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Operator: Good day, and thank you for standing by. Welcome to the BAE Systems 2025 Preliminary Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Paul Checketts. Please go ahead. Paul Checketts: Welcome to BAE Systems 2025 Full Year Results. I'm Paul Checketts, Director of Investor Relations. And with me, I have Charles Woodburn, our Group Chief Executive; Tom Arseneault, Chief Executive Officer of BAE Systems, Inc.; and Brad Greve, our Chief Financial Officer. Charles, over to you. Charles Woodburn: Hello, everyone, and thank you for joining us this morning. Before we begin, I want to thank our employees, trade unions and supply chain partners for the tireless work they do to ensure we deliver on our commitments to our customers. Delivering reliably on our mission to protect those who protect us is vitally important given the increased threats to security around the world. There are 3 key messages I'd like to leave you with today. First, 2025 was another year of strong performance. We delivered solid growth in revenue, profit, earnings per share and order intake and once again, cash flow was high. Second, the breadth of our business across air, land, sea, cyber and space and across multiple geographies puts us in an exceptionally strong position for both current and future opportunities in defense. And third, we are confident in the future growth we can deliver and the duration of that growth. We delivered strong outcomes in 2025. Sales and EBIT both grew at double-digit rates. Cash generation was high, and we secured GBP 37 billion of new order intake, demonstrating strong demand for our products. Our order backlog increased to a new record of GBP 84 billion, around 3x our annual sales. At the same time as focusing on delivery today, we're preparing for our future. Part of this is investing in research and development and CapEx. Our collective spending on these in 2025 was our highest ever. These results extend the track record we've built over multiple years of strong financial and operational performance and demonstrate our value compounding model in action. If we step back and look at our performance over the last 5 years, the story is compelling. At constant currency, our sales are up more than 50%. That's around 8% compound growth each year. We've also steadily expanded our margins, adding around 100 basis points or roughly 20 basis points a year. And because of that, our EBIT has grown even faster than sales, up by more than 60%. Earnings per share have been even stronger, increasing by over 70%, which equates to a 12% compound growth rate. Importantly, we continue to convert earnings into cash at a very high level. Across these 5 years, we've generated more than GBP 11 billion of free cash flow. And that cash gives us real strategic flexibility. It's allowed us to reinvest in the business to support further organic growth and to make targeted value-enhancing acquisitions. It's also supported increasing shareholder returns with dividends per share growth at around 9% a year. So overall, we're delivering strongly and consistently across the key financial metrics, and we see a very clear path for further progress. Our business has an outstanding geographic footprint. We have established positions in some of the largest defense markets in the world. This gives us an excellent breadth of opportunity and reduces the risk and volatility that comes with being more concentrated. Across all our key regions, defense spending is increasing because of the growing threats to national security. In each of our markets, the work we've done to invest in and position our business means our existing proven portfolio of capabilities aligns well to customer priorities. We'll look at Europe and the U.S. in more depth shortly. Here in the U.K., the government has committed to the largest sustained increase in defense spending since the end of the cold war. The U.K. Strategic Defense Review set out its vision for defense to move to greater warfighting readiness and to act as an engine of U.K. economic growth. It committed to invest in both our long-term programs and new disruptive technologies. We formed a new joint venture with industrial partners in Japan and Italy to design and develop the next-generation combat aircraft under the Global Combat Air Program, or GCAP. More broadly, Japan is on a path to double its defense spending by 2027, and we're exploring how we can support the country in other areas of defense capability. Australia is also increasing its defense spending. We're already the largest defense contractor in Australia and through the Hunter class frigate program and SSN-AUKUS, where we'll deliver state-of-the-art nuclear-powered submarines, we expect strong long-term growth. The geopolitical situation in the Middle East is likely to drive higher defense spending in the region. The largest defense market there is the Kingdom of Saudi Arabia, where we have a 60-year track record of partnership. Their 2026 military budget is expected to increase by 5% and areas of long-term focus include combat aircraft, missile defense systems, naval vessels and further increasing the localization of defense spend. Across the globe, our growth opportunities are significant, and we're focused on consistently executing our long-term strategy to deliver strong top line growth, margin expansion and cash generation. Over the past 12 months, there have been 3 consistent themes that have come up in our discussions with investors. First is our exposure to Europe, considering the rising threat posed by Russia, which is now driving increased defense expenditures in the region. The second is our shareholding in MBDA, given the growing significance of this business as Europe's preeminent manufacturer of missile systems. The third is the evolution of modern warfare and why we feel so confident in the continued and indeed increasing relevance of our portfolio, particularly in the light of new opportunities such as Golden Dome. As a result, we wanted to spend a few minutes focusing on each of these areas in turn, bringing Tom in to cover our U.S. business. The last year has seen a profound change in Europe security situation with the continent facing an acute and growing threat. In response, most countries are now significantly increasing the amount they spend on defense, underpinned by their commitment to meet NATO's target by 2035 of 3.5% of GDP being spent annually on core defense requirements and 5% in total. We're one of the leading defense companies in Europe, and our business is going from strength to strength. When you look across the continent, our equipment and services are integral to the defense of more than 25 countries. We have great capabilities across multiple areas, including combat air, land vehicles and missile systems. Growth for us in Europe is higher than the overall group. And at the same time, our order backlog has increased materially, now representing 32% of our total compared with 11% of our current annual sales in this region. To support our customers as they look to rebuild defense readiness, we're investing to support increased capacity, efficiencies and enhanced capabilities. An excellent example of our critical role in the defense of Europe, both today and in the future, is MBDA. As a reminder, MBDA provides sovereign capabilities to Europe and is a shining example of European defense collaboration. It's a joint venture between BAE Systems, Airbus and Leonardo with our shareholding totaling 37.5%. MBDA is a world leader in missile systems and the #1 player in Europe. Their portfolio has excellent breadth with products in service with more than 90 armed forces around the world. When you look at the critical areas where Europe and its allies are looking to rapidly improve defense readiness, MBDA has proven products. Areas of strength include air dominance since MBDA provides weapons for more than 10 different combat aircraft, including Typhoon, Rafale, Gripen and KF21. In air defense, they have capabilities across land and sea, including counterdrone, short-range air defense and medium range, including antiballistic missile threats. For longer ranges, they have a complete array of deep strike precision products, all of which makes MBDA extremely well positioned to benefit from increased defense spending as European and other nations focus on growing their weapons capabilities and inventories. You can see the high demand for MBDA's products and their momentum since 2021. Since Russia invaded Ukraine, order intake has stepped up from a cadence of around EUR 4 billion per year to EUR 13 billion. The order backlog has increased by 150% to EUR 44 billion or 7.5x annual revenue. And over that 4-year period, revenue has increased by 37%, a compound average growth of 8% to EUR 5.8 billion with improving momentum in recent years. MBDA is investing to fulfill orders and support customers' urgent needs. Significant funds are already committed over the medium term. They're renewing sites, accelerating digitalization, significantly increasing production capacity, investing in their supply chain and developing new products and technology. The combination of investing in the business, the high order backlog and the alignment of the portfolio with customer needs mean MBDA is positioned for continued strong revenue growth in the coming years. I'll now hand over to Tom, who will explain why we are confident about the outlook for our business in the U.S. Tom Arseneault: Thank you, Charles. Across the U.S. business, our strong performance in 2025 reflects our continuing efforts to align our portfolio strategy with evolving U.S. government defense and intelligence priorities. This enables us to support a broad range of programs and deliver for our customers with speed and at scale. We remain well positioned in areas the U.S. administration is clearly focused on. National security space and missile defense capabilities will play critical roles in the Golden Dome architecture, and we support a number of the key mission solutions, which underpin it. For example, as a result of emerging demand for the Terminal High Altitude Area Defense or THAAD interceptor, we expect a fourfold increase in production of our THAAD Seeker over the life of the 7-year contract. Our critical electronics and sophisticated apertures will also factor into the production ramps of other key munitions such as the long-range anti-ship missile or LRASM. Production of these additional key munitions will at least double in the coming years. Our teams are also rapidly developing and delivering cost-effective counter-UAS capabilities. Last year, we were awarded a new 5-year IDIQ contract worth up to $1.7 billion from the U.S. Navy to produce additional APKWS kits. This precision munition is combat proven for both surface-to-air and air-to-air engagements against hostile drones. And our platforms and services team has expanded its maritime business, allowing us to apply our highly skilled workforce and industrial capacity to contribute to the U.S. submarine and surface ship industrial base in addition to ongoing ship repair and modernization support for the U.S. Navy and commercial customers. While we have been investing in capacity and innovation for many years, the current market environment and long-term demand signals present additional opportunity. Since 2020, the businesses across our U.S. portfolio have invested more than $4 billion to expand production capacity and advance our research and development to deliver growth. To further support that growth, our workforce has increased by nearly 14%, and we've expanded our footprint by more than 2 million square feet. While there has been considerable focus on supporting the record production rates associated with key munitions demand, we have also been leveraging investments in a number of other important areas. In our Electronic Systems business, we have been investing to modernize and expand our microelectronics center to triple our production capacity for critical electronic components, supporting electronic warfare and other applications. Our Space and Mission Systems team has invested to develop Elevation, a new series of cost-effective modular spacecraft that will deliver world-class reliability and performance. An Elevation spacecraft has already been selected for the $1.2 billion resilient missile warning and tracking program we won last year. Supported by previous investments in combat vehicle manufacturing and robotic welding, we anticipate more than doubling our vehicle production compared to 2024 levels. In the maritime domain, our new state-of-the-art Shiplift in Jacksonville, Florida is now operational and will increase the capacity of that shipyard threefold. These are but a few examples of our investments in capacity and key technologies to support growth and ensure we deliver to our customers at speed and at scale. With that, Charles, I'll hand it back over to you. Charles Woodburn: Thanks, Tom. Technology and innovation sit right at the heart of our strategy and have done for many years. In 2025, we took that commitment further, increasing our self-funded research and development to a new record level. Let's look at how we develop the next generation of defense capabilities and our competitive advantages in technology. Areas of the defense market are developing at a rapid pace. Technology is being embraced and a number of companies are competing, including new entrants who often don't come from a purely defense background. This includes in drones, counter-drone systems and autonomy more generally. While it's a competitive market, solving the complex problems involved in producing equipment that works in a warfighting domain is extremely difficult. We bring together an understanding of our customers' operational needs with an understanding of the operating environment, agile software capability, differentiated hardware and an ability to successfully integrate the various elements rapidly and crucially the capability to scale up production quickly. I'll give you some examples to bring this to life. First, our platforms and products are deployed on the battlefield today, which gives us firsthand understanding of our customers' operating environments in real time. For example, our Callen-Lenz drones have proven themselves to be resilient and capable in extremely contested electronic warfare environments, and we take all these learnings into other products across our portfolio. A second highlight is our agile software capability. We are actively using generative AI to allow drones to understand the commander's intent and then configure their own software to best deliver that mission need. And we wrap these capabilities within well-understood assurance methodologies, which means the drones are only able to operate within the parameters set by their human operators. This enables rapid introduction of new behavior models and allows the drone to perform missions that were not originally envisaged. Next, consider our differentiated hardware. While software can define the optimal tactics for deploying artillery, being able to implement these tactics still requires a platform. Our mobile artillery system, ARCHER, can deploy fire 4 rounds and leave the location before the first round has reached its target. Now to integration. Bringing together the APKWS precision guiding munition from our U.S. business, heavy lift quadcopter technology from our Malloy acquisition and expertise in weapons integration from FalconWorks, a major step was achieved when we successfully used the drone to shoot down another drone. In just 4 months, we moved from concept to successful live firing trials. Finally, our APKWS technology more generally is a great example of how we can scale up quickly. It has brought down the cost of counter drone technology by so much that it's similar to the cost of the drones it targets. We've now produced over 100,000 units in total. And by the end of this year, we anticipate more than doubling our production rate compared to 2024. Our combination of established multi-domain expertise, decades of delivery and agile software capability gives us an advantage that many of our competitors simply can't match. It provides our customers trusted, differentiated solutions that have proven to work on the battlefield, and these provide us with a competitive advantage. And now over to Brad for the financials. Bradley Greve: Thanks, Charles. It's been a really strong year for the business. We delivered a record year in sales for the group with a 10% increase while building our backlog to an all-time high of GBP 84 billion. Our focus on efficient delivery contributed to a 12% increase in underlying EBIT, and we posted a double-digit increase as well in earnings per share. Free cash flow at GBP 2.2 billion was above our guidance with the benefit of strong delivery and material customer advances. This free cash was after double-digit increases in R&D and continued high levels of capital expenditure. And after all of these increased internal investments, we returned GBP 1.5 billion to shareholders, in line with our disciplined capital allocation policy. All of these numbers highlight the health and effectiveness of our value compounding model. I'll now break these results down in more detail. And as usual, when comparing results to prior periods, I will use a constant currency basis. With orders of GBP 37 billion, the book-to-bill was 1.2 and reflected the continued relevance of our broad technical and geographical reach. Key orders in the year featured close to GBP 9 billion in electronic systems orders. This included GBP 2 billion from our space business, featuring the missile warning and tracking satellite systems for the U.S. Space Force. GBP 6 billion in our P&S business, including significant orders in Europe for Hägglunds and Bofors and over GBP 2 billion for U.S. combat vehicles. The air sector recorded GBP 15 billion, including the Typhoon win in Turkey and GBP 4.2 billion in MBDA. Our Maritime business recorded GBP 5 billion of orders, including increased funding for submarines. And finally, the Cyber and Intelligence sector recorded a further GBP 2.7 billion. Our record backlog, together with the pipeline of incumbencies sets us up well for continued growth over the medium term. We grew sales by 10% to reach GBP 30.7 billion with growth across all sectors. Organic growth was 9%. Platforms & Services led the group with a 17% increase, hitting GBP 5 billion for the year. European growth in Hägglunds and Bofors was over 30%, while our U.S. combat vehicle business grew by 15%. Maritime continued to grow in double digits, up 11% to GBP 6.8 billion, with strong growth in design work for the SSN-AUKUS submarine and double-digit growth in Australia. The air sector rose by 9% to reach GBP 9.3 billion with 17% growth in MBDA, GCAP ramp and continued growth in drone sales and FalconWorks. Electronic Systems sales rose by 8%, paced by double-digit gains in EW sales, strong contributions from our precision strike and sensing activities and the full year contribution from the space business. Finally, Cyber and Intelligence was up 2%, predominantly on gains in counter-drone sales. Group EBIT of GBP 3.3 billion was up 12%, and our margin of 10.8% represented 20 basis points of expansion. This means over the last 5 years, we have delivered 100 basis points of expansion. The largest gain in EBIT came from P&S with 30% growth to reach GBP 576 million. Margin climbed to 110 basis points to 11.4%, with accretion on higher full rate production volumes from AMPV and growth in our European businesses. Electronic Systems EBIT rose by 12%, with margins growing by 50 basis points to 15.4%, including a strong contribution from SMS. The air sector EBIT grew by 10% with margins of 11.9% at the high end of our guidance range. Maritime margins reflected the early-stage maturity of the portfolio with several first-in-class programs trading at relatively low margins. We expect margins to improve in 2026 and beyond as these programs mature and as key milestones are achieved, allowing for risk release. Cyber and Intelligence EBIT was up 15% with a full year of Kirintec included. Organic growth for the sector was 10%. The group delivered operating cash flow of GBP 2.8 billion, significantly higher than our expectations as large customer advances were received very late in the year. With close to GBP 1 billion of CapEx, we once again invested at levels substantially higher than depreciation with capacity expansion and efficiency investments across the portfolio. There was a reduction in net advanced inflows in 2025 compared with 2024 in P&S and Air, which is the primary driver for the reduction in operating cash flow. Our free cash flow after netting tax and finance costs was GBP 2.2 billion. The strong performance contributed to a 22% reduction in net debt, which landed at GBP 3.8 billion. Excluding lease liabilities, the net debt to EBITDA was 0.9x. Our strong balance sheet provides excellent optionality to support our growth ambitions, and it was good to see this month's rating upgrade from Moody's, taking us up to A3. Turning now to guidance. We anticipate another strong year of sales with a 7% to 9% growth range, supported by the record backlog. Strong sales in air and continued growth in Europe for P&S should drive both sectors up in the 9% to 11% range, while growth in space and EW should drive growth in ES in the 6% to 8% range. Growth in maritime and cyber are expected to be in mid-single digits. EBIT should grow above sales with more margin expansion expected. Our guidance is for a 9% to 11% growth in profitability across the group. Earnings per share should grow in line with EBIT at 9% to 11% despite a higher tax rate anticipated in 2026. Regarding free cash, we do not include material advance receipts in our guidance. As you have seen in 2025, this can result in large positive variances. But given the difficulty in predicting these, we exclude them from guidance. We do include the anticipated unwind of existing advances. For 2026, we expect free cash flow to exceed GBP 1.3 billion, reflecting advanced unwinds and continued high levels of CapEx investment planned. So with the strong 2025 delivered, our guidance for 2026 demonstrates our confidence in the continued high performance of our business across all key measures. I'd like to discuss the 3-year cash delivery in a little bit more detail. Our consistency in hitting our 3-year guides continued in 2025, where we recorded GBP 7.3 billion over these last 3 years. For the next 3-year period covering '26 to '28, the target we are setting today is to exceed GBP 6 billion, including an assumed unwind of advances and high levels of investment to support growth. I'll end my section of the presentation with a quick reminder of our consistent value-creating capital allocation model. The first rung on our ladder is investing in the business, specifically in our people, facilities and technology. From the skills academies we opened to our commitment to early careers programs and a constant focus on building strong teams and leaders, investment in our people is essential to delivering our strategy. We have invested over GBP 1 billion since 2020 on education and skills. Our investments in CapEx to increase the efficiency in how we deliver to our customers as well as expanding the capacity of what we deliver continues to be maintained at very high levels, helping us to drive growth. Our investments in CapEx are over GBP 4 billion since 2020 and are now averaging close to GBP 1 billion a year. And our higher investments in self-funded R&D help to increase differentiation and open new revenue streams. These investments have increased by 70% since 2020 and programs like the APKWS illustrate how these convert to value. The second rung of the ladder is our dividend, which is covered approximately 2x by underlying earnings. Our dividends have increased for 22 consecutive years. And today, we have announced a 10% increase for our full year 2025 dividend. While maintaining our strong balance sheet with a focus on preserving investment grading, we have strong optionality to use M&A to grow the portfolio as we have done successfully over the last several years with over GBP 6 billion invested since 2020. And finally, when there is surplus cash after all of these allocations, buying back our shares has proven to be another important way we return cash to our shareholders, and we have retired 9% of our ordinary share count since the program started in the summer of 2021. So handing over to Charles with a final comment that our value compounding model has led to a high compound annual growth rate in both sales and underlying EBIT over the last several years, significantly enabled by this consistent approach in the allocation of capital. Over this time, we have also converted cash at very high levels. With our record backlog and pipeline, we are very well positioned for continued strong delivery across the medium term. Over to you, Charles. Charles Woodburn: Thanks, Brad. Looking ahead, we're well positioned to keep building on our momentum. A key strength of BAE Systems is not just our near-term growth, but the visibility we have over the long term. Our order backlog and incumbent program positions total around GBP 260 billion, nearly 9x our annual sales. This includes both shorter-cycle products such as drones, counter-drones and munitions, where we're currently experiencing high growth but also critical multi-decade programs such as frigates and submarines with long-term embedded value. Some of our biggest programs like the Global Combat Air program and SSN-AUKUS submarines don't come into full production until the mid-2030s and beyond. The combination of our order backlog, incumbent positions and a strong new business opportunity pipeline due to rising defense spending gives us the visibility and confidence that we can deliver strong growth for an extended period. Bringing this all together, what should it mean for investors? The combination of our exceptional breadth of world-class defense products and capabilities, strong positions in some of the largest defense markets in the world, a continued focus on execution while increasing our investments in technology and innovation and a large backlog of long-term work with significant new business opportunities means we're confident we can deliver strong revenue growth that is both visible and sustainable over multiple years with higher margins and strong cash generation, all of which will be amplified by our disciplined capital allocation, giving us enhanced visibility on our value compounding model. Many thanks. And with that, we're ready for your questions. Operator: [Operator Instructions] And now we'll go and take our first question and it comes from the line of Ross Law from Morgan Stanley. Ross Law: The first is just on the U.S. budget and the potential upside there for fiscal '27. Are you actually planning for a GBP 1.5 trillion (sic) GBP 1.5 billion scenario? And when would this increase flow through to your P&L? Second question, just on Europe. You highlighted that it's 11% of sales, but 32% of the backlog. And what do you expect the mix of European sales contribution to trend to midterm, please? And then lastly, just on MBDA, how should I think for the growth outlook there in terms of CAGR? Charles Woodburn: The first one, U.S. budget upside. Tom, do you want to take that one? Tom Arseneault: Yes, sure. I think we're very encouraged by the trajectory of the budget. I mean how that -- how the 2027 top line ends up remains to be seen, but it certainly is heading in the right direction. It is not part of our current guidance. And so we do see upside in there. And to the extent we've worked to align ourselves well with the National Defense strategy and various priorities that fall out of that, I think we are well positioned. The Golden Dome, for example, we talk about the recent wins in the base layer and our involvement in the interceptors, FAD and others. And so I think you'll see some of the budget applied there as well as shipbuilding. We've recently pivoted some of our maritime solutions to be the better part, as I mentioned earlier, of the shipbuilding, the submarine and surface ship industrial base. And so I think we are well positioned to the extent that budget heads in that direction, we're all encouraged by that. Charles Woodburn: So on the European composition, I mean, clearly, it's going to grow quite significantly with that 11% European ex U.K. in our current sales and 32% in the order backlog. Quite what the final number ends up being, I think it's a bit hard to tell a lot depends back on things like U.S. budgets as to the rate at which they grow, the relative rate of other areas. So I think it's a bit hard to judge, but we are looking at significant growth over the next 5 years as we build out that backlog. On MBDA, Brad I mean we've had already a pretty rapid growth. I think it was 17% year-on-year growth last year to the year before. But do you want to comment a little bit on the outlook for that business? Bradley Greve: Yes, I'll just echo too, on Europe. We -- GBP 3.6 billion of sales in Europe in 2025. That is against GBP 2.8 billion in 2024. So you can already see how our European revenue growth is really accelerating. And actually, our European business is bigger than our KSA business now. So I think that's worth reflecting on and positioned for continued growth. I think MBDA has been a really strong 2025 with over 17% growth. And Charles laid out some of that backlog that they've got. So sometimes revenue there can be a bit choppy because it's point on delivery revenue recognition. So some of that revenue growth may not be even. But with that backlog they've got, we expect really continued high levels of growth for a long time to come here. And also, Charles mentioned the production capacity investments that they're making, that will allow us to accelerate growth over the medium term once those get online. So I think all of this points to a really strong outlook for MBDA on the back of what's already on a pretty strong run for that business. Operator: And the question comes from the line of Robert Stallard from Vertical Research. Robert Stallard: I've got a couple for you this morning. First of all, this might be for Tom and Charles. Given the broader industry trends, are you expecting much higher CapEx in your U.S. business going forward? And in relation to that, are there any limits you potentially see on your flexibility on returning cash to shareholders? And then secondly, you highlighted the growth potential in MBDA and the rapid growth you've seen already. We've seen one of your peers in the U.S. announcing plans to spin a minority stake in its missile business. Is there any chance of a similar move for MBDA? Charles Woodburn: I think on the MBDA, I think we're very happy with the business. We don't see any particular need to change the structure or the holding system at the moment. We're just pleased to see the performance and keep supporting it. On CapEx, I'll maybe leave that to both of you, Brad and Tom to say a couple of words on it. But I would come back to the fact that we have because of the good performance of the business, ample capacity to invest as we have been at record levels. If we needed to increase, we can still do it and still maintain our very disciplined capital allocation strategy. But if you want to just say a couple of words on U.S. in particular CapEx growth, maybe... Tom Arseneault: Rob. So in the U.S., I mean, clearly, we're focused on -- and as we've all been encouraged by the executive order to make sure we are positioning and applying our capital resources in a way to help grow capacity and focus in areas of technology investments, some of which I mentioned earlier. We are on the verge. We're part of the FAD program. We do the -- we make the interceptor. We anticipate signing our own head of agreement with the Department of War here in the coming weeks in order to secure that quadrupling of demand over the 7-year multiyear program. As part of that, we would look to invest appropriately and it's quite a bit easier to close the business case on a multiyear demand like that, but to ensure that we can produce at that level. So that's just one very near-term example. But we continue to focus and make sure we're applying our resources to the benefit of the Department of War and their priorities. CapEx will generally impact to you. Bradley Greve: Yes. At a higher level, Rob, we -- as we've laid out in the scripts in the prepared remarks today, you've seen us talk about a lot more investment. And over the last 3 years, we've been averaging sort of GBP 1 billion a year. I would expect in the next 3, it's likely to go up as we see this increasing growth environment that we're in. And a lot of that, as Tom has laid out, is in the U.S. But overall, this is embedded in our 3-year cash guide where we said we're going to have 6 -- over GBP 6 billion in the next 3 years of free cash. That is reflective of higher CapEx investments. Operator: And now we're going to take our next question from the line of David Perry from JPMorgan. David Perry: Two questions. First one, just an update on AUKUS, please. I think the last few days, there's been quite a lot of press reporting out of Australia that the government there is about to commit AUD 30 billion to a new production facility. So just any info you have on that? And then secondly for Tom, I think one of the surprises for me in the results was U.S. land vehicles, where both sales and margin were better than expected, because that's a business that you've been less bullish on recently. Have you changed your view on that? And any thoughts on the outlook? I mean, could there be more margin upside from where you are at the moment? Charles Woodburn: Thanks, David. So on AUKUS, I think as you already alluded to, there was some announcements over the weekend about infrastructure investments in the Osborne precinct around for the long-term build of SSN AUKUS, which I think is excellent progress and just underlines the strength of the program longer term. From a U.K. perspective as well has been continued investments in the design work that's going on the SSN AUKUS submarine. So I think whilst we've always said this is a long-cycle program, much of it doesn't really bear fruit until well into the 2030s. These are early days, laying the -- literally the foundations for the success of the program. And I think we're making good progress on that. On U.S. land vehicles, I think Tom, as you said, is best place to answer that one. Tom Arseneault: Yes. Thank you, Charles. And David, yes, no, thank you for pointing that out. I mean I think the team and Platforms & Services has done an excellent job playing out the backlog that we've been reporting in recent years. And programs like the amphibious combat vehicle, for example, which is a Marine Corps program, factors well into the Pacific deterrent dimension of the National Defense Strategy an important vehicle for Marine Corps as well as the armored multipurpose vehicle, AMPV, which is the highest volume vehicle running through the factories there. Some of the -- and the margin improvement, excellent performance, coupled with some of the investments we've made in recent years, robotic welding, et cetera, that helped drive a little bit of automation, allowing for better throughput in some of those higher markets. And so we continue to focus on delivering for our customer and ensuring that we can return to the shareholders at the same time. I won't point out, I mean, we do -- our combat vehicle portfolio also includes the business in Hägglunds in Sweden, and that business is growing quite strongly. We are -- it was in the press late last year, working on a 6 nation agreement for CV90s. That will likely result in orders for additional vehicles in the hundreds. The 6 nations, Finland, Sweden, Norway, the Netherlands, Lithuania and Estonia, and the team is working with all 6 nations now in order to hammer out an agreement for a common vehicle platform across those nations. I hope that's helpful. Charles Woodburn: Which I might say is a great example of European partnership. Operator: Now we're going to take our next question and it comes in of Christophe Menard from Deutsche Bank. Christophe Menard: I had 3. The first one is still on the U.S. Can you comment on the drive for affordability in the U.S.? How -- and does it impact you? Is it in technology programs or in -- for instance, I don't know, the Radford rebid that's coming up? Second question is on capital allocation, share buyback. The GBP 1.5 trillion (sic) [GBP 1.5 billion] is coming to an end, I think, around June. What are the clients plans beyond? And the last one is on order intake. I'm still -- I'm always surprised -- I mean, always very positively surprised by your order intake. Any guidance for 2026 of book-to-bill or any key orders we should be watching in terms of influencing the order intake in '26? Charles Woodburn: Well, Christophe. So drive for affordability, I will let Tom say a few words on that, but we are fully supportive of the intent of the executive order to improve production rates and make sure that we deliver on the programs. Capital allocation, I may correct you there, is GBP 1.5 billion, not GBP 1.5 trillion. And -- but I'll hand over to Brad to do that one. And then order intake guidance, as you know, we don't guide on order intake. They tend to be quite lumpy. But if Brad, as you're answering capital allocation, do you want to expand on that by all means do. So maybe, Tom, over to you on the drive for affordability. Tom Arseneault: Yes. No, that's a great question. Thank you, Christophe. We -- the focus on affordability is highly enabled by volume production, right? And so some of these investments in capacity, I mentioned robotic welding a little bit earlier, brings automation to bear, drives for the economies of scale and economies of labor and automation that allow us to create a more affordable situation. Investments in technology around how we're driving, for example, as I mentioned earlier, the microelectronics position, right? As the microelectronics get denser and denser, we're able to get more capability into smaller space, drive down the material -- the builds of material on some of these items and again, helps with affordability. So we're looking at it in every dimension from the way we work all the way through to the technology we apply. I hope that's helpful. Charles Woodburn: Brad, do you want to talk about capital allocation? Bradley Greve: Yes. I think it's healthy just going to look back to our capital allocation hierarchy again. And the first rung in that ladder, as we said, was investment in the business. And so this takes the shape and investment in our people, the GBP 1 billion that we spent over the last several years on skills academies and early careers programs, self-funded R&D. We've been making meaningful increases in those investments and CapEx. We've talked a lot in this presentation about how much we're increasing our investments there in CapEx. And all of this, I think, is very much aligned to a growing business and a growing backdrop. And our customers all want capability faster and our investments are designed to do that. So that is our very first priority, and that's completely aligned with our customers' view on this. And after that, of course, we have a dividend policy that's very established and clear covered 2x by underlying earnings. And we've then looked at M&A as sort of another wrong and using a strong balance sheet to increase and enhance our portfolio. And finally, if there's cash left over after all of this, that's when the buyback program kicks in. And we're in a situation with the business that across all these increases of internal investments and dividends and the M&A we've been doing, we still have had cash left over. And so I think that's been a useful tool to deploy that surplus cash. Charles Woodburn: Then on order intake guidance, as I said, we don't give guidance, but Tom alluded to, for example, more CV90 potential orders translating. The Type 26 selection by the Norwegians is not yet in order backlog. We've got a number of additional opportunities for Eurofighter, both support and new aircraft sales. Electronic systems, there's opportunities with Compass Call. I mean there's a wide hopper of opportunities. But as you always know, the -- some of these big programs, quite what year they fall from an order intake perspective can be a little hard to predict, which is why we are cautious around giving specific guidance on that. Christophe Menard: And yes, indeed it was GBP 1.5 billion. Charles Woodburn: I was joking to be honest, Christophe, I knew you have -- anyway, thank you, Christophe. Operator: The question comes from the line of Ian Douglas-Pennant from UBS. Ian Douglas-Pennant: I have 3, at least one of which is quite quick. Firstly, on the free cash flow. So your free cash flow guidance 2025, '27 implies GBP 2 billion of free cash flow in 2027, which is a decline on what we've seen recently. Like can you talk about why that's the case beyond -- and obviously, I hear what you're saying on the advanced payments, but anything else beyond that, we should be considering? Secondly, could you talk about the outlook for tax rates? I think your communication there has changed? And thirdly, on the Eurofighter, can you talk about the long-term production rate plans there given some of the recent demand we've seen coming in? And related to that, could you talk about progress on FCAS and when you now think that will be ready for use for our customers? Charles Woodburn: So maybe the first couple for you there, Brad, free cash flow and... Bradley Greve: Free cash flow, really the story on the variability is not a new story. It's just really down to how advances move and how we guide on the basis of a conservative outlook on advances where we always model the burn of advances. And in 2026, we expect to have a circa GBP 600 million burn down of advances. We haven't guided to any material advanced receipts. So to the extent those come in, that would be upside to what we've guided. And that also is true of the forward guidance ranges in those 3-year increments that we've outlined. So none of those include material receipts for new advances, but all of those new ranges looking ahead include burn down. So that -- I think that's really the simple explanation of your question on that one. And on tax rates, we did see an increase, we're expecting to increase rather in 2026, and that's mainly coming from '25. We did have some prior year releases from some retired tax issues. Those obviously don't recur in '26. And the France tax regime has carried forward what was meant to be a 1-year surplus and tax rates. They've now taken those into a second year. So the France tax rate is 36% compared to what we expect it to be sort of in the mid-20s. So I think I really explains the tax movements and a 22% guidance for ETR for '26, that's probably a range that's likely to endure for a little bit longer. Charles Woodburn: Thanks, Brad. On Eurofighter, I mean, we've talked before about sort of the pathway to doubling production rates, and I think we're well on that. Having secured Turkey and there are other opportunities. I mean, obviously, some European buys that you're well aware of. We'll look to adjust that. But I think that we said at the time at the Capital Markets Day last year that it was sort of a couple of year trajectory to get to the new production rates, and we're well on that journey. And we will adjust, if needed, upwards if we are successful in securing further orders. And of course, the good news is that we now have production requirements all the way through to when we start doing final assembly of a GCAP capability, which is important. And I think to your final question, GCAP is making really good progress. We have a really strong team, moving well and are delighted with the partnership that we have and moving at pace. Operator: And now we're going to take our next question. And the question comes from the line of Olivier Brochet from Rothschild & Co. Olivier Brochet: I would have a couple of things to ask. The first one is on the operating cash flow in H2, it doubled in electronic system. Do you have any areas that you would like to point to explain the move? On the same vein, did you have any cash payment catch-up on the F-35 after the release from inventory aircraft last year? And the second question would be on the space exposure. Can you maybe size how big it is across the group, maybe in terms of backlog and sales as you very hopefully did for the European business? Charles Woodburn: On cash OCF, do you want to do that, Brad, and then maybe over to you for space, Tom? Bradley Greve: I'll simply say, Olivier, we tend to have a very back weighted cash flow profile. So '25 is no exception to that. We did see some advances come through in our space business from SMS into the ES cash flow. So that was a contributing factor in that. But we always have a very H2-weighted cash profile, and that continued into 2025. Tom? Tom Arseneault: Yes. I think I mean backlogs in the former Ball Aerospace, now our Space & Mission Systems business are at record levels. I mean, after some delay in the early part of the year as the administration was settling in and working through its priorities, there were some pivots on their part early in the year. Although as we moved to the half and beyond, we spoke at the half, and I mentioned earlier, the big win on missile warning and tracking. We won a ground systems award called FORGE C2 that will -- is a ground systems for this missile warning and tracking kind of mission in our national and military space businesses grew and won a number of other programs. And so record levels. I think Brad, just check me if I'm wrong, GBP 8-ish billion for SMS. And so a really good performance there, and 1 that will play out through sales growth here. We're projecting double-digit sales growth in 2026. Operator: We're going to take our next question and it comes from the line of Alessandro Pozzi from Mediobanca. Alessandro Pozzi: The first one is referring to your opening remarks about the outlook, very strong pipeline as well. I was wondering, can we have any color on the medium-term growth? A lot of your peers have given 2030 targets. We don't guide to 2030. But I was wondering, is it the right time maybe to factor in an acceleration in top line and maybe growth of double digit rather than high single digit, also in line of defense spending in the U.S. going up? And the second question on the GCAP. There's a lot of speculation that Germany and France may not go ahead with the FCAS any longer. Would you be able to accommodate Airbus as a new partner in the GCAP and what the implication could have for the program? And maybe a last one. Any update on the Eurofighter potential opportunity in Saudi Arabia? And any thoughts on that? Charles Woodburn: So outlook, thanks for the question, Alessandro. We don't, as you know, give medium-term outlook, but we've been on a strong temper of growth, and we do see that continuing. As you probably are aware, everyone on this call much debate around the U.K., for example, and the defense investment plan and will there be more funding around that. And I don't know any more to add to that other than has been in the press already. But none of that is in a sense, assumptions around that further upside would be in our guidance and indeed -- but it would affect our medium-term outlook, but we just have to wait and see how that plays through. So there is further upside, we think, to the medium-term outlook, depending on how things play through. And indeed, as Tom alluded to already, with the U.S. budgets as we see how that plays through, but that's not a '26 impact. That would be a '27, '28 and beyond impact. On GCAP, I mean, really the decisions around expanding the partnership are entirely down to the 3 governments of Italy, Japan and the U.K. that are partners already. So there's not really not much more I can comment on that apart from the fact that we have a really strong partnership that is making great progress and moving at pace. And on Eurofighter, again, there's a little I can really add apart from we have a large portfolio of additional opportunities for the Eurofighter platform. It's a superb fighter aircraft. And with the latest missile systems from MBDA has extremely good capabilities. So we do see a range of additional opportunities, both from existing customers and new customers as we see with like Turkey coming into the Eurofighter family. That's really all I can say at this point. Operator: And the question comes from the line of Sam Burgess from Goldman Sachs. Samuel Burgess: Three, if I may. Firstly, just back on Europe. If there is movement in the rules on U.K. company participation in future European defense funds, just in big picture terms, how material could this be for BAE Systems? Secondly, can you give us just any directional indication of the expected magnitude of advanced payments expected in 2026 relative to '25? I mean given quite a lot fell in Q4 '25, might we assume it's a slightly slower year in terms of prepayments? And then thirdly, maybe one for Tom. Just following on from Ross' question about potential U.S. budget increases. I know there's been a lot of kind of CapEx going in for Jacksonville and Louisville, but that was obviously in advance of some of the latest messaging from the U.S. President on budget. So what's your sense on the areas that incremental budget spend may be directed? And might you need to accelerate CapEx to capture some of that demand if it's not in your base case? Charles Woodburn: Thanks. Good set of questions. On Europe, I would just come back to -- we already have -- we're well positioned within Europe. So our position with MBDA, Eurofighter, our Swedish businesses mean that we are very well positioned, and we can happily partner with companies like PGZ in Poland, who are recipients. So for example, say funding we can work with them. So we see, as you've already seen in our order outlook, we're expecting significant growth in Europe, and it's a combination of selling in from our U.K. business, but very importantly, strongly enhanced by our footprint already within the Europe and specifically EU. So -- and then in terms of advanced payments, I mean, we don't guide around that. It's very hard to predict, which is why we specifically exclude them from our cash guidance. And I think that's probably the prudent place to be. And I think we're very clear around our position there. Tom areas for CapEx -- in the U.S., do you want to say a little bit about that? Tom Arseneault: Yes. I'm happy to it. Thank you for the question, Sam. I mean if I had to point to one area and again, as I mentioned earlier, we're very encouraged by the administration's move toward multiyear contracts, particularly in and around munitions. So if you look at the 2026 National Defense Authorization Act, the budget has outlined, particularly Section 804, that really outlined these multiyear procurements where they create effectively 7 years of demand for some of these munitions. Our 8-ish munitions sort of called out there as key munitions. We play a role on 6 of those. FAD I mentioned earlier has one. And so as we look to the sorts of volume increases associated with those anywhere from doubling in production to quadrupling there will definitely be some CapEx expected in those areas across the portfolio. By the way, that's both ES and SMS, those 2 businesses will contribute. So I'd call that out as probably the dominant area, although there would be others. Operator: We're going to take our next question comes the line of Chloe Lemarie from Jefferies. Chloe Lemarie: I have a first question, please, on the 2026 to '28 cash outlook. You helpfully said the GBP 600 million advances burn in '26. Could you maybe share how much over the total period you're factoring in for this? The second question is on P&S. Obviously, quite a strong performance in '25. We touched on the U.S. platform performance. But I think a 30% growth in both for Hägglunds was mentioned. So could you maybe touch on capacity utilization now in those businesses and the expansion phasing going forward? Charles Woodburn: Over to you, Brad, for cash guidance and then, Tom, for the excellent performance in P&S. Bradley Greve: Yes. I think the GBP 600 million burn down is probably a fair average to use across the medium term. So the '26 to '28 cash guide. Again, we don't assume any advances coming in, so any prepayments coming in. We do have a slightly higher CapEx across the next 3 years and then there's the normal working capital movements, but we will have higher profits, which will fall to cash. So all that weighted in is kind of what colors in that GBP 6 billion -- greater than GBP 6 billion cash guide over the next 3 years. I mean it's going to be timing on programs that will dictate the cash burn on advances. It may not be evenly distributed GBP 600 million each year. But I wouldn't be surprised if it's a number like that over the next 3. Tom Arseneault: Yes. And then on Adrien (sic) [Chloe], on vehicle performance and production. I mean P&S, again, thank you for highlighting that a really excellent performance on the part of that business. Remember, P&S includes both the U.S. portfolio as well as Hägglunds and Bofors in Sweden. We expect that we would focus -- again, we don't see additional capacity necessary in the U.S., for example, we are -- we have built that up over the course of the last 5 or 6 years. And so now we're sort of running at rate, focusing on good performance there and that you can see in the bottom line in that business. So over in Hägglunds, I mentioned earlier, the 6-nation opportunity that would likely require some additional CapEx in Sweden, but we do, as we've reported in the past, spread that capacity work out into the countries to which those vehicles would be delivered and in industrial cooperation. And so a modest investment there, we expect. But here's a business that was maybe 50 vehicles a year, only a handful of years ago, now looking at maybe somewhere between 200, 300 vehicles a year. So really good opportunity there, and business has done well to scale. I hope that is helpful. Operator: We'll go and take our next question and it comes from the line of Adrien Rabier from Bernstein. Adrien Rabier: I also have 2, please. Sorry to ask again about the U.S. budget, but if you don't ask -- if you don't mind me asking in a more basic manner, if we have anywhere near 50% growth in U.S. budget in 2027, what would that mean for you? How much you expect to participate? And how long will it take to flow into your P&L? And the second question on your 2026 guidance, please. Your sales growth target implies some sequential slowdown from 2025. But as you said, budgets are growing in your key regions and backlog is great and you've been expanding capacity. So should we see this as a reasonable caution? Or is there a reason to actually expect a slowdown this year? Charles Woodburn: Well, on the second one, the answer is no. But do you want to explain that a little bit guidance? You're saying it's slowing down compared to this year. But Bradley Greve: On top line? Charles Woodburn: Yes, on top line. Bradley Greve: Yes. The growth that we printed for 2025, the 10% included a full year of SMS, our space business, former Ball Aerospace. So that compares to a partial year in 2024. If you look at our organic growth rate in 2025, it was 9%. So again, if you put that in the context of our go-forward guidance, where we're saying 7% to 9% for 2026, we're continuing to grow at these very high levels on a higher 2025 base. So hopefully, that helps you understand a little bit that we're continuing to grow in pretty high levels here. Charles Woodburn: Yes, we still see strong momentum in the business. And maybe over to you, Tom, on U.S. budgets. Tom Arseneault: So there is so much that has to play out here before we understand where the top line for 2027 will settle. I mean it's -- again, we're very encouraged by the directionality of the discussions around the budget. You'd have to imagine that the way that would translate into portfolios would be sort of relative to how well aligned we are around the demand signals. And we feel very well aligned, as I mentioned earlier. And so we would hope we would get a reasonably proportionate share. The focus on the national defense strategy, deterrence in the Pacific, our electronic warfare, our space portfolio, the work we're doing to help with the submarine and shipbuilding industrial base. When it comes to defend the Homeland, we spoke about Golden Dome, Clearly, the space and the munitions side of that, Counter-UAS, with our APKWS solution. So we've worked to align as best as we can with the national defense strategy. I think that's paying dividends for us, and we would hope to earn our fair share of that budget when it settles out. Charles Woodburn: But this would really play out in '28, '29. Tom Arseneault: Right. It will be some time before we know exactly where that is, but the directionality is clearly encouraging. Operator: And the next question comes from the line of George Mcwhirter from Berenberg. George Mcwhirter: Maybe on R&D, going back to the comments that Charles you made about self-funded R&D reaching a record high this year. Do you expect self-funded R&D to continue to account for the minority of R&D? Or could you see that the self-funded share grows a bit faster than customer funded as government shift to a greater company, that innovation to reduce the time it takes for products to come to market? That's the first question. Charles Woodburn: Okay. Is that the only question? Or do you want to ask... George Mcwhirter: Sure, I can ask the second one. Maybe on margins. You talked about 20 basis points of margin expansion a year for the past 5 years. Do you think this is a reasonable level that you can achieve in the next 5 years? Charles Woodburn: So on margins, I'll let you answer that one, Brad. On R&D, I mean, as you said, we have been increasing self-funded R&D. The most intensive area of self-funded R&D is the electronic systems portfolio in the U.S., and that's been really good investments, things like APKWS is -- was a self-funded R&D program that is now doing extremely well and a huge commercial success for us. So we are encouraged to keep investing in R&D. The balance between that and customer-funded R&D, I mean, it largely depends as well as to the amount that we get through customer funding on R&D programs. So I'm not sure it's going to change dramatically, but we will keep investing in self-funded R&D. We've had some great success there. The other area that we've invested and continue to invest heavily in self-funded R&D is in the U.K. air sector, specifically around drones, counter drones some of those capabilities is making sure that we really build out that what is already a market-leading portfolio and develop that further. On margins and the margin progression, do you want to say a bit about that, Brad? Bradley Greve: Yes. Last several years, our mantra here has been top line growth, margin expansion and cash conversion. And we were pleased to generate those 100 basis points of expansion over the last 5 years. And when we look forward, we'll continue to focus on these things. And where we have opportunity for more improvement is really everywhere. Operational efficiency is a key lever of expansion. The extent that we deliver our programs and retire risk to the bottom line rather than consume it. That's a really important part of how we're going to grow margins from here. We'll have some operating leverage with top line growth, where we can keep indirect costs flat. That's another key lever. And our supply chain function continues to make size our scale advantage so we can get procurement volumes to drop down into bottom line margin expansion. I mean across the entire business, we look at these margin levers to really drive improved delivery, and we've seen that over the last several years. Now looking at where we're going to go from here and where you're going to expect more margins. Obviously, the maritime sector is one that is below the range that we expect from that sector. And so I would look at that sector as being the one that will drive the biggest gains over the next 3 years. But we're already pretty top range and a lot of our delivery across the sector. We look at ES at 15.4% and P&S at 11.4%. There's still room to go on those. So I wouldn't just extrapolate a 20 basis point a year over the next 5 years to come, but we certainly are focused on it. And we continue to think that we can drive margins up from already these high levels in 2025. Operator: And the next question comes from the line of Nick Cunningham from Agency Partners. Nick Cunningham: Yes, so the -- a few details on the U.S... Charles Woodburn: Yes, we can hear you, Nick. Nick Cunningham: Can you hear me? Charles Woodburn: We hear you loud and clear. We are hearing you. Nick Cunningham: So the administration is Good. So the U.S. administration is not very happy about NOAA and NASA budget. And it's obviously engaged in a big fight with Congress. But in the meantime, it's been holding out signing checks. And is that an issue for BAE? Or are you assuming that those delayed payments will get caught up later in the year? And also, of course, will it be more than offset by the growth in military space anyway? Secondly, on the P&S shipbuilding move, is this into something new like building modules? Or is it more of the surface ships fit out that you did in earlier years? And how big could it get? And then a final high-level question for Brad. Debt reduction wasn't mentioned as an option in capital allocation. Some of your U.S. peers are looking at retiring debt instead of buybacks. And in that context, what is the right level of debt? Charles Woodburn: Okay. So Tom, I mean, you already alluded to the pivot early in the year from civil space to military and where you think that's going. So I think you maybe say a bit on that and also the shipbuilding and maybe the pivot to submarines. Tom Arseneault: All right, Nick. What was the first one again? Charles Woodburn: The question was about civil space -- [ NASA ]. Tom Arseneault: Yes. No, you're right. And that has played out a bit in the press of late. -- our current trajectory is depending only on the contracts that we have in hand. There is potential upside in this debate around NASA NOAA priorities. But you are exactly right, and that is our -- the growth we've seen has really been driven by military and national space. And that backlog I mentioned earlier, was built around that. And so to the extent the NASA NOAA debate settles in the direction we would like and that is to reinstitute some of the capability in like the GeoXO that program, for example, that would be beneficial to us. But our focus has been on ensuring we're well positioned to deliver on that military and national space. And then second question around shipbuilding. And here, let me be very clear. We are not intending to build full ships, and we had gotten ourselves in trouble in the middle of the last decade or so off on a commercial shipbuilding venture. That is not our intent here. We are contributing components and working to earn our way in to be a reliable supplier. We do the Virginia payload module, for example, for the Virginia class submarines today. We're looking to expand on some of that work. But we are just trying to be a good, healthy and reliable supplier in this submarine and shipbuilding industrial base but in the supply chain. I hope that's clear. Charles Woodburn: Would you, Brad, on the sort of debt reduction and debt levels? Bradley Greve: Yes. We're not looking at doing any accelerated reductions in our debt. We're already at 0.9x net debt to EBITDA. So pretty healthy balance sheet. And I do believe that constructive debt can help grow the business. And that's what we've done with the acquisitions of Ball Aerospace. And I'm really comfortable with where we are with the balance sheet, and that gives us really strong optionality, which really is what you want as a business. So we don't have any plans to accelerate any early maturities of debt. Charles Woodburn: Thanks very much, Nick. So I think over to you, Ben, for the last question. Operator: And now we're going to take our last question for today. And it comes from the line of Benjamin Heelan from Bank of America. Benjamin Heelan: Thank you for holding it for me. So the first question I had was on M&A, Charles, can you talk about the M&A pipeline? It feels as though buyback has been somewhat kind of deemphasized the potential to kind of grow that medium term, a lot of focus on CapEx, a lot of focus on self-funded R&D. But how are you seeing M&A within that? And if you could talk about the pipeline, how are you thinking about where you want to deploy capital geographically technology-wise, over the next couple of years? That would be great. And then the second question, I guess one for Tom. If I look at Electronic Solutions, I would have -- I would have assumed it would have grown a little bit better organically in '25 than the 5%. And when I look at the guide, the '26, the 6% to 8%, I kind of feel it would be more towards the top end and high single digit given the program mix that you have there. So first question on that, is there anything in there that is slower that we need to that we need to be thinking about? And then you've had a lot of questions on the budget in the U.S. I mean, obviously, we don't know what is going to happen. But I guess one way to ask it is, if you do see the budget moving to the kind of GBP 1.2 trillion to GBP 1.3 trillion range over the next couple of years, do you think the U.S. exposure that the BAE has will be able to outgrow that budget over the medium term? Is that what we should be thinking about? Charles Woodburn: M&A I'll take first. I mean really, it's much of similar focus areas as before, bolt-on opportunities adding to our Electronic Systems portfolio has been a good hunting ground for us in the past, and we'd continue if we found the right opportunities to look at that. Europe is presenting more opportunities given the growth rates there, although being careful and prudent with our valuations and making sure that we're not paying for opportunities -- we just announced our intention to move forward with an acquisition of a relatively small business in Sweden, which supplies barrels and castings to our Swedish businesses. I think will be a great addition to the portfolio. I've identified before Nordics as being an area that we'd be looking at. And then you'll have seen, and again, very much in the bolt-on category over the last couple of years, we've done some very interesting acquisitions in the drone and counterdrone space, things like Malloy, Callen-Lenz, Kirintec capabilities. And again, we'd look for those kind of opportunities to add to the portfolio. So very much in the bolt-on space and in the kind of areas that we've looked at in the past. ES growth, do you want to say a little bit more on that Tom? Tom Arseneault: Yes. Sure. So ES, as you know, it includes SMS, the Space & Mission Systems business. And as we were discussing a little bit earlier, we saw a slowing of growth in the Space & Missions Systems over what we had originally expected in 2025 driven by some of this uncertainty, some of the delays in the -- again, as the administration settled in and they work through their various priorities, we saw some decisions and awards being delayed through the year. And so that resulted in a little bit of lower ES growth overall at the reporting segment level. As mentioned earlier though, the wins that eventually came here in the latter part of 2025, position us for double-digit growth here in 2026 that backlog translates. And so really good growth that will recover in the coming year. And then the other question around budget growth. And again, here we are with our crystal ball trying to get a sense of whether what that trajectory, what the slope of that budget growth will be. Our strategy all along as we -- as we've said, is we are working to pivot and align our portfolio as accurately as we can with the demand signals of the Department of are where is that budget likely to be spent? It's in the areas we've mentioned munitions the Secretary that maybe came out the other day saying that with the higher budget, they could potentially double the shipbuilding budget for the Navy. Marine Corps and ACV, so an additional award there. So we've done quite a bit to get that alignment right. And so again, we would hope to earn our way into a proportional benefit from that growth when it comes. Thank you for the question, Ben. Charles Woodburn: I think that actually brings us to an end now on the questions. But thank you all for joining. I think I'll see many of you out on the road over the next couple of weeks and beyond. But thanks for joining and -- thanks for joining. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Abel Arbat: Good morning, everyone, and thank you for joining our full year 2025 results presentation. This is Abel Arbat speaking from the Capital Markets team at Naturgy. Next to me sits our Executive Chairman, Mr. Francisco Reynes; the General Counsel to the Board, Manuel Garcia Cobaleda; the Global Head of Financial Markets and Corporate Development, Mr. Steven Fernandez; and the Global Head of Control and Energy Planning, Ms. Rita Ruiz de Alda. Today's presentation is a bit longer than usual as we aim to cover the results, but also to address some of the key themes and opportunities for 2026. As usual, we will start the presentation and then move to the Q&A session at the end of the call. Please, as usual, submit your questions through the webcast platform. And with that, let me hand it over to Steven Fernandez to kick off the presentation. Steven Fernández: Thank you, Abel, and good morning to everyone. Thank you for joining our webcast to discuss the full year numbers for 2025 and the outlook for 2026. So before moving into the detailed review, I would like to highlight some of the key messages for the year. As you have seen in the results presentation, 2025 was a strong year for Naturgy, where we met our guidance, once again, reinforcing our track record of consistent delivery. The successful execution of our 2018 to 2025 transformation has underpinned the value creation of the company, and, we hope, our credibility. Now looking ahead, our 2026 guidance is well supported by business fundamentals, a very proactive risk management, as you will see throughout the presentation. We remain fully committed to the energy transition with gas increasingly recognized as essential. Also, our strengthened balance sheet provides strategic flexibility. And on the capital markets front, the tender offer on our own shares and subsequent placements have also led to a significant increase in the free float and stock liquidity, resulting in the return to major indices like the MSCI. Finally, the governance of the company has been adapted to align with the long-term objectives and ambitions of Naturgy. Now we move over to the consolidated results. Starting with the evolution of the energy markets, as you can see on Page 6 of the presentation, gas benchmark softened during the second half of the year with TTF declining by 23%, the Henry Hub by 6% and JKM by 14% compared to the first half of the previous year -- of 2025, sorry. Brent prices were also lower, both in the second half of the year and year-on-year, averaging $66 per barrel in the second half of 2025 versus $77 in the same period of 2024. Iberian pool prices for its part increased from EUR 62 per megawatt hour in the first half of the year to EUR 69 in the second half of the same year, owing mainly to the usual seasonal patterns with lower renewal generation in the second half of the year. If we move over to Slide 7, in terms of FX, we saw a broad-based depreciation across most of our operating currencies versus the euro. The U.S. dollar weakened meaningfully, particularly in the second half of the year, and it's continued to do so in 2026 so far, with LatAm currencies, including the Brazilian real, Mexican peso and Chilean peso also depreciating. Now we turn over to the full year 2025 results. We have a quick snapshot of some of the key metrics of these figures. EBITDA reached EUR 5.3 billion. This is a record level for the company. Net income reached EUR 2 billion. CapEx in the year amounted to EUR 2.1 billion, in line with the estimates that we had for our strategic plan. And net debt ended the year at EUR 12.3 billion. In this period, we've almost paid around EUR 1.3 billion in taxes and levies. So overall, the company has met its guidance despite a year of challenging environment, and these robust results reinforce our track record of consistent delivery. The year's performance was also supported by continued improvements in operational efficiency and very strong risk management, which have translated into higher profitability and visibility. At the same time, the strong cash flow generation and our capital discipline have allowed us to reduce our net debt levels below our 2025 guidance. So as a result, we end the year 2025 with a strengthened balance sheet that provides the company with strategic flexibility. If we move on to the income statement, EBITDA remained in line with last year, again, as a reminder, at record levels, with net income slightly above, in part due to higher minorities in 2024 for the reversal of TGN provisions in Chile. These earnings, we believe, show strong resilience and are supported by a balanced mix of activities, risks and currencies, as you can see on the right-hand side of the page. If we move over to Slide 10, which is the capital allocation, the cash flow from operations amounted to EUR 4.5 billion, which have allowed us to, one, fund EUR 2.1 billion investments, as I mentioned before, distribute close to EUR 1.7 billion in dividends and execute the tender offer of our own shares, which, for the most part, has already been placed in the market. The investments remain focused on networks and renewables with EUR 1 billion allocated to networks and around EUR 800 million to renewal generation, allowing us to reach 8.1 gigawatts of installed capacity at year-end 2025. So we take all this together, these figures, we think, clearly demonstrate the strength of our cash flow generation and, of course, of our disciplined approach to capital allocation. In fact, if we move over to Slide 11 in terms of cash flow and net debt evolution, you can see that free cash flow after minorities stood at around EUR 2.2 billion, EUR 800 million above 2024. That's 58% above. Net debt for the year closed at EUR 12.3 billion, which is broadly stable versus the figures from last year, 2024, correct, with net debt to EBITDA at around 2.3x. And of course, this includes approximately EUR 1.7 billion in dividends, as previously stated, and the EUR 941 million of shares repurchased net of the subsequent placements that we executed. The average cost of debt stands at 3.9%, in line with 2024 levels with around 66% of the debt locked at fixed rates. And the FFO-to-net debt stands at around 27%, which is comfortably above the threshold required for a BBB rating. During the year, it's worthwhile highlighting that we completed around EUR 11 billion of financing operations, reinforcing our liquidity and extending maturities. So all in all, our balance sheet remains solid and again, provides the company with strategic flexibility. If we think about shareholder remuneration on Slide 12, for fiscal year '25, we are proposing a total dividend of EUR 1.77 per share, representing an almost 11% year-on-year growth and above the DPS floor of EUR 1.7 per share committed for the year. This includes two interim dividends of EUR 0.60 per share each and a final dividend, which we are announcing today of EUR 0.57 per share, which will be payable the next 31st of March, subject to the AGM approval. The final dividend per share has been increased to account for treasury shares as these shares do not receive dividends and its corresponding amount is redistributed among the outstanding shares. So all in all, when we think about 2025, we've delivered on our company's guidance across basically all metrics. EBITDA reached EUR 5.3 billion, slightly above our guidance. Net income was above EUR 2 billion, also above the EUR 2 billion guidance. The net debt closed at EUR 12.3 billion, which is below our guidance of around EUR 13 billion, and the DPS amounted to EUR 1.77 per share, which is above our minimum commitment of EUR 1.7 per share. So all in all, this consistent track record of delivery once again reflects the company's commitment and delivery. So now I'll hand over to Rita, who will take you through the operational business performance in each of our businesses in greater detail. Rita de Alda Iparraguirre: Thanks, Steven, and good morning, everyone. Starting with Networks on Page 15. Networks reported a total EBITDA of EUR 2,735 million in 2025, representing a 5% decline when compared to 2024. This decrease was primarily driven by a one-off positive impact in Chile last year and the depreciation of several Latin American currencies, most notably the Argentine peso, but also Brazilian and Mexican currencies. In Spain, gas networks experienced remuneration adjustments foreseen in the current regulatory framework as well as increased demand in the residential segment due to temperature effects. In electricity, EBITDA increased driven by a higher regulated asset base and increased contribution rates. On December 23, the new regulatory framework for the 2026-2031 was finally approved, introducing an OpEx remuneration model with a regulatory rate of 6.58% compared to the 5.58% in the previous period. In Mexico, results mainly impacted by negative foreign exchange effects compensated by tariff updates in July. And in Brazil, results were also affected by currency depreciation. In Argentina, a substantial tariff increase was implemented in 2024 and 2025 to offset inflation. In fact, the new regulatory review approved for 2025-2030 period provides visibility and also includes mostly inflation adjustment that allowed to compensate for FX devaluation during the year. In Chile, performance declined when compared to last year due to an extraordinary effect in 2024 related to TGN conflict, which is now officially closed. In Panama, results were negatively affected by lower demand due to temperature effects and increased operating expenses from higher maintenance activity to improve quality standards. In summary, comparison is affected by an extraordinary impact in 2024, currency depreciation in LatAm, and I will also highlight the publication of the distribution model for electricity distribution in Spain. Now turning to Energy Management on Page 16. EBITDA reached EUR 815 million, which shows an increase versus 2024 of an 8%, mainly due to higher margins on hedge sales. The group benefited from effective hedging in a context of high volatility and uncertainty. It is important to highlight that we have reached a price agreement with our gas suppliers, Sonatrach, for the period 2025, 2027, which strengthens the good relationship between both parties and provide us with visibility in the context of energy price volatility. Finally, last October, Naturgy signed a purchase agreement of 1 million tonnes of LNG with a U.S. gas supplier starting in 2030. This agreement strengthens the group's positioning and its commitment to a diversified LNG portfolio as a key enabler of the energy transition. Overall, the period benefited from effective hedging and diversified procurement portfolio. And furthermore, the group is building new capabilities that reduce risk and enhance optionality. Continuing with Thermal Generation, EBITDA reached EUR 837 million in 2025, 39% over 2024 levels due to higher activity in Spain, partially offset by lower revenues in Latin America. In Spain, the increase in results was supported by higher demand for ancillary services from our combined cycle fleet. Naturgy holds the largest CCGT fleet in Spain with 7.4 gigawatt acting as a backbone to energy security of supply. Furthermore, the group obtained a favorable court ruling confirming the reimbursement of the hydrocarbons tax related to the 2014-2018 period. In Mexico, production and margins remained stable. However, revenues from availability markets and prices declined, mainly due to an exceptionally high revenue base in 2024. Overall, CCGTs remain essential for ensuring system stability with an extraordinary contribution in 2025 following the positive ruling. Let's turn now to Renewable Generation on Page 18. Renewable generation reached an EBITDA of EUR 586 million during the period, slightly above 2024 levels. In Spain, renewable production was 7% lower when compared to 2024, mainly due to lower wind and hydro generation given the exceptionally high levels of hydro production in 2024. This negative impact was partially offset by the commissioning of new installed capacity. In the United States, results are higher when compared to 2024, mainly due to higher production and higher energy prices as the completion of the construction of its second solar plant in Texas. In LatAm, activity continues with impacts due to currency devaluation in both Mexico and Brazil. And finally, in Australia, performance was supported by increased production, more than 100%, driven by the additional installed capacity implemented during the final months of 2024. Investment includes 1.2 gigawatt of power under construction that will come into operation in 2026. All in all, higher results in Renewable Generation due to commissioning of new capacity that reinforces vertical integration and selective growth. Last, moving to Supply. EBITDA has been EUR 535 million, 17% lower when compared to 2024. It is important to remember that in 2024, we had an extraordinary impact due to the positive ruling in favor of Naturgy regarding tariff subsidies. Gas margins have shown resiliency, but negatively affected by regulated tariffs with legal process for recovery underway. In terms of electricity, the group has expanded its client portfolio in a higher competitive environment. However, it was impacted negatively by increasing costs. Finally, our AI-enabled digital commercial platform drives efficiency and improves client service through a significant simplification of product and processes. Overall, stable volumes and margins pressure partially offset by integrated position and operational efficiency. I will now hand it over to our Executive Chairman. Thank you. Francisco Reynés Massanet: Hello. Good morning to everyone. Thank you for joining. And thank you, Steven and Rita, for this wrap-up on 2025 results. I wanted just to spend a few minutes talking about the overview of the transformation we have conducted since 2018, which demonstrates that the company has been focused, as you will see later, in delivering or even exceeding our commitments that were placed in two strategic plans that were already ended. The six key messages I wanted to share with you are about our decision in 2018 to get strongly involved in the energy transition. Our important target to move Naturgy into a more reliable, efficient and derisked company. All this transformation being done under the umbrella or clear financial discipline. As a conclusion of these targets, achieving a much stronger balance sheet, which demonstrates that our commitments are firmly achieved by the hard work of all the team. Finally, as you will see, the conclusions of all this work is that we have improved in the main metrics as return on capital employed, return on equity and total shareholders return. In Page 22, you have it in your hands, and I will not go in big details, but the most important thing is that back to 2018, we have decided to change the face of our portfolio generation, betting on more renewable generation, maintaining the flexibility that our gas turbines are providing to the system and moving ahead in a transformation that has brought us to a very important share of the non-emission technologies. On Page 23, one of our key mantras during the last 7 years has been around making the company more efficient. We really believe that a company will survive as more efficient it is. And the efficiency is shown in this page as an important change from a 36% OpEx over margin to a level of 25% of it. It's important that this work has been done streamlining by all the different business units and in particular, as a demonstration of three pillars that has been driven this efficiency to an end is a portfolio simplification that started back in 2019, OneGrid as a philosophy to extend the best practices across all the business units in the company and leveraging on genAI, in particular, on the commercial field to improve not only our cost, but also our client service. On the other side, and with the aim to make the company more reliable and less volatile, we have been focused every year to secure the level of pricing by hedging our LNG portfolio, we did change it from 30% -- around 30% of volume hedged at the beginning of the period to 100% volume hedged in the last year we closed. In parallel, as a business decision, we have decided that a way to self-hedge our fixed price sales contracts of electricity with clients could only be supported by our inframarginal base of electricity generation. In this period, we have been generating around EUR 40 billion of cash flow -- EUR 41 billion of cash flow. And the solid use of these sources has been divided between three major destinies. One is investment. The second one is shareholders' remuneration and the third one is back to society through taxes and levies. As you can see, this equilibrium has been maintained, in particular, to create a much more solid company for the future with a high degree of investments. The conclusion of this work is that we have been able to reduce our leverage, we're reinforcing the balance sheet and as a result, it provides us a strategic flexibility for the future. The level of rating has been able to be maintained as a BBB from Standard & Poor's. And today's liquidity is already around EUR 10 billion. If you look backwards to 2018 and 2021, there have been two strategic plans in place that were shared with the market in June 2018 and at the end of 2021. Each of it had four important indicators as a target. As you can see in the slide, in all these different targets, the company and the team has been able to meet or exceed the expectations provided to the market with a consistent delivery through the years. In conclusion, the company has created value for its shareholders. If we look at from the ratio point of view, we have clearly increased our efficiency in ratios like return on investment capital and return on equity. As you can see, we were at the time, clearly below our peers. And today, in comparable terms, our metrics are clearly above peers' average. If we will go back to the market and despite of all the different turmoils that may have around the equity markets, the total shareholders return for our shareholders could be clearly above 10%. This is what we have done in this period of work, 2018 and 2025. The company has not stopped. This has been the case since 183 years of existence. And now I think that we want to tackle the most important issues that we have for the year 2026, which hopefully, Steven will clarify to all of you. Steven? Steven Fernández: So thank you, Paco, and I'm super happy to be able to discuss this part of the presentation with you because when we look at some of the questions that are coming in as we discuss this presentation, we think we address a lot of those in this particular area. So we focused on some of the key themes for 2026 that we know the market is looking at. And I would like to start off perhaps with the first one, in no particular order, but on Page 29, a word about the rising value of flexible generation. So we are seeing a structural shift in the Spanish system where CCGTs are playing an increasingly important role. It's worth highlighting that just a few years back, having CCGTs in your fleet was seen as something potentially negative. We kept on defending their relevance, and we are seeing that play out today. So we do see an increase in the value of flexible generation. In Spain, it's worthwhile highlighting that our thermal installed capacity of 7.4 gigas of combined cycles and 600 megas of nuclear, and the CCGTs located in key areas provide grid support and operational flexibility, making the company a best-in-class operator. Potential capacity payments are only assumed from 2027, so not included in the 2026 guidance. In LatAm, as you know, we also have a relevant fleet, specifically in Mexico, where we are engaging in discussions for the extensions of the PPAs. However, we do expect lower margins and lower availability in the excess capacity market for those combined cycles. So all in all, when it comes to the rising value of flexible generation, we see that the fleet's reliability, our flexibility and the fleet's efficiency are one of the key elements of the company's competitive advantages in this business. Another area that I would like to touch on has to do with supply. So we are getting a lot of questions on supply, and we'd be happy to answer most of them. But before we go on to them, hopefully, this slide clears some of the elements. So we continue to focus on competitiveness and operational excellence. So some of the key drivers for 2026 include a stable market share and volumes to preserve margins. So we're not engaging in a battle here to gain market share at all. We rather preserve margins. And this is in the context of a highly competitive environment. We have a well-balanced and vertically integrated position, which is also something worth highlighting. And we are experiencing and focusing clearly on excellence in client service and efficiency, which is supported by the new digital commercial platform the company launched, what we commonly know as NewCo. Some key elements about this. So when we think about NewCo and the impact of this new digital commercial platform, we've seen a simplification and reduction of the number of energy plans offered to our clients from 634 previously to about half of that, 342 in 2025. So there's simplification easier to understand by our clients. We also have improved significantly the first call resolution from 80% in 2024 to 94% in 2025. And this has resulted in an increase in the customer satisfaction levels from 9.4% in '24 to around 9.6% in 2025. We also have more margin visibility into 2026 based on the high percentage of already contracted sales. So for example, if you look at electricity, around 65% and 75% of -- is contracted for industrial and retail segments, respectively. And if you look at it in terms of gas, the numbers are 75% and 80% contracted for industrial and retail segments, respectively. We also have a limited exposure to lower margin regulated tariffs in the sales mix. As you can see, overall, we can say that margin pressure during the year should be contained by our integrated position and high percentage of contracted sales for 2026 and together with what we think are the right ingredients for client retention and attraction. If we move over to another interesting part of the business, which is energy management, we will continue to reduce our gas risk profile. I think the group has been very vocal about this, and we've been able to show very clear successful results. All this while maintaining the security of supply and optionality. So some of the key drivers for this area include an agreement with Sonatrach on the price until 2027, which increases our commercial visibility. And obviously, this is subject to the customary commercial -- the customary authorizations. Moreover, our total gas exposure for 2026 is negligible, thanks primarily to our hedging efforts with risk significantly reduced through 2028. This is made both with U.S. volume hedging and residual positions offset by short sales. In addition, the hedge volumes are closed above current market levels, preserving the company's potential. Our long-term procurement strategy is also focused in prioritizing security of supply and disciplined risk management. So we have made progress on the following areas. We have executed a long-term U.S.-sourced LNG gas procurement agreement with Venture Global starting in 2030, which is public. And we have up to two 2 new bcms under long-term SPAs with additional procurement opportunities under evaluation. So we are actively engaging the market. We also have a proactive management of the upcoming EU ban on the Russian gas imports effective 2027. So all in all, the company keeps reducing the gas risk profile, increasing the visibility while obviously maintaining the focus on security of supply and our optionality. In terms of networks, in Spain, in electricity distribution, the new regulatory framework increases the financial remuneration, as you know, to 6.58%, although with a strong adjustment to OpEx remuneration. Our investment plan in this strategic plan, which I remind you is around between EUR 300 million and EUR 350 million a year, is subject to the approval of the government network planning, which we're still awaiting. So we expect in 2026 to have a one-off recognition of remuneration also from previous years. In gas distribution, we should have the new regulatory framework from October 2026, and that covers a time span of '27 to '32. We expect the current parametric formula to be maintained with some adjustments to remuneration parameters. And we should also see an acceleration in biomethane production and distribution. So Nedgia in that sense, distributed last year 170 gigawatt hours of biomethane, which represents a 53% increase versus 2024. Finally, in gas distribution, we also expect a gradual rollout of smart meters. So in essence, when you look at both areas, both electricity and gas in networks in Spain, we believe that visibility has improved, and we expect stability in gas. If we move over then to renewables, it's worth highlighting that our development remains disciplined and return-focused with 1.2 gigas under construction that will come into operation throughout the year 2026. In Spain, in particular, we'll continue benefiting from our low-risk and flexible portfolio, which is focusing on repowering and battery hybridization. Execution will focus on high-return projects, as you can imagine, and the opportunity to capture value from unique assets, suitable specifically for data centers and pumped-storage solutions. On top of that, 640 megawatts of additional capacity and 115 megawatts of repowering will be fully operational by Q4 '26. In Australia, we will have some additional capacity, around 360 megas, with supply contracts supported via long-term PPAs. And lastly, in the United States, we will see additional capacity to the tune of around 125 megas coming operational in 2026, with supply contracts supported via long-term PPAs of between 10 to 15 years. In addition, in the U.S., we will see asset rotation, and we will seek asset rotation opportunities to projects under development. So overall, I think renewable growth remains focused on profitable and selective investments. This goes to our mantra of value over size. And this will continue to contribute, of course, to our vertically integrated position in Spain. Moving on to biomethane. Biomethane, we believe, in Spain presents significant long-term potential of around 160 terawatt hours because it's an efficient solution to decarbonize the transport, the residential, the industrial sectors as gas networks are already ready to distribute the gas, the biomethane with no modifications. In this sense, Spain's biomethane plants have doubled from 12 to 24 in 2025. Nedgia or the gas distribution business, biomethane distribution has also seen a material increase, as I just previously mentioned. And the forthcoming Spanish policy package should provide regulatory tailwinds from 2026, accelerating biomethane production and the use for decarbonization. So we continue progressing in the development of our portfolio with more than 75 projects, that's equivalent to more than 5.5 terawatt hours despite the investment plan being delayed due to slow administrative processes. So it's worth highlighting that we're admittedly not going as fast as we'd like. And this is shown by the 20 environmental authorizations in Spain versus 140 under review, of which 40 belong to Naturgy. So we continue to become the leading energy player in biomethane in Spain. We continue to push for the right regulation, and we are ready to accelerate our CapEx plan once visibility on this front improves. I'd also like to take this opportunity to discuss data centers a little bit, right? And when we talk about data centers, we work and we deliver results as opposed to deliver expectations with no results. So let's talk about the data center opportunity here. Spain is one of the fastest-growing data center markets. It is supported by competitive costs and a strategic geographic position, which make the country an attractive hub for international data traffic. We believe the company is very well positioned to benefit from this. So we combine 8 gigawatts of thermal capacity with 5.7 gigas of renewables, which, together with our multi-energy focus provide us with the flexibility, and this is very important, to adapt to the clients' energy needs. So in addition, we also offer integrated solutions, combining grid access, energy and network resilience and redundancy. So in this context, Naturgy's business model is evaluating opportunities to monetize suitable power land and provide long-term PPAs and energy services, while the investor retains control of the data center assets. That is our model. We hold close to 3 gigas of locations with suitable access or potential for obtaining access to power consumption, of which around 500 megas in renewables, 400 megawatts in combined cycles and a conservative 2 gigawatt pipeline. So in conclusion, we see this as an opportunity to unlock value with very limited capital deployment. We are working in this area, and we are optimistic in our ability to deliver. We recognize that the process won't happen overnight, that capturing value from DC expansion may take a few years, but we also recognize the unique position the company is in to capture some of this growth. Finally, if I move over to LatAm. This year, we'll see relevant tariff reviews across businesses and the preparation for concession extensions. In Panama, the main drivers will be the 2026 to 2030 tariff review, which should include both inflation and higher losses recognition. And we are also seeing higher demand and the continuation of the ongoing quality upgrade plan. In Mexico, the '26-'30 tariff review will also reflect inflation recognition. And additionally, we expect industrial demand to recover from '25 levels. In Chile, the '26-'29 tariff review will come with full asset value recognition. And in supply, we're seeing a slight margin contraction due to the expected energy scenario. In Brazil, the focus is on the preparation for the concession retender in 2027. So we have a lot of questions about this. The reality is that the government has the ability to retender the concession. We'll look at the tender conditions when and if they are published, and we'll make the decision on whether or not to go ahead. But suffice it to say, the company is uniquely positioned to continue operating these assets. In Argentina, the gas review for '25-'29 was approved in April. And while the electricity tariff review for '26-'30 was approved in February 2026. So both reviews, very importantly, incorporated the inflation recognition. So in summary, we do expect ordinary tariff reviews across businesses in LatAm with demand continued to grow and with the company ramping up and getting ready for the retender of the concession in Rio. And with that, I hand over to our Chairman for the last remarks. Francisco Reynés Massanet: Thank you, Steven. And again, thank you for listening to me. Two important messages for 2026. If you remember, one of the key topics of the strategic plan 2025, '27 was to be a truly listed company again. And that was translated in one word, increasing liquidity. Increasing liquidity has been the aim of what it was behind all our plans during this year, and we have been able to achieve our targets even 2 years earlier than the finish of the strategic plan '27. In terms of liquidity and after the BTO that we launched in June 2025 and after the placement of the shareholder GIP of 7% of its stake by December '25, this is the new configuration of our shareholding base. It's important to remark that now the free float is above 23%. And one demonstration that the company is becoming more liquid is that if you compare the ADTV of shares in January '25 with January '26, the volume of shares traded has been multiplied by 5x. On the governance side, I want to highlight first a very important message. Naturgy's Board is a solid and peaceful room. All the plans that we have submitted to the market for your consideration has been approved by unanimity and all the changes that were going to happen have been also approved by unanimity of its members. Therefore, for many things that has been written, we have the privilege to have a very committed and devoted Board that works for the benefit of all shareholders, large and/or small. What we have done is to adapt the new equilibrium of shareholders to the new circumstances of the bylaws of the company, including a respect of the proportional representation for the stakes of every shareholder. In this regard and after the placement of GIP, the Board unanimously have decided to change one board seat from GIP to IFM. These numbers, which are not only pure mathematics, would also like to reflect the long-term commitment of the shareholders in the company. If we go back -- if we go ahead on 2026 forecast, we want to share with you how we see this year, which has started very bumpy. And as we see a scenario in both energy prices and exchange rates, very challenging. We see a market that is again deteriorating a little versus the last half of 2025. And in particular, in what it reflects to the price of electricity, we are seeing more depressed electricity prices in the first half of '26 compared to last year. When we go to the exchange rates, there are also some visions based on the forwards of last 11th of February that we are seeing a certain stable evolution in Chile, Brazil, probably a little decline in the U.S. dollar and a continuous, now less, decline on the Argentinian peso. With all into account, what we can provide to you today is a vision of our figures in 2026 which, as you will see, may think less affected than this challenging scenario, in particular, because of the proactive hedging policy of our volatile business and our proactive regulatory management of our infra business. We can tell today that we see EBITDA for this year at a level of 2025. Net income slightly below than 2025, but clearly above EUR 1,800 million with an investment around the same level than last year. That will provide us room enough to continue delivering the messages of our commitments and in particular, a dividend that was established as a floor for this year '26 on EUR 1.8 per share. As you know, we regularly pay our dividends in three steps: one after the first half results, the second after the third quarter results and the third at the time of the AGM. If you allow me to close this first introduction after going to your Q&A session, just to remember which are our key fundamental messages for the investment community. One is about 2025 results, strong as committed. Second, about the transformation 2018-'25, a clear transformation from different points of view, operationally, financially and shareholder base. Third, on the guidance 2026, supported by our aim to maintain risk management in our core. Firm commitment to energy transition by investing with financial discipline. A balance sheet that give us this strategic flexibility. Increased free float as part of our key fundamentals. And governance adapted and aligned with long-term objectives and ambitions. Thank you very much for your time. I give the floor to Abel, who will manage the part of the Q&A session. Abel Arbat: Thank you. Thank you, Mr. Chairman, and thank you, everyone, for submitting your questions. In the meantime, we have the pleasure of having some of our business heads joining the discussion and helping us to address the more spicy questions with Pedro Larrea from Networks, Carlos Vecino from the Supply business, Jorge Barredo from Renewables Activity and Jon Ganuza from Energy Management. But before we get into the specific business questions, let's address the more -- the questions more related to the group and business strategy. So starting with guidance 2026. There's a question around underlying assumptions for guidance 2026 and how it compares to the former strategic plan and whether we are comfortable -- still comfortable with the 2027 targets and what offsets the more challenging scenario? Rita de Alda Iparraguirre: Thank you, Abel. So I think we've mentioned during the presentation that we expect increased investment in Networks and also tariff reviews in LatAm, that will bring higher results in the following months. Also, we've mentioned that we have a 1.2 gigawatt under construction of new renewable capacity that will also enter into operation during 2026 and 2027. Third, we still see the thermal generation will remain strong in the following months. And also, I think it is also mentioned during the presentation that there is one positive retroactive impact in electricity distribution in Spain expected in 2026. So I think that all these impacts will compensate for the margin decline expected under energy scenario. Abel Arbat: Thank you, Rita. Now questions on net debt. Some analysts recognize that net debt came better than expected in 2025. And wonder if we can elaborate on the drivers of the increase in net debt to 2026 of EUR 13.5 billion. Rita de Alda Iparraguirre: Okay. So we are expecting to pay some liabilities in 2026 regarding supply contract agreements and also some payments to the CNMC, for example, the one regarding electricity price caps from 2023 that we provisioned, but we have to pay. So therefore, we expect some debt increase in 2026, in line with the guidance. However, operational cash flow will remain solid in 2026. Abel Arbat: Thank you, Rita. In line with the lower-than-expected net debt delivery in 2025, there are some questions around balance sheet capacity. And recognizing that balance sheet capacity, where do we see organic growth opportunities? And also, are we contemplating any inorganic opportunities? And what would be the criteria of these potential inorganic opportunities? Steven Fernández: So thank you, Abel. We recognize that we have balance sheet headroom and flexibility. I think to answer the question, the first thing that we need to remember is that we have a very clear commitment to a BBB rating. So that is fundamental as a starting point of any discussion. To keep that rating right now, we have to meet a number of metrics to focus on one in particular, FFO to net debt has to be above 18%. We're running right now at a level of around 27%. So you can do the math on how much additional leverage capacity the group has. It doesn't mean that we're going to be using it. So we don't want to stress the balance sheet, but it means that we have the ability to deploy or to put our balance sheet to work. When we think about investments, you also have to think about our mantra, which is very clear as well, which is value over size. And we've been following that since 2018. We will continue following that. So by no means are we going to be jumping into the market doing crazy things. We're very rational and very disciplined as a company. So when we divide between inorganic and organic, organic, I think the company has provided you with guidance for year 2026 of around EUR 2.1 billion. In terms of inorganic growth, as you can imagine, we're constantly monitoring the market for attractive opportunities that make sense for the company, that create value for our shareholders, that do not stress us. We're looking for opportunities that are not dilutive, that are accretive from the beginning. We're looking at opportunities where we can actually export our know-how. I think you've seen in the presentation, the track record the company has from '18 to '25. We've been able to develop best-in-class expertise in certain areas. And these are areas that we would look to be able to leverage on when thinking about acquisitions. Do we have anything on the table today? The answer is no. But we do have a very good team that spends a lot of their time looking at opportunities. And when and if one of those fits what we're looking for, then we'll bring it to the Board and decide whether or not we want to go ahead with them. Francisco Reynés Massanet: If you allow me, Steven, just to remark on a very important fact that reinforces Steven's words. Since 2018 until now, that has been more than 7 years, there have been a lot of rumors about different potential projects that the company may get involved. And as you have seen, we haven't lost the financial discipline and our commitment to firmly stay on the words that Steven has said, and I would like to remark, value over size. This is going to continue. And this is the main reason why we are not obsessed about inorganic growth. We are obsessed about value creation. Abel Arbat: Thank you, Steven. And Mr. Chairman. There is a question on the upper end of a net debt-to-EBITDA range, but I think that Steven already answered that by stating our commitment -- our firm commitment to a BBB rating. And as a result, there's not an upper end of net debt to EBITDA, but rather a commitment to a BBB rating. We're more guided around the FFO-to-net debt criteria. There's another question around cash flow and in particular, on working capital. What are the key moving parts of the change in working capital during 2025? Rita de Alda Iparraguirre: Okay. So the evolution of working capital is significantly influenced by seasonal demand patterns, fluctuations in energy prices and also with the negotiation of gas contracts with our suppliers. And this has been the case in 2025. Abel Arbat: Thank you, Rita. There is also a lot of interest around the data center theme. I think that Steven covered very well the topic and our positioning on the matter. But I guess it's worth clarifying a few of the questions. So let's go with them. Are we contemplating any kind of partnerships, and how imminent a deal could be? Also, a deal on power land could be expected already this year. And also, what exactly is the self-consumption capacity for data centers? Steven Fernández: So partnerships, we don't envisage -- our model for development in data centers or to capture the opportunity presented by data centers does not envision any partnership per se. In other words, we're not going to be getting involved in the construction of the data center. We're not going to be getting involved in the running of the data center. We're going to be getting involved in the procurement of energy. We're going to be getting involved in the procurement of permits, and we're going to be getting involved in the selling of electricity and selling of the power land. So that's our business model, right? We do think we have a unique position to capture part of this growth because of the locations where we operate, which are, by the way, generating quite a bit of interest from a number of parties. As to whether or not we should expect any deal this year, all we can say is that the company is working to make this potential a reality. And when we have any news to share, we'll obviously be happy to do so with the market, but we're not going to anticipate things ahead of time. And I think the other question had to do with self-consumption. There's two different alternatives that you can do as a data center, connect directly to the network or do self-consumption, which has its own advantages. The majority of developers are looking for self-consumption. So that's one of the -- that's the area that we're focusing on. Abel Arbat: Thank you, Steven. So we can now move on to the specific questions around the various business units. So let's start with electricity distribution in Spain. And the first question relates to how the new regulatory framework for electricity distribution in Spain affects us in terms of our investment plans or strategic ambition? Rita de Alda Iparraguirre: Okay. Thank you. So as you all know, the CNMC has already published a definitive resolution for the new regulatory framework covering the 2026-2031 period. The published proposal introduces a shift to an OpEx-based remuneration model with an increase in the contribution rate to 6.58%. This new model finally defines investment cap in 0.13% of gross domestic products. The group considers that this new regulatory model creates value and provides the distributor with a solid growth path for the coming years that is consistent with our strategic plan estimates. Abel Arbat: Thank you, Rita. Another question also related to the new framework, and it relates to our views around the new OpEx standard and the new incentive mechanism, if we could share our views on the new regulatory changes. Rita de Alda Iparraguirre: So we think that the new model fails a little bit in order to incentive -- to be more efficient in the future. That's our perspective. Abel Arbat: Okay. Also, during the presentation, we mentioned the retroactive one-off recognition from previous years. Can we clarify the concept behind this recognition, this one-off recognition? Rita de Alda Iparraguirre: So this is mainly contribution related to maintenance activity from previous periods in the past that depends on court rulings that are currently being published. Abel Arbat: Okay. Thank you very much, Rita. Let's now move on to questions around our gas distribution activities in Spain. And there are a number of questions around our expectation for the new regulatory framework in gas distribution for the period 2027 to 2032. Rita de Alda Iparraguirre: Okay. So regarding timing, we are expecting a first draft of the remuneration methodology should be ready probably the next month in 2026 as the final distribution model should be expected by the end of the year. From our point of view, continuing with the parametric model will be a desirable option to provide both stability and predictability to the sector. I want to highlight that the current model has proven to be efficient. It has provided system stability and the remuneration has fallen significantly in the recent years as a result of the drop in demand. However, parameters should be -- should reflect exceptional inflation of the current period. Furthermore, we foresee this new regulation as the opportunity to incentive renewable gases, smart metering and the decarbonization of the gas networks. Pedro Larrea: Maybe just highlight that we have been arguing and I think everybody is now acknowledging that gas networks are a strategic asset for energy in the country. Gas networks actually distribute 1.5x the amount of energy that electricity networks do, and they are around 6x more efficient than electricity networks. So -- and by the way, gas demand has been increasing consistently for the past 20 years. So everybody, I think, today is acknowledging the long-term strategic value of gas networks in Spain. Abel Arbat: Thank you very much, Pedro. So moving now on to networks in Latin America. The first question is around the retender process for the Rio de Janeiro concession, and if we can share any updates or views on the matter. Unknown Executive: Well, a public process for extending concessions is the base case. In this case, there was an opportunity, at least the [ regulator threw it ] like this, that it could have been more efficient to make a renewal with the current concession holder, but just the politics timing in the Rio de Janeiro state haven't made this possible. So we are now back to the base case of renewing within an ordinary process. Pedro Larrea: And maybe two comments on my side. One is we have been in the past 2 years, having a very candid and open relation both with government and regulator, and we have been successful in unlocking a number of discussions we have been having like tariff reviews, asset values, et cetera. And we plan to continue to do so. So we will continue to be openly having open conversations with both regulator and government. Second is that there is no questioning of our management of the concession of our management of the assets. So there's no negative valuation of our performance as a concession holder so far. And we will continue again to have this open relationship with the government and see what comes out of the retendering. And there is a number of regulatory discussions that are open and that we are having just as normal course of business. Abel Arbat: Thank you very much, Pedro. One last question on regulatory networks in LatAm, and it mainly relates to the key drivers coming into 2026 and 2027. Rita de Alda Iparraguirre: Okay. So regulatory management continues to be a key priority in Latin America as we aim to obtain tariff reviews in most of our distributors in LatAm and updates which compensate for ongoing inflation and FX depreciation as well as tariff updates that reflect investment plans in those geographies. I think it's important to highlight that in the case of Argentina gas, the new tariff review published this year includes monthly adjustments for inflation, which is a very important milestone regarding high inflation rates in this country. Abel Arbat: Thank you, Rita. And a final question on not networks, but on Latin America. And it's related to the reclassification of our Chilean renewable assets that are now reclassified as held for sale. So why is that a decision? Is there any read-across for other renewable assets in Latin America? Steven Fernández: So thank you, Abel. No, there is absolutely no read-across for any assets in LatAm or anywhere else. The reason why those assets are held for sale quite simply is because they did not meet or are not meeting our return requirements. Abel Arbat: So let's now move on to the energy management questions. So starting with the more generic questions. So what is the -- our views on the gas outlook and the expected performance of the energy management division in 2026 and 2027 compared to the strategic plan? Rita de Alda Iparraguirre: Okay. So regarding energy scenario forecast for the next months indicate a moderate gas price level environment in Europe, mainly driven by increasing exports from the U.S. However, we are nearly fully hedged this year, and we have margin visibility throughout the next months. Regarding contracted volumes, we anticipated already in the strategic plan that we will have lower contracted volumes in 2026 due to contract expirations. And these effects will be mitigated through our diversified gas portfolio and our ability to access to market volumes. Overall, while we foresee a more challenging environment in the next few years, due to rising global LNG exports that we actually anticipated this in our strategic plan, we rely on LNG as a key enabler of the energy transition in the future. That's why we signed a new contract with U.S. gas suppliers starting in 2030. Abel Arbat: Thank you, Rita. Tons of questions around the levels of hedging and exposure and sensitivity to moves in the TTF, Brent and Henry Hub. I think that throughout the presentation, we clarified and guided towards the very limited sensitivity and the high levels of hedging. But if there are any comments that we can add, please? Jon Ganuza de Arroyabe: No, I mean, basically -- thank you, Abel. If we are hedged for 2026, that means that we are -- we have no impact or negligible impact associated to any variation on the TTF or Henry Hub or even power prices. So I think that for 2026, we are fully hedged. And for 2027, we are mostly hedged and the same could also be said for 2028. Abel Arbat: Thank you very much, Jon. Also, a question on the Sonatrach price review. And if we can comment on the main elements of that review and why it's helpful to the group. Jon Ganuza de Arroyabe: Of course, we cannot disclose any of the commercial details, but I think that the most important thing is that it allows us to have a 3-year outlook of how the prices are going to evolve. That helps on our supply business, it also helps in our overall cash position. But especially, I think that it strengthens the relationship, the long-term relationship partnership that we have with Sonatrach, and it reflects that we can work even in a challenging condition or environment like the one that we've seen in the past few months and the past few years. Abel Arbat: Thank you very much, Jon. A few questions as well on the European ban to importing gas from Russia. What is the current status? And what are the sort of alternatives that we are considering in line of the current situation? Jon Ganuza de Arroyabe: So I think that we always talk about the ban, but actually, there are two overlapping measures that have different scope and different time line. On the one hand, we have a sanction that is a full ban on Russian LNG. So it not only covers that we could not import LNG to Europe, but we could not do anything with the LNG. But the time line of that sanction is until July 31 of this year. And if it doesn't review, it will die off. And then there is the second measure that is the ruling that was approved by the European Parliament in February. And the scope there is more limited. The scope of that ruling, it limits itself to the import of Russian LNG to Europe, but it would allow eventually diversions to other markets or other countries. So I think that the first thing that we have to look out is whether the sanction will be renewed on July 31 or not, and that would mean a different scenario for a company like ours. Abel Arbat: And finally, on this business unit also a few questions related to acknowledging that we signed a new contract with Venture, are we looking for other alternatives to replace or to top up our current gas procurement volumes? Jon Ganuza de Arroyabe: So I think the security of supply in energy is a bit like the saying that you have in English that you fix the roof only when it rains, and we don't like to work that way. We think that we have to work in advance. And that's why we are always looking to different procurement solutions that would increase the security of supply and would increase our diversification. We are having talks with the different parties. And if we find something that makes sense and is sensible for both parties and it strengthens our supply procurement portfolio, of course, we will move ahead with that. Abel Arbat: Thank you, Jon. So now moving on to the thermal generation, particularly a number of questions in Spain. So what's our view on the outlook for 2026 and beyond on the role of CCGTs and its contribution by ancillary services? How sustainable do we think this is? Rita de Alda Iparraguirre: Okay. So as we mentioned during the presentation, we don't expect capacity payments in 2026. We expect them to be published for 2027. And what we see is that CCGTs will continue to play a key role in this -- in the current environment, and we don't expect this to change in the near and the medium term. This translates into higher demand and production in ancillary services market that guarantee the system stability and the security of supply. We are nevertheless taking a more conservative assumption in CCGT's production for 2026. And also, it's important to understand that probably the launch of new voltage control markets, the entry of new batteries or the development of new infrastructure will obviously influence some restriction in the future, but we insist that CCGTs will remain essential as a backup technology. Abel Arbat: Thank you, Rita. Moving on to a few questions on the renewable businesses. And the first one relates to renewables in Spain. We continue to invest in renewables in Spain. There is around EUR 430 million of growth CapEx in 2025. Do we still find returns are reasonable? What kind of -- what's our focus in Spain and our competitive advantage? Rita de Alda Iparraguirre: Okay. So regarding renewables in Spain, we are conscious that they face significant challenge, for example, delays in permitting and also limited profitability due to negative prices. However, for this reason, we are focusing our investment during the next months in repos of existing wind plants and also in batteries and finishing the projects that we have under construction. As we always defend, we seek a multi-technology and balanced position that allows us to meet the demand of our customers. And we are, therefore, committed to renewals, but always under selective growth that guarantees profitability. Abel Arbat: Thank you, Rita. There is also a related question around our views about curtailments and how we see the curtailments evolving this year and in the current dynamics, I guess. Rita de Alda Iparraguirre: Okay. So curtailments of renewable energy have increased significantly in the recent months. We expect them to decrease with the entry of new storage capacity in the next months and years. Abel Arbat: Thank you, Rita. There is a question about the amount of hydro, nuclear and renewable terawatts in Spain that we have hedged already. I think I guess it's worth highlighting our positioning between how we manage our power generation and supply. Rita de Alda Iparraguirre: So I think we have several times mentioned that we have an integrated position. So we sell at a fixed price, the energy that we produce. So in this sense, we have a hedged position between production and sales. Abel Arbat: Thank you, Rita. So we can now move on. There's a question around biomethane. And so what's our latest views on the current state of administrative authorizations and the potential of this activity? Rita de Alda Iparraguirre: Okay. So we are expecting a policy package to be published in 2026 that will accelerate biomethane production and its use for decarbonization. In this sense, the group has, during the last years, made a strong progress in the development of biomethane portfolio with more than 75 projects in pipeline and 40 of these projects are already waiting for permitting. However, our investment plan has been delayed by a slow administrative process. We expect administrations to collaborate in order to achieve these objectives. But however, this means that 2027 investment plan will be partially delayed. Abel Arbat: Thank you, Rita. So moving now to the last part in the Supply business. So our Supply EBITDA performance has dropped versus last year. How could we describe the competitive landscape in Spain between electricity and gas? Rita de Alda Iparraguirre: Okay. So generally, the sector is experiencing high levels of competition and churn ratios, especially in electricity, and we expect them to remain both in retail gas and electricity. Even in this context, the group has expanded its client electricity portfolio. On the other hand, a substantial portion of the customer portfolio for 2026, more or less 70% or 80% of our sales have already been contracted. This provides us a strong visibility into next year margins, which remain solid. Finally, the group is focusing on excellence in client service and efficiency, supported by our new digital platform that we call NewCo. Abel Arbat: Thank you, Rita. Okay. So -- and also a question on Supply around the evolution of our Supply margins and whether or not we are maintaining market shares in both gas and electricity segments. Rita de Alda Iparraguirre: Yes, we expect volumes to remain solid, as I've already mentioned, we've already -- we have most of our customer portfolio already contracted, and we see continuity in this sense. Abel Arbat: All right. Many thanks, Rita, and this finishes the questions that we've received through the webcast. So thank you, everyone, for joining the presentation. The Capital Markets team remains available for any further questions you may have. And the management team is going to be on the road for the coming weeks in London, Continental Europe and the U.S. So we hope to see as many of you as possible. And many thanks again. Thanks, everyone, for joining.
Operator: Good morning, ladies and gentlemen, and welcome to the Element Solutions Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Varun Gokarn, Vice President, Strategy and Interrogation. Please go ahead. Varun Gokarn: Good morning, and thank you for participating in our fourth quarter and full year 2025 earnings conference call. Joining me today are our CEO, Ben Gliklich; and our CFO, Carey Dorman. In accordance with Regulation FD, we are webcasting this conference call. A replay will be made available in the Investors section of the company's website. During today's call, we will make certain forward-looking statements that reflect our current views about the company's future performance and financial results. These statements are based on assumptions and expectations of future events, which are subject to risks and uncertainties. Please refer to the Investors section of our website for a discussion of material risk factors that could cause actual results to differ from our expectations. Today's materials include financial information that has not been prepared in accordance with U.S. GAAP. Please refer to the earnings release and supplemental slides for definitions and reconciliations of these non-GAAP measures to comparable GAAP financial measures. It is now my pleasure to introduce our CEO, Ben Gliklich. Benjamin Gliklich: Thank you, Varun, and good morning, everyone. Thank you for joining. Element Solutions had another record year in 2025. We executed our model, marrying operational excellence and prudent capital allocation to deliver record results while accelerating investment in future growth. The company is benefiting from its position as a solutions partner across the electronics manufacturing supply chain and also strengthening it. Our portfolio breadth, strategic positioning in high-value growth niches and deep technical expertise have accelerated opportunities for our businesses. We see that in the results we are reporting today and the activity levels at our customers as we enter 2026. In the past year, demand from data center and high-performance computing markets drove 10% organic revenue growth in our Electronics business, a trend that accelerated in the fourth quarter. Our Electronic Solutions and our people enable the increasing performance that our markets demand as well as faster product iterations and significant advances in reliability and complexity. Customer engagement is as strong as ever, partially driven by our pipeline of new exciting products. Overall, our company achieved record adjusted EBITDA and record adjusted EPS in 2025 despite continued industrial weakness and the divestiture of the Graphics business in the first quarter. Our focus on operational excellence means we strongly believe that each of our businesses can improve every year regardless of the macro environment. We demonstrated that over the past 12 months in our newly renamed Specialty segment, where margins expanded 250 basis points, driven by higher value selling, supply chain initiatives, cost efficiencies and portfolio optimization. The businesses that comprise the Specialty segment focus on attractive niche markets with demanding customer qualification requirements and an emphasis on value-added technical service. This creates high-margin recurring revenue streams, and we've demonstrated the ability to grow our profits in these businesses even when volumes are soft. We believe we can continue to drive profit growth through share gains and productivity improvements until industrial end markets inevitably recover. We enhanced our portfolio in 2025 through prudent capital allocation. In the first quarter of last year, we divested our slower growth, relatively lower-value flexographic printing business and redeployed that capital into 2 value-enhancing transactions that expand our presence in attractive electronics-focused growth adjacencies. We announced the acquisitions of both Micromax and EFC Gases & Advanced Materials in the fourth quarter and closed them both in early 2026. We believe that within the ESI family, these businesses will have the opportunity to flourish and grow faster and more efficiently. Micromax is a global leader in advanced electronics inks and pastes as well as low-temperature ceramic materials essential for the most demanding electronics applications. The acquisition enhances our leadership position and technical bonafides in the electronic supply chain. Micromax's innovation and go-to-market capabilities align with our customer-centric approach, enabling us to deliver next-generation materials for high-growth applications such as satellites, electric vehicles and data centers. Our initial weeks together have reinforced our excitement for the product portfolio and the untapped commercial opportunities that can be unlocked in the years ahead as part of a larger electronics materials company. EFC provides high-purity specialty gases and advanced materials that are essential for certain high-value, high cost of failure applications requiring stringent purity and performance standards. The business is concentrated in fast-growing markets such as semiconductor fabrication, electrical infrastructure and satellite propulsion. It has grown at a revenue CAGR in excess of 15% since 2009, with growth accelerating recently, primarily in semiconductor applications. EFC's focus on niche, high-value products and people centricity has yielded commercial momentum and a pipeline of customer qualifications that we anticipate will translate into robust earnings growth in the coming years. And their team is a great cultural fit with ours. The business is off to a very strong start in 2026. Taken together, we had an outstanding year with demand improving sequentially throughout. That sets us up well for 2026. Carey will now take you through the fourth quarter and full year financials in more detail. Carey? Carey Dorman: Thanks, Ben, and good morning. On Slide 4, you can see a summary of our fourth quarter results. Net sales increased 10% organically, led by high-end electronics growth, primarily from AI and data center investments. Electronics segment organic growth was 13% with all 3 business verticals growing in the double digits. The Circuitry business has been a large beneficiary of AI-related investment as our market-leading pulse plating chemistry is used to support fabrication of high layer count server boards. Assembly Solutions saw similar benefits from both consumer electronics and high-performance computing applications that drove 12% organic growth in the quarter. Finally, our Semiconductor Solutions business grew 13% organically as advanced packaging applications drove demand for wafer-level plating chemistries and power electronics sales returned to growth on the back of new customer wins. Specialties organic growth was 4% with modest volume improvement in core Industrial and 9% year-over-year growth in Energy Solutions. Adjusted EBITDA for the quarter was $136 million, up 8% year-over-year on a constant currency basis when excluding the impact of divestitures. Higher pass-through metals in our Assembly business created an optical margin headwind of roughly 1% in the fourth quarter. Excluding net sales from these pass-through metals, adjusted EBITDA margin would have been 25.5%, representing a 40 basis point improvement year-on-year. The rapid increase in metal prices in the fourth quarter, particularly silver and tin also had a negative impact on adjusted EBITDA of several million dollars. This is simply a timing impact, and those earnings should be recaptured in 2026 as inventory sells through and metal prices stabilize. We would have seen stronger incremental margins without this impact. On Slide 5, we discuss full year financial results. Net sales for 2025 were $2.6 billion, growing 6% organically. Electronics net sales increased 10% organically, driven by strength in AI and data center markets, demand for advanced packaging metallization solutions and growth with new EV customers. Specialties grew 1% organically as offshore hydraulic production fluid growth remained robust. In Industrial surface treatment, strong automotive growth in Asia and new customer wins later in the year offsets overall sluggish Western industrial markets. Adjusted EBITDA for the year was $548 million, which represents 7% constant currency growth when excluding the impact of the Graphics divestiture. Excluding net sales from assembly pass-through metals, adjusted EBITDA margin would have been 26.5%, a 60 basis point increase year-over-year. Once again, this margin would have been higher if not for the earnings timing impact associated with the steep increase in metal prices during 2025 and particularly in Q4. Finally, we delivered record adjusted EPS for the year of $1.49 despite the Graphics divestiture. Next, on Slide 6, we share additional details on full year organic growth by business. Our Assembly Solutions business has a relatively diversified set of end markets with larger exposure to industrial, consumer electronics and automotive applications than our other electronics verticals. In 2025, this business grew organically at 8%, with the outperformance driven by strong consumer electronics and automotive demand in Asia, particularly in the first half of the year and increased demand for our engineered preform materials used in high-performance computing applications. Circuitry Solutions delivered robust organic growth of 10% for the year, supported by investments in high-performance computing and data center infrastructure. We have industry-leading metallization solutions for the fabrication of dense high aspect ratio circuit boards that are uniquely suited for the extreme requirements of data centers. In addition, our solutions for data storage, EV electronics and low-earth-orbit satellites provided additional growth vectors. This year, we also focused on investments intended to meaningfully strengthen our presence in Southeast Asia, a region that should see continued momentum in the years ahead as the electronics supply chain seeks to diversify its manufacturing footprint. Semiconductor Solutions grew 13% organically year-over-year, reflecting strong demand from advanced packaging metallization solutions and power electronics growth with new EV customers. This is the second consecutive year of mid-teens organic growth for this business. Demand remains robust across all our product lines and the opportunity pipeline continues to expand. Our customers are performing well with our technologies. For example, our top ViaForm copper damascene customers grew 20% on average for the year, and we expect this trend to continue in 2026. We've introduced multiple new product families that are gaining customer traction and see opportunities to grow in areas that intersect with printed circuit board metallization such as IC substrate and large format panels. Turning to the Specialty segment. Organic growth of 1% reflects softness in industrial-oriented end markets. Energy Solutions remained a bright spot, growing 7% organically as we saw continued production fluid revenue growth due to competitive wins and pricing activities. Our core Industrial surface treatment business was flat organically for the year on the top line. Underlying volume growth in Asia, automotive end markets was offset by lower European industrial activity. Net sales growth comparisons were impacted by a large customer equipment deal in the third quarter of last year, which is tied to a high-value multiyear chemistry contract. Moving to cash flow and the balance sheet on Slide 7. We generated $256 million of adjusted free cash flow in the year with $83 million of cash generated in the fourth quarter. Working capital investment in the fourth quarter was higher than we expected due to the rapid increase in tin and precious metal prices and the timing of our hedge settlements. Higher metal prices, even though they are passed through, tie up more capital, all else being equal. However, all else is not equal. Over the past several years, we have worked on optimizing our inventory on a volume basis. Consequently, we have seen solid improvement in both inventory days and overall cash conversion. When the metal prices eventually normalize, we expect to see a benefit to cash flow. We invested $61 million in net CapEx in 2025, advancing key strategic projects such as Kuprion and new advanced packaging product manufacturing, as well as our global R&D and production footprint. These investments support high-value growth opportunities and technology leadership in our Electronics segment. For 2026, we expect capital expenditures of approximately $75 million, reflecting our continued commitment to innovation, capacity expansion where necessary and new product introductions in fast-growing AI and data center markets primarily. This figure includes the expected capital requirements of our newly acquired businesses. We ended 2025 with a strong balance sheet, including $627 million in cash and a net debt to adjusted EBITDA ratio of 1.8x. When we closed our 2 acquisitions earlier in Q1 this year, we paid approximately $870 million, which was funded in part by a new $450 million term loan add-on. Overall, our debt is currently 95% fixed and our cost of debt remains roughly 4%. Today, pro forma leverage is slightly above 3x, which we expect to approach 2.5x by year-end 2026, assuming no further capital allocation. Our liquidity and financial flexibility position us well to fund organic growth, strategic M&A and capital return to shareholders as appropriate. With that, I will turn the call back to Ben to discuss our outlook. Ben? With that, I will turn the call back to Ben to discuss our outlook. Ben? Benjamin Gliklich: Thank you, Carey. Looking ahead to 2026, we expect market conditions to largely resemble late 2025 with continued strength in high-performance computing and leading-edge electronics and slower industrial markets. There will be noise on the top line driven by metals price volatility, which may also have a bearing on our adjusted EBITDA seasonality and short-term cash flow. But in the fullness of time, these are only timing differences with no impact on overall profit dollars. Our 2026 adjusted EBITDA guidance range is $650 million to $670 million, inclusive of the expected contributions from the EFC and Micromax acquisitions and assuming current FX rates and metal prices. This range includes a modest year-over-year FX tailwind and an expected $5 million headwind as we lap the 2025 stub period contribution from our Graphics business, together implying high single-digit organic adjusted EBITDA growth. This also translates to adjusted EPS growth in the mid- to high teens. Our focus in 2026 will be similar to prior years with the only adjustment relating to our recent acquisitions. The emphasis will be on operational excellence, integrating EFC and Micromax and scaling capacity for new products. We made product qualification milestone payments in the first quarter of this year for Kuprion and are in the final innings before ramping capacity at our first site in California. We have other compelling product launches underway in thermal materials, die attach and circuit board fabrication. We also retain and will build capacity for further accretive capital deployment should attractive opportunities become available. We have strong customer partnerships, a clear strategy and a growing high-performing team that is enthusiastic and incentivized to continue to execute on the momentum we have. We're a people-powered company, and I'm grateful for the extraordinary talent that is responsible for a great 2025 and focused on another record year in 2026. Operator, please open the line for questions.Operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Mike Harrison with Seaport Research Partners. Please go ahead. Michael Harrison: Congrats on a nice finish to the year. Benjamin Gliklich: Thanks, Mike. Good morning. Michael Harrison: I wanted to start with the Electronics business and just the margin performance there. If we adjust for that metal price pass-through, it was still relatively weak. It sounds like maybe the metal price spike or kind of the significant rise that you saw in metal prices were also a drag on margins. So I was hoping you could talk about that. But maybe also just if we kind of excluded that metal price impact completely, what were you seeing in terms of underlying margin performance as it related to operational efficiency, mix, your cost structure, any other factors that we would think about kind of the underlying sustainability of margin performance into next year or into '26, I should say? Benjamin Gliklich: Thanks for the question, Mike. There are a few things impacting margin in the quarter and in the year. We talked about a corporate allocation shift as subsequent to the sale of our Graphics business that had a bearing. We talked about ramping up investment primarily in Kuprion, which is just OpEx as we prepare to ramp that. And then the third variable, which was a new variable here in Q4 and really in December was this metal pricing dynamic where the spike in metal prices and the associated hedge losses that occurred in Q4 and were more acutely in December had a several million dollar hit to the P&L. Absent that, we would have been above the high end of our guidance range, and we'll recapture that value sitting here in 2026. So the incrementals would have been better than reported in Q4 and in the full year absent that. And as we roll into 2026, we expect the incremental margins to be more normal in the Electronics business and across all of Element. We've talked about a 30% to 40% incremental in normal times, and there's no reason that, that has changed. Michael Harrison: All right. And then just a second question here. There are some concerns about rising memory prices and potential shortages and the impact that could have on logic demand in areas like consumer electronics or automotive or industrial applications within Semicon. How do you see higher memory prices affecting ESI's Electronics business as we move forward in '26? Benjamin Gliklich: Yes. So we don't want to be dismissive of that risk. That's a real risk that memory prices will rise and correspondingly, consumer electronics prices will rise and that will have an impact on demand. But that's really looking at a single variable. And it's a multivariable equation, which is to say the reason that memory prices are rising is because capacity is constrained by the surge in demand from data center applications. And we're beneficiaries of that surge in demand. You see it in the P&L, and you saw the acceleration in all of our Electronics businesses here in Q4. We have more value on a high-end server board for a data center than in a PC or a smartphone. And so insofar as memory prices are rising and that's having a negative impact on consumer electronics, it should be associated with a correspondingly positive impact in the data center market, which will benefit Element. So I don't want to dismiss that as a risk. It's something we're keeping an eye on. Our underlying forecast for 2026 doesn't have strong growth assumptions for the smartphone market or consumer electronics more broadly, but it does have quite strong growth assumptions associated with the data center market, which we're seeing on the ground here today. Operator: Your next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets. Aleksey Yefremov: Ben, can you just talk about the new product adoption in '26? Do you expect that process to be accelerating in '26 versus '25? And as a result, your outgrowth versus the market, would it increase in '26 versus '25? Benjamin Gliklich: Is that a question about our new products or our supply chain new products, Aleksey? Aleksey Yefremov: Your new products, Ben. Benjamin Gliklich: Yes. So historically, Element hasn't really been a blockbuster product type company, right? We have a lot of product proliferation because our solutions are very much customized to customer-specific requirements. That having been said, over the past several years, we've had real traction in a couple of areas in power electronics. We've talked about Kuprion as a compelling value proposition and a product we're ramping. And then a few other areas around die attach solutions and some new introductions around circuit board fabrication and some thermal materials. Those are responsible for some of our outgrowth relative to the market. The other thing to think about is just that our technology skews towards higher-end applications, and those are outgrowing relative to the market. And both of those things will be true in 2026 as they were in 2025. Our Circuitry business skews towards the highest end, highest value circuit boards, which are growing well in excess of the market. Our power Electronics business is gaining share in excess of the automotive market as an example, and growing much faster than your semi assembly market. We have seen real traction with Argomax in proliferating our customer base, and that's a business where outside of our original core customer, we're seeing 20-plus percent growth in the back half of 2025. We expect that to continue, and on and on. Kuprion also contributes to that where we should see a ramp in sales over the course of 2026, which would be idiosyncratic to the overall market. So I'd say there are multiple factors that support the -- our ability to outgrow end market indicators in the medium and long term. And we've got high confidence, I would say, growing confidence in our ability to continue that coming out of 2025. Aleksey Yefremov: And a bit of a crystal ball question. You grew organically 13% in Electronics in Q4. You're guiding to high single digit in 2026. Is something in the low teens in terms of growth for this segment within reach, within the range of outcomes in your view if we were thinking about bull case scenarios? Benjamin Gliklich: Ultimately, we're in a units-driven business that's short cycle. And so what we target is to outperform our end markets by 2 or 3 points through the cycle. And so the cycle is going to be the driver -- underlying unit demand is going to be the driver. And if we see a continuation of what we're seeing in the data center market, if we see a modestly better smartphone market than expected, yes, you could see a continuation of double-digit organic growth on the top line for our Electronics business. But as you know us, we tend to -- given the visibility in this business, not guide towards the bull case, guide towards sort of shared down the fairway market expectations -- end market expectations. Operator: Your next question comes from the line of Chris Parkinson with Wolfe Research. Christopher Parkinson: Ben, you hit on this as it related to the Circuitry a couple of questions ago. But can you just hit on Assembly and Semi, just given your portfolio has been constantly evolving in many ways away from just baseline consumer electronics as well as handsets. But across the Electronics segment, how should we think about the relative growth rates embedded in your guidance, for instance, like HPC, data center and advanced packaging versus some of the more legacy end markets? And do you feel the buy side fully appreciates that evolution? Benjamin Gliklich: Yes. Thanks for the question, Chris. Historically, the Semi business and the semi market was assumed to grow faster than the printed circuit board market and the Printed Circuit Board business. But for the past 3 years, we've seen PCB square meters exceed -- or growth exceed MSI growth. And so our Printed Circuit Board business has seen a real acceleration. And looking ahead into 2026, the market or industry experts expect the PCB market to outgrow MSI once again, which is a good arbinger for our Circuitry business. And we've been outgrowing MSI by a greater delta than we have PCB square meters, right? So PCB square meters were high single-digit growers, and we were 10% in Circuitry this year and MSI was mid-single digit and our Semi business grew in the low teens. So as we look to 2026, we would expect similar degrees of outperformance relative to underlying growth. The industry is expecting 6-ish percent PCB growth in 2026, which would be a bit of a deceleration. And so we see potential room for upside there, but our guide doesn't contemplate that. The semi market is expecting similar year-on-year growth, and we believe we can outperform by a similar delta in 2026, driven by what we see in power electronics and some of the other new product introductions we have. The more surprising growth vector has been our Assembly business, which we historically would have thought would grow roughly in line with or the market driver would be electronic systems growth, which was a low to mid-single-digit grower and has really accelerated here in 2025. And our business has substantially outperformed that, growing in the high single digits. And that's because we've introduced some new products, higher reliability solders, finer solder pastes, preforms, which are used in high-end server boards to keep the chips flat on -- because the chips have gotten so big. So we've got some really interesting engineered materials that keep chips flat on the highest-end server boards going into data centers. So our overall electronics business is benefiting from advances in technology and accelerating. And so yes, we do believe the portfolio has improved from a quality perspective and will continue to. Christopher Parkinson: Got it. And just shifting back to Kuprion. I understand '26 is still very, very early, and there's still some growth investments. But can you just comment based on what you're hearing from customers and the potential demand pull from both of your facilities, can you just remind us on kind of where you stand in that process as well as what you perceive to be the current customer receptiveness to that product portfolio? Benjamin Gliklich: Yes. Thanks for the question, Chris. So Kuprion is really exciting, and we're in the crucible here as we're beginning to ramp production at our first significant site in California. And at the moment, the pipeline of demand exceeds our production capacity based on this first site. Now we need to ramp that. We need to convert that pipeline into high-volume manufacturing at the customer level. But we're progressing on planning the second site already on the back of the robustness of the demand for this capability. So we are in the crucible customer receptivity, customer pull remains exceptionally strong, and we're still deep in getting the supply chain set up to meet that demand. Operator: Your next question comes from the line of Josh Spector with UBS. Joshua Spector: I wanted to ask just on your 1Q guidance. Your range is wider than what you typically give. Can you talk about why that is and what drives the upper versus lower end? Benjamin Gliklich: Yes. Thanks for the question, Josh. The range is wider than typical because of metal price impacts. So we saw a significant increase in metal prices, tin and silver in January. And so that same impact we talked about in Q4 may recur in Q1, but it may also unwind in Q1 if metal prices stabilize. And so that creates a little bit of variability, as I said in the prepared remarks, around seasonality of the business. That's the biggest needle mover. The second is acquisitions and how they feather in from a seasonal perspective, right? This is our first quarter owning Micromax and EFC. And so we gave ourselves a little bit of a wider birth around the seasonality in those businesses. Operator: Your next question comes from the line of Bhavesh Lodaya with BMO Capital Markets. Bhavesh Lodaya: Could you share some thoughts on why the Specialty segment was the right place for EFC? And then do you expect the overall segment to grow at your mid-single digits guidance for this year? Benjamin Gliklich: Yes. EFC is a great niche business with highly technical, highly qualified products in a wide range of industries. And it could have fit within both segments. The way we're running it as an autonomous unit and the breadth of end markets it's supplying is why it landed in our Specialty segment. It accelerates the growth of the Specialty segment. It also improves the margins of the Specialty segment. So as we look out to 2026, it's value enhancing to the Specialty segment and quality enhancing. So you'll see that feather in as well. When we look into 2026 for that segment, we talked about end market conditions being similar to 2025, which is uninspiring end market growth in the industrial vertical, but an opportunity to make that business better and grow profits. The offshore business continues to be robust and the EFC business is growing very, very nicely. And so from an EBITDA growth perspective, we could repeat the mid-single-digit growth we delivered in 2025. Bhavesh Lodaya: Got it. And then maybe on your acquisitions, Micromax, EFC, how did they perform in '25? Does your guide include them as still at $70 million EBITDA? And maybe also, I think in your prepared remarks, you mentioned some untapped commercial opportunities, is that something we see in '26? Benjamin Gliklich: Yes. So when we announced Micromax, we said it was roughly $40 million of EBITDA in '25 and EFC, we said it was roughly $30 million. We expected roughly $30 million in '26, right? And so that's the roughly $70 million of contribution in '26 is adding those 2 with some modest growth and a little bit of conservatism as we navigate integrations. The Micromax business outgrew our expectations in 2025, organic revenue growth was north of 10% for Micromax. So there were some questions about its ability to grow and I think it just proved them in their early days in 2025, and we're seeing a really robust start to the year for that business here in 2026. Also for EFC, a month doesn't make a trend, but both of them are outperforming our initial expectations. And the integrations are going really well. The folks at Micromax are incredibly excited to be a part of an electronics-oriented company. And we have, just in the first days of integration, identified several areas where collaboration and relationships -- discrete relationships their organization has and our organization has will yield, what we believe, will be better commercial outcomes for both businesses. So that's what we're referring to the untapped commercial opportunities. We see our ability to make these businesses better as part of Element as quite compelling over and above the high-quality businesses they were independently. Operator: Your next question comes from the line of Matthew DeYoe with Bank of America. Matthew DeYoe: Ben, so I think you had shared this with me, right? So the Taiwan Printed Circuit Board Association, right, calling for the PCB market to be up 14% in 2026. I mean, is it reasonable to assume this is like a base case for your associated volumes? Obviously, you can make maybe your own assumptions on the end markets. But like presumably, you would also expect to outgrow this? And how do you factor in an outlook like that into how you perceive your own business performance? Benjamin Gliklich: So we use Prismark data as our baseline, and Prismark is talking about a 6% year in 2026, a 9% CAGR from '24 to '29. And so that's what we benchmark ourselves against. It's important to look at meter squared versus dollar value. So a lot of the PCBs that are being produced today, a lot of where the growth is coming from is really high-value complex boards. Now that's good for us because that's higher-margin sales, but we're not driven by the dollar value of the circuit board. We're driven by the volume of circuit boards being produced. And so that might be the reconciling figure. There's a bull case in the circuit board market right now given the acceleration of investment in data center capacity. And we were in Asia in early January and the level of activity was unbelievable and super exciting. But as we look to 2026, we're looking at that 6% number, that's what we're building off of. Matthew DeYoe: All right. I appreciate that. And I think in the call, I heard 7% organic growth in Energy Solutions. So I made the comment, seemed maybe to be a decent amount price driven. Can you break down price volume in here? And should we kind of assume this price annualizes in '26? Is this -- I know this is a pretty solid business for you. Is this kind of price in excess of raws? Or is there some obscure raw material that I don't know of that's up materially? Just trying to chart the course for next year. Benjamin Gliklich: Yes. The Offshore business is a wonderful business. And I would say of the 7%, it's about half and half price volume growth. And this is one of those businesses where there is a bit more of a pricing lever available to us and it's one where we're building that muscle as appropriate. Entering 2026, we were a little cautious, I would say, about volumes there. Energy price had been a little low. We saw some projects potentially shifting out to the right. But it should be a mid-single-digit grower between price and volume next year again. Operator: Your next question comes from the line of John Roberts with Mizuho. John Ezekiel Roberts: Nice results. Is Kuprion used in copackage optics where they're using glass as a substrate? Benjamin Gliklich: So today, Kuprion isn't used in high-volume manufacturing anywhere. It has applications in Through-Glass Vias which are the core layers for some of the highest-end printed circuit boards, and it solves a major customer pain point there. That's just one of many potential markets for it. Matthew DeYoe: Okay. And how do we think about wafer level packaging, like what are your key products that would be used in that application? Benjamin Gliklich: So we have wafer plating products that are -- that go on to the backside of wafers for packaging applications. We have advanced interconnect products that are used for copper pillars and barrier layers. We have printed circuit board chemistries for the highest-end printed circuit boards that are used in packages. So wafer-level packaging, advanced packaging, that is right at the sort of center of the Venn diagram of our capabilities and our solution sets for foundries and OSATs and the associated... Matthew DeYoe: Is there a way to scope the size of that opportunity? Benjamin Gliklich: So we have a specific business we call wafer-level packaging, which is about $150 million of revenue, actually bumping up against $200 million now that we've seen some precious metal price increases, and there are some precious metals in there that are not reported as pass-through. And then we've got ancillary products that go into advanced packaging applications in the -- which would bring our advanced packaging revenue to the multiple hundreds of millions. But again, these are generic terms. And so it's hard to be too precise. Operator: Your next question comes from the line of Duffy Fischer with Goldman Sachs. Patrick Fischer: Just wanted to follow up. I think Carey in the prepared remarks talked about a large customer contract. And I wasn't clear, it seemed like there was some distortion from that either currently or in the future. But could you just walk through what that is, the size and kind of how that impacts the P&L? Benjamin Gliklich: Yes. So in Q3 of 2024, we sold a large equipment line to a customer that was building manufacturing capacity in the industrial business in Mexico. And so that was large revenue, it was lower margin on the equipment. And we didn't make the equipment, by the way. We purchased it on their behalf in exchange for a multiyear high-margin contract. It's a big market share win for us and a short payback period. So when you look at the year-over-year in Q3 and on a full year basis, there was a revenue contribution at lower margin in '24, which was replaced by higher-margin chemistry sales in '25. Patrick Fischer: Okay. Great. And then can you remind us on Kuprion, if the plant runs as you expect, how long will it take, do you think to sell the first plant out? And then roughly, what's the contribution from the first plant when it's at full operating rates? Benjamin Gliklich: There are a lot of assumptions embedded in that. And so we don't want to be too precise. What I would say is we have a pipeline today for volumes in excess of that plant. The ramp of that plant, we should be ramped to full production in the second half of this year. And it will come at pretty compelling incremental margins. What we've guided to is multiple millions of dollars of revenue in '26 and a material contribution to EBITDA from this in '27. Operator: Your next question comes from the line of Pete Osterland with Truist Securities. Peter Osterland: I just wanted to follow up on some of your comments around Specialties. What are your expectations around segment margins in 2026, excluding the impact of the EFC acquisition? I guess, it's stable to slightly higher a reasonable expectation given what sounds like continued growth in offshore? Are there any other major puts and takes to call out for margin performance in that business this year? Benjamin Gliklich: No, I think that we would expect that business to be expanding margins if we're going to deliver mid-single-digit growth given the end market outlook for the segment overall ex EFC. Peter Osterland: Okay. And then just given some of the dynamics you've called out with working capital and the higher CapEx you're guiding for 2026, what are you targeting for free cash flow generation in 2026? Do you have a target in terms of EBITDA conversion you can share? Carey Dorman: Yes. I think consistent with prior years, we target roughly a 50% conversion of EBITDA to free cash flow. To your point, the dynamics around metal pricing put some seasonality questions in that. But ultimately, on a full year basis, I would expect right around 50%, maybe just a tick lower. Operator: And your final question comes from the line of Frank Mitsch with Fermium Research. Frank Mitsch: Obviously, a very busy start to the year with the acquisitions, and you offered some very constructive comments on how they're trending so far. I was wondering if you could expand upon your thoughts on top line synergies for both as we progress through this year and into next year. How should we think about the longer-term implications for the top line synergies between Micromax, EFC and Element? Benjamin Gliklich: Yes. Thanks for the question, Frank. It's really hard to underwrite to revenue synergies because they're sort of hard to prove out. And we're in businesses that have long sales cycles, especially when you think about EFC and Micromax, it's highly qualified products. And so it's hard to say in 2026, we're going to see material revenue synergies. But what we've said repeatedly is that these businesses are better inside of Element than outside. And so in both cases, there's not a huge amount of cost synergy we're driving from this. It's being a part of a larger electronics organization and the resources and relationships that we can bring to bear to support those businesses. And we're already starting to see that in the collaboration and joint customer visits is just beginning. And so we believe that the Micromax business will grow faster than it would have independently. EFC doesn't need any help growing faster, but we do believe that the relationships we have and frankly, some of the relationships they have will help accelerate growth in both businesses. And so we do expect to see an acceleration overall from what you might call revenue synergies, but it's hard to quantify that and put time bounds on it. Frank Mitsch: Okay. Got you. So at this point, the trend is positive, customer -- joint customer visits, et cetera, but you're too early to try and throw some numbers to it. And then just lastly, I mean, I believe you said before that the capital intensity of Micromax was similar to Element Solutions. I assume that, that's similar for EFC as well? Benjamin Gliklich: I wish. Just going back to that question, I wish I could say that 1 or 2 months into 2026 post closing, we're responsible for the strength in the businesses we're seeing, but that's just the quality of the businesses and the end markets they're participating in. With regard to capital intensity, Micromax is similar to ESI overall. EFC is modestly more capital intensive, but it's a smaller business. And again, we're guiding to $75 million of CapEx this year, which should comfortably cover it. Carey Dorman: Yes. And I would just add that the returns on capital in that business, EFC in particular, are as high, if not higher, just given the profitability. Operator: I will now turn the call back over to Ben Gliklich for closing remarks. Benjamin Gliklich: Well, thank you, Rebecca, and thank you, everybody, for joining. Have a great day. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries. Michael Fries: Hello, everyone, and thanks for joining us today. As you would have seen by now, in addition to our results, we announced 2 significant transactions earlier today, which, of course, we'll address in our prepared remarks. As a result, I think this call may run over 60 minutes. I hope you can stick with us because there's quite a bit to talk about here. We've broken this down into our typical quarterly results presentation, which Charlie and I will breeze through as we usually do, perhaps a little faster than normal, and then we'll move into more of a strategic update like we did 2 years ago at this time. I also think it might be a good call to follow the slides that we're broadcasting, especially in the second half. But let me jump right in on Slide 4. And certainly, by now, you are all familiar with how we organize and manage our business today. As illustrated here, everything falls into 1 of 3 operating verticals. Liberty Telecom comprises our 4 national FMC champions that generate $22 billion of revenue and $8 billion of EBITDA on an aggregate basis and where our primary goals are to drive commercial momentum and importantly, unlock equity value for shareholders. Much more on that in a moment. Liberty Growth on the far right houses our portfolio of media, infra and tech investments totaling $3.4 billion today. And here, we're focused on rotating capital, right, and investing in high-growth sectors with scale and tailwinds. And of course, in the center sits Liberty Global itself with $2.2 billion of cash and a team with decades of experience operating and investing in these businesses. Now I'll come back to this slide and the strategic update. But first, let me provide some highlights on each of these for 2025. So it has clearly been a busy year for us on all 3 fronts. And as Slide 5 points out, we feel like we've delivered on our core strategic priorities. There's a lot of detail here, so I'm just going to hit a few of the high points. We'll talk about our telecom operating results in the next couple of slides, but we're pleased with the momentum that our commercial and network strategies are delivering, especially in the second half of the year, supported in parts by the benefits we realized from AI, all of our 3 large OpCos hit their guidance targets last year. When it comes to unlocking value in telecom, a key goal for us, as you know, you've no doubt seen our announcements on the U.K. fiber transaction and our acquisition of Vodafone's interest in the Netherlands. We'll dig into both those deals shortly, but this is exactly what we said we would do on our call last year and the year before. At Liberty Global, we've totally reshaped our operating model, having reduced our net corporate spend by 75% in the last 12 months. Needless to say excited to see how this new guidance leads its way into analysts some of the parts calculations. And we continue to allocate capital to the highest return. As you know, we did reduce the buyback last year from 10% to 5% of shares partially, to be honest, in anticipation of some of these varied transactions. And so far this year, we're not actively in the market, but we always remain opportunistic on our stock and we'll keep you abreast of our plans throughout the course of the year versus guiding to them. And with respect to our cash balance, pro forma for the transactions announced today and for what we expect to realize in further asset sales, we should end the year with $1.5 billion of cash, and Charlie will get into that in a bit more detail in a moment. And then finally, our growth portfolio remains highly concentrated with 5 assets comprising 70% of the $3.4 billion in value. We couldn't be more excited about Formula E and the progress we're making on the Gen4 car, our racing calendar and of course, our sponsors. And we have renewed focus on the experience economy. I'm not going to get into much detail here. But by this, we mean live events, sports, et cetera. We probably looked at 100 deals in this space. We've done real work on about 40, and we've only closed a handful of very small transactions. So that should give you some comfort that while we're excited about this sector, we're staying very disciplined as we look to rotate capital. Now the next 2 slides summarize Q4 operating performance for our telecom businesses. In the U.K., Lutz and the team have implemented a number of things that helped improve broadband performance throughout the year, initiatives like bundling Netflix and being recognized as a top U.K. broadband provider. Those things drove a strong Q4 as well as stable ARPUs. Postpaid mobile results were impacted, however, by the increases that they took in October. Hopefully, we'll see improved performance in '26, especially as 5G coverage continues to grow and pricing pressure settles. In Ireland, a combination of fiber wholesale activations, improved network performance. Actually, they are also ranked the best provider in the market and off-net expansion, supported net growth in the fixed base with stable ARPUs. Mobile in Ireland continues to grow steadily. Remember, we're an MVNO there, helped in part by a EUR 15 offer launched in June. In the Netherlands, Vodafone Ziggo's How We Win plan is driving substantial improvements in the broadband base. Becoming the largest provider of 2 gigabit broadband speeds in the market and recent recognition as the best TV provider helped make Q4 the single best result in fixed services in nearly 3 years with steady improvement over the last 6 months carrying into 2026. Postpaid mobile growth in Holland continues to be supported by nearly universal 5G coverage and a strong flanker brand. And then finally, Telenet had its highest quarterly broadband results in 3 years, helped by fixed mobile convergence in the South and a strong Black Friday period. And similar to other markets we operate in, ARPUs were fixed and mobile are very stable. Now if it wasn't enough information for you, we will be discussing 3 out of these 4 markets in our strategic update later in the call, including a lot more commentary on their performance and outlook. So in the meantime, Charlie, over to you. Charles Bracken: Thanks, Mike. Now turning to our Q4 financial highlights. Our operating companies in the U.K., the Netherlands and Belgium delivered on their full year guidance metrics despite challenging market conditions. VMO2 delivered a revenue decline of 5.9% on a reported basis, which was impacted by lower Nexfibre construction revenues due to a slowdown in the fiber build and also sustained competitive pressure in both the fixed and mobile market in the U.K. On a guidance basis, excluding Nexfibre construction and O2 Daisy, we delivered modest growth for the full year. Adjusted EBITDA declined by 2.4% on a reported basis, primarily driven by lower Nexfibre construction profitability. Excluding this, adjusted EBITDA fell by 1% in Q4, but we still achieved growth overall for the full year of positive 1%. Moving to VodafoneZiggo, we saw a revenue decline of 2.3% in Q4, driven by fixed churn and reduced low-margin IoT revenues. This was partially offset by the annual price adjustment and higher Ziggo Sport revenues. Adjusted EBITDA declined 3.4% in Q4, driven by this lower revenue and higher costs related to commercial initiatives. The full year figures were in line with the guidance in Q1 for the new How We Win strategy. At Telenet, we saw a revenue decline of 1.3%, driven by our strategic decision to not renew the Belgium football broadcasting rights and lower programming revenues. Adjusted EBITDA declined by 9.9%, driven by elevated labor and marketing costs as well as higher professional services and outsourced labor spend. Turning to our treasury update. We've been extremely proactive through 2025 and the early part of 2026 and extending our 2028 and 2029 maturities. And we successfully refinanced close to $15 billion across our credit silos. At both VMO2 and VodafoneZiggo, we have fully refinanced all 2028 maturities following successful term loan refinancings, senior secured note issuances and private taps within these credit silos. In Belgium, as we announced in Q3, we have EUR 4.35 billion of committed financing at Wyre, which is contingent on BCA regulatory approval of our fiber sharing agreement. A portion of the proceeds of around EUR 2.34 billion are allocated to repay the intercompany loan with Telenet and will be used to rebalance leverage at Telenet. We intend to further repay some of the 2028 debt at Telenet with the proceeds from our partial Wyre stake sale, which is expected to complete this year. All of this proactive refinancing activity has significantly reduced our 2028 maturities and maintained our average tenor of around 5 years at broadly comparable credit spreads to our historic levels. Turning to the next slide. We remain committed to our disciplined capital allocation model as we rotate capital into high-growth investments and strategic transactions. Starting on the top left, we successfully delivered against all free cash flow guidance metrics for the year across our OpCos and JVs. Additionally, following our corporate reshaping program, Liberty Services and Corporate closed 2025 ahead of guidance at negative $130 million of adjusted EBITDA, which is around $20 million better than our $150 million target. Moving to the Liberty Growth walk in the bottom left. The fair market value of our growth portfolio remained broadly stable versus Q3 at $3.4 billion. This was driven by modest investments in Nexfibre, AtlasEdge and EdgeConneX, offset by the partial disposal of our ITV stake and the full exit of our Enfabrica stake as well as positive fair market value adjustments at Formula E and UPC Slovakia, which has been held in the growth portfolio until the sale process completes later this year. Turning to our cash walk on the top right. We ended the year with a consolidated cash balance of $2.2 billion. During the quarter, we received $162 million of upstream cash and JV dividends and $140 million of net cash proceeds from disposals in our growth portfolio, including $180 million from the partial ITV stake sale. We spent $34 million on our buyback program during the quarter, repurchasing a total of 5% of our outstanding shares during the year. Moving to the bottom right, we are aiming to end 2026 with around $1.5 billion of corporate cash. After deducting for the cash outflows related to the M&A transactions Mike will touch on in a minute, we intend to replenish our corporate cash with a combination of dividends and cash upstream from our operating businesses as well as noncore asset disposals from our growth portfolio. Turning to Liberty Growth in Media and Sports. Our strategy remains to invest in live sports and entertainment platforms with growing global fan bases. Formula E is our lead example of this, and Season 12 has started strongly ahead of the launch of the Gen4 car. Our data center assets, EdgeConneX and AtlasEdge, continue to show strong top line revenue growth, supporting a $1 billion-plus year-end valuation. And our energy transition assets also made big steps forward in 2025. Egg Power secured GBP 400 million of senior debt to help fund over 400 megawatts equivalent of wind and solar power projects, and Believ, our destination charging business has now built 2,500 public charging sockets, which are averaging around GBP 1,500 of EBITDA per socket with a further 23,000 awarded to them by U.K. local authorities. And they're currently bidding on a large number of additional sockets, which are being awarded. In tech, the focus is on AI. We made a strategic investment in 11 labs, and we're also moving our in-house AI investments into the growth pillar, given their potential to sell services to third-party customers outside the Liberty family. We've also established a new services pillar and have transferred Liberty Blume into it from Jan 2026. Now Liberty Blume develops tech-enabled back-office solutions for Liberty Global companies as well as third parties. It delivered over 20% revenue growth in 2025, achieving over GBP 100 million of revenue with an order book of nearly GBP 400 million. The initial value has been set at GBP 100 million, and we've hired a new CEO to accelerate growth. Starting January 2026, we're also introducing an annual management fee of 1.5% of assets under management paid by Liberty Growth to Liberty Services. This fee will be funded by distributions from the growth portfolio, including disposals and will be used to fund direct and allocated operating costs such as treasury and related legal services, and these are all directly attributable to the growth portfolio. Turning to our guidance for 2026. We're providing guidance by operating company. For Virgin Media, O2 from Q1 2026, we will move to new disclosure, which better reflects the 3 key operating verticals following the creation of O2 Daisy. Now these are consumer, business and wholesale. There's a pro forma information in the stand-alone VMO2 release, which explains this further alongside updated KPI disclosures. On this basis, the VMO2 revenue guidance is now set on total service revenues, which we expect to decline by 3% to 5%. Now this is adjusted for the impact of the Daisy transaction, which is driven by continued promotional intensity as well as planned streamlining of the B2B product portfolio following the creation of O2 Daisy. Adjusted EBITDA is also expected to decline by 3% to 5%, also against the comparable period adjusted for the Daisy impact, driven by lower revenue and lower gross margin due to the changing customer mix. Stable property and equipment additions of GBP 2 billion to GBP 2.2 billion, excluding right-of-use additions due to continued investment in 5G and fiber-to-the-home and adjusted free cash flow of around GBP 200 million for the year, supporting cash distributions to shareholders of the same amount. For VodafoneZiggo, we expect stable to low single-digit decline in revenue, driven by a lower fixed base and the flow-through of the front book pricing impact, albeit with support from continued price indexation and fixed and mobile. Mid- to high single-digit decline in adjusted EBITDA, driven by OpEx investments into network resilience and service reliability. Property and equipment additions to revenue is expected to be around 23% to 25%, driven by continued 5G and DOCSIS 4.0 investments as well as the CapEx component of investments into network resilience and service reliability. Now to give more detail on this additional investment, we expect EUR 100 million of incremental investment of OpEx and CapEx into network resilience and service reliability during 2026. Now this will reduce to EUR 50 million OpEx impact in 2027, 2028. And we're expecting adjusted free cash flow to be around EUR 100 million with no shareholder distributions planned for the year. For Telenet, we're introducing new full year 2026 guidance based on IFRS financials, excluding Wyre. We expect stable revenue growth, reflecting a stable operating environment and the annual price indexation under Belgium regulations, low single-digit growth in adjusted EBITDAaL, supported by OpEx savings from significant digital and IT investments and continued lower programming costs. Property and equipment additions to revenue of around 20% as investments in 5G and digital upgrades step down and positive adjusted free cash flow of around EUR 20 million. And finally, for Liberty Corporate, we expect around $50 million negative adjusted EBITDA, driven by the annualization of the cost savings from the corporate reshaping that took place in 2025 and the implementation of the new 1.5% management fee from the growth portfolio. Michael Fries: Thanks, Charlie. Great job. And now we're going to switch gears to what I think I hope is the most important part of today's call. And that, of course, is an update on the key transactions we've just announced and how they significantly advance our plans to deliver value to shareholders. I'll start by revisiting the first slide that I showed you today, and that's the 3 core pillars of our operating structure, Liberty Telecom, Liberty Growth and Liberty Global. I won't go back through the strategies for each of these. I think you've got them by now. But what I have done on this slide is present a very rudimentary sum of the parts valuation exercise for these 3 pillars at the bottom of the slide. It shows that the Liberty Growth portfolio today, accepting the fair market value that Deloitte has prepared is worth roughly $10 per Liberty Global share. Our corporate cash of $2.2 billion, even after a reasonable reduction of the value for the $50 million of corporate spend this year is roughly $6 per Liberty share, which means that with an $11 stock price today, there's at least $5 per share of negative value being ascribed to our Liberty Telecom businesses. And of course, there are multiple ways of arriving at these figures. Some people start by valuing Liberty Telecom and then applying discounts to cash and Liberty Growth and Corporate. But I like this approach. Cash is cash, and we believe the growth assets are valued fairly and appropriately. More importantly, we're rapidly turning those growth assets into cash. We've already exited something like $1.6 billion in the last 6 years. So whether it's negative 5 or 0, you can see why we have focused a lot of time and attention on creating and delivering value in our telecom portfolio. Of course, the Sunrise spin-off just 14 months ago was step 1. That transaction delivered what is today roughly $13 per share of value to Liberty Global Investors, far more than anyone expected at the time or what the implied value was for that business at the time. And that's why we can say our stock really on a combined basis is up meaningfully over the last 2 years. Now moving to the next slide, here's another thing that gives us some confidence in the value of our telecom business. The European telecom sector has been experiencing a broad-based rally this year with the Euro Telco Index up 16% year-to-date and just about every major incumbent telco, and you know all the names, up even more than that, 20%, 25%. So what's happening here? We see 3 key tailwinds impacting the sector. First, of course, is an improving regulatory environment. This is not to say that we're totally satisfied with where things stand. You know us better than that. But if you look at the U.K. and the changes they've made to the CMA or if you look at the recently published draft of the EU's Digital Networks Act, we believe there's a good chance regulators continue to loosen rules around consolidation and spectrum policies, especially in the age of AI, where telecom continues to be perceived rightly as critical infrastructure for consumers, for businesses and for governments. Secondly, just as we are seeing in our own operations like Telenet, where 5G CapEx is largely behind us now or Ireland, where our fiber build is coming to an end, there is light at the end of the CapEx tunnel. And when you combine declining CapEx intensity with Telecom's high margins and stable revenues, you've got a strong recipe for improving free cash flow. And then finally, there is the AI thesis. It's hard to find an industry more ready to benefit from AI-driven efficiencies, customer improvements, network automation than the telecom sector. In addition, as AI permeates every aspect of our lives, our role, telco's role as foundational connectivity and data transport providers, I think, continues to increase. And then lastly, there appears to be -- and this is an area you're experts in more than me, but there appears to be a rotation going on here. Investors growing a bit sour on how capital-light software-driven industries and rotating capital into more infrastructure-based or defensive sectors where AI is a net-net positive and quite frankly, unlikely to be as disruptive over time. I think the impact of AI, if you ask me on our industry, will be positively transformational. I recently asked the CEO of one of the big tech companies, look, how do I go from spending $14 billion a year on OpEx to $7 billion? That's what I want to do. He said, bring me your P&L, and we'll go through it. The point is we're just scratching the surface today. I think the upside for us from AI is massive, and it's massive for our entire industry. Now so with that as background, on this call, last year and the year before, we laid out 2 very specific goals related to our telecom businesses, and they're summarized here on Slide 16. The first was to prepare each of our Benelux operating companies, this was last year, for the next phase of value creation. And I'd say we achieved that goal. Bringing in Stephen van Rooyen as CEO, has been a game changer for VodafoneZiggo. And of course, today, we're announcing the acquisition of Vodafone's 50% stake in VodafoneZiggo in order to advance our plans to spin off a new company that combines our Dutch and Belgian operations. More on that, of course, in a second. And in the U.K., we committed last year to advance our plans to monetize our fixed network infrastructure for both financial and strategic reasons. And early last year, we pivoted away from a pure NetCo, as you know. But together with Telefonica, we continue to evaluate accretive ways to grow and finance fiber infrastructure in the U.K. Today, of course, we announced the acquisition of U.K.'s second largest AltNet, creating what will ultimately be an 8 million home fiber platform with the opportunity to further consolidate a fragmented market. So let's get into these deals, beginning with the Vodafone acquisition on Slide 17, after what can only be described as a very successful, and I mean -- seriously mean rewarding partnership with Vodafone in the Netherlands, we're pleased to announce an agreement to acquire their 50% stake in exchange for EUR 1 billion of cash plus a 10% equity interest in a new company called Ziggo Group, which will own 100% of VodafoneZiggo and 100% of Telenet in Belgium. Now there's 3 primary reasons we're doing this, 3 primary benefits from this deal. To begin with, we believe the net present value of both operational synergies and incremental service revenues from this transaction and combination total about EUR 1 billion alone. And of course, pretty much all that accrues to us. Second, we think the combination of Holland and Belgium is a financial winner. As the chart on the right shows together, the 2 operations serve 7 million mobile subs and over 5 million broadband subs with total revenue of EUR 6.6 billion and over EUR 2.5 billion of EBITDA. The combination also creates a clear road map to reduce leverage to what we're estimating will be about 4.5x through a combination of synergies and improving operational performance. In fact, we think we'll generate $500 million of free cash flow by 2028. And then third and perhaps most importantly, we are announcing today our intention to list Ziggo on the Euronext exchange in 2027 and to simultaneously spin off our 90% interest to Liberty Global shareholders as we did in Switzerland. Interestingly, similar to Sunrise, there is a strong equity story here. Belgium and Holland are rational markets just like Switzerland. We have a clear network strategy in each country like we have in Switzerland. Our plans to reduce leverage are front and center and actionable like they were and are in Switzerland. And the financial profile should support both free cash flow and dividends in the future. Interestingly, this is more anecdotal, just as Sunrise was once a very successful public company that we took private and then relisted. Ziggo was also a very successful public company that we took private. So we will be reintroducing Ziggo to the public markets as we did with Sunrise. Now just a quick update on Slide 18 of VodafoneZiggo's recent performance. There's no question that Stephen's How We Win plan is driving clear operational turnaround. The combination of OpEx savings, repositioned broadband pricing, speed upgrades and a multi-brand strategy are delivering materially lower churn. And you can see that on the bottom right of this slide, where Q4 '25 was the best broadband performance, I think, in 10 quarters, and things continue to look good into 2026. We've also provided a medium-term outlook for VodafoneZiggo on Slide 19. And while 2025 EBITDA was in line with our plan, 2026 guidance, as Charlie indicated, shows a decline impacted in part by our largely one-off investment we're making in network resilience and service reliability. In 2028, however, we expect EBITDA growth to rebound. We're not giving you actual numbers here, but we are confident in that trajectory. That EBITDA growth, combined with a very stable CapEx envelope should generate the meaningful free cash flow I just referenced. And as Charlie indicated, leverage will peak in 2026, but should decline thereafter, both organically, that's, of course, from EBITDA growth and through asset sales like our tower portfolio, the proceeds of which we intend to use to reduce debt. And then a quick strategic update on Telenet on Slide 20. We can't underestimate the importance of the steps we've taken over the last 24 months in Belgium to both rationalize the market structure and create a clear operating road map for both of our businesses there. As you know, this is the first time we've completely carved out a fixed NetCo, which we call Wyre, and have even gone one step further by entering into a network sharing arrangement with the incumbent telco Proximus that will create arguably the most attractive fiber wholesale market in Europe. And to facilitate the carve-out, we secured EUR 4.35 billion of new capital to both fund the Wyre build and reduce leverage at Telenet. And as we've discussed, we're in the process of selling a stake in Wyre with the proceeds earmarked for further deleveraging in Telenet. The goal here is to bring Telenet's midterm leverage down to the 4.5x level. And Telenet, as part of the new Ziggo Group, I think, represents a very strong equity story itself with outstanding retail brands, significant B2B growth, an upgraded 5G network and long-term access to fiber. Perhaps even more importantly, though, with CapEx declining significantly this year, Telenet's free cash flow is at that inflection point and poised for continued growth. Now let's switch gears to the U.K. and our announcement today to use our fiber JV, Nexfibre to acquire Substantial Group, which consists of the Netomnia fiber network and a 500,000 subscriber broadband customer base for a total enterprise value of GBP 2 billion and a net payment of GBP 1.1 billion at closing. Now I'll walk through the various transaction steps on the next slide, but the goal here is simple. The first goal is to create the second largest fiber network after BT Openreach. When you combine Netomnia's 3.4 million fiber homes with Nextfibre's existing 2.6 million fiber homes and then you add 2.1 million VMO2 homes that will be made available to Nextfibre for upgrade, the platform will ultimately reach 8 million fiber homes by 2027. As I'll outline in a moment, there are significant benefits to VMO2 stakeholders here. This is a fantastic outcome for VMO2. It's also a strong vote of confidence in the U.K. generally. We want the U.K. government to know that we, together with our partners, are willing to commit significant capital to the U.K. based upon their pro-growth policies. And this next slide is one that you'll probably want to print out and tuck away somewhere. As I said, this is a complicated transaction, they often are, and this is an attempt to simplify it as best we can. On the left-hand side, you'll see the money and asset flows. The green numbers, when you take a look at the slide, if you're aren't looking at it now, the green numbers simply show the cash and how it moves from and to the various parties here. Approximately GBP 1 billion of equity will be injected into Nexfibre, the acquisition vehicle, and that's our 50-50 JV with InfraVia, of course. And this will consist of GBP 850 million of cash from InfraVia and GBP 150 million from Liberty and Telefonica. So the first point to make is that Liberty Global directly will be responsible for GBP 75 million of cash in order to complete this transaction. The GBP 1 billion together with a new debt facility, I think it's about GBP 2.7 billion will fully fund both this transaction and the longer-term strategic plans for Nexfibre 2.0. Now once capitalized, Nexfibre distributes a little over GBP 2 billion of cash, GBP 950 million to Substantial Group for the Netomnia fiber assets, and GBP 1.1 billion to VMO2. Of course, VMO2 will use that capital to both acquire the broadband subscribers for GBP 150 million and reduce leverage. The vast majority of the GBP 1.1 billion going to VMO2 is in exchange for a significant commitment to utilize the Nexfibre network on a wholesale basis. That's how these deals work. Specifically, VMO2 will provide access to 2.1 million of its own homes and we will agree to pay Nextfibre wholesale access fee on those homes once they're upgraded to fiber. And additionally, VMO2 will pay wholesale access fees day 1 on another 2.5 million homes that overlap Nextfibre's footprint. So there's substantial value being contributed to the Nexfibre 2.0 plan by VMO2, and that's why it's being paid. Now as I mentioned, the benefits to VMO2 are substantial. To begin with VMO2 gets cash to reduce leverage. This is necessary, of course, given the increased wholesale fees paid out to Nexfibre. Second, it will end up with 500,000 additional broadband customers. Third, there will be substantial CapEx avoidance here, both in terms of the cost to build and the cost to connect millions of premises that will no longer be the responsibility of VMO2. We think the NPV of that is around GBP 800 million. Fourth, VMO2 will be able to continue providing construction and managed services to Nexfibre in exchange for revenue and positive EBITDA margin. The NPV of that contract, we think, is around GBP 400 million. And then finally, in addition to having access to the second largest fiber footprint in the U.K., VMO2 will also receive a direct stake in Nexfibre 2.0. Now looking ahead, I think this transaction also opens up the market for further consolidation, something that we have talked about for a long time and may just be on the horizon. One quick slide here providing additional context on VMO2's operational outlook, as I promised. On the left-hand side of Slide 23, we make the point that despite a highly competitive market, VMO2 has delivered pretty good financial results, especially in comparison to its peers. While revenue has been largely flat over the last 4 fiscal years, and you know that, EBITDA has grown annually at around 1.5%. During the same time frame, VMO2 has generated GBP 2.6 billion of cumulative free cash flow and distributed GBP 5.2 billion to Liberty and Telefonica in the form of dividends. We are happy shareholders here. That's clear. Now the rest of the slide identifies the main drivers of growth moving forward and why we're confident in the VMO2 story, including 3 powerful brands, Virgin Media, O2 and Giffgaff, that reach every segment and help drive fixed mobile convergence. There's also synergies and B2B growth from the recently completed O2 Daisy merger, strong wholesale position as the #1 MVNO provider and now a key partner in the second largest fiber footprint. I mean, Lutz and the team, we believe we have a pretty good head start in AI-driven innovation and efficiency as well. And on top of that, there's the opportunity to drive growth off-net to the 10 million homes we don't reach today. So a lot of really good things happening in the U.K. market for us. Finally, this is the key takeaways here on the final slide, what we'd like you to bring home, if you will, from the second half of this call, right? Number one, we think the telecom sector broadly and equity values in Europe more specifically are poised for continued appreciation in the eyes of investors. Tailwinds from consolidation, stable cash flows and what appears to be a rotation into stocks that will be net beneficiaries of AI as opposed to roadkill are drivers here. Hopefully, by now, you're convinced that we are serious about delivering value to shareholders. The Sunrise spin-off was always step 1. We told you that. And the transactions we announced today, in particular, the Vodafone stake acquisition and our intention to list and spin off the new Ziggo Group will be step 2. In the meantime, we worked extremely hard to reshape our corporate operating model. This is not just a cost-saving exercise, even though it did save considerable costs. We believe that our structure today is fit for purpose, both to continue operating and investing in the TMT sector as we've done for the last 20-plus years, but also to provide our unique form of expertise to existing and future affiliates. Now while we were only marginally successful in convincing analysts to look at our corporate costs differently, we have been spectacularly successful at reducing those net corporate costs, as I said, by 75%. That is going to accrue to the benefit of our stock price. And we're excited about our growth platform. We have a great track record here, and we're focused on the right sectors where we have a clear right to play as they say, and where there are tailwinds and scale-based opportunities that I think we're uniquely qualified to pursue. So stay tuned to see what we do there. And then finally, in our world, capital allocation is everything. Now where you choose to invest your capital, especially in a capital-intensive business, has never mattered more. We've always run our telecom businesses as if we're going to own them forever. And even in that context, they generally have not required any cash from us to achieve their strategic and operating objectives. We will invest in a telecom business when it unlocks value for shareholders. We've said that many times, like we did with Sunrise, delevering the company pre-spin and like we're doing with the acquisition of Vodafone stake in Holland. We have been significant buyers of our own stock. $15 billion over the last 9 years to be exact, reducing the number of shares outstanding by 63% and ensuring that those who stuck around with us end up with a bigger piece of the pie. If you owned 1% of our company in 2017, you ended up with over 2.5% of Sunrise, for example. And finally, we do believe there will be opportunities in tech, infrastructure, energy, media, sports and live entertainment. These are areas where we have significant deal flow, great partnerships lined up, $10 per share of value and importantly, strategic flexibility to deliver that value to shareholders. So hopefully, that update was helpful for you, especially on the recent announcements of the 2 deals this morning. So with that, operator, we'll get to questions. Operator: [Operator Instructions] The first question will go to the line of Robert Grindle with Deutsche Bank. Robert Grindle: My head is spinning with all the news you guys have provided. So I'll ask one question about the U.K. deal. 8 million Nexfibre homes post deal completion and the 2.1 million HFC home upgrade. Do you think that definitively unlocks the U.K. wholesale opportunity in a major way. Do you think you have to wait to get to the full 8 million? Or are you on a course before you get to that point to get more wholesale business in. Michael Fries: I'll take a crack at it, Robert. Thanks for the question. And Lutz or others -- Andrea can chime in here. But the 8 million will be achieved relatively quickly end of '27 probably. So that's a good fiber number for Nexfibre 2.0 both, as you say, from the 3 -- the contribution of the 3 entities. And VMO2 will be a significant wholebuy partner for that 8 million home footprint. And remember that Lutz and VMO2 continue to upgrade their network. So there'll be another 12 million homes on the VMO2 network that continue to be upgraded. So we believe you're looking at what is effectively a 20 million home footprint in the end, the vast majority of which will be fiber. So obviously, first order of business is to grow and manage our own customer base on that 20 million home network, but also very much so to provide a wholesale opportunity for the market, which is much needed for reasons that you understand very well. Does that answer your question? Robert Grindle: It does, Mike. Is there a time line on getting the rest of the VMO2 network upgraded? Michael Fries: Well, I don't know if we've disclosed that time line. Lutz, if you want to reference that, let me know if we disclose that or not. Lutz Schüler: I would add only that we have already upgraded 5 million homes to fiber out of the 13 million we are having. So you -- Robert, you can add these 5 million to the 8 million. So you have very quickly an access to 13 million fiber homes. And the second part, right, I think we always said that we will enter the consumer wholesale market. And obviously, the more homes and fiber we are able to offer, the more interested it is. Further guidance on how quickly we will upgrade the remaining homes, we haven't given, and we don't want to. Operator: Our next question will go to the line of Josh Mills with BNP Paribas. Joshua Mills: Maybe I'll take my questions on the VodafoneZiggo transaction. I think you're still talking about a stable CapEx envelope over the guidance period. But now that you're creating this new Ziggo group with more scale, does it change your appetite or opportunity to invest more on the cable to the fiber upgrade strategy? Is there any synergies there you can take from your learnings in the Telenet business and bring them over to the Netherlands, it would be very helpful. And then secondly, I think on Slide 17, where you talk about the clear road map of bringing Ziggo Group leverage to 4.5x. Is that all organic deleveraging? Or would you be willing to inject cash into this business prior to the spin-off as you did with Sunrise. Michael Fries: Great questions. Listen, I think on the network strategy for Holland and Belgium, those plans are set. So we have made a definitive assessment of the CapEx strategy and network strategy for a fixed business in VodafoneZiggo's market, and we are going with DOCSIS 4. The team has already done a great job of getting 2 gig rolled out nationwide with the largest 2 gig provider, and they'll be at 4-gig and 8-gig right around the corner. So there is no strategy or plan to build fiber in the Netherlands, and we don't believe it's necessary either from a commercial and certainly not attractive from a capital point of view. So the CapEx profile does not change as a result of this or any announcements that we're making today. On the leverage, I think that as we mentioned, there's 2 very clear sources of deleveraging. One is organic growth. the second -- or 3, I guess, the second is free cash flow and paying down debt as we're doing in Sunrise. And then three is asset sales. So in the case of Holland, we have PropCo and TowerCo. In the case of Belgium, we have the Wyre stake. So there will be asset sales. With those proceeds used to delever, there will be growth in EBITDA organic, and there will be free cash to organically delever. And that is the plan. At this stage, we don't anticipate putting any capital or cash into the Ziggo Group to get the plans launched in 2027. And Charlie, do you want to add anything to that? Charles Bracken: No, I absolutely endorse what it is. I mean remember, there are some pretty material financial synergies that we get, which obviously give us strong free cash flow. And I should clarify that, that $500 million is the annual target. It's not a cumulative target. I also think that there's -- Stephen has performed and his team, by the way, performed fantastically. And as they get this EBITDA turnaround, I think you can do the math and figure out how that contributes to getting towards this 4.5 target, which we think works based on what we saw in Sunrise. Operator: The next question will go to the line of Matthew Harrigan with StoneX. Matthew Harrigan: Since I'm the last American left in the draw again. When I talk to your U.S. peers on AI, they don't expect to see too much quantifiable benefit this year, but pretty substantially by '28. Is that something that you layer into your numbers somewhat. And clearly, the market is not remotely assigning the value of the ventures plus cash. So they're not going to give you anything for having your telecom OpEx. But what are your thoughts on really seeing that discernible in the numbers? And when you look at AI, is that -- I mean, clearly, a lot of the value in your network has been appropriated by Silicon Valley and other tech companies. But when AI really sticks in, are you going to see 85% of the benefit on the cost side? Or do you expect to see some revenue enhancements that actually attach to you as well? I know it's a fairly big question, but obviously, people are -- it will be very transformative if you can have your OpEx even if it's in 8 to 10 years. Michael Fries: Yes. Look, I'll address that generally, and I'll ask Enrique to step in and provide a bit more color. But 3 things are really driving for any telco driving the benefits from AI, right? Beginning with customer acquisition and retention, which we're all seeing marginal improvements from the investment in our call centers and things like that. The second is fraud, credit, things like that, that can really drive down OpEx and inefficiencies. And then as you mentioned, the network and operations. And I don't know, roughly, those are each going to contribute about 1/3, let's say, of the demonstrable benefits we expect to see in the next let's say, 1 to 3 years. And they're not small numbers. There will be real benefits. And I think the nice thing that I'm seeing in the space is that whereas a year ago on this call, I would have said that we're inventing a lot of these applications. Right now, we're getting bombarded with start-ups and third-parties and Silicon Valley companies that are doing a much better job in many instances of creating these solutions for us. And so the pace of integration and implementation, I think, is speeding up, and it's real. So as I said in my remarks, I don't think there's an industry better positioned to benefit from marginal improvement in CapEx, OpEx and revenue from AI. But I would emphasize the word marginal there. That's really all we're doing at this stage as an industry is finding marginal benefits. I think the real home run is to think more broadly and bigger about how we kind of disrupt our own supply chain, our own software stacks, our own operating models and to do that could be material. I'll let Enrique chime in if you want, if you're on, Enrique. Enrique Rodriguez: Yes. I mean I think maybe the first thing I'll emphasize, Mike, is, as you said, it is real. We have gone from a year ago exploring AI to now seeing real benefits being delivered today and even more importantly, over the next 12 to 24 months, pretty material improvements. I would say, maybe as most of the industry is seeing a lot of benefits on the call center and the support part of the business first. We'll see that going to operations. But we're really, really getting excited about what we're starting to see as innovation more on the revenue side. I think we're going to see '26, at the end of '26, we're going to look back and look at those revenue opportunities as the year where they became real. Charles Bracken: Mike, can I just have a quick plug. Sorry, I was going to say can I have a quick plug at sort of Liberty Blume. Look, the other aspect of this is back-office services, which is not as big as what Mike and Enrique said in the front office and middle office, but the back office still is material for telco, and it's about $1 billion, $1.5 billion by some definitions of spend for us. And what Blume is finding out is there's lots of tech enablement with AI tools to significantly reduce their accounting, their payments, their procurement of these financial products, et cetera, et cetera. And we're finding actually these are opportunities where we're getting massive savings by reducing heads, but we're able to scale our existing heads to grow revenues. And that's really what's driving that 20% revenue growth that we see in Blume. And actually, we see that continuing for many years. Operator: Our next question will go to the line of Polo Tang with UBS. Polo Tang: It's really about VMO2 guidance. It was weaker than expected with a minus 3% to minus 5% decline in EBITDA. I think consensus on the same basis was probably getting for about minus 1%. Can you help us understand how much of the decline relates to the rationalization in B2B that may be specific to VMO2? And separately, how much of the decline reflects weakness in the broader U.K. markets? And can you maybe just give us some color in terms of what you're seeing in terms of U.K. competitive dynamics in both mobile and broadband. And I also have a quick clarification in terms of the Netomnia Nexfibre deal because VMO2 is receiving in GBP 1.1 billion of cash from Nexfibre. But can you clarify what VMO2 is giving up? So specifically, what is the minimum commitment on the 4.6 million fiber footprint? And can you give some sense in terms of what the wholesale rate is per subscriber? Michael Fries: Yes. Thanks, Polo. I'll let Lutz address your first question around VMO2 guidance and what we're seeing in the market. And then Andrea, you can work up a good answer to the question around VMO2's commitments. I don't know how specific we're being about that as we sit here now, Polo, but I'll let Andrea address that. Guys? Lutz Schüler: Yes. Polo, so you can broadly contribute 30% to the B2B restatement of numbers, including Daisy. And 70% is attributed to a cautious view on the fixed consumer market. So it's not mobile, it is fixed consumer. As we all know, competition is very high as we speak. Yes, as Mike alluded to, I think we had a pretty good Q4 with very low fixed net add losses and a pretty stable ARPU. But so far, right, the market is even more competitive. There's some fixed telecom access ready outstanding from Ofcom. And therefore, we have factored this in a cautious guidance. The reason why you see a similar number on EBITDA is simply that we are also paying more and more wholesale fees to Nexfibre, and that is, to some extent, eating up some of our efficiencies. Michael Fries: But just to be clear, and Charlie, you keep me honest here, the guidance we provided today for VMO2 does not pro forma into that guidance the transaction with Substantial Group. So we'll have -- that is all happening real time. Charles Bracken: We're going to have to amend it. Michael Fries: Yes. Lutz Schüler: Completely excludes it also. I think, Mike, why I said Nexfibre is we have a growing customer base in the existing Nexfibre coverage. Michael Fries: I know why you said it. I just wanted to clarify it. Andrea? Andrea Salvato: Polo, I think there were 3 questions there. One was, are we giving any sort of -- is there any sort of minimum penetration commitments. No, there's an adjustment at closing depending upon how many subs get transferred over, but that's very manageable. But going forward, there's no minimum commitments. There's also no migration commitments. The transaction has been designed to give Lutz full flexibility in terms of managing the migration from HFC to fiber, which we obviously thought was very important in the overall market context. I think the second question was just a clarification on what VMO2 is getting. And I think if you break it down, VMO2 is getting $1.1 billion in cash and is getting a -- is getting a 15% stake in Nexfibre. In return for that, it's going to spend GBP 150 million to buy approximately 500,000 subscribers at closings, we think is the estimate that the Substantial Group will have. And it's also committing its traffic on 4.6 million homes. 2.4 million are in the overlapping Netomnia area and then 2.1 million are in these new homes that we're contributing into the Nexfibre 2.0, which have been carefully selected to make it a contiguous complete network. So it's not going to be a sort of Swiss cheese. And I think what was -- there was a third point, I'm sorry, I'm just... Michael Fries: Third question is, are we providing any detail on wholesale rates and things of that nature. And the answer is no. Andrea Salvato: No. Yes. Thank you, Mike. Yes, thank you. We're not today, but it's a competitive wholesale rate. Operator: Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group. Ulrich Rathe: On the Belgium deal, you mentioned a synergy figure there. Could you talk a little bit about what kind of synergies these are because this is a cross-border deal where the story in European telecoms has always been that it's harder to create synergies. And specifically on the synergies, would the financial synergies that Charlie sort of alluded to be included in that EUR 1 billion figure. And if I may just add a clarification, there was some Bloomberg sort of headlines about Telenet deferring a refinancing because of difficult markets. Could you comment on that, if that is appropriate at this time. Michael Fries: Charlie? Charles Bracken: Yes. Let me just comment on the Telenet refinancing. I think we felt that the market fully understood the number of steps we were taking in Belgium, which we essentially were to pay down debt to 4.5x on Telenet through the Wyre sale and the fact that we docked in the refinancing to separate out Wyre at the EUR 4.35 billion, we thought have been well understood. I think it probably was in hindsight, too much for the credit market to digest in one go. And that's fine. I mean it was an opportunistic transaction as we always do. We thought that by halving the amount of available Belgium debt, there'll be a lot more demand than we felt, and it was a pretty choppy market. And you may recall, it was a softer market that we had a few weeks ago. So I think the discretion is the better part of [ ballard ]. Nick and I felt that the right thing to do is take a pause. We will let these transactions settle. We'll prove out the various steps. And at the right time, we'll go away and do what we usually do, which is in the $500 million to $1 billion tranches refinanced. But we still have plenty of time. I think as we tried to show in the results call, we actually don't have any material debt maturities, if you include our revolver until 2029 in Telenet, but we're very confident, and hopefully the credit markets will support this, that as these steps unfold, we can essentially reprice the debt and extend the maturity. And it's interesting, actually, the debt still trades at a very tight level despite this transaction last week, which perhaps is a bit bewildering. Look, I think in terms of the synergies, I think I slightly disagree that I think there are cross-border synergies. Enrique has proved that with the incredible work he's been doing on technology. I mean there's an awful lot of scale benefits and national technology doesn't really have a difference market to market. And I think also, as you rightly point out, the ability to drive financial synergies will come because we are able to use the platform that we will create in VodafoneZiggo and Telenet to really drive the technology across the broader footprint, which obviously has some benefits to us. So I think we feel pretty good about the synergies. And actually, to be honest with you, we might have undercooked them because we were obviously operating on a clean team basis in this transaction. So stay tuned. Let's see what we can come up with. Michael Fries: Yes. Our track record on synergies is pretty good. And I would agree with Charlie's comment that we've probably undercooked them, especially on the OpEx and potential revenue side. Does that answer all your questions, Ulrich? Ulrich Rathe: Yes. I was just wondering, so are the financial synergies included? Or is the $1 billion just the operational bit. Michael Fries: They are included. Charles Bracken: They are included, yes. Operator: Our next question goes from the line of David Wright with Bank of America. David Wright: Again, so much to absorb here. I guess when we're thinking about the Ziggo spin, Mike, it's a strong equity story similar to Sunrise, but that does ignore what I think you flagged at the time, which was Sunrise was a very clear and strong dividend payer, obviously, in a very low rate market. And we've seen that dividend growth just today in the Sunrise share price work so well. There's no dividend story here in Ziggo. And I guess my other question is, what's the sort of run rate of synergy you guys sort of need to hit in the short term to really commit to the spin. Is that date really in stone there? And I guess my sort of associated question is, I think the VodZiggo guidance was also quite a lot weaker than most of us had forecast alongside VMO2. I'm just wondering, is there a sense as you sort of restack this business that you're -- I don't want to use the phrase kitchen sinking, but you are guiding to find a level you can absolutely deliver on and maybe put a little bit more investment into 2026 to grow from. Michael Fries: Yes, David, that's a lot of good questions there. So I'll try to address and Stephen can jump in here as well. With respect to timing, I mean, we were purposely general about timing. We believe 2027, as we especially get into the second half of that -- of next year, we are going to be able to see or forecast the kind of storyline here that the market will want to see. That does reflect and has comparisons to Sunrise, namely a deleveraging story from free cash flow, EBITDA growth and asset sales. Secondly, the ability to project or forecast a free cash flow number. We gave you a number today, EUR 500 million. That's 50% more free cash flow than Sunrise generates. It's not coming this year or next year, but we're going to be -- we believe we'll be able to forecast that kind of free cash flow story when it's time to get to the market. And I think the growth -- we've talked quite a bit about How We Win plan and how it -- we even showed you some visuals on the slides about how '26 is an investment year for 2027 and 2028, we start to see a rebound. So it's our view that all those things when they come together, will tell a compelling equity story. But here's the other thing to point out, which is unlike, say, Oddo, we're not listing this company through an initial public offering. We're not waiting to build a book. We're not looking for a minimum price. We're not going to raise primary capital. So those -- we don't have any of those strikes against us. We're listing the shares and spinning them off to shareholders exactly as we did with Sunrise and the market will find a value, we believe, a healthy good value well above the negative $5 we're getting in our stock today. That's all you got to believe. That's it. You've got to believe that there's good equity value in this story that in the hands of our shareholders, that equity value will trade well on a Euronext exchange with a compelling operating and brand-driven storyline, and it will be less than 0. It will be more than 0. That's all you got to believe. And so I think we have lots of flexibility here, tons of freedom to plan how and when and what we do, which is -- which to me is very exciting. Stephen, do you want to add anything to that on the Vodafone side? Stephen van Rooyen: Well, I think the only component I'd add to it is that, as you said -- can you hear me, Mike? Michael Fries: Got you. Stephen van Rooyen: So look, as you said, I think the core of it is that we have an unfolding story of business improvement. So the underlying value of the core VodafoneZiggo business, I think, will come through as we get through the investment in 2026 and into 2027. We've shown a track record so far in the last 12 months, and we've got high confidence given what we're seeing today and given the plans we have ahead of us that 2026 will be another step forward in the plan. And as you say, 2027 will show those return on investments, and we'll accelerate out of that. So I think the core business, if you value the core business, will look slightly different in 12 months from now. Operator: Our next question goes to the line of James Ratzer with New Street Research. James Ratzer: So I was interested in following up on the slide you had to discuss the kind of Netomnia Virgin transaction in a bit more detail on Slide 22. So you've got a very kind of helpful chart there showing all the cash movements. Could you just run me through also what the debt movements are because Netomnia, I think, will have around maybe a bit over GBP 1 billion of debt on closing. Does that all go to Nexfibre? Or does some of it go to VMO2? And then of the subscribers or the homes, sorry, you've got the 2.5 million homes where VMO2 is going to pay committed wholesale fees on closing. How many subscribers does VMO2 have in that footprint, please? And then secondly, on the 2.1 million homes that then Nexfibre will be upgrading, what's VMO2's customer volume in that footprint? And to give us an idea of kind of Lutz's incentive to migrate customers over to FTTH, can you let us know, please, how many customers today within VMO2 have been upgraded from HFC to FTTH, where VMO2 has done that upgrade itself as a result of the overlay. Michael Fries: Thanks, James. Charlie, you hit the debt question, please? Charles Bracken: Yes. So first of all, there's no incremental debt going on to VMO2. I'm not sure how much we're disclosing, but I would underline that Nexfibre will have a fully financed business plan to get to 8 million fiber homes, with a combination of existing debt, but also the undrawn facilities. So this is a fully financed cash flow positive AltNet, which I don't think we can say about all of them. And I think in terms of the details of the numbers, look, let's take that offline because I'm not sure what we've agreed to disclose or not disclose. But that is the key message, fully financed and no debt into VMO2. Michael Fries: And on the 4.6 million homes, Andrea, keep me honest, I think you could -- we're not disclosing the number of customers today, but you can read across from our broad penetration rates to those areas. It's going to roughly equal our current penetration rates. I think it's a safe bet. Lutz, do you want to address the fiber question? Lutz Schüler: Yes. So far, we have a very low number on fiber in our existing Virgin Media, O2 cable coverage, right? Majority of our customers in fiber are coming from the fiber network Nexfibre owns. And so we still -- no customer is leaving us because of technology. Also, we are able to acquire exactly the same number of customers in the cable network as well as in fiber. So therefore, commercially, we don't have, at the moment, an incentive to put customers on fiber. And therefore, we have a low number for now. Michael Fries: Yes. But in this, you should assume in the deal we just announced, there will be some incentives, for example, cost to connect, wholesale rates, but we're not disclosing those details today. Operator: That will conclude the formal question-and-answer session. I would now like to turn the call over to you, Mr. Fries, for closing remarks. Michael Fries: Sure. Thanks for sticking with us, guys. Sorry, we went a little bit over. We had a lot, as you said, to disclose. I just want to say quickly, thank you to everybody on the call today from my team because this has been a Herculean effort and just about everybody on this call was involved in these transactions and of course, delivering these results. So thank you to each of you for the great work and terrific, terrific outcomes. And look at the deals we think were announced today, I'm excited about. I think they unlock both value, but also give us a tactical runway to control our destiny here, specifically in the Benelux region, but also, I think, increasingly in the U.K. market. So they're the right kind of deals. That's exactly what we told you we would do a year ago. I think you can trust us when we tell you where we're focused, what we're focused on and how we intend to create value. So I appreciate you joining us. I know there'll be a lot of questions and follow-up, you know where to find us. So thank you, everybody. Operator: Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2025 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There, you can also find a copy of today's presentation materials.
Operator: Good morning, and welcome to the Analog Devices First Quarter Fiscal Year 2026 Earnings Conference Call, which is being audio webcast via telephone and over the web. I'd like to now introduce your host for today's call, Mr. Jeff Ambrosi, Head of Investor Relations. Sir, the floor is yours. Jeff Ambrosi: Thank you, Danny, and good morning, everybody. Thank you for joining our first quarter fiscal 2026 conference call. Joining me today is ADI's CEO and Chair, Vincent Roche; and ADI's CFO, Richard Puccio. For anyone who missed the release, you can find it at investor.analog.com, along with related financial schedules. The information we're about to discuss includes forward-looking statements, which are subject to certain risks and uncertainties, as further described in our earnings release, periodic reports and other materials filed with the SEC. Actual results could differ materially from the forward-looking information as these statements reflect our expectations only as of the date of this call. We undertake no obligation to update these statements, except as required by law. References to gross margin, operating and nonoperating expenses, operating margin, tax rate, earnings per share and free cash flow in our comments today will be on a non-GAAP basis, which excludes special items. When comparing our results to our historical performance, special items are also excluded from prior periods. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's earnings release, references to earnings per share are on a fully diluted basis. And with that, I will turn the call over to ADI's CEO and Chair, Vincent Roche. Vincent Roche: Thank you, Jeff, and a very good morning to you all. Well, we extended our momentum through the first quarter with revenue, profitability and earnings per share, all coming in above the midpoint of our guidance. Year-over-year growth was broad-based across our end markets with particular strength in industrial and communications, reflecting both cyclical improvement and company-specific execution. This performance underscores the strength of ADI's diversified and resilient business model, enabling us to navigate uncertainty while continuing to capture share in the markets that matter most. As you've heard me say many times before, the wellspring of ADI's prosperity is built on a culture of relentless innovation and deep customer engagement across the life cycle of our solutions. As such, these activities are always our first call on capital. And now we're investing at record levels. At the same time, we remain committed to returning 100% of our free cash flow to shareholders over the long term. And I'm pleased to share that we just announced an 11% increase to this year's dividend extending our impressive track record of annual dividend growth and reinforcing our focus on delivering consistent shareholder returns. Looking ahead, a strong second quarter outlook and improving demand signals reinforced our belief that fiscal '26 has the potential to be a banner year for ADI barring unforeseen material changes in the macroeconomic and geopolitical backdrop. Now as mentioned in previous calls, we're aligning our strategic investments to key mega trends that we believe offer outsized long-term secular growth potential, namely autonomy, proactive health care, sustainable energy transition immersive sensory experience and AI-driven computing and connectivity. And it's in this last area that I will focus the remainder of my comments today. Over our history, we have prided ourselves on our ability to sense the early signals of emerging trends and to invest aggressively to ensure leadership as those trends proliferate. Artificial intelligence is a good case in point. Our investments targeting solutions for AI's massive performance requirements are generating substantial returns in two distinct parts of ADI our automated test equipment and data center businesses, which collectively make up close to 20% of our revenue. Now let me begin with Automated Test Equipment, or ATE, Revenue increased approximately 40% in fiscal '25 and further accelerated in the first quarter of '26, fueled by several factors. ADI's ATE portfolio sits at the heart of the most complex semiconductor production test systems for digital SoC, memory, RF and millimeter wave and power devices as well as system-level products. We deliver the integrated pin electronics, device power supplies and parametric measurement units that drive sense and precisely characterize every pin and rail on complex ICs under the most demanding real-world conditions. Our application-specific solutions are complemented by a suite of analog RF and power products, enabling complete high-density test subsystems. These solutions enable customers to increase platform channel density and throughput to validate the most advanced nodes and packaging technologies faster and more thoroughly at lower costs, with up to 30% less energy consumption per system. As a result, we enjoy industry leadership across the major test platforms and our content per tester stretches into the tens of thousands of dollars. Importantly, we've earned a durable role as the leading-edge technology partner in the fast-evolving ATE market which continues to grow with rising semiconductor complexity and the proliferation of connected intelligent devices. Now let me turn to our data center business, which grew approximately 50% in fiscal '25 and also saw accelerated growth in the most recent quarter. Several factors are driving this expansion. AI's demand for faster processing speeds and greater power density, combined with the monumental increase in data volume is creating exponentially greater complexity in data centers. This, in turn, drives the need for faster innovation cycles and new architectures. And ADI's analog and mixed signal, power and optical portfolios are critical to this evolution. I'll talk a bit now about power management, which is increasingly a system-level differentiator in AI data centers. At a high level, it breaks down into power delivery and power control. Think of power delivery as the vascular system moving energy across the data center. As customers migrate to higher-voltage architectures, safely moving larger amounts of power becomes foundational Protection is nonnegotiable as the consequences of faults rise sharply for both uptime and safety. ADI's hot swap and high-performance protection solutions which represent roughly 1/3 of our data center power revenue today, enable predictable fault isolation, fast recovery and live maintenance, allowing racks to run continuously even as power levels increase. Beyond protection, architectural change is also expanding our role in power delivery. We continue to see strong growth in point-of-load converters, micro modules and high-performance regulators, new approaches such as vertical power and higher voltage distribution, are now opening incremental SAM for ADI. We shipped our smart power stage to our first vertical power customer last quarter, and adoption of our intermediate bus converter modules is accelerating for 48- and 54-volt architectures. Now let's think of power control as the brain of the data center energy system. AI performance per watt depends on how precisely power is regulated and converted at the GPU or CPU. Roughly 1/3 of our data center power revenue comes from DC power control, including our power system management ICs and multiphase controllers. AI accelerators demand fast, highly efficient, digitally controlled power conversion from the rack down to tightly regulated core voltages. ADI's analog and mixed signal solutions abilities to enable higher compute density and better system-level performance are driving increasing demand and design wins. To sum up our AI data center power story, ADI enables customers to move power safely, regulated intelligently and scale AI infrastructure for the future. As power becomes a strategic constraint in AI data centers, our suite of high-performance technologies and system-level approach position us well for the next wave of infrastructure growth. Finally, turning to our optical connectivity portfolio. As AI continues to scale, the amount of data that must move within and between data centers is increasing exponentially, to deliver AI class bandwidth and latency, industry leaders are re-architecting their networks, increasingly replacing traditional electrical switching with Optical Circuit Switches or OCS. In this environment, performance is no longer defined solely by the optical modem system. It increasingly depends on the precision control monitoring and power solutions, the nervous system, if you will, around the laser, DSP and photodiode signal chain. By tightly integrating precision control, temperature regulation, real-time monitoring and compact high-performance power management, ADI allows optical systems to operate at higher speeds with lower power and in smaller form factors. This enables data center operators and carriers to increase front panel bandwidth density, reduce power consumption and cost per bit and accelerate time to market. As AI workloads continue to drive faster upgrade cycles and new network architectures. Our ability to help our customers manage optical complexity, performance and economics positions us well to benefit from AI-driven infrastructure investment in the future. So in closing, it's important to remember that AI is just a part of our larger growth story. Our diverse business model is enabling profitable growth across numerous trends, markets and applications. And as a result, we've never been more optimistic about our future at the intelligent edge. And with that, I'll pass it over to Rich. Richard Puccio: Thank you, Vince, and let me add my welcome to our first quarter earnings call. Revenue in the first quarter came in towards the higher end of our outlook at $3.16 billion, growing 3% sequentially and 30% year-over-year. Industrial represented 47% of our first quarter revenue, finishing up 5% sequentially and 38% year-over-year. Strength was broad-based with all segments delivering growth of 25% or more on a year-over-year basis including record quarters for ATE and aerospace and defense. Automotive represented 25% of revenue, finishing down 8% sequentially and up 8% year-over-year. We saw continued year-over-year growth for our leading connectivity and functionally safe power portfolios driven by our strong position in Level 2+ ADAS systems. Communications represented 15% of revenue, finishing up 20% sequentially and 63% year-over-year. Accelerating year-over-year growth was led by our data center business as increasing investments in AI infrastructure continue to drive robust demand for our optical and power portfolios. Wireless also recorded accelerated growth driven by cyclical improvements and has now grown double digits for 3 consecutive quarters. And lastly, consumer represented 13% of quarterly revenue, finishing up 2% sequentially and 27% year-over-year. The year-over-year growth was due to an upside across all consumer applications with notable benefits from content and share gains in the fast-growing wearables market and in premium handsets. Now on to the rest of the P&L. First quarter gross margin was 71.2%, up 140 basis points sequentially and 240 basis points year-over-year, driven by higher utilization, favorable mix and roughly 50 basis points from discrete items, which were not included in our original forecast. OpEx in the quarter was $812 million, resulting in an operating margin of 45.5%, above the high end of our guidance, up 200 basis points sequentially and 500 basis points year-over-year. Nonoperating expenses were $53 million and the tax rate for the quarter was 12.7%. All told, EPS was $2.46, up 9% sequentially and 51% year-over-year. Now I'd like to highlight a few items from our balance sheet and cash flow statements. Cash and short-term investments finished the quarter at $4 billion, and our net leverage ratio decreased to 0.8. Inventory increased $111 million sequentially with days of inventory finishing at $171. Channel inventory increased ending within our 6- to 7-week range. We are continuing to build die bank and finished good buffers to help support the upside we are seeing while balancing a strategically leaner channel position. Over the trailing 12 months, operating cash flow and CapEx were $5.1 billion and $0.5 billion, respectively. We continue to expect fiscal 2026 CapEx to be within our long-term model of 4% to 6% of revenue. Free cash flow over the trailing 12 months was $4.6 billion or 39% of revenue. As a reminder, we target 100% free cash flow return over the long term, using 40% to 60% for our dividend and the remainder for share count reduction. To that end, since the inception of our capital return program in 2004, we have returned more than $32 billion to shareholders via dividends and share repurchases. And since our Maxim acquisition in 2021, we have returned more than 100% of free cash flow to our shareholders. And as Vince mentioned, yesterday, we announced our 22nd consecutive annual dividend increase raising the quarterly amount by 11% to $1.10. Now moving on to our second quarter outlook. Revenue is expected to be $3.5 billion, plus or minus $100 million. Operating margin at the midpoint is expected to be 47.5%, plus or minus 100 basis points. Our tax rate is expected to be between 11% and 13% and based on these inputs, adjusted EPS is expected to be $2.88 plus or minus $0.15. In closing, our strong first quarter performance and favorable second quarter outlook underscores ADI's disciplined execution and the growing momentum we are seeing with customers across our end markets. While the macro backdrop remains fluid, demand indicators continue to trend favorably, and I believe we are well positioned to continue capitalizing on the opportunities ahead. With that, I'll give it back to Jeff for Q&A. Jeff Ambrosi: Thank you, Rich. Now let's get to our Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning. If you have a follow-up, please requeue and we will take your questions if time allows. With that, operator, we will have our first question, please. Operator: [Operator Instructions] Our first question comes from Jim Schneider with Goldman Sachs. James Schneider: Good job on the results. I'm curious as you look forward over the next quarter or 2, whether you expect to continue to see above seasonal performance in the Industrial segment in particular? And can you maybe also discuss are you seeing any kind of signs of OEM customer restocking at this stage or not yet? Unknown Executive: Sure, Jim. Thanks for the question. So obviously, Q2 was our strongest sequentially -- strongest sequential quarter, normally up in the mid-single digits, 4% or 5%, and our outlook, which embeds sell-in equal the sell-through reflects about an 11% sequential growth implying obviously significantly above seasonal growth. By end market, as we look out for Q2, what we expect to see is industrial continuing strong, up 20% sequentially and well above seasonal at 50% year-over-year, clearly being aided by the cyclical recovery and our strength in ATE and ADAS. We expect comms to be up high single digits sequentially, above seasonal and about 60% year-over-year. Again, as we talked about now, the AI surge for data center and the wireless cyclical recovery of both driving. From an auto perspective, we do expect that to be flat to down sequentially, a bit below seasonal, and this is, as we've talked about, largely due to the tariff and macro pull-in unwind that we've been talking about since the second and third quarters of last year. And then consumer in Q2, we expect to be down mid-single digits, in line with seasonality. And then obviously, we don't guide out to the third quarter, but I'll remind everybody that our third quarter is typically up low single digits. Vincent Roche: Yes. I think, Jim, one other comment you asked as well about any evidence of restocking. We don't see any evidence whatsoever of that at this point in the cycle. Operator: Thank you, SP1 Our next question comes from Stacy Rasgon with Bernstein Research. Stacy Rasgon: I was wondering if you could give us some color on gross margin and OpEx drivers embedded in the guide. I know OpEx, I presume is up on variable comp gross margin, I assume mix and utilization. And just any color you can give us on those drivers within the model would be helpful. Unknown Executive: Stacy. I'll start. I'll go through the GM question first. So obviously, as you saw in the post, Q1's gross margin was 71.2%. This was higher than expected on better mix, stronger utilization and then a few items that we did not forecast. During Q1, we've gotten closer to our optimal utilization level. So as we look out, we expect only to see modest upside from utilization. And in our Q2 outlook, we're assuming 100 bps of gross margin expansion or up essentially 150 bps versus Q1 because that excludes the discrete items that I mentioned in my prepared remarks, and again, the expected increase here is driven by favorable mix and uplift from price, which includes 50 bps that will not repeat in Q3 since it relates to the onetime effect of repricing our inventory in the channel. So you will expect us not to see that same 50 bps recur. On the operating margin side, for us, Q1 was roughly in line with expectations. The beat at the operating margin line was driven mostly by the stronger gross margin we just talked about. In Q2, I see OpEx growing in the mid-single-digit range. Obviously, we have no shutdown in the second quarter. We're continuing to hire in strategic investment areas. We've got a higher bonus factor. We've got our GTC conference, but we will see OpEx as a percent of revenue fall. And with the expected growth in gross margin, we see about 200 basis points of sequential improvement in Q2. So 47.5% at the midpoint. And for the full year, we continue to expect OpEx growth to trail revenue growth by roughly half. One of the -- sorry, Stacy, one last point. Stacy Rasgon: Just to clarify on the gross margins, on a reported basis, up 100 bps and excluding the 50 bps of onetime, it would be up $150 on a normalized basis. That's what you said? Unknown Executive: Yes, correct, Stacy. Stacy Rasgon: I just wanted to make sure I had that. Unknown Executive: Yes. The highlight is -- no, it's okay, Stacy. We obviously have been talking about seeing increased leverage this year. part which is the large reset on the variable comp headwind we spoke about last year. And obviously, we're seeing that leverage play out. Operator: Our next question comes from Harlan Sur with JPMorgan. Harlan Sur: Congratulations on the strong quarterly execution. Within your AI business connectivity, power, ATE, that was a great overview, Vince, of the differentiation in your prepared remarks. You articulated a strong portfolio of RF mixed signal, power products and performance differentiation. But the Analog team has always further differentiated on systems-level integration, software digital signal processing. So how are you leveraging your software, DSP and systems capabilities to gain further traction in this very fast-growing end market? Vincent Roche: Yes. Thanks, Harlan. Good question. Well, I'd say, first and foremost, if you look at ADI's trajectory over the last 5 to 10 years, we've been approaching our innovation activities centered around application system knowledge. And that's enabled us to capture more of the customers' complexity, boil it down, increase our ASPs. So I think what we see in certainly the power side of things is a mix of all the technologies. In the last -- up to kind of the last 3 or 4 years, most of the power business was about the analog circuits that configured the power systems. But tomorrow systems are going to be more and more digitally controlled, if you like. So that's where a lot of our digital signal processing heritage will come increasingly into play in these multiphase, very, very high-speed conversion systems where precision is critically important and being able to manage more and more rails of power. So that is a very, very good use an example of where our digital heritage comes into play with the mixed signal as well as the power technologies. In the optical sector, around the optical modem the nervous system, as we call it, again, that's a mix of a lot of digital functionality that partners with our mixed signal conversion systems as well as the power. So everything we do these days has a strong mix of analog, increasingly digital and increasingly software. And even -- you may have seen, I think on the last earnings call, we talked about a couple of product platforms that we have brought to market in the fourth quarter that had machine learning embedded in them as well. Operator: Our next question comes from Vivek Arya with Bank of America Securities. Vivek Arya: I was hoping you could quantify your data center exposure across ATE, optical and power. What's that exposure right now? How much did it grow last year? And then what is the right way to kind of model growth for that segment going forward? And part of that, power is a high-growth segment, but it tends to be very crowded. So I'm curious, Vince, what's your visibility around keeping or extending your market share in that segment? Vincent Roche: Maybe I'll start with the last piece. Yes, look, ADI thrives in an environment of incredibly hard problems. And the problems in the power system are becoming increasingly difficult in both scope and form, so that is the sweet spot for ADI. And we're able to approach the solution of these problems at the system level by virtue of the knowledge that we have in the area of thermodynamics, for example, electro-magnetics, coupled with our circuit magic and all the mixed signal and signal processing technology that will go around those things. So I think the problems are becoming more and more difficult. And in fact, there is a norm in the high-performance computing world that ultimately computing performance equals availability of power. And that power has got to be delivered with increasing efficiency, in tighter and tighter spaces. So we feel good about the possibility of differentiating for the long term there. What was the growth stuff, Rich, you want to? Richard Puccio: The breakdown between ATE data center and then within -- yes, so Vivek, if you think about our data center business, Vince commented on the call, is roughly 20% of total ADI now. It's over a $2 billion run rate and to think about the breakdown there. About 40% of that ATE the rest is data center. And then within data center, it's pretty balanced between power and optical. Vivek Arya: And historical and any forward kind of looking growth objectives, if you have them? Vincent Roche: Well, I think it's safe to say that these areas will all grow at double digits over the next several years. Operator: Our next question comes from Timothy Arcuri with UBS. Timothy Arcuri: You have been thinking that you're shipping about 10% to 12% below consumption. Where do you see that in the guidance for April? And then do you think by the end of the year, if you're sort of seasonal plus through the fiscal year, will you be shipping to consumption by the end of the year? Unknown Executive: Thanks, Tim. I'll take that one. So as we've talked about, if you look at that longer-term trend line where we've been shipping well under in '24 and '25, our sense now is customers are through that digestion phase and are essentially ordering to consumption. And we think that's broadly true across the end markets, but there's probably some differences across the diversified customer and application base. And obviously, for everybody who we don't talk always about this, when we talk about consumption, we're talking about that long-term linear trend line for shipments. But we do expect that we are nearing customers ordering at consumption across the board. And I think Vince mentioned earlier, we have not seen evidence yet that there's been restocking activity across our portfolio. Operator: Our next question comes from Joshua Buchalter with TD Cowen. . Joshua Buchalter: Congrats on another set of strong results and guidance. In response to an earlier question, you mentioned industrial is growing because of the cyclical global recovery, but I guess you've been very clear that you're not seeing evidence of restocking. Any help you can give us on where you're seeing the biggest signs of demand recovery because the outlook does seem well better than most of your peers. And how much of this is idiosyncratic growth drivers? And any help you can give us on how much industrial is growing ex ATE in the near term? Unknown Executive: All right. Thanks for that question, Josh. So I'll just do a little bit of a level set since we called the bottom industrial, obviously, our most profitable business has grown sequentially every quarter. And in Q1, actually, our book-to-bill was well above 1. And that does exclude any impact from pricing. So we feel very good about where we are landing from an orders perspective on the industrial. For 4 straight quarters, we've been an above seasonal growth with double-digit year-over-year growth, and that is driven by strength across all of the industrial segments. And I think that's part of what is indicative of the cyclical momentum we've been highlighting. Adding to that is our strength in ATE and Aerospace and Defense, which as we've talked about, is about 1/3 of our industrial, each of which are continuing to achieve new highs. And given that momentum in bookings and backlog, we don't see this trend stopping. As for the other 2/3 of industrial, we're still 20% below previous peaks. So we've got plenty of room to go as the cyclical momentum continues, evidenced by improving PMIs, positive book-to-bill across all industrial sectors and all geographies. And embedded in our outlook for Industrial is, as we said, to lead our growth sequentially up 20% plus. And we expect all of our segments to increase led by ATE, which is growing greater than 30% sequentially. And so very broad-based. And I'll highlight one other point that we've been talking about, and this is one of the pieces of evidence we look for in the cyclical piece that we continue to see growth in the broad market industrial. We're now seeing normalized ordering patterns for an up cycle in the broad-based industrial market. Operator: Our next question comes from Tom O'Malley with Barclays. Unknown Analyst: This is [ Nat Penn ] on for Tom O'Malley. Just curious if you're seeing any particular strength or weakness from a regional perspective? Unknown Executive: Yes. So geographically, we -- in Q1, we saw a broad-based strength. We had double-digit year-over-year growth in Asia, Americas and in Europe. When we look at it on a sequential basis, we saw strength in Asia and Europe, while Americas were down from typical buying -- customer buying behavior in consumer and the weaker auto demand. Operator: Our next question comes from Joe Moore with Morgan Stanley. Joseph Moore: You talked about the reasons for auto remaining a little bit softer. Any signs there of stabilization or potential growth as you move past this subsidy environment? Unknown Executive: Sure. I'll give a little bit of context in what we think we're seeing and what we've got baked into our guide. Obviously, this has been a really strong growth market for us. We've been growing double digits through the cycle. Particularly as we've gained content and share particularly in our connectivity and power for the ADAS systems. And as we've talked about in the past, we've had a notable share gain in China, which is taking largely taking light vehicle share from other regions. So it drove a record 25%. So now you look near term, you said in the prior call that we were approaching Q1 with some caution, as we had flagged some unusual behavior related to tariffs, where we thought we saw some order acceleration. We suspected it will be a headwind in Q1 and feel that it's probably what happened here. While we managed to grow 8% year-over-year, Q1 was well below seasonal and our book-to-bill did end under one. So given the softer bookings we saw and the fact that we now have greater exposure to China than ever, which is typically light in Q2 due to the Chinese New Year, our expectation is that auto will be below seasonal in Q2 or flat versus our typical seasonality of plus mid-single digits. Now what's important to note is nothing has changed with respect to our strong share position and underlying content growth. Therefore, we're pretty confident that once we get past the headwinds in the first half, our second half will be stronger and I actually believe that auto will grow in fiscal '26 versus what was a record fiscal '25. Operator: Our next question comes from Ross Seymore with Deutsche Bank. Ross Seymore: I just wanted to dive back into the industrial side. guiding up 20%, I can't remember you guys ever unless it was a Maxim or linear quarter, guiding that business up. So how much of that is ASPs? And how much of it is secular and how much is cyclical? Any sort of breakdown on that would be helpful. Unknown Executive: Yes, maybe I'll kind of break down the growth. So 20% plus, obviously, a very strong sequential growth, Ross. We're not going to break out price by end market, but as we commented on, there is some lift there from price. But importantly, I think what Rich said was if you exclude any pricing impact, our book-to-bill in Industrial was well above 1, and that included strength across regions and across applications. So everything is driving growth for us really in our industrial market. And then as far as what's cyclical and what secular if you just take our ATE and Aerospace and Defense business, that's roughly 1/3 of industrial. And as Rich talked about, that those are continuing to drive new highs, pretty clear end demand drivers in those markets. And then while there's probably more secular tailwinds in the other parts of industrial. But right now, kind of where those are relative to their past peaks. You can kind of call that cyclical, but there's certainly content gains elsewhere if you think about automation and energy and health care, there's definitely secular trends there as well. Vincent Roche: I think it's worth noting that none of this has happened by accident. Industrial has always really been when we think about the sectors within ATE, aerospace and defense, health care and so on, instrumentation. These are very, very core parts of the identity of ADI, and we've been investing. We've been bringing new strands of innovation to that business now for several years, and we're seeing the benefit of that, particularly right now in the ATE as well as the aerospace and defense area. So -- but as Jeff and Rich have unpacked the story for you, price resiliency is also very, very strong in this business. The life cycles are long. So overall, we've got stability with some very, very good tailwinds driving the industrial business ahead. Jeff Ambrosi: Thank you. We'll move to our last caller, please. Operator: Our final question comes from Chris Caso with Wolfe Research. Christopher Caso: I just wanted to ask a bit more on your comments on pricing and understand that some of that pricing benefit is onetime because of what's going on in the channel. But perhaps you could speak more broadly on what you're seeing with pricing where you'd expect your blended pricing to be for the year? And what -- how much of this is coming down to what the customers are actually paying? Vincent Roche: Yes. Well, Chris, thank you for the question. The first thing I'll say is that really not much has changed in our approach to pricing. As a company, we've always been dynamically adjusting the prices of the portfolio really to reflect the value of the solutions that we deliver over the life cycle, the entire life cycle of our products. So I think our ability and our track record of delivering the highest level of system performance in the analog space. And ultimately, the total cost of ownership benefits to our customers has always enabled ADI to attract a premium, an innovation premium. And that premium actually is extending. And over the last few years, as you know, we've committed quite a bit of capital to augment the supply side of our value proposition, the support side and giving our customers greater optionality from a regional and geographic perspective, but at the same time, we have, like everybody else, we've been facing persistent inflation. And what we've done in terms of this latest tranche of price increase, was really just a practical response to the inflationary environment. So I think that's the way to think about it. We -- there is a dynamic ongoing element to what we do and a response to the current economic environment. Rich, do you want to say anything else on this or Jeff? Richard Puccio: Yes. So obviously, you've heard us talk about the pricing adjustments that we made with our channel partners that went into effect at the start of Q2, I would add a couple of things. We are also largely through our annual negotiation with our direct customers. So our Q2 results should reflect the full scope of our recent pricing actions. And the way to think about it, just to help you guys out here, the overall impact of the pricing actions on our 2Q outlook is about 1/3 of the quarter-over-quarter revenue increase at the midpoint is related to price. Excluding the pricing uplift, our sequential growth outlook is more like 7% versus the 11% I mentioned before, still nicely above our 4% to 5% seasonality. And importantly, as I mentioned, roughly half of the price lift relates to repricing of channel inventory, which will not repeat in Q3. The other thing I would just to help you out as you think going forward, I think that we would expect about 50 bps of incremental growth in each of Q3 and Q4 related to price. So it's -- over the full period, it's not a huge number, but that's the right kind of sizing, right? Jeff Ambrosi: All right. Thanks, everyone, for joining us today. A copy of this transcript will be available on our website and all available reconciliations and additional information can also be found in the Quarterly Results section of our Investor Relations website, investor.analog.com. And thank you for your continued interest in Analog Devices. Operator: This concludes today's Analog Devices conference call. You may now disconnect.
Operator: Welcome to Community Healthcare Trust 2025 Fourth Quarter Earnings Release Conference Call. On the call today, the company will discuss its 2025 fourth quarter financial results. It will also discuss progress made in various aspects of its business. Following the remarks, the phone lines will be opened for a question-and-answer session. The company's earnings release was distributed last evening and has also been posted on its website www.chct.reit. The company wants to emphasize that some of the information that may be discussed on this call will be based on information as of today, February 18, 2026 and may contain forward-looking statements that involve risks and uncertainty. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's disclosures regarding forward-looking statements in its earnings release as well as its risk factors and MD&A in its SEC filings. The company undertakes no obligation to update forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. During this call, the company will discuss GAAP and non-GAAP financial measures. A reconciliation between the 2 is available in its earnings release, which is posted on its website. Call participants are advised that this conference call is being recorded for playback purpose. An archive of the call will be made available on the company's Investor Relations website for approximately 30 days and is property of the company. This call may not be recorded or otherwise reproduced or distributed without the company's prior written permission. Now I would like to turn the call over to Dave Dupuy, CEO of Community Healthcare Trust. Please go ahead, sir. David Dupuy: Great. Thanks so much, Nick. Good morning, everybody, and thank you for joining us today for our 2025 fourth quarter conference call. On the call with me today is Bill Monroe, our Chief Financial Officer. Leigh Ann Stack, our Chief Accounting Officer; and Mark Kearns, our Senior Vice President of Asset Management. Our earnings announcement and supplemental data report were released last night and furnished on Form 8-K, along with our annual report on Form 10-K. In addition, an updated investor presentation was posted to our website last night. During the fourth quarter, the geriatric behavioral hospital operator, a tenant in 6 of the company's properties, paid rent of $200,000, consistent with last quarter. On July 17, 2025, this tenant signed a letter of intent for the sale of the operations of all 6 of its hospitals to an experienced behavioral health care operator and is under exclusivity with that buyer. Among other terms and conditions of the sale, the buyer would sign new or amended leases for the 6 geriatric hospitals owned by CHCT. We continue to maintain frequent productive communication with the buyer's team to advance the closing process. The buyer is finalizing legal and business due diligence. And while the transaction is progressing, we can't provide specific timing or certainty that it will close. We will share more information as we move through the process. As it relates to our core business, we had a busy fourth quarter from an operations perspective and capital recycling perspective and continue to be selective from an acquisition standpoint. Our occupancy increased from 90.1% to 90.6% during the quarter, and our leasing team is very busy with renewals and new leasing activity. Our weighted average lease term increased from 6.7 to 7 years. We have 3 properties that are undergoing redevelopment or significant renovations with long-term tenants in place when the renovations or redevelopment are complete. We expect the largest of these projects to be completed in the second quarter of 2026, with rent expected to commence in the third quarter after the tenant obtains the appropriate provider license. As previously disclosed, during the fourth quarter, we sold an inpatient rehab facility at an approximate 7.9% cap rate, resulting in a gain on the sale of approximately $11.5 million with net proceeds reinvested through a 1031 like-kind exchange into a new inpatient rehab facility for a purchase price of $28.5 million. We entered into a new lease with a lease expiration in 2040 and an anticipated annual return of approximately 9.3%. I will note an additional benefit of the transaction was the reduction of our largest tenant concentration, further enhancing our overall portfolio diversification. For the year, we acquired 3 properties with a total of 113,000 square feet for an aggregate purchase price of $64.5 million, which were 100% leased with leases running through 2040 and anticipated annual returns of 9.3% to 9.5%. As it relates to other capital recycling activity, we had 2 additional dispositions closed in the fourth quarter and 1 disposition closed in the first quarter, resulting in net proceeds of approximately $7.7 million. We have other properties both in market and under review as part of our capital recycling program. And when appropriate, we would anticipate using a similar 1031 like-kind exchange to accretively reinvest proceeds to fund our pipeline. Also, we have signed definitive purchase and sale agreements for 5 properties to be acquired after completion and occupancy for an aggregate expected investment of $122.5 million. The expected return on these investments should range from 9.1% to 9.75%. We expect to close on one of these properties in the first quarter with 2 properties expected to close in the second half of 2026 and the remaining 2 closing in the second half of 2027. We did not issue any shares under our ATM last quarter. However, we anticipate having sufficient capital from selected asset sales, coupled with our revolver capacity to fund near-term acquisitions. Going forward, we will evaluate the best uses of our capital, all while maintaining modest leverage levels. To finish up, we declared our dividend for the fourth quarter and raised it to $0.4775 per common share. This equates to an annualized dividend of $1.91 per share, and we are proud to have raised our dividend every quarter since our IPO. That takes care of the items I wanted to cover. So I will hand things off to Bill to discuss the numbers. William Monroe: Thank you, Dave. I will now provide more details on our fourth quarter financial performance. I am pleased to report total revenue grew from $29.3 million in the fourth quarter of 2024 to $30.9 million in the fourth quarter of 2025, representing 5.6% annual growth over the same period last year. On a quarter-over-quarter basis, the capital recycling and asset disposition progress in the fourth quarter that Dave discussed led to relatively flat quarterly performance across many line items on our income statement as I will review. The $30.9 million of fourth quarter total revenue was a slight decrease of $140,000 quarter-over-quarter versus the $31.1 million in the third quarter of 2025, impacted by the capital recycling and asset disposition activity. Moving to expenses. Property operating expense increased by less than $100,000 quarter-over-quarter to $6 million for the fourth quarter of 2025. Total general and administrative expense was $4.8 million in the fourth quarter of 2025, which was nearly flat both quarter-over-quarter from the $4.7 million in the third quarter of 2025 and year-over-year from the $4.8 million in the fourth quarter of 2024. Interest expense decreased slightly by approximately $100,000 quarter-over-quarter to $7 million in the fourth quarter of 2025 due primarily to recent FOMC interest rate cuts and the resulting lower floating rates on our revolving credit facility. Moving to funds from operations. FFO in the fourth quarter of 2025 was $13.3 million, a 4.6% increase year-over-year compared to the $12.7 million of FFO in the fourth quarter of 2024. On a diluted common share basis, FFO increased from $0.48 in the fourth quarter of 2024 to $0.49 in the fourth quarter of 2025, although this was $0.01 less quarter-over-quarter from the $0.50 of FFO in the third quarter of 2025 as a result of the net impacts to revenue and expenses described earlier. Adjusted funds from operations, or AFFO, which adjusts for straight-line rent and stock-based compensation, totaled $14.9 million in the fourth quarter of 2025, a 2.1% increase year-over-year compared to the $14.6 million of AFFO in the fourth quarter of 2024. AFFO on a diluted common share basis was $0.55 in the fourth quarter of 2025, even with the $0.55 of AFFO in the fourth quarter of 2024, although this was $0.01 less quarter-over-quarter from the $0.56 of AFFO in the third quarter of 2025, again, as a result of the net impacts to revenue and expenses described earlier. And finally, while it did not impact FFO or AFFO, we did have net gains on sale of $12.1 million from the capital recycling and asset disposition activity during the fourth quarter of 2025 that increased net income. That concludes our prepared remarks. Nick, we are now ready to begin the question-and-answer session. Operator: [Operator Instructions]. And the first question will come from Connor Mitchell with Piper Sandler. Connor Mitchell: I guess just focusing first on the geriatric behavioral hospital operator that signed the transaction last summer. Just want to get -- I know you guys can't speak too much about the timing or some details, but just trying to get a little better understanding. Is the transaction on your part essentially supposed to all take place in one bite at the same time? Or is there any chance that the new operator that would come in and sign leases on the properties could do it on a property-by-property time line or even a state-by-state time line instead of kind of all at once? William Monroe: Connor, thanks for the question. Yes, as it relates to the transaction itself, there was not as much progress as we would have hoped been made in the fourth quarter. And I think a lot of that is the buyer had to confirm various liabilities and was related -- was dependent on the government to get through some of those issues. I think we're seeing significantly more activity in this first quarter as far as the progress made from a due diligence standpoint and site visits and really working on getting the documentation squared away. What I would say about your question specifically the buyer is still very interested in all 6 hospitals and the goal is for this transaction to happen all at one time. And that's our expectation, that's the buyer's expectation. So there would be no plans to have any sort of a staged closing. I think it just makes it more challenging that way and a little bit messier. And so everybody is moving forward with the acquisition of the operations of all 6 hospitals in the 3 states. And so there would not be a stage closing based on our expectations or the buyers' expectations. Connor Mitchell: Okay. I appreciate the color. And then turning towards transactions. The pipeline seems pretty stable compared to prior quarters as well. Just curious kind of how you balance the level of transactions, the timing of closing those transactions along with the time needed to find the right dispositions to fund the acquisitions or if you are considering maybe increasing the debt levels or leverage if there's a scale you have there when you see the optimal acquisitions and the time line needs to be sped up, so you can't really wait for the offsetting dispositions? William Monroe: Our goal is really to execute and sequence the dispositions just like we did in the fourth quarter, where we sold the inpatient rehab facility. There was a little bit of a gap between selling that facility and acquiring the new facility, which had some small impact on our financials. But overall, it worked very, very well. And as I mentioned in the prepared remarks, we're working right now on a handful of other acquisitions so that we could similarly sequence in the same way when we acquire these facilities that we expect, these inpatient rehab facilities that we expect to close sometime in the third quarter. So the goal is obviously to do it and sequence it in a way that we can do a 1031 like-kind exchange, if that's appropriate because we would anticipate a significant gain on some of the assets that we're looking to sell. But you're right, I mean buying and selling real estate is inherently -- sometimes those time gaps don't always sequence correctly. I think everybody should know there may be some gaps between when we close and when we sell. But the goal is to keep that leverage in sort of the ZIP code that it is today and certainly not add leverage over time. But some of that is going to be dependent on the timing of close. But we feel confident that based on what we have in progress from a capital recycling perspective will allow us to acquire assets without adding meaningful leverage to the balance sheet. Connor Mitchell: Okay. I appreciate that as well. And maybe just one more, if I could sneak it in. Can you just give an update on if there's really been any change in what you're seeing for cap rates for either acquisitions or dispositions? I know you gave some color in your opening remarks, but just maybe if there's anything you're seeing in the market right now that's really changing drastically from the recent closed transactions? William Monroe: I think -- look, the good news is I think there's a high level of demand for the assets that we're looking to selectively manage through a disposition process and our capital recycling. We received an indicative 7.9% cap rate on the sale of inpatient rehab. We would expect similar sort of pricing on other types of dispositions that we're looking at. So we feel like that, that disposition capital recycling activity is going to be accretive to us and to the business. And we do see opportunities on the buy side in that 9% to 10% cap rate range. But of course, not having -- not wanting to raise stock through the ATM at these price levels, we're being very, very selective. What I would say is, in addition to these acquisitions that are in the pipeline, as I mentioned on the prepared remarks, we have some embedded growth in our 2026 numbers because we've got a redevelopment project that we anticipate coming online in mid-2026. And then we've got another redevelopment project that should be coming online at the end of the year. And so those are essentially like acquisitions for us. And so we expect that to be a nice tailwind in the second half of the year for us. Operator: The next question will come from Michael Lewis with Truist. Michael Lewis: Dave, last quarter on the call, you said you expected the leased percentage for the portfolio to be up 50 to 100 bps in 4Q, and it was. It was up 50 bps. I was just wondering if you felt compelled to give a little bit of insight into what you might expect for occupancy either over the next quarter or 2 or for the full year? Do you expect that to continue going up this year? William Monroe: Michael, thanks for the question. I think over the next -- we have had great leasing activity in the portfolio. We've also had some -- we had some terminations toward the end of last year. And so I think Mark and his team are doing a remarkable job of taking some of those terminations, re-leasing the space. I think our view, big picture is that's going to be really good overall for the portfolio. As you know, it takes a little bit of time for those new leases to become economic. But we feel very good about the leasing activity we're seeing. But the reality of it is, it's probably -- I would say, this range of in the low 90s will continue for the next couple of quarters. I wouldn't suspect that it goes up meaningfully or down meaningfully just because some of the new leases we're getting in place. I think it's really in the second half of the year that we would expect to see some momentum as it relates to growing leased occupancy. So I would anticipate that, that leased occupancy would stay in that general ZIP code of where it is today for the next couple of quarters with it looking to increase second half of this year. Michael Lewis: Okay. And then my second question is about the investment pipeline. I remember the days when the annual target was $120 million to $150 million annually. Obviously, with COVID and some changes in the cost of capital, you've been below that in recent years. Is the goal now you have these developments that you'll be taking down? Is that kind of the pipeline? Or if you were going to do $120 million to $150 million annually and you had the cost of capital, is there still that volume of opportunity out there? Or has something changed since the pandemic and maybe there's not as many opportunities in your neck? William Monroe: Yes. The opportunity is still there, Michael. We're chomping at the bit and see a lot of great opportunities. We're constantly in touch with sort of that core group of brokers that we've worked with routinely over the last 10 years with the company. We've got great relationships. And we're seeing the activity in that 9% to 10% range. And what I would tell you is, if our stock was in a different spot, and we were doing what we have done prior to the last 1.5 years, we would be looking to make those acquisitions. We've always, as you will recall, because you've covered the company for a long time, there's always been sort of half of our business has been client business that we've -- programmatic that we've done, so call it, $50 million to $60 million a year. And then the other half has been that brokered business with some redevelopment projects mixed in. And I think what you've seen and what we've acted on over the last couple of years with our stock price where it was is we've been focused more on supporting our clients. And as soon as that dynamic changes and the share price gets to a level where we can raise capital accretively, we would absolutely look to augment that client acquisition with the broker deals that we've done historically. Michael Lewis: Okay. And then lastly for me, the last few years, you've also had a note in the investor presentation about this dialysis term sheet pipeline. I didn't see that disclosure this time. Is that relationship kind of done? Or is that on the back burner and that could still become something programmatic down the line? William Monroe: It's on -- I think you nailed it. It is on the back burner. Most of that company's growth has really been buying operations, there hasn't been real estate as part of the -- their overall acquisition cadence, and that has been the case now for a while. And so -- and they have been focused on really their core business over the last couple of years now that they've done several acquisitions. So putting it in there just didn't seem like it made sense just given the fact that we haven't executed any transactions under that deal. We still have a great relationship and 4 dialysis clinics with the operator, and we'll continue to monitor their acquisition activity. But yes, I would anticipate that, that is an opportunistic and certainly not a focus or an expectation that, that would occur anytime soon. Michael Lewis: Thank you, Michael. Appreciate the questions. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Dave Dupuy for any closing remarks. William Monroe: Thanks, everybody. I appreciate everyone joining us, and feel free to reach out if you have any additional questions. Hope everyone has a good day. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Greetings. Welcome to the USANA Health Sciences Fourth Quarter and Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll now turn the conference over to Andrew Masuda, Director of Investor Relations. Thank you, Andrew. You may now begin. Andrew Masuda: Thanks, Rob, and good morning, everyone. We appreciate you joining us to review our fourth quarter and fiscal year 2025 results. Today's conference call is being broadcast live via webcast and can be accessed directly from our website at ir.usana.com. Shortly following the call, a replay will be available on our website. As a reminder, during the course of this conference call, management will make forward-looking statements regarding future events or the future financial performance of our company. Those statements involve risks and uncertainties that could cause actual results to differ perhaps materially from the results projected in such forward-looking statements. Examples of these statements include those regarding our strategies and outlook for fiscal year 2026, uncertainty related to the economic and operating environment around the world and our operations and financial results. We caution you that these statements should be considered in conjunction with disclosures, including specific risk factors and financial data contained in our most recent filings with the SEC. I'm joined by our Chairman and Chief Executive Officer, Kevin Guest; our Chief Financial Officer, Doug Hekking; our Chief Commercial Officer, Brent Neidig; our Chief Operating Officer, Walter Noot, as well as other executives. Yesterday, after the market closed, we announced our fourth quarter and fiscal year 2025 results and posted our management commentary document on the company's website. We'll now hear brief remarks from Kevin and Doug before opening the call for questions. Kevin Guest: Thank you, Andrew, and good morning, everyone. As we sharpen our strategic focus and position the company for renewed and sustainable growth, I'm honored to return as Chief Executive Officer while continuing to serve as Chairman of the Board. I appreciate the Board's confidence in my leadership and its commitment to ensuring continued stability and disciplined execution during this next phase of growth. As I reassume the role of CEO, I do so with a deep understanding of USANA's strengths and a clear view of the opportunities ahead with the fruition of our strategic plans that we will execute. Having spent more than 3 decades at this company, including 8 years as CEO, I have seen firsthand the power of our science-based products, the dedication of our employees and the resilience of our sales force across the world. These elements form the core of USANA's competitive advantage and establish a solid foundation for the long-term value creation that we intend to deliver. During my previous tenure, USANA expanded its international footprint, strengthened operational capabilities and achieved record financial results. While this external environment continues to evolve, our strategic pillars remain consistent. Scientific excellence at the center of product innovation, operational discipline and cost efficiency, a high-performing, aligned global sales force and a culture rooted in integrity, resilience and execution. Over the past several weeks, I've engaged in extensive discussions with our leadership team as well as our brand partners. These conversations reinforce that USANA remains well positioned with strong underlying fundamentals and meaningful opportunities for growth across multiple markets and channels. However, the clear message is that we must move with greater speed, focus, relevancy and precision. As we look ahead, our priorities are straightforward. First, strengthen USANA's global brand positioning by delivering science-backed nutrition through an omnichannel platform and evolving the company's identity from a legacy direct selling business to a modern science-driven nutritional products company. Second, enhance the customer and brand partner experience to drive retention, loyalty and long-term brand equity; third, reinvigorate global sales momentum through enhanced field support, market-specific strategies and strengthen leadership engagement; fourth, advance our product innovation pipeline by leveraging our world-class research and science teams to deliver differentiated offerings; fifth, improve operational efficiencies across the organization through disciplined cost management and streamlined processes; and sixth, execute with accountability at every level of the business, ensuring our actions translate into measurable, sustainable results. We are committed to delivering shareholder value by focusing on these top priorities. Importantly, our consolidated net sales outlook for fiscal 2026 is for growth of 4% at the midpoint, reflecting confidence in our strategy and our ability to execute. We will also remain focused on long-term strategic execution, not short-term optimization as we strengthen the company for its next chapter of growth. Our fiscal 2026 operating strategy entails the following: first, expand our omnichannel reach by leveraging USANA's strong nutrition foundation and diversifying distribution channels to access a larger global base of health-conscious consumers and strengthen brand relevance; second, advance product innovation through refreshed branding, alignment with modern consumer usage behaviors and robust pipeline for upgraded and new products launching globally in 2026. Third, accelerate technology modernization by adopting best in practice third-party platforms to improve customer experience, enable scalable growth and drive long-term IT and operational efficiencies. Fourth, drive Hiya's growth through continued direct-to-consumer expansion, new channel and product launches and entering into additional markets. We are also leveraging USANA's capabilities to improve margins, including transitioning to in-house manufacturing to increase speed, efficiency and reduce costs. Fifth, scale Rise Wellness performance by building on the strong recent momentum, expanding the Rise Bar footprint and accelerating Protein Pop distribution, particularly within major retailers and within club retail channels. USANA's mission, culture and people have always been at the heart of our success. As we embark on this transition, I am confident in our direction and energized by the opportunities ahead. Together with clarity, discipline and a shared vision, we will position USANA to deliver stronger performance and create enduring value for all stakeholders. With that, I'll now ask Doug to provide additional color on our fiscal 2026 outlook. G. Hekking: Thanks, Kevin, and good morning, everyone. I'd like to provide some additional color on our fiscal 2026 outlook and the key financial considerations shaping our guidance for the upcoming year. As Kevin mentioned, we're expecting net sales growth at the midpoint of about 4%. The sales growth is being driven by our venture companies, Rise Wellness and Hiya. Note that our outlook reflects a 52-week fiscal year in 2026, which includes one less week of operations when compared to fiscal 2025. As Kevin indicated in his remarks, we intend to accelerate our technology road map to fundamentally improve how customers experience our brand as well as allow for future benefits in both speed and cost efficiency. This incremental investment has not been factored into our fiscal 2026 outlook at this time. We will provide updated information once the scope, timing and capital requirements of this project are finalized. Turning to inventory. Inventories increased $35 million or 48% to $107 million at the end of fiscal '25. Approximately 80% of the year-over-year increase was driven by initiatives to support the significant growth opportunities at Rise Wellness and Hiya. Let me break this down further. For Rise Wellness, the increase reflects the inventory necessary to support the launch and growth of Protein Pop, particularly retailers like Costco. For Hiya, the inventory increase largely reflects channel expansion, including distribution into Target, international expansion into Canada and the United Kingdom and building raw materials inventory in connection with USANA to begin manufacturing Hiya products in-house. Given the growth trajectories of both Rise Wellness and Hiya, we anticipate elevated inventory levels throughout fiscal 2026. Although we will continue to focus on working capital efficiency, our intention is to continue supporting product demand as well as the expansion of distribution channels and geographies for these important brands. We expect Rise Wellness to operate at approximately breakeven in fiscal 2026, while we position the company for future growth, thoughtfully scale the business and strengthen long-term revenue and profitability profile. Let me now touch on our expected effective income tax rate. Our effective tax rate guidance for fiscal 2026 is expected to range between 55% and 60%. The primary challenge we continue to face is a geographic misalignment between revenue generated and costs incurred. This dynamic has been particularly evident in our effective tax rate during the second half of fiscal 2025 and particularly felt with the recognition of certain onetime costs during the period. Execution of our growth strategy as well as targeted cost efficiencies are expected to contribute to a lower effective tax rate in future years. With that, I'll now turn the call back to Kevin before we open the line for questions. Kevin Guest: Thanks, Doug. Let me close by saying this. We believe USANA is in a strong position, and the path ahead is both clear and compelling. Our core business has faced year-over-year sales declines, but we are seeing encouraging signs of stabilization as we take the right steps to return the business to growth. Hiya and Rise Wellness broaden our market and bring new energy to the portfolio, while our strategic investments are strengthening the foundation that will support our next phase of expansion. And with a solid financial position, including a strong cash balance and an efficient model that generates healthy cash flow, we have the flexibility to invest thoughtfully, execute with confidence and build long-term value. Put simply, we have the people, the products and the financial strength to win, and we're committed to doing exactly that. This, we believe, will deliver sustainable value creation for our shareholders. I'll now turn the call back to the operator for Q&A. Operator: [Operator Instructions] And the first question is from the line of Anthony Lebiedzinski with Sidoti & Company. Anthony Lebiedzinski: It's certainly nice to see the better-than-expected results for the fourth quarter as well as the higher-than-expected EPS guidance for '26 as well. So as we look at the guidance for both revenue and EPS, obviously, you provided revenue guidance in January. But nevertheless, they are pretty wide ranges. Can you just walk us through the different puts and takes as to what you would need to do to get to the top end of the guidance? Are you perhaps assuming a notable improvement in the macro environment? Maybe just kind of walk us through the different puts and takes for revenue and EPS guidance. G. Hekking: Yes. So I think it's easier if we break it down by some of the kind of the key brands we talked about, Anthony. And so with Rise Wellness, they're really on an emerging path. There are some of these orders we have in our back pocket and some are banking on having orders in the back half of the year. And so as we look at Rise, that's kind of the range that we provided specifically on the sales there. Hiya is just very, very newly into Canada and will soon be in the U.K. and then launching Target here in April. So there's a lot of activity on the horizon there to go back and bridge that. I think in short, when we look at the revenue kind of equation and kind of the margin profile, I think achieving the top line is going to be the main thing that will help us go back and deliver the top end of the EPS. Kevin Guest: Yes. And Walt -- we have Walter here. Walter, will you just give some color to what Doug said? Walter is on the management team that's in the trenches day-to-day on some of these things, and I thought I might bring you some added color to hear from Walter on this subject. Walter Noot: Yes. As what Doug was saying, we've got -- we've booked a lot of business on the retail side that when you look at the inventory buildup, most of that inventory buildup is already committed revenue, which is -- which we've had through these retailers. We've got Target. We're in all the Target stores in the U.S. We're in all the Costco stores now as of last week. And then we've got other major U.S. retailers that we're talking to right now. And so that's really, as we move forward, we're adding more flavors to the Protein Pop line that's going to go into Target. And then, of course, all the new retailers that are coming in. So we just see a huge upside, a huge potential for us. But again, that's why we put such a big range on the guidance. And with Hiya, we're super excited with what we've seen so far in Canada. It's been really good. We just barely launched that probably in the next couple of weeks, next 3 weeks, we're going to see the U.K. go live in April. You see Target go live on the retail side, and that's a stand up that goes into every store. So we're -- like we're pretty bullish on both these businesses and the growth of these businesses. And a lot of it is just -- because there's such a range, I mean, the reason the range is there is because you don't know exactly what you're going to do, but Hiya has been such a great brand. The company has spent so much money on marketing and creating so much awareness in the U.S. We think the retail channel is going to be really good for us. Kevin Guest: And one of the things that I'm sure of which you all are aware is that the omnichannel strategy is also a diversification of revenue strategy, meaning the more of these succeed and we're generating money, so it's not disproportionate to China and more locally based, that will help our effective tax rate where we're generating income, which is part of our also long-term strategy just to diversify where revenue is being generated because as you can see from what hit us this last quarter, it's pretty significant. And so that's a very real opportunity for us. G. Hekking: Yes. And maybe, Anthony, to kind of go full circle on this, we're still very bullish on our core nutritional business, and there are so many opportunities. I think Kevin's initiative to go back and look at technology and advance some of those road maps and really support that team. But I think we're at a time where people want health and wellness products, and we make as good as products as you can find out there. And so we really see these things as enablers moving forward. Anthony Lebiedzinski: Got you. So as we look to update our models here, is there anything that you guys can say as far -- I mean, obviously, you will have one less week of sales in the fourth quarter. So I realize that. But other than that, I mean, for -- as we look at the business quarter 1 to 2, 3 and 4, I mean, is there anything to keep in mind as far as will the revenue ramp up as the year progresses? Or do we think that it should be more kind of even throughout the year? Anything to point out to as far as the seasonality of the business? G. Hekking: Yes. So seasonality, I think, particularly in our core nutrition business has really, as we evolved and grown in China has revolved around that Lunar New Year. And it's fairly impactful. And so that market as well as many of our markets in the Asia Pacific region really set up a pretty heavy promotional cadence surrounding that to support the business as we go through there. And so the -- I would say the activity that we see quarter-to-quarter isn't perfectly equal. And so you'll see some ebbs and flows, which we can just give color as the year progresses. Kevin Guest: Yes. And I have -- we have Brent Neidig here at the table, who is our Chief Commercial Officer that also could add some color to what we're seeing from the revenue base as it relates specifically to our core nutritional business. Brent? Brent Neidig: Yes. Thanks, Kevin. Doug just highlighted, there is a certain element of seasonality in our core nutritional business, especially with our predominance within the Chinese community. We're currently in Chinese New Year right now and typically leading up to that new year in many of our Chinese markets, specifically in Mainland China, there is a heavier emphasis on promotional activity as many of our brand partners want to stock up on product to provide for gifts and other selling opportunities throughout the Chinese New Year. That's why we typically see a stronger Q1. And then that momentum starts to escalate into Q2 as well as we have different conventions and events that kick off both in our first quarter and our second quarter. As we hit Q3, summer season and a lot of our brand partners typically take time off where they go on vacation, they spend time with families, their kids are out of school. So we typically see a lull there. That's what we're expecting. That's what I'm continuing to expect. And then Q4, people start to get back into action and prepare for the following year. So that's typically the model that I see. Anthony Lebiedzinski: Got you. And then as it relates to Hiya and then Rise, any added color there that you can share? Walter Noot: This is Walter. I don't know how much color I can share. When I look at that business, of course, there's -- it's a growing trend. Protein, especially Protein Pop, there's a really strong trend there. And we basically introduced late last year, we really introduced Protein Pop retail. So it's a very new brand, and it's building. And as that brand continues to build, I think we'll continue to see it grow in the retail channel. I don't know exactly what the numbers are going to look like, but we've put some guidance in place, and we're feeling really good about where we're going. Anthony Lebiedzinski: Got you. All right. And so -- and it sounds like you also feel good about Hiya as well. So as far as the cost realignment that you guys did in the fourth quarter, can you just help us out as far as how much that lowered your headcount? And then I know you're using some of those cost savings for other things as well. But maybe just you can also touch on how to think about gross margins here for '26 as well as your SG&A? Any sort of added color there would be certainly appreciated. G. Hekking: Yes, Anthony, so the total was about 10% of the workforce that was impacted in that cost realignment. Overall, on a net basis after some of the money has been repurposed, we're probably about $10 million or so in savings, maybe $10 million plus in that range. I think a lot of the things these are being repurposed to are very important to the business and executing strategy and stabilizing. But that's -- those would primarily reside in SG&A. I wouldn't expect a whole lot in gross margin or cost of sales. The primary issue you're going to see on a few of our key line items is the mix between the different businesses, right? And so as you see Rise grow, and right now, we talked about them being breakeven this year, they're going to be at a little bit -- they'll be at a much thinner gross margin. And so that will kind of give the impression, but we'll break that out accordingly so you have some optics there as we move forward into the year as well. Anthony Lebiedzinski: Got you. Okay. And then you touched on some of the -- you mentioned technology initiatives that you're working on. I know you're not ready to share specifics. It sounds like it's still something that you're working on. But can you give us a sneak peek as to what you're thinking as far as how impactful that could be as far as some of the changes that you're looking to do on the technology side? Kevin Guest: Well, this is Kevin. From my perspective, the notion of staying relevant in today's world is so important for us and how people interact with our brand and/or brands is very critical and will determine the future growth of our company, I believe. And so I want to focus on the ability to be quick and be nimble. And our traditional approach has been where we build things in-house, and that has served us very well. Strategically, we're going to look at how can we leverage outside resources in a more robust way, both in the U.S. as well as internationally. But I think speed to market and speed to change and the relevance of how people interact will be a big part of the focus of the strategy behind our technology spend, which will allow people to interact in a much more robust way with our brand and our brands across the board. The other thing we're going to do, which we haven't really spoken much about is we're going to leverage the knowledge and expertise. For instance, Hiya, they have a great knowledge and expertise in brand awareness. And so how can we utilize some of their expertise and resources to help us leverage the USANA brand and the USANA brand awareness. And so as we move forward, that's very kind of high-level fluff and not real detail, but I just -- I am convinced that if we can leverage especially AI in a way that we see many, many really high-end brands interact and utilize AI, which we aren't to its fullest capacity right now, and it's changing literally every day. And we have to play in that space and be as good at technology and utilizing AI as we are in Nutrition is the goal. I think that's the future of a growth company in our space. One of the things I'm most excited about is, if you look at the -- I've seen numbers, a global CAGR of about anywhere from 5% to 8% growth in the health and wellness space. Well, that's where we play. We should be on those curves as a company and technology plays a key role in that growth. So that's where my head is at. Operator: The next question comes from the line of Ivan Feinseth with Tigress Financial. Ivan Feinseth: Congratulations on the ongoing success of Hiya and the new Rise Bars, which I sampled at the ICR Conference, and were really delicious and subsequently have purchased them. So I think that's really great. Going to the technology question for Kevin, what are your focus and thoughts on integrating technology into the consumer health management journey? Recently, another company launched a product that can give you a nutritional absorption reading through your finger. And when I was at the ICR Conference with Doug and Andrew and Patrick, we were talking about the monitor from [ Kolar ] and what gets measured, gets managed and the more technology that a consumer can use to give insight to their health and nutrition journey, the more they can see where they need products or creating product opportunities for your company. Kevin Guest: So Ivan, thanks for the question. That's a great question. I am highly interested in the utilization of technology and the ability to personalize how a person receives their nutrition and not have it based on a one-size-fits-all approach and moving further into the technology space. I have our Chief Science Officer here with us, Kathryn Armstrong. Kathryn, do you want to jump in on this real quick with this conversation with Ivan? Kathryn Armstrong: Ivan, it's good to talk to you again. So I think for us, we have obviously a focus on integrity and ensuring that everything we provide to our customers through all of our brands meets scientific rigor. And I know all of us have watched with eager anticipation over the past decade and more as these types of devices have been launched and then really struggle to link to clinical efficacy. And it's a lot about behavioral science versus physiological science, as you know. So are we actively looking at how to help individuals personalize and monitor their health status, of course, we' will continue to do so. And we are partnering to better understand how to advance that in a way that has scientific integrity and ensures our customers are able to apply their spend to true physiological benefit. Operator: [Operator Instructions] Thank you. At this time, this will conclude our question-and-answer session. I'll turn the floor back to Andrew Masuda for closing comments. Andrew Masuda: Thanks for your questions and participation on today's conference call. If you have any remaining questions, please feel free to contact Investor Relations at (801) 954-7210. Operator: Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Liberty Global's Fourth Quarter 2025 Investor Call. This call and the associated webcast are the property of Liberty Global, and any redistribution, retransmission or rebroadcast of this call or webcast in any form without the expressed written consent of Liberty Global is strictly prohibited. [Operator Instructions] Today's formal presentation materials can be found under the Investor Relations section of Liberty Global's website at libertyglobal.com. After today's formal presentation, instructions will be given for a question-and-answer session. Page 2 of the slides details the company's safe harbor statement regarding forward-looking statements. Today's presentation may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including the company's expectations with respect to its outlook and future growth prospects and other information and statements that are not historical facts. These forward-looking statements involve certain risks that could cause actual results to differ materially from those expressed or implied by these statements. These risks include those detailed in Liberty Global's filings with the Securities and Exchange Commission, including its most recently filed Forms 10-Q and 10-K as amended. Liberty Global disclaims any obligation to update any of these forward-looking statements to reflect any change in its expectations or in the conditions on which any such statement is based. I would now like to turn the call over to Mr. Mike Fries. Michael Fries: Hello, everyone, and thanks for joining us today. As you would have seen by now, in addition to our results, we announced 2 significant transactions earlier today, which, of course, we'll address in our prepared remarks. As a result, I think this call may run over 60 minutes. I hope you can stick with us because there's quite a bit to talk about here. We've broken this down into our typical quarterly results presentation, which Charlie and I will breeze through as we usually do, perhaps a little faster than normal, and then we'll move into more of a strategic update like we did 2 years ago at this time. I also think it might be a good call to follow the slides that we're broadcasting, especially in the second half. But let me jump right in on Slide 4. And certainly, by now, you are all familiar with how we organize and manage our business today. As illustrated here, everything falls into 1 of 3 operating verticals. Liberty Telecom comprises our 4 national FMC champions that generate $22 billion of revenue and $8 billion of EBITDA on an aggregate basis and where our primary goals are to drive commercial momentum and importantly, unlock equity value for shareholders. Much more on that in a moment. Liberty Growth on the far right houses our portfolio of media, infra and tech investments totaling $3.4 billion today. And here, we're focused on rotating capital, right, and investing in high-growth sectors with scale and tailwinds. And of course, in the center sits Liberty Global itself with $2.2 billion of cash and a team with decades of experience operating and investing in these businesses. Now I'll come back to this slide and the strategic update. But first, let me provide some highlights on each of these for 2025. So it has clearly been a busy year for us on all 3 fronts. And as Slide 5 points out, we feel like we've delivered on our core strategic priorities. There's a lot of detail here, so I'm just going to hit a few of the high points. We'll talk about our telecom operating results in the next couple of slides, but we're pleased with the momentum that our commercial and network strategies are delivering, especially in the second half of the year, supported in parts by the benefits we realized from AI, all of our 3 large OpCos hit their guidance targets last year. When it comes to unlocking value in telecom, a key goal for us, as you know, you've no doubt seen our announcements on the U.K. fiber transaction and our acquisition of Vodafone's interest in the Netherlands. We'll dig into both those deals shortly, but this is exactly what we said we would do on our call last year and the year before. At Liberty Global, we've totally reshaped our operating model, having reduced our net corporate spend by 75% in the last 12 months. Needless to say excited to see how this new guidance leads its way into analysts some of the parts calculations. And we continue to allocate capital to the highest return. As you know, we did reduce the buyback last year from 10% to 5% of shares partially, to be honest, in anticipation of some of these varied transactions. And so far this year, we're not actively in the market, but we always remain opportunistic on our stock and we'll keep you abreast of our plans throughout the course of the year versus guiding to them. And with respect to our cash balance, pro forma for the transactions announced today and for what we expect to realize in further asset sales, we should end the year with $1.5 billion of cash, and Charlie will get into that in a bit more detail in a moment. And then finally, our growth portfolio remains highly concentrated with 5 assets comprising 70% of the $3.4 billion in value. We couldn't be more excited about Formula E and the progress we're making on the Gen4 car, our racing calendar and of course, our sponsors. And we have renewed focus on the experience economy. I'm not going to get into much detail here. But by this, we mean live events, sports, et cetera. We probably looked at 100 deals in this space. We've done real work on about 40, and we've only closed a handful of very small transactions. So that should give you some comfort that while we're excited about this sector, we're staying very disciplined as we look to rotate capital. Now the next 2 slides summarize Q4 operating performance for our telecom businesses. In the U.K., Lutz and the team have implemented a number of things that helped improve broadband performance throughout the year, initiatives like bundling Netflix and being recognized as a top U.K. broadband provider. Those things drove a strong Q4 as well as stable ARPUs. Postpaid mobile results were impacted, however, by the increases that they took in October. Hopefully, we'll see improved performance in '26, especially as 5G coverage continues to grow and pricing pressure settles. In Ireland, a combination of fiber wholesale activations, improved network performance. Actually, they are also ranked the best provider in the market and off-net expansion, supported net growth in the fixed base with stable ARPUs. Mobile in Ireland continues to grow steadily. Remember, we're an MVNO there, helped in part by a EUR 15 offer launched in June. In the Netherlands, Vodafone Ziggo's How We Win plan is driving substantial improvements in the broadband base. Becoming the largest provider of 2 gigabit broadband speeds in the market and recent recognition as the best TV provider helped make Q4 the single best result in fixed services in nearly 3 years with steady improvement over the last 6 months carrying into 2026. Postpaid mobile growth in Holland continues to be supported by nearly universal 5G coverage and a strong flanker brand. And then finally, Telenet had its highest quarterly broadband results in 3 years, helped by fixed mobile convergence in the South and a strong Black Friday period. And similar to other markets we operate in, ARPUs were fixed and mobile are very stable. Now if it wasn't enough information for you, we will be discussing 3 out of these 4 markets in our strategic update later in the call, including a lot more commentary on their performance and outlook. So in the meantime, Charlie, over to you. Charles Bracken: Thanks, Mike. Now turning to our Q4 financial highlights. Our operating companies in the U.K., the Netherlands and Belgium delivered on their full year guidance metrics despite challenging market conditions. VMO2 delivered a revenue decline of 5.9% on a reported basis, which was impacted by lower Nexfibre construction revenues due to a slowdown in the fiber build and also sustained competitive pressure in both the fixed and mobile market in the U.K. On a guidance basis, excluding Nexfibre construction and O2 Daisy, we delivered modest growth for the full year. Adjusted EBITDA declined by 2.4% on a reported basis, primarily driven by lower Nexfibre construction profitability. Excluding this, adjusted EBITDA fell by 1% in Q4, but we still achieved growth overall for the full year of positive 1%. Moving to VodafoneZiggo, we saw a revenue decline of 2.3% in Q4, driven by fixed churn and reduced low-margin IoT revenues. This was partially offset by the annual price adjustment and higher Ziggo Sport revenues. Adjusted EBITDA declined 3.4% in Q4, driven by this lower revenue and higher costs related to commercial initiatives. The full year figures were in line with the guidance in Q1 for the new How We Win strategy. At Telenet, we saw a revenue decline of 1.3%, driven by our strategic decision to not renew the Belgium football broadcasting rights and lower programming revenues. Adjusted EBITDA declined by 9.9%, driven by elevated labor and marketing costs as well as higher professional services and outsourced labor spend. Turning to our treasury update. We've been extremely proactive through 2025 and the early part of 2026 and extending our 2028 and 2029 maturities. And we successfully refinanced close to $15 billion across our credit silos. At both VMO2 and VodafoneZiggo, we have fully refinanced all 2028 maturities following successful term loan refinancings, senior secured note issuances and private taps within these credit silos. In Belgium, as we announced in Q3, we have EUR 4.35 billion of committed financing at Wyre, which is contingent on BCA regulatory approval of our fiber sharing agreement. A portion of the proceeds of around EUR 2.34 billion are allocated to repay the intercompany loan with Telenet and will be used to rebalance leverage at Telenet. We intend to further repay some of the 2028 debt at Telenet with the proceeds from our partial Wyre stake sale, which is expected to complete this year. All of this proactive refinancing activity has significantly reduced our 2028 maturities and maintained our average tenor of around 5 years at broadly comparable credit spreads to our historic levels. Turning to the next slide. We remain committed to our disciplined capital allocation model as we rotate capital into high-growth investments and strategic transactions. Starting on the top left, we successfully delivered against all free cash flow guidance metrics for the year across our OpCos and JVs. Additionally, following our corporate reshaping program, Liberty Services and Corporate closed 2025 ahead of guidance at negative $130 million of adjusted EBITDA, which is around $20 million better than our $150 million target. Moving to the Liberty Growth walk in the bottom left. The fair market value of our growth portfolio remained broadly stable versus Q3 at $3.4 billion. This was driven by modest investments in Nexfibre, AtlasEdge and EdgeConneX, offset by the partial disposal of our ITV stake and the full exit of our Enfabrica stake as well as positive fair market value adjustments at Formula E and UPC Slovakia, which has been held in the growth portfolio until the sale process completes later this year. Turning to our cash walk on the top right. We ended the year with a consolidated cash balance of $2.2 billion. During the quarter, we received $162 million of upstream cash and JV dividends and $140 million of net cash proceeds from disposals in our growth portfolio, including $180 million from the partial ITV stake sale. We spent $34 million on our buyback program during the quarter, repurchasing a total of 5% of our outstanding shares during the year. Moving to the bottom right, we are aiming to end 2026 with around $1.5 billion of corporate cash. After deducting for the cash outflows related to the M&A transactions Mike will touch on in a minute, we intend to replenish our corporate cash with a combination of dividends and cash upstream from our operating businesses as well as noncore asset disposals from our growth portfolio. Turning to Liberty Growth in Media and Sports. Our strategy remains to invest in live sports and entertainment platforms with growing global fan bases. Formula E is our lead example of this, and Season 12 has started strongly ahead of the launch of the Gen4 car. Our data center assets, EdgeConneX and AtlasEdge, continue to show strong top line revenue growth, supporting a $1 billion-plus year-end valuation. And our energy transition assets also made big steps forward in 2025. Egg Power secured GBP 400 million of senior debt to help fund over 400 megawatts equivalent of wind and solar power projects, and Believ, our destination charging business has now built 2,500 public charging sockets, which are averaging around GBP 1,500 of EBITDA per socket with a further 23,000 awarded to them by U.K. local authorities. And they're currently bidding on a large number of additional sockets, which are being awarded. In tech, the focus is on AI. We made a strategic investment in 11 labs, and we're also moving our in-house AI investments into the growth pillar, given their potential to sell services to third-party customers outside the Liberty family. We've also established a new services pillar and have transferred Liberty Blume into it from Jan 2026. Now Liberty Blume develops tech-enabled back-office solutions for Liberty Global companies as well as third parties. It delivered over 20% revenue growth in 2025, achieving over GBP 100 million of revenue with an order book of nearly GBP 400 million. The initial value has been set at GBP 100 million, and we've hired a new CEO to accelerate growth. Starting January 2026, we're also introducing an annual management fee of 1.5% of assets under management paid by Liberty Growth to Liberty Services. This fee will be funded by distributions from the growth portfolio, including disposals and will be used to fund direct and allocated operating costs such as treasury and related legal services, and these are all directly attributable to the growth portfolio. Turning to our guidance for 2026. We're providing guidance by operating company. For Virgin Media, O2 from Q1 2026, we will move to new disclosure, which better reflects the 3 key operating verticals following the creation of O2 Daisy. Now these are consumer, business and wholesale. There's a pro forma information in the stand-alone VMO2 release, which explains this further alongside updated KPI disclosures. On this basis, the VMO2 revenue guidance is now set on total service revenues, which we expect to decline by 3% to 5%. Now this is adjusted for the impact of the Daisy transaction, which is driven by continued promotional intensity as well as planned streamlining of the B2B product portfolio following the creation of O2 Daisy. Adjusted EBITDA is also expected to decline by 3% to 5%, also against the comparable period adjusted for the Daisy impact, driven by lower revenue and lower gross margin due to the changing customer mix. Stable property and equipment additions of GBP 2 billion to GBP 2.2 billion, excluding right-of-use additions due to continued investment in 5G and fiber-to-the-home and adjusted free cash flow of around GBP 200 million for the year, supporting cash distributions to shareholders of the same amount. For VodafoneZiggo, we expect stable to low single-digit decline in revenue, driven by a lower fixed base and the flow-through of the front book pricing impact, albeit with support from continued price indexation and fixed and mobile. Mid- to high single-digit decline in adjusted EBITDA, driven by OpEx investments into network resilience and service reliability. Property and equipment additions to revenue is expected to be around 23% to 25%, driven by continued 5G and DOCSIS 4.0 investments as well as the CapEx component of investments into network resilience and service reliability. Now to give more detail on this additional investment, we expect EUR 100 million of incremental investment of OpEx and CapEx into network resilience and service reliability during 2026. Now this will reduce to EUR 50 million OpEx impact in 2027, 2028. And we're expecting adjusted free cash flow to be around EUR 100 million with no shareholder distributions planned for the year. For Telenet, we're introducing new full year 2026 guidance based on IFRS financials, excluding Wyre. We expect stable revenue growth, reflecting a stable operating environment and the annual price indexation under Belgium regulations, low single-digit growth in adjusted EBITDAaL, supported by OpEx savings from significant digital and IT investments and continued lower programming costs. Property and equipment additions to revenue of around 20% as investments in 5G and digital upgrades step down and positive adjusted free cash flow of around EUR 20 million. And finally, for Liberty Corporate, we expect around $50 million negative adjusted EBITDA, driven by the annualization of the cost savings from the corporate reshaping that took place in 2025 and the implementation of the new 1.5% management fee from the growth portfolio. Michael Fries: Thanks, Charlie. Great job. And now we're going to switch gears to what I think I hope is the most important part of today's call. And that, of course, is an update on the key transactions we've just announced and how they significantly advance our plans to deliver value to shareholders. I'll start by revisiting the first slide that I showed you today, and that's the 3 core pillars of our operating structure, Liberty Telecom, Liberty Growth and Liberty Global. I won't go back through the strategies for each of these. I think you've got them by now. But what I have done on this slide is present a very rudimentary sum of the parts valuation exercise for these 3 pillars at the bottom of the slide. It shows that the Liberty Growth portfolio today, accepting the fair market value that Deloitte has prepared is worth roughly $10 per Liberty Global share. Our corporate cash of $2.2 billion, even after a reasonable reduction of the value for the $50 million of corporate spend this year is roughly $6 per Liberty share, which means that with an $11 stock price today, there's at least $5 per share of negative value being ascribed to our Liberty Telecom businesses. And of course, there are multiple ways of arriving at these figures. Some people start by valuing Liberty Telecom and then applying discounts to cash and Liberty Growth and Corporate. But I like this approach. Cash is cash, and we believe the growth assets are valued fairly and appropriately. More importantly, we're rapidly turning those growth assets into cash. We've already exited something like $1.6 billion in the last 6 years. So whether it's negative 5 or 0, you can see why we have focused a lot of time and attention on creating and delivering value in our telecom portfolio. Of course, the Sunrise spin-off just 14 months ago was step 1. That transaction delivered what is today roughly $13 per share of value to Liberty Global Investors, far more than anyone expected at the time or what the implied value was for that business at the time. And that's why we can say our stock really on a combined basis is up meaningfully over the last 2 years. Now moving to the next slide, here's another thing that gives us some confidence in the value of our telecom business. The European telecom sector has been experiencing a broad-based rally this year with the Euro Telco Index up 16% year-to-date and just about every major incumbent telco, and you know all the names, up even more than that, 20%, 25%. So what's happening here? We see 3 key tailwinds impacting the sector. First, of course, is an improving regulatory environment. This is not to say that we're totally satisfied with where things stand. You know us better than that. But if you look at the U.K. and the changes they've made to the CMA or if you look at the recently published draft of the EU's Digital Networks Act, we believe there's a good chance regulators continue to loosen rules around consolidation and spectrum policies, especially in the age of AI, where telecom continues to be perceived rightly as critical infrastructure for consumers, for businesses and for governments. Secondly, just as we are seeing in our own operations like Telenet, where 5G CapEx is largely behind us now or Ireland, where our fiber build is coming to an end, there is light at the end of the CapEx tunnel. And when you combine declining CapEx intensity with Telecom's high margins and stable revenues, you've got a strong recipe for improving free cash flow. And then finally, there is the AI thesis. It's hard to find an industry more ready to benefit from AI-driven efficiencies, customer improvements, network automation than the telecom sector. In addition, as AI permeates every aspect of our lives, our role, telco's role as foundational connectivity and data transport providers, I think, continues to increase. And then lastly, there appears to be -- and this is an area you're experts in more than me, but there appears to be a rotation going on here. Investors growing a bit sour on how capital-light software-driven industries and rotating capital into more infrastructure-based or defensive sectors where AI is a net-net positive and quite frankly, unlikely to be as disruptive over time. I think the impact of AI, if you ask me on our industry, will be positively transformational. I recently asked the CEO of one of the big tech companies, look, how do I go from spending $14 billion a year on OpEx to $7 billion? That's what I want to do. He said, bring me your P&L, and we'll go through it. The point is we're just scratching the surface today. I think the upside for us from AI is massive, and it's massive for our entire industry. Now so with that as background, on this call, last year and the year before, we laid out 2 very specific goals related to our telecom businesses, and they're summarized here on Slide 16. The first was to prepare each of our Benelux operating companies, this was last year, for the next phase of value creation. And I'd say we achieved that goal. Bringing in Stephen van Rooyen as CEO, has been a game changer for VodafoneZiggo. And of course, today, we're announcing the acquisition of Vodafone's 50% stake in VodafoneZiggo in order to advance our plans to spin off a new company that combines our Dutch and Belgian operations. More on that, of course, in a second. And in the U.K., we committed last year to advance our plans to monetize our fixed network infrastructure for both financial and strategic reasons. And early last year, we pivoted away from a pure NetCo, as you know. But together with Telefonica, we continue to evaluate accretive ways to grow and finance fiber infrastructure in the U.K. Today, of course, we announced the acquisition of U.K.'s second largest AltNet, creating what will ultimately be an 8 million home fiber platform with the opportunity to further consolidate a fragmented market. So let's get into these deals, beginning with the Vodafone acquisition on Slide 17, after what can only be described as a very successful, and I mean -- seriously mean rewarding partnership with Vodafone in the Netherlands, we're pleased to announce an agreement to acquire their 50% stake in exchange for EUR 1 billion of cash plus a 10% equity interest in a new company called Ziggo Group, which will own 100% of VodafoneZiggo and 100% of Telenet in Belgium. Now there's 3 primary reasons we're doing this, 3 primary benefits from this deal. To begin with, we believe the net present value of both operational synergies and incremental service revenues from this transaction and combination total about EUR 1 billion alone. And of course, pretty much all that accrues to us. Second, we think the combination of Holland and Belgium is a financial winner. As the chart on the right shows together, the 2 operations serve 7 million mobile subs and over 5 million broadband subs with total revenue of EUR 6.6 billion and over EUR 2.5 billion of EBITDA. The combination also creates a clear road map to reduce leverage to what we're estimating will be about 4.5x through a combination of synergies and improving operational performance. In fact, we think we'll generate $500 million of free cash flow by 2028. And then third and perhaps most importantly, we are announcing today our intention to list Ziggo on the Euronext exchange in 2027 and to simultaneously spin off our 90% interest to Liberty Global shareholders as we did in Switzerland. Interestingly, similar to Sunrise, there is a strong equity story here. Belgium and Holland are rational markets just like Switzerland. We have a clear network strategy in each country like we have in Switzerland. Our plans to reduce leverage are front and center and actionable like they were and are in Switzerland. And the financial profile should support both free cash flow and dividends in the future. Interestingly, this is more anecdotal, just as Sunrise was once a very successful public company that we took private and then relisted. Ziggo was also a very successful public company that we took private. So we will be reintroducing Ziggo to the public markets as we did with Sunrise. Now just a quick update on Slide 18 of VodafoneZiggo's recent performance. There's no question that Stephen's How We Win plan is driving clear operational turnaround. The combination of OpEx savings, repositioned broadband pricing, speed upgrades and a multi-brand strategy are delivering materially lower churn. And you can see that on the bottom right of this slide, where Q4 '25 was the best broadband performance, I think, in 10 quarters, and things continue to look good into 2026. We've also provided a medium-term outlook for VodafoneZiggo on Slide 19. And while 2025 EBITDA was in line with our plan, 2026 guidance, as Charlie indicated, shows a decline impacted in part by our largely one-off investment we're making in network resilience and service reliability. In 2028, however, we expect EBITDA growth to rebound. We're not giving you actual numbers here, but we are confident in that trajectory. That EBITDA growth, combined with a very stable CapEx envelope should generate the meaningful free cash flow I just referenced. And as Charlie indicated, leverage will peak in 2026, but should decline thereafter, both organically, that's, of course, from EBITDA growth and through asset sales like our tower portfolio, the proceeds of which we intend to use to reduce debt. And then a quick strategic update on Telenet on Slide 20. We can't underestimate the importance of the steps we've taken over the last 24 months in Belgium to both rationalize the market structure and create a clear operating road map for both of our businesses there. As you know, this is the first time we've completely carved out a fixed NetCo, which we call Wyre, and have even gone one step further by entering into a network sharing arrangement with the incumbent telco Proximus that will create arguably the most attractive fiber wholesale market in Europe. And to facilitate the carve-out, we secured EUR 4.35 billion of new capital to both fund the Wyre build and reduce leverage at Telenet. And as we've discussed, we're in the process of selling a stake in Wyre with the proceeds earmarked for further deleveraging in Telenet. The goal here is to bring Telenet's midterm leverage down to the 4.5x level. And Telenet, as part of the new Ziggo Group, I think, represents a very strong equity story itself with outstanding retail brands, significant B2B growth, an upgraded 5G network and long-term access to fiber. Perhaps even more importantly, though, with CapEx declining significantly this year, Telenet's free cash flow is at that inflection point and poised for continued growth. Now let's switch gears to the U.K. and our announcement today to use our fiber JV, Nexfibre to acquire Substantial Group, which consists of the Netomnia fiber network and a 500,000 subscriber broadband customer base for a total enterprise value of GBP 2 billion and a net payment of GBP 1.1 billion at closing. Now I'll walk through the various transaction steps on the next slide, but the goal here is simple. The first goal is to create the second largest fiber network after BT Openreach. When you combine Netomnia's 3.4 million fiber homes with Nextfibre's existing 2.6 million fiber homes and then you add 2.1 million VMO2 homes that will be made available to Nextfibre for upgrade, the platform will ultimately reach 8 million fiber homes by 2027. As I'll outline in a moment, there are significant benefits to VMO2 stakeholders here. This is a fantastic outcome for VMO2. It's also a strong vote of confidence in the U.K. generally. We want the U.K. government to know that we, together with our partners, are willing to commit significant capital to the U.K. based upon their pro-growth policies. And this next slide is one that you'll probably want to print out and tuck away somewhere. As I said, this is a complicated transaction, they often are, and this is an attempt to simplify it as best we can. On the left-hand side, you'll see the money and asset flows. The green numbers, when you take a look at the slide, if you're aren't looking at it now, the green numbers simply show the cash and how it moves from and to the various parties here. Approximately GBP 1 billion of equity will be injected into Nexfibre, the acquisition vehicle, and that's our 50-50 JV with InfraVia, of course. And this will consist of GBP 850 million of cash from InfraVia and GBP 150 million from Liberty and Telefonica. So the first point to make is that Liberty Global directly will be responsible for GBP 75 million of cash in order to complete this transaction. The GBP 1 billion together with a new debt facility, I think it's about GBP 2.7 billion will fully fund both this transaction and the longer-term strategic plans for Nexfibre 2.0. Now once capitalized, Nexfibre distributes a little over GBP 2 billion of cash, GBP 950 million to Substantial Group for the Netomnia fiber assets, and GBP 1.1 billion to VMO2. Of course, VMO2 will use that capital to both acquire the broadband subscribers for GBP 150 million and reduce leverage. The vast majority of the GBP 1.1 billion going to VMO2 is in exchange for a significant commitment to utilize the Nexfibre network on a wholesale basis. That's how these deals work. Specifically, VMO2 will provide access to 2.1 million of its own homes and we will agree to pay Nextfibre wholesale access fee on those homes once they're upgraded to fiber. And additionally, VMO2 will pay wholesale access fees day 1 on another 2.5 million homes that overlap Nextfibre's footprint. So there's substantial value being contributed to the Nexfibre 2.0 plan by VMO2, and that's why it's being paid. Now as I mentioned, the benefits to VMO2 are substantial. To begin with VMO2 gets cash to reduce leverage. This is necessary, of course, given the increased wholesale fees paid out to Nexfibre. Second, it will end up with 500,000 additional broadband customers. Third, there will be substantial CapEx avoidance here, both in terms of the cost to build and the cost to connect millions of premises that will no longer be the responsibility of VMO2. We think the NPV of that is around GBP 800 million. Fourth, VMO2 will be able to continue providing construction and managed services to Nexfibre in exchange for revenue and positive EBITDA margin. The NPV of that contract, we think, is around GBP 400 million. And then finally, in addition to having access to the second largest fiber footprint in the U.K., VMO2 will also receive a direct stake in Nexfibre 2.0. Now looking ahead, I think this transaction also opens up the market for further consolidation, something that we have talked about for a long time and may just be on the horizon. One quick slide here providing additional context on VMO2's operational outlook, as I promised. On the left-hand side of Slide 23, we make the point that despite a highly competitive market, VMO2 has delivered pretty good financial results, especially in comparison to its peers. While revenue has been largely flat over the last 4 fiscal years, and you know that, EBITDA has grown annually at around 1.5%. During the same time frame, VMO2 has generated GBP 2.6 billion of cumulative free cash flow and distributed GBP 5.2 billion to Liberty and Telefonica in the form of dividends. We are happy shareholders here. That's clear. Now the rest of the slide identifies the main drivers of growth moving forward and why we're confident in the VMO2 story, including 3 powerful brands, Virgin Media, O2 and Giffgaff, that reach every segment and help drive fixed mobile convergence. There's also synergies and B2B growth from the recently completed O2 Daisy merger, strong wholesale position as the #1 MVNO provider and now a key partner in the second largest fiber footprint. I mean, Lutz and the team, we believe we have a pretty good head start in AI-driven innovation and efficiency as well. And on top of that, there's the opportunity to drive growth off-net to the 10 million homes we don't reach today. So a lot of really good things happening in the U.K. market for us. Finally, this is the key takeaways here on the final slide, what we'd like you to bring home, if you will, from the second half of this call, right? Number one, we think the telecom sector broadly and equity values in Europe more specifically are poised for continued appreciation in the eyes of investors. Tailwinds from consolidation, stable cash flows and what appears to be a rotation into stocks that will be net beneficiaries of AI as opposed to roadkill are drivers here. Hopefully, by now, you're convinced that we are serious about delivering value to shareholders. The Sunrise spin-off was always step 1. We told you that. And the transactions we announced today, in particular, the Vodafone stake acquisition and our intention to list and spin off the new Ziggo Group will be step 2. In the meantime, we worked extremely hard to reshape our corporate operating model. This is not just a cost-saving exercise, even though it did save considerable costs. We believe that our structure today is fit for purpose, both to continue operating and investing in the TMT sector as we've done for the last 20-plus years, but also to provide our unique form of expertise to existing and future affiliates. Now while we were only marginally successful in convincing analysts to look at our corporate costs differently, we have been spectacularly successful at reducing those net corporate costs, as I said, by 75%. That is going to accrue to the benefit of our stock price. And we're excited about our growth platform. We have a great track record here, and we're focused on the right sectors where we have a clear right to play as they say, and where there are tailwinds and scale-based opportunities that I think we're uniquely qualified to pursue. So stay tuned to see what we do there. And then finally, in our world, capital allocation is everything. Now where you choose to invest your capital, especially in a capital-intensive business, has never mattered more. We've always run our telecom businesses as if we're going to own them forever. And even in that context, they generally have not required any cash from us to achieve their strategic and operating objectives. We will invest in a telecom business when it unlocks value for shareholders. We've said that many times, like we did with Sunrise, delevering the company pre-spin and like we're doing with the acquisition of Vodafone stake in Holland. We have been significant buyers of our own stock. $15 billion over the last 9 years to be exact, reducing the number of shares outstanding by 63% and ensuring that those who stuck around with us end up with a bigger piece of the pie. If you owned 1% of our company in 2017, you ended up with over 2.5% of Sunrise, for example. And finally, we do believe there will be opportunities in tech, infrastructure, energy, media, sports and live entertainment. These are areas where we have significant deal flow, great partnerships lined up, $10 per share of value and importantly, strategic flexibility to deliver that value to shareholders. So hopefully, that update was helpful for you, especially on the recent announcements of the 2 deals this morning. So with that, operator, we'll get to questions. Operator: [Operator Instructions] The first question will go to the line of Robert Grindle with Deutsche Bank. Robert Grindle: My head is spinning with all the news you guys have provided. So I'll ask one question about the U.K. deal. 8 million Nexfibre homes post deal completion and the 2.1 million HFC home upgrade. Do you think that definitively unlocks the U.K. wholesale opportunity in a major way. Do you think you have to wait to get to the full 8 million? Or are you on a course before you get to that point to get more wholesale business in. Michael Fries: I'll take a crack at it, Robert. Thanks for the question. And Lutz or others -- Andrea can chime in here. But the 8 million will be achieved relatively quickly end of '27 probably. So that's a good fiber number for Nexfibre 2.0 both, as you say, from the 3 -- the contribution of the 3 entities. And VMO2 will be a significant wholebuy partner for that 8 million home footprint. And remember that Lutz and VMO2 continue to upgrade their network. So there'll be another 12 million homes on the VMO2 network that continue to be upgraded. So we believe you're looking at what is effectively a 20 million home footprint in the end, the vast majority of which will be fiber. So obviously, first order of business is to grow and manage our own customer base on that 20 million home network, but also very much so to provide a wholesale opportunity for the market, which is much needed for reasons that you understand very well. Does that answer your question? Robert Grindle: It does, Mike. Is there a time line on getting the rest of the VMO2 network upgraded? Michael Fries: Well, I don't know if we've disclosed that time line. Lutz, if you want to reference that, let me know if we disclose that or not. Lutz Schüler: I would add only that we have already upgraded 5 million homes to fiber out of the 13 million we are having. So you -- Robert, you can add these 5 million to the 8 million. So you have very quickly an access to 13 million fiber homes. And the second part, right, I think we always said that we will enter the consumer wholesale market. And obviously, the more homes and fiber we are able to offer, the more interested it is. Further guidance on how quickly we will upgrade the remaining homes, we haven't given, and we don't want to. Operator: Our next question will go to the line of Josh Mills with BNP Paribas. Joshua Mills: Maybe I'll take my questions on the VodafoneZiggo transaction. I think you're still talking about a stable CapEx envelope over the guidance period. But now that you're creating this new Ziggo group with more scale, does it change your appetite or opportunity to invest more on the cable to the fiber upgrade strategy? Is there any synergies there you can take from your learnings in the Telenet business and bring them over to the Netherlands, it would be very helpful. And then secondly, I think on Slide 17, where you talk about the clear road map of bringing Ziggo Group leverage to 4.5x. Is that all organic deleveraging? Or would you be willing to inject cash into this business prior to the spin-off as you did with Sunrise. Michael Fries: Great questions. Listen, I think on the network strategy for Holland and Belgium, those plans are set. So we have made a definitive assessment of the CapEx strategy and network strategy for a fixed business in VodafoneZiggo's market, and we are going with DOCSIS 4. The team has already done a great job of getting 2 gig rolled out nationwide with the largest 2 gig provider, and they'll be at 4-gig and 8-gig right around the corner. So there is no strategy or plan to build fiber in the Netherlands, and we don't believe it's necessary either from a commercial and certainly not attractive from a capital point of view. So the CapEx profile does not change as a result of this or any announcements that we're making today. On the leverage, I think that as we mentioned, there's 2 very clear sources of deleveraging. One is organic growth. the second -- or 3, I guess, the second is free cash flow and paying down debt as we're doing in Sunrise. And then three is asset sales. So in the case of Holland, we have PropCo and TowerCo. In the case of Belgium, we have the Wyre stake. So there will be asset sales. With those proceeds used to delever, there will be growth in EBITDA organic, and there will be free cash to organically delever. And that is the plan. At this stage, we don't anticipate putting any capital or cash into the Ziggo Group to get the plans launched in 2027. And Charlie, do you want to add anything to that? Charles Bracken: No, I absolutely endorse what it is. I mean remember, there are some pretty material financial synergies that we get, which obviously give us strong free cash flow. And I should clarify that, that $500 million is the annual target. It's not a cumulative target. I also think that there's -- Stephen has performed and his team, by the way, performed fantastically. And as they get this EBITDA turnaround, I think you can do the math and figure out how that contributes to getting towards this 4.5 target, which we think works based on what we saw in Sunrise. Operator: The next question will go to the line of Matthew Harrigan with StoneX. Matthew Harrigan: Since I'm the last American left in the draw again. When I talk to your U.S. peers on AI, they don't expect to see too much quantifiable benefit this year, but pretty substantially by '28. Is that something that you layer into your numbers somewhat. And clearly, the market is not remotely assigning the value of the ventures plus cash. So they're not going to give you anything for having your telecom OpEx. But what are your thoughts on really seeing that discernible in the numbers? And when you look at AI, is that -- I mean, clearly, a lot of the value in your network has been appropriated by Silicon Valley and other tech companies. But when AI really sticks in, are you going to see 85% of the benefit on the cost side? Or do you expect to see some revenue enhancements that actually attach to you as well? I know it's a fairly big question, but obviously, people are -- it will be very transformative if you can have your OpEx even if it's in 8 to 10 years. Michael Fries: Yes. Look, I'll address that generally, and I'll ask Enrique to step in and provide a bit more color. But 3 things are really driving for any telco driving the benefits from AI, right? Beginning with customer acquisition and retention, which we're all seeing marginal improvements from the investment in our call centers and things like that. The second is fraud, credit, things like that, that can really drive down OpEx and inefficiencies. And then as you mentioned, the network and operations. And I don't know, roughly, those are each going to contribute about 1/3, let's say, of the demonstrable benefits we expect to see in the next let's say, 1 to 3 years. And they're not small numbers. There will be real benefits. And I think the nice thing that I'm seeing in the space is that whereas a year ago on this call, I would have said that we're inventing a lot of these applications. Right now, we're getting bombarded with start-ups and third-parties and Silicon Valley companies that are doing a much better job in many instances of creating these solutions for us. And so the pace of integration and implementation, I think, is speeding up, and it's real. So as I said in my remarks, I don't think there's an industry better positioned to benefit from marginal improvement in CapEx, OpEx and revenue from AI. But I would emphasize the word marginal there. That's really all we're doing at this stage as an industry is finding marginal benefits. I think the real home run is to think more broadly and bigger about how we kind of disrupt our own supply chain, our own software stacks, our own operating models and to do that could be material. I'll let Enrique chime in if you want, if you're on, Enrique. Enrique Rodriguez: Yes. I mean I think maybe the first thing I'll emphasize, Mike, is, as you said, it is real. We have gone from a year ago exploring AI to now seeing real benefits being delivered today and even more importantly, over the next 12 to 24 months, pretty material improvements. I would say, maybe as most of the industry is seeing a lot of benefits on the call center and the support part of the business first. We'll see that going to operations. But we're really, really getting excited about what we're starting to see as innovation more on the revenue side. I think we're going to see '26, at the end of '26, we're going to look back and look at those revenue opportunities as the year where they became real. Charles Bracken: Mike, can I just have a quick plug. Sorry, I was going to say can I have a quick plug at sort of Liberty Blume. Look, the other aspect of this is back-office services, which is not as big as what Mike and Enrique said in the front office and middle office, but the back office still is material for telco, and it's about $1 billion, $1.5 billion by some definitions of spend for us. And what Blume is finding out is there's lots of tech enablement with AI tools to significantly reduce their accounting, their payments, their procurement of these financial products, et cetera, et cetera. And we're finding actually these are opportunities where we're getting massive savings by reducing heads, but we're able to scale our existing heads to grow revenues. And that's really what's driving that 20% revenue growth that we see in Blume. And actually, we see that continuing for many years. Operator: Our next question will go to the line of Polo Tang with UBS. Polo Tang: It's really about VMO2 guidance. It was weaker than expected with a minus 3% to minus 5% decline in EBITDA. I think consensus on the same basis was probably getting for about minus 1%. Can you help us understand how much of the decline relates to the rationalization in B2B that may be specific to VMO2? And separately, how much of the decline reflects weakness in the broader U.K. markets? And can you maybe just give us some color in terms of what you're seeing in terms of U.K. competitive dynamics in both mobile and broadband. And I also have a quick clarification in terms of the Netomnia Nexfibre deal because VMO2 is receiving in GBP 1.1 billion of cash from Nexfibre. But can you clarify what VMO2 is giving up? So specifically, what is the minimum commitment on the 4.6 million fiber footprint? And can you give some sense in terms of what the wholesale rate is per subscriber? Michael Fries: Yes. Thanks, Polo. I'll let Lutz address your first question around VMO2 guidance and what we're seeing in the market. And then Andrea, you can work up a good answer to the question around VMO2's commitments. I don't know how specific we're being about that as we sit here now, Polo, but I'll let Andrea address that. Guys? Lutz Schüler: Yes. Polo, so you can broadly contribute 30% to the B2B restatement of numbers, including Daisy. And 70% is attributed to a cautious view on the fixed consumer market. So it's not mobile, it is fixed consumer. As we all know, competition is very high as we speak. Yes, as Mike alluded to, I think we had a pretty good Q4 with very low fixed net add losses and a pretty stable ARPU. But so far, right, the market is even more competitive. There's some fixed telecom access ready outstanding from Ofcom. And therefore, we have factored this in a cautious guidance. The reason why you see a similar number on EBITDA is simply that we are also paying more and more wholesale fees to Nexfibre, and that is, to some extent, eating up some of our efficiencies. Michael Fries: But just to be clear, and Charlie, you keep me honest here, the guidance we provided today for VMO2 does not pro forma into that guidance the transaction with Substantial Group. So we'll have -- that is all happening real time. Charles Bracken: We're going to have to amend it. Michael Fries: Yes. Lutz Schüler: Completely excludes it also. I think, Mike, why I said Nexfibre is we have a growing customer base in the existing Nexfibre coverage. Michael Fries: I know why you said it. I just wanted to clarify it. Andrea? Andrea Salvato: Polo, I think there were 3 questions there. One was, are we giving any sort of -- is there any sort of minimum penetration commitments. No, there's an adjustment at closing depending upon how many subs get transferred over, but that's very manageable. But going forward, there's no minimum commitments. There's also no migration commitments. The transaction has been designed to give Lutz full flexibility in terms of managing the migration from HFC to fiber, which we obviously thought was very important in the overall market context. I think the second question was just a clarification on what VMO2 is getting. And I think if you break it down, VMO2 is getting $1.1 billion in cash and is getting a -- is getting a 15% stake in Nexfibre. In return for that, it's going to spend GBP 150 million to buy approximately 500,000 subscribers at closings, we think is the estimate that the Substantial Group will have. And it's also committing its traffic on 4.6 million homes. 2.4 million are in the overlapping Netomnia area and then 2.1 million are in these new homes that we're contributing into the Nexfibre 2.0, which have been carefully selected to make it a contiguous complete network. So it's not going to be a sort of Swiss cheese. And I think what was -- there was a third point, I'm sorry, I'm just... Michael Fries: Third question is, are we providing any detail on wholesale rates and things of that nature. And the answer is no. Andrea Salvato: No. Yes. Thank you, Mike. Yes, thank you. We're not today, but it's a competitive wholesale rate. Operator: Our next question will go to the line of Ulrich Rathe with Bernstein Societe Generale Group. Ulrich Rathe: On the Belgium deal, you mentioned a synergy figure there. Could you talk a little bit about what kind of synergies these are because this is a cross-border deal where the story in European telecoms has always been that it's harder to create synergies. And specifically on the synergies, would the financial synergies that Charlie sort of alluded to be included in that EUR 1 billion figure. And if I may just add a clarification, there was some Bloomberg sort of headlines about Telenet deferring a refinancing because of difficult markets. Could you comment on that, if that is appropriate at this time. Michael Fries: Charlie? Charles Bracken: Yes. Let me just comment on the Telenet refinancing. I think we felt that the market fully understood the number of steps we were taking in Belgium, which we essentially were to pay down debt to 4.5x on Telenet through the Wyre sale and the fact that we docked in the refinancing to separate out Wyre at the EUR 4.35 billion, we thought have been well understood. I think it probably was in hindsight, too much for the credit market to digest in one go. And that's fine. I mean it was an opportunistic transaction as we always do. We thought that by halving the amount of available Belgium debt, there'll be a lot more demand than we felt, and it was a pretty choppy market. And you may recall, it was a softer market that we had a few weeks ago. So I think the discretion is the better part of [ ballard ]. Nick and I felt that the right thing to do is take a pause. We will let these transactions settle. We'll prove out the various steps. And at the right time, we'll go away and do what we usually do, which is in the $500 million to $1 billion tranches refinanced. But we still have plenty of time. I think as we tried to show in the results call, we actually don't have any material debt maturities, if you include our revolver until 2029 in Telenet, but we're very confident, and hopefully the credit markets will support this, that as these steps unfold, we can essentially reprice the debt and extend the maturity. And it's interesting, actually, the debt still trades at a very tight level despite this transaction last week, which perhaps is a bit bewildering. Look, I think in terms of the synergies, I think I slightly disagree that I think there are cross-border synergies. Enrique has proved that with the incredible work he's been doing on technology. I mean there's an awful lot of scale benefits and national technology doesn't really have a difference market to market. And I think also, as you rightly point out, the ability to drive financial synergies will come because we are able to use the platform that we will create in VodafoneZiggo and Telenet to really drive the technology across the broader footprint, which obviously has some benefits to us. So I think we feel pretty good about the synergies. And actually, to be honest with you, we might have undercooked them because we were obviously operating on a clean team basis in this transaction. So stay tuned. Let's see what we can come up with. Michael Fries: Yes. Our track record on synergies is pretty good. And I would agree with Charlie's comment that we've probably undercooked them, especially on the OpEx and potential revenue side. Does that answer all your questions, Ulrich? Ulrich Rathe: Yes. I was just wondering, so are the financial synergies included? Or is the $1 billion just the operational bit. Michael Fries: They are included. Charles Bracken: They are included, yes. Operator: Our next question goes from the line of David Wright with Bank of America. David Wright: Again, so much to absorb here. I guess when we're thinking about the Ziggo spin, Mike, it's a strong equity story similar to Sunrise, but that does ignore what I think you flagged at the time, which was Sunrise was a very clear and strong dividend payer, obviously, in a very low rate market. And we've seen that dividend growth just today in the Sunrise share price work so well. There's no dividend story here in Ziggo. And I guess my other question is, what's the sort of run rate of synergy you guys sort of need to hit in the short term to really commit to the spin. Is that date really in stone there? And I guess my sort of associated question is, I think the VodZiggo guidance was also quite a lot weaker than most of us had forecast alongside VMO2. I'm just wondering, is there a sense as you sort of restack this business that you're -- I don't want to use the phrase kitchen sinking, but you are guiding to find a level you can absolutely deliver on and maybe put a little bit more investment into 2026 to grow from. Michael Fries: Yes, David, that's a lot of good questions there. So I'll try to address and Stephen can jump in here as well. With respect to timing, I mean, we were purposely general about timing. We believe 2027, as we especially get into the second half of that -- of next year, we are going to be able to see or forecast the kind of storyline here that the market will want to see. That does reflect and has comparisons to Sunrise, namely a deleveraging story from free cash flow, EBITDA growth and asset sales. Secondly, the ability to project or forecast a free cash flow number. We gave you a number today, EUR 500 million. That's 50% more free cash flow than Sunrise generates. It's not coming this year or next year, but we're going to be -- we believe we'll be able to forecast that kind of free cash flow story when it's time to get to the market. And I think the growth -- we've talked quite a bit about How We Win plan and how it -- we even showed you some visuals on the slides about how '26 is an investment year for 2027 and 2028, we start to see a rebound. So it's our view that all those things when they come together, will tell a compelling equity story. But here's the other thing to point out, which is unlike, say, Oddo, we're not listing this company through an initial public offering. We're not waiting to build a book. We're not looking for a minimum price. We're not going to raise primary capital. So those -- we don't have any of those strikes against us. We're listing the shares and spinning them off to shareholders exactly as we did with Sunrise and the market will find a value, we believe, a healthy good value well above the negative $5 we're getting in our stock today. That's all you got to believe. That's it. You've got to believe that there's good equity value in this story that in the hands of our shareholders, that equity value will trade well on a Euronext exchange with a compelling operating and brand-driven storyline, and it will be less than 0. It will be more than 0. That's all you got to believe. And so I think we have lots of flexibility here, tons of freedom to plan how and when and what we do, which is -- which to me is very exciting. Stephen, do you want to add anything to that on the Vodafone side? Stephen van Rooyen: Well, I think the only component I'd add to it is that, as you said -- can you hear me, Mike? Michael Fries: Got you. Stephen van Rooyen: So look, as you said, I think the core of it is that we have an unfolding story of business improvement. So the underlying value of the core VodafoneZiggo business, I think, will come through as we get through the investment in 2026 and into 2027. We've shown a track record so far in the last 12 months, and we've got high confidence given what we're seeing today and given the plans we have ahead of us that 2026 will be another step forward in the plan. And as you say, 2027 will show those return on investments, and we'll accelerate out of that. So I think the core business, if you value the core business, will look slightly different in 12 months from now. Operator: Our next question goes to the line of James Ratzer with New Street Research. James Ratzer: So I was interested in following up on the slide you had to discuss the kind of Netomnia Virgin transaction in a bit more detail on Slide 22. So you've got a very kind of helpful chart there showing all the cash movements. Could you just run me through also what the debt movements are because Netomnia, I think, will have around maybe a bit over GBP 1 billion of debt on closing. Does that all go to Nexfibre? Or does some of it go to VMO2? And then of the subscribers or the homes, sorry, you've got the 2.5 million homes where VMO2 is going to pay committed wholesale fees on closing. How many subscribers does VMO2 have in that footprint, please? And then secondly, on the 2.1 million homes that then Nexfibre will be upgrading, what's VMO2's customer volume in that footprint? And to give us an idea of kind of Lutz's incentive to migrate customers over to FTTH, can you let us know, please, how many customers today within VMO2 have been upgraded from HFC to FTTH, where VMO2 has done that upgrade itself as a result of the overlay. Michael Fries: Thanks, James. Charlie, you hit the debt question, please? Charles Bracken: Yes. So first of all, there's no incremental debt going on to VMO2. I'm not sure how much we're disclosing, but I would underline that Nexfibre will have a fully financed business plan to get to 8 million fiber homes, with a combination of existing debt, but also the undrawn facilities. So this is a fully financed cash flow positive AltNet, which I don't think we can say about all of them. And I think in terms of the details of the numbers, look, let's take that offline because I'm not sure what we've agreed to disclose or not disclose. But that is the key message, fully financed and no debt into VMO2. Michael Fries: And on the 4.6 million homes, Andrea, keep me honest, I think you could -- we're not disclosing the number of customers today, but you can read across from our broad penetration rates to those areas. It's going to roughly equal our current penetration rates. I think it's a safe bet. Lutz, do you want to address the fiber question? Lutz Schüler: Yes. So far, we have a very low number on fiber in our existing Virgin Media, O2 cable coverage, right? Majority of our customers in fiber are coming from the fiber network Nexfibre owns. And so we still -- no customer is leaving us because of technology. Also, we are able to acquire exactly the same number of customers in the cable network as well as in fiber. So therefore, commercially, we don't have, at the moment, an incentive to put customers on fiber. And therefore, we have a low number for now. Michael Fries: Yes. But in this, you should assume in the deal we just announced, there will be some incentives, for example, cost to connect, wholesale rates, but we're not disclosing those details today. Operator: That will conclude the formal question-and-answer session. I would now like to turn the call over to you, Mr. Fries, for closing remarks. Michael Fries: Sure. Thanks for sticking with us, guys. Sorry, we went a little bit over. We had a lot, as you said, to disclose. I just want to say quickly, thank you to everybody on the call today from my team because this has been a Herculean effort and just about everybody on this call was involved in these transactions and of course, delivering these results. So thank you to each of you for the great work and terrific, terrific outcomes. And look at the deals we think were announced today, I'm excited about. I think they unlock both value, but also give us a tactical runway to control our destiny here, specifically in the Benelux region, but also, I think, increasingly in the U.K. market. So they're the right kind of deals. That's exactly what we told you we would do a year ago. I think you can trust us when we tell you where we're focused, what we're focused on and how we intend to create value. So I appreciate you joining us. I know there'll be a lot of questions and follow-up, you know where to find us. So thank you, everybody. Operator: Ladies and gentlemen, this concludes Liberty Global's Fourth Quarter 2025 Investor Call. As a reminder, a replay of the call will be available in the Investor Relations section of Liberty Global's website. There, you can also find a copy of today's presentation materials.
Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the JELD-WEN's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to James Armstrong, Vice President of Investor Relations. James, please go ahead. James Armstrong: Thank you, and good morning. We issued our fourth quarter and full year 2025 earnings release last night and posted a slide presentation to the Investor Relations portion of our website, which can be found at investors.jeld-wen.com. We will be referencing this presentation during our call. Today, I am joined by Bill Christensen, Chief Executive Officer; and Samantha Stoddard, Chief Financial Officer. Before I turn it over to Bill, I would like to remind everyone that during this call, we will make certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties, including those set forth in our earnings release and provided in our Forms 10-K and 10-Q filed with the SEC. JELD-WEN does not undertake any duty to update forward-looking statements, including the guidance we are providing with respect to certain expectations for future results. Additionally, during today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to their most directly comparable financial measures calculated under GAAP can be found in our earnings release and in the appendix of our earnings presentation. With that, I would like to now turn the call over to Bill. William Christensen: Thank you, James, and good morning, everyone. Before turning to results, I want to thank the teams across JELD-WEN. The fourth quarter remains challenging and the progress we made required sustained effort in an environment that continued to put volume pressure on the business. Our employees stayed focused on customers, operated with discipline and worked through the realities of the market. I'm grateful for their commitment and their work continues to strengthen the foundation of the company as we move forward. The macro environment remained very soft during the fourth quarter, consistent with what we expected coming into the period. End markets did not improve meaningfully and demand across both new construction and repair and remodel continue to be under pressure. Despite those market challenges, we delivered results at the high end of our expectations. That outcome reflects disciplined execution and sustained effort across the organization to manage through a difficult environment. As seen on Slide 4, we delivered the high end of the sales and adjusted EBITDA range we forecasted through a combination of top line performance and cost actions. Sales came in stronger than we expected, driven by the hard work of our sales team, combined with improving operational execution, including continued progress with on-time in full delivery. At the same time, we took deliberate labor and cost actions to better align the business with market conditions, consistent with what we outlined in November, including reducing full-time positions by approximately 14% or about 2,300 people in full year 2025. These actions were structural and reflected our view that demand is unlikely to improve meaningfully in the near term. While cost actions played an important role, we remain focused on serving customers and securing the long-term health of the business. Adjusted EBITDA also came in better than we expected. The quarter included a few million dollars of in-period items that were timing related and are not expected to recur. However, excluding those items, underlying adjusted EBITDA would have been above our guidance range. Cash performance followed that improvement. Free cash flow came in approximately $20 million ahead of our expectations, even with higher capital spending due to carryover projects, reflecting tighter working capital management and the benefits of the cost actions we have taken. Additionally, we completed the sale leaseback of our Coral Springs, Florida facility in the fourth quarter, giving us net proceeds of roughly $38 million, increasing our liquidity position. However, as the macro environment remains soft, volumes and margins continue to face pressure. And while operational performance is improving, there is more work to be done. For the full year, we delivered sales of $3.2 billion and adjusted EBITDA of $120 million. While that result was at the high end of the guidance we provided after the third quarter, it is well below where we expected to finish the year when we began. The macro environment remained difficult throughout the year, particularly in retail and lower-priced new housing and demand did not recover as we had originally anticipated. At the same time, we experienced more disruption from service challenges earlier in the year than we expected as we work to rightsize the business, reposition our operations and implement more standard ways of working across our manufacturing landscape. That said, the business exits the year in a more stable position than it entered it. Over the second half of the year, we made meaningful progress improving service levels as production transitions from consolidations were completed both in North America and Europe, backlogs worked down and operations stabilized. Our on-time and full performance has improved as equipment ramped and processes have become more consistent, particularly late in the third quarter and into the fourth. We are also implementing a common manufacturing operating system across the North American network, which is allowing us to identify issues faster and balance operations more effectively than we could earlier in the year. While we still have a lot of work to do, service performance is moving in the right direction. As we look ahead, our focus remains on controlling what we can control. Customers continue to tell us that service matters most and where service has improved, we are seeing opportunities to regain volume. We have taken structural actions to align costs with current market realities while being careful not to undermine service. Market conditions remain soft, and we are not counting on a near-term recovery, but we are improving execution and putting in place operating practices that position the business to perform better when demand eventually improves. In addition, we continue to work through the strategic review of our European business. While the process is ongoing and we have nothing to announce at this time, we believe this review or other potential actions could provide meaningful liquidity and help further strengthen the balance sheet. We are evaluating alternatives thoughtfully and deliberately with a focus on improving financial flexibility while preserving long-term value. In addition to the European review, we continue to evaluate other actions, including smaller noncore assets and selective sale-leaseback opportunities as seen with the Coral Springs transaction. Our liquidity position remains strong. At the end of the year, we had approximately $136 million of cash and about $350 million of availability on our revolver. We have no debt maturities until December of 2027. And while those maturities are not imminent, we expect to address them before they become current. Importantly, our only relevant covenant requires a minimum of approximately $40 million in total liquidity, which is well below our current position. Over the past year, we have increasingly focused the business on execution and decisions within our control. We have taken meaningful steps to improve service, simplify operations, align cost with demand and secure our financial position. These actions are beginning to show up in more stable performance and better control of the business. As market conditions eventually improve, we believe JELD-WEN will be operating from a stronger position with better service, greater discipline and a more resilient foundation. With that, I'll hand it over to Samantha to review our financial results in greater detail. Samantha Stoddard: Thank you, Bill. Turning to the financial results on Slide 6. Fourth quarter net revenue was $802 million, down 10% year-over-year from $896 million in the prior year. Core revenue declined 8%, driven primarily by lower volume. Mix was stable year-over-year following the shift towards lower-cost products we saw in 2024, and pricing was a slight positive. Overall, the revenue performance reflects continued pressure from soft end markets rather than changes in customer mix or pricing discipline. Adjusted EBITDA for the quarter was $15 million or 1.8% of sales compared to $40 million or 4.5% of sales in the fourth quarter of last year. The decline was driven primarily by lower volumes, resulting in unfavorable operating leverage as well as ongoing price and cost pressure. These headwinds were partially offset by continued productivity improvements and lower SG&A costs. The fourth quarter is also seasonally weaker from a margin perspective and adjusted EBITDA was also impacted by approximately $7 million of timing-related items that are not expected to recur. Excluding those items, underlying adjusted EBITDA performance would have been higher. From a cash flow perspective, we were roughly free cash flow neutral in the quarter. Operating cash flow was largely offset by capital spending, and we benefited from a $55 million reduction in net working capital, driven primarily by lower accounts receivable and inventory levels, consistent with normal fourth quarter seasonality. As Bill mentioned, we also completed a sale leaseback of our Coral Springs facility during the quarter, generating approximately $38 million in net proceeds. Overall, our focus during the quarter was on disciplined cash usage and managing liquidity carefully in a very challenging macro environment. As a result of lower EBITDA, net debt leverage increased to 8.6x at year-end. Importantly, this increase was driven by earnings pressure rather than incremental borrowing. We did not add debt or draw on our revolver during the fourth quarter. Reducing leverage remains a priority, and we continue to manage the business with a disciplined focus on cash, cost and balance sheet flexibility. Turning to Slide 7. The year-over-year change in revenue was driven primarily by lower volumes. Fourth quarter sales were $802 million compared to $896 million in the prior year. Core revenue declined 8%, reflecting a $77 million headwind from volume mix, with the impact overwhelmingly volume related. Pricing contributed a modest $2 million benefit in the quarter. The year-over-year comparison also reflects a $41 million reduction related to the court order divestiture of the Towanda operation. Foreign exchange provided a $22 million tailwind driven by the weaker U.S. dollar. Taken together, these factors explain the revenue decline in the quarter and are consistent with the market conditions and operational dynamics we discussed earlier. Turning to Slide 8. Adjusted EBITDA for the quarter was $15 million or 1.8% of sales compared to $40 million in the prior year. The year-over-year decline reflects a combination of volume-related pressure and ongoing price/cost headwinds, partially offset by productivity improvements and lower SG&A. Lower volumes were a meaningful headwind, reducing adjusted EBITDA by approximately $21 million. In addition, price/cost dynamics contributed to an additional $21 million headwind as cost inflation, particularly due to tariffs, glass and metals continued to outpace pricing recovery. The year-over-year comparison also includes a $7 million reduction related to the court order divestiture of the Towanda operation. These headwinds were partially offset by improved execution across the business. Productivity contributed a $12 million benefit in the quarter, reflecting continued operational improvements, although that benefit was muted by lower production volumes. SG&A was also $12 million lower year-over-year, driven by the cost actions we have taken throughout the year and into the fourth quarter to better align the organization with current market conditions. Turning to Slide 9 and our segment results. In North America, fourth quarter revenue was $522 million compared to $640 million in the prior year. The year-over-year decline was driven primarily by lower volumes, along with the impact of the court order divestiture of the Towanda operation. Adjusted EBITDA for North America was $14 million compared to $42 million last year, with adjusted EBITDA margin declining to 2.6% from 6.6%. The reduction in profitability reflects volume-related pressure and continued price/cost headwinds, partially offset by productivity actions taken during the year. In Europe, revenue was $280 million, up from $256 million in the prior year, primarily reflecting the benefit of a weaker U.S. dollar. On a constant currency basis, volumes and mix were lower year-over-year, consistent with continued soft demand across key markets. FX translation accounted for all of the 900 basis point year-over-year improvement in sales. Adjusted EBITDA for Europe was $12 million compared to $17 million last year, with adjusted EBITDA margin of 4.1% versus 6.5% in the prior year. Productivity was slightly positive, but those benefits were more than offset by lower volume mix, along with higher SG&A costs. With that, I'll turn it back over to Bill to discuss our updated market outlook and how we're positioning JELD-WEN for the path ahead. William Christensen: Thanks, Samantha. Turning to Slide 11. I want to provide our market outlook for 2026 and the assumptions that underpin our guidance. We continue to see a challenging and uncertain environment, and our outlook reflects disciplined actions rather than any expectation of a meaningful near-term recovery. In North America, we expect the overall market for windows and doors to be down low to mid-single digits. Within that, we anticipate new single-family construction to be down low single digits with repair and remodel activity down mid-single digits. Multifamily activity in the U.S. is expected to be relatively stable, while Canada remains under pressure. We continue to expect high single-digit declines in the Canadian market, reflecting the ongoing economic slowdown and weaker housing activity. In Europe, we are seeing signs of stabilization. We expect volumes to be broadly flat year-over-year with no material improvements, but also no further deterioration from current levels. Demand remains subdued, but year-over-year conditions appear to be more stable than what we have experienced earlier in the current cycle. Importantly, our company volume expectations are more conservative than the underlying market. As we move through the last year, we have taken pricing actions to cover cost inflation. As a result, we do expect to lose some volume and are prioritizing pricing discipline. That share pressure is intentional and reflected in our guidance. While we are seeing improving service levels and have actions in place to regain share over time, we are not assuming any benefit from service-driven volume recovery in our outlook. Taken together, this framework reflects a cautious view of the market and a disciplined approach as to how we are managing the business. Our guidance is built on our view of current demand levels with pricing actions largely already implemented and a focus on protecting margins while improving execution rather than relying on external market volume improvement. Turning to Slide 12. I'll walk through our full year 2026 guidance. Our outlook reflects continued uncertainty in the market and disciplined assumptions around demand, pricing and execution. For the year, we expect net revenue in the range of $2.95 billion to $3.1 billion. Core revenue is expected to decline between 5% and 10%, driven by a combination of macroeconomic pressure and a continued competitive market as we work towards a more neutral price/cost position. While pricing remains slightly negative relative to cost inflation, much of our pricing action has already been implemented and our guidance assumes continued pricing discipline, consistent with how we have managed the business historically. We expect adjusted EBITDA to be in the range of $100 million to $150 million. The range is driven primarily by volume uncertainty rather than execution risk. Our outlook reflects current demand levels and does not assume a material improvement in the market over the course of the year. On cash flow, we expect operating cash flow of approximately $40 million and capital expenditures of approximately $100 million, resulting in a free cash flow use of approximately $60 million for the year. Capital spending at this level is largely maintenance in nature. Cash usage is expected to be weighted toward the first quarter, which is typically our seasonally highest period for working capital. Restructuring cash outflows are not likely to be of similar magnitude compared to prior year, and we would expect working capital to improve as the year progresses. Our guidance assumes no portfolio changes and reflects Europe continuing to operate as part of the company. At the same time, we continue to evaluate a range of strategic options, including our ongoing review of the European business, as well as additional actions to improve liquidity, such as selective sale-leaseback opportunities and reviews of other select parts of the portfolio. Finally, we expect to use our revolver during the first quarter due to normal seasonal working capital needs and would expect to pay down much of that usage by year-end. Overall, our guidance reflects a cautious view of the market, disciplined pricing and cost management and a continued focus on executing through uncertainty. Turning to Slide 13. This chart bridges our 2025 adjusted EBITDA of $120 million to the midpoint of our 2026 guidance of $125 million. Moving from left to right, the first headwind reflects market volume and mix, which we expect to reduce EBITDA by approximately $25 million, consistent with the continued pressure we see across our end markets. We also expect a $60 million headwind from share loss driven by a combination of pricing discipline and the lingering impact of prior service challenges. As we discussed earlier, we have taken pricing actions to address ongoing cost inflation. And at the same time, we are continuing to work through the residual effects of poor service performance earlier in the cycle. This share impact is assumed to persist through the year and is reflected in our guidance. Price and costs represent an additional $10 million headwind as cost inflation, particularly in tariffs, glass and metals continues to modestly outpace pricing. Much of our pricing action has already been implemented, and this assumption reflects a more normalized price/cost relationship than we have seen in recent years. These headwinds are more than offset by actions within our control. We expect approximately $75 million of benefits from rightsizing the business and improving base productivity, reflecting actions that are largely already executed and fully realized over the course of the year. In addition, we expect about $35 million of carryover benefit from our multiyear transformation program. This carryover reflects automation, footprint changes and system improvements and represents a transition from a discrete program to a more steady-state operating model. The remaining items include approximately $10 million of headwind from compensation and other timing-related items, reflecting a more normal incentive compensation environment and reversal adjustments from prior periods, partially offset by foreign exchange and other items. Taken together, these factors bridge us to the midpoint of our 2026 adjusted EBITDA guidance. This bridge reflects both the reality of the continued market pressure and the impact of disciplined actions we have taken to adapt the business. As we noted earlier, the range around our guidance is driven primarily by volume sensitivity rather than execution risk. Before we close, I want to step back and talk about how we are improving execution and building greater consistency into the business. In the past, we operated under what we call the JELD-WEN Excellence Model, or JEM. While that framework brought structure, it was largely a one-size-fits-all approach. It relied heavily on top-down driven metrics and did not consistently trigger structured problem solving tied to local daily management routines. As a result, issues were often identified but not always addressed with the speed, rigor and accountability required to sustain improvement. We have now moved to a more disciplined A3 operating system across our manufacturing network. This is a practical management system designed to improve how we define problems, identify root causes and execute countermeasures. Unlike the prior model, it adapts to the specific needs of each site. It uses multiple KPIs across safety, quality, delivery, cost and growth and connects hourly, daily and longer-term work streams into a single layered operating rhythm. This structure creates clearer ownership and faster escalation when performance drifts. Slide 14 shows what this looks like in practice at our Kissimmee, Florida facility, which was one of the first three plants to implement the new operating model. In 2024, our on-time in full right first-time performance at that facility was approximately 55%. Through 2025, that improved steadily. And by year-end, the plant was consistently operating above 95%. Importantly, that improvement has been sustained. The system allowed teams to identify disruptions early and correct them before they materially impacted customers. The same discipline is reflected in past due performance and inventory control. We entered 2025 with more than $5 million of past due orders at the facility. And by December, that had been reduced to approximately $200,000. Inventory accuracy and material flow have also improved, supporting more stable production and better day-to-day execution. While Kissimmee is one example, this is not isolated. We have rolled out or are in the process of rolling out this operating model across North America, and we are seeing similar improvements as it takes hold. Our customers are beginning to see the impact of service becomes more consistent and reliable. Moving to Slide 15. I want to close by stepping back and putting the quarter and the year into perspective. In the fourth quarter, we performed at the high end of our expectations even as conditions remain challenging and demand did not materially improve. That performance did not come from a change in the environment. It came from tighter execution across the business. As we look ahead, our focus is on continuing what we've already put in motion. We are sizing the business to current market realities, not to a recovery that may take time to materialize. We are managing the company with a high degree of discipline, particularly around cost and cash, recognizing the importance of preserving flexibility in a soft and uncertain macro environment. These are not short-term measures. They reflect how we intend to run the business going forward. At the same time, we are continuing to drive improvements in customer service and reliability. As you heard about the operating system example and the work underway at Kissimmee, we are deploying systems that improve consistency and allow us to respond more quickly when performance drifts. Our goal is to rebuild trust and position JELD-WEN as the door and window supplier of choice by being dependable, responsive and disciplined every day. We are encouraged by the early signs that customers are beginning to see the difference, but we know this must be proven over time. I want to briefly recognize the work of our teams across the organization. The progress we are making is the result of focused execution and a willingness to address difficult issues. There is more to do, and we are clear-eyed about that. We remain committed to running this company with consistency, accountability and discipline. The environment may remain challenging, but we are taking responsibility for the outcomes we can influence and continuing to strengthen how JELD-WEN operates. With that, I will turn the call over to James for questions. James Armstrong: Thanks, Bill. Operator, we are now ready to begin Q&A. Operator: [Operator Instructions] Your first question comes from Susan Maklari with Goldman Sachs. Susan Maklari: My first question is around that price versus volume dynamic that you spoke to in your prepared remarks. Can you talk a bit more about how we should think of the amount that price may decelerate as we move through the year? And how much of that you're willing to give up in relation to volume as you continue to face some of those cost headwinds that you mentioned? William Christensen: Yes. Thanks for the question, Susan. So as we signaled in the prepared remarks, our pricing actions are more or less into the market. So there was a lot of negotiation and work with our customers through the last number of months to get ourselves ready for 2026. So as you can see on the bridge and where we're showing the look forward in 2026, we still expect headwind from a price/cost standpoint, mainly due to some tail inflation and some of the input cost increases that we're seeing on glass. But we believe that, that brings us back into a reasonable pocket, which clearly we have not been in through the last few years. So we feel fairly good headed into this year about where we are and the partnerships with our customers to drive performance and make sure we're delivering what we need to for our customers. Samantha Stoddard: So, just on that, Susan, from a phasing standpoint on price. So with price being implemented and being put in already, we're expecting that to be fully into our financials in Q2. So we do expect Q1 to be down year-over-year with slightly positive EBITDA, and that's really because of the price dynamic that I just spoke about, which you'll see that pick back up in Q2. In addition, the year-over-year headwinds from Towanda being included in the majority of January 2025 and not in '26 and then some of the winter storms. So I just wanted to give you kind of that pricing phasing as well. Susan Maklari: Yes. No, that's very helpful, Samantha. My second question is moving to the slide that you walked us through outlining the efforts at the Kissimmee facility. It sounds as if there's been some very basic blocking and tackling that's happened across your operations. And can you talk a bit about where you are in terms of implementing this across the business? And how we think about that freeing you up to then tackle some of the larger productivity and efficiency projects that are sitting out there and also that ability to eventually regain share? William Christensen: Yes. So thanks for the question. That's exactly why we wanted to share this progression, Susan, to make it very clear that we are making progress. And of course, in a down market environment, it's challenging because, obviously, the volume reductions have eroded a lot of the efforts that we are making behind the scenes. So the first message is we have a system that is working and is being implemented. I'd probably say we're 85% of the way there through 2025, meaning spreading it across to all of our sites, really having the leadership and the layered audit structure and an ownership at site level on controlling their own destiny and serving the customer. So great progress there, and we're very happy with that. I think the second fact is it still remains a challenging environment, but we are controlling what we can control. And a lot of the things that we're doing here are to shop floor-based improvement activities and layered structuring of problem solving and less requiring large capital expenditures to drive scale improvement. Of course, we think we'll get there when the volume returns. But again, this is more us focused on controlling what we can control. And I think the third lever is productivity. There's also a lot of opportunity on productivity. Clearly, if the volume does recover, it's a lot easier for us to gain productivity benefit across our North American and European network. And right now, that's one of the biggest challenges that we have, the scaling up of the volume is not allowing that productivity drop through. Samantha Stoddard: So, Susan, your comment is spot on about the blocking and tackling. And I think Bill highlighting and showing some of that improvement will give color into some of the guidance bridge that you see. And that's the slide that we have in 13, it's the 2026 guidance. So the two large green bars add up to about $110 million. 50% or just more than 50% of that is structural cost actions that we executed. So that is in the bag that were done in '25, especially in Q4 that then carries over into '26. You have about 25% of it that are executed actions that need to be scaled full year. This is exactly what Bill is talking about when it comes to the operating model and scaling that from a full year standpoint. And then the remaining 25% is productivity projects that are identified and are in progress using this simple model that is really driving root cause and solving some of the challenges even despite the operating headwinds of lower volumes. Operator: And that concludes our question-and-answer session. I will now turn the conference back over to James Armstrong for closing comments. James Armstrong: Thank you for joining our call today. If you have any follow-ups, please reach out, and I would be happy to answer any questions. This ends our call, and please have a great day. Operator: This concludes today's call. Thank you for your participation, and you may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 and Year-end 2025 Hecla Mining Company Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mike Parkin, Vice President of Strategy and Investor Relations. Please go ahead. Michael Parkin: Thank you, Kelvin. Good morning, and thank you all for joining us for Hecla's Fourth Quarter and Full Year 2025 Results Conference Call. I'm Mike Parkin, Vice President, Strategy and Investor Relations. Our earnings release that was issued yesterday, along with today's presentation, are available on our website. On the call today with us is Rob Krcmarov, President and Chief Executive Officer; Russell Lawlar, Senior Vice President and Chief Financial Officer; Carlos Aguiar, Senior Vice President and Chief Operations Officer; Kurt Allen, Vice President, Exploration; Matt Blattman, Vice President, Technical Services; as well as other members of our management team. At the conclusion of our prepared remarks, we will all be available to answer questions. Turning to Slide 2, cautionary statements. Any forward-looking statements made today by the management team come under the Private Securities Litigation Reform Act and involve risks as shown on Slide 2 in our earnings release and in our 10-K filings with the SEC. These and other risks could cause results to differ from those projected in the forward-looking statements. Non-GAAP measures cited in this call and related slides are reconciled in the slides or the news release. I will now pass the call over to Rob. Robert Krcmarov: Thank you, Mike, and good morning, everyone. Turning to Slide 3. 2025 was a transformational year for Hecla, one marked by disciplined execution and strategic clarity. Hecla's 135-year legacy as the oldest company on the New York Stock Exchange is our foundation, but it's not our destination. What drives us forward is our clear, compelling strategy to become and be recognized as the premier silver company in North America. So let me walk you through how we're executing against this strategy. Our foundation rests on 3 critical pillars. First, legacy and longevity. 135 years old. We're the oldest mining company on the NYSE. We protect value through market cycles for over a century. Second, top jurisdictions. All of our mines and projects from Greens Creek in Alaska to Lucky Friday in Idaho to Keno Hill in the Yukon to Midas in Nevada, they operate in the best and safest mining jurisdictions in North America. This jurisdictional advantage is a competitive advantage that protects our cash flows, reduces our risk profile and safeguards our license to operate. Third, silver focused. We've made a deliberate choice to build peer-leading silver exposure in both our revenue mix and our reserve base. While we produce gold, lead, zinc and copper as important byproducts, silver is the strategic anchor of our business. Our strategy delivers 4 key outcomes: Portfolio value surfacing. So we're actively managing our portfolio, retaining and investing in our world-class silver assets while strategically divesting noncore assets. The pending sale of Casa Berardi, which we announced last month is an example of this disciplined approach to capital allocation. It was a difficult decision, but one as fundamentally as a silver company, we had to make. Operational excellence. We're relentlessly focused on core asset optimization and execution. Not at the expense of safety or sustainability, they are the foundation of everything that we do and key drivers of productivity, not a compliance exercise. Investment discipline. This is the new Hecla. We utilize strict capital discipline with target ROIC thresholds to guide us in our path forward. Every dollar we deploy is intended to generate returns for our shareholders. And finally, organic growth. Through disciplined exploration programs, we are surfacing value for shareholders. And I think our recent Nevada exploration demonstrates this approach. We're working to discover and build the next generation of production from assets that we already own. This strategy is not abstract. It's delivering tangible results, as you'll see on the next slide. So moving to Slide 4. 2025 was a transformational year for Hecla. On the financial front, we delivered records, record revenue of $1.4 billion, record profitability, net income applicable to shareholders of $321 million or $0.49 per share, record adjusted EBITDA, $670 million. But the headline number that matters most is what these records enabled, which is substantial deleveraging and balance sheet transformation. Our total debt has declined to just $276 million. Our gross debt to adjusted EBITDA ratio, 0.4x. We generated operating cash flow of $563 million, which translated to $310 million in free cash flow, with each mine generating positive free cash flow last year. On the operational front, we executed well, hit our top end of silver production guidance at 17 million ounces, exceeded our gold production guidance with 150,000 ounces produced. Lucky Friday delivered a record 5.3 million ounces of silver production, exceeding the top end of the guidance range. It was as recently as 2021 that Lucky Friday was producing 3.6 million ounces, nearly a 50% increase in just 4 years. Keno Hill achieved new record production of over 3 million ounces while achieving first year profitability and positive free cash flow under Hecla ownership. Our Lucky Friday surface cooling project is 79% complete and on track for mid-2026 completion. That's a critical investment in the health and safety of our workforce and a key milestone as we work towards making Lucky Friday a zero discharge facility. And we received our finding of no significant impact or FONSI at Aurora, which is a major permitting milestone, allowing us to kick off exploration activities this year at the historic very high-grade gold, silver producer in -- past producer in Western Nevada. Turning to Slide 5. Now I want to talk about the pending sale of Casa Berardi to Orezone Gold Corporation. This transaction represents portfolio optimization and action. Casa Berardi is a gold mine in a Tier 1 jurisdiction. It has a nice future, has had a nice run with us. Its mid-range mine plan is for a gold miner, some with a different schedule than us. So we plan to redirect capital and management focus towards our silver assets. We still have upside exposure with a 10% stake in Orezone. Why does this matter strategically? Well, there's 4 reasons. First is strategic portfolio optimization. So we're sharpening our focus. Capital that was tied up in gold would now flow towards silver assets with superior economics and longer reserve lives. Second is the enhanced market position. Upon closing, Hecla should be recognized unambiguously as the premier North American silver mining company. So silver would represent about 73% of our consolidated revenues, the highest silver revenue exposure among all our multi-asset mining peers with all our operating mines in the best jurisdictions. Third, strengthened balance sheet. We plan to use cash proceeds towards debt reduction and enhance financial flexibility. This positions us to a debt-free balance sheet with prices sustaining or better. Fourth is value maximization. We maintain exposure to Casa Berardi's upside through our OreZone shares with OreZone well positioned to extract additional value from the asset given their focus and expertise in gold. I think this is a sophisticated capital allocation. This is how we maximize shareholder returns. And so now I'll pass the call over to Russell. Russell Lawlar: Thank you, Rob. As we turn to Slide 7, let me take you through our financial scorecard because the numbers tell a compelling story of transformation. On balance sheet strength, our gross leverage ratio improved to 75% from 1.6x in 2024 to 0.4x in 2025, while our net leverage ratio improved 94% from 1.6x to 0.1x. And at current metal prices, we're positioned to achieve a debt-free balance sheet within 2026. This balance sheet transformation has set the company up for future growth with a substantial reduction to risk. On margin and return generation, our silver all-in sustaining cost per ounce margin improved from a very strong 54% in 2024 to 75% in 2025. This reflects both strong realized prices and disciplined cost management. And our free cash flow surged from $4 million last year to $310 million this year. While our return on invested capital improved 3x from 4% to 12%, we're now generating returns well above our cost of capital. These changes all sum up to cash on our balance sheet increasing ninefold from $27 million coming into the year to $242 million coming out of the year. This represents a complete transformation from a leveraged balance sheet to a position of financial strength in a single year. As we turn to Slide 8, I'll walk through some of the details from the fourth quarter because they show a sustained momentum and operational consistency. During the fourth quarter, we generated $439 million in revenue. Silver accounted for 59% of that total, but notably, excluding Casa Berardi, our silver exposure is expected to increase to approximately 73%, which would provide the highest silver exposure among our peer group, not to mention jurisdictional profile or other unique attributes. Our realized silver price in the fourth quarter was nearly $70 per ounce, beating the quarterly average by over $14 per ounce. Our all-in sustaining cost was $18.11 per ounce, putting the -- our silver margin at $51 per ounce or 74% of the realized price. This is exceptional profitability. Our adjusted EBITDA was $670 million in 2025, which coupled with gross debt deleveraging improved our net leverage ratio from 0.3x last quarter to 0.1x this quarter, demonstrating the momentum in our deleveraging trajectory. We generated almost $135 million in free cash flow on a consolidated basis during the quarter, and all our operations contributed positively. This excellent quarter and the resulting cash flow was due to better pricing, but also executing on a variety of strategic initiatives across all our assets. As we turn to Slide 9, the bar chart here illustrates our projected cash flows across a range of silver and gold price scenarios. As we discussed during our Investor Day, Hecla has among the best leverage to silver prices compared to peers, which could improve upon closing of the Casa Berardi sale. This analysis on the slide assumes the Casa sale is completed and at $75 silver and $4,500 gold, we forecast cash flows of about $600 million, but this grows to about $850 million at $100 silver and $5,500 gold. our forecast and at these metal price scenarios, we estimate nearly 70% of our revenue would be tied to silver sales, which is an industry best. Turning to Slide 10. I want to continue to emphasize our capital allocation framework because it's central to how we create shareholder value. We've shared this framework over the recent months, and it guides every decision we make at Hecla. We maintain an unwavering commitment to 6 key pillars in priority order. First, safety and environmental excellence, which is first and foremost. Second, sustaining growth capital maintains our asset base, derisking our assets and providing a solid base to build from as we provide high return organic growth. On exploration, it provides asymmetric potential returns and is critical in the long-term strategy of any mining company. As we think about deleveraging and strengthening of our balance sheet, this provides financial resilience and flexibility and ensures ability to invest when opportunities arise. If we think about strategic investments, whether internal or external, will be guided by our predetermined return on investment criteria. And we -- and lastly, as we think about shareholder returns, we'll look to return additional capital to shareholders when appropriate with a focus on maintaining strict return on investment criteria. This framework ensures disciplined decision-making aligned with long-term value creation. I'll now turn the call to Carlos. Carlos Aguiar: Thank you, Russell. Turning to Slide 12. Before we move to asset-by-asset operational results, I want to start with what matters most. Operational excellence begins with safety. Our 2025 total recordable injury frequency rate was 1.69, which is a 13% reduction year-over-year. So this single year improvement reflects a multiyear of systematically driving down our TRIFR through dedicated focus on keeping our employees and contractors safe. This is not luck. It's culture, systems and commitment, and it matters because safe mines are productive mines. In 2024, we reaffirmed our commitment to safety values to a company-wide safety day and the rollout of Safety 365: Work safe. Home Safe. In 2025, we focused intensively on the specific drivers of incidents. And in 2026, we are implementing a formal Fatality Prevention Program alongside continued improvement of all safety systems. Moving to Slide 13. Let me walk through our 3 operating silver mines, starting with Greens Creek, our flagship world-class, low-cost silver mine in Alaska that has been in production for over 35 years and is expected to continue delivering exceptional economics for many years to come. In Q4, Greens Creek produced 2 million ounces of silver with AISC of under $3 per ounce after by-product credits, generating $102 million in operating cash flow and nearly $80 million in free cash flow. For the full year 2025, Greens Creek delivered 8.7 million ounces of silver at the top end of guidance with AISC of under negative $2 per ounce after by-product credits. For 2026, we are projecting 7.5 million to 8.1 million ounces of silver and 51,000 to 55,000 ounces of gold with AISC guided to nearly 0 after by-product credits. This is a testament to the extraordinary economics of this asset. What's remarkable about Greens Creek is the longevity of the resource base. We had a 12-year reserve mine plan, but through ongoing exploration success, we see a pathway of sustained reserve replacement well beyond that time frame. That's why we are investing today in our tailings facility, building out capacity through 2045. When this mine started 35 years ago, it had a 10-year mine life. Today, 12 years of reserves ahead plus significant reserves, we are actively working to convert to reserves. Greens Creek is a mine in a Tier 1 jurisdiction with world-class economics. It is the cornerstone of our portfolio. Turning to Slide 14. Lucky Friday is our primary silver mine in Idaho, a deep underground operation with a 15-year reserve mine plan, producing consistently high-grade silver ore. I'm extremely excited about this mine. I spent 10 years working in that place. In Q4, Lucky Friday produced 1.3 million ounces of silver with AISC under $26 per ounce after by-product credits, generating $57 million in operating cash flow and over $33 million in free cash flow. For the full year 2025, the mine delivered record production of 5.3 million ounces of silver, exceeding the top end of guidance with AISC of under $22 per ounce after by-product credits. For 2026, we are guiding to 4.7 million to 5.2 million ounces of silver production with AISC of $23.50 to $26 per ounce after byproduct credits. The expected year-over-year increase in AISC reflects higher profit sharing payments to our workforce. This is a good thing. These payments are tied directly to profitability, which we expect to remain strong given the current metal prices. A key near-term project at Lucky Friday is our surface cooling project, which is 79% complete and on track for completion by mid-2026, which will significantly improve underground health and safety. Turning to Slide 15. Keno Hill's transformation story. Hecla acquired Keno Hill in 2022. And last year, the mine achieved its first full year of profitability and positive free cash flow generation. This is a significant milestone. In Q4, Keno Hill produced 597,000 ounces of silver, generating $33 million in operating cash flow and over $17 million in free cash flow. For the full year 2025, we exceeded 3 million ounces, a new production record and above the top end of guidance. For 2026, we are guiding to 2.9 million to 3.2 million ounces of silver production with capital investment of $61 million to $66 million as we continue to advance towards steady-state operations. What's exceptional about Keno Hill, it's current profitability while still on path to its nameplate capacity. As we reach the planned throughput rate of 440 tons per day, we are modeling robust positive free cash flow generation potential across a wide range of silver prices, as you can see in the bar chart on this slide. Keno Hill represents the optionality and upside within our portfolio. I will now hand it over to Kurt to discuss exploration. Kurt Allen: Thanks, Carlos. Moving to Slide 17. Our exploration strategy is straightforward: discover and develop the next generation of production from within our existing portfolio of high-quality projects. Moving to Slide 18. Our primary growth engine is the Nevada platform. At Midas, recent drilling returned outstanding results, including 6.1 feet at 0.46 ounces per ton gold and 0.93 ounces per ton silver at Sinter offset and 2.2 feet at 0.95 ounces per ton gold and 0.6 ounces per ton silver at Pogo. These confirm high-grade mineralization and support a potential near-term production restart with existing mill infrastructure on site. Aurora achieved a major milestone, receiving our FONSI from the U.S. Forest Service, clearing a path for 2026 exploration at this historic high-grade gold-silver producer. Regarding mine life extension, Greens Creek definition drilling delivered. We added 3.7 million silver ounces through model updates, replaced 9.5 million ounces depleted through mining and grew the reserves by 2.4 million ounces net. With a 12-year reserve life and 88.7 million silver ounces in measured and indicated resources, Greens Creek continues to demonstrate longevity potential. Lucky Friday nearly replaced reserves, reducing only 200,000 silver ounces during a record 5.3 million silver ounce production year and with 40.5 million ounces of measured and indicated resources beyond reserves, providing a clear runway for continued reserve replacement. Now we're investing $45 million to $55 million in 2026 exploration, heavily weighted towards Nevada and near-mine opportunities. This directly supports achieving greater than 100% reserve replacement and building the pipeline to drive us toward 20 million ounces annually. We're discovering high-grade mineralization on lands we control, in jurisdictions we understand with infrastructure often already in place, organic growth with superior economics. I'll now turn the call back to Rob. Robert Krcmarov: Thank you, Kurt. Let me now address our medium-term outlook because it shows some of the depth of optionality that's within our portfolio. Our 2026 silver production outlook calls for 15.1 million to 16.5 million ounces. But as we've shown recently at our Investor Day, we've got a credible pathway to 20 million ounces over the medium term. We've got multiple projects that could drive us towards that 20 million ounce target. So first, continued ramp-up of Keno Hill to the permitted capacity of 440 tons per day that could drive meaningful production growth from current levels. Second, the potential Midas production restart that Kurt just spoke about. Midas is an exceptional gold and silver project in Nevada that Hecla operated historically. As Kurt pointed out, we have the mill infrastructure in place. And we're currently advancing exploration at Midas with exceptional drill results that we just spoke about. And that supports greater exploration investment in the project this year. A development decision on Midas could add meaningful gold and silver production over the medium to longer term at low capital intensity, representing a potential significant value surfacing opportunity. But the upside doesn't end there. Touching on just a couple of our other projects, we see potential to optimize Lucky Friday even further from the current record production levels it's been achieving. At Greens Creek, we've identified the potential for reprocessing of historic dry stack tailings to extract value from the significant metals contained within. These are projects within our control, within our existing portfolio, projects that offer the potential for significant value creation that we don't need to execute expensive M&A to own. That's why we believe 20 million ounces of silver production over the medium term is achievable with further upside potential over the long term. So what we've presented today is a company in transformation, a company that's moved from financially leveraged and free cash flow constrained into one with a robust balance sheet, strong cash generation and the financial flexibility to invest in our project pipeline to surface value for shareholders over the long term. We're executing operationally at the highest level across our entire portfolio. We're maintaining strict capital allocation discipline across all 6 pillars of our framework. We're strategically focused on becoming the premier North American silver producer, and we have multiple near-term and medium-term growth projects within our existing asset base. 2025 was a year of multiple records. 2026 and beyond present exceptional opportunities. We're executing our strategy with precision, and we're confident in delivering sustainable shareholder value. Thank you. And with that, I'll turn it over to questions. Operator: [Operator Instructions] Your first question comes from the line of Heiko Ihle of H.C. Wainwright. Heiko Ihle: Exploration at Keno Hill, anything you've seen there that was maybe a bit unexpected, better or worse than internal plans so far this year? And building on all of that, the costs -- the ongoing costs of exploration per meter so far this year, how has pricing been? And what are you sort of modeling out for the remainder of the year, please? Kurt Allen: Yes. Our -- I guess, things that we've seen that in the exploration from 2025, I mean, we've intercepted what we think is a new high-grade ore shoot off the deep Birmingham, and it's open for expansion. And that's going to be one of our focuses this year as well as drilling around the rest of the Birmingham and the Flame & Moth. Now our budget for Keno Hill this year is $13 million. The direct drilling costs, I think, are on the order of USD 180 to USD 190. I'll have to check that number, though, Heiko, and get back to you. The exploration potential there is quite spectacular. Heiko Ihle: Fair. And then just one quick clarification before I go back in the queue. On Casa, and I went through the press release that you guys issued earlier today again. Just to be clear, you're getting all cash flows from Casa through the closing date, correct? There won't be any backdating or anything. I mean, with gold above $5,000 again as of today, obviously, there's real money to be made every single hour. Russell Lawlar: Yes. Heiko, that's right. We'll get cash flows through closing. And then obviously, then the structure of the deal will bring further cash flows. Operator: Your next question comes from the line of Cosmos Chiu of CIBC. Cosmos Chiu: Maybe my first question is an accounting question, again, on Casa Berardi. I'm just wondering about the accounting -- sort of treatment accounting impact that could come from Casa. I realized or I kind of looked at the cost for Q1, your guidance, gold cost guidance, and I saw that it's actually higher now. It's only 1 quarter's worth of Casa. So does that feed into your earnings? How does that impact earnings? And the second part is, will you be looking to book some type of gain on the transaction? I forget what the book value might be. And then overall, what's the timing of some of these accounting transactions? Russell Lawlar: Yes. So Cosmos, a couple of things here. First, in terms of the guidance, we took an estimate through the first quarter. So we expect we'll close the deal sometime in the first quarter. So we took a full first quarter versus of production estimated cost, that kind of thing. I will say, in January, there was a significant weather in the Abitibi in Eastern Canada. I think you probably saw some of that in Toronto. And as a result, January's production was a bit lower than estimated. But since we only have a quarter of a year essentially, we just didn't have the time to recoup that production. So that's why you see the cost on a per ounce basis is higher. And then as we think about the recording of the transaction, so that will flow through our financials through closing. In Q1, we would anticipate Casa Berardi would be held for sale. So that essentially kind of comes out of the core part of our financial statements. But you will still see in the net income line, the impact of Casa's operations through closing. It just separated, right? And I'm trying to think -- there's a few other things in there. As we think about the value of the transaction, we -- obviously, there's a portion of that, which is deferred and contingent. So we have to go through a fair value process to book the kind of estimated fair value of that, and then we'll compare that to the carrying value. I would actually expect we'll see some type of a loss on the transaction versus a gain just because the carrying value is likely going to be a bit higher than that, but we're working through that process now. So I won't speculate or try to tell you what that might be. And tell me if I marked off all your questions. I may have missed one. Cosmos Chiu: Okay. Great. And so likely, it's going to be a Q1 sort of -- if it closes in Q1, it will be a sort of Q1 accounting transaction, and I'm sure you'll give us some kind of guidance ahead of it. Russell Lawlar: Yes, that's right. And obviously, we guided production and costs such that you all have the information needed to kind of see what the ongoing cash flows and that type of thing you'd expect to see from Casa. Cosmos Chiu: Great. And then maybe my second question is on strategy. And Rob, it's good to hear that you're going to be silver focused, looking to be the premier silver company and looking to redeploy some of those proceeds coming from Casa into growing your silver sort of portfolio. But again, I guess my question is, if I look at your exploration budget, a big chunk of it is heading to Nevada, which is more gold-rich. You do have some longer-term exploration assets, including in the Silver Valley, also San Juan Silver, but that's, again, longer dated. So I guess my question is, if you can walk us through your thinking behind how you can continue to grow your silver production, your silver focus? And do you need to look externally, and I think you answered that question, but I'll ask you anyways, do you need to look externally to really unlock the full silver potential of Hecla? Robert Krcmarov: Yes. Thanks for the question, Cosmos. It's very much on my mind that we need to continue to grow our silver portfolio. Now one of the things is while we've been focused on divesting a few assets and potentially farming out some more to come, we need to bring new projects in the pipeline. And so I've tasked Kurt with establishing a project generation and a new business -- let's call it, a new business group, which is what I had when I was at my previous company. And their task is to get us into some new silver districts early on, monitor competitor intelligence, particularly in the new -- in the junior space, where we can potentially spot some emerging new discoveries and try and partner up with those. On M&A, it's obviously something that we'll continue to consider going forward. But obviously, there's a scarcity of silver-producing assets. And I've spoken about our criteria at our Investor Day, what's going to drive some of that. So yes, I'm very aware that we need to replenish the pipeline and Kurt has recruited someone just recently actually with a lot of experience. Kurt Allen: Yes, yes. We've got a recruit in. He's quite experienced. So it will be good with the program going forward. Yes. Cosmos Chiu: Great, Kurt, you've got quite a task. Operator: Your next question comes from the line of Alex Terentiew of National Bank. Alexander Terentiew: Just a couple of questions from me. First, on Lucky Friday. Your cooling -- surface cooling project should be done as you're seeing here midyear. I'm just wondering kind of longer term, with this project being completed, opportunities to reduce costs here. How does this kind of factor into the long-term plan? I mean, Rob, you made a comment about optimizing Lucky Friday as another venue of potential upside longer term. So just kind of wondering how this project factors into the longer-term potential of the mine. Robert Krcmarov: Yes. Thanks for the question, Alex. So the surface cooling project should be done by about midyear. It's primarily driven for, I guess, health and safety reasons or the well-being of our workers. We're obviously deep at Lucky Friday. It's a hot mine. And so as we go into successively deeper values, bearing in mind that we have a long, long mine life here, we still have many levels to develop ahead of us, so this is really setting the foundation for the future. But the other thing I'd ask you to consider is that, obviously, when workers are comfortable, they're generally more productive. And so that could have an impact. The other thing I spoke about on our Investor Day is that even though we broke successive records in throughput at Lucky Friday, our GM there, Chris Neville, he still believes that he might be able to wring some more out of that. Anything you want to add, Carlos, on that? Carlos Aguiar: Yes. And it's part of the optimization plan, right? We have different steps where we have continuous improvement and the hoisting capacity and securing the areas in the deep underground, this is the cooling system. So it's -- we say it in New York, right, the best decade of Lucky Friday is still ahead of us because we have plenty of opportunities going up an order proportion of production. Alexander Terentiew: Yes, makes sense. Okay. Another question just on Midas. Obviously, the stuff you guys have going on there in Nevada is pretty exciting. I mean you've got the good infrastructure, some really high-grade intercepts. I know this is a -- I wouldn't call it long term, but a longer-term plan anyways. Can you just kind of remind me or refresh me over the next 1 to 2 years, what can we expect to see there in terms of your guys' plans to move that forward? Robert Krcmarov: So a lot of it hinges on building up a critical mass of high-grade resources to get it back into construction. Again, just to recap, we've got the mill, we've got the tailings dam. We have some new discoveries. Out where one of the new discoveries is there's a resource that was discovered roughly 4 years ago, I guess, it's somewhere around 180,000 to 200,000 ounces at well above the historic Midas production grade. So that's the head start that we have. Now 4 years ago, when that was discovered, the drilling came up against the fault. Across the other side of the fault, there was no mineralization. And so the groundwork that was laid over the last couple of years has basically identified where the offset has gone. And now we've picked up the scent again and starting to drill mineralization. And I guess the starting resource, we're not talking about 1 million ounces to get this thing going. We're talking about 300,000, 400,000 ounces. So we're already a significant portion of the way there. And really, the focus on this year is going to be on exploration. At the same time, we'll do some studies. Matt, maybe you can talk about that. Matt Blattman: Yes. I mean this is out in -- the discoveries are out in an area that has no or very little historic mining. So we have -- we've got to collect data on the geotechnical side, the metallurgical performance and hydrogeologic, everything in mining is about water ultimately. So we need to collect that information. So in order to fast track this, we're going to be collecting that data and doing studies in parallel with that exploration. So as soon as we have a resource model, we can start doing more technical feasibility work. Robert Krcmarov: And at some point, we'll appoint a dedicated project manager to that. We're planning on success. Operator: The next question comes from the line of John Tumazos of John Tumazos Very Independent Research. John Tumazos: Could you refresh us on the capacity tons per day of the Midas mill, what you think the initial throughput would be, whether you can fill it up and whether the grades would compare to back in the heyday, something like 10 grams gold, 10 ounces of silver per ton? Robert Krcmarov: It was -- I think it was 1,200 tons per day is the permitted capacity of the Midas mill. Matt Blattman: That's right. The permit is 450,000 tons a year, which works out to about 1,200 tons a day. Robert Krcmarov: Yes. And sorry, what was the second part of your question, John? John Tumazos: How many tons per day do you think you're going to put through it? And what might the grades be? In the old days, it was something like 10 grams gold, 10 ounces silver. Robert Krcmarov: I think it's too early to say, John. I mean we're in the early discovery stages. We need to pin down a more robust resource. The historic grades, you're right, it was 0.4 ounces per ton, so roughly 12, 13 grams per ton and significant silver as well, actually. Operator: There are no further questions at this time. And with that, I will now turn the call over to Rob Krcmarov, CEO, for closing remarks. Please go ahead. Robert Krcmarov: Well, thank you all for your thoughtful questions and your continued interest and support of Hecla. 2025 was a genuine year of transformation financially, operationally and strategically. And so we enter this year with a stronger balance sheet, a sharper focus and what we believe is the most compelling silver portfolio in North America. We've got a lot of work ahead of us. We know that, and we're looking forward to it, and we'll talk again at Q1. So thank you, everyone. Have a great day. Operator: Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.
Operator: Good day, and thank you for standing by. Welcome to the Constellium Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jason Hershiser, Director of Investor Relations at Constellium. Jason Hershiser: Thank you, Josh. I would like to welcome everyone to our fourth quarter and full year 2025 earnings call. On the call today, we have our Chief Executive Officer, Ingrid Joerg; and our Chief Financial Officer, Jack Guo. After the presentation, we will have a Q&A session. A copy of the slide presentation for today's call is available on our website at constellium.com, and today's call is being recorded. Before we begin, I'd like to encourage everyone to visit the company's website and take a look at our recent filings. Today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding the company's anticipated financial and operating performance, future events and expectations and may involve known and unknown risks and uncertainties. For a summary of specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to the factors presented under the heading Risk Factors in our annual report on Form 10-K. All information in this presentation is as of the date of the presentation. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. In addition, today's presentation includes information regarding certain non-GAAP financial measures. Please see the reconciliations of non-GAAP financial measures attached in today's slide presentation, which supplement our GAAP disclosures. And with that, I would now like to hand the call over to Ingrid. Ingrid Joerg: Thank you, Jason. Good morning, good afternoon, everyone, and thank you for your interest in Constellium. Let's begin on Slide #5. I want to start with safety, our #1 priority. In 2025, we achieved a recordable case rate of 1.9, an improvement compared to 2024 and much better than the industry average. While we did not meet our ambitious target of 1.5, this progress reinforces our commitment to safety and reminds us that reaching our goal will require continued strong efforts across the organization. Our safety journey is never complete, and we all need to remain committed to this critical priority every day. Now let's turn to Slide #6 and discuss the highlights from our fourth quarter performance. Shipments were 365,000 tons were up 11% compared to the fourth quarter of 2024 due to higher shipments in each of our operating segments. Revenue of $2.2 billion increased 28% compared to the fourth quarter of 2024 due to higher shipments and higher revenue per ton, including higher metal prices. Remember, while our revenues are affected by changes in metal prices, we operate a pass-through business model, which minimizes our exposure to metal price risk. Our net income of $113 million in the quarter compares to a net loss of $47 million in the fourth quarter last year. The main driver of the increase was higher gross profit in the quarter versus last year. Compared to the fourth quarter last year, adjusted EBITDA increased 124% to $280 million in the fourth quarter this year. So this includes a positive noncash impact from metal price lag of $67 million. If we exclude the impact of price lag, which, as you know, is the way we view the real economic performance of the business, we achieved an adjusted EBITDA of $213 million in the quarter. This is a new fourth quarter record for us and is up 113% versus the $100 million in the fourth quarter last year. Our free cash flow in the quarter was strong at $110 million. And during the quarter, we returned $40 million to shareholders through the repurchase of 2.4 million shares. Now please turn to Slide #7 for our full year 2025 highlights. For the full year, shipments were 1.5 million tons were up 4% compared to 2024. Revenue of $8.4 billion increased 15% compared to 2024 due to higher shipments and higher revenue per ton, including higher metal prices. Our net income of $275 million compares to a net income of $60 million in 2024. The main driver of the increase was higher gross profit versus the prior year. Adjusted EBITDA increased 36% to $846 million in 2025, though this includes a positive noncash impact from metal price lag of $126 million. Again, if we exclude the impact of metal price lag, the real economic performance of the business reflects adjusted EBITDA of $720 million for the year compared to $575 million we achieved in 2024 and represents our second best year ever. Moving now to free cash flow. Our free cash flow for the year was $178 million in 2025. During the year, we returned $115 million to shareholders through the repurchase of 8.9 million shares. We reduced our leverage by the end of 2025 to 2.5x, which is at the upper end of our target range. Constellium achieved strong results in 2025 that were ahead of our own expectations coming into the year and despite the uncertain macroeconomic and end market environment. I want to thank each of our 11,500 employees for their commitment and relentless focus on safety and serving our customers. We delivered strong execution and demonstrated our ability to control costs throughout the year in 2025, and we believe we are well positioned heading into 2026 to capitalize on market opportunities as they arise. With that, I will now hand the call over to Jack for further details on the financial performance. Jack? Jack Guo: Thank you, Ingrid, and thank you, everyone, for joining the call today. Please turn now to Slide 9, and let's discuss our A&T segment performance. Adjusted EBITDA of $83 million increased 43% compared to the fourth quarter last year. Volume was a tailwind of $31 million due to higher TID shipments. TID shipments were up 41% versus last year. First, as we continue to see increased demand from onshoring in the U.S. And secondly, we also benefited from higher shipments in Valais following recovery from the flood last year. Aerospace shipments were stable in the quarter versus last year as commercial OEMs continue to work through excess aluminum inventory in the supply chain. Demand in space and military aircraft remained generally healthy. Price and mix was a headwind of $28 million due to unfavorable mix in the quarter, partially offset by improved contractual and spot pricing in Aerospace and TID. Costs were a tailwind of $18 million, primarily as a result of lower operating costs. FX and other was also a tailwind of $4 million in the quarter due to the weaker U.S. dollar. For the full year 2025, A&T generated adjusted EBITDA of $339 million, an increase of 16% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, except volume was a headwind of $1 million for the full year. Now turn to Slide 10, and let's focus on our PARP segment performance. Adjusted EBITDA of $136 million increased 143% compared to the fourth quarter last year and is a new quarterly record for PARP. Volume was a tailwind of $19 million in the quarter. Packaging shipments increased 15% in the quarter versus last year as demand remained healthy in both North America and Europe. In North America, we also benefited at Muscle Shoals from continued improvement of operational performance in the quarter. Automotive shipments were relatively stable in the quarter overall, though we did benefit in both regions from the current supply shortages in North America of aluminum automotive body sheet. Price and mix was a tailwind of $15 million, mainly as a result of improved pricing and favorable mix in the quarter. Costs were a tailwind of $40 million, primarily as a result of favorable metal costs given improved scrap spreads and higher metal pricing environment in North America and increased consumption of scrap given the Muscle Shoals improvement, which is partially offset by higher operating costs. FX and other was a tailwind of $6 million in the quarter. For the full year 2025, PARP generated adjusted EBITDA of $353 million, an increase of 46% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, though we benefited more in the fourth quarter from favorable metal costs compared to the full year. Now turn to Slide 11, and let's focus on the AS&I segment. Adjusted EBITDA of $5 million increased by $1 million compared to the fourth quarter of last year. Volume was a $4 million tailwind as a result of higher shipments in industry-touted products, partially offset by lower shipments in automotive. Industry shipments were up 33% in the quarter versus last year as we had higher shipments in Valais following recovery from the flood last year. The industrial markets in Europe appear to have bottomed, although they remain at depressed levels. Automotive shipments were down 10% in the quarter with weakness in both North America and Europe. Even though the broad automotive market in North America are relatively stable, our automotive structures business was negatively affected by the current supply shortages of aluminum automotive body sheet and its impact on production of certain platforms in the region, which automotive structures business supply to. Price and mix was a $6 million headwind in the quarter. Costs were a tailwind of $1 million, primarily due to lower operating costs, partially offset by the impact of tariffs. FX and other was a tailwind of $2 million in the quarter. For the full year 2025, AS&I generated adjusted EBITDA of $72 million, a decrease of 3% compared to 2024. The drivers of the full year performance were similar to those in the fourth quarter, except that volume was stable for the full year. And in the third quarter, we received net customer compensation for the underperformance of an automotive program. It is not on the slide here, but our holdings and corporate expense for the full year 2025 was $44 million, up $11 million compared to the prior year. The increase is primarily due to higher labor costs and costs associated with corporate transformation projects. We currently expect holdings and corporate expense to run at approximately $50 million in 2026. Now please turn to Slide 12. It is not on the slide here, but I wanted to summarize the current cost environment we're facing. As you know, we operate a pass-through business model, so we're not materially exposed to changes in the market price of primary aluminum, our largest cost input. On other metal costs, following the U.S. tariff announcements in 2025, market aluminum prices in the U.S., which includes the LME aluminum price plus the Midwest premium have risen sharply to historical levels. Spot scrap spreads for aluminum, mainly used beverage cans or UBCs have also improved from historically tight levels experienced in the second half of 2024 and into 2025. Both of these dynamics unfolded as we moved through the year in 2025. Given that a portion of our scrap purchases were negotiated previously, we did not benefit much from this dynamic in 2025 until the fourth quarter and the favorable impact was augmented through strong performance at Muscle Shoals in the quarter. As we look at 2026, we expect to benefit from these trends, especially in the first half. Moving on to inflation. Inflationary pressures continue today across operating cost categories, including labor, energy, maintenance and supplies, albeit at more normal levels. Regarding tariffs, we have made some progress on pass-throughs and other actions to mitigate a portion of our gross tariff exposure, and we believe at this stage, our direct tariff exposure remains manageable and the current tariff and trade policies are net positive for us. In terms of the overall cost management, we have demonstrated strong cost performance in the past, and we're confident in our ability to maintain a right-sized cost structure in any environment. On that front, we're pleased today to announce our next group-wide excellence program, which we're calling Vision 2028. This program will target both operational efficiencies and cost reduction across our businesses and is one of the building blocks in our road map to our 2028 targets. We look forward to updating you on our progress going forward. Now let's turn to Slide 13 and discuss our free cash flow. We generated $178 million of free cash flow in 2025, well ahead of a very challenged 2024. The increase in free cash flow in 2025 was primarily a result of higher segment adjusted EBITDA and lower capital expenditures, partially offset by higher cash interest. Looking at 2026, we expect to generate free cash flow in excess of $200 million for the full year. We expect CapEx to be approximately $115 million, which includes approximately $100 million of return-seeking CapEx, primarily related to key aerospace and recycling and casting projects we announced previously at Issoire, Muscle Shoals and Ravenswood. We expect cash interest of approximately $125 million and cash taxes of approximately $70 million, and we expect working capital and other to be a use of cash for the full year. As Ingrid mentioned previously, we continued our share buyback activities in the quarter. During the quarter, we repurchased 2.4 million shares for $40 million, bringing our 2025 total to 8.9 million shares for $115 million. We have approximately $106 million remaining on our existing share repurchase program, which we intend to complete by using our free cash flow generated this year. Now let's turn to Slide 14 and discuss our balance sheet and liquidity position. At the end of the fourth quarter, our net debt of $1.8 billion was up approximately $50 million compared to the end of 2024, with the largest driver being the translation impact from the weaker U.S. dollar at the end of the year. We reduced our leverage to 2.5x at the end of 2025, which is at the upper end of our target range. We expect leverage to trend lower in 2026 and to maintain our target leverage range of 1.5 to 2.5x over time. As you can see in our debt summary, we have no bond maturities until 2028. And as of the end of 2025, we had no outstanding borrowings under the Pan-U.S. ABL facility. Our liquidity increased by around $140 million from the end of 2024 and remains very strong at $866 million as of the end of 2025. With that, I'll now hand the call over to Ingrid. Ingrid Joerg: Thank you, Jack. Let's turn to Slide 16 and discuss our current end market outlook. The majority of our portfolio today is serving end markets benefiting from durable and attractive secular growth trends in which aluminum, a light and infinitely recyclable material plays a critical role. Turning first to the aerospace market. Commercial aircraft backlogs are at record levels today and continue to grow. Major aerospace OEMs remain focused on increasing build rates for both narrow-body and wide-body aircraft as evidenced by higher plane deliveries year-over-year and rising delivery ambitions in the near term. Although supply chain challenges have continued to slow deliveries below what OEMs were expecting for several years in a row now, demand is steady for the most part and aluminum destocking in the supply chain appears to be easing. Demand for high value-add products, which is one of our core focus areas remains strong. We remain confident that the long-term fundamentals driving commercial aerospace demand remain intact, including growing passenger traffic and greater demand for new, more fuel-efficient aircraft. In addition, demand remains stable in the business and regional jet market, whereas demand for space and military aircraft is strengthening. We believe we are a leading provider of proprietary aluminum solutions for those customers in the space and military aviation markets today. As you know, we are investing in additional capacities and capabilities such as our third Airware casthouse in Issoire, which we expect to start up by the end of this year to further strengthen our position in the future. Looking across our entire commercial and military aviation and space businesses, we believe our product portfolio is unmatched in the industry, and we have industry-leading R&D capabilities for aluminum aerospace solutions. Given the visibility over the next several years, we are raising our adjusted EBITDA per ton target for our A&T business to $1,300, which is up from $1,100 that we provided last year. Turning now to packaging. Demand remains healthy in both North America and Europe. The long-term outlook for packaging continues to be favorable as evidenced by the growing consumer preference for the sustainable aluminum beverage can, capacity growth plans from the can makers in both regions and the greenfield investments ongoing here in the U.S. We continue to see aluminum gain share against other substrates in the beverage market and the majority of new beverage products are launched in aluminum cans today due to its sustainable attributes. Aluminum cans are highly recyclable, and we are well positioned to capitalize on the benefits from recycling packaging materials at our facilities in Muscle Shoals and Neuf-Brisach. Packaging markets are relatively stable and recession resilient as we have seen many times in the past. Longer term, we continue to expect packaging markets to grow low to mid-single digits in both North America and Europe, providing a strong baseload for our operations in both regions. Now let's turn to automotive, which continues to be a bit of a different story in North America versus Europe. In North America, demand is relatively stable, though the tariff environment is creating some uncertainties. Last year, one of our competitors' U.S.-based facilities was impacted by fire, a very unfortunate event and which has created an interruption in the aluminum rolled product supply chain in North America. The entire industry continues to mobilize to ensure we limit the impact on our customers. In the fourth quarter, we started to benefit on the rolled product side as we were able to help our customers during this outage. On the automotive structures side, we were negatively impacted as some OEMs were forced to reduce production on certain platforms impacted by the disruption on the rolled product side. The overall impact in 2025 was a net positive on our results, which we expect to continue into the first half of 2026. Automotive demand in Europe remains weak, particularly in the premium vehicle segment where we have greater exposure. European markets are seeing increased Chinese competition and have lowered their battery electric vehicle ambitions. Automotive production in Europe is also feeling the impact of the current Section 232 auto tariffs given the number of vehicles Europe exports to the U.S. Longer term, we believe electric and hybrid vehicles will continue to grow, but at a lower rate than previously expected. Secular trends such as lightweighting, fuel efficiency and safety will continue to drive the demand for aluminum products. As a result, we remain positive on this market over the longer term in both regions despite the weakness we are seeing today. As you can see on the page, these 3 core end markets represent over 80% of our last 12 months revenue. Turning lastly to other specialties. These markets are typically dependent upon the health of the industrial economies in each region, including drivers like the interest rate environment, industrial production levels and consumer spending patterns. Industrial market conditions in North America and Europe became more stable in the second half of 2025, and we believe the markets, particularly in Europe, have bottomed after 3 years of market downturn. Nevertheless, we expect the specialties markets in Europe to remain relatively weak in the near term. We do believe TID markets in North America provide us with some opportunities today given the current tariffs make imports less competitive compared to domestic production. We also believe there are some opportunities in land-based defense and semiconductor markets given current market dynamics. In most industrial markets, we are focused on niche high value-added applications. To conclude on the end markets, we like the fundamentals in each of the markets we serve, and we strongly believe that the diversification of our end markets is an asset for the company in any environment. Turning lastly now to Slide 17. We detail our key messages and financial guidance. Our team delivered strong execution and results in 2025 that were well ahead of our expectations coming into the year. Excluding metal price lag, our adjusted EBITDA in 2025 was our second best year ever. We returned $115 million to shareholders in the year with the repurchase of 8.9 million shares, and we reduced our leverage to 2.5x by year-end. We remain focused on strong cost control, free cash flow generation and commercial and capital discipline. Based on our current outlook, for 2026, we are targeting adjusted EBITDA, excluding the noncash impact of metal price lag in the range of $780 million to $820 million and free cash flow in excess of $200 million. Our guidance assumes the recent demand trends in our end markets that I described earlier will continue into at least the early part of 2026 and the overall macroeconomic environment to remain relatively stable. Looking into the future, we also want to reiterate our targets of adjusted EBITDA, excluding the noncash impact of metal price lag of $900 million and free cash flow of $300 million by 2028. To conclude, we are extremely well positioned for the long-term success and remain focused on executing our strategy and shareholder value creation. With that, operator, we will now open the Q&A session. Operator: [Operator Instructions] And our first question comes from Katja Jancic with BMO Capital Markets. Katja Jancic: Maybe starting on the '26 guide. Can you let us know how much of a benefit for scrap spreads is embedded in this guide? Jack Guo: Katja, so I think it's -- thank you for the question. Regarding the scrap benefits for 2026, and here, I'm going to go on for a little bit. Obviously, it's -- we believe it's a tailwind for us in 2026. Our expectation is given our scrap consumption needs are fully contracted in the first quarter, we should see similar type of benefits as we've seen in the fourth quarter of 2025. And if you were to kind of look at the bridge for Q4 2025 for PARP business unit, you'll see that -- and we called this out, right, the metal benefits in the system, so it includes the European plants as well as Muscle Shoals more than offset a little bit of higher operating costs, if you will. So the net impact is $40 million, which gives you an idea on the amount of benefits we had in the fourth quarter of 2025, and we believe that should continue to carry into at least the first quarter of 2026. Now, obviously, there is quite a bit of interest on this topic. So I think it is -- we think it's important to have some context. Number one, as we mentioned and discussed previously, the recycling economics is quite complex. There are really a lot of elements at work. Here, we're talking about the market, the aluminum price levels. We're talking about scrap spreads. We're talking about scrap consumption levels, productivity, melt loss type of scrap we procure and it's not just UVCs. We also consume other types of scrap. And even within UVCs, you have different grades. So it gets really, really complicated. And if you just -- even if you just take 3 of the many elements there, it becomes a 3-dimensional matrix. So it's very complicated as they can work in sync or they can work against one another. I think another important point to understand is recycling economics have averaged out over time. And that was the case when markets were much more stable and call it, the pre-2024 time periods where we have mentioned previously that the annual swings could vary between sort of the $20 million to $30 million range. But they have averaged out over time. And that is also the case in times which are more volatile like between 2024 to today. And if you just rewind a little bit, in '24, we saw a sharp contraction in scrap spreads, and we had challenges at Muscle Shoals. So we experienced actually $15 million to $20 million worth of quarterly headwind, if you will. And then you kind of multiply that by 4, you'll get the full year headwind. So it's quite substantial. And then we saw a similar type of headwind in the first half of 2025, which was more pronounced in the first quarter to a lesser extent in the second quarter as spot spreads tightened, but Muscle Shoals was doing better and the Midwest saw a sharp rise -- sharp increase due to the tariffs. But overall, if you look at '24 to the first half of 2025, that was an extremely challenging 18 months for us from a metal profit perspective. Now Q3 2025 was stable. And then in the fourth quarter, as I mentioned, we benefited from favorable environment and quite strong performance at Muscle Shoals, which have allowed us to recoup the losses we had in the first half of 2025, plus a bit more. So now looking at 2026, I've already covered the first quarter. And looking at the future quarters, we do have some open volumes, and we're working very hard to lock in those additional open volumes beyond the first quarter. But the incremental benefits based on the current expectation is that they should gradually taper off as we move through the year. But overall, we should -- our expectation is that we should be able to recoup the losses we had from 2024. So that's a long answer, but it gives you a lot of kind of color around the scrap topic. And I think the takeaway is, one, it's a very complicated topic. Number two, it does average out over time. And number three, recycling, it requires a lot of investments, which we have made. It requires a lot of know-how. We've been operating it for decades. It is one of the cylinders in our engine as we mentioned previously. And when the market conditions are more favorable like it is today, you can count on us to make the best out of the opportunity. Katja Jancic: Okay. And I understand that it's complicated. But let's say if these scraps stay at the current level. And then looking more to your '28 target of $900 million, it seems that, that target might be conservative. Can you just remind us how we get there? Or what are some of the moving parts there? Ingrid Joerg: Katja, thank you for this follow-up question. I'll let Jack come in later. But maybe with respect to 2028, I think when we talked the first time a year ago about our bridge, we said we were going to take more conservative assumptions on the metal side. So what you are seeing today is that we are ahead due to metal benefits versus our 2028 target. But obviously, this is a very dynamic market environment and things can change very, very quickly. So Midwest premium can change very quickly and the percentages of spreads can change very quickly, which is why we have taken a conservative assumption in the first place. We don't know if the current situation that we experienced in 2026 are going to last and for how long they are going to last, which is why we have preferred to remain at a more prudent stance and assumption in our 2028 targets. Operator: Our next question comes from Bill Peterson with JPMorgan. William Peterson: Maybe outside of the scrap spread, I'm trying to get a sense for some other factors within the 2026 guidance. For example, what is your latest thoughts on the aerospace recovery? How much can be attributed to Vision 2028? Any sort of assumptions related to one of the peers in the space with their rolling mill ramping for the automotive space? Trying to get a sense for some other puts and takes within the full year guidance. Ingrid Joerg: Thank you very much for the question, Bill. I start and let Jack complete. Let me start on the market side, maybe. I think we believe that packaging is going to remain a good driver of growth for us going into next year. We see both regions, U.S. and Europe with solid performance. And we have been having quite a good turnaround in our Muscle Shoals operations. And so we have been growing on the packaging side, and we expect to continue to grow. On the automotive side, I think we have a very mixed picture between the U.S. and Europe. The U.S. seems to be rather stable. But remember, we do -- we only have one continuous annealing line in the U.S. So our capacity on the rolled product side is limited to this one line. We have seen nice benefits in Q4 from this unfortunate event that happened in the U.S. supply chain. And we've also had benefits in Europe, which we expect to last until the first half of 2026. As you know, the European automotive market has remained weak, and we have not seen any change. It seems that the market has bottomed out, but it's very hard to predict at this point in time. On the aerospace side, we see the business as steady. We see quite a good and strong mix on the aerospace products today in 2026. We have a little bit more visibility today than we had during our last call on '26 and maybe also 2027. We feel that military jets and space is going to continue to grow and be positive for us. Just as a reminder, we are also going to get our new Airware casthouse that will ramp up towards the end of this year. So most of the benefit you should expect coming in -- starting to come in 2027 and not this year, but we are fully on track with the expansion of our Airware capacities and capabilities. I think on the more negative side is maybe that industrial markets and specialty markets in Europe remain weak. We also feel they have bottomed out, but we do not see a recovery coming in Europe as of yet. So I think there's a good mixture of positives and also some uncertainties in the market that we see for 2026. On the recycling side, we continue to expand our recycling with the investments we've made in the past and the strong operating performance that we also had in Q4. So it was not just because of scrap spreads, but also strong operating performance, and we expect that to continue in 2026. As Jack already explained, the second half scrap spreads may be less favorable. So this is something that we will update as we go along. Important also to note that inflationary pressures are continuing. That's why we are very focused on cost control and controlling what we can control in this fluid environment, market environment that we're experiencing. And with our Vision 2028 program, we want to underpin our road map to 2028 in terms of operating efficiencies, which is something that we need to focus on every year. William Peterson: Okay. Great. Maybe it's a little bit early days, but there's been some news here about some potential tariff relief on downstream or derivative products. Trying to get a sense of maybe if there's any overlap with your own product suite that you sell into the U.S. What are you hearing on the ground? And I guess, specifically, is there any risk if there's relief on derivative products that, that could have some impact on your business? Any sort of thoughts would be helpful. Ingrid Joerg: I think the situation remains very fluid as it comes to tariffs. So with the information we are having today, we do not see any impact on us. And we continue to believe that tariffs are a net positive for us given that we will have stronger demand within the North American market. Operator: Our next question comes from Mike McNulty with Deutsche Bank. Corinne Blanchard: This is Corinne. Can you hear me? Jack Guo: Yes, Corinne. Corinne Blanchard: So maybe a few questions. And first of all, congratulations. I mean, this is an amazing quarter and a pretty good outlook what you're giving us here. Can you talk maybe about the cadence that we can expect in terms of EBITDA and free cash flow? And then the second question, Ingrid, if you can go back on the Vision 2028. I think we know that you're probably going to focus quite a lot on cost control, but I'm interested to hear more about the operational efficiencies and especially in terms of debottlenecking, like where are the opportunity that you're seeing in which market? Jack Guo: Thank you for the question. So I'll start, Corinne, and I appreciate the comments. I'll start on the cadence question and then Ingrid can help out on the Vision '28. So in terms of '26 cadence for EBITDA, I think as you know, Q1 and first half, typically, there's seasonality in our business. So from a seasonality perspective, they tend to be stronger than the second half. That's normal course. Now for '26, I've mentioned about the incremental benefits we expect to see in the first quarter from favorable recycling economics, right, recycling profits. So that should come in the first quarter. And on top of it, we expect to see a full quarter of benefits related to the automotive supply due to the unfortunate fire that happened at one of our competitors' plants last year. So we should see a full quarter benefit. So Q1 is set up nicely, and it should be stronger than Q4 of 2025 based on the current expectation. And then from a free cash flow perspective, typically, we build working capital in the first quarter and then into the first half of the year, and then we would release working capital. So that gives you an idea on the cadence for free cash flow. Ingrid Joerg: Thanks, Corinne. So in terms of Vision 2028, this is a program that is really going to support our 2028 target. We have net productivity assumed in our bridge, and this program is there to support achieving those numbers. So in terms of major pillars, we're certainly targeting asset reliability. You see when Muscle Shoals is running well that it's a very important driver of profitability for us. So asset reliability remains an opportunity across our system, which will support the throughput maximization. And it goes along with the portfolio optimization of the products that we make today. Given that some markets are rather weak and others have continued growth ahead of us, we want to better optimize how we are using our assets, and this project is going to help us work more on cross qualification so that we optimize our overall footprint and not just optimize one site. So asset reliability throughput and optimized load, we have debottlenecking activities that are part of our bridge to 2028 with some limited investment that is embedded in our numbers. And then on top of it, I think we also have still opportunity to improve recycling and metal cost reduction. These are really going to be the focus areas of this program. In terms of which markets additional capacity should be going to, I think it's clear from what we see in the market, it's on the packaging side. So can sheet, we would continue to like to grow with the market in both regions. And then obviously, on the aerospace side, as this is our highest margin product. And with the new casthouse coming in on the aero side, we would like to continue to grow this business for space, military, but also commercial aviation. And we have invested in some finishing capability in our sites that will allow us to support the ramp of the aerospace that is expected to come somewhere around '27. Operator: [Operator Instructions] Our next question comes from [indiscernible] with Wells Fargo. Timna Tanners: I think I'm the only person from Wells Fargo. This is Timna. I hope you all are doing well. I wanted to dig down back to Katja's question, if I could. Just if you look at the second half cadence and annualize it, that's above where the midpoint is on your guidance. So just trying to really understand what takes a step down, maybe more in the second half. Can you help elaborate on that and please give us the assumptions on the Midwest premium and scrap spread that's baked into your guidance? Jack Guo: So I'll start. So the way to think about it is Q4 '25, we've seen a fairly substantial amount of metal benefits, as I mentioned previously, right? But then the first half is quite challenged. Then from a relative comparison perspective as we go through the year, Q1 of '25 was extremely weak. Q2 was also weak. So the incremental benefits on the metal side, you would expect it to kind of to be more significant in the first half of 2026. I think that's one point. Then the other piece of it is we have more certainty, more visibility. Obviously, as we stand here today in February, looking at Q1 and into the first half of the year and some of the markets, the visibility there is not as certain into the second half. Timna Tanners: Okay. So does that mean that you have assumption of the Midwest premium and scrap spreads stronger in the first half than the second half? I was hoping for quantification, but even if we just know that, that's the way to think about it would be helpful. Jack Guo: I think there is more volume consumption -- volume that's locked in the first quarter relative to the future quarters. So we have more exposure. Timna Tanners: Got you. And then if I could, we're hearing a bit about demand destruction, a little bit of switching to steel away from aluminum in some auto and tractor trailer applications, but also opportunities for aluminum to take share from copper. So I was hoping you could comment on that. And along those same lines, would be great to get any thoughts on the CBAM impact as there were some public quotes from Constellium on that topic recently. Ingrid Joerg: Okay. Let me start, Timna. So I think with respect to aluminum substitution in automotive, we really do not see any evidence of that and particularly nothing related to the outage that has happened in North America. You know that these design decisions, I mean, it takes a long time to change design is very, very costly, and we develop a lot of platform-specific products. And usually, once you're on the program, it doesn't really -- or on the platform, it really doesn't happen that you get substituted. So we haven't seen any impact or any talk from our customers with respect to substitution with steel. The trailer bills are low right now, and that's more related, I think, also to the general economic situation. But clearly, we haven't seen it, and we do not expect it because the trend to lightweight, the trend -- the better safety needs and the fuel economy, this is just going to stay. So we are not worried that on the automotive or transportation market, anything like this could happen. And then with respect to copper, I have to say I have -- I'm not aware of this. In terms of substitution of materials, we have been able to substitute some materials in the past with our more high-performing alloys on the aerospace side, for example, but not particularly related to the copper. Now going to your question on CBAM, we are -- even though CBAM has been adjusted a little bit, we still think it's negative for the industry in Europe. We need to really create a level playing field with people importing into Europe, we need much more than what is on the table right now. We think the CBAM is going to be reflected in the regional premium in Europe. And so it's for people who are exporting a lot from Europe, it's not going to be good to pay higher metal prices in Europe for exports. We produce mostly local for local, so we are not really directly impacted by this. But clearly, the CBAM design as it is today, is flawed and will not prevent carbon leakage, and it could potentially lead to resource reshuffling, material coming into Europe based on recycled content that is very, very difficult to prove. So overall, we continue as an industry to oppose to its current design, and we're working with industry associations like European aluminum to work on changing it and adjusting it to the needs that the industry has. Operator: I would now like to turn the call back over to Ingrid Joerg, CEO of Constellium, for any closing remarks. Ingrid Joerg: Well, thank you, everybody, for your interest in Constellium. As you see, we have delivered strong results in 2025. And today, we provided a strong outlook for 2026. We are very happy with the steps that we are making towards our 2028 targets, and we look forward to updating you on our progress in April. Thank you very much, everyone. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Good morning, and welcome to the OneSpaWorld Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Allison Malkin, Investor Relations. Please go ahead. Allison Malkin: Thank you. Good morning, and welcome to OneSpaWorld's Fourth Quarter and Fiscal Year 2025 Earnings Call and Webcast. Before we begin, I'd like to remind you that certain statements and information made available on today's call and webcast may be deemed to constitute forward-looking statements. These forward-looking statements reflect our judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting our business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our fourth quarter and fiscal year 2025 earnings release, which was furnished to the SEC today on Form 8-K. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to certain adjusted non-GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier this morning. Joining me today are Leonard Fluxman, Executive Chairman and Chief Executive Officer; and Stephen Lazarus, President, Chief Operating Officer and Chief Financial Officer. Leonard will begin with a review of our fourth quarter 2025 performance and provide an update on our key priorities for 2026. Then Stephen will provide more details on the financials and guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question-and-answer portion of the call. I would now like to turn the call over to Leonard. Leonard Fluxman: Thank you, Allison. Good morning, and welcome to OneSpaWorld's Fourth Quarter and Fiscal Year 2025 Earnings Call. It's a pleasure to speak with you all today about our record fourth quarter. The period capped a year of exceptional performance underpinned by innovation across our global operating platform and the delivery of extraordinary guest experiences and excellent results for our cruise line and destination resort partners. During the quarter, we advanced our strategic priorities, driving growth in key operating metrics and introducing 2 new ship builds. This served to further cement our market leadership and resulted in double-digit growth in total revenues and adjusted EBITDA. Our unique capabilities and the successful execution of our strategy have produced 19 consecutive quarters of year-over-year growth or fourth consecutive year of record performance of both metrics. We continue to identify ways to elevate our positioning, increase efficiency and accelerate growth. Innovation, AI and the reorganization of certain operations that year held included the strategic decision to exit land-based health and wellness centers in Asia and reorganized operations in the United Kingdom and Italy have us poised to achieve this objective. We begin 2026 even more strongly positioned to maximize our powerful standing as the preeminent operator of health and wellness centers at sea. I'm extremely proud of the team that assisted in delivering the year-end equally confident that the year ahead will represent another year of outstanding performance. At year-end, we operated health and wellness centers on 206 ships with an average ship count of 199 for the quarter. This compares with a total of 199 ships at year-end and an average ship count of 188 ships in fiscal 2024. Also at year-end, we had 4,582 cruise ship personnel on vessels compared with 4,352 cruise ship personnel on vessels at year-end in fiscal 2024. Along with our strong financial results, the quarter year -- and year included noteworthy progress towards our key strategic priorities. Let me share some of those highlights with you. First, we captured highly visible new ship growth with current cruise line partners. We continue to solidify our market leadership, introducing 2 new health and wellness centers, aboard 2 new ship builds Disney Destiny and Star Seeker during the quarter, which brought our total ship build to 8 for the year. In 2026, we'll introduce health and wellness centers on 6 new ship builds, 3 of which are expected to commence voyages in the first half of the year. Second, we continue to expand higher-value services and products. These higher-value services include Medi-Spa and Acupuncture, to name a few, increases our addressable market and help to grow some ship [ build ] revenue performance. We continue to introduce these services to more ships and expand offerings with the latest innovations and adding to our growth. In addition, we continue to elevate the innovation in our MedSpa services with the expansion of further rollout of next-generation technology with Thermage FLX CoolSculpting Elite and Acupuncture LED, which offer improved results and reduced treatment time by up to 50%. These new technologies generated between 23% and 40% revenue growth in Q4 versus last year. In addition, the adoption of LED light therapy with acupuncture remains a high conversion add-on to treatment. At year-end, Medi-Spa services were available on 153 ships, up from 147 ships at year-end of fiscal '24. We expect to have Medi-Spa offerings on 157 ships by year-end 2026. Thirdly, we focused on enhancing health and wellness center productivity. This is best reflected in the delivery of across-the-board increases in key operating metrics, including revenue per passenger per day, weekly revenue, pre-cruise revenue and revenue per staff per day. Our unique ability to identify onboard and retain staff is leading to this performance. We continue to be known as a great place to work and take pride in being a desired employer striving to create an environment that fosters retention. These and other onboard employee initiatives have led to a 4 percentage point increase in staff retention versus 2024. Importantly, experienced staff generates significantly higher revenue per day versus first stop contract. And lastly, we possess a strong and durable balance sheet, which, combined with our ongoing successful growth enabled us to advance each of our capital allocation objectives in the quarter. These are invest in our future growth, return value to our shareholders and reduce debt. During the year, we returned nearly $93 million to shareholders during the year through our stock buyback and quarterly dividend and reduced outstanding debt. Our asset-light business model delivers consistent after tax free cash flow. With this, combined with our positive long-term growth prospects, has made us poised to continue to advance our value creation objectives going forward. We remain confident in our ability to continue our strong performance in 2026. Our positive outlook is supported by the continued innovation of our product and service offerings and the unwavering commitment to service excellence by outstanding staff, further buoyed by the implementation of emerging AI technologies that enhance our unique global positioning. These growth drivers are complemented by the contribution from the annualization of new ships that entered service in 2025, 6 of which commenced voyages in the second half of the year as well as the introduction of 6 new health and wellness centers beginning voyages in 2026. In summary, we believe our highly visible revenue growth, along with the continued discipline with which we execute our asset-light business model, positions us very well to deliver strong results for our stakeholders and shareholders in the near and long term. As Stephen will share momentarily, we have reiterated our 2026 guidance and expect total revenues, excluding revenues associated with restructured operations and adjusted EBITDA to increase high single digits at the midpoint of the range. With that, I will turn the call over to Stephen, who will provide more details on our third quarter financial results and guidance. Stephen? Stephen Lazarus: Thank you, Leonard. Good morning, everyone. We ended the year on a high note, delivering record performance in total revenues and adjusted EBITDA in the fourth quarter and continued strong and predictable cash flow generation. This record performance reflects our investment in breakthrough technology applications across our business, reinforcing our market-leading strengths and deepening our cruise line and resort partnerships. At year-end, we implemented strategic actions to focus operational and capital investment on our highest growth and most profitable operations, exiting land-based health and wellness centers in Asia and reorganizing operations in the United Kingdom and Italy. In addition, our initiatives in AI will serve to accelerate our strategic growth initiatives and increase efficiency, further building our revenue and profitability growth potential. Let me provide some highlights prior to reviewing our financials and guidance. First, as it relates to revenue enhancements. As I mentioned with our Q3 results, we have implemented a machine-learning algorithmic engine to improve revenue and utilization, which is progressing well. In addition, we recently began work and allows us to implement a true dynamic price optimization model that we will start to introduce with prebooking. Today, we have over 11,500 itineraries that are open for prebooking, which makes it virtually impossible to have true dynamic pricing with only humans involved. And we're confident that adding these genetic AI tools will improve utilization and yields. By leveraging advanced recommendations and algorithmic optimization, this initiative aims to unlock additional revenue and improve utilization. Second, on the operational efficiency and scalability side, we are seeing early success with our rollout of our onboard virtual assistant. This AI assistant, helps our managers receive and respond to questions immediately and meaningfully reduce help desk hours. For example, this tool enables our managers to close voyages and start booking the next cruise faster than before. Currently, 80% of all questions are answered within seconds by the virtual assistant, which is compared to perhaps a day or more if only humans were involved. Our virtual assistance tool has now been deployed across 180 vessels, up from 40 vessels in the third quarter. Third, automation and streamlining is part of our broad efficiency initiative to continue to explore and develop solutions to reduce manual work simplify operations shoreside and improved scalability at our corporate locations. Although still in the early stages, our steering committee needs regularly to analyze different metrics such as time to implementation, cost of implementation, potential impact and difficulty, return on investment and the prioritization of where to focus next. This is very exciting work for all of us, has strong buying across our organization, and we hope will further enhance productivity, operational scalability and our key operating metrics over time. Overall, our AI initiatives demonstrate our commitment to leveraging cutting-edge technology to strengthen our market position and deliver value for our shareholders. Turning now to a review of the fourth quarter and fiscal year, starting with the quarter. Total revenue increased 11% to $242.1 million compared to $217.2 million for the fourth quarter of 2024. Growth was driven by fleet expansion from 2025 new ship builds, a 2% increase in revenue days and a 1% increase in average guest spend contributing $15.5 million, $8.7 million and $2.1 million, respectively, the increase in total revenues. Of this $2.8 million was attributable to increased guest spend from prebook services. Growth in our Maritime total revenue was offset by a $1.3 million decrease in destination resorts total revenue partially due to the closure of hotels where we had previously operated. Cost of services increased $18.5 million attributable to the $21.5 million increase in service revenues compared to the fourth quarter of 2024. Cost of product increased $3.4 million attributable to the $3.4 million increase in product revenue compared to the fourth quarter of 2024 a $0.3 million quarter-over-quarter increase in freight expense related to the timing of purchases and $0.3 million of nonrecurring inventory write-off charges in the fourth quarter of 2025 related to the exit from its -- from our land-based health and wellness centers in Asia. Admin expenses were $4.9 million compared to $5.8 million in the fourth quarter of 2024, with the decrease being primarily attributable to higher professional fees incurred in the prior year quarter, including approximately $700,000 related to incremental public company costs such as Sarbanes-Oxley compliance. Salaries, benefits and payroll taxes were $8.9 million compared to $9.3 million in the fourth quarter of 2024. This decrease was primarily attributable to lower incentive-based compensation of approximately $500,000 compared to the fourth quarter of prior year. Restructuring expenses were $2.7 million in the fourth quarter of 2025 attributable to the aforementioned reorganization of operations in the United Kingdom and Italy and the exiting of resort health and wellness operations in Asia. Long-lived asset impairment was $3 million compared to $400,000 in the fourth quarter of 2024. Due to exiting resort operations in Asia, the fourth quarter of 2025 included a $2.8 million impairment charge with respect to the value of associated long-lived assets. $2.2 million attributable to intangible assets and $600,000 attributable to property and equipment and right-of-use assets. Net income was $12.1 million or net income per diluted share of 12p as compared to net income of $14.4 million or net income per diluted share of 14p for the prior year. The decrease was primarily attributable to the recognition of these restructuring expenses and [indiscernible] asset impairments totaling $5.7 million during the current quarter partially offset by $4.4 million improvement in income from operations. Adjusted net income was $24.3 million or adjusted net income per diluted share of 24p as compared to adjusted net income of $21.4 million or adjusted net income per diluted share of 20p in the fourth quarter of prior year. And finally, adjusted EBITDA was $31.2 million compared to adjusted EBITDA of $26.7 million in the fourth quarter of 2024. For the fiscal year, total revenue of $961 million increased 7% compared to $895 million from the prior year. Adjusted net income rose 15% to $102.9 million or 99p per diluted share from adjusted net income of $89.7 million or $0.85 per diluted share in 2024. And adjusted EBITDA increased 10% to $123.3 million as compared to adjusted EBITDA of $112.1 million in fiscal 2024. Our strong balance sheet included total cash of $17.5 million at year-end, reflecting the disbursement of $17.5 million throughout the year in quarterly dividend payments, investment of $75.4 million to repurchase 3.9 million of our common shares and payment of $15 million on our term loan. In addition, we had full availability of our $50 million revolving line of credit, giving us total liquidity of $67.5 million at year-end. Total debt, net of deferred financing costs was $84 million at December 31, 2025, compared to $98.6 million at December 31, 2024. Also at quarter end, we had $37.5 million remaining on our prior $75 million share repurchase authorization. We expect the disciplined execution of our growth initiatives and strong cash flow generation driven by our asset-light business model to enable the payment of our ongoing quarterly dividend while evaluating opportunities to repurchase our shares and retire debt. We believe this positions us well to create long-term value for our shareholders. Turning now to guidance. We are reaffirming our fiscal 2026 outlook and begin the year with strong momentum and confidence to deliver another record performance. Based on our market outlook, outstanding team proven strategies and execution, scaling innovations, new ship builds and strong capitalization, we expect fiscal 2026 total revenues to exceed the $1 billion mark for the first time. Total revenues are expected in the range of $1.01 billion to $1.03 billion, representing high single-digit increases at the midpoint of our guidance range from actual 2025 results, excluding exited and reorganized operations mentioned previously. Adjusted EBITDA continues to be expected in the range of $128 million to $138 million, representing high single-digit increases at the midpoint of our guidance from actual fiscal 2025 results. And for the first quarter of 2026, we expect total revenue in the range of $241 million to $246 million, with adjusted EBITDA expected in the range of $30 million to $32 million. Please bear in mind that exited and reorganized revenue contributed $5.3 million to first quarter 2025 revenue and $23 million to fiscal 2025 revenues. And with that, we will open the calls up for questions. Gary, if you could take over, please. Operator: [Operator Instructions] Our first question today is from Steve Wieczynski from Stifel. Jackson Gibb: This is Jackson Gibb on for Steve Wieczynski. I wanted to dig in a little further on the AI integration. And with another quarter under your belt, is there any more color you can give on the potential benefits you guys could realize from this investment, whether that's on the cost side or the revenue side? And any updated thoughts on how that might impact margins? Up to this point, you guys have kind of talked about these initiatives starting to show up meaningfully in the second half of 2026. Is that cadence still accurate? And would we be correct to assume you have not factored in any of this potential impact to current full year guidance? Stephen Lazarus: Yes, Jackson. As previously mentioned and you reiterated, we did say that we will begin to talk about that after our second quarter results with more specificity. So -- we remain on track to do that. We are encouraged, obviously, by the initial results, and that is reflected in the incremental rollout of these initiatives, 2 vessels and starting of additional initiatives as well. So we remain pleased with where we're at. And to your last point, yes, our current guidance does not include potential impact from these initiatives. Jackson Gibb: Okay. Got it. And then switching gears for my follow-up. I was hoping to get a little bit more detail around how consumer trends are shaping up, specifically attachment rates and how you're going about discounting. Are you seeing any differences worth calling out in these metrics or anything that stands out as far as changes in spend patterns across different brands, geographies, ship sizes, et cetera. And then how are you thinking about your ability to take price throughout 2026 relative to price action taken in 2025? Stephen Lazarus: So I'll address the last part first. As you know, in 2025, we effectively did not take service price increases. We do always continue to evaluate that. And if there's opportunity to do so. In 2026, we will certainly address an action our comments. Again, from a guidance perspective, we are not assuming any service price increases embedded at this point in time. We'll see how things play out. With regards to the consumer, we had previously mentioned in the fourth quarter of last year, a little bit of softness in November, and we did not see that reoccur in December, which was great. So far year-to-date, we are definitely seeing overall higher prices being accepted by the consumer. So on a net basis, we are selling at a higher price. There may be slightly additional discounting. But at the end of the day, the net that's going to the customer in our facility, which remains high. And it's also therefore a reflection of, as you will have noted, our first quarter guidance, which we feel good about and is about consensus, and we think is a reflection of what we anticipate going forward with the consumer. Operator: The next question is from Gregory Miller with Truist. Gregory Miller: I'd like to ask first about the dynamic price optimization model that you spoke about in your prepared remarks. Melissa, missed it on the -- in your remarks this morning, have you discussed in terms of detail in terms of the rollout? Are there certain banners or itineraries or vessels that you're going to start this implementation first? Or is this going to be a broader rollout across the fleet. Stephen Lazarus: Specifically as it relates to that initiative, Greg, the first place we will begin with is actually on prebooking -- so effectively, it will cover 94% of the vessels that today are on that prebooking platform. I would like to say it's still relatively early stages. Obviously, we're excited about it because, as mentioned, the share volume of itineraries available on the prebooking platform, make it effectively impossible for humans to have a true dynamic pricing impact that can literally look at day-to-day even ultimately, hour to hour where we might want to adjust things. So we are excited about it when we roll it out, the phases will be #1, pre-booking once we get that working and finalized, there will be a relatively quick rollout to the remaining vessels. But realistically, we're talking here into the back half of the year. Gregory Miller: Okay. Shifting gears, I was on 1 of your ships recently. And I noticed that the spa menu appeared reformatted. It looked like the offerings were perhaps more condensed and just different stylistically than what I've seen in the past. And I'm curious if you have any intentions of a broader rollout of reformatting your spa menus in terms of the offerings that you're presenting to passengers on board. Leonard Fluxman: No. Actually, we took a very proactive approach in doing that. So I'm glad you noticed. We decided to condense and rather focus guest choice on sort of the more popular items versus a full Chinese menu of everything and anything as opposed to the top choices that everybody takes. But also a focus to moving people into specific price points and time slots. So it's a much more manageable and conversion into the higher treatment rates, particularly around face and body -- so I just think narrowing the aperture to the more popular treatments that we want to sell with a higher retail attachments is sort of the strategy and science behind a narrower menu. We have no intention of broadening it because at the -- from what we did and looked at it statistically, there was just no purpose in having an extensive menu that we did would have like 3 years ago. Operator: [Operator Instructions] Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Leonard Fluxman for any closing remarks. Leonard Fluxman: All right. Thank you, everybody, for joining us today. As Stephen mentioned, we've got off to a great start here in the first quarter and look forward to speaking with you all on our next investor call as well as conferences that we may attend through the first quarter entering the second quarter. So thank you, and look forward to speaking to you next time. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Kenny Green: Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtek's Results Zoom Webinar. My name is Kenny Green, and I'm part of the Investor Relations team at Camtek. [Operator Instructions] I would like to remind everyone that this conference call is being recorded, and the recording will be available from the link in the earnings press release and on Camtek's website from tomorrow. You should have all received by now the company's press release. If not, please view it on the company's website. With me today on the call, we have Mr. Rafi Amit, CEO; Mr. Moshe Eisenberg, CFO; and Mr. Ramy Langer, COO. Rafi has a cold and has lost his voice. So Ramy will be providing the opening remarks followed by Moshe, who will then summarize the financial results of the quarter. Following that, we will open the call for the question-and-answer session. Before we begin, I'd like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of the federal securities laws. Those statements are subject to a range of changes, risks and uncertainties that can cause actual results to vary materially. For more information regarding the risk factors that may impact Camtek's results, please review Camtek's earnings release and SEC filings and specifically the forward-looking statements and risk factors identified in the results press release issued earlier today and such other factors discussed in Camtek's most recent annual report on SEC Form 20-F. Camtek does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of the financial results will be presented on a non-GAAP financial basis unless otherwise specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP financial results can be found in today's earnings release. And now I'd like to hand the call over to Mr. Ramy Langer, Camtek's COO. Ramy, please go ahead. Ramy Langer: Thanks, Kenny. Hello, everyone. Camtek concluded the fourth quarter and full year with record results. Fourth quarter revenues reached a quarterly record of $128 million, representing an increase of 9% year-over-year. Gross margin was 51% and operating margin was 29%. For the full year, I'm excited with our revenues, which totaled $496 million, reflecting 16% year-over-year growth. Gross margin was 51.6% and operating margin reached 30%. These results bring us to our milestone of $0.5 billion in revenues. In terms of revenue mix for the full year, approximately 50% was driven by AI-related products, 20% came from the other advanced packaging applications. The remaining revenue was distributed across CMOS image sensors, compound semiconductors, front-end and general 2D applications. Regarding our outlook for the first quarter of 2026. In our previous meeting, we indicated that we expect our revenues to be more second half weighted following a somewhat slower start to the year and that we expect 2026 to be a growth year compared to 2025. In line with this, our revenue guidance for the first quarter is to be around $120 million. At the same time, I am pleased to share that the months passed since our previous guidance significantly reinforced our confidence in our forecast regarding the strength of the second half and in our ability to achieve a full year growth in 2026. Moreover, at this point of time, we expect 2026 to be another double-digit growth year for Camtek. This confidence is derived from our pipeline of order and backlog as well as ongoing interaction with our customers. As you are aware, key customer of ours have made public announcements regarding their investment plans for the coming year, and are discussing with us about their plans for the latter part of the year in this respect. Customers have been verifying with us ability to ship and install a double-digit number of systems within a relatively short time frame. Certain customers are finalizing development of their next-generation devices and want clarity on which of our system models best fit their requirements. The primary growth engine of the semiconductor industry continues to be high-performance computing components designed for AI applications. As I said, the growth curve expected in 2026 is largely linked to the pace of which device manufacturers, particularly memory suppliers plan to expand their production capacity. As an example, last week, we announced a $25 million order received from an IDM customer for multiple Hawk systems. This order is in addition to previous orders placed in recent months by this customer, bringing the total to approximately $45 million. The customer continues to expand its manufacturing capacity by building new fabs to meet growing demand for components produced for AI applications, and we expect additional orders from this customer. We expect additional major customers of ours to expand their production capacity after this year to meet rising demand for their products. Another major factor supporting our outlook is the proven exceptional performance of our systems, particularly the Hawk and the Eagle Gen 5, both models were launched about a year ago, and we have already installed dozens of systems of each over the past year. Moreover, since this introduction, we have continued to invest efforts in our R&D and completed the development of new capabilities to meet the requirements of our customers' next-generation products. We have already demonstrated these new capabilities to several customers and received strong validation and interest. The transition to HBM4 is already in process, and represents a major opportunity for us. We are the tool of reference for 3D metrology at all major players. We have a significant market share in 2D inspection, which we expect to expand in 2026. We, therefore, expect to not only maintain our market share in AI-related applications, but to increase it meaningfully. Moreover, as our products introduce to the market superior new capabilities, we expect them to enable us to penetrate additional production steps and expand our total available market. To summarize, 2 major developments coincided during the last several months. We have experienced a significantly increased orders flow and pipeline, thus improving our visibility. In parallel, we have completed the development of new capabilities to meet the requirements of our customers' next-generation products, which we expect to enable us to increase our market share in our total available market. We are excited with what we can achieve in 2026. And now Moshe will review the financial results. Moshe Eisenberg: Thank you, Ramy. Revenue for the fourth quarter came in at a record $128.1 million, an increase of 9% compared with the fourth quarter of 2024. For the full year, revenues came in at $496.9 million, an increase of 16% compared with 2024. The geographic revenue split for the quarter was as follows: Asia was 89%, and the rest of the world accounted for the remainder 11%. Gross profit for the quarter was $65.4 million. The gross margin for the quarter was 51.1%, similar to the previous quarter and slightly better than the 50.6% reported in the fourth quarter of last year. Operating expenses in the quarter were $28.7 million compared to $23.1 million in the fourth quarter of last year and $27.2 million in the previous quarter. Operating profit in the quarter was $36.7 million compared to the $36.3 million reported in the fourth quarter of last year, and $37.6 million in the third quarter. Operating margin was 28.6% compared to 30.9% and 29.9%, respectively. For the year, operating margin was 30%, similar to 2024. Financial income for the quarter was $8.2 million compared to $6.2 million reported last year and $6.5 million in the previous quarter. Within that, interest income increased due to the increased cash balance from the strong cash generation and the convertible notes issued towards the end of the third quarter. Net income for the fourth quarter of 2025 was $40.7 million or $0.81 per diluted share. This is compared to a net income of $37.7 million or $0.77 per share in the fourth quarter of last year. Total diluted number of shares as of the end of the fourth quarter was 51.3 million. Turning to some high-level balance sheet and cash flow metrics. Cash and cash equivalents, including short- and long-term deposits and marketable securities as of December 31, 2025, were $851.1 million. This compared with $794 million at the end of the third quarter. The fourth quarter was characterized by a very strong cash generation of $61.2 million from operations. This is a result of a strong collection and reduction in accounts receivables as well as optimization in our inventory levels. Accounts receivables were down by $22 million to $90.8 million compared to $112.5 million in the previous quarter. Our days sales outstanding decreased to 65 days from 81 days last quarter. Inventory level is down by $50 million. Having increased our inventory level in the last few quarters to support the launch of the Hawk and the Eagle Gen 5, it is now back to the right level to support the expected revenues in the coming quarters. As for guidance, as Ramy said before, we expect revenues of around $120 million in the first quarter, with growth expected in the second quarter and more significant growth in the second half of 2026. And with that, Ramy and I will be open to take your questions. Kenny? Kenny Green: [Operator Instructions] First question will be from Brian Chin of Stifel. Brian Chin: Can you hear me? Kenny Green: Yes. Brian Chin: Maybe firstly, just to reference the big accelerating increase in demand that you referenced. Where is that more prevalent? Is it more concentrated on HBM or on the chiplet logic side? And at this time, is the larger step-up occurring in Q3 or Q4? Ramy Langer: Well, Brian, so first of all, I would say it's the -- what we call high-performance computing or the AI-related products that are all ramping up. And I would say that I can't go at this stage to the resolution, whether it's Q3 or Q4, this is really customer-dependent. I can say that it's in the second half, you will -- we will see the step. Brian Chin: Got it. Can you still hear me? Ramy Langer: Yes. Kenny Green: Yes, yes. Brian Chin: Maybe for a follow-up, I think in the past, you've noted that you expected 50% plus of your system shipments this year to be either one of the newer platforms, Hawk or Eagle Gen 5. Is that still the case? Or is there an update to that? And this year, we'll have HBM4 sort of coexist alongside HBM3E. Can you maybe outline sort of that decision point that some of your customers are having either moving to Hawk or potentially sticking with the latest Eagle? And also, are you seeing any reuse of existing systems? Is that any factor why shipments are lower in first half? Ramy Langer: So let me start to talk about the Eagle versus the Hawk. I think the Hawk is going primarily to people that want very high throughputs and long-term capability. The Hawk can reach accuracies, performance that is much higher than the Eagle, the G5. The G5 is a fantastic machine, very high flexibility, very popular in the OSATs world. So therefore, there is room for both of them. But definitely, when you go to very high volumes, these customers will gradually move to the Hawk. Now the Hawk and the G5 accounted to about 30% of our revenues this year. We expect it to be at least 50% in 2026. Did I answer your question clear, Brian? Brian Chin: Yes. That was helpful. And is there any reuse that you're seeing as sort of HBM4 and 3E both coexist? Or just the fact that 3E is still pretty strong and prevalent limiting the amount of reuse your customers can have? Ramy Langer: Well, it's very hard for us to really know the 3E versus the HBM4. But I think gradually, the industry will go to HBM4, and this will be the product that most people will be using. And definitely, the move to HBM4 is a very important opportunity for us. As we've discussed in previous calls, there is a lot more dense structures. The requirements there are much higher. It is more metrology and inspection intensive. So all in all, this move is very positive for us. Kenny Green: Our next question will be from Charles Shi of Needham. Yu Shi: Maybe the first one, I want to dig a little bit deeper into the Hawk versus G5, the question here, Eagle G5. I remember, Hawk was more positioned for high-end logic type of applications and Eagle G5. You also mentioned it's a high -- it's a good productivity, good cost of ownership. And I thought that you probably more positioned the G5 as maybe more for the memory for high-bandwidth memory, but of course, for the OSAT market. Is some of that changing right now? Because I'm getting the sense maybe Hawk is seeing more of the adoption or maybe a faster adoption by your customers, maybe also including the memories? Ramy Langer: No, no, this is not the case. What we are seeing, and this is -- the Hawk is targeted for those applications that are high-end applications. If you go to a very large number of bumps, let's say, 150 million and more, people and with low structures with the bumps comparatively shallow, these applications will definitely go to the Hawk. The accuracies that are required there and definitely the throughputs that are required there are very high. So we will see these kind of applications go towards the Hawk. The second applications that will go to Hawk in general will be to those application people that are looking to go to 100 nanometers. So when we look at applications that are more related to front end, related to hybrid bonding, those people that will want down the road to use the machine for hybrid bonding, those people will naturally adopt the Hawk. And the G5, obviously, it is -- we've got thousands of machines in the market. So you would see some customers using the Eagle platform adopt the G5 because they know it, they feel more comfortable with it. But I think the strength of the G5 is very, very, I would say, high flexibility, very good accuracy, very good ROI. So all in all, it will continue to be a very popular machine. But definitely, on the other hand, when you go to the high-bandwidth memory, the higher ones, the 4 and the 5, definitely, those customers will, to a certain extent, use the Hawk. Yu Shi: Okay. So is it fair to say for memory market, especially for HBM market, we still should consider G5 as the workhorse and Hawk is more deployed more selectively at this point? Ramy Langer: The way you should look at it, we have hundreds of Eagles, many hundreds of Eagles already doing these applications. But I think some of the future capacity that will be built will be more tended towards the Hawk. Yu Shi: That was very clear. I want to -- checking with you guys, what's the expectation for China this year, if there's any number you can give to us, maybe a percentage of total revenue expected or year-on-year growth? What's the China expectation for this year? Ramy Langer: Well, first of all, the China expectation this year is all in all positive. We do not see any signs of weakness, and we expect to see the revenues in China, they're going to be, I would say, stable. And keep in mind that most of the sales to China are OSATs. And -- which are engaged in a lot of applications. So it's a primarily stable market. I think there is growth in OSATs in general, in China. So I don't see any changes compared to previous years. Kenny Green: Our next question will be from Jim Schneider of Goldman Sachs. James Schneider: Relative to the double-digit growth outlook you talked about for the year and some of your competitors who have cited 15% to 20% WFE growth for 2026. Can you maybe frame for us where you expect your overall revenue to fall this year relative to some of those broader WFE forecast? Would you expect the inspection market to sort of undergrow the broader WFE envelope this year? And if not, would you expect this is more of a timing issue where you have a little bit weaker first half of the year and then you sort of catch up in terms of revenue growth in 2027? Ramy Langer: So first of all, we said in the prepared notes, that we are going to achieve double digits this year in 2026. Now it's too early to quantify at this time, but looking at our results, in the last few years, we always did better than the WFE because we are focused on the fastest-growing segments. But if I want to give you a little bit more color on what we are seeing this year. So compared to what we discussed here a quarter ago, we are seeing a much better visibility, and this is resulting from the new orders that we have received, a much better pipeline following our discussions with customers and understanding the forecast much better. We understand today the timing of the expected orders. So the full visibility and our confidence in 2026 and specifically in the second half is very high. James Schneider: Okay. And then can you maybe just talk about how we should expect your gross margin trajectory to go throughout the year? I think you've previously cited that the improving ASPs on Hawk, et cetera, would drive gross margin expansion. Is this something you can expect that the gross margins to continue to increase throughout the year as you build volume? Moshe Eisenberg: Yes, absolutely. We are looking into an improved gross margin throughout the year. And as we expect to grow the revenue in the second half of the year, we expect to improve the margins. We did take certain measures to improve the bill of materials. We took other measures in terms of supply chain, and we believe that we are positioned well to benefit from this and improve the gross margin later in the year. Kenny Green: Our next question is from Shane Brett of Morgan Stanley. Shane Brett: I have a question on the competitive dynamics. Just has there been any change to the competitive dynamics for HBM sockets? Just how should we think about your share at these memory customers? Ramy Langer: So thank you for the question. So I want to make it very clear. We have not lost any market share to competitors. We also estimate that we will be able to increase our market share this year. I talked in the prepared notes about our efforts in the R&D that yielded exceptional solutions and capabilities. And these capabilities will enable us to increase our market share by penetrating into more inspection and metrology steps. Shane Brett: Great. That's very encouraging to hear. And for my follow-up, so some OSATs have mentioned pretty monstrous CapEx numbers throughout this earnings period. Just can you talk about your business with these customers? And just how a broadening of advanced packaging beyond the leading foundries benefits Camtek? Ramy Langer: So definitely, we see what is called the CoWoS technology, moving to OSAT. Some of it, call it CoWoS, some of it call it CoWoS like technologies. All in all, I would say that the OSAT, this is our home ground. This is where we are very strong. We dominate this market. We have hundreds of machines in this area. It's about 50% of our business. So definitely, the move to these technologies are very important in the OSAT. This will definitely benefit Camtek. And I would say one more thing that, of course, the OSATs are very important to our business. But on the other side, we have a very strong position at all the big players. When we talk about the HBM, when we talk about the CoWoS, we talk about TSMC. All of these are our customers, and we are very -- and we have a very good market position, and we plan to continue and grow with them. Kenny Green: Our next question will be from Craig Ellis of B. Riley. Craig Ellis: I wanted to start stitching together a couple of earlier answers and implications for the year's growth. So it sounds like what you're saying, guys, with the real strong uptake you're getting across OSATs, IDMs and foundry for Hawk and Eagle that this year, there should be real strong IDM growth since that's where you've got your HBM exposure, good growth in OSAT and I suspect good growth in foundry with 2.5D. Is that a fair characterization of how we should look at growth across your different customer classes? Ramy Langer: I think it's an excellent view, and I totally agree with your comment. This is how we see the market. As you said, they are the big customers, the HBM, the foundries that definitely are going to be very dominant this year, and we expect growth there. But the OSATs, which is, give or take, 50% of our business are continuing to invest on one side in advanced packaging applications, but moreover, are starting to adapt the CoWoS of the AI technologies, and this is for real. I mean this is real. I mean, I think they are talking about it openly, and they are also talking about significant growth this year, and we have really -- in this respect, we already have POs on hand. We have in the backlog. And definitely, the focus is very positive. Craig Ellis: That's helpful. And then the follow-up is related to one of Jim's questions, but also tying in some further color on gross margin. So can you just identify, guys, if we were to see demand go from double-digits, low end, 10% towards something that was more WFE like? Do you feel like you have the materials, the production capacity, the shift flexibility to meet that degree of upside through the year? And then Moshe, are there any things we should be aware of on gross margin, if you were to be chasing demand that was near WFE like? And can you just clarify what we should expect with gross margin in the first quarter, given the decline in volume? Are we going to stay at 51% plus? Or do we go down to 50%? And then what about the OpEx contour through the year? Ramy Langer: Before you answer, so I just want to answer regarding the operational aspects. So we are ready to respond to any demand that will come from the market. So whether it will be very high teens or mid-teens or whatever the number will end up from the operational point of view, we are ready. Moshe Eisenberg: Yes. I mean we do have -- just to complete, we do have the capacity, we have the inventory and all the supply chain ready for the growth. So from an operational perspective, we are all aligned. In terms of gross margin, as I said, we do expect an improvement in the second half of the year. The first half of the year will still be around the same level between 50.5% to 51.5%. That's the current level of gross margin in the business. With respect to OpEx, we do expect to see some increase in the first half of the year as a result of R&D investments. We see a lot of opportunities ahead of us. I think we've made it very clear that we are expecting a strong second half. And as a result, we plan to invest in R&D in the first half of the year in order to capture these opportunities, and we will see some increase in operating expenses as a result of that. Kenny Green: Our next question will be from Edward Yang of Oppenheimer. Edward Yang: Ramy, you talked about maintaining market share and expanding it. Are you watching any specific time frames or decision points? Do you have any systems under qualification? Just wondering if there are any specific catalysts you have in mind. Ramy Langer: So in general, I cannot disclose exactly the time frame and the decision times. What I can tell you that there are several steps, different customers that we already confirmed and we're already shipping machines to those steps or will ship as we move into the year. And we are in a very good position at other places to capture additional steps and these are based on work that has been done already and being confirmed by the customer. And we are more going into the validation process. So definitely, we are very confident that not only we will maintain our market share, we will be able to increase it and go to additional steps in 2026 as the year progresses. Edward Yang: Got it. And just for my follow-up, you also mentioned you do -- you always do better than WFE. We've heard some diverging views on WFE growth for 2026. A couple of larger depth and edge players are pointing to above 20% growth. One of your process control peers are looking for something more like low double-digits growth. Just curious where you mean? Ramy Langer: I said before in one of the previous questions that from our point of view, it's too early to quantify the number. We will start with the year, and we'll see how things progress, and then we will meet every quarter. And I think we will be far more knowledgeable as we go ahead. But definitely, it's too early to quantify. Kenny Green: Our next question will be from Gus Richard of Northland. Auguste Richard: When I look at test and probe, those companies expect to be up sequentially in Q1. You're down sequentially in Q1. I know they're different applications. I know they're different things, but they tend to move together. And could you sort of help explain why there's this divergence in the current quarter? Ramy Langer: Gus, a slow start of 2026 is primarily driven by the timing of the orders of our customers. And big part of their capacity expansion and especially the big ones is planned for the second half. And this is the reason for the slow start. Auguste Richard: Okay. Sort of looking at KLA's results, they talked about their packaging-related revenue being up 70% in last year. And I'm wondering, are they -- and I don't believe your packaging revenue in advanced packaging was that strong. Are they addressing different markets? What's the disconnect between their growth rate and yours? Ramy Langer: So first of all, I don't know for which baseline they're counting. So I don't want to make a mistake here. But I suspect that we are not talking here apples to apples, but we are comparing here some different steps and some areas that we do not play in with. From our point of view and what we see in the segments and what we call, in our markets, in our applications and the customers that we serve everybody, we have not lost any market share. On the contrary, we expect to gain, and we expect even to increase our total available market. So from that point of view, we feel comfortable. I think we discussed in previous calls how we see the competition with KLA. We understand the strength of KLA. But definitely, we have a lot of advantages in the fact that we are well entrenched in the market that we're playing in. We have an inherent advantage by offering on our tools, the 3D metrology and the 2D inspection, which is very important to the advanced packaging. And I think in general, the unique combination of technology, scale and flexibility is a key reason why we are performing so well in this market, and I don't expect this to change. Kenny Green: Our next question will be from Michael Mani of Bank of America. Michael Mani: I wanted to ask on the chiplet business. So first off, and I know you don't really segment this out anymore, but just in general, for last year, how much of the growth, especially in AI came from the chiplet side of the house? And then as you look out to this year, especially as it pertains to your lead customer in the chiplet business, how do you feel about your share position there? I think you said you felt good about your position, but if you could just elaborate on that, like what applications are you potentially gaining share in, especially on the 2D side of the business? Could that -- is that part of the reason you're seeing more strength in the second half? Just any kind of clarity there would be great. Ramy Langer: So Michael -- so first of all, we did not -- in the past, and I cannot break down whether it's chiplets on HBM, we refer to the business as a high-performance computing, which is about 50% of the business. But of course, you know and I think it is well known, and I think TSMC made a note -- made a comment in one of the previous announcements that Camtek is a significant vendor to them. So it's not a secret. Yes, we are there. We have a share of the chiplet business. We are doing a few steps there. And this is where further on, obviously, I cannot comment on exactly which of the steps, but it's not only one step, it's multiple steps. I expect this business is a healthy business. And as I said in my comments before and also in the prepared notes, we did not lose any market share. We expect to gain market share. And this is the case also related to chiplets. We don't see it differently. And so we are very optimistic about, obviously, the HBM market, but the chiplet or the high-performance computing as a whole. Michael Mani: Great. And for my follow-up, I was hoping you could provide a finer point on your capacity. I know you talked about this in response to a previous question. But in the past, you've talked about, I think, up to $650 million in capacity potential from a revenue perspective. As you look out over the next couple of years, what is definitely a materially -- significantly stronger demand environment, it seems. Do you feel like that's still the right size of the footprint to address all that demand? And if you were in a position where you needed to add capacity, how quickly from a lead time perspective, would you be able to build that out? Or given your strong cash position, would you seek to acquire that from some other vendors? Ramy Langer: Yes. So Michael, let me answer your question. So first of all, at this stage, we don't have limitation on our current capacity. We've made some changes internally. We changed the process. We are -- as we go on and we are becoming far more efficient from year-to-year, we are doing things better and more efficiently. So we've increased the capacity that we have on hand today. I think it is well over $700 million in capacity. So I don't foresee any issues. In parallel, we started already to expand our capacity. I cannot give comments at this stage, but we will have additional capacity in Europe. I believe it will happen late '26, and we will start to be able to use this capacity. So all in all, we are in a good position from the capacity and the all, I would say, operational organization, it is well organized. The performance is very well. We have enough buffers in place in case that the business will be even better than we think. So from that point of view, I feel very comfortable. Kenny Green: Our next question will be from Vedvati Shrotre of Evercore. Vedvati Shrotre: So I kind of wanted to understand how far your visibility is going now. We all understand it's a strong demand environment. Your backlog is growing. You're seeing the orders come in. So do you have visibility going beyond like 4Q '26 now? Ramy Langer: Vedvati, so thank you for the question. So I alluded more in my discussion previously to '26. But I think we're starting to see also signs of '27. And I would say it's obviously not the backlog, but it's definitely customers are talking to us about shipping machines in the first and second quarter of '27. So yes, the industry is ramping up, and it's starting to think not just '26, '27. And so I would say I haven't gone into the numbers very thoroughly. But definitely, we are seeing signs of '27, people thinking about '27 and putting some numbers, some initial numbers. So it's a positive answer. Vedvati Shrotre: Understood. And for my follow-up, so I know this was asked a couple of times on the call back -- on the call, and so I've tried again. But the advanced packaging growth by some of the depth and edge players is in the 40% levels. And then if you listen to your bigger peer on process control, they think it's like high teens kind of level. So there's a big disparity on how the advanced packaging market would look. And since you guys, I think, have the highest exposure, like could you give us a sense of where that lands for you and what you're seeing? Ramy Langer: So I think the main applications today, when you talk about advanced packaging, I think the leading applications is Fan-Out. There is a lot of Fan-Out. And there are many variations on it. From high-resolution Fan-Out, regular Fan-Out. But definitely, this is a big market. And of course, what's called the regular bump inspection in the OSATs, everything today is advanced packaging. And the growth of this market, it's definitely double digits. How far in the double digits? It's -- I can't pull this number from my sleeve now. But -- and it's too soon to quantify how it will be in '26, but definitely, it's a good growth number. Kenny Green: So that will end the Q&A session. Before I hand over to Rafi for his closing statements, in the coming hours, we will upload the recording of the conference call to the IR section of Camtek's website at www.camtek.com. I'd also like to thank everybody for joining this call. And Ramy, please go ahead with the closing statements. Ramy Langer: I want to express my gratitude to all our investors for your ongoing interest and support in our business. Special thanks goes to our employees all over the world and management teams for their outstanding performance. I want to mention the Chinese New Year that's celebrated by many of our customers and many of our employees around the world. I would like to extend our best wishes for them and for a successful and prosperous year of the Fire Horse. I look forward to our next conversation in the upcoming quarter. Thank you, and goodbye.
Operator: Good morning, ladies and gentlemen, and welcome to the ICL Fourth Quarter 2025 Earnings International Conference Call. [Operator Instructions] I would now like to turn the conference call over to Peggy Reilly Tharp, Vice President of Global Investor Relations. Please go ahead. Peggy Tharp: Thank you. Hello, everyone. I'm Peggy Reilly Tharp, Vice President of Global Investor Relations for ICL Group. And I'd like to welcome you, and thank you for joining us today for our earnings conference call. This event is being webcast live on our website at icl-group.com and there will be a replay available a few hours after the live call and a transcript will be available shortly thereafter. Earlier today, we filed our presentation with the securities authorities and the stock exchanges in both Israel and the United States. Those reports as well as the press release and our presentation are also available on our website. Please be sure to review the disclaimer on Slide 2 of the presentation. Our comments today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. The company undertakes no obligation to update any information discussed on this call at any time. We will begin with a presentation by our CEO, Mr. Elad Aharonson, followed by Mr. Aviram Lahav, our CFO. After the presentation, we'll open the line for a Q&A session. I would now like to turn the call over to Elad. Elad Aharonson: Thank you, Peggy, and welcome, everyone, to review our fourth quarter 2025 earnings. We delivered a solid finish to the year and achieved our annual guidance target with $1 billion of specialty-driven EBITDA. In the fourth quarter, we also made significant progress towards our new strategic principles, which you can see on Slide 3. This includes the acquisition of Bartek Ingredients, the global leader in food-grade malic and fumaric acids. Bartek serves hundreds of customers and distributors in the food, beverages and other end markets and distributes its products to more than 40 countries worldwide. This acquisition allows us to expand our portfolio deeper into specialty food solutions. It also helps to position us for further growth as we leverage our existing global food presence to expand into other food ingredient segments. It further advances our recently refined strategy, which focuses on the significant growth engines of specialty crop nutrition and specialty food solutions, 2 areas where we already have deep experience and broad exposure. We will continue to seek additional nonorganic growth opportunities in these 2 markets driven by a commitment to creating long-term value and sustainable growth for our shareholders. At the same time, we will stay focused on our mission to maximize our core business segments, and this includes our potash resources. As you know, we signed an MOU with the State of Israel regarding the Dead Sea concession assets in November of last year. In January of this year, we signed a binding agreement based on the principles agreed upon in the MOU. We secured compensation for our assets at the Dead Sea and established certainty on the timing of this payment. It also included the insurance of bromine supply through at least 2035. Additionally, as part of our strategic efforts, we have been conducting a review of our capital allocation priorities and reevaluating less synergetic and low potential activities. As a result, in the fourth quarter, we made several adjustments with the majority related to advancing our new strategic principles. These were essential in moving ICL forward and designed to help fund our 2 profitable growth engines. These shifts in our priorities will help us to redirect our resources to where better aligned opportunities. Adjustments included the discontinuation of ICL's LFP battery material projects in St. Louis and in Spain, the closure of a minor R&D facility in Israel and the initiation of a sale process for our operations in the U.K. We expect to share updates on our strategic efforts throughout 2026 and look forward to strengthening and growing ICL for the long term. Now if you will please turn to Slide 4 for a brief overview of the quarter. Sales were $1.701 billion, up 6% year-over-year with all 4 segments delivering sales growth. For our Industrial Products, Phosphate Solutions and Growing Solutions segment, sales of $1.281 billion were up 4%. We remain committed to growing our leadership position in these 3 segments. Consolidated adjusted EBITDA was $380 million in the fourth quarter, and this amount improved 10% year-over-year. For the quarter, EBITDA for our Industrial Products, Phosphate Solutions and Growing Solutions segments was $249 million. In the fourth quarter, adjusted diluted earnings per share were $0.09 and up 13% versus last year. Operating cash flow of $340 million, improved 2% on a sequential basis. In general, the quarter was in line with expectations with year-over-year growth in key adjusted financial metrics. Prices continued to increase for bromine, potash and phosphate fertilizers in the fourth quarter. And similar to the previous 3 quarters, overall performance remained varied across the wide array of end markets and regions we serve. Turning to Slide 5 and the review of annual results. Consolidated sales for 2025 were $7.153 billion and up 5% versus 2024. Sales for Industrial Products, Phosphate Solutions and growing Solutions were $5.650 billion in 2025, also up 5%. Full year EBITDA of $1.488 billion was up slightly, while EBITDA for Industrial Products, Phosphate Solutions and Growing Solutions came in at $1.021 billion. Adjusted diluted EPS was $0.36 for 2025, and we delivered operating cash flow of $1.056 billion. During the course of 2025, we faced shifting macro forces and industry issues while simultaneously achieving our goals. From an ICL perspective, we gained significant clarity regarding the value of the Dead Sea assets, which I just discussed. Also, as previously mentioned, we completed a comprehensive review of the company and identified 2 strategic growth engines, specialty crop nutrition and specialty food solutions. We intend to expand in these 2 areas while continuing to benefit from our distinctive global presence and regionally diversified operations. Now let's review our divisions and begin with our Industrial Products business on Slide 6. For the full year, sales of $1.254 billion were up slightly year-over-year with EBITDA of $280 million. For the fourth quarter, sales of $296 million were up 6% with EBITDA of $68 million, so a solid end to a good year. In the fourth quarter, bromine prices maintained their upward trajectory even as some end markets such as building and construction remained soft. For flame retardants, sales of both our brominated and phosphorus-based solutions were flat versus the prior year. For bromine-based products, higher prices were offset by lower volumes due to continued soft demand. For sales of phosphorus-based products, higher volumes and prices in the U.S. were unable to fully offset lower volumes in other regions, mainly in Europe. Sales of clear brine fluids, which are used by the oil and gas industry during well completion remained solid and were driven by increased demand in South America and Europe. Specialty minerals sales increased on strong pre-season demand for magnesium chloride after an early snowfall in the fourth quarter in the U.S. This was followed by a massive winter storm in North America in January. Turning to our Potash division on Slide 7. For the full year, sales of $1.714 billion were up 4% with EBITDA of $552 million, up 12%. In the fourth quarter, Potash sales of $473 million were also up 12% year-over-year, while EBITDA of $150 million increased 15%. Our average potash price for the fourth quarter was $348 CIF per tonne. This amount was up more than 20% year-over-year. Potash sales volume of 1.2 million metric tons in the fourth quarter were up roughly 15% on an annual basis. This marks a strong finish to 2025 as we successfully addressed operational issues in the Dead Sea related to the war. For our Spanish operations, our focus on debottlenecking and optimizing helped us to improve reliability and advance our production goals. These efforts also helped us to deliver a quarterly production record in Spain in the fourth quarter. In the fourth quarter, we also signed a contract with our Chinese customers for supply at $348 per metric ton, which is in line with other recent industry contract settlements. Finally, potash affordability remained attractive in the fourth quarter, and we continue to maximize the profitability of our potash resources. Whenever possible, we prioritize potash supply to the best global markets. Now turning to a review of the Phosphate Solutions division on Slide 8. For 2025, sales of $2.333 billion were up 5%. However, EBITDA of $528 million was impacted by higher sulfur costs. In the fourth quarter, sales increased 2% to $518 million, while EBITDA came in at $121 million. Food specialties sales increased slightly in the fourth quarter versus the previous year and reflected growing volumes in North America and Asia as we leverage our regional expansion strategy. In the fourth quarter, our overall food business gained additional sales and also expanded its new product pipeline for dairy in the U.S. and EMEA. We also saw an increase in global processed meat sales across the U.S. and EU. In China, our food sales increased 15% in the fourth quarter, our best quarter of the year. For 2025, sales were up 12% as our business expansion in this region has been successful since its debut. In total, we expanded our food project pipeline with nearly 40 new solutions since mid-2025. While we are committed to growing this business organically, you can also expect us to continue to evaluate M&A opportunities. As I mentioned earlier, in January, we completed our acquisition of approximately 50% of Bartek Ingredients. And for 2026, we are targeting a wide array of growth options. This includes expansion into emulsifiers along with other R&D efforts such as the development of a high-protein drink stabilization system for GLP-1 users. We expect additional growth to come from portfolio expansion in seafood and soy protein and as the segment looks to deliver more localized food solutions to emerging markets. In China, our YPH joint venture benefited from both higher prices and volumes and an increase in demand for battery materials in the fourth quarter. We also celebrated the 10th anniversary of our Chinese partnership in January of this year. Overall, Phosphate specialties performance continued into the fourth quarter as expected with most regions remaining stable. However, market softness was maintained in Europe, a trend that lingered as anticipated. Higher cost of raw materials and specialty sulfur persisted in the fourth quarter and show no signs of abating in 2026. This brings us to our Growing Solutions business division on Slide 9. Sales for 2025 were $2.063 billion and improved 6% year-over-year, while EBITDA of $213 million increased 5%. This growth was due to our continued strategic focus on global specialty solutions, which have been customized for our customers on a regional basis. For the fourth quarter, Growing Solutions sales increased 6% to $467 million, while EBITDA of $60 million was up 18% versus the prior year. In the fourth quarter, we saw profit improvement in both North America and Europe. In North America, higher prices helped drive an increase in profit. In Europe, we continue to benefit from our successful product mix strategy, which is focused on our higher-margin products. Sales in Asia also improved in the fourth quarter, but rising raw material costs impacted profits as expected. In Brazil, the overall market remained under pressure as farmers faced affordability issues and distributors shift their buying behavior. Although this did impact our profitability, sales performance remained solid, and we were able to expand our specialty market share. I would ask you to now turn to Slide 10 and some key takeaways. We have already made progress in advancing our strategic principles, which we announced in the third quarter. We added Bartek Ingredients to our specialty food solutions portfolio, and you can expect to see more acquisitions in the coming year. We also took a comprehensive look at our existing portfolio and elected to discontinue our downstream LFP battery materials expansion, which we announced in the third quarter. In the fourth quarter, we initiated a sale process for our Boulby operations in the U.K. in the hope of getting this facility into the best hands for the future. During 2025, we also worked diligently to provide clarity around the 2030 Dead Sea concession process, which I discussed earlier. We continue to believe that ICL is the most suitable candidate to be awarded the future concession. We currently intend to participate in this process once it begins, assuming, of course, that the terms are economically viable, and we will ensure stable regulatory environment. I would now like to look outside of ICL towards the markets where we operate. Across our minerals, which include potash, phosphate and bromine, we see prices are stable to improving, and these trends are expected to continue into the first quarter of 2026. For our specialty phosphate, we are seeing pressure related to both competitive forces and higher raw material costs, and we are actively monitoring and reacting to these dynamics. While some cost inputs are rising, the sulfur market is experiencing exceptional volatility on a global basis. Prices have surged to multiyear highs, driven by supply and geopolitical issues. These increases are causing issues across several of our businesses and significantly impacting other agriculture and chemical manufacturers. At ICL, we are actively working to mitigate higher costs, including sulfur, and we will keep you up to date on our efforts as the year progresses. We are also experiencing pressure as the shekel continues to strengthen versus the U.S. dollar. This makes it more costly for us to do business in Israel as a dollar-denominated company. However, we are using hedging techniques to help eliminate some but not all of this exposure. Now before turning the call to Aviram, I would ask you to turn to Slide 11 and a review of our guidance for 2026. For this year, we expect consolidated EBITDA comprising all 4 of our business segments to be between $1.4 billion to $1.6 billion. As the price of potash has stabilized over the past few years, we believe providing consolidated guidance is now more relevant. For potash sales volumes, we expect this amount to be between 4.5 million and 4.7 million metric tons as we continue to benefit from the operational improvements made at the Dead Sea and in Spain in 2025. Finally, we expect our annual adjusted tax rate to be approximately 30% in 2026. And with that, I would like to turn the call over to Aviram for a brief financial overview. Aviram Lahav: Thank you, Elad, and to all of you for joining us today. Let us get started on Slide 13 with a quick look at quarterly changes in key market metrics. On a macro basis, average global inflation rate improved versus the prior quarter with the exception of the U.S., which was flat and China, which swung positive. Interest rates were a bit more mixed. While rates in most regions were relatively stable, rates in the U.S. improved by nearly 40 basis points. For Brazil, while the Central Bank held its target rate unchanged at 15%, rates remain elevated on a year-over-year basis. Looking to exchange rates, the shekel has strengthened versus the U.S. dollar when compared to long-term historical rates. Wrapping up our macro metrics, you can see that U.S. housing starts trended up slightly by the end of the fourth quarter. For fertilizers metrics, the picture was more mixed. The grain price index declined on a quarterly basis with rice showing a significant reduction. On the positive side, corn and soybeans both improved in the quarter and on an annual basis with soy showing solid mid- to high single-digit growth for both periods. While farmer sentiment improved by the end of the fourth quarter, those gains were reversed in January. When asked specifically about soybeans, 21% of U.S. producers said they expect soybean exports to abate over the next 5 years with increasing competition from Brazil weighing on their minds. In the fourth quarter, potash prices moderated slightly, mainly due to sentiment and seasonality, while P2O5 prices trended higher in 2025. This is not expected to continue in perpetuity. Over the same time frame, there was a significant reduction in ocean freight rates of nearly 25%. Beyond agricultural indicators, we also track other indicators relevant to our Phosphate Solutions and Industrial Product segments. Our Phosphate Specialty Solutions are an important part of the food and beverage end markets. This is an area we are targeting for growth, both organically and via M&A. In the U.S., retail trade and food services improved both through November and year-over-year. For our Industrial Products segment, the price of bromine in China is an important metric, and these prices continue to improve in the fourth quarter. Durable goods are another indicator for Industrial Products, and they picked up slightly through November. For remodeling activity, which is a good metric for both Industrial Products and Phosphate Solutions, growth was up approximately 1% on a sequential basis and 2% year-over-year. If you now turn to Slide 14 for a look at our fourth quarter sales bridges, on a year-over-year basis, sales were up $100 million or 6% with all 4 segments demonstrating growth. Turning to the right side of the slide, you can see a $98 million benefit from higher prices this quarter, which was partially offset by a reduction in volumes. Exchange rates also had a positive impact. On Slide 15, you can see our fourth quarter adjusted EBITDA, which improved approximately 10% versus the prior year. Similar to sales, we saw higher prices and reduced volumes. There was also an impact from exchange rate fluctuations, and you should expect to see this continue in 2026 if the shekel continues to strengthen versus the dollar. We also saw a significant increase in raw material costs, especially sulfur. This trend is continued into 2026, and it is becoming more difficult to pass this increase along. Additionally, as we shared publicly last December, the Israeli Supreme Court ruled that ICL is obligated to pay fees for water extracted from wells in the Dead Sea concession area. This equaled $14 million for 2025, and this entire amount was recorded in the fourth quarter. As Elad mentioned earlier, we had a number of adjustments this quarter, so I want to spend just a few moments on Slide 16. Here, you can see a representation for these items. I would like to point out that the majority of these items are related to advancing our new strategy. These adjustments are essential in moving ICL forward as we look to fund our profitable growth engines, specialty crop nutrition and specialty food solutions and as we focus on extracting value from our core businesses. These changes will help us redirect our resources towards better aligned opportunities. First, as you know, we announced the discontinuation of our LFP battery material project in St. Louis and in Spain on our third quarter call. And in the fourth quarter, we took an adjustment of approximately $61 million. In the fourth quarter, we also closed a minor R&D facility in Israel, and this adjustment was approximately $6 million. As Elad mentioned, we also recorded an impairment of our Boulby assets in the U.K. related to our shifting strategy, and this amount is approximately $50 million. We also recently initiated a sale process for these operations. Additionally, we made a $19 million provision for early retirement programs at several other sites. Turning to the ruling related to fees for water extracted from wells in the Dead Sea concession area. While this ruling was the opposite of the legal opinion issued by the Israeli Ministry of Justice, we, nonetheless, recognized approximately $80 million in the fourth quarter of this year for prior periods. Now if you will turn to Slide 17 for a quick review of our full year sales bridges for 2025. All 4 of our segments contributed to the 5% year-over-year growth we delivered. While we experienced a reduction in volumes, we benefited from generally improving prices across our businesses. On Slide 18, you can see a breakout of our adjusted EBITDA, both by segment and inputs. Once again, we benefited from higher pricings. However, a reduction in volumes, exchange rate fluctuation and higher raw material and energy costs tempered our EBITDA growth. Before I turn the call back to the operator, I would like to quickly share a few fourth quarter financial highlights on Slide 19. Our balance sheet remains strong with available resources of $1.6 billion. Our net debt to adjusted EBITDA rate is at a stable 1.3x. And we delivered operating cash flow of $314 million. Once again, we are distributing 50% of adjusted net income to our shareholders. This translates to a total dividend of $224 million in 2025 and results in a trailing 12-month dividend yield of 3.1%. And with that, I would like to turn the call back over to the operator for the Q&A. Operator: [Operator Instructions] Your first question is from Ben Theurer from Barclays. Benjamin Theurer: Two quick ones. So first of all, thanks for the guidance. And obviously, it kind of like at the midpoint looks more or less like a similar year 2026 than what was 2025. Maybe can you help us frame the upside risks to the higher end and the downside risks to the lower end as you look into 2026 across the different segments? Like what are the drivers to get it to the upper end? And what would be issues that you may face that could drive you more towards the lower end? That would be my first question. Elad Aharonson: Okay. Thank you, Ben. So I think for the upside, I think we'll see higher potash quantities for production and sales. And maybe there will be an upside on the price per tonne of the potash. Also on the bromine, we see increase in bromine prices. We'll see what happen after the Chinese New Year. China is the biggest market for bromine and there could be upside there as well. Also, we need to see the demand. So that's about upside. And on downside, so the 2 headwinds that we have right now, one is the cost of sulfur, which went up from around $140, $150 1.5 years ago to more than $500. And the sulfur is the most dominant raw material for the phosphate portfolio. So this is a headache for us. So we mitigate it, but still it's an issue. And the second one is the exchange rate of shekel versus dollar. Our functional currency is dollar, while we have expenses in shekel here in Israel. And as the shekel continues to strengthen versus the dollar, that would be a challenge for us. Aviram Lahav: Ben, I would add one thing specifically. It applies to basically most things that Elad described, but the cost of sulfur specifically, it's also the timing in the year when it will happen. I mean basically, we are not sitting on significant inventories of sulfur, which means that when it goes up, we pretty much quickly absorb it in the cost of manufacturing. But when it will eventually go down, then we will be rid of expensive sulfur pretty quickly. Now the guidance is for the year. We are giving it in February. So basically, everybody can do the math. It depends not only the extent to which it will happen, but the timing when it will happen. I think that's quite important to mention that. Elad Aharonson: And also maybe it's worth mentioning the Brazilian market. The last season in Brazil in general, not only for ICL, was a difficult one for the agri business. I think we performed better than the average, but still it wasn't a great year in the agri business in Brazil. If next year or this year, 2026 will be a normal one or even higher than normal, then there could be an upside related to that. Benjamin Theurer: Yes. Actually, I wanted to follow up on the Growing Solutions side and what you're seeing. I mean, obviously, this is -- there's a lot of like different pieces. And you talked about the market share gains in specialty, but with the farmer affordability issues, so probably is what you wanted to comment on. So what are you seeing like on the ground in terms of like demand within the Brazilian farmers, because given that the interest rate environment is still high, we've talked about this over the last couple of quarters as that being an issue? But it feels like it could potentially get better into 2026 with maybe rates coming down, it's an election year. So there's a lot of potential. So I wanted to understand how you feel about ICL's position in Brazil, in particular, within Growing Solutions. Elad Aharonson: So I'll say the following. All in all, I'm encouraged by the progress that we are making on Growing Solutions, and you can see the nice development on EBITDA for Q4 for Growing Solutions. Having said that, Brazil, which is give or take 1/3 of Growing Solutions business, it was a difficult year in Brazil because of the reasons that you mentioned, interest and so on. We like to believe that the interest rate will go down. I don't think it will go dramatically down, but it will go a bit down. And then we'll see what happen in the next elections. We adapted our cost structure in Brazil. And I do believe that next year -- or this year, 2026, will be better for us. Talking about Growing Solutions in general, we are changing our mix of product portfolio in Europe. Europe is also around 1/3 of the business for Growing solutions and our portfolio there has to be adapted, and we started doing it in 2025. I believe we'll see the results in 2026 and onwards. Still, we'll see what happen in general in Europe. And the last comment is about the Far East, China and the region where we see a nice progress. Here, the issue is more about the cost of raw materials, and that comes back to the comment about sulfur and some other raw materials. Do you want to add, Aviram? Aviram Lahav: Yes. Maybe to say something further. Thank you, Elad. Say something further about Brazil, I think it will resonate with you guys. It's -- credit is tricky. There's the rate of credit, there is the availability of credit. So what's happening on the ground in Brazil that, Ben, you're totally correct, the rate is extremely high. The real rate is probably around 10%, if not more than that. The nominal is about 15%, inflation is scaled at below 5%. That's exactly, by the way, why the Brazilian Central Bank is keeping rates so high. But that's only part of the story. Second thing is that commercial banks are not giving credit to -- not fully, of course, to the industry, which means that the farmers and the agriculture industry is using the suppliers as banks. And therefore, the issue of availability of credit is something that we obviously have to take into account, reckon with and decide how much exposure are we willing to take. Now notoriously, companies that have given too much credit in the Brazilian market have been beaten. It happens time after time, and we are very careful with our location, which means that we'll keep an open eye. Notwithstanding that, we can very well have a better year in '26, but this remains to be seen. So -- and by the way, during this process, you can see the pressure that exists and what's happening in the distribution companies. Distribution companies in Brazil are basically squashed between the suppliers and the -- actually the farmers. And that's a place that you really do not want to be. Okay. That's about that and that's continue. Operator: Your next question is from Joel Jackson from BMO Capital Markets. Joel Jackson: I'm going to follow up a little bit on some of this. I'm sort of surprised about the -- like, I think you've laid out the opportunities and challenges in '26. But I'm trying to figure out which businesses are up and down in '26 in your guidance. So potash volume higher, that's clear. Prices are higher, like if you just compare '25 versus '26 expectations, so potash should be up. And does that mean that you've got the other businesses like Growing Solutions and IP growing a little bit and phosphates down to get to a flattish midpoint? Aviram Lahav: No. I think the following. First of all, potash, indeed, as you said, quantities should be in a better place. Prices should be in a better place. But there is a but, the shekel is in a worse place, which means that all the -- and this is one particular division with heavy, heavy expenses. Obviously, on the shekel side, you can imagine by the size of the facilities in Israel. All of them obviously being paid for in shekel, which means that if we look at '26 and we benchmark it to '25, it should be better, but less so that was -- that it could have been if the shekel would have been at a better place. That's about the potash side. When you look at the bromine side, I would tend to say that we should be pretty much around the same ballpark that we were this year. When you look at the Phosphate Solutions side, then to an extent on the EBITDA, it makes sense that it will come somewhat lower, and this is due to the sulfur price with the caveat that we previously discussed. We don't know for how long this will prevail. And the last but not least is the Growing Solutions. It's one division that actually is not -- is actually gaining a little bit even from the currencies because it is less dependent on the shekel side, and it obviously sells around the world than most currencies vis-a-vis the dollar. The phenomenon of the weak dollar is not only vis-a-vis the shekel, it is vis-a-vis the euro, vis-a-vis the pound, et cetera, et cetera. I guess you all know that. And actually, we can find ourselves in a somewhat better position in Growing Solutions than in '26 versus '25. And all in, when you bake it all in and you look at what we are seeing for next year, we should see a very similar picture. Again, some gaining a bit, like all in, as I said about the potash, some remaining the same and some weakening to a degree. But these are not that dramatic. So if I had to take a guess, I would say that all in it's very near with a little bit going more toward the potash, a little bit less vis-a-vis the phosphate. I hope that answers your question, Joel. Joel Jackson: Very helpful. Could you remind us your sensitivity to the shekel how in U.S.? Aviram Lahav: Yes, yes, yes. Well, generally, we are above $1 billion short shekel. Obviously, it fluctuates, but you can make the math. So basically, every 1 percentage point is about $10 million. That is -- we are not actually when we -- our financials are driven by the hedged shekel. It's not the naked shekel that is the representative rate every day. So basically, we have got quite a significant amount of our exposure hedged. And therefore, our -- when rates go -- when the shekel strengthens against the dollar, it effectively strengthens less against our hedges. However, in the longer term, obviously, it takes an effect. So if this continues for a very long, and again, we do not know, the shekel at this stage is quite abnormally high for many reasons, nothing to do with our industry. The question is how long it will prevail. But generally, the yardstick every about 1%, it was about $10 million. Joel Jackson: Okay. Finally, just following up on that. What is your -- in your guidance for this year '26, what is your U.S. dollar shekel assumption? And how much of that is hedged right now? Aviram Lahav: Yes. So the naked, absolute naked, we would have taken somewhat around $310 million. But hedged, it is over $320 million, that's our assumption. It will be -- and it -- by the way, I saw quite a lot of guidance coming from companies, Israeli exporters in different fields. And I would say that anywhere from $315 million to $320 million plus is -- would be a common yardstick for where we see the market going. However, it can be... Joel Jackson: I'm sorry, how much of the billion are you hedged? I'm sorry. Aviram Lahav: Sorry, how much percentage do we hedge? Joel Jackson: How much of the billion are you hedged right now? Aviram Lahav: Yes. Around 50% at that time. Normally, we hedge around 60%, but when the rates go down, our analysis says that we can allow us to be a little bit more exposed because there's a limit to how much it can go down. Operator: [Operator Instructions] And your next question is from Laurence Alexander from Jefferies. Daniel Rizzo: This is Dan Rizzo on for Laurence. If we could just go back to Brazil for half a sec. Have we seen this before? And how long has it lasted with suppliers basically acting as the main creditors for their customers in Brazil? What happened last -- I mean and again, how long does it last? Aviram Lahav: Yes, Dan, it's -- I've been following and working in the Brazilian market about 15 years now, probably going on 20 and it waves. It is -- it has a lot of waves. I mean, basically, you're able to cope with it. If you work in a smart way -- I mean, the Brazilian market in agriculture is the #1 agricultural market in the world. If you're not in Brazil, you're actually not playing in agriculture, end of story. I mean we are active, by the way, in Brazil and other divisions as well. But predominantly, I would say, it's in agriculture. Now the Brazilian agricultural economy is obviously very, very important, especially around soy. You know the story there. And if you play it carefully, you can get very good results. Now you have to be aware at certain points of time, again, I'm trying to recollect from my past -- by the way, you can see it reflected in the currency. I've seen the real at 4. I've seen it at 160. I've seen it at 6. And now it is at 520 or something around that. It toggles. I mean, I believe that it will prevail. They will sort it out. I think that this -- the last year has seen probably a shift to a new reality. This year should be stable. Why am I saying this? Because what happens normally when things start to get tougher, it takes time for people to acclimate. I believe they have acclimated. And I believe that what we're seeing and we're seeing it in our performance, we are doing not great, but we're doing okay. Our level of doubtful debt does not grow. We are able to collect. We could have sold much more, but it would have taken a significant amount of more risk. So we are playing the game. I think we've got the experience, the knowledge how to play the game. And I do not believe that there is any particularly, let's say, bad news that should come there. I would gather that the next stage will be somewhat better than we've seen in the past year, but it remains to be seen, of course. Does that answer your question? Daniel Rizzo: That does. No, it does, it does because it sounds like we're at the trough for... Aviram Lahav: I believe so. Yes, I believe so. Yes, yes, yes. Daniel Rizzo: Okay. And then -- so with the moves you made with your portfolio with kind of deemphasizing or stopping the big battery project, how should we think about batteries going forward? Is this a temporary pause waiting for the market? Or are you just kind of moving away from this end market is not really relevant anymore? Aviram Lahav: Yes. That's a very good question. I think that something very fundamental has happened in the market. I mean, ultimately, when you look at the horizon, electricity, electric cars, electric other systems are here to stay. There's no question about that. The question is the pace and the question is who will be the winners and losers in this industry. Now if you look at the U.S. country to what was the -- what was, let's say, the aspirations and the thoughts, 1.5 years ago, they are very different at this stage for many things. It's the infrastructure, it's the support the government gives direct and indirect. And it is a situation where it will be a much, much more rockier road. You can see this by the way that Ford are reacting. You are seeing that by the way that GM are reacting. GM are not reacting the same way, but notwithstanding that, they took a significant hit and it's probably going to take a lot longer. And for somebody in novice starting to play the game, we came to a definitive conclusion that was not our game. We should have gotten a lot of support from the government. That support is off the table. Many factors were baked in. In Europe, the question -- the issue is quite different. The result is very similar, but different, different things. First of all, in Europe, there is an issue with the level of adoption -- of theoretical adoption is higher than the state. However, the propensity to consume is hampered. The real wages in Europe are not going up, and there was always the notion that the car needs to be cheap enough in order to play in this game. And of course, the Chinese are much freer to work in Europe than they are in the U.S. And the situation came, which culminated in the announcement -- dramatic announcement that Stellantis came about 2 weeks ago. They dropped a very significant amount of their project. Share was down 25% that day. It's quite dramatic. Ford pulled out of Germany, there are many stories here. So when we look at it in the global market, we obviously have got an extremely successful operation in China supplying to the best players in the market. We continue that. But our dreams of going downstream to become a full-fledged LFP producer or, let's say, the cathode side, that has been put off. And I may say, you have the CEO of the group with me. He's the one that makes the calls, but I don't think we're going to come there anytime soon, if at all. Elad Aharonson: No, no. But the bottom line is that the industry of LFP cathode material remains in China and only in China. Aviram explained about the U.S. and Europe. And we don't have any competitive advantage in moving forward in the supply chain in the -- for the cathode material. So we will remain a supplier of raw material of MEP chemical grade to others in China, which is a great market for us. We are doing great there, but we don't have to continue with the projects in Spain and in the U.S. I think it was a very good decision, if I may. Aviram Lahav: And for us, just to finally close, we said all along, if you remember, time after time that we're investing in the qualification side, we're investing in technology. But we are not going to go to continue and to set up facilities until we have all the stars aligned. I think it was a very, very smart decision. And you can see that ultimately, when things indeed didn't turn out as we would have hoped to us is relatively minor. It could have been completely different magnitude if we've gone downstream and go to manufacturing sites. So that's, I believe, the story on that one. Operator: There are no further questions at this time. I will now hand the call back over to Elad Aharonson for the closing remarks. Elad Aharonson: Okay. So thank you, everyone, for participating today. Look, we said the strategy -- new strategy in the third quarter. And as you can see, we are moving forward by executing this strategy. So on one hand, we acquired Lavie Bio for Growing Solutions. Recently, we acquired Bartek for the food business. And you can expect some more M&As along the year. As for maximizing the core, we signed this definitive agreement with the State of Israel, which is very important for us to secure the future and we are very happy with this agreement. At the same time, we improved the production rate of the potash, both in the Dead Sea and in Spain towards the end of the year, and we will continue like that in 2026, as you can see in the guidance. And as for efficiency and optimization, so we took decision to stop the LFP project, and we just explained why. Also, we put on the shelf Boulby because we are very disciplined with the capital allocation, and we want to direct the capital of the company in those areas where we see most of the potential and which are more synergistic. And probably next week -- next quarter, sorry, we'll talk about cost transformation program as we need to take care of this as well. So we are pushing and making investment on the 3 pillars of the strategy. It's a bit like transformation phase. It will take some time, not a lot, but I guess we'll all see the results soon. Again, thank you very much, and probably we'll be in touch in different forums. Thank you. Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.
Operator: Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the TAV Airports Investor Day live webcast to present and discuss the 2025 full year financial results. [Operator Instructions] The conference is being recorded. At this time, I would like to turn the conference over to Mr. Serkan Kaptan, CEO; and Mr. Karim Ben Salem, CFO. Mr. Kaptan, you may now proceed. Vehbi Kaptan: Thank you, Maria. Hello, and welcome to all. Thank you for joining our 2025 full year webcast presentation. I would like to start by giving you the highlights of the year's traffic first. The year was unfortunately marked by many geopolitical developments. These, of course, have affected especially the Middle Eastern traffic negatively. We have lost about 3% of our international traffic due to the geopolitical developments during the year. Strong lira was also a headwind during the year because it makes the Turkish holiday more expensive in euros or dollars. Bodrum, especially Bodrum, felt these affects the most during the year. Antalya, however, is more dominated by all-inclusive package tourism, coupled with competitive ticket prices, this makes the destination more affordable. A shorter and milder winter season also supported the traffic in Antalya. So the international traffic still managed to grow slightly at 1%. You may recall that at the beginning of the year, we have a shifted season where we had cold spring days and were suffering from a decreased traffic. And in summertime, due to the unexpected Iran-Israel clash, we suffered some traffic, but because of the milder winter season and late winter season, we managed to increase the traffic in September, October and till mid-November and managed to grow slightly around 1% for Antalya. In Izmir, which has mostly outbound Turkish traffic or visiting diaspora traffic, we see a strong lira working in our favor. The same goes for Ankara. Ankara is also being supported by the growth of AJet, which has recently based 2 new aircraft in Ankara, where we will realize strong growth in Ankara for 2026. Ajet is growing in Ankara as part of its hubbing strategy. As you know, they are based in Sabiha Gokcen in Istanbul, the secondary airport, but established their second base in Ankara, connecting almost all central Anatolian traffic via Ankara to international destinations. This strategy is working well. We have seen the output last year in 2025 with 14% international growth. And this year, we see that this growth continues very robust. The fleet growth of the other two low-cost carriers, the Turkish low-cost carriers such as Pegasus and SunExpress is also supporting both Ankara and Izmir. SunExpress mainly grows in Izmir and Pegasus continue growing in Ankara. Almaty international traffic also grew by 7%. This is because of the grounded A321neos in the airport. They continued suffering the Pratt & Whitney engine failure for the A321 and growth was limited to 7%. Normally, we would expect it to grow much more than the 7%. This is because of the high GDP per capita of the country compared to the size of the aviation sector. This year, we believe that we will realize much higher percentages on international growth in Almaty. Georgia, Georgia is also very popular with Turkish, Israeli and Russian tourists and their traffic has increased a lot this year. In 2025, in Georgia, we had a growth of 16%, and we believe that this robust growth will continue in 2026 as well. We see a boom in Georgia, both in terms of tourism and also becoming a regional gateway to other destinations. We have high single-digit growth for the rest of the portfolio, which is a great performance compared to the peer airports as well. So when we look at the January results of 2026, we see that the traffic came in very strong in most of our assets. All international assets grew very high percentages. We see the effects we talked for 2025 in the Turkish airports. The strong Turkish lira is affecting Antalya and Bodrum negatively and Izmir and Ankara positively. We have a strong winter, I would say, for Antalya. That's why the demand was low in January, but we hope the recovery to be very quick soon. And the growth of low-cost airlines is also affecting Izmir and Ankara in a positive way. Almaty made a strong start to the year with domestic aircraft diverted to international routes. The 15% international growth is closer to the real potential of the airport. Because of, again, the engine problems of A320 in Almaty, Air Astana and the other local carriers diverted their flights more to international. You will see a decreasing trend in domestic, whereas we have an increasing traffic trend in international. That's how we made the 15% growth in January. There is also a very strong travel demand between China and Almaty, which doubled when we compare the traffic to the last year and became the largest source market for the airport in January. So Chinese traffic is coming. Georgia's spectacular growth continued in January, too. In Georgia, in January, we had a growth of 19%. We believe that we will have this continued trend as well. We had 31% growth in Macedonia because as we reported last year, we were missing almost half of Wizz Air's fleet due to the neo engines. And now we have new 320 -- 321s based in the airport as of November, which has a 30% higher seat capacity because the 320s are replaced by 321neos, which brings this 30% higher seat capacity. All in all, 12% international growth was for January is a strong start for the year. But of course, January is a low month. It's a low season. These are off-season numbers and do not carry a lot of weight when we compare the 12 months. We have a more conservative passenger guidance than the numbers on this table, which we'll talk about on our guidance slide as well. So when we looked at the growth of source market slide, it shows how our passenger mix has shifted over time, especially since the pandemic. One big difference is the drop in visitors coming from Russia and Ukraine. With the sanctions in place, Russians have to fly in Russian aircraft to Turkey. Earlier, you may recall that mostly Western aircrafts were used for Russian aircraft flying to Turkey. But due to their lack of aircraft, they also started -- they decreased their flights to Turkiye, and we have lost 3.7 million Russian passengers due to the sanction. On the Ukrainian side, we had 2.7 million passengers before the tragic war, but because of the war, there is no civil aviation in Ukraine presently. We don't have any flights between Ukraine and Turkiye, but we have, of course, some Ukrainian passengers flying via Poland. We believe that we have made up for some of the loss in Ukrainian traffic with Polish traffic, which has increased significantly. You can see the growth of Poland on the chart, which also includes Ukrainian travelers flying through Poland, as I stated before. Russians used to be the #1 source market for our airports. So if the sanctions are lifted, Russians could again become #1. Bear in mind that in our forecast, in our guidance, we didn't include any sanction to be lifted. It is the status quo continuing on as per our disclosures. Compared to the last year, the best performing markets were Turkiye and North Cyprus due mostly to the strong lira. UAE, Netherlands and Kazakhstan underperformed the most, unfortunately, again, mostly due to the same reason and due to the geopolitical development. With that, I will now hand over the presentation to Karim to go over our financials. Karim Salem: Thank you, Serkan. Coming to the financials in euros and starting with revenue. It continued to be above traffic growth for the full year, and it is the continuation of the trend in previous quarters. One of the reasons for that is that, as you may know, we do not consolidate Antalya. The consequence of it is that it is in our passenger numbers. And actually, it pulls traffic growth downwards, but it is not in our reported consolidated revenue. We only consolidate the net income after purchase price amortization. So when it comes to commenting the main highlights by category and starting with catering, we had significant growth in catering revenue this year related to BTA new Antalya operations. So BTA Antalya operations also boosted the area allocation revenue, which contributed to revenue growth being above passenger. Coming to ground handling, where 73% roughly of our revenue is in Turkish lira. Our OpEx continues to increase with TL inflation. And thanks to the great management team that we have at Havas, we have been able to reflect this cost to our prices. Ground handling as a segment was also strong in our foreign airports. So ground handling was overall another factor in revenue surpassing the passenger growth. The new concession in Ankara was also strong with an additional EUR 19 million in terms of year-over-year revenue growth. In 2025, we have 2 quarters of Ankara operations under the new concession terms, but we will operate the full year 2026 under the new concession, which brings an even better perspective for 2026 regarding Ankara, sorry. The nonfuel aviation revenue growth was in low teens. The jet fuel business is also in aviation revenue that was affected by fuel market volatility and a weak U.S. dollar. Lounges continue to grow, especially in the U.S. and in Kazakhstan. And despite the closure of some unprofitable Spanish lounges, which we discussed earlier this year, we had strong growth there as well. Looking at the like-for-like duty-free spend per pax, excluding Antalya and Almaty, it is up 9% from last year. Almaty kicked off right before Q3 last year. So we are feeling the full year impact kicking in for 2025. And all in all, our duty-free revenue went up by a solid 17% for year 2025. Finally, we have car park revenue that didn't grow this year because we shut down the Oman parking operations. And one last point regarding Havas related to bus operations, Havas closed down the Adana station this year, which is the reason why you are seeing a small dip in the bus services revenue. Coming to OpEx, if we look into the operating expenses before EBITDA, these expenses continue to stay below revenue, and we continued to expand our EBITDA margin. We had a drop in jet fuel costs and a flat cost of services renders. Maintenance and utility expense growth was muted, and we had flat other operating expenses. Operationally, BTA's New Antalya operations and the new Ankara concession supported margin expansion. And just as in the third quarter, in the fourth quarter, too, a lot of assets delivered strong operating leverage. If we adjust for the impairment expenses made in the last quarter of 2024, we had higher depreciation expenses compared to last year which was due to the first full year of the new terminal in Almaty, sorry, and the end of the old concession in Ankara as well as Ankara's rent expenses for the new concession, BTA Antalya's rent expenses and TAV Operation Services lounge rent expenses in New York. In equity accounted investments, the cash picture is much better than what the numbers in equity accounted investments suggests. From Antalya One, we got a dividend of EUR 72 million this year versus a dividend of EUR 68 million last year. So in terms of free cash flow, the performance is actually better than last year. The combined EBITDA of Antalya One and new Antalya is EUR 135 million this year. It has to be compared to an EBITDA of EUR 127 million last year. Nevertheless, due to the amortization of the purchase price in Antalya One, higher deferred taxes in both and higher depreciation and finance expenses in New Antalya due to the opening of the new terminal, we were not able to show it this year under the equity accounted investment line. Coming to ATU, it had higher EBITDA this year, mostly because of Antalya, but it made a lot of investments, so its finance expenses increased. And for TGS, we see the effect of less third-party sales and the end of the pandemic compensation that we already evoked in the past. Getting down the P&L and reaching the net income line at the end, we continue to have overall strong EBITDA growth with margin expansion in the fourth quarter as well. So we had higher D&A, which we discussed earlier. Equity accounted investments had EUR 54 million more deferred tax losses compared to last year and EUR 12 million more of purchase price amortization in Antalya. The operations in Antalya, as we discussed, they are actually very strong. We have EUR 36 million more FX losses this year, which are mostly due to the appreciation of the euro and which are noncash. And with the canceling of inflation accounting in tax accounts, we accrued deferred tax losses due to the appreciation of euro versus Turkish lira. Most of this effect was actually in New Antalya and in Ankara due to the new investments made in these 2 assets. The canceling of inflation accounting increased the tax loss carryforward of these 2 assets, which had a somewhat neutralizing positive effect on deferred tax. And we used the legal revaluation right in Ankara, which was a benefit of EUR 11 million. So pretty sophisticated technical topics. But all in all, for the year, we had EUR 119 million of total noncash effect on the bottom line. If you adjust for the increase in negative noncash one-offs, the net income for 2025 becomes even EUR 170 million, which is only 7% below last year. We can see this large clearly in our free cash flow, which is standing at EUR 223 million for 2025 with a strong 44% growth over 2024. There are many moving parts in our financials, but definitely, free cash flow is the number which shows the clearest picture. We are generating a significant amount of cash for the year 2025. Coming to debt. You know that this has been an indicator that we have definitely been following over the past couple of years and especially in 2025 in connection with our guidances. With very strong cash generation throughout the year, we reached our long-term net debt-to-EBITDA guidance with an amount that finally comes out at 2.89x EBITDA for year 2025. In the fourth quarter, we had the currency-protected deposits mature and turn into cash. We had working capital improvements in many assets and the revaluation of the Almaty put, which was before standing at EUR 54 million and which is now coming out at EUR 91 million. All in all, our consolidated net debt dropped versus both last year and the last quarter. Normally, the fourth quarter is and should be seasonally weak. So the net debt drop over the previous quarter is quite a strong performance from our side. Coming to the next page. On dividend, the main highlight there is that as we have guided the market in 2025, we are restarting the distribution of dividends this year. We are planning to distribute TRY 1.3 billion, which corresponds to 50% of our IFRS net income converted to Turkish lira amount as of yesterday's exchange rate. We have invested heavily this year, and we will continue to invest at the service of our growth and our development next year as well. Against this backdrop, the decreasing of net debt and the resumption of dividend shows the strength of our balance sheet and our high capacity for cash generation. So I switch to Page #10. As many of you have followed, we were able to extend our Tbilisi concession until the end of 2031 in January. We pay fees to the state. We eliminate this and we pay a flat 30% of our passenger fees as the new lease for that 5 years period. The airport grew with a passenger CAGR of 13% during the last 20 years and EBITDA CAGR was 21%. It's a very high-growth market and a very robust operation. We are very happy to continue to serve Georgia with Tbilisi Airport for another 5 years beyond 2027. So if I go to Slide 11, Ankara Esenboga Airport. We were always guiding you that Ankara's profitability will jump with the new concession and its EBITDA would reach to EUR 45 million. On 24th of May 2025, last year, this -- the new concession of Ankara started, where we have enriched passenger fees and no cap in the collection of the international passenger fees. This is the first year of the new concession, and we have reached EUR 45 million of EBITDA with a 67% growth over the last year. This made with only a 14% year-on-year international passenger growth due to the new concession, which is much more profitable compared to the first concession. We have only seen the half year effect this year because of the new concession. As I said, it started as of 24th of May 2025. In 2026, we will see the full year effect. In the beginning of the call, I also talked about AJet's two new aircraft to be based in Ankara, which grew January traffic by 30%. So everything is looking good for Ankara for 2026. On the next slide, this is related to ATU. ATU is in Antalya now. Antalya, as you know, is a 40 million passenger airport involved with 32 million international passengers. You see the effects of ATU's Antalya operations. ATU operation also started end of April. The full operation with all terminals started mid-September. So we don't have the full year effect of ATU. It started end of first quarter. There is very high revenue growth versus next year, which is mostly due to Antalya. Year-over-year EBITDA growth was also very strong in the third quarter. EBITDA growth was not as strong in the fourth quarter because of some start-up costs and continued ramp-up. As I said, we took over late September, the existing facility, and we didn't have the chance to furnish and redo the shops or change the look or bring in new merchandise for the stores. But this year in 2026, it will be a full year effect. You will see this. Opening of the new stores and the refurbishment of existing spaces will continue until the summer. It started, but it takes time. So next year's offering, 2026 offering, both in terms of area and the number of products offered will be better than 2025. The spend per passenger in Antalya increased from EUR 6.5 per passenger to EUR 7.9 throughout the year as we continue to open more and more shops throughout 2025, and this will continue in 2026 as well. On the chart to the right, you see the spend per passenger over there. Almaty's first full year of operations and addition Antalya decreased our overall spend per pax. For Antalya, you see that per pax spending increased. But when we add up Almaty full year effect and so, if you look at the overall one, the spend per pax seems to decrease because in Almaty, we have departures and arrivals, duty-free, but at arrivals, we have limited sales that tracks the overall spend per pax to a lower amount. But if we had not added these new operations to the calculation, the like-for-like SPP would actually be EUR 10.3. So we can say that the duty-free spend per pax of the existing operations grew by 13% in 2025. You can see this growth also in our consolidated duty-free commission revenues, which grew by 17% in '25. So I would like to talk about the guidance, the realization of 2025 guidance and the expectation for the guidance. Karim discussed already about our financial results in detail. Here, you can see the results against the guidance that we had provided in the beginning of 2025. I won't go over the items one by one, but we can say that in all items, except for the CapEx, we were able to achieve our guidance targets. In CapEx items, we are slightly below our guidance, which is good, which resulted in less cash outflow from the company. In Almaty, due to the harsh winter conditions, we were behind schedule in terms of investments, in terms of CapEx. for the second phase. And due to the market conditions, we postponed some investments of Havas to '26 and '27. So it again makes us very happy to have achieved our targets for another year. For 2026, in this table, you also see our new guidance. We are looking for another great year. Growth will continue. Our base case is for the passenger traffic to be in between 116 million to 123 million passengers, whereas we expect international traffic to be between 78 million to 83 million passengers. So revenue in accordance with the traffic numbers should be between 180 to -- sorry, EUR 1.888 billion to EUR 1.988 billion. EBITDA should be between EUR 590 million to EUR 650 million. And in 2026, we will be the second year of Almaty second phase investment and the first year of Georgia expansion investment. Due to the heavy CapEx, the second phase of Almaty and the new investment for Georgia, we estimate that the CapEx to be spent will be maximum of EUR 330 million or less for 2026. I think that's all for the presentation. Operator: [Operator Instructions] Karim Salem: So I will start with the first questions received, and I'm starting with questions received from [ Melis Pojarr ] from Oyak Securities. The question being, first question being regarding guidance 2026 CapEx, could you please briefly quantify on an airport basis? Well, on that question, if the question is about, let's say, breakdown of CapEx by activity airports, what I can say is that we can say that roughly 30% of the CapEx is allotted for the second phase of investments in Almaty. Then you have another 20% to 25%, let's say, of the CapEx, which should correspond to the investments in Georgia and as part of the extension of the concession as was evoked, presented, I mean, in mid-January and reevoked a couple of minutes ago by Serkan. And then for the rest of the CapEx, we are planning solar panel investments for Ankara. We should have growth CapEx for BTA, but also for other service companies, and the rest should be maintenance CapEx. I have another question, still from [ Melis Pojarr ]. What is the reason behind 25% year-on-year decline in cost of services rendered in Q4 2025? And for that question related to the specific line of cost of services rendered, I can say that the decline is related to, I would say, several topics. Main one is corresponding to TAV IT projects. Actually, they classify some of their costs here in the cost of services renders and it has decreased. We also have an effect of the closing of Spanish lounges here as well, and it was already there earlier in the year. And we also have decreases in other companies, too, with different reasons for each company. I mean we have -- I mean, apart from TAV IT projects and Spanish lounges, we have many reasons, actually, it's very split. Vehbi Kaptan: So again, a question from [ Melis Pojarr ], Oyak Securities. What are the tenders in your radar right now? Will you attend alone? And what are the airports current and targeted KPIs? We are always looking for growth opportunities in our core geography, as we always say. Our main criteria are growth prospects and sound legal infrastructure when selecting the opportunities. You know that we were prequalified for Montenegrin airports, but we did not bid in the tender, although it was a project that we looked at extensively. The preferred bidders in the tender were announced, but the results were contested. So we are following further developments there. Egypt has started its privatization. And the first project on the privatization pipeline is Hurghada touristic Airport. in the range of 10 million passengers. And this project started with prequalification process. We are submitting our prequalification. And naturally, we are evaluating the pros and cons of this project as well. Of course, there are many other projects that we are evaluating, but the business development pipeline in our business sometimes takes years. So it's best not to put too much weight on possible new tenders unless we officially disclose that we are participating in a certain tender. Karim Salem: I'm moving with a question from Julius Nickelsen from Bank of America. Thank you, Julius. The question is the following. Could you please provide any indication on where net income should go in 2026? And should we assume that the EUR 120 million of noncash one-offs to reverse during 2026? Well, that is, I mean, one of the most important questions, of course, for 2026, and we cannot provide net income guidance because, I mean, first of all, this is the very bottom line of the P&L, and therefore, it includes, let's say, the most important level of volatility. It includes every flows, everything that flows in our P&L. And on top of this, there are many moving parts, generally speaking, below EBITDA. And I can also add that the legislative framework also shifts very quickly, especially in connection with our Turkish activities. Having said that, I think that I can quickly elaborate on the fundamentals of this movement would be useful, but I'll be very quick about two fundamentals that could make things move on one side or the other in 2026 regarding our net income. First one is inflation accounting measures and second one is FX variations. Inflation accounting measure related to the fact of taking into account, let's say, Turkish lira inflation in the way our balance sheet is revaluated and FX variation related to the way we operate in various currencies and mainly in euro, USD and TL versus the way we report, so in euros. So for these two fundamentals, we are definitely lacking long-term visibility, but just like many institutions, I would say, and for 2026 as well, even though I would say that the situation is improving, especially from the outlooks in terms of inflation for the full year of 2026. But it is still hard to give, let's say, guidance on this topic for 2026. Then another question from Julius. Any reason why EBITDA from Almaty was down 35% in Q4 2025? Is there any impact from the investments? Well, this topic has been addressed in a way during the presentation. One of the main reasons actually why it was down was the movement in FX, in euro-USD FX because you know that the main currency in which Almaty operates is USD, and it went up 10% year-on-year, meaning that when you are comparing Q4 2025 to Q4 2024, there was an appreciation of euro by 10%. And the other reason is volatility, generally speaking, in the fuel market, again, on a year-on-year basis, Q4 2025 compared to Q4 2024, and it led to lower volumes. We identified the matter Q4 2025. But I mean, going beyond this topic, we had disclosed previously that we will be shifting the revenue and EBITDA mix of the Almaty airport from fuel to aviation through tariff increases over the next couple of years. And this process is going as planned. And of course, I mean, this downward trend, we have followed it again. But the most important is that we are having a path forward with moving from a fuel-centric airport to an aviation-centric airport. Vehbi Kaptan: Thank you. So another question from Julius Nickelsen, Bank of America. How should we think about the relatively wide range of your guidance? What scenario represents the lower end of the guide on traffic and EBITDA? What needs to happen for the upper end of the guidance? So we are located in a fast-growing region, but this growth unfortunately comes with risks as well. The main of these risks being geopolitical developments. As everybody has followed, there were numerous geopolitical events throughout the year, and we lost 3% of our international passengers at 2025 due to these developments. We are still being affected by the grounded A321s with the Pratt & Whitney engines, especially in Almaty. The guidance were provided -- we provided balances our base case for strong uninterrupted growth with these kind of numerous exogenous risks in the region. And I switch to the questions of Cenk Orcan from HSBC. The traffic outlook within your 75 to 83 international passenger guidance, 4% to 11% year-on-year growth. How do you expect your Turkish airports and Antalya in particular, to perform? What is your Turkish tourism, the foreign visitors outlook this year? We talked about these a bit during the presentation. Last year, we had several factors affecting traffic, one of which was the real value of the Turkish lira. This especially affected Bodrum and Gazipasa the most and Antalya, the less. Strong TL and the growth of low-cost carriers had positive effect on Izmir and Ankara, and Ankara was especially strong with the growth of AJet. Most of these trends have not changed in 2026, but we hear of some renewed low-cost interest in Bodrum. So Bodrum could have a better 2026 compared to 2025. The foreign airports would probably continue to outperform Turkish airports in 2026 as well. And North Macedonia could be outperformer because there are new A321s base with 30% higher capacity versus the previous A320s. The second question is also about the traffic outlook. 2025 was strong domestic passenger growth at key airports in Turkey and your traffic guidance implies 0 to 5% growth in 2026. Any specific factors for normalization this year? For the domestic passenger figures, they improved due to higher ticket price caps implemented in 2025 and the increase appeared substantial because of the base year effect and the cost increase in 2026, the price cap loses its attraction for the airlines. For this reason, our base case is for domestic traffic not to be as strong as last year in 2026. Of course, material increase in price caps could change that picture. What we try to mean is that in Turkiye, as you know, we have a price cap for domestic fares. When it is low, the airline's tendency is to utilize the aircraft more in international routes or lease the aircraft outside. If the price cap is favorable to the airline, if it's higher, they rather use it in domestic routes because there is a demand, and we have an immediate effect in the growth of the domestic passengers. Karim Salem: One more question about Almaty tariffs. So the question is the following. 2025 presentation shows a lower blended average international pax fee than the 2024 presentation, $10.7 versus $13.8 for non-Kazakh airlines. Is that because $10.7 for 2025 now includes local airlines? Well, this question connects to previous presentations, and we only have provided back then the tariff for non-Kazakh airlines. And indeed, it was $13.8, as you correctly noted. However, now starting from 2025 to make a more comprehensive picture, let's say, we have now included local airlines in the calculation, thereby presenting a blended passenger fee for both Kazakh and non-Kazakh carriers. And this is the number that can be used with the departing international passenger numbers. So it's a much more useful number for everybody actually. As you can see, it increased from [ $10.3 ] in 9 months to $10.7 in full year. So it's getting along with the tariff increases that we are getting. We also got security fees, which are $5.41 for non-Kazakh and KZT 2.815 for Kazakh international passengers as part of our tariff increase process, which is, as I said previously, continuing. So now I have a question from Ashish Khetan from Citi. It relates to Ankara, sorry. Ankara EBITDA has increased significantly in 2025. Do we expect further improvement in 2026 or the full benefit of increased fee and end of guarantee structure has been materialized in 2025? Well, the answer is yes. We only have the effect of the new concession for 2 quarters in 2025. So definitely in 2026, we will have it for the full year, what we call the full year effect, and this will definitely be a boost to our profitability, the profitability of the Ankara Airport. Another point is that the AJet airline, formerly AnadoluJet is continuing to grow in the airport and providing a very important traffic growth driver at international level, especially. So all in all, we have -- we feel very good tailwinds at Ankara level, and it should continue for the full year of 2026. Other question from Ashish regarding personnel costs. How do you see personnel costs increasing in 2026 with inflation easing out? Well, I guess the question mainly relates to Turkish staff costs for 2026 since we are talking about inflation. For staff costs in Turkiye, the main moving parts will definitely be in 2026. First of all, the Turkish minimum wage rate increased rates. And then we will have a second factor, which is the average number of employees. Vehbi Kaptan: Okay. Question from Gorkem Goker, Yapi Kredi Yatirim. In what ways and how any potential end of Russia-Ukraine war would impact your operations on aggregate in light of last couple of years' realizations? Due to the sanctions imposed on Russia and the ongoing war in Ukraine, our airports are experiencing a loss of 27% of Russian traffic and 100% of Ukrainian traffic compared to 2019. Any potential resolution in this situation, coupled with the lifting of the sanctions would be beneficial for passenger numbers across all our airports, particularly in Antalya. If Ukrainian civil aviation comes back, that would also be a positive, but that could take more time. In Antalya, the proportion of Russian passengers is a key driver of overall spend per passenger as Russians are among the highest standards within the non-Turkish passenger mix. Additionally, our ground handling company, Havas, used to serve a higher number of Russian charter flights, which carry higher service charges compared to the scheduled flights by nature. The absence of these charter flights has affected Hava's EBITDA margin. Therefore, any potential end to the Russian-Ukrainian war would also positively impact Havas margins. I think that concludes our Q&A session, too. Thank you for joining us. Thank you all for our webcast, and we hope to see you in events or in Istanbul physically soon. Bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant evening.
Alfonso Ianniello: Good morning, and welcome to Codan's H1 FY '26 Results Presentation. I'm Alf Ianniello, Managing Director and CEO. And joining me today is our CFO and Company Secretary, Michael Barton. As announced this morning, after more than 22 years with Codan, Michael has informed us of his decision to retire at the end of August following our FY '26 full year results. Over that time, Michael has played a pivotal role in shaping Codan's financial discipline, capital allocation framework and acquisition strategy. On behalf of the Board and the broader team, I'd like to sincerely thank him for his contribution. I'm also pleased to confirm that Kayi Li, currently our Deputy CFO, will succeed Michael as our Chief Financial Officer. With nearly 19 years at the business, including senior finance roles at Codan since 2013, Kayi has played an integral role in our financial strategy and operational execution. We are confident her experience will support a smooth and seamless transition. In addition, Daniel Widera, our General Counsel and Joint Company Secretary, will become Codan's sole Company Secretary upon Michael's retirement. Michael will remain with the business for a structured 12-month transition period from August to ensure continuity and stability. Before we begin, please take a moment to review our standard notice and disclaimer. Today, we'll begin with our H1 FY '26 performance highlights, followed by a detailed review of each of our segments being Communications and Metal Detection. We also highlight 2 products that contributed meaningfully during the half, demonstrating how our engineering investment is translating into commercial outcomes. We'll then revisit our strategy and near-term priorities before closing with our outlook for the remainder of FY '26. Following our remarks, we'll move on to a live Q&A session, which will be hosted by Sam Wells from NWR. While Michael and I are working through the slides, you are welcome to submit written questions at any time [Operator Instructions] For those newer to Codan, we're a global group of technology businesses focused on critical communications and detection. Our technologies are designed for mission-critical environments, keeping people connected, informed and safe in demanding and often remote conditions. We operate across defense, public safety, gold detection and recreational markets, supported by a global footprint and strong engineering capability. At our core, we focus on reliability, performance and long-term customer relationships, particularly in environments where failure is not an option. Our strategy to build a stronger Codan remains consistent and disciplined. It is underpinned by sustainable organic growth, targeted and accretive acquisitions and continued engineering investment and strong operational execution. Diversification remains a key strength with Minelab delivering a strong cyclical performance and Communications positioned for structural long-term expansion driven by defense and public safety demands. Over time, this approach is building a more resilient and diversified earnings base with improved visibility and quality. At a high level, our H1 results reflect consistent delivery against our strategic plan, underpinned by disciplined execution and favorable market conditions in several key regions. Communications delivered another period of consistent and high-quality growth, supported by strong defense demand and the integration of Kagwerks. Metal Detection delivered exceptional performance, particularly in Africa, where elevated gold prices supported demand. Importantly, this performance was achieved while continuing to invest in engineering, systems and people, ensuring that our growth remains sustainable and repeatable over the longer term. Turning to the numbers. Group revenue increased by 29% to $394 million, reflecting strong organic growth and a full first half contribution from Kagwerks. EBIT increased by 52% and NPAT increased by 55% to $71 million, demonstrating strong operating leverage across the group. This reflects both revenue growth and improved product mix, particularly within Minelab. The Board declared a fully franked interim dividend of $0.195 per share, up 56% on the prior corresponding period, consistent with our disciplined capital management approach. I will now hand over to Michael to step through the financial detail. Michael Barton: Thanks, Alf, and thanks for the kind words at the start of your presentation. Also, I'd just like to thank you for your support of the succession plan to Kayi and Daniel, much appreciated. And thank you for making the time under your leadership so enjoyable and so successful. On to the numbers. So as highlighted, group revenue increased 29% during the half and pleasingly, the growth came from both our Communications and Metal Detection businesses. Our gross margins increased 58% and all profitability metrics were increased. Operating expenses increased primarily due to a targeted investment in shared services, higher performance-linked expenses, which are reflective of our strong results, product launch costs and the integration of Kagwerks for the full period. Tax expense was slightly higher at 25% with more of our increased Metal Detection profits taxed here in Australia. NPAT margin improved to over 18%, reflecting improved profitability and operating leverage. We continue to actively manage our foreign exchange exposure through our hedging program with contracts in place to mitigate approximately half of the expected USD exposure in the second half. Overall, the financial result reflects both strong performance and continued investment in capability. We closed the half with net debt of $88 million, an increase of $10 million compared to June, largely reflecting working capital investment to support growth and our increased activity levels. Leverage remains conservative at 0.4x EBITDA. With an undrawn debt facility of $140 million as well as an additional $150 million accordion capacity, we retain significant financial flexibility to pursue inorganic growth opportunities. This slide illustrates the key drivers of our net debt movement during the half, including the investment in operating cash flow into working capital to drive growth, our dividend payments and continued investment in our engineering programs. Engineering investment during the half was $36 million, representing approximately 9% of Group revenue. This level of investment is consistent with our long-term approach and supports product development pipelines across both Communications and Metal Detection. In Communications, investment is focused on advanced tactical platforms, next-generation waveforms and public safety applications. In Minelab, investment continues to support our product refresh cycles and our technology leadership. This sustained commitment to innovation underpins our organic growth trajectory. And back to you, Alf, to take a closer look at our business units. Alfonso Ianniello: Thanks, Michael. We'll now move on to the business units. Communications revenue increased by 19% to $222 million. Segment profit increased 17% to $58 million, with margins broadly stable at 26% as we integrate Kagwerks and manage the challenging trading period in Zetron Americas. The orderbook increased by 19% to $294 million at the 31st of December, providing strong revenue visibility into H2 and beyond. We remain focused on progressing Communications margins towards our 30% target by FY '27 as integration benefits and scale efficiencies materialize. DTC delivered strong growth, supported by defense demand and increased adoption of our unmanned system solutions. Revenue from unmanned systems increased 68% to $73 million. Approximately half of this unmanned revenue during the period related to operational defense application in conflict zones with the balance being driven by adoption of our technologies across non-conflict defense and security programs in Asia, the U.S. and Europe. Importantly, growth rates across both conflict and non-conflict markets were broadly consistent, reinforcing the structural expansion of the unmanned systems market. Kagwerks contributed in-line with expectations and continues to integrate effectively, enhancing our position within U.S. military programs and strengthening our ecosystem offering. Our presence across the U.K., U.S. and Australia positions us well to capture long-term defense program across allied markets. The BluSDR contributed meaningfully during the half and represents a strong example of our engineering capability translating into commercial success. It is an ultra-lightweight, high-performance software-defined radio platform designed for long-range, secure connectivity across unmanned and mobile applications and has proven particularly well suited for drone-based deployments. Its technical characteristics, including high output power, mesh networking capability and low size, weight and power reinforces DTC's competitive positioning in mission-critical communications. Trading conditions for Zetron Americas were temporarily impacted by slower procurement cycles across the state and local agencies that we serve, which extended sales cycles and deferred order timing during the half. Early indications in the second half of the year are encouraging with trading conditions showing signs of improvement as funding approvals progress. Outside the Americas, EMEA and APAC markets delivered stable performance. We continue to invest in next-generation 911 capability and the SALUS platform to enhance recurring revenue streams and strengthen long-term customer retention. Minelab's first half results were exceptional, with revenue up 46% versus prior corresponding period to $168 million. Segment margin expanded to 45%, reflecting a higher mix of gold detector sales and improved operating leverage. Africa delivered exceptional performance, supported by elevated gold prices and strong demand across West Africa. Rest of the world delivered high teens growth, which is an excellent result, reflecting continued strength across key recreational markets. Rest of world performance was supported by product innovation, retail expansion and the ongoing development of our direct-to-consumer platforms. This performance highlights both cyclical tailwinds and structural improvements in the business model. During H1, we launched the Gold Monster 2000. It delivers enhanced sensitivity to ultrafine gold and improved depth and accuracy in mineralized ground, critical attributes in many of our core gold markets. Early customer feedback has been positive, supporting continued momentum as distribution scales up. Now I'd like to move on to the strategy update section of today's presentation. Our strategy remains anchored in 3 core pillars: first, investing in ourselves, strengthening systems, process, people and product innovation; secondly, strengthening our core businesses, which means expanding addressable markets, improving revenue quality and increasing reoccurring revenue components; and thirdly, disciplined capital allocation, where we pursue strategically aligned and accretive acquisitions that enhance capability, scale and market penetration. Together, these pillars support sustainable, diversified earnings growth. In DTC, we are expanding towards a full system solution provider model, continuing investment in the next generation of waveforms and ecosystem integrations. In Zetron, we are focused on increasing reoccurring service revenue and expanding support contracts and also advancing next-generation command and control platforms. And in Minelab, we continue product innovation, retail footprint expansion and channel development with another new detector scheduled for release shortly. These initiatives support both near-term performance and long-term structural improvement. Now turning to our summary and outlook on Slide 23. Tying today's presentation together, market conditions remain positive in both Communications and Metal Detection, reflecting the diversified nature of the Group's portfolio and the quality of our business. Codan's strategy is to continue to invest in engineering programs to maintain product and technology leadership and to underpin long-term growth. In Communications, elevated defense spending and ongoing geopolitical tensions globally continue to generate strong demand for our unmanned systems products. Communications is on track to deliver FY '26 revenue growth within a 15% to 20% target range, supported by strong underlying demand and the full year contribution from Kagwerks. Minelab revenue in the second half of FY '26 to date is tracking in line with the strong first half performance. Based on Minelab's current trading conditions, we expect the second half performance to be at least in line with the first half, supported by favorable gold market conditions and a full 6-month contribution from recent product releases. With balance sheet capacity and a disciplined approach to capital allocation, Codan remains well-positioned to continue investment in the business and pursue future acquisitions that fit our product and technology road maps, which enhance the quality, resilience and the diversification of our earnings. The company will continue to keep shareholders updated as FY '26 progresses. Back to you, Sam. Sam Wells: As a reminder, the audience may ask questions to the management team. [Operator Instructions] There are a few pre-submitted questions, so I'll kick off with those before getting to the analysts. Firstly, just on Communications margins. You've talked about the moderating pace of margin expansion within Communications. Can you elaborate on the path from current margins to the 30% target by the end of FY '26? Michael Barton: Yes. Thanks, Sam. Yes, remain -- we've been very consistent that we remain focused on margin expansion. We did improve organically in the half, which was good. And we've been really consistent also on our revenue expectations for Communications, the 15% to 20% range remains the focus. As we deliver that and we see further revenue growth to be within that range in the second half, we would expect to see more improvement at the margin line as well. Sam Wells: And on Zetron, can you elaborate on the early encouraging signs in trading conditions in the Americas business? And are there any meaningful near-term opportunities specifically in the U.S.? Michael Barton: Yes. I think we posted a really pleasing increase in our order book at the half. So quite -- I think we're up 16% versus June, 19% versus last December. So we do go into the second half of this year with a stronger order book than what we entered the first half. So that's pleasing and sets us up to be within that 15% to 20% range that I mentioned. And I think we're also seeing -- while not yet in the order book, we are seeing some increased activity in the pipeline also in the U.S. market, public safety market for us. Sam Wells: And on Minelab Africa, an exceptional set of numbers within the Minelab business. How should we think about the sustainability of this performance, particularly in the context of 45% segment profit? Alfonso Ianniello: I think when you're looking at Minelab, I don't want to make it just an African discussion. We had a rest of the world high teens growth rate, really reflecting great execution from the Minelab team at a distribution, e-com level and direct-to-customer approach and new releases of great product. And then when you look at Africa, obviously, the gold price has been a tailwind for Minelab and then our great products have been a tailwind for Minelab. So the 45% is an exceptional number in its own right, and we believe it's maintainable in the future. Sam Wells: And just moving to unmanned. You printed some extraordinary numbers within the unmanned business. Can you help us understand how sustainable these opportunities are, particularly within the defense landscape? Alfonso Ianniello: Yes, it's really interesting. If you wind back 12 months, 18 months throughout these calls, we've referred to an unmanned market growing at 30% per annum globally. This is just increasing. The environment and the ecosystems in defense are very different today than they were previously. Our solutions back right into those unmanned platforms. And our ability to perform in conflicted environments well has really created a halo effect into other markets, hence, highlighting the success of the BluSDR-90, which was really born over the last 18 months through very high exposure to very conflicted environments. So we think the unmanned space over time will continue to be a significant tailwind for Codan. Sam Wells: Got you. And just shifting to some of those non-conflict opportunities you referenced in the presentation. Can you just elaborate on those? And where are the bulk of the revenues coming from in terms of specific applications? Alfonso Ianniello: Yes. So I won't talk about the specific applications. I'll talk more about the market -- the geographic markets that we are looking at. So if you look at, we did call out, we've started to see some positive work in the U.S., positive work in APAC, positive work in Europe. So if they're not in a conflicted environment at the moment, they're probably preparing for pre-conflict, I would say. So -- and again, let's take a step back and just reflect on the technology that we put in market, and that technology fundamentally is selling itself in these other markets at the moment. Sam Wells: Great. We'll move across to some of the analysts. First question comes from Josh Kannourakis at Barrenjoey. Josh Kannourakis: First, congrats, Michael, and wishing you all the best on the transition of your new steps and congrats to Kayi as well on the step-change in role. Good to see. Just jumping on to the first question just around regional exposure. So you did mention a bit of a step-up in terms of activity in the U.S. I know there's a lot of hoops to jump through in terms of getting into those programs and historically comms being dominated by a couple of those big local players. Is that a new incremental thing? Can you just give us some more detail on how recent that is? And maybe just specifically around the U.S., what you think the opportunity is across the broader comms space? And then obviously, specifically, unmanned as well? Alfonso Ianniello: Yes. I think when we look at comms in the U.S., we probably look at the dismounted soldier solution within the Kagwerks acquisitions and the unmanned solution giving us some good dialogue with potential U.S. customers. So there's a lot of -- as always, with these platforms, they're not plug-and-play. They are plug significant testing and evaluation and then you get an order. So we are comfortable that we're having the right dialogue with the right organizations, either at a defense department level or Tier 1s into the defense department. So that is positive. The other areas that we're actually having positive traction is APAC, and I won't go into the specific countries, but also there's been an uptick in European defense spend, and there's been some sort of shadowing of that application of that funding into unmanned systems and the DTC product category itself. Josh Kannourakis: Got it. That's really helpful, Alf. And just in terms of -- so just to understand it within the U.S. specifically because I guess my understanding was more that a lot of your volumes and things historically have been outside of that region. So you're sort of from a military perspective, within the sort of evaluation phase at the moment for that. So that's probably in terms of potential upside, that's significant if you can get through that. And -- but then on the other side, you're seeing traction in some of the nonmilitary sort of settings also. Is that the way to sort of read it through? Alfonso Ianniello: Yes, that's right. If you look at what we've seen over the last couple of months, we've been heavily involved in the border with our communications. So that's with government departments, not defense related. We are also heavily working with other sort of peripheral government departments in the U.S. that require our solution that in some ways, isn't defense related, it's more public safety related in theory, keeping the American public safe. So yes, and that's a great thing with the product categories. We can actually put it into dismounted soldier solutions, unmanned solutions, public safety solutions. Josh Kannourakis: Great. And just in terms -- I know you don't want to go into specific countries for obvious regions, but there's been some very large funding packages allocated to areas like Taiwan and in that sort of region. There's also a lot more flagged in terms of progressive step-up. How early in the journey do you think you are? Are you sort of -- do you have the right connectivity in place to capture what will obviously be a significant step-up in this broader region? Alfonso Ianniello: I would suggest, as we've said in the U.S., we are all part of the right conversations happening in APAC and EMEA being Europe. So yes, we're definitely having the right discussions with the right levels of people. Josh Kannourakis: Awesome. Final one from me. Just on M&A. I mean, obviously, it's been a pretty tumultuous environment across the software space. Defense on the other side has obviously has been a lot more favorable in terms of all the trends you've talked about. Can you maybe just talk about when you're thinking about it now the lens, how you're sort of seeing that in terms of the opportunities within both maybe comms and -- within comms within the tactical side, but also Zetron, especially with some of the potential in software, the AI-related disruption as well. Alfonso Ianniello: Yes. I think when you look at Codan and you look at our comms, the good thing we make products with software on it. So the -- any AI application is just an enhancements to the product and the end user, and that's how we actually see that. But we have pipelines of M&A targets. As you clearly mentioned, in the defense world, it's pretty hot at the moment. Multiples are far higher than we've seen in the past. People on the line would clearly know that we are very prudent when it comes to acquisitions about multiple and accretion levels. So we've been involved in processes. Some have worked. And then as in the past and the ones that we've been unfortunate on has been really the fact that we didn't believe we could extract the right value for it. But the process continues. We've invested heavily in structure at Codan. So we've got the right people working on it. We're looking heavily on how to enhance our technology road maps and our market positioning. So it's definitely a space where you just need to continue to be active in and ensure that you buy well and you can extract value for the future. So that's where we're at, Josh. Sam Wells: Next question comes from Mitch Sonogan at Macquarie. Mitchell Sonogan: And yes, congratulations to you, Michael and also Kayi as well. Just echoing Josh's comments. Just the first one, just on the outlook for Metal Detection or Minelab second half revenue to be at least in line with the strong first half. Just trying to get a little bit more color on that because obviously, you had pretty strong sequential growth. You've got, as you said, good gold conditions in that market and also still benefiting from new product releases. So just trying to understand what sort of visibility you have at the moment, how we should think about the second half potential upside risks. Alfonso Ianniello: Yes. Well, it's interesting if we talk about Minelab, that's probably the first time we've actually ever given a forward-looking number in Minelab. So yes, we've had a strong first half, right? We've got a lot of tailwinds either from a gold perspective -- gold price perspective, new product introduction, great performance in recreational. We sit here today, and we never comment on seasonality in Africa because we don't know. So we're not going to be a fact-based about that. But we do sit here today that we're saying there's the same tailwinds that existed in H1 exist in H2. And so I guess that's what our commentary was about, so okay? Mitchell Sonogan: Yes. And just in terms of -- obviously, you called out Africa being quite strong. But do you mind just giving a bit more color on other regions where you might have seen some big outperformance and other areas that you are more positive on the next 6 to 12 months as well? Alfonso Ianniello: Yes. I think I'll call out Australia. I think our work we've done in Australia has been exceptional on repositioning the way we go to market, big tick, some great work in APAC, big tick, LatAm, big tick. And then you've got Africa and Europe. We have been consistent in our approach either at a recreational level with e-comm, the marketplaces, the distribution point increases and new product introductions. So when I look at Minelab, it's very hard to fault anything they're doing in any market at the moment. And the most important thing is I'm as excited as with the gold detection and the gold sales as I am with the rest of the world sales because that high teens growth in a fairly flat consumer market is fantastic. So it just shows that where we're spending our money away from product development, it's working. Sam Wells: Next question comes from Evan Karatzas at UBS. Evan Karatzas: Just can we dive into Zetron a bit here. One of your larger competitors, Motorola, I mean they've been delivering some pretty consistent strong growth over recent quarters to their command center business. Can you maybe just speak to why you think there's such a discrepancy there to what you've seen in the U.S.? And anything you can, I guess, elaborate on around that order book for Zetron explicitly and how that's changed relative to 6 months ago, how you entered the year as well? Alfonso Ianniello: Yes. Good question. I think when you look at Motorola in the command and control space and you look at us, I don't think we're comparing apples-to-apples consistently on product offering. There's probably a bit more rolled up in that space of Motorola. And secondly, they're a Tier 1, Tier 2 player. We're a Tier 3, Tier 4 player. The way the funding and the grants work for Tier 3, Tier 4 are slightly different than they are in Tier 1, Tier 2. So -- and I think we also need to analyze Zetron over the last 4 years of Codan ownership, it's been well above market growth rate. So it's been an amazing acquisition for Codan. And so looking forward, what are we seeing in January, Feb when you -- just going further to what Michael said, yes, orders are being unlocked, so that they're pushing into the order book. There's far more activity in the pipeline. So the activity levels have come up from H1. It's a financial year. I think let's have a chat at the end of H2 and where these orders have rolled through. And let's not get away from the fact that we have entered H2 with an order book that is higher than most times. So that's the marketplace that public safety, it is. Also, let's not -- also let's understand the fact that we've been doing well in APAC and EMEA as well from a Zetron perspective, so. Evan Karatzas: Yes. Okay. No, all fair points. And just sort of coming back around to the DTC, the tactical comms, just around those investments you've been making, especially for contested environment, some of those new product releases, have they now been released into market? And then you can talk to about how early take-up or reception has been? And then also how that helps when you spoke about from a strategic sense with that expansion into your other growth regions like North America, Europe, Asia as well? Alfonso Ianniello: Yes. From a product perspective, I think the DTC product category is quite set. The feature content involves from market feedback. And that's the sort of the strength that we've had. We've been able to feed back those technical requirements from the field back into our product really quickly, either enhancing current product or creating new product like the SDR-90. So at the moment, we're heavily focused on feature content for the SDR range. And also we're heavily focused on feature content for the Kagwerks range as well. So probably less form factor changes, but more on feature content for the environment that these products work in. Sam Wells: We might just move on to the next question, please, from Tom Tweedie at Moelis. Tom Tweedie: Just the first one on Kagwerks. Are you able to give us a sense of the revenue contribution for the half for that business? And also just the color on the pipeline for program of record RFPs? Michael Barton: Yes. If I'd just give you the revenue range when we acquired that business, I think we were expecting high $40s million revenues into the low 50s. And I think we've commented, Tom, that it's been -- it's met our expectations. So it's been in that range over its first, what, 13 months of ownership. And Alf, do you want to talk about pipeline? Alfonso Ianniello: Yes. So when you look at, we've been heavily invested in supplying the Nett Warrior program, doing some international BD on other Army opportunities that we're looking at. I think what I've seen, which is very pleasing for us from a Kagwerks perspective is there's an evolution of movement from the standard DOCK Lite product, which is the base version to the DOCK Ultra product, which is the version with the radio and the AI technology and the edge computing technology. So that's what we're seeing happening in the Nett Warrior program itself. So that is significantly positive for us. And then like everything, we'll just keep doing the BD efforts with the other defense opportunities in the U.S. and internationally. Tom Tweedie: Very helpful. Just on Minelab and that side of the business, you called out detector launches. In the release, you've also mentioned one new detector to launch shortly. Just stepping back, can you remind us what the expectations are in the pipeline there over, say, the next 12-18 months for further models to come to market? Alfonso Ianniello: Yes. So we've released already an upgraded recreational detector, a new countermine detector and obviously, the Gold Monster 2000, great launches, great tech, keep moving forward. We've got a high, high-end gold detector coming out in the next couple of weeks, which is the GPZ, GPX range updates first time in almost a decade. So it will be -- it's probably anxiously being awaited by the users globally. Post that, the Minelab team has a road map on enhancing detection out 12 to 18-24 months. So -- and that's across recreational and gold and countermine, which is really the key areas. So there's no shortage of ideas from our Minelab. They are very good at creating products that exceptionally -- work exceptionally well in market. So like we always say, our ability to move that IP from an idea to a product is really the Codan superpower. Tom Tweedie: Awesome. And then one final one. You made a comment earlier around the distribution for Gold Monster 2000 still expanding. Are you able to give us a sense of -- is that in terms of key markets that you've still yet to properly launch the detector in? Or is there still more distribution to go in the second half? Can you give us a sense of what that comment related to? Alfonso Ianniello: Yes. I think that comment relates to launching a product. When you launch a product, we launched at the back probably in middle of Q2. So you're just ramping up supply chains, you're ramping up product to get into market. So at the moment, we're just in the ramp-up stage of Gold Monster 2000. So the scale up is to -- you just scale up production over time and you get into the supply chain into your customer base as more markets. And that's what that comment is about. So we are well on the way now, and that will continue over the next 12 to 18 months, I would suggest. Sam Wells: Next live question comes from Cam Bell at Canaccord. Cameron Bell: Just a couple of quick questions. So the Metal Detection comments you gave in the second half, flat revenue. Is it fair to say that with flat revenue, we can expect similar margins in the second half? Michael Barton: I think, Sam (sic) [ Cam ], we used the words at least rather than flat. So yes, in terms of the commentary on H2. At these revenue levels, we think 45% contribution margin out of Minelab is outstanding. We don't -- at these revenue levels, that would remain our expectation. I think it's fair to say at this level of revenue and that level of profitability, we are looking to reinvest in that business to continue the revenue growth that we've seen. So 45%, if that's what the contribution margin is in H2, that would be a fantastic result. Cameron Bell: Yes. Okay. I might stick with just 2 quick ones for you, Michael, to continue off on those. You might not miss these style of questions in a few months' time. Last half, you had a bunch of M&A costs unallocated. Is it fair to say there were some of those semi potentially nonrecurring M&A costs in this half? Michael Barton: Yes, probably not to the same extent. But yes, we did have M&A activity and ongoing integration costs across the business. We don't really call them out as one-off, Cam, because the business continues to evolve, and we continue to invest in different areas of the business to improve what we do. So the costs we've incurred in the first half is a fair representation of that cost base going forward. Cameron Bell: Okay. Sure. And then just last one for me. Is 25% tax rate the new norm? Michael Barton: Yes. I think with this mix of product, then yes, we're going to be in the mid-20s, whether it's 24%, 25%. But yes, I think we're in that range. Our Minelab business performing at this level, highly profitable. All that IP is generated here in Australia. We pay all of our -- majority of our Minelab taxes here in Australia at $0.30. So that caused that rate just to go up a percentage point or 2. Cameron Bell: Okay. Great. And congratulations, Michael, on everything you've achieved over the last 22 years. Michael Barton: 22 years, yes. Thanks, Cam. Sam Wells: And maybe just one last question here from James Lennon at Petra. Can we expect Codan's typical seasonal movement in working capital to repeat in FY '26, i.e., a wind down of working capital as the financial year progresses? Michael Barton: Yes. Historically, that has been the case, Sam. Look, we have had an increase in working capital over the first half. A lot of that was just activity related and the timing of that activity. So -- and we've had a really strong start to the year, the second half, a really strong start from a cash collection point of view. So some of that has unwound to start the second half. So yes. Sam Wells: And just one final question. What is DTC and Zetron revenue for the half? And would you consider disclosing DTC and Zetron revenue going forward? Alfonso Ianniello: I think we get asked that question a lot. And I think when we did the full year presentation for '25, we started talking about public safety ecosystems, defense ecosystems, unmanned, how it all comes together. If you see here today as Codan compared to 4 years ago, our Comms divisions are converging with the products that we have and how they work in market, right? So I guess a short answer to that is that we probably won't because a lot of our thinking is around public safety, which is heavily linked to Zetron, but there is creeping in on DTC products for that as that ecosystem evolves and not dissimilar to the defense ecosystem where you have unmanned systems, you have dismounted soldier solutions and you've got our standard core products in HF. So I guess the answer is that I see more converging rather than diverging today than I did probably 4 years ago. Sam Wells: Okay. Great. Thank you. We're just going through the hour. So I think that's all the time we have for live Q&A. If there are any follow-ups or unanswered questions, please feel free to reach out to us directly. And maybe with that, I'll just pass it back to you, Alf and Michael, for any closing comments. Alfonso Ianniello: Yes. Thanks, Sam. First, I'd just like to thank everyone for joining us today and the continued support you have for Codan as an organization. I think today, it just continually demonstrates our consistent approach in running Codan, our consistent strategy, our investment in product development, our investment in people and processes. We've actually steered into very good markets through M&A. So we sit here today, highly confident in our strategy, highly confident on our skills and execution and delivery and above all, that consistent approach. So I'd just like to thank everybody and we'll provide updates as we see fit for the rest of H2. Sam Wells: Great. Thank you very much for joining today's Codan's First Half FY '26 Results Call. Enjoy the rest of your day. Thank you, and good-bye.
Operator: Good day, and thank you for standing by. Welcome to Auckland Airport Interim Results 2026. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Carrie Hurihanganui, CEO. Please go ahead. Carrie Hurihanganui: Thank you. [Foreign Language]. Welcome, and good morning to everyone on the line. I am joined today by Chief Financial Officer, Stewart Reynolds, and we are pleased to be able to share the interim financial results from the first half of FY '26 with you. Listen, overall, it's been a promising start to the financial year. We've seen strong momentum across the business as travel demand and seat capacity has continued to build along with increased cargo movements. The focused cost management and solid commercial performance. Customer journey times continued to improve with robust operational performance, all while making significant progress on our aeronautical investment program with key projects delivered in the period and our new integrated domestic jet terminal firmly on track. As we look ahead to the remaining 6 months of the financial year and beyond, we're feeling optimistic, and that's based on the recent trading momentum and continued growth in demand across aeronautical and commercial opportunities as well as a pipeline of additional new air connectivity and the continued substantial progress of our infrastructure program. Now of course, that is notwithstanding the complexity and challenges that naturally come with a program of the scale that it has in a live operating environment. Now plenty to run through today on the half year performance and outlook before we jump into Q&A as normal. So let's jump to Slide 4. We'll kick things off with an overview of the first half results. I'd summarize the half year really about reflecting a growing momentum. First half '26 revenue increased 4% to just under $520 million, reflecting the combination of an increase in aero charges, increased passenger numbers and higher commercial income. Operating EBITDAFI lifted from the prior comparable period by 6% to $371.3 million, and that resulted in a lift to the EBITDAFI margin. Net underlying profit after tax is also up 6% at $157.1 million and total reported profit after tax, which included revaluations down 5% to $177 million. An interim dividend of $0.065 per share will be paid on the 2nd of April with total dividends declared at $110.2 million. Capital expenditure was almost $431 million in the first half with assets commissioned in the period of more than $743 million. If we move to Slide 5 and look at some of the key highlights that underpin the half year results, you can see there that total passenger movements increased 2% to $9.64 million, and that was made up of domestic passengers at 4.37 million, up 2% and international, including transit, also up 2% to $5.27 million. We also saw almost 86,000 tonnes of international cargo movements worth $20.3 billion, and that was up a healthy 37%. The ongoing focus, collaboration and investment is making a tangible difference for our customers. We've been working together with our airport partners and border agencies, and we've seen the introduction of new technology and digital enhancements and an expanded arrivals area, resulting in improved customer satisfaction measures and importantly, shorter customer journey times. In the commercial space, we've continued to see growth across key business lines of car parking, retail, investment property and rental income, up 5% to just under $240 million. Of the $743.5 million of assets commissioned in the period that I mentioned a few minutes ago, $724 million of that was aeronautical projects across terminals, transport and airfield. Moving ahead to Slide 7. Fundamentally, we continue to build for the long haul, and it has certainly been a busy 6 months. And that 6 months has been focused on delivery and progress in creating capacity, increasing resilience and uplifting the customer experience and business performance. Moving to Slide 8. Auckland Airport, we've been incredibly proud to serve as a critical gateway and enabler of economic growth for both Auckland and New Zealand. International travel here at the airport is an essential driver of the economy, generating over $35.1 billion in economic output in trade tourism and employment per annum with Auckland Airport serving more than 90% of long-haul flights into and out of New Zealand. Or another way to look at it is $1.4 million of economic value for every international aircraft that lands into Auckland Airport. Now we've seen inbound tourists through Auckland up 2% in the 12 months to December at 2.4 million, and that makes up 67% of New Zealand's international visitor arrivals. Auckland also has 89% share of New Zealand's international airfreight by volume and 93% by value. In the period, that equated to $8.2 billion worth of goods exported by Auckland, which was up 75% and $12.1 billion imported, which was up 19%. Moving to Slide 9. Listen, we've been really pleased to see more seats and greater choice coming into the market for travelers. And the most significant of that, particularly in the international space, a highlight was the launch of China Eastern's Shanghai-Auckland-Buenos Aires service in the first half, and that was made possible through years of collaboration between China Eastern Auckland Airport and government partners. Now overall, the China market growth is positive with forecast around 50,000 additional seats during FY '26 versus FY '25, and that's primarily been driven by China Eastern, China Southern and Hainan Airlines. It was also positive to see Air New Zealand growing its network from Auckland with seat capacity to Australia up 8.4% and capacity to the Pacific Islands increasing by 7.3%, primarily driven by their incremental A321neos. Now that Tasman growth was also complemented by capacity increases from both Jetstar and Qantas, which lifted seat capacity from Auckland to Australia by 4% and 7.3%, respectively, during the period. It was great to see Qantas Group announce their new samoa and Gold Coast routes that will commence in the second half. And it's worth noting that [ CF's ] launch of Auckland samoa introduces competition to that existing route and the Gold Coast Auckland launch sees the Qantas full-service airline brand now come on to that route. Moving to Slide 10. A huge highlight for us. We were delighted to see the strengthening of Southeast Asia connectivity with Thai Airways announcement of their planned resumption of services in the back half of 2026, and that will restore a long-standing long-haul connection between New Zealand and Thailand. And really, for us, it's an important milestone as we think about the rebuild of long-haul connectivity to and from New Zealand. It adds real value for travelers between both countries while also strengthening our connections into Asia's wider aviation network. Moving to Slide 11. There's been a tremendous amount of work underway between business and government and working together to stimulate tourism recovery. And it's really positive to see outbound tourism by Kiwis fully recovered and inbound tourism seeing a 5 percentage point lift to 90% from the prior comparable period. As New Zealand's Gateway Airport, Auckland Airport actively promotes New Zealand abroad through strategic route development and working with airline partners to launch new international services to strengthen our country's connectivity to key global markets. And this connectivity matters. Each daily wide-body fleet to Auckland delivers annual tourism spend of more than $150 million and $0.5 billion in high-value airfreight. Now Auckland's international seat capacity was up 4% over the peak period, which was that November to March period. And this has been assisted by the gains made over the past year on tourism with business and government, both combining efforts to see things such as tangible progress on visitor visa turnaround times. What's been really interesting is the November introduction of that simplified visa requirement for Chinese travelers who already held an Australian visa, enabling them to come to New Zealand. That's driven a 44% year-on-year increase in Chinese traveling between Australia and Auckland for the months of November and December. And finally, the announcement of the $70 million events in tourism package as well as investments in the wider regions such as the opening of the convention center, excuse me, and the City Rail Link are all key in driving economic activity. Slide 12. If we dive in a little bit deeper, growth in the domestic jet and international capacity is providing greater competition and the resulting impact of that is, therefore, travelers with more choice. Overall, it's been a promising start for international travel at Auckland as both seat capacity and passenger volumes are growing. International seat capacity increased 1.8% during the first half compared to the prior year and reached 89.3% of 2019 levels. Non-transit pax movements reached 93.2% of 2019. In December, what we did see was the international load factors were 5 percentage points up on the FY '19 equivalent and clearly indicating that demand is not the problem as it continues to outpace supply. And it is something that we are very cognizant of. We are seeing the passenger demand trajectory as positive, but we do also see and expect the ongoing global fleet shortages to continue to weigh on the availability of new seat capacity supply and pace of growth in the near term but also have a clear line of sight that we see that washing through. Now if we turn our sights to the domestic market, first half '26 saw the largest boost to domestic jet seat capacity in a decade. So it was up 5%, albeit I acknowledge still not at 2019 levels. But the growth is positive. The additional 181,000 seats in the domestic jet market helped to make flying just a little more affordable on key routes with the average jet airfare costs falling by around 6% during the period. Moving to Slide 13. We are continuing to invest in driving efficiency and improvements across the customer journey. Now this extends to the ongoing close collaboration with airport and government border agency partners as we look to optimize the ecosystem alongside the infrastructure improvements. And that's things such as the expanded arrivals area, the new security screening technology and the new express pathway for eligible arriving travelers. Now delivering infrastructure improvements in a 24/7 airport is highly complex. And despite increased customer and passenger activity, we have continued to deliver tangible operational improvements, making traveler journeys more streamlined than ever. Over the summer peak period, which is that December to January time frame, median international departure processing times were 21% faster at 6.5 minutes compared to the same period last year, while international arrivals were 10% faster at 18 minutes. So from smoother passenger processing to reduce queue dwell times to providing enhanced customer experiences at airside, such as lounges and retail. These improvements are enabling the airport to both manage growing demand and do so efficiently while maintaining a reliable and positive experience for travelers. Moving to Slide 14. We are New Zealand's Gateway Airport, and it is critical that we continue to invest in greater capacity and resilience. The first half marked a significant milestone in the infrastructure plan with over $700 million of assets commissioning in the period. This includes the $465 million Northern Airfield expansion, assets at the eastern end of the international terminal that we refer to internally as the stitch into the new domestic jet terminal, a new direct cargo airside access point, a major upgrade of the stormwater network, the Western truck dock, critical airfield pavement renewals and works associated with the contingent runway. So in short, it was a very busy but productive first half. Moving to Slide 15. The integrated domestic jet terminal remains on track for completion in 2029. We've seen steady progress achieved across both the terminal and airfield works in the first half. And the new terminal structure is now clearly visible to all airport visitors. And in November last year, the project reached a key milestone with the physical connection to the existing international terminal building, which you can clearly see on this slide. Approximately 60,000 square meters of airfield has been temporarily closed and made available to support construction of the domestic jet terminal pier and aircraft stands with piling underway, fuel system installation progressing and airfield pavement works now commencing. The scope and scale of activity at the new domestic jet terminal will only increase further in the year ahead with more workers on site as the footprint availability in both the head house and the pier continues to increase and the structure becomes more enclosed, allowing some of the interior fit-out to get underway. Slide 16. Looking ahead, as travelers to the airport precinct, they are going to see in the international terminal building construction activity becoming even more visible as we transform the check-in area. Travelers will experience some changes with the opening of a new temporary check-in facility and change to passenger access routes heading into quarter 4 of this financial year. This next phase of the build is an essential step in delivering the future long-term capacity, resilience and improved customer experience travelers have been asking for. And while travelers can expect some temporary disruption as it gets underway, we are working very closely with airlines and government agency partners to minimize those impacts as much as we possibly can. Moving to Slide 17. In retail, the partnership we have with our new duty-free partner, French global travel retailer, Lagardere, ensured a smooth transition at the start of the half year and is focused on a competitive proposition that delivers both customer value and future growth. The new offering is already proving popular with travelers as Lagardere starts to significantly upgrade the store experience for customers, offering new brands and more choice. And while travelers will notice construction activity in the duty-free stores, the work is being undertaken in a very carefully staged manner throughout 2026 calendar year to minimize the disruption and travelers will continue to be able to access and buy their favorite brands. Our retail income in the period was $92.3 million with total PSR up 2%. It's actually 5% if you excluded FX, and that's versus the prior comparable period. Income per pax of $9.76 was down 4% with a change of sale mix noted as part of that. Lower concession rates are driving higher sales volume with duty-free basket sizes increasing and sales growth outpacing the pax growth. And in a sluggish retail environment, both on the high street here in New Zealand and in travel retail more broadly, to be able to grow basket size and PSR is a pleasing outcome with the duty-free business outperforming most regional peers. Moving to Slide 18. Investment in our parking product range with the opening of the transport hub and the Park and Ride South is delivering improved customer choice and revenue. Revenue was up 14% to $41.1 million, reflecting the full 6 months operation of the transport hub, an uplift in premium product, an increase in average duration of stay, growth of international passenger numbers and growth in total car park exits by 1%, with international up 3%. However, we did see domestic car park exits reduced by 7% due to weaker corporate demand, the ongoing domestic economic backdrop and the loss of circa 700 spaces due to the expansion of the regional airfield capacity program. This was partially offset, however, by the resilient performance of the Valet and Park and Ride products. Moving to Slide 19. Manawa Bay celebrated its first birthday in the period and is performing well. We've been seeing increased footfall of 6% and increased sales of 18% for the comparable November and December periods. And it's providing a valued shopping amenity for around 75,000 people who engage with the airport every day, including airport workers and the Auckland community. Taking it to Slide 20. Investment property rental growth continues with the existing commercial property portfolio seeing a 9% growth in investment property rental income in the first half and a 2% increase in the rent roll to $195.4 million, which all came from growth in the existing portfolio and further Manawa Bay leases. Now softer market conditions have contributed to a slower-than-expected investment property activity during the period. However, we are continuing to see strong interest from prospective commercial property tenants. Hotels are seeing an average occupancy of 83%, which is up from 78% in the prior period. And the ibis refurbishment program is on plan with the first of the 2 stages now complete in the period, and the second is going to kick off from April. Slide 21, a few key updates in the regulatory space. In December 2025, the High Court declined the appeals lodged by airports in relation to the Airport Services input methodologies, merits review and Auckland Airport has elected not to pursue the matter further. And related to this, the Commerce Commission has advised that in March, it will commence consultation on amendments to the airport cost of capital input methodologies in light of the coding errors that informed the 2023 input methodologies. Auckland Airport will be making submissions as part of this process, and the commission has indicated it is targeting a final decision in June 2026 on those amendments. Last month, the commission began its process to consult on the information disclosure requirements for major airport investment in line with the earlier recommendation by MBIE. The commission is targeting to complete this process by the third quarter of 2026. And finally, following consultation, the final master plan is expected to be published midyear 2026. So with that, I'll now hand over to Stewart to take us through the financial performance in more detail. Stewart? Stewart Reynolds: Thank you, Carrie, and good morning, everyone. It's a pleasure to be sitting here today and presenting Auckland Airport's interim results for the 6-month period to December 2025. Turning to Page 23, where we summarized our financial performance for the half. As Carrie mentioned, the first 6 months of 2026 financial year has indeed been a very busy one for the company with the continued recovery in aviation activity flowing into improved financial metrics and delivering what I would describe as a good start to the financial year. Higher tax movements, particularly international, combined with improved performance across the commercial lines of business drove a 6% lift in revenue for the 6 months, excluding interest income. With careful cost management in the period, the increase in revenue flowed through to a lift in EBITDAFI, up 6% to just over $370 million in the period. And with that, pleasingly, a lift in EBITDAFI margin on the prior period from just under 70% to 71.5%. Net profit for the year was down 5% to $177 million, largely as a result of a reduction in the investment property revaluations that we saw in the prior period, with underlying profit, that is profit excluding noncash movements associated with revaluations and derivatives in the period, rising 6% to $157 million, with the lower cost of debt and improved performance from our investment in Queenstown Airport and the hotel JVs, partially offsetting below-the-line impact of asset commissioning. Turning now to Page 24, where we've set out a breakdown in revenue across the different lines of business. In the half, it was pleasing to see aircraft movements at Auckland Airport return to a positive trajectory with an increase in both domestic and international movements on the prior period. During the 6 months, this increase was driven by higher value, larger aircraft with the [indiscernible] increasing ahead of both PAX and aircraft movements in the period. This increase in higher-value aircraft movements, combined with the lift in PAX movements and higher aeronautical charges associated with the significant investment in aeronautical infrastructure has resulted in total aeronautical revenue up 7% in the period to a combined almost $240 million. The increase in passenger activity was a key driver to the improved performance across most of our commercial lines of business with improved performance in car parking and the airport hotels, whilst also supporting our retail business in what has been a more challenging market for travel retail. Starting first with retail. Income declined 2% in the period to $92.3 million as the combined effects of lower concession rates to support customer value, promotional activity and a change in customer buying patterns to a larger proportion of lower-margin categories such as technology, resulted in higher sales and average transaction values, but resulted in a lower income per passenger in the period. On a category basis, duty-free traded well with sales up on the prior period. And as indicated at the full year results, the new contract has evolved with industry trends to support more flexibility to drive greater basket size and with it, customer value. In addition, food and beverage, destination, news and books categories also traded well in the half, reflecting the attractiveness of the retail proposition. However, also reflecting the difficult New Zealand retail environment, luxury and foreign exchange continued to underperform in the period with the latter remaining challenged as the industry continued its migration to new technologies. In car parking, income rose 14% on the prior period as the combined effects of a full period contribution from the transport hub, migration towards products closer to the terminal and pleasingly, an increase in over 20% in the duration of stays across all of the parking categories all contributed to a lift in revenue. You will recall previously, Carrie and I have spoken to the airport seeing a migration of parking to more remote, cost-effective options as the effects of the economic cycle were seen in our transport business. We are now seeing a reversal of this trend with migration from these more remote parks to those more proximate products. The reversal of this trend and the lift in demand has enabled Auckland Airport to also reduce promotional activity that occurred in the months following the opening of the transport hub. Property and other rental income rose by $8 million or 9% in the period, driven by new assets commissioned of close to $5 million and just over $2.5 million from the growth in the existing portfolio. And finally, Auckland Airport booked $3 million in the period of income associated with the insurance proceeds from the January '23 flooding event and lower interest income as the business cash reserves have been gradually utilized to fund infrastructure investment. In summary, the investment in commercial products in recent years has delivered an overall 5% lift in our commercial revenue in the half complementing the 7% growth in aeronautical, highlighting the continued strength and balance of our diversified revenue base. Turning to Page 25. Despite the increase in both aviation activity and also commercial and construction activity in the period, we are very pleased to report operating costs were down on the prior period as the continued focus by management on managing costs has resulted in operating expenses declining 1% in the 6 months to just over $148 million. In particular, our match-fit program of focusing on cost management whilst carefully investing in activities that improve the operation of the airport, reduce risk or improve the customer journey is working with over $20 million in costs saved and in some cases, redeployed to higher priority areas. Key to this has been improvements in procurement, a full 6-month benefits of organizational changes made in the prior period and focus on optimizing asset management throughout the life cycle that has enabled the business to reduce costs while still supporting ongoing investment in the customer experience and importantly, investment in new digital capability. As outlined on the page, marketing and promotional costs declined in the half, reflecting no repeat of the activities to support the launch of the new commercial activities in the prior period. And rates and insurance expenses have increased by $2.5 million or 12% in the period, reflecting a growth in the value of the asset base, a portion of which can be recovered from tenants and is reflected in our rates recoveries or other income. Turning to nonoperating costs outlined on the page. Depreciation costs rose substantially in the half, up over $19 million or 20%, reflecting the combined effects of the full period effect of assets commissioned in the second half of the prior financial year, which drove close to $14 million of this increase and commissioning, as Carrie mentioned, over $743 million of assets in the current half. In addition, for the first half of the financial year, we also included $2 million of accelerated depreciation for assets whose useful lives were shortened due to the decommissioning required as a result of the aeronautical investment program. Finally, gross interest expense declined in the period to $68.4 million, a decline of $6.2 million or 8% on the prior period, reflecting the full period benefit of cash from the equity raise undertaken in late 2024 and lower interest rates in the half, albeit the effect of the latter, moderated by our relatively high fixed debt component. Reflecting the significant number of assets commissioned in the half, capitalized interest dropped $3.7 million or 12% to $27 million as compared to just over $30 million in the prior period. As a result, the net interest expense that you see on the page for the 6 months dropped to $41.4 million or 6% on the prior period. Now turning to Page 26, where we outline a bridge in EBITDAF between the prior half and the first half of FY '26. Over the last couple of years, our EBITDAF has been impacted by one-off events that are not reflective of trading in the underlying business. In particular, the financial impact of the January '23 flood event and additional interest income earned from the 2024 equity raise have colored our EBITDAF. When you strip these out, you can see from the slide the improvement in trading within the core business and with it, a lift in normalized income of 6%, supported by the reduction in costs I talked about, resulting in an 8% lift in EBITDAF. Now turning to Page 27, where you can see our aeronautical investment program is gaining real momentum. CapEx in the period spanning both aeronautical and commercial investment totaled $430 million, with spend on terminal integration of over $219 million in the half, up 21% on 1H '25 or over 8% on the last 6 months of FY '25. For those of you who have been out to the airport recently, you'll see the scale of activity continues to increase with more workers and trades on site across the head house and connecting peer with work on the airfield recently underway. CapEx on the airfield works, as you'll see on the slide, has dropped in the period following the commissioning of the Northern Airfield in the stands and the team now is pivoting to more renewal work and upgrade of activities out on the airfield. With 229 projects on the go, 200 of which are in the construction phase of CapEx activity, we're expecting to see a step-up in activity in the second half due to several milestone payments relating to plant for the new systems as well as a full month -- sorry, full 6 months of activity on the airfield around the new domestic jet terminal after the project team took possession of the site in November. Reflecting the step-up in activity, we were pleased to see CapEx in January come in at $86 million despite it being a short month. Finally, closing WIP at December totaled $1.1 billion, down on the $1.4 billion you'll recall at 30 June 2025 as the 6-month period saw the significant commissioning of not only aeronautical but other assets across the period that Carrie touched on earlier. Now finally, before I hand back to Carrie, on Page 28, we outline our credit metrics. Despite the ongoing significant level of capital expenditure in the period, Auckland Airport continues to maintain a strong liquidity position and robust credit metrics. Total drawn debt at 31 December amounts to circa $2.6 billion with undrawn bank facilities of just over $1 billion. And this is in conjunction with or in addition to cash reserves, I should say, of $361 million. At 31 December, Auckland Airport's key credit metrics remain strong with its FFO to interest cover and FFO to net debt on a spot basis remaining well above their respective tests. With almost 87% of our borrowings fixed and a measured debt maturity profile, it gives us confidence and good visibility of the funding costs over the medium term. As Carrie mentioned, Auckland Airport has declared an interim dividend of $0.065 per share in the period, up from the $0.0625 in 1H '25, and we'll retain a dividend reinvestment plan for the interim dividend, offering those shareholders who elect to participate at a 2.5% discount. In the period, we were pleased to see ongoing strong shareholder support for the DRP with a participation rate in excess of 40% for the second straight period. In conclusion, the 1H '26 result represents a solid start to the year with the continued recovery in travel, improved performance across our commercial lines of business and continued success from the focus on cost control translating into strong underlying financial result. With that, I'll now hand back to Carrie, who will take you through the outlook for the remainder of the financial year. Carrie Hurihanganui: Excellent -- thank you, Stewart. And as we do look ahead to the remainder of the financial year, we can see demand is strong, and we can also see that challenges remain with the global issues impacting the supply of jets. However, we are optimistic based on the recent trading momentum, the continued growth in our aeronautical and commercial activity. The pipeline of additional new air connectivity that we have and the continued substantial progress of our aeronautical construction program. And as I mentioned earlier, we do acknowledge that there is complexity and challenges that come with the program at scale, but we have planned and anticipated those in our look ahead. So reflecting this and our growing confidence in the passenger forecast for F '26, Auckland Airport is narrowing its guidance to underlying profit after tax to between $295 million and $320 million with domestic and international passenger numbers of circa 8.6 million and circa 10.6 million, respectively. Capital expenditure guidance, we are narrowing that to between $1 billion and $1.2 billion in the year. And as always, the guidance is subject to any material adverse events and other criteria as highlighted on the slide. So at this stage, let's move to questions. Operator: [Operator Instructions]. First question comes from Andy Bowley from Forsyth Barr. Andy Bowley: A couple of questions from me. The first is on retail. So it was good to see the PSR going up, albeit average concession yields coming off modestly during the period. And the question is really around those concession yields. You both talked about sales mix being an issue that we've got to think about. But I'm kind of curious around the like-for-like concession yields that you've achieved in the new duty-free contract versus what you'd have had previously? And any discernible trends that you're seeing elsewhere in retail categories? I guess being blunt, are we seeing structural pressures on retail concession yields. Carrie Hurihanganui: Andy, I'll kick off, and then I'm sure Stewart will love to jump into that. I mean in terms of the like-for-like, the terms of the contracts are clearly commercially confidential. So we won't talk specifically on those. But I think there's an element we had over the last couple of years, even when that RFP was out. I know we talked several times about the fact that we were seeing trending changes. We were seeing elements around trends in both regional and global travel retail evolving. You were seeing it moving away from liquor in some instances towards fragrance, beauty and technology, et cetera. And that very much -- that trend continues. And so that's certainly in the sales mix and what you see there. But Stewart, do you want to talk more on the yield question in particular that Andy has asked? Stewart Reynolds: Yes. So Andy, in terms of your question, so in short, yes, we are seeing pressure on yields and -- but this is not unique to us. You see that across the region and more broadly and some of the well-publicized departure of retailers from New Zealand is a good example of that. So I think that's how I would just answer your question. Andy Bowley: And I guess following on from that, your desire strategically is to try and push that PSR further than what we've achieved in recent times, I mean, kind of the last 10 years or so where PSR has been relatively lackluster, but PSR to try and combat the concession yield issue? Stewart Reynolds: Yes, Andy, the way I would summarize it, and look, I'm not a retailer, but I'd say we like to push activity. We don't want the airside retail to be a shop window that people walk past. So we're keen that consumers step into the store and engage. And so to do that, we are taking a more active posture that we've talked about in terms of retailing, and that involves everything from promotional activity to bundling goods, et cetera. So trying to ensure that retail remains relevant to the consumer as they move through the airport. Andy Bowley: Great. And then second question on OpEx. The reduction in OpEx was pleasing. Now could you talk about the direction of travel here, please? And by that, firstly, the level of OpEx you anticipate through the second half? And then secondly, also the shape over the next few years as you commission additional assets leading up to the ITB in 2029? Stewart Reynolds: Yes. Look, I'll touch on that, Andy, and then I'll hand to Carrie to what talks about in terms of the challenges of trying to do that going forward because there's a number of sort of bigger considerations. So in short, we've managed to effectively optimize a lot of the spend in the business by ensuring we focused on what really mattered. And that meant that where we had greater discretion on the spend, and I highlighted some of the spend on promotional activity and consultants, et cetera, we took a very careful lens on that to ensure it made the boat go faster and redeployed that spend where it was required to higher priority areas. So that, in conjunction with some of the work we're doing on procurement, around asset life cycle management has resulted in a lot of those savings that we've talked about. So as we look into the second half of the year, then what we expect is that not only would we bank those savings, but we'll probably see a little bit of a lift in OpEx into the second half. But I would anticipate that would be in the low single digits, and that's just naturally reflecting the greater activity that's going on in the airport. And what I mean by that is the management of the disruption that Carrie alluded to around things like the check-in, et cetera, and we're trying to ensure that we manage the customer journey through that process. So it will be a little bit lumpy over the next 12 to 18 months. But notwithstanding that, as you then move forward into a longer period, we're trying to then normalize down and drive down that cost to serve, so to speak. Andy Bowley: You mean on a unit basis or in absolute terms? Stewart Reynolds: On a unit basis, first and foremost. Andy Bowley: Yes. Okay. And just to clarify, single-digit increase through the second half, you mean on top of the first half in dollars or percent or what's? Stewart Reynolds: Yes, in terms of dollars. Andy Bowley: On top of the first half. So a higher level of OpEx through the second half. Operator: Our next question comes from Wade Gardiner from Craigs Investment Partners. Wade Gardiner: A few questions from me. Can you -- given you've just given some guidance around the OpEx number, can you also sort of give a bit of guidance around what we should see around depreciation and interest given the assets being commissioned and the capitalized interest running off? Stewart Reynolds: Yes, I'll take that, Wade. So yes, it's -- I think at the full year results, I guided to the full year would be sort of around $300 million, and that would be essentially net of interest income for both depreciation and interest. And so when we're looking at the result for the first half, I'm still broadly comfortable with that number, but it might be somewhere between 2% and 5% sort of slightly higher. And that's really reflecting the slight change in the depreciation number that's flowed through the first half. Wade Gardiner: Okay. Just to clarify sort of following on from what Andy was saying on the duty-free concession, is there anything structural in that contract in regards to the period we're in now where there's fit-out construction. In other words, once they have done the fit-out, will we see any sort of structural step-up in that arrangement? Stewart Reynolds: Yes, Wade, I can't comment on the contract specifically. But I think if you go back previously, I think where your question is coming from is when we completed the expansion of the Phase 3 as we called it or the airside dwell and security processing area, there was a step-up as new space was deployed. And so we've tended to move away from those type of mechanisms. Wade Gardiner: Okay. While we're on retail, I mean, interesting to hear you talk about driving the PSR higher. How can you, as a management team actually do that versus just reliance on the retailers doing their thing? Stewart Reynolds: Yes. So you're right. It comes from, in short, a greater partnership with the retailer. And that was one of the reasons why we selected Lagardere. And it's -- so in working together and alignment around effectively ensuring that the retail environment is one where customers want to stop dwell and with that potentially spend ensures a greater outcome for all concerned. And so we work with them around promotional activity. We work with them around bundling as an example. And so you recall in the previous results, we talked about some promotional activity that we had in the liquor category as an example. And we also work with them around what [ Howard ] described as complementing some of the experiential elements that go on within the terminal and ensuring that travelers are aware of these sort of things before they turn up. So a big part of that is ensuring people get to airside relaxed and on time and are not rushing through that space. Carrie Hurihanganui: And if I could add to that, Wade, I think Stewart has covered it well. But one of the things that we also talked about back, you might recall when we were going from the 2 operators to the 1 and the way that we plan that, part of this refurbishment also moves away from, in effect, what -- even though we have one operator, it's still a duplicated or dual store layout. And so part of that also is we work together with them, and that was part of the agreement of how we move to a single integrated store, how we enhance layout, the brand visibility of the customer, all the things that Stewart was just referring to, but that's one of these key elements that goes alongside that as well. Wade Gardiner: Okay. And just finally for me, just -- I mean, $34 million on property in the first half. Can you give us an idea of what you're expecting in the second half? I mean I know you did say it will be down. And also what the sort of the medium-term outlook looks like for property CapEx? Stewart Reynolds: Wade, apologies, I can't quote that number for the second half, like Carrie and I have talked to what the long run rates of between $100 million and $150 million on commercial development, but that's very much on average over the longer term. And so you'll see from that number that we're expecting things to be a little bit more reflective of the subdued local market. We've obviously got some exciting developments underway at the moment, but I couldn't give you a CapEx number, I'm sorry. Operator: Next, we have Grant Lowe from Jarden. Grant Lowe: Can you hear me okay? Carrie Hurihanganui: We can. Grant Lowe: Perfect. Congratulations on a good result. It seems we all have very similar questions around retail and OpEx and the like. Just focusing on changing to the car parking side of things, quite a strong uplift and cycling some discounting and the like in the previous period. Do you see this as a new base for the car parking going forward and sort of inflationary and passenger growth from here? Carrie Hurihanganui: Yes, there isn't anything, Grant, that will make us think otherwise, particularly when it -- because we've had the full 6 months, obviously, versus the prior comparable period for the transport hub. We've got the change in mix in premium products pipeline. So some of those foundational elements are going to carry forward. I think probably the piece that interests us and we want to continue to build is probably the increased duration of stay. That's one that's getting under the skin of that and kind of understanding how do we continue to encourage that because that's been a key element for us. But the foundational elements have us seeing that as a carry forward. Grant Lowe: Yes. Okay. And then just looking at the route development and Thai Airways coming back at the end of the year, et cetera. I think they were sort of the key -- sort of the last of the missing pieces from pre-COVID times. Can you give us sort of any indication as to what sort of level of increase in capacity that return now gives on the international side? Carrie Hurihanganui: Well, the -- until a little bit in terms of its -- they have announced coming back daily. So -- but we -- they haven't landed on a specific date yet. So we're not in a position is until we know the start date for F '20 second half this year, but it will be around about 200,000 seats, which gives you an idea of the quantum. And then ultimately, they will confirm in the next while when exactly they will be starting in the second half of this year, and that will give them a better play-through of the impact to the forward impact for F '27 and beyond. Grant Lowe: That's great. And how does that compare to pre-COVID for [indiscernible] at least? Carrie Hurihanganui: At the time they were doing daily. So we were delighted that they didn't -- some airlines return, say, 3 or 4 and then build back into it. They've committed to coming back exactly in line with what they had exited during COVID. So we're really pleased with that. Grant Lowe: Okay. That's great. And then just going back to the retail side of things. So like I haven't been out to the international side of things for the last few months. But in terms of when exactly did that start? That was fairly late in the period, wasn't it? Stewart Reynolds: Yes. It started in -- some of the work was effectively in the fourth quarter of the calendar year, but there was work happening behind the scenes. So in the -- I think the store areas that the customers obviously don't walk through. So we've been progressively doing it behind the scenes as well. Grant Lowe: Yes. I guess where I'm going with that question is like there would have been fairly minimal disruption impact. And the second part of that question really is, are we expecting to see any sort of disruption impacts in the current half? Carrie Hurihanganui: Listen, on that, we would... Grant Lowe: In terms of spend and the like. Carrie Hurihanganui: We're doing everything to minimize that, which is part of the reason it's probably a little bit of a slower burn and throughout 2026 because we do want to minimize that impact, Grant. But will there be some? I think it would be very hard for us to say there would be 0, but we're certainly going to minimize that as much as we possibly can. Grant Lowe: Okay. So it hasn't had a big impact at this stage. Stewart Reynolds: Hard to measure, Grant, but I think your initial assumption, the initial works were behind the shelves, so to speak, and we've now stepped into that. But we're not seeing a measurable difference at this point. But like Carrie mentioned, it is a close focus of the team. Operator: Next, we have Rob Koh from Morgan Stanley. Robert Koh: Happy Lunar New Year. Just a question on Chinese passengers. I think you've called out that with the visa improvement, you started to see some better seat capacity. Should we be thinking that, that also flows through to the PSR results that you've seen? And then also, if you could maybe just give us any color on the timing of Chinese New Year impact this year so far? Carrie Hurihanganui: Yes, absolutely. As far as I take the first question in terms of do we expect that will flow through. Ultimately, we'd like to think it will. And I look at things that the change to the Australian visa holders that make them eligible travelers people who come to New Zealand. We've seen a 44% increase between Australia and Auckland in the month of November and December, sorry, and that was nearly 23,000 Chinese travelers using that route. So the indicators are all positive, but early days, right? We had kind of 1.5 months, but we'd like to think that, that will play through in that space. In terms of the capacity that's come through as part of Lunar New Year, we've had a significant uptick across multiple carriers adding in capacity through to, I think it's around, I want to say, the 2nd of March as far as their schedules. And again, because that's live now, we don't have any indication of how that's performing thus far. But we certainly, at the end of February, we'll be looking at our operating statistics as to what we kind of saw come through on that, but there was a significant uplift in that capacity over that period. Stewart Reynolds: And then, Rob, to your question on PSR, I think all things considered equal, yes, it should, but it's still too early to understand what we're seeing in that space. Robert Koh: Yes. Okay. All right. My next question, I just want to make sure I've got my kind of understanding of how to calibrate your revised guidance because you haven't changed your pax numbers that underlying that guidance, but it does seem you're a little bit more positive on seat capacity. So are you still thinking of those pax numbers as your central scenario? Stewart Reynolds: Yes, Rob, we are. When we put that guidance out, gosh, many moons ago now, there was essentially a bit of anticipation of capacity being deployed into that. And so that capacity, we have more confidence of it being deployed now, some of it, obviously, you see both domestically, but also internationally. So it's giving us greater confidence that, that target will be achieved. Operator: Next question comes from Marcus Curley from UBS. Marcus Curley: I just wondered if we could start with the CapEx, Carrie. It looks like -- well, it has been, let's call it, rounded down in terms of the year-end CapEx. My question is, should we -- or is there any associated further delays to endpoints on the major projects that we should read into that? Or is all of the major projects still on time to what you talked about 6 months ago? Carrie Hurihanganui: Yes. Thanks, Marcus, there's a few things, I think, in your question of trying to get an understand of that play forward, and I'm hearing beyond the next 6 months potentially as part of your question. I think if we do take this next half, the second half, a couple of things. Obviously, some of the revised guidance is that the higher levels of spend contemplated for commercial property that informed the top of that original guidance have not materialized. So that's one element that we certainly plays into the second half. And then as far as activity that we are expecting to pick up in the aeronautical space in the second half, we've got everything from kind of milestone payments relating to plant for the new baggage handling system. They fall in the second half as does a full 6 months of activity on the airfield around the new domestic jet terminal because they only took possession of that site in November. So only had kind of a month with Christmas close down. So we'll see the full 6 months play through that. And then we've got a number of other key projects moving from design to enabling to significant construction activity such as check-in expansion, payment renewals, et cetera. So those are things that give us the confidence for the next 6 months or so. Then I guess if your question is longer beyond that and some of the bigger projects that I'm hearing, consistent with our previous messaging, we do expect there have been some changes in that original forecast we had around PSE4 at the time of setting prices and PSE4, for example, assume that the Western stands on the new peer would be operational in the second half of FY '27, along with new regional stands. Now both of those are making great progress, but they are tracking slightly behind that period to land in that kind of first half of 2027. So -- but in terms of fundamentals of the programs, hitting the milestones and moving ahead, we have absolute confidence in those. Marcus Curley: And completion of the domestic terminal? Carrie Hurihanganui: Yes, that's on track for 2029. Marcus Curley: Yes. And then just secondly, you've obviously flagged again the downward trend in revenue from FX. I just wondered if you could provide any perspective in terms of the level of revenue exposure in that category? Or how should we be thinking about that over the next, call it, 3 to 5 years? Stewart Reynolds: Marcus, so I'd describe it as -- yes, I think it's just reaching that natural level now where there will always be some people who look to get foreign currency and take it to destinations around the Pacific or even into Asia. But over time, that number will reach a very de minimis number. So we described, I think, at the full year results is sort of that mid- to low single digits was the sort of revenue exposure there, and I can just see that continuing to trend in that direction. Operator: Our next question comes from Owen Birrell from RBC. Owen from RBC. Owen Birrell: Just wanted a question around, I guess, tourism outreach to international markets. Can you give us a sense on, I guess, what sort of activity is occurring at the moment broadly, I guess, at the government level to encourage tourism activity in New Zealand? Carrie Hurihanganui: Yes. I mean there's a number of facets moving across it, I guess, in terms of you've got what I would call the expected space, which is TNZ, and they've obviously been provided additional funding last year and into the year to promote that. There's -- that then carries forward. TNZ works in relevant markets like Australia and like North America and otherwise to build that out. Alongside that, we engage and often work if we think about kind of last year, we did work with RotoruaNZ and Tataki Auckland Unlimited to appeal to the Australian market, for example, what the North Island has to offer. We've also sponsored kind of 15 regional tourism organizations and came together with ourselves and Tataki Auckland Unlimited to create Kiwi North and again, how do we promote North Island to external markets and encourage them to. So there's a number of facets underway. And then you've got things like I mentioned earlier, that $70 million investment by government in terms of large events and bringing events to New Zealand, and you're seeing things like the state of origin and some of those other things starting to come through as well as the changes to Eden Park settings being proposed. And then obviously, with the convention center opening, they've got a really nice forward book in terms of large events coming. So it's a combination of pure leisure travel events and those things together that continues to gain momentum. Owen Birrell: I mean historically, we've seen some big pushes into Europe, India, a little bit of China. Is any of that sort of activity coming back at this point? Carrie Hurihanganui: Yes. Well, certainly, again, if you look at an organization like TNZ or [ Tosm ] New Zealand, sorry, they have offices and investment in all of the markets, so China, Europe, North America, all of those. So those are all part of that broader pace. And some of it also, I know in my discussions with TNZ things like Southeast Asia, we knew was, in particular, a bit of a missing piece of the puzzle. I said, hence, why we're so delighted with Thai Airways returning, but there's been a bit more of a targeted focus in Southeast Asia because we knew that was an area for New Zealand that needed to recover both the connections because you can stimulate travel, but you also need the connections to enable that to have kind of a multiplier effect, so to speak. So as we start to get recovery across some of those markets that have been missing like Southeast Asia, my anticipation would be that they'll look at those broader markets as well again. Operator: Our last question comes from Amit Kanwatia from Jefferies. Amit Kanwatia: Just a couple of questions. I mean you've given kind of guidance for operating expense, finance cost and D&A. I'm just wondering, I mean, if I look at the tax expense into first half '26, I think that tax rate was a bit lower as compared to the PCP fiscal '25. Maybe if you can give us a steer in terms of the tax rate that you expect for full year '26? Stewart Reynolds: Amit, what you should expect over time is we get trend back towards more the company tax rate. So I expect it will be closer to the 28% for the full year. There is obviously a number of moving parts within that, including the government's recent policy changes around the nondeductibility of depreciation on building structures. So there is a little bit of noise in that. But I think over the medium term, you should expect us to trend back to that overall rate. Amit Kanwatia: Okay. And then, I mean, if I think about the guidance range and you've increased the midpoint of the range, you've narrowed the range, $295 to $320. I mean you've kept the passenger expectations unchanged. Maybe if you can speak to kind of the swing factors to the -- from the midpoint towards the top of the guidance range? Stewart Reynolds: Yes. Certainly, Amit. So I think what I said at the full year was if we achieve those passenger forecasts and subject to any other unknowns that we could see ourselves getting into the top half of that guidance range. But the range really catered for the potential one-off costs that could come through in such a significant infrastructure investment program and managing the disruption with that and also some of the variability associated with as you commission assets and you disaggregate effectively what I would describe as the as built into specific assets, the variability in depreciation that comes. And the lack of, I think, one-offs that we saw in the first half has given us comfort around lifting the bottom of the range. And so I would come back to what I said at the sort of full year results that if we can achieve that passenger forecast as well as reduce the likelihood of any unknowns that appear, then we could be in the top half of that guidance range. Amit Kanwatia: Sure. That's very useful. And just back on -- I mean, if I still think back around the passenger guidance, I mean, international passenger growth, 3% for the full year. I mean the implied growth rate into second half is not too dissimilar to what we saw in the first half, slightly more. But if I think about the capacity outlook, I think that's improved over the last few months. Maybe can you talk to some of the thinking behind the expectation around the second half for passenger growth, particularly for international? Stewart Reynolds: Yes. So Amit, why don't I start with domestic and then move into international. And then I'll hand to Carrie to give her thoughts as well. So -- within the domestic system, we're obviously very cautious around the regional system. And as you've seen in our presentation and some of the commentary in the monthly traffic updates, we've been a little surprised to the downside in terms of the domestic capacity and travel numbers through there. But notwithstanding that, the addition of additional capacity on the jet side or trunk activity has been pleasing to see. And so we're confident overall of that domestic number, but it is essentially a 2-sided coin in many respects is where it's a watch on regional and positive on jet. On international, what you're seeing there is complementing some of that additional capacity that Carrie talked about in new services, you're getting additional frequency on existing routes as well. And so that's particularly the services that have been announced to date is what giving us confidence around that growth rate continuing into the second half as we get a full period effect of some of those services that turned up in the fourth quarter of the calendar year last year. Carrie Hurihanganui: And if I could add to that, it's this balance also of kind of the first half is what was actually phone, there's slots filed. So as we look forward, it's what we anticipate airlines to fly, but sometimes everything that's -- all the slots that are filed don't necessarily get operated. So there's a little bit of that. And then we're really positive. The optimism I talked about earlier was around things like I called out the Samoa and Gold Coast through Qantas Group. Those actually commenced in -- I think it's June. So actually, the pickup in this financial year is going to be minimal, but actually then carries forward. So we have a kind of a -- to Stewart's point, there's a mixture of things that are influenced, we have -- we're positive and optimistic about that, but there are those elements that we are just aware of in terms of those pulling through. Operator: Thank you. That concludes our Q&A. I will now pass back to Carrie. Carrie Hurihanganui: Well, thank you, everyone, for your time today. And as I said just before, we are optimistic is the word that I will use on the remainder of the year and beyond. We continue to be laser-focused on the successful delivery of the key enablers for growth across the business. And of course, that also includes our infrastructure investment program. It would be remiss of me not to take the opportunity to pass on my thanks to all the Auckland Airporters and our partners in terms of the positive performance in the first half has been a team effort, as they say. And so I want to pass an acknowledgment of the work that's gone into that. But we certainly look forward, Stewart and I to connecting with many of you over the coming weeks of investor meetings, both here in New Zealand and also Australia. So with that, have a fabulous afternoon. Thank you.
Operator: Thank you for standing by, and welcome to the Emeco Holdings Limited Half Year Results. [Operator Instructions] I would now like to hand the conference over to Mr. Ian Testrow, CEO and Managing Director. Please go ahead. Ian Testrow: Good morning, everyone, and welcome to Emeco's Financial Year 2026 Half Year Results Presentation. Thank you all for joining us today. I'm delighted to have our Chief Financial Officer, Theresa Mlikota, here with me as well as Adam Buckler, our new Deputy CFO. Welcome, Adam. Today's session will follow our usual format. We'll take you through the presentation lodged on the ASX this morning, after which we'll be happy to take any questions. Before we begin, I'd like to direct your attention to disclaimer on Slide 2, which covers important information regarding forward-looking statements. I want to start with Slide 5 and some of the key takeaway messages before we get into the more detailed presentation. Emeco continues to deliver strong operational and financial performance. We've worked hard to strengthen the business and now delivered 6 consecutive halves of period-on-period growth in earnings and cash flow. Our balance sheet is in the best shape it's been in 10 years since I've been CEO, and we've recently completed a refinancing of our debt facilities on better terms and conditions, which provides us with great flexibility to consider growth options going forward. I just want to call out Theresa and her team and the finance and legal teams for absolutely cracking finance, a fantastic work. Well done, team. Our strategy has evolved to focus on disciplined organic and inorganic growth while continuing to target 20% returns for shareholders. We're focused on growing our portfolio of fully maintained rental projects, winning stand-alone maintenance projects and also for the pursuit of adjacent maintenance services businesses. We're also actively monitoring our rental competitors for consolidation opportunities. Additional to this, we will further develop our existing artificial intelligence and operational technology capabilities to expand our competitive advantage. We believe our capabilities in the areas of asset management, condition monitoring and reliability engineering are unique and set us apart from our competition. Moving to Slide 6 and the first half financial highlights. Emeco has an excellent start to FY '26 with a strong operational and financial performance in the first half. Our simplified business model and focus on disciplined capital and cost management has continued to deliver positive results. We have again seen good growth in all metrics, including revenue, operating earnings, free cash flow and return on capital. Group revenue was up 9% to $421 million, operating EBITDA increasing 7% to $155 million. Operating EBIT was up 13% to $77 million on the prior comparative period. Margins were driven by revenue mix with high levels of maintenance work in first half '26 compared to first half '25. While maintenance work is lower margin, it's also low capital and has been a key driver of the continued improvement in return on capital. The positive financial performance flowed through to the bottom line with operating net profit after tax increasing by 21% to $46 million. Operating free cash flow was up 37% to $67 million, with excellent cash conversion of 110% through improved working capital in the period. Return on capital was up 100 basis points on FY '25 and 230 basis points on the first half of '25 and has now reached 18%, which is good progress on our journey to our target of 20%. We've made strong gains in improving our balance sheet and improving returns. Preserving these gains and our capital will be important as we grow the business going forward. Our focus continues to be achieving a return on capital target of 20%. These gains are illustrated in Slide 7, which summarizes Emeco's half-on-half performance history. The slide shows steady and consistent half-on-half improvement over the past 2 to 3 years. The result has been a strong profit uplift in operating earnings from the prior comparative period and a solid repeat delivery of really strong performance we generated in the second half of FY '25. This is in line with the expectations we set out at our AGM. The real highlight here is the uplift in free cash flow generation, which has increased by nearly 70% during the 2-year period. In dollar terms, the business has generated around $230 million in free cash flow since first half '24. Much of this growth is being delivered organically without investment in growth capital, in particular, the growth in earnings from maintenance services, which will remain a key focus going forward. I'll cover this in more detail later. The strong cash generation has driven a significant improvement in Emeco's balance sheet. Net leverage has improved from 1.1x in first half '24 to 0.5x in first half '26. This is an outstanding result and puts the company in a strong position for future growth opportunities, which I'll cover more in the strategy and outlook discussion. Finally, the slide also clearly shows the strong progress we've made towards our return on capital target of 20%. The business generated a return on capital of 15% in the first half of '24, and we've grown this to 18% in the first half of '26. This has been a 230 basis points improvement, and I'm confident the Emeco team can continue to drive this towards our 20% target. Slide 9 shows the group's safety performance over the last 5 years. The safety of our people is paramount, and safety remains a key priority for Emeco and all of our employees. We remain committed to providing a healthy and safe workplace. The total recordable injury frequency rate reduced from 3.4 at 30th of June 2025 to 2.5 at 31st of December 2025. The lost time injury frequency rate remained at 0. We'll continue to focus on reducing TRIFR with ongoing investment in training, which is a key focus. Slide 10 outlines the key highlights for our Rental business in the first half of '26. Emeco is Australia's largest provider of surface and underground rental equipment with a fleet size of 840 primary machines and a workforce of 480 people and net assets approaching $900 million. Emeco's Rental business delivered a strong operational and financial performance in the first half of '26, with Rental revenue increasing 14% to $342 million, driven primarily by the delivery of increased maintenance services across key contracts. Operating EBITDA increased 6% in the first half of '26 to $168 million, while operating EBIT grew to $94 million from $86 million, up 9% for the half. Operational highlights include the successful ramp-up of a new large fully maintained operation in Queensland, where Emeco provides mining fleet and full maintenance services to both Emeco and the customers' fleets. We also continue to roll out infill digital tools to enhance our service offering, improving quality and productivity. Surface fleet utilization remained healthy at 85%, while underground utilization increased to 69% and is currently running at 75%. We have good operating leverage within the existing capacity of our current fleet, which limits the needs of growth CapEx to grow our earnings. The outlook for the Rental business remains positive. Our competitive positioning via our fully maintained rental model positions the business well to capitalize on new opportunities. While wet weather remains challenging in Queensland impacting utilization in early second half '26, the medium-term production outlook remains robust as customers recover operations. Slide 11 outlines the key highlights for Force in the first half of '26. Force is strategically important to the group with our workshops, field maintenance, asset management and condition monitoring service capabilities, the key driver of Emeco's competitive advantage. These deliver cost-effective maintenance and rebuild capabilities to both our customers and to our own Rental business. Force operates across 7 workshops as well as fully mobile Australia-wide field maintenance capability with approximately 350 employees. Force workshops completed 84 machine rebuilds in the first half of '26 and also provided support services to XCMG for their battery-powered fleet in preparation for delivery to Fortescue. Force delivered total gross revenue of $141 million in the half. External revenue was down year-on-year as workshop capacity was redeployed to support our internal rental fleet. Trade labor utilization remained high. The business maintained relatively stable gross operating EBITDA of $18.3 million and a gross operating EBIT of $15 million. Cost efficiencies realized during the half supported stable margins. The focus for Force will be on business development and increasing external work in both the Eastern and Western regions. The integration of underground capability has opened new maintenance services opportunities, while field-based services remain in strong demand. I'd like now to hand over to Theresa to run through the financials. Theresa Mlikota: Thanks, Ian, and good morning, everyone. As with our prior presentations, we refer to operating results in our presentation today, which are non-IFRS. You'll find a reconciliation to our statutory results in the appendices. Slide 13 summarizes the group profit and loss. Without rehashing too much of what Ian has covered already, the high-level message from the accounts is that the business continued to deliver period-on-period top line and bottom line growth with strong returns on capital. The business maintained a momentum created in FY '25, mirroring the strong performance generated in the second half of '25 into the first half of '26. Importantly, revenue growth was driven by growth in low capital maintenance services, which continues to drive stronger returns for our business. Whilst margins from services are lower, the return on capital is much higher. We expect to continue to grow this low capital side of our earnings to reach our 20% ROC target. Another point to make about our earnings for the half, our hours of rental fleet utilization were very similar to our last half, but our fleet mix was made up of smaller fleet. This reflected an average price per hour as well as depreciation cost per hour, which were both lower this half. Statutory profit after tax of $38.7 million increased 15% compared to the prior corresponding period, while our operating profit after tax of $46.5 million increased 21%. Lower finance costs contributed to this with lower drawn debt and lower base rates in the half. Whilst our intention is to grow the business, we will continue to maintain discipline around the investments we make, and we will continue to have a laser-like focus on our ROC target, which, as Ian already mentioned, has increased by a further 100 basis points to 18% in the last 6 months. Slide 14 shows the major cash movements half-on-half. The key number here is operating free cash flow, which was up a strong 37% on the prior corresponding period. This was driven by a strong EBITDA-to-cash conversion of 110%. Strong debtor collections in combination with timing benefits on creditor payments drove the stronger cash conversion, releasing $11.3 million in working capital. We expect the timing benefits on working capital to reverse by year-end. Finance payments of $13 million were largely consistent with the prior comparative period. Stay in business CapEx totaled $90.7 million in the half, representing a 17% increase from $77.6 million in the prior corresponding period. Proceeds from disposal of property, plant and equipment were $4 million, resulting in a net CapEx of $86.7 million. Second half CapEx will be lower and will align with the guidance we have provided to the market for the full year. Free cash flow was again applied primarily to debt reduction, including lease liabilities and other financing obligations, which reduced by $13.7 million. No shareholder distributions were made as the company focused on debt reduction ahead of the company's refinancing. The net result was an increase in cash of $45 million bringing total cash to $171 million at period end, up from $126 million since June. As with the prior year, no income tax is paid due to the group's carried forward tax loss position, which was $74 million at period end. Moving to the balance sheet and capital management on Slide 15. Emeco's balance sheet is in great shape and shows the delivery of our deleveraging strategy with net leverage now reduced to 0.5x EBITDA. This provides substantial financial flexibility to manage business growth or to make shareholder distributions in the future. Just highlighting some of the numbers on the balance sheet. The $52 million reduction in net debt since June was driven by strong earnings and cash conversion. The reduction in net working capital was driven by the reduction in debtors with strong cash collections for the half. Prepayments and accruals were both higher, recognizing the renewal of the company's insurance program. Contract assets were higher due to fleet mobilizations to surface and underground projects during the period. $12 million in noncore or end-of-life fixed assets were transferred into held for sale. Trade creditors were higher due largely to timing, and tax liabilities are higher due to the consumption of tax losses. Value created for shareholders and equity totaled $39 million with NTA per share increasing $0.08 per share to $1.44. CapEx outweighed depreciation during the half, mostly due to timing, with, as I just mentioned, $12 million of fixed assets being transferred into held for sale assets as part of the group's fleet optimization program. Turning to capital management. Importantly, the company's debt facilities were refinanced in November 2025 and were used to take out the company's maturing facilities in January '26. A 5-year $355 million syndicated bank debt facility was secured on better pricing and conditions than the preexisting debt facilities and will provide us with better flexibility around the use of excess capital. Emeco's credit ratings were reaffirmed during the half with Moody's maintaining Ba3 and Fitch at BB-. Ian will talk to this a little more in coming slides, but we are actively assessing low capital vertical opportunities to complement core business and will actively monitor competitors for consolidation opportunities. We expect to see opportunities emerge over the next 12 months, which will be assessed using strong capital discipline principles, including our key target of 20% ROC. On that note, the Board have elected to preserve capital at this time and to prioritize flexibility for growth. Consequently, no shareholder distributions have been recommended by the Board in relation to the half. Slide 16 shows the maturity profile and liquidity position in a bit more detail. The main things to highlight here are that we successfully completed the refinancing of our AMTN, which has extended the bulk of our debt maturity profile to be on the 5-year mark. As I mentioned on the previous slide, the new facility was applied towards refinancing the group's existing financial indebtedness, including the replacement of the existing RCF and the redemption of the $250 million AMTN, which occurred on the 19th of January 2026. The group's liquidity position has improved since FY '25, increasing by around $50 million to $271 million, taking account of the note redemption, which took place after period end. Slide 17 outlines our progress towards our ROC target. Our target of 20% has been key to driving improved efficiency and performance across all parts of our business. Over the last 2 years, we have consciously reduced our level of growth CapEx and focused on improving the cost performance of our business as well as organically growing earnings through the value-added services we provide to our rental customers. These low capital earnings have grown through the expansion of field services, on-site maintenance for our fleet as well as customer-owned fleet in combination with condition monitoring and reliability support. We delivered another 100 basis point improvement in ROC for the half, which now stands at 18%. This compares to 17% in FY '25, 16% in the first half of '25 and 15% in FY '24. Our drivers to achieve the 20% target lay in increasing our equipment utilization, optimizing the fleet and increasing our low capital maintenance services earnings. If you recall, in Slide 10 on Force, the segment delivered $15 million of EBIT in the half from $3 million in net assets. So you can see the opportunity from continuing to grow lower capital intensity earnings. Similarly, we have further potential to increase utilization with strong commodity prices in gold and copper. We see opportunities to grow here and our BD teams are focused on achieving this. ROC improvement has been a direct driver of cash generation. Emeco has delivered around $265 million of free cash flow since FY '24. As you can see on the right-hand side, when the company is delivering an 18% return on capital, the business is expected to deliver around $120 million in free cash, which is a good guide for this year. At 20%, this increases to around $140 million. This remains our key target. As always, I'm happy to talk more to the finances in the Q&A section. I'll now hand it back to Ian. Ian Testrow: Thanks, Theresa. I'll now move on to strategy. On Slide 19, you'll find the pillars that guide our strategy and its execution. Emeco's core strategic pillars guide consistent execution and long-term sustainable value creation for shareholders. I want to briefly recap these given their importance. We're Australia's lowest cost, highest quality, technology-driven mining equipment rental and maintenance service provider. We use our scale to invest in maintenance services, condition monitoring and asset management, technology and development of our skilled workforce to create a competitive market advantage. Secondly, we'll build on our diversified portfolio of businesses and services, balanced by service line, customer, project, commodity and region. This gives us flexibility to service a broad range of customers across a range of sectors utilizing our core strength while also exploring complementary or logical adjacencies. Finally, Pillar 3, exercise disciplined capital management. This pillar provides some of the guardrails to ensure disciplined capital allocation. Setting a ROC target of 20% in combination with a more conservative leverage target will provide more robust investment decision-making. It is worth noting the reset of our target leverage of 0.5 to 1x. This has been reset to support resilience through mining cycles but also providing the flexibility of dry powder to make opportunistic investments should they arise. Being prudent in the consideration of our capital investments will drive us closer to our 20% return on capital target and will assist to maintain strong free cash flow whilst protecting the balance sheet for all the cycles. These targets provide the flexibility to reinvest in the business, pursue inorganic growth or return capital to shareholders. Moving on to Slide 20 and our scale and competitive advantage. We've worked really hard over the years to create a competitive advantage for our scale. As you can see by the map, we have operations all around Australia. We're truly national. We have a very large rental fleet, 840 pieces of equipment. We have the ability to rebuild those equipment and rebuild mid-life equipment, which gives us a cost and quality advantage. And we're supported by the Force workshop, which has workshops all around Australia and a very talented workforce. On top of that, we have our asset management team, which is based in Brisbane. They provide reliability engineering, asset planning, condition monitoring and a bunch of analysts that really are key to our business. Moving on to strategic priorities on Slide 21. These are presented across 3 broad time horizons. Our near-term focus will be on strengthening and optimizing our core by growing our fully maintained rental projects, expanding low capital earnings and maintenance offering. This includes organically growing our earnings for the provision of maintenance services for customer-owned fleet. We'll actively monitor competitors for consolidation, and we'll scale our artificial intelligence and operational technology capability. These opportunities will likely be within or adjacent to the mining sector. Over the medium term, we will extend our capabilities for adjacent low capital opportunities. This includes assessing adjacent maintenance services and asset management acquisitions, commercializing our artificial intelligence-driven operational technologies into a repeatable operating model and partnerships to accelerate entry into adjacencies. Over the longer term, our strategic focus will be on portfolio resilience by divesting our earnings base by expanding existing capabilities into new industries or sectors, strategically scaling up digital services offerings, positioning the business for the energy transition. I want to emphasize this does not mean that we're going on a buying spree. Each investment decision will continue to be considered utilizing strong guardrails aligned with the disciplined capital management, including key financial hurdles, capability fit or strategic alignment and a driver for growth. Slide 22 shows the growth of our workshop and maintenance services and just how significant a part of this business this is. This generates 50% of gross revenues and about 35% of gross EBITDA of the business from a small capital base. Maintenance services have been an important contributor to Emeco's financial performance. Low capital and maintenance services earnings have doubled over the last 12 months. The scale of this contribution demonstrates a strategic shift towards a low capital, high-return service offerings. This expansion has been underpinned by significant growth across fully maintained projects, including projects where Emeco maintains both our and our customers' fleets. The maintenance service expansion directly strengthens Emeco's competitive positioning through the differentiated service capabilities that extend beyond traditional equipment rental. It has been a key factor in recent rental contract wins and renewals while achieving high returns. By leveraging Force's mid-life rebuild capability and on-site service expertise in combination with its asset management, condition monitoring and reliability technology, the company has created a defensible competitive advantage that supports sustained earnings growth and improved capital efficiency across the business cycle. It's important that we show how management have organically grown this low capital side of the business significantly. We believe this is a strong avenue to deliver future earnings growth. We have a good delivery track record, and we'll seek to expand and grow this part of our business. I want to use Slide 23 to judge just how serious we are about technology as a competitive advantage. Our asset management, reliability and field service teams are applying artificial intelligence and machine learning to drive better equipment reliability, lower cost and longer asset life for our customers. We actively apply AI and machine learning to the data that we source from our oil samples analysis and machine telemetry to provide better predictive maintenance across our fleet and an increasing number of cases, our customers' fleet, with active condition monitoring through our in-house telemetry across more than 200 of our machines. We're developing first-generation in-house agentic reliability solutions using patent analysis and root-cause investigations to drive improved decision-making and response times. We're rolling out the digitization of all paper-based field and workshops activities to improve maintenance decision-making, quality and cost control. We're investigating the application of artificial intelligence and machine learning across asset knowledge, field quality, service delivery and commercial processes. We have performed early proof-of-concept work to assess its commerciality feasibility and business value. Slide 24 outlines a brief update on ESG. We continue striving to be a sustainable business that delivers creative solutions for our customers, a family feel for our people, support of our local communities and value for our investors. Emeco is committed to integrating environmental, social and governance principles into our business strategy and operations. We published a climate change position statement available on Emeco's website and are developing a decarbonization transition plan to work towards lower Scope 1, Scope 2 and Scope 3 emissions. Scenario analysis has been undertaken to identify potential physical impacts of climate change in our people, equipment and operations. Preparations for reporting under AASB S2 climate-related disclosures are well advanced with oversight through the ESG Committee, and Audit and Risk Management Committee. I touched on safety metrics for the first half earlier on Slide 9. We continue to focus on strengthening workplace, health, safety, well-being and training through targeted initiatives and improved consistency of execution. FY '26 HSET focus areas include ongoing uplift in critical risk and control insurance, continued enhancement of workshop safety controls and expansion of role-based leadership and workforce training. Governance assurance is underway with ongoing assessments and compliance monitoring to validate policy effectiveness and drive continuous improvement. Slide 25 lists our priorities and outlook for the second half of FY '26. I'll start with our priorities for the core business. We continued disciplined capital expenditure and cost efficiencies to drive returns and cash flow while increasing utilization by building a portfolio of fully maintained projects for a pipeline of opportunities and expanding the Force service offering. With regards to capital management and the deployment of growth capital, investment in fleet will be limited until our existing fleet is more fully utilized with current capacity to grow earnings without the need to buy more fleet, a key driver to achieving our 20% return on capital. We'll also actively evaluate potential M&A opportunities, including low capital intensity businesses to complement our core business, and we're actively monitoring competitors for sensible consolidation opportunities. We intend to preserve our improved balance sheet and capital position to provide maximum flexibility should the right opportunity present. We'll continue to invest in technology to improve efficiency and to build our competitive advantage. The focus will be on delivering the build phase of our D365 ERP project and continuing the digitization of operational technology. I mentioned ESG earlier. Our focus will continue to be on improving safety and health, continuing the development of our plan to reduce emissions, and preparing for the new FY '26 sustainability reporting requirements. The mining sector outlook remains supportive for the business with the medium-term production outlook remaining robust. This provides a stable foundation for continued demand for our equipment rental and maintenance services across the sector. For FY '26, we expect stay in business capital of approximately $170 million to $175 million. Depreciation is expected to be in the order of $160 million to $165 million, while nonrecurring spend is anticipated to be approximately $15 million. We expect positive financial performance in the second half subject to wet weather events in Queensland, impacting client operations. Just to conclude, we're confident that continued execution of our strategy will enable us to deliver sustainable growth and increase shareholder returns in FY '26 and beyond. I'd like to take this opportunity to acknowledge the efforts of our entire Emeco team for delivering another great result and an excellent start to FY '26. I'd like to thank our customers, suppliers, financiers and the community partners who play a crucial role in our ongoing success. With that, I'll hand over for questions. Operator: [Operator Instructions] Your first question comes from the line of Gavin Allen from Euroz Hartleys. Gavin Allen: Good numbers. Just a couple for me quickly. Just firstly, thinking about the journey to 20% ROC, which has been a long-term target now and you're obviously making very good progress on that front. Do we think about that directionally now as a sort of a 12-month or an 18-month or 24-month journey? Do you think -- not to hold you to anything, but just in terms of direction. Ian Testrow: Thanks, mate. Appreciate your support. Yes, that one, we've obviously -- can you hear me? Gavin Allen: Can, mate, yes. Ian Testrow: Yes. Cool. Yes. Thanks, Gav. The question you made, we've made great progress on that. We launched this objective at your other conference a couple of years ago, and I'm really proud of the progress that we've made towards our target of 20%, remains our target as we put through the pack. It's all in utilization, really. This -- what we're doing around the maintenance services has really helped improve our return on capital. But if you look at that utilization at about 85%, it's kicking that up to 90%. That really gets us to 20% at some point, which shows that there is operating leverage in the business and capacity for increased earnings on this fleet. Gavin Allen: Yes. That makes sense. So you can do it. You can do it quickly if you get to 90%. And if it's more steady, it might include some sort of, I don't know, continued growth in the maintenance side. Is that sort of one way to look at? Ian Testrow: Yes, it is. The maintenance side of things that earnings come through, which is really what I'm really proud of, to be honest, the team has done a fantastic job, really leverages that return on capital because it's not capital-intensive earnings. But ultimately, getting that fleet working harder gives us that uptick in earnings as well, so it's a combination of those 2 things. Gavin Allen: Yes. Good one. Just one more for me. So medium term, you're talking about adjunct acquisitions in the maintenance side and asset management side. Just wondering if you got any flavor on how you're finding the competitive environment on the M&A front. Do vendors seem sensible to you in terms of price as a general rule? Or where are we thinking about that in an M&A curve or cycle? Ian Testrow: To be honest, we haven't been overly active in that space this year. We're working hard on our strategy and working with our Board. We've been in the gym for a couple of years getting fit. We're getting that return on capital from 13% to 18%, getting that leverage from 1.1x down to 0.5. So we've been at the right to consider those options. So I wouldn't say that we've done a hell of a lot of work. A fair bit of work in regard to how do we position this thing. There's 2 areas of focus. One is consolidation, looking at competitors where their fleet aligns with us when we can take our maintenance services to improve their business. That's attractive to us. And the other thing is, is to have a look at what are we doing really well in maintenance. What's facilitated that growth? There hasn't been so much in our typical Force workshops. It's been growth in maintenance services in the field. What are we doing there? What are we doing well? Where can we improve on it? And where does that add value to look at M&A to improve that and broaden that value proposition? So they're the sort of 2 things that we're looking at in parallel together. Operator: [Operator Instructions] There are no further phone questions at this time. I will now hand back to Mr. Testrow for closing remarks. Ian Testrow: Thanks, everyone. I appreciate all the hard work from the Emeco team. I touched on it in the preso, but great work to Theresa and her team and our legal team, Penny and just the hard work on that refi. I think that's a great thing for the business. So thanks for that, and thanks to everyone. I appreciate it. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Welcome to The Hackett Group Fourth Quarter Earnings Conference Call. [Operator Instructions] Please be advised the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and CEO; and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin, sir. Robert Ramirez: Good afternoon, everyone, and thank you for joining us to discuss the Hackett Group's fourth quarter results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett Group; and myself, Rob Ramirez, Chief Financial Officer. A press announcement was released over the wires at 4:08 p.m. Eastern Time. For a copy of the release, please visit our website at www.thehackettgroup.com. We will also place any additional financial or statistical data that's discussed on this call that is not contained in the release on the Investor Relations page of our website. Before we begin, I would like to remind you that in the following comments and in the question-and-answer session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections and are not a guarantee of future performance. They involve risks, uncertainties and are considered difficult to predict and which may not be accurate. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors that are contained in our SEC filings. At this point, I would like to turn it over to Ted. Ted Fernandez: Thank you, Rob, and welcome, everyone, to our fourth quarter earnings call. As we normally do, I will open up the call by providing overview comments on the quarter. I will then turn it back over to Rob to comment on detailed operating results, cash flow and guidance. We will then review our market and strategy-related comments, after which we will open it up to Q&A. This afternoon, we reported revenues before reimbursements of $74.8 million and adjusted earnings per share of $0.40, which were above and at the high of our quarterly guidance, respectively. While we cannot control the short-term market sentiment or demand volatility, we can control the intrinsic value we create. Over the past 2 years, we have been systematically expanding our suite of GenAI-enabled platforms to lead in the rapidly emerging Agentic enterprise era. By embedding our IP into our new platforms and models, we believe we will be able to generate new revenue with higher margins in entirely new ways that allow us to deliver breakthrough value to clients. Our quarterly results continue to reflect the market and our own disruptive effects given our aggressive AI transition. Our strategy has been to develop highly differentiated GenAI-enabled capability that leverages our unique expertise as well as our proprietary IP. The goal was to be able to accelerate and, more importantly, enhance the value of solutions we deliver to clients. Our AI leadership and relevance is being defined by our distinct capabilities to help clients identify, evaluate, design and deploy high-impact AI solutions utilizing our AI XPLR platform. We are not surprised by the changes required by the AI transition. We were early adopters and anticipated the required changes. We started in January of 2024 when we first introduced AI XPLR version 1, and in September of 2024, when we acquired the globally recognized GenAI engineering capabilities of LeewayHertz to expand our agentic design and build capabilities and also enhance our platform innovation as well as licensing efforts. Our AI XPLR version 5 release is now licensable. AI XPLR is distinct due to its enterprise-wide solution simulation, ideation and detailed process and agentic design capabilities, which are supported by solution-specific ROI. AI XPLR is uniquely ours because it is powered by our proprietary Hackett solution language model and informed by our globally recognized Hackett process benchmarks and best practices process intelligence IP. Although we started with AI XPLR, we have now introduced new platforms, which include XT to support our business transformation engagements, and AIX to support our enterprise application implementation engagements, and Ask Hackett, which we rolled out last summer, to support the delivery of our executive applied intelligence programs. As we recently announced, we now have a complete suite of GenAI-enabled platforms to support nearly all of our services. We believe we have been innovative leaders in our industry. As I mentioned, these platforms significantly accelerate and enhance the value of our services and should allow us to grow our revenues and realize meaningful margin increases as we move from labor-based delivery to labor-led services supported by our powerful GenAI delivery platforms and globally recognized IP. Our job is to make sure our clients understand the importance of their business process context and the critical role it plays in the successful adoption of AI. There is little to no value realization without a detailed understanding of a client's specific business process and reimagining those specific client requirements by assessing the AI-enablement opportunity of each work step. That is the critical foundational element of AI XPLR. We believe that our platform-enabled delivery strategy will provide significant new revenue growth opportunities with higher margins while helping clients capture this unprecedented transformative opportunity. We also believe that channel partners can help us accelerate our efforts by increasing client access, which should also result in revenue growth. We have spent nearly 6 months with a global technology and consulting company demonstrating and testing AI XPLR's powerful capabilities on global, highly complex client solutions that have resulted in our platform being described as game changing. We expect to execute and launch a global go-to-market collaboration agreement that will allow us to jointly serve new and existing clients. We expect to finalize our agreement and launch our first client shortly. We also continue to believe that we can bring significant value to all organizations that utilize Celonis' software and other process mining software. Our ability to ingest their valuable volume and process execution detail into AI XPLR allows us to accelerate and better inform our ideation and solutioning recommendations, which allows customers to accelerate their transformation initiatives. We also plan to launch a go-to-market pilot initiative with ServiceNow this month. We have been pursuing this opportunity for several months and are eager to see the outcome from our joint pursuits. On the balance sheet side, we continue to generate strong cash flow from operations, which has allowed us to maintain our dividend and continue our strong buyback program. With that said, let me ask Rob to provide details on our operating results, cash flow and also comment on outlook. I will make additional comments on strategy and market conditions following Rob's comments. Rob? Robert Ramirez: Thank you, Ted. As I typically do, I'll cover the following topics during this portion of the call. I'll cover an overview of the fourth quarter results for 2025, along with an overview of related key operating statistics, an overview of our cash flow activities during the quarter, and I'll then conclude with a discussion on our financial outlook for the first quarter of 2026. For the purposes of this call, I will comment separately regarding the revenues of our Global S&BT segment, our Oracle Solutions segment, our SAP Solutions segment and the total company. Our Global S&BT segment includes the results of our North America and International GenAI consulting and implementation licensing revenues, benchmarking and business transformation offerings, Executive Applied Intelligence Advisory Programs and our OneStream and eProcurement implementation offerings. Our Oracle Solutions and our SAP Solutions segments include results of our Oracle and SAP offerings, respectively. Please note that we will be referencing both total revenues and revenue before reimbursements in our discussion. Reimbursable expenses are primarily project travel-related expenses passed through to our clients that have no associated impact on our profitability. During our call today, we will also reference certain non-GAAP financial measures, which we believe provide useful information to investors. Specifically, all references to adjusted financial measures will exclude reimbursable expenses, noncash stock-based compensation expense, all acquisition-related cash and noncash expenses, amortization of intangible assets and other nonrecurring items, and AI transition charges related to headcount reductions. We have included reconciliations of GAAP to non-GAAP financial measures in our press release filed earlier today and will post any additional information based on the discussions from this call on the Investor Relations page of our company's website. For the fourth quarter of 2025, our total revenues before reimbursements were $74.8 million, which exceeded the high end of our guidance. The fourth quarter reimbursable expense ratio on revenues before reimbursements was 1.2% as compared to 1.3% in the prior quarter and 2.3% when compared to the same period in the prior year. Total revenues before reimbursements from our Global S&BT segment were $38.6 million for the fourth quarter of 2025, a decrease of 11% when compared to the same period in the prior year. As Ted mentioned, the market is moving to AI-enabled services. AI is becoming an increasing percentage of all of our client engagements as the convergence of traditional and new AI-oriented services is occurring at an accelerated rate. Given our expanded platform delivery capabilities, we can accelerate value realization and realize productivity improvements utilizing our XT and AI XPLR platforms. We expect Q1 revenue to be up sequentially and gross margin to be up on a year-over-year basis and both to continue to increase throughout the year. Total revenues before reimbursements from our Oracle Solutions segment were $14 million for the fourth quarter of 2025, a decrease of 20% when compared to the same period in the prior year. With the recent introduction of our AIX platform, which supports the delivery of our Oracle implementation engagements, we have started to realize delivery productivity improvements. Correspondingly, we expect both revenue and gross margin improvement in Q1 on a sequential basis, and we expect those improvements to continue to increase throughout the year. Total revenues before reimbursements from our SAP Solutions segment were $22.2 million for the fourth quarter of 2025, an increase of 32% when compared to the same period in the prior year. This was primarily driven by strong software-related sales in the quarter, resulting from the increased sales investments we have made and the SAP success driving S/4HANA cloud migrations. The strong software sales were coupled with significant implementation fees, and therefore, we expect demand for our SAP services to be strong throughout the year. Approximately 22% of our total company revenues before reimbursements consist of recurring multiyear and subscription-based revenues, which include our Executive Advisory, Application Managed Services and GenAI license contracts. We are seeing the natural migration of IPaaS requests to transition to the Hackett Intelligence IP capabilities embedded in Ask Hackett, AI XPLR and ZBrain related recurring revenue opportunities. Total company adjusted cost of sales totaled $40 million or 53.4% of revenues before reimbursements in the fourth quarter of 2025 as compared to $40.5 million or 52.3% of revenues before reimbursements in the prior year. Total company consultant headcount was 1,301 at the end of the fourth quarter as compared to total company consultant headcount of 1,317 in the previous quarter and 1,284 at the end of the fourth quarter of 2024. Total company adjusted gross margin on revenues before reimbursements was 46.6% in the fourth quarter of 2025 as compared to 47.7% in the prior year. Adjusted SG&A was $20 million or 26.7% of revenues before reimbursements in the fourth quarter of 2025. This is compared to $18.4 million or 23.7% of revenues before reimbursements in the prior year. The year-over-year increase is primarily due to incremental commissions from increased license sales in the SAP segment. Adjusted EBITDA was $15.9 million or 21.3% of revenues before reimbursements in the fourth quarter of 2025 as compared to $19.5 million or 25.2% of revenues before reimbursements in the prior year. GAAP net income for the fourth quarter of 2025 totaled $5.6 million or diluted earnings per share of $0.21 as compared to GAAP net income of $3.6 million or diluted earnings per share of $0.12 in the fourth quarter of the previous year. Fourth quarter 2025 GAAP net income includes noncash stock compensation expense from our stock price award program of $1.8 million or $0.08 per diluted share and acquisition-related cash and noncash compensation expense of $1.1 million or $0.04 per diluted share. 2024 GAAP net income includes noncash stock compensation expense from our stock price award program of $5.1 million and acquisition-related cash and noncash compensation and related expenses of $2.3 million, which in total impacted our Q4 2024 GAAP results by $0.23. Acquisition-related cash and noncash stock compensation items related to purchase consideration for the LeewayHertz acquisition. This consideration paid to the sellers contain service vesting requirements, and as such, is reflected as compensation expense under GAAP rather than purchase consideration. Adjusted net income and diluted earnings per share for the fourth quarter of 2025 totaled $10.9 million or adjusted diluted net income per common share of $0.40, which is at the high end of our earnings guidance range and compares to prior year adjusted diluted net income per share of $0.47. The company's cash balances were $18.2 million at the end of the fourth quarter of 2025 as compared to $13.9 million at the end of the previous quarter. Net cash provided from operating activities in the quarter was $19.1 million, primarily driven by net income adjusted for noncash activity and increases in accounts payable and accrued expenses, partially offset by an increase in accounts receivable. Our DSO or days sales outstanding was 71 days at the end of the fourth quarter as well as in the previous quarter and 66 days in the prior year. As Ted mentioned, we were pleased that during the fourth quarter of 2025, we were able to utilize our strong balance sheet and cash flow to return capital to our shareholders. By leveraging our credit facility, we completed our stock tender offer, which resulted in the repurchase of 2 million shares of the company's stock at a price of $20.29 per share, including transaction-related fees. In total, including purchases from employees to satisfy income tax withholding triggered by the vesting of restricted shares, the company acquired 2.1 million of the company's stock at an average of $20.30 per share for a total cost of approximately $42 million. Our remaining stock repurchase authorization at the end of the quarter was $11.4 million. At its most recent meeting subsequent to quarter end, the company's Board of Directors authorized a $13.6 million increase in the company's share repurchase authorization, bringing it to a total of $25 million. Additionally, the Board declared the first quarter dividend of $0.12 per share for its shareholders of record on March 20, 2026, to be paid on April 3, 2026. During the quarter, the company borrowed a net of $32 million from its credit facility to fund the tender offer. The balance of the company's outstanding debt at the end of the fourth quarter was $76 million. Before I move to guidance for the first quarter of 2026, I would like to remind everyone of the seasonality of our business relative to costs as we move sequentially from Q4 to Q1. Specifically, consistent with first quarter guidance provided in previous years, our first quarter guidance for 2026 will reflect the sequential increase in U.S. payroll-related taxes and the sequential buildup of our vacation accruals. The company estimates total revenues before reimbursements for the first quarter of 2026 to be in the range of $70.5 million to $72 million. We expect both Global S&BT and Oracle Solutions segments to be down when compared to the prior year, but sequentially up from Q4. We expect SAP Solutions segment revenue before reimbursements to continue to be up on a year-over-year basis. As a result of the continuing pivot of our business to generative AI, the company will incur AI transition charges in the first quarter of approximately $1 million to $1.5 million. These charges primarily relate to severance costs due to headcount reductions and the leverage of our AI delivery platforms. The company may continue to incur additional charges during 2026. These charges will be excluded from adjusted results. We estimate adjusted diluted net income per common share in the first quarter of 2026 to be in the range of $0.34 to $0.36, which assumes a GAAP effective tax rate on adjusted earnings of 26.3% as compared to GAAP effective tax rate of 20.1% in the first quarter of the prior year, an unfavorable increase in taxes of approximately $0.04 per diluted share. We expect the adjusted gross margin as a percentage of revenues before reimbursements to be approximately 44% to 45%. We expect adjusted SG&A and interest expense for the first quarter to be approximately $20 million. We expect first quarter adjusted EBITDA as a percentage of revenues before reimbursements to be in the range of approximately 19.5% to 20.5%. Lastly, we expect cash balances, excluding the impact of share buyback activity, to be tempered due to the payment of 2025 performance-related bonuses and the payment of employee income tax withholding triggered by the net vesting of restricted shares. At this point, I would like to turn it back over to Ted to review our market outlook and strategic priorities for the coming months. Ted Fernandez: Thank you, Rob. As we look forward, let me share our thoughts on the near- and long-term demand environment and the growth opportunity it offers our organization. Although demand for digital transformation remains solid in traditional areas, it continues to be impacted by thoughtful decision-making as organizations assess competing priorities partly due to economic concerns and also partly due to the consideration and also confusion of emerging GenAI technologies and what they offer. We have not been surprised by the powerful potential to the compute and inference power of the large language models to drive transformative change, but rather the confusion created by the frequent introductions of new technology, primarily build capabilities, is where we believe the confusion lies. What requires greater understanding is what is necessary to realize high returns from the deployment of the available emerging capabilities. To assess and design high ROI solutions requires client-specific process knowledge in order to reimagine and enhance the new workflows to determine Agentic workflows, which should be designed and deployed, which can provide targeted returns. That is where our process knowledge, expertise, benchmarks, and the powerful capability of our Hackett solution language model, which powers all our platforms are distinct. The rapidly emerging build capabilities which are being introduced by the client providers like Anthropic and OpenAI are only accelerating and reducing the cost to build agents and Agentic workflows. However, they do not eliminate the need to fully understand the exact client-specific business process requirements, the client's existing automation footprint and the need to assess existing and potential data sources necessary to fully optimize the value of AI in the design, build and deployment of solution. This is without even considering what it takes to fully then execute a high-impact, high productivity solution, which impacts both the number of people that support that activity as well as the new cognitive capabilities that are going to be utilized and how. We believe we are entering the greatest automation expansion area of our lifetime, which will dramatically increase the enterprise automation footprint of every organization. The opportunity of all technology players to provide the underlying application and infrastructure solutions is obviously massive, and therefore, their marketing is understandable. But no one should underestimate the incumbent enterprise application providers' ability to thrive in this hyper-growth automation environment. Based on our estimates, the automation expansion opportunity is somewhere between 3x to 5x the existing automation footprint which exists today. Imagine all of the change that was to happen if you really were transitioning an organization from what is primarily static and rule-based automation to fully cognitive automation, which allows for the deployment of digital labor. Again, do not underestimate the opportunity for software and services companies to be able to grow in this environment given the significant amount of automation, which will and can be deployed and the help they will need to affect those changes. One of the critical questions that AI XPLR answers is what automation is required by a proposed AI solution which already exists in the client's enterprise application footprint. Clients have no desire to duplicate any automation they have worked so hard to deploy. So is the transition as disruptive as software and services companies and as the current stock market volatility of that sector suggests. The answer is yes, yes. But again, at the same time, what has not been equally or properly reported is the total addressable market increase for enterprise automation that will be delivered when and as existing automation footprints extend into the cognitive and Agentic workflows and therefore, who will provide it. Increasing automation opportunity should more than offset any disruption that software and services provider experience if they expand their current application footprint and related services capability to capture the significant growth. All organizations will need to understand the potential productivity and intelligence force multiplier that will emerge when existing static rule-based automation starts to transition to cognitive automation. We expect IT budgets to increase with increasing attention and allocations to the rapidly emerging GenAI solutions and the related opportunities and threats that it brings. Eliminating confusion, as I say, will be key to accelerating the adoption. The unlimited potential of GenAI will define an entirely new level of AI world-class performance standards, driving all software and services providers to extend the value of their existing offerings with the introduction of Agentic AI capability. We believe this will result in unprecedented innovations, which all organizations will have to consider. This shift is consistent with our aggressive pivot to GenAI-enabled transformation, which we believe creates a unique value creation opportunity for our organizations. We believe that the platforms that we have deployed and the unique capabilities of AI XPLR have already significantly expanded our opportunity to help clients address areas and opportunities that we were not previously pursuing. Another critical investment that we have made is to also build our own GenAI-assisted knowledge-based solution, which I previously shared is called Ask Hackett AI. Ask Hackett leverages our proprietary Hackett benchmarking, executive advisory business transformation intelligence, which allows us to define and enable digital world-class performance for clients. Our IP will also be increasingly leveraged across all of our market-facing service delivery platforms. We are continually ingesting and indexing all IP in order to make sure that it is available to support our clients as well as our associates. On the talent side, competition for experienced executives with high technology agility continues. Overall turnover continued at acceptable levels during the quarter, and we expect that trend to continue. Lastly, even though we believe that we have the client base and offerings to grow our business, we continue to look for acquisitions and alliances that strategically leverage our IP, platforms and transformation expertise, and can add scope, scale or capability, which can accelerate our growth. As always, let me close by congratulating our associates on our innovation and performance and by thanking them for their tireless efforts and always urgent to stay highly focused on our clients and our people no matter what challenges we may encounter. Those conclude my comments. Let me turn it over to our operator, and let us move on to the Q&A section of our call. Operator? Operator: [Operator Instructions] Our first caller is George Sutton with Craig-Hallum. George Sutton: Ted, you threw out a couple of big nuggets there, so I wanted to bite. First, on the 6-month demonstration and testing work that you've been doing with what sounds like an international potential reseller and partner. Can you just talk a little bit more about what the ultimate outcome you're looking for from that specific relationship would be? Ted Fernandez: Yes. Look, it goes without saying that I would have loved to have been able to announce the agreement on the call, but we expect to do so shortly. But with that said, look, the capabilities of AI XPLR are really distinct. I know it sounds repetitive, but I want you to know where we believe we are just -- we have extreme capability, which continues to be very distinct. Our ability to first to simulate an entire industry's AI opportunities across 26 industries and our ability to do so with AI XPLR are distinct. Our ability to capture a client's automation footprint inside of the client, so that we understand any automation considerations the client wants to consider or make, we believe, are distinct. Our ability to evaluate the return on investment on any AI solution, which a client asks us to review, we believe it may not be distinct, but in that performance intelligence side, gosh, our IP is as strong or stronger than anyone. And as you know, George, that acquisition from LeewayHertz allowed us to expand the solution design module of AI XPLR to just incredible capabilities. We call this our ability to develop an 80% solution with specific client input that we require. But our ability to do that, to develop a detailed functional design and soon to extend that same capability within ZBrain to a technical design, we think are also going to be highly distinct. It is those capabilities that will allow a partner to provide us the required information we normally request or they provide us when they're trying to pursue a specific area of their business or evaluate the performance of specific area of the business, our ability to use our AI XPLR capability to provide our partners and their clients with significant productivity ideas supported by detailed agentic workflows with a Hackett prepared return on investment is very valuable. And I believe that those organizations that are considering strategic alliances with us is because of the credibility of the brand and then the unique capability of AI XPLR. So I would describe that relationship and leveraging that for existing or actually prospecting new clients would be where we intend to initially start. George Sutton: Just to be clear on this relationship, if you do get this signed, that would be something you would announce intra-quarter, hypothetically? Ted Fernandez: Yes. If we get it signed, they would like to announce it as -- I don't know as much as we do, but they obviously would like to announce that relationship as well. George Sutton: Okay. And then separately, you actually mentioned ServiceNow and going forward with that partnership. Can you just give us a sense of how you'd be going to market with them? And any more details on that plan? Ted Fernandez: We were trying to do something with them for months and they were looking for specific go-to-market areas to use, again, this unique capability we have and to see what the impact is in introducing their existing platform capabilities. So it's a pilot to target. We've recommended and we've discussed a specific industry that, again, the hope is to be able to launch that before the end of the month. George Sutton: Got you. And just one final question. You mentioned transition costs from GenAI, meaning your headcount can actually now be reduced in certain areas due to GenAI. So that's interesting because, obviously, the other parts we're talking about our go-to-market strategies with AI. This would be your costs are actually starting to come down because of GenAI. Can you just give us a better sense there? Ted Fernandez: Yes. If you will recall, we launched 2 new platforms at the end of the year, which include XT for our transformation professionals, this is where we do operational modeling and transformation road maps for clients, as well as AIX, originally known as AIXelerator, which we use to help deliver our technology implementation solutions. We've rolled out that on the transformation side. I believe that there's now 10 clients where we are leveraging this new capability to deliver the targeted outcome for the client. And we think we're seeing productivity improvements that could result in some numbers that will be in excess of 25%. Let me just leave it there. And as you and I have mentioned, we don't quote rates anymore. We quote outcomes, and we put a value on that outcome, and the client can determine whether that outcome can be delivered by anyone else as powerfully and as efficiently as we can. And if they can't, then we will realize margin expansion as we believe we've already started to experience in Q1. The AIXelerator platform launched initially through our OneStream group, and it's now rolling out into Oracle. And that platform, the best story for that platform is that we were asked to jump in late in the game to a very significant OneStream opportunity in an industry, I'll just say, we have limited capabilities in. The power of our platform to demonstrate how we are able to execute, configure, build, test that OneStream opportunity was powerful enough for us to come in late in the game and win this over a list of who's who. We expect similar results. So we've now got it in front of 2 or 3 other opportunities. So we're just seeing some success, but we clearly know that we have built the initial capability looks at how to really eliminate what I'll call production or data gathering or execution costs that would have been generally done by some of our junior consultants, not that we have many of them, because that's not the way our enterprise model works. But there is no doubt that our ability to take that and deliver a much powerful outcome on a similar opportunity that we would have had without the new AIX capability is distinct, and it's significant. And if we're able to demonstrate that enhanced capability with a tremendous -- with a high level of confidence, leveraging the IP and the Hackett brand that people come to rely on and trust, we're going to capture a meaningful amount of those gains. The client will get a higher and better result and accelerated speed, and we will be able to provide that with, I'll call it, people obviously leading the implementations, but being, gosh, powerfully supported by these new platforms. Since we just rolled out the platforms and we started and launched all these new engagements, we saw that there was both an opportunity that we were going to have additional people that we may not need under this new service delivery environment. So we decided that we should make sure that the marketplace knew that we were realizing those productivity gains and how they were impacting our operating results. Operator: Our next caller is Jeff Martin with ROTH Capital Partners. Jeff Martin: Ted, I wanted to dive in. You mentioned at the start of the call that your products are all licensable now. Just curious how things are progressing on the licensing front. Ted Fernandez: Like we said, we announced that, I believe it was the first week of January. So we expect to start licensing the product here as we progress throughout the year. The product has been utilized in the version 4 capabilities to assist the delivery of a consulting engagement. But after a consulting engagement, once the client is exposed to the platform, now if they would like to continue to either ideate, discover opportunities on their own, because the module now resulted in 2 modules, an ideation explorer module and a solutioning module, the client has the option to license either one or both depending on how they want to avail themselves to that capability. So we expect to expose clients to version 5 as we are on any and all of the engagements that we're launching. And then we expect clients to decide how they would like to avail themselves to those platforms. So they'll make that determination. Jeff Martin: Got it. And then you mentioned that you're not quoting on rate anymore, you're quoting on outcome. I was curious if you could elaborate on that, so we can understand that from a financial model point of view. Ted Fernandez: Well, we evaluate each job and respond to the client requirements. And we quote the completion of the pass that the client has either in an RFP or whatever the detailed request is, and we quote that fee. If the client wants to have a rate discussion, which some may, then we talk about the licensing aspect of the platform during the engagement. If the client wants to -- most of the clients want to focus on specific deliverables and the outcome from those deliverables, then we quote a fee. So we know we're in a transition period, but we are not making our platform available to clients for free. Let's make sure that's clear. We believe that it results in an accelerated deployment, which the client values, and value realization, and greater value to any of these engagements that we have, whether we are doing AI discovery and solutioning with XPLR, business transformation with XT or an Oracle or OneStream implementation for now using AIX. Jeff Martin: Great. And then I was curious on this large international channel partner, would that be a relationship where you could leverage some of their implementation? Or would you need to continue to staff up additional implementation resources as you go along? Ted Fernandez: Entirely up to them. They obviously have been exposed and understand the capability of our engineering capabilities. So it will be determined on an engagement basis. Operator: Our next caller is Vincent Colicchio with Barrington Research. Vincent Colicchio: Ted, can you give us an update on the pieces within the S&BT business, how they're trending? Ted Fernandez: Specifically, which ones are you thinking about, Vince? Is there something specific you have in mind or... Vincent Colicchio: No, nothing specific, just to get a sense for how things are trending. You talked about AI, the AI piece. Ted Fernandez: Clearly, the number of clients that have an AI element is going to be increasing meaningfully throughout the year. The other big pieces that are in there, the advisory business actually did pretty well given the current environment. So the integration of our GenAI -- the introduction of our GenAI program and now the fact that we're also providing our members with access to ideation capabilities of AI XPLR, so that they can get, I mean, exposed to actual actionable AI opportunity identification through their program, we believe, is also helping. So that performed -- I'm going to say, in the environment and seeing what others have presented, we performed pretty well. And OneStream, well, I mean, that group is up sequentially. S&BT, as Rob said, is expected to be up sequentially from Q4 to Q1. Same with Oracle. Same with SAP. Well, maybe not sequentially to SAP because of the bar, but year-on-year, SAP is in a very strong position. So again, look, in '25, we saw the, if you want to call it, demand disruption and the confusion I referred to at the beginning. We believe that new capabilities, better understanding of adoption. And if the technology providers actually describe their capabilities a little bit more precisely, I think it will help all of us as well. But I don't know if that's the background that you wanted or you had some more specific, Vince? Vincent Colicchio: That's helpful. And then with SAP and Oracle improving and expected to improve throughout the year, I assume we'll still see a mix shift towards AI for the next 12 months. Is that accurate? Ted Fernandez: Yes, absolutely. I mean the SAP performance, as we mentioned, has been coming on for a few quarters, because SAP has done a terrific job with convincing clients to migrate to S/4HANA. So that's reflective in our business. And the Oracle sequential decline is important for us. So we continue to be very hopeful that with that increase and with the AIXelerator capability rolling out inside of that practice, that it gives our Oracle group an opportunity to start growing in 2026 -- resume growth in 2026. Operator: And at this time, I show no further questions. I would now turn the call back over to Mr. Fernandez. Ted Fernandez: I'd like to thank everyone for participating on our fourth quarter earnings call. Look forward to updating everyone again when we report the first quarter. Thank you, everyone. Operator: Thank you. This concludes today's conference call. You may go ahead and disconnect at this time.
Toni Laaksonen: Good morning, everyone, and welcome to the annual report release call. And today here with me is presenting Roland Andersen, our Chief Financial Officer; and I'm the new CEO for FLSmidth, Toni Laaksonen. Briefly about my background, I have a 20-year industrial background from different companies and most of that from the mining industry. And before joining the group, I was the CEO of a stock-listed company in Finland. Before the CEO position, I was with the service business line in FLS and spent like 8 months over here, leading service team and now taking over the CEO position. I'm very excited to start working with the entire group across the world. Then a few strategic highlights from last year. 2025 was the big milestone in the FLS history. One big transformation in the company was the divestment of the cement business. We became a pure-play mining supplier for technologies and services, which is a huge milestone for the whole company. Then on the other hand, at the same time, we were strengthening our offering commercially both with our service business line and products, cyclones and valves. With both businesses, we saw solid organic growth throughout the year, which was then strengthened in Q3 and Q4. Then on the other hand, with the products business, we see -- saw an uptick during the Q4. But otherwise, the market was pretty soft during the year and subdued. We saw certain engineering activities, but it was not steady market as such, which we had with services and PCV. Therefore, we continue to derisk the products business, and now we are more focused on the product side, and we are not anymore as a project supplier as such. Then on the other hand, from the financial point of view, we had a very solid EBITDA margin. We continue to improve that compared to last year's. We hit almost 16% as a total for the full year. And then from the free cash flow point of view, excluding the M&A activities, we had a strong year, hitting DKK 640 million. So solid financial results as such. Then on the other hand, we introduced the share buyback program last year, which is also a big milestone for the company. It was in total DKK 1.4 billion, which is a very big commitment from the company to support the shareholder value. So several strategic highlights throughout the year and milestones for the company. Then from the sustainability point of view, we had good success in many fronts. And to take a few highlights from the picture, I would say that we still have improvement opportunities with our safety. We are aiming for 0 harm that we still had 2.3 as an average injury rate, which is too high. We are making all the proactive actions to take the number down continuously, which we are driving to get to the 0 harm level. Then on the other hand, 1 improvement area is definitely the Scope 3, where we are doing a lot of work with our equipment and technology range to make improvements. But then the other aspects, I would say that we were developing well throughout the year. And now for this year, we will have a new baseline when the cement business has been divested and we are just fully focusing on the mining technologies. Then a few words on the market conditions. As mentioned about the products, the market has been subdued. We have been derisking and focusing more on the project -- sorry, on the products business instead of the full-blown big projects. And that's, of course, impacting us. But then on the other hand, with the services and PCV, we have been seeing stable development and we see that, that development continues this year. The commodity prices have been increasing, especially copper and gold. Copper is being very high. But then still, that's not impacting on the customer decision-making in the short term. Of course, the long-term decision-making might be impacted but that's not meaning that they would release any large-scale mining projects in the short front. The engineering activity has been very high in some countries. But of course, that means that the engineering activity covers both brownfield and greenfield sites and majority of the activities are with the brownfield operations at the moment. That the customers are, therefore, they are not sanctioning the greenfield projects as fast as maybe people would like to see from the market point of view. And we believe that in Q4 in '27, we would see more action related to the project business. On the gold side, we have been seeing certain smaller projects being activated due to the high gold price. And there, we see certain potential, especially with the smaller equipment deliveries, although the gold sites do not consist of major projects as such. Then deep diving into the business lines and starting from the services. The Q4 results were very strong with service order intake up plus 14% organically compared to last year and then revenue up plus 15% compared to 24%. So a very solid quarter. And there, with services, we were gaining back backlog which was not delivered in Q3. So Q4 was catching up with our supply chain and catching up with the backlog, which resulted in very healthy revenue level in Q4. Then when looking at the total year, the organic growth of plus 4%, which was the normal level, I would say, in that sense, that's something that we expect as a yearly development for the business. Revenue-wise, we were up plus 9% as a total. So healthy results from the revenue and order intake point of view. Growth markets were specifically South America and Africa. Then from the margin point of view, an excellent end for the year, driven by the high revenue results we achieved more than 20% EBITDA, adjusted EBITDA margin, which is on the high end, I would say, for the service business line. So a clear uptick there and the revenue level was supporting it. From the product point of view, the year was subdued, as mentioned previously, so order intake organically declined for the full year minus 5%, certain uptick was visible in Q4 where we were gaining a few orders more than in a normal quarter. But then when balancing out the quarters, the organic growth was negative. From the revenue point of view, we were declining minus 28%, which also demonstrates that the market activity is not the highest at the moment. From the profitability point of view, good development in Q4 as we were gaining up with our deliveries and increasing our revenue that resulted in a healthy result compared to the previous quarters we were on the black numbers. So this was an extremely positive quarter in that sense. But then when balancing out the full year, we were still in negative figures. So there is still room to develop on the product side. With pumps, cyclones and valves, an excellent year from the growth point of view, plus 12% order intake growth organically and the same with revenue. So we were driving consistently the business up, and that was also helping us with the results. And we have been seeing continuous growth with the PCV business throughout the quarters. So very healthy activity over here. And of course, the deliveries are smaller focused on the mine improvements and replacements and therefore, this business has been more active during last year and this year. Also the profitability remain at a very good level with PCV. So 25% was the end result in Q4 with our margin level, which was then a bit above compared to the previous quarters. So on average, very good development with our margins with pumps, cyclones and valves. And then I hand over to Roland. Roland Andersen: Thank you for that, Toni. So let's just have a quick glance of the consolidated financials revenue of a bit more than DKK 4 billion gross profit at 34.6% and with a significant reduction in SG&A, we end up with an adjusted EBITDA margin for the group of 18%. Below the line, we decided to take an impairment charge on our deferred tax assets in Denmark. This is predominantly due to the macroeconomic and geopolitical developments around the world. And it's a pure accounting noncash impairment charge to our P&L. The tax losses live indefinitely and are in no shape or form lost. And when also finalizing discontinued activities in connection with the handover of our cement business, profit for that period was minus DKK 282 million. Our gross margin remained high through 2025, predominantly as a result of mix. Service and PCV business was a relatively high part of our revenue throughout the year. So a healthy end to the year of 34.6% gross margin. SG&A costs for Q4 is 19% down on the same period last year, both a drop in Danish kroner, but also reduction in SG&A as a percentage of revenue. And that indicates that we are moving forward on rightsizing our organization and moving into our new operating model. Most of the last savings have been taken in the support functions. And then we have ramped up and invested a little bit in the commercial front and both in our PCV business, but also bits and pieces in the service business. And adding all that up, a relatively high revenue quarter in Q4, healthy gross margin, SG&A at a lower level, means an 18% adjusted EBITDA margin for that quarter. This is by no means a run rate number. It's an exceptionally good quarter for us. And of course, a home run in terms of ending 2025. The higher revenue in -- towards the end of the year and in Q4 also means that we were invoicing and had a relatively higher trade receivables level in New Year's Eve product business line with a higher revenue, we're finalizing a few projects, and that means that we reduce our prepayments from customers and also a bit on work in progress, all in all means that our working capital for -- in Q4 compared to Q3 went up by DKK 573 million. And despite a relatively high EBITDA, that's partly offset by the uptick in net working capital, leaving us with a modest cash flow from operating activities of plus DKK 3 million for Q4 and the free cash flow adjusted for M&A activities was plus DKK 70 million. Just a quick recap of the P&L, so DKK 14.6 billion revenue, adjusted EBITDA margin for the year 15.9% and a modest profit for the year of DKK 8 million which reflects that we have lost a bit more than DKK 700 million on discontinued activities. So the cement business that is now finally out of FLSmidth and also the tax impairment charge of DKK 600 million. Cash flow from operating activities for the year ended just shy of DKK 1 billion, roughly in line with what we had expected. Our share buyback program that we launched last year is about to come to an end. By the end of Q4, we had a leverage ratio of 0.8x. And just last night, we announced an intention to launch a new share buyback program given we get the authorization from the AGM by end of March, then we intend to launch it after we have printed our Q1 results in May. And that also means that we are returning quite a fair bit to the shareholders in 2026. In 2025, dividends -- ordinary dividends of DKK 461 million and the share buyback of DKK 1.4 billion. This year, we will propose ordinary dividend of DKK 231 million and a share buyback program of DKK 1 billion. This year, we have introduced a new way of guiding. We are done with the transformation and no longer see the need for directly guiding on our revenue in terms of Danish kroner. So we will convert to guiding on organic revenue growth, organic means fixed currencies. And for the group, we're guiding 2026 at minus 1% to plus 4% organic revenue growth, and we expect to post an adjusted EBITDA margin of between 15.5% and 16.5%. A little bit of underlying flavor or assumptions or to that guidance underlying, we expect the service business line to grow 2% to 5% organically. The products business line will decline by minus 5% to minus 15%. Sounds like a wide range, but it is really plus/minus DKK 150 or so, and that can easily happen when you execute larger product bundles or smaller projects, either because of delays on our side or changes in scope and time line and so on, on the customer side. So hence, why that span. And then we expect our pumps business to post say an organic growth rate of 4% to 7% and that gives us the full guidance of minus 1% to 4%. For those of you that'd like to do the reported revenue growth in Danish kroner, we can say that with the FX effects as per Monday, 16th of February, our DKK revenue growth would be about minus 2% to plus 3% growth. On the margin side, we came out of this year, 15.9%. We'll guide next year, 15.5% to 16.5% EBITDA margin. We'll adjust for about DKK 100 million equal to around the percentage around it, one-off items predominantly related to our ERP implementation and principal company model. And on the other hand, as some of you recall, we are selling our corporate -- former corporate headquarters in Denmark, and that cash comes in as extraordinary other operating income in Q1, and that means an extra plus 5% that we also adjust for. And that means when we do that, the expected reported EBITDA margin will be around 19% to 20% margin. And with that, I'll give it back for a few comments to Toni. Toni Laaksonen: Thanks, Roland. Excellent results, I would say, last year. And I also want to use this opportunity to thank our employees for their reports, great contribution for the results. And then also our customers, I want to thank them for their collaboration with us. So good year indeed for FLS. Then a few words on this year and the way forward. So -- of course, we are now in a good position from the company point of view, we have cash, credit limits available. Financially, we are in a strong position, which then means that we can start investing in the growth journey. So we are looking for organic expansion opportunities actively. But on top of that, there are selective M&A cases, which we would like to explore this year, we have been actively developing our pipeline. Through this, we want to be closer to the customers to support them even more in the future and help them to improve their operations. Then at the same time, we continue improving our customer offering. So we are looking into the portfolio that we can drive that forward so that the miners can improve their productivity, reliability and sustainability by utilizing our technologies and services. Then on the other hand, it's super important that our supply chain and delivery experience is great for the customers. And therefore, we are continuously driving forward with our supply chain improvements, accountability within the organization. But at the same time, securing that when doing the exercise and securing that the cost level remains competitive throughout the organization. Through that, we want to ensure that the margin stays at the same level or even higher when moving forward based on our forecast. And then, of course, we want to ensure that the growth journey continues from here. Then we, of course, want to balance the investments and so that we are utilizing a certain amount of money into our internal and external growth opportunities. But at the same time, we want to have the shareholder returns secured so that we have the combined financial flexibility for both company and the shareholder purposes. So those are the key themes when moving forward. And then, of course, we are continuing to do the strategic planning for the company so that we have the long-term plan available also for the external markets. And based on our current expectations, we will host the Capital Markets Day in September when we would then release the full strategy for the coming years. And now it would be time for the questions. Operator: [Operator Instructions] Your first question comes from Chitrita Sinha with JPMorgan. Chitrita Sinha: Congratulations on new role, Toni. I have 3, please. Maybe firstly, if I could just start on the products margin. Clearly, a very strong result in the quarter. And I know there have been initiatives that have been implemented to reduce the breakeven point in the business to DKK 3 billion. I guess how much of this benefit came through in the quarter? And how much is left to do? I'm just trying to understand what we can expect for next year, especially as volumes will be down. Toni Laaksonen: Thank you for the question, and thanks for the congratulations. So when looking at the quarterly figures, of course, the products volume was high in Q4. That was higher than maybe the normal quarter, and that was a big part of the profitability improvement. So we still have work to do to improve the profitability level. We have taken many actions last year to improve the margin level, but still work remains to be done this year to get to that overall black figures. But the volume impact in Q4 was significant with the products, and that was driving up the profitability level. Chitrita Sinha: Understood. My second question is just on, I guess, the outlook in products. Two large orders were booked in the quarter, but then you've obviously mentioned there's hesitancy in customers allocating capital to these larger projects. So I mean, how -- what is the catalyst for these customers to make this decision? And then is it possible to increase the small, medium-sized orders given where we are with commodity prices? Or should we continue to expect that DKK 400 million to DKK 700 million run rate? Toni Laaksonen: Yes. So with the projects, I would say that the engineering activities have continued active. But then, of course, the customers are thinking about their risk level when doing the investments. The greenfield cases, the bigger cases involve more risks and that's one factor, which has been like delaying those cases and delaying the sanctioning of the project. Many of the customers they have been seeking for improvement opportunities with their current operations that we have been also seeing M&A activity within the miners. And through the M&A, they have been improving their performance within selected sites, and they have such plans in place for the future. So we believe that based on the engineering activities, we would see more maybe sanctioning next year and probably in the end of the year. But short term, I wouldn't say that there is too much like big projects being sanctioned. Then as mentioned in the presentation, with the gold projects, we have been seeing more activities and smaller cases and the customers are actively seeking for improvement opportunities with their current operations and possibly some smaller mines. And of course, we are in those discussions actively, and we are participating in them through all the business lines. Some of the impacts are then visible [Technical Difficulty] line, some with services where we have upgrades and modernizations. And then, of course, this will, to a certain extent, help products from the order intake point of view. But then when looking at the revenue, normally, it takes a bit longer for the products business revenue to come through the profit and loss statement. Chitrita Sinha: Final question just on capital allocation. So obviously, you've spoken about this as one of the priorities for next year. But just trying to understand maybe in order in terms of what your priorities will be given you've announced the share buyback this year, but maybe the dividend was lower than what we saw last year. Roland Andersen: Thank you for that one. So obviously, our dividend policy say that we will distribute in dividend 30% to 50% of our net profits and net profits were close to 0. So we chose a number of dividend that was slightly outside that range and then a share buyback of DKK 1 billion. And then we have an M&A pipeline that we are currently developing. And I think we expect maybe 1 or 2 of the targets in that pipeline to come through in 2026. That's never certain, but that's what we expect. So we have balanced sort of what we may need in terms of M&A, what we could return to shareholders. And then at the same time, thinking about that our leverage ratio can be slightly higher than the 0.8x we came out of 2025 with. Operator: Your next question comes from the line of Christian Hinderaker with Goldman Sachs. Christian Hinderaker: Welcome, Toni. I want to start and apologies for a bit of reiteration of the last question. But if we think about the ex large order numbers, OE was down in organic terms quite considerably, and you had about [ 515 ] of underlying orders. I guess if we map the comments in your release and also from peers that are reported in terms of decision-making on large projects being subdued, but smaller product activity-related investments continuing. That narrative, frankly, is just at odds with the Q4 numbers, which are obviously driven by large order growth. You've also seen the BHP Vicuna investment. I guess that was yesterday or earlier this week. I guess -- what are we missing here in terms of that dislocation because the numbers tell a different story to the narrative? Toni Laaksonen: Yes. Maybe some clarification on that one. So if you look into our numbers last year, there was also maybe a certain shift between the quarters. So Q2, Q3 were not that strong with the products. And then for certain reasons, some of the customers wanted to just sign the deals just before the year-end. So some of the signings were postponed throughout the year. We were seeing pretty low quarters and then the order intake went up in Q4 because of the fact that the customers were signing those delayed cases. They just wanted to finish the year so that they have a clear way forward. So if you then balance out the order intake between the quarters, that gives maybe a more stable and clear impression on the situation. Christian Hinderaker: Maybe secondly, on the exit margin in products in the fourth quarter. You'd said at the 3Q results that the segment would likely be loss making until we were exiting 2026. Clearly, you're running well ahead of that. I guess, curious about the phasing of profitability through the quarter. I appreciate you had a good delivery period in 4Q '25. Should we think about that being an implied volume threshold for being breakeven within products? How do we think about the phasing in 2026? Roland Andersen: Yes. Thank you for that question. I think we are not really running ahead of ourself. I think I understand that Q4, it looks like a significant home run. But it's -- we always said it's volatile, both the order intake, but really also the execution of the backlog. And a few things were finalized in Q4, and that meant a higher revenue and the contribution margin gross profit was flowing through to the bottom line. So our Q3 was not particularly great as we can all remember. And the -- I won't say restructuring, but the adjustments we do in the product business line continue and we still expect to spend most of this year doing that so that the product business line around DKK 1 billion -- DKK 3 billion in revenue, DKK 2.83 billion needs to be breakeven on a run rate basis in Q4 next year. So that's still the thinking. There has been no change in that. And yes, so that's how it is. Christian Hinderaker: Understood. And maybe finally, as we think about the order intake, but maybe also the revenue delivery, how is pricing developing and what are your expectations for the year ahead? This is on product. Toni Laaksonen: Yes. So thanks for that. So from the pricing point of view, I would say that the market remains at a stable level. So the stable development, which we are seeing from the sales development perspective with PCV with our pumps, cyclones, and valves and with services, similar development is visible in pricing. So we are not seeing any major fluctuation due to the like material costs or so on. So pretty stable development there due to the activity level. Operator: Your next question comes from Claus Almer with Nordea. Claus Almer: And also from my side, first and foremost, a very warm welcome to you, Toni. I have 2 questions. And the first 1 is also about the order intake in Q4. And you said that weak Q2, Q3 and then a lot of that came in Q4 instead. Is there also a negative read into Q1 '26? So your pipeline has been more or less been used and you need '26 to build a new pipeline. That will be the first one. Toni Laaksonen: I would say that that's not the case in this situation. So in many industries, we are seeing similar development at the customers are utilizing their CapEx budget, which they have for the year in Q4. And then that means in several cases that there's more activity. That was also visible in our figures. Quite often, there is some sort of an uptick with the Q4 figures, that's normal in many businesses. We didn't like front load in this case, anything for Q4. So we should see pretty stable development in Q1. Claus Almer: Sounds great. And then a second question regarding the order intake and compared to your internal, let's call it, [indiscernible] KPIs, order intake missed expectations set out in the start of '25. Was that broad-based? Or was it product or where did you see the miss? Roland Andersen: Yes. So I think the Board had high expectation to Mikko and myself. So that target was set pretty high. And then it was set in Danish kroner. And so we have had considerable FX headwind. And I understand, Claus, you've read the magic pace in the remuneration committee, which is where you pick that up. So that's the reason. Claus Almer: Right. Okay. And then just a final question regarding your 2026 guidance. This, you could call broad revenue growth guidance of 5 percentage points, but the margin is only 1 percentage point. So is that really the possible difference between ending in the upper and the lower end of the revenue growth guidance. Roland Andersen: Yes, Claus. So there's only 1 answer to that, and that is yes, right? But I was trying to explain that we need a little bit of a band in the product business line. Because execution can swing a bit month by month, Q-by-Q due to our own way of executing, but also very much due to the customers' decisions to either change or delay or rescope or things will happen. Then I think both in pumps business and also in our service business line, we have a number of initiatives coming up, and we are actually a little uncertain how fast can we make the rubber hit the ground, so to speak. Pumps have done a lot of good jobs and a very good job in 2025, and that can't continue. So we're looking at the whole thing for the pump business saying 4% to 7%, I think that's also even by comparing to peers and so on, a good ambition. And then I'll let Toni maybe comment a little bit on the service business line where we are closer to the same level as we saw in 2025. Toni Laaksonen: Absolutely. So the range is now between 2% to 5%. Of course, with services, our baseline is a bit higher than with the pumps, and then it means that in percentage, it gets more difficult to grow the business faster. But then in DKK, of course, the growth is high, even if we reach like a 4% level as like last year. So the comparable let's say, level from last year is the full year figure about 4%. And based on that, we see that similar development would happen this year within the range of 2% to 5%. And we have a solid plan in place that's how to make it happen by using our resources and investments. Operator: Your next question comes from Alex Jones with Bank of America. Alexander Jones: Two, if I can. Maybe first, Toni, as you step into the CEO role and based on your experience at FLS for the past 8 months, could you outline a little bit where you'd like to put a particular focus as you step up on improvement or other efforts and any changes of emphasis you'd already like to highlight for us at this early stage? Toni Laaksonen: Yes. Thanks for that. So one of activity, of course, which is visible in the plans and which is also closely related to my background is M&A. So I have been doing a lot of M&A activities in the past in my previous roles and maybe that's one flavor, which I'm bringing now in. That's, of course, then part of the journey this year and will be then part of the plan, which we will then release as part of the Capital Markets Day. So that's definitely one focus area. Now the transition of the company into a pure-play mining allows us to do that. We are in a financial healthy position, and we have made the divestments and now there's the timing. The timing is right now to make the M&A activities active and start executing them. So therefore, that will be one big part. And then, of course, I have certain products background from the past and one part of our journey needs to be that we get the products business to the black figures. And of course, I will be working with our products business line team to make that happen then and supporting them. Alexander Jones: Excellent. And maybe a second question to follow up on the M&A. You talked about 1 to 2 targets potentially converting this year. Are there particular areas of the business where you're seeing strong opportunities or progress on those targets? Or is it really broad across the different areas you previously highlighted? Toni Laaksonen: So at the moment, we are screening the targets, I would say, across the business lines. So all business lines are active and evaluating opportunities from the marketplace. And then we have quite many opportunities in the pipeline in different phases. And based on the pipeline activity, we assume that a couple of cases could land this year. But as Roland mentioned previously, of course, there is uncertainty always with the M&A cases but the activity level is rather good, I would say. And based on that, we believe that some cases will take place by the end of the year. Operator: Your next question comes from the line of Lars Topholm with DNB Carnegie. Lars Topholm: And also from my side, welcome, Toni, looking forward. A couple of questions from me also. So Roland, you made some comments on the net working capital and certain of the moving parts being affected by the high revenue in Q4. I wonder if you can give some outlook on the expected net working capital development in 2026. Roland Andersen: Yes. Thank you for that, Lars. So how we see it play out is, of course, the Q1 will be an aggressive collection month. So that's one thing. And then secondly, both the service business line, but also the pump business have plans to build up in a disciplined way, inventories as we move forward. So that's true opposite, moving parts in the net working capital. Work in progress and prepayment for customers are a little bit depending on when, how we get orders in and how they are structured and so on. But I think guidance wise, you should expect that, that net working capital is on a new level now around to DKK 2.4 billion as we move through 2026. Lars Topholm: Okay. And then I had a question about CapEx guidance. Roland Andersen: Yes. So internally, we are trying to lower the level a little bit. But you should expect 2% to 3% of revenue in CapEx. Lars Topholm: That is very clear. Then I had a question to the service order intake in Q4 because less than 8 quarters, and of course, I know there's also volatility here. But I wonder what's driving it is it new customers? Is it increased scope on existing service contracts? I know what you put into the order intake is the expected revenue generated on a contract in the next 12 months. So I wanted some color on that. And maybe if you could also comment on whether this improvement is a step change or just a blip? Toni Laaksonen: Yes. So as discussed previously, in the core, we would still continue to highlight the fact that it was just an individual quarter where we saw the jump and that there was transitioning of the orders between the quarters, that's for sure. And then we received a bit more bookings due to the year-end activities, which the customers were having. And then, of course, when the average level is calculated, that's then a balanced view and around DKK 2.2 billion. So again, we would highlight the fact that it's good to compare the average level to our forecast for this year, and not looking at the individual quarter because especially the bigger project cases might go back and forth between the quarters, and there's uncertainty with them and the bookings are not that clear and stable as with the service business. Then on the other hand, we're looking at the service side of it with the orders there, we might have some individual [Technical Difficulty] also cause some fluctuation between the quarters. Operator: Sorry to interrupt, sir. We had lost... Toni Laaksonen: [indiscernible] is definitely there. PCV, the pumps business where the order intake is at a stable level and has been growing quarter-by-quarter. But all this fluctuation caused by the bigger cases, bigger modernizations, upgrades that then sometimes visible, especially in the year-end. Lars Topholm: That's good. Then a final question, if I may. I don't know to what extent you can answer it. But [indiscernible] made a revised feasibility study, of course, ahead of that asset being created just at the end of last year. I know in the original feasibility study, FLSmidth was listed as supplier of all the equipment for the concentrator. Is that also the case in the revised outcome? Roland Andersen: I think we can't comment on that, Lars. We can't comment on that. Lars Topholm: That's fair enough. I had to try to ask. Operator: Your next question comes from the line of Kristian Tornøe with SEB. Kristian Tornøe Johansen: Yes. A couple of questions from my side as well. So first question on the SG&A cost. If we look at SG&A cost before transformation and separation cost, it's been fairly stable for the past 3 quarters. Should we expect this run rate going forward as well? Or is there a potential for another leg down on the SG&A cost? Roland Andersen: Yes. So thank you for that question. I think we should expect a bit further cost out. But the last bits and pieces will come a bit slower. So towards the end of this year, then we're done. Kristian Tornøe Johansen: Okay. So you would say a slight decline throughout the year, what are you saying? Roland Andersen: Yes. Slight one, yes. Kristian Tornøe Johansen: Understood. The second question is just on your amortizations in the quarter. You are writing down projects no longer in use. Can you elaborate on what these projects were? Roland Andersen: That's a little bit of a cleanup. So we had different IT projects and so on. So in connection with the SG&A reductions we have done, there has been bits and pieces in the balance sheet also that we are writing down. So it's small stuff cleanup type of thing. Kristian Tornøe Johansen: Fair enough. And then just my last question. So previously, Roland, you have been kind to help us a bit on your cash flow from operations expectations. So where do you roughly expect that for '26? Roland Andersen: So roughly, the cash flow from operations we'd say between DKK 700 million up to DKK 1 billion. That's a good starting point. Operator: The next question comes from Casper Blom with Danske Bank. Casper Blom: And also welcome Toni from my side. Most of my questions have been answered, but just one left here regarding the impairment on the tax asset. Maybe 1 for you, Roland. Could the DKK 600 million that you impair on the tax asset, can you talk a bit about to what degree this is due to a lower expectation of earnings for the next 5 years? Or is it more due to a lower expectation of being able to transfer tax payments to Denmark? And as a second to that one, if you could talk a little bit about your journey on bringing down your tax rate over the coming years. Roland Andersen: Yes. Thanks, Casper. So it's a number of things, right? So first of all, of course, the macroeconomic and geopolitical uncertainty. And then secondly, it's also so that the European stock market authority have -- actually this year, sort of emphasized that we should double click on the usability of our tax assets. So we have done that. And then thirdly, we internally are moving or redirecting our principal company a little bit because U.S. is currently imposing tariffs on everything that comes into U.S. So if we are selling it via Denmark and then over to U.S., it may not be the smartest thing to do. So for a few operational reasons, things are being slightly delayed in combination with the authority sort of, what shall I say, indication that it would be a good opportunity to revisit this. We have taken the decision to take this impairment now. Our plans, otherwise, ERP principal company model and so on are moving forward. Our ETR will continue to go down as we have expected. And we still expect it to be below 30% in '27 and onwards. So there's no change to that. And then, of course, this is an accounting impairment. The underlying tax assets or deficits live forever. They are eternal, and there's no cash impact to this one. Casper Blom: Understood. Just to be crystal clear, can you sort of confirm that the tax asset impairment is not related to you having lower expectations of activity for the next 5 years? Roland Andersen: Yes. Operator: Your next question comes from William Mackie with Kepler Cheuvreux. William Mackie: Yes. Welcome, Toni. Thank you for making the time. As per the last comment, I think you pretty much ticked every box on my Q&A list. Maybe with the exception of organic growth drivers as you move the business to focus on growth and away from transformation. You've touched a little on inorganic and stepping up the M&A machine. But when you look across the business, I think when I look at your service growth target for this year, it doesn't look very ambitious if I incorporate some pricing assumption. So maybe more detail on how you build up the organic growth assumption there similar for pumps, cyclones, valves. And perhaps overall, how do you see your future prioritization of corporate resource to drive the organic growth? Toni Laaksonen: All right. Thanks for that, Will. So from the service point of view, I would comment that the major difference compared to PCV, our pumps, cyclones, and valves is that the service business line consists of different mix of activities. Like I said, we have upgrades, modernizations over there, site services and spare parts, consumables and so on. So it might be so that some of them are growing at a bit, let's say, faster rate than the others. And then the mix is around the forecast, which we were providing out. Like mentioned in the call, with the upgrades, we are seeing much more like fluctuation. They are more like a product business. And therefore, this impact, of course, needs to be taken into account. Then as you have been seeing, we have been taking down and divesting certain businesses and descaling the products side and derisking it. So of course, that's to some extent impacting on certain site services, which we are not doing anymore. So when taking all these aspects into account, we see the stable growth continuing in line with last year and the average should be very much in line with the last year's figure. And more details, of course, about the growth plans we will provide in the CMD presentations, then later on this year, but of course, in general, I can say that it -- this year, we are doing resourcing, facility investments and so on, which will then help the service business to be closer to the customer and to be faster with our service support. Operator: Your next question comes from David Farrell with Jefferies. David Richard Farrell: Hopefully, you can hear me. My first question is around the ERP implementation that you've highlighted for this year, DKK 100 million cost. Is there any risk to your operational delivery of that ERP system being implemented this year? Clearly, we've seen it across a number of companies where ERP implementation has created a knock-on effect in terms of their capability to deliver. Roland Andersen: I think that -- so our approach is that we go very focused ahead and we built a pilot implementation. We tested out before we move on to the next one. So that will -- there may be disruptions here and there, but it will never impact the full business line. Then it will be -- we'll find out and then we back off and use whatever we have until it's fixed. So it's not the intention to do a massive rollout and we would also be spending more than DKK 100 million per year if we rolled out an entire region in one big bang and so on. So we're moving forward a bit more controlled exactly to avoid any operational disruptions. David Richard Farrell: Okay. Wonderful. And then a follow-up question, just in terms of your R&D spend, that looks to have fallen from DKK 273 million down to DKK 184 million. Are you just being more focused in terms of where you're spending R&D now? Toni Laaksonen: Yes. So of course, we continue developing our products some of the -- and services. Some of the work is happening actually as part of the customer deliveries. So that's not classified as R&D, which is, of course, impacting on the budget. Then on the other hand, as you have been seeing, we have been divesting quite many, many businesses. That's also impacting on our R&D budget when moving forward. And then what we have been found like very useful is that when we do this collaboration with the customers in the customer interface and then developing the service solutions or the technologies in connection with them, not as a separate R&D project that has been very powerful. So a lot of cost is then allocated also to the projects and service deliveries, which we are then providing to our customer base. So maybe that explains some of the differences. Well, one example is that the major Indian project, which we are doing, there, we are operating this way when developing the solution to the end customer. Operator: The next question comes from Klaus Kehl with Nykredit. Klaus Kehl: Yes. Klaus Kehl from Nykredit. First of all, also welcome to you, Toni, and welcome to FLS and Denmark. And then a couple of perhaps borrowing financial questions to Roland. First of all, if you look at the discontinued operations, there's a big loss here in Q4 and also for the full year due to the divestment of cement. But just to be clear, is it reasonable to expect the deadline in [Technical Difficulty]. Operator: Sorry to interrupt. Roland Andersen: Are you there, Klaus? Can you hear me? Okay. Thank you for that, Klaus. I'll just rephrase the question, as I think I heard it. So you're asking whether the loss on discontinued business means that we are now done with that, and there won't be any noise in the numbers in 2026. Is that the question? Klaus Kehl: That's the question, yes. Roland Andersen: Yes. So that's the intention. That's the intention. So we have provided for what we think is going to be the final settlement with the buyer and we have also provided for the so-called transfer service agreement we have with the supplier in terms of running the IT platform until they can take over and so on. And that is expected to be roughly what we need. If there are small bits and pieces here, then most likely we'll take it in the continued business and it won't be disruptive in any shape or form. That's the intention. Klaus Kehl: Okay. Perfect. And then you mentioned that you would expect a tax rate -- effective tax rate below 30% in '27. Do you have any comments about the tax rate here in '26? Roland Andersen: No. So I refrain on that. But last year, it was 34% and then we have 33%, right, and then it's coming down to below 30% in '27. So let's see where we go. They won't be below 30% in '26. Operator: Your next follow-up question comes from the line of Lars Topholm with DNB Carnegie. Lars Topholm: Yes, I have a very quick one. So Roland, you talked about cash flow from operations this year, DKK 700 million to DKK 1 billion. Just to make clear, does that include the gain from the sale of the head office? Roland Andersen: No. It doesn't. Operator: As there are no further questions, I would like to turn the conference back over to management for any closing remarks. Toni Laaksonen: All right. Thanks for everyone for joining the call. It was a pleasure having you with us today. And a few closing remarks from our perspective. So as mentioned, we have a very solid year behind us. The company has been doing several strategic improvements. And based on them, we are now in a very good position to start the growth journey in the company's new phase of working. So now entering in this year, we have a very solid chance to gain more business, especially with our PCV service business line and then get to the black numbers with our products business. So all in all, a good situation for FLS, and we are looking for the growth journey. Thank you for joining us. Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.