch at Fermium Research. Please go ahead. John D. Romano: Hey. Good morning, John. Listen. I mean, when I see something Duffy Fischer: like 13% volume growth at the same time that price is down 8%, John D. Romano: macro 101 suggests that there is a price war breaking out, and people are using price to grab volumes. You know, you have been outlining why that is not the case, but what are you seeing on behalf of the industry as a whole? You are announcing price increases. It takes two to tango. Is there some resolve in the industry, you believe, and some price discipline, given that we are at pretty low John D. Romano: profitability levels? Any color there would be very helpful. John D. Romano: Yes. It is a great question, Frank. Thanks. Again, I cannot speak to everybody. What I can tell you is what I hear in the industry, and that is everybody is announcing price increases. So we are not on an island. And, again, for us to be getting traction on prices, others need to be pushing. China has made some announcements. The question is, will they implement those price increases? There are other things that are going on as well. I mean, we talk a lot about antidumping. I mean, there is some activity going on to try to increase those duties in Europe. But the reality is profitability in the industry—you look at Duffy Fischer: Yeah. John D. Romano: fourth quarter EBITDA announcements by the publicly traded companies—there was not a lot of EBITDA there. And I do not—I cannot presuppose what is going to happen when other announcements happen, but I think the industry needs to get back to a profitable place. So part of it has to do with profitability, but at the end of the day, there has to be—to your point, it does take two to tango, and you cannot be on an island. I do believe that the industry is moving towards price increases. I cannot speak to exactly what that will look like, but I do think that, based on what we are hearing, we are not the only one announcing increases. D. John Srivisal: And I would say, you know, one contributing factor with our Chinese competitors is sulfur prices have gone up significantly. If you take a look at where they were since mid-2025, they are up 70%. So they are facing a big headwind on raw material costs. John D. Romano: Yes. I think that is a good point because it is not just Chinese. It is anybody that makes TiO2 on the sulfate base. So it is all the European sulfate producers. And John made that point: it is up 70% since July. Since 2025, it is up 160%. And that is not sustainable. It has a lot to do with the Ukraine-Russia war, but there are lots of reasons why prices need to move. But the point you made is the most valid one, Frank, and that is it all depends on how the competition works, and I cannot speak exactly to that other than we are not the only one announcing increases. Frank Mitsch: That is very helpful color. Frank Mitsch: And I appreciate the breakouts on Slide 6 and 7 in terms of what drove sales and what drove EBITDA. What jumped out at me was volumes sequentially increasing $56 million on the top line but $2 million on the bottom line sequentially. I was wondering if you could speak to the incremental margins on volume growth and what your expectations are there? John D. Romano: Great question. And, again, a lot of that has to do with a lot of the sales that we had, or a lot of sales growth we had in the fourth quarter. I would say the variance between the 3% to 5% guide that we had and the 9% that we actually achieved had a lot to do with where we sold it, and a lot of that in Asia. The significant portion of it was in India. Again, we are still competing with the Chinese over there. So it had a lot to do with where we are selling. So when we think about the volume shifting in the first quarter, it is shifting away from those markets. And that is why part of our margin improvement in the first quarter is being driven by mix. And that is regional mix, in addition to price increases. Frank Mitsch: Terrific. Thanks so much. John D. Romano: Thank you, Frank. Operator: Next question will be from Vincent Andrews at Morgan Stanley. Please go ahead. Frank Mitsch: Good morning. This is Justin Pellegrino on for Vincent. Justin Pellegrino: Was just hoping you could describe the next process and kind of the antidumping duty story here. What is the approach to take share from other Western suppliers for share that had originally been ceded to the Chinese? And then are there any other markets that you are watching for potential antidumping duty measures in the future? Thank you. John D. Romano: Yes. I will start with the last question, and I would say anywhere where there is TiO2 production, there is probably work underway to look at antidumping. I cannot go into any specifics, D. John Srivisal: but Duffy Fischer: you know, John D. Romano: this is a shifting tide. And as I have mentioned before, in Asia, China has largely saturated that market. But there are other areas where TiO2 is produced, and, you know, there is work underway in every one of those regions on antidumping. Could you restate your first part of the question again so I make sure I answered it? Justin Timothy Pellegrino: The next step? Absolutely. I was just kind of curious, you know, as we have Justin Pellegrino: seen these antidumping duties put in place, now that they are largely in place, what is the approach to take share from other Western suppliers—was originally share that was ceded to the Chinese? Is it largely a price dynamic? Or are there other competitive actions that you can take to gain share? John D. Romano: From other Western suppliers, I would say the majority of what we are doing with antidumping is actually taking share from China. So, again, when we think about our marketing plan, there are areas that are strategic for us, and we will continue to grow in those markets. But antidumping is largely going to be a structural shift where we are taking share that we basically lost to China as they were dumping. Not to say that we do not compete with all the other Western suppliers—we do—but antidumping is not really driving an opportunity for us to go out and do anything other than recapture share that the Chinese actually had taken based off of very low dumping prices. Justin Timothy Pellegrino: OK. Thank you. Operator: Next question will be from Roger Neil Spitz at Bank of America. Please go ahead. John D. Romano: Hi. Thank you very much, and good morning. Operator: And maybe you said it and I missed it, but if you exclude John D. Romano: for TiO2 price for Q4 on a year-over-year basis, or sequential basis, if you exclude the regional mix, which was an adverse mix, what was Operator: what was TiO2 pricing? Was it Joshua Spector: was it essentially flat, John D. Romano: was down 2%. And that was what we forecasted. Operator: OK. And Joshua Spector: the Stallingborough downtime, did you provide an EBITDA impact in Q4 from that? John D. Romano: About $11 million. Roger Neil Spitz: Got it. And lastly for me, have you or can you say what is the total fixed cost savings of having shed Botlek and Fuzhou on an annual basis? D. John Srivisal: So, you know, as we have—from a Botlek perspective—we have mentioned that longer term, the fixed cost leverage would be about $30 million of savings. And then Fuzhou would be about a $15 million savings. John D. Romano: And just to be clear, maybe on that Stallingborough comment, that outage is behind us. Roger Neil Spitz: Yes. Got it. Thank you very much for your time. John D. Romano: Thank you. Operator: Next question will be from John Roberts at Mizuho. Please go ahead. Please go ahead, Mr. Roberts. John D. Romano: Sorry. I was on mute. Should we think about normal, seasonal, sequential volumes after the March quarter? It has obviously been pretty volatile and unusual seasonality in the last couple of quarters. But is that, in your mind, kind of when we normalize again? John D. Romano: Yes. I would say even in the first quarter when we think about seasonal volumes—I made a reference that if you look at Europe and North America, the Q4 to Q1 growth is pretty similar to what we saw last year, and that was an uptick. And we are forecasting normal seasonal growth. To the extent we see more of a pickup in demand, and it is not just a structural shift, then you could get a bit of a higher bump on that. But I think a lot of that is going to depend on the housing market and what happens with interest rates. But short answer is yes. We would see more of a normal shift in seasonal demand. And could you share any updated thoughts on the proposed China acquisition of the idled U.K. TiO2 plant? John D. Romano: I can tell you that there is a lot of work going on there. There was an article that came out earlier this week. CMA is obviously investigating that. I think on the last call, we said that it is not a slam dunk. That is still a work in progress. And I cannot give you clear visibility on what is going to happen there, but there is a lot of, I would say, activity going on around that acquisition, and there has been no decision on how that is going to be concluded yet. Thank you. Operator: Next question comes from Aaron Rosenthal at JPMorgan Chase. Please go ahead. John D. Romano: Hey. Good morning. Thanks for the call. D. John Srivisal: Is your definition of cash flow that is being referenced both on the call and in the slides defined as cash from ops plus CapEx? Or is there an adjusted cash flow definition that we Justin Pellegrino: should think about? D. John Srivisal: And on that same front, what are your expected cash restructuring charges this year? D. John Srivisal: Yes. No, that is correct. It is free cash flow after—basically before the dividend and other debt movements. Then from a restructuring charge perspective, the vast majority of the restructuring charges were hit in 2025. So we do see a significant reduction—just about $6 million left there. And then China, we expect about $15 million or so restructuring charges related to that. So overall, a $50 million improvement on a cash basis year over year. Okay. Great. John D. Romano: Then just looking at liquidity and thinking about the cash flow bridge. So Q1 cash burn, I think, Q2 maybe flattish, and then an implied second-half cash generation. Roger Neil Spitz: But as you think about D. John Srivisal: effective liquidity, you know, pro forma at either 3/31 or into the second quarter, it seems like it is going to be very light and with very little margin of error. Are you entertaining any additional sources of liquidity in the near term? Equity is up a lot. Secured bonds are par. The market loves chems. It seems like right now it would be a very opportunistic time. D. John Srivisal: Yes. So we ended the year with $674 million of liquidity. So we believe that is a strong and sufficient amount of liquidity to manage through any cycle. We have said in the past that, you know, we can operate as low as $200 million or so of liquidity. We like to go into Q1 with over $300 million as that is the biggest use for us. So we are more than double the position of even being comfortable at a reasonable range. And so we are just focused on running the business, managing, you know, pulling levers that we can. But, you know, as we expect to generate a significant amount of free cash flow in the rest of the year after Q1, we think we are in a solid position. Justin Pellegrino: Great. And if I could just sneak maybe one more in. I think D. John Srivisal: beyond the primary cash flow revolver, there is a handful of other smaller facilities. I think there is one that was up for renewal. I think it was maybe $50 million or $60 million in 2026. Is the expectation that you are going to renew and extend that? D. John Srivisal: Yes. We normally get those renewed every year. We have a couple facilities in the U.K. and Saudi that we get renewed. Justin Pellegrino: Great. Thank you. Operator: Next question will be from Hassan Ahmed at Alembic Global. Please go ahead. Hassan Ahmed: Morning, John. John, obviously, a lot of comments made about volume growth Justin Timothy Pellegrino: in 2026 year on year. And then obviously, expecting a positive titanium dioxide sort of pricing inflection. So just wanted to sort of bring all of those factors together and seek some clarification. Look, I mean, my understanding is, and correct me if I am wrong, that you guys obviously had a very strong Q4 volume-wise. Right? So even if the market does not, demand-wise, grow that much this year, just, you know, for Tronox Holdings plc in particular, the sort of market share gains from antidumping and the like should put you in a very decent position to show meaningful volume growth year on year. So first part of that question is, is that fair to assume? And then, you know, obviously, restocking and maybe growth in the market would just be gravy from a volume perspective. And then, you know, alongside that, on the pricing side of things, it just seems that towards the end of last year, pricing got a bit sloppy. You know, you had a bankruptcy out in England. You know, there was this chatter about, you know, inventory being sold at below market pricing and the like. So a combination of maybe Roger Neil Spitz: the absence of that Hassan Ahmed: and a lot of folks not making EBITDA, you know, is that really what is driving your confidence in terms of getting pricing in Q1 and beyond? John D. Romano: Thanks, Hassan. I think I will start with your first part of your question, and you are exactly right. We are not forecasting a tremendous amount of demand growth. It has a lot to do with the restructuring of the business. And again, I made that reference if, you know, we only get— Duffy Fischer: if China keeps half the exports that they were exporting at the peak, John D. Romano: and we get 25% of that 400,000, 100,000 tons for us, and, you know, very quickly, we are sold out. To the extent market demand improves, then that is going to be additional volume for us. So we are not banking on a significant recovery. Although, as I mentioned last quarter, the market will recover. I cannot specify exactly, but we are starting to see seasonal trends that would lend themselves towards supporting that. So agree with everything you said from a demand perspective. On the pricing side of the equation, I would agree with you as well. You know, there were a lot of reasons why pricing should not have gone down in this fourth quarter. It did. We are starting to not only announce increases, we are implementing them in the first quarter. And, you know, kind of going back off the question Frank had earlier, you cannot do that if you are on an island. I tell you that, you know, if we are the only one raising pricing and Duffy Fischer: there is a John D. Romano: supply-demand that is out of balance, then it is hard to do that. So I would agree with that. And, again, you start to think about the recovery. The recovery is going to be an inflection that will be a bit different because there is a lot of Western supply that is just not there anymore because it is permanently closed. Every single Western supplier has closed plants. We have closed two. One supplier does not even exist anymore. And it was not like, you know, they were not a good supplier. So I would agree with everything that you said. And if the market picks up, and interest rates start to move and housing moves in the right direction, that will only be a catalyst for higher pricing. Hassan Ahmed: Very helpful. And as a follow-up, obviously, everything pointing towards 2026 certainly being a better year than 2025. And, you know, hopefully, you know, things cycling up thereafter. I mean, you know, with that said, where do we stand in terms of rationalization? I know you talked about it in prior calls, even on this call—that 1.1 million ton figure of capacity shutdown since 2023. Are you—I mean, with this sort of improving backdrop—what are your thoughts about further rationalizations? Particularly as they pertain to China? I keep sort of thinking through, you know, at least 20 facilities in China being less than 50,000 tons. So how does the whole sort of anti-involution thing play in? And does further rationalization happen if indeed the environment is getting a bit better? John D. Romano: Yes. It is another good question. The closure of our Fuzhou plant was not an easy decision, and it was not as if it was low on the profitability wheel in China. We do not get subsidized. But, you know, it is a great question. I would have thought capacity would have closed already. And to the extent these antidumping initiatives continue to expand as we believe they will outside the regions they are already implemented in, you are going to have to see some kind of rationalization. And, again, is it going to be in China? Will it be outside of China? I think there could be a mixture of both. I cannot tell you how long sulfur prices are going to be up. But that is a significant headwind in the industry right now. Prices up in twelve months almost 160%. That is not sustainable. It takes about 1.3 tons of sulfur to make a ton of pigment. So you do the math. It is a lot of money. So I would expect if the market continues to recover quickly, maybe you will not see as much. If it takes a bit longer to recover, you might see more rationalization. And China is still kind of an unknown. I would have expected more capacity to come out already. Hassan Ahmed: Very helpful, John. Thank you so much. John D. Romano: Thank you. Operator: Ladies and gentlemen, this concludes the question-and-answer portion as well as our conference call for today.
Operator: Hello, everyone, and thank you for joining the Irish Residential Properties REIT plc 2025 Preliminary Results Conference Call. My name is Harry, and I'll be coordinating your call today. Joining us on today's call are Eddie Byrne, Chief Executive Officer; Brian Fagan, Chief Financial Officer; and Stephen Mulcair, Investor Relations. [Operator Instructions] I will now hand the call over to Stephen Mulcair with Investor Relations to begin. Please go ahead. Stephen Mulcair: Good morning, and welcome to the Irish 2025 Preliminary Results Call. We're excited to share our strategic progress and financial results with you today. Joining me is CEO, Eddie Byrne; and CFO, Brian Fagan. Before I hand over to Eddie, please note that some statements made today may be forward-looking and subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. For detailed information, please refer to the Risks section of our results issued today. I'll now hand over to Eddie to provide an overview of the results for the year. Eddie Byrne: Thanks, Stephen. Good morning, everyone, and welcome to our 2025 preliminary results presentation. The past 12 months have marked a step change in both our operational and financial performance, driving meaningful improvements in margins and earnings. Our strategic initiatives have delivered tangible results, underpinned by our relentless focus on operational excellence and cost control, all powered by our internalized operating platform. Our asset recycling program continued to deliver, generating sales premiums over 25% above book value. Our disciplined approach to capital allocation is totally focused on creating sustainable long-term shareholder value, and the momentum is set to accelerate as we look to capitalize on favorable regulatory and market trends. The coming year will present exciting opportunities to expand on the strong foundation we built in 2025. Turning to the numbers. Our unwavering commitment to cost management has driven a 120 basis points margin uplift, directly boosting earnings. In 2025, we have sustained and strengthened on the earnings growth trajectory we established in 2024, with adjusted EPRA earnings per share up 2.3% year-on-year. Operationally, our platform continues to deliver. Occupancy remains at an impressive 99.5% with rent collections exceeding 99%. Asset disposals into the owner-occupied market have further enhanced our results with adjusted earnings, excluding fair value movements, growing by a strong 7.4% across the full year. And in line with Irish REIT legislation, we are proposing a final year-end dividend of EUR 0.0253 per share, bringing our full-year dividend to EUR 0.0489, an increase of 20% on 2024. As at the 31st of December 2025, our EPRA net initial yield stood at 5.2%, with asset values improving slightly compared to the prior year due to improved operating performance rather than any yield tightening. PRS prime yields have now been stable for 2 full years. And looking ahead, we are confident in the outlook for valuations as major headwinds, including elevated inflation, interest rates, and restricted rent controls, have largely subsided. Greater liquidity and embedded reversion in the market in general is expected to have a positive impact on yields over time. On the balance sheet, we successfully refinanced our debt and returned surplus capital to shareholders through an accretive share buyback during the year. We continue to see an increasing number of opportunities for growth in the market. There has been a significant shift in market sentiment in PRS since the government announced a suite of changes to the regulatory landscape. We are very positive on the outlook for growth for the business over the coming year. Importantly, overall, we have continued to deliver across all measures within our control. The regulatory landscape is shifting positively with the government's announcement of the revised rental regulation, representing a very positive development. These changes will substantially enhance our business outlook, and I'll go into further details on the reforms later in the presentation. Turning now to Slide 6. As we look at this slide, I want to highlight the core strategic pillars that underpin our business and drive our success. These pillars provide a clear blueprint for our management team to maximize value creation for our shareholders. We are constantly refining our operating strategy to ensure we stay ahead of market trends and seize every opportunity to deliver outstanding results. We also maintain a sharp focus on reviewing all capital allocation options available to the company, ensuring we remain agile and responsive in a dynamic environment. Our unique and fully internalized operating platform, further strengthened by advanced digitalization, sets us apart in the market. This enables us to consistently drive operational excellence and cost efficiency, maximizing value for shareholders. We are relentless in our pursuit of value creation. Our strategy is anchored by a commitment to maintain a robust balance sheet, moderate gearing, and flexible financing by managing our loan-to-value ratio, financing costs, and maturities with discipline and foresight. Optimizing our portfolio is at the heart of our approach. We are actively recycling capital from assets, channeling proceeds into either our existing portfolio or looking to selectively acquire high-quality, better-yielding assets whilst continuing to manage the LTV. Where it makes sense, we are ready and able to return capital to shareholders efficiently, demonstrating prudent capital management, evidenced by our share buyback during the period. Sustainability is also a core element of our strategy. We consistently work to ensure our portfolio is fit for purpose over the long term and continues to generate the returns we expect. As a plc, we operate as a responsible business with strong governance frameworks in place. As we look across our performance for the full year, we've executed strongly on each of these strategic priorities. Our operational metrics are exemplary. Our asset recycling program continues to deliver significant value. Our capital allocation remains highly efficient and aligned with our strategic framework, and our balance sheet and financial position has strengthened. Having executed on our strategic priorities, the business enters 2026 well-positioned to capitalize on the growth opportunity and deliver strongly for shareholders. Moving on now, I'll discuss some of the positive changes that we've seen across the regulatory spectrum. As you are all likely aware, rent regulation has long presented significant challenges for the Irish residential sector. However, the landscape has now shifted decisively for the better. Following the government's substantial changes to rental and other regulations, we are entering a new environment that is set to stimulate investment and accelerate the development of much-needed homes across Ireland. This progressive suite of rent, building design standards, and VAT reforms marks a pivotal moment for the sector. The headline changes include Rental property owners will be able to reset rents to market levels for all new tenancies commencing from the 1st of March 2026, bringing greater flexibility and transparency to the rental market. Importantly, this will allow us to gradually bring rents across our portfolio back to the prevailing market rate over time as units turn over. While annual rent increases remain capped at 2% or the rate of inflation, whichever is lower, the index for inflation will move from HICP to CPI, which has historically tracked higher, ensuring a more realistic market conditions. Crucially, new build properties will be exempt from the 2% cap and instead will only be limited to CPI, providing a genuine incentive for development and investment in new builds. Under these rules, every unit in our portfolio with the lease commencing after the 1st of March 2026 can be relet at prevailing market rents once vacant. Currently, our independently assessed rents are approximately 20% below market. And while in 2024 and 2025, around 14% of our portfolio turned over, we do see this moderating slightly into 2026 to around 10%, but we do not see it going below that level based on historical data from our resident surveys. The opportunity to realize this embedded reversion is substantial, and we expect it to translate into enhanced returns for the company and our shareholders. But importantly, whilst this change is set to be a substantial driver for our business and will enable us to contribute to increasing the supply of rental accommodation in Ireland, the mechanics of the legislation ensures that renters will continue to be protected at the same time. Looking at the wider market, these changes are set to make a real difference. By addressing long-standing viability challenges, the reforms will encourage greater investment into the Irish residential sector, improving liquidity, which will potentially lead to a tightening of yields over time. As shown by the graph on the bottom right-hand side of the slide, restrictive regulations have led to a substantial drop in investment in PRS assets over the subsequent years. The new changes will take time to translate to the level of investment that is needed, but we are already seeing a shift of sentiment and the potential for new fresh capital to enter the market since the government has announced these changes. We are optimistic about the future. The new regulatory framework puts Ireland on a more competitive footing and will unlock fresh investment, drive growth, and support the creation of new homes nationwide. It's an exciting time for our sector and a positive turning point for the Irish housing market. I'll now hand over to Brian to run through the financial results for the year. Brian Fagan: Thank you, Eddie. Good morning to everybody. Moving to Slide 10, where we provide a summary of our financial performance for the year. Growth delivered through continued operational excellence. Looking at the P&L, these results reflect our team's expertise and commitment. We manage one of Ireland's largest highest quality residential portfolios, delivered by an experienced in-house team and with a fully integrated digital platform that adds significant value. Our unique operating model is what sets IRES apart. We are Ireland's only solely residential rental company with permanent capital and a fully internalized management team. No other public or private residential owner matches this. By managing maintenance, leasing, revenue management, and operations in-house, we achieved material cost efficiencies while maintaining exceptional resident service. This structure allows us to build deep operational knowledge and harvest large amounts of data, which helps improve decision-making, efficiency, and scalability. As a result, we consistently deliver near full occupancy and rent collections in excess of 99%. This market-leading performance directly drives shareholder value. Today's results demonstrate the strength of our operating model and its ability to deliver significant value for shareholders, not only in the short term, but particularly over the longer term as the opportunities to leverage these capabilities through scale materialize. We are very pleased to report an excellent performance for 2025. Revenue increased by 0.2% year-on-year despite being impacted by the sale of approximately 1% of units in the portfolio and a lower HICP outturn, inhibiting our ability to capture rental growth. NRI margin increased by 120 bps to 78% as a result of our continued intense focus on cost management and driving ancillary revenues. At 99.5%, the portfolio remains effectively fully occupied. Financing costs increased by 4% during the year, mainly reflecting accelerated amortization of deferred loan costs associated with our owned RCF, which was refinanced in March 2025. Adjusted EPRA earnings increased by 1.5% to EUR 29.4 million. Adjusted EPRA earnings per share increased by 2.3%, reflecting improved operating performance and the benefit of our share buyback program. Our ongoing asset recycling program continues successfully, resulting in adjusted earnings increasing by 7.4%. This strong operational performance and also the fact that we had no nonrecurring costs in the year means we have delivered EPRA EPS growth of 16%, whilst we have also returned to profitability with profit before tax of EUR 49.7 million. Following today's results, we have proposed that a final dividend of EUR 0.53 per share will be paid, in line with our policy of maintaining an 85% payout ratio and in compliance with Irish REIT legislation. This brings the full-year dividend to EUR 0.0489 per share and represents a 20% increase on 2024. And now turning to Slide 11. Robust financial position and improving valuations. On the financing front, we successfully refinanced our revolving credit facility in March 2025, securing a new EUR 500 million RCF plus a EUR 200 million accordion facility, adding greater flexibility to our capital structure. The facilities have a 5-year term to March 2030 with 2 potential 1-year extensions. We have put in place EUR 275 million of hedging instruments for 5 years, maintaining fixed-rate debt at approximately 85% of drawn facilities. As a result, our weighted average cost of interest for 2025 was 3.71%, slightly lower versus 2024 at 3.79%. Following this refinancing, our weighted average debt maturity has increased to 4.1 years, ensuring no near-term refinancing risk for the company. In line with our ESG principles, we converted the RCF to a sustainability-linked loan in November. In 2025, our portfolio recorded a fair value gain on investment properties of EUR 17 million, underpinned by improving asset and operational performance and aided by the stable yield environment across the wider Irish residential market. At year-end, our gross yield stood at a robust 7%, providing a good spread over our weighted average cost of interest at 3.71%. Our net LTV at year-end was 43.6%, down from 44.4% at December 2024. Market dynamics remain favorable. Prime PRS yields have held flat for 2 years, even as inflation has moderated towards the 2% target and the ECB has implemented 8 interest rate cuts since peak. Despite Ireland's 10-year sovereign yield being lower than many developed European nations and the country's strong credit profile, the spread to prime residential investment yields in Dublin remains wider than in peer cities. This, coupled with Ireland's exceptional market fundamentals and the easing of headwinds such as inflation, interest rates, and regulation, positions us well for potential future yield compression in line with European peers. We are seeing further support for valuations, thanks to new rental regulations, which will allow rents to be reset when a tenant vacates and the new lease commences. Legislation is set to take effect on the 1st of March, so has not yet impacted valuations, but we anticipate a positive uplift to property values as income profiles improve, provided market yields remain unchanged. Moving now to Slide 12. Executing on asset recycling strategy. During 2025, another 41 units were disposed of as part of our ongoing multiyear asset recycling program. We are achieving strong pricing with average sales prices coming in at over 25% above book values. As a result of these disposals, adjusted earnings, excluding fair value movements, increased by 7.4%. This brings the total number of unit sales to date to 107. And at December 2025, we had an additional 21 units classified as held for sale. To date, total proceeds amount to EUR 35 million. We will continue to actively dispose of the identified units once they achieve vacancy. And given the sales prices achieved in 2025, we expect that the disposal premium will continue to remain strong in 2026. We have seen a real increase in the number of investment opportunities in the market. There's been a significant shift in market sentiment and development activity in PRS since the government announced a suite of changes to the regulatory landscape. We are very positive on the current growth outlook. And given the performance of the disposal program, proceeds of EUR 35 million reduced LTV, we are confident that we will be able to execute on opportunities to recycle this capital into higher-yielding bolt-on acquisitions at attractive prices over the coming period. Before I hand you back to Ed, as many of you know, this will be my last full set of results before my retirement, and I would like to take this opportunity to thank all of you for your continued support over my last 5 years as CFO. I wish Mari Hurley all the best in the CFO role, and I look forward to meeting with many of you to discuss this set of results over the coming weeks and months. Thank you. Eddie Byrne: Thank you, Brian. Looking now at Slide 14. The key message on this slide is that Ireland is operating from a position of economic strength, with the current macro backdrop highly supportive of long-term investment in residential rental accommodation. Ireland combines strong domestic fundamentals with improving external conditions. Employment remains exceptionally high. Economic growth continues to outperform European peers. The interest rate environment is improving, and the state's fiscal position is one of the strongest in Europe. Together, these factors create a stable, low-risk environment that underpins sustained demand for housing. High employment and personal income visibility support household formation, rental affordability, and occupancy, which are drivers of residential property performance. At the same time, Ireland's superior growth outlook relative to the EU and euro area reinforces long-term population and housing demand, particularly in cities and commuter regions where supply remains structurally and chronically constrained. Importantly, the macro cycle is now turning more positive. The shift in the ECB policy following a series of rate hikes, which peaked in 2024, improved funding conditions and sentiment across real assets. This supports valuations, enhances development viability, and increases investor confidence at a point where new housing supply is urgently needed. Overlaying all of this is a very strong sovereign balance sheet. Ireland's budget surplus and low relative debt position provide resilience against external shocks and give the government flexibility to continue supporting infrastructure and housing delivery. This brings a materially reduced macro risk compared to many other European markets. In summary, Ireland offers a rare alignment of strong labor markets, above-average growth, easing financial conditions, and fiscal strength. When set against a persistent undersupply of housing, this macroeconomic environment provides a compelling foundation for investing in residential accommodation with visibility on demand, stability of income, and long-term growth. Moving now to Slide 15. At a more structural level, Ireland continues to experience sustained population growth driven by both natural increases and strong net migration. This is occurring alongside high employment levels and income growth, which together are expanding the pool of renters and reinforcing depth of demand across the private rental sector. Importantly, this demand growth is not cyclical in nature, but rooted in long-term demographic and labor market trends. These forces are translating directly into persistent rental demand, particularly in Dublin and other key urban areas where housing supply has consistently failed to keep pace. As a result, occupancy remains high, and income visibility is strong, providing a stable foundation for residential cash flows. From a pricing perspective, Irish prime PRS yields have remained unchanged for the last 2 years despite the easing of inflation and interest rates. While Irish yields continue to be an outlier relative to European peers, this can largely be explained by Ireland's more restrictive rent regulation framework rather than weaker market dynamics. Looking forward, there is growing regulatory clarity and stability in the PRS market. With a more balanced framework governing rent setting, it is expected we will see increased institutional investments, improve liquidity, and ultimately encourage new supply. As regulatory risk diminishes, Irish PRS yields are increasingly positioned for compression, particularly when set against comparable European markets and considering the relative spread to sovereign yields in those markets. In combination, strong demographic growth, resilient employment, stable income performance, and improving regulatory certainty create a highly compelling macroeconomic backdrop. Set against chronic undersupply, these factors support sustainable rental growth, low vacancy risk, and attractive long-term returns for residential investors in Ireland. Turning now to Slide 17. There is a clear and compelling opportunity ahead for IRES. Our strong operational performance and delivery against our strategic priorities has positioned the business extremely well as market conditions improve. Demand for high-quality rental homes in Ireland remains exceptionally strong, providing a resilient foundation for our income and long-term growth. At the same time, the headwinds that have constrained the PRS market in recent years have now reversed and have materially improved the outlook for our business. We enter this next phase with clear strengths. We have operational excellence, improving NOI margins, exceptional collection rates, efficient leasing and turnovers, and high tenant satisfaction. We have a market-leading platform fully internalized, vertically integrated, and highly digitalized, giving us control, scalability, and efficiency. We have a strong balance sheet, LTVs within target range, improving valuations because of improving operational performance, and long-term flexible debt in place. We have a high-quality, fully occupied portfolio, modern assets located in high-performing locations with strong reversionary income, values well below replacement cost, and excellent sustainability credentials. These company strengths are now aligned with a rapidly improving external context, lower interest rate environment, optimistic outlook on valuations, regulatory and planning frameworks have improved. Transaction activity is returning and gaining pace. And importantly, demand for rental accommodation continues to significantly exceed supply. This dynamic is unlocking new opportunities in the Dublin PRS market, and we believe we are uniquely positioned to capitalize. Our asset disposal program is delivering exceptional outcomes, with sales delivering premiums of more than 25% above book value, equivalent to selling at around 4% net yields. We see a strong pipeline of earnings-enhancing assets coming to the market, which are suitable for reinvestment of those disposal proceeds. Our message is clear. We are delivering on what we said we would do. We are confident and optimistic about the direction of the business. With strong operational execution, improving market conditions, and some of the most supportive demographic dynamics in Europe, we believe the scale of the opportunity ahead is very significant. And before I move to questions, I would just like to mention Brian, who has highlighted that this will be his last full set of results, and I would like to take the opportunity to thank him. But there is plenty of work to do before he hangs up his boots for good. So we'll get on to that before we do the formal thank you. With that, I'll open it to questions. Operator: [Operator Instructions] And our first question today will be from the line of Colin Grant with Davy. Colin Grant: A couple of questions from me. Congratulations on a very good set of results, and well done to the team. Just firstly, in terms of your net rental income margin, which increased 120 basis points during the year, that's very strong given the dilutive impact of disposals. And you've mentioned the cost efficiencies that you've put in place. I wonder if you could give us a bit more color on some of the actions that you've taken during the year and whether or not you see more scope for things to take place in 2026 in that area on the net NRI margin? And secondly, just in terms of the market, which is clearly strengthening, and you've mentioned the potential for a strong pipeline there. I'm just wondering if you can give us a bit more color on the scale of what you see potentially coming 2026 and beyond in terms of portfolios coming to the market, and also just the kind of liquidity that you see in the market at present. Brian Fagan: Thanks, Colin. Colin, I'll take the question around the margin, okay? Yes, look, you are correct. We improved our margin year-on-year by 120 bps, right? And that involves initiatives right across the range of our operating costs and also then some ancillary revenues. So ancillary revenues, we increased car parking income, for instance, right, okay? On the cost side, it would have involved us looking at our -- basically our purchasing arrangements, and trying to get better bang for our book. So one example was insurance, right, okay? So we had renewed our broker, and we've got our broker to go out to the market for ourselves, but also then to use our buying power, together with the OMCs to go and get better savings. We didn't just go to the Dublin market. We also went into the London market. Other aspects we have been organized on a geographical basis in the Dublin area. So we've 3 offices, right? And each of the locations must, we say, buying a lift contract from Colin, from Brian, from Amedi, we've combined that now, so they're just buying from the best price provider. Do we see much scope going forward? At the half year, we were at 78%. There had been some one-offs in the first half. We said we would work very, very hard to maintain that in the second half. As Eddie said, we have done that. Look, our ability to go forward, we absolutely will strive. And no stone will go unturned. However, as we are all aware, our rents are 20% reversionary, right? So it does limit our ability to go and get into the [indiscernible] But as we see the new rent regulations coming in, there should be definitely benefits to our NRI margin. Eddie Byrne: And maybe, Colin, if there's no follow-up on that, then I will just take the scale of the opportunity that's out there. We have seen a very significant increase in the pipeline that the sales brokers would talk about, right? So if you went into this time last year, there might have been -- you could count the potential deals on the finger of one hand. You'd probably need a 4 hall now to count what the pipeline looks like at this stage. So we would see not just of standing stock, and we were saying this 12, 18 months ago that there is a -- once the rent legs changes and that brings certainty to the market, whatever the changes happen to be, as long as there was certainty, you would see all the deals that hadn't traded in the previous number of years start to come to market. So we see a very significant pipeline. In addition to that, we also have a number of conversations ourselves, our own pipeline around some potential new build stock. So it's not just all necessarily standing stock. And I think we have explained this before. Every development within the Greater Dublin area must -- because of densities, must have houses, apartments, and duplexes. And there hasn't been a viable exit for a lot of the apartments unless they were going into the state, and that's starting to change now. So we see an increase in that. And then more importantly, that's all on the sales side. In terms of capital coming to the market, the last couple of deals that have gone say and agreed, maybe under contract now at this stage, are contracted to new entrants in the market, new European in both cases. So I think there is -- there will be a lot of supply. But very importantly, there is also demand, and that's been our own experience as we go and talk to various forms of capital throughout Europe. There is a -- I think the expression that's used is this makes Ireland investable again in terms of the rent regulations. So I think the liquidity, the scale of the opportunity, I think that's all very positive. Operator: The next question will be from the line of Eleanor Frew with Barclays. Eleanor Frew: Three questions from me, if I may. I'll go one by one. Firstly, can you give any indication of where you expect your like-for-like rental growth to land this year, thinking about balancing inflation with upside you can get from retrofitting, and of course, the impact from the new regulation? Eddie Byrne: Well, I guess, Eleanor, as you know, we don't do guidance. However, we have seen a number of -- including your own models. And look, I mean, it's not a complicated sum really. We expect about 10% of our portfolio to turn over this year. We expect 90% of the portfolio to remain at the 2% level. And then we would expect to see that 10% grow at the level of reversion, the independently assessed level of reversion in the portfolio of 20%. So when you do those sums, it comes up with a number pretty close to the number that I think most of the analysts would have. Eleanor Frew: And then occupancy, obviously very high. How do you see that trending over the year? And then more broadly, looking further out, do you see any risk to that occupancy from the new supply, given the more attractive regulatory environment? Eddie Byrne: Well, you know what, the new supply, Eleanor, is -- it takes at least 2 years to build anything. So that's definitely not an issue for 2026 or 2027. I mean I think in terms of our occupancy, it -- well, it's not going to go up much. I can tell you that. But in terms of going down, one of our key operational metrics for our staff is to maintain that occupancy level. I don't think turnovers will impact that as much, possibly a couple of small basis points, but it's really -- that's a point in time. So I don't see the rent regulations having a negative impact on our occupancy because we will continue to drive what we think is our operational excellence to make sure that we don't have vacancies. So I think occupancy remains fine. Eleanor Frew: And then last one, so you mentioned a strong pipeline of earnings-enhancing assets. Are you going to limit yourself to just reinvest in your disposal proceeds? Or is there scope for external capital if the deals are accretive enough? Eddie Byrne: Well, certainly, in the first instance, what we would see ourselves doing is reinvesting the capital that we have internally generated. So over the last 2 years, we've generated somewhere in the low to mid EUR 30 million, and we would see ourselves reinvesting that in the first place. Above and beyond that, then will depend on the opportunity and the circumstances at the time. But we absolutely are tracking all of the opportunities in the market, and we'll consider how we could participate in those. So we are -- all options are on the table for us. But in the first instance, it's reinvesting our internally generated capital. Operator: Your next question will be from the line of Denis McGoldrick with Goodbody. Denis McGoldrick: I just have one, actually. I got a couple of the other ones ahead. Just in terms of the asset recycling program, so 41 disposals in '25, 21 sales agreed. Just wondering how we should think about that pace of disposals into '26 and then the implications of that for net rental income. Eddie Byrne: Yes. So what I would say is we would view the program has been very successful to date, Denis. And I think one measure obviously is how many units we sell, but the other measure is the total proceeds. I mean you can see that we've generated a premium of 3.4 million above book value on the 41 units we have sold. That 3.4 million is in excess of the premium that we expect to generate across 50 units for the year. So that really is a key measure that we look at because it is very hard to predict exactly when a unit will close because you have at least 2 sets of lawyers, buyer and seller. And in many cases, because we're selling apartments, we also have a lawyer for the OMC, 3 sets of lawyers, and the banks involved in the financing, typically. So getting our own side of the transaction in shape is one thing, but we can't control the others. And I think if you look across -- even government are going to multiyear targets now rather than single-year targets because they've seen the folly of trying to predict exactly what gets delivered in a 12-month period. Having said all of that, we would continue -- we would see -- obviously, the units held for sale, and I would just clarify there, I think you said sale agreed. Held for sale is not exactly the same as sale agreed. So these are units that are vacant, which we are currently selling, some of which may be on contract and some of which are not. But 20 units is -- 21 units is a strong pipeline. In addition, we have another -- probably another 10 units at this stage, which are not vacant, but where we have received notice of the tenant leaving. So our pipeline is of the order of 30 units in February for 2026. So we would feel comfortable that we will continue to do on the order of what we said this year or last year, we were hoping to do 50 units. And I think one of the things that you will see going forward is that selling units is just a normal course of our business, right? It's not -- we did announce a program in 2024 of 314 units, and we will continue to sell all of those units. And when those units are gone, we will continue to refine our portfolio and look at units that are non-core. So I think that's probably the way to think about our sales program is that every year, we will have -- we will consider the previous year of business that we need to do to refine our portfolio. that will become our target for the year. But for 2026, I think you can think about it in the same quantum of the 50 units there or thereabouts that we had said we would do this year. Operator: The next question today will be from the line of Steven Boumans with ABN AMRO ODDO. Steven Boumans: I appreciate the positive view on the investment opportunity set and understand, of course, you want to fund it with proceeds from disposals. However, if some great opportunities arise, some questions, could you -- which debt metrics, such as LTV, would you be willing to go to if good investment would rise? And second, would a scrip dividend be possible next year? Maybe provide your considerations on the potential of a scrip dividend. Brian Fagan: Okay. Stephen, thanks for the question. I think what I would say in the first instance is we've been pretty clear over the last couple of years, management and the Board have a strategy around LTV to manage it between 40% and 45% through the cycle. So I don't see that changing. We'll continue to manage it within that range. Clearly, with the view to being at the lower end of the range as we reach the end of a cycle now we're -- we have to be very careful, and everybody needs to be careful about calling the top and bottoms of markets, right? But as we move through the cycle, we will be managing that down a little bit. So any acquisition has to fit within that plan of 40% to 45%. And in relation to a scrip dividend, look, we keep everything -- we have not done a scrip dividend in the past. We keep everything on the table. There is -- we feel a little bit of a lack of clarity just around the regulation and scrip dividends. So that is something that we have been spending some time looking at. And I would say -- as I said, we will keep everything on the table to ensure that what we're doing is the right allocation of our capital. Steven Boumans: And maybe one last question. I understand correctly that you see also opportunities in development. So you are also looking at funding deals. There's a probability that you will sign something like that in '26. Brian Fagan: That is definitely part of the suite of potential opportunities that we see. We think one of the issues for development in Ireland has been lack of capital available to a lot of developers. We think we can bring our balance sheet to bear on that and enter into contracts with those developers, take, which will then allow them to go and get financing. So we do think that that is an important part of the role that we will play in terms of increasing housing supply in Ireland. So yes, funds are definitely on our agenda. And I would certainly see us doing that before we would necessarily develop ourselves. We don't really feel the need to definitely not take planning risk, other than we have 2 very small sites of our own, which we will continue to bring through the planning process. But in terms of buying land and taking planning and development risk, that would -- I don't see that happening. And in the first instance, forward funds developers take the planning and development risk, and we will take the completed product, and will absolutely be part of our suite of options. Operator: Thank you. That will conclude our Q&A session for today, and I'll now hand the call back to Ed for closing remarks. Eddie Byrne: Thank you very much, everybody, for listening in today, and we look forward to meeting many of you on the road over the next couple of weeks. We've got a lot of meetings in the diary. So hope to catch up with you then. Thank you very much. Brian Fagan: Thanks, everybody. Operator: This concludes the Irish Residential Properties REIT plc 2025 Preliminary Results Conference Call. Thank you all for your participation. You may now disconnect your lines.
Operator: Good morning, and thank you for standing by. Welcome to Madrigal Pharmaceuticals, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to introduce Ms. Tina E. Ventura, Chief Investor Relations Officer. Please go ahead. Thank you, Michelle. Good morning, everyone, and thank you for joining us to discuss Madrigal Pharmaceuticals, Inc.'s fourth quarter and full year 2025 earnings. Tina E. Ventura: We issued a press release this morning and posted a slide deck to accompany this webcast on the Investor Relations section of our website. On the call with me today is William J. Sibold, Chief Executive Officer; David Soergel, Chief Medical Officer; and Mardi C. Dier, Chief Financial Officer. They will provide prepared remarks followed by Q&A. Please note on slide two, we will be making certain forward-looking statements today. We refer you to our SEC filings for a discussion of the risks that may cause actual results to differ from the forward-looking statements. With that, I will now turn the call over to William J. Sibold on slide three. Thanks, Tina. Good morning, and thanks for joining us. William J. Sibold: Today, I will provide an update on the Rezdiffra launch where we ended our first full year on the market at nearly $1,000,000,000 in net sales and solidified Rezdiffra as the foundational therapy in NASH. We will discuss the significant growth in the U.S. NASH market, which is up nearly 50% since 2023 and growing at a double-digit pace. And then Dave will provide an update on our R&D strategy, where we now have more than 10 programs in our pipeline. Before turning to our fourth quarter results, I want to reflect on what we accomplished in 2025 and in just the first six weeks of this year. In a remarkably short period of time, we built the leading company in MASH and assembled a pipeline we believe will help define the future of this category. We continue to execute on a fantastic U.S. launch, extended Rezdiffra’s patent exclusivity to 2045, and initiated our ex-U.S. rollout beginning in Germany. Advancing our F4C trial for Rezdiffra, and we are accelerating evidence generation to further differentiate the product. At the same time, we moved quickly to build a high-quality pipeline around Rezdiffra, completing three transactions in roughly six months adding an oral GLP-1, a late-stage DGAT2 inhibitor, and a portfolio of six preclinical siRNA targets. Each designed to be studied in combination with Rezdiffra. The reason we are moving with this level of urgency is simple. Assets like Rezdiffra do not come along often. We have a high-quality, high-growth foundational therapy driving strong top-line performance with patent protection into 2045. When you have an asset like that, you have an opportunity to build a sustainable and durable franchise for the long term. That is exactly what we are doing. Rezdiffra gives us a unique ability to pursue combinations, to attract high-quality assets and to shape the market in ways other companies simply cannot. As a result, we are fundamentally a different company today than just six months ago. Transitioning from a single asset launch story into a fast-growing biotech with a pipeline designed to extend our leadership for years to come. Let us turn to net sales performance on slide five. We delivered fourth quarter 2025 net sales of $321,000,000, more than tripling fourth quarter 2024. For our first full year on the market, net sales totaled $958,000,000, an exceptional launch by any industry standard. That nearly billion-dollar result took a lot of work, we did not just launch a product. We built a market from scratch. Let us take a second and really think about that. Remember, NASH was long viewed as the graveyard of drug development. No treatments, no market, and skepticism that one would ever exist. Particularly with GLP-1s on the horizon. We took a different view. The unmet need was substantial, and demand for an effective therapy was real. We believed in the science and Rezdiffra’s ability to become the standard of care. We built the right team. People who have created categories and launched blockbuster brands. And we got to work. We executed with a long-term mindset. Wiring the system practice by practice, educating prescribers, establishing care pathways, expanding prescriber breadth and depth, and securing first line through disciplined contracting. And we continue to iterate and improve. The results speak for themselves. We were first to market, and that matters. Rezdiffra, with its liver-directed and differentiated profile, has established itself as the foundational therapy in NASH. The market is real and only beginning to take shape. GLP-1s are here, and as we expected, we are still steadily adding patients. There is room for competition, which we believe will further expand the market and we are building a pipeline designed to extend our leadership over time. As a result of the foundation we have built in our large base of prescribers, we continue to steadily add patients quarter over quarter as seen on slide seven. Remember, the number we report reflects the net of new starts and discontinuations at the end of each quarter. We continued to steadily add patients ending the fourth quarter with more than 36,250 patients on Rezdiffra up from more than 29,500 at the end of the third quarter. That tells us two things. First, Rezdiffra’s profile is exceptional and resonates very well with prescribers and patients. Second, this large and expanding market is capable of supporting multiple therapies. This represents a small fraction of the growing addressable population, and we expect to continue to steadily add patients quarter over quarter going forward. Let me spend a moment on the U.S. NASH market on slide eight. We are still in the early stages of what we expect to become a large specialty market. In just the last two years, the F2-F3 target population of 315,000 representative patients seen by our target specialists has expanded nearly 50% and we expect this market to grow at a double-digit pace for the foreseeable future. Rezdiffra’s approval and the increased industry investment across the ecosystem has fundamentally changed the market dynamic. Driving increased awareness, diagnosis, referrals, specialist involvement, and patients seeking care. This is a category in its very early stages where Rezdiffra is now established as the standard of care. As the market expands, we expect to benefit from its growth, increased penetration, and ultimately the introduction of additional therapies from our pipeline. NASH is a rare opportunity in biotech. Few therapeutic areas offer this combination of and high growth potential. That is why we expect MASH to follow the trajectory of other large specialty markets as shown on slide nine. Markets that support 10 to 15 plus therapies and have grown over decades to exceed $20,000,000,000 in annual sales. We believe MASH will evolve the same way. With one important difference, we are first to market with a product that has an unmatched profile. As an effective liver-directed, safe, and well tolerated oral medicine, it far surpasses the profile of first-to-market products in those other categories. And we continue to hear from our prescribers that Rezdiffra is performing even better than expected in the real world. This profile positions us well to expand into compensated MASH cirrhosis or F4C, the next phase of our growth strategy outlined on slide 11. We believe F4C could double Rezdiffra’s opportunity with approximately 245,000 patients, no approved therapies, and a significantly higher urgency to treat. Assuming regulatory approval, we expect to be first to market in F4C. Importantly, our F4C outcomes trial focuses on clinically meaningful outcomes, preventing decompensation, rather than relying on biopsy. Rezdiffra would be the only medicine with outcomes data solidifying it as the standard of care in NASH and supporting full approval across F2-F4C. Before I turn it over to Dave, I want to briefly outline how we see the MASH market evolving and why Madrigal Pharmaceuticals, Inc. is uniquely positioned to lead it by building on the pipeline strategy that I described earlier. NASH is a complex heterogeneous disease. Over time, we expect distinct patient subpopulations to emerge, each requiring different mechanisms, combinations, and sequencing approaches all anchored by Rezdiffra. We have seen this evolution before in other diseases, where progress was driven by matching the right combinations to the right patients. That is the model we are pursuing in NASH, and it is why we have moved quickly to add these specific assets to our portfolio. And the reason we can execute on this strategy is our high confidence in the growth potential of Rezdiffra. We are able to build an industry-leading MASH pipeline because we have an outstanding product. One that is performing exceptionally well today and is positioned for continued strong growth. That strong foundation allows us to develop the next generation of NASH therapies for patients. That is exciting, and it is a true differentiator for Madrigal Pharmaceuticals, Inc. Dave, I will turn it over to you to walk through our R&D strategy. Tina E. Ventura: Thanks, Bill. William J. Sibold: Our objective in R&D at Madrigal Pharmaceuticals, Inc. is straightforward. Build the industry-leading pipeline in MASH to make better therapies for patients. We are doing that through targeted business development and smart clinical execution leveraging the expertise of an R&D team that pioneered modern MASH drug development. Our strategy has four goals. Deliver outcomes data and full approval for Rezdiffra from F2 through F4C, advanced complementary mechanisms for combination with Rezdiffra to deliver the best efficacy across the NASH spectrum. Remain modality agnostic, keeping development to the best combination regimens as our strategic aim. Note our recent addition of injectable siRNAs. Leverage our experience to evolve the science. Design smarter, more informative clinical trials enabled by our extensive data and operational experience in NASH. Our aim is to use capital efficiently to take more shots on goal and advance only the most promising programs for patients. The first pillar of our R&D strategy is delivering outcomes data in F4C. The basis of our high confidence in our outcome study are the data from our two-year open-label study, the importance of the two-year data is better understood in the context of how cirrhosis progresses. Development of clinically significant portal hypertension or CSPH is a critical inflection point in the disease. Marks a transition from compensated cirrhosis towards decompensated disease. And is when the most serious complications like variceal bleeding and development of ascites begin to occur. Crossing the threshold into decompensated cirrhosis predicts poor prognosis, with an average survival time of two to three years without a liver transplant. From the literature, it is clear that patients with CSPH have meaningfully higher rates of liver-related events, and reducing CSPH risk lowers liver-related events. That is why the two-year open-label 122 patient F4C data from our NAFLD1 trial are so exciting. As shown here on slide fourteen, 65% of patients with CSPH at baseline moved into lower risk categories by year two. These data support Rezdiffra’s potential in F4 and reinforce confidence in our outcomes trial. Particularly given that both trials have very similar patient populations. The second pillar of our R&D strategy is advancing combination therapies anchored by Rezdiffra. Slide 15 shows many of the known mechanisms involved in NASH. NASH is driven by excess free fatty acid delivery to the liver leading to steatosis, inflammation, and fibrosis. While there are many potential points to intervene in the disease, it took decades and more than 20 industry failures before Madrigal Pharmaceuticals, Inc. cracked the code with Rezdiffra. Today, only two mechanisms have crossed the finish line, THR beta agonism, addressing NASH at its source in the liver and indirect acting GLP-1 agonism. But NASH is a heterogeneous chronic disease and therefore, we expect treatment to evolve toward combinations. Rezdiffra gives us a unique solid foundation on which to build combinations to achieve better efficacy overall, or in certain patient subpopulations. Our combination strategy is simple. Prioritize validated mechanistically complementary approaches that enhance efficacy while preserving Rezdiffra’s strong safety and tolerability profile. In orange, you see where we have already acted, an oral GLP-1, a late-stage DGAT2 inhibitor, and multiple targets using siRNA. Let us discuss why we are excited about these new mechanisms starting with siRNA on slide 16. First, siRNAs target validated genes that drive MASH progression. Using precise mRNA knockdown, we can either enhance efficacy broadly or develop more tailored approaches for defined patient subpopulations. Second, the modality. GalNAc conjugated siRNA is well established and highly liver targeted. The clinical safety of the platform is supported by multiple marketed products. We acquired six preclinical siRNA assets that are highly complementary to 17 covers our DGAT2 which we are excited about for a number of reasons. First, DGAT2 inhibition is a complementary mechanism to THR beta agonism. Evogastat prevents free fatty acids from being incorporated into triglycerides, and Rezdiffra restores mitochondrial function to allow those free fatty acids to be turned into energy through beta-oxidation. The two mechanisms together, therefore, address both the production and clearance of excess hepatic fat. Second, we know a lot about Evogastat. It is already completed a phase 2b trial in NASH, demonstrating robust MRI-PDFF reductions and clean safety. In the MIRNA study, 72% of patients at the 150 milligram dose achieved at least a 30% reduction in PDFF. And 61% achieved a 50% reduction, what many experts now consider a super response predicting a greater likelihood of a reversal of fibrosis. Mardi C. Dier: The combination of these two mechanisms has the potential to move more patients into that super responder category, and drive better anti-fibrotic efficacy and better outcome. We plan to initiate a drug-drug interaction study this year and to begin a phase 2 combination program in 2027 following FDA discussions. Next, our oral GLP-1 on slide 18. Tina E. Ventura: Let us start by acknowledging that there is strong real-world enthusiasm Mardi C. Dier: for combining GLP-1s with Rezdiffra with an understanding of the mechanistic complementarity of GLP-1 and Rezdiffra. GLP-1s act outside the liver by improving systemic metabolism and reducing free fatty acid delivery to the liver. This complements Rezdiffra’s liver-directed mechanism of action. Importantly, our focus for this program is on developing a better treatment for NASH not maximal weight loss. And therefore, our goal is to balance the right amount of weight loss to potentiate Rezdiffra’s anti-fibrotic effect. So what is the right amount of weight loss to achieve better efficacy in NASH? In MAESTRO-NASH, we saw that as little as 5% weight loss meaningfully potentiated Rezdiffra’s fibrosis benefit. So our aim is a once-daily, well tolerated oral fixed-dose combination that optimizes efficacy while maintaining good tolerability. Phase 1 single-ascending dose study of MGL-2086 is expected to start in the second quarter. Putting it all together on slide 19, we are translating our into action with one goal in mind. Build the leading MASH pipeline. And this is really just the beginning of an exciting journey. With Rezdiffra protected into 2045, we have a long runway to invest and innovate. Building a pipeline that will define the future of NASH care. With that, I will hand it over to Mardi. Tina E. Ventura: Thanks, Dave, and good morning. Turning to slide 20 and a summary of our financials. Fourth quarter 2025 net sales totaled $321,100,000 reflecting another quarter of strong demand and bringing full year 2025 net sales to $958,400,000 As we have discussed, we have made excellent progress Operator: contracting for first line access in 2026, Tina E. Ventura: with some contracts taking effect in the fourth quarter of last year as anticipated. As a result, our gross-to-net impact increased from the third quarter to the fourth quarter. As a reminder, gross-to-net includes several components. Commercial rebates, government rebates, copay assistance, and channel distribution costs. Operator: The team did an exceptional job managing these dynamics resulting in a full year average at the low end of the 20% to 30% range we previously outlined Tina E. Ventura: an excellent outcome for 2025. We are off to a strong start this year and continue to steadily add patients. As indicated last quarter, we expect our payer agreements to bring our full year 2026 gross-to-net impact into the high 30% range, Operator: consistent with specialty medicine analogs. Tina E. Ventura: Looking ahead, we expect robust net sales growth in 2026 despite the step up in gross-to-net from contracting that begins in Q1 plus the typical Operator: first quarter dynamics related to benefit plan changes and insurance reverifications. The fundamentals of the business are strong, and we are looking forward to another outstanding year of performance. Tina E. Ventura: Moving briefly to operating expenses. R&D expenses for the fourth quarter and full year 2025 were $116,300,000 and $388,500,000 respectively, the increase over the prior year periods was primarily due to business development. In the third quarter, this included a $120,000,000 upfront payment for our oral GLP-1 and in the fourth quarter, $50,000,000 upfront payment for Evogastat and our two additional early-stage MASH pipeline assets. Of note, the upfront payment of $60,000,000 $60,000,000 for our 2026. SG&A expenses for the fourth quarter and full year 2025 were $240,000,000 and $8,800,000 respectively, the increase over the prior periods was expected to support the Rezdiffra launch. Looking ahead, we expect 2026 R&D expenses to be roughly the same as 2025 as we build our organization and begin to invest in our pipeline programs. Operator: We anticipate SG&A expenses to increase next year as we continue to support the launch of Rezdiffra and build the foundation for exceptional long-term growth. Tina E. Ventura: Turning to our balance sheet. We ended 2025 with $988,600,000 in cash, cash equivalents, restricted cash, and marketable securities. With a strong cash position, we continue to be well resourced to support the ongoing launch of Rezdiffra and the advancement of multiple pipeline programs and continued business development. So to close, slide 21 captures why we are so confident about where Madrigal Pharmaceuticals, Inc. is headed. Rezdiffra is the foundational therapy in F2, F3, NASH is just getting started. F4C represents another meaningful growth driver that could double our commercial opportunity. And our pipeline, now more than 10 programs deep positions us to extend our leadership position as a durable Operator: category-leading franchise. Tina E. Ventura: Taken together, this is a company built for sustained value creation, Operator: across our launch, indication expansion, and pipeline. Tina E. Ventura: We believe we are exceptionally well positioned to lead in MASH Operator: in 2026 and beyond. I will now turn the call back to Tina to open the Q&A session. Tina E. Ventura: Thanks, Mardi. Let us move into the Q&A portion of the call. Michelle, please go ahead and provide instructions for the Q&A session. Operator: We will now open the lines for questions. And to open your line, please press 11, and you will be added to the queue. And our first question is going to come from Eliana Merle with Spark. Your line is open. Eliana Merle: You are seeing meaningful growth in the number of diagnosed patients. Can you elaborate on the drivers here and talk about your expectations for category growth in 2026? And then second, you are also seeing an acceleration in patient starts despite the launch of Wegovy. Can you elaborate on the types of patients you are seeing starting on Rezdiffra now versus say, in the past and any trends you are seeing across the types of different prescribers. Thanks. William J. Sibold: Great. Eliana, thanks for the question. Yes. We are seeing really strong growth. As you saw on the slides, which say a lot, almost 50% growth over a two-year period. And this you know, we had talked about the market is in a position to grow. Right? The 315,000 diagnosed patients was diagnosed sitting in the offices of the target specialists that we were calling on. And what we are seeing is our efforts are really paying off on a couple of fronts. Number one, as awareness goes up, there is going to be more people that are diagnosed. I think that having another company in the mix Novo who is really trying to drive, I would say, broad awareness and uptake in the primary Operator: care William J. Sibold: offices, etcetera, is leading to more diagnosis. Our focus has always been the 315 as we see a path to peak essentially through what is already available. Now, inevitably, though, as you bring products to market, you see higher growth in that space, and that is where we have seen the 50% and double-digit growth we are expecting, into the foreseeable future. So we are really quite excited about it, and it gives us not only a clearer path to peak, but also perhaps it gives us a greater opportunity than we had even anticipated in planned around. So, growth you see in all these markets you are going to see patient growth for, really, years and years. And, you know, I will leave that there. The question on patient adds, you know, we have been saying and we continue to steadily add patients. And we have seen really no difference in the type of patients that is being prescribed Rezdiffra. They tend to be a pretty even mix between F2 and F3. And as it relates to I think you mentioned a little bit about endocrinology. Or how our efforts are just in general with growing. You know, we are seeing prescriptions mostly in the hep GI space. That is the predominant number of obviously, more gastroenterologists than endocrinologists. They have just gone deeper into the deck, I would say. You know, we said that we have established really great breadth of prescribing, and now it is a matter of going deeper into their patient population. And I think what we are seeing is proof points that, this is becoming the standard of care. Patients are being put on Rezdiffra, having great experiences, staying on the drug, and you see that reflected in the patient adds? Great. Thanks, Eliana. Next question, please. Operator: And our next question will come from Thomas Jonathan Smith with Leerink Partners. Your line is open. Hey, guys. Good morning. William J. Sibold: Congrats on the quarter, and thanks for taking our questions. Maybe just one quick clarification question on I just wanted to ask about the contribution of the Germany launch to the worldwide revenues and patient numbers, and maybe if you could expand a little bit on expectations for 2026. And then on the pipeline combo programs, I know you are starting to look and you have guided today to a phase 2 study with Evogastat next year. Could you just elaborate on how you are thinking about sort of mid-stage phase 2 studies from here? Do you think these studies will need to evaluate Michael DiFiore: liver histology via biopsy before you progress into, pivotal studies is there potential for a more accelerated path that perhaps leverages NITs? Thanks so much. Yeah. William J. Sibold: Tom, thanks for the question. I will start off with answering Germany. Germany contribution in 2025 was negligible. And we do not see actually a lot in 2026 as well. You know, really, part of the driver of that is as we are launching into an MFN world, it is still uncertain how ex-U.S. is going to evolve. And that is not a Madrigal Pharmaceuticals, Inc. issue. That is for the whole industry. So, negligible in 2025, we are just getting started really in 2026. Do not expect a lot of contribution from Germany or ex-U.S. in 2026. This is U.S. is the base business. U.S. has had exceptionally strong dynamics to it as you have seen. Not only from a performance perspective, but from an outlook perspective. So we are very, very comfortable being able to have robust growth in 2026 the way 2026 is unfolding from an international market perspective. Tina E. Ventura: And maybe I will just put on a finer point about our 2026, Tom. We really do expect robust growth, and where consensus is coming out for 2026 already, we feel really good about that, which reflects very good growth from where we ended up with the $958 for 2025. Mardi C. Dier: Dave, do you want to Yeah. Sure. For the for the combination. Thanks thanks for the question, Tom. So, you know, it is it is a bit early to be definitive about our program in phase a conversation about their expectations two at this point because, you know, we do need to go to the FDA and have for the phase 2b program, you know, then leading into the phase 3 program. However, what I will what I will say with respect to NITs is that, you know, clinical care has moved well past biopsy. You know, biopsy is not used in clinical care anymore. And FDA has, shown more and more interest in qualifying noninvasive tests, for use in drug development. I would say in phase 2, our expectation is that NITs will play a major role in our assessment as, you know, as we show in the in the slides, we have a strong understanding the relationship between PDFF reduction and a potential improvement in fibrosis. So, as you can see, we are anchoring a lot, how we are looking at the program around, evaluation of NITs in phase 2. Tina E. Ventura: Great. Thanks, Dave. Michelle, next question, please. Operator: And the next question will come from Yasmeen Rahimi with Piper Sandler. Your line is open. Tina E. Ventura: Yeah. Good morning. This is Yasmeen Yeah. Good morning. Is Emma on for Yasmeen. Thanks for taking our questions. Firstly, it is maybe help us understand for MAESTRO-NASH outcomes in F4C, how are you tracking blinded event rates? Like and how is this, like, tracking for on-time data? At what point in this year might you tighten guidance in that regard? And is there any additional cirrhosis open-label NAFLD data follow-up that we could get to further strengthen conviction in the test? Thank you. Great. Thanks for the question, Dave. I will turn that over to you. Yep. Sure. Mardi C. Dier: I I guess for, thanks for the question. I think on the, let us start with the last part. Is there going to be any additional open-label data? I mean, think we have shown quite a bit already. So we have gotten quite a lot of information out of those 122 patients in the open-label NAFLD1 study. And I think what you can see from that experience is that even patients with the most severe disease, so individuals with clinically significant portal hypertension, we see what look like a positive effects of Rezdiffra in that population. You can move people into lower risk categories, of CSPH over a two-year time frame. So we have already gotten a lot out of this. Out of this open-label experience. With respect to the progress of MAESTRO outcomes, we are seeing events track in the range that were expected. So, as as we have talked about, historically, if you look at natural history data, you see about a 5% to 10% annual event accrual in patients with cirrhosis. We estimate in the placebo group somewhere in that range. And we are seeing, events, track, with expectation to deliver data, in 2027. With respect to guidance, we need to get a little bit further along to get, more precise on our timing. Tina E. Ventura: Great. Thanks, Dave. Michelle, next question, please. Operator: And the next question will come from Prakhar Agrawal with Cantor Fitzgerald. Your line is open. William J. Sibold: Hi. Good morning, and thank you for Akash Tewari: taking my questions and congrats on a strong quarter. Maybe firstly on gross-to-net, you could comment on gross-to-net for 4Q and cadence for the rest of 2026. And would you still expect broad first line access without step edits for Rezdiffra in 2026. Now that we are seeing no contract. And maybe just another follow-up, if you can comment on compliance persistence and discontinuation rates that you are seeing especially since Wegovy’s launch in the market. Thank you. William J. Sibold: Great. So, maybe I will start a little bit with just the payer contracts. They are complete. They were in place January 1 or earlier. And as we previously said, we were contracting for broad first line access. No step edits, and improved utilization criteria where it is possible. So that holds true. We are in a really great place for contracting. I think this when I think about kind of the accomplishments, the way we have managed contracting and gross-to-net is absolutely best in industry that I have seen that certainly any launch I have been a part of. Remember, we came out of the gates. We did not contract. It is now only entering into the quarter of launch that you are going to be having broad contracting. So the focus really has been preservation of gross-to-net, and I think we have done a great job at it. And we have set ourselves up, exceptionally well for 2026. Before turning it over to Mardi for gross-to-net, let me finish the compliance and persistence question. Same as what we have said, well tolerated oral. You know, a well tolerated oral at the one-year mark is in this 60% to 70% range. Certainly, we are continuing to see that strong performance and, you know, really encouraged. As I said, we have seen some institutions have been able to have persistence up in the 90% range. We are doing everything we can to learn from kind of the the best performance and how to apply that to the broader population. We have got an outstanding patient service team that is all over this. We work closely with specialty pharmacy and providers and patients to work on that. You asked the question about Wegovy. And, you know, what is the what is the impact that we are seeing there. Well, look. Wegovy is being used, but certainly not to the detriment of Rezdiffra. In fact, we just had our best NBRx week since launch, which says to me that just as we had said, you can have multiple products in the space, but that Rezdiffra really is the winning profile. Maybe with that, why do I not turn it over to Mardi to talk about gross-to-net evolution? Tina E. Ventura: Yep. Great. Thanks, Bill. Yeah. Let us break down gross-to-net a little bit. Operator: Prakhar, thanks for the question, and maybe a little comment on Q1 as well. So nothing is really changed from what we discussed. Tina E. Ventura: Last quarter with respect to gross-to-net. So we ended the fourth quarter exactly where we thought we would be, which was the midpoint of our 20% to 30% range. And that was a bit of an from third quarter as anticipated as some of the commercial contracting, which remember is one component of gross-to-net, took hold in the fourth quarter. So again, ending fourth quarter in that midpoint of the 20% to 30% range as expected. Now going into 2026, none of our messages have changed here either. With the, basically, zero to contracting that we have been discussing as we put those commercial contracts into effect. Operator: As of 01/01/2026, that moves our gross-to-net discount our overall gross-to-net discount, with all the components into the high 30s for 2026. And we have broken that down really by quarter. It really Tina E. Ventura: stays in that high 30s for each of the quarters for 2026. There is always intra-quarter variability because there are so many components but generally in the high 30s, for gross-to-net all as expected. And remember, as Bill just said, we get that excellent first line access no step edits, etcetera. So we are in very good shape and have always taken our gross-to-net our diligence around gross-to-net very seriously. But, you know, for as we discussed about Q1, looking at Operator: Q1 and what our expectations are for Q1, not much has changed there either. So we have to Tina E. Ventura: take into effect Operator: which is different than most companies that we have this zero to contracting impact to gross-to-net for Q1. In addition, to just the normal Q1 effect. So if we look at our analog Tina E. Ventura: all the specialty medicine analogs that we refer to Operator: frequently and have since launch, if we look at what the typical first quarter impact is, it is a decline in net sales of Tina E. Ventura: mid to high single digits. And that takes into effect the reverifications of the insurance plans and sort of the typical Q1 effect. And that is really reflective of where we believe our first quarter will be as well. But you have to consider not only do we have the Q1 effect, we are never immune to that. But we also have this in this order, the zero to Operator: contracting impact on gross-to-net that we just discussed. Tina E. Ventura: So we feel that that is pretty impressive considering that we have been able to steadily add and still have a strong Q1. Operator: With the typical Q1 effect and zero to contracting. So we think we are going to be in good shape. Overall. For 2026. And as I already mentioned, we will have robust sales growth in 2026. Tina E. Ventura: Great. Thanks, Mardi. Next question, please, Michelle. Operator: And the next question comes from Akash Tewari with Jefferies. Your line is open. Akash Tewari: Hey. This is Manoj on for Akash. Thanks for taking our question. Just one from our end. Gao Yi Chen: You mentioned about, like, 60% to 70% persistence rate. When we looked at the AASLD data, there was, like, some presentation showing more than 90% adherence rate in the real world. How important is to keep the adherence rate to that 90 is to maintain the current patient adds and the revenue growth. And also, do you expect any acceleration in patient adds going forward now with all the contracts in place, or should we think about, probably around 6,000 to 7,000 patients net patient adds every quarter? Just to trying to understand that point. Thanks. William J. Sibold: Great. So thanks for the question. Let me start with the patients. Look. We have said that we have been steadily adding patients, and we expect to steadily add patients going forward. And I think that is certainly an important measure as we show you this quarter, how we did in light of having another product on the market. So the fundamentals are really, really great, and we would expect in this environment to continue to steadily add to the contracting, remember, we have had great access from the beginning. The contracting does not really accelerate anything. Because we through if there was no policy in place, if you had a medical exception, those were flowing through very quickly. But in this next phase of launch, you know, we partnered with the payers. I think we have had some really great discussions. I think they have understood the value of Rezdiffra. They see the cost of these patients in their systems, and you know, we I think we have landed in a really good place for the future with them, and, you know, we do appreciate the partnership that we have. Now regarding persistence, you know, we are in that well tolerated oral range, as I said, the 60% to 70%. And, yes, as you point out, there are some institutions that have reported rates all the way up to 90%. Now what we will always try to do is look for ways to, you know, help appropriate patients stay on product as long as they need it. And I think that sense of urgency has increased coming out of AASLD where we presented data from both the F2-F3 population and the F4C population if you discontinue therapy. Disease comes back, and it comes back quickly. So, you know, we do believe this is a chronic therapy and that it is in patients' best interest obviously, prescribers' best interest, and overall for the system. Best interest that they stay on therapy. So we have a lot of initiatives underway that we are doing with our own patient services group. Partnering with specialty pharmacy and institutions, and working with patients as well directly to try to help that persistence rate improve to a level which is even higher than the well tolerated oral range. But that takes a lot of work, and, you know, there is just you know, people look. They regardless of whether it is for regardless of the type of indication, people tend to drop off drugs in time, but we are going to do everything we can to educate people on appropriately. Tina E. Ventura: Great. Thanks so much. Next question, please. Operator: And the next question will come from Michael DiFiore with Evercore. Your line is open. Michael DiFiore: Hi, guys. Thanks so much for taking my questions, and congrats on the continued progress. Two for me. The first, over the past several months, you have added multiple combination assets around Rezdiffra, including DGAT2 and GLP-1 and siRNA programs. My question is how do you avoid diminishing return from putting too many synergistic mechanisms into the pipeline? And what is your go, no-go criteria for advancing a second agent both clinically and commercially? And then my second question is briefly has there been any change in expected timing of MAESTRO-NASH outcomes now that the FDA has approved AI-supported pathology rates? Thank you. William J. Sibold: Okay. Dave, I am going to pass over to you in a second. But just, you know, just let us just take a step back what we are trying to do here, Mike. And thanks for the question because I think this is really important. So with Rezdiffra, we have what has become standard of care and is truly a foundational therapy. And that is just not from use. Looking at the clinical data, one of the things that is really striking is that across all subgroups, you have essentially a consistent effect. So in other words, it tends to be that, you know, all these F2, F3 patients do well. It is not as the one group does, you know, like, a super responder group. Now that is a great therapy. And, you know, rarely do you see something that has that type of results. Now if we can, through the addition of new mechanisms of action, find a way to have the whole population or a subpopulation do better then that really provides an opportunity for better patient outcomes. And that is how we are thinking about this. So when we are going out and looking at any of the mechanisms we are bringing in, it starts with we believe that there is a strong mechanistic rationale that in combination we could see a better effect for all or some patients. Now we have to test that theory, and that is why we are going to do these trials to quickly determine whether we if there is a there there. And we will kill or move forward quickly. The goal is not to have a lot of straggling things in the pipeline that never do anything except for suck up resource. We are not doing that. We are going to try to only take forward what is meaningful for patients. Now we also see the market evolving, though, where various subpopulations or let us call them segments may emerge. And we are well positioned not only with Rezdiffra, but now as we make these combo programs to provide a better product for those segments. So this is extremely when I say well thought out, it is well thought out. It is deliberate. It is based on mechanism, what we like, and it all starts with the fact that Rezdiffra is a foundational therapy that is really one which is amenable to either dose combinations or combinations for instance, with siRNA where you may have a pill and an injection but in a very favorable regimen. So that is just to give you the thinking of it. Dave, maybe Yeah. Just over to you for a little bit more color around it. Yeah. Yeah. I think I think Mardi C. Dier: the only thing I would add there is that when you start with a solid foundation that works in everybody, that is not necessarily true of every combination partner you add. Right? So it could be that, a particular combination partner, for example, DGAT the GLP-1 or one of the siRNAs, does better, for certain patient subtypes, whether they have a genetic predilection to disease progression or they have some comorbidity that sort of the combination partner happens to target more effectively. So the other thing I think that is really important about our strategy is that it is adaptable. Right? It is adaptable to the science. So as we run our phase 2 studies, we will be able to determine whether or not you know, the drug is kind of going to be broadly applicable to the population and broadly does something you know, that is going to be meaningful for patients with NASH or a subsegment within the NASH population is going to be a better target for that combination treatment. So I would just add the adaptability part for how we are thinking about pursuing these agents. Yeah. Then I think your second question was about MAESTRO outcomes and AI path reading. So it is great, you know, that the agency again is sort of evolving their perspective on MASH drug development. MAESTRO outcomes is an event-driven trial, so it does not it is not a histology-driven study. So, you know, AI path reading would really would not be relevant there. For MAESTRO-NASH, our F3 study, that is a biopsy-driven trial, but it is a landmark study. In other words, everybody gets, a biopsy at, month 54. Which is then, you know, compared to baseline. So it, we would certainly, consider using AI path reading as part of our analysis, but it is not the primary assessment we would William J. Sibold: Thanks for the question, Mike. Tina E. Ventura: Thanks. Next question, please. Operator: Next question comes from Jay Olson with Oppenheimer. Your line is open. Tina E. Ventura: It is always Oh, hey. Congrats on the impressive Mardi C. Dier: progress, and thanks for taking our questions. Just to follow-up on the previous question. Since you have two all oral combos, where do you envision the siRNA modality to fit into the future Jay Olson: treatment landscape of NASH? And is there any color you can share with us on the targets of those six siRNA programs, and when should we expect the timing of clinical development? Thank you. William J. Sibold: Thanks, Jay. Look. First of all, on the siRNA targets, for competitive reasons, we are not going to disclose the targets at this point. But stay tuned as we move along. We will certainly be sharing that, with, with you. Look. Where does where does it fit? So first of all, you know, we thought of the targets that we are looking at, we believe there is a rationale. For MASH and potentially making a better product. As I said, it starts with mechanism and the rationale to make a better drug. I am going to let Dave kinda walk through kind of our whole siRNA siRNA strategy, but you know, we really think it is a nice combo when you think about it. A every three to six month injection and a daily pill. Pretty easy. You know? If you are getting if you get a better effect from that, that is not a that is a pretty strong value proposition. What makes it an even stronger value proposition is it is all within the same company. So this is not going to be a it is not a battle for somebody having to optimize a single product. It is us being able to look holistically across the disease and say, what is the right solution for that patient or segment of patients? And we can provide that in an efficient manner. And so it will always be about what is the right therapy rather than having to sell a therapy. Dave, maybe I will pass it over to you. Yeah. I mean, I think just to add on, I mean, from a Mardi C. Dier: scientific standpoint, the you know, as Bill mentioned, siRNA technology is really had a breakthrough over the last ten years or so, and we can develop now highly targeted, well tolerated therapies that last three to six months as Bill said or even up to twelve months. You know, the latest technology can even get you that much further. So we are, you know, we are very fortunate to be working with Ribo Life Sciences, you know, a leader in siRNA technology. To be developing these drugs. And, you know, I think the key is that that sort of that combination regimen that sort of approach will make sense for either all patients or some patients. Again, we look for drugs that either have preclinical, clinical, or genetic validation and all of these targets kind of fit within those categories. So we think that, you know, with Rezdiffra, that solid foundation to add on these long-acting therapies, this could be a real advantage for patients with NASH. Tina E. Ventura: Good. Dave. Thanks, Jay, for the question. Next question, please, Michelle. Operator: Next question will come from Jonathan Wolleben with Citizens. Your line is open. Michael DiFiore: Hey, thanks for taking the question and congrats. Andrea Tan: You guys have talked about this growth of the market. This is the first time you guys put some numbers to it, and it does not seem like any of these dynamics you are attributing it to are going to go away anytime soon. Wondering how should we think about you know, five years from here, the F2-F3 target population, growing? And then also, should we expect, you know, further growth of the F4 population as well with patients still advancing? Just trying to get a bigger picture about the road ahead. Thanks. William J. Sibold: John, thanks for the question. Yes. I mean, look, what we said is that we would expect double-digit growth for the foreseeable future. That is certainly for the five-year period. So pretty robust growth I think now, again, you have got a therapy that works. People are talking about the disease. And, you know, as I said, we are benefiting from having a competitor that is out there talking a lot about it. And as we know, they need, you know, really lots of patients in order to make MASH a meaningful, indication for them. So we think that it is a position for years of growth. And your other question was Tina E. Ventura: Laid that four. William J. Sibold: Oh, F4. Look. Yes. We would expect to see similar not similar growth, but growth there. We are still working through the details of what that F4 population looks like, but I think you can assume that there will be growth as we get a little bit further into our analysis of the market and we are getting closer to our launch, we will provide updates as to where that is going. But overall, you know, as MASH grows, F4C will grow as well. Tina E. Ventura: Great. Thanks, John. Next question, please, Michelle. Operator: Next question is from Ritu Subhalaksmi Baral with TD Cowen. Your line is open. Eliana Merle: Hi, everyone. This is Nicole on line for Ritu. I am just wondering about the extensive script Andrea R. Newkirk: growth needed over the fiscal year 2026 to grow revenue off of the increased for the gross-to-net. And just a quick second question, what do you think companion diagnostics predisposition would need to be developed to show any genetic to for NASH if you are going to eventually move forward with the siRNAs if data is positive. Thanks. And, Nicole, can you just clarify your first question? It was a little we missed a word. Yeah. Sure. Yeah. Absolutely. The extent of script growth or patient adds needed over fiscal year 2026 to see a growth in revenue. To offset the increase in gross-to-net. William J. Sibold: Well okay. So let me let me start then. But let me be clear. There is Mardi C. Dier: there is William J. Sibold: we are growing. The fundamentals of the business are exceptional. We are steadily adding patients. We are going to see robust growth in 2026. And into the future. So, I mean, let me just be crystal clear. When we talk about Q1, Q1 has two Q1 things going on. First of all, the Q1 effect that every single product in the industry experiences, reauthorizations, etcetera. On top of that, though, we have the zero to contracting. So instead of contracting for the two years previously, and having a steady increase in gross-to-net, we held off contracting until the seventh quarter of launch and or eighth quarter of launch, I guess. And so you have the zero to contracting effect. So we are still, despite that, in the range of the comps that we look at, which is kind of really remarkable. It says how strong the underlying business is. So expect to see growth. Our you know, look. We are not going to do the model is the number of patient adds, etcetera. But robust growth now and in the future. Mardi, do you have any other comment on that? Andrea R. Newkirk: Exactly. We talked about it, Nicole, for 2026. From a consensus standpoint, we feel really good where where the Street is right now for 2026, which reflects robust growth Tina E. Ventura: from where we ended in 2025. So we feel like we are in good shape. We already talked about the Q1 effect and gross-to-net as daily adding patients. And I will just reiterate what Bill said. Last week was our best MBRx week ever. So the underlying business is in really good shape, and we anticipate that that growth through 2026 and beyond. Quite frankly. William J. Sibold: Yeah. And yep. That is right. Go ahead. Dave. Mardi C. Dier: So companion diagnostic. Real interesting question. I mean, you know, it is early to sort of comment on that because, you know, to consider a companion diagnostic, you have got to be looking for a particular, for example, genetic or biomarker type target. To tie your therapy to. So as Bill mentioned, Rezdiffra, of course, does not need that because it works very well across all patient subpopulations. We will see, you know, as the combination products move forward, you know, if there is a need to develop a companion diagnostic. But as of right now, we do not foresee that, with these programs. Right. Or just just really quickly to follow-up. Are genetic screening common in the clinic already? They are becoming I think, generally speaking, I cannot speak in NASH in particular necessarily, but across general clinical care, genetic screening is becoming more common. Yes. But, you know, I think producing, a genetic or another biomarker companion diagnostic, you know, takes an additional lift for sure. Yeah. And just remember, we Jay Olson: let us just William J. Sibold: let us just put a fine point on this. We are seven quarters into the launch of an entirely new category. There are decades of growth and evolution in front of us. The decisions that we are making today with the pipeline are not 2026 decisions. They are not even 2027 decisions. These are helping to form treatment which will include diagnosis any kind of test that obviously will be done to segment patients, etcetera, that will evolve in time. So we are very much on the forming side of this. And remember, we are less than 12% penetrated into the 315. It is less than 8% into the 460 that we talked about. This is at the beginning of a very significant specialty market. We are the company at front end of it that can drive it, not only for the coming years, but for, we believe, decades in advance. Tina E. Ventura: Great. Thanks. Next question, please, Michelle. Operator: Next question is from Thomas Smith with B. Riley Securities. Your line is open. Jay Olson: Thank you so much for taking our question, and congrats on a very nice quarter. Catherine Okoukoni: Just sort of sticking with what you were just talking about, Bill, in terms of the market increase from 315,000 to 460,000. Just curious if you or know, if you see that correlated with the increase of patient prescriber interest and potentially we should think about that as reading through to sort of new patient adds. Is this more of a longer term, just more runway in terms of patients? Or is this actually feeding increased new patient additions. And then I have a follow-up. William J. Sibold: One of the real important yes. Thanks. Look. So I think pieces of this of the update is if you look and see where that real growth is taking place is in the target specialists that we are calling on. And I think that is really important. What it is saying is that our efforts really are working in that patients that are diagnosed are making their way to the specialists that treat NASH. And, you know, we have been clear from the beginning. We think this is a specialist disease. That is why we are focused on hepatology, gastroenterology. And now some endocrinology as well. That is where the patients are. Those are the experts that should be treating it, and that is where we are seeing the biggest growth taking place, which is indicative of our wiring of the system being extremely successful. So I think what you are going to see is, remember, we are still at a very low rate in the already diagnosed. And so we still have a lot of patients to get through just in that initial 315. And then as more and more come in, and this becomes standard of care, that is when you see just treatment rates get higher. As well as diagnosis rates gets higher. So, you know, that is just you a little bit of flavor around it. And you said you had a quick follow-up. Maybe, it is just real quick because we have got to move on. Catherine Okoukoni: Yeah. Thanks. In reference to your GLP-1 and your DGAT, it looks like GLP-1 might be, initiation starting for your for phase 1. It looks like it might be pushed back slightly from first quarter to second quarter. In terms of both those programs, just curious what remaining gating activities still need to be completed. Mardi C. Dier: Yeah. We so we I think we guided initially to first half. William J. Sibold: And then we have refined it to second quarter. So there is there has been no delay in the no change. No delay. Okay. Thanks. Okay. Thanks. Tina E. Ventura: And, Michelle, we have time for one more question, please. Operator: Okay. The last question will come from Srikripa Devarakonda with Truist. Your line is open. William J. Sibold: Hi. This is Alex on for Kripa. Thanks for taking our question. Congrats on the progress. Now that we are seeing more and more patients on for longer time periods, we want to know, have you seen any challenges in the reimbursement process to keep patients on drug Michael DiFiore: for the extended time periods? We can imagine that for many patients with Rezdiffra, that their fibrosis scores could improve, and they might technically be outside of the label requirement. Catherine Okoukoni: That is that. Thanks. William J. Sibold: Okay. Thank you very much for the question. So, you know, first of all, the reauthorizations we said are very routine. Oftentimes, it is physician attestation or showing some kind of stabilization or improvement in one of the NITs that has been used initially. I think you know, look. We are, again, we are really early into the treatment of the disease. Think what is very compelling for the community is I will go back to the AASLD data which showed that discontinuation of Rezdiffra led to a return of disease in both F2 and F3 and also F4C patients. So I think that, you know, more and more the belief is that this is a chronic disease. And, you know, you just you cannot stop the medicine even if you have a response because you will have done all that hard work. And then you are just going to have disease come back. So we think that is how it is going to evolve in the future again, though. You know, look, it is early, but our belief is that this is a chronic therapy. That is the way the community tends to be using it. So we feel really, you know, quite confident that will be the case. So Tina E. Ventura: Alright. Yeah. Maybe we will maybe we will end it there. Maybe, look. Just just maybe I will finish off just with William J. Sibold: a remark of just kind of what is the state of the union, if you will. Rezdiffra is performing exceptionally well. This is truly a best launch I have ever been associated with, and I can tell you that is from a that is a factual perspective. Nothing is done as well as this. And it is poised for substantial long-term growth in a rapidly growing market. It is because of those two things that we can build a pipeline now to establish long-term leadership. Most companies have a pipeline looking for a great product, we have a great product. That is performing exceptionally. Is poised to perform exceptionally for the future, now we have a chance to build long-term leadership. It does not happen often. This is an opportunity. We are not going to waste the opportunity. So with that, we will close the call. Perfect. Thanks. Thanks, Bill. And thank you all for your Tina E. Ventura: time and interest today. This now concludes our call. A replay of this webcast will be available on our website in about two hours. Thank you for joining us. Operator: Ladies and gentlemen, thank you for your participation in today's conference. You may now disconnect. Have a wonderful day.
Operator: Thank you for standing by, and welcome to the APA Group 2026 Half Year Results. [Operator Instructions] I would now like to hand the conference over to Mr. Adam Watson, Managing Director and CEO. Please go ahead. Adam Watson: Thank you, and good morning, everyone. Thank you for joining us for today's first half FY '26 results presentation. I'm joined by Garrick Rollason, our CFO, as well as our Investor Relations team. Let me start by acknowledging the Gadigal people of the Eora Nation, traditional custodians of the land on which I'm speaking. First Nations people have taken care of our lands and waterways for the past 60,000 years. We acknowledge and pay our respects to their elders, past and present. As always, I'll start today's presentation with a safety share on Slide 4. To prepare for extreme weather conditions, we conduct a summer readiness program, including activities such as site clearing and weed prevention. I'm pleased to say that we haven't had any weather-related customer impact so far this summer. I'd like to thank the APA operations team for the fantastic work they do to keep our people and our assets safe and to keep our customers' operations going 24/7. Suffice to say, we are very pleased with today's results. I'll highlight 3 key takeaways to Slide 5. First, we've delivered a strong financial result. We're continuing to deliver against our commitments. Underlying EBITDA is up 7.6%, and our EBITDA margins have expanded by 280 basis points. Much of this has been driven by our cost reduction initiatives, which included a 13.6% reduction in corporate costs. Looking forward, we expect to see our FY '26 EBITDA above our guided midpoint. Second, we have a compelling growth outlook. The ongoing role of gas in the energy transition is now well understood. And this has been reinforced by outcomes of the federal government's recent Gas Market Review and the move to establish a domestic gas reservation. These thematics, together with strong customer demand, give us confidence to move ahead with the next phase of our East Coast Gas Grid expansion plan. We've completed the first stage of our Beetaloo development. We've announced an agreement with CS Energy to deliver the Brigalow Peaking Power Plant, and our organic growth pipeline has increased from $2.1 billion to $3 billion, reflecting the strong growth we see in our target markets. The third highlight is that we have ample capacity available to fund our growth. The S&P threshold modification announced in December 2025 has provided an additional $1 billion of capacity to fund new growth. This threshold modification reflects our disciplined focus on our core growth markets of gas transmission and storage and contracted power generation. By focusing on our core markets and applying our competitive advantages, we have delivered returns well above our cost of capital, creating value for our security holders. Slide 6 sets out our financial highlights. The strength of our business is demonstrated by our 7.6% growth in underlying EBITDA for the half. And we have the confidence to say we can expect to exceed the midpoint of guidance for the full year. It's worth noting that the midpoint of guidance would represent growth of more than 7% in on FY '25, which would be another very strong result. Our EBITDA margins are now at 77.3%. The great progress we've made with our cost reductions, coupled with strong contributions from our recently commissioned assets and our inflation-linked revenues puts the business in a strong position. Free cash flow is higher, in line with expectations, noting we had a one-off working capital timing impact relating to the divestment of our Networks business. Our distribution of $0.275 per security is up 1.9%, and our distribution guidance for FY '26 is reaffirmed at $0.58 per security, which will be our 23rd consecutive year of distribution growth. Let's move to Slide 8 to cover our strategy. The key point to note is that our strategy remains unchanged. We remain extremely confident in our ability to create long-term value. And while it's easy to think about our business in terms of markets, our strategy is about creating value by developing energy infrastructure assets with inflation-linked revenues under long-term contracts with Tier 1 counterparties. Underpinning this is our focus on core assets and projects that deliver returns well above our cost of capital. We remain focused on growth markets where APA has a clear competitive advantage. Examples of what we're focused on are set out on Slide 9. APA has [indiscernible] businesses. The first has been the foundation of our growth for the past 25 years, and that's our gas transmission and storage business. The growth here is centered on our East Coast Gas Grid expansion, supporting new basin developments such as the Beetaloo and Taroom Trough and building laterals to support growing customer demand for GPG on Australia's East and West Coasts. Our other focus is on contracted power generation. This includes growth coming from new gas power generation projects across the country. AEMO forecast the need for 13 gigawatts of new GPG investment in the NEM alone. More recent analysis from Griffith University suggests up to around 20 gigawatts may be required. And this is all largely before factoring in the likely growth in energy demand to support new data center developments. Demand for remote contracted power generation presents similar growth opportunities. Slide 10 demonstrates the strong long-term demand for gas in Australia and the significant domestic supply available to service it. And this supports the investment case for expanding our East Coast Gas Grid. The chart on the right shows the significant volumes of domestic gas reserves and resources available to meet domestic demand. These reserves will also continue to supply Australia's critically important LNG export market. Over 68,000 petajoules of 2P reserves and 2C resources are available in Eastern Australia to serve an East Coast domestic market that consumes around 500 petajoules of natural gas each year. Domestic gas supply is simply not a constraint. And taking steps to unlock this supply, including expansion of our East Coast Gas Grid and the proposed domestic reservation for the East Coast is in Australia's national interest. Moving to Slide 11. Given our announcement today of our East Coast Gas Grid expansion plans, I want to ensure we address the debate regarding LNG import terminals relative to the transportation of domestic gas. As we've said at APA, we're somewhat agnostic as to whether we transport domestic gas or imported LNG. Most of these molecules will end up flowing through our network in any event. What we advocate for, however, is the delivery of the lowest cost, lowest emissions and most reliable energy source to service gas demand. And that, without question, comes from domestic gas supply. Now some of the arguments used to advocate for LNG import terminals don't withstand closer scrutiny. And the main argument is that imported LNG can be cost competitive. The truth is multiple data points confirm that in the short and long terms, LNG imports will continue to present a higher cost option than pipeline infrastructure expansion and domestic gas. Asian LNG spot prices have rarely been lower than domestic wholesale gas prices. And modeling from Rystad forecasts long-term pricing somewhere between USD 8 and USD 12 per gigajoule to spot LNG arriving into Asia. This is before you factor in transport and regasification costs and foreign exchange, which take the forecast delivered cost into Australia to be an average of over AUD 20 per gigajoule. Australian manufacturers and consumers generally cannot afford such high prices. Another argument for import terminals is the domestic supply to meet southern market demand is entirely dependent on the Beetaloo. While opening the Beetaloo will no doubt benefit Australia's gas market, domestic gas demand on our East Coast can be met from multiple existing basins, including the Surat and Bowen basins in Queensland. Quite simply, domestic gas is the clear solution for the Australian market. Slide 12 provides detail about Stage 3 of our East Coast Gas Grid expansion plan, which would increase the capacity of the East Coast network by around 30%. Final investment decision has been reached on Stage 3A with an investment of $260 million to deliver 3 new compressors. This will increase North to South capacity by 11%, including a 20% increase in capacity for Northern gas into Victoria, and it will be ready by winter 2028. We're also investing $220 million in Stage 3B to enable continued early works and procurement of long lead items for the Bulloo Interlink, including the purchase of 342 kilometers of 28-inch line pipe. It's worth acknowledging that the favorable regulatory outcomes for the Bulloo development, along with the federal government support to implement a domestic gas reservation on the East Coast, builds confidence to make these investments. Strong interest from customers is also driving our progress on the Bulloo. The demand for Stage 3 is clear and domestic gas supply is not a constraint. This expansion plan is a timely and cost competitive solution to our predicted southern market supply shortfalls. In short, APA's expansion plan will deliver the capacity that ensures certainty of supply into Victoria and the East Coast more broadly. Gas supply, whether it be molecules or transport, is no longer a constraint. And it's now up to our federal government to bring this to life. Moving to Slide 13. We're also continuing to support new basin developments in Australia, including the Beetaloo, which is showing particularly strong near-term momentum. We've completed construction of the Sturt Plateau Pipeline with gas to flow to Darwin from mid-2026. We're now working on plans to expand the **SPP with additional compression that would increase capacity to around 100 terajoules a day. In December, we announced that the Northern Territory government granted APA a pipeline permit to survey a potential route for the North to East Australian pipeline. The NEAP, as we call it, has the potential to connect to APA's East Coast Gas Grid, utilizing our existing **Carpentaria corridor. We're also planning work for a new pipeline to go north to Darwin with one option being to utilize the same existing corridor as our Amadeus pipeline. The key point is that we're well prepared to support our Beetaloo customers with either a northern or eastern transport route as developments in the basin continue to progress. Moving to Slide 14. We were pleased to announce late last year that we're partnering with CS Energy in Queensland to develop the 400-megawatt Brigalow Peaking Power Plant. The project expands APA's footprint in GPG and deepens our partnership with CS Energy. The [ Pekka ] will connect into APA's Roma Brisbane pipeline via a new transport and storage lateral, which is currently being developed separately by APA. There's a strong list of opportunities for similar GPG developments that we're currently investigating across the country. Moving to Slide 15. Our Pilbara business continues to perform strongly and in line with our acquisition business case. It's worth noting that the vast majority of the value ascribed to the Pilbara acquisition was allocated to existing assets, not to growth. These assets are generating a lot of cash, about $140 million of EBITDA last year, representing a yield of around 10%, which is obviously very strong. And while demand for new power generation developments by our customers in the Pilbara is a little slower than anticipated, the development pipeline is now larger, supported by new opportunities such as the Burrup transmission line. We remain confident about the opportunities ahead in the Pilbara and other remote regions such as Kalgoorlie and Mount Isa. With that, I'll now hand to Garrick for a deeper dive into our financial performance. Garrick Rollason: Thanks, Adam, and good morning, everyone. I'll start with our headline financials on Slide 17. In the first half, we have delivered strong growth in underlying EBITDA, up 7.6% for the half year as the benefits of inflation-linked tariffs, earnings from new assets and cost reductions were realized. Pleasingly, underlying EBITDA margin increased to 77.3%. Free cash flow was up slightly as the benefits of higher earnings were offset by increased funding costs and cash tax payments as well as movements in working capital and SIB CapEx. I'll have more to say on this on a subsequent slide. Moving to Slide 18, where I'll step through the drivers of our 7.6% uplift in underlying EBITDA. 1H '26 represents a strong clean result, and I'll call out some of the key period-on-period movements. We delivered new earnings from the Kurri Kurri lateral and Atlas to Ready Creek pipelines as well as the Port Hedland Solar and Battery, alongside inflation-linked tariff escalations and savings from cost reduction initiatives. Offsetting this was the nonrecurring $13 million in insurance proceeds relating to the Moomba Sydney ethane pipeline that was received and disclosed in the corresponding period. Corporate costs of $70 million decreased by 13.6% in the half compared with 1H '25. We are making strong progress with our enterprise-wide cost reduction initiatives, and I'll touch on this further later in the presentation. Slide 19 summarizes the drivers of free cash flow, which was up slightly half-on-half to $556 million. Consistent with our previous statements, the uplift in underlying EBITDA was partially offset by higher interest and cash tax paid. Higher interest costs reflects increases in net debt to fund growth and a marginally higher average cost of debt. Higher cash tax reflects the continuation of tax installment payments, which recommenced in the second half of last year. The change in working capital in the first half is primarily related to one-off timing impacts arising from the divested Networks business. This will unwind upon the conclusion of this service under the TSA, which is expected in the first half of FY '27. Stay-in-business CapEx was lower due to timing of expenditure in the first half of last financial year. Looking forward to the full year, we continue to expect broadly flat free cash flow. Beyond this year, we expect to see free cash flow growing as earnings continue to increase and tax begins to normalize. Moving to Slide 20, which outlines our statutory results. Net profit after tax of $95 million was higher than the corresponding period, noting that higher reported EBITDA and lower net finance costs were offset by higher depreciation due to the inclusion of new assets. Within nonoperating items, aside from the noncash hedge and technology transformation-related items that you've seen before, there were 2 one-off items in the first half. First, a $15 million noncash loss on the sale of the Networks business, primarily due to the write-off of historical goodwill. and secondly, a $14 million payment for the settlement of a legacy revenue-related legal claim that has been in dispute since 2015. Moving to Slide 21 and an overview of CapEx. We continue to invest in projects to support long-term growth, strengthen our foundations and maintain safe and reliable asset operations. We invested in growth capital expenditure through early works on the East Coast Gas Grid expansion, the Sturt Plateau and Brigalow Pipelines and the proposed Brigalow Peaking Power Plant. We are maintaining our full year guidance for foundational and stay-in-business CapEx. And as Adam said previously, we have increased our organic growth CapEx pipeline from $2.1 billion to approximately $3 billion over the next 3 years. All of this capital expenditure is consistent with our capital allocation framework, which is outlined in the appendix and is expected to achieve returns over our hurdle rate of 150 basis points above post-tax WACC. The framework is designed to ensure we allocate our free cash flow to those initiatives that can create the most value for our security holders. To that point, I'll cover funding on the next slide. We have existing balance sheet capacity to fund in excess of our $3 billion organic growth pipeline over FY '26 to FY '28. Apart from the DRP, APA does not need to issue ordinary equity to fund this identified growth pipeline. The $3 billion organic growth pipeline includes in-flight and probable growth projects across gas transmission and storage, GPG, remote grid and other on-grid contracted power generation projects. This strong balance sheet position, combined with active capital management and the predictable capacity-based inflation-linked revenues leaves us well positioned to deliver on our organic growth opportunities. In short, we are very confident we have the funding flexibility required to deliver the attractive growth opportunities available to us. More detail on our key balance sheet metrics, near-term maturities and capital management activities are provided in the appendix. Finally, I'll cover our progress on our cost reduction target on Slide 23. The key message is, we are making strong progress towards our $50 million cost reduction target in FY '26. We are achieving this by leveraging the foundational investments made into the business over the past 3 years. These included investments in technology, business resilience, climate and community and capability uplift. These investments have enabled the initiatives, which are reducing costs and driving margin expansion across the business. We now have the business set up to drive ongoing, enduring and sustainable cost improvements. We will provide a further update at the full year results, along with our target for FY '27. And with that, I'll hand back to Adam. Adam Watson: Thank you, Garrick. As you can see on Slide 25, we believe we have APA in a strong position. We've simplified our business. Our core business is performing well, and we continue to drive a lean and efficient cost base. There's good momentum in our growth markets, and we remain disciplined in capital allocation, prioritizing projects with the highest returns. Our balance sheet is strong, and we have ample capacity to fund growth, which takes us to the wrap up on Slide 26. We've delivered another strong half year result with underlying EBITDA up 7.6%. The outlook for the full year is also strong. We're well placed to capitalize on emerging opportunities with a $100 billion-plus addressable market and a $3 billion organic growth pipeline for FY '26 to '28, which we can fund from our existing balance sheet. Thank you for your time. Let's now move to Q&A. Operator: [Operator Instructions] Today's first question comes from Dale Koenders with Barrenjoey. Dale Koenders: Just wondering first around the reduced downgrade trigger with the S&P. Could you maybe provide some color about how you're able to negotiate that and if you had to give anything away by getting the more favorable balance sheet settings? Garrick Rollason: Thanks, Dale. It's Garrick. I'll respond to that. As you'll be aware, we speak to the rating agencies often and frequently and provide them with a lot of detail around our operations and our forecast. We've been talking to S&P specifically around the downward threshold for some time. And I suppose really pushing them relatively hard on the underlying basis of our earnings and the strength of the contracted inflation-linked revenues and both today and going forward and the nature of the assets and the contracts we have. So through those discussions, S&P obviously continually review the business metrics and what's appropriate for our rating and came out with a threshold that we think makes a lot of sense. Certainly, there was no -- nothing that we were required to give up in order to achieve that. It's just consistent with the nature of our earnings and nature of our business. Dale Koenders: When we think about Slide 22 then, and we think about this increased growth CapEx outlook, it looks like it really has been facilitated by the increased balance sheet capacity, the generation and uses of cash looks like you've only got kind of $100 million spare balance sheet capacity over the next 3 years even with the DRP running. Can you talk a little bit about what balance sheet capacity you have left over the next 3 years? Adam Watson: Yes, Dale, I might just take the first part of that question, and then I'll hand it over to Garrick in terms of what additional capacity. But strategically, there's no shortage of opportunities, and we're conscious of that. And we're very focused on making sure we're working on projects that are customer-led and in our core markets where we can deliver returns above our cost of capital. And effectively, we have the organization fighting for capital, which is where you want it to be. So we always look at that also in the context of the balance sheet and making sure we're not taking on too much. And obviously, the capacity provided through S&P has been helpful to be able to continue to progress the opportunities ahead of us. But I just want to make sure that people are left with the understanding that it's really a disciplined approach to how we allocate capital, of which the balance sheet is just one part of that. Garrick Rollason: And then I'll address the question around balance sheet capacity. So the S&P downward threshold did create about $1 billion of additional debt capacity at the time. And I think we announced that when we went to the market and told them about the downward threshold. That's obviously pleasing from our perspective because it means that we have the capacity to fund more accretive organic growth on balance sheet. So as we stand here today and clearly, balance sheet capacity increases as our operational cash flow also increases. But sitting here today, we're certainly not capital constrained. And when I look on Page 22, we actually have capacity in excess of the $3 billion of growth opportunities that we've talked about in the presentation today. I'd actually say well in excess of that $3 billion. But it's also worth reminding you, and I might sound like a broken record here, but we have many levers available to us to deliver balance sheet capacity. So that includes the existing balance sheet capacity we have. It includes things like issuance of hybrid instruments, which are efficient use of balance sheet. There's partnering, there's asset recycling, there's structured equity. So we have a number of levers available to us to manage that accretive organic growth that we see ahead of us. Dale Koenders: And then just finally, is the $3 billion the new run rate you'll look to sort of hold or grow from going forward? Adam Watson: We're going to assess that as the projects come forward. And as you know, that $3 billion is a portfolio of projects. And there are projects in there that are probability weighted, some more certain than others, which tells you that the opportunities there ahead of us are more than $3 billion, but you don't necessarily win every one of them. And ultimately, with the right projects come along that are highly accretive to our security holders, make sense for our customers, all those things that we hold ourselves accountable to, then we'll always consider those opportunities. And again, then we'll look at it from the lens of the funding, and Garrick's already commented on the different levers we've got to be able to address the funding of any opportunities that are before us. Operator: And our next question comes from Tom Allen at UBS. Tom Allen: Congratulations on committing to Stage 3A of the East Coast grid expansion today. But I'd like to ask about Stage 3B, please. So APA has committed $220 million to order long lead items. I assume that, that's the compressors for the Bulloo Interlink. You've outlined the total project cost of about $800 million. So can you confirm the level of customer underwriting that you have for Stage B given the commitment for that today? Adam Watson: So just to be clear, we break Stage 3 into 2 components. 3A is compressors. So that's 3 new compressors. We've already got them ordered and then we'll continue to deliver those now in line with our project plans, which get that delivered by winter 2028. They're no different to what we've delivered in Stages 1 and 2. And we -- as you know, we don't underwrite those projects. They're incremental to our existing capacity. But obviously, we do that off the back of the demand and the inquiries and the process that we go through with our customers to ensure that the demand is going to be there. Stage 3B is not compression. It's pipeline. It's the Bulloo interlink. And what we've ordered there is the line pipe, the 28-inch line pipe, 342 kilometers of that. We're well progressed with landholder consultation and engagement planning and approvals. And we wanted to get ready for our ability to be able to hit go on the next stage, which is what we've done today around ordering those long lead items, but also give ourselves enough capacity and flexibility to be able to sit here and monitor how the National Gas Review would play out. Now the National Gas Review in draft that came out just prior to Christmas from the federal government was positive for domestic gas supply. It sent the right signals around the need. The demand is not an issue, right? Everyone understands industrial demand is incredibly strong. And as you see demand for GPG for other sources of intermittent capacity being required or supply being requiring capacity, there was no question around the demand. It was making sure that we had the supply capacity available. And quite frankly, the biggest constraint or almost the only constraint there was pipeline capacity. So we've addressed that today. We're now sending a strong signal to our customers, to the industry, to government that capacity is not a constraint now, and we're just waiting for the federal government to finalize the policies that they've drafted. From a customer perspective, as you'd expect, we've had deep engagement with our customers. There's a lot of interest there. But they too are sitting there waiting for the National Gas Review to play out. I can get into the details behind that, but you know very well what the implications are there that it's pretty hard to sign up to long-term contracts when the producers aren't able to do that because they're not sure about how the National Gas Review is going to play out. So I think we've made really good steps in the last couple of months with the federal government's announcement and with our announcement today, I think that's really positive. And obviously, we'll continue to work forward with our customers over the coming months. Tom Allen: If the customers are waiting for the National Gas Review to play out and you comment then that they're finding it hard to sign long-term commitments to transport, why is -- why won't the Board also wait for underwriting before making such a material commitment to Stage 3B because it's effectively lifting the risk profile of the business by taking such a merchant risk position on that asset. Or why not wait if the demand is so strong? Adam Watson: So it's a chicken and egg issue, Tom. If we don't come out and provide the capacity and the transport that's required to move that gas North to South, then the government is sitting there saying, well, you've got a constraint in the market, so I need to look at potentially other options. So what we're doing is allowing industry, allowing our customers and allowing the federal government to be able to have comfort that we are committed to moving forward to ensure that capacity is not a constraint, which then allows the government to be able to put the right policy in place, which again, in draft is very encouraging to be able to make that happen. I know it's a big financial commitment. But again, we've spent well north of $500 million over the last couple of years, which was uncontracted. And you've got to have comfort that the demand for our product is there, which we have deep comfort from and that you can continue to recontract that capacity, and we've been incredibly successful at recontracting that capacity. In fact, we haven't had any negativity there at all. And again, when you get comfort around the demand thematics and the supply thematics, and obviously, we've got a gas market model that takes into consideration all the potential risks, we are incredibly confident to move forward. But again, we just want to ensure that we don't make that final decision until we've got the parameters laid out with the National Gas Review. Tom Allen: I guess the challenge, obviously, being on such a long-life infrastructure is that the demand outlook can change. And I don't mean to draw a negative tone to it, but I mean, APA's internal demand estimates also expected that the Northern gas interconnect over -- so the Northern Goldfields Interconnect over in Western Australia, when that was committed in November 2020, would also be contracted by the time the asset was commissioned. So it was commissioned 2 years ago. And looking today on the bulletin board, it still looks like the asset is roughly only 20% contracted. And so there's obviously commercial risks out there and there's some good information in the pack on how APA see those around import terminals. But I note the analysis on import terminals is using a current North Asian spot LNG price at over USD 12 MMBtu. When this Bulloo Interconnect would be commissioned is winter 2028, which independent forecasts and even the current futures curve have at USD 8 MMBtu, which on our analysis using the [ ACCC ] approach would have landed gas in Australian dollars a gigajoule leaving Port Kembla at comfortably below $15 a gigajoule, which would make it look like very in the money competitive cost gas for southern flexible demand. So are you able to confirm that if an import terminal were built and in winter '28 gas prices were USD 8 MMBtu that you'd still be comfortable that long term, you're going to make a return on and of equity on these investments? Adam Watson: So I'll address your first part of that, Tom, around contracting risk and demand and supply. And again, I'm repeating myself, but I do want to ensure that I answer the question that you've got to look at the demand for gas and the supply of gas and the gas market model that supports that on the East Coast Gas Grid, and we remain very confident about that. So the customer inquiries are there. The customer demand is going to be there. And you got to remember that we continue to build out the East Coast Gas Grid in an incremental way, principally through compression. Now the Bulloo interlink is obviously not compression, and that is a bigger link of capital than an individual compressor. But it does -- it has been built in a way that addresses the shortfalls out to the early 2030s, but we're not trying to overcapitalize on that beyond that time period because we know beyond the early 2030s, we can continue to build out the East Coast Gas Grid through further compression. So we're trying to do it in a way that's cost competitive and price competitive for our customers, which we're very confident about. Look, the NGI, you're right, it's been slow to ramp up, but it's a very similar ramp-up to what we had with the Goldfields pipeline a number of years ago. We said that, that's going to take around 5 years to ramp up, and it's going to be dependent on a number of customers in the region, the Goldfields as an example, to procure into that. And it's a very different market to the East Coast Gas Grid. It's much more individual contracts in the East Coast Gas Group being with customers who run portfolios in terms of their gas movement. But again, we remain confident around the long-term value of the NGI as well, and it's consistent with our expectations. If you go to LNG import terminals, it's a really interesting argument. And look, the most recent credible long-term forecast that came out was Rystad. It's actually in the pack, I think it's Slide 44. And that has long-term average U.S. dollar LNG spot prices into Asia of somewhere between $8 and $12. There will be days where it goes below that. I understand that. And LNG producers, importers, if they want to sell into the market on particular days that are below the domestic price, then that's great. They can be free to do that. But from a sustainable perspective, it doesn't make any sense to think that LNG imports can be price competitive. You know that you've got to take into account regasification, you've got to take into account transportation against the Asian spot price. And the counterfactual argument is that if prices -- LNG global prices were getting to those lower numbers that you were talking about, those $5, a couple of things happen. One is if prices are so low, then Australia's LNG exporters will be selling into the domestic market because it will be more attractive to sell domestically than for an LNG import. So we don't need LNG imports and under that scenario. And the second one, the only other scenario where LNG imports make sense is when a government agency or the government directly subsidizes principally the regasification of that, which means that either the consumers will end up paying for that higher cost directly or you'll be -- every taxpayer will be paying for that through higher taxes. I don't think politically that's going to be something that anyone is going to put their name to. So not saying that LNG doesn't -- LNG imports won't exist in Australia. We just don't have any confidence at all that it's sustainably going to make sense. Operator: And our next question today comes from Henry Meyer at Goldman Sachs. Henry Meyer: Over in the Pilbara, we've seen GIP acquiring a share of BHP's network. Could you just share how you're expecting that would influence competition and the pipeline you see for your position in the Pilbara? Adam Watson: So look, the Pilbara, first thing we remind everyone, and we get a lot of questions on this. So we wanted to be upfront about this is that the Pilbara business is performing really well. The vast majority of the value that we ascribed to the business when we acquired it was to existing assets, and they're performing bang on line with expectations. And the business case, which we monitor and do post investment reviews on is doing really well. From a growth perspective, the growth opportunities are still there. There's nothing in our pipeline that we announced at the time of acquisition that doesn't exist today. It's just that they have been pushed to the right from a timing perspective, which is effectively customers, you know who they are, have pushed out their ambitions somewhat to the right. But we are confident that the ones that we're bringing to market, which are closest to the customer, lowest levelized cost of energy, all of those sorts of important elements from a customer perspective will be absorbed at the right time. But the size, as I said in my intro, the size of the opportunity is now bigger in terms of there are more projects that are available. And the Burrup Peninsula is one of them. There's reasonably good progress there in terms -- certainly good progress in terms of planning and approvals and the work that we're doing with customers and government there. But we've always said that, that will be a bit of a longer game for us. So we're comfortable with how it's progressing in the Pilbara. We are seeing good interest in other areas outside of the Pilbara, Mount Isa, Kalgoorlie, which we see good opportunities where we can deploy capital and create value. And again, we run a portfolio. So we continue to monitor those and look at them relative to the other opportunities in the other markets. Henry Meyer: Yes. Diving into the asset results, we've seen a bit of a pullback in earnings on the Southwest Queensland Pipeline MSP versus this time last year. Can you maybe just step through what's driving some of that and expectations if that continues or reverses? Is this potentially lower Northern haul contracting that could be reversed going forward? Adam Watson: Garrick and I might tag team this one. I'll just provide some highlights and if I've missed anything, Garrick, jump in. But look, Southwest Queensland Pipeline and Roma Brisbane, firstly, they're fully contracted out to 2027. So that's important. So -- but you do get swings and roundabouts in our portfolio every year, which is understandable. We are capacity constrained on some of those assets. So you don't -- there's limited upside, which is part of the reason why we've announced our East Coast Gas Grid expansion today to alleviate those bottlenecks. From a contracting perspective, we've got lots of interest there, and we want customers to recontract over the longer term. But again, as I've said before, a lot of them are waiting for the National Gas Review and understanding how that plays out, which is, again, why we feel encouraged about what we expect to be happening over the coming months with the completion of that review. Look, RBP has been an interesting one because there's been less gas flow principally to the West as the LNG exporters have reduced their supply because of the price cap effectively that was introduced a couple of years ago. They're not big volumes at all, but in the periods prior, there was a bit more supply coming from them. SWQP has been impacted a little bit by Blacktip up in the Northern Territory. When Blacktip wasn't flowing, there was more supply going through the Southwest Queensland pipeline. Blacktip is now -- well, when it was flowing, it's now not flowing to the degree that it should be. And as a result, it's the flows east along the NGP and SWQP, -- it's really -- it's not going there anymore. It's only going north to Darwin. So there's small swings and roundabouts, but the point is that there's been nothing material that's driven any of that movement. Garrick Rollason: Thanks, Adam, and Henry, welcome on board. I won't add a lot to what Adam said. Maybe the only other thing to note is just on MSP, bear in mind that in the prior period, we had the nonrecurring insurance recoveries relating to MSEP, that was $13 million. So if you take that out, you actually see good growth on MSP. Adam touched on the fact that it's a portfolio of long-term core infrastructure assets. So we will see some small fluctuations in the margin. And what's interesting for me this period is we've obviously seen really strong performance across our contracted power generation even after you normalize for the impact of the Port Hedland Solar and BESS new earnings as well. So there's a lot of good stuff in the asset-by-asset performance as well and then some assets have just had particularly good prior periods. Operator: And our next question today comes from Nik Burns at Jarden Australia. Nik Burns: Just a question on your $3 billion organic growth pipeline. As you can appreciate, we don't get a lot of visibility on the composition of the projects in there. On my numbers, the combination of Brigalow and East Coast Gas Grid Stage 3 announced today gets us around 2/3 of the way there on that $3 billion number. Can you just talk about what's driven the increase from $2.1 billion to $3 billion today? Is it primarily derisking of those 2 projects? Or have you increased the risk weighting on other projects in your portfolio of opportunities? Or have you added new projects in there? Adam Watson: Thanks, Nik. Look, short answer to the second part of your question, going from $2.1 billion to $3 billion, that's principally the East Coast Gas Grid. So we had small components of it in there at the $2.1 billion. And again, it's portfolio weighted. So you're right, getting further along the journey with the East Coast Gas Grid takes the overall portfolio to $3 billion. Just to give you some color and again, it's portfolio weighted, and I won't get into some of the specific customer projects for reasons, which I trust you can appreciate. But it includes the overall $3 billion, includes the East Coast Gas Grid. As you said, it includes the Brigalow Peaking Power Plant and the Brigalow Pipeline that we're also building. There's some laterals that we're working on at the moment, and we hope to bring those to market in terms of announcing them shortly. The work that we're doing in the Beetaloo, it includes the Sturt Plateau Pipeline. I know we can finish construction of that, but that was included in there. And then you've got some probability weighting around other potential opportunities there. And then we've got some opportunities in the remote grid. So again, I can look -- Garrick and I look at a long list of projects and how that all plays out and how we probability -- we don't probability weight every single one of them, but how we probability weight those. But I hope that gives you color of what's included in there. Nik Burns: It probably makes the next question a bit more [ repartee ] just focusing on your, I guess, contracted power generation opportunities beyond Brigalow. I mean that seems to be a really good space you can be hope to be active in. But can you talk about how many other opportunities are out there that you think APA could participate in and when you think they may come through? You probably can't name names at this point but just interested in the pipeline of opportunities in that space there. Adam Watson: It's an important question and probably the full year, we will come out with a little bit more clarity on the first part of my response, which is around the fact that we've got a number of our own sites, [ LM ] sites. And I'm not suggesting that we're necessarily self-developing. We -- our strategy, as you know, to partner with customers. But one of the important things as part of the recipe to be able to partner with the customer is to have the site. And the secret sauce there is to be on a site that traverses the electricity transmission link as well as the gas pipeline transmission link. So we've got a number of sites that are earmarked, and that's been really positive for us because it enables us to have rich conversations with customers around meeting their needs. And then we're also working with a number of customers who have their own sites, and we would play a different role, which is similar to what we've done with the Brigalow Peaking Power Plant, where CS Energy had its site. They wanted a development partner, not only to develop it, but from an ownership perspective as well. And we're obviously their preferred partner in that regard. So it's a long list actually. Timing will be interesting. And getting equipment is a question that I'll get asked at some point, but we work really hard at making sure we can try and get it in front of the queue as much as we can in terms of getting equipment supplies. We've built the capability and we had existing capability, but we've really strengthened our bench in terms of capability to be able to deliver and operate those GPG projects. And we think we've got a really strong competitive advantage. So we're just working closely with a number of customers, and we'll continue, hopefully, to announce good progress with that strategy over the coming months and years. Operator: And our next question today comes from Gordon Ramsay at RBC Capital Markets. Gordon Ramsay: Adam, I'm going to ask about the Beetaloo and what we heard yesterday from Kevin Gallagher were some very encouraging and positive commentary about the potential of the area. And he made the comment that he felt that the gas pipeline was a critical path item. Just kind of wondering how that fits in with the work that you're doing right now with Tamboran. And I guess, particularly, I'm referring this to Phase 3 because Kevin did make the comment that the Bulloo gas could support Darwin LNG expansion and GNG backfill for what looks like decades. So can you just comment on how, I guess, APA Group has positioned to get involved potentially with not just Tamboran, but also Santos down the road? Or are they doing their own work separately? Adam Watson: Yes. Thanks, Gordon. And it's a really interesting one because I'm sure many of you have seen it. But when you look at the flow rates, when you look at the rocks and you look at -- it's a significant acreage. There's no debate about that, and people will tell you that the acreage is bigger than the Permian Basin in the U.S. and Marcellus basins. It's a big, big acreage, but that's great until such time as you find the gas. So -- but the flow rates have been really, really positive. It's dry gas. It's incredibly low emissions relative to other markets. And with those flow rates, it looks like it's going to be very cost competitive as well. Our strategy has been to partner with all of the active participants in that market. Tamboran, obviously, with the Sturt Plateau pipeline and Daly Waters, who have also been part of that acreage connection there are people that we're working closely with. And then from a -- our strategy is to be positioned really well, not only works for us because we want to use that as a competitive advantage, but it works really well for our customers and for the basin development breadth generally, we've been getting on with the planning approvals. So what's one of the, I guess, really positive things around our position is that we have 2 really important existing corridors along the Carpentaria, which would facilitate going east, obviously, going south for the domestic market. But given the size of the acreage, there's no question that Beetaloo is principally going to be an LNG export play. So there's obviously opportunity to send that gas east. We've done an enormous amount of work on planning and approvals, pipeline permits, et cetera, to be able to take that pipeline, connect it down and allow that gas to flow out of Gladstone. And the strategy there clearly is for -- you would imagine some existing LNG exporters in that region whose facilities are effectively coming to their end of their gas flow life, would be able to utilize that gas to keep their sunk infrastructure going. But equally, we're doing work going north as well. So going north to Darwin. There's principally 2 routes that are being looked at there. One, the Northern Territory government has put a proposed route in play for some time, and we're working with the NT government and our customers on exploring that route. But equally, we're also doing our planning and approvals work to move along our existing pipeline corridor there, which is obviously incredibly efficient because you're dealing with the same landholders and the same traditional owners. So we think we're really well positioned, and we're doing the heavy lifting to ensure that we're ready. And Kevin is right, you can't bring it to life without the pipeline. So we don't want to be the constraint there. We want to make it happen. Gordon Ramsay: And a question just for Garrick on the cost base. In your guidance, you're saying you're targeting further efficiencies in FY '27. What would they be? Can you give us a hint on where you can see further cost gains? Garrick Rollason: Thanks for the question, Gordon. Are you asking for hints on what they -- the nature of the savings or the dollar amount associated with them? Gordon Ramsay: Not the dollar amount, just where you see them coming from and if you relate it back to dollar amount, great, but where do you see opportunities to reduce costs further? Garrick Rollason: Yes, definitely. So I won't relate it to a dollar amount. We'll announce that at year-end when we provide guidance for the full year. On Page 23 of the presentation, we obviously set out some of the savings that we've delivered in the way in which we've done that. And that's through simplification that's enabled us to look at our organizational structure and drive improvements through that. In terms of frontline efficiencies, we've really looked at how we work and what we do. And that's things like integrating works planning, it's things like planned maintenance. And fundamentally, it means that we reduce our reliance on external contractors. So we're doing more work more efficiently in-house. When we look forward, a big focus continues to be on the operational side of the business, but it's how we work smarter. So using the data we have to drive things such as predictive maintenance to look at strategic sourcing. We've got approximately $350 million to $400 million external spend per annum across both OpEx and CapEx. And if you can drive some efficiencies in the way in which you spend that, so this is external spend, then that obviously delivers significant value to the business. So there's some of the opportunities that we see available to us. So it's really how do we work smarter and how do we reduce our external spend. Gordon Ramsay: Congratulations on expanding the EBITDA margin again. Operator: And our next question today comes from Rob Koh at MS. Robert Koh: Just want to ask a question around Slide 42, which is where you're kind of tweaking your guidance to be, to be above the midpoint. Possibly a silly question, why not just raise the lower band of the guidance? Or maybe if you could think of -- give us some color on what are the pluses and minuses that could happen in this half? Adam Watson: Yes. Thanks, Mr. Koh, and nice to hear from you. It's -- look, from our perspective, there are -- well, there's still a number of months to go. And you can see the key assumptions on the right-hand side of that chart, consistent with the key assumptions that were there when we put forward that forecast. So we're just being conservative and prudent, we believe, to make sure that we don't get over our skis in terms of changing the guidance. And quite simply, what we can give you with a level of confidence is a view that we think will be above the midpoint and principally because of the strong progress that we've made with the cost reduction target that Garrick spoke to before. So we're just trying to be prudent. Robert Koh: Yes. Okay. Can I also ask where in that bridge we should be putting the currency impact from the Wallumbilla Gladstone and U.S. dollar net revenues because it's my recollection, I might have this wrong, that we were at 72 in FY '25, and we should be using something like 67 for this year. Garrick Rollason: Yes. Thanks, Rob. It's Garrick. I'll address that. So it is a simplified bridge on Page 42. So there are buckets that where there's ups and downs. Principally, when we look at the inflation-linked tariff that will include the inflation associated with WGP. If we think to explicitly around the exchange rate, we lock in revenue, and we discussed this previously, we lock in the exchange rate around the U.S. dollar revenue associated with WGP. We do that on effectively a rolling 5-year basis. So looking forward from today, we are fully hedged out for the next 3 years and then that decreases over the 2 years that follow. So effectively, when we approached our guidance for FY '26, we looked at that revenue as relatively fixed within those buckets of what we've shown. Robert Koh: And then can I ask a little bit about -- I think it's the slide on your capital framework, which you said very clearly is unchanged, but you're now telling us that your threshold return is WACC plus 150 bps, and that 150 bps minimum is new information. Have you changed your WACC or anything with the availability of debt? Or am I reading too much into it? Adam Watson: You're reading too much into it, Rob. Look, we've been -- you might be right that it hasn't been -- may not have been put in print, I can't remember. It has been in print. I'm getting nods from the team. So that is not new information. And we take a long-term view as we look at our WACC. As you'd expect, we look at it every 6 months and our Board signs off on that as well. But we try and look -- we use assumptions that try and look through the cycle. And really, that's just us we get a lot of questions, as you can imagine, on the growth pipeline, in particular, about how we're deploying capital and what returns we're getting. And obviously, it's all very sensitive, and I feel for everyone on the call because we'd love to give you what those numbers are, but then it makes us hard for us to run our business. So the best we're trying to provide you is with a guide and a minimum threshold, same with the cash flow, and we try and get cash payback within the first half of the contract life or an asset life. Just to give you the framework that we look at. And then obviously, we look at each individual project on a cost and risk relative basis and come up with an outcome for our customer that we think works for both of us. Robert Koh: And then maybe just a slightly more detailed question on East Coast Grid expansion Stage 3B with some pre-FID expenditure on pipes. Can you talk to us about, heaven forbid that, that project doesn't happen, what can you use those pipes elsewhere in the business? Is there some kind of element of hedge to that? Adam Watson: Yes. We've obviously looked closely at that, Rob, and it's a good observation. And of course, I have to say we don't expect to get to that position because of the confidence we've got with our customers and because of the way that the National Gas Review is currently drafted. So we're very confident. But of course, you would expect us to have done the diligence around what you would do. And quite simply, you would redeploy that line pipe. It's going to go offshore, obviously, if it's not going to be used domestically by us, then it's going to go offshore. And we've made sure that there is sufficient market demand for that. But hopefully, that's all academic. Robert Koh: Yes. Yes, absolutely. That makes sense. Yes, I guess there'll be someone will need a gas pipeline somewhere. And should we be -- for the Beetaloo pipeline, which is a much more distant proposition, should we be thinking that there will be a similar kind of pattern for long lead item expenditure? Or is that different? Adam Watson: Yes. And it is a bit different to the East Coast Gas Grid, which -- and Tom made the good observation before around contracting. And it's -- as you know, the East Coast gas market for us is multiple customers who have multiple portfolios of gas flows and different customers and suppliers. Whereas the Beetaloo, as you'd expect, because it's a big basin with some developers, the contracting will be different there. And just given the size of the CapEx involved relative to Bulloo Interlink, they're big leads of capital. So we would have to have a very different approach to how we would develop that. And you'd be wanting to partner with somebody and have that confidence [ partnering ] with the customer to be ordering those long lead items. What we are doing though, so that's the line pipe. But what we are doing is spending time and money on planning and approvals and all of those sorts of things at our cost. We are backing ourselves in that regard, and we've been doing that for some period of time. Robert Koh: Maybe one last question, if you'll indulge me. For your Pilbara assets, and you've said a number of times about how the clients are pushing right to their aspiration. And so that's why there hasn't been growth announcements just yet. Can you talk to -- I think at the time of the deal, there was like a 4-year weighted average contract life. I presume that the contracts just move to an evergreen type basis. Are there any actual physical constraints if you don't have repowerings or extensions? Adam Watson: No. From a -- so we will have recontracting. And the way the customers will always look at it is, do I recontract with APA's existing asset, existing infrastructure? Or do I pay for somebody else to build a new piece of equipment? Which has got a time issue with it. It's got a cost issue with it. And quite frankly, our sites are very close to their operations. So you'd have to assume with cost escalations and transmission line costs that the next best alternative is going to be more expensive than ours. So that gives us a level of confidence around recontracting. And when we look at assets like that in the mining regions, the thing that we're looking closely at is mine life. And what we're seeing from a mine life perspective in and around the Pilbara is that there's plenty left there. So we've got a high degree of confidence there in terms of recontracting, and we've got to be very smart in how we work with our customers to give us the solution they need there. So it's -- in terms of new projects, it's really about additional demand from our customers rather than aging assets or anything like that. It's new demand. Operator: And our next question comes from Ian Myles at Macquarie. Ian Myles: Just a couple of simple ones. What do you see the risk of slippage and decisions around 3B if [indiscernible] may come out and say the shortfalls are being pushed further to the right gas markets? Adam Watson: Look, we've staged it and designed it so that we address the most pressing constraint from a -- it's obviously from a timing perspective, 2028, but Stage 3A addresses that and addresses the bulk of that. 3B is more around bringing Northern gas down to southern markets. And as you know, Ian, there is a bit of swings and roundabouts and [indiscernible] now gas market model plays out all these scenarios around additional BESS straight gas, for example. We're not saying that it's going to be [indiscernible] into the 2030s, but if there's more molecules coming from southern supply, then that could relieve some of the pressure. But again, it's hard to time it precisely, but what we've done is staged it in a way that within, call it, 24 months of when it's needed. And the other way to look at it is we're not expecting 3B to go to 100% capacity on day 1. We're expecting it to ramp up over time. So if it comes in a little earlier than it's required, it just means that there's a bit of a longer ramp-up in that regard. And that's okay. Our return thresholds are conservative and accommodate that. Again, we're confident that it will be delivered on time to address any shortfalls. Ian Myles: The other one is Taroom Trough. And you've mentioned it. I think a few other people have mentioned it. Just sort of interested, does that have implications for Beetaloo development? If the Taroom Trough actually proves viable, do we see Beetaloo get pushed to the right and those projects sort of move up through the agenda? Adam Watson: I don't think so. Look, what we're seeing early days in the Taroom is it's wet gas, more wet gas than it is Beetaloo is very dry gas. And obviously, when you think about the gas that's flowing out of Gladstone, for example, then that's very dry gas and the processing facilities there and the gasification facilities there are set up to take dry gas. So it will be interesting to see whether or not Taroom is a strong export product? Or is it better off being used as a domestic product? And the other thing I'd say is that Beetaloo -- the really good thing about Beetaloo where it's positioned and the size and the way that the checkerboard, the farm -- the acreage has been structured is that it's got as much viability going north as it has going east. And you might find that it goes north first and east second or it could go east first and north second. And again, we're not trying to back any particular horse in that regard. We're just trying to get prepared with all the planning and approvals to be able to accommodate that. Same with Taroom Trough, where, as you can imagine, we're working with all the producers who have acreage in the Taroom and doing work and because we know that pipeline capacity is critical for them to be able to commercialize their operations. Ian Myles: And one final one. Did you guys -- in the generation side, did you guys bid in the South Australian firm option? Or have you passed on that opportunity? Adam Watson: No, we did not. Operator: And our next question comes from Nathan Leed at Morgans. Nathan Lead: Just a couple for me, please. Just in terms of the growth pipeline, obviously, upside from $2.1 billion to $3 billion. It might be a particularly easy thing to do, but can you give us an idea of the projects that are in that pipeline, how much spend is required beyond FY '28 to bring those projects into operation? And then if you can sort of give us a steer in terms of when you think the earnings from those projects will be fully ramped up? Adam Watson: I'll try my best, Nathan, not because I don't have it in front of me, but just obviously, I can't provide any information that's not already out there. So look, if you think about the list that I went through before East Coast Gas Grid some of that will fall out of the FY '28 because the Bulloo is -- we said is going to be available by the end of calendar '28. So there will be some additional flow on there. And again, I'll just sort of subject to answered your question around when we start generating cash flows there. We've been clear in our announcement today that we're targeting a winter '28 for Stage 3A and a end of calendar '28 for 3B. With the Brigalow Peaking power plant, you're stretching my memory, but we would have to -- I think we're able to provide you with some guidance around the timing of that, but that principally falls into this period. From memory, there's a little bit that stages beyond the FY '28 period. And the pipeline would obviously be there before the power plant is commissioned, which is important. Some of the laterals that we're working on fall within -- obviously, we've got a -- pardon but we've got a pipeline of opportunities in laterals, both to service GPG and other gas fields that fall outside of '28. Beetaloo, some of those big developments are in the $3 billion. They all fall outside of that. We've obviously got the SPP within, but those bigger ones would fall principally outside of that. And remote grid, again, portfolio weighted -- we've got some in the $3 billion. But when you look at the opportunities that we've outlined before in places like the Pilbara, most of that falls outside of that $3 billion in FY '28 period. So one of the things that we look at is how we stage all of that and how we fund it and the teams have got models after models, as you can expect, to be able to ensure that we can create value in the way that we deliver those. But that's easy to say on a spreadsheet, it's -- the team do an enormous amount of work having to work with our customers to try and time it to perfection, which is not always the case. Nathan Lead: Second one, probably more for Garrick, but the increased debt capacity, I mean, that's with a reference to the S&P downgrade trigger being reduced. Can you just talk through the Moody's credit rating and whether that's a constraint on debt capacity or there's an opportunity there for you? Garrick Rollason: The constraint has always been S&P. Moody's is the downward threshold is 8% debt. So there is slightly different calculation between the 2 rating agencies, but there is more debt capacity when we look at Moody's relative to S&P. Again, we have great discussions with both rating agencies, and they're really comfortable with nature of the revenues and nature of the growth we've got ahead of us. So that's really exciting that we can sit here, have confidence in our debt capacity and confidence in delivering that accretive growth. Operator: There are no further questions at this time. I'll now hand back to Mr. Adam Watson for closing remarks. Adam Watson: Thank you very much. And look, thanks, everyone. I know it's a super busy day. So thanks for taking the time, and thanks for your questions. If I can just leave you with the key takeaways from today's results. First, we've delivered a strong financial and operating result, which we're really pleased with. And we've provided what we believe is a strong outlook for FY '26. Our growth outlook more broadly is compelling and the returns that we can generate from those projects are really positive. And thirdly, our balance sheet is strong. So again, I do appreciate your support, and thank you for taking the time, and we'll speak to you soon. Operator: Thank you. That does conclude our conference for today. Thank you for your participation. You may now disconnect your lines.
Operator: Good day, and thank you for standing by. Welcome to Aegon's Second Half 2025 Results Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Yves Cormier, Head of Investor Relations. Please go ahead. Yves Cormier: Thank you, operator, and good morning, everyone. I would like to welcome you to this conference call on Aegon's second half year 2025 results. My name is Yves Cormier, Head of Investor Relations. Joining me today to take you through our progress are Aegon's CEO, Lard Friese; and CFO, Duncan Russell. Before we start, I would like to ask you to review our disclaimer on forward-looking statements, which you can find at the end of the presentation. And with that, I would like to give the floor to Lard. E. Friese: Thank you, Yves. Good morning, everyone. I will start today's presentation by running you through our strategic developments and commercial performance in 2025 before Duncan will go through the results in more detail. So let me start with Slide #2 with the key messages for the year. Our results over 2025 demonstrate the strength of our strategy and our ability to consistently deliver upon our ambitions. We have either met or outperformed all our financial targets for 2025. Operating capital generation before holding and funding expenses increased year-over-year to EUR 1.3 billion ahead of target. Our operating results increased by 15% compared with 2024 to EUR 1.7 billion. This increase reflected business growth across all units, stable market impacts, and improved experience variances in the Americas and international businesses. Free cash flow for the full year 2025 was at EUR 829 million, consistent with our target. On the back of our strong capital position and financial performance, we proposed a final dividend of EUR 0.21 per common share, resulting in a full year 2025 dividend of EUR 0.40 per share, in line with our target and up 14% from EUR 0.35 per share over 2024. Furthermore, we executed EUR 400 million of share buybacks in the second half of 2025. And we are currently executing the first half of our new EUR 400 million buyback program for 2026, as announced at our Capital Markets Day in 2025. Commercial momentum remains strong in 2025. In our U.S. strategic assets, we continue to grow WFG as well as our new life sales and our retirement plan assets. At the same time, we continue to reduce our exposure to financial assets. The capital employed in this segment was $2.7 billion at year-end, ahead of our target. We also reported solid results in our other business units in 2025. Our asset manager delivered net third-party inflows. Our U.K. workplace platform generated healthy net inflows. And our international business continued to perform well. Finally, we are making progress with the preparations for our proposed relocation to the U.S. as announced at the Capital Markets Day. U.S. GAAP implementation is still at an early stage, but is progressing as planned. I'm now turning to Slide 3 to run through the commercial performance of the Americas in more detail. As we discussed at our 2025 Capital Markets Day, progress in the Americas remains strong. Starting with World Financial Group, we remain on track to grow the number of licensed agents to around 110,000 in 2027. As of year-end 2025, the number of licensed agents amounted to nearly 96,000, an 11% increase on the previous year. Initiatives to improve agent productivity have led to a higher number of producing agents. In addition, producing agents also sold a higher average number of policies at a higher average premium per policy sold. As a result, new life sales increased by 10% compared with 2024, while sales of annuities increased by 6%. The productivity gains in WFG were one of the key drivers of the 30% increase in new life sales in our Individual Life business. We also recorded strong new life sales of the final expense product that we offer in the instant decision market through a fully digital underwriting platform. Furthermore, we continue to successfully grow our RILA sales. We achieved a 45% increase in indexed annuity net deposits in 2025, thanks to higher gross deposits from further improvements in wholesale distribution productivity. In the Savings & Investments segment, the midsized retirement plans business reported net inflows in 2025 on the back of our strong positioning in the pool plan space and supported by a large takeover deposit earlier in the year. The level of written sales remains solid, which should support gross deposits going forward. We also generated further growth in both general accounts stable value and individual retirement accounts as we work to increase profitability and diversify revenue streams of the retirement plans business. I'm now moving to Slide 4 for an update on our other businesses. At Aegon U.K., we continue to be well positioned in the Workplace Platform business. Net deposits during 2025 were driven by both the onboarding of new schemes and members and regular contributions from existing schemes. For the Adviser Platform business, net outflows in 2025 reflected ongoing consolidation and vertical integration in nontarget adviser segments. As announced at our 2025 Capital Markets Day, the strategic review of the Aegon U.K. is ongoing. In our International segment, new sales continued to contribute to the growth of the book in 2025. Our joint venture in Brazil reported higher new life sales, particularly in credit life products as did our activities in Spain and Portugal. In China, new life sales were negatively impacted by changes to product pricing to reflect the new pricing regulations and the current economic environment. Aegon Asset Management generated positive third-party net deposits during the year in both global platforms and strategic partnership businesses, although at a lower level than last year. In global platforms, net deposits were mostly driven by fixed income products and more than offset outflows from the SGUL reinsurance transaction that we did last year. In strategic partnerships, net deposits were driven by our Chinese joint venture, AIFMC. We are implementing the plan for asset management as presented at the 2025 Capital Markets Day. For instance, we recently expanded our CLO warehouse capacity in the U.S. and Europe in line with our ambition to grow our higher revenue margin third-party business. Before handing over to Duncan, I would like to take a step back and reflect on the outcome of the plan we presented at the 2023 Capital Markets Day using Slide #5. First, as I mentioned, we either met or exceeded our financial targets in terms of operating capital generation, free cash flow, dividend and leverage. Second, at the same time, we have significantly transformed our business. We finished the year ahead of our target in terms of capital employed for the financial assets at $2.7 billion, and our U.S. strategic assets now significantly outweigh our U.S. financial assets, both in terms of CSM and capital employed. This is quite a remarkable shift. These are not only great achievements, but they also lay strong foundations for the next steps of our journey as we relocate to the United States while continuing to increase the profitability of the group and return capital to stockholders. I am very proud of all our colleagues across our businesses for contributing to our success. Well done, everyone. I will now hand over to Duncan to discuss our financial performance in more detail. Duncan, over to you. Duncan Russell: Thank you, Lard. I will zoom in on our second half 2025 results, starting on Slide 7. The operating results increased by 11% year-on-year to EUR 858 million, with all of our businesses delivering higher figures. Operating capital generation increased by 8% with strong figures from Transamerica. Free cash flow in the second half of 2025 amounted to EUR 388 million, and we received remittances from all units. Cash capital at holding decreased to EUR 1.3 billion at the end of 2025, mostly because of capital distributions to shareholders in the form of dividend payments and share buybacks. Valuation equity per share increased by EUR 0.60 with a positive contribution from both shareholders' equity and the CSM balance after tax. Gross financial leverage was stable at EUR 4.9 billion. Finally, the group solvency ratio remains robust at 184%. As announced in May last year, the eligibility of the perpetual cumulative subordinated bonds in our capital stack ended as of January 1, 2026. These bonds contributed 7 percentage points to the group solvency ratio as of December 31, 2025. Now using Slide 8, I will address the development of our operating results in the second half of 2025. Starting with the U.S., the operating result increased by 5% in euros or 14% in U.S. dollars, thanks to a combination of growth and more favorable variances. The operating results of strategic assets increased by 10% in local currency and benefited from business growth, notably in the individual life and retirement plan businesses, partially offset by a lower operating margin in the Distribution segment. In financial assets, the operating result increased because of more favorable experience variances compared to the second half of 2024. On the other units, the operating results of the U.K. increased, benefiting from business growth in favorable markets, which led to both a higher CSM release and increasing noninsurance revenues in the second half. In the International segment, the increase of the operating result was also driven by business growth and a onetime item in China. Furthermore, the results from China benefited from a true-up related to the local implementation of IFRS 17, which is booked in the second half. Aegon Asset Management's operating results improved in the global platforms business mostly from the impact of favorable markets on revenues and from an improved operating margin. Looking forward, as mentioned at our recent Capital Markets Day, over the 2026 to '27 period, we aim to grow the operating result of the group by around 5% per year from the EUR 1.5 billion to EUR 1.7 billion in run rate in 2025, taking into account an assumed euro-dollar exchange rate of $1.20. I now turn to Slide 9. Here you see our IFRS net results for the second half of 2025. Nonoperating items were unfavorable in the period and were largely driven by realized losses on assets transferred in the context of the SGUL reinsurance transaction. These realized losses were taken in the P&L, were fully offset in other comprehensive income and therefore, had no impact on the development of shareholders' equity. Net impairments reflect an ECL reserve increase from new investment purchases as well as a small number of downgrades and defaults of bond investments. Fair value items were negative mostly from revaluations of solvency hedges in the U.K. and other charges were mostly driven by various items in the U.S. and U.K. and partially offset by the positive result from the stake in ASR. I am now on Slide 10. In the second half of the year, our shareholders' equity grew by 2%, and our CSM balance increased by 4% over the same period. The increase in the CSM was largely from business growth in the U.S. strategic assets. We saw a 24% increase in CSM in the second half, thanks to profitable new business, favorable assumption changes and experience variances. The CSM of our financial assets decreased due to the runoff of the book as well as the impact of the SGUL reinsurance transaction. These developments mean that the CSM balance of our strategic assets now accounts for 57% of total Americas CSM. Outside the U.S., the changes to the total CSM balance were limited. Overall, valuation equity per share, which represents shareholders' equity plus net of tax CSM increased by 7 percentage points over the second half of 2025 to EUR 9.06 per share. Moving now to Slide 11. OCG before holding, funding and operating expenses increased by 8% compared with the second half of 2024. OCG from the U.S. increased by 19% or 27% in U.S. dollars over the same period with a higher contribution from both the strategic and financial assets. Mortality and morbidity claims experience was favorable in the second half of 2025, while it was unfavorable in the prior year period. OCG benefited also from a favorable release of required capital from the investment portfolio actions and a reduction in short-term financing. This was partly offset by a higher new business strain from growing our strategic assets. Adjusting for favorable items, the U.S. OCG in the second half of 2025 fell within the guidance of $200 million to $240 million per quarter. In the U.K., OCG decreased mostly because the second half of 2024 includes some favorable items, while the International segment reported lower OCG. At Aegon Asset Management, OCG increased due to favorable markets and an improved operating margin compared to the prior year period. Holding, funding and operating expenses were largely unchanged year-over-year at EUR 142 million, bringing the total for full year 2025 to EUR 295 million. As a result, OCG after holding, funding and operating expenses for the full year 2025 amounted to EUR 992 million. I'm now turning to Slide 12. The capital positions of our business units remain strong and well above their respective operating levels. The U.S. RBC ratio increased by 4 percentage points compared to June 2025 to 424%. The increase was driven by OCG from the operating entities applying the RBC framework. This is partly offset by remittances to the holding. Onetime items and management actions negatively impacted the RBC ratio by 3 percentage points during the period. The negative impact on the RBC ratio of the SGUL reinsurance transaction was offset by capital investment into Transamerica from the group. Market movements had a limited impact. In the U.K., the solvency ratio of Scottish Equitable decreased by 2 percentage points to 183%. Operating capital generation in the period was offset by remittances to the holding and investments in the business. Market movements here also had a limited impact. On Slide 13, you see that cash capital at holding has come down in the second half of 2025 to EUR 1.3 billion. This development is consistent with our aim to reach the midpoint of the operating range for cash capital at holding around EUR 1.0 billion by the end of 2026. Free cash flow amounted to EUR 388 million in the period and included remittances from all our units as well as dividends received from our stake in ASR. For full year 2025, free cash flow amounted to EUR 829 million, consistent with our target of around EUR 800 million for the year. We returned nearly EUR 1 billion of capital to our shareholders through dividends and share buybacks in this period. Consequently, our share count ended 2025, 5% lower than at the start of the year. Capital injections into the businesses amounted to EUR 751 million and mostly related to the investment in Transamerica to offset the impact of the SGUL reinsurance transaction. This is funded by the disposal of part of our ASR stake, 12.5 million shares, as indicated at our Capital Markets Day. The remainder mostly related to investments in our international investment management businesses and in Aegon Asset Management. We have already launched a share buyback for the first half of 2026, totaling EUR 227 million and expect this to be completed on or before June 30, barring unforeseen circumstances. This share buyback covers both the first half of EUR 400 million program for 2026 announced at the Capital Markets Day and EUR 27 million related to share-based compensation plans. After completing this first part, we expect to launch the second half of the EUR 400 million program. I am now moving to my final slide, #14. To conclude, the results over the second half of 2025 were strong, and we are confident we are well positioned to meet our growth ambitions for 2026 and 2027. As discussed at our 2025 Capital Markets Day, the next time we present our results will be in August with the first half figures. We will also move the timing of our results conference call to 2:00 p.m. Central European Time to accommodate U.S.-based investors. With that, I would now like to open the call for questions. Please limit yourself to 2 questions per person. Operator, please open the Q&A session. Operator: [Operator Instructions] And our first question today comes from the line of Farooq Hanif From JPMorgan. Farooq Hanif: My first question is on the operating profit in the second half of the year, which was kind of at the upper end of your guidance range. Having looked at the detail and discussed with the IR team, it feels like it's a reasonably clean number. But obviously, it's towards the upper end. So I'm just wondering about the sustainability of that, given the growth in CSM, the strategic assets that you talked about. So if you could comment on that, that would be helpful. And my second question is on, I mean, the ASR stake. I know you've been reluctant to really give much update on it in the past. But I was just wondering, sort of philosophically, is this something that you would want to or could or would be happy to own once redomiciled in the U.S.? And to what extent do the proposed tax legislation in the Netherlands impact your decision around that? E. Friese: Thanks, Farooq. Duncan, can you take both? Duncan Russell: Sure. Farooq, you're right, the second half operating result was, once you adjust for favorable or unfavorable items, I think, is a reasonable representation of the underlying figure. It benefited obviously from strong markets, which we saw in the second half of the year. But it leaves us in a good place with our ambition to hit the targets we outlined at the Capital Markets Day in December. On ASR, no change there. So that's a shareholding which we're happy with. We've given guidance in the past that there are 2 reasons we would sell that. One is that we feel that it hits intrinsic value and/or we have an alternative use of the capital. Our redomiciliation to the U.S. has no impact on our ownership there. Farooq Hanif: What about the tax, is that something you've considered? Duncan Russell: Again, I think, at the Capital Markets Day, I said that I didn't see tax having an influence on our ownership position with ASR. Operator: Your next question comes from the line of David Barma from Bank of America. David Barma: Firstly, on OCG, which is tracking towards the bottom end of your quarterly run rate in Q4. What conditions do you need to see for you to be closer to the top besides currency movements? And in particular, on the new business strain, which was particularly strong or high in Q4, what kind of strain are you expecting for the coming years? And then secondly, on WFG, results came down in 2025. I'm looking at the first profits here. And if I look at agent productivity or cost income, they both seem to have deteriorated in the period. So are you able to give some color, please, on the trends there? And maybe if you can quantify the investment program that I think is going on at WFG in '25? Duncan Russell: On the first question, on OCG, you know, we had a very strong quarter in OCG. Our reported OCG was actually very healthy. We highlighted three things in there, which supported it in the fourth quarter. The first was, we had positive mortality and morbidity variances. As you know, that's going to move around quarter-on-quarter, but this quarter, it was pretty favorable. Secondly, we had high new business strain versus the guidance we gave during 2025, and that reflects that we had a very strong commercial performance on the life insurance side. And then thirdly, we had a high release of required capital, which was high versus prior quarters. Although if you look at our history there over the last 2 years, you do see that can move around quite a bit, and does tend to spike in the second quarter and the fourth quarter as that's the quarter we paid dividends out of Transamerica. So net-net, it was a strong quarter. Once you adjust for all of these favorable items and also take into account FX, we think we were at the bottom end of the kind of underlying run rate. And if you go back to our Capital Markets guidance, which we gave in December, we feel in a good place with achieving that for 2026 and 2027. E. Friese: So on WFG, we have a lower margin on the back of very strong sales growth and also productivity growth. So there's more producing agents producing also higher premium per policy sales. But the reason why the operating result is lower than last year is that we're investing in the business in a number of areas. It's in leadership and governance of the company as a whole because the company is growing quite a lot, don't forget that, from 56,000 agents a number of years ago to 96,000 now. Also, technology initiatives to strengthen the sales process, a lot of training that we did to improve productivity and making more agents that are licensed producing quicker and compliance and field support for the growing number of agents. So that's the reason -- that's the investments that we are having in the business. Duncan? Duncan Russell: And maybe just to add on that. So if you go back to the Capital Markets Day, we flagged that we saw our strategic assets in the U.S. growing by around 10% per annum over the coming years. For Distribution segment, we flagged also that we expected the operating margin to remain at the lower end and the growth in the profits to be mostly driven by revenue growth. Operator: Your next question today comes from the line of Farquhar Murray from Autonomous. Farquhar Murray: Just 2 questions, if I may. Firstly, on the legal settlement. So I suspect in terms of magnitude, the most we're going to get is that it's part of the $230 million of charges in the U.S., which I can understand. But maybe you could give us some color on those cases where this settlement takes us in terms of the uncertainties around that and maybe what's the process for finalizing this? And then secondly, on the U.K. strategic review, if this ultimately does come to a sale towards the summer, could I ask how you will approach any decision between cash and equity within the offers made around it? And is there any preference or what are the criteria and considerations from your side? E. Friese: Farquhar, this is Lard, I'll do both. So let's start with the legal settlements. They are pertaining to 2 cases, which we settled. The detail of that, it's quite technical. So I will refer to a page, which is Page #269, 2-6-9, of the annual report. It's the first 2 paragraphs under the section proceedings in which Aegon is involved. And if you read those 2 sections, you will find those are the 2 cases that we're talking about here. They are indeed included in the other charges of USD 230 million, as you pointed out yourself. So they're including that alongside other items in that bucket. As pertaining to the process, we settled those cases, they now need to be approved by the courts, and that's a process that will take a bit longer. Then when it comes to the U.K. review, we have launched it, as you know, at the Capital Markets Day on the 10th of December. It's early days, so we will not give any comments on this until such time as we have an update for you. We expect that update to happen somewhere before the summer, let's say. That's what we aim to do. Operator: [Operator Instructions] And our next question today comes from the line of Michael Huttner from Berenberg. Michael Huttner: I had 2 questions. One, in the past, Duncan, you've given us the kind of waterfall to the underlying OCG. I just wondered if you could do that, for my benefit, I imagine my competitors are much more clued up than I am, but that would be really, really helpful for the year. And then the second question, which kind of relates to it, but maybe a bit differently. I'm always obsessed by mortality, and there's that lovely Munich Re update, I think, this week on GLP-1s and stuff. Can you talk a little bit about the improvement in mortality you've seen? So year-on-year, the variance is better, but is there any trends here we should be thinking about? Duncan Russell: Michael, thank you. So we think that the clean 4Q OCG was around EUR 294 million for the group compared to the reported OCG of EUR 372 million. And if I break the movement from one to other down, we had a positive impact of around EUR 47 million in the U.S. from favorable items. And within that, there was EUR 36 million attributable to favorable claims experience. The majority of that was mortality, EUR 29 million was mortality, EUR 7 million was morbidity. So that's good. Against that, we had new business strain, which was EUR 34 million higher than the guidance we gave at the start of 2025, and that's reflecting strong sales. And then against that, we had relatively elevated release of required capital against the guidance we gave at the start of 2025 of around EUR 45 million, and that's reflecting normal ALM activity. And as I noted, we do tend to see that spike a bit in 2Q and 4Q as Transamerica pays dividends. Then in the other units, we had overall positive favorable items of around EUR 31 million, of which about EUR 20 million was in international, split equally between China and Spain. And then around EUR 7 million in the U.K. and EUR 4 million in Aegon Asset Management. On mortality, we saw this quarter favorable severity. We saw that particularly in younger ages and very old ages. You know that number can move around in any single quarter, given the size of our book. But if I take a step back and look at our mortality experience since we made the updates, about 1.5 years ago now, we're happy with how it's performing versus our best estimate. Operator: Our next question today comes from the line of Nasib Ahmed from UBS. Nasib Ahmed: First one on financial assets. At the CMD, you did the universal life deal. And it seems like you've got the SPV set up. So are you going to chip further away at the $2.7 billion this year? Do you have anything in the pipeline in terms of reinsurance transactions or anything else? Any more color on that, Duncan, would be appreciated. And then secondly, I noticed you're focusing a little bit more on IFRS in the presentation slide. You removed the bridge of the OCG where you show the expected in-force and the release of capital. Just wondering why the change? Is it because U.S. GAAP is closer to IFRS? How should we think about U.S. GAAP, is it more closer to OCG or IFRS? E. Friese: Duncan, 2 questions for our CFO. Duncan Russell: So on the reinsurance deal, you're right. In December, we announced at the Capital Markets Day, I think a very innovative transaction on our part, whereby we reinsured a significant part of our secondary guarantee universal life exposure in the U.S., and that brought our required capital down to $2.7 billion. Actually, if you take a step back and look over the last 4 years, I would argue that we've done a huge amount of management actions across all of our books. And we're actually positioned as one of the more innovative parties in the market with the recent transaction, I think, giving us even more optionality because we've established this reinsurer. We continue to look for ways to bring down the $2.7 billion to our targets in 2027. That will be done through a range of actions, management actions we can take ourselves, actions which we engage with policyholders on and then also potentially third-party actions. I think the main message I'll give you is that we're confident we can hit our targets. And we've demonstrated, I think, that we are at the forefront of innovation in dealing with these legacy blocks. On the shift from -- on the emphasis on IFRS, I think we've always placed a great deal of emphasis on IFRS. We've historically run 2 frameworks, OCG and our accounting framework, which is IFRS 17. We are trying to simplify our communication. We took a step of that with the Capital Markets Day, where we have given targets, which I think are simple to understand and simple to track. And so that's how we're going to manage the next 2 years. You know that we're in the early phases of implementing U.S. GAAP. I'm not going to comment on that on how that's going or what the expected outcome of that is. But over the coming years, we will update the market when we have U.S. GAAP figures and eventually transition our disclosures to that of a normal U.S. company. Operator: [Operator Instructions] And our next question today comes from the line of Farooq Hanif from JPMorgan. Farooq Hanif: So just following on from Nasib's questions. You mentioned at the CMD that the reserving on a stack basis, you're happy with across most of your books, but LTC is the one that stands out. Is your position still that it's hard to find market deals that economically make sense to you right now? Is that still your position and that you can deal with it kind of internally through your internal management actions on pricing? And secondly, this is a slightly kind of open-ended question, I guess, but just, I mean, you consistently have lots of positive and negative experience variances on an IFRS basis, for example. And I see quite a lot of assumption changes again in CSM. I'm just kind of wondering to the best of your knowledge, do you feel like you're getting closer to dealing with these variances going forward? Or are there any items we should watch out for going forward in earnings that could still remain volatile under IFRS? E. Friese: Both questions for you, Duncan? Duncan Russell: Okay. On the financial assets, so what we tried to give at the Capital Markets Day was, firstly, a framework whereby we said that we look at third-party transactions on an economic basis, and we referenced our valuation equity and also free cash flow per share, so both cash and economics. So that's the framework when we assess transactions. Second thing we gave was, we stated that our statutory reserving in aggregate for the financial assets was now comparable to on an IFRS basis. But within that, there are obviously blocks which are stronger and blocks which are lower. And we did indeed say that long-term care was lower. If we look at third-party transactions, actually, I think the binding is more the economic price. And if you look at long-term care, the reality there is that there are a lot of -- it's a relatively more sensitive block because it's long duration. The peak reserves are not until sometime in 2030. And that makes it a bit more sensitive to various policyholder and behavior assumptions. And therefore, we've so far taken a view that we are the appropriate owner of that block and our approach to managing that liability is through rate increases and other options we give to the policyholder to manage exposure. And I think that's probably the base case for the coming period. On variances, well, we gave a range of around EUR 100 million within our operating profit, which I think should be enough to cover positive and negative variances in a half year period, both from experience variances and onerous contracts. There will always be variances. This half year, we had positive mortality. We had some negative on premium persistency and expense on onerous contracts. So there will always be a number, and that simply reflects the leverage of the balance sheet to the P&L. But I believe that the operating range we give, which is EUR 100 million range, so plus or minus EUR 50 million should be enough to cover those variances on a go-forward basis. Operator: Your next question today comes from the line of Iain Pearce from BNP Paribas. Iain Pearce: Just one. In the presentation, you flagged some impacts from downgrades and defaults. I was just wondering if you could give us any more details on what this relates to, if there's sort of concerns about further downgrades in the investment portfolio? If it has anything to do with any of your private credit holdings as well? And I assume these are U.S. related as well. Just any details on what's driving that because it's not something we've really had flagged before. Duncan Russell: I can take that. That's a good question. So as you know, under IFRS, we have the ECL. And if you look in our statistical supplement on Page 15 you'll see the movement in the ECL and there you'll see transfer between stages, which we saw some movement from stage 1 to stage 2 and some movement from stage 2 to stage 3, relatively small. I would say, still fairly benign. And that was across a range of bond holdings we have, ABS holdings we have, et cetera, but still pretty benign, to be honest with you, not a meaningful number yet, but it is something we track. On our asset portfolio, in general, it's performing very well, and you can see that in the movement in the ECL. Operator: And your next question comes from the line of Jason Kalamboussis from ING. Jason Kalamboussis: Two quick follow-up questions. The one is in the U.S., plus 14% on local currency is above your -- which you're indicating as guidance. Do you think that this was supported mostly by the stronger markets we saw in the second half? Or do you find that there is a good momentum that could be carried in 2026? And also incidentally, I mean, if you could comment on the fourth quarter, how was it compared to the previous 3 quarters in the U.S. in local currencies? And the second thing is just for my understanding on the U.K. sale process, I understand that you are not going to comment on it, but I was looking just to understand how it works. So you are looking at bids for the whole of the U.K. But within it, do you also take or do interested parties show an interest for part of it and give a price or they have to actually look at it as one piece. And if you want afterwards to sell it in two different pieces, for example, because you're not happy with the price you get for the whole piece, then they have to resubmit, and you start discussions on that kind of second process. Essentially, is it a 2-stage process? Or is the second one folded partly in the first one. So I would be just interested if you could share any thoughts on it. E. Friese: Jason, this is Lard. I will do the U.K. piece and then I'll hand over to Duncan for your first question. On the U.K., as I mentioned, the strategic review that we launched pertains to the insurance business and pertains to the platform business. It does not pertain to the asset management office that we have and business that we have in the U.K. So that's something I want to make sure it's clear for everybody. Secondly, it's in the early stages, and we aim to give an update when appropriate, and we hope to do that before the summer of this year. Duncan Russell: On the operating profit in the second half, what tends to drive -- or what drove a lot of that growth, Jason, was the variances. So in the second half of 2025 for the U.S. on a U.S. dollar basis, we had a positive experience variance on claims of $129 million linked to mortality and morbidity comment earlier, whereas last year in the second half, that was only $33 million. So there's a big swing from variances, which are always going to occur, but hopefully should be captured in our range. If we look forward, the guidance we gave at the Capital Markets Day was that we would expect the operating result run rate to grow around 5%, driven by around 10% growth in strategic assets and shrinking profits and financial assets. As you know, the strategic assets profits are driven mostly by CSM progress and then our noninsurance profits. You see that our CSM is progressing really nicely. So our CSM on Protection Solutions ended the year at $4.3 billion and at half year it was $3.6 billion. So good progress there, which I think is supportive of the growth ambitions on the insurance side. And I just flagged earlier that on distribution, we expect a continued lower margin but good revenue growth. So that should support the overall roughly 10% growth in strategic assets. Against that, the financial assets will continue to run down. You note there that the CSM ended the year at $3.2 billion, began the year at $3.8 billion. So as that runs down, there'll be a lower release from CSM and hence shrinking operating profit over time. And the dynamic of those two things should get you the roughly 5% growth in operating profit. Operator: And the next question comes from the line of Michael Huttner from Berenberg. Michael Huttner: It was on the net inflows rather than -- so what I noted from speaking to your excellent IR, but I wanted to have some comments on how you see it developing. In the second half, net outflows in retirement plans in the U.S. was $0.6 billion. I think that's the retirement of baby boomers. I just wondered what the outlook is there? And then in the U.K., we had EUR 273 million net inflows in H2, which is well below what we had in H1, I think EUR 1.9 billion or something. So I just wondered how you see the run rate here. Then finally, on asset management, EUR 1.3 billion net outflows, I think, again, second half. And I just wondered how you see that developing? E. Friese: These are different business lines. I will go one by one. First of all, our plan assets in the U.S. have gone up by 13% year-on-year. And the net outflows you're reporting, so the business itself is in very good shape. And especially when you look at the written sales, the new plans, the pool plans that we're getting, actually, the retirement business is doing very well. The outflows are indeed something that is in line with what the market sees overall in the U.S., which is baby boomers taken there, taking some of the money out. But also given where the stock markets are, people taking a little bit of money out. And that's what you're seeing there. Nothing else driving it. If you look at the U.K., the outflows we're seeing there is stemming from the same trend that we've been seeing for a longer time, which is a combination of a couple of things. And in the second half, there was one additional thing that I want to mention as well. So first of all, we target, as you know, a target segment of 500 advisers. Beyond that, in the nontarget segment, there's quite a lot of vertical consolidation and that drives where people are buying platforms and as a result, move assets away from it. So we've seen that for quite a number of quarters, and that has not changed. What we also saw in the second half of the year, there was quite some jitters in the U.K. on the budget. It's now settled because the budget is clear. But before that, there were concerns and as a result, clients took some money out because there were rumors that the tax-free pickup of pension money would not be possible anymore. And as a result, that led to a little bit of that. We have good progress actually on the technology improvements that we're making with target advisers providing positive feedback on that. But unfortunately, the commercial result of that is not yet visible. If you look at the AUM flows, so first of all, third-party flows were up. So they were worse than last than 2024. '24 was a record year, by the way, for that. But they were much lower than 2024, but they were positive. So we have positive flows driven -- so both on global platforms, which is our own platform as the strategic partnerships. And in terms of the outflows, we saw 2 main things happening; one client in the U.S. redeemed from our U.S. high-yield fund; and then we had the ASR, so they had some allocation changes in their general account. And as you know, we have a partnership with them on that. We noticed that in our asset management results. That is what we've been seeing. However, bottom line is, the retirement business in the U.S. is doing very well as is demonstrated by the set of numbers here. And the U.K., the workplace business is also in a very good place. It may not have been as high as the previous year because that was like a record year. This one is the second best year that we had, so it's still in a very good place. And on the adviser platform, I gave my views. And on AUM in total -- sorry, on asset management in total, we had positive flows, as I mentioned earlier. I also want to point to the margin improvement that we saw, by the way, in the asset manager, it nearly doubled this year to 17%. Operator: And the next question comes from the line of Nasib Ahmed from UBS. Nasib Ahmed: Just one question. Lard, you mentioned the legal proceedings on Page 269. I had a look, and there's a paragraph, the third paragraph, which has been there for a while around distribution. Just wanted to understand what that's related to? Is that WFG related? Or is it something else? E. Friese: Well, the two that I was referring to are the cases that -- so one has to do with an old block of business and bonuses that were paid on that on universal life policies. Again, it's more eloquently described in the first paragraph of that section in Page 269. And the second one had to do with the topic of the MDR, so the monthly reduction rates that were increased. And also that is described more wholesome in Page #269. Those two cases have been settled. That's good news. And now we await the confirmation. Now, then what you're referring to, the third paragraph, they're not WFG related. So the first two cases -- so the cases I mentioned that we settled are not WFG-related. Nasib Ahmed: Sorry, I was asking about the third paragraph where it says, there's some legal action going on around agents that might be considered independent contractors as opposed to employees. So I was asking about that one, whether that's WFG related? E. Friese: We'll follow up with you on that. But I think you're referring to a case that we mentioned half a year ago, already in our half year disclosure. We'll follow up. IR will give you a ring. Operator: And the next question is a follow-up from Michael Huttner from Berenberg. Michael Huttner: Sorry about that. On the number of advisers at WFG, the total number is up, which is wonderful. The dual or the multiticket number is up, but it's kind of much slower growth. Can you talk a little bit about that? I think it was a question a couple of years ago, and I think the implication was that it didn't worry you too much, but it's the multiticket is obviously the higher value part, I don't know. Any comment would be helpful. E. Friese: You may recall in many of the discussions last year that we wanted to improve productivity, right? And I've mentioned in a number of earnings calls that we were running programs to indeed improve that productivity. Now what has happened is that through our training and through our field support, we have been able to make more agents because the agency sales force has grown quite a bit. So the agents that become fully licensed agents, then also need to learn and to get productive and to become sellers. And that's what you're actually seeing in the numbers. We were able to improve the number of producing agents. Then the second thing that happened is they also sold insurance policies with a higher premium amount. And that also drives the metric of productivity up. That's all good news. So the agency network become stronger, has become bigger, has become more productive and that bodes well for the future, and we will continue to strengthen the network. I mentioned that we are doing investments supporting the field force training, all these good things to ensure that, that massive sales force that we have, which is the second largest in the U.S., and that goes to the underserved mainstream American family class and help them with our protection and retirement plans, et cetera. So yes, it's a good progress that we're making there. Operator: Thank you. We have no further questions. I would like to hand the call back over to Yves Cormier for closing remarks. Yves Cormier: Thank you, operator. This concludes today's Q&A session. If you have any remaining questions, please get in touch with us at the Investor Relations team. On behalf of Lard and Duncan, I would like to thank you for your attention. Thanks again, and have a good day. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Greetings and welcome to the Gentherm Incorporated Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. At this time, participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star 0. It is now my pleasure to turn the call over to Gregory Blanchette, Senior Director, Investor Relations. Please go ahead. Thank you, and good morning, everyone. And thanks for joining us today. Gentherm Incorporated’s earnings results were released earlier this morning, and I Gregory Blanchette: copy of the release is available at gentherm.com. Additionally, a webcast replay of today’s call will be available later today on the Investor Relations section of Gentherm Incorporated’s website. During this call, we will make forward-looking statements within the meaning of federal securities laws. These statements reflect our current views with respect to future events and financial performance and actual results may differ materially. We undertake no obligation to update them except as required by law. Please see Gentherm Incorporated’s earnings release and SEC filings, including the latest 10-Ks and subsequent reports, for discussions of our risk factors and other significant assumptions, risks, and uncertainties underlying such forward-looking statements. During the call, we will also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included in our earnings release and investor presentation. On the call with me today are William T. Presley, President and Chief Executive Officer, and Jonathan C. Douyard, Chief Financial Officer. During their comments, they will be referring to a presentation deck that we have made available on the Investors section of Gentherm Incorporated’s website. After the prepared remarks, we would be pleased to take your questions. I will now turn the call over to William T. Presley. Thank you, Greg, and good morning, everyone. Let us begin on slide three. During the year, we made significant progress on our long-term strategic initiatives while executing against our 2025 financial and operational priorities. To drive strategic growth, we provided a thesis early last year on the broad applicability of our technology beyond automotive. We purposefully broke out our technologies into four platforms: thermal management, air moving devices, pneumatic solutions, and valve systems, so that our commercial team could go out and kind of wet business with the technology in other markets. We provided updates on wins throughout the year to validate our hypothesis, and continue to believe this will drive growth going forward. William T. Presley: Operationally, Gregory Blanchette: we continued our work to strategically realign our footprint, which will continue through 2026, and despite the near-term headwinds, these actions will play a significant role in our margin expansion over time. During the year, we began laying the foundation to drive improved efficiency and performance across the organization through business process standardization, and the global rollout of our company operating system. We are starting to gain traction and reap benefits from stronger operational rigor. These improvements will drive better financial performance and cash generation, allowing us to deploy capital aligned with our strategic framework. To be clear, 2025 financial results are not of what Gentherm Incorporated can deliver as a business. We remain focused on executing our plans to grow and increase margins. As we enter 2026, we are confident that we have the right plan established to drive performance. We are executing our strategic priorities to build a more resilient gender. Let us turn to slide four. I took this role with a strong belief that Gentherm Incorporated was at an inflection point to enter its next phase of growth by scaling its core technologies beyond its existing applications. And we have proven that ability in a short period of time. The team is focused on reigniting a profitable growth trajectory through both organic and inorganic opportunities. In January, we announced a key part of transforming Gentherm Incorporated into a precision flow management company that serves diverse markets through our planned combination with Modine Performance Technologies, which is expected to close by the end of the year. This combination creates a $2,600,000,000 market leader positioned to grow to over $3,500,000,000 with a compelling financial profile and end-market diversification. I am confident that this is the right transaction at the right time for Gentherm Incorporated, and we will talk more about the benefits later in the deck. Turning to organic. When I first joined Gentherm Incorporated, I was impressed by the portability and scalability of our four core platforms. We saw great growth potential in scaling our existing products and technologies with new markets, new applications, and nontraditional customers. We tested that thesis very quickly in 2025, and validated that Gentherm Incorporated products have broad applicability. Within months, we generated a commercial funnel totaling over $300,000,000 of lifetime revenue in markets outside of light vehicle. That funnel enabled us to successfully expand into commercial vehicles, powersports, and home and office. Beyond just winning awards, Genther began supplying product in rapid time to revenue markets. During the fourth quarter, we were selected by another leading global furniture brand supply our climate and comfort products, our momentum in this market is accelerated. Our first discussions in this market began in 2025. We have already started manufacturing and delivery components in January, demonstrating shorter development cycles and rapid time to revenue compared to our automotive business. For our customers, these represent innovative, next-generation product offerings William T. Presley: centered on wellness Gregory Blanchette: a major and growing trend across these markets. For Gentherm Incorporated, we are leveraging our existing assets and core technologies to drive this incremental revenue growth with accretive margins. In Medical, we have prioritized reinvigorating our product life cycle roadmap. Refreshing the product portfolio remains a key focus and we are advancing these efforts by leveraging existing automotive intellectual property to accelerate innovation, improve time to market, and support sustainable growth within the segment. Earlier this month, announced our FDA 510(k) submission for a new innovative product. The way surgeries are performed is changing. Robotic positioning, which allows the surgeon to move the patient for better access, is becoming more common. Our first-of-its-kind solution, the ThermoFix system, combines conductive, air-free patient warming with securement technology to help prevent both hypothermia and patient movement during procedures. Given our strong relationships and deep engineering capabilities, medical professionals came to us to help solve this unmet gap in the markets. The ThermoFix system will begin generating revenue later this year, and we expect this product to be a key contributor that accelerates Medical’s annual revenue growth into the high teens. This is the first new product on our roadmap, and we will continue to leverage Gentherm Incorporated’s core technologies to develop solutions for the medical market. These are just a few examples of how we are executing against our plans. We said we would reposition the company for growth by taking our technology outside of light vehicle, and we provided several proof points in 2025. We are just getting started, and the combination with Modine Performance Technologies will play a key role going forward. We are taking bold, decisive actions that will position Gentherm Incorporated for sustainable, profitable growth. Turning to slide five. I am very confident in our path to improved financial performance. Though revenue has plateaued over the last few years, we have one high level of visibility to growth accelerating driven by strong automotive launch activity, and our pursuits in adjacent medical markets. We have said before that we expect Gender’s growth trajectory to be mid-single-digit growth over market, and our belief in that has only strengthened. On margins, we consistently shared our views on the major levers driving future margin expansion. We are investing in footprint optimization, we are launching lumbar and massage comfort solutions at improved margins, and we will be able to leverage scale as growth accelerates. Our roadmap to delivering improved financial performance is clear. We are now well-positioned to deliver meaningful revenue growth and margin expansion. I will now turn the call over to Jonathan C. Douyard to review some business highlights and our outlook. John? Thanks, Bill. Now turning to slide six. Our team delivered another strong year of automotive new business awards, finishing 2025 with $2,200,000,000, including $485,000,000 in the fourth quarter. For the year, these awards were highlighted by the Ford F-Series, high-volume platforms with Mercedes-Benz, and further adoption of our innovative pulse-based solution. These wins demonstrate the strength of our industry-leading technology. We defend existing business, launch innovative new products, and create new market opportunities. We generated record revenue of $1,500,000,000 in the year, which increased 2.9% compared to prior year, or 1.8% when excluding foreign currency translation. Automotive Climate and Comfort Solutions revenue increased 5.8% ex-FX, which was offset by declines in other automotive products of $28,000,000 driven by our previously discussed planned exits. We continue to see strong growth of our market as we ended 2025, with fourth-quarter Climate and Comfort Solutions revenue outgrowing light vehicle by 820 basis points, excluding FX, with strong performance globally and across product categories. Turning to profitability, we delivered $175,000,000 of adjusted EBITDA in 2025, or 11.7% of sales, compared to 12.6% last year. The decrease was primarily driven by higher material costs, including unfavorable mix, as well as expenses related to our footprint realignment, partially offset by operating leverage. We generated $117,000,000 of operating cash flow, an increase of 7% compared to 2025. This was despite the fact that we were building inventory throughout the year to support the ongoing program transitions. Capital expenditures for the year were $56,000,000, down from $73,000,000 in the prior year, as our team did a nice job focusing on assay utilization, Jonathan C. Douyard: scrutinizing new capital expenditures. Jonathan C. Douyard: As a result of our team’s efforts, we further strengthened our balance sheet and ended the year with net leverage Jonathan C. Douyard: of 0.2 turns. Jonathan C. Douyard: We continue to emphasize capital as a key business priority and believe we are well-positioned to generate increased levels going forward. I am confident that our increased financial rigor will drive improved results into 2026. Please turn to slide seven for a discussion on our guidance for 2026 and a preliminary revenue outlook for 2027. At this time, we have not factored in any impact regarding our planned combination with Modine Performance Technologies, which is expected to close by the end of 2026. We will provide better visibility on timing and impact as the year progresses. For 2026, we expect revenue to be between $1,500,000,000 and $1,600,000,000, which is up approximately 3% at the midpoint when excluding slight year-over-year FX tailwinds. According to S&P Global Mobility’s mid-February 2026 report, light vehicle production in our key markets is expected to decrease approximately 1% for the year. This positions us to grow above market by mid-single digits in the year, consistent with our long-term view. We expect the impact of strategically exited businesses to decline to approximately $10,000,000 year-over-year. On margins, we expect adjusted EBITDA for 2026 to be in the range of $175,000,000 to $195,000,000, which implies a midpoint adjusted EBITDA margin of approximately 12%, or 30 basis points expansion year-over-year. The ongoing footprint transitions will continue to be a profit drag, which we expect to be approximately 60 basis points for 2026. As we think about the 2026 cadence, we expect the second half revenue to be slightly stronger than the first half, driven by new program launches. On margins, we expect first quarter will be similar to prior year, with expected improvement throughout the year as the impact of contractual price downs is offset by material savings and productivity actions as the year progresses. We estimate that adjusted free cash flow will be in the range of $80,000,000 to $100,000,000, assuming CapEx is in the range of $45,000,000 to $55,000,000, or approximately 3% of sales. This results in an adjusted free cash flow conversion rate of approximately 50%. While this marks an improvement from the last few years, we continue to believe there are opportunities to increase conversion to 60% or higher moving forward. In addition to 2026 guidance, we are also introducing a preliminary 2027 revenue outlook. Based on current visibility, we expect 2027 revenue of $1,700,000,000, up approximately 10% versus the 2026 midpoint guidance. This growth is supported by strong launch activities and adjacent market pursuits. While we continue to believe that our Automotive New Business Award is a leading indicator of the long-term revenue of the business, we appreciate the challenge in connecting these awards to a near- to mid-term outlook given the lag in start of production and the varying program lives. In order to provide additional visibility to the revenue trajectory, we believe it is important to communicate revenue projections beyond the current year at this time, and we will continue to look for other opportunities to increase transparency moving forward. Overall, we believe that the strategic actions we are taking to accelerate growth and drive operating discipline provide us a clear roadmap for value creation as we move forward. I will now hand it back to Bill for some further color on our recent announcement to combine with Modine Performance Technologies. Thanks, John. Moving to slide eight. Our combination with Modine Performance Technologies accelerates the execution of our strategic framework by expanding our technologies and capabilities in thermal and precision flow management. The combined company will have an attractive financial profile with revenue of approximately $2,600,000,000, pro forma synergy-adjusted EBITDA of 13%, and a strong balance sheet. We believe Gentherm Incorporated is the ideal home for Performance Technologies and will provide it with a renewed focus to drive growth in attractive markets, including power generation, heavy-duty equipment, and commercial vehicle. This is a well-run organization that has a high-performing culture and a strong industrial leadership team in place. We expect continued strong execution upon closing. William T. Presley: The team Gregory Blanchette: brings a continuous improvement and lean mindset that Gentherm Incorporated is excited to leverage. Now, let us turn to slide nine. As we talked about on our January call, there are significant value creation opportunities with this transaction. First, we have identified actionable near-term run-rate cost synergies of approximately $25,000,000 through efficiencies in direct materials, indirect purchasing and logistics, as well as supported costs related to the overall company operating model. As we work closely with the team, we are looking to introduce additional cost savings initiatives that could increase the run rate over time. That said, we believe the real power of this combination is in the product and end-market opportunities that are unlocked, and we have strong conviction that together we can greatly accelerate our growth path. This is an area where I have personally spent a significant amount of time, and I want to highlight a few specific examples. First, Modine brings established commercial relationships in industries that Gentherm Incorporated has not historically participated in, including commercial vehicle and heavy-duty equipment. Based on early discussions, we expect this will accelerate Gentherm Incorporated’s progress as we pursue these markets. Furthermore, Modine has footprint in regions like India, which Gentherm Incorporated has been evaluating over the past year as an area of potential expansion. As one company, we will now be able to sell directly into these geographies without the need for incremental footprint investment. While we have high levels of confidence in those areas, the most value creation opportunities relate to product integration, particularly where Gentherm Incorporated’s valve technology has applicability. To be more specific, in markets such as power generation—and power generation for data centers specifically—Modine Performance Technologies has a leading position supporting the thermal needs of customers as they build out necessary infrastructure. As part of their solution, valves are required to regulate the flow of fluids and air through the thermal management systems of the power generation architecture, which Gentherm Incorporated, as a premier valves manufacturer, is able to supply. In addition to supporting power generation needs, Gentherm Incorporated valves are mission-critical components with applications inside the data center as well. These are tangible and sizable opportunities that we will continue to develop together post closing. Merging Gentherm Incorporated and Modine Performance Technologies opens key new markets for Gentherm Incorporated’s product, including one experiencing significant growth. Together, our combined capabilities put us in position to capitalize on this expanding opportunity and rapidly scale our highly attractive valves business. On our January call, I highlighted that in a very short period of time, our collective team identified a commercial synergy funnel of over $100,000,000. It is important to note that valves made up more than half of that number given their broad applicability, mission-critical nature, close adjacency to, and integration with the products that Modine Performance Technologies produces today. These are just a few examples from the initial work we have done, and we expect to significantly increase the funnel size once we close the transaction and are able to work together as one company. These product integration efforts will strengthen our ability to meet the rising demand for our combined mission-critical offerings. It is important to remember that none of these commercial opportunities were factored into our base assumptions and represent incremental upside to the transaction. Together, we can accelerate each other’s growth path and margin improvement beyond what either could accomplish as a standalone business. We summarized the growth of Gentherm Incorporated and the power of bringing these two companies together on slide 10. We are charting a new course by creating a company that can grow substantially with differentiated and scalable core technologies. We see a clear path to generating $3,500,000,000 in revenue and more than a half billion of earnings by 2030, driven by our disciplined commercial strategies and continued focus on operational excellence. We are on a relentless pursuit to build a more resilient company. Wrapping up on slide 11, I want to reiterate my excitement about Genatherm’s future. We remain confident in our growth trajectory and look forward to welcoming Modine Performance Technologies later this year. We are focused on closing the transaction, ensuring we hit the ground running on day one. We will update you on our progress throughout the year. As we enter 2026, our team is invigorated and operating with a clear focus on strategic priorities. We are acting with a strong sense of urgency to build on the momentum achieved in our adjacent market initiatives and margin expansion efforts. We are taking decisive actions to position Gentherm Incorporated for sustainable, William T. Presley: profitable growth Gregory Blanchette: and long-term value creation. With that, I will turn the call back to the operator to begin the Q&A session. Operator: Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing 1. One moment, please, while we poll for questions. Our first question today is coming from Ryan Ronald Sigdahl from Craig-Hallum Capital Group. Your line is now live. Appreciate Pardon, man. Ryan Ronald Sigdahl: Appreciate all the commentary on the current business this year, but also going out to 2030. It is helpful from a pro forma standpoint. Want to start with the adjacent end markets, curious, knowing that there is a lot of synergy potential with the merger combination, but kind of how you view the next couple quarters, if you guys are continuing to lean in there, or if there is a better, more opportunistic wait-and-see on certain end markets once you are combined. And then second to that, if you are able to quantify the percentage of revenue in 2026 and 2027 for the expectations you gave that are representative of those adjacent markets? William T. Presley: Yes. So I will start. Look, we will continue to lean into the adjacent markets. I would say home and office, which we previously called Motion Furniture—we are calling home and office as we are getting a lot of pull in that market—driven by trends in health and wellness. So we will continue to lean into that market and just put a little color on that. With the pipeline we have, with the engagements we have, we would expect that home and office would be contributing somewhere between $50,000,000 and $100,000,000 in revenue by 2028. So very rapid time to revenue, and margins are, as we have discussed before, not quite at Medical, but above what we have in light vehicle. So accretive there. We will continue to lean into Medical. We announced the new product introduction this quarter and submitted the 510(k)s. We anticipate that that product will begin contributing revenue this year. But look, that product is going to be a leading contributor, we believe, to doubling the size of the Medical William T. Presley: business William T. Presley: before 2030. And then we continue to see some traction in the other adjacent markets with our and comfort solutions for what we would call other mobility. So really around commercial vehicle. We are not slowing anything down, Ryan. The attractive part for us with the Modine Performance Technologies merger is it is a true, what I would say, accelerator for our plans to grow our valve business. Our valve business is very attractive to us. It is above company margins, and we want to scale that. And Modine Performance Technologies gives us a really nice runway to scale valves. John, anything else you want to add? Just that we have historically said, I think, that the adjacent markets will bring one to two points of growth year-over-year. I think Bill’s comments are consistent with that. And so we are certainly not taking the focus off that as we look to close the Modine transaction. Helpful. Then on the Ryan Ronald Sigdahl: footprint realignment, last quarter, it was substantially by 2026. Now it is completion in 2027. I guess, has there been a shift out from any of your expectations, from a timing standpoint and what all doing from an alignment standpoint? And then second point to that, as I look to 2027, you gave revenue, but not EBITDA expectations. I get a lot of moving pieces. But are you at least willing to say if margin expansion is expected to accelerate with that revenue growth acceleration, as a lot of this alignment and cost efficiencies start to flow through? Jonathan C. Douyard: Yeah, Ryan. I would say no change to the timing of footprint transitions. And so we may not track to be done in 2026, with benefits coming in 2027. So if you look at the $1,700,000,000 number next year, which is 10% growth at the midpoint, we did not put out an EBITDA number, but we do expect to see the benefits of the footprint transition flow through, as well as the benefits of more favorable mix, both from pneumatics pricing as well as the adjacent market becoming a bigger piece. And so we would expect to see a bit of a step-function change in 2027 from a margin perspective. Ryan Ronald Sigdahl: Bill, John, appreciate it. Thanks. Good luck, guys. Jonathan C. Douyard: Thank you. Operator: Thank you. Next question is coming from Matthew Butler Koranda from Roth Capital. Your line is now live. Jonathan C. Douyard: Good morning, guys. This is Joseph on for Matt. Just thank you again for taking my questions. Just want to hop back on a previous clip. Question asked. You know, flow-through, I guess, for 2026 on the sales outlook coming in a little bit lower than expected. Just outside of the realignment on your footprint, is there any other incremental investments we are kind of factoring in for this year? Know, as we look at 2026, just to walk through it, right, I think the growth from a top line perspective being in the mid-single digit over the automotive industry volumes. I think if you look at it from a productivity and gross margin perspective, we continue to make progress within the plans in terms of driving operational rigor. We continue to make progress in driving material savings to offset pricing. We do have the footprint headwind in the year, which will be relatively consistent with last year, but we did see that start to increase a little bit towards the end of the year and expect that to continue into 2026. I would say the only other dynamic out there would just be from an FX perspective. We do see some headwinds from the peso in particular, just how that has moved in the last couple months. Other than that, we are not expecting any sort of incremental investments beyond the footprint piece and our continued focus on the adjacent market, which has really just been reallocating internal spend. Got it. Okay. Thank you. And then as you guys provided the 2027 guide, given majority of the core revenue is coming from automotive, where is the confidence coming from if you can just kind of highlight any key line items that you want to highlight for 2027. Excuse me. Yeah. Look, I would say we continue to have strong launch activity. So we are confident in our core automotive business, as we have been. So we continue to see adoption and penetration of both our Climate Solutions and our pneumatic solutions. So we are confident there. Matthew Butler Koranda: And then we are also Jonathan C. Douyard: starting to see just some traction in the adjacent markets. Right? We will start getting contribution, as we said, from new product launches in Medical. We will start getting contribution more from home and office and the other things we have been working on. So we have very strong visibility. We are very confident in the 2027 revenue number. Okay. Thank you, Bill. We will go ahead and take the rest of ours offline. Thank you. Operator: Thank you. Our next question is coming from Luke Junk from Baird. Your line is now live. Jonathan C. Douyard: Good morning. Thanks for taking the questions. I wanted to start with maybe backwards looking in terms of China specifically. You cited strength across geographies in the quarter, just hoping we could double click on China and maybe back up and talk about just broadly your China positioning exiting 2025 and then in the near term, you know, just some turbulence from a production standpoint in China, just how you are thinking about it in terms of the setup for Gentherm Incorporated? Thank you. You want to take the first part? Yeah. I mean, we saw, I would say, really strong growth from a China perspective and really across Asia in the fourth quarter. You know, I think the interesting thing, and I think we talked about this on a prior call, we actually saw strength with the global OEMs in China in the quarter as they increased take rates to expand to not just the passenger seat, but the Luke Junk: the second row as well. Jonathan C. Douyard: And so that changed some of the dynamics there. So we really saw very strong growth above market with both local and global OEMs. And I think we expect that to continue at least through the first half of this year. Yep. I would agree with that. And we did remain focused on rebalancing our mix to represent more domestic OEMs in China. We finished the year with about 60% of our awards in China were domestic. So good progress there. But, again, we remain focused on winning with the right business. We are not interested in buying top line growth. We will stay focused on shifting the mix. As John said, we saw a big pickup from the global OEMs in China that was really driven by the China market having a high level of adoption of our products. So that will slow the mix-adjusted down a little bit, but does not change anything strategically that we are focused on. Yeah. And then just trying to near term, does that contribute at all to your comment that revenue may be a little more back half weighted? Or is that just really launch cadence? I would say that is more launch cadence. Luke Junk: Okay. Jonathan C. Douyard: Second, Bill, just hoping to dig into the ThermoFix patient safety system a little bit more. And, you know, assuming you do get FDA approval in the first half, just how quickly you can start to build out that business? I do not know to what extent you have kind of got potential awards in hand or now you have got a license to hunt. And then, you know, looking over the next few years, your comment that this is the bridge to Medical doubling by 2030, should we assume that there is more launches like this that are coming that kind of build to that expectation? Yeah. So I would say we have already started the voice of customer and clinical work with the ThermoFix system. So we are already, what I would say, priming the pipeline, Luke, which is why we anticipate revenue starting this year. So, again, this will be a big driver towards us doubling the business by 2030. Adoption curves in Medical take a little longer, but we are already out there in front of that as feeling we will push that. You absolutely can expect more new product introductions. We anticipate another significant announcement sometime early 2027, and it will once again leverage technology that we have been utilizing in the automotive industry for 30 years. So, again, it will be another minimal investment leveraging existing technology Luke Junk: But, yeah, we will continue to refresh that product line. Jonathan C. Douyard: Yeah. And then lastly, you mentioned opportunities within data center for valves and yeah. Just something to expand on that. Would that be liquid cooling, or just what would the application there be? Yeah. The application would be liquid cooling. That is an area we have to explore. I would just say in our work with Modine Performance Technologies on the power gen side, that was a market that we gained visibility into. It is not one we have been traditionally in. It is one that we are early in understanding. But Modine Performance Technologies gives us a lens and an avenue in, but there are true liquid cooling applications that require valve technology in data centers. Got it. I will leave it there. Thank you. Thanks, Luke. Thanks, Luke. Operator: Thank you. We have reached the end of our question and answer session. Ladies and gentlemen, that does conclude today’s teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation today.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Kinross Gold Corporation Fourth Quarter and Year End 2025 Results Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to David C. Shaver, Senior Vice President. Please go ahead. Thank you, and good morning. With us today, we have J. Paul Rollinson, CEO, and from the Kinross senior leadership team, David C. Shaver: Andrea Susan Freeborough, Claude J. Schimper, William D. Dunford, and Geoffrey P. Gold. For a complete discussion of the risks and uncertainties which may lead to actual results differing from estimates contained in our forward-looking information, please refer to page 3 of this presentation, our news release dated February 18, 2026, the MD&A for the period ended 12/31/2025, and our most recently filed AIF, all of which are available on our website. I will now turn the call over to J. Paul Rollinson. Thanks, David, and thank you all for joining us. This morning, I will provide an overview of our fourth quarter and full-year results, highlight our operations and projects, discuss our outlook for the business going forward, and review our achievements in sustainability. I will then hand the call over to the team to provide more detail. Looking back, 2025 was another strong year for our business, underpinned by consistent operational and financial performance. We produced just over 2,000,000 ounces and achieved our cost guidance, demonstrating a rigorous focus on cost control. As a result, our margins increased by 66% compared to a 43% increase in the gold price. This margin expansion resulted in record free cash flow generation for our business, with $769,000,000 generated in Q4 and $2,500,000,000 for the full year. This free cash flow strengthened our balance sheet and allowed us to return significant capital in 2025. In addition to returning approximately $1,500,000,000 of capital to debt and equity holders, we also ended the year with approximately $1,000,000,000 of net cash. With respect to operations, Tasiast and Paracatu continued to anchor the portfolio in 2025. Together, they accounted for approximately 1,100,000 ounces for the full year, more than half of our production, at strong margins. At Paracatu, full-year production of over 600,000 ounces exceeded the midpoint of guidance, with production exceeding 500,000 ounces for the eighth consecutive year. At Tasiast, full-year production also exceeded the midpoint of guidance and the mine was once again our highest-margin operation in the portfolio. In La Coipa, we delivered on full-year production guidance and saw strong performance in the fourth quarter. In the U.S., our assets delivered another solid year of operations, with full-year guidance achieved. Turning now to our projects. In 2025, we continued to make excellent progress across our attractive pipeline. In mid-January, we announced that we are proceeding with construction of three high-quality organic growth projects, which will extend mine life and benefit the long-term costs of our U.S. portfolio. Each of these projects demonstrates compelling economics at a range of gold prices and represents a strong case to invest capital to grow the overall value of the business. We also saw notable progress across our broader resource base, with resource additions at several assets enhancing our strong resource optionality and long-term production outlook. We also continue to advance our two world-class development projects, Great Bear and Lobo Marte. At Great Bear, surface construction for the AEX is well advanced and we look forward to starting construction of the exploration decline later this year. I am very pleased to report that we were just designated under the Ontario One Project One Process, which Geoff will elaborate more on. For the main project, detailed engineering and permitting continues to advance as we work with the Ontario and federal authorities, including the Impact Assessment Agency of Canada. The third and final phase of the impact statement submission remains on schedule to be filed at the end of this quarter. At Lobo Marte, we are progressing baseline studies and plan to submit an EIA by Q2, and we look forward to providing a project update later this year. With respect to our outlook, we are reaffirming our stable multiyear production profile. Production of 2,000,000 ounces for 2026 and 2027 remains consistent with our previous guidance. And we are introducing a new year of production of 2,000,000 ounces for 2028, at which time our new higher-grade U.S. projects are expected to come online, coinciding with higher-grade mining at Tasiast. Together, we expect this will provide an organic offset to cost inflation through grade enhancement within the mine plan. Looking further ahead, we expect production to remain around the 2,000,000-ounce level through the end of the decade, supported by the higher-grade mining at Tasiast, U.S. projects, open-pit extensions at La Coipa, and the start-up of Great Bear. As with everyone in the industry, costs are expected to increase compared to 2025, primarily on higher royalties and inflation. However, I want to stress that we are holding the line on what we can control through continued cost discipline. With respect to future capital allocation plans, we will continue to remain disciplined to ensure that we are investing in our operations to maintain a reliable low-risk business, growing net asset value through continued pipeline development and strengthening our balance sheet while also returning meaningful capital to shareholders. The outlook for our business remains very robust, and Andrea will speak more on our plans to return capital to shareholders later. Turning to sustainability. In 2025, we continued to advance several priorities across this important area. In Q2, we will publish our annual sustainability report, which will provide a detailed review on our sustainability performance and initiatives throughout 2025. Some highlights from the past year include: under the heading of environment, we completed an energy efficiency program delivering an estimated 1.5% reduction in greenhouse gas emissions through the implementation of more than 30 projects across our sites. Under the heading of social, in Mauritania, we donated medical supplies to our longstanding partnership with Project C.U.R.E. and Mauritania’s Ministry of Health. To date, the program has supported more than 70 health clinics. And under the heading of governance, we were once again named the top-scoring mining company in the Globe and Mail’s annual corporate governance ranking, including maintaining placement in the top 15% of companies overall. With that, I will now turn the call over to Andrea. Thanks, Paul. Andrea Susan Freeborough: This morning, I will review our financial highlights from the quarter and full year, provide an overview of our balance sheet and our capital allocation plan, and discuss our outlook Andrea Susan Freeborough: and guidance. Andrea Susan Freeborough: We finished the year producing just over 2,000,000 ounces, in line with guidance, with 484,000 ounces produced in the fourth quarter. Cost of sales of $12.89 per ounce and all-in sustaining cost of $18.25 per ounce in the fourth quarter were higher compared to the prior quarter Andrea Susan Freeborough: as expected, Andrea Susan Freeborough: due to higher gold prices and lower planned production related to mine sequencing. Full-year cost of sales of $11.35 per ounce and full-year all-in sustaining cost of $1,571 per ounce were in line with guidance despite the impact from higher royalties. Margins were strong at $2,847 per ounce sold in Q4 and $2,283 per ounce for the full year. Our adjusted earnings were $0.67 per share in Q4 and $1.84 per share for the full year. Adjusted operating cash flow was a record $1,100,000,000 in Q4 and a record $3,600,000,000 for the full year. Attributable CapEx was $362,000,000 in Q4 and $1,180,000,000 for the full year, in line with our full-year guidance. Attributable free cash flow was a record $769,000,000 in Q4 and a record $2,500,000,000 for the full year. Turning to the balance sheet. We continue to strengthen our financial position with significant cash flow generation in 2025, $700,000,000 of debt repayments, and significant growth in our cash position. In Q1, we repaid the remaining $200,000,000 on the term loan we used to fund the acquisition of Great Bear. And after redeeming our 05/2027 senior notes in December, we ended the year with $1,700,000,000 in cash, approximately $3,500,000,000 of total liquidity, and net cash of approximately $1,000,000,000. We now have no near-term debt maturities, with $500,000,000 due in 2033 and $250,000,000 due in 2041. In December, we received a credit rating upgrade, Moody’s Investors Service upgrading our rating Andrea Susan Freeborough: to Baa2 from Baa3. Andrea Susan Freeborough: Also in December, we renewed our $1,500,000,000 revolving credit facility, restoring the five-year term. Turning to our guidance and outlook. We are forecasting production in the range of 2,000,000 ounces for 2026, remaining consistent with previous guidance. Production is expected to be relatively evenly split across the year at approximately 490,000 to 510,000 ounces each quarter. With respect to cost this year, we are guiding $13.60 per ounce for cost of sales and $17.30 per ounce for all-in sustaining costs Andrea Susan Freeborough: at a gold price of $4,500 per ounce. Andrea Susan Freeborough: The expected increase of 10% for all-in sustaining costs compared to 2025 is driven by three factors: Andrea Susan Freeborough: First, Andrea Susan Freeborough: higher royalty cost due to higher gold prices, resulting in an approximate impact of 4% or $55 per ounce. Second, overall cost inflation of 5% or $75 per ounce. And the remaining 1% is primarily related to mine plan sequencing across the portfolio. With the increase in costs largely related to noncontrollable factors, our cost guidance continues to demonstrate our effective cost management strategy. Our capital expenditure guidance of $1,500,000,000 for 2026 reflects annual inflation and planned higher capital investment as we reinvest more in our business to extend mine lives and increase production in the late 2020s and 2030. Approximately $1,050,000,000 of our total CapEx is expected to be non-sustaining, with the remaining $450,000,000 expected to be sustaining capital. Looking ahead, our production guidance of 2,000,000 ounces remains unchanged for 2027. And we have now added another year, 2028, to our stable 2,000,000-ounce Andrea Susan Freeborough: profile. Andrea Susan Freeborough: Capital expenditures for 2027 and 2028 are expected to be approximately in line with 2026, subject to ongoing inflation and potential other project opportunities for the 2030s that are currently under study. Andrea Susan Freeborough: As Paul noted, Andrea Susan Freeborough: we will maintain our disciplined capital allocation strategy, which includes reinvesting in our business, where we have chosen to increase capital expenditures by $350,000,000 this year, continuing to strengthen our investment-grade balance sheet, and returning meaningful capital to shareholders. This year, we are targeting to return approximately 40% of our free cash flow back to shareholders through both dividends and share repurchases. Our shares remain a strong return on invested capital, considering our attractive valuation and free cash flow yield. With respect to dividends, we are further increasing our dividend by $0.02 per share annually, or 14%, following a 17% increase we announced in Q4, for a total increase of 33%. Also, as a reminder, as typical for us, we expect Q1 to be a higher cash outflow quarter due to annual tax payments in Brazil and Mauritania and semiannual interest payments on the remaining senior notes. We expect to start executing our share buyback program next week. I will now turn the call over to Claude to discuss our operations. Claude J. Schimper: Thank you, Andrea. I would like to start with our safety culture. In the fourth quarter, our risk management practices continued to be strengthened across all the assets, ensuring that our highest-risk activities are consistently and effectively controlled in the field. Building on our safety excellence programs, we continue to enhance capability at the frontline by investing in our field supervisors, equipping them with practical tools, targeted training, and visible leadership expectations to improve the quality of our critical control verifications. In December, we signed a five-year collective labor agreement at Tasiast and a two-year CLA at La Coipa. Claude J. Schimper: Reflecting our ongoing partnership with our employees and ensuring stability for both the local workforce and our businesses in Mauritania and Chile. Our culture of operational excellence, which is backed by dedicated site teams, continues to drive strong performance from our operations. Beginning with Paracatu, the mine delivered another strong year of production, exceeding 600,000 ounces, resulting in significant cash flow. Full-year production of 601,000 ounces exceeded the midpoint of guidance. Cost of sales of $978 per ounce were below the midpoint of guidance. Production of 155,000 ounces in the fourth quarter increased over the prior quarter due to timing of ounces processed through the mill, partially offsetting lower planned throughput. Paracatu is expected to produce 600,000 ounces at a cost of sales of $12.40 per ounce in 2026. Tasiast delivered another strong year of operations with full-year production of 503,000 ounces at a cost of sales of $884 per ounce, both meeting guidance. Tasiast was once again our lowest-cost operation in 2025, delivering robust cash flow. In the first quarter, the site delivered 126,000 ounces at a cost of sales of $1,002 per ounce. Production was higher over the prior quarter due to higher grades and stronger throughput. Tasiast is expected to be slightly higher in 2026 and 2027 compared to the technical report due to ongoing mine plan optimization. The site is expected to maintain production at around the 500,000-ounce level until we are back into higher grades in 2028. Claude J. Schimper: In 2026, Claude J. Schimper: Tasiast is expected to deliver 505,000 ounces with a target cost of sales of $1,050 per ounce and is expected to be our lowest-cost operation once again this year. La Coipa delivered a strong final quarter with production of 67,000 ounces, improving over the prior quarter on higher mill throughput. Full-year production of 232,000 ounces was in line with guidance. In 2026, mining at La Coipa will continue to take place at the two open pits, Phase 7 and Puren, and blend the ore feed into the process plant. La Coipa is anticipated to produce 210,000 ounces at a cost of sales of $1,320 per ounce in 2026. Our U.S. assets collectively delivered full-year production of 676,000 ounces at a cost of sales of $1,426 per ounce, in line with guidance. Production of 136,000 ounces in the final quarter was on plan. In Alaska, fourth-quarter production of 65,000 ounces was lower compared to the prior quarter, and cost of sales of $16.73 per ounce was higher as a result of planned mine sequencing, including lower contributions from Manh Choh. At Bald Mountain, we produced 38,000 ounces at a cost of sales of $1,192 per ounce, and production was lower over the prior quarter while costs were higher due to planned mining of lower-grade areas at the Galaxy and Royal pits. At Round Mountain, production of 32,000 ounces was lower compared to the prior quarter as Phase S continued to transition into initial ore while processing from lower-grade stockpiles, resulting in a higher cost per ounce sold. With that, I will now pass the call over to William to discuss our resource update and projects. Thanks, Claude. I will start by providing an update William D. Dunford: on our year-end reserve and resource. For this year, we have updated our reserve price to $2,000 per ounce and our resource price to $2,500 per ounce. The intention was to be more reflective of the recent gold price environment while still maintaining discipline and a focus on strong margins. Starting with reserves, I am pleased to report that we added 1,200,000 ounces of reserve before depletion. At Paracatu, we saw a 700,000-ounce addition, Claude J. Schimper: largely offsetting depletion through mine design optimization and successful near-mine exploration. William D. Dunford: At Bald Mountain, we added 200,000 ounces before depletion, Claude J. Schimper: primarily through conversion of resources to reserves at the five satellite pits that were approved as part of the Redbird 2 project. William D. Dunford: At Tasiast, we added 200,000 ounces before depletion, Claude J. Schimper: with additions both at West Branch in the existing pit design and at the Fennec satellite pit. William D. Dunford: At Round Mountain, the transition to underground replaced just over 1,000,000 ounces of lower-margin, Claude J. Schimper: lower-grade open pit reserves, William D. Dunford: with approximately 1,200,000 ounces of higher-grade, higher-margin underground reserves, fully offsetting our depletion. We are pleased to continue to see this type of progress in our reserve base, Claude J. Schimper: extending mine life as we advance exploration, optimizations, and project studies across the portfolio. William D. Dunford: We have also grown our resource base by 1,600,000 ounces of M&I William D. Dunford: and 3,400,000 ounces of inferred. These resource additions were spread across our portfolio and were reflective of both exploration success and the impact of higher gold prices as we continue to hold the line on cost. Claude J. Schimper: Increasing the size of potential future open pit laybacks at some assets. William D. Dunford: Just as we are holding the line on costs, we are also holding the line on our cutoff grades to ensure we maintain the margin and quality of our resource, Claude J. Schimper: and only saw a small resource addition William D. Dunford: from additional mill feed at the end of mine life Claude J. Schimper: at the higher gold price. William D. Dunford: We are pleased to see these strong additions to enhance our long-term resource optionality. You can see on this slide a summary of that significant resource optionality, which now includes 27,000,000 ounces of M&I and approximately 17,000,000 ounces of inferred. These resources, which include a number of projects across our operating and development sites, form the pipeline of potential opportunities that we are progressing to support our production profile through the end of the decade and into the 2030s. Our January announcement of progression to construction across three high-return projects in the U.S. is a great example, demonstrating the depth and quality of the significant resource base and how we are progressing these projects into our business plan. Phase S at Round Mountain is a low-cost, bulk-tonnage, underground opportunity that extends operation through 2038, with average annual production of approximately 140,000 ounces. Claude J. Schimper: Curlew is a high-grade underground William D. Dunford: that leverages existing infrastructure at the Kettle River mill, Claude J. Schimper: and at the historic Curlew Mine to bring online an additional high-margin mine William D. Dunford: that produces up to 100,000 ounces per year. And the Redbird 2 project is a highly efficient extension of mining at Bald Mountain, providing the next anchor pits alongside five satellite pits that combined deliver 640,000 ounces. We have progressed the construction across these three projects on the back of strong margins, with an average AISC of $1,660 per ounce, quick paybacks of less than two years, Claude J. Schimper: a combined NPV of $4,300,000,000, William D. Dunford: and combined IRR of 59% at $4,500 gold. Together, they are expected to add over 3,000,000 ounces of production, just based on the initial resource and mine plan inventory Claude J. Schimper: we have drilled to date. William D. Dunford: We are excited to be moving ahead with three high-quality projects as we continue to execute our portfolio grade-enhancement strategy. Beyond our initial life-of-mine at Phase S and Curlew, to go out to 2038, both projects have significant potential for mine life extension Claude J. Schimper: down dip William D. Dunford: and further enhance our return on asset value. Claude J. Schimper: At Phase S, William D. Dunford: we have recently completed drilling 220 meters down dip, which has demonstrated mineralization continues, with similar strong width and grade, providing further confirmation of our hypothesis that the system extends significantly down dip. This mineralization provides potential for both mine life extensions and for mining rate increases, through opening of more mining horizons, potentially increasing the production rate. At Curlew, Stealth and Roadrunner exploration development completed last year has provided drilling access to target wide high-grade resource extensions in these areas to augment our production profile in the mid-30s, and drilling is now underway. As you can see on the slide, we have seen strong intercepts outside of the current resource and mine plan inventory. Claude J. Schimper: In both of these zones. Good width, William D. Dunford: and grades that have potential to extend the mine life and enhance the margins of the asset. Exploration will continue to be a priority for these two sites, and we look forward to providing further drilling updates through 2026. With these three projects now progressing to construction, expected to come online in 2028, Claude J. Schimper: our focus is now shifting to adding value-accretive production in the 2030s. This slide shows a summary of some of the longer-term projects in that extensive resource William D. Dunford: base that are our next focus to progress. I will come back to an update on Great Bear, which is next in line, shortly. Moving across to Chile, Claude J. Schimper: at Lobo Marte, the project team continues to advance technical work William D. Dunford: as well as baseline studies to support our upcoming EIA submission, and we look forward to providing a project update later this year. Claude J. Schimper: At Tasiast, William D. Dunford: we continue to see positive results down dip at West Branch and are studying both open pit and underground optionality there for mine life extensions in the 30s. At Paracatu, this year, we will be progressing technical and baseline studies and refreshing the mine plan to refine our view given the extent of resource base. Beyond these projects, we are continuing to progress exploration and studies for pit layback opportunities that you can see in our resource base across our portfolio, with a strong focus on Paracatu, Fort Knox, and La Coipa Extension. Now moving to Great Bear. Both the AEX program and main project are progressing well, with the main project on schedule for first production later in 2029, subject to permitting. Claude J. Schimper: Starting with updates on AEX, we made strong progress on-site William D. Dunford: construction. Surface construction for AEX is 80% complete. As Paul noted, we look forward to construction of the exploration decline later this year pending receipt of provincial permits, which Geoff will comment on shortly. With respect to the main project, Claude J. Schimper: which remains on track, William D. Dunford: detailed engineering and technical work continue to advance well. Detailed engineering is now approximately 35% complete. Initial major equipment procurement for process plant and surface infrastructure is already underway, with contract awards in progress. Manufacturing of selected long-lead items is anticipated to commence later this year. With respect to exploration at Great Bear, in 2025, our efforts shifted to focus on regional exploration across a 120-square-kilometer land package. Claude J. Schimper: Deep drilling completed up to 1.8 kilometers along strike William D. Dunford: of the main LP Fault, returned encouraging results, indicating high-grade mineralization beyond the current resource base. Drilling on the broader land package outside of the main LP trend also returned encouraging results. We will progress additional drilling to follow up on these results along trend and on the broader land package this year. I will now hand it over to Geoff to discuss the permitting progress at Great Bear. Thanks, Will. Permitting of the AEX program and the main project continue to advance as we work hand in hand with the Ontario and federal authorities. Focusing on AEX, we continue to work with the Ontario Ministry of the Environment, Conservation and Parks to finalize the two remaining AEX permits. We anticipate receiving these permits and to commence construction of the decline by Q2 of this year. Turning to the main project, which remains on schedule, work has commenced on both federal and provincial permits. Geoffrey P. Gold: Federally, Geoffrey P. Gold: we continue to work with the Impact Assessment Agency of Canada, IAAC, to advance the project impact statement. The first two of three phase submissions for the project’s impact statement were filed on time in September and December respectively. The third and final phase is scheduled to be submitted at the end of Q1 of this year, as previously noted. As a reminder, finalizing the impact statement and receiving the final impact assessment report from IAAC is the critical first step to obtaining the other federal and provincial permits we require to construct and operate the Great Bear mine. Work has also commenced on other main project federal permits, with technical documents submitted to Fisheries and Oceans Canada and Environment and Climate Change Canada during the quarter. Provincially, we were pleased that the main project was recently designated for the One Project One Process permitting framework by the Ontario Minister of Energy and Mines, Steven Lecce. This helpful initiative aims to better coordinate, integrate, and streamline Ontario mining project authorizations, permitting, and Indigenous community consultation, which we support. We expect this more coordinated framework will facilitate the Ontario component of Great Bear permitting and targeted first gold production later in 2029. Respecting Indigenous communities, we continue to advance the negotiation of benefits agreements Andrea Susan Freeborough: dollar budget in 2026. We had a strong year of brownfields exploration, driving both the significant reserve additions we spoke about earlier and identification of additional resource potential across a number of projects, a few of which I will now highlight. First, at Tasiast, we have continued to see positive results at West Branch. With 2025 deep drilling demonstrating that mineralization continues at least 1.8 kilometers down plunge of our existing underground resource. Next, in Alaska, the team spent 2025 building on our knowledge of the Gil satellite deposit at Fort Knox, alongside opportunity drilling near the Fort Knox pit to enhance the optionality of our next layback. Results at Gil were encouraging, with a few highlight intercepts shown on the slide, strong grades and widths, including a 15.2 gram per tonne intercept over more than four meters. Gil is a satellite opportunity with potential to augment production in future phases of the Fort Knox main pit. And as a last highlight, at Bald Mountain, efforts have continued to explore our large land package at the site, and we were successful at bringing in the 200,000-ounce reserve add I mentioned earlier, primarily through satellite pit extension. We have also seen strong results outside of those satellite pits that were added to reserves as part of the Redbird 2 project. One highlight was the drilling at the Rat satellite pit. We saw intercepts with significant grades and widths, including 10 grams per tonne over 16 meters. Rat is one of more than 40 historic mining areas on the property and will be a focus to explore and study for potential to complement our next anticipated anchor pit at Bald Mountain, the Top pit. You can find more details on the strong results from our 2025 brownfield program and our plans for 2026 in our press release. Moving to our greenfields program, we completed approximately 40 kilometers of drilling across targets in Canada, the U.S., and Finland. In Canada, exploration was primarily focused in Manitoba, New Brunswick, and Ontario. At Snow Lake in Manitoba, we saw exciting new results both from our first drill program on the McCafferty property, including an intercept of four meters at 34 grams per tonne, and from grab sampling on the SLG property, which returned a number of results with strong gold grades. These properties further complement the high-grade vein system we have outlined at Laguna North, providing critical mass to support further exploration work in the area. In New Brunswick, work consisted of mapping and drilling in the Williams Brook JV property, where gold-rich quartz veins were identified at the Lynx Hill. At Red Lake North in Ontario, fieldwork also identified several high-grade quartz veins, and rock grab samples returned numerous strong grades, the highest assay returning 65 grams per tonne. In Nevada, we completed two drill holes at the PWC JV project to test for lower-plate, Carlin-type host rocks. The program returned a 149-meter mineralized intercept, confirming the presence of Carlin-type disseminated gold. Our work this year will focus on following up on this exciting result. We continue to be encouraged by our success identifying earlier-stage brownfields and greenfields opportunities to progress into our resource base and projects pipeline. We plan to build on this success in 2026. I will now turn it back to Paul for closing remarks. Thanks, Will. After delivering on our commitments in 2025, we are well positioned for a strong 2026. Our business is in great shape both operationally and financially. J. Paul Rollinson: With a number of upcoming catalysts for the year ahead, including ongoing return of capital through our dividend and share repurchases, continued strengthening of our balance sheet supported by strong operational performance and cash flow generation, advancing our projects pipeline, including the U.S. projects discussed in January, as well as Great Bear and Lobo Marte, which we intend to provide a project update on later this year, and continued exploration intended to bring in new projects and mine life extensions. Looking forward, we are excited about our future. We have a strong production profile. We are generating significant free cash flow. We have an excellent balance sheet. We have an attractive return of capital. We have an exciting pipeline of both exploration and development opportunities. And we are very proud of our commitment to responsible mining that continues to make us a leader in sustainability. With that, operator, I would like to open up the line for questions. At this time, I would like to remind everyone, in order to Operator: ask a question, please press star then the number one on your telephone keypad. First question comes from the line of Fahad Tariq with Jefferies. Your line is open. Fahad Tariq: Hi. Thanks for taking my question. On Great Bear, the One Project, One Process designation, I believe Kinross is the first major mining company to receive that. Can you maybe talk about the relationship with the provincial government and whether this could help get Great Bear into the Major Projects Office designation at the federal level? Thanks. Geoffrey P. Gold: Yeah, sure. I will take that question. Let me start by saying that we were pleased by the Ontario Ministry of Energy and Mines’ decision to designate the Great Bear project for inclusion in the One Project One Process, and we believe this designation represents an important milestone. I am going to talk about both processes. At the One Project One Process level, the main benefit of the designation is a more streamlined and integrated approach for the provincial component of main project permitting, and it gives us a single point of contact at the Ontario Ministry of Energy and Mines to coordinate all required provincial authorizations, permitting, Geoffrey P. Gold: and First Nations consultation. And so as a result, we expect that will help facilitate Geoffrey P. Gold: the provincial piece of main project permitting and targeted first gold production in late 2029. Fahad Tariq: And Geoffrey P. Gold: we have worked hand in hand through this process with the Ministry of Mines and other provincial permitting agencies, and we are pleased with the relationship. It is a strong relationship as we continue to work together to develop the project. On your federal piece of the question, I can tell you that we have been in touch with the federal Major Projects Office, and they, along with other federal agencies, are aware of the Great Bear project and its potential significant Geoffrey P. Gold: economic and sustainable benefits for predominantly Ontario, but Canada and Indigenous communities. Geoffrey P. Gold: And it is absolutely possible to obtain designations under both the One Project One Process permitting framework that I talked about previously and the federal National Project of Interest framework, but we have elected at this juncture to not apply for that federal designation. We believe that with the benefit of the One Project One Process designation that we currently have, along with the fact, as Paul noted, that Geoffrey P. Gold: we are far enough along with the federal impact assessment process overseen by IAAC. As we told the markets, we will be filing the third and final phase of our impact statement at the end of Q1, so we believe we are well positioned for our targeted first gold production in late 2029. Great. Appreciate the detailed response. That is very clear. And then maybe just switching gears to 2026 cost guidance. Can you just break out the impact of the royalties, the higher royalties because of the higher gold price, and underlying cost inflation? Thanks. Andrea Susan Freeborough: Sure. I can take that. It is Andrea. I will start with talking about all-in sustaining costs. Our total all-in sustaining cost guidance is up about 10% over 2025, and most of that is related to those two items, inflation and higher royalties on gold price. So, of the 10% increase, 5% is inflation and 4% is royalties from using the $4,500 gold price versus where we were for 2025. And then there is about a 1% increase that is left, and that is really puts and takes across the portfolio on that mine plan sequencing. When we look at cash cost, there is a bigger increase, so the increase looks like 20% year over year. Half of that 20% is the inflation and royalties. And the other half is sequencing as well. There is a bit of a different impact there that is kind of accounting characterization of our stripping costs. We started to see this starting in the second half of last year where stripping costs moved from being characterized as sustaining capital at some of our assets into operating costs. So we see the increase in cash costs but the offset of that is in sustaining capital. That is why there is no impact or a very small impact on the all-in sustaining cost guidance. I would say overall, we are moving the same spend; it is just the characterization of cost shows up differently. Fahad Tariq: Okay. Great. Thank you very much. Operator: Your next question comes from the line of Daniel Major with UBS. Your line is open. Daniel Major: Hi, and thanks so much for the presentation. First question Daniel Major: just on the capital allocation and cash returns going forward. I think it is great that you are anchoring a capital return to free cash flow going forward. But I suppose two parts to the question. Is there a preference or can you comment on the split between ongoing buybacks and potential special dividends to get to the 40% of free cash capital return? And then 40% of free cash flow with a $1,000,000,000 net cash position implies you are going to continue to build net cash. What are you going to use that for? And is there a maximum limit above which you would pay it all out to shareholders? J. Paul Rollinson: I will start, and Andrea can jump in. The first part of the question, we have a baseline dividend that is meant to be there forever, and the bulk of the return of capital really comes in the form of the buyback. We like the buyback. We think a lot of our investors prefer the buyback. One of the things we like about the buyback is it does come with that benefit of reducing our share count and therefore improving our per-share metrics. We reduced our share count last year, and our intention is to do that again this year. So in terms of the preference between dividend and buyback, we will do both, but the greater volume or total of cash will be returned through the form of the buyback. Looking forward, I think our focus is to get the appropriate return of capital, and that is why, as you acknowledged, we focused on a percentage of free cash flow. That is the focal point. We do realize that in the context of current prices, there will be more cash flow and, therefore, more returns than we had last year. So we are increasing. But at the same time, we are reinvesting in our business. We do expect in the context of spot that our balance sheet will continue to strengthen. But the point there is we also have to look at the other side of it. With these higher gold prices, as we have already seen, we expect higher royalties, higher taxes. We just demonstrated with the announcement on the U.S. projects, we have lots of optionality in our pipeline. And we will take a steady-as-she-goes approach with the balance sheet, while reinvesting in our business with the appropriate return of capital, expecting that we may have higher taxes, royalties, and opportunities to reinvest in our business. Daniel Major: Okay. Daniel Major: Thanks. Then a follow-on to that. In terms of the inorganic options, are you actively looking at many opportunities at this point? J. Paul Rollinson: I would say we get the question reasonably frequently. We do have a very strong internal technical team. We do look at opportunities, particularly if there is a process. But I would say we are hard markers. We are not under any pressure. When you look at our reserve-resource—really more of our resource optionality—we have lots of depth in our organic portfolio. We have given good visibility on our guidance for three years and beyond. So we do not feel under any pressure. What that means is if we saw the right thing and we felt it created value, we would have a look at it. We certainly do not feel under any pressure, and we are quite happy with the organic profile as it looks today. As I said, our objective really with the free cash flow is to continue to grow our per-share metrics. Daniel Major: Great. Thanks. And then last one for me. I think I see you slowly changed the way of the accounting for the tax payables. But just on that, in terms of Q1 now we are past the year-end, what we should be expecting in terms of the cash outflow. And you have obviously given the guidance for cash for the full year. And then with respect to the run rate, the capital return free cash flow will be lower in Q1 because of the tax payments. Should we read that you will slow the buyback? Or will you just look to distribute that at a similar rate through the year? Andrea Susan Freeborough: We, as I noted in my remarks, have not started the buyback yet just because of the more significant cash outflows in Q1, largely related to tax, and I will come back to that. But we are planning to get on the buyback next week. So, on the whole, Q1 may be lower than the rest of the year. But given we are targeting the 40% of free cash flow for total return of capital, it will be a bit of a calibrate-as-we-go throughout the year. And then we will report back each quarter. Like last year, we do expect to be in the market systematically, sort of daily throughout the year, repurchasing our shares. In terms of the tax payments, in Q1, we expect to be paying over $400,000,000, and that is largely related to 2025. And then we gave the guidance for the full year, but $500,000,000 of that is related to 2025. Daniel Major: Alright. Probably closer to $600,000,000. So $400,000,000 in the first Daniel Major: the first quarter and then the remainder of the $1.25. So $1.25 over the year. Okay. Andrea Susan Freeborough: Great. For Andrea Susan Freeborough: tax, we sort of have the lowest payment in Q3, Q1 the highest, then Q2. Daniel Major: So Andrea Susan Freeborough: more weighted to the first half and Q1 being the highest. Okay. Great. Daniel Major: Thanks a lot. Operator: Your next question comes from the line of Carey MacRury with Canaccord Genuity. Your line is open. Carey MacRury: Congrats on the strong year. Carey MacRury: Just going back to the 40% target, just to clarify that is for 2026, and that is a number that you will revisit, I guess, in 2027? Andrea Susan Freeborough: That is right. Carey MacRury: Okay. And then just in terms of the 2,000,000 ounces, is there a Carey MacRury: quarterly progression we should be expecting or pretty flat quarter to quarter like last year? Andrea Susan Freeborough: Pretty flat quarter to quarter. J. Paul Rollinson: Okay. Yeah. As Andrea noted in her comments, we like to arrange sort of consistency, but obviously, 2,000,000 divided by four, that is 500,000, but you have ups and downs. So we think anything 485,000 to 515,000—490,000 to 510,000—that is kind of the average. Carey MacRury: Okay. Great. That is it for me. Thanks. J. Paul Rollinson: Thanks. Operator: Your next question comes from the line of Tanya M. Jakusconek with Scotiabank. Your line is open. Great. Good morning, everyone. Hello? Can you hear me? J. Paul Rollinson: You cut out, Tanya. I can hear you now again. Can you hear me now? Operator: Hello? Carey MacRury: No. J. Paul Rollinson: Yep. Yep. Okay. Perfect. Great. Thank you for taking my questions. Tanya M. Jakusconek: Some have been asked, but I just wanted to follow back on the contract renewals. Are there any other ones that are coming up for renewal this year for your labor contracts that we should be aware of? Claude J. Schimper: Yes, Tanya. There is. We are currently busy working through the Brazil Paracatu contract negotiations. Those are pretty standard. We do them almost annually or every eighteen months. It is slightly different to the other sites. A bit more legislative as well. So it is just a bit more of a process, and that is why it has taken on into this year. But for the rest of the sites, as you know, our U.S. sites have them, and then it is Tasiast and Mauritania. Generally, we completed, so we are J. Paul Rollinson: You know what I thought? And I should be thinking about labor Claude J. Schimper: the inflation and wage inflation in that 4% to 5%. Would that be fair? Claude J. Schimper: Yeah. It is really relative to the country. Inflation in Mauritania was, it is like, 10%. Brazil, it is about 8%. So relative to each country. And then overall for us as a portfolio, it is in the 4% to 5% range. Tanya M. Jakusconek: Okay. So it is not out of line. Okay. Thank you for that. My second question is on Great Bear. And thank you for the information on the permitting side. Hopefully, we get that permit in Q2. That will be good to see. But I read that you are going to give us an update later in the year on the Great Bear. What exactly are we getting in terms of an update? Is it a new technical study? Maybe just some clarity on what is coming. J. Paul Rollinson: Yeah. It may have come out a little bit on the script. The update we are going to provide is on Lobo Marte. We were talking about Great Bear and Lobo at the same time. Tanya M. Jakusconek: Is J. Paul Rollinson: I do not know that there is a specific update that we are planning. It is just continued milestones J. Paul Rollinson: in the case of Great Bear, J. Paul Rollinson: getting those two remaining permits, starting the decline, filing the third and final impact assessment filing. So there is not a specific deliverable that I think we are thinking about with Great Bear. In the case of Lobo, we will be filing the EIA and plan to give a project update Tanya M. Jakusconek: on economics. Tanya M. Jakusconek: Right. Okay. Tanya M. Jakusconek: Now that makes more sense because I was just like, what is coming on Great Bear that needs an update? But okay. Thank you for that clarity. And then my final question is there is a slide that we talked about—you talked about on some mine life extensions—and Paracatu was there. I am just wondering, years ago, there was a potential to do a layback that would add quite a bit of ounces on Paracatu. Is that what you are still thinking about? Is that something that is practical and makes sense? William D. Dunford: Yeah. You can see that there is a variety of layback optionality both in reserve and resource at Paracatu. You can see that we put about 700,000 ounces into the reserve this year as it converts. That is material that is now in our strategic business plan. And that is a further redesign of the layback. So that full reserve is now approved and part of our business case. An easy way to think about the direct business case is laybacks that sit in the reserve. Then there is also a significant multimillion-ounce resource that we are looking at for the next stage of optionality there. Okay. Tanya M. Jakusconek: Okay. Perfect. Thank you so much. Those are all my questions. I will turn the call back over to J. Paul Rollinson for closing remarks. J. Paul Rollinson: Great. Thank you, operator, and thanks, everyone, for joining us this morning. We look forward to catching up with you all in person in the coming weeks. Thank you for dialing in. Operator: Ladies and gentlemen, that concludes today’s call. Thank you for joining. You may now disconnect.
Operator: Good day, and welcome to the Cushman & Wakefield plc Fourth Quarter and Full Year 2025 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To ask a question, you may press star then 1. After today's presentation, there will be an opportunity to ask questions on a touch tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Megan McGrath, Head of Investor Relations. Please go ahead. Megan McGrath: Thank you, and welcome to Cushman & Wakefield plc's Fourth Quarter and Full Year 2025 Earnings Conference Call. Earlier today, we issued a press release announcing our financial results for the period. This release, along with today's presentation, can be found on our Investor Relations website at ir.cushmanwakefield.com. Please turn to the page in our presentation labeled “Cautionary Note on Forward Looking.” Today's presentation contains forward-looking statements based on our current forecast and estimates of future events. These statements should be considered estimates only, and actual results may differ materially. During today's call, we will refer to non-GAAP financial measures as outlined by SEC guidelines. Reconciliations of GAAP to non-GAAP financial measures, definitions of non-GAAP financial measures, and other related information are found within the financial tables of our earnings release and in the appendix of today's presentation. Also, please note that throughout the presentation, comparisons and growth rates are to the comparable periods of 2024 and in local currency unless otherwise stated. All revenue figures refer to fee revenue unless otherwise noted. I will now turn the call over to Michelle MacKay. Thank you, Megan. I want to start by saying I am excited. I am excited because of the exceptional results we delivered in 2025. I am excited because of the three-year financial targets and strategy we laid out at Investor Day. And I am excited because of the transformational evolution we are seeing with AI. Starting with our 2025 results, we consistently and successfully executed against our targets, outperforming on many fronts. In 2025, we delivered 34% adjusted earnings per share growth, the highest total revenue and highest leasing revenue in company history, more than 100% free cash flow conversion, and we ended the year at a net leverage ratio of 2.9 times, nearly a full year ahead of our original expectations. In addition to this, we exited the year with momentum, especially in capital markets where we delivered 15% growth in the fourth quarter. Our leasing business continued its consistent and solid performance, contributing to our strong free cash flow. And our services businesses continue to make strides on new business wins, retention, and moving up the value chain. I am also excited about the three-year financial targets we presented to you at Investor Day in December, including 15% to 20% annual adjusted EPS growth. We have confidence in these targets and the strategic growth priorities we outlined. We already see early indicators of success in these high-growth areas, particularly in The Americas, and multi-market leasing grew where capital markets was up 19% in Q4, 33% in 2025. We also spoke about how our organization shows up as an enterprise for our clients. Let me highlight an example of this work. We recently won an integrated portfolio management mandate from a large international corporation. But why did we win? During the RFP process, we showed up as a team, not just a group of individuals. We worked with the client not to just win their business, but to provide integrated execution across all of their locations. Michelle MacKay: We displaced the incumbent, Unknown: Now Michelle MacKay: let us talk about the transformational evolution we are seeing in AI. Make no mistake. AI will create winners and losers. Winners will be trusted partners that provide advisory-led, relationship-driven solutions to their clients for complex problems. They will have large platforms and global execution capabilities. They will have flat organizational structures with change makers in leadership roles. Winners will have embedded a culture of change, not constrained by traditional operating models and ways of working. They will be de-siloed, integrated enterprises with open data and information flow. And most importantly, they will have proprietary data at scale that crosses both the advisory and services businesses. As we discussed at Investor Day, we have already broken down every silo of every department, every data source, every technology. We are already deploying technologies that bring together our thought leadership, our data assets, and our AI capabilities to create digital workflows that extend to every single one of our clients and our colleagues. The work that we have done structurally, operationally, and most important, culturally, underpinned by a strategy to move up the value chain, is exactly what this moment requires. I will now turn the call over to Neil Johnston to discuss our financial results in more detail. Neil Johnston: Thank you, Michelle, and good morning, everyone. Before I get started, a quick reminder. Neil O. Johnston: All comparisons are to the prior year and in local currency. Unless otherwise noted, all revenue figures refer to fee revenue. We exited 2025 with strong momentum, capping off a year of meaningful improvements. For the full year 2025, we achieved top line growth in every service line and every reporting region. We expanded adjusted EBITDA margin by 46 basis points while continuing to invest for organic growth. We generated over $290 million in free cash flow, well exceeding our targeted free cash flow conversion rate. And we entered the fourth quarter below three times net leverage for the first time since 2022, after prepaying $300 million in principal during the year. Looking at the year in more detail, revenue of $7.1 billion increased 7% and adjusted EBITDA grew 11% to $656 million. Adjusted EPS was $1.22, up 34% from last year and at the high end of our guidance range. We delivered $293 million in free cash flow for the year, representing a 103% conversion rate and a $126 million improvement versus 2024. The key drivers of our cash flow performance were strong earnings growth, continued prudent working capital management, higher accrued commissions, and reduced interest costs. We believe this strength in free cash flow gives us ample flexibility to continue to balance our organic growth investments without deleveraging targets. We closed the year with approximately $800 million in cash and cash equivalents and $1.8 billion in total liquidity. Our leverage ratio improved to 2.9 times from 3.8 times at the end of 2024. Moving on to our quarterly results. Fourth quarter revenue of $2 billion increased by 7%. Capital markets revenue was up 15% globally as transaction markets remained healthy. Our leasing business delivered another strong quarter, growing 5% and reaching the highest quarterly level ever for Cushman & Wakefield plc. Adjusted EBITDA of $239 million increased 5% as revenue growth was balanced against our ongoing ramp up in strategic investments and higher annual health care costs, which were weighted towards the fourth quarter. Before moving on, I want to address two non-cash items we incurred during the fourth quarter. We recorded a $177 million impairment to our Greystone joint venture as a result of lower future earnings expectations relative to when we made the acquisition. Unknown: acquisition. Neil O. Johnston: As you recall, we made the Greystone acquisition in 2021, when market conditions and interest rates were much different. We continue to expect Greystone to be a solid contributor to earnings going forward, just at a slower pace than we originally forecasted. For 2025, Greystone contributed $36 million of adjusted EBITDA, which we believe is a reasonable run rate going forward. Secondly, we recorded a roughly $27 million gain included in other income, which primarily represents our investments in an international facilities management company that went public in Q4. Both of these items are non-cash and excluded from adjusted EBITDA and adjusted net income. Moving to service line performance for the quarter. In The Americas, leasing grew 5% with continued strength in office and industrial, driven by higher deal count and increased revenue per lease as clients continue to prioritize a high-quality employee experience. In industrial, demand remains centered on large modern facilities, and the market is seeing substantial demand for sites over 500,000 square feet that can support automation and higher power requirements. Across both office and industrial asset classes, we continue to see opportunities for our project management businesses, as occupiers and investors seek to elevate the quality of their properties to meet evolving market demand, particularly as new construction activity declines. Unknown: In APAC, Neil O. Johnston: leasing revenue increased 5% driven by strength in India and improvements in Greater China. In EMEA, leasing grew 7% driven by strength in Netherlands, Belgium, and Poland. Turning to capital markets. Our efforts to expand our platform continue to drive positive results. In the quarter, we achieved 15% growth globally following 36% growth in the fourth quarter of the prior year. This sustained momentum reflects our ongoing investments in hiring top talent and strengthening our platform, which continue to enhance our competitive positioning. The Americas Capital Markets grew 19% with particular strength in office and retail. EMEA grew 9% led by the UK, Belgium, and Spain. APAC capital markets declined 5% primarily due to a difficult prior year comparison in Japan. Finally, turning to services. Fourth quarter Services revenue grew 6% globally, as we drove strong project management revenues across our global platform. We continue to prioritize steady, profitable growth in the segment as we move up the value chain with our clients. Moving now to our 2026 outlook. In line with the three-year targets we provided at our Investor Day, we anticipate 2026 revenue growth of 6% to 8%, with full-year service line growth trends similar to 2025. We anticipate adjusted EPS growth of 15% to 20% with expected free cash flow conversion in the 60% to 80% range. We also plan to continue delevering consistent with our three-year target of reaching two times leverage in 2028. Unknown: In closing, Neil O. Johnston: our teams executed exceptionally well in 2025, driving strong growth across our global platform, meaningfully improving free cash flow, and investing in the business while also reducing our leverage. This strong performance gives us confidence in our 2026 and three-year targets as we focus on continuing to deliver long-term value to our shareholders. I will now turn the call back over to Michelle. Unknown: Thank you, Neil. Michelle MacKay: We have entered 2026 with confidence and momentum, supported by a defined set of strategic priorities, a stronger balance sheet, and operating leverage embedded across our platform. As we stated in December, our opportunity is undeniable and our path is clear. Our model aligns client success with our success, and we have compelling financial targets that we believe will generate long-term shareholder value. Unknown: We are meeting the AI transformation with insight and Michelle MacKay: advice on how this will shape the built world. We invite you to join us on Monday on a webcast hosted by our think tank where they will be presenting the first phase in a body of work focused on answering the most critical questions around AI and its impact on the commercial real estate industry. A big thank you to all of our employees who are change makers, enterprise-first thinkers, and who focus on value creation for our clients and shareholders every day. I will now turn the call over to the operator for questions. Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up. Michelle MacKay: At this time, can go here. Momentarily to some more roster. Operator: The first question comes from Julien Blouin with Goldman Sachs. Please go ahead. Neil O. Johnston: Yes. Thank you for taking my question this morning. Operator: Michelle, I appreciate your comments on AI creating winners and losers. One of the topics or debates that is out there is related to fears that one of the losers could be mid-market or smaller deal size brokerage businesses given less complexity of deals, greater standardization, greater prevalence of buyers. When we look at your average transaction size, it does seem to skew lower than some of your other peers. Wondering, do you think that that is a real potential risk within the business? Michelle MacKay: Good morning, Julien. Thank you for your question. We believe the concerns about AI disintermediating the commercial real estate brokerage on the whole are materially overstated. This is not the residential sector. Unknown: And Michelle MacKay: yes, there are commercial real estate transactions that are large, complex, negotiation-driven decisions, but there are also the mid-sized deals that are complex and negotiation-driven, and in each case, there is significant financial and operational risk to those individuals signing those leases. So we believe that AI is absolutely going to enhance underwriting or market intelligence efficiency, but it is far more likely to augment a trusted adviser than replace them. Think about making a five- to ten-year decision. Think about the financial impact of that on a company and as to whether or not they would turn that decision over to AI. We do not believe that will be the case. Operator: No. Thank you. That is really helpful. And, Neil, maybe on the EMEA side, top line results were strong, but the margin came in a little lower year over year. Just wondering, are you still confident of driving margin growth in EMEA after the services business restructuring you effected? Neil O. Johnston: Yes, absolutely, Julien. I think the way to look at EMEA is really to look at it on an annual basis. And as one looks at the full year, we saw very, very nice improvement in margin overall. We are particularly pleased with what we are seeing on the services side, both in property management and in project management. In the fourth quarter, we did have a little bit of a decline in margin. That was really just driven by the timing of certain one-time expenses. Still very confident as we look forward. Operator: The next question comes from Ronald Kamdem with Morgan Stanley. Please go ahead. Great. Just staying with the AI theme, if you think about Ronald Kamdem: we talked about large, mid, and small, but there are also different types, whether it is office, industrial, and retail. And as you are re-underwriting the business, how do you think about the risk to the end markets across those subsectors and does that make you want to position differently? Michelle MacKay: Yes. Great question, Ron. Thank you. The call that I mentioned that we are hosting on Monday that you are all welcome to attend is the conversation and is presenting the answers to the question that you are answering because most of the dialogue in our industry has, you know, rightfully been focused around data centers and AI, but this goes much further. When you talk about industrial, what are the needs for an industrial asset going forward? What makes an office building Unknown: compelling? Our researchers and experts have been studying AI's impact to GDP, employment, demand, vacancy, rent, values, and has implications to your point across nearly every sector and office class. So I would encourage you to attend our call on Monday because we are going to be creating practical tools for our clients. They will get a first look at our new AI impact barometer, which is the first-of-its-kind framework to help both real estate investment and our occupier clients make better long-term real estate decisions by understanding the trend lines of AI's impact as it unfolds. Great. Ronald Kamdem: And then my quick follow-up, just wanted to double click on the guidance a little bit. I appreciate you gave three-year targets. And I think you said in your opening comments that services revenue growth would be comparable in 2026 to 2025. But wondering if you could comment on leasing revenue growth, capital markets revenue growth, and just margin trajectory for the year. Neil O. Johnston: Yes, absolutely, Ron. So in my prepared remarks, I did say that we expect 2026 to unfold in a very similar fashion to what we saw in 2025. And that not only applies to overall revenue, but also the revenue growth of each of our service lines. So we are very pleased. You asked specifically about leasing. Very pleased with what we are seeing in leasing. We hit the highest numbers Cushman & Wakefield plc ever has in the fourth quarter, and we see that continued growth moving into 2026. Certainly, economic indicators are strong. Pipelines look good. So we feel pretty good about 2026. In terms of margin, we gave a three-year guide on margin, but we do not give full-year guidance on margin. And so I would focus on our EPS guide of 15% to 20%, and then the other color around each of the service lines. Operator: The next question comes from Stephen Hardy Sheldon with William Blair. Please go ahead. Stephen Hardy Sheldon: Maybe starting with Michelle, I think one of the things you talked about in the Investor Day quite a bit was trying to drive even more cross-selling motions between business lines. So can you talk about some of the things you are working on as an organization as we think about 2026 to support better cross-selling activity this year? What are some of the big initiatives that you are trying to push through? Unknown: Yeah. Certainly. Push through certain events. Watch this Unknown: yeah. Thank you. You have watched us shift around our senior level leadership Michelle MacKay: You have watched us reorganize to get ourselves set up for what we call the spine. Unknown: But I think equally as important and where AI comes into this conversation again is how AI is driving that flow of data and information. So if you think about de-siloing an organization, it is one thing to do structurally and organizationally. It is something else to have the data flow freely throughout the organization. So a big piece of what we are doing, aside from tracking the cross-selling and adjusting people's compensation going forward as it relates to that, is that in capital markets, we have a capital markets CRM. In legal, we have contract and obligation management using AI, and in services we have a proprietary platform with guided insights. In leasing, we are using OneAdvise, which helps automate digital tour books, lease negotiation, benchmarks, and GOS. We have space planning, etcetera, etcetera, etcetera. And what that does is that really creates a very strong data lake for us to work with as we are cross-selling to our clients. Got it. That is really helpful. Operator: And maybe just on Stephen Hardy Sheldon: capital deployment, really nice to see Cushman & Wakefield plc end the year below three turns of leverage. So I know you have the goal of reaching two times by 2028. How aggressive do you plan to be in 2026 in terms of focusing on delevering? Is that still the big priority, or could you be more aggressive in other areas such as continued organic reinvestment and potentially M&A? How are you generally thinking about it? Neil O. Johnston: Yes. Certainly very pleased with how leverage has come down and the $300 million prepayment. As we look to 2026, we expect to maintain a balanced approach to how we think about capital allocation. So certainly, we will be looking at organic growth. As you mentioned, that is a key component of our growth in our three-year plan. But we will also continue to reduce debt. As we said at our Investor Day, our plan is to get to two times in 2028, and so that will involve additional debt repayment. But I think balance is the best way to think about it. Operator: The next question comes from Seth Eugene Bergey with Citi. Please go ahead. Seth Eugene Bergey: Hey, thanks for taking my question. First off, could you provide a bit more color on what your exposure is to office? I think that has come up as a sector that is viewed as more likely to be disrupted by AI. Neil O. Johnston: Yes. Sure. Office for us overall, if one looks at leasing in particular, our mix is roughly 55%. And then on the capital markets side, it is around 21%. So overall, Operator: Class B office space, and that is the space that we feel is going to be the most impacted. By this transition. Again, I reflect you back to joining the call on Monday for further discussion around that. And as there are increasing delinquencies in real estate, I want you to understand we do not own any real estate. And the most important driver of our results is really velocity. So if the increase in delinquencies leads to more buildings changing hands and a bit more price discovery, that is net positive not only for our brokerage business, but also for our services business as this means we have the opportunity to manage buildings as they change hands. Michelle MacKay: Great. Thank you. And then maybe just sticking a little bit with the AI topic, does it change the way you think about headcount needs for different parts of the organization? Operator: We think a lot about AI as a tool to empower our employees. Remember, we have combinations of people who are deep experts, a lot of skilled labor out there that is on-site. We do not anticipate a massive reduction in our labor force, in our workforce, in our white collar jobs. We actually see this as a great opportunity for us to build and grow the platform without necessarily adding people. And so that is a great operating leverage point for us, using AI in combination with the employee. Michelle MacKay: The next question comes from Anthony Paolone with JPMorgan. Please go ahead. Great. Thanks. My first question relates to your 2026 guidance relative to your three-year outlook. If I look at your revenue growth, it is basically the same thing you expect for 2026 as you laid out for your three-year goal. And if I step back and think about the transactional businesses having been bouncing off of lower levels, I would think that those comps get tougher. As you look out over the next three years, maybe that growth slows. So do you foresee that in the future and thus have other parts of the business that you think accelerate while those maybe come back down to more normalized levels? Or do you think your system will be more steady than what the market might deliver the next few years? Operator: Hi, Tony. Thanks for the question. The capital markets recovery is certainly underway, but we believe it is still in the early stages. So pricing has largely reset. Capital has returned. And the recovery has room to run. We have always spoken about how we think this is going to be a very steady uplift in capital markets over a couple of years. We have all the elements that are really shaping up to be healthy for these markets. And we do not think a 25 basis point move by the Fed in one direction or another really changes this. Industrial leasing demand has reaccelerated. Operator: Of the 83 markets that we tracked, 55 have already registered positive net absorption in 2025, and we think that is going to continue. Part of this is also in balance to the fact that there has been such a limited amount of new construction, Tony, over the last several years that those assets of higher quality are going to continue to gain value, and we think there is still momentum at the higher quality level in most of these asset classes. Michelle MacKay: Okay. And then just follow-up on the capital allocation side. Any thoughts on stock buyback just given what has happened to the stocks with this AI-driven downturn? Operator: Look. We are certainly evaluating share buybacks, especially given where the stock has been trading recently. We believe our share price right now is holding extraordinary value. However, in terms of capital allocation, our main priority is investing for organic growth and deleveraging the company. In the longer term, share buybacks will certainly be on the table. Michelle MacKay: The next question comes from Peter Dylan Abramowitz with UBS. Please go ahead. Yes. Hey. Good morning, everyone. Maybe this is a follow-up from the 2026 guidance. And Neil, can you be a little bit more specific on the services side? Because you said same as last year, but there were a lot of moving pieces, organic, non-organic, a couple of business shut down. So maybe just help us specifically there. And while you are on that topic of services, maybe just flesh out where you are the most excited. It sounds like project management is an area of strength, but maybe talk about what you are expecting in some of these other businesses in services. Michelle MacKay: Sure, Alex. In terms of the guide, Neil O. Johnston: I provided high-level ranges for the full year and each of the service lines we expect to be very similar to what we saw this year. So do not really have much more color there other than that guidance. Your question on services is a good one. I think we had a very, very strong year in services. Essentially, we moved from flat services growth the year before to 6% organic growth in 2025, and that really is the number that we are pegging to. We have said all along that we expect services to be in the mid- to high-single growth rate, and we feel very good about what we did in that business and what we expect to see. We had some great new wins in the year. And we have seen some real momentum. As you mentioned, we saw a strong improvement in project management in the back half of the year, especially outside the US and in EMEA and APAC. And we believe this was driven by confidence in the economy and confidence in people doing work and strong real estate fundamentals. In asset services, we have a growing pipeline. Asset managers and investors are reevaluating who is managing their buildings and how to manage that property, and we have a very, very strong presence there. So I think across all of our services lines, we expect some good momentum as we go into 2026. Unknown: K. No. That is helpful. Thank you. And then just maybe very quickly on the margin side, understand no specific guidance here, but maybe flesh out a little bit the biggest areas of investing maybe by business line. But then also, you have been looking at efficiencies. I assume that is ongoing. Any areas that you are looking in particular, or do you think heavy lifting has been done here? Neil O. Johnston: Alex, I think most of the heavy lifting on the cost side has been done, but we are maintaining our cost discipline. And that is a key part of everything we do. Looking at profitability in our services business, looking at how we are driving growth in a profitable way. So cost has become part of our culture, but it is not the key focus. The key focus is on growth as we go into 2026. Michelle MacKay: The next question comes from Mitchell Bradley Germain with Citizens Bank. Please go ahead. Neil O. Johnston: Good morning, guys. Greystone, it just seems like the inputs in your calculation changed a bit because of the backdrop. Is that the way to consider the write down? Neil O. Johnston: That is exactly right. When we look at our assumptions for that acquisition as we look out, compared to the original assumptions when we made the investment in 2021, we felt like adjusting the value of that joint venture was appropriate. Unknown: Gotcha. It seems like a different Michelle MacKay: press release almost daily from you on new hiring. I am curious about how the company is approaching hiring in 2026. Do you think it is going to be greater than what you accomplished in 2025? Some thoughts around that and maybe where the emphasis is in terms of where you are looking to add people. Operator: Great. Thank you for the question. Yes. We will continue on pace. We have a substantial budget for recruiting going into 2026. You will continue to see us hire both in institutional capital markets globally and leasing as well. So no slowdown from us. Unknown: The next question Michelle MacKay: comes from Brendan Lynch with Neil O. Johnston: Barclays. Michelle MacKay: Please go ahead. Great. Thank you for taking my question. Michelle, I wanted to follow up on your comment about capital markets still having room to run. What, if anything, needs to change to keep things going at this level and get back to the levels seen in past cycles? Or is it just a matter of avoiding a recession that could sustain the recent pace of growth? Operator: Yes. I think to your point, avoiding any dramatic economic event, we will continue on pace here. And when you see the ten-year bumping around 4% to 4.5%, as most of us on this call know, the market likes that. You can transact in those zones, and we think that is most likely what is going to be happening over the next year plus. We continue to, as I have said many times, we do not think there is going to be the kind of peak-ish recovery you saw in something like 2022 coming off a market that was totally shut down. We think there is just going to be continued growth. Asset values are going to increase. And transaction volume over time is going to increase as well. Michelle MacKay: Great. Thanks. That is helpful. And, Neil, to follow up on one of your comments about industrial demand being strong, particularly for sites that are greater than 500,000 square feet. Maybe you could talk a little bit more about how the customer base has evolved and what is driving the strength in demand for that particular size of asset? Neil O. Johnston: Yes. That reference is really particularly focused on The Americas. In The Americas, our industrial leasing was very strong, up 10%. And I think the key thing is that we are continuing to benefit from flight to quality. The sector has been very resilient. We certainly remain very optimistic about what we are seeing in the industrial space. Strong e-commerce last-mile delivery trends support these large industrial facilities. And so that certainly has been an area of strength for us and one that we see continuing into 2026. Operator: And just to add a little more context there, large users often seeking modern logistics facilities to support automation and higher Neil O. Johnston: power. Operator: requirements were the primary drivers of demand, and we think that is what is going to keep industrial leasing on track. The overall vacancy rate has held steady for the past three quarters, and construction is down 62% from 2017. So you have a really healthy formula here for driving growth in industrial. Michelle MacKay: The next question comes from Patrick O'Shaughnessy with Raymond James. Please go ahead. Hey, good morning. Just one question from me. A bigger picture question on your multifamily origination strategy. Given some of the headwinds facing the Greystone JV, is there potential for you to change up how you approach that multifamily origination business? And is a JV still the right structure versus owning the business outright? Mhmm. That is a really interesting question and something we are certainly considering. I would not say that we are going to change the way we do business. That business is pretty structured in the way that it operates. But let us just say we are being a little more hands on in the JV with the operations and really helping to guide that management team to a more profitable business model. Great. Thank you. Operator: Yep. This concludes our question and answer session. Michelle MacKay: I would like to turn the conference back over to Michelle MacKay for closing remarks. Operator: Thank you, everyone, and we hope to see you at our webcast on Monday where we already have more than 2,000 clients registered to attend. Megan McGrath: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Allie Summers: Prepared remarks. We will open the line for questions. I will now turn the call over to Allie Summers, Senior Director of Investor Relations. Good morning, and thank you for joining us. Before we begin, please note that today's discussion includes forward-looking statements as defined under U.S. securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For more information, please refer to our filings with the SEC, including our most recent Forms 10-K and 10-Q. These statements speak only as of today, and we undertake no obligation. Joining me this morning are Patrick S. Pacious, our President and Chief Executive Officer, and Scott E. Oaksmith, our Chief Financial Officer. Patrick will discuss our business performance and strategic progress, and Scott will review our financial results and outlook. I will turn the call over to Patrick. With that, Patrick S. Pacious: Thank you, Allie, and good morning, everyone. We appreciate you joining us today. In 2025, we delivered adjusted EBITDA of $626,000,000, up 4% year over year, and grew adjusted earnings per share, both in line with our expectations. These results reflect the continued strength of our higher-revenue brand mix, accelerating earnings contribution from our international portfolio, robust group demand, business travel growth, and sustained momentum across our partnership revenue streams. 2025 was also a year of meaningful progress in advancing our long-term growth strategy. We delivered 14% year-over-year growth in global hotel openings, expanded our international footprint at a double-digit pace, and further strengthened our leadership position in the attractive extended stay segment, achieving record U.S. openings. When we look at our existing hotels, the success of our overall strategy to improve product quality and strengthen franchisee economics can best be seen in the higher average royalty rate we were able to achieve across the U.S. portfolio, which increased eight basis points in 2025 and ten basis points in the fourth quarter. On the consumer front, we are particularly excited by the recent launch of the next evolution of our Choice Privileges loyalty platform, and the launch next quarter of a dedicated digital platform for small and midsized businesses. Our hotel development pipeline remains a powerful engine for future earnings growth supported by strong developer interest, with global franchise agreements awarded up 22% year over year in 2025. Today, 97% of rooms in our global pipeline are in higher-revenue brands, and these projects are expected to be roughly 1.7 times more accretive than our current portfolio, driven by RevPAR premiums, higher average royalty rates, and larger average room counts. Importantly, our advantage is not only pipeline quality, but execution speed. Our conversion-led model accelerates openings and revenue realization with certain hotels opening without ever appearing in quarter-end pipeline metrics. That execution strength is especially evident in the U.S., where pipeline conversion rooms increased 12% sequentially from 09/30/2025. Our conversion engine remains a key differentiator for Choice Hotels International, Inc., enabling those hotels to open about five times faster than new construction hotels. In the fourth quarter, U.S. conversion franchise agreements increased 12% year over year, and we expect conversion activity to be a core driver of improving U.S. net room growth in 2026. As we indicated on our last call, we have been actively optimizing our U.S. portfolio throughout the year. With developer demand remaining constructive, including full-year U.S. midscale and economy franchise agreements up 5% year over year, we accelerated the selective exit of underperforming hotels in the fourth quarter. These properties generated royalties well below our portfolio average, and ranked predominantly in the bottom quartile of guest satisfaction within their brands. This improving portfolio mix strengthens the system's earnings profile, and positions us to backfill those markets with higher-quality hotels that deliver stronger unit economics for owners and more durable long-term growth for shareholders. With a larger hotel conversion pipeline, and a higher volume of conversions expected to open in 2026, and based on current year-to-date trends, we believe U.S. net rooms growth is positioned to return to positive territory this year. Looking ahead, increasingly constructive on U.S. lodging demand in our segments. Our core customer continues to prioritize travel within their overall spend with a clear focus on affordability. Choice has long been strategically positioned at the center of value-driven travel, and in the current environment, that consumer recognition supports our ability to capture incremental share within the segment. As gas prices have declined to their lowest level in five years, bringing them back within pre-pandemic ranges, road trips are becoming more budget friendly for our consumers. In addition, tax relief expected to reach middle income households this year has historically provided significant stimulus for travel within our segments. Importantly, the timing of the relief aligns with the start of the summer travel season, the most meaningful period for our owners. Furthermore, upcoming national events, the 2026 FIFA World Cup, the U.S. 250th anniversary, and the Route 66 Centennial provide additional demand catalysts. More broadly, we are benefiting from a limited new supply industry backdrop and steady workforce-based travel demand tied to infrastructure, manufacturing, and data center investment alongside favorable long-term demographic trends. With expected continued demand growth in several of our strong consumer segments, including retirees, road trippers, and America's blue- and gray-collar workforce, combined with an improved portfolio of purpose-built hotels to serve them, we believe Choice is well positioned to capture this demand and deliver durable long-term growth. Turning to our business outside the U.S., we view specific international markets as an increasingly driver of our growth. And in 2025, our international business delivered exceptional results. Over the past several years, we have deliberately built the foundation for scalable, high-return international growth. Today, directly franchised rooms represent more than 40% of our international portfolio. That number is up over 20 percentage points over the past three years, materially enhancing earnings per unit and overall economics. With that foundation in place, momentum accelerated in 2025. We delivered 37% growth in international revenues, driven by portfolio expansion and positive RevPAR growth across every region. We expanded our international system by 13% year over year to approximately 160,000 rooms, outpacing our prior growth assumptions supported by an 82% increase in hotel openings. In the Americas outside the U.S., RevPAR increased 5.4% year over year in 2025. Within that region, Canada remains a key focus with the rooms pipeline growing 49% year over year. As we continue to enhance the Choice value proposition in Canada, under a direct franchising model, we see a meaningful opportunity to drive both system growth and stronger franchise economics over time. In EMEA, rooms increased 13% year over year to approximately 70,000, including nearly doubling our footprint in France through direct franchising. Taken together, our international business is entering its next phase, with greater scale, stronger unit economics, and a meaningful runway for sustained growth. Another important growth engine for us is the U.S. extended stay segment. In the fourth quarter, we delivered our tenth consecutive quarter of double-digit system growth. Today, the extended stay segment represents more than 40% of our U.S. pipeline, and is characterized by longer average stays, higher margins for owners, and greater earnings stability across cycles. In 2025, we achieved a record number of U.S. extended stay hotel openings, up 8% year over year driven by our Everhome Suites brand. Despite a challenging construction environment, we ended the year with approximately 57,000 extended stay rooms in the United States. With continued investment in manufacturing capacity and data center infrastructure nationwide, and the largest under-construction hotel pipeline in the economy and midscale extended stay segments, we believe Choice is well positioned to extend its leadership in this structurally resilient category. Our portfolio strategy is also strengthening our economy brands. Our guest satisfaction scores improved significantly across the segment, and as quality improvements take hold, we are replacing lower performing assets with higher-quality, more profitable hotels, enhancing brand equity across the category. As a result, our economy transient hotels outperformed their chain scales in RevPAR, and gained RevPAR index share versus competitors in 2025. That performance reinforced developer confidence, with our U.S. economy transient rooms pipeline expanding 6% quarter over quarter and U.S. franchise agreements awarded up 13% year over year in 2025. These trends are expected to drive improvement in the segment's net room growth trajectory. In our midscale segment, developer interest remains strong with global franchise agreements awarded up 14% year over year in 2025. The redesigned Country Inn & Suites by Radisson prototype, optimized for cost efficiency and conversion flexibility, has reinvigorated the brand, driving a 50% increase in U.S. franchise agreements in 2025, and expanding the U.S. pipeline by 18% year over year. With that momentum, and a compelling owner value proposition, we believe the brand is well positioned for growth in 2026. Let me now turn to the efforts we are focused on that are strengthening franchisee economics and driving higher customer lifetime value. Among our targeted investments, two key areas are business travel and guest loyalty. In business travel, we have expanded our global sales capabilities and deepened relationships with corporate accounts. Business travelers now represent roughly 40% of total stays, supporting a balanced mix across cycles. In 2025, group revenue increased 35% year over year, and small and mid-sized business revenue grew 13%, led by resilient sectors such as construction, utilities, and high-tech manufacturing. Our AI-enabled RFP tools are accelerating hotel responsiveness and driving high-value bookings. And next quarter, we expect to launch a dedicated digital platform for small and midsized businesses targeting an estimated $13,000,000,000 addressable We also continue to elevate the lifetime value of the guests we serve. Today, half of our U.S. guests have household incomes above $100,000, and one in five exceeds $200,000, an increasingly attractive customer base for our franchisees and partners. Loyalty remains a powerful driver of customer lifetime value. Choice Privileges now exceeds 74,000,000 members, up 7% year over year. With international enrollment up 11% in 2025, our strongest year internationally. Our most loyal members stay nearly twice as often, spend more per stay, and are significantly more likely to book direct. In January 2026, we launched the next evolution of Choice Privileges, broadening how members earn and engage. We introduced a faster path to status by reducing night thresholds and added a spend-based pathway that allows co-brand card usage to contribute toward elite qualification. We also introduced a new top-tier status and added return-and-earn bonuses to encourage additional stays within the same year, reflecting research that shows our travelers value more frequent and attainable recognition. Together, these enhancements are designed to increase repeat frequency and deepen co-brand card engagement, enabling Choice to capture a greater share of demand within our core customer base. Early indicators are encouraging, with post-launch enrollment trending at a faster rate than last year. We are also actively expanding how travelers discover and book our hotels by partnering with leading technology platforms as AI reshapes travel search and booking behavior. We and remain highly visible as consumer search behavior continues to evolve. As we look ahead, Choice is well positioned for continued growth. Our disciplined execution, technology-forward strategy, and asset-light, fee-based model continue to generate substantial free cash flow, enabling us to reinvest in high-return initiatives while delivering value to shareholders. With a higher-quality portfolio, a more accretive development pipeline, expanding international business, and targeted investments that strengthen franchisee economics and guest lifetime value, we believe Choice is positioned to grow market share and deliver durable earnings expansion. With that, I will turn the call over to our CFO. Scott? Thanks, Pat, and good morning, everyone. I will cover three areas this morning: our fourth quarter and full year 2025 financial results, our balance sheet and capital allocation priorities, and our outlook for full year 2026. For full year 2025, we we delivered adjusted EBITDA of $626,000,000, up 4% year over year and in line with the midpoint of our guidance range. Adjusted earnings per share for the full year $6.94 per share, also in line with the midpoint of our guidance range. Growth was driven by our continued leadership in the higher-revenue extended stay segment, robust average royalty rate, significant expansion of our international business, and strong partnership revenue performance. These results reflect the strength of our diversified revenue streams and the early returns from our targeted strategic investments. In fourth quarter 2025, revenues, excluding reimbursable revenue from franchised and managed properties, increased 2% year over year to $234,000,000. Adjusted EBITDA was $141,000,000, and adjusted earnings per share rose 3% year over year to $1.6 Let us turn to the three key drivers of our royalty fees: rooms growth, RevPAR performance, and average royalty rate. In the fourth quarter, we grew our global rooms a half a percent year over year, led by 1.2% growth in our higher-revenue segments and highlighted by a 42% increase in hotel openings. In the U.S., we opened more than 22,000 gross rooms during the year, and our conversion pipeline increased 7% year over year as of December 31. This healthy level of openings and development activity provided us flexibility to accelerate select hotel exits. From an economic standpoint, the trade-off is clear. In 2025, hotels that exited the system generated U.S. RevPAR more than 20% below the company average. Improving portfolio mix enhances long-term earnings quality, and positions U.S. net rooms growth to return to positive territory in 2026. We also saw continued strength in franchisee retention, Scott E. Oaksmith: with U.S. contract renewal activity in 2025 matching prior all-time highs, reflecting sustained confidence in the Choice brands. Across our focus segments in the fourth quarter, developer interest for our extended stay brands remained robust with 26% growth in global extended stay franchise agreements year over year. As of today, we have 27 Everhome Suites hotels opened in the U.S., including 18 opened during 2025, with 38 additional projects in the U.S. pipeline. In midscale, we increased global hotel openings by 47%. We also executed 18% more global midscale franchise agreements year over year, driven by our Quality Inn, Country Inn & Suites by Radisson, and Sleep brands. In the upscale segment, we expanded our global roofs portfolio by 7% year over year, highlighted by 48% more global upscale hotel openings. Our Ascend Collection hotel openings increased 58% year over year, and the brand now exceeds 75,000 rooms worldwide. In the U.S., we more than doubled Radisson franchise agreements year over year, and grew rooms pipeline by 32% quarter over quarter. I also want to recognize our teams for completing the integration of our Canadian operations in just six months. We transitioned the business to a direct franchising model, enabling franchisees to fully leverage Choice's commercial platform while enhancing our effective franchise agreement economics over time. We are already seeing early momentum on the development front, including a recent multi-unit agreement for approximately 700 upscale Ascend Collection rooms in Quebec. Turning to RevPAR performance. Our global RevPAR declined 4.6% year over year in the fourth quarter on a currency-neutral basis. As discussed on the prior call, this was driven by the tougher hurricane comparison in the U.S. Southeast from the prior year. International performance remained strong, with RevPAR up 3.2% year over year on a currency-neutral basis. The Asia Pacific region led with 11% growth. In the U.S., we lapped a 540 basis point hurricane-related benefit from the prior year. Excluding that impact, U.S. RevPAR declined 2.2% year over year, representing a modest sequential improvement from the prior February. Results were also affected by the government shutdown and continued softness in international inbound travel. Despite these pressures, we achieved occupancy share index gains versus our competitors on a full-year basis. Excluding hurricane-related distortions, our U.S. extended stay segment outperformed the industry RevPAR by 30 basis points, and our U.S. transient economy segment outperformed its chain scale RevPAR by 80 basis points, while gaining RevPAR index share versus competitors in 2025. Moving to royalty rate, our third driver of royalty fee growth. In 2025, we exceeded our full-year U.S. average royalty rate guidance, finishing the year up eight basis points, including a 10 basis point increase year over year in the fourth quarter. This expansion reflects our success in growing higher-revenue brands and the continued improvement in our franchisee value proposition. We remain confident in the upward trajectory of system-wide royalty rates, supported by sustained demand generation investments and a development pipeline characterized by higher contracted royalty rates and stronger unit economics. Turning to our partnership business, which remains a key priority. In 2025, we delivered a 14% year-over-year growth in partnership revenues, including 16% growth in the fourth quarter. Performance was driven primarily by co-brand fees, increased supplier and strategic partnership fees. As we enhance our franchisee-facing service offerings, adoption remains strong, supporting durable growth in our non-RevPAR franchise fees across the broad range of services we provide. Together, these revenue streams meaningfully diversify our earnings base and represent an attractive, high-margin growth opportunity going forward. At the same time, we remain focused on margins through improved productivity and operational efficiency. Adjusted SG&A increased approximately 3% for the full year, in line with our guidance, to $283,000,000, reflecting cost discipline while continuing to invest in strategic initiatives. Now turning to the balance sheet and capital allocation. We ended the year with total liquidity of $571,000,000, and net debt to trailing twelve-month EBITDA of 3.0x, and we are comfortably within our targeted gross leverage range of 3.0x to 4.0x. For full year 2025, we generated more than $270,000,000 of operating cash flow, including nearly $86,000,000 in the fourth quarter. This cash generation combined with our strong balance sheet provides meaningful financial flexibility. Our capital allocation framework remains consistent and disciplined. We prioritize high-return organic investments that strengthen our brands and drive long-term growth, evaluate selective acquisitions where returns are compelling, and return excess capital to shareholders. Our dividend reflects a stable During the year, we were approximately 1,000,000 shares representing more than 2% of our shares outstanding and ended the year with approximately two to scale Cambria Hotels and Everhome Suites while recycling capital at the appropriate time. In 2025, we generated $32,000,000 in net proceeds from recycling activities, and our hotel development-related net outlays and lending declined $46,000,000 year over year a $103,000,000 Looking ahead, as both brands approach critical scale milestones, we expect hotel development net capital outlays to continue to decline significantly. This reflects the delivery of our final company-developed Cambria in the 2026, and our planned tapering of new ever growth to return to positive territory alongside continued international expansion consistent with the normal timing of same-year conversion openings U.S. net rooms growth is expected to be more heavily weighted towards the latter part of the year. Global RevPAR in the range of negative 2% to positive 1% year over year in constant currency, with U.S. RevPAR between negative 2% and positive 1%. Average royalty rate growth in the mid-single digits year over year and adjusted SG&A increasing in the mid-single digits. Our outlook excludes the impact of any additional M&A or other capital markets activity, share repurchases completed after December 31, We remained focused on investing in high-return initiatives that enhance our long-term growth Patrick S. Pacious: trajectory. Scott E. Oaksmith: Improve returns for our franchisees and drive meaningful shareholder value. With that, Pat and I are happy to take your questions. Operator? Thank you. Patrick S. Pacious: Ladies and gentlemen, we will now open for questions. Should you have a question, Scott E. Oaksmith: please Operator: Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Michael Joseph Bellisario from Baird. Please go ahead. Michael Joseph Bellisario: Thanks. Good morning, everyone. First question, just for Scott, just one more on the spending outlook. Maybe you could just walk us through expectations for key money spending, CapEx, and also JV investments in 2026 as well. Scott E. Oaksmith: Sure, Michael. Michael Joseph Bellisario: Thank you. Scott E. Oaksmith: Thanks for the question. So in terms of t money, as you saw in our release, we did some less key money in 2025 than we did in 2024. We were about net $83,000,000 compared to 1 and $12,000,000 in the prior year. So we were pleased to see that our average key money check size for our domestic system was down year over year, as well as the number of deals that needed key money to be signed. For 2026, we do think we will see an acceleration of openings. So do expect key money to increase off that base. $83,000,000 did include some recovery. So our net out our gross outlays key money were about $92,000,000 We would expect for 2026 for that number to be somewhere between $105,000,000 and 1 and $10,000,000 for 2026 in terms of key money. In the recyclable capital, we had really, really good success of continuing to pull down that use of capital there. Capital for 2025 was about $103,000,000 net, 30% lower than it was in the prior year. And as I said in the prepared remarks, we are tapering down the use of that key of that recyclable capital. So we expect that to drop another 70%. So we are guiding to a net use of capital of about $20,000,000 to $45,000,000 next year. So that will be a decline from the $103,000,000 we spent this year. So as we have been talking to the street the last couple of several years been, that that real capital is really around launching the growth of both the Cambria and the Everhome Suites brand. We have been very pleased with how those brands have grown with Cambria now over 75 hotels and Everhome really with a strong start. We feel we are in the place now if we can start tapering that capital And as we taper the outlays, we also expect to see recycling improve here over the next couple of years as a transaction mark. Market improves in the overall U.S. hospitality industry. Patrick S. Pacious: Yeah, Mike, I would just add that, you know, the strategy underlying it all is as the value proposition for our franchisees has gotten better, the amount of key money per deal to attract new new entrants is is declining. And as Scott said, obviously, as more hotels open and that key money actually gets used, that that is a positive sign. And then just back on the on the capital for both Cambria and Everhome, you know, the final chapter in all of this is to recycle it back to back to either higher investment initiatives or return it to shareholders. So we are really entering that phase with Cambria, and we will be doing that this year with Everhome. Michael Joseph Bellisario: Got it. That is helpful. And then one related question, just sort of on the buyback front there. Just where does the balance sheet need to get to in order for you guys to be more aggressive or more programmatic with buybacks going forward? That is all for me. Thank you. I think when you look Patrick S. Pacious: yeah, when you look at last year, you know, we we took kind of a pause after we bought the other half of the Canadian JV. I mean that was a basically, about a $100,000,000 worth of of money going out to to acquire that business. A market we have been in for seventy years, thirty years of that in a joint venture. And we have seen a really fantastic early results in that. As Scott mentioned, we we got the integration of that done at the end of 2025. So we took a strategic pause during the summer months and then resumed it in Q4. I think when we look at it, we are always doing our normal investment prioritization and looking at ways to invest back in the business, looking at M&A as an opportunity. And then as those things provide additional capital, we look for share returns and dividends. So, that is kind of the way we look at it. You have seen our net debt to EBITDA ratios, are in the range where we feel very comfortable. So that that is how we will be thinking about it as we move forward in 2026. Operator: Thank you. Your next question comes from Elizabeth Dove from Goldman Sachs. Please go ahead. Hi, good morning. Thanks for taking the question. Elizabeth Dove: I wanted to ask about your commentary around U.S. rooms growth returning to positive this year, just given that would be quite an improvement from where it was at least organically in 2025. Any more color on that or specific brands that you think will drive that? Patrick S. Pacious: Yeah, Lindsay. It is a it is a great question. As we mentioned in the in the remarks, we saw an increase in our both midscale and economy franchises awarded. They were both up 5%. That coupled with our conversion pipeline increasing by 12% in the fourth quarter And then as we mentioned, you know, we are seeing improvement in guest scores as well. So the brand quality is getting better. That gave us the confidence in the fourth quarter to take some very targeted, deliberate and ultimately value accretive exits, which was really the story towards the 2025. We look at 2026, there is a lot of constructive things that we see both in our pipeline today with regard to the brands, as you mentioned, the ones that we are really seeing a lot of uptick from a conversion perspective our Quality, Clarion, Clarion Pointe, College Roadway, and Ascend. Those those brands from a conversion perspective really performed well for us. We are also seeing as I mentioned in the remarks, Country Inn & Suites by Radisson. The redesigned prototype there is driving a lot more both new construction and conversion interest for that brand as well. So those are the drivers we expect to be from a brand perspective will help us get back to that sort of positive territory we mentioned. Elizabeth Dove: Awesome. That is clear. Thanks. And then just on the RevPAR side of things, you know, in terms of what you are forecasting for domestic RevPAR outlook, you called out a couple of tailwinds or potential tailwinds from World Cup and stimulus, etcetera. I am just curious how much of that is kind of baked into what you are expecting for U.S. RevPAR growth this year or whether that is more kind of incremental upside if those come through? Patrick S. Pacious: I would say some of these, if you look at the impacts that hit us last year, they were all transitory, whether it was the government shutdown, the lapping hurricane impact we had in Q4, which is continuing here into Q1 of continued into 2025. So we have that comp the 2026. And then weaker inbound travel from international markets. When I look at the the, potential for the upside here, it is it is really some things that are a little bit harder to measure. If we look at the tax relief, the early, returns are looking great. So far, the tax refunds that U.S. citizens are getting are up 11%. And the overall tax relief that is come back so far this year on a year-over-year basis is up 18%. So we do know that the consumer has that stimulative backdrop for the first half of the year here, which we think will be a real positive for us When you look at international inbound, the dollar is the weakest it is been in four years. So, international inbound travel The U.S. is on sale from from from that perspective. And that also makes travel outside of the U.S. more expensive. So we would expect U.S. travelers to stay at home So those things are not necessarily baked in because they are a little bit harder put into our guidance. But when we look at sort of where we are in the midpoint of that range we gave, that is sort of the backdrop for how we thought about some of the demand catalysts. But as I said, you know, last year's weakness was primarily transitory. It was not structural. And we are very constructive on what we see from a RevPAR perspective in 2026. Elizabeth Dove: Got it. Thanks very much. Operator: Thank you. Your next question comes from Daniel Brian Politzer from JPMorgan. I wanted to go back Patrick S. Pacious: to the RevPAR expectations for 2026. It does sound there is some hope for stimulus in there and certainly midscale and up midscale seem to be promising. But I guess kind of as you think about the RevPAR cadence for the year, how should we think about it progressing as it relates to that guidance that you have laid out? So one thing I think to look at, and we mentioned this on the prior call when we saw it in 2025, is the fact that our occupancy index for the entire year was positive. So when we have looked at cycles in the past, the first thing to recover is occupancy then followed by rate. So from the standpoint of going into the year, that that is a really positive green shoot. The second thing, we mentioned this on the last call, and again, we saw it in Q4, is the performance of the economy segment. Is that segment improves and midscale improves and you you get sort of an upward trajectory there. Again, we saw that from a RevPAR perspective and from a RevPAR index perspective. We saw better performance in Q4 for our economy brands. And then I would just say, as you look at the first six weeks of the year here, if we look at the markets outside of the U.S., we are already seeing a 1.7% increase in RevPAR year to date. So that is without the hurricane impact in it. And then we look at what is in that 1.7, again, it is driven by a 2.3% occupancy gain. So we are seeing that strength in our hotels able to sort of fill the rooms. And that usually then leads to the impact for the ability for them to to to begin to move ADR in the right direction. I think as the year lays out, traditionally our Q2 and then our Q3, our Q3 is usually our highest demand RevPAR. And as I said in the remarks, that aligns nicely with the tax relief. It aligns it aligns nicely with the gas prices for road trippers as well. So, we would expect that RevPAR increase to sort of improve as we move into the year in addition to the lapping of the hurricane impact that we are going to see here in Q1. Scott E. Oaksmith: Dan, just to add a little bit more color. We do expect Q1 RevPAR will still be negative given those hurricane impacts that we had really is about 340 basis points to our results in in the first quarter of last year. So we will be lapping that, but we expect an inflection point in Q2 as we lap those hurricane those comps that Pat mentioned. So you will see kind of a more of a negative rep in Q1 with improving as the year goes on to reach our overall guidance. But Pat mentioned, we are very very optimistic given what we have seen on the non-hurricane states given that that is positive RevPAR for those through the first one point months of the year. Patrick S. Pacious: Got it. And then just for my follow-up, I think the footprint you have talked about in the past removing some of the lower performing properties off the platform. Maybe that were not complying with the guidelines or just underperforming in general. Have you basically cycled through that element of your of kind of culling the footprint Or is there more to go there just as we think about that pathway to achieving U.S. domestic rooms growth in 2026? Yeah. It is it is something we do naturally. So it is it is always there as as potential owners, you know, are not performing or a an asset, you know, becomes the owner wants to move that to a different to a different either go independent or or or make it a a different product altogether. So that that is a natural, but we did accelerate some of that or, I would say, you know, took some targeted ones in the fourth quarter. That was more of a onetime on really looking at where we can clean out markets where we know there is opportunity to backfill that with a higher quality, better performing hotel That impacts our average royalty rate. It impacts our guest satisfaction scores when we are able to to upgrade the portfolio. And it is something that the company has been doing for for years, but in the fourth quarter, we we we saw some real positive signs from a growth perspective on the pipeline and also on new deals. Which gave us more confidence in the ability to sort of take out some of the lower performers. So I would say it was it was more of a an outsized number in the fourth quarter. But but our normal sort of 3% to 4% churn rate is is is kind of where we would likely get back to Is there any way to just give the fourth quarter number for that? Scott E. Oaksmith: Or Patrick S. Pacious: the additional or the the overall Just just for the amount that we are kind of taking out as part of this initiative so so we can kinda better get an idea of the organic It was about 20 hotels. It is it is it is when you look at that, it is about 30 to 40 basis points of of net unit growth. Got it. Thanks so much. Operator: Yep. Thank you. Your next question comes from David Katz from Jefferies. Please go ahead. David Katz: Morning, everybody. Thanks for the question. Pat, I think you may have just touched on this a bit. But I wanted to get a sense for you know, often when there is kind of a period of removals, you know, it lasts for a period of time. How how long do you expect you know, this sort of offsetting removal process to take before we sort of settle into what Patrick S. Pacious: and presumably, David Katz: know, Nug Would Would Would Would Go Up. Right? Once That Process Is A Bit More Completed. Right? Patrick S. Pacious: Yeah. Well, That That That That is Why We Feel We are Gonna Get Back To A Positive Note This Year In The U.S. We will be we will be positive overall, but Patrick S. Pacious: in that U.S. nug number, really are looking at what is in our pipeline today The franchise agreements we sold last year, which were, as I said, in the in these primary areas where we are taking these additional exits, they are up 5%. So we have seen that, and they are in the conversion as part of the pipeline, which was up 12% in the quarter. So that gave us the opportunity to say, we know we have opportunity and interest for these markets for these brands, And so exiting these underperformers and the ability to backfill them is is the strategy. When you look at our conversion hotels, they open anywhere between three and seven months. So, again, there is a lot of that that will be sold this year. That is not yet in the pipeline that will open this year. So that that is a historical fact about the type of as I mentioned, the the speed of execution within our pipeline. So that is the that is the way we think about it, David. I would say that we what we did in in Q4 was elevated more so than what we would normally do. Scott E. Oaksmith: I think, David, think the other thing you are saying is we have been Please. We have been in a few years of of no new construction, you know, across the U.S. industry. So, you know, the the the the normal processes Pat talking about that we are always wanna make sure that we are making sure our portfolio is performing well, is a little bit more enhanced in terms of terminations just because you do not see the new construction coming in. Typically, we have about one-third of our openings are new construction. In the last couple of years, it is been more in the 15% to 20% just given the tougher U.S. development environment. So calling of our system, our exits here, sure we keep brand quality up. It is just a little bit more pronounced. But we expect our termination rate as we go forward in 2026 and 2027, to trend back to historical normals. Understood. And when we think about a much longer term you know, view, Pat, how do you see sort of the company getting Operator: you know, to a normal Scott E. Oaksmith: nug? I mean, do you know, is it reasonable to aspire Operator: you know, to where Robin Margaret Farley: you know, the the the nug levels are for some of the, you know, top industry. You know, companies are, or, you know, is something more moderate like, what you think is an appropriate sort of ongoing normalized NUB level? For choice? Patrick S. Pacious: Yeah. David, I mean, when I look at across the industry, NUB is coming from international. I mean, that is everybody's Nug. It is it is international. And and if you look at ours as well, you know, 2025 was kind of the the next phase of our growth on that on that in in effectively the rest of the world. So we are really excited about that becoming a bigger contributor mean and then I think the second piece is the return of new construction. You know, that is the that is the other, aspect of this. When I look at our business, I look at the extended stay opportunity that we have here in the U.S., I mean, that is continuing to outperform the competition. You know, we added 12% more rooms We outperformed on RevPAR. So it is really a function when I look across the industry most of the Nug is coming outside of the U.S., and that is an area that we are growing in as well. Robin Margaret Farley: Thank you very much. Thank you. Operator: Thank you. Your next question comes from Robin Margaret Farley from Unibank Switzerland. Robin Margaret Farley: Thank you. Great. I wanted to ask about your RevPAR guidance, just that the the the global is at the same rate as U.S., but you know, your international RevPAR has been growing above the U.S. rate. I think we see that broadly. So just wondering why you are not seeing something at or expecting something at a higher rate in your international markets? Robin Margaret Farley: Thanks. Patrick S. Pacious: Well, I think the the first part of it, Robin, is the the size of the international market relative to Operator: the so as we Patrick S. Pacious: we saw last year, we had very strong international RevPAR growth. But relative to the U.S., it was it was it it was offset. So that that is one factor in it. I think the second is many of the a lot of the growth we had this year are going to be ramping hotels next year. So we are factoring that into our RevPAR thinking in the 47 countries that we are in outside of the U.S. So it is a it is a bit of a a a story about it is a small contributor today, and there is obviously a lot of variability in the 47 markets that we have that we have hotels in. Scott E. Oaksmith: Yeah. And, Robert, Robin Margaret Farley: Do you think the Scott E. Oaksmith: general economic environment in the international markets is will be stronger than the U.S. Robin Margaret Farley: Great. And just as a follow-up, so thinking about your international growth. I do not think I saw that the U.S. royalty rate you mentioned in the 5% range. I do not know if you gave that specific number for for international royalty rate. I know you indicated it was up, but just wanted to get a sense of that just given how much more direct you are doing versus master franchise. It seems like that would have would have stepped up a lot. And then do not know if there is anything about key money with international growth that is that is different that you would call out than than what we are we typically see from U.S. domestic growth. Thanks. Patrick S. Pacious: I will answer the key money question Robin. So as we as we have looked at our international business, as you mentioned, it has become more a direct franchising model than than we had been in the past. And what is really exciting is the power of the brands that we have internationally means we do not have to do key money the way we do here in the U.S. from from perspective to get the the types of openings. So it is a it is a much lower amount of money that that is required to to incent new growth. And then I think, Scott, you wanted to answer that? Yeah. In terms of the royalty rate, we have Scott E. Oaksmith: contracts we have been doing, we have seen some improvement in the royalty rate Our royalty rate in our direct markets is about around 2.7% across the the international markets. When we do go to market in a MFA agreement, a master franchise agreement, obviously, are lower, royalty rates given that our partners are responsible for servicing brands in the local markets. And those rates are more around 0.5% to 1%. So we will continue to evolve our disclosures and we will moving forward, we will look to give more you know, forward-looking guidance on what that royalty rate looks like going forward. But those are, if you are looking to model some broad numbers to use. Yeah. Robin Margaret Farley: Great. Very helpful. Thank you. Patrick S. Pacious: Thank you. Operator: Your next question comes from Patrick Scholes from Turits Securities. Please go ahead. Hi. Good morning, everyone. Thank you. Patrick S. Pacious: Sorry if I missed this. Did you give a Scott E. Oaksmith: outline or a guided range for expected return of capital such as combination of share repurchases and dividends? And if not, would you Operator: be able to do so? Thank you. Patrick S. Pacious: No. No. No, Patrick. Scott E. Oaksmith: We did not give any guidance as we typically do not. You know, we we think about our capital allocation. Obviously, we have talked many times on the call, is we we first and foremost always look to invest our capital back into the business organically as we think that is the highest return to shareholders. You know, if there is meaningful and accretive M&A, we certainly look at that. And then with our excess cash flows, we do return those to our shareholders through cap dividends and share repurchases. But we typically do not provide guidance on that We will continue to evaluate, those opportunities, and as the year goes on, we will report on how we allocate that capital. But we as we typically have not, we did not give guidance. Okay. Okay. I I do think it would be helpful you know, from talking with quite a few investors about this If you did, just a suggestion. Certainly, it is well received the way Hilton and Marriott do in their earnings releases. Patrick S. Pacious: So Scott E. Oaksmith: food for thought. Thank you. Patrick S. Pacious: Thanks, Patrick. Thank you. Operator: Your next question comes from Charles Patrick Scholes from Wells Fargo. Please go ahead. Hey, guys. Just a couple of Patrick S. Pacious: more on financials questions. Working capital and other was a pretty big drag in 2025. As we look to model '26, should we Scott E. Oaksmith: expect a reversal of that $98,000,000? Or is there anything to call out specifically that Patrick S. Pacious: that is driving that? Patrick S. Pacious: Sure. And I welcome, Tran. This is your your first earnings call with us, so we are glad to Scott E. Oaksmith: have you. On the call from covering the company. Yeah. There are some some timing reversal items that are in there really around just the timing of some tax payments that we had made that will obviously be utilized in 2026. As well as the other some other working capital. So I would expect most of that to reverse going forward. In in 2020 in 2026. Great. And and then thank you guys for the the clarity on the capital outlay. Just as we look to model that, is that more an increase in the distributions and proceeds Patrick S. Pacious: coming back to you? Or is it Scott E. Oaksmith: in lockstep with that also lower contributions? A little bit of both? Or or just if you could give a little more granular detail around Patrick S. Pacious: the the multiple items that kinda feed into that? Yeah. Trey, welcome. And it is it is a little bit of both as as we we have talked about, you know, lower lower key money per unit. And then also the the tapering off of Everhome This Year And And The Completion Of Cambria last year. As we think about recycling, a lot of that is gonna be driven by market conditions around the attractiveness of the buy sell bid ask that is that is out in the market to allow us to to move some of that those owned hotels back to franchise hotels. Scott E. Oaksmith: When you look at the recycled capital, I would say the step down that I mentioned, the 70% reduction, that is primarily on outlays. So as we mentioned, we are tapering these down. So we expect recycling. This year, we did about $32,000,000 to be somewhere in that that same range, you know, with opportunities to do more of the transaction market rebounds here. But, really, the step down is really about outlays as we start tapering down those programs. Patrick S. Pacious: Perfect, guys. Thank you. Patrick S. Pacious: Thank you. Operator: Your next question comes from Meredith Prichard Jensen from HSBC. Please go ahead. Meredith Prichard Jensen: Yes. Thanks. Good morning. I was hoping you might speak a little bit more about conversions in terms of how they are breaking down from independents or other branded companies, potentially how you think about interbranded conversion. I know that is separately. And maybe a little bit of regional color there. And I I a second part of this, and I think I understand. From your comments, you may have a different take on it. I was listening to a CEO interview at ALIS, and he talked about how giving lender comfort and more conversion options that conversion levels were going to be structurally higher, that there was a change there. And I would love to get your thoughts on that. Thank you. Patrick S. Pacious: Sure. Yeah. Definitely, when you see where the marketplace has been, kind of a flattish RevPAR for the last couple of years and interest rates being high, that has driven new construction down. So it is become much more of a conversion model. That is an area that Choice Hotels has led on for years. They do pick up in times like the global financial crisis, the pandemic. And and even in the last couple of years as as new construction projects have just been harder to finance. So it is an area where of strength for us, where the conversion opportunities come from, for us, you know, I I always say when when times are a little tough for for hotel owners, independent hotels come in out of the rain. They want to come into a brand that has a, it is a proven brand, but b, it is got a loyalty program, revenue management, opportunity to lower their costs through the use of our tools and our procurement programs and the like. So those are the the types of hotels we normally see. And that is why brands like Ascend do well in times like this. Ascend had a very good year last year. Brands like Quality Inn, our economy brands, kind of picking up new units. So that is where the growth coming from into those brands, but it is primarily coming from I would say, independence, and then there are some other branded conversions. That is the usually, the second highest contributor to to our new conversion or new entrants model that are from the conversion hotels. Meredith Prichard Jensen: Great. Thanks so much. Patrick S. Pacious: You are welcome. Operator: Thank you. There are no further questions at this time. I will now turn the call over to Choice's CEO, Patrick S. Pacious, for closing remarks. Please go ahead. Patrick S. Pacious: Well, thank you, operator, and thanks, everyone, for joining us this morning. We look forward to hearing you again in to speaking with you again in May when we report our first quarter results. Have a great day. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.