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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: Hello, and welcome to the Amrize Q4 2025 Earnings Conference Call. [Operator Instructions] Also as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Aroon Amarnani, Vice President of Investor Relations. Aroon Amarnani: Great. Thank you so much, and good morning, everyone. Welcome to Amrize's Fourth Quarter 2025 Earnings Conference Call. We released our fourth quarter and full year financial results yesterday after the market closed. You can find both our earnings release and presentation for today's call in the Investor Relations section of our website at investors.amrize.com. On the call with me today are Jan Jenisch, our Chairman and CEO; and Ian Johnston, our CFO. Jan will open today's call with highlights from the full year and the fourth quarter as well as the growth investments we're making in our business. Ian will then review our financial performance for the quarter before turning the call back to Jan to discuss our outlook for 2026. We will then take your questions. Before we begin, during the call and in our slide presentation, we reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to U.S. GAAP in our earnings release and slide presentation. As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website. Any statements made about the future results and performance, plans and expectations and objections -- objectives are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those presented during the call to various factors, including, but not limited to, those discussed in our Form 10 filings and in other reports filed with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Jan. Jan Jenisch: Thank you, Aroon, and thanks to everyone for joining us today. 2025 was a very important year for Amrize as we did our successful spin-off and launch in June of the company. I have focused my time at our operations and projects across North America to see our work in action, meet with customers and hear from our people. What I see is the market-leading footprint and a performance-driven change. Together, we are delivering for our customers as the partner of choice for their most important building projects. For the full year 2025, we increased revenues by 0.9% to $11.8 billion, with $3 billion in adjusted EBITDA. We generated a strong cash flow of $1.5 billion, and our cash conversion rate was 49%. Overall, we completed the year with a net leverage ratio of 1.1x. Our strong cash conversion and balance sheet [ for right ] flexibility and firepower to fuel our growth and return cash to our shareholders. Increased our investments to $788 million during 2025 to expand production, improve efficiencies and best serve our customers in the most attractive markets. Last month, we were excited to announce our agreement to acquire PB Materials, the aggregates leader in West Texas, significantly expanding our position in this high-growth region. Delivering shareholder return. The Board has approved a $1 billion share repurchase program and is proposing a special onetime dividend of $0.44 per share payable following the Annual General Meeting. The Board is also proposing an annual ordinary dividend of $0.44 per share to be paid in further reinstallments. These dividends will be paid out of legal capital reserves from tax capital contributions, and are not subject to Swiss withholding tax. The dividend and share program are subject to customary shareholder approvals at our AGM in April. Looking to the future, we are well positioned in our $200 billion addressable market, and we have set our 2026 guidance, reflecting accelerating customer demand and profitable growth. This includes 4% to 6% growth in revenues and 8% to 11% growth in adjusted EBITDA. Let us look at some of the highlights of the fourth quarter. We saw growth -- continued growth in Building Materials. The segment's revenues grew 3.9%, and more important, we expanded our adjusted EBITDA margins by 60 basis points. Both cement and aggregates volumes were up, and we have strong aggregates pricing growth, in addition to production efficiency gains and first savings from our ASPIRE program. Within our Building Envelope business, our results were affected by soft residential roofing volumes, and we expect residential demand to gradually return in this year. Our commercial roofing margins were up, driven by resilient [indiscernible] and refurbishment. At the total company level, revenues were slightly lower, 0.4% in the fourth quarter. Let us look at some of the market trends at Amrize. We see continued infrastructure demand and an improving commercial landscape. In the commercial market, which makes up half of our business, demand is improving led by new data centers. Data construction has been and continues to be a significant bright spot as hyperscalers rapidly build out the infrastructure that will power the AI economy. This is the largest infrastructure expansion in recent history, and the United States is at the center. In fact, over 40% of global data center infrastructure investment is expected to be spent in the United States through 2030. Speed, efficiency, innovation and reliability are key in this market, making it a space where Amrize building solutions and unparalleled footprint offers strong competitive advantages. In 2025 alone, we supported and supplied more than 30 data center projects, and we will see that work accelerating into this year. For us, you have just as much opportunity to supply the data centers as we do to support the infrastructure surrounding them. In 2026, we expect the commercial market to pick up as interest rates continue to move lower, and as customers accelerate the investments in advanced manufacturing, warehousing and logistics. In infrastructure, demand continues to be steady, with federal, state and local authorities privatizing modernization projects. We see increasingly domestic focused agendas of our customers in both the United States and Canada. Each country is prioritizing national investments to build strong futures. Within residential, new construction remains soft. We expect demand to gradually return later this year as the U.S. continues to have a significant housing shortage that will drive longer-term growth. As interest rates continue to decline, we expect pent-up demand to unwind and construction activity to accelerate across all sectors. If we turn to Slide 7, you can see our strong pipeline of key projects into 2026, which are directly aligned to these growth trends. We are supplying advanced building materials, the new data center campuses like in Louisiana, we're supplying water infrastructure projects like in Dallas, airport modernizations like Colorado and a new Amazon distribution facility in New York City. We are seeing increasing demand for our high-performance Elevate MAX PVC roofing systems and are supporting a new industrial warehouse in Ontario and a significant data center project in North Dakota. We see increasing data center demand for the MAX PVC roofing system going forward. These are just a few of our project highlights, and they reflect the megatrends underpinning long-term growth in the North American market. As we move into 2026, we have a big pipe of projects, and new ones are kicking off every month. We move to Slide 8. You can see some of our important expansion projects. Our -- we completed our Ste. Gen plant expansion to support growing demand and increase our efficiency. In December, we commissioned the production expansion of our flagship cement plant in Missouri, adding 660,000 tons of production capacity per year, increasing the plant's total capacity to 5.5 million tons annually. Our Ste. Gen plant is North America's largest market-leading plant, setting the standard for high performance. If you turn to Slide 9, you can see that we are on track with key organic growth projects for this year and beyond. We're building on the success of our Ste. Gen plant expansion, we are on track with key growth projects for 2026 and beyond. To serve the booming Texas region, we are investing in our Midlothian cement plant to expand production capacity by 100,000 tons, modernize logistics and increase operational efficiency at the same time. In Alberta, Canada, we are investing in our Exshaw cement plant to add 50,000 tons of cement production capacity, supporting the growing Calgary market. In Quebec, we are investing to expand our St. Constant cement plant by 300,000 tons, and further strengthening our position in Canada and increasing efficiency of these specialties. If we turn to Slide 10 now, we see more growth projects. In Virginia, we are progressing with our new Fly Ash facility to enable the use of recycled landfill as a high-quality supplementary material. We are progressing our Greenfield Aggregates quarry in Oklahoma, adding about 200 million tons of reserves to serve the fast-growing Dallas-Fort Worth market. On the Building Envelope side, we are progressing with our new state-of-the-art Malarkey Shingles plant to expand our market share to the attractive Midwest and Eastern markets. We expect this plan to be commissioned at the end of 2026, putting us in a strong position to deliver more volumes for when residential demand picks up. If you move to Slide 11, let me talk about our latest acquisition, PB Materials, which strengthens our aggregates footprint in West Texas. We announced the acquisition earlier this year. This will strengthen our aggregates business at over $180 million in annual revenue, adding 50 years of aggregates reserves and 26 operational sites in West Texas to serve long-term demand as infrastructure, data centers and commercial investments drive construction growth. This acquisition will be EPS and cash accretive already this year. We just received antitrust clearance from the Federal Trade Commission, and now expect this acquisition to close in the first quarter of 2026. Looking beyond PB Materials, we have a strong M&A pipeline and plan to continue making smart deals to accelerate our profitable growth. Now let's move to Slide 12, our ASPIRE program, which is on track to drive value through scale and focus. We made good progress here in the fourth quarter. We have now onboarded over 450 new logistics and service providers to optimize third-party spend, and we launched more than 400 projects to leverage our scale and drive synergies across raw materials, services, logistics and equipment. We started realizing savings in the fourth quarter last year, and we are now targeting a 70 basis points of margin expansion in 2026 and $250 million of full surgeries by 2028. Let us talk about allocating capital. On Slide 13, you see our priorities, increasing investments and returning cash to shareholders. We are committed to a capital allocation strategy that invests for growth and delivers value to our shareholders. We raised our CapEx investments last year by 23%. And this year, we plan to increase our investments further to $900 million. We are on track with our M&A strategy, and we have a strong pipeline of targets, led by aggregates and with additional opportunities in [indiscernible]. Our strong cash conversion and balance sheet allows us to also return cash to our shareholders. The Board has just approved a $1 billion share repurchase and is proposing a special onetime dividend of $0.44 per share, payable following the AGM in April. The Board also proposing an annual ordinary dividend of $0.44 per share to be paid in quarterly in stores. Both dividends will be paid out of legal capital reserves and are not subject to Swiss withholding tax. I'm very pleased to have established a strong balance sheet and platform for growth that enables us to return value to our shareholders while further increasing our growth investments through CapEx and M&A. Before discussing our guidance for this year in more detail, I turn over to Ian, and he gives us more details on our financial results. Ian Johnston: Thank you, Jan. I'll begin on Slide 15 with our results by segment, starting with Building Materials. For strong volume and revenue performance in Q3, we saw continued momentum and margin expansion in our Building Materials segment during the fourth quarter as new infrastructure and data centers and [ commercial ] projects program. Revenues were approximately $2.2 billion in the quarter, an increase of 3.9%, driven primarily by higher volumes across both our cement and aggregates businesses, compliance with continued aggregates pricing growth. Cement volumes increased 3.6% and aggregates grew 3%. We continue to see steady support on federal, state and local infrastructure spending as well as growth in select commercial markets, particularly in data centers and warehousing and logistics, which we expect to continue in 2026. Net pricing for the quarter was down 0.8%, while full year 2025 was up 30 basis points on a constant currency basis. As we mentioned last quarter, we have announced price increases in 2026 [indiscernible] in our markets, driven by the positive volume trend we have seen across our cement business over the last 2 quarters and into the new year. Pricing has been phasing in since the start of the year, with full run rate in place assumed by April 1. As a reminder, our markets are driven by local demand, varying by geographic region. That said, we continue to see favorable pricing dynamics across our network, supported by our inland positions and higher growth in proactive markets. Meanwhile, aggregates pricing on a freight adjusted constant currency basis increased 3.8% in the quarter. Including freight, pricing was up 7.3%. We continue to see how the aggregates pricing, supported by strong local market fundamentals and ongoing infrastructure demand. Building Materials adjusted EBITDA was $705 million in the fourth quarter, up 4.9% compared to the prior year, while adjusted EBITDA margin was 32.6%, 60 basis points. The increase in adjusted EBITDA was primarily due to volume growth, aggregates pricing, production efficiency and early ASPIRE sales. Moving forward, we expect cement pricing to be up low single digits and aggregates pricing to be up mid-single digits on a freight-adjusted basis in 2026. Given the positive customer demand we see across these businesses, we expect volumes for both cement and aggregates to be positive this year. Before we move to Building Envelope results, it's worth noting that the first quarter is typically a seasonally slower quarter for Building Materials as we perform annual maintenance and build inventory ahead of the peak selling season. Moving to Slide 16. Turning to the Building Envelope. Fourth quarter results were $678 million, a decrease of 11.8% compared to the prior year. The decline was largely driven by softer residential roofing demands. That said, when we look across our business, commercial regrouping activity remained strong with revenues up during the quarter, as this type of spend is often nondiscretionary on discretionary for our customers. In commercial new construction, we continue to see robust data center demand. As Jan mentioned earlier, our MAX PVC product line and Elevate is addressing the higher performance specifications that many of our data center customers require. So far, we've been pleased with the traction, and expect this product will continue driving growth for us in the future. Meanwhile, we have also started to see a recovery in warehousing, distribution and logistics end markets. As interest rates and the cost of capital move lower, we expect further improvements from commercial new construction. Building Envelope adjusted EBITDA was down year-over-year, largely due to softer residential roofing demand and an $8 million increase in warranty provisions to reflect claims activity in our residential roofing business. We continue to see pressure on residential demand from higher interest rates and affordability concerns. These headwinds were partially offset by an increase in commercial roofing margins driven by resilient repair and refurbishment demand. Moving into 2026, we are focused on what we can control. We launched ASPIRE to improve our third-party cost base, a significant progress, and expect additional savings to materialize in 2026. While residential demand remains soft, we expect strong demand in commercial R&R, to continue and lower interest rates to support a broader recovery across new commercial roofing [indiscernible]. As a result, we expect low single-digit volume growth in commercial roofing. In residential, we expect flat volumes for the year, the second half being better than the first half. So far, Q1 customer demand has improved compared to Q4. Looking out further, we continue to see a long tailwind of growth in commercial R&R activity, driven by an aging commercial roofing stock that needs to be replaced. We are also encouraged by recent policy developments that aim to address affordability, which can support new construction and help bridge the housing. And as I mentioned earlier, our focus is on operations and efficiently running the business through different economic environments. We continue to see a path towards best-in-class EBITDA margins. Moving to Slide 17. We had a strong cash flow performance during the year. We generated approximately $1.5 billion, representing a 49% cash conversion rate on adjusted EBITDA. This is in line with our historical average cap conversion of approximately 50%. 2025 free cash flow was lower due to net income and increased organic CapEx growth. Cash flow is a key performance indicator for all of the P&L leaders across our business. Our free cash flow performance in 2025 demonstrates the strength of our working capital management and resilient underlying cash generation of our business. Turning to Slide 18. We are very pleased with the progress we made post-spin to further strengthen our financial position during our first year as Amrize. At the end of the year, our net leverage ratio was 1.1x, delivering on our commitment of less than 1.5x on a year. Net debt at the end of the year was approximately $3.3 billion, down over $1.5 billion from the end of the third quarter as we generated strong cash flow at the end of the year. Turning to Slide 19. In 2025, we established a solid foundation to deliver growth and return capital to shareholders in 2026. As of December 31, we had $5.3 billion in senior notes, nearly $6 billion of available liquidity and a low leverage ratio, providing us with ample firepower to accelerate growth this year. We are also effectively managing our interest expense and expect run rate to come down in 2026 compared to 2025 as we continue to optimize our capital structure. We expect our effective tax rate to stabilize in the range of 21% to 23% in 2026. Corporate costs are expected to be approximately $200 million this year, a modest step down from 2025. This sufficient capital structure and operating model allows us to continue generating significant cash in 2026 and drive profitability. This model also lays the foundation for our capital allocation strategy, putting us in an excellent position to announce our shareholder return plan while continuing to invest in organic growth projects and value and pursue value-accretive M&A. This speaks to our financial power, firepower and our business and flexibility of our balance sheet. With that said, I will pass it back to Jan to cover our 2026 outlook. Jan Jenisch: Thank you, Ian. When we look at the guidance of 2026, I'm confident that this will be the year of accelerating demand from our customers. The commercial market will continue its improving trends as lower interest rates support new products, adding to already strong demand for data centers, but also for other projects in logistics and manufacturing facilities where we have a lot of sideline projects. We have a good demand here, which will unfold throughout this year. In infrastructure, the demand will continue to be strong as governments prioritize modernization. Only in the residential market we will remain soft, with improvements rather towards the end of the year. We expect pricing and volumes in Building Materials to be key growth contributors in 2026. Cement pricing is expected to increase low single-digit percentage range, while aggregates pricing is expected to increase mid-single-digit percentage range. The market trends and increasing customer demand will drive volume growth both cement and aggregates. Building Envelope, we expect low single-digit growth in commercial roofing volumes, while we see flat volumes in residential roofing, with demand improving in the second half of the year. Very important for us, the ASPIRE program is a key priority and will deliver significant results in 2026. We are now targeting a margin expansion of 70 basis points and are on track with our goal of $250 million in synergies through 2028. Based on this momentum from our customers to all the programs under our control, we have set our 2026 guidelines or guidance with 4% to 6% revenue growth and 8% to 11% EBITDA growth. Both numbers include the contribution from our recent PB Materials acquisition. With that, I'll now pass back to Aroon and to open up our question-and-answer session. Aroon Amarnani: Thank you, Jan. Operator, we're now ready to begin the question-and-answer session. Operator: [Operator Instructions] Our first question is from Adrian Huerta from JPMorgan. Adrian Huerta: Can you hear me? Unknown Executive: We can hear you. Adrian Huerta: Ian, Jan and Aroon, congrats on the results. My question has to do with the cement prices. I want to understand a little bit better why this confidence on getting a low single-digit price increase for the year? I mean just from comments from other companies, it seems like a traction on price increases at the beginning of the year is not going as expected. What are you seeing on your own markets and where you see better pricing traction? And where do you think it might be a bit more difficult to get the increases that you're looking for? Jan Jenisch: Look, we are confident and we're going to see a price increase for our Amrize products this year. I think we made good progress in this. And we have -- I have nothing negative really to report here. Adrian Huerta: And if I may ask just a follow-up question. On the ASPIRE program, good to see a larger target on savings this year than the run rate of 50 basis points, now with a target of 70 basis points. Any more color on where are these savings, which should be somewhere around $100 million between SG&A or by segment within Envelope or Materials? Where most of the savings coming? Jan Jenisch: No. Great. Good question. Look, I mean, I'm very excited. As you know, we have over $7 billion of cost to third party, and we haven't done really the synergies. So we have doubled the company just in the past few years from $6 billion to $12 billion, and we have not really run that synergy program. So very exciting now to have savings. Of course, we have it in logistics. We have it in raw materials. And we have a lot of services, which are provided to us for maintenance, for equipment and other things. So we made great progress. You can see already in the fourth quarter results in Building Materials that we had quite a significant impact from the ASPIRE program. And this is just the start. So we are very confident to see a significant contribution this year from ASPIRE, and that's why I also guide this to be fully margin accretive. Operator: Our next question is from Anthony Pettinari from Citigroup. Unknown Analyst: This is [ Asher Stone ] on for Anthony. And just in terms of compare and contrasting the way you're looking at 2026 versus maybe how you're thinking 3 months ago, what are you seeing in terms of project backlog, cancellations, et cetera? And then on top of that, your positive volume growth outlook for '26, how does that break out between your different end markets between commercial, infrastructure and residential? Jan Jenisch: Look, I'm very happy how things are accelerating with all our customers. You have to see that the strongest market segment in last year was infrastructure, where we have this program is running and we are very happy to supply a lot of those projects. However, at Amrize, we do 50% of sales. We do have our commercial customers, and that's really key, and that market has really picked up from mid last year. And then you can see it from some indexes like [indiscernible], where we have increasing -- the number of standing projects, and we can literally see it with our customers. They have a backlog of projects, not only for data centers but for logistics, for infrastructure, around logistics centers for manufacturing facilities, and this will unfold. We have no canceled projects, a lot sideline and -- slowed down. And now we see that coming. The 2 cuts in interest rates has helped a lot. Many people -- most people always speak about the mortgage rates and the interest cuts. But actually, for us, the interest rate is more important for our commercial customers. And this is why I'm very excited for this year, and I -- we will see an accelerating demand and number of projects from our commercial customers. Operator: Our next question is from Trey Grooms from Stephens. [Operator Instructions] Trey Grooms: Got it. Can you hear me now? Operator: Please go ahead. Trey Grooms: Okay. Sorry for that. Just on the acquisition, maybe if we could touch on that. PB Materials, aggregates-led business with some ready mix. It's included -- I believe it's included in the full year guide. It's doing $180 million in annual revenue. Any other details maybe you could give us there around PB? The -- I understand it's in West Texas and geographically where it stands. But anything around the -- maybe the production or tonnage or how much it's adding to the overall volume being positive this year in aggregate? Any other details that maybe you could give us? Jan Jenisch: No, no, thank you. Great question. And look, we have a great slide on Slide 11. And I think what's key here for me is, first of all, the size of the acquisition, over $180 million. We're going to close that very soon now in Q1. So very excited now when the season really starts that we have this business with us. It's already a very well margin product business which has now significant synergies. I like that -- we bought a little map there where you can see how well that fits with our footprint in Texas, especially also our cement terminals and our [indiscernible] service all those sites. We have about 26 sites -- operating sites and 13 are quarries and another 13 are ready-mix sites. So it's a well-balanced business, and the other market leader around 30% of market share. So I'm very happy we can onboard now then with our very successful business in Texas. Operator: Our next question is from Bryan Blair from Oppenheimer. Bryan Blair: Ian, you had offered pretty good color on the visibility in commercial and infrastructure project outlook. I was hoping we could drill down a little bit on the residential side. And we know that there's weakness anticipated and [ understandably ]. So over the near term, looking to the back half, there's some degree of recovery against relatively weak comps. If we look at the low versus high end of your guidance, are you willing to quantify what is baked in specific to residential market activity through the back [indiscernible]? Jan Jenisch: No, I wish I could share with you, but I think what's exciting about residential, while it's only around 20% of our business, 50% of that is repair and refurbishment. And this gives us this resilient demand from the residential customers. And that was slowed down last year. We had much less storm impacts like we had in years before, but this has really slowed us down, especially in Q4, but we believe this will normalize this year again. So to the question, I'm quite confident that within refurbishment, we will see significant growth for us in 2026. New residential, that needs to be seen if that sees a recovery towards the end of the year or let's say, a start of recovery. But in our numbers, we are not planning for any growth in new construction residential. But very confident about repair and refurbishment. Operator: Our next question comes from Pujarini Ghosh from Bernstein. Pujarini Ghosh: One follow-up on the guidance. Please, can you confirm that you have not baked in any future potential acquisitions in the revenue and EBITDA growth guidance for 2026? And could you give some color around the CapEx spend that you are going to do in 2026? And how much new capacity addition in terms of the overall portfolio does these new projects bring in? Jan Jenisch: Thank you for the question. So the guidance of 4% to 6% revenue growth and 8% to 11% EBITDA growth is organic, including the PB Materials acquisition. We are very confident about these numbers. You have to see we have now this accelerating demand from our customers and our order books, which are on a good level. And then we have a lot of self-help. So -- and we see the pricing this year. We have the ASPIRE program, and we have the first impact from our new growth CapEx programs. So very excited to start to run our flagship cement plant in St. Louis at higher volumes and then the other CapEx will come. I think at this point, we don't give a break, which is maintenance CapEx and growth CapEx. But you can see, as we come somewhere from below $600 million to $900 million this year, you see already that we are more than doubling our growth CapEx. And this is a good thing. We have a lot of low-hanging fruits to debottleneck, to expand in new markets. This is a new plan of Malarkey to enter the Eastern markets or is it new terminals to distribute our cement and aggregates. And of course, we are excited to debottleneck some of our best-performing cement plants to increase the volumes, but also to further improve the efficiencies. Operator: Our next question is from Yassine Touahri from On Field Research. Yassine Touahri: Just one question regarding your Building Envelope business. We see that QXO has acquired Beacon and is aiming to substantially increase its margin and also double its EBITDA. And I think one of the lever is to work on changing the relationship with roofing product suppliers, including MIs. Could you give us some color on what has happened over the past year in terms of your relationship? And what has been the impact of these developments so far on your commercial strategy and potentially even your overall strategy as a group? Jan Jenisch: Look, we are partnering with the distributors in roofing, and they are very good companies. A company you mentioned, there are another 2 big nationwide, the roofing distributors. And then there are many local business in roofing distribution. I think what is important for us is that we are not focusing on a distributor itself. We are focusing on the end customer. So we have the ambition to build the best roofs. So all what we do is we focus on innovation, providing the best systems brand, everything. We are offering the training for the roofing contractor, we're offering the warranty, we're offering the roofing inspection. So when you look at our business, the distributor has an important function to make sure our product is on time on the construction side. But beyond that, we just focus on the best roof, the best service, the best warranty for the end customer. And we do -- I think we do about 30% of the roofing business is direct, about 70% goes through distribution. So I have nothing to report here. I know -- there are some distributors they like to talk a lot about their future. But I can just tell you, we partner with all of them. And we make decisions who is our partner in certain geographic markets. So I think we're in a very good spot here to further increase our market share and expand our systems for roofing. Operator: Our next question is from Arnaud Lehmann from Bank of America. Arnaud Lehmann: My question is regarding your Q4 free cash flow generation, very impressive, around $1.7 billion, I believe. Is it the normal inflow, in your view, considering seasonality? Or was there any specific effect related to the merger or to accounting that we need to consider? Jan Jenisch: No, I think it's nothing special, Arnaud. I think we have -- I mean our cash flow conversion from EBITDA is around 50%. This is what we're also targeting for the future. So I'm very happy. In this first year of Amrize, we just started the company in June last year. So we're very happy to -- that we were able to deliver, also considering our significant increase in CapEx spend, very happy to, nevertheless, deliver such strong cash flow so you, I think, should expect from us that this will continue in the years to come. Operator: Our next question is from Julian Radlinger from UBS. Julian Radlinger: Jan, Ian, Aroon, any color you can give investors on building Envelope earnings in 2026? I know you're guiding to overall positive volumes, commercial up a little bit; resi, more flat. But what about margins? If resi roofing volumes are as you expect in commercial as well, should we expect Building Envelope EBITDA to be up as well in 2026? Jan Jenisch: Yes. I mean, look, when you look at our guidance that we want to grow the EBITDA, 8% to 11% this year, you can imagine that this is true for both segments, for Building Materials and for Building Envelope. And we have strong programs in place, also with ASPIRE to increase our efficiencies in Building Envelope as well. We have pricing in place. And our target is to increase price over cost in Building Envelope in 2026. Operator: Our next question is from Tom Zhang from Barclays. Tom Zhang: Yes. Could you maybe just elaborate a little bit on the volume and materials? I think you said volume will be a growth contributor for the Materials business, both cement and aggregates. Is that a sort of low single-digit, mid-single-digit number? And is that predominantly driven by the self-help and organic growth that you have as you ramp Ste. Gen? Or do you think that's more a sort of market growth number? And I guess maybe just you link to that, can you talk a little bit about how you plan to approach the Ste. Gen ramp up? Obviously, it sounds like commercial and infra demand is okay, resi a little bit weaker, but it's still a decent amount of capacity to try and bring to the market. If you can just talk about the strategy of how you'll introduce those volumes? Jan Jenisch: I think it's important if you run Amrize and you guide the year and you give the targets to your sales force, to all the people responsible. I very much like to focus on ourselves. I don't make a big market prediction. So like the Ste. Gen expansion is based on our customers demanding the product. And this is how we work. And this is why we come up that we believe our volumes will increase in '26. And this is all I can say at this point. We make this all for the customers and we have good order books and again, nothing negative to report here. Operator: [Operator Instructions] Our next question is from Carlos Caburrasi from Kepler Cheuvreux. Carlos Caburrasi: Just wondering on CapEx, if you could give us some color regarding the expected investments during the rest of decade? I'm just wondering if we should expect a further acceleration from the $900 million in 2026? Or is it going to be kind of flat or a front-loaded performance that will normalize as we get closer to 2030? Jan Jenisch: I'm very happy to invest in the business. So I was happy that we have the opportunity. There are a lot of low-hanging fruits on the CapEx side, and we are doing all the good projects. So that adds up to around $900 million CapEx spend this year. I think this is already a significant increase, especially when you focus on the growth CapEx, this means we more than double the growth CapEx this year. And I think this is in a good spot. And then we will take it from here. Those projects we also introduced here, I think we have 2 slides on like 6 of the most important projects for us. And that also keeps us busy because you not only have to execute this and commission the plan or whatever the CapEx is about, you also have to commercialize the volumes into the market. So I think we are on a great track to fully support our growth ambition for 2026, and then we will see later this year what the CapEx is for the years to come. But I think $900 million is a good number for us. Operator: Our next question is from Keith Hughes from Truist. Keith Hughes: Can you hear me now? Operator: We've got you. Keith Hughes: There we go. A question on pricing on the roofing markets. Can you talk about in the fourth quarter, what pricing was like in residential and commercial and what you're expecting in your guidance for calendar '26 on pricing? Jan Jenisch: And for us in roofing is a bid to an aggregate cement, we like to talk straightforward about price. In roofing, it's a bit different. We like to talk about price of cost and as we shared a bit in the presentation, we were very satisfied with the commercial roofing margins. They increased. So we had a positive price over cost in commercial roofing. And we had quite a disruption in the residential market, which I think will be fully stabilized already in the first month of this year. But nevertheless, there was quite a big disruption you saw in the fourth quarter and also maybe a bit softer pricing. I think that pricing even will come back now fast already this year. So for the full year, I mentioned this before, we are targeting a positive price over cost growth in the Building Envelope side. Operator: We have no further questions at this time. I will now turn the call back over to Aroon Amarnani for closing remarks. Aroon Amarnani: Thank you, operator. Thank you all for joining us for our fourth quarter and full year '25 earnings call. We look forward to speaking with you after we report our first quarter '26 results in the coming months. Thanks, everybody. Operator: This concludes the Amrize Q4 2025 earnings conference call. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter 2025 Pitney Bowes Earnings Conference Call. Joining us today are Chief Executive Officer, Kurt Wolf; Chief Financial Officer, Paul Evans; and Director, Investor Relations, Alex Brown. [Operator Instructions] Please be advised that today's conference is being recorded. It is my pleasure to turn the call over to Alex Brown, Director, Investor Relations. Please go ahead. Alex Brown: Good morning, and thank you for joining us. Included in today's presentation are forward-looking statements about our future business and financial performance. Forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from our projections. More information about these items can be found in our earnings press release, our Form 10-K and other reports filed with the SEC that are located on our website at www.pb.com and by clicking on Investor Relations. Please keep in mind that we do not undertake any obligation to update forward-looking statements as a result of any new information or developments. Also included in today's presentation are non-GAAP measures. Specifically, EBIT, EBITDA, EPS and free cash flow are all on an adjusted basis. You can find a reconciliation for these items to the appropriate GAAP measure in the tables attached to our press release. We have also provided a slide presentation and a spreadsheet with historical segment information on our website. With that, I'd like to turn the call over to Kurt. Kurt Wolf: Good morning, and thank you for joining us. I trust that everyone has had a chance to read our earnings release and my quarterly letter. As such, I will keep my comments brief. First, I'd like to welcome our recently announced executive hires. It's exciting to see the level of talent we are now able to attract to Pitney Bowes. I'm particularly pleased to have Steve Fischer join the company. Steve is an accomplished bank leader, something that stood out during the recruiting process. I look forward to working closely with him to maximize the value of Pitney Bowes Bank. Moving to the fourth quarter. Our results demonstrate the progress we're making in transforming Pitney Bowes. While we did have some tailwinds, our financials were strong absent those benefits and reflect the growing strength of our business. In closing, we are rapidly progressing through our transformation. In 2025, we significantly strengthened the foundation of our business, taking meaningful steps in upgrading leadership, simplifying our structure, streamlining processes and eliminating costs. All of this is putting us on strong footing as we pivot to a focus on profitable growth and beginning our external review with qualified advisers during the second quarter. With that, let's open the call for questions. Operator: [Operator Instructions] And our first question will come from Aaron Kimson with Citizens. Aaron Kimson: Kurt, can you expand on the additional market uncertainty and geopolitical challenges you mentioned in your letter as reasons for the wider guidance range? Kurt Wolf: Yes. Aaron, thanks for the question, and thanks for joining the call. Yes, some of the things that we -- I guess, I would point to, one is, as we've seen in the past, there's been issues with government shutdowns. I think there's no guarantee that doesn't happen again. As we talked about during our Q3 call, that certainly affects some of our performance in the SendTech space. More broadly, obviously, there's questions about a change at the Fed, other -- there's some uncertainty about where the direction of the economy is going. We're a pretty noncyclical business. However, I would really point to our marketing mail aspect of the Presort business. which is more economically sensitive. So while we don't expect anything major, we are cognizant that there could be potential headwinds related to both of them, but not necessarily expect them. Aaron Kimson: Okay. That makes sense. And then I wanted to ask on the Presort business as well. You mentioned new business wins and no churn since June of 2025. I think you had a nice win in the state of Pennsylvania that was well publicized in 4Q. Are boomerang customers and new wins generally reflected in Presort volumes immediately? Or is there a ramp time where Debbie and her team get agreements, but the volumes come at the end of a pre-existing contract with another vendor and you have some visibility into the ramp? Kurt Wolf: Usually, they come in pretty quickly. But what I would point to is there's definitely a sales cycle that can be pretty long. So we got more aggressive starting in June of last year, and it's taken time to fill that pipeline. And I think at this point, the pipeline is pretty full start to finish. And one thing I'd point to is the customer wins that we had in Q4, we've essentially met that level of wins this half the way into Q1 of this year. So you can see as that pipeline is filled that we're getting more and more wins on a more rapid basis. And then finally, in terms of flow-through to the financials, it does take a little bit of time. We have to add multiple customers. We have a lot of major losses from the first half of last year that we're trying to eclipse. So it's just going to be a process over the next few months and quarters. Operator: And our next question is going to come from Anthony Lebiedzinski with Sidoti. Anthony Lebiedzinski: So just a quick follow-up. Kurt, you said that the government shutdown had some impact in the quarter. Any way you guys could quantify what that impact may have been? Paul Evans: Anthony, it's Paul Evans. Yes. Look, we were impacted on that. That was hardware purchases. It sort of pushed it into the subsequent quarters. So we saw most of it in Q3 last year. I'm not sure we go down to that level of granularity to give that. But I mean we are susceptible to government shutdowns. Anthony Lebiedzinski: Understood. Okay. So Kurt, in your shareholder letter, you mentioned being more aggressive with pricing on Presort. So just wondering if you could further expand on that as far as how perhaps aggressive you would be with pricing to win back clients? And what type of EBIT margins should we think about as we look at the Presort business going forward? Kurt Wolf: Yes. I'll let Paul speak to the EBIT margins. But just broadly speaking, what I'd highlight on that, I know there's been questions about what's going on in Presort. To be quite honest, I think we got caught flat footed early last year. Industry margins went up, and pretty much everybody in the space did what you would expect, which is to go out and be aggressive to try to win new customers with the higher margin levels. We unfortunately were not in the same boat. So we did face a lot of headwinds in terms of customer losses and having to give concessions to our customers, but we weren't necessarily aggressive going after customers in the space. And that's really what's happening now. So -- when I -- when we talk about being aggressive on pricing, a lot of it is trying to pull in new business. We've already made the required concessions to our existing customer base. So it's really about winning new customers. Paul Evans: And Anthony, to add to that, I think if you sort of target low to mid-20% range for EBIT margins and -- but it's also important to note that we are the low-cost provider. So we can sustain that. So when we come out and say we're going to get more aggressive on our pricing strategy, and we can certainly afford to do that. Anthony Lebiedzinski: Got you. Okay. And then my last question before I pass it on to others. So as we look at the free cash flow guidance, you guys add back restructuring payments to your definition of free cash flow. So how much restructuring payments are you guys assuming in 2026? Paul Evans: It is true, yes, we do add it back. And the reason we add it back is it's not really representative of our business going forward. I'm just trying to think if we've offered that level of detail in the past on that. Maybe I'll circle back to that payment. I'm not sure we've offered that level of detail. Operator: Our next question is going to come from George Tong with Goldman Sachs. Keen Fai Tong: Going back to the Presort business, in terms of winning back customers and being more competitive on pricing, given the comps ease pretty materially in the second half of this year, would you expect that by then you would return to positive growth in Presort? Paul Evans: I think we'll see -- it will be an easier comp year-over-year on growth, but we've got to get past Q1, Q2, which are going to be tougher comps for us. But again, as we said before, we stopped the decline mid last year. We've Kurt sort of empower Debbie Pfeiffer to be more aggressive on pricing. And as Kurt also mentioned, there is a sales cycle to this. So we're certainly getting some traction. But I think second half of the year will be a better comp for us. Keen Fai Tong: Okay. Makes sense. And then in the SendTech business, how do you envision the revenue performance over the course of the year? If there's any bifurcation of performance in the first half of the year, for example, versus the second half, would you expect the second half to be stronger within the SendTech business? Paul Evans: Let's start, first for the year, we expect a top line decline in the business. But if you -- to split apart the year, we believe second half of the year will be stronger than the front part of the year. Kurt Wolf: Yes. And George, just look at sequential year-over-year throughout 2025, you can see there's a trend that is essentially getting more positive every quarter, and that ties back to what we've spoken about in the past with the IMI migration. And again, we expect that to continue. So we can't guarantee that each year-over-year comparison is going to get better quarter by quarter, but that should -- we expect to be somewhat the trend on a go-forward basis, at least through 2026. Operator: And the next question will come from Jasper Bibb with Truist. Jasper Bibb: I was just curious how you're thinking about the underlying mix in SendTech in '26. I think the letter mentioned you didn't get the growth rate you wanted in the shipping technology piece. Could you maybe frame for us how you're thinking about the growth rates in the shipping technology business in '26 versus, I guess, maybe the core hardware business and everything that's associated with the mailing meters, et cetera. Kurt Wolf: Yes. And we can essentially cut it into 3 pieces. We have the mailing meter business. We have the shipping business -- shipping software business. And then we have the bank, which currently is reported as a part of SendTech. So with respect to the mailing meters, again, the IMI migration certainly created some serious headwinds in 2025. We expect that to slowly ease. In addition to that, we've had a bias in the past of always focusing on growing markets, which does not apply to the mailing meter business. So one of the things that Todd has really identified since joining the company is we probably aren't doing as much as we could to slow that rate of decline. So I think there's a lot of efforts going to be put into slowing the rate of decline. So that's what I'd say about the mail meter business. With respect to shipping software, Todd has done some great work there. We have a vast array of product offerings, and we're trying to get more focused on how we do that. And then also we're trying to figure out where do we have the best competitive advantage so we can better hone our go-to-market strategy. I think it's going to take some time to fully identify exactly what that looks like. But I will say that we're not cautious or slow in how we go about this. Todd is aggressively already testing some concepts in the market. So we'll have more in future quarters on that. And then with respect to the bank, as you saw with the hiring of Steve, that's really unlocking the opportunity for us to focus on growth in the bank. So too early to say just yet, but that's an area we're really excited about, but we will obviously show caution given the risks associated with the lending space. So hopefully, that gives you some good color. Jasper Bibb: No, that's very helpful. Maybe just one on capital return. So pretty aggressive pace of buybacks in the fourth quarter. It seems like that maybe slowed a little bit in the first, call it, 1.5 months of '26. Just wanted to get an update on how you're thinking about the balance of share repurchase and the dividend and other priorities in '26? Paul Evans: Yes. So Jasper, this is Paul. Look, I think the keyword on share buybacks and debt buybacks is opportunistic. I mean, we're very opportunistic in Q4. We're just -- we're very disciplined on how we look at this. I think I'll say it on here. I mean, we're committed to a net debt of EBITDA of around 3x. But we definitely see that our stock continues to be undervalued, and so we will continue to buy our stock. Again, relative to dividends, that's a quarter-by-quarter decision. This quarter, we decided the best use of our capital is to continue to look at debt buybacks and share buybacks. Operator: And our next question will come from Curtis Nagle with Bank of America. Curtis Nagle: Just wanted to follow up quickly on the free cash flow guide. It came in nicely above where the Street was. In terms of the components, yes, maybe we can return to that restructuring point later. But are you including the net investments in the loan receivables from the cash from investing line? Because I think the sort of comparable or the component of that in cash from ops is in there. So just wondering kind of how all that rounds out and is that in the guide? Paul Evans: A little bit on free cash flow. A big component of free cash flow is Presort prepayments. We don't control the timing of that per se, but we had a very strong Q4 on that despite not fully controlling it. So that's definitely a larger component for us when we look at that. And as far as the detail on the amount of restructuring in there, I'm just not sure that that's a number that we've given out in the past. Operator: And the next question comes from Dillon Bandi with Northcoast Research. Dillon Bandi: Looking at that target of 3x net debt, is that a 2026 target? Or are you guys kind of looking more into 2027 or longer term for that? Paul Evans: I think on how we define net debt, we actually came in end of the year slightly below 3x net debt to adjusted EBITDA. I think it's just a good overall target to be. There might be times we were slightly above it on the quarter or slightly below it. But I think for this business going forward, that's the right place to be. Kurt Wolf: Yes. And Dillon, just to add to that, Paul has highlighted we're going to be opportunistic in our capital allocation. And we've said on previous calls, we're cognizant of how the market views us and what levels of debt they think we can manage. So we believe we could have a higher ratio than that. But as long as the market doesn't believe it, we're going to follow the market's lead on that. So what I would say is by being opportunistic in the capital markets, we may go above, we may go below, but that's sort of our -- the mean or the point we want to keep returning to over time. So we may go above for a bit, return back or go below for a bit and then return back. Dillon Bandi: Got you. That's really helpful. And then, Kurt, in your letter, you talked about SendTech exiting its low point of the product cycle. Has there been any fundamental change in that business, whether that's renewal rates or price competition? Or do you guys just overall feel confident about that? Kurt Wolf: Yes. No, I would just say, overall, we feel confident we have -- we believe we have the best products in the market. I think the market agrees with that in terms of buying habits. We're doing increasingly well in the federal space and the government space. And again, it's just -- it really is -- there was a low point tied to the IMI migration recovering from it. We are recovering from it. And there's fundamentally nothing that's really changed as far as we can see in terms of the rate of decline that we've historically seen should change going forward. Operator: [Operator Instructions] And our next question comes from Justin Dopierala with Domo Capital Management. Justin Dopierala: So do the new hires you've announced signal that you're no longer looking to sell the business as part of the strategic review? Kurt Wolf: No, no, not at all. Again, what I'd highlight is with these additions, and I hope everybody recognizes the level of talent we brought in here. it's going to be important no matter what the future of the business is. These are great executives bring a lot to the table. No matter where this company goes, they're going to be a great asset going forward. So that is in no way a comment on the future path of the company. Justin Dopierala: Got it. I know you touched a little bit on restructuring. In Q4, it was a lot larger than I was expecting. I would assume in 2026 that these costs drop closer to 0. I don't know if you can say what was the largest restructuring cost in Q4? Paul Evans: Just headcount reductions. Justin Dopierala: Okay. So that was essentially onetime cost? Paul Evans: In '26. But most of it will -- it's already captured in the '25 number. Justin Dopierala: Perfect. Also, it appears that your dominance in the Presort space has contributed to a much lower price for Presort customers. I was just wondering how does the USPS view this with respect to workshare discounts? And wouldn't the post office also benefit considerably if they simply privatize the entire Presort function to companies like Pitney Bowes in the future? Kurt Wolf: Yes. I don't think we're going to comment on postal relations. All I'd say is we have an amazingly constructive relationship with the post office. With respect to workshare discounts, the whole rationale for those being introduced is -- and it's common throughout the government, whether you look at Medicare -- with Medicare Part C there's always an interest in figuring out private public partnerships, and that's exactly what these workshare discounts are. And then in terms of -- I think you were asking about pricing. Yes, I completely agree. In the end of the day, one of the big benefits of the workshare discounts is not only does it save money for the post office, but a lot of those discounts end up getting passed on to customers. So it creates a lower cost for the end user of postal services, which helps keep volume going through the postal system due to lower costs. So I think it's a win-win for the post office, but I can't speak on their behalf. Justin Dopierala: Absolutely. Got it. And I think you briefly touched on this. But looking ahead over that maybe the next few years, what do you think are the top growth opportunities that you're seeing? Paul Evans: I think I'd say in Presort, obviously, given that we're the low-cost provider in the market, our pricing strategy, we should see growth there, but that will take a little time. We're seeing more inbounds on acquisition opportunities. So we will definitely look at that. The renewed focus back on mail and investment where we have to, to slow the decline, that, in a sense, is a form of growth. And then shipping, I mean, the team that Kurt and Todd's assembled there, we like our chances on how to evolve. And then finally, with Steve coming on to run the bank, I think there will be definitely opportunities there for us. Justin Dopierala: Okay. And just, I guess, lastly, analyst coverage from yesterday seems to amplify that there's still a huge opportunity to educate people on the fundamentals of the Pitney Bowes business. Are you planning to have an Investor Day in 2026? Kurt Wolf: Yes. Yes, we are. And I certainly agree with you on the education level. But as Paul said, we're incredibly opportunistic in the -- in our allocation of capital. I think when we sit here and look at it, I think we're trading on a levered basis of 4x free cash flow. So -- and I think our -- we did have a decline in revenue that was larger than typical last year, which I think maybe creates some concern from shareholders. But again, a lot of that is tied to customer losses in Presort that was entirely preventable and shouldn't recur going forward. And then in SendTech, it was tied to the IMI migration. But to quote Warren Buffett, when the price -- if you buy hamburgers and the price of hamburgers goes down, you should be happy. So we're not worried about short-term price movements. We just are opportunistic about how we handle them. Our belief is in the long-term outcome for the company. Operator: And at this time, I'm showing no further questions in the queue. I would now like to turn the call back to Kurt for closing remarks. Kurt Wolf: Yes. Thank you, everybody, for joining us. I appreciate your continued investment in our company. Hopefully, everybody has seen the results of Q4 show some of the progress we're making. I know everybody is eager to understand and see when we get to growth. But what we hope people appreciate and I think the right investors will appreciate. We're doing everything we can to build a strong foundation. And as that foundation is built, it's going to be -- we're going to be much more successful in our pursuit of growth going forward. So thank you for your continued investment, your continued faith in us. And we will do our best to continue to deliver strong results for you. So thank you all. Operator: Thank you for participating. You may now disconnect.
Operator: Ladies and gentlemen, welcome to the Straumann Group Full Year 2025 Results Conference Call and Live Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Guillaume Daniellot, CEO. Please go ahead, sir. Guillaume Daniellot: Thank you, and good morning or afternoon to all of you. Thank you for attending this conference call on the Straumann Group's Full Year 2025 results. Please take note of the disclaimer in our media release and on Slide 2. During this conference call, we are going to refer to the presentation slides that were published on our website this morning. As usual, the discussion will include some forward-looking statements. As shown on Slide 3, I will start with the 2025 performance overview. Isabelle will then cover the financial details. And afterwards, I will share strategic updates and our outlook. We will be happy to answer your questions at the end of the presentation. And let's move directly to Slide 5. Thanks to a strong full year performance, I would like to start by highlighting that we have created more than 7.3 million smiles in 2025. In other words, together with dental professionals, we've supported around 10% more people improving their oral health and confidence than in the previous year to keep delivering on our purpose, unlocking the potential of people's lives. Now let me share how we have progressed in 2025 by moving to Slide 6. 2025 has been a very dynamic year, and I'm very pleased with the results we delivered. We achieved a strong growth with revenue reaching CHF 2.6 billion, representing an organic growth of 8.9%, supported by a very strong fourth quarter despite the uncertainties around the VBP in China. On a reported basis, growth in Swiss francs was 4.1%, which represents a translation impact of around CHF 100 million of revenue. Despite these currency and tariff headwinds, we intensified our focus on efficiency, generating gains that supported our improved profitability. Our core EBIT margin, excluding currency headwinds, increased year-on-year to 26.5%, which corresponds to 25.2%, including currency effects. These results clearly demonstrate the resilience of our business model and the disciplined execution across the group. On the innovation side, 2025 was a year of record launches. Starting with the Premium Implants segment, innovation remains the primary growth driver. It is the foundation on how we outperform the market and gain share. In 2025, these strategies translated in a record year of new product launches, reflecting both the depth and speed also of our innovation pipeline, iEXCEL is an excellent example. We have already sold more than 1 million iEXCEL implants, making it the most successful implant launch in our history. This performance demonstrates not only strong market adoption, but also the relevance of our innovation for clinicians worldwide. In parallel, we have seen a strong momentum of our SIRIOS X3 intraoral scanner since its launch in October 2025, significantly expanding the clinician base being connected to our Straumann Group digital ecosystem. On the transformation side, the partial transition of the ClearCorrect manufacturing to Smartee is well on track, boosting our value proposition and supporting scalable and profitable growth in orthodontics. Overall, those very promising progress gives us confidence as we enter 2026. Looking ahead, we expect another successful year with continued market share gains and high single-digit organic revenue growth, along with further profitability expansion of 30 to 60 basis points in the core EBIT margin at constant 2025 currency rates. Now let's have a look at the regional performance on Slide 7. Thanks to our large geographical presence, we delivered strong growth across the year and in the fourth quarter, especially looking at the strong comparison basis of 2024. Let's start with EMEA, both our largest region and biggest growth contributor for the group. EMEA performed particularly strong in the fourth quarter, leading to a full year organic growth of above 11%. This was achieved across premium and challenger implantology, digital solutions and orthodontics, which supported our continued market share gains across all markets. In North America, performance improved through the year, reaching a strong organic growth of 6.8% in the fourth quarter. This sequential acceleration is particularly significant as North America remains a strategic market for the Straumann Group. This progress reflects the impact of a strengthened leadership team, sharper execution and the contribution of recent product innovations, all of which are driving more consistent performance and stronger market traction. Growth in the fourth quarter was supported by implantology, digital solutions alongside continued momentum in the DSO segment, underscoring improved operational focus and disciplined execution. Moving to Asia Pacific. The region delivered solid underlying organic growth of around 7% for the full year, driven by strong momentum outside China, where we achieved a growth of more than 10%. Countries such as India, Japan and Southeast Asia continued to perform well, supported by challenger brands, digital workflow adoption and strengthened education activities. In China, performance during the second half of the year was significantly impacted by a softer patient flow and distributor destocking behavior, particularly linked to the upcoming VBP process. Despite the seasonal VBP impact, we believe that the underlying fundamentals of China remain intact. With the ongoing ramp-up of our Shanghai manufacturing campus, we are strengthening local production capabilities and supply chain resilience, positioning us very well for the next VBP ramp. Latin America once again delivered very strong performances with a high double-digit organic revenue growth of around 18% for the year, driven by Neodent, continued market expansion of our Straumann premium brand and fast adoption of our new digital equipment SIRIOS. Growth was strong both in the full year and in the fourth quarter and the region contributing 17% of the group's total organic growth. With this, I will now hand over to Isabelle, who will take you through the financials in more detail. Isabelle Adelt: Thank you, Guillaume, and good morning also from my side. It is a great pleasure to walk you through our financial highlights of 2025. Let me start on Slide 9 with how we translated our strong growth in 2025 into solid cash generation. We delivered revenues of CHF 2.6 billion, which translated into a core gross profit margin of 70.1%. This is a strong result in a year marked by elevated investments and external headwinds and driven by our productivity improvements and the favorable product mix. The strong gross profit flowed through to profitability. As Guillaume mentioned, we achieved a core EBIT margin of 25.2%, including currency effects or 26.5% at constant 2024 exchange rates. This was driven by disciplined execution, targeted OpEx measures and operating leverage and demonstrates our ability to protect and improve margins despite FX headwinds and tariff-related pressure. At the bottom line, our core net results reached CHF 478 million, corresponding to a net margin of 18.3%, supported by the quality of earnings and effective cost management across the entire group. Importantly, the strong operating performance translated into cash. We generated a free cash flow of CHF 290 million, representing 11.1% of net revenue and influenced by tactical working capital management decisions as well as one of the highest investment years in our history. This also marks the ending of a large manufacturing investment cycle for future growth. Overall, this clearly shows that we not only delivered strong growth in 2025, but also successfully converted this growth into profitability and cash generation, fully in line with our guidance. With this overview, let us now look at the individual line items in more detail, starting with gross profit on Slide 10. Compared to the prior year, the margin was only slightly lower with 70.1%. This development was mainly driven by 2 factors: Firstly, the impact from U.S. tariffs; and secondly, the ramp-up of production at our Shanghai campus, which weighed on margins during the year. These effects were partly offset by our strong product mix and productivity improvements across the group. Overall, the gross margin development reflects the strength of our portfolio mix and our ability to further automate our production while maintaining a high and resilient margin profile. With this, let me now turn to Slide 11 and discuss EBIT in more detail. Foreign exchange effects had a visible impact on our profitability. While revenue growth differed by around 480 basis points between local currencies and Swiss francs, only around 130 basis points of FX impact flowed through to the EBIT line. This reflects the effectiveness of our local-for-local production strategy and the structural improvements we have implemented across our supply chain, which significantly reduced the sensitivity of margins to currency movements. In addition, cost saving and efficiency measures contributed around 120 basis points to the EBIT margin improvement. These measures were implemented across the organization and focused on operating discipline, prioritization and productivity while continuing to invest in our strategic priorities. Overall, EBIT development shows that we were able to translate strong growth into improved profitability, even in an environment characterized by currency volatility, tariffs and cost pressure. Looking ahead, it is important to note that the ClearCorrect Smartee partnership was only announced in October and, therefore, has not yet had a meaningful impact on EBIT margin in 2025. As part of the production transition during 2026, we expect to see positive effects on margin, especially in the second half of this year. Against this backdrop, let me now take you to the net results on Slide 12. The financial result was slightly lower compared to the prior year. This was mainly driven by the effects of currency hedging, reflecting the volatility in foreign exchange markets. Taxes were somewhat higher as a larger share of profits was generated outside of Switzerland, which is also a consequence of our local-for-local production strategy. As in previous years, we present core results in addition to IFRS results to facilitate a like-for-like comparison. In 2025, noncore items amounted to around CHF 120 million after tax. A significant part of these noncore items related to restructuring measures, which are directly linked to strategic decisions we have taken to strengthen our operational setup. We transferred implant volumes for the Chinese market from Switzerland to our new manufacturing campus in Shanghai. And furthermore, restructuring costs were incurred in connection with the transformation of the orthodontic business. In addition, noncore items include acquisition-related amortization and special items, legal costs as well as impairments related to the planned relocation of the group's headquarters to our new campus in [indiscernible]. From here, I will move on to the cash flow and investments on Slide 13. In 2025, we generated a free cash flow of CHF 290 million. This is particularly noteworthy given the very high level of investments during the year. Capital expenditure amounted to CHF 223 million, an increase of CHF 56 million compared to the previous year, making 2025 one of the strongest investment years in the group's history. These investments were focused on clearly defined strategic priorities. They include the expansion of production capacity, most notably the ramp-up of our Shanghai manufacturing campus, Medentika and the new third production site in Curitiba as well as continued investments in innovation, digital infrastructure and operational efficiency. Despite this elevated CapEx level, cash conversion remains solid. This reflects strong operating performance and working capital management across the group. Overall, this combination of high investments and strong free cash flow demonstrates our ability to invest for future growth while maintaining financial flexibility and balance sheet strength. With this, I will now move to Slide 14 and the proposed dividend. Based on our strong performance and solid cash generation, the Board of Directors proposes a dividend of CHF 1 per share, which is subject to approval at this year's Annual General Meeting. This represents an increase of 5% compared to the prior year and corresponds to a core payout ratio of around 33%. This is in line with our capital allocation priorities to maintain and increase dividends with earnings. With this, let me now briefly touch on our efforts and progress in sustainability on Slide 15. Before I turn to the details, let me briefly highlight that the annual report published today includes our sustainability report prepared in line with CSRD requirements for the first time. This reflects our commitment to transparency and regulatory alignment. In 2025, we continue to make progress across our key sustainability priorities, closely linked to our strategy and operations. As part of our long-term growth strategy, education remains a central pillar for the group. During the year, we trained more than 370,000 dental professionals worldwide with around 42% of all education activities taking place in low- and middle-income countries. This shows our continued efforts to broaden access to care and enables the adoption of modern efficient treatment approaches across regions. On climate, we continue to move towards our net zero ambition. We further reduced our Scope 1 and 2 CO2 emissions by around 17% compared to 2021 and 98.5% of our electricity consumption now comes from renewable sources. This reflects the fact that renewable electricity is increasingly embedded as an operational standard rather than an aspiration. In addition, our local-for-local manufacturing strategy contributes not only to resilience and efficiency, but also to sustainability by reducing transportation needs and strengthening regional supply chains. Overall, sustainability at Straumann Group is closely integrated into how we operate the business and supports long-term value creation for patients, customers and society. With this, I will now hand back to Guillaume for the strategy update and outlook. Guillaume Daniellot: Thank you, Isabelle. Let me now focus on our strategy update, starting with highlighting the massive market opportunity we are facing on Slide 17. First, within our total addressable market of more than CHF 20 billion, we have gained market share across key segments, increasing our total share from 12.5% to 14% within the last 12 months. While we have once again outperformed, this total addressable market still offers us a very significant opportunity to grow in the short and midterm future. Our growth playbook has 2 major dimensions. First, we want to continue to strongly perform in our core market segments, Implants and Regenerative through innovation, digitalization and education. Secondly, we are focusing on transforming our business in key market segments to capture the huge growth opportunities. Then let me start on the left-hand side with the performed dimension. In implantology, our core segments, we are continuing to strengthen our leading position. The market size is around CHF 6.1 billion, and our market share increased to above 35%. This reflects consistent outperformance of the market driven by innovation, digital workflows and strong execution in a still underpenetrated market segment. Regenerative is closely linked to implant surgery with a market size of around CHF 1.3 billion and a market share of around 13%. This is another area where we continue to expand our positions, supported by our strong clinical heritage and portfolio breadth. These segments represent our core strength. This is where we have strong brands, deep clinical relationships and a proven innovation pipeline. Now on the right-hand side, the focus is on transformation. In clear aligners, the market is sizable at around CHF 4.9 billion, but our market share remains below 5%. This clearly highlights the upside potential. With the ongoing large transformation of our orthodontics business, supported by our technology partners such as Smartee, we are very confident in the future of our business repositioning to grow and scale efficiently. Secondly, digital equipment such as SIRIOS scanner and 3D printers represent another attractive segment with a market size of around CHF 1.8 billion. In this area, we have made excellent progress in 2025, achieving strong growth and a market share of above 10% now, and we see further acceleration ahead driven by a very differentiated and competitive equipment and workflows. Finally, CAD/CAM prosthetics is a large market of around CHF 5.7 billion, where our market share is still below 5%. Here, we see an interesting opportunity to accelerate growth by disrupting workflows through chairside solutions. We are very confident that this perform and transform strategic playbook, combining our core strength together with new technologies, which are radically changing our competitiveness in key new segments, will deliver consistent short- and midterm growth opportunity. With this, let me now turn to Slide 18 and walk you through how we execute against this playbook. Our strategy is focused around 3 strategic priorities, each addressing a specific growth engine of the group. First, we aim to expand our leadership in implantology by driving further penetration in an underpenetrated market through innovation, digitalization and education supported by our strong premium and challenger brands. Secondly, we are transforming our orthodontics business, building a stronger value proposition in a more scalable, digitally enabled model that allows us to grow efficiently and profitably together with strong partners. Third, to unlock the market potential of digital equipment and the CAD/CAM prosthetic market, we are working to disrupt chairside prosthetics by simplifying and accelerating workflows, leveraging our SprintRay strategic partnership and our open cloud-based digital ecosystem. What connects these 3 priorities is a common execution logic. Across all of them, innovation definitely supports our value proposition differentiation. Digitalization delivers the expected efficiency and education enables adoption and opening up wider the market segments. Let's now move to Slide 19. Before we go into the details of each pillar, let me highlight the clear principle differentiating our solutions. We are leveraging our cloud-based ecosystem to combine the best products with the best workflows to deliver practice efficiency and superior clinician experience. In today's dental market, product performance alone is no longer sufficient. Clinicians expect not only innovation at the implant or aligner level, but also complete, efficient and integrated workflows that support them from planning to treatment and case follow-up. This combination is what enables us to differentiate and consequently gain market share across segments. With this foundation in mind, let us now go into the first pillar of more detail, starting with implantology on Slide 21. I would like to highlight once again the fact that the implantology market remains yet significantly underpenetrated, offering a vast growth potential. Spain, with its large number of surgically trained dentists and a dynamic DSO presence driving increased affordability, serves as a valuable benchmark for evaluating average implant treatment penetration. Using Spain as a reference, we see significant potential for growth in both developed markets such as Italy, France, Germany, but also especially U.S. as well as in emerging markets like India. We are very confident that market penetration will continue to rise. This development is driven by increasing patient awareness of dental implant treatments and constant growing number of surgically trained dentists who can place implants in all geographies and more affordable treatment costs. With this context, let me now go into the first growth driver, starting with innovation on Slide 22. In implantology, innovation is the key driver to expand penetration and gain market share. In 2025, we launched iEXCEL, our next-generation implant system. Since its launch at IDS in Cologne, we have already sold more than 1 million iEXCEL implants, making this the most successful product launch in our history. IEXCEL combines unique features such as our premium surface SLActive and our Roxolid material with a simplified system architecture. One connection, one prosthetic diameter and one single surgical instrument set enabled to treat a wide range of indications with easier handling. In parallel to excellent clinical outcome, this simplicity is critical. It reduces complexity for clinicians such as inventory management, improves efficiency in daily practice and supports the adoption of more advanced treatments such as immediate loading and full-up solutions. Importantly, iEXCEL is not only driving growth within our existing customer base, it is especially a strong conversion tool, driving new customer acquisition. Premium competitors implant users on the one side, but even more importantly, it is now also a strong tool to switch clinicians using value systems. With this, let me now turn to our leading global challenger brand, Neodent on Slide 23. Neodent continues to be a strong growth engine driven by innovation and geographical expansion. In 2025, we sold around 5 million Grand Morse implants, underlining the strong acceptance of this platform across markets. Grand Morse is a very powerful system. It combines a modern implant design with a broad indication range and is also available in ceramic materials. Neodent is now established as a leading global challenger brand and continues its dynamic expansion into new geographies and growing market share in the Challenger segment. A key milestone ahead will be the registration of Neodent in China, which we expect to be done by 2027, opening up a significant additional growth opportunity. Overall, Neodent plays a critical role in complementing our premium portfolio and driving global expansion in implantology. Let's now turn to Slide 24. Embedded in our innovation process, digitalization is what turns products into a comprehensive and efficient customer experience. With Straumann AXS, we have built a successful open cloud-based platform that connects implantology workflow end-to-end across planning, surgery and restoration. The adoption of Straumann AXS has scaled up very rapidly. Within 18 months, the platform has grown from 0 to more than 15,000 active users, clearly demonstrating strong acceptance and relevance in daily clinical practice. What drives this adoption is the integration of complex workflow. Solutions such as co-diagnostic surgical planning and Smile in a Box are fully embedded into AXS, enabling faster, standardized and predictable implant treatments. Importantly, Straumann AXS also strengthened customer engagement. The platform drives a recurring usage and creates a continuous interactions between clinicians well beyond a single product transaction. Let me show you a concrete example how digitalization amplifies innovation and turns it into a differentiated customer experience on Slide 25. By combining intraoral scanner, the iEXCEL implant and a specifically designed anatomic healing abutment for the digital Straumann AXS platform, we created a fully connected workflow that significantly improves efficiency and accelerates treatment, and the impact is measurable. With the Fast Molar workflow, patient treatment time can be reduced by up to 26 weeks, clinical churn time by around 50 minutes and the number of appointments can be reduced from 5 to 2, enabled by the fully integrated digital nature of the solution. Importantly, it also strengthens the economics. By accelerating treatment and standardizing workflow, we increased the pull-through of original abutments and restorative components, driving higher recurring revenue per case. For clinicians, this means higher productivity and predictable results. For patients, fewer visits and faster restoration. And for Straumann, stronger consumables growth and scalable value creation. Moving up to Slide 26. To drive access to care, education is critical to make our solutions accessible to more clinicians and patients. In 2025, we delivered more than 10,700 education programs worldwide and trained over 370,000 dental professionals covering implantology, digital workflows and advanced indications such as pull out procedures. Education plays a critical role in increasing penetration. It enables more clinicians, particularly general practitioners to adopt implant treatments and to use digital workflow in a predictable and efficient way. With this, let me now move to the second pillar of our playbook for growth, the transformation of our orthodontics business on Slide 28. Through the Smartee and DentalMonitoring strategic partnership announced last quarter, we are transforming our Clear Aligner value proposition and accelerating our growth capabilities. On the product side, it means the launch of a scalloped trimline option in May 2026, together with mandibular repositioning devices later in the year, allowing us to address a broader range of orthodontic indications and more complex treatment needs. Equally important is the transformation of our production setup. As planned, EMEA and Asia Pacific aligner production is now transitioning to Smartee manufacturing, enabling constant quality, faster turnaround time and lower cost of goods. The first customer feedback on quality and service levels has been very positive so far. Together, these innovations and production capabilities are strengthening our ability to compete and our potential to scale and win market share in the Clear Aligner segment looks very promising. Moving to Slide 29. Digitalization is also here a critical enabler to scale orthodontics and broaden access to treatment, particularly for general practitioners, which is the focused growth segment for us. Through ClearCorrect remote care powered by DentalMonitoring, we enable remote treatment monitoring. This reduces the need for in-office visits and supports a simpler and more efficient patient journey while building the confidence of general practitioners to achieve consistent quality clinical outcomes. Digital workflows also support case conversion for general practitioners, which is one of the most important aspects of market growth. Tools such as before and after simulations make treatment outcomes more tangible, helping clinicians explain cases more clearly and increasing patient acceptance. In addition, the integration of CBCT data simplify treatment planning and enables more comprehensive diagnostics, especially for more advanced cases. This further expands the range of orthodontic treatments that can be addressed digitally by general practitioners. Overall, the digital capabilities simplify workflows, improve efficiency and create a faster and more compliant patient journey, supporting clinical success and scalable growth in orthodontics. And to ensure broad adoption of these workflows, education plays also here a critical role, which I would like to comment on Slide 30. Lowering barriers for general practitioners is critical to accelerate adoption and enable scalable case growth. Digital workflows and advanced aligner technologies only create value if clinicians are confident in using them in daily practice. With the ClearCorrect orthodontics, we provide structure and modular education tailored to different experience levels and treatment needs. This allows clinicians to progress step by step and build clinical skills over time. In addition, we complement education with ongoing online and clinical treatment support, ensuring that clinicians are supported beyond the initial training and through to the treatment process. With this, let me now move to the third pillar of our playbook for growth, disrupting chairside prosthetics on Slide 32. Digital equipment is an attractive and growing market in its own right and at the same time, a strategic enabler across our entire portfolio. Across implantology, orthodontics and prosthetic, there is always the same starting point. It all begins with an intraoral scan. Intraoral scanners are the entry point into our digital Straumann AXS platform. They capture the data that connects treatment workflows and platform across all segments. And this is why the intraoral scanner is strategically important for us. With our iOS portfolio, we cover the full market spectrum. We offer premium solution through our partnership with FreeShape, mid-range solutions with our SIRIOS X3 and entry solution with SIRIOS. This breadth allow us to address all customer segments and significantly expand access to digital workflows. This strategy has delivered very strong results in 2025, and we are confident to continue this momentum in 2026. We are seeing strong market share gains in intraoral scanners, allowing us to outgrow the digital equipment market. Each scanner placed increases adoption of Straumann AXS, our open cloud-based platform. And this expands our active user base, strengthen engagement and drives recurring usage across implantology, orthodontics and prosthetic. Let me now show you how this applies to prosthetic on Slide 33. What you see on this slide is a clear example on how we translate digital integration into speed, efficiency and recurring revenue while transforming the chairside prosthetics segment. With the Straumann Signature Midas 3D printer fully integrated into Straumann AXS, we enable automated crown design and production directly at the chairside. Clinicians can produce crowns, inlays or onlays in less than 10 minutes, significantly accelerating treatment and reducing dependency on external lab processes. This workflow is supported by our innovative chairside resin portfolio developed by our partner, SprintRay, delivered in patented capsule format. This format simplifies handling, improved consistency and ensures predictable clinical outcomes. Importantly, this is not only about speed, it fundamentally changes the economics. For clinicians, this means faster turnaround time, higher productivity and more control. For patients, it means especially fewer appointments and same-day restoration. And for Straumann, it means recurring revenue streams embedded in the workflow and the Straumann AXS ecosystem. For us, the integration of scanning, design, production and material into one seamless workflow creates a recurring revenue model driven by ongoing resin and consumable usage linked to every printed case. Finally, moving to Slide 35 to unlock those many opportunities and execute flawlessly on our growth playbook, the player learner culture is a key asset. We operate in a world that is increasingly volatile, uncertain and complex. In this environment, speed, agility and learning capability are decisive. At Straumann, our high-performance player-learner culture brings this all together. It encourages entrepreneurial thinking, accountability and continuous improvement, while at the same time, fostering collaboration and learning across functions and regions. This culture enables us to innovate closer to customers, take faster decisions and execute our strategy consistently across markets. And importantly, this is not an aspiration, it is measurable. Our employee engagement score of 80 reflects the high level of commitment and energy across our organization and represents the top score amongst globally leading companies. This is a major robust competitive advantage and allows us to turn strategy into execution and execution into results. With this, let me now turn to our outlook for 2026 on Slide 37. We entered 2026 with solid momentum, supported by our strong market position in a total addressable market of more than CHF 20 billion. While market conditions are expected to remain volatile with ongoing macroeconomic and regulatory uncertainties, we're expecting positive impact from our new key strategic initiatives, especially in the second half of the year. In China, the impact from the VBP process is expected to support growth momentum as the year progresses. And in orthodontics, the ClearCorrect transition to Smartee is advancing as planned and will contribute positively over the course of the year. With this timing effect, we are very confident in our outlook. For 2026, we expect to deliver high single-digit organic revenue growth alongside a core EBIT margin improvement of 30 to 60 basis points at constant 2025 exchange rates. With this, we are happy to move to the Q&A session to answer your questions. As usual, we kindly ask you to limit the number of your questions to 2 in order to give other participants a chance to post their questions within the available time. Chorus Call, can we have the first question, please? Operator: The first question comes from Doyle, Graham from UBS. Graham Doyle: Maybe, Guillaume, just firstly, on sales phasing for the year, I know it's early in the year, it's a bit hard to fully describe it given what's going on in China. But it does look like the way EMEA and the U.S. finished that maybe those regions are a little bit more H1 weighted. So is it reasonable to think that this is a relatively balanced year in terms of group growth for organic? And then secondly, just on free cash flow, should we expect a good step-up from H1 just as some of that inventory unwinds and maybe the restructuring charges fall as well? Guillaume Daniellot: Yes, Graham, for the top line, we will have obviously some different effect also from a regional basis. But when you look at Asia Pacific, where China is obviously a major impact, for the time being, assumption is that VBP will take place in the second quarter. That's an assumption as there is not yet any official statement by the China authorities, but the latest information that are coming up seems to demonstrate that it will be rescheduled around this time frame. As we have a very strong comparative base in 2025 in the first half and the low in the second half, I would say 2026 is going to be the reverse of 2025. We are going to have obviously still a weaker first half in China and Asia Pacific for the first half and a much stronger one in the second half when we look at the start of the year. When it comes to North America, we expect progress to continue, and we expect in our guidance, let's say, we have tabled a stable macro environment where we believe that our execution is going to continue to produce positive results, then that's the way we are seeing that our growth rate for 2026 will be more weighted on the second half than the first half. Isabelle Adelt: Let me take your question on cash flow, Graham, a very easy answer to that. Yes. What are the big building blocks when we look at it? It's CapEx, it's net working capital and it's the noncore items we're looking at. So CapEx, as outlined earlier, we said we are coming out of one of the biggest CapEx cycles we've had in the history of the group. By end of this year, we will have doubled our capacity in terms of how many implants we can produce this year. So the last big project to be finished is our third factory in Curitiba during this year, but you can already expect a significantly lower CapEx level for 2026 compared to prior year. Same holds for working capital. As you might recall, we did a couple of tactical decisions to increase our inventories to mitigate for the U.S. tariffs last year, and this is likely to unwind. So we will see structurally a little bit lower working capital in 2026. And last but not least, I think last year, we have seen a lot of effort we put into putting the right structures for our future growth. so namely preparing the orthodontics transition as well as enabling the China campus and making sure volumes can be produced where they are needed. And this is why we expect to see significantly lower noncore items in 2026 as well. Operator: Next question comes from Hugo Solvet from BNP Paribas. Hugo Solvet: Just Guillaume, maybe for you on North America and the U.S. in particular. Can you help us understand the balance between volumes and price mix in Q4? And just a word on current trading. Do you continue to see that sequential improvement in the U.S. as we start 2026? And maybe on a follow-up to Graham's question on the phasing, but more on margin this time, maybe for you, Isabelle. Can you quantify how much of margin pressure should we expect in H1? I think historically, you were more 55%-45% H1, H2 EBIT weight and that was more 50-50 in 2025. So would 2025 be a better proxy? Or would it be even more skewed towards H2? Guillaume Daniellot: Hugo, when it comes to U.S. volume price, it has been mainly volume growth. We had some price impact, but really small. Then I would say 80% to 90% of our development came from volume and share gain. When it comes to what we start to see in Q1, we see the trend still being positive with our iEXCEL still being very appreciated and helping us to gain share. Actually, something which is important, I tried to allude that in the script, not only on premium users, but also on value system users based on the efficiency gains delivered by the digital workflow and the digital equipment. Our DSO development is also positive. We have seen the DSO starting to reinvest on the marketing activities in order to keep then the patient flow at the same level. While it's still not very dynamic, at least we have seen a really good stability over the past month. That's why we believe that at least the beginning of the year should also see North America being able to keep delivering this kind of performance. Isabelle Adelt: And regarding your question for the margin distribution, Hugo, so I think this follows a little bit the same pattern Guillaume already elaborated on for the sales phasing. Just to help you think about how the margin distribution could look like, for me, there are 3 big building blocks. On the one hand side, of course, it's the China business and the VBP. There's still a little bit of uncertainty regarding the timing. But what Guillaume already explained that last year, we had a super strong first half year in China and a little bit weaker second half of the year, this will look the other way around this year. The second big building block definitely, the ortho transformation. As we speak, we are in the process of transferring production volumes to Smartee for the EMEA and APAC region and winding down our own production line in Germany, which, of course, means the benefit will be bigger in the second half of the year that the first, where we have transition costs and the wind-down costs included. There's still a little bit of double cost. And last but not least, which we shouldn't forget is the phasing of the tariffs. From all we know to date, the amount we expect to see is a little bit the same we had last year. But last year, it was more biased towards the second half of the year since it was only announced in April, and we didn't see a big effect in the first half. And this year, the amount will not differ significantly for the full year, but will be a little bit more biased towards the first half year since we will have a more continuous flow of tariffs from what we know today. Operator: The next question comes from David Adlington from JPMorgan. Mr. Adlington removed his question. Let's take the next one from Susannah Ludwig from Bernstein. Susannah Ludwig: I have two, please. I guess, first, could you just give a bit more color in terms of the strength of the EMEA performance in Q4 and maybe what you're seeing in Q1 so far? How sustainable are you thinking about sort of the acceleration in performance there? And then second, on prosthetics, that's a business that historically, the dental labs have controlled and dental offices have very strong relationships with their labs. So what do you see as the catalyst for sort of the disruption of that relationship? Dentists often tend to be a creature that have a bit of inertia. What do you see as sort of driving the shift to chairside? And what role will the DSOs play here? Guillaume Daniellot: Yes, Susannah. Then on those two questions. EMEA is obviously a very, very solid trend. We had an exceptional Q4 first, because I think we have very underlying capability to continue gaining share, and we are leveraging all the innovation that we have at our fingertips. And I think the EMEA team is doing very well on all the different franchises, and this has to be highlighted. I think in premium, in challenger, also digital and orthodontics is really driving then the very solid performance. Now -- the fourth quarter has been also boosted by some January '26 price increase announcement that has been done, and we know that there have been some also high digital equipment orders that have boosted performance. And I would say we have always said that the EMEA regular high performance is going to be between high single digit to low double digit. And I think this is what we expect to see also in 2026. And it will be balanced between the different quarters, saying that potentially the first quarter will be a little bit lower based on the strong finish. But all in all, it's going to be just a balance in all the different quarters that will still see us delivering strong contribution of EMEA with regard to our total 2026. When it comes to prosthetics, you have a very good point that the lab relationship with the dental practitioner is very strong. And why do we believe that such chairside 3D printed crown can have some disruption capabilities in the future for one very good reason, we believe, is patient expectation. If you can say to a patient that you are going to solve his decay or his crown issue in one appointment, there will be a lot of benefits on the patient side and obviously, a lot also on the clinician side because it will save significant number of appointments. Will it be a fast disruption? No, because we all know that dentistry is rather conservative. But as soon as practitioner will have experienced this same-day dentistry being able to gain significant efficiency in posterior crown restoration like this, we do believe that the share of the business will not go to the lab anymore. Obviously, DSO will be able to push those workflow because of the efficiency and profitability gain that they can generate. But it will be all across the market based on the significant appointment savings that could be generated. Then to be seen step by step, but I think all the elements are here now to be able to allow the same-day dentistry that will, I personally think, going to take significant share in the future. Operator: The next question comes from David Adlington from JPMorgan. David Adlington: Yes, just -- I may have missed it, sorry if you addressed it. But just in terms of your margin guidance, just wondering if I could check what you're assuming in terms of savings from Smartee or whether you're looking to reinvest those? And then secondly, again, I think you may have touched this and I just missed it, but in terms of the tariff impact in the second half, I just wondered if you could quantify that and how you see that evolving through 2026? Isabelle Adelt: Sure to take that. So I think -- I mean, margin guidance for Smartee. So David, I think what we explained a little bit before, we have a very clear plan how we want to turn the orthodontics business profitable over the next 2 years. And I think the first big step will be this year really working on our COGS position, working on our profitability position by transferring the big production volumes we have in EMEA and in APAC to Smartee. But how will this look like? So on the one hand side, we're currently closing down our own production site in Germany to be finished by end of Q1. So you will potentially still have the COGS in Q1, but then at the same time, transfer to Smartee at a much lower cost per liner than we had before internally. And this will ramp up over Q2, so we can see the full effect in Q3 and in Q4. And then I think in addition to that, obviously, we expect to see a little bit higher growth rates for the ortho business as well, being a positive impact to the margin in the second half because we are planning, as Guillaume said, to launch the scalloped shape trimline during Q2, which will substantially complement our portfolio. And this is why we will, for sure, already see a step-up in terms of margin in the first half, but the bigger impact we would see in the second half of the year once the cost for our own production is out and Smartee is fully ramped up for those 2 regions. And then for tariffs, I think to give you an indication, we expect the total amount from all we know today, so assuming tariffs will stay where they are to be at a similar level as 2025, where we saw a total hit of around about CHF 20 million in our P&L in the COGS line. We expect that number to be pretty similar, maybe a little bit higher in 2026. But saying this, it was very biased towards the second half of the year in 2025, especially in July when we did all the shipments, but then in the second half of the year when we had the high tariffs, whereas in this year, you can rather think about it as distributed half and half, so half in the first half of the year, half in the second half of the year. Operator: Next question comes from Hassan Al-Wakeel from Barclays. Hassan Al-Wakeel: I have two, please. So [indiscernible] up on the margin guidance and why this isn't higher given your commentary on Smartee halving the loss, [indiscernible] loss in '26? And is the guidance is that of the uncertainty that you still see in China? Or is there anything else to highlight in terms of the margin building blocks? And then secondly, on China, is the second half realistic? And what do you have in your guidance from the potential continuation of destocking beyond this quarter and the [indiscernible] can also ask what the margin headwind that you're baking China VBP in 2026? Guillaume Daniellot: We are going to try to answer, but you have been breaking up on your questions. And let me try to summarize your questions and try to answer that, and you will let us know if this is in line. First question is, what are the different building blocks we are seeing on our margin. I think as Isabelle explained and what we discussed already quite a lot is, on the one side, we have that negative impact of tariffs. That will be almost the same, a little bit more than potentially 2025, but that will be then having an effect more in the first year -- in the first half than the second half because of the fact that it has been, in 2025, impacting our second half mainly. The second side that we said is about Smartee, where as our manufacturing now is for Asia Pacific and EMEA translating to Smartee, we will see the effect over the year starting from March because we are going to finally close our German plant, as just Isabelle said, there in the end of the first quarter. and something also to express on Smartee, there are 2 effects for our margin. The first one is the immediate COGS effect that will be obviously direct. And the second one will be the operational leverage that will come over the next 18 months, where we really are expecting significant growth that will help us to drive then significantly improvement in profitability as well with regard to all our SG&A costs that are going to be absorbed in a much higher way with the double-digit growth that we're expecting and that we are seeing at this point. But we are having also additional elements in our building blocks that we are counting and that are going to have positive effect on our profitability. The first one is obviously the manufacturing of the Shanghai campus, where we are allowing to have all our China volume being manufactured at a lower COGS that have been obviously planned in our guidance. We have also another one, which is in part looking at the growth of our digital equipment, where we are transitioning some significant part of our volume from third-party products to our own SIRIOS intraoral scanners, meaning that we can also benefit from a higher profitability. And last but not least, we are continuing to do operational leverage in the overall organization, thanks to the growth that we are delivering. Then that's where our improvement from a profitability standpoint is coming from many parts that are allowing us to be pretty confident about delivering then the improvement that we have been presenting. To the second side, I think if I understood well, you were talking about or you were asking about what is baked in our guidance somewhat with the current VBP being in Q2 and the destocking -- potentially further destocking of distributor. What we believe is that the destocking of the distributor is going to be less important than the second half of 2025 because they are -- it seems from our information in between 1.5 to 1.8 months of stock right now than at a pretty minimum level to operate. Then while it's going to be still slow from a patient standpoint, we don't believe that the destocking will be massive anymore. Now obviously, we are going to be still against a very strong comparison base. What you have to remember is our first half in China has been in the 20-plus percent growth. And we are going obviously to see much more than the weak market than what we have seen in the first half. Then it's much more this challenging comparison base that are going to provide, I would say, China still in the negative territories from our perspective that will strongly be reversed for the second half. Then we have baked more or less this dynamic in our guidance for our high single-digit growth for 2026. Operator: The next question comes from Daniel Jelovcan from ZKB. Daniel Jelovcan: The first one is also on Clear Aligners. Can you elaborate a bit on the geographical growth? It was probably double digit in all areas, but I'm not sure, that's why I'm asking. First question. Guillaume Daniellot: Yes. Daniel, Clear Aligner has been very dynamic, and we had double digit in 2025 again. Significantly in Latin America and EMEA, rather flattish in the North America, which we expect this to change with a better consumer sentiment. And we have been, since the partnership with Smartee, also seeing some interesting uptick in Asia Pacific and especially in the 2 markets where I think we will be able to drive interesting volume in the future, which are Japan and Australia. And that's why we are pretty confident to get on track with our Clear Aligner also operational leverage in the future, looking at the current growth trend that we're having on this business segment. Daniel Jelovcan: Okay. Great. And the second -- last question is the development in Spain. As you elaborated, you mentioned a lot in the past, DSO is pushing penetration up because of the low price and so on. I would wonder if you can add a bit more details. So what implants do the Spanish use? I mean, is it Neodent or is it premium or both? I'm talking about the DSOs. And also when you look at your penetration chart, is the DSOs, you see evidence that the DSOs are also pushing growth in other underpenetrated countries. I mean, have in mind the DSOs are not allowed in Germany, for instance, or maybe there is a change coming up. So yes, that's the question. Guillaume Daniellot: Yes. Spain has been a very good example on how DSO has grown the market through opening up a segment of patients that was not thinking that they could afford implant treatment. And with rather aggressive marketing activities, presenting, of course, implant treatment at a lower level, but especially pushing the patients to go through the door to get presented with the diagnostic, actually, it's a question of spending prioritization. Then if you do an implant, then you might not buy the latest, I don't know, computer or iPhone or whatever. And that's a little bit what we have seen for countries where most of the oral care or dental care are full copayment by the patient, which is the case in Spain. Then this has been one of the significant effect DSOs have had on those patient group that was not going to a dentist anymore, but are suddenly going to DSO because they feel that it's actually more affordable than they were thinking about. Then those DSOs are mainly using challenger brands and our Neodent system, but some are still using premium as well, especially because of the efficiency driven by the digital workflow that are not fully yet available on the challenger brands. We are expecting this to continue developing in other geographies. And one of the good reasons why we have also seen China developing so strongly after VBPs has been because DSOs have been able to invest and scale clinician education and also doing investments in equipment to be able to place more implants. Then DSOs are a very strong partner for us for continuing to open the market and expand the market in most geographies because they are also the ones that are investing in technology that are allowing efficiency and then potentially more affordable pricing, that's what we see the future. And that's one of the reasons also why we are working in co-creation with a lot of DSOs to develop specific solutions that are adapted to the strategy they would like to pursue. Daniel Jelovcan: That's great. And also congrats for this achievement in '25 in these challenging times. Operator: The next question comes from Julien Ouaddour from Bank of America. Julien Ouaddour: I have only one. But I just want to understand the level of maybe [indiscernible] conservatism that you have in the margin guide this year. Just to explain myself. So I mean, usually in a given year, you have some operating leverage that you expect to grow high single digits. You should have some -- I think you mentioned strong growth in EMEA, like North America also probably improving, which should help you on the mix side. In the call, you mentioned digital and Shanghai production to be a tailwind as well. So it seems the swing factors are the savings from ClearCorrect and like the VBP. Have you changed your expectation in terms of the VBP? I think in the past, Isabelle said China is expected to have roughly a flat margin. So is there, I mean, any different assumptions in the guidance? And in terms of savings, do you still expect the losses from ClearCorrect to have in '26, which should clearly give you a nice boost. So just trying to understand really the 30 to 60 bps of margin expansion. It's pretty -- I mean, it's pretty good already, but I wanted to check if there is any level of prudence there. Guillaume Daniellot: I can start with answering. Again, on the ClearCorrect, as we expressed, it has been a large transformation we started in August. And honestly, we are really pleased on where we are right now. We have made a very strong progress being able to connect manufacturing for 2 major regions with no hiccup, having really strong already feedback from customers from turnaround time, from quality levels and still using, again, all the ClearCorrect specific technology. That means we are using all our ClearCorrect portal. We are using all our specific ClearCorrect material. We are having still a very clear differentiated branding by leveraging the technology of Smartee. From a manufacturing standpoint, we are well on track, being able to -- we have started to transfer this manufacturing, meaning that with operational leverage, the plan that we have for end of 2027 to be breakeven of ClearCorrect should be really achieved. At least for the time being, we are pretty positive about this midterm perspective that we have. Then looking at regions like North America doing better and being able to deliver the stronger growth than the 4% we had in 2025 and backing for higher growth rate for 2026 will also deliver then higher profitability, thanks to the higher pricing that we have there versus the other regions. Solid EMEA will also contribute well that we can generate operational leverage from those geographies. Then I think we already expressed manufacturing in China, the fact that we have our digital equipment that are going to be more in-house than third party and the fact that we are also going to have the latest for us high CapEx year because we have been investing a lot into profitability -- into capacity, sorry, in the past years. I think it is making us, yes, I would say, confident about our capability to deliver higher gross margin and higher EBIT moving forward in 2026, but also having a profile keeping improving over 2027, which is really something that we are looking at from a midterm standpoint. Operator: The next question comes from Julien Dormois from Jefferies. Julien Dormois: I have two. The first one relates to the iOS business. I think you have mentioned during your presentation that you have experienced significant share gains, obviously, related to the comprehensiveness of your portfolio. So I was wondering whether you could help us size this market on a global basis and whether your current market share is maybe above or below the 10% you have highlighted for the broader digital equipment market. So just to understand where you sit on that side. And what do you think could be a realistic target for Straumann maybe by the end of the decade or in the next 5 to 10 years? That would be quite interesting. And the second one is very much a housekeeping question, and sorry if I missed that, but it's probably more for Isabelle. But at the current FX rates, I'm just curious whether it is fair to assume more than 500 basis points of adverse impact on top line and maybe a new round of headwinds to margin, probably to the tune of 150 bps if I compare to the 130 bps you had in 2025. Guillaume Daniellot: Yes, I will. I think -- thanks for the question, Julien. It's not so easy to assess the real full market total value of iOS. But if we look at what we call modern technology that our iOS and 3D printer, that's where we are assessing this market to be a bit shy of CHF 2 billion. And when we see our development, we are seeing, yes, our shares being double digit now. We have been, I would say, more on the 5% to 6%. We think that we have significantly increased this, this year, thanks to this new technology coming from our AlliedStar acquisition that we have made in September 2023. And we believe that this is going to continue to grow as together with our FreeShape partner, we are on the sweet spot to be able to deliver a really advanced technology with FreeShape for surgeons and orthodontists that really want to leverage the latest technology also in terms of diagnostic and having advanced capabilities. But as we are now entering a lot into the GP segment with orthodontics, but also implant treatments and now prosthetics, very often, they like a good technology that does not need to have all the latest one at a more affordable price. And what we have seen in this market penetration, we are now in the middle of the S curve, and we are well positioning to take a fair share of the volume of our intraoral scanner in the next 3 years. And we see that significant growth in the next 3 years. Afterwards, we expect the total market penetration to move from -- it is around 35% to, I would say, 35% globally today. It will double in the next 3 years from my perspective because we are having the sweet spot in terms of quality to price ratio on digital equipment. And this is where we believe strong growth will still be achieved on our side. This being said, I want to express once again the fact that we consider intraoral scanner as an enabler. What we want to do is really connect as many clinicians as possible into our open cloud-based AXS platform, where clinicians have then the efficiency, the access to consumables and solutions that are really creating a difference in their practice. That's where they can go to the Fast Molar workflow from Straumann, they can go to the clear aligner, then ClearCorrect solutions. They can go to the SprintRay. And every new technology that will come will be able to be connected through that AXS platform, meaning that we will be open to any innovation in-house or externally, thanks to that customer base connected with our intraoral scanner and that ecosystem. That's really the strategy that we have been pursuing and that we are very pleased into the progress of it right now. Isabelle, do you want to comment on the... Isabelle Adelt: The FX impact, yes. Julien, you didn't miss it. I think you're actually the first one to ask it, which I think is a little surprising. But I think -- I mean, FX impact, as you all know, I mean, we're operating in a very volatile environment. And I think you gave a very good range already when you said that. So from what we currently see and looking at -- basically looking at what we say we are doing at January spot rates, we are looking at a very similar impact we had last year once again. But having said this, to give a clear guidance at this point in time is very difficult. Because in January alone, we saw movement of over 50 bps up and down just by the volatility of the U.S. dollar. So I think for the time being, if you look at a very similar impact to what we had last year. So to remind you, in terms of top line, 480 bps; in terms of bottom line, 130 bps for the time being, the estimation is not too wrong. And we will keep you updated as the year evolves given of what the currencies will do throughout the course of the year. Operator: Next question comes from Richard Felton from Goldman Sachs. Richard Felton: Just two questions for me, please, both on orthodontics. So the first one, on the product side, like how important are some of the product innovations that you've referenced in your presentation? And for instance, the scalloped trim products, how important is that in filling a gap in your portfolio? And what percentage of cases are you now able to address? And then secondly, also on orthodontics, are there any changes to your commercial organization that you are making? Just trying to get a sense of what is driving the acceleration in liners that you expect over the next couple of years. Guillaume Daniellot: Yes. Thanks a lot for the question on orthodontics. And yes, I think happy to be able to explain this. When we are commercializing ClearCorrect, we had a significant differentiation, which is a specific high trimline, which is helping to place a little bit more force to the teeth in order to move them a bit faster and to do some different movements. This is something which has been appreciated by some clinicians, but a lot of others are used to scalloped trimline, which is what has been proposed by most of the players in the market. Then when we have been willing to switch some of the GPs that were using a lot of competitor products, they were asking us to have also the scalloped trimline option because they are so used to this that they don't want to change any of their protocols or their experience so far by moving to ClearCorrect. Then it has been a pretty strong obstacle to some of the switches that we were wanting to do because of asking the clinicians to change the way they were treating patients. And obviously, then a lot of the clinicians like to continue doing what they are used to and what they are confident with. And it's a very different way of manufacturing product. We have also to look at how to redefine protocols with a different trimline. And that's why for us, it's also a major addition to our portfolio because we will be able to offer those different trimline capabilities, either the high or low trimline that are existing to ClearCorrect and the additional scalloped auction that will be also a lot of wishes by a lot of general practitioners that we have been meeting over time. The second aspect on the commercialization side and what we have done is we have also to generate operational leverage decided to focus on the key growth market. And what we are doing is making sure that our customer experience, clinician support and commercial go-to-market investments are going to be done in the 14 major countries where we are seeing actually those double-digit growth. And as much as we are seeing growth, we will then continue doing specific go-to-market investments in order to support growth as we are seeing it happening. Operator: The next question comes from Sibylle Bischofberger from Vontobel. Sibylle Bischofberger: I have only two questions left. First of all, the gap between the reported EBIT and the core EBIT was quite strong in 2025. Could you give us a hint how will be the delta between your reported and core in 2026? And secondly, CapEx will clearly come down, as you said, only Curitiba 3 will be spent. And then in 2027, it will be even lower. Could you tell us how much it will be in 2026 and what to expect for '27? Isabelle Adelt: Yes. No, happy to take those two questions. I think this is what we discussed a little bit as influencing factors to our free cash flow performance already, right? So just to remind you, 2025, we had a lot of extraordinary impacts in there. So we provided quite some detail in our annual report what they were. And I think it wouldn't be too wrong to assume that everything regarding restructuring when it comes to the ortho business, when it comes to the transfer of our factory from Villeret to Shanghai is something that will not occur again this year. Although having said this, of course, costs related to M&A and so on will remain. So if you look at those categories, we provide quite a lot of detail. I think it's a fair assumption to say that 2026 will be a little bit more of the same as in previous years, but not in 2025, where we did all of those projects I just talked through. And then I think CapEx, I think it's important to understand that in the last 4 years, we invested over CHF 1 billion into our manufacturing capacity. Having said this, with the finishing Curitiba 3, we will have doubled our capacity for implants. And this means for the rest of the cycle, we will step down significantly in terms of CapEx intensity, so meaning CapEx over revenues. So you can already expect the first step down more towards the level of 2024, 2023, a mix of that in this year with the Curitiba finishing and then a further step down in 2027. Operator: The last question for today's call comes from Falko Friedrichs from Deutsche Bank. Falko Friedrichs: My first question is whether you expect China to see similar sales declines in H1 as it was in the fourth quarter? And my second question is, do you foresee a return to high single-digit growth in North America in 2026? Guillaume Daniellot: Sorry, the first one. Could you say again the first one on China, Falko, please? Falko Friedrichs: Do you expect the first half of 2026 to see similar sales declines in China compared to what you saw in the fourth quarter? Guillaume Daniellot: First half. No, not to the same extent. We don't think so because we believe that some of the destocking has already happened on the distributor side. But again, it will still be then quite lower than 2025 first half because of the fact that the growth was very significant. But we don't feel we will see the same trough that we have seen in Q4 than 2025. And when it comes to North America, we are not doing specific guidance per region, but I think we expect in between the high end of mid-single-digit growth to high single-digit growth being potentially possible, depending on what will be also the macro around there. But it's -- if we see the labor -- the latest news about the labor market that was rather positive. The inflation that has been just been presented at 2.4% and being also on the right side, that could help, of course, adding a little bit additional pressure on the Fed lowering their interest rate. We believe that we can have a rather positive development of the macro situation in North America that could support then a really good outcome for North America. It's still too early to say to see consumer confidence, but I think there are options for having a healthy growth for North America in 2026. Well, thank you for joining us today and for your continued interest in the Straumann Group. We look forward to seeing you again soon, and we wish you a nice day and a warm goodbye from Basel. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, welcome to the Straumann Group Full Year 2025 Results Conference Call and Live Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Guillaume Daniellot, CEO. Please go ahead, sir. Guillaume Daniellot: Thank you, and good morning or afternoon to all of you. Thank you for attending this conference call on the Straumann Group's Full Year 2025 results. Please take note of the disclaimer in our media release and on Slide 2. During this conference call, we are going to refer to the presentation slides that were published on our website this morning. As usual, the discussion will include some forward-looking statements. As shown on Slide 3, I will start with the 2025 performance overview. Isabelle will then cover the financial details. And afterwards, I will share strategic updates and our outlook. We will be happy to answer your questions at the end of the presentation. And let's move directly to Slide 5. Thanks to a strong full year performance, I would like to start by highlighting that we have created more than 7.3 million smiles in 2025. In other words, together with dental professionals, we've supported around 10% more people improving their oral health and confidence than in the previous year to keep delivering on our purpose, unlocking the potential of people's lives. Now let me share how we have progressed in 2025 by moving to Slide 6. 2025 has been a very dynamic year, and I'm very pleased with the results we delivered. We achieved a strong growth with revenue reaching CHF 2.6 billion, representing an organic growth of 8.9%, supported by a very strong fourth quarter despite the uncertainties around the VBP in China. On a reported basis, growth in Swiss francs was 4.1%, which represents a translation impact of around CHF 100 million of revenue. Despite these currency and tariff headwinds, we intensified our focus on efficiency, generating gains that supported our improved profitability. Our core EBIT margin, excluding currency headwinds, increased year-on-year to 26.5%, which corresponds to 25.2%, including currency effects. These results clearly demonstrate the resilience of our business model and the disciplined execution across the group. On the innovation side, 2025 was a year of record launches. Starting with the Premium Implants segment, innovation remains the primary growth driver. It is the foundation on how we outperform the market and gain share. In 2025, these strategies translated in a record year of new product launches, reflecting both the depth and speed also of our innovation pipeline, iEXCEL is an excellent example. We have already sold more than 1 million iEXCEL implants, making it the most successful implant launch in our history. This performance demonstrates not only strong market adoption, but also the relevance of our innovation for clinicians worldwide. In parallel, we have seen a strong momentum of our SIRIOS X3 intraoral scanner since its launch in October 2025, significantly expanding the clinician base being connected to our Straumann Group digital ecosystem. On the transformation side, the partial transition of the ClearCorrect manufacturing to Smartee is well on track, boosting our value proposition and supporting scalable and profitable growth in orthodontics. Overall, those very promising progress gives us confidence as we enter 2026. Looking ahead, we expect another successful year with continued market share gains and high single-digit organic revenue growth, along with further profitability expansion of 30 to 60 basis points in the core EBIT margin at constant 2025 currency rates. Now let's have a look at the regional performance on Slide 7. Thanks to our large geographical presence, we delivered strong growth across the year and in the fourth quarter, especially looking at the strong comparison basis of 2024. Let's start with EMEA, both our largest region and biggest growth contributor for the group. EMEA performed particularly strong in the fourth quarter, leading to a full year organic growth of above 11%. This was achieved across premium and challenger implantology, digital solutions and orthodontics, which supported our continued market share gains across all markets. In North America, performance improved through the year, reaching a strong organic growth of 6.8% in the fourth quarter. This sequential acceleration is particularly significant as North America remains a strategic market for the Straumann Group. This progress reflects the impact of a strengthened leadership team, sharper execution and the contribution of recent product innovations, all of which are driving more consistent performance and stronger market traction. Growth in the fourth quarter was supported by implantology, digital solutions alongside continued momentum in the DSO segment, underscoring improved operational focus and disciplined execution. Moving to Asia Pacific. The region delivered solid underlying organic growth of around 7% for the full year, driven by strong momentum outside China, where we achieved a growth of more than 10%. Countries such as India, Japan and Southeast Asia continued to perform well, supported by challenger brands, digital workflow adoption and strengthened education activities. In China, performance during the second half of the year was significantly impacted by a softer patient flow and distributor destocking behavior, particularly linked to the upcoming VBP process. Despite the seasonal VBP impact, we believe that the underlying fundamentals of China remain intact. With the ongoing ramp-up of our Shanghai manufacturing campus, we are strengthening local production capabilities and supply chain resilience, positioning us very well for the next VBP ramp. Latin America once again delivered very strong performances with a high double-digit organic revenue growth of around 18% for the year, driven by Neodent, continued market expansion of our Straumann premium brand and fast adoption of our new digital equipment SIRIOS. Growth was strong both in the full year and in the fourth quarter and the region contributing 17% of the group's total organic growth. With this, I will now hand over to Isabelle, who will take you through the financials in more detail. Isabelle Adelt: Thank you, Guillaume, and good morning also from my side. It is a great pleasure to walk you through our financial highlights of 2025. Let me start on Slide 9 with how we translated our strong growth in 2025 into solid cash generation. We delivered revenues of CHF 2.6 billion, which translated into a core gross profit margin of 70.1%. This is a strong result in a year marked by elevated investments and external headwinds and driven by our productivity improvements and the favorable product mix. The strong gross profit flowed through to profitability. As Guillaume mentioned, we achieved a core EBIT margin of 25.2%, including currency effects or 26.5% at constant 2024 exchange rates. This was driven by disciplined execution, targeted OpEx measures and operating leverage and demonstrates our ability to protect and improve margins despite FX headwinds and tariff-related pressure. At the bottom line, our core net results reached CHF 478 million, corresponding to a net margin of 18.3%, supported by the quality of earnings and effective cost management across the entire group. Importantly, the strong operating performance translated into cash. We generated a free cash flow of CHF 290 million, representing 11.1% of net revenue and influenced by tactical working capital management decisions as well as one of the highest investment years in our history. This also marks the ending of a large manufacturing investment cycle for future growth. Overall, this clearly shows that we not only delivered strong growth in 2025, but also successfully converted this growth into profitability and cash generation, fully in line with our guidance. With this overview, let us now look at the individual line items in more detail, starting with gross profit on Slide 10. Compared to the prior year, the margin was only slightly lower with 70.1%. This development was mainly driven by 2 factors: Firstly, the impact from U.S. tariffs; and secondly, the ramp-up of production at our Shanghai campus, which weighed on margins during the year. These effects were partly offset by our strong product mix and productivity improvements across the group. Overall, the gross margin development reflects the strength of our portfolio mix and our ability to further automate our production while maintaining a high and resilient margin profile. With this, let me now turn to Slide 11 and discuss EBIT in more detail. Foreign exchange effects had a visible impact on our profitability. While revenue growth differed by around 480 basis points between local currencies and Swiss francs, only around 130 basis points of FX impact flowed through to the EBIT line. This reflects the effectiveness of our local-for-local production strategy and the structural improvements we have implemented across our supply chain, which significantly reduced the sensitivity of margins to currency movements. In addition, cost saving and efficiency measures contributed around 120 basis points to the EBIT margin improvement. These measures were implemented across the organization and focused on operating discipline, prioritization and productivity while continuing to invest in our strategic priorities. Overall, EBIT development shows that we were able to translate strong growth into improved profitability, even in an environment characterized by currency volatility, tariffs and cost pressure. Looking ahead, it is important to note that the ClearCorrect Smartee partnership was only announced in October and, therefore, has not yet had a meaningful impact on EBIT margin in 2025. As part of the production transition during 2026, we expect to see positive effects on margin, especially in the second half of this year. Against this backdrop, let me now take you to the net results on Slide 12. The financial result was slightly lower compared to the prior year. This was mainly driven by the effects of currency hedging, reflecting the volatility in foreign exchange markets. Taxes were somewhat higher as a larger share of profits was generated outside of Switzerland, which is also a consequence of our local-for-local production strategy. As in previous years, we present core results in addition to IFRS results to facilitate a like-for-like comparison. In 2025, noncore items amounted to around CHF 120 million after tax. A significant part of these noncore items related to restructuring measures, which are directly linked to strategic decisions we have taken to strengthen our operational setup. We transferred implant volumes for the Chinese market from Switzerland to our new manufacturing campus in Shanghai. And furthermore, restructuring costs were incurred in connection with the transformation of the orthodontic business. In addition, noncore items include acquisition-related amortization and special items, legal costs as well as impairments related to the planned relocation of the group's headquarters to our new campus in [indiscernible]. From here, I will move on to the cash flow and investments on Slide 13. In 2025, we generated a free cash flow of CHF 290 million. This is particularly noteworthy given the very high level of investments during the year. Capital expenditure amounted to CHF 223 million, an increase of CHF 56 million compared to the previous year, making 2025 one of the strongest investment years in the group's history. These investments were focused on clearly defined strategic priorities. They include the expansion of production capacity, most notably the ramp-up of our Shanghai manufacturing campus, Medentika and the new third production site in Curitiba as well as continued investments in innovation, digital infrastructure and operational efficiency. Despite this elevated CapEx level, cash conversion remains solid. This reflects strong operating performance and working capital management across the group. Overall, this combination of high investments and strong free cash flow demonstrates our ability to invest for future growth while maintaining financial flexibility and balance sheet strength. With this, I will now move to Slide 14 and the proposed dividend. Based on our strong performance and solid cash generation, the Board of Directors proposes a dividend of CHF 1 per share, which is subject to approval at this year's Annual General Meeting. This represents an increase of 5% compared to the prior year and corresponds to a core payout ratio of around 33%. This is in line with our capital allocation priorities to maintain and increase dividends with earnings. With this, let me now briefly touch on our efforts and progress in sustainability on Slide 15. Before I turn to the details, let me briefly highlight that the annual report published today includes our sustainability report prepared in line with CSRD requirements for the first time. This reflects our commitment to transparency and regulatory alignment. In 2025, we continue to make progress across our key sustainability priorities, closely linked to our strategy and operations. As part of our long-term growth strategy, education remains a central pillar for the group. During the year, we trained more than 370,000 dental professionals worldwide with around 42% of all education activities taking place in low- and middle-income countries. This shows our continued efforts to broaden access to care and enables the adoption of modern efficient treatment approaches across regions. On climate, we continue to move towards our net zero ambition. We further reduced our Scope 1 and 2 CO2 emissions by around 17% compared to 2021 and 98.5% of our electricity consumption now comes from renewable sources. This reflects the fact that renewable electricity is increasingly embedded as an operational standard rather than an aspiration. In addition, our local-for-local manufacturing strategy contributes not only to resilience and efficiency, but also to sustainability by reducing transportation needs and strengthening regional supply chains. Overall, sustainability at Straumann Group is closely integrated into how we operate the business and supports long-term value creation for patients, customers and society. With this, I will now hand back to Guillaume for the strategy update and outlook. Guillaume Daniellot: Thank you, Isabelle. Let me now focus on our strategy update, starting with highlighting the massive market opportunity we are facing on Slide 17. First, within our total addressable market of more than CHF 20 billion, we have gained market share across key segments, increasing our total share from 12.5% to 14% within the last 12 months. While we have once again outperformed, this total addressable market still offers us a very significant opportunity to grow in the short and midterm future. Our growth playbook has 2 major dimensions. First, we want to continue to strongly perform in our core market segments, Implants and Regenerative through innovation, digitalization and education. Secondly, we are focusing on transforming our business in key market segments to capture the huge growth opportunities. Then let me start on the left-hand side with the performed dimension. In implantology, our core segments, we are continuing to strengthen our leading position. The market size is around CHF 6.1 billion, and our market share increased to above 35%. This reflects consistent outperformance of the market driven by innovation, digital workflows and strong execution in a still underpenetrated market segment. Regenerative is closely linked to implant surgery with a market size of around CHF 1.3 billion and a market share of around 13%. This is another area where we continue to expand our positions, supported by our strong clinical heritage and portfolio breadth. These segments represent our core strength. This is where we have strong brands, deep clinical relationships and a proven innovation pipeline. Now on the right-hand side, the focus is on transformation. In clear aligners, the market is sizable at around CHF 4.9 billion, but our market share remains below 5%. This clearly highlights the upside potential. With the ongoing large transformation of our orthodontics business, supported by our technology partners such as Smartee, we are very confident in the future of our business repositioning to grow and scale efficiently. Secondly, digital equipment such as SIRIOS scanner and 3D printers represent another attractive segment with a market size of around CHF 1.8 billion. In this area, we have made excellent progress in 2025, achieving strong growth and a market share of above 10% now, and we see further acceleration ahead driven by a very differentiated and competitive equipment and workflows. Finally, CAD/CAM prosthetics is a large market of around CHF 5.7 billion, where our market share is still below 5%. Here, we see an interesting opportunity to accelerate growth by disrupting workflows through chairside solutions. We are very confident that this perform and transform strategic playbook, combining our core strength together with new technologies, which are radically changing our competitiveness in key new segments, will deliver consistent short- and midterm growth opportunity. With this, let me now turn to Slide 18 and walk you through how we execute against this playbook. Our strategy is focused around 3 strategic priorities, each addressing a specific growth engine of the group. First, we aim to expand our leadership in implantology by driving further penetration in an underpenetrated market through innovation, digitalization and education supported by our strong premium and challenger brands. Secondly, we are transforming our orthodontics business, building a stronger value proposition in a more scalable, digitally enabled model that allows us to grow efficiently and profitably together with strong partners. Third, to unlock the market potential of digital equipment and the CAD/CAM prosthetic market, we are working to disrupt chairside prosthetics by simplifying and accelerating workflows, leveraging our SprintRay strategic partnership and our open cloud-based digital ecosystem. What connects these 3 priorities is a common execution logic. Across all of them, innovation definitely supports our value proposition differentiation. Digitalization delivers the expected efficiency and education enables adoption and opening up wider the market segments. Let's now move to Slide 19. Before we go into the details of each pillar, let me highlight the clear principle differentiating our solutions. We are leveraging our cloud-based ecosystem to combine the best products with the best workflows to deliver practice efficiency and superior clinician experience. In today's dental market, product performance alone is no longer sufficient. Clinicians expect not only innovation at the implant or aligner level, but also complete, efficient and integrated workflows that support them from planning to treatment and case follow-up. This combination is what enables us to differentiate and consequently gain market share across segments. With this foundation in mind, let us now go into the first pillar of more detail, starting with implantology on Slide 21. I would like to highlight once again the fact that the implantology market remains yet significantly underpenetrated, offering a vast growth potential. Spain, with its large number of surgically trained dentists and a dynamic DSO presence driving increased affordability, serves as a valuable benchmark for evaluating average implant treatment penetration. Using Spain as a reference, we see significant potential for growth in both developed markets such as Italy, France, Germany, but also especially U.S. as well as in emerging markets like India. We are very confident that market penetration will continue to rise. This development is driven by increasing patient awareness of dental implant treatments and constant growing number of surgically trained dentists who can place implants in all geographies and more affordable treatment costs. With this context, let me now go into the first growth driver, starting with innovation on Slide 22. In implantology, innovation is the key driver to expand penetration and gain market share. In 2025, we launched iEXCEL, our next-generation implant system. Since its launch at IDS in Cologne, we have already sold more than 1 million iEXCEL implants, making this the most successful product launch in our history. IEXCEL combines unique features such as our premium surface SLActive and our Roxolid material with a simplified system architecture. One connection, one prosthetic diameter and one single surgical instrument set enabled to treat a wide range of indications with easier handling. In parallel to excellent clinical outcome, this simplicity is critical. It reduces complexity for clinicians such as inventory management, improves efficiency in daily practice and supports the adoption of more advanced treatments such as immediate loading and full-up solutions. Importantly, iEXCEL is not only driving growth within our existing customer base, it is especially a strong conversion tool, driving new customer acquisition. Premium competitors implant users on the one side, but even more importantly, it is now also a strong tool to switch clinicians using value systems. With this, let me now turn to our leading global challenger brand, Neodent on Slide 23. Neodent continues to be a strong growth engine driven by innovation and geographical expansion. In 2025, we sold around 5 million Grand Morse implants, underlining the strong acceptance of this platform across markets. Grand Morse is a very powerful system. It combines a modern implant design with a broad indication range and is also available in ceramic materials. Neodent is now established as a leading global challenger brand and continues its dynamic expansion into new geographies and growing market share in the Challenger segment. A key milestone ahead will be the registration of Neodent in China, which we expect to be done by 2027, opening up a significant additional growth opportunity. Overall, Neodent plays a critical role in complementing our premium portfolio and driving global expansion in implantology. Let's now turn to Slide 24. Embedded in our innovation process, digitalization is what turns products into a comprehensive and efficient customer experience. With Straumann AXS, we have built a successful open cloud-based platform that connects implantology workflow end-to-end across planning, surgery and restoration. The adoption of Straumann AXS has scaled up very rapidly. Within 18 months, the platform has grown from 0 to more than 15,000 active users, clearly demonstrating strong acceptance and relevance in daily clinical practice. What drives this adoption is the integration of complex workflow. Solutions such as co-diagnostic surgical planning and Smile in a Box are fully embedded into AXS, enabling faster, standardized and predictable implant treatments. Importantly, Straumann AXS also strengthened customer engagement. The platform drives a recurring usage and creates a continuous interactions between clinicians well beyond a single product transaction. Let me show you a concrete example how digitalization amplifies innovation and turns it into a differentiated customer experience on Slide 25. By combining intraoral scanner, the iEXCEL implant and a specifically designed anatomic healing abutment for the digital Straumann AXS platform, we created a fully connected workflow that significantly improves efficiency and accelerates treatment, and the impact is measurable. With the Fast Molar workflow, patient treatment time can be reduced by up to 26 weeks, clinical churn time by around 50 minutes and the number of appointments can be reduced from 5 to 2, enabled by the fully integrated digital nature of the solution. Importantly, it also strengthens the economics. By accelerating treatment and standardizing workflow, we increased the pull-through of original abutments and restorative components, driving higher recurring revenue per case. For clinicians, this means higher productivity and predictable results. For patients, fewer visits and faster restoration. And for Straumann, stronger consumables growth and scalable value creation. Moving up to Slide 26. To drive access to care, education is critical to make our solutions accessible to more clinicians and patients. In 2025, we delivered more than 10,700 education programs worldwide and trained over 370,000 dental professionals covering implantology, digital workflows and advanced indications such as pull out procedures. Education plays a critical role in increasing penetration. It enables more clinicians, particularly general practitioners to adopt implant treatments and to use digital workflow in a predictable and efficient way. With this, let me now move to the second pillar of our playbook for growth, the transformation of our orthodontics business on Slide 28. Through the Smartee and DentalMonitoring strategic partnership announced last quarter, we are transforming our Clear Aligner value proposition and accelerating our growth capabilities. On the product side, it means the launch of a scalloped trimline option in May 2026, together with mandibular repositioning devices later in the year, allowing us to address a broader range of orthodontic indications and more complex treatment needs. Equally important is the transformation of our production setup. As planned, EMEA and Asia Pacific aligner production is now transitioning to Smartee manufacturing, enabling constant quality, faster turnaround time and lower cost of goods. The first customer feedback on quality and service levels has been very positive so far. Together, these innovations and production capabilities are strengthening our ability to compete and our potential to scale and win market share in the Clear Aligner segment looks very promising. Moving to Slide 29. Digitalization is also here a critical enabler to scale orthodontics and broaden access to treatment, particularly for general practitioners, which is the focused growth segment for us. Through ClearCorrect remote care powered by DentalMonitoring, we enable remote treatment monitoring. This reduces the need for in-office visits and supports a simpler and more efficient patient journey while building the confidence of general practitioners to achieve consistent quality clinical outcomes. Digital workflows also support case conversion for general practitioners, which is one of the most important aspects of market growth. Tools such as before and after simulations make treatment outcomes more tangible, helping clinicians explain cases more clearly and increasing patient acceptance. In addition, the integration of CBCT data simplify treatment planning and enables more comprehensive diagnostics, especially for more advanced cases. This further expands the range of orthodontic treatments that can be addressed digitally by general practitioners. Overall, the digital capabilities simplify workflows, improve efficiency and create a faster and more compliant patient journey, supporting clinical success and scalable growth in orthodontics. And to ensure broad adoption of these workflows, education plays also here a critical role, which I would like to comment on Slide 30. Lowering barriers for general practitioners is critical to accelerate adoption and enable scalable case growth. Digital workflows and advanced aligner technologies only create value if clinicians are confident in using them in daily practice. With the ClearCorrect orthodontics, we provide structure and modular education tailored to different experience levels and treatment needs. This allows clinicians to progress step by step and build clinical skills over time. In addition, we complement education with ongoing online and clinical treatment support, ensuring that clinicians are supported beyond the initial training and through to the treatment process. With this, let me now move to the third pillar of our playbook for growth, disrupting chairside prosthetics on Slide 32. Digital equipment is an attractive and growing market in its own right and at the same time, a strategic enabler across our entire portfolio. Across implantology, orthodontics and prosthetic, there is always the same starting point. It all begins with an intraoral scan. Intraoral scanners are the entry point into our digital Straumann AXS platform. They capture the data that connects treatment workflows and platform across all segments. And this is why the intraoral scanner is strategically important for us. With our iOS portfolio, we cover the full market spectrum. We offer premium solution through our partnership with FreeShape, mid-range solutions with our SIRIOS X3 and entry solution with SIRIOS. This breadth allow us to address all customer segments and significantly expand access to digital workflows. This strategy has delivered very strong results in 2025, and we are confident to continue this momentum in 2026. We are seeing strong market share gains in intraoral scanners, allowing us to outgrow the digital equipment market. Each scanner placed increases adoption of Straumann AXS, our open cloud-based platform. And this expands our active user base, strengthen engagement and drives recurring usage across implantology, orthodontics and prosthetic. Let me now show you how this applies to prosthetic on Slide 33. What you see on this slide is a clear example on how we translate digital integration into speed, efficiency and recurring revenue while transforming the chairside prosthetics segment. With the Straumann Signature Midas 3D printer fully integrated into Straumann AXS, we enable automated crown design and production directly at the chairside. Clinicians can produce crowns, inlays or onlays in less than 10 minutes, significantly accelerating treatment and reducing dependency on external lab processes. This workflow is supported by our innovative chairside resin portfolio developed by our partner, SprintRay, delivered in patented capsule format. This format simplifies handling, improved consistency and ensures predictable clinical outcomes. Importantly, this is not only about speed, it fundamentally changes the economics. For clinicians, this means faster turnaround time, higher productivity and more control. For patients, it means especially fewer appointments and same-day restoration. And for Straumann, it means recurring revenue streams embedded in the workflow and the Straumann AXS ecosystem. For us, the integration of scanning, design, production and material into one seamless workflow creates a recurring revenue model driven by ongoing resin and consumable usage linked to every printed case. Finally, moving to Slide 35 to unlock those many opportunities and execute flawlessly on our growth playbook, the player learner culture is a key asset. We operate in a world that is increasingly volatile, uncertain and complex. In this environment, speed, agility and learning capability are decisive. At Straumann, our high-performance player-learner culture brings this all together. It encourages entrepreneurial thinking, accountability and continuous improvement, while at the same time, fostering collaboration and learning across functions and regions. This culture enables us to innovate closer to customers, take faster decisions and execute our strategy consistently across markets. And importantly, this is not an aspiration, it is measurable. Our employee engagement score of 80 reflects the high level of commitment and energy across our organization and represents the top score amongst globally leading companies. This is a major robust competitive advantage and allows us to turn strategy into execution and execution into results. With this, let me now turn to our outlook for 2026 on Slide 37. We entered 2026 with solid momentum, supported by our strong market position in a total addressable market of more than CHF 20 billion. While market conditions are expected to remain volatile with ongoing macroeconomic and regulatory uncertainties, we're expecting positive impact from our new key strategic initiatives, especially in the second half of the year. In China, the impact from the VBP process is expected to support growth momentum as the year progresses. And in orthodontics, the ClearCorrect transition to Smartee is advancing as planned and will contribute positively over the course of the year. With this timing effect, we are very confident in our outlook. For 2026, we expect to deliver high single-digit organic revenue growth alongside a core EBIT margin improvement of 30 to 60 basis points at constant 2025 exchange rates. With this, we are happy to move to the Q&A session to answer your questions. As usual, we kindly ask you to limit the number of your questions to 2 in order to give other participants a chance to post their questions within the available time. Chorus Call, can we have the first question, please? Operator: The first question comes from Doyle, Graham from UBS. Graham Doyle: Maybe, Guillaume, just firstly, on sales phasing for the year, I know it's early in the year, it's a bit hard to fully describe it given what's going on in China. But it does look like the way EMEA and the U.S. finished that maybe those regions are a little bit more H1 weighted. So is it reasonable to think that this is a relatively balanced year in terms of group growth for organic? And then secondly, just on free cash flow, should we expect a good step-up from H1 just as some of that inventory unwinds and maybe the restructuring charges fall as well? Guillaume Daniellot: Yes, Graham, for the top line, we will have obviously some different effect also from a regional basis. But when you look at Asia Pacific, where China is obviously a major impact, for the time being, assumption is that VBP will take place in the second quarter. That's an assumption as there is not yet any official statement by the China authorities, but the latest information that are coming up seems to demonstrate that it will be rescheduled around this time frame. As we have a very strong comparative base in 2025 in the first half and the low in the second half, I would say 2026 is going to be the reverse of 2025. We are going to have obviously still a weaker first half in China and Asia Pacific for the first half and a much stronger one in the second half when we look at the start of the year. When it comes to North America, we expect progress to continue, and we expect in our guidance, let's say, we have tabled a stable macro environment where we believe that our execution is going to continue to produce positive results, then that's the way we are seeing that our growth rate for 2026 will be more weighted on the second half than the first half. Isabelle Adelt: Let me take your question on cash flow, Graham, a very easy answer to that. Yes. What are the big building blocks when we look at it? It's CapEx, it's net working capital and it's the noncore items we're looking at. So CapEx, as outlined earlier, we said we are coming out of one of the biggest CapEx cycles we've had in the history of the group. By end of this year, we will have doubled our capacity in terms of how many implants we can produce this year. So the last big project to be finished is our third factory in Curitiba during this year, but you can already expect a significantly lower CapEx level for 2026 compared to prior year. Same holds for working capital. As you might recall, we did a couple of tactical decisions to increase our inventories to mitigate for the U.S. tariffs last year, and this is likely to unwind. So we will see structurally a little bit lower working capital in 2026. And last but not least, I think last year, we have seen a lot of effort we put into putting the right structures for our future growth. so namely preparing the orthodontics transition as well as enabling the China campus and making sure volumes can be produced where they are needed. And this is why we expect to see significantly lower noncore items in 2026 as well. Operator: Next question comes from Hugo Solvet from BNP Paribas. Hugo Solvet: Just Guillaume, maybe for you on North America and the U.S. in particular. Can you help us understand the balance between volumes and price mix in Q4? And just a word on current trading. Do you continue to see that sequential improvement in the U.S. as we start 2026? And maybe on a follow-up to Graham's question on the phasing, but more on margin this time, maybe for you, Isabelle. Can you quantify how much of margin pressure should we expect in H1? I think historically, you were more 55%-45% H1, H2 EBIT weight and that was more 50-50 in 2025. So would 2025 be a better proxy? Or would it be even more skewed towards H2? Guillaume Daniellot: Hugo, when it comes to U.S. volume price, it has been mainly volume growth. We had some price impact, but really small. Then I would say 80% to 90% of our development came from volume and share gain. When it comes to what we start to see in Q1, we see the trend still being positive with our iEXCEL still being very appreciated and helping us to gain share. Actually, something which is important, I tried to allude that in the script, not only on premium users, but also on value system users based on the efficiency gains delivered by the digital workflow and the digital equipment. Our DSO development is also positive. We have seen the DSO starting to reinvest on the marketing activities in order to keep then the patient flow at the same level. While it's still not very dynamic, at least we have seen a really good stability over the past month. That's why we believe that at least the beginning of the year should also see North America being able to keep delivering this kind of performance. Isabelle Adelt: And regarding your question for the margin distribution, Hugo, so I think this follows a little bit the same pattern Guillaume already elaborated on for the sales phasing. Just to help you think about how the margin distribution could look like, for me, there are 3 big building blocks. On the one hand side, of course, it's the China business and the VBP. There's still a little bit of uncertainty regarding the timing. But what Guillaume already explained that last year, we had a super strong first half year in China and a little bit weaker second half of the year, this will look the other way around this year. The second big building block definitely, the ortho transformation. As we speak, we are in the process of transferring production volumes to Smartee for the EMEA and APAC region and winding down our own production line in Germany, which, of course, means the benefit will be bigger in the second half of the year that the first, where we have transition costs and the wind-down costs included. There's still a little bit of double cost. And last but not least, which we shouldn't forget is the phasing of the tariffs. From all we know to date, the amount we expect to see is a little bit the same we had last year. But last year, it was more biased towards the second half of the year since it was only announced in April, and we didn't see a big effect in the first half. And this year, the amount will not differ significantly for the full year, but will be a little bit more biased towards the first half year since we will have a more continuous flow of tariffs from what we know today. Operator: The next question comes from David Adlington from JPMorgan. Mr. Adlington removed his question. Let's take the next one from Susannah Ludwig from Bernstein. Susannah Ludwig: I have two, please. I guess, first, could you just give a bit more color in terms of the strength of the EMEA performance in Q4 and maybe what you're seeing in Q1 so far? How sustainable are you thinking about sort of the acceleration in performance there? And then second, on prosthetics, that's a business that historically, the dental labs have controlled and dental offices have very strong relationships with their labs. So what do you see as the catalyst for sort of the disruption of that relationship? Dentists often tend to be a creature that have a bit of inertia. What do you see as sort of driving the shift to chairside? And what role will the DSOs play here? Guillaume Daniellot: Yes, Susannah. Then on those two questions. EMEA is obviously a very, very solid trend. We had an exceptional Q4 first, because I think we have very underlying capability to continue gaining share, and we are leveraging all the innovation that we have at our fingertips. And I think the EMEA team is doing very well on all the different franchises, and this has to be highlighted. I think in premium, in challenger, also digital and orthodontics is really driving then the very solid performance. Now -- the fourth quarter has been also boosted by some January '26 price increase announcement that has been done, and we know that there have been some also high digital equipment orders that have boosted performance. And I would say we have always said that the EMEA regular high performance is going to be between high single digit to low double digit. And I think this is what we expect to see also in 2026. And it will be balanced between the different quarters, saying that potentially the first quarter will be a little bit lower based on the strong finish. But all in all, it's going to be just a balance in all the different quarters that will still see us delivering strong contribution of EMEA with regard to our total 2026. When it comes to prosthetics, you have a very good point that the lab relationship with the dental practitioner is very strong. And why do we believe that such chairside 3D printed crown can have some disruption capabilities in the future for one very good reason, we believe, is patient expectation. If you can say to a patient that you are going to solve his decay or his crown issue in one appointment, there will be a lot of benefits on the patient side and obviously, a lot also on the clinician side because it will save significant number of appointments. Will it be a fast disruption? No, because we all know that dentistry is rather conservative. But as soon as practitioner will have experienced this same-day dentistry being able to gain significant efficiency in posterior crown restoration like this, we do believe that the share of the business will not go to the lab anymore. Obviously, DSO will be able to push those workflow because of the efficiency and profitability gain that they can generate. But it will be all across the market based on the significant appointment savings that could be generated. Then to be seen step by step, but I think all the elements are here now to be able to allow the same-day dentistry that will, I personally think, going to take significant share in the future. Operator: The next question comes from David Adlington from JPMorgan. David Adlington: Yes, just -- I may have missed it, sorry if you addressed it. But just in terms of your margin guidance, just wondering if I could check what you're assuming in terms of savings from Smartee or whether you're looking to reinvest those? And then secondly, again, I think you may have touched this and I just missed it, but in terms of the tariff impact in the second half, I just wondered if you could quantify that and how you see that evolving through 2026? Isabelle Adelt: Sure to take that. So I think -- I mean, margin guidance for Smartee. So David, I think what we explained a little bit before, we have a very clear plan how we want to turn the orthodontics business profitable over the next 2 years. And I think the first big step will be this year really working on our COGS position, working on our profitability position by transferring the big production volumes we have in EMEA and in APAC to Smartee. But how will this look like? So on the one hand side, we're currently closing down our own production site in Germany to be finished by end of Q1. So you will potentially still have the COGS in Q1, but then at the same time, transfer to Smartee at a much lower cost per liner than we had before internally. And this will ramp up over Q2, so we can see the full effect in Q3 and in Q4. And then I think in addition to that, obviously, we expect to see a little bit higher growth rates for the ortho business as well, being a positive impact to the margin in the second half because we are planning, as Guillaume said, to launch the scalloped shape trimline during Q2, which will substantially complement our portfolio. And this is why we will, for sure, already see a step-up in terms of margin in the first half, but the bigger impact we would see in the second half of the year once the cost for our own production is out and Smartee is fully ramped up for those 2 regions. And then for tariffs, I think to give you an indication, we expect the total amount from all we know today, so assuming tariffs will stay where they are to be at a similar level as 2025, where we saw a total hit of around about CHF 20 million in our P&L in the COGS line. We expect that number to be pretty similar, maybe a little bit higher in 2026. But saying this, it was very biased towards the second half of the year in 2025, especially in July when we did all the shipments, but then in the second half of the year when we had the high tariffs, whereas in this year, you can rather think about it as distributed half and half, so half in the first half of the year, half in the second half of the year. Operator: Next question comes from Hassan Al-Wakeel from Barclays. Hassan Al-Wakeel: I have two, please. So [indiscernible] up on the margin guidance and why this isn't higher given your commentary on Smartee halving the loss, [indiscernible] loss in '26? And is the guidance is that of the uncertainty that you still see in China? Or is there anything else to highlight in terms of the margin building blocks? And then secondly, on China, is the second half realistic? And what do you have in your guidance from the potential continuation of destocking beyond this quarter and the [indiscernible] can also ask what the margin headwind that you're baking China VBP in 2026? Guillaume Daniellot: We are going to try to answer, but you have been breaking up on your questions. And let me try to summarize your questions and try to answer that, and you will let us know if this is in line. First question is, what are the different building blocks we are seeing on our margin. I think as Isabelle explained and what we discussed already quite a lot is, on the one side, we have that negative impact of tariffs. That will be almost the same, a little bit more than potentially 2025, but that will be then having an effect more in the first year -- in the first half than the second half because of the fact that it has been, in 2025, impacting our second half mainly. The second side that we said is about Smartee, where as our manufacturing now is for Asia Pacific and EMEA translating to Smartee, we will see the effect over the year starting from March because we are going to finally close our German plant, as just Isabelle said, there in the end of the first quarter. and something also to express on Smartee, there are 2 effects for our margin. The first one is the immediate COGS effect that will be obviously direct. And the second one will be the operational leverage that will come over the next 18 months, where we really are expecting significant growth that will help us to drive then significantly improvement in profitability as well with regard to all our SG&A costs that are going to be absorbed in a much higher way with the double-digit growth that we're expecting and that we are seeing at this point. But we are having also additional elements in our building blocks that we are counting and that are going to have positive effect on our profitability. The first one is obviously the manufacturing of the Shanghai campus, where we are allowing to have all our China volume being manufactured at a lower COGS that have been obviously planned in our guidance. We have also another one, which is in part looking at the growth of our digital equipment, where we are transitioning some significant part of our volume from third-party products to our own SIRIOS intraoral scanners, meaning that we can also benefit from a higher profitability. And last but not least, we are continuing to do operational leverage in the overall organization, thanks to the growth that we are delivering. Then that's where our improvement from a profitability standpoint is coming from many parts that are allowing us to be pretty confident about delivering then the improvement that we have been presenting. To the second side, I think if I understood well, you were talking about or you were asking about what is baked in our guidance somewhat with the current VBP being in Q2 and the destocking -- potentially further destocking of distributor. What we believe is that the destocking of the distributor is going to be less important than the second half of 2025 because they are -- it seems from our information in between 1.5 to 1.8 months of stock right now than at a pretty minimum level to operate. Then while it's going to be still slow from a patient standpoint, we don't believe that the destocking will be massive anymore. Now obviously, we are going to be still against a very strong comparison base. What you have to remember is our first half in China has been in the 20-plus percent growth. And we are going obviously to see much more than the weak market than what we have seen in the first half. Then it's much more this challenging comparison base that are going to provide, I would say, China still in the negative territories from our perspective that will strongly be reversed for the second half. Then we have baked more or less this dynamic in our guidance for our high single-digit growth for 2026. Operator: The next question comes from Daniel Jelovcan from ZKB. Daniel Jelovcan: The first one is also on Clear Aligners. Can you elaborate a bit on the geographical growth? It was probably double digit in all areas, but I'm not sure, that's why I'm asking. First question. Guillaume Daniellot: Yes. Daniel, Clear Aligner has been very dynamic, and we had double digit in 2025 again. Significantly in Latin America and EMEA, rather flattish in the North America, which we expect this to change with a better consumer sentiment. And we have been, since the partnership with Smartee, also seeing some interesting uptick in Asia Pacific and especially in the 2 markets where I think we will be able to drive interesting volume in the future, which are Japan and Australia. And that's why we are pretty confident to get on track with our Clear Aligner also operational leverage in the future, looking at the current growth trend that we're having on this business segment. Daniel Jelovcan: Okay. Great. And the second -- last question is the development in Spain. As you elaborated, you mentioned a lot in the past, DSO is pushing penetration up because of the low price and so on. I would wonder if you can add a bit more details. So what implants do the Spanish use? I mean, is it Neodent or is it premium or both? I'm talking about the DSOs. And also when you look at your penetration chart, is the DSOs, you see evidence that the DSOs are also pushing growth in other underpenetrated countries. I mean, have in mind the DSOs are not allowed in Germany, for instance, or maybe there is a change coming up. So yes, that's the question. Guillaume Daniellot: Yes. Spain has been a very good example on how DSO has grown the market through opening up a segment of patients that was not thinking that they could afford implant treatment. And with rather aggressive marketing activities, presenting, of course, implant treatment at a lower level, but especially pushing the patients to go through the door to get presented with the diagnostic, actually, it's a question of spending prioritization. Then if you do an implant, then you might not buy the latest, I don't know, computer or iPhone or whatever. And that's a little bit what we have seen for countries where most of the oral care or dental care are full copayment by the patient, which is the case in Spain. Then this has been one of the significant effect DSOs have had on those patient group that was not going to a dentist anymore, but are suddenly going to DSO because they feel that it's actually more affordable than they were thinking about. Then those DSOs are mainly using challenger brands and our Neodent system, but some are still using premium as well, especially because of the efficiency driven by the digital workflow that are not fully yet available on the challenger brands. We are expecting this to continue developing in other geographies. And one of the good reasons why we have also seen China developing so strongly after VBPs has been because DSOs have been able to invest and scale clinician education and also doing investments in equipment to be able to place more implants. Then DSOs are a very strong partner for us for continuing to open the market and expand the market in most geographies because they are also the ones that are investing in technology that are allowing efficiency and then potentially more affordable pricing, that's what we see the future. And that's one of the reasons also why we are working in co-creation with a lot of DSOs to develop specific solutions that are adapted to the strategy they would like to pursue. Daniel Jelovcan: That's great. And also congrats for this achievement in '25 in these challenging times. Operator: The next question comes from Julien Ouaddour from Bank of America. Julien Ouaddour: I have only one. But I just want to understand the level of maybe [indiscernible] conservatism that you have in the margin guide this year. Just to explain myself. So I mean, usually in a given year, you have some operating leverage that you expect to grow high single digits. You should have some -- I think you mentioned strong growth in EMEA, like North America also probably improving, which should help you on the mix side. In the call, you mentioned digital and Shanghai production to be a tailwind as well. So it seems the swing factors are the savings from ClearCorrect and like the VBP. Have you changed your expectation in terms of the VBP? I think in the past, Isabelle said China is expected to have roughly a flat margin. So is there, I mean, any different assumptions in the guidance? And in terms of savings, do you still expect the losses from ClearCorrect to have in '26, which should clearly give you a nice boost. So just trying to understand really the 30 to 60 bps of margin expansion. It's pretty -- I mean, it's pretty good already, but I wanted to check if there is any level of prudence there. Guillaume Daniellot: I can start with answering. Again, on the ClearCorrect, as we expressed, it has been a large transformation we started in August. And honestly, we are really pleased on where we are right now. We have made a very strong progress being able to connect manufacturing for 2 major regions with no hiccup, having really strong already feedback from customers from turnaround time, from quality levels and still using, again, all the ClearCorrect specific technology. That means we are using all our ClearCorrect portal. We are using all our specific ClearCorrect material. We are having still a very clear differentiated branding by leveraging the technology of Smartee. From a manufacturing standpoint, we are well on track, being able to -- we have started to transfer this manufacturing, meaning that with operational leverage, the plan that we have for end of 2027 to be breakeven of ClearCorrect should be really achieved. At least for the time being, we are pretty positive about this midterm perspective that we have. Then looking at regions like North America doing better and being able to deliver the stronger growth than the 4% we had in 2025 and backing for higher growth rate for 2026 will also deliver then higher profitability, thanks to the higher pricing that we have there versus the other regions. Solid EMEA will also contribute well that we can generate operational leverage from those geographies. Then I think we already expressed manufacturing in China, the fact that we have our digital equipment that are going to be more in-house than third party and the fact that we are also going to have the latest for us high CapEx year because we have been investing a lot into profitability -- into capacity, sorry, in the past years. I think it is making us, yes, I would say, confident about our capability to deliver higher gross margin and higher EBIT moving forward in 2026, but also having a profile keeping improving over 2027, which is really something that we are looking at from a midterm standpoint. Operator: The next question comes from Julien Dormois from Jefferies. Julien Dormois: I have two. The first one relates to the iOS business. I think you have mentioned during your presentation that you have experienced significant share gains, obviously, related to the comprehensiveness of your portfolio. So I was wondering whether you could help us size this market on a global basis and whether your current market share is maybe above or below the 10% you have highlighted for the broader digital equipment market. So just to understand where you sit on that side. And what do you think could be a realistic target for Straumann maybe by the end of the decade or in the next 5 to 10 years? That would be quite interesting. And the second one is very much a housekeeping question, and sorry if I missed that, but it's probably more for Isabelle. But at the current FX rates, I'm just curious whether it is fair to assume more than 500 basis points of adverse impact on top line and maybe a new round of headwinds to margin, probably to the tune of 150 bps if I compare to the 130 bps you had in 2025. Guillaume Daniellot: Yes, I will. I think -- thanks for the question, Julien. It's not so easy to assess the real full market total value of iOS. But if we look at what we call modern technology that our iOS and 3D printer, that's where we are assessing this market to be a bit shy of CHF 2 billion. And when we see our development, we are seeing, yes, our shares being double digit now. We have been, I would say, more on the 5% to 6%. We think that we have significantly increased this, this year, thanks to this new technology coming from our AlliedStar acquisition that we have made in September 2023. And we believe that this is going to continue to grow as together with our FreeShape partner, we are on the sweet spot to be able to deliver a really advanced technology with FreeShape for surgeons and orthodontists that really want to leverage the latest technology also in terms of diagnostic and having advanced capabilities. But as we are now entering a lot into the GP segment with orthodontics, but also implant treatments and now prosthetics, very often, they like a good technology that does not need to have all the latest one at a more affordable price. And what we have seen in this market penetration, we are now in the middle of the S curve, and we are well positioning to take a fair share of the volume of our intraoral scanner in the next 3 years. And we see that significant growth in the next 3 years. Afterwards, we expect the total market penetration to move from -- it is around 35% to, I would say, 35% globally today. It will double in the next 3 years from my perspective because we are having the sweet spot in terms of quality to price ratio on digital equipment. And this is where we believe strong growth will still be achieved on our side. This being said, I want to express once again the fact that we consider intraoral scanner as an enabler. What we want to do is really connect as many clinicians as possible into our open cloud-based AXS platform, where clinicians have then the efficiency, the access to consumables and solutions that are really creating a difference in their practice. That's where they can go to the Fast Molar workflow from Straumann, they can go to the clear aligner, then ClearCorrect solutions. They can go to the SprintRay. And every new technology that will come will be able to be connected through that AXS platform, meaning that we will be open to any innovation in-house or externally, thanks to that customer base connected with our intraoral scanner and that ecosystem. That's really the strategy that we have been pursuing and that we are very pleased into the progress of it right now. Isabelle, do you want to comment on the... Isabelle Adelt: The FX impact, yes. Julien, you didn't miss it. I think you're actually the first one to ask it, which I think is a little surprising. But I think -- I mean, FX impact, as you all know, I mean, we're operating in a very volatile environment. And I think you gave a very good range already when you said that. So from what we currently see and looking at -- basically looking at what we say we are doing at January spot rates, we are looking at a very similar impact we had last year once again. But having said this, to give a clear guidance at this point in time is very difficult. Because in January alone, we saw movement of over 50 bps up and down just by the volatility of the U.S. dollar. So I think for the time being, if you look at a very similar impact to what we had last year. So to remind you, in terms of top line, 480 bps; in terms of bottom line, 130 bps for the time being, the estimation is not too wrong. And we will keep you updated as the year evolves given of what the currencies will do throughout the course of the year. Operator: Next question comes from Richard Felton from Goldman Sachs. Richard Felton: Just two questions for me, please, both on orthodontics. So the first one, on the product side, like how important are some of the product innovations that you've referenced in your presentation? And for instance, the scalloped trim products, how important is that in filling a gap in your portfolio? And what percentage of cases are you now able to address? And then secondly, also on orthodontics, are there any changes to your commercial organization that you are making? Just trying to get a sense of what is driving the acceleration in liners that you expect over the next couple of years. Guillaume Daniellot: Yes. Thanks a lot for the question on orthodontics. And yes, I think happy to be able to explain this. When we are commercializing ClearCorrect, we had a significant differentiation, which is a specific high trimline, which is helping to place a little bit more force to the teeth in order to move them a bit faster and to do some different movements. This is something which has been appreciated by some clinicians, but a lot of others are used to scalloped trimline, which is what has been proposed by most of the players in the market. Then when we have been willing to switch some of the GPs that were using a lot of competitor products, they were asking us to have also the scalloped trimline option because they are so used to this that they don't want to change any of their protocols or their experience so far by moving to ClearCorrect. Then it has been a pretty strong obstacle to some of the switches that we were wanting to do because of asking the clinicians to change the way they were treating patients. And obviously, then a lot of the clinicians like to continue doing what they are used to and what they are confident with. And it's a very different way of manufacturing product. We have also to look at how to redefine protocols with a different trimline. And that's why for us, it's also a major addition to our portfolio because we will be able to offer those different trimline capabilities, either the high or low trimline that are existing to ClearCorrect and the additional scalloped auction that will be also a lot of wishes by a lot of general practitioners that we have been meeting over time. The second aspect on the commercialization side and what we have done is we have also to generate operational leverage decided to focus on the key growth market. And what we are doing is making sure that our customer experience, clinician support and commercial go-to-market investments are going to be done in the 14 major countries where we are seeing actually those double-digit growth. And as much as we are seeing growth, we will then continue doing specific go-to-market investments in order to support growth as we are seeing it happening. Operator: The next question comes from Sibylle Bischofberger from Vontobel. Sibylle Bischofberger: I have only two questions left. First of all, the gap between the reported EBIT and the core EBIT was quite strong in 2025. Could you give us a hint how will be the delta between your reported and core in 2026? And secondly, CapEx will clearly come down, as you said, only Curitiba 3 will be spent. And then in 2027, it will be even lower. Could you tell us how much it will be in 2026 and what to expect for '27? Isabelle Adelt: Yes. No, happy to take those two questions. I think this is what we discussed a little bit as influencing factors to our free cash flow performance already, right? So just to remind you, 2025, we had a lot of extraordinary impacts in there. So we provided quite some detail in our annual report what they were. And I think it wouldn't be too wrong to assume that everything regarding restructuring when it comes to the ortho business, when it comes to the transfer of our factory from Villeret to Shanghai is something that will not occur again this year. Although having said this, of course, costs related to M&A and so on will remain. So if you look at those categories, we provide quite a lot of detail. I think it's a fair assumption to say that 2026 will be a little bit more of the same as in previous years, but not in 2025, where we did all of those projects I just talked through. And then I think CapEx, I think it's important to understand that in the last 4 years, we invested over CHF 1 billion into our manufacturing capacity. Having said this, with the finishing Curitiba 3, we will have doubled our capacity for implants. And this means for the rest of the cycle, we will step down significantly in terms of CapEx intensity, so meaning CapEx over revenues. So you can already expect the first step down more towards the level of 2024, 2023, a mix of that in this year with the Curitiba finishing and then a further step down in 2027. Operator: The last question for today's call comes from Falko Friedrichs from Deutsche Bank. Falko Friedrichs: My first question is whether you expect China to see similar sales declines in H1 as it was in the fourth quarter? And my second question is, do you foresee a return to high single-digit growth in North America in 2026? Guillaume Daniellot: Sorry, the first one. Could you say again the first one on China, Falko, please? Falko Friedrichs: Do you expect the first half of 2026 to see similar sales declines in China compared to what you saw in the fourth quarter? Guillaume Daniellot: First half. No, not to the same extent. We don't think so because we believe that some of the destocking has already happened on the distributor side. But again, it will still be then quite lower than 2025 first half because of the fact that the growth was very significant. But we don't feel we will see the same trough that we have seen in Q4 than 2025. And when it comes to North America, we are not doing specific guidance per region, but I think we expect in between the high end of mid-single-digit growth to high single-digit growth being potentially possible, depending on what will be also the macro around there. But it's -- if we see the labor -- the latest news about the labor market that was rather positive. The inflation that has been just been presented at 2.4% and being also on the right side, that could help, of course, adding a little bit additional pressure on the Fed lowering their interest rate. We believe that we can have a rather positive development of the macro situation in North America that could support then a really good outcome for North America. It's still too early to say to see consumer confidence, but I think there are options for having a healthy growth for North America in 2026. Well, thank you for joining us today and for your continued interest in the Straumann Group. We look forward to seeing you again soon, and we wish you a nice day and a warm goodbye from Basel. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Good morning. My name is Gigi, and I'll be your conference operator today. At this time, I would like to welcome everyone to CT REIT's Q4 2025 Earnings Conference Call. [Operator Instructions] The speakers on the call today are Kevin Salsberg, President and Chief Executive Officer of CT REIT; Jodi Shpigel, Senior Vice President, Real Estate; and Lesley Gibson, Chief Financial Officer. Today's discussions may include forward-looking statements. Such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see CT REIT's public filings for a discussion of these risk factors, which are included in their Q4 2025 management's discussion and analysis and 2025 Annual Information Form, which can be found on CT REIT's website and on SEDAR+. I will now turn the call over to Kevin Salsberg, President and Chief Executive Officer of CT REIT. Kevin? Kevin Salsberg: Thank you, Gigi, and good morning, everyone. We were very pleased to report that 2025 shaped up to be a great year for CT REIT. In the face of continued geopolitical uncertainty and macroeconomic disruption, CT REIT once again delivered on its value proposition to unitholders. CT REIT's goal is to provide its investors with strong returns, growing distributions and stability. We manage our business with these hallmarks in mind, focusing on growth opportunities that leverage our strategic relationship with Canadian Tire, optimizing our existing asset base and maintaining a balance sheet that provides us with a resilient foundation. In 2025, we successfully deployed approximately $235 million and added nearly 900,000 square feet of new retail to our portfolio, with approximately 400,000 square feet of that being added in the fourth quarter alone. Although we were very pleased with the quantum and quality of the new space that we brought on this past year, as I discussed on our conference call last quarter, we were even happier with how we delivered these results. Across 13 discrete investments, our team found new opportunities to acquire assets from third parties to redevelop and improve existing CT REIT properties and to build new locations, both for Canadian Tire and for other third-party tenants. As we look to the future, we will lean into these growth levers and the core competencies that we have built in order to continue to create value for our unitholders and to improve our portfolio. This portfolio growth, coupled with our foundation of contractual rent escalations and our successful lease renewals, contributed to our strong financial performance in 2025. As we have seen across our peer group, demand for retail space continues to outpace supply and the fundamentals for retail real estate are currently very strong. Jodi will provide a little more color on this momentarily, but we continue to leverage this dynamic to drive organic growth and seek out new opportunities. Our successes over the course of the last year led to solid growth in our bottom line. In the fourth quarter, net operating income grew by 4.9% and adjusted funds from operations per unit grew by 2.9%. For the full year, growth in net operating income came in at 4.6% and adjusted funds from operations per unit grew by 2.8% and we achieved this growth while maintaining our payout ratio in the low 70% range and further reducing our indebtedness ratio by approximately 130 basis points relative to the end of 2024. We are also pleased that construction began at the Canada Square property related to Canadian Tire's new long-term head office lease in Q4. This project will substantially refurbish the existing 640,000-square-foot office complex with completion anticipated towards the end of 2028. With the improvements that we will be making to the property and the new Eglinton LRT line now operational, the future for this asset looks bright. I want to take a moment to recognize the CT REIT team for their hard work and dedication over the past year. In addition to our financial and operational achievements, we made a difference in our communities in 2025 through our fundraising efforts, the way we managed our assets and through our various sustainability-related initiatives. I'm very proud of the efforts of our entire team, and I'm optimistic about what 2026 will bring for CT REIT as we continue to advance our business. And with that, I will pass it over to Jodi for her comments on our investment, development and leasing activity. Jodi? Jodi Shpigel: Thanks, Kevin, and good morning, everyone. As highlighted in our press release yesterday, we were pleased to have completed several previously announced projects in the fourth quarter. These included 6 intensification projects, 5 of which represented expansions of existing Canadian Tire stores that are located in Victoria, British Columbia; Winnipeg, Manitoba; Fergus and Brampton, Ontario; and Donnacona, Quebec. The last intensification project related to the development of a third-party pad at an existing Canadian Tire-anchored property in Fort Frances, Ontario. In Q4, we also completed the development of a new 172,000-square-foot Canadian Tire store in Kelowna, British Columbia and the redevelopment of a former -- of a vacant former Canadian Tire store in Lloydminster, Alberta. This building was successfully backfilled with a national grocer, furniture store and a footwear retailer. Finally, as previously announced, we also acquired the freehold interest underlying an existing Canadian Tire ground lease as well as a multi-tenant commercial retail building in Fort Saskatchewan, Alberta. As Kevin noted, this is a very productive quarter for growth. In total, projects completed in the fourth quarter represented $116 million of investment and added more than 400,000 square feet of incremental GLA to the portfolio. They are also strong examples of how we collaborate with our principal tenant, Canadian Tire, to unlock additional value for our unitholders. Looking ahead, our development pipeline remains healthy. We currently have 11 projects at various stages of progress with 4 expected to be completed in 2026 and the remainder in 2027 and beyond. These developments, including the Canada Square office retrofit project in Toronto, represent a committed investment of approximately $329 million, of which $102 million (sic) [ $112 million ] has been spent to date. We expect to invest roughly $78 million over the next 12 months to advance these projects. Once completed, they will add just over 600,000 square feet of new GLA to the portfolio, approximately 95% of which is already pre-leased. Turning to leasing. During the fourth quarter, CT REIT completed a little over 1 million square feet of lease extensions, primarily comprised of 14 Canadian Tire store lease renewals. For the full year, we completed 30 Canadian Tire store lease extensions and overall, renewed retail leases representing over 2 million square feet of GLA. For the full year, these renewals were completed at a weighted average first year rental uplift of approximately 10.4%. As of year-end, we maintained a long weighted average lease term for the portfolio at 7.2 years, and our occupancy rate remained robust at 99.5%, up 10 basis points from a year ago. I will now turn it over to Lesley to discuss our financial results. Lesley? Lesley Gibson: Thanks, Jodi, and good morning, everyone. As Kevin mentioned, we are very pleased with the REIT's financial performance in the fourth quarter and full-year 2025. Once again, our results demonstrated the steady growth and resilience of our portfolio. Same-property NOI, which includes the impact of intensifications, grew 2% in the quarter compared to Q4 2024. For the full year, same-property NOI increased 2.2%. These increases reflect the contractual rent escalations of approximately 1.5% per year in many of our Canadian Tire leases as well as the contributions from intensification projects completed in 2024 and '25 of $1.2 million and $3.3 million for the quarter and year, respectively. Overall, net operating income for the quarter grew 4.9% year-over-year, representing an increase of about $5.7 million. For the full-year of 2025, NOI grew 4.6% or over $21 million. This strong performance was supported by the same-property NOI growth that I just spoke to and the impacts of acquisition and development activity over the relevant period. In the fourth quarter, general administrative expenses as a percentage of property revenue were 2.8% compared to 2% in the same period last year. The increase was mainly due to the timing of noncash fair value adjustments on unit-based compensation in Q4 2025. Excluding these fair value adjustments, G&A as a percentage of property revenue decreased 20 basis points to 2.7%. On a full-year basis, G&A expense represented approximately 3.1% of revenue or roughly 2.8% after normalizing for unit-based compensation fair value changes, slightly better than the 2.9% in 2024. The fair value adjustment of our investment properties was $110.4 million in the fourth quarter compared to $54.8 million in the prior year. This sizable gain was driven primarily by increases to underlying cash flows due to updates made to market leasing assumptions, strong leasing and renewal activity completed during the period, the impact of numerous development project completions mentioned by Jodi earlier and the compression of terminal capitalization and discount rates for certain retail properties within the portfolio. These factors more than offset the expansion of terminal capitalization discount rates applied to the valuation of our industrial properties, a change that was made to reflect current market conditions. For the full year, fair value adjustments totaled $195.4 million, up from $119.1 million in 2024. In the fourth quarter, AFFO per diluted unit was $0.317, up 2.9% compared to the fourth quarter last year and the full year. AFFO per unit diluted was up 2.8% year-over-year. FFO on a diluted basis was $0.339 per unit, up 1.5% compared to Q4 2024 and up 2% on a full-year basis. Growth in FFO and AFFO primarily reflects increases in NOI, partially offset by higher interest expense. Cash distributions paid in the quarter increased 2.5% compared to Q4 2024 to $0.237 per unit, reflecting the higher monthly distribution rate that became effective in July '25. This continued growth is further evidence of our strong track record of increasing distributions every year since our IPO in 2013, reflecting the cumulative growth of 45.9% that unitholders have enjoyed since that time. With AFFO per unit growing faster than distributions, our payout ratio improved slightly. The AFFO payout ratio for Q4 was 74.8% compared to 75% a year ago. On a full year basis, the AFFO payout ratio remained stable at 73.5%. Turning to the balance sheet. Our interest coverage ratio for the fourth quarter was 3.34x compared to 3.52x in Q4 2024. This decrease reflects the higher interest costs arising from the reset of interest rates on several series of our Class C LP units effective June 1, 2025, and increased utilization of our credit facilities to fund acquisitions and developments and the issuance of $200 million of Series J unsecured debentures in June '25. Even with these financing activities, our total indebtedness to EBIT fair value improved to 6.77x in 2025 from 6.81x a year ago as earning growth outpaced the increase in debt. Our indebtedness ratio at the year-end also improved relative to the end of 2024 at 39.8%, down from 41.1%. This improvement reflects the continued increase in the fair value of our investment properties and the growth in total assets from acquisitions and developments, partially offset by draws on our credit facilities. The strength in our balance sheet and these industry-leading debt metrics provide us with ample financial flexibility to fund our future growth initiatives. With respect to liquidity, we ended Q4 with approximately $4 million of cash on hand. Our committed $300 million bank credit facility was essentially undrawn at year-end, and we also maintained our $300 million uncommitted credit facility with CTC with roughly $104 million available on this line at year-end. Altogether, we continue to have adequate liquidity and balance sheet capacity to fund ongoing investments and to pursue new opportunities. And with that, I'll turn the call back to the operator for any questions. Operator: [Operator Instructions] Our first question comes from the line of Brad Sturges from Raymond James. Bradley Sturges: Congrats on the good quarter and obviously, a lot of success on a number of fronts on the growth side. Just curious on the -- I guess, as you think about the expansion intensification opportunity, you completed a number of projects in the quarter. Like how do you think about new opportunities to be added to the pipeline this year? Kind of what do you see in terms of new opportunities right now? Kevin Salsberg: Thanks, Brad. Yes, super happy about the completions in Q4. I think that was a big quarter for us. Obviously, looking to reload the pipeline just in terms of new opportunities and continue to work with Canadian Tire. I think the cost environment is still somewhat challenging on the new development side. As you know, we have several growth levers that we can pull, whether it be store intensifications, new store development, acquiring assets from other third-party landlords or even vend-ins, which we haven't done in some time. So we're obviously looking to the opportunities and availability of each of those types of transactions. And I'm pretty optimistic that we'll be able to find some that fit our strategy and our financial parameters and 2026 will shape up similarly to the way we were able to deliver in 2025. Bradley Sturges: Okay. So you think pipeline across all those buckets could be pretty similar year-over-year? Kevin Salsberg: Yes. I mean it's always opportunity based. So it's hard to say exactly. But certainly, we're out there. We're looking at some things that are on market, some things that are off market. We're having discussions with Canadian Tire. So I guess the best I would say is I'm optimistic, but time will tell. Bradley Sturges: Okay. And just what got completed or delivered in the quarter? Can you just comment, generally speaking, ongoing in yield on cost? Kevin Salsberg: Probably a mixed bag. I mean, obviously, we had some different project types, one ground-up development for a third party, some of the store intensifications, an acquisition. So on a blended basis, I would probably say mid- to high 6s, but that's without really spending a lot of time thinking about the math in my head. So I think that's probably a good rough guide. Operator: Our next question comes from the line of Giuliano Thornhill from National Bank. Giuliano Thornhill: Just had one question on the kind of vend-in opportunity. How large is that? And do you think kind of CT is mostly fleshed out on the industrial distribution side? Kevin Salsberg: On the supply chain side, yes, I think they're pretty set. They had a major swell in COVID when their inventory positions increased, and we helped them with that as we built a new DC for them in Calgary, I would say, looking back at the last couple of quarters, I think they've normalized that to a certain extent. So I don't see any huge opportunities with CTC necessarily on the supply chain side, although we do always look at synergies with respect to our existing holdings and if there's anything in terms of adjacent sites or opportunities in the nodes that we operate in to consolidate space. So that continues to be a strategy for us. In terms of your first question, in terms of the vend-in opportunities, there's roughly 10 to 15 Canadian Tire stores that we believe meet our investment criteria. The last couple of years, our unit price hasn't been exactly where we want to be in terms of issuing equity in exchange for assets, which is part of the formula we've used in the past when acquiring assets from Canadian Tire. I think today, we feel a little better about that. And certainly, with the development pipeline a little bit smaller than it was at this time last year, that is something we will be looking at. Giuliano Thornhill: And just with leverage kind of declining at all-time lows really, is there maybe the possibility to pursue larger distribution increases or possibly buying back stock at these levels? I'm just wondering kind of how you would utilize like that low leverage level for unitholders. Kevin Salsberg: Yes. I mean we've said before, while being below 40% is not necessarily a target for us, we certainly feel comfortable where we are. We also believe it provides some dry powder as you're sort of intimating. We prefer to use that dry powder to acquire or develop sites at the unit price levels that we're currently experiencing. I'm not sure we'd be users of our NCIB. That was something we were a little bit more active on when we were trading kind of in the low to mid- $13 range. Today, we're in the high 16s. So I think primarily, we would like to use it for growth initiatives at the portfolio level. Operator: Our next question comes from the line of Tal Woolley from CIBC Capital Markets. Tal Woolley: Apologies if I missed some earlier commentary, I had to jump on late. Just with Canada Square, now that the Eglinton LRT is done, can you just talk a little bit about -- I know this was one of the hitches sort of in getting things moving on that site. Can you talk a little bit more about just progress there? Kevin Salsberg: Sure. So very happy that the Crosstown LRT is finally open. In terms of hitches, there's kind of 2 components of that. One was the actual usability of the new line. The other is the 2 acres at the, I guess, northwest corner of our site are being controlled by Crosslinx, the consortium that built the LRT. And the first phase of development cannot begin on those lands until such time as they relinquish control. We don't have a specific time line as to when that will happen. I would imagine it would be sooner than later, but we have no notice yet at this point. Having said that, although the benefits of the LRT still accrue to the existing commercial complex and its users, the connectivity that it brings and access to the employee base here, we're really focused on the commercial refurbishment, the retrofit of the office space that we'll be undertaking with Oxford between now and the end of 2028. So I think while we will continue to advance the master plan and the zoning efforts, we're not really turning our minds quite yet to incremental density on the site in terms of the desire to proceed with that part of the project. Tal Woolley: And does that sort of -- does the ongoing like question about when you will sort of maybe start that piece, is that sort of factoring into why the pipeline is sort of where it's at right now that you wanted when you're thinking about this a few years ago, you want to have capital available to pursue that and so took on less? Or is it a function of just there are fewer projects to do at Canadian Tire? Kevin Salsberg: I think it's mostly the latter where there's fewer projects. Certainly having that dry powder to allocate as we feel is appropriate is a nice-to-have. So if in a couple of years, the market has improved, the density is realized and it's something we want to pursue, having the balance sheet capacity to do that is obviously great. But in the current circumstances, I think it's more of the cost environment that's impeding our ability to continue to add to the store intensification and new store development pipeline. Tal Woolley: Okay. And then just lastly, I guess this would be for Lesley. You have the, I believe, a $200 million debenture maturing in June. Would we expect you to move earlier on that. And I'm assuming you'd be looking to refinance the -- whatever you have left on your credit facilities too, in addition to the $200 million? Lesley Gibson: Tal, definitely, we're watching markets. And I think the public debt market, which is sort of our continued preferred avenue for sort of financing, is very constructive right now and it has been -- and it's quite active. So definitely looking to refinance the existing maturities, that $200 million and likely some upside to that. We'll just see where you are drawn on the line and where our use for the rest of the year is in terms of how much new offering could be. But yes, definitely in the next sort of 3 months, we'll be watching the markets to find an opportune time. Operator: Our next question comes from the line of Sam Damiani from TD Cowen. Sam Damiani: I just jumped on a little late. So -- but I think the question was asked about the former Canadian Tire store in Kelowna that has been backfilled. Has it been like 100% backfilled? And I wonder if you could comment on the rents versus the pre-existing rents on that space. Jodi Shpigel: Sam, it's Jodi. Just to clarify, it was a former Canadian Tire store in Lloydminster, Alberta that we backfilled. We completed a new store in Kelowna as well in this quarter, but the backfill was in Lloydminster. And so that's the tenants that were the grocer, the footwear retailer and furniture store. Sam Damiani: Okay. Okay. But there is an empty former Canadian Tire store in Kelowna, too. Is that not, right? Jodi Shpigel: That is correct. Canadian Tire still occupies it and has lease terms. So we're determining what comes next for that asset. Sam Damiani: I see. Okay. Thank you for the clarification. And I appreciate the new disclosure on rent increases, on renewal rent increases. That's very helpful. You showed both an uptick in the fourth quarter versus sort of first 9 months, both on the Canadian Tire and third-party tenants. Was there anything unusual in the Q4 stats there? Or would you say that's indicative of kind of just a market trend? Kevin Salsberg: I don't think there's anything unusual. I think certainly we're seeing an improved leasing and renewal market as we kind of commented on earlier. We've substantially dealt now with our 2026 maturities. So in the next couple of months, we'll be turning our eyes to the first few that come up in 2027. But yes, I think there's certainly an opportunity to replicate these kinds of results across the portfolio. I mean every batch of renewals that we deal with is slightly different in terms of where they're located, the size of the market, where the rents are relative to market rents. So there certainly could be some fluctuation up and down amongst the output, but we do think there is upside for us as we continue to get at these renewals, and that will start kicking in more and more as time goes on as we get further into our lease expiries. I think in 2027, I think there's about 6%, 7% -- 6% of CTR leases come up for renewal, 2028, almost 9%. So that number will continue to grow in prominence, and we'll continue to hopefully follow the trends that we're seeing more broadly in the retail leasing market. Sam Damiani: I appreciate that, Kevin. And the sort of 10.5%, 11% on the Canadian Tire store lease renewals, just to clarify, those are 5-year fixed renewals. Is that correct? Kevin Salsberg: Yes, that's correct, Sam. Sam Damiani: Yes. And so the average sort of annual increase is a snick above 2%. So if I'm not mistaken, that is higher than previous years, which I seem to recall was more in the 1.5% annual -- sort of average annual increase. Is that right? Kevin Salsberg: That's correct, Sam. Sam Damiani: Okay. And is that any reason, anything different with the 2025 renewals that would sort of justify that? Or is it purely just a reflection of overall markets, the mix geographically isn't meaningfully different year-to-year? Kevin Salsberg: I think it's a combination of the improved retail leasing market as well as the mix of those leases that we were dealing with. Operator: [Operator Instructions] As there are no further questions at this time, I will now turn the call over to Kevin Salsberg, President and CEO, for closing remarks. Kevin Salsberg: Thank you, Gigi, and thank you all for joining us today. We look forward to speaking with you again in May after we release our Q1 results. Thank you. Operator: This concludes today's call. You may now disconnect.
Operator: Good morning, and welcome to the Bel Fuse Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Jean Marie Young with Three-part advisers. Please go ahead, Jean. Jean Young: Thank you, and good morning, everyone. Before we begin, I'd like to remind everybody that during today's conference call, we will make statements relating to our business that will be considered forward-looking statements under federal securities laws, such as statements regarding the company's expected operating and financial performance for future periods, including guidance for future periods in 2026. These statements are based on the company's current expectations and reflects the company's views only as of today and should not be considered representative of the company's views as of any subsequent date. The company disclaims any obligation to update any forward-looking statements or outlook. Actual results for future periods may differ materially from those projected by these forward-looking statements due to a number of risks, uncertainties and other factors. These material risks are summarized in the press release that we issued after market close yesterday. Additional information about the material risks and other important factors that could potentially impact our financial performance and cause actual results to differ materially from our expectations as discussed in our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports and other documents that we have filed or may file with the SEC from time to time. We may also discuss non-GAAP results during this call, and reconciliations of our GAAP results to non-GAAP results have been included in our press release. Our press release and our SEC filings are all available at the IR section of our website. Joining me today on the call is Farouq Tuweiq, President and CEO; and Lynn Hutkin, CFO. With that, I'd like to turn the call over to Farouq. Farouq? Farouq Tuweiq: Thank you, Jean, and good morning, everyone. We appreciate you joining our call today. I want to begin by expressing a big thank you to our global team for making customer service and meeting demand their top priorities and for delivering innovative technologies as a key partner to our customers. As a result, 2025 was a milestone year for Bell, with record revenue and EBITDA. We delivered net sales of $675.5 million for the full year, a 26.3% increase over 2024 and achieved a record GAP and non-GAAP EPS. We Fourth quarter sales reached $175.9 million, up 17.4% year-over-year. Our gross margins expanded to 39.1% for the year, reflecting strong execution and operational discipline. Aerospace and defense, including space, continued to be strong drivers for us in 2025. For the full year, A&D accounted for 38% of our consolidated sales with 28% from defense and 10% from commercial aerospace. Recovery in the networking end market and growth in AI applications also contributed to higher sales in 2025. Order volumes remained strong across multiple end markets throughout the year, resulting in the full year book-to-bill ratio of 1.1. We have seen continued improvement and strength heading into Q1. This sustained momentum in incoming orders highlights a healthy demand environment across our end markets and positions us well as we move into 2026. Our team delivered these record results despite headwinds from material pricing, particularly gold, copper and PCBs and unfavorable FX movements in the peso, renminbi and shekel. We're actively monitoring these factors and have and will continue to take pricing actions to mitigate incremental cost, ensuring continued margin strength. Operationally, we successfully completed the closure of our China facility in Q4, transitioning operations to a third-party supplier without interruption to the business. This move is part of our ongoing efforts to optimize our global footprint and drive cost efficiencies. We also made significant progress in strengthening our balance sheet, paying down our debt by $90 million during 2025. We -- this has created additional capacity and flexibility for future investments and potential acquisitions as we continue to pursue growth opportunities. Looking ahead to 2026, we anticipate continued growth in aerospace, defense, space and AI, the same revenue drivers that have benefited Bell over the past few quarters. Additionally, we have seen positive shift in sales across the networking, consumer premise wiring markets as well as through our distribution channel. The rebound in these areas are expected to continue into 2026. We also foresee increased raw material input costs and a weaker USD, which will require us to proactively manage pricing and pass costs along where appropriate. Our pipeline for M&A activity remains active, and we are excited about several opportunities currently in various stages of evaluation. We anticipate a better backdrop in terms of M&A opportunities as the market noise settles down a bit in 2026. As announced a few weeks ago, we're excited to welcome Tom Smelker to our executive team. Tom joins us from Mercury Systems, bringing valuable experience and a fresh perspective in aerospace and defense. His leadership will help us better align our organization with changing customer needs and industry trends. As we continue to evolve, we are reviewing our segment structures to ensure we're well positioned for future growth. With aerospace and defense now representing a significant portion of our business, we see opportunities to further tailor our leadership and strategy to the unique demands of these markets. Before turning the call over to Lynn here, I would like to take a moment to recognize Pete Bittner, President of our Connectivity Solutions business, who will be retiring in April after 23 years with Bell. Pete has been instrumental in shaping and growing this segment and leaving it in the great conditions as he pursues his next chapter, and we thank him for his many meaningful contributions. We wish you great luck, and you'll be missed, but will surely enjoy his time with his wife and family. I'd also like to take a moment to recognize Dan Bernstein, who transitioned out of the CEO role in May 2025. This last year has been 1 of significant transition for Bell, and I want to sincerely thank Dan for making it a seamless one. Our business transformation, which began years ago under Dan's leadership, laid a strong foundation for the company's continued success. His vision and commitment to Bell's growth have positioned us well for the future, and we're grateful for the guidance and dedication. On behalf of the entire organization, thank you, Dan, for your outstanding contributions and for setting Bel up for success. With that, I'll turn the call over to Lynn to run through the financial highlights from the quarter and provide color on the outlook for Q1 2026. Lynn? Lynn Hutkin: Thank you, Farouqu. From a financial standpoint, we had another strong quarter and year with continued margin expansion and solid sales growth across all segments. Fourth quarter 2025 sales were $175.9 million, up 17.4% from the same quarter last year. Full year 2025 sales totaled $675.5 million. a 26.3% increase over 2024. On an organic basis, sales grew by $41.5 million or 7.8% over 2024. All 3 product segments delivered organic growth for the quarter, demonstrating the strength of our diversified portfolio. Profitability improved alongside sales with gross margin rising to 39.4% and Q4 25, up from 37.5% in Q4 '24. I -- for the full year 2025, gross margin was 39.1% compared to 37.8% in 2024. This margin expansion was driven by improved absorption of fixed costs in our factories due to higher sales volumes and by strong execution within each segment, maintaining discipline around SKU level profitability. These results highlight our ability to drive value through operational efficiency and strategic focus. Now turning to our product groups. Power Solutions and Protection delivered another exceptional quarter with sales reaching $92.5 million in Q4 '25, an increase of 18.5% compared to the fourth quarter of last year. The sales growth in the Power Solutions segment was driven by several key end markets, including a $1.5 million increase in sales of our front-end power products, serving the network networking end market and Q4 '25 compared to Q4 last year. Fourth quarter sales into AI-specific customers reached $4 million in Q4 25 up from the $3.3 million in Q4 '24. Fuse product sales were up by $1.4 million in Q4 '25, a 31% increase from Q4 '24. Sales into consumer applications increased by $1.8 million in the current quarter, up 32% from Q4 '24. And just to note, in our Power segment, this is also where we had the acquisition last year. So there was some organic growth on the defense side as well. These areas of growth were partially offset by a decrease in sales of our rail products by $4 million and e-mobility sales were down $1.1 million as compared to Q4 '24. The gross margin for the Power segment was 44.5% for the fourth quarter of 2025, representing a 390 basis point improvement from Q4 '24. This improvement was primarily driven by higher power sales into the aerospace and defense end markets, a favorable shift in product mix and better absorption of fixed costs at our factories. Our Connectivity Solutions group achieved sales growth of 15.1% during the fourth quarter of 2025 as it reached $60.5 million compared to Q4 '24. This improvement was due to the continued strong performance in commercial aerospace applications, where sales totaled $18.2 million, an increase of $3.8 million or 26% year-over-year. Sales into space applications amounted to $2.6 million in Q4 '25, up 53% from Q4 '24. Connectivity sales through the distribution channel were up $3.8 million or 20% versus Q4 '24, primarily due to shipments into the defense end market through the distribution channel. Profitability within the Connectivity segment continued to improve with gross margin for the group rising to 37.2% in Q4 '25 from 36.6% in Q4 '24. This margin expansion reflects the benefits of operational efficiencies achieved through improved revenue, a more favorable product mix and facility consolidations completed last year. These positive factors were partially offset by minimum wage increases in Mexico. Lastly, our Magnetic Solutions group sales delivered a solid quarter with sales reaching $22.9 million in Q4 '25, a 19.1% increase compared to Q4 '24. This performance was primarily driven by higher shipments to a major networking customer. Gross margin for the group was 27.3% in Q4 '25 and down from 29.1% in Q4 '24. This margin differential was due to minimum wage increases in China, an increase in material costs, primarily in gold and PCBs and unfavorable foreign exchange impacts related to the renminbi. Research and development expenses totaled $8 million in Q4 '25 in representing an increase of $1.1 million compared to Q4 '24. This increase was primarily attributable to the inclusion of Entercom's R&D costs, which amounted to an incremental increase of $1 million during Q4 '25. We anticipate that R&D expenses in future quarters will generally remain consistent with the Q4 '25 level as we continue to invest in new technologies and solutions to support our customers and drive long-term growth. Selling, general and administrative expenses for the fourth quarter of 2025 and were $32.6 million, down $2.2 million from the $34.8 million in Q4 '24. -- primarily driven by lower acquisition-related legal and professional fees in 2025 compared to 2024. Turning to our balance sheet and cash flow. We closed the year with $57.8 million in cash, down $10.5 million from last year, primarily driven by our proactive efforts to strengthen our balance sheet, including paying down $90 million in long-term debt, resulting in $197.5 million of total debt outstanding at December 31, 2025. Additionally, we made $3.5 million in dividend payments and we invested $12 million in capital expenditures to support growth and efficiency initiatives. These outflows were partially offset by $7.8 million in proceeds from property sales, and $1 million from the sale of held to mature securities earlier in the year. During the full year 2025, we generated cash flows from operations of $80.6 million. Taking into account our swap agreements, the weighted average interest rate on our debt balance at December 31, 2025, was 4.4%. Looking ahead to the first quarter of 2026, we continue to see strength across all 3 segments. Historically, our first quarter tends to be our lowest sales quarter of the year, given the impacts of the Lunar New Year holiday in China. In light of this historical trend and based on the information available as of today, we expect Q1 26 sales to be in the range of $165 million to $180 million. Gross margin is expected to be in the range of 37% to 39% and given anticipated headwinds related to higher material costs and the unfavorable FX environment we are in. Overall, our consistent performance strategic investments and operational excellence have positioned Bel for continued success. We remain committed to driving shareholder value, innovating for our customers and capitalizing on growth opportunities across our markets. I'd now like to turn the call back to the operator to open the call for questions. Operator: [Operator Instructions] The first question is from Bobby Brooks from Northland Capital Markets. Robert Brooks: So I wanted to touch on kind of sales initiatives moving forward. So you guys brought in the new head of sales about a year ago, right? And I'd just be curious to hear where he sees the most interesting opportunities for growth. Obviously, for Roop, when you initially joined as CFO a handful of years ago, you had a massive shift in the margin profile of the company, which A lot of that was sort of low. A lot of that was sort of like low-hanging fruit that you targeted. So I'm just curious to hear if that sort of same scenario. If Ooma has seen that sort of same scenario and again, like what he sees as the largest opportunities to go after. Farouq Tuweiq: Yes. Thanks, Bobby, and good to speak with you here. I think that's a pretty nuanced question. As a reminder, we are largely in a medium- to long-term design cycle businesses, right? So as we think about influence, and we think about A&D, I'd probably suggest the largest part of E&D for 2026 is going to be simply receiving orders from the customers as they get funding and deployment. So if we were to think about sitting early on in the year here about new wins and when they get funding, you're at least a year out probably 1 to 2 years before you monetize them. And some of our shorter design cycle businesses on the other end, I would say something like fuses you could probably see a win a couple of quarters out, and that translate into some sales of some of our consumer business. So we are a long-cycle design business. There's no quick claims here. We sell technology. We want to get in with the customer. We want to do the hard stuff. -- and therefore, that does take a while. If we look at the past few quarters on some of the benefits I have in there, that has been a reflection of the work that the team has done at a global level. within the various businesses, right? So I would suggest that the wins and the performance that was probably not much due to sales efforts that happened in Q4, right? This is stuff that probably happened early on in 2026. So we are seeing the benefits of the global team folks in doubling down. When we look across the business, we have new wins across probably all of our end markets, maybe a little bit less so in places like e-mobility or maybe some of our, I'd say, rail is kind of a little bit of a slow year. But I would say more often than not, we always have new wins. And when we think about the funneling process, right, we want to make sure we're going after a robust set of opportunities that are good opportunities and try to convert them to sales. And that process, we started a while back. Now that's not to suggest that we don't have work to do. On the last call, we talked about CRM implementation in Q4. We did 3 -- a little over 3 dozen worth of contracts with our reps in the U.S. to really lean into new opportunities. So we're trying to move the whole system forward from compensation structures to software and data to a shift and it's been happening, right? It's evolutionary. So we've seen the wins. Where is it going to come from? I mean we think probably there's a lot of money going into A&D data centers, AI, a lot of obvious interest going in there. But quite frankly, our consumer business did very good last year. So I think what we like about us is we touch a lot of end markets, and we like the way they're looking today heading in 2026, a little bit more maybe than early '25 or '24. So a long answer to your I just want to caution, we're not a quick turn business, and we're trying to sell more design-in type work or modified solutions versus just purely off-the-shelf stuff. Robert Brooks: Absolutely. Really appreciate that detail color for. And then -- maybe just turn into the 1Q guide, very, very impressive, but just wanted to maybe unpack that a little bit more and maybe hoping to get a little bit more granular on the expectations for growth across the 3 segments? Lynn Hutkin: Sure, Bobby. So as we look to the first quarter, and I guess I'll compare it to this recent Q4 that just ended here. We're seeing a lot of the same areas of strength across all 3 segments. So not seeing much in the way of significant shifts or changes from Q4 to Q1. I think the only variable in there is the Lunar New Year holiday, which impacts primarily magnetics and then to a lesser extent, power. So those are the areas where we may see a little bit of softness from Q4 to Q1. But Other than that factor, everything is pretty similar to the Q4 drivers. Robert Brooks: Got it. I appreciate the color there. Congrats on the great quarter. Operator: The next question is from Christopher Glynn from Oppenheimer & Company. Christopher Glynn: I just want to build on Bobby's question about developing the commercial funnel. So you mentioned focus on designing and modified by modified burs off-shelf is how you're developing the funnel that makes sense. We've heard that. Curious if you're noting any traction in win rates for us historical as you mature this -- these strategies. Farouq Tuweiq: I think we're doing a better job at defining what a win is and how we want it to be at certain levels of margin. The other thing I think we are moving more towards 2026, and we talked about last call, is we want to really try to bring the whole Bel portfolio to our customers. I think historically, we've been really more focused around selling specific products like fuse or a connector power supply. And we do need to do a better job at doing a little bit more systems type sales to our customers. Now this is a little bit of a longer journey. . But the idea there is we want to get more alignment to the customer, solve more of their problems and challenges and really be a little bit more of a solutions address the difficult things for our customers. So it's not just simply about more shots on goal, which we are seeing. We're seeing better shots on goal, but we still want to continue to evolve to higher content on goal. So Yes, we're seeing better also the markets a little bit better place, right, so which creates more opportunity for us. I think the team also remember, we spoke on the last call, where we started creating new internal groups and structures to align to that. So for example, we created a key accounts group, right, which we have not had that most of the time it was kind of sitting inside the BUs, now we want to have a more Bel focused key account groups that bring all of our products to the customers because we do have a lot of SKUs. Same thing on the business development efforts. We're [indiscernible] the teams around end markets as we think about products and directions. So I would also argue customer service is an extremely important part of this as we create an easier user experience for our customers. And we just have a lot of different e-mail addresses to customers in different forms and everything and the like or different pricing list to our distribution partners. So I think calling these things out to not underemphasize that there is a robustness in what we're doing that needs for you a pervasive in our holistic approach to the market. So the short answer is yes, there, Chris, but it's also more than just trying to get more shots on goal. Christopher Glynn: Great. That was great color, for. And then on the AI customer base, you mentioned that as one of the continued drivers of growth next year. You've often described it as being in early stage. I think with single source to well funded more start-ups for us the headline, big 3 or 4. Just curious if any of those customers are potentially positioning for adoption curve to their technology where you can cotail, not necessarily first half of '26, but more conceptually. Farouq Tuweiq: Yes. I think the answer is yes in short. The body language from our customers, I'd say, across the networking side. But specific to your question around AI, yes, and that is obviously reflected based on the bookings that came in towards the end of the year last year, the discussions that are ongoing with our customers and obviously, the ultimate outlook that we put out there in the quarter. So the answer is yes, we're seeing the positive momentum scaling and continuing to move forward. And also, let's not forget, there's a networking set of customers that bundle our product into their solutions that ultimately make it to folks like hyperscalers, right? So when we think about networking, it is obviously AI, and that is not an insignificant number for us, which is nice to see the team's efforts pay off there, but also networking side is just as important because we do touch AI in a couple of different ways, right? Christopher Glynn: Yes. Understood. And then just defense, just wanted to clarify. I get a lot of questions about the mix. I think you're pretty broad-based rotor, fixed wing, munitions, comms, radars, maybe even just curious if all those categories, if that is accurate, where the weightings are. Farouq Tuweiq: Yes, in short. Christopher Glynn: Okay. Okay. Great. Understood. I understand it... Farouq Tuweiq: Yes, I would say we want to be careful with kind of talking about at our side here, right? But all the kind of mean -- we're on all the major programs and some not major programs. So it's a very diversified portfolio anywhere to the things that you called out, munitions, things that fly, right? And we're doing more ground obviously, space is a little bit tangible to that as well. But we cover encryption communication, right? So all the things that you talked about, we probably touch it. Christopher Glynn: Great. And last one, just a housekeeping -- any thoughts on share class consolidation. I think 1 of your holders had generated a headline. Farouq Tuweiq: Yes. I would say I think from the gist of it, the -- our shareholder structure is a little bit more nuanced from the perspective of the economic differential between the 2 shares, right, versus just a vote, no vote. So that's one. I would say, as an appropriate due course, we'll have a company response and views on that at the appropriate time. I don't want to speak on the behalf of the board, but at the appropriate time, we'll address that. And also we -- I think the -- what we're trying to do here, Chris, and we've really been at this for the last handful of years here, is we want to our fiduciary dairies to serve the best interest of all of our shareholders, As and the Bs. And as we build a company that's set up for the future, with good performance and investing in our employees and our customers, ultimately, that's kind of what moves the needle. So I just wonder, we're very aware of the fiduciary duty, but I think the Board at the appropriate time, will have a response. That's a little more formal to this. Operator: The next question is from Theodore O'Neill from Litchfield Hills Research. Theodore O'Neill: Congratulations on the good quarter. . Farouq Tuweiq: Thank you, Theo. Theodore O'Neill: So are you guys seeing any impact from the spike in prices on memory? . Farouq Tuweiq: I was going to say, our customers, I would say, largely are the ones that feel it. We not directly are impacted by that. Obviously, we have our other let's say, spike in prices that we're dealing with, like gold and copper we spoke about. But on the memory specifically, it's more, I'd say our customers are influenced by that. Theodore O'Neill: Okay. And on the gold, copper and print circuit board side and the weaker dollar, do you have the ability to hedge some of those? Or do you pass the pricing on? How do you adjust for that? Farouq Tuweiq: Yes, that's a good point. Today, we hedge our FX exposure from a raw material perspective, we're in the business of providing solutions to our customers and technology. So we want to focus on what we're good at. We're not running a prop desk care trying to hedge everything, right? So I think our approach has been we want to try to do our best to mitigate and offset price increases, but to the ability -- and work with our customers to the extent that we can't. We, unfortunately, have to pass that along, and I think that's not unique to us and really kind of in line with the supply chain behavior. But ultimately, we want to be great partners to the extent we can offset it. Sometimes we will find alternative sources. We want to be a solutions provider really to our partners. But in cases we can't, we need to do the unfortunate decision of passing it along. Theodore O'Neill: Okay. And finally, on the Aerospace side, do you have any exposure to the drone market. Farouq Tuweiq: I would say we generally do, yes, I think the drill market is going through some interesting things, right, where there is, let's call it, more consumer that tends to get retrofitted as we're seeing out in the world in, like Ukraine. That's not really our market. We're more in the military kind of U.S. primes and some of the European and Israeli OEMs, the stuff they manufacture. So we're not in the, let's say, drones that you and I are maybe buying or in the more sophisticated drone game. . Operator: The next question is from Greg Palm from Craig-Hallum Capital Group. Unknown Analyst: This is Dany Egerton for Greg today. Maybe just hitting again on A&D and maybe unpacking how you saw that develop in the quarter maybe between Enercon and Corbel and maybe what you saw in some cross-sell business. And then obviously, we know kind of about the increased spend. But as you look into 2026 here, what gets you excited about the growth in this business? And what kind of visibility do you have here? Lynn Hutkin: Yes. So Danny, I'll take the first part of that question. So the growth that we saw when we talk about defense, it's both in our legacy singe business and through Enercon -- we definitely saw growth in the Enercon business. As we look at the business, I think it's important to also keep in mind what we sell through our distribution channel. So there are direct sales and then there are sales through distribution, which we don't really break out into those end markets today. But we did see, as we mentioned in the commentary, we did see a nice increase in distribution that related to growth in defense for that fine business. So I would say that it was pretty split between the 2. So both Sinch and Enercon had robust growth in defense in Q4. Farouq Tuweiq: One thing we would just add [indiscernible] 6, right? We're seeing the build rates on the plan side continue to increase and head in the right direction. Also a lot of the programs around munitions and given kind of what's going on in the world, these are well-funded programs. So we think there'll be a prioritization to make sure those get to fruition and the finish line. So as we look at the amalgamation of that, we feel pretty good as to where we stand compared to what's funded out there. . Unknown Analyst: Okay. No, that's very helpful. Then maybe if I can just touch on gross margin here, which was pretty strong in the quarter, especially in power. I know you mentioned some of those headwinds with FX and input costs, but any way to quantify those? And then as we kind of have that push-pull between input costs and passing on price in any way to think about potential margin expansion in '26? Lynn Hutkin: Yes. I think as we look at the fourth quarter, I think we thought that we may have had some additional FX headwinds in Q4. But we have had hedging programs in place, as Bruce mentioned. So we're still seeing the benefits of those prior hedging programs come through the current period. So as we look we do foresee some margin pressure there on FX. I mean if you look at the peso rent and chuckle, they're all moving in an unfavorable direction. And we do hedge probably half of that, but that's going to start rolling off -- so we definitely see pressures there. And then even on the material side, that's something that -- it takes time to ultimately come through our numbers, right, as we're buying raw materials today, that's something that will flow through our financials at a later date. So we do think that we will see margin pressures in '26. And this is why we're really being mindful of pricing actions that we may need to take with customers. Farouq Tuweiq: And 1 thing to just kind of flag in the pricing, right? It's a little bit of -- it's not as simple as we wake up and raise our prices, right? There's a little bit of cadence to that. So some of the contemplations are do you reprice the backlog, do you come up with an updated pricing list for distribution, which takes, I think, something like 30 days before it's effective. So there's a little bit of a time issue. The other thing I would say, and we've talked about this in the past, while our margins are great, and we'll always continue to try and push margin expansion, we have pivoted from a margin gain to a growth game. So we need to make sure that we are winning our fair share of business and opportunities out there that we can get in on. And to enable that, there is some potential investment that we've been doing a little bit around the go-to-market, the systems piece of it and the people piece of it. So I just want to make sure -- and I know the margin gets a lot of discussions on the Bell earnings. And obviously, we're very proud of our margins. But we are hitting some headwinds that we've got to make sure that we have in the middle of this kind of growth that's coming that we're positioned appropriately for not picking up too much. Operator: The next question is from Luke Junk from Baird. Luke Junk: Just wanted to double click on what we've been talking about in terms of what you've been doing to realign the sales force really thinking more about how do you attack markets or key customers, but something that you said in the script, kind of caught my attention in -- with oncoming in to head the connectivity business, that there might be some like opportunities even further down in the organization. Am I hearing that right in terms of aligning operations, maybe even from a, let's say, manufacturing footprint to better attack some of these discrete opportunities? Farouq Tuweiq: Thanks for the question there. Look, I would say a couple of things to maybe answer it from the back way of your question here. So on the operational side, we I can't remember 7, 8 facilities. We've done a lot. So what's going to dictate facility moves is the current state of the business and the customer demand, right? We pride ourselves and were our customers. So obviously, for a while, there was a lot of discussion around China and India than that froze. If that kind of starts up for some people at a startup, we were going to move to some of our products to India. So I would say, given the geopolitical world that we live in and the realignment of localization of supply chains, we are in these, let's say, active discussions, right? But in terms of Bel as a stand-alone basis in putting a political supply chains, our facilities are pretty good. So we have to react to the fundamentals of the market. I think our biggest opportunity here is around the go-to-market and sales piece of it. I think maybe just to highlight on moving a facility for us is a big task, and it's not simply is just moving equipment, building some buffer supply, moving equipment from place A to place B., you need to set up a lot of kind of the legal structures. And if you're talking about A&D, there's a lot of regulatory hurdles to jump through. As we're setting up, for example, our Slovakia factory to be more A&D facing to the European markets we're living through the complexity and spider web of getting all the clearances and certifications on defense weaponry control. In addition to that, customers usually always have to want to come up to your facility and do audits and usually there's feedback and that takes a whole issue. So it's not easy. We don't take these decisions on moving facilities lightly. So we need our customer market changing dynamics to force our hand on a facility move. Go-to-market our products today that we have that can be bundled together that can be brought to bear as we talked about, the key accounts group earlier, that is our biggest opportunity at hand. And then operations, there's always things to be done, sure. But I think we've done so many of them that we need to live in growth land. And if we're not going to move a facility unless it's going to help us grow, right? Luke Junk: Yes. That's super helpful. Near term, just curious from a guidance standpoint, New Year, obviously, having a seasonal impact as we've normally seen the business, but it's pretty late this year. I think it's almost as late as it can be just from a calendar standpoint. Would you normally have maybe a little better feel for that seasonal impact in the fiscal year? Is there any conservatism just because of your timing and the guidance? Farouq Tuweiq: I think as you know, Luke, in public land, right, everybody is always trying to figure out the optimal way to guide the Street. Our perspective from guidance is we want to land in a range and we build it to around the midpoint, right? So we're not trying to -- we don't build it to the high end point of our range and hope to guide we go over a range. We build it to the midpoint. -- right, to allow for some room for shifting from quarter-to-quarter. Obviously, we're in A&D, that tends to be kind of sometimes funny business. If we allow for some overordering fuses, yes, given how late we are in the quarter, talking about Q4 right here, we are roughly in the back of February, yes, we have better visibility. But to put your comment on question specifically about Chinese New Year, it's 2 weeks off, right? Everybody can trust down. It's not just us. It's all the CNs, it's all our customers in the Far East, right? So as a result of that, everybody goes pencils down for 2 weeks. And when they come back, it doesn't just turn on a dime. Usually, there's a week of, let's say, tough start time getting back into the groove, getting things going. So you're probably talking is somewhere between 2 to 3 weeks loss on a 3-month period, all right? That's not insignificant. So I wouldn't say conservatism. I would say we wanted to do what we say we're going to do and we're in our best guess. So we're not trying to be conservative on that. Luke Junk: Fair enough. And then I just want to zoom out for my last question. The Power side of networking. Obviously, you've got some exposure there. I mean, the higher levels of power that power these more capable chips really becoming quite apparent in that world right now. And I'm just wondering to what extent you're seeing any pull-through from a design cycle point of view for high-voltage components from either your Tier 1 customers or your direct customers in that world? And especially if there's any IP that might be leverageable either, I think, rail or mobility, both have some high-voltage IP that might be interesting. Farouq Tuweiq: Yes, I would just say -- I think there's a couple of things to unpack there, right? Specifically the AI networking world, it's always going to go to more high power, higher density, less energy right, more efficiency. So that's a constant theme over ever. Now we are seeing, I would say, some new designs coming in relatively maybe in a short period of time, maybe back of the day, it was a 3- to 4-year device cycle, things are coming in a little bit sooner. So we are, for example, selling some products -- but we're already working on the next gen stuff. So that has happened a little bit quicker. I will also say, generally, right, we do have exceptions, but we're not really an IP business, right? We R&D to fix or address a problem. And then what we want to do is we want to -- we do a pretty good job at this inside of each of our business units is how do we leverage what we've developed for somebody to either standardize it or select modifications and then we extend the recap products, whether we do distribution or other similar customers. The other thing we are seeing, which is actually interesting in some of our actual e-mobility products, given the nature of those products, we are starting to see some military folks looking at, let's say, high-end products and services but not quite military grades. So kind of I guess, we're calling semi military being used. So we are seeing that extension of the R&D effort that has gone to e-mobility into other markets. Now we haven't won anything yet, but we're feeling good about potential wins coming if that makes. So that's how we extend our R&D dollars. We're not looking to reinvent the world every time. Operator: The next question is from Jacob Parsons from Needham & Company. Unknown Analyst: I'm just asking a question on behalf of Jim Ricchiuti. So we've been kind of hearing a better tone in the commercial aerospace market. Really, particularly with the leading domestic players in the marketplace. So how are you guys thinking about this area of the business in 2026 and potential for better growth within the Connectivity Solutions area. Farouq Tuweiq: So as it relates to commercial air specifically, right? I mean for better or for worse, we are -- from an OEM perspective are attached to the hit to our largest North American customer. And the way that we're going to make more money and to be clear, we service that customer both our Connectivity and our Power A&D business. So the way we're going to grow revenue is a direct correlation to increase build rates right? And we've lived the ugly side of that when there was kind of the all the union negotiation. If you recall, I think it was Q4 last year, there was a shutdown at kind of threw our business a little out of whack or back in the days of the grounding of the MAX. So we are going to see how that correlates to the build right. So what we always point close to is, I think they're very public about build rates and what's going to get approved and not approved. So take a view on that, and that should have a direct correlation back to us. On the Connectivity business, so not the Power business, there is an element to it, right? So as we think about MRO cycle, I can think about are people on the planes flying being consumed and miles are being put on these planes. And up to every so often, those mine to be kind of retrofitted or MRO, right? So we think flights and when we look at the earnings of the -- some of the flight operators out there, people are flying and planes are moving. So we feel both good on the OEM and MRO side. Unknown Analyst: Yes. That's all super, super helpful. And if I can just kind of get 1 more in. So I'm curious, how's the book-to-bill ratio varied much by market vertical and which areas of the business have you guys seen the biggest changes relative to last quarter? Lynn Hutkin: Yes. So I think on the book-to-bill side, Farouq had mentioned we were at 1.1% for the full year. I think our book-to-bill has strengthened as the year progressed. In Q4, our book-to-bill was 1.3. And I would say that strength was seen across all 3 product segments. So there's not 1 segment that is really high, while someone else is below 1. All 3 are very strong in Q4. Operator: The next question is from Hendi Susanto from Gabelli Funds. Hendi Susanto: I have several questions. Park, can you help unpack more details on your AI opportunities in terms of end products or devices to help us build better ideas. Some products that come to mind are like power modules, network switches, traditional compute, AI surfaces and optical networking. Perhaps you can help us build better ideas of your devices? Farouq Tuweiq: Yes. I would say, Hendi, we want to be a little bit careful here, but our products are going to are more around the power side of the business, and the Bel Power is kind of where it's at. I would say from a direct where we know things are going for AI. Obviously, our magnetics business is also beneficiary from the networking guys and then they're kind of the RJ-45s kind of what we call magnetic solutions, which is really more maybe a potential interconnect product. So that's how we go at it largely. Our connectivity business doesn't do too much into those end markets given that we're really more low volume, medium volume harsh environment applications in that product that coupled with it being more copper based. So that's how we kind of go at the AI piece of it. Generally, we do some stuff with the hyperscalers, but that's not really our focus market. So if you remember, we got in trouble there back in 2020. So we want to make sure we pick slots where technology and service matters versus just a copy product with a race to the bottom on pricing. Hendi Susanto: Yes. And if I may quickly check if there are products that may carry some opportunity for physical AI or humanoid robots? Farouq Tuweiq: I think the humanoid market is still getting settled. Today, it's definitely not a big dollar amount. It's very much R&D-centric. I think there's a question around from a humanoids perspective, is that ultimately a consumer product like auto, or is that going to be a technology play? I still think we're far out from mass production. But today, it has not been a discussion level for us. That's a dominant one. Hendi Susanto: Okay. And then what are your latest view and outlook on pockets of market recovery and inventory rebuild activities among customers? Farouq Tuweiq: I don't think we -- right. I think the inventory rebuild is kind of stacking up the shelf really on the customers. I think given that everybody, I'd say, went through a pretty difficult lesson back in '23 and '24 and overlaid with the tariff geopolitical world we're in, I'd say people are generally ordering more to demand versus building up the shelf. And quite frankly, I think that's probably a good thing in the sense, right? If you want to be able to shelf then you've got to deal with the hangover. So today, we feel largely and I'm sure there's exceptions. Obviously, we touch a lot of markets. But largely, we feel to shift to demand versus ship to put on a shelf and build a buffer stock because obviously, with tariffs, if things move, the things that you put on the shelf all of a sudden really changed pretty quickly. So I think there's a little bit of nervousness around that from our customer perspective. Hendi Susanto: Yes. And then, Lynn, I have a question on seasonality of sales in aerospace and defense. Is there a -- like if I look at Enercon cells, I'm trying to figure out what seasonality we need to model? And then plus considering that you are -- you may also like winning like more design. So what kind of seasonality can we expect in 2026 in aerospace and defense? Farouq Tuweiq: I'd say generally, aerospace and defense is not a seasonal business where we play, right? North America, Israel, Europe, right? I would say it's really more around sometimes they move for a core to the other when things get funding, right? That's kind of where the choppiest comes from. But it's not really a seasonal to seasonal play, I would say, if there was a seasonality I mean not to the Enercom business, obviously, our connector business. But there is some less working days generally in Q4 just with the holidays and Thanksgiving but -- and some of the Jewish holidays in October. But other than that, I would not say it's a seasonal business. Hendi Susanto: Okay. And then I have a question on capital allocation and debt payment, especially following the $90 million of debt payment in 2025. What is your playbook for capital allocation and debt payment? Farouq Tuweiq: Yes, Go ahead, Lynn. . Lynn Hutkin: So I think as we look at capital allocation, Priority #1 is reinvesting in the business through CapEx. We have regular weight dividends that we continue to pay. Barring anything on the M&A front, debt paydown is where it would be. And I think from a dollar perspective, the last couple of quarters, it's -- they've been robust debt paydowns to the tune of, call it, between $20 million and $30 million a quarter. and we would look to continue doing that going forward. Now keep in mind, Q1 tends to be a cash -- heavy cash utilization quarter just with our annual bonus payment, insurance payments, things like that. So I expect Q1 would be on the lower side. But as we look to Q2, 3, 4, that would be around the level of debt paydown, assuming there isn't anything on the M&A front. Operator: The next question is from Bobby Brooks from Northland Capital Markets. Robert Brooks: So just wanted to circle back and ask specifically kind of on Enercon and cross-selling opportunities there. Obviously, obviously, you mentioned this spend more specifically with aerospace and defense, these are long-cycle programs, right? So these aren't happening in 1 quarter and seeing the outcome the next. But just curious to hear if maybe that's still on the back burner just because demand was so robust in 2025 and the segments kind of just had a deal with the demand that they were seeing. So just kind of curious to hear more on that. Farouq Tuweiq: Yes. No back burners here. Yes, we understand we've got to prioritize. But also remember, we have to live in new wins, land, right, because we can't influence when orders come from our customers, right? When the program gets funding, can they sell it, right? What does the military budgets look like? And then you get an order. The thing that we can influence is going after new programs and aligning ourselves to new wins and new design cycles, right? So as we go after these, we are doing a better job at collaborating I think we're doing a better job at ensuring that both the connectivity and the power side of the house understand what they're going after, weekly calls and putting in some incentives along the way, we can do a little bit better job, but that process is in place. . And what's interesting is we're definitely seeing some of this, let's say, go to market. So there was some -- a couple of interesting quotes in Israel, where I was lining to earn from our e-mobility products that there was a need locally in Israel that our team flagged, but they didn't need quite the, let's say, high levelness of the military stuff but they need really complex products, which are e-mobility and Slovakia teams do a great job at. So we're trying to quote those into Israel. So I classify that as kind of a real-time opportunity that we're chasing. And we've seen a few of those as well. Another example of this is there was a cabling need at our let's say, U.S. Enercom business, which our competivity Group can assist with. So they're working on kind of getting all that qualified and approved normally, in this case, Entercom had to go outside and deal with others, but we're able to capture more of this. And so the opportunities are real but in the spirit of greeting is, we'd always love to do more. But I think as we're getting more bids out there now at a joint level, we're seeing some nice traction. Hopefully, we continue to do that and kick that to gear a little bit more. Operator: There are no further questions at this time. I would like to turn the floor back over to Farouq Tuweiq for closing comments. . Farouq Tuweiq: Thank you for that. Again, I could not be more proud of the team for the great year. Again, also thank you for all of you guys joining the call today, taking interest in what we think is a very, very exciting time for Bel. So thank you, and look forward to speaking to you in a couple of months from now. . Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, ladies and gentlemen, and welcome to the Genco Shipping & Trading Limited Fourth Quarter 2025 Earnings Conference Call and Presentation. Before we begin, please note that there will be a slide presentation accompanying today's conference call. That presentation can be obtained from Genco's website at www.gencoshipping.com. To inform everyone, today's conference is being recorded and is now being webcast at the company's website, www.gencoshipping.com. [Operator Instructions] A webcast replay will also be available via the link provided in today's press release as well as on the company's website. At this time, I will now turn the conference over to the company. Please go ahead. Peter Allen: Good morning. Before we begin our presentation, I note that in this conference call, we'll be making certain forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements use words such as anticipate, budget, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with the discussion of potential future events, circumstances or future operating or financial performance. These forward-looking statements are based on management's current expectations and observations. For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday, the materials relating to this call posted on the company's website and the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year ended December 31, 2024, and the company's reports on Form 10-Q and Form 8-K subsequently filed with the SEC. At this time, I would like to introduce John Wobensmith, Chairman and CEO of Genco Shipping & Trading Limited. John Wobensmith: Good morning, everyone, and welcome to Genco's Fourth Quarter 2025 Conference Call. I will begin today's call by reviewing the progress we've made executing our comprehensive value strategy since its implementation in 2021, and then we'll review our Q4 2025 and year-to-date highlights. We will then provide additional details on our financial results for the quarter as well as provide an update on the industry's current fundamentals before opening the call up for questions. For additional information, please also refer to our earnings presentation posted on our website. Starting on Slide 5, 2025 marked the fifth year since our Board and management team formulated and began implementing our comprehensive value strategy centered around dividends, financial deleveraging and opportunistic fleet growth. When we launched the strategy in April of 2021, we set out to accomplish 3 main objectives: transform Genco into a low leverage, high dividend company, maintain significant flexibility to grow the fleet and pay a sizable quarterly dividend through the cycles based on an established dividend formula. 5 years later, we are pleased to have made notable success executing against each of these objectives. Among our accomplishments, we fortified our balance sheet to effectively operate in diverse rate environments, provided shareholders with sizable returns and invested in our fleet to further expand our earnings power and dividend capacity. Specifically, over this time, we have invested $347 million in high-quality modern vessels, distributed $270 million in dividends to shareholders and paid down $249 million of debt. Moving to Slide 6. We continue to advance our value strategy in the fourth quarter, ending the year with strong momentum going into the first quarter. We declared our 26th consecutive dividend, representing an annualized yield of 9% on our current share price. Our highest dividend level since Q4 2022 and the longest period of uninterrupted dividends in our dry bulk peer group. Heading into the fourth quarter, we took important steps to maximize fleet-wide utilization in a strong freight rate environment with the completion of 90% of our 2025 dry docking schedule and delivery of a high-quality modern Capesize vessel early in the quarter. During the fourth quarter, these proactive measures enabled us to generate the highest levels of both EBITDA and TCE for the year at $42 million and $20,064 per day, respectively. Additionally, in November, we agreed to purchase 2 2020-built high-quality premium earning Newcastlemax vessels that we expect to take delivery of in March. Importantly, these well-timed investments further increase our operating leverage and expand our presence in a key sector with compelling supply and demand fundamentals. We also ended the fourth quarter with an industry low net loan-to-value of 12%. As depicted on Slide 7, we achieved multiyear highs across key metrics in Q4 and have significant momentum going into Q1 2026, building on our success generating TCE and EBITDA levels that were the highest in 3 years, estimated Q1 TCE of approximately $18,000 per day for 80% of the quarter represents a strong start to the year in what is typically a seasonally slower period. Notably, estimated Q1 2026 TCE is our highest Q1 level since 2024 and over 50% above Q1 2025 levels. Based on our firm fixtures to date and the continued execution of our value strategy, we expect a higher dividend in Q1 on a year-over-year basis. Turning to Slide 8. Genco has one of the lowest cash flow breakeven rates in our peer group. This key differentiator is directly related to our industry low net loan-to-value as well as not having mandatory debt amortization, which further reduces our cash flow breakeven rate compared to peers. As our TCE increased from approximately $12,000 per day in Q1 2025 to $20,000 per day in Q4, our overall profitability and dividend capacity increased as well. As can be seen from the chart, our estimated Q1 TCE also compares favorably to our low breakeven rate on a cash basis. Turning to Slide 9. Through the execution of our value strategy, Genco has paid compelling quarterly dividends to shareholders across cycles. Notably, we have paid 26 consecutive quarterly dividends to shareholders in diverse rate environments, having distributed between $0.15 and $0.50 a quarter over the past 3 years. In addition to the Q4 dividend being the highest since Q4 2022, it also represents a 233% increase over the Q3 2025 dividend. Supporting our dividend and complementing our low breakeven rate is our balanced approach to fleet composition, which we present on Slide 10. In addition to the 2 Newcastlemax vessels we agreed to acquire, we own a fleet of 17 Capesize vessels as well as 15 Ultramax and 11 Supramax vessels. We continue to balance the high beta and upside potential of the Capesize sector along with steadier earnings stream of our minor bulk ships. On a vessel ownership basis, our splits are 40% Capes and 60% Ultra Supras. However, when viewed on a net revenue basis over the last 2 years, we are 50% weighted towards Capesize vessels. With just 20% of our overall fleet fixed for the year, Genco is uniquely positioned relative to some in the peer group to benefit from a strengthening freight rate environment, providing us with meaningful upside exposure to the current strong spot market. Our high operating leverage is balanced against our low financial leverage, which is shown on Slide 11. This provides Genco with significant financial flexibility in various freight market conditions. In strong markets, Genco generates meaningful cash flow with its industry low breakeven rate and scalable fleet. In market downturns, Genco's low financial leverage and undrawn revolver availability allow the company to take advantage of countercyclical growth opportunities. Specifically, as demonstrated on Slide 12, Genco has taken advantage of our strong liquidity position for opportunistic acquisitions of modern, high-specification premium earning vessels at attractive values, including 6 Capesize and Newcastlemax vessels since 2023. I emphasize the positioning of the fleet today is not an artifact of history or chance. It is the result of the steady execution of our plan to optimize the fleet, which began in 2023. At that time, the management team and the Board formed a specific strategy focused on the compelling supply and demand fundamentals of the Capesize sector, which had the lowest order book among the major dry bulk sectors with long-haul ton-mile expansion on the horizon. Since 2023, our strategy has been built upon this thesis and over this time, Capesize vessels have been the best-performing dry bulk class from an earnings and an asset value appreciation perspective. Notably, our Capesize vessels have increased in value by nearly $40 million despite several years of age depreciation. Furthermore, we have generated an IRR of over 30% on these ships, since acquisition. In 2025 alone, we agreed to purchase 3 2020-built Capesize and Newcastlemax vessels, growing our pro forma fleet by 20% on an asset value basis and significantly increasing our earnings and dividend capacity in 2026 and beyond while reducing the average age of our fleet. On Slide 13, both Genco's pro forma 45 vessel fleet and Cape fleet provides significant operating leverage for shareholders. Every $1,000 fleet-wide increase in TCE equates to $16 million of incremental annualized EBITDA or $0.37 per share. Furthermore, our 19 Newcastlemax and Capesize vessels, every $5,000 increase equates to $34 million or $0.77 per share of incremental earnings and dividend capacity. Our fleet strategy has been very successful since we implemented it in 2023. And as you see in these figures, has well positioned the company to continue creating shareholder value going forward. Lastly, turning to Slide 14. Genco continues to prioritize strong corporate governance, which is another key differentiator for the company relative to the peer group. Specifically, Genco is the largest U.S. headquartered dry bulk shipping company, and we are also a U.S. public company subject to robust SEC and New York Stock Exchange disclosure regimes. We are also the only listed dry bulk shipping company with no related party transactions. We have a diverse and independent Board of Directors and observe U.S. public company governance best practices such as having a lead independent director. We provide detailed disclosures on company performance and initiatives while striving to provide a clear and thoughtful strategy to shareholders as we execute our disciplined approach to capital allocation. We are also consistently ranked in the top quartile on corporate governance among public shipping companies by Webber Research. Our corporate governance is a core part of Genco's identity and reflects our Board's commitment to upholding the highest standards of fiduciary duty and governance excellence. I will now turn the call over to Peter Allen, our Chief Financial Officer. Peter Allen: Thank you, John. On Slide 16 through 18, we highlight our fourth quarter financial results. Genco recorded net income of $15.4 million or $0.35 basic and diluted net earnings per share. Adjusted net income is $17.3 million or $0.40 and $0.39 basic and diluted earnings per share, excluding other operating expense of $1.9 million for shareholder-related expenses. Adjusted EBITDA for Q4 totaled $42 million, an increase of 94% as compared to Q3 and bringing the full year 2025 total to $85.9 million. Our cash and debt positions as of December 31, 2025, were $55.5 million and $200 million, respectively. Our undrawn revolver availability at year-end was $400 million. During March of 2026, we expect to take delivery of 2 2020-built Newcastlemax vessels. We have approximately $131 million of remaining CapEx for these acquisitions, which we expect to fund primarily through proceeds from our revolver. As part of our existing $600 million credit facility, we plan to utilize the accordion feature for $80 million and pledge these 2 vessels as collateral. This would increase our pro forma borrowing capacity to $680 million in total with expected post-acquisition debt outstanding of $330 million and undrawn borrowing capacity of $350 million. Our lenders participating in this revolving credit facility upsizing include Nordea, DNB, ING and SEB. With our full revolving credit facility structure, we will continue to actively manage our cash and debt positions to reduce interest expense while maintaining access to capital to quickly act on growth opportunities as we have demonstrated in recent years. Moving to Slide 19, we highlight the sequential increases in our quarterly EBITDA throughout the year, culminating in a strong fourth quarter performance and an EBITDA increase of 94% from Q3 2025 and also the highest quarterly level since 2022. As outlined on Slide 20, we believe that Genco is in a highly advantageous position. With the current fleet of 43 high-quality modern dry bulk vessels, our significant operating leverage, combined with low financial leverage, a sub-$10,000 cash flow breakeven rate and $400 million of undrawn revolver availability collectively provide a compelling risk-reward balance for shareholders. Furthermore, we continue to reward shareholders through our quarterly dividend policy, which targets a distribution based on 100% of operating cash flow less a voluntary reserve as described on Slide 21. For Q4, our Board of Directors declared a $0.50 per share dividend based on operating cash flow of $41 million and a voluntary quarterly reserve of $19.5 million, marking our highest payout in 3 years. Looking ahead to Q1 2026, we currently have 80% of owned available days fixed at approximately $18,000 per day as compared to our anticipated cash flow breakeven rate, excluding dry docking related CapEx of approximately $9,715 per vessel per day. Importantly, Q1 2026 TCE is on pace to increase over 50% year-over-year. On the expense side, we anticipate vessel operating expense to marginally increase in Q1 compared to Q4 levels due to the timing of crew-related expenses. However, we expect vessel OpEx to revert to levels similar to Q4 moving forward during the year. I will now turn the call over to Michael Orr, our dry bulk market analyst, to discuss the current industry landscape. Michael Orr: Thank you, Peter. Beginning on Slide 23, the dry bulk freight rate environment meaningfully improved in the second half of 2025, reaching its height in Q4, led by the Capesize sector. The Baltic Capesize Index averaged nearly $29,000 per day in Q4 and approached $45,000 per day in early December, driven by all-time high Brazilian iron ore shipments. Supramax rates were also firm, supported by augmented coal shipments to China as well as firm grain exports. Turning to Slide 24. China reported strong levels of iron ore imports in recent months, led by increased seaborne supplies together with the restocking of iron ore inventories. Specifically, the country's iron ore imports in Q4 rose by 7% year-over-year. And for the second half of the year, China's iron ore imports rose by 12% as compared to first half levels. On the seaborne supply side, we saw Brazilian iron ore shipments rise by 26% second half over first half. Turning to Slide 25, we highlight the long-haul iron ore and bauxite trade growth expected from Brazil and West Africa in the coming years. Given the scale of the projects, these volumes could absorb potentially over 200 Capesize vessels, which is more than the current Capesize newbuilding order book. Supply constraints in Capesize newbuilding activity combined with added long-haul trading distances are 2 key catalysts for the sector. We expect West African iron ore flows to ramp up in 2026 after first shipments were made in 2025. In terms of the grain trade, as detailed on Slide 26, China has reportedly fulfilled their 12 million tonne quota from the U.S. as part of the October agreement. However, further reports highlight additional purchases of up to 8 million tons of U.S. soybeans in the coming months. With the onset of South American grain season at the end of Q1, attention is likely to shift to Brazilian soybean volumes. Regarding the supply side outlined on Slide 27, net fleet growth in 2025 was 3%, split between 1.5% net fleet growth for Capesizes and 4% to 5% net fleet growth for Panamaxes down to Handysize. Importantly, 2025 marked the fourth straight year of sub-3% net fleet growth for Capes, which is the first time on record this lower level hasn't materialized for this long. Additionally, as scrapping has remained low in recent years, the age of the global fleet has risen to nearly 13 years old, the highest average age of the global dry bulk fleet since 2010. This has increased the pool of potential scrapping candidates at 11% of the on-the-water fleet is 20 years or older, which is nearly identical to the global dry bulk order book as a percentage of the fleet of 12%. This implies net replacement of tonnage over time as opposed to any material net fleet growth. While we expect volatility in the freight market to persist, the foundation of a low supply growth picture provides a solid basis for our positive view of the dry bulk market going forward. I'll now turn the call back over to John to conclude the call. John Wobensmith: Thank you, Michael. Turning to Slide 29. We have made outstanding progress executing our comprehensive value strategy, providing shareholders with sizable returns and investing in our fleet to further expand Genco's earnings power. With our high-quality and modern fleet, leading commercial operating platform, strong balance sheet and significant operating leverage, we remain well positioned to create meaningful value for shareholders in 2026 and beyond. As we progress through the year, our unrelenting focus will be on continued capital return for shareholders, further growing our high-specification premium earning fleet as well as maintaining our industry-leading leverage profile and strong corporate governance standards. Before we turn the call over to Q&A, I'd like to briefly address our announcements from last month regarding a nonbinding indicative proposal we received to acquire all outstanding shares of Genco. As detailed in our previous press releases, our Board thoroughly reviewed the proposal with the assistance of external advisers and determined the proposal significantly undervalued Genco. As part of its review, our Board did determine that a differently structured transaction, one organized as an acquisition by Genco would create value for all shareholders. We sought to engage privately on an alternative structure, but our offer to engage was turned down. Our management and Board are focused solely on delivering maximum value for shareholders. With that said, the purpose of today's call is to discuss our fourth quarter and full year 2025 results and the opportunities ahead for Genco. The company is performing very well today, and we are very excited and confident in the future. We ask that you please keep your questions focused on results, performance and industry trends. Thank you for that in advance. This concludes our presentation, and we would now be happy to take your questions. Operator: [Operator Instructions] Your first question comes from the line of Omar Nokta with Clarksons (sic) [ Jefferies ]. Omar Nokta: Solid quarter. Obviously, John, yes, the dry bulk market ended '25 on a pretty strong note and as shown in your results, obviously. And so far this year, things are progressing quite nicely. You've upsized your facility by the $80 million, and you're going to take delivery of those 2 Newcastlemaxes next month. Obviously, you have plenty of flexibility. Asset values look like they're on the rise and -- or at least have risen a good amount here over the past few months. Where does that leave Genco kind of strategically? I know you touched on this a bit at the end of your comments, John, but how are you thinking about Genco strategically, capital allocation as we look ahead here for the rest of '26? John Wobensmith: Look, in terms of the capital allocation, dividends and the value strategy is top of the list. We will endeavor to continue to cycle out some of the older vessels and redeploy those funds more modern fuel-efficient ships such as we've done or such as we did last year. So I don't think much has changed, but you're correct. Values continue to move up. We're actually in a situation where they're moving up almost weekly at this point, which is obviously very positive basis the timing of the acquisitions that we did last year. But it -- look, it makes newer tonnage more expensive, but it also makes our older tonnage more firm in what we can get. So dividends and value strategy is the first. And as part of that value strategy, we have a fleet replacement and growth element. Omar Nokta: And maybe just as a follow-up then, as we referenced asset values having risen. I wanted to ask sort of how are you thinking about the term charter markets? Or what are you seeing there? As we kind of think about it from, say, the crude tankers just as what we've seen there, VLCC values have risen and there's been a lot of charter interest. Are you seeing something similar in the Cape market? And how do you feel about deploying ships on term charter today? John Wobensmith: I think -- well, there has not been as much liquidity in the dry bulk TC market, as you just mentioned, in the tanker sector. I think a lot of that has to do with the optimism as we look at the supply side and demand growth for the rest of 2026, but then certainly going into 2027 as West African iron ore really starts to ramp up. So I think it's more of a function of, I believe, owners not wanting to lock in currently because of the optimism, again, low supply demand growth coming. Having said that, there have definitely been some 1-, 3-year deals done. I think there was a 3-year deal done on a new -- at least 1, maybe 2 Newcastlemaxes from an iron ore major excess $30,000 a day. Those are firm rates. And clearly, the market is indicating a bullish stance and positive sentiment. You know that we, from time to time, have taken exposure off the table, particularly in the Capesize sector. We really do look at it as a portfolio approach. But we spend a lot of time and analysis looking at whether we want to lock in. And there could easily come a time this year where maybe we take some exposure off the table. But for the time being, we're going to continue to trade spot. And I think it's one of the unique things about Genco. We really only have 20% of this year fixed. So with a rising market, we are fully exposed -- 80% exposed to that positive market and sentiment. Operator: Your next question comes from the line of Liam Burke with B. Riley Securities. Liam Burke: John, in the past discussions on asset acquisitions, you always like the flexibility of the Capes versus the Newcastlemaxes. Has there anything changed in trading patterns that makes you favor more of the Ultramaxes vis-a-vis a Cape? John Wobensmith: I'm sorry, the Ultramaxes or the Newcastlemaxes? Liam Burke: Newcastlemaxes, excuse me. John Wobensmith: Yes. No. Okay. That's -- yes. No, I wouldn't say anything has drastically changed, though, certainly, on the Brazilian trade, those Newcastlemaxes have always been filled up to their capacity. Over the last several years, that may have not been true with Australia loadings, but that's really changed. And we certainly have seen the bauxite trade develop as well out of West Africa. So that bauxite can go on Newcastlemaxes. So we like the nucs we bought. We like our Capesize fleet. The Newcastlemaxes that we bought are no doubt premium earning assets with very high specifications and low fuel consumption. I think Bulkers 2020 did a fantastic job ordering and kitting out those ships. So we're very happy to be taking delivery of those. But we're going to continue to look at Capes and Newcastlemaxes. And that's where I think you'll see growth for us. And we'll stay steady with our Ultra Supramax fleet, probably do a little bit of fleet renewal on the Supras. Liam Burke: Okay. Just as a follow-on, you just mentioned the Supras. Is there any opportunity or is there any interest in adding to that part of the fleet when you're discussing renewal? Or is it just sell the older vessels on elevated asset values? John Wobensmith: Well, it certainly would be selling older vessels. Again, we're focused on the larger ships in terms of redeploying capital, though I'm not going to rule out that we wouldn't buy an Ultramax. I mean that market is doing pretty well. As you know, these are all correlated. It's just that Capes have certainly more upside potential based on higher beta and volatility. And if you look at, again, the supply side on the Capes is the most favorable in the dry bulk sector and demand growth that is coming is Newcastlemax and Capesize oriented. Operator: Your next question comes from the line of Chris Robertson with Deutsche Bank Securities, Inc. Christopher Robertson: John, just on the back of Omar and Liam's questions around the S&P market, I just wanted to touch on -- last year, it was reported that a large number of Chinese buyers of dry bulk vessels were active in the market. I was wondering if you could comment, is that trend still continuing? And where do you see kind of the activity being driven in the S&P market for potential asset sales? John Wobensmith: Yes. I think the Chinese continue to be very active. I would put them as the #1 buyer right now, particularly of older assets, not on the -- not necessarily on the modern eco side, but the older assets, they they're very active on. China is the largest importer of dry bulk commodities, right? So seeing the Chinese go long tonnage, I think that's a positive or a vote of confidence in the market going forward. And you've seen it across the board. I mean, they certainly have been active in older Capes, but they've also been buying some of the older Supramaxes as well. And I'm sure they see the same thing that we see. Again, the low supply growth on the Capes, the age of the fleet. And I think most importantly, there are additional cargo volumes that are going to be coming both on the bauxite side, but more importantly, on the iron ore front out of West Africa. Christopher Robertson: Got it. Makes sense. My second question is just related to kind of reevaluating the geopolitical environment and the disruptions that we've seen across various shipping segments over the last few years. Where do things stand in terms of the disruption levels related to dry bulk? And let's say, if there was a reversal, whether it's the Red Sea or Russia, Ukraine, et cetera, where do you see kind of puts and takes around some of those themes? John Wobensmith: Well, I mean, let's take the Russian-Ukraine situation. If there is a conclusion to that and the Black Sea reopens fully, clearly, that's potential for more grains and to a smaller degree, iron ore. So that would be a net positive for dry bulk shipping. In terms of the Red Sea, we're well aware that there are some container companies that have started operating through Suez and the Red Sea. We're still cautious and we're still not putting our ships through that area. But having said that, it's maybe 1% to 2% max in terms of number of ships that would actually go through the Red Sea. So deviating around Africa is -- it's not a big factor in dry bulk. It certainly is in containers, but it's not for dry bulk. Operator: Your next question comes from the line of Sherif Elmaghrabi with BTIG. Sherif Elmaghrabi: A couple of questions on operating costs here. It looks like the cost of charter hire in Q4 roughly doubled sequentially. So I'm wondering, does the current strength in spot rates change how you think about augmenting your fleet with outside tonnage? John Wobensmith: Well, in terms of -- again, in terms of growth, we're definitely focused on the larger ships. And hopefully, this is going to be answering your question. If it's not, please feel free to clarify. But when you look at where rates have really moved up, it is in the larger ships, which, again, that's been our strategy of growing that fleet since 2023. And you can definitely see that in the revenue side. It's driven quite a bit of the upside in revenues. Did that answer your question? Sherif Elmaghrabi: I was asking about the chartered-in fleet. John Wobensmith: Okay. Peter Allen: Yes. Sherif. Yes, in terms of the charter-in fleet, that is a very opportunistic part of the business. A lot of the times, the guys will take forward cargoes. And if it makes more sense in the moment to charter in a vessel to create an arbitrage, they'll do that. And that's something that the guys are -- have been really good over the years of assessing whether they can make, whether it's $100,000 plus on a particular cargo. A lot of the times in the first quarter, you'll see that because we'll book forward cargoes. The market will come off relative to Q4, and we'll be able to get that arb. But it's a very opportunistic play. Some quarters, you'll see higher than others. But certainly, in a strengthening market, being on the longer side and having the spot focus that we have is certainly where you want to be right now. John Wobensmith: What you're not going to see us do is speculative long-term time charter-ins. It will either be short term backed up by a piece of cargo, as Pete said, but we're not going to just go naked on chartering at Capesize or an Ultramax for that matter, long term into the company. That's not part of the strategy. Sherif Elmaghrabi: Okay. Yes, that's very clear. And then just looking back at the presentation, Slide 8 highlights your remarkably stable cash breakeven, which has remained below $10,000 a day for a few years now. Is there anything you're doing, obviously, besides keeping leverage low to manage breakeven costs while some other owners have seen operating cost inflation? John Wobensmith: Look, we've seen operating cost inflation. There's no doubt, particularly on the crew side and when you look at spares and stores just from an inflationary standpoint. We certainly manage to a budget that we set every year, though I want to emphasize, particularly with the larger ships, the bar keeps getting raised calling Australia. So we need to make sure that we are keeping our ships well maintained so that we do not have any issues trading anywhere in the world. So there is a little bit of inflation. We certainly manage and pay very close attention to OpEx, but we're not going to be penny-wise pound foolish. Operator: As there are no further questions at this time, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Operator: Good morning, ladies and gentlemen. Welcome to The Andersons 2025 Fourth Quarter Earnings Conference Call. My name is Dave, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for playback purposes. I will now hand the presentation to your host for today, Mr. Mike Hoelter, Vice President, Corporate Controller and Investor Relations. Please proceed. Michael Hoelter: Good morning, everyone, and thank you for joining us for The Andersons Fourth Quarter Earnings Call. We have provided a slide presentation that will enhance today's discussion. If you are viewing this presentation via the webcast, the slides and commentary will be in sync. This webcast is being recorded, and the recording and the supporting slides will be made available on the Investors page of our website shortly. Please direct your attention to the disclosure statement on Slide 2 as well as the disclaimers in the press release related to forward-looking statements. Certain information discussed today constitutes forward-looking statements that reflect the company's current views with respect to future events, financial performance and industry conditions. These forward-looking statements are subject to various risks and uncertainties. Actual results could differ materially as a result of many factors, which are described in the company's reports on file with the SEC. We encourage you to review these factors. This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of the non-GAAP to GAAP measures are included within the appendix of this presentation. On the call with me today are Bill Krueger, President and Chief Executive Officer; and Brian Valentine, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will be happy to take your questions. I will now turn the call over to Bill. William Krueger: Thanks, Mike, and good morning, everyone. Thank you for joining the call today to discuss our fourth quarter results and initial outlook for 2026. I would like to start off by thanking the entire Andy team for their hard work and strategic focus over the past several quarters. This effort allowed us to deliver a record fourth quarter EPS, confirming our portfolio's versatility and resilience in various market conditions. The fall harvest produced larger-than-expected volumes of grain in the Western Grain Belt and we were able to accumulate significant corn and sorghum at favorable basis values. This increased production added to space income at our assets, but limited our merchandising opportunities. Exports for wheat and sorghum from our Western assets saw sizable increases in the fourth quarter compared to the first 3 quarters of the year. In the Eastern Grain Belt, harvest results were more variable. Our team focused on sourcing corn for a record export program and strong ethanol demand, achieving higher seasonal elevation margins. Production at our ethanol plants resulted in another year of record volume and above-average yields. Ethanol exports again reached a record level, which helped to support improved ethanol board crush. However, our eastern ethanol plants were also impacted by higher corn basis and natural gas costs. Our plants continue to run well. In the fourth quarter, we continued to execute our stated strategy. Although our capital allocation may vary from year-to-year, we are committed to profitable growth in both Agribusiness and renewables. In renewables, after acquiring full ownership of our 4 ethanol plants last year, we recently announced an additional investment in our Clymers Indiana facility, which is expected to add 30 million gallons of incremental annual production in 2027. In the first quarter, we plan to begin operations at a renewable feedstock storage and blending facility in Ulysses, Kansas, where we will add capacity for low CI feedstocks to supply the bio-based diesel and feed markets. Agribusiness growth initiatives include continued improvements in our Skyland asset footprint, and we are pleased with their improved performance this quarter. Work continues with the Port of Houston expansion project, we expect completion of our upgrades to the grain elevator in Q2 of 2026. And the soybean meal export capacity should be online in late Q3 of 2026. After completing the first phase of the mineral processing facility in Carlsbad, New Mexico, we are adding processing capabilities in a second phase, scheduled to be complete in the second quarter. We continue the buildout of our corn and wheat light processing capabilities strategically located within our asset footprint to support key CPG customers. I'm now going to turn things over to Brian to cover some key financial data. When he's finished, I'll be back to discuss our early outlook for 2026. Brian Valentine: Thanks, Bill, and good morning, everyone. We're now turning to our fourth quarter results on Slide #5. In the fourth quarter of 2025, the company reported net income attributable to The Andersons of $67 million or $1.97 per diluted share and adjusted net income of $70 million or $2.04 per diluted share. This compares to adjusted net income of $47 million or $1.36 per diluted share in the fourth quarter of 2024. Overall, fourth quarter gross profit of $231 million increased 8% year-over-year, primarily due to higher volume and margins in renewables, as well as the addition of Skyland Grain in November of 2024. For the full year, gross profit of $714 million increased 3%, primarily due to the Skyland investment. Adjusted EBITDA for the fourth quarter was $137 million compared to $117 million in 2024 with an increase in renewables, partially offset by a year-over-year decline in the agribusiness. Full year adjusted EBITDA was $337 million compared to $363 million in 2024. Our effective tax rate for the fourth quarter was 19%. And for the full year, it was 16%. Our effective tax rate varies each quarter based on the amount of income attributable to noncontrolling interests as well as the recognition of nontaxable biofuels credits. Now let's move to Slide 6 to review our cash flows and liquidity. We generated fourth quarter cash flow from operations before changes in working capital of $110 million in 2025 compared to $100 million in 2024. Full year cash flow was $278 million compared to $323 million in 2024 with the reduction due to challenging ag market conditions in the first half of the year. This strong cash flow generation shows consistency and stability throughout the ag cycle, supporting our ability to fund growth projects and reinvest in our asset footprint. Our year-end cash balance is down and short-term debt reflects a modest increase, both of which are a result of the acquisition of our partner share of the ethanol plants completed in the third quarter of 2025. Next, let's turn to Slide 7 to review capital spending and long-term debt. We continue to take a disciplined and practical approach to capital spending and investments. but intentionally increased our level of strategic investment in 2025. This includes the handful of larger growth projects in both segments that Bill mentioned earlier, together with the full year impact of Skyland capital spending. Long-term debt to EBITDA at year-end was 1.8x, which remains well below our stated target of less than 2.5x. We continue to evaluate various acquisitions and internal growth projects and have a strong balance sheet that will support investments that meet our strategic and financial criteria. Now we'll move on to a review of each of our segments, beginning with Agribusiness on Slide 8. Agribusiness reported fourth quarter pretax income of $46 million and adjusted pretax income attributable of $45 million compared to $56 million in 2024. The large harvest provided significant quantities for our assets to handle particularly in our Western footprint, where we were able to acquire grain at favorable values and realize good basis appreciation. We also made considerable sorghum export sales in December, supporting our Skyland and Port of Houston assets. Our Eastern grain assets also had a solid fourth quarter with strong elevation margins and a significant portion of the corn acquired moving into the export markets. Our merchandising portfolio remained challenged as grain markets were well supplied at relatively low prices. Our premium ingredients business had solid results, and our Skyland investment also saw improved results in the quarter. Agribusiness had adjusted EBITDA for the fourth quarter of $80 million compared to $88 million in 2024. Adjusted EBITDA for the full year was $187 million compared to $218 million in 2024. Moving to Slide 9. Renewables generated fourth quarter pretax income attributable to the company of $54 million, a significant increase when compared to $17 million in 2024. This increase reflects the full ownership of the 4 ethanol plants following the acquisition of our partner share in the third quarter of 2025. Strong operations in our ethanol plants resulted in another quarter of record production. Ethanol board crush margins were up $0.15 per gallon year-over-year. However, this was partially offset by higher natural gas costs and firmer Eastern Corn basis. The impact of 45Z tax incentives was $15 million for the quarter and $35 million for the full year. These credits reflect our full ownership since August and relative share of the gallons produced for the first 7 months of 2025. Renewables had EBITDA of $69 million in the fourth quarter of 2025 compared to $41 million in the fourth quarter of 2024. For the full year, renewables generated adjusted EBITDA of $203 million compared to $189 million in 2024. We -- and with that, I'll turn things back over to Bill for some comments about our early 2026 outlook. William Krueger: Our 2025 results once again proved the resilience of our business model and creates optimism for 2026. Although we had external factors challenging our Agribusiness during the year, our team stayed committed and finished the year with a solid fourth quarter. Conversely, there were several favorable external market factors that the renewables team quickly identified diligently researched and then executed to drive bottom line results. We expect that 2026 will bring better financial results in Agribusiness with more certainty in our global grain markets, while we believe demand for ethanol and related products will remain strong. We are focused on continuous improvement in our safety culture and in our enterprise business support organization. Our agribusiness outlook remains focused on connecting supply to end users and export demand. With the large fall harvest, our Western footprint should see basis appreciation into 2026 and sorghum exports have continued into the new year. Our Eastern assets should benefit from higher elevation margins on corn export programs that may not see the same basis appreciation as our Western footprint. The current farm- gate environment is faced with challenging economics. Domestic demand for production is critical to the U.S. farmer. The passage of year-round E15 and finalization of increased RVOs as proposed, would provide significant support for ongoing domestic demand. as a significant amount of grain remains stored on farm and will need to be marketed, we are ready to act as a conduit to finding consumptive demand and supporting our farmers with disciplined risk management tools. While off prior year highs, we are forecasting higher-than-normal planted acres in 2026. This combined with higher acres during the 2025 harvest would necessitate additional nutrient applications, primarily nitrogen. These factors should benefit our fertilizer business but volumes are dependent on farmer decisions and could be challenged by their current economics. We believe that we are well positioned to serve our customers with crop inputs during spring applications and with our specialty liquid fertilizers during the growing season. I mentioned we expect to have several of our larger capital projects completed in 2026. Finalizing these projects will allow us to operate more efficiently, along with handling increased volumes of products like soybean meal, cleaned corn and wheat. We continue to assess internal growth projects and acquisition opportunities that support our growth strategy. We expect that the challenging 2025 market may bring us additional acquisition opportunities to evaluate. In renewables, we expect that ongoing domestic and global demand will continue to support ethanol prices and volume. We also expect to see clarification of biofuels policies such as the Renewable Volume Obligations and small refiners exemption reallocation. We are optimistic that year-round E15 legislation will eventually get congressional support as this would provide great benefits to the domestic ag economy. We recently received the proposed regulations around the 45Z tax credit and are pleased with the clarifications that were provided. As usual, maintenance shutdowns in the industry and summer driving increases could positively influence ethanol demand and crush margins beginning in the second quarter. We continue to invest in our plants and consider our assets to be among the best in the industry. The recently announced investment in additional production at our Clymers plant is the latest example of this commitment. We have additional investments planned to improve efficiency and save operations in our plants and increase both the quality and yield of distillers corn oil. As we mentioned at our Investor Day in December, we expect our 45Z tax credits to increase in 2026 and with the removal of the indirect land use change penalty. The Class 6 well permit for Clymers continues to move through the required review process. We are actively pursuing investments aimed at reducing the carbon intensity of our ethanol production through alternative energy sources and the previously mentioned sequestration. Lastly, we remain interested in the acquisition of additional ethanol production facilities that align with our criteria. In 2025, we demonstrated our capability to generate positive returns and cash flow during the lower range of the ag cycle. We anticipate generating ongoing cash from operations that will support our stated strategy. Our balance sheet is well positioned to support future growth. We will maintain responsible decision-making to benefit our customers and optimize shareholder value. We expect to exit 2026 with run rate EPS, more than our prior target of $4.30 and recently updated our long-range target of $7 as we exit 2028. And now we are happy to take your questions. Operator: [Operator Instructions] Our first question comes from Ben Klieve with [ StoneX ]. Benjamin Klieve: Congratulations on a really great end of the year here. First, I think the biggest surprise to me in the quarter was really the strength of the legacy Skyland business. I'm wondering if you can elaborate on a couple of things. First of all, was that performance something that kind of surprised you guys? Or did that fall in line with your expectations throughout the quarter? And then second, with 1 -- with a full year now of Skyland integrated, can you break down the EBITDA contribution of that business within 2025? William Krueger: Ben, this is Bill. I'll take the first part of it. I do not think that it was surprising when you consider the backdrop of the large fall harvest. Being new to the business, I don't have access to all of their records for volume handled -- but compared to any numbers that we had considered, the fall harvest in Southwest Kansas and the Panhandle of Texas allowed us to acquire more harvest bushels than we were planning on going into the year. Brian Valentine: And Ben, with regard to the EBITDA contribution, I think when we originally talked about that transaction, we said we expected it to be kind of a run rate of $30 million to -- $30 million to $40 million per year. And then last year, we said we thought it would be more about half of that range. It finished the year just shy of $20 million. So it was right in that range. Benjamin Klieve: Okay. Very good. One other one for me. You guys talked about the kind of outlook for fertilizer application this year. I'm wondering, kind of given the kind of big variables that you outlined, how you're positioning that business here going into the spring application season. Has kind of the relative uncertainty here kind of change your kind of inventory build thus far in the season? Or are you really -- is really the strategy in '26 unchanged relative to the historic years despite the relative uncertainty that I think is in this space. William Krueger: Ben, I'll take that question. This is Bill. So let's maybe. Rewind just a little bit and talk about fall applications that will give us a little bit better vantage point looking forward into 2026. So if you start in the Western U.S., we actually saw substantial applications of ammonia, just due to the nearly perfect application season, and obviously, as you know, with ammonia going down and hydrous ammonia going down, that is only going to be used for corn acres. So that's what drives our belief that corn acres will be higher than normal, but less than 2025 acres. As you move to the east, where we had a little less favorable application weather, we believe that we're going to be well poised for stronger-than-normal applications in Q1 and obviously, with the recent bean rally versus the corn futures, there is some concern that we'll have bean acres potentially taking away some corn acres. But at the end of the day, we still believe across even the Eastern Corn Belt, it's getting kind of late to be switching from corn to beans. So we feel like we'll have slightly higher than normal applications for Q1 and early Q2 in the Eastern Corn Belt. Operator: The next question comes from Ben Mayhew with BMO Capital Markets. Benjamin Mayhew: And yes, congrats on a really strong finish to the year here. So my first question is around the agribusiness segment outlook for 2026. And I'm just wondering if you can highlight the biggest potential profit opportunities for the Agribusiness segment and '26 versus '25. And kind of like what needs to fundamentally happen to make these realization? William Krueger: That's a good question, Ben. And I'm going to I'm going to start with the assumption that we'll have a normal growing season. But as we look back and try to compare the first half of '25 to the potential first half of 2026, it feels today like we're going to have more certainty around policy on exports. So with that assumption, we should see trade free up both domestically and for exports. First half of 26 versus first half of '25. That's the #1 area that I think will give us a little bit more stable earnings. As I just commented around fertilizer with the large harvested acres in 2025, we are going to need to apply more nitrogen across the board for the '26 acres that we are expecting. Again, the economic conditions at the farm gate will drive a little bit of that, but we feel that will be pretty consistent on our PN outlook for 2026. And then probably the last area that will should benefit agribusiness is the continued biofuels policy. And as mentioned, with the assumption that we'll see the RVOs come out as proposed. That should give us a little bit of an uplift for the underlying grain and soybean trade domestically. Benjamin Mayhew: Great. And then my next question would be about the strength in the fourth quarter earnings was very apparent. And I'm just wondering about momentum in the first quarter, '26, particularly with the ethanol business. So I was hoping you could just update us on year-to-date kind of where we are with the board crush and with -- before we head into maintenance season, it seems like the inventory levels have maybe picked up a little bit. So if you could just kind of reconcile the ethanol segment and where we're at right now and where you expect to be throughout the year profit-wise. William Krueger: Well, as you know, we don't provide guidance by segment. but we can talk to the transition from Q4 to Q1. I'll talk about the fundamentals and if Brian has anything to add on the financial aspect, I'll let him do that. As we entered Q1, which is traditionally a lower board crush at the time of the year and has been over the last several years. we actually had slightly stronger board crush than I think the industry had expected. There are parts of our area where we did see a little bit higher corn basis and nat gas costs continue to roll into Q1. But the fundamentals of ethanol, both export and domestic continue to feel very strong on Q1. And we don't have any reason as we look into the future to assume there's going to be a drastic change on '26 versus '25 from the fundamentals. We also believe that the opportunity to continue to drive efficiency at our plants exists. And with the current biofuels policy should provide support for those capital investments. With that, I'll let Brian hit on some financials. Brian Valentine: Yes. And then just with regard -- I mean, you know Q1 is always kind of seasonally low, but we should see -- we expect export demand to remain high again this year. We expect the seasonal uplift with summer driving season. And then what I would say is the other 2 things to factor in would be the full year impact of the full plant ownership -- and then we talked about 45Z for the full year of $90 million to $100 million, and that's kind of still the range that we would expect. Operator: Our next question comes from Pooran Sharma with Stephens. Pooran Sharma: Thanks for the question. I will be the third to say, congratulations on the strong results. Wanted to start off with Skylands. I understand you said it finished the year with just shy of $20 million, but it does sound like you're off to a strong start. You did quote you did note of strong basis appreciation opportunity for your Western assets. And so I just wanted to maybe ask about Skylands contribution for 2026. Do you think that this business will be able to achieve the $30 million to $40 million that you had initially targeted just given the stronger start to 2026? William Krueger: This is Bill. I will let Brian address the financial question. The one thing I do think is important to discuss here. When we talk about our Western footprint on assets, there are more assets than just Skyland. We have a nice setup in Nebraska we have continued to have a facility footprint in Idaho and Delhi, Louisiana. So just when we talk towards our western asset footprint, it is larger than just Skyland so that -- to maybe clarify. So then I'll let Brian talk about question -- you're right. I mean we -- what I would say is for 2026, our expectation . For 2026, our expectation is probably somewhere in the $25 million to $35 million range for EBITDA. So we do expect it to normalize into that $30 million to $40 million range that we originally talked about over time, assuming that the conditions get back to kind of a mid-cycle type market. Brian Valentine: Okay. Great. Appreciate the color there and appreciate the clarification as well, Bill. On my follow-up, wanted to understand a little bit about farmer selling dynamics. Now you said on the prepared comments, there's still a lot of crops on -- in storage. And I wanted to get your sense on what do you think drives more selling here? Is it more clarity in the RVO? And do you have a sense as to kind of timing when that occurs, when farmers would be willing to be more commercial. It's a good question. What I would tell you is the easy answer is higher prices. And that's really what the farmer is looking for today. it's pretty widely documented on the economics at the farm gate. And so the farmer is going to hold off as long as they can. The payments that they are receiving this month will help them be able to go longer before generating cash flow. So as we look at it, it's not as important to us when the timing is for most or nearly all farmers, they will have to move a substantial portion prior to next year's harvest. If a farmer has grain in store today and we don't see a sizable rally, they're going to want to make sure that the corn and beans that they're going to plant this spring are in the ground and have a good start to the growing season before we're going to see a substantial amount of selling in our opinion. Again, a large rally in the price similar to what we've seen in soybeans lately can change that forecast. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mike Hoelter for any closing remarks. Michael Hoelter: Thanks, Dave. We want to thank you all for joining us this morning. Our next earnings conference call is scheduled for Wednesday, May 6, 2026 at 8:30 a.m. Eastern Time when we will review our first quarter results. As always, thank you for your interest in The Andersons, and we look forward to speaking with you again soon. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, and welcome to the Amrize Q4 2025 Earnings Conference Call. [Operator Instructions] Also as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Aroon Amarnani, Vice President of Investor Relations. Aroon Amarnani: Great. Thank you so much, and good morning, everyone. Welcome to Amrize's Fourth Quarter 2025 Earnings Conference Call. We released our fourth quarter and full year financial results yesterday after the market closed. You can find both our earnings release and presentation for today's call in the Investor Relations section of our website at investors.amrize.com. On the call with me today are Jan Jenisch, our Chairman and CEO; and Ian Johnston, our CFO. Jan will open today's call with highlights from the full year and the fourth quarter as well as the growth investments we're making in our business. Ian will then review our financial performance for the quarter before turning the call back to Jan to discuss our outlook for 2026. We will then take your questions. Before we begin, during the call and in our slide presentation, we reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to U.S. GAAP in our earnings release and slide presentation. As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website. Any statements made about the future results and performance, plans and expectations and objections -- objectives are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those presented during the call to various factors, including, but not limited to, those discussed in our Form 10 filings and in other reports filed with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Jan. Jan Jenisch: Thank you, Aroon, and thanks to everyone for joining us today. 2025 was a very important year for Amrize as we did our successful spin-off and launch in June of the company. I have focused my time at our operations and projects across North America to see our work in action, meet with customers and hear from our people. What I see is the market-leading footprint and a performance-driven change. Together, we are delivering for our customers as the partner of choice for their most important building projects. For the full year 2025, we increased revenues by 0.9% to $11.8 billion, with $3 billion in adjusted EBITDA. We generated a strong cash flow of $1.5 billion, and our cash conversion rate was 49%. Overall, we completed the year with a net leverage ratio of 1.1x. Our strong cash conversion and balance sheet [ for right ] flexibility and firepower to fuel our growth and return cash to our shareholders. Increased our investments to $788 million during 2025 to expand production, improve efficiencies and best serve our customers in the most attractive markets. Last month, we were excited to announce our agreement to acquire PB Materials, the aggregates leader in West Texas, significantly expanding our position in this high-growth region. Delivering shareholder return. The Board has approved a $1 billion share repurchase program and is proposing a special onetime dividend of $0.44 per share payable following the Annual General Meeting. The Board is also proposing an annual ordinary dividend of $0.44 per share to be paid in further reinstallments. These dividends will be paid out of legal capital reserves from tax capital contributions, and are not subject to Swiss withholding tax. The dividend and share program are subject to customary shareholder approvals at our AGM in April. Looking to the future, we are well positioned in our $200 billion addressable market, and we have set our 2026 guidance, reflecting accelerating customer demand and profitable growth. This includes 4% to 6% growth in revenues and 8% to 11% growth in adjusted EBITDA. Let us look at some of the highlights of the fourth quarter. We saw growth -- continued growth in Building Materials. The segment's revenues grew 3.9%, and more important, we expanded our adjusted EBITDA margins by 60 basis points. Both cement and aggregates volumes were up, and we have strong aggregates pricing growth, in addition to production efficiency gains and first savings from our ASPIRE program. Within our Building Envelope business, our results were affected by soft residential roofing volumes, and we expect residential demand to gradually return in this year. Our commercial roofing margins were up, driven by resilient [indiscernible] and refurbishment. At the total company level, revenues were slightly lower, 0.4% in the fourth quarter. Let us look at some of the market trends at Amrize. We see continued infrastructure demand and an improving commercial landscape. In the commercial market, which makes up half of our business, demand is improving led by new data centers. Data construction has been and continues to be a significant bright spot as hyperscalers rapidly build out the infrastructure that will power the AI economy. This is the largest infrastructure expansion in recent history, and the United States is at the center. In fact, over 40% of global data center infrastructure investment is expected to be spent in the United States through 2030. Speed, efficiency, innovation and reliability are key in this market, making it a space where Amrize building solutions and unparalleled footprint offers strong competitive advantages. In 2025 alone, we supported and supplied more than 30 data center projects, and we will see that work accelerating into this year. For us, you have just as much opportunity to supply the data centers as we do to support the infrastructure surrounding them. In 2026, we expect the commercial market to pick up as interest rates continue to move lower, and as customers accelerate the investments in advanced manufacturing, warehousing and logistics. In infrastructure, demand continues to be steady, with federal, state and local authorities privatizing modernization projects. We see increasingly domestic focused agendas of our customers in both the United States and Canada. Each country is prioritizing national investments to build strong futures. Within residential, new construction remains soft. We expect demand to gradually return later this year as the U.S. continues to have a significant housing shortage that will drive longer-term growth. As interest rates continue to decline, we expect pent-up demand to unwind and construction activity to accelerate across all sectors. If we turn to Slide 7, you can see our strong pipeline of key projects into 2026, which are directly aligned to these growth trends. We are supplying advanced building materials, the new data center campuses like in Louisiana, we're supplying water infrastructure projects like in Dallas, airport modernizations like Colorado and a new Amazon distribution facility in New York City. We are seeing increasing demand for our high-performance Elevate MAX PVC roofing systems and are supporting a new industrial warehouse in Ontario and a significant data center project in North Dakota. We see increasing data center demand for the MAX PVC roofing system going forward. These are just a few of our project highlights, and they reflect the megatrends underpinning long-term growth in the North American market. As we move into 2026, we have a big pipe of projects, and new ones are kicking off every month. We move to Slide 8. You can see some of our important expansion projects. Our -- we completed our Ste. Gen plant expansion to support growing demand and increase our efficiency. In December, we commissioned the production expansion of our flagship cement plant in Missouri, adding 660,000 tons of production capacity per year, increasing the plant's total capacity to 5.5 million tons annually. Our Ste. Gen plant is North America's largest market-leading plant, setting the standard for high performance. If you turn to Slide 9, you can see that we are on track with key organic growth projects for this year and beyond. We're building on the success of our Ste. Gen plant expansion, we are on track with key growth projects for 2026 and beyond. To serve the booming Texas region, we are investing in our Midlothian cement plant to expand production capacity by 100,000 tons, modernize logistics and increase operational efficiency at the same time. In Alberta, Canada, we are investing in our Exshaw cement plant to add 50,000 tons of cement production capacity, supporting the growing Calgary market. In Quebec, we are investing to expand our St. Constant cement plant by 300,000 tons, and further strengthening our position in Canada and increasing efficiency of these specialties. If we turn to Slide 10 now, we see more growth projects. In Virginia, we are progressing with our new Fly Ash facility to enable the use of recycled landfill as a high-quality supplementary material. We are progressing our Greenfield Aggregates quarry in Oklahoma, adding about 200 million tons of reserves to serve the fast-growing Dallas-Fort Worth market. On the Building Envelope side, we are progressing with our new state-of-the-art Malarkey Shingles plant to expand our market share to the attractive Midwest and Eastern markets. We expect this plan to be commissioned at the end of 2026, putting us in a strong position to deliver more volumes for when residential demand picks up. If you move to Slide 11, let me talk about our latest acquisition, PB Materials, which strengthens our aggregates footprint in West Texas. We announced the acquisition earlier this year. This will strengthen our aggregates business at over $180 million in annual revenue, adding 50 years of aggregates reserves and 26 operational sites in West Texas to serve long-term demand as infrastructure, data centers and commercial investments drive construction growth. This acquisition will be EPS and cash accretive already this year. We just received antitrust clearance from the Federal Trade Commission, and now expect this acquisition to close in the first quarter of 2026. Looking beyond PB Materials, we have a strong M&A pipeline and plan to continue making smart deals to accelerate our profitable growth. Now let's move to Slide 12, our ASPIRE program, which is on track to drive value through scale and focus. We made good progress here in the fourth quarter. We have now onboarded over 450 new logistics and service providers to optimize third-party spend, and we launched more than 400 projects to leverage our scale and drive synergies across raw materials, services, logistics and equipment. We started realizing savings in the fourth quarter last year, and we are now targeting a 70 basis points of margin expansion in 2026 and $250 million of full surgeries by 2028. Let us talk about allocating capital. On Slide 13, you see our priorities, increasing investments and returning cash to shareholders. We are committed to a capital allocation strategy that invests for growth and delivers value to our shareholders. We raised our CapEx investments last year by 23%. And this year, we plan to increase our investments further to $900 million. We are on track with our M&A strategy, and we have a strong pipeline of targets, led by aggregates and with additional opportunities in [indiscernible]. Our strong cash conversion and balance sheet allows us to also return cash to our shareholders. The Board has just approved a $1 billion share repurchase and is proposing a special onetime dividend of $0.44 per share, payable following the AGM in April. The Board also proposing an annual ordinary dividend of $0.44 per share to be paid in quarterly in stores. Both dividends will be paid out of legal capital reserves and are not subject to Swiss withholding tax. I'm very pleased to have established a strong balance sheet and platform for growth that enables us to return value to our shareholders while further increasing our growth investments through CapEx and M&A. Before discussing our guidance for this year in more detail, I turn over to Ian, and he gives us more details on our financial results. Ian Johnston: Thank you, Jan. I'll begin on Slide 15 with our results by segment, starting with Building Materials. For strong volume and revenue performance in Q3, we saw continued momentum and margin expansion in our Building Materials segment during the fourth quarter as new infrastructure and data centers and [ commercial ] projects program. Revenues were approximately $2.2 billion in the quarter, an increase of 3.9%, driven primarily by higher volumes across both our cement and aggregates businesses, compliance with continued aggregates pricing growth. Cement volumes increased 3.6% and aggregates grew 3%. We continue to see steady support on federal, state and local infrastructure spending as well as growth in select commercial markets, particularly in data centers and warehousing and logistics, which we expect to continue in 2026. Net pricing for the quarter was down 0.8%, while full year 2025 was up 30 basis points on a constant currency basis. As we mentioned last quarter, we have announced price increases in 2026 [indiscernible] in our markets, driven by the positive volume trend we have seen across our cement business over the last 2 quarters and into the new year. Pricing has been phasing in since the start of the year, with full run rate in place assumed by April 1. As a reminder, our markets are driven by local demand, varying by geographic region. That said, we continue to see favorable pricing dynamics across our network, supported by our inland positions and higher growth in proactive markets. Meanwhile, aggregates pricing on a freight adjusted constant currency basis increased 3.8% in the quarter. Including freight, pricing was up 7.3%. We continue to see how the aggregates pricing, supported by strong local market fundamentals and ongoing infrastructure demand. Building Materials adjusted EBITDA was $705 million in the fourth quarter, up 4.9% compared to the prior year, while adjusted EBITDA margin was 32.6%, 60 basis points. The increase in adjusted EBITDA was primarily due to volume growth, aggregates pricing, production efficiency and early ASPIRE sales. Moving forward, we expect cement pricing to be up low single digits and aggregates pricing to be up mid-single digits on a freight-adjusted basis in 2026. Given the positive customer demand we see across these businesses, we expect volumes for both cement and aggregates to be positive this year. Before we move to Building Envelope results, it's worth noting that the first quarter is typically a seasonally slower quarter for Building Materials as we perform annual maintenance and build inventory ahead of the peak selling season. Moving to Slide 16. Turning to the Building Envelope. Fourth quarter results were $678 million, a decrease of 11.8% compared to the prior year. The decline was largely driven by softer residential roofing demands. That said, when we look across our business, commercial regrouping activity remained strong with revenues up during the quarter, as this type of spend is often nondiscretionary on discretionary for our customers. In commercial new construction, we continue to see robust data center demand. As Jan mentioned earlier, our MAX PVC product line and Elevate is addressing the higher performance specifications that many of our data center customers require. So far, we've been pleased with the traction, and expect this product will continue driving growth for us in the future. Meanwhile, we have also started to see a recovery in warehousing, distribution and logistics end markets. As interest rates and the cost of capital move lower, we expect further improvements from commercial new construction. Building Envelope adjusted EBITDA was down year-over-year, largely due to softer residential roofing demand and an $8 million increase in warranty provisions to reflect claims activity in our residential roofing business. We continue to see pressure on residential demand from higher interest rates and affordability concerns. These headwinds were partially offset by an increase in commercial roofing margins driven by resilient repair and refurbishment demand. Moving into 2026, we are focused on what we can control. We launched ASPIRE to improve our third-party cost base, a significant progress, and expect additional savings to materialize in 2026. While residential demand remains soft, we expect strong demand in commercial R&R, to continue and lower interest rates to support a broader recovery across new commercial roofing [indiscernible]. As a result, we expect low single-digit volume growth in commercial roofing. In residential, we expect flat volumes for the year, the second half being better than the first half. So far, Q1 customer demand has improved compared to Q4. Looking out further, we continue to see a long tailwind of growth in commercial R&R activity, driven by an aging commercial roofing stock that needs to be replaced. We are also encouraged by recent policy developments that aim to address affordability, which can support new construction and help bridge the housing. And as I mentioned earlier, our focus is on operations and efficiently running the business through different economic environments. We continue to see a path towards best-in-class EBITDA margins. Moving to Slide 17. We had a strong cash flow performance during the year. We generated approximately $1.5 billion, representing a 49% cash conversion rate on adjusted EBITDA. This is in line with our historical average cap conversion of approximately 50%. 2025 free cash flow was lower due to net income and increased organic CapEx growth. Cash flow is a key performance indicator for all of the P&L leaders across our business. Our free cash flow performance in 2025 demonstrates the strength of our working capital management and resilient underlying cash generation of our business. Turning to Slide 18. We are very pleased with the progress we made post-spin to further strengthen our financial position during our first year as Amrize. At the end of the year, our net leverage ratio was 1.1x, delivering on our commitment of less than 1.5x on a year. Net debt at the end of the year was approximately $3.3 billion, down over $1.5 billion from the end of the third quarter as we generated strong cash flow at the end of the year. Turning to Slide 19. In 2025, we established a solid foundation to deliver growth and return capital to shareholders in 2026. As of December 31, we had $5.3 billion in senior notes, nearly $6 billion of available liquidity and a low leverage ratio, providing us with ample firepower to accelerate growth this year. We are also effectively managing our interest expense and expect run rate to come down in 2026 compared to 2025 as we continue to optimize our capital structure. We expect our effective tax rate to stabilize in the range of 21% to 23% in 2026. Corporate costs are expected to be approximately $200 million this year, a modest step down from 2025. This sufficient capital structure and operating model allows us to continue generating significant cash in 2026 and drive profitability. This model also lays the foundation for our capital allocation strategy, putting us in an excellent position to announce our shareholder return plan while continuing to invest in organic growth projects and value and pursue value-accretive M&A. This speaks to our financial power, firepower and our business and flexibility of our balance sheet. With that said, I will pass it back to Jan to cover our 2026 outlook. Jan Jenisch: Thank you, Ian. When we look at the guidance of 2026, I'm confident that this will be the year of accelerating demand from our customers. The commercial market will continue its improving trends as lower interest rates support new products, adding to already strong demand for data centers, but also for other projects in logistics and manufacturing facilities where we have a lot of sideline projects. We have a good demand here, which will unfold throughout this year. In infrastructure, the demand will continue to be strong as governments prioritize modernization. Only in the residential market we will remain soft, with improvements rather towards the end of the year. We expect pricing and volumes in Building Materials to be key growth contributors in 2026. Cement pricing is expected to increase low single-digit percentage range, while aggregates pricing is expected to increase mid-single-digit percentage range. The market trends and increasing customer demand will drive volume growth both cement and aggregates. Building Envelope, we expect low single-digit growth in commercial roofing volumes, while we see flat volumes in residential roofing, with demand improving in the second half of the year. Very important for us, the ASPIRE program is a key priority and will deliver significant results in 2026. We are now targeting a margin expansion of 70 basis points and are on track with our goal of $250 million in synergies through 2028. Based on this momentum from our customers to all the programs under our control, we have set our 2026 guidelines or guidance with 4% to 6% revenue growth and 8% to 11% EBITDA growth. Both numbers include the contribution from our recent PB Materials acquisition. With that, I'll now pass back to Aroon and to open up our question-and-answer session. Aroon Amarnani: Thank you, Jan. Operator, we're now ready to begin the question-and-answer session. Operator: [Operator Instructions] Our first question is from Adrian Huerta from JPMorgan. Adrian Huerta: Can you hear me? Unknown Executive: We can hear you. Adrian Huerta: Ian, Jan and Aroon, congrats on the results. My question has to do with the cement prices. I want to understand a little bit better why this confidence on getting a low single-digit price increase for the year? I mean just from comments from other companies, it seems like a traction on price increases at the beginning of the year is not going as expected. What are you seeing on your own markets and where you see better pricing traction? And where do you think it might be a bit more difficult to get the increases that you're looking for? Jan Jenisch: Look, we are confident and we're going to see a price increase for our Amrize products this year. I think we made good progress in this. And we have -- I have nothing negative really to report here. Adrian Huerta: And if I may ask just a follow-up question. On the ASPIRE program, good to see a larger target on savings this year than the run rate of 50 basis points, now with a target of 70 basis points. Any more color on where are these savings, which should be somewhere around $100 million between SG&A or by segment within Envelope or Materials? Where most of the savings coming? Jan Jenisch: No. Great. Good question. Look, I mean, I'm very excited. As you know, we have over $7 billion of cost to third party, and we haven't done really the synergies. So we have doubled the company just in the past few years from $6 billion to $12 billion, and we have not really run that synergy program. So very exciting now to have savings. Of course, we have it in logistics. We have it in raw materials. And we have a lot of services, which are provided to us for maintenance, for equipment and other things. So we made great progress. You can see already in the fourth quarter results in Building Materials that we had quite a significant impact from the ASPIRE program. And this is just the start. So we are very confident to see a significant contribution this year from ASPIRE, and that's why I also guide this to be fully margin accretive. Operator: Our next question is from Anthony Pettinari from Citigroup. Unknown Analyst: This is [ Asher Stone ] on for Anthony. And just in terms of compare and contrasting the way you're looking at 2026 versus maybe how you're thinking 3 months ago, what are you seeing in terms of project backlog, cancellations, et cetera? And then on top of that, your positive volume growth outlook for '26, how does that break out between your different end markets between commercial, infrastructure and residential? Jan Jenisch: Look, I'm very happy how things are accelerating with all our customers. You have to see that the strongest market segment in last year was infrastructure, where we have this program is running and we are very happy to supply a lot of those projects. However, at Amrize, we do 50% of sales. We do have our commercial customers, and that's really key, and that market has really picked up from mid last year. And then you can see it from some indexes like [indiscernible], where we have increasing -- the number of standing projects, and we can literally see it with our customers. They have a backlog of projects, not only for data centers but for logistics, for infrastructure, around logistics centers for manufacturing facilities, and this will unfold. We have no canceled projects, a lot sideline and -- slowed down. And now we see that coming. The 2 cuts in interest rates has helped a lot. Many people -- most people always speak about the mortgage rates and the interest cuts. But actually, for us, the interest rate is more important for our commercial customers. And this is why I'm very excited for this year, and I -- we will see an accelerating demand and number of projects from our commercial customers. Operator: Our next question is from Trey Grooms from Stephens. [Operator Instructions] Trey Grooms: Got it. Can you hear me now? Operator: Please go ahead. Trey Grooms: Okay. Sorry for that. Just on the acquisition, maybe if we could touch on that. PB Materials, aggregates-led business with some ready mix. It's included -- I believe it's included in the full year guide. It's doing $180 million in annual revenue. Any other details maybe you could give us there around PB? The -- I understand it's in West Texas and geographically where it stands. But anything around the -- maybe the production or tonnage or how much it's adding to the overall volume being positive this year in aggregate? Any other details that maybe you could give us? Jan Jenisch: No, no, thank you. Great question. And look, we have a great slide on Slide 11. And I think what's key here for me is, first of all, the size of the acquisition, over $180 million. We're going to close that very soon now in Q1. So very excited now when the season really starts that we have this business with us. It's already a very well margin product business which has now significant synergies. I like that -- we bought a little map there where you can see how well that fits with our footprint in Texas, especially also our cement terminals and our [indiscernible] service all those sites. We have about 26 sites -- operating sites and 13 are quarries and another 13 are ready-mix sites. So it's a well-balanced business, and the other market leader around 30% of market share. So I'm very happy we can onboard now then with our very successful business in Texas. Operator: Our next question is from Bryan Blair from Oppenheimer. Bryan Blair: Ian, you had offered pretty good color on the visibility in commercial and infrastructure project outlook. I was hoping we could drill down a little bit on the residential side. And we know that there's weakness anticipated and [ understandably ]. So over the near term, looking to the back half, there's some degree of recovery against relatively weak comps. If we look at the low versus high end of your guidance, are you willing to quantify what is baked in specific to residential market activity through the back [indiscernible]? Jan Jenisch: No, I wish I could share with you, but I think what's exciting about residential, while it's only around 20% of our business, 50% of that is repair and refurbishment. And this gives us this resilient demand from the residential customers. And that was slowed down last year. We had much less storm impacts like we had in years before, but this has really slowed us down, especially in Q4, but we believe this will normalize this year again. So to the question, I'm quite confident that within refurbishment, we will see significant growth for us in 2026. New residential, that needs to be seen if that sees a recovery towards the end of the year or let's say, a start of recovery. But in our numbers, we are not planning for any growth in new construction residential. But very confident about repair and refurbishment. Operator: Our next question comes from Pujarini Ghosh from Bernstein. Pujarini Ghosh: One follow-up on the guidance. Please, can you confirm that you have not baked in any future potential acquisitions in the revenue and EBITDA growth guidance for 2026? And could you give some color around the CapEx spend that you are going to do in 2026? And how much new capacity addition in terms of the overall portfolio does these new projects bring in? Jan Jenisch: Thank you for the question. So the guidance of 4% to 6% revenue growth and 8% to 11% EBITDA growth is organic, including the PB Materials acquisition. We are very confident about these numbers. You have to see we have now this accelerating demand from our customers and our order books, which are on a good level. And then we have a lot of self-help. So -- and we see the pricing this year. We have the ASPIRE program, and we have the first impact from our new growth CapEx programs. So very excited to start to run our flagship cement plant in St. Louis at higher volumes and then the other CapEx will come. I think at this point, we don't give a break, which is maintenance CapEx and growth CapEx. But you can see, as we come somewhere from below $600 million to $900 million this year, you see already that we are more than doubling our growth CapEx. And this is a good thing. We have a lot of low-hanging fruits to debottleneck, to expand in new markets. This is a new plan of Malarkey to enter the Eastern markets or is it new terminals to distribute our cement and aggregates. And of course, we are excited to debottleneck some of our best-performing cement plants to increase the volumes, but also to further improve the efficiencies. Operator: Our next question is from Yassine Touahri from On Field Research. Yassine Touahri: Just one question regarding your Building Envelope business. We see that QXO has acquired Beacon and is aiming to substantially increase its margin and also double its EBITDA. And I think one of the lever is to work on changing the relationship with roofing product suppliers, including MIs. Could you give us some color on what has happened over the past year in terms of your relationship? And what has been the impact of these developments so far on your commercial strategy and potentially even your overall strategy as a group? Jan Jenisch: Look, we are partnering with the distributors in roofing, and they are very good companies. A company you mentioned, there are another 2 big nationwide, the roofing distributors. And then there are many local business in roofing distribution. I think what is important for us is that we are not focusing on a distributor itself. We are focusing on the end customer. So we have the ambition to build the best roofs. So all what we do is we focus on innovation, providing the best systems brand, everything. We are offering the training for the roofing contractor, we're offering the warranty, we're offering the roofing inspection. So when you look at our business, the distributor has an important function to make sure our product is on time on the construction side. But beyond that, we just focus on the best roof, the best service, the best warranty for the end customer. And we do -- I think we do about 30% of the roofing business is direct, about 70% goes through distribution. So I have nothing to report here. I know -- there are some distributors they like to talk a lot about their future. But I can just tell you, we partner with all of them. And we make decisions who is our partner in certain geographic markets. So I think we're in a very good spot here to further increase our market share and expand our systems for roofing. Operator: Our next question is from Arnaud Lehmann from Bank of America. Arnaud Lehmann: My question is regarding your Q4 free cash flow generation, very impressive, around $1.7 billion, I believe. Is it the normal inflow, in your view, considering seasonality? Or was there any specific effect related to the merger or to accounting that we need to consider? Jan Jenisch: No, I think it's nothing special, Arnaud. I think we have -- I mean our cash flow conversion from EBITDA is around 50%. This is what we're also targeting for the future. So I'm very happy. In this first year of Amrize, we just started the company in June last year. So we're very happy to -- that we were able to deliver, also considering our significant increase in CapEx spend, very happy to, nevertheless, deliver such strong cash flow so you, I think, should expect from us that this will continue in the years to come. Operator: Our next question is from Julian Radlinger from UBS. Julian Radlinger: Jan, Ian, Aroon, any color you can give investors on building Envelope earnings in 2026? I know you're guiding to overall positive volumes, commercial up a little bit; resi, more flat. But what about margins? If resi roofing volumes are as you expect in commercial as well, should we expect Building Envelope EBITDA to be up as well in 2026? Jan Jenisch: Yes. I mean, look, when you look at our guidance that we want to grow the EBITDA, 8% to 11% this year, you can imagine that this is true for both segments, for Building Materials and for Building Envelope. And we have strong programs in place, also with ASPIRE to increase our efficiencies in Building Envelope as well. We have pricing in place. And our target is to increase price over cost in Building Envelope in 2026. Operator: Our next question is from Tom Zhang from Barclays. Tom Zhang: Yes. Could you maybe just elaborate a little bit on the volume and materials? I think you said volume will be a growth contributor for the Materials business, both cement and aggregates. Is that a sort of low single-digit, mid-single-digit number? And is that predominantly driven by the self-help and organic growth that you have as you ramp Ste. Gen? Or do you think that's more a sort of market growth number? And I guess maybe just you link to that, can you talk a little bit about how you plan to approach the Ste. Gen ramp up? Obviously, it sounds like commercial and infra demand is okay, resi a little bit weaker, but it's still a decent amount of capacity to try and bring to the market. If you can just talk about the strategy of how you'll introduce those volumes? Jan Jenisch: I think it's important if you run Amrize and you guide the year and you give the targets to your sales force, to all the people responsible. I very much like to focus on ourselves. I don't make a big market prediction. So like the Ste. Gen expansion is based on our customers demanding the product. And this is how we work. And this is why we come up that we believe our volumes will increase in '26. And this is all I can say at this point. We make this all for the customers and we have good order books and again, nothing negative to report here. Operator: [Operator Instructions] Our next question is from Carlos Caburrasi from Kepler Cheuvreux. Carlos Caburrasi: Just wondering on CapEx, if you could give us some color regarding the expected investments during the rest of decade? I'm just wondering if we should expect a further acceleration from the $900 million in 2026? Or is it going to be kind of flat or a front-loaded performance that will normalize as we get closer to 2030? Jan Jenisch: I'm very happy to invest in the business. So I was happy that we have the opportunity. There are a lot of low-hanging fruits on the CapEx side, and we are doing all the good projects. So that adds up to around $900 million CapEx spend this year. I think this is already a significant increase, especially when you focus on the growth CapEx, this means we more than double the growth CapEx this year. And I think this is in a good spot. And then we will take it from here. Those projects we also introduced here, I think we have 2 slides on like 6 of the most important projects for us. And that also keeps us busy because you not only have to execute this and commission the plan or whatever the CapEx is about, you also have to commercialize the volumes into the market. So I think we are on a great track to fully support our growth ambition for 2026, and then we will see later this year what the CapEx is for the years to come. But I think $900 million is a good number for us. Operator: Our next question is from Keith Hughes from Truist. Keith Hughes: Can you hear me now? Operator: We've got you. Keith Hughes: There we go. A question on pricing on the roofing markets. Can you talk about in the fourth quarter, what pricing was like in residential and commercial and what you're expecting in your guidance for calendar '26 on pricing? Jan Jenisch: And for us in roofing is a bid to an aggregate cement, we like to talk straightforward about price. In roofing, it's a bit different. We like to talk about price of cost and as we shared a bit in the presentation, we were very satisfied with the commercial roofing margins. They increased. So we had a positive price over cost in commercial roofing. And we had quite a disruption in the residential market, which I think will be fully stabilized already in the first month of this year. But nevertheless, there was quite a big disruption you saw in the fourth quarter and also maybe a bit softer pricing. I think that pricing even will come back now fast already this year. So for the full year, I mentioned this before, we are targeting a positive price over cost growth in the Building Envelope side. Operator: We have no further questions at this time. I will now turn the call back over to Aroon Amarnani for closing remarks. Aroon Amarnani: Thank you, operator. Thank you all for joining us for our fourth quarter and full year '25 earnings call. We look forward to speaking with you after we report our first quarter '26 results in the coming months. Thanks, everybody. Operator: This concludes the Amrize Q4 2025 earnings conference call. You may now disconnect.
Operator: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Expand Energy Corporation Fourth Quarter 2025 Earnings Conference Call. After the speakers' presentation, there will be a question and answer session. To ask a question, press 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from your queue, press 11 again. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Colby Arnold. Sir, please begin. Colby Arnold: Thank you, Howard. Good morning, everyone, and thank you for joining our call today to discuss Expand Energy Corporation’s 2025 fourth quarter and full year financial and operating results. Hopefully, you have had a chance to review our press release and the updated investor presentation that we posted to our website yesterday. During this morning's call, we will be making forward-looking statements which consist of statements that cannot be confirmed by reference to existing information, including statements regarding our beliefs, goals, expectations, forecasts, projections, and future performance and the assumptions underlying such statements. Please note that there are a number of factors that will cause actual results to differ materially from our forward-looking statements, including the factors identified and discussed in our press release yesterday and in other SEC filings. Please recognize that, except as required by applicable law, we undertake no duty to update any forward-looking statements and you should not place undue reliance on such statements. We may also refer to some non-GAAP financial measures, which help facilitate comparisons across periods and with peers. For any non-GAAP measure, we use a reconciliation to the nearest corresponding GAAP measure that can be found on our website. With me on the call today are Mike Wistrich, Joshua J. Viets, Daniel F. Turco, and Brittany Raiford. Mike will give a brief overview of our results, and then we will open up the teleconference to Q&A. So with that, thank you again. I will now turn the teleconference over to Mike. Thanks, Colby, and good morning. I would like to start out by talking about Mike Wistrich: 2025. I think we had a really phenomenal execution year. I mean, we have a 15% reduction in our breakevens in the Haynesville. That is very difficult to do. The team should be congratulated on that. It is phenomenal. It does not just help our reinvestment rate. It also helps our inventory. You will notice in the deck, we have moved locations over to the left, getting closer to lower breakevens. I think that is really a tribute to the team. We did the Southwestern merger, we focused on reducing debt, fulfilling that promise this year. We have reduced debt, but we also returned a lot of money to our shareholders. And we continue to think that is a good way for the company to continue. Volatility. Look, we are seeing volatility in gas prices today. You have seen it all quarter. We believe in hedging, and our hedging program has been effective. We have $200,000,000 in gains this year. But, I mean, just look at today's prices, and we are glad we have them. You will see we are very active this quarter. What I like about the 15% breakevens in the Haynesville is you know they are real, and they know they are real because when we talk about 2026, we have reduced our maintenance capital. That absolutely is proof positive that the team is working, and it is working well. In 2026, we will continue to do our buy down of debt. We will also consider shareholder returns as we always have. Big news, of course, is the change that we made last week. That is really a reflection of the changing natural gas business. We believe the world has fundamentally changed in natural gas. We are seeing tremendous growth in demand. We are seeing 35% to 40% in the next five years. This move is absolutely trying to address that reality. Today, our marketing business, while we think about it, is in three buckets. The first bucket that we consider is do we get our gas to premium markets? This has been a goal for the company from the very beginning last year. We started in Chesapeake in 2021, we had our goal of moving these numbers. It was at the time almost all in-basin sales. Today, we are close to 50%. We feel good progress has been made. The second leg of marketing is we need to take care of volatility. We live in a very volatile gas market. We know that. And so by hedging, by doing storage transactions, this helps us capture, helps us in the low-price environments, which we always are concerned about. It is about discipline. Hedging is about that. Our third, which we have not made as much progress in and we are disappointed in, and we expect to do better, is we need to capture and facilitate new demand. We need to get our fair share of this market. Our team has done some good stuff. We saw the LCM deal this year, but we have not done enough. And we are taking that challenge, and that is really some of the fundamental reasons why we are moving to Houston. In order to participate in that market, you can see you have to compete on our trading side of our business, or our marketing side. We are not the only ones who are saying this. I mean, you see wellhead to water. You see wellhead to water. We have to think beyond the wellbore. We have to say, it is not good enough anymore to just drill great wells. We have to compete on the marketing side of our business. What is the size of the prize? I have been asked many times about that. I think the size of the prize we are chasing is $0.20. We are looking for improved realizations across our business. We think that will make us competitive and a better energy company. These changes, as all changes, you have some things that are unfortunate. Obviously, our senior leadership has changed. That does not change our mission. This does not change our strategy, but what you are seeing is a change in tactics and focus. We have a new business. We have to spend time on that business. What is not changing? Our operations have been great. Look at the results. We are not changing our leadership. We are not changing even our location. We plan to stay in Oklahoma City with our operations team. Joshua is still leading that group, and we do not expect to have changes there because, frankly, it works. And so we do not do things that do not work. So when you think about us, our mantra is our foundation is in place. Our strategy is clear. The opportunity set is huge. It is time for us to act and so we are talking about urgency. We are talking about competitiveness. And so all we need to do to be successful is execute. So with that, we would like to turn it over to questions. Operator: Ladies and gentlemen, if you have a question or comment at this time, please press 11 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press 11 again. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Neil Singhvi Mehta from Goldman Sachs. Your line is open. Neil Singhvi Mehta: Yes. Good morning, Mike. Good morning, team. Thanks for taking the time and Mike, appreciate some of the color that you provided around management change. Maybe you could talk about the characteristics you and the board are looking for in that next CEO and any thoughts on timing, how long you think the search could take? Mike Wistrich: Sure. Thank you for the question. We are looking for a leader who has a bigger view of energy. He will be an energy person, but someone who is going to continue our mission to look beyond the wellhead. That is someone who thinks about the whole value chain and including we need to get closer to customers, not just here in the U.S. We need to get customers, closer customers in Europe. So it is someone who has a bigger view of the energy industry as a whole. How long does it take? Well, we have done the search before for a CEO. It took about six months. This is a bigger, more complicated company. I would not be surprised if it went to nine months. But call it six is the goal. I will tell you, I am committed to find the right person. I will be here until that occurs. Neil Singhvi Mehta: Okay. That is really helpful. And then as you talk about marketing, can you talk about the quantification of the uplift in cash flow or realizations that you think could happen if you optimize the commercial side of the business, and one case study could be FERN. Did you capture all the upside that you think you could have in that event? And if you had a more robust marketing effort, do you feel like you would have done even better? Mike Wistrich: Well, I think all energy companies and gas companies are moving towards more marketing because we can no longer give away margin to the guys in between us, the marketers. So number one, our first goal is premium markets. We are starting to see a little bit of results this year on that. I expect that to be the near-term catalyst for us to increase our realizations across our portfolio. That will move into 2027. I think volatility. I mean, especially when prices are low, storage is phenomenal. Volatility is high. Storage will be very helpful. Moving our gas to premium markets, whether it be Gillis or to Perryville, has been very helpful. Those are the near-term ways to help our margins right away. To go get that $0.20 a little bit longer. Let us call it three to five years. We have to do more LCM deals. I mean, to facilitate demand, generally, that has to do with building something, building a plant, building a facility of some sort. So they take a little bit longer, but that is really the future. We are really fighting for years three to five. Again, the goal is $0.20. A $0.20 improved realization is obviously very material to our margin. And we think we can make it there. Neil Singhvi Mehta: It is about $500,000,000 in EBITDA, right? Mike Wistrich: That is what we are talking about. Neil Singhvi Mehta: Yeah. Yeah. And then, Neil, hey. Just on you asked about Joshua J. Viets: Winter Storm FERN. I mean, I think your question around, what are you going to be able to do with the integration of the operations that we have with the marketing commercial business. And all those things have to work in tandem. But I think just talk about that entire value chain and starting with the operations. Those operations have to hold up when you have these types of weather events. And, of course, it really is going to depend on the type of weather that we incur. In the Northeast, really across our entire Appalachian region, the operations held up incredibly well and performed incredibly strong through the weather events. In fact, the other thing I would just point out in Northeast Pennsylvania, we were actually peaking out on our production levels as we headed into January. So, again, just thinking about the flexibility of our business there. In the Haynesville, that was a little bit different of a challenge. We had over an inch of ice accumulate on roads and that simply was detrimental to the power infrastructure as well as our ability to manage water across the asset. So definitely a little bit of a different situation there that had some impact on our volumes across that time period, but we absolutely know that in order for us to realize these aspirations, the entire value chain has to work, and that includes our operations. That has to include our marketing commercial business. And then it also implies that we have to gain additional access to infrastructure, further down the value chain. Neil Singhvi Mehta: Thank you. Operator: Our next question or comment comes from the line of Matthew Portillo from TPH. Mr. Portillo, your line is open. Matthew Portillo: Good morning, all. Maybe just to follow up on the marketing front. It feels like, and I know you laid out in the slide deck, but it feels like there has been a pretty significant shift in a constructive way in the supply-demand balances for natural gas on the Gulf Coast. I was curious if you might be able to discuss at a high level how you think the demand dynamics have been changing and if there is any shift in your conversations for contract tenor, but also pricing dynamics for offtake agreements, whether it be LNG players, utilities, or industrial consumers around Louisiana and Texas? Mike Wistrich: Yeah. I will start and let Daniel finish. Really high level, we are definitely seeing the Gulf Coast be very active. It is a unique area. Of course, it is with 50% of our production where it is. We are seeing gas-on-gas demand. We are seeing that end-use customers want to be closer to the wellhead. And so we think that is going to go into our favor. And you could see others talking about this as well. We are not the only ones. In the Northeast, of course, that is a power market. And it is a little different. It is actually having, of course, with Virginia and the data centers built, it is a little bit different market. Generally think that there is more diversity in the Gulf Coast. But, Daniel, you should add additional color. Daniel F. Turco: Thanks, Matt. I think you have nailed it. The Gulf Coast is a place where we are seeing growing demand. If you look at the entire United States, we are seeing about 25,000,000,000 cubic feet a day of gas demand coming online. A lot of that, half of that is coming from LNG, and that sits right in our backyard and right where our Haynesville asset is and right where our pipeline capacity gets down to Gillis. And somebody asked me the other day, how do you feel about this market? And I said, I have been around this for, like, 25 years. And the first time, we are getting tons of inbounds, people looking for that security of supply that you referenced. So the team is out there working all these deals, trying to do something better. As Mike pointed out, this opportunity set is huge, and we are accelerating what we are trying to do here. And grow and further expand down the value chain. Where we are set up, our Haynesville asset, Gillis, and that demand is quite unique for us. Not only the Louisiana side of the border, the Texas side of the border is growing as well. There is a unique aspect going on between Texas and Louisiana. With the amount of demand growth, people talk about the Permian a lot. The Permian will grow into these markets. Of course, Texas is growing substantially as well as Louisiana, and the ability to get from interstate pipelines across the border to meet that demand is also a little bit challenged. So we are set here to go and capture all this demand. Matthew Portillo: Great. And then maybe a question for Joshua. One thing we have noticed on the macro side is the industry has continued to accelerate the rig count in the Haynesville, but more of those rigs are making their way to East Texas. And then in the core of the basin, some of your peers are starting to face degradation in their well results. I guess, Joshua, as we look at your well data and then also the slide you laid out on Page 12, curious how you think about Expand’s productivity trends in the Haynesville over the next few years and how that might contrast to the industry as a whole? Joshua J. Viets: Yeah. Thanks for the question, Matt. I mean, the reality is the inventory that we carry in the Haynesville is just simply unmatched. It is both in terms of depth and quality. You see that show up in a number of different spots. And then you combine that with what is a 15-plus-year history of operating the basin, and so that simply leads to operational excellence. And then at the end of the day, that is going to show up in the breakeven of our inventory. We are just in the one year alone. We have been able to add five years of inventory below $3.50. And so, yes, though we have seen roughly 10 rigs added to the Haynesville, those 10 rigs that are being added by no means can make any comparison to a rig that we might choose to add. In fact, if you reference slide 30, you will see we have characterized there what over a two-year time period of production our rig is able to generate relative to an average rig in the industry. So the things that we are continuing to be on, of course, is operational excellence and continuing to manage the way at which we drill our wells. So that is primarily around how we manage temperature. And then the other differentiator for us is, of course, how we source sand. And not only that is lowering the input cost, but it is simply allowing us to optimize a better economic outcome by increasing proppant intensity and driving our well productivity higher. That is not about IPs. I will just note, that is really about changing the decline parameters of the well, which again translates to value at the end of the day. Operator: Thank you. Just a sec. Our next question or comment comes from the line of Douglas Leggate from Wolfe Research. Mr. Leggate, your line is open. Douglas Leggate: You had me on pause there for a minute. Thanks so much. Good morning, guys. Mike, I wonder if I could ask two quick things to the extent you are able to answer them. There is a lot of focus obviously on your breakeven. When you and I have chatted, it has been almost like you have kind of laser-focused on how you get this breakeven down. Some of your peers have obviously taken different routes on this, whether it be greater liquids mix, introducing midstream, deleveraging. I am wondering to the extent you can share your vision for how Expand gets that breakeven down given the proportion of dry gas you have as my first one. My second one is you have called the 2029 bonds a big nut, obviously. I am wondering if this is defining a different priority for the use of cash in terms of balance sheet over buybacks. I will leave it there. Thank you. Mike Wistrich: Great. Thanks, Doug. A couple things. I do think we focus a lot on breakevens, but we also need to focus on our total financial picture, including earnings per share. Obviously, we are making a big dent in our debt. We think that actually helps. That is one way to do it. But we are also thinking about marketing. It is the top line. We have to have the margin get better. And so I think we are trying to squeeze this number anyway. We are fighting for pennies. We know we are fighting for pennies as an industry. And so you have to use the whole tool chest to get that done. And so between debt reductions, between I think you have noticed this last couple years, we have made pretty good synergy adjustments in G&A and not just our business. And so we hope marketing will be the next leg of that. As far as paying down debt versus buyback shares, of course, we like to do both. We have done both this year. We continue to do both. But we are in a very volatile commodity business. And with that, having a nonnegotiable of a fantastic balance sheet comes first. And so that is why you are seeing our priority to pay down debt. I think we will lean into that. We would like to be a little bit less prescriptive on our buybacks. I think it is a terrible policy to tell the market exactly when we are buying back shares and when not. We want to be smart about it. But first deal is balance sheet first. And so that is why you will see us focus on that. And I think that is also, again, great for EPS, which is important. Mike, if I could just add a quick follow-up there? I wonder, does M&A come in Douglas Leggate: the picture here in terms of resetting that breakeven, again midstream and liquids is kind of what I am driving at here. What would you say to that? Mike Wistrich: Well, I would say we are very actively looking at every potential party in the basins that we operate, and some of those have liquids. But the more important part of that question is you have to have discipline. This year, we looked at a lot of transactions, we passed on a lot because it starts with our nonnegotiables. Our nonnegotiables are balance sheet and accretion. And sometimes, this year, gas price was pretty high, and so those deals were not that attractive. But if you are asking about liquids and helping margin, is that a possible answer? It is. Douglas Leggate: It is. Great. Appreciate the comments. Thanks so much. Operator: Our next question or comment comes from the line of Kevin Moreland MacCurdy from Pickering Energy Partners. Mr. MacCurdy, your line is now open. Kevin Moreland MacCurdy: Sorry about that. Good morning, and thank you for taking my question. I wanted to ask about your maintenance CapEx and specifically slide six. It looks like there were some improvements to your maintenance capital compared to last quarter, although the guidance did not change, if I am reading that correctly. And I also noticed that there are three production levels bolded on the left-hand side there, 7.25 Bcf to 7.75 Bcf, a range a little bit wider than your 2026 guidance. Is there anything to read into that as well? Joshua J. Viets: Yes, Kevin. I mean, I think the first thing is to reemphasize the improvement that we have seen in our maintenance CapEx. I mean, if you were to go back to a year ago and look at this slide, it would have been $225,000,000 higher to deliver the 7.5 Bcf a day. So first, I think just acknowledging that the business has gotten stronger, and that is reflected here. So you will see that our program does have the ability to still be incredibly efficient from a free cash flow generation standpoint up to 7.75 Bcf a day. But one of the things that I just think is incredibly important to recall and really what is underwriting this slide is a view on mid-cycle price. And that view on mid-cycle price remains unchanged from $3.50 to $4. $0.50 for us is a pretty big range. And so one of the things we really want to continue to be focused on is maintaining a level of flexibility in the business and, therefore, how much we produce in any given month or across a given year based upon how we see those prices trend. And so in certain instances, that might cause us to push volumes a little bit higher. But if we see the market maybe turn a little bit bearish, whether that is shorter term or even longer term, we want to have the ability to flex those volumes. Kevin Moreland MacCurdy: And for my second question, your budget outlines $75,000,000 for the Western Haynesville this year. Can you talk a little bit about how that program progressed, when you will be drilling, and what you are looking for in results? Joshua J. Viets: Yeah. Kevin, this is Joshua again. On that, we have roughly two and a half wells scheduled. There is a little bit of carry-in and carry-out capital that will take place across the year. We have just finished drilling the first well. That was a horizontal well. Those operations went incredibly well. In fact, when we benchmark our performance both in terms of days and cost, we are at the very low end of what we have seen from some of the bigger competitors in the Western Haynesville, so we feel really good about that. That well is being completed as we speak, and we expect first production sometime in late Q1, early Q2. Really there, we are going to be interested in longer-term decline parameters. We know the reservoir is there. We know it is highly saturated with overpressure gas. But understanding those decline characteristics will be really important. For the rest of the year, we have, again, roughly two additional wells that we plan to drill, and those are really going to be centered around helping us appraise the full extent to the acreage position that we put together there. Operator: Thanks, Joshua. Brittany Raiford: Thank you. Operator: Our next question or comment comes from the line of Scott Michael Hanold from RBC Capital Markets. Mr. Hanold, your line is open. Scott Michael Hanold: Yes, thanks. I would like to maybe key off something, Mike, you had said in your overview. And one of the things you mentioned is that you want to look to, you know, just cannot give away margin to the middleman. And as you step back and think about that, would that also contemplate looking at more of an integrated operation, such as going out and actually owning midstream to be more integrated? Does that help the effort? Is that a possible avenue you would be willing to look at? Mike Wistrich: Yeah. I think, generally speaking, we are focused more on partnerships with midstream companies. We are looking at stuff like Momentum that we have done in the past. We are looking, and we actually, an LCM deal has a Momentum component on it. So I imagine this is more partnerships. We have to get our gas to premium markets. It is unrealistic to think we are not going to have to deal with some sort of midstream to get there. We would like to be part of that equation. So I think it is that more than just going out and buying gathering systems. I am not sure that would be really helpful for us. We have to get to end-use customers. So yes, integrated, but maybe think about that in a partnership way. Scott Michael Hanold: Okay. Understood. Appreciate the context. And then if I could ask on cash taxes, surprised at the minimal cash tax that you are looking at this year. Can you give us a sense of what drove that? Is that part of the OBDD from last year? And do you have any visibility over the next couple of years where that cash tax rate might go? Brittany Raiford: Yes, Scott. This is Brittany. So you are absolutely right. It is the benefit of the OBDD, and we saw that last year and are seeing the benefit of it this year. So we do expect to be a full cash taxpayer probably in the back part of the decade, and so I would expect us to stair-step our cash tax increases throughout the next couple of years to be a full cash taxpayer probably later, closer to 2030. Thank you. Operator: Thank you. Our next question or comment comes from the line of Benjamin Zachary Parham from JPMorgan. Mr. Parham, your line is open. Benjamin Zachary Parham: I wanted to follow up on Matt's question earlier. In the slide deck, you highlighted an increase in your first-year cumes that you expect from the Haynesville in 2026. Can you talk about that a little bit? What drove that expected increase? And if you see that as sustainable going forward? Joshua J. Viets: Yeah. Good morning, Zach. Yeah. Is it sustainable? Absolutely. Again, to tie back to my earlier comments. We have really been able to reset the economics of the Haynesville with improvements in drilling efficiency, self-sourcing our own sand. And we have been able to drive in this higher productivity largely through enhancing the completion designs. On the call during the third quarter, I talked about, at the merger onset, we came together. We put together what we have referred to as our Gen 1 completion design. We are already now progressing to what is considered our Gen 3 design and seeing really improved results from that. And so we expect that this type of trend that you are seeing continues forward. And, again, I will just bring it back to we have an unmatched inventory quality and depth in the Haynesville, and that combined with our history in the basin, there is a good reason why we are delivering these outsized results relative to peers. Benjamin Zachary Parham: Then my follow-up, just on D&C costs in the Haynesville. You have done a lot to bring down costs over the last several years. You have got a slight reduction in your numbers for 2026. But can you talk about your ability to potentially drive that number even lower going forward? Joshua J. Viets: Yeah. You know, my expectation is pretty high for the organization and our ability to do that. We continue to find opportunities to improve tool reliability. The bigger issues you fight in the Haynesville is temperature. And so we continue to partner with some of our service providers to increase tool reliability. In addition, we are seeing some pretty significant advancements with artificial intelligence to help us refine in a more optimal way our well designs, but more importantly, a faster real-time optimization of drilling parameters. And we think those two items there are really going to allow us to unlock further savings from a D&C standpoint. Operator: Our next question or comment comes from the line of Joshua Ian Silverstein from UBS. Mr. Silverstein, your line is now open. Joshua Ian Silverstein: Yep. Hey, good morning, guys. Mike, it felt it was a challenge to get Expand volumes to the demand growth areas. Just talk about what the biggest challenges are in doing so. Is it getting the customer to actually just agree to supply? Is it price? Concerns over inventory duration? I am just curious. Mike Wistrich: Yep. Well, there are two challenges for our team. And one is on us, and one is just the facts of the world. The first is our team needs to be more aggressive to review more transactions or potential transactions. We will build more generators. We will add to the team to be in the room more often. A big part of moving to Houston is to be in that room, and so we have to get out of our own way. The other side is just real, which is you need to get your gas to them physically. And so you always are thinking about transportation, how to get it there, how to service those clients, and that gives advantages to companies, frankly, like Williams who have been connected to them for a generation. We have to compete by having assured production that they do not have. And so that is our competitive advantage, but we definitely have to partner. That is why we want to partner with midstream companies because that is the biggest thing to overcome. Joshua Ian Silverstein: Got it. And then you talked about trying to get an incremental $0.20 of realizations or margins there. What is the cost to get it there? Because you are going to have to start to build out a bit more. Is this going to cost you more upfront to then have benefits later? Some sort of sense of that would be great, sir. Mike Wistrich: Yeah. I think that is a great question. And the first thing is we talk about our culture of discipline. We talk about rate of return. We think of ourselves as how do you grow long-term shareholder value, and that means you have to talk about the cost as well. So, generally speaking, the lowest dollar change will be on just trading to premium markets. Those will turn into commitments at feet. Those are not debt necessarily, but call it commitments. Everything else, if we have to put more capital to work or risk our balance sheet, has to have a higher rate of return, has to have a bigger payout because we are returns-focused. And so do I think we will probably spend some money over the next three to five years? Undoubtedly. Undoubtedly, we have to, but we will put it in the context of our rate of return framework. We have to have a decent ROCE in our program, and so these things will have to have discipline around that. Operator: Our next question or comment comes from the line of John Christopher Freeman from Raymond James. Mr. Freeman, your line is now open. John Christopher Freeman: Good morning. It was nice to see the Haynesville productivity improvement continue, but it does look like the upside on production in the quarter was actually from the Appalachia region. Maybe it looks like, I do not know if it is quicker turning lines, but just any color you could provide on that relative to the guide for the quarter? Joshua J. Viets: Yeah. So, John, this is Joshua. I mean, just to address that. Really, that is about our returning our production from curtailments in the fourth quarter. That was a big piece of it, coming to the end of the year. And, of course, most of those curtailments would have been taking place across Northeast Appalachia. And then, of course, in Q1, we would have had a little bit more weather-related downtime in the Haynesville, as a result of Winter Storm FERN where we saw roughly an inch of ice show up at the end of January. So that had some modest amount of impacts. But across the full course of the year, we do anticipate to be averaging in and around 7.5 Bcf a day. John Christopher Freeman: Got it. Thanks, Joshua. And then Mike, sorry to belabor the marketing topic, but it seems like, and I do not want to put words in your mouth, but you are a lot more focused, it appears, on the LCM type agreements as opposed to maybe long-term LNG supply agreements. Is that a fair characterization? Mike Wistrich: I do not think that is fair. I think we are looking at both. We are looking at both. We are chasing margin. We have to participate in the value chain downstream of us. That is definitely LNG. That is definitely manufacturing. It is power. I think it is all. And so all of the above. I just want to be more aggressive because to get in the room, we have to hustle. It is a competitive space. I mean, it is a super competitive space. We will have to focus. Operator: Thank you. Our next question or comment comes from the line of Neil Dingmann from William Blair. Mr. Dingmann, your line is now open. Neil Dingmann: Morning, Mike. Nice quarter. Mike, my question, you guys talked about a little bit this last night, was on your upstream position. Just looking at your share price, it certainly does not seem to me that you all are getting credit for the massive, what, the 2,000,000-plus acres position on top of your material production. So I am just wondering, is there something you all would consider doing with, I do not know, either monetizing a bit of the inventory or drilling carry to something somebody or something to unlock some of this value given it just seems like, given that size of position, your investors are just not recognizing this. Mike Wistrich: Well, first of all, thank you for saying that we are not getting full credit. We would love to get full credit. We hope you all are paying attention. We think we have a good business. Generally speaking, we are not actively looking to do what you are talking about, but I would say it is always on the table. It has to be. And just to say no for the sake of no is the wrong answer. If we see something that is attractive and part of our portfolio that someone wants to overpay, we are a public company. That could happen any day, and so nothing is off the table. But I do not think we are actively doing that right now. Neil Dingmann: Makes sense. And then just secondly, it looked like on the guide, you are going to run about the same rig count. Do you assume, I am just wondering if you are running, if you continue to have the efficiencies that you have recently seen, would you see yourself potentially, let us say you are running ahead of schedule by, I do not know, second, third quarter. Would you pull back on the rig count and just sort of continue to bank that free cash flow, or would you continue to potentially boost the production a little more than suggested? Joshua J. Viets: Well, I mean, I think, Neil, we would have to take a look at fundamentals and understanding where supply-demand balances sit. We really take great pride in maintaining a high level of flexibility within our business. We have noted today that we see this business being efficient up to that 7.75 Bcf a day number. But at this point in time, we feel really good about the program that we have laid out to deliver the 7.5 Bcf a day at the $2,850,000,000 of CapEx. And, until the market fundamentals start to shore up, that is the plan that we expect to execute this year. Operator: Thank you. Our next question or comment comes from the line of Charles Meade from Johnson Rice. Mr. Meade, your line is now open. Charles Meade: Yes. Good morning, Mike, to you and the whole Expand team there. I would like to ask a question about maybe drilling down on one piece of your marketing push, and that is on storage. You guys, in your presentation, say you have 5 Bcf of storage that you own now. Can you talk about the nature of those assets and what the trajectory has been for building that position? And is storage an area that you expect to be, I guess, competitive in acquiring more? Daniel F. Turco: Yeah. Hey, Charles. This is Daniel. I will take that question. This year, we added about 3.5 Bcf of storage in the last quarter here to our 1.5 we already had, so we like this storage, and we like it for many reasons. Right? You go back to our M&C strategy. One of the key components is managing volatility. The market is highly volatile as we have seen over the last few months, not only from time movements, but geography movements. So we are actively using that storage. We like that storage, and we have made money on it already. And we plan on turning that storage a lot more. We would like to grow that storage position, but it is a very competitive market. The total demand of this market has grown substantially, and storage has not caught up. That is why you are seeing a lot of volatility. So it is highly competitive to actually get more capacity. We continue to actively look at it and, back to our disciplined approach here, we are only going to take that capacity we feel is going to make us value and help us manage that volatility and create more margin ultimately. Charles Meade: Got it. Thank you. And then, if I could ask a question about the West Virginia Utica. You guys, also in your presentation, talking about bringing the potential of bringing some Ohio Utica development concepts towards West Virginia and a lot of upside there. Can you elaborate on what that is and how big the upside might be? Joshua J. Viets: Yeah, Charles. I mean, we are pretty excited about our sup-location program. I mean, the reality is there has not been a lot of Utica development as you move across the Ohio River, and I can assure you the geology does not stop at the river. And so we think there is quite a bit of upside with that. It is something that the teams have been working for some time. It is just really about getting into the right environment in which that inventory development makes sense. There will be some infrastructure requirements to be able to process it, but it is something that we think we can take the learnings that we have built up of drilling deeper gas wells in the Haynesville and leverage those learnings in the Utica and expect it to be a highly profitable part of the business going forward. Operator: Next question or comment comes from the line of Mr. Phillip Jungwirth from BMO. Sir, your line is open. Phillip Jungwirth: Yeah. Thanks. Good morning. With the NG3 pipeline now flowing volumes, can you talk through how this will benefit Expand this year also as Golden Pass starts up? And is there a benefit to maintaining ownership in the project long term or at least through a potential expansion? Daniel F. Turco: Yeah. Hi, Phillip. This is Daniel. I will talk about the market dynamics. So, yeah, NG3 came on in October, and that is providing us just, again, more market optionality, and that is bringing our gas to Gillis, which over time is going to be a pretty premium market. At the moment, we are getting about even on where we are, and the capacity payments we get and the uplift we are getting. But over time, back to the structural demand of this market, LNG is growing significantly, and we see Gillis becoming even more premium. So it is providing us two things. It is getting us to a premium wholesale market, it is providing us market optionality where we can move between Gillis and Perryville on any given day. Phillip Jungwirth: Okay. Great. And then besides the capacity going to Gillis, you also have 2 Bcf a day going to Perryville. So it is further away from the LNG corridor. So can you just talk about the advantages of selling gas to this hub? And how would the go-forward marketing strategy be tailored here versus volumes going to Gillis? Daniel F. Turco: Yeah. Perryville is also a great market. There is a strong pull from the utilities down in the Southeast. A lot of that is coming from the dynamics of Gillis, more gas is being redirected to Gillis for the LNG demand. And the historic gas that would come across over to Perryville has been less. There is more demand that is going to be taken away from Perryville. There is, I think, 3 Bcf/d of new pipeline capacity coming online pulling further down to the Southeast. So this market is also a premium. A lot of utilities are looking for that longer-term reliable supply. So our advantage here is actually the ability to go to both markets, not only structurally selling to these markets, but any given day being able to move molecules between the two markets. If we sell down in Gillis and the Perryville market changes, we can buy back that position at Gillis or buy gas into that position and move gas to Perryville. We have been doing this quite a lot, proud of the team and how they are capturing that optionality value, and we are just going to continue doing more of that. Operator: Our next question or comment comes from the line of Betty Jiang from Barclays. Ms. Jiang, your line is open. Betty Jiang: Hello. Good morning. Mike, I am with you on the scale of the marketing opportunity and the need to think bolder. I am just curious on your $0.20 uplift that we talked about. Just how you came up with that target, and do you see that as a reasonably achievable number, or is it more of a stretch goal for the organization? Mike Wistrich: I do not think it is a stretch. Let us just start with that. I think it is something that we will have to be aggressive to do. It is something that we will have to invest time and energy into. I do not think it is a stretch. We will definitely have to pull all three of our levers. Lever one is premium markets. Two, we need to work on our storage. And three, we are going to have to participate in the value chain beyond the wellbore, and that means LNG or industrial. And so I do not think that. I think this will be a big part of our business going forward. And I also think that will help our breakeven. That will help our downside protection. Because those tend to be a bit more fixed, closer to a fixed-fee concept if you think about it. So, I do not think it is a stretch. I sure hope that we make it really quick so that you all can be comfortable, and then I hope to expand that over time. Betty Jiang: Great. No. That makes sense. And definitely a lot of opportunity to fill in the hopper. My follow-up is on M&A. A lot of talk already on the Gulf Coast, but we have also seen rising dealmaking in Appalachia. What is your appetite for M&A in the Northeast? Is there value to having more in-basin exposure in order to capture that growing power opportunity up north? Mike Wistrich: Yeah. I think M&A has been something that we have done a lot of over the past five years. You can see, I think we have done over $15,000,000,000 of transactions. So it is in our DNA to continue to look at everything. And Appalachia, of course, and the liquids concept that you all mentioned earlier, of course. The question is, can you do it disciplined? Can you do it to protect the balance sheet? Can you do it with the nonnegotiables? This year, we were not able to. I mean, some of these deals went for premium prices that we did not think were fair value. So, the answer is we will look at everything in our basins, of course, that is our job. But M&A is a tricky market. You just have to think about your base business first. And we will do that. Operator: Thank you. Our next question or comment comes from the line of Kalei Akamine from Bank of America. Your line is open. Kalei Akamine: Mike, going back to your comments about marketing, you expressed this desire to be more commercial around your volumes. You look at your portfolio, I am curious how much gas you have to commit to long-term sales agreements. Trying to get a sense of how much flexibility you have in the portfolio to ship gas to higher value markets. And is it fair to think that more flexible molecules in that portfolio is in the Haynesville? Mike Wistrich: I think it is two things. You are right to point out, of course, that we make commitments every day, and some of those commitments would have to be rolled off. I do not think we have a set number in my mind as exact, and Daniel may be able to answer that question. But I do think the Gulf Coast is where we can build. It is where we can grow. We could add volumes there. And so to the extent we get more demand, we can increase production to fulfill that demand. And so I think that is always a great answer. In Appalachia, you have less ability to do that. And we are talking about growing there, but the Gulf Coast is where it is. And we feel it is our competitive advantage. I mean, we have three basins. Everyone else has one. We have a bigger market area. We have to take advantage of it, but the ability to grow and, frankly, shrink the Haynesville gives us a lot of marketing opportunities. Daniel F. Turco: I would just add that we do stage those commitments. And on page 19, we laid out a couple of commitments we just made. And over a five-year time, we have commitments that go up 15 years, but over a five-year time frame is really where we are looking at doing a lot of our sales. We just added a couple sales to premium markets here. So these are not the big deals that we are going to announce, but these are singles and doubles that we are doing every day, adding more sales to end users. And just getting that premium uplift. A sale becomes an asset as well. As I pointed out in the last point here, you make a sale and markets move, you can still fulfill that sale with other gas and move your molecule to higher-priced markets. So there is a double combination here: premium market and capturing the volatility. Kalei Akamine: I appreciate that. This next question is on the LNG exposure. Pre-filed, the desire was for exposure to be somewhere between 15% to 20%. Post-merger, that commentary shifted a bit. What does desired exposure look like today? Is it a quarter of gas? Is it a third? And do you think it is necessary to physically match the molecules at the wellhead to takeaway on the water, or is there some synthetic way that you could go about it? Brittany Raiford: Yeah. Kalei, great question. And I will start, and Daniel can jump in here as well. That commitment that Chesapeake had made prior to close, 15% to 20% on LNG, if you think about it, really the gas markets have changed quite a bit since then. Back then, we probably were not talking near as much about power and industrial demand growth. And so, really, when you think about it, and we have mentioned this several times, we are interested in reaching premium markets. We are agnostic really to exactly what those premium markets are. We think the opportunity set is broad. And so we are going to look for the highest-return way for us to diversify our sales exposure. So we are not going to be overly prescriptive on exactly how much we want to go to LNG. Mike Wistrich: Got it. Okay. Brittany Raiford: Appreciate that, Brittany. Thank you. Operator: Our next question comes from the line of Leo Mariani from Roth. Mr. Mariani, your line is open. Leo Mariani: You guys talk about this a lot, but just on the goal of the $0.20 uplift on gas, is there a rough timeframe for that? And you mentioned trying to get some deals over three to five years, just trying to get a sense if that is a five-year goal. Any other color on that? Mike Wistrich: I would say, yes. It is three to five, and giving five to give us some room. I certainly hope to make that in three, three and a half. And so we want to be aggressive here. Leo Mariani: Okay. And then just following up on the buyback, you guys spoke about this. I do not want to put words in your mouth, but it sounds as if there are really going to be times of dislocation in the stock, and the priority is really going to be just to make this balance sheet even more rock solid here. Mike Wistrich: Agreed. We totally agree with your statement right there. Operator: Thank you. Our next question or comment comes from the line of John Annis from Texas Capital. Mr. Annis, your line is open. John Annis: Good morning, all, and thanks for taking my questions. For my first one, you noted around 20% of the 2025 TILs exceeded 1 Bcf per 1,000 feet, and you expect that to rise above 30% in 2026. I wanted to get a sense of what is different about those top-performing wells. Is it geology, lateral placement, completion intensity, or some combination? And then is there a ceiling on how high that percentage can go given your acreage mix? Joshua J. Viets: Yeah. I mean, it is definitely a mix, John. Completion design is really going to be the biggest driver for us moving forward. But, clearly, where you drill is going to matter as well. So typically, we see the best-performing wells in the southern part of our acreage position within the NFE. And so you are going to be limited in the number of wells you can drill in any one gathering system. You will just simply hit capacity constraints. So, yes, to answer your question, there would be some constraints. But we just see continued upside across the entire acreage position. We have had a lot of success this year drilling three-mile laterals. We are going to continue to get better and see a bigger portion of that showing up going forward. And as I mentioned earlier in the call, I do not think we have reached what we really deem to be optimal from a completion design standpoint. And, again, we continue to reset those economics as a result of having access to a cheaper sand source. John Annis: Makes sense. For my follow-up, you mentioned supplying microgrid solutions in Appalachia with flexible volume contracts. How large is this opportunity today? And how would you compare the attractiveness of these smaller volume deals with some of the larger supply commitments announced in the basin? Daniel F. Turco: Hey, John. Thanks for the question. Yeah. We went live with this microgrid solution. It is relatively small, to be fair, but we are excited about these because a bunch of these small deals adds up, and this actually commands quite a premium by having a reservation fee behind our gathering system where this micro solution can pull volume from us and capture at a higher price. So we are getting a dual effect here of a reservation fee and a higher price. It is small, but these singles are going to add up over time. We are going to do a lot more of these types of deals. Mike Wistrich: Great. Thank everyone for their questions today. We want you to ask tough questions. We want to be responsive, so thank you for them. I would like to close with just a few big picture comments. Number one, our execution has been amazingly solid. That is our foundation. We are not changing it. We expect it to continue, and we continue to expect our teams to perform better in the future. Two, we are definitely thinking beyond the wellbore. Obviously, we have talked a lot about marketing today. That is actually not a strategy change. We have had that strategy. What we are talking about changing today is urgency, attention, discipline. We want to be more aggressive, but always know that we are ready to return and build shareholder value. You have to have that. Third, the opportunity is huge. We see it. We finally feel like gas has got its moment. We want to take advantage of it. The demand is amazing. And now it is just time for us to not talk and execute. And so that is our focus here at the company, and we will continue. So with that, I think that is the end of our call. And I hope you have a good day. Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Speakers, standby.
Operator: Good morning, ladies and gentlemen, and welcome to Ferroglobe's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin. Alex Rotonen: Good morning, everyone, and thank you for joining Ferroglobe's Fourth Quarter and Full Year 2025 Conference Call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz Garcia-Cos, our Chief Financial Officer. Before we get started with some prepared remarks, I'm going to read a brief statement. Please turn to Slide 2 at this time. Statements made by management during this conference call that are forward-looking are based on current expectations. Factors that could cause actual results to differ materially from these forward-looking statements can be found on Ferroglobe's most recent SEC filings and the exhibits to those filings, which are available on our website at ferroglob.com. . In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, adjusted net debt and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliations of those non-IFRS measures may be found in our most recent SEC filings. We'll be participating in the BMO Metals, Mining and Critical Materials Conference in Hollywood, Florida, on February '23 and '24. We hope to see you there. With that, I'll turn the call over to Marco. Marco Levi: Thank you, Alex, and thank you all for joining us today. We appreciate your continued interest in Ferroglobe. While 2025 presented significant external challenges, including muted demand, tariff uncertainty, delayed trade measures and elevated levels of predatory imports. It was a year in which Ferroglobe made important strategic progress and substantially strengthen its position for future growth. . Most importantly, we achieved significant and impactful trade measures in both the European Union and the United States. In Europe, the European Commission voted to protect the Ferroglobe industry by implementing safeguards targeting a 25% reduction in imports relative to the baseline of average imports by country and product from 2022 through 2024. During those years, on imports of ferrosilicon averaged approximately 450,000 tons and manganese [indiscernible] averaged approximately 900,000 tons. These [indiscernible] create substantial opportunity for domestic producers, including Ferroglobe to gain market share under a more balanced competitive framework while ensuring security of EU supply chains for critical and strategic materials. We are encouraged by the European Commission's advocacy to support and strengthen the long-term sustainability of local industry. To further enhance the new manufacturing base and drive economic growth, the main Europe pledge was signed by more than 1,000 business leaders. This is similar to the Bay American plunge, encouraging increased use of products with domestic content. In the United States, the International Trade Commission rolled in favor of imposing antidumping and countervailing duties on federal silicon imports from Brazil, Kazakhstan and Malaysia after having rolled similarly against Russia in 2024. These decisions meaningfully improve the long-term outlook for the U.S. ferrosilicon market. To capitalize on improving pheroceuticaleconomics, we have converted 3 furnaces from silicon metal to ferrosilicon. one in the U.S. and two in Europe. This highlights the benefits of our diversified global footprint, which enables us to optimize production in response to market dynamics and geopolitical factors. With respect to silicon metal in the U.S. The case was delayed due to the government shutdown. Prior to the shutdown, the preliminary decision in September indicate strong measures against Angola, Australia, Laos, Norway and Thailand. The preliminary combined antidumping and countervailing duties range from 21% for Norway to 334% for [indiscernible]. We now expect the final decision on ongoing as in Thailand later today with Australia and Norway anticipated in June. Operationally, we executed with discipline and focus. Through proactive cost onto measures, including a hiring freeze and reduced discretionary and CapEx spending, we successfully navigated through weaker demand and lower pricing while maintaining a solid balance sheet. After the Safeguard announcement on November 18, [indiscernible] index prices for ferrosilicon and manganese alloys in Europe jumped approximately 20%. While paraceuticals has retreated some in recent weeks. Is still up more than 10% since the safeguard announcement. Our outlook for silicon metal remains more measured due to its exclusion from new safeguards and continued aggressive imports from China and increasingly from Angola. In the U.S., the silicon market is expected to grow modestly according to CRU. We are actively starting longer-term opportunities associated with our idled operations in Venezuela. This site includes 3 large pheroceuticalfurnaces and manganese alloy furnace, originally design into produced silicon metal, which can be converted back to [indiscernible]. In addition, the facility includes a Soderberg based plant that could be used to produce electrodes. While it is too early to determine the timing and conditions of the infrastructure and operations, the asset base represents a potential opportunity for the future. given Venezuela's proximity to the U.S. market, this opportunity could become strategically meaningful over time. We also took important steps to enhance our long-term cost structure and operating flexibility signing a new competitive 10-year French energy agreement effective January 1, 2026. In addition to competitive energy prices, this agreement provides greater flexibility, enabling us to produce up to 12 months a year in France. Combined with implementation of safeguards, this flexibility meaningfully improves the earnings potential of our [indiscernible] business by allowing higher volumes to leverage our fixed operating costs. Beyond our core operations, we continued to invest in long-term opportunities increasing our total investment in [indiscernible] to $10 million in 2025, reflecting strong technological progress in the development of advanced silicon reach EV batteries. In addition to ongoing collaboration with automotive OEMs, Corcel is expected to begin initial shipments to defense and robotics customers in the first quarter of this year. Furthermore, we are in the process of finalizing the multiyear supply agreement with [indiscernible]. For those who are new to the [indiscernible] story, silicon rechannels offer lower-cost batteries with increased capacity, longer driving range, faster charging and maybe most importantly, reduce reliance on graphite of which more than 90% is produced in China. We believe this technology has the potential to become increasingly strategic over time. Alongside these trade developments and operational enhancements, we continue to execute on shareholder-friendly capital allocation. We increased our first quarter 2025 dividend by 8% to [indiscernible] per share. and we are increasing it again by 7% to $0.015 per share starting in the first quarter of 2026. In addition, during the early part of 2025, we selectively executed discretional share repurchases, acquiring 1.2 million shares at an average price of $3.55 per share. Looking forward to 2026. Ferroglobe is well positioned to benefit from the cumulative impact of the trade actions. We expect most of our segments to post considerable growth in 2026 and we anticipate revenues improving to a range of $1.5 billion to $1.7 billion, an increase of 20% at the midpoint over 2025. This expectation is driven primarily by strong volume growth in the [indiscernible] based and manganese-based alloys segment. The implementation of EU [indiscernible] Safeguard in the U.S. ferrosilicon antidumping and anticircumvention rulings give us increased confidence in this outlook. Next slide, please. Our shipments increased by 13% to 165,000 tons on the strength of silicon-based and manganese-based alloys resulting in a 6% increase in quarterly revenue to $329 million. Our adjusted EBITDA declined slightly to $15 million while our free cash flow was negative $19 million. Beatriz will provide more detailed comments in your section. Next slide, please. I'll update on our segments, starting with silicon metal on Slide 5. This may sound like a repeat of last quarter, but the situation remains essentially unchanged. The demand is still weak across our regions. And Europe is still plugged by unabated predatory imports from China, which roughly doubled in 2025. As well as by rising imports from Angola up nearly fourfold, driving prices to unsustainable levels. As a critical and strategic material, the European Commission should ensure sufficient production to meet basic demand. Overall, volumes and revenues declined by approximately 3% due to an 8% decline in U.S. shipments, partially offset by a 5% increase in shipments in the year. It is important to note that the [indiscernible] shipments in the fourth quarter were up from a very weak third quarter. We idled our EU silicon metal plans in the fourth quarter to the extremely low unprofitable prices. Within the silicon metal segment, the [indiscernible] sector is performing better in relative terms, as highlighted by the recent recovery in aluminum prices compared to the weak polysilicon sector. The chemical sector remains weak, also due to imported siloxane and silicones from China into Europe and the U.S. The U.S. index prices rose a modest 2% in the fourth quarter over the third quarter. EU prices declined by 7%, primarily due to imports. For the year, European prices are down by 1/3, while U.S. index is up less than 2%. In the U.S., we expect the volumes to improve in the second half of 2026 as the antidumping and anti-silconvention measures are expected to be finalized in February and June. Next slide, please. The story is quite different in our other product segments. Globally, silicon base allows had a very strong fourth quarter Total volumes increased by 19% to 51,000 tonnes with EU and North America increasing 25% and 14%, respectively. Pricing trends were mixed in the fourth quarter. The EU ferrosilicon index rebounded strongly in the quarter, rising 22% to EUR 1,495 from Q3. driven by the implementation of secrets in November. In the U.S., the ferrosilicon index retreated a modest 4% during the quarter. For the full year, the European index gained 12%. The U.S. index is down less than 2% for the year. Overall, we are optimistic than 2026 will be a stronger year for total silicon base alloy sales for Ferroglobe. We have already booked incremental business for 2026 in Europe and in U.S. An additional catalyst for the second half of the year is expected from enhanced EU steel safeguards with a proposal to reduce import quarters by 50% and double tariffs to 50% for exceeding the quarter. It is anticipated that domestic production will be ramped up as a result. These measures are expected to take place on July 1, 2026. Next slide, please. Our manganese segment reported another strong quarter with a 16% volume increase to 81,000 tonnes, up from 70,000 tons in the third quarter. We benefit from a larger customer base as well as safeguards. EU sales, which accounts for more than 90% of our manganese volumes grew 18%. Manganese alloy index prices improved substantially in the fourth quarter with ferromanganese and silicomanganese increasing 16% and 21%, respectively. The combination of solid demand from our European steel customers, whose business is expected to grow by 3% in 2026 in and EU and [indiscernible] should propel a robust volume increase in 2026. Accordingly, we are optimistic about the European market opportunity for manganese this year. I would now like to turn the call over to Beatriz Garcia-Cos, our Chief Financial Officer, to review the financial results in more detail. Deric? Beatriz García-Cos Muntañola: Thank you, Marco. Please turn to Slide 9 for a review of the fourth quarter income statement. Fourth quarter sales grew 6% over the prior quarter to $329 million. while raw material costs increased 23%, excluding the $40 million impact of [indiscernible] for all power purchase agreements. Fourth quarter raw materials and energy as a percentage of sales increased from 58% to 67%, primarily due to temporary hiding in France, again, excluding PP&A, or purchase price agreements. These PPAs are mark-to-market using fair value, given the long-term nature of our EDF contract which accounts for the majority of the PPA impact. We will continue to strip out PP&A mark-to-market volatility to provide a clearer view of our underlying operational performance. A strong silicon-based alloys and manganese-based alloys volumes drove the increased sales with quarter-over-quarter volumes increasing 19% and 16%, respectively. Silicon metal volumes declined by 3%. Volume improvements were partially offset by a 6% decline in average selling price of silicon-based alloys and Manganese Vazalore, with silicon metal prices essentially flat. Adjusted EBITDA declined 20% from the prior quarter to $15 million versus $18 million. Adjusted EBITDA margin declined to 4% driven by lower prices and elevated costs as result of AI in France. Next slide, please. Moving to Product segment adjusted EBITDA bridges Silicon metal revenue declined 3% sequentially to $96 million in Q4, driven by a 3% decrease in shipments to 33,000 tons. The average selling price was essentially flat at $2,157 per ton. Volumes remain constrained due to soft markets in the U.S. by Chinese and Angolan dumping of silicon metal in the European Union. Silicon metal adjusted EBITDA declined from $12 million to $1 million in Q4. with margins decreasing to 1%. The margin compression was primarily due to Island in France, slightly offset by improved cost in North America. Next slide, please. Silicon-based alloys revenue grew 12% to $104 million, driven by a 19% sequential increase in volumes to 51,000 tons, partially offset by a 6% decline in average selling prices to 2020 per ton. Adjusted EBITDA increased to $60 million in the fourth quarter from $12 million in the third quarter. Margins expanded by 160 basis points to 15%. The improvement in adjusted EBITDA and margins result from lower cost in the Spain partially offset by early aiming in France. Next slide, please. Manganese base alloys revenue increased 10% and to $93 million from $84 million in the prior quarter. Improvement was primarily due to a 16% increase in volumes to 81,000 tons. Fourth quarter average selling price declined 6% to 1,147 mainly due to a lag versus index prices. Adjusted EBITDA in the fourth quarter doubled to $9 million, while adjusted EBITDA margins increased from 5% to 9%. This margin expansion was primarily driven by improved performance in Norway and higher overall volumes. Next slide, please. Adjusted EBITDA for the full year was $28 million, down from $154 million in 2024, and the adjusted EBITDA margin declined to 2%. The price decline driven by weak demand and increased imports to Europe had a significant impact on adjusted EBITDA,; accounting for more than 80% or $104 million of the decline. Reduced volumes account for another 16% of the EBITDA decline. Cost impact on adjusted EBITDA was negligible, while head office and noncore business detract less than $3 million from adjusted EBITDA. Next slide, please. There are lots of details on this slide. So I will just highlight a few of the most important items. For the full year, we generated $51 million in cash from operations, driven by a $48 million improvement in net working capital. We curtailed CapEx by $60 million to $63 million in 2025. For the year, our free cash flow was negative $12 million. During the fourth quarter, we consumed $4 million in operating cash flow due to weak EBITDA and an increase in net working capital of $8 million. For the year, we reduced our net working capital by $48 million, in line with our target of $50 million. Energy rebate was $7 million for the fourth quarter. As we operate under the new contract in France in 2026, we don't expect energy rebates going forward. which will help align our adjusted EBITDA generation more closely with our cash flow. Fourth quarter capital expenditures totaled $14 million representing a $5 million reduction versus the third quarter. Next slide, please. Despite the headwinds in 2025, our balance sheet remains strong. In total, we paid $10.5 million in dividends during the year, and we are again increasing our dividend starting in the first quarter of 2026, our quarterly dividend will increase 7% to $0.15 per share. It will be paid on March 30 to shareholders of record on March 23. While we did not repurchase any shares in the second half, we bought back 1.3 million shares for the first half. Our discretionary share repurchase plan remains in place. Our net debt position increased to 30 million in 2025, and we remain in a solid financial position to support growth in 2026. We reduced our 2025 CapEx by 20% to $63 million. At this time, I will turn the call back to Marco. Marco Levi: Thank you, Beatriz. Before opening the call to Q&A, I'd like to provide key takeaways from today's presentation on Slide 15. 2025 was a year of important progress for Ferroglobe. The trade measures secured in Europe and in the United States represent a clear positive shift in our markets, particularly in Ferroglobe. Europe safeguards and U.S. antidumping and counter-billing duty rulings significantly improved competitive conditions. Support pricing and give us increased confidence in a much stronger market environment in 2026. At the same time, we continue to execute a disciplined shareholder-friendly capital allocation strategy. Despite the challenging macro backdrop, we increased our dividend during 2025, completed selected share repurchases and have announced another dividend increase beginning in the first quarter of 2026. These actions underscore our confidence in the business and our focus on delivering consistent shareholder returns. We have also taken important steps to enhance the economics and flexibility of our operations. The new long-term energy agreement in France, combined with our ability to ship production from silicon metal to ferrosilicon allow us to optimize volumes, better leverage fixed costs and respond efficiently to changing market conditions across our global footprint. At the same time, we managed through a difficult demand and pricing environment in 2025 with discipline and focus. Proactive cost control, strong execution and a solid balance sheet allowed us to navigate near-term headwinds while strengthening the foundation for future growth. Overall, we believe Ferroglobe is exceptionally well positioned for 2026 and beyond. With improving market fundamentals, increased confidence driven by trade actions and more flexible, efficient operating platform, we see a clear path to stronger performance and long-term value creation for our shareholders. Operator, we are ready for questions. Operator: [Operator Instructions] Our first question and the question comes from the line of Martin Englert from Seaport Research Partners. Martin Englert: Hello. Good day, everyone. Wanted to touch on volume expectations across the 3 businesses for 2026. And -- and then also the plan for the EU silicon assets. I know you provided some detail about furnaces converting over to ferrosilicon but what remains vital there? And is it to remain idle for the foreseeable future, but any type of goalpost for volumes on silicon metal in 2026. Silicon-based alloys and manganese-based alloys would be helpful. Marco Levi: Yes. Thank you, Martin. Let me try to address your first question on volumes and then I move to the asset. Starting from Europe, the safeguard, basically on [indiscernible] silicon and paraceutical kind of products free up 25% of imports that were 450,000 tons in 2025. So 25%, about 100,000, 110,000 tons of these products are mainly available for EU '27 producers. Well, [indiscernible], the imports were under [indiscernible] ton. So when you calculate 25% of you end up to 250,000 tons available for EU 27 producers. And of course, all these pie to be shared among the local producers. . Assuming that safeguards are controlled and put in place in a proper way. When you go to the U.S., I think that we are at the end of the period where inventories mainly of Russian products, but also other products have been waiting on volumes and also price recovery. So we expect some gains in Ferro silicon, and we see that already from our customer portfolio in U.S. in the first quarter 2026. On top, talking about trends, still will improve -- is expected to improve in Europe by about 3% across the year, mainly in the second part of the year when the new safeguard measures imposed by would be applied with a further reduction of imports of 50%, an increase of tariffs to 50% for excess of products. Aluminum is expected to grow in Europe by a solid 3% next year. In U.S., aluminum is expected to grow between 8% and 9%. And while steel is expected to start recovering. And actually, we have seen asset utilization in U.S. recovering already in quarter 4 2025. These are the major indicators for volumes in ferroalloys, [indiscernible] in Europe. Going to your second question, yes, we have converted 1 furnace in Beverly to federal silicon or [indiscernible] 2025. We converted as of January 2 furnaces in Europe, 1 in Salon and 1 in Loudon from silicon metal to ferrosilicon. And concerning the utilization of the other silicon metal furnaces in U.S. and Canada were fully utilized well in Europe, we are selectively restarting furnaces based on contracted demand. So some furnaces will stay idle in the first quarter, while some others have been really started to supply on track at volumes already in January. [indiscernible] . Martin Englert: Thank you. I appreciate all the detail and context there. I wanted to inquire about the component of minimum prices with EU safeguards for ferroalloys, do you ultimately expect that domestic prices will gravitate to these levels? Or is there a dynamic within the EU footprint where there's sufficient capacity out there and that there isn't necessarily maybe the case that we see clarity with the minimum price levels embedded in the safeguards. Marco Levi: Yes. Well, the key question is the month which is not until now has not been great or [indiscernible] in Europe and in U.S. So the key question is how much demand is going to ramp up. or the different products. There is definitely enough capacity in the U to cover the safeguards for all products. If you look at what happened until now in Europe in ferrosilicon prices have jumped up by 22% on ferrosilicon immediately after safeguards have been announced. But then due to stocks at traders and others and the price index price has been going back and today is only 10% higher than previous safeguard announcement. Different trend for manganese Manganese, products have jumped up around 20% on average in terms of index price. The price is holding is not improving, but is holding this level. This is why I say that demand is critical. And again, I expect a major improvement of steel demand in Europe in the second half of 2026. Martin Englert: Do you know if you cranes manganese alloys facilities are still producing and supplying just the coming to the region overall? Marco Levi: Yes. they are, but a very small at a very small rate. For reasons that are related to supply chain, but also conditions of the assets. Of course, I do not have too many the insights about the status of the assets, but considering a number of years of work, the location of the assets, I think that even when we signed the favor gets signed, it will take a while before they ramp up to the previous rate. Martin Englert: Understand. Are you able to explain a little bit and provide some context about how the EU carbon credits function, what's covered with your allocated carbon credits for 2026 volumes. And maybe discuss if you have to go back to the carbon credit market. for incremental volume output that you may gain from market shares due to safeguards? Marco Levi: So this is a question that requires about 1 day of explanations, but let me try to be sure. First of all, at the moment, on C-band, we are impacted only for Carbon ferromanganese, not for the other products. And the way that the [indiscernible] works basically looks at the imported products looked at the content of actually the emissions of CO2 per ton required to produce these products, and they apply to this amount, the cost of CO2 in Europe per ton, deducting whatever the supplier has paid in his own country for its CO2 emissions. So the overall game is to tax CO2 exporters to Europe to favor RPL producers who are at lower producing with lower CO2 emissions. Now all of this will be beautiful -- was beautiful. If 1, there was a proper calculation of the CO2 emissions for every kind of producer in the sporting countries. All of these will be beautiful if Yes. If Europe was not anxious to reduce our CO2 credit because trying to implement these measures when you don't have all the data, you end up potentially penalizing more European producers than the exporters. So the -- of course, the commission is aware of that. They are doing their best. So steel is early involved in that. we will see how the situation develops. But again, we are -- our impact at the moment is minor due to the fact that [indiscernible] is applied on this Ticarbonfero manganese. Martin Englert: Okay. I appreciate all the color and detail and good job on the cost performance, given the fundamental volume headwinds. . Marco Levi: Thank you, Martin. Operator: The question comes from Nicholas Giles from B. Riley Securities. Nick Giles: Thanks, operator. Good morning, guys. -- my first question was maybe just back to silicon metals exclusion from EU safeguards and -- just wanted to get your perspective on what the use appetite might be to revisit an inclusion of silicon metal in those safeguards -- and maybe any background you can provide on kind of what prevented them from being included in the first place. Marco Levi: Yes. Well, the -- as you know, we asked for safeguards for silica metal in Europe. The reasons why the official reasons why Europe did not support us on this request are related to the fact that silicon metal is -- has a much stronger energy footprint, meaning it requires much more energy to be produced versus the other products. The other key element from a [indiscernible] perspective, is related to the fact that imports did not increase in absolute terms. They have increased in relative terms for the period considered because the imports gain an 85% market share in EU 27 territory. But in absolute terms, they did not. . These were the main 2 reasons. The third reason was about our point is related to all the silicon metal and ferrosilicon are interchangeable, which is or to dispute because we can convert our furnaces to position metal and pheroceuticalvice versa. And our customers in steel can move from ferrosilicon to civic metal. So -- the fact that they called for no changeability was quite a surprise due to the time and the number of meetings that we spent to explain our business. The top reason was a stronger position of the chemical industry to protect silicon metal and a stronger position of Germany to trade measures. And so there is a combination of -- there was a combination of technical, if you want, and political and legal aspects that excluded silicon metal from the safeguards. This situation doesn't make any sense for 2 reasons. One is that without protecting silicon metal, you basically don't protect pheroceuticals and because is quite easy for [indiscernible] users to replace pheroceuticalth silicon metal when the price difference is not there. silicon metal should be much more expensive because of the energy, which is required to produce it. So alluding safes were pheroceuticaland not protecting silicon metal is like shooting in your food. and this shouldn't be a surprise for the European community. Going to the first part of your question, yes, we are working on new measures for silicon metal in Europe. Actually, the commission has asked us to submit our data. So we have submitted mid-December relative to the last year in Europe. And we are waiting for their reactions to this document. The expectation is that we will go for anti-dumping to against the major dumpers in Europe. China is #1. And then we are still to see how do we address Angola, which is a sort of subsidiary of China with the same pricing policy. The combined volume of the 2 countries, if you calculate also Vietnam, which is pure circumvention of silicon metal from China basically shows that the last year, the volume coming from China or China subsidies doubled. And in a market that has been going down, of course, with pure liquidity, they have been determining price based on the index. And the -- like I reported in the last quarter, the go-to-market with prices 25%, 30% before -- below the cash cost of European producers. So it's clear dumping. The case is clear the difficulty is not the case. It is the fact that, as you know, Europe and the industry in Europe is finally reacting to these situations. And so the commission is the admission table is gene with cases asking for protection for every kind of products. And this causes some delays. So at the moment, the game is all about as politically pushing to get our case of the pile of cases of Therapan Commission. Nick Giles: I really appreciate all that background and your perspective on the situation. I guess my follow-up question to that is ultimately there's plenty of reason for optimism in aero silicon when you look at that segment in a vacuum, but -- do you think that these dynamics within silicon metal could ultimately weigh on pricing volume expectations in Fei? Marco Levi: All depend on -- yes, it all depends on demand and appetite marketing reformulating with critical metals knowing that medium term, it doesn't make sense to have silicon metal at the price of erosion in Europe. At this stage, our order portfolio has started going up already in quarter 4 on peracetic both in U.S. and in Europe. . Nick Giles: Understood. My next question would just be over the past couple of years and especially with the change in the administration in the U.S. I think end market exposure has shifted and then you kind of layer on the conversion of some of your silicon metal capacity to Fez is that kind of rerate things more towards the steel market. So I was just hoping you could kind of zoom out and provide us a high-level breakdown of your ultimate end market exposure. I think about solar as an area that comes to mind that might be less relevant today than it was in the past. So appreciate any color you can provide there. Unknown Executive: Well, today, when you look at our total business, I would say that the 70%, 80% of the business is protected and only 20% is not -- which is basically silicone in Europe. So the other high-level thing is not a surprise that the United States, apart from government shutdown are plenty favorable to protect critical and strategy -- critical and strategic minerals and this is why we are going for antidumping done to your convention and things are going fast, but it's also true that things are changing in Europe, maybe not at the speed that we would like. But in terms of political support I have to assure you that our case is at the top of the agenda of all the states that are involving in federal lays and silicon metal. So the drop has decided to protect industry has decided to protect our industry like the chemical industry or other industries. The problem is that Europe is not united like United States. So there is quite a change of continuous exchange of responsibilities between the center, the commission in the single states. The last case was last week, what Bandel basically told the states were complaining about [indiscernible] in deciding basically pushing back the decision to the states. And this dedicated situation in the ones causing [indiscernible] lower. On the other side, when I talk to politicians in Spain, in Norway and in France, they are pretty aware of what we need to do, which is a combination of protection right, energy price for the industry and make sure that when they think about products, they think about supply chains and about single products. Nick Giles: Very good. Maybe just 1 quick one, if I could, for Beatrice. I want to commend you on really managing the cash balance during this -- during the trough here. I mean you still have a pretty healthy net cash position. So can you just touch on -- anything we should be focused on from a working capital perspective, CapEx was down year-on-year, should we kind of expect CapEx to be more flat this year? Anything on miles out just from a cash flow or capital allocation perspective. Beatriz García-Cos Muntañola: Yes. Thank you. Thank you for the question, Nick. As you have been seen on the date. So the cash position at the end of the year -- it's -- we've been in the year with a strengthened with a strong cash position. Nevertheless, I have to say that this difficult year, the cash is coming mainly from the release of the working capital. So we have been releasing at the end, 48 million of working capital and therefore, a total positive operating cash flow for the year, right? Looking into 2026, I think 1 of the things that we are working and we have already seen the results is the -- will the additional release of the working capital even if the business we are planning to produce more volumes and sell a higher number of tons that this is typically creates consumption of working capital because we have this [indiscernible] in place. We plan to continue to release additional working capital. And as referred to the targets that we put out there, I think, in 2024 when we said that we want to run the company, we have 20% less of working capital, if you remember, Now we are close to the 400 million, and we expect to continue to go down into the release of working capital. So that's 1 angle. On the other side, we are having a net debt position at the end of the year. And we expect to improve slightly, maybe as well this debt position as we go through the year. and, of course, supported by the lease of the working capital and cost reductions as Marco as you mentioned. Nick Giles: And then just CapEx, you would expect CapEx to be pretty similar to 2025 levels? Beatriz García-Cos Muntañola: Yes. So this year, we went to 6 million for CapEx that is already at 20% less versus 2024. And in 2026, we expect a similar or slightly lower levels of CapEx, of course, This is always talking about maintenance CapEx base of the company or sustaining CapEx Yes, maybe around the same date. . Nick Giles: Got it. Got it. Understood. Well, guys, I appreciate the update as always and continued best of luck. Operator: This concludes today's question-and-answer session. I'll now hand back for closing remarks. . Marco Levi: Thank you, Heidi. We are encouraged by our accomplishments and positioning the company for a more robust market environment and much stronger financial performance in 2026. Thank you again for your participation. We look forward to updating you on the next call in May. Have a great day. . Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Hello, everyone, and thank you for joining us today for the LCI Industries Fourth Quarter 2025 Earnings Call. My name is Lucy, and I will be coordinating your call today. Before we begin, I would like to remind that certain statements made on today's conference call regarding LCI Industries and its operations may be considered forward-looking statements under the securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors are discussed in the company's earnings release, Form 10-Ks, and in other filings with the SEC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date of the forward-looking statements are made, except as required by law. In addition, during today's conference call, management will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available in the company's earnings release and investor presentation, which have been posted on the Investor Relations section of the company's website and are also available on Form 8-K filed this morning with the SEC. On the call from management today are Jason Lippert, President and Chief Executive Officer, Lillian Etzkorn, Chief Financial Officer, and Kim Emmenheiser, VP of Finance and Treasurer. Later in the call, we will conduct a question and answer session, at which point you can register to ask a question by pressing star one, and you may withdraw from the question queue by pressing star two. With that, it is my pleasure to turn the call over to Jason Lippert. Thank you, and welcome, everyone, to our Q4 2025 earnings call. Jason Lippert: We are pleased with the company's strong results as our team continues to execute effectively, delivering a 15% year-over-year top-line growth along with further margin expansion in the fourth quarter. By leveraging our diverse competitive strengths, we capitalized on opportunities across our RV, aftermarket, transportation, marine, and housing end markets. At the same time, our relentless focus on our operational efficiencies drove enhanced profitability, with fourth quarter operating margin more than doubling, expanding 180 basis points compared to Q4 of the prior year. Starting with our OEM segment, net sales increased 18% to $737,000,000 in the fourth quarter. RV OEM revenue rose 17%, driven by market share gains, increased sales of newer products, and a favorable mix shift toward higher-content units. Our other OEM end markets—transportation, marine, housing—delivered 21% year-over-year net sales growth to $297,000,000, or 8% on an organic basis. This growth was primarily driven by market share gains and content growth in North American utility trailer, bus, and marine OEM customers. Bus-related content contributed $31,000,000 of year-over-year growth in the quarter, reflecting the recent acquisitions of Friedman Seating and TransAir, for which integration efforts and synergies are ahead of plan. Looking ahead, we expect to expand market share across all four of our OEM markets. As we move into 2026, we expect RV wholesale shipments to range between 335,000–350,000 units, while we expect the boat industry to remain flat to up low single digits. Despite a potential flatter industry backdrop, we have multiple growth strategies in place that we believe will drive OEM expansion in excess of overall end-market volumes. Central to this strategy is our relentless focus on innovation. Since 2020, new products and market share gains have driven a 67% increase in total content. These innovations include new slide-out designs, Chill Cube air conditioners, advanced window designs, anti-lock braking systems, touring coil suspensions, bed lift and bed tilt mechanisms, larger and more robust fifth wheel chassis, electric biminis, and our new ladder system for boats, among others. In many of these categories, we offer either the leading product or, in fact, the only product available, further expanding our addressable market, margins, and long-term growth opportunities. In the fourth quarter, our total content per unit increased 11% year over year, reaching $5,670 and representing our largest year-over-year content growth in the past five years. To highlight our innovation momentum, our five most recently launched products are now generating an annualized revenue run rate of approximately $225,000,000. For example, our air conditioner unit shipments increased from 50,000 units in 2023 to more than 200,000 units last year, partially driven by strong consumer adoption of our Chill Q air conditioner platform. In addition, following the launch of our patented Sun Deck in 2025, we are scheduled to build over 4,500 of these patio systems this year, contributing over $4,000 in revenue per unit. These examples underscore our ability to create and scale high-value, innovative content to the entire RV customer base quickly. At a high level, LCI Industries’ competitive moat, built on our scale, technology, deep industry expertise, and people, positions us to consistently outgrow the market. Our broad product portfolio, structurally efficient operating model, and strong customer relationships enable us to rapidly scale new product launches and seamlessly integrate acquired companies. Our competitive advantage is reinforced by highly differentiated, sophisticated manufacturing technologies that enable us to produce complex, mission-critical components through flexible and increasingly automated processes. Equally as important, our people are the best in the industry, leading in innovation, cultivating deep customer partnerships, and sustaining the collaborative culture that is foundational to our long-term success. The same competitive moat that drives our OEM business also provides significant advantages in the aftermarket, where we grew net sales 8% year over year in the fourth quarter to $196,000,000. This continued success is directly driven by the strength of our OEM sales platform, which expands content with key customers. When one of our OEM components requires repair or replacement in the field, it almost always must be replaced with our proprietary parts or fully integrated assemblies, creating natural, durable, and high-margin aftermarket revenue streams. Taking a step back, we have come a long way. Just twelve years ago, we had virtually no presence in the RV aftermarket. Over the past decade, we have organically built our RV aftermarket organization to 400 team members with a singular focus on delivering the best customer experience across more than 2,000,000 annual interactions with dealers and RV consumers who acquire our parts and service. The primary catalyst for growth in our aftermarket engine is simple. We have embedded more than $20,000,000,000 of replaceable content into the RVs through our OEM partners over the last decade. These RVs eventually all come into the aftermarket service and repair cycle. At the moment, approximately 1,500,000 RVs are entering the repair and replacement cycle in the next one to three years, each one requiring our parts and service solutions. Our components reach nearly every RV consumer because our parts are literally on almost every RV on the road. Because we manufacture a broad portfolio of mission-critical products, dealers and consumers rely on us for service and replacement across virtually every major RV system—from slide-outs and leveling systems to doors and awnings, chassis and suspension systems, windows and appliances, mattresses and furniture, and much more. This breadth positions LCI Industries as a trusted partner throughout the entire RV ownership life cycle, supporting every customer channel from dealers and distributors to OEM, direct-to-consumer, and leading e-commerce platforms. We have a uniquely strong right to win in the aftermarket, something that no other supplier can credibly match. To further accelerate service-related aftermarket growth and strengthen dealer relationships, we continue to invest in our service infrastructure. In 2025, dealer service personnel completed approximately 50,000 of our technical training courses, and our online technical resources generated nearly 2,000,000 visits, as dealers and consumers increasingly rely on our service videos to resolve issues in the field. These efforts are driving higher-quality service outcomes and stronger dealer partnerships, reinforcing Lippert as the go-to partner in RV aftercare. In addition, we expanded our service footprint in 2025 with the opening of three new service facilities and the doubling of our mobile technician workforce. These investments have already resulted in a double-digit increase in service completions, improving speed, convenience, and customer satisfaction while allowing us to schedule and complete significantly more service projects than a year ago. Our goal is to simply reach more consumers seeking a better service experience, including faster turnaround, higher-quality care, and the opportunity to upgrade their RVs with our newest and most talked about products. This year, we are partnering with dealers to launch the Lippert Upgrade Experience, a new program that enables our dealers to offer upgrades such as TCS, ABS, and other advanced systems not currently offered by dealers. Several of the largest dealers in the country have already expressed strong interest in rolling this program out later this year. Turning to our auto aftermarket business, there have been several important developments worth highlighting. As many of you are aware, First Brands, which owns our largest competitor in the hitch and towing space, has experienced significant operational challenges as a result of a complex bankruptcy process. As a result, both automotive OEMs and aftermarket customers are actively seeking new, stable, long-term partners. Against that backdrop, we are already seeing meaningful opportunities emerge, and we are in the process of capturing substantial incremental business as a result. Although it is still early, we currently estimate the potential opportunity here at approximately $50,000,000 annually. We expect to share more of these developments as things progress. We have the existing capacity to support this incremental volume without the need for new facilities or additional shifts in most cases, allowing us to efficiently absorb this anticipated growth. We are also continuing to strengthen our auto aftermarket infrastructure. We recently transitioned into a state-of-the-art 600,000 square foot distribution center in South Bend, Indiana, consolidating operations from a couple of smaller, less efficient distribution facilities. In addition, we are preparing to open a new manufacturing facility in Seguin, Texas later this year, which will serve as the home for our Ranch Hand truck accessory business, a brand that has seen growing consumer awareness and demand, including increased visibility through popular shows like Yellowstone and Landman. Turning to our profitability initiatives, we delivered a full-year operating margin of 6.8%, an improvement of 100 basis points year over year, driven by cost improvements, market share gains, and enhanced operating efficiencies. Given the challenging environment that persisted in 2025, we are pleased with the result we delivered and are excited about the goals for 2026 that position us well for continued progress. We believe these strategies can drive an additional 70 to 120 basis points of operating margin improvement over the last year, while also providing a clear and disciplined path toward our objective of achieving double-digit operating margins. These gains will be supported by continued market share growth and improving product mix, and further reductions in overhead and G&A where we made meaningful progress in 2025. To build on last year's progress in 2026, we plan to complete eight to ten facility consolidations on top of the five we executed last year. We also continue to evaluate the divestiture of select lower margin businesses while accelerating automation, operational efficiencies, and fixed cost reductions throughout the year. I will wrap up my remarks with an update on our balance sheet and capital allocation strategy. Despite a challenging operating environment last year, we have made significant progress in strengthening our financial profile. Since 2023, we have increased ROIC from 5.3% to 13.5% as of 2025, reflecting improved returns and disciplined capital deployment. We ended 2025 with a net debt to adjusted EBITDA ratio of 1.8 times, supported by strong cash generation. Earlier in the year, we also completed a successful refinancing that both extended and staggered our debt maturities, further enhancing our financial flexibility. Liquidity remains robust, with over $200,000,000 in cash and equivalents, along with full availability under our revolving credit facility of $595,000,000. As we enter 2026, we will remain disciplined in our capital allocation, with a continued focus on investing in the business to support innovation and ongoing product development. Our M&A pipeline remains active, and smaller tuck-in acquisitions continue to be a core competency for LCI Industries, completing 77 strategic acquisitions since 2001. We will continue to evaluate opportunities within our existing markets and expect to remain active on the M&A front, building on the success we have achieved in 2025 with successful acquisitions like Friedman and TransAir. Returning capital to shareholders also remains a priority, as we continue to pay an attractive dividend currently yielding about 3%. During 2025, we returned $243,000,000 to shareholders, including $114,000,000 in dividends and $129,000,000 through share repurchases. In closing, our entire team is energized by the opportunities ahead, and we are confident in our strategy to leverage our many strengths to drive continued growth, margin expansion, and shareholder value creation. Having had the privilege of leading this company for more than twenty-five years, I have never been more excited about the opportunities in front of us than I am today. We have a tested, focused, and highly capable team ready to execute on the plan, and I am incredibly proud of the accomplishments of more than 12,000 men and women at LCI Industries, whose perseverance and commitment continue to be the driving force behind our success. Because of their efforts, we enter 2026 in one of the most competitive positions in our company's seventy-year history. With that, I will turn it over to Lillian, who will walk you through our financial results in more detail. Lillian Etzkorn: Thank you, Jason. We ended the year on a strong note with fourth quarter results that included double-digit top-line growth and meaningful margin expansion. These results cap a year of progress, which the hardworking men and women of LCI Industries executed our strategic initiatives, demonstrating the potential of the LCI platform, and we enter 2026 well positioned to generate even stronger results in the new year. For the fourth quarter, consolidated net sales were $933,000,000, up 16% year over year. OEM net sales grew an even stronger 18%, including 17% growth for RV, primarily driven by sales price increases due to higher material costs, a favorable mix shift towards higher-content fifth wheel units, and LCI's ongoing market share gains. We also generated 21% top-line growth across our other OEM end markets, with transportation and marine expanding year over year, partially offset by a modest decline in housing. Primary drivers included sales from acquired businesses and higher sales to North American utility trailer OEMs. Our content per towable RV unit increased 11% over the prior year to $5,670, and content per motorized unit was up 7% to $3,993. Total RV organic content grew significantly, up 3% year over year, driven by the continued success of our recent product launches. Content levels also benefited from the continued strength of higher-content fifth wheel units. We also expanded motorhome RV content per unit by 7% to nearly $4,000. Turning to aftermarket, our net sales expanded 8% versus the prior-year quarter to $196,000,000, primarily driven by product innovation and increased demand for our upgrade and service parts, as more units enter the upgrade and repair cycle to which Jason referred. Our consolidated operating profit during the fourth quarter was $35,000,000, reflecting 180 basis points margin expansion to 3.8%. Our margin growth benefited from our continued focus on driving operating efficiency and cost reduction along with the increased North American RV sales volume related to an increased sales mix of higher-content fifth wheel units and market share gains. Partially offsetting this progress was $3,900,000 of restructuring costs related to the closure of our glass operations in Ireland. Breaking down further our margin performance, our fourth quarter OEM-related operating profit margin was up significantly to 3.7% versus 0.3% in the same period the prior year. This operating profit expansion was driven by the increased selling prices for targeted products primarily related to increased material costs as well as reduced costs from our material sourcing strategies and better fixed cost absorption. For aftermarket, our operating profit margin was 4.3% in the fourth quarter, as compared to 7.9% a year earlier. This operating profit margin change was primarily driven by higher material costs related to tariffs, and higher steel, aluminum, and freight costs, increases in sales mix towards lower margin products, and investments in capacity, distribution, and logistics technology to support the growth of the aftermarket segment. The margin was positively impacted by increases in selling prices for targeted products primarily related to increased material costs, and reduced cost from material sourcing strategies. Turning to adjusted EBITDA, we generated robust annual growth of approximately 53% to $70,000,000, reflecting a 7.5% margin, 180 basis points above the 5.7% margin in 2024. Our GAAP net income came in at $19,000,000, or $0.77 per diluted share, more than doubling over the prior-year quarter's $0.37. On an adjusted basis, excluding restructuring costs, net of tax effect, net income of $22,000,000 equated to $0.89 per diluted share, which also more than doubled. Turning to the balance sheet, we continue to operate from a position of strength, ending the year with cash and cash equivalents of $223,000,000, which was up from $166,000,000 to start the year. The increase benefited from cash provided by operating activities of $331,000,000 and also reflects $147,000,000 of investment-related cash outlay, which included $53,000,000 in capital expenditures and $113,000,000 worth of acquisitions during the year. As of December 31, we had outstanding net debt of $723,000,000, reflecting a net debt to EBITDA ratio of 1.8 times, which is within our targeted range. In terms of our balanced approach to capital allocation, in addition to strategic investments in the business and the pursuit of select accretive acquisition opportunities, we continue to execute on the $300,000,000 share repurchase program announced last year. During the fourth quarter, we returned $28,000,000 to shareholders through a quarterly dividend of $1.15 per share. For the full year, we repurchased $129,000,000 worth of shares and paid $114,000,000 in dividends, as the return of capital to shareholders remains a key component of our commitment to creating long-term shareholder value. Turning to our outlook, as Jason mentioned, we expect to see industry RV wholesale shipments of 335,000 to 350,000 in 2026, and we look for the marine industry to be flat to up low single digits. For the transportation market, we expect the market to be flat; we will have the benefit of increased sales from acquisitions of Friedman Seating and TransAir, which we completed in 2025. We also expect that the housing industry growth will be in the low single digits, aided by our growth of residential window products. For the aftermarket, we are estimating mid-single-digit growth, supported by the significant numbers of RVs entering the repair and replacement cycle in the next few years. Lippert should also see lift in automotive aftermarket sales as the result of the key competitor's bankruptcy. I would also like to note that we have started the year strong, with January net sales of approximately $343,000,000, up 4% from prior year. With this backdrop, we expect consolidated 2026 revenue of $4.2 to $4.3 billion, an operating margin in the range of 7.5% to 8%, and adjusted diluted EPS of $8.25 to $9.25. Helping to drive the bottom line results, we plan to consolidate eight to ten facilities during the year on top of the five that we completed in 2025, while also continuing to focus on additional efficiency initiatives. In addition, we expect our continued penetration of newer end markets to support margin expansion, and we will also continue to seek divestiture opportunities related to lower margin noncore products. For capital allocation in the new year, we expect $60 to $80,000,000 of capital expenditures, mainly for business investment and innovation. We also look to return additional capital to shareholders through both our dividend and share repurchases while maintaining our target leverage ratio of 1.5 to 2.0 times net debt to EBITDA. In summary, while we ended 2025 on a strong note, we are even more excited about the opportunities ahead for LCI Industries and are determined to create additional long-term shareholder value through adherence to our strategic initiatives, with a focus on diversified growth opportunities and disciplined cost management. I will now turn the call back to the operator to open the lines for questions. Operator: Thank you, Lillian. When preparing to ask your question, please ensure your device is unmuted locally. We will now open for questions. The first question today comes from Bret Jordan of Jefferies. Your line is now open. Please go ahead. Patrick Buckley: Hey, good morning, guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. Focusing on the 2026 outlook, you know, I guess, how sensitive is that range to potential rate cuts? Do three or four rate cuts drive the high end or potentially higher? Or, I guess, what other metrics, you know, drive that range there? Jason Lippert: I would just say we are not factoring the rate cuts into the range. I think it is kind of steady state as we are right now. Certainly, if we get some rate cuts, that would be helpful. I mean, a lot of our growth that we are planning on the top line is going to be predicated on market share gains and some of the other things we have talked about in the call. So is that helpful? Patrick Buckley: Yeah. Yeah. Thank you. And I guess staying on the ’26 guide here, can you help us bridge the difference between 2026 and what may be a potential, quote unquote, normal run rate looks like, I guess, between the COVID highs and the post-COVID lows? You know, where do you expect to settle in during a more normal cycle? Jason Lippert: Yeah. I think, you know, when you look at the past cycles, I mean, we are kind of—it is as I say to a lot of people, we, you know, we went up to such a monster high that when we came down to, you know, half of the 600 down to 300, you know, things broke into a lot of pieces. So I think we are going to be picking those pieces up for a while. It has been three years. I think it is going to be, you know, a slow out of the cycle. So, you know, obviously, if you look at our forecast for 2026 with units, you know, at a midpoint of, you know, 345 or 344, whatever the midpoint is of our range, it is, you know, we feel like we are coming out slow, and,you know, pick up more momentum next year as we get through more of this. But I think, you know, we would say that the midpoint is probably 375 to 415, somewhere in that range, in terms of what is more normalized for the near term. But, you know, as we have said on past calls over the years, and we feel like this is a 500,000 plus industry, but we have got to get healthy before we get back to that. Patrick Buckley: Great. That is all for us. Thanks, guys. Jason Lippert: Thanks. Operator: Thank you. Next question comes from Scott Stember of ROTH Capital. Your line is now open. Please go ahead. Scott Stember: Good morning, and thanks for taking my questions as well. You know, early in the year, we are hearing of trade-up activity, mix shift towards higher-priced units, and obviously, we are seeing that in your results already. What are you hearing through your various touch points at retail trying to get a sense if that narrative is continuing as we enter the selling season. Jason Lippert: Yeah. Yeah. I think, you know, there is a lot going on out there on the retail side of things. I would say that there—you know, I have been and sat with and talked to a handful of the larger dealers lately. The larger dealers seem to be doing decent. But I think that there is a lot of small and mid-sized dealers that are struggling. I think everybody is struggling on the margin side. But I think, you know, everybody is being very disciplined. We had some weather. I had heard that Camping World had, as well as some other stores had, you know, 45 to 60 stores that were down for a couple days because of weather. So, you know, we have that kind of thing going on this time of year, but I think the big guys are doing okay. The—some of the smaller guys and mid-size guys are struggling. And I think that is what, you know, gets us to our forecast of that, you know, 335 to 350. It just feels like things are moving slowly, and, hopefully, we get some, you know, some stronger retail numbers as we get into the selling season this year. Scott Stember: Got it. And then looking at the aftermarket, you called out the RV side, I guess, doing better. And that was—if you look at the profit for aftermarket as well, it looked like it was a little bit lower. Maybe just talk about on the aftermarket, RV versus the automotive side, maybe talk about your different brands. Jason Lippert: Go ahead. You go—yeah. Go ahead. Sorry. I was just going to say that some of the headwinds on the aftermarket side related to the pricing on the auto aftermarket side. So, you know, we have pricing cycles typically January and April. So when you look at fourth quarter, some of our numbers on the profitability side were held up a little bit there. But all those, you know, all those increases due to, you know, the tariffs and all the other related inflation that we had last year will come, you know, in the next couple quarters. But our—but all in all, like we said, our aftermarket side of our business is doing well. We have got new products, new market share. We are continuing to gain steam on the RV side. And then as we said, we have got some really big opportunities on the automotive aftermarket side with a bankruptcy of announcement of First Brands and what they are going through. A lot of pieces to pick up there for us. Scott Stember: Got it. And then just last question on guidance cadence. Anything we should know about modeling down to the bottom line for the first quarter? Lillian Etzkorn: Yes. So, Scott, as you think about the first quarter, I think January is pretty indicative of what we are thinking that we are going to see from a year-over-year perspective. So we started off with an improvement over last year, but it is only 4%. I think we are expecting that that is going to trend fairly consistently as we look at the quarter. And when we think about the margin cadence going through the year, we are not going to start at 7.5% to 8% operating margin. We will step into that as we go through the year. Scott Stember: Gotcha. Yeah. Very helpful. Thank you so much. Operator: Thank you. The next question comes from Daniel Moore of CJS Securities. Your line is now open. Please go ahead. Daniel Moore: Thank you. Good morning, Jason. Good morning, Lillian. Jason Lippert: Good morning. Daniel Moore: Maybe go back to the first question a little bit. Guidance kind of low to mid single digit growth for ’26. Just talk about puts and takes. One, kind of price versus volume. Two, expectations for content gains. And then, you know, how much revenue are you contemplating being kinda coming out of the bucket, either deemphasized or discontinued, either from consolidating facilities or kind of shedding low margin business? Lillian Etzkorn: Yeah. Good morning, Dan. Definitely a lot of puts and takes as we are looking at, you know, that potential range going into this year. From an organic growth perspective, we have talked before around that 3% organic growth. I would expect that we continue to see that as we move through 2026. Excuse me. Probably less so from a pricing perspective and more so from that market share expansion. I think we shared previously in the third quarter call that we are looking at maybe $75,000,000 of potential divestitures of that lower margin product. So that is going to be one of the takes from the growth. And then, you know, modest expansion across the markets, flat to modest expansion as highlighted in the prepared remarks. So definitely puts and takes but feeling good as we are starting the year. Jason Lippert: And then I would just add that, you know, our expectation of continued content growth. Obviously, had a nice content growth year this past year. But, you know, I look at—you know, last year was a tough market. We, you know, we grew $380,000,000 in that market, some through M&A, and through organic growth and market share gains. You know, we expanded our margin during that time. We consolidated facilities, to the tune of five facilities, which helped. We have got that momentum carrying on into this year with another eight to ten facilities. Well, we again expect a little bit of growth—flat to a little bit of growth in all of our markets, maybe a little bit more in aftermarket, given some of the things going on there. But I think when you look at, you know, the growth that we had last year, significant growth in a really tough market, and we are continuing that this year with even some more ability to improve our cost structure. I think it is a really, really good position we are entering ’26 in. Daniel Moore: Really helpful. Maybe just following up on the last question. Looking at Q1, the full-year guide implies 70 to 120 bps of operating margin expansion. I think last year was around 7%, or 7.8%, if I am not mistaken, adjusted operating income. Just how are we thinking about kind of year-over-year growth as far as, you know, up margin for the first quarter given weather and some of the other issues? Lillian Etzkorn: Yeah. I would say probably less of a year-over-year growth from an operating margin perspective, more as we get into the latter part of the year to get us to that 7.5% to 8% margin. Jason Lippert: Yeah. So, I mean, I think first quarter is going to look very similar to the operating margins that you saw in the—1,000,000 units coming into the age of repair in the next one to three years. Daniel Moore: How do you think about kind of that aftermarket business? You gave color for this year. How do you think about that ramping, you know, over the next two to three years? And what are your kinda near-term and longer-term operating margin goals in that business? Thanks again for the color. Jason Lippert: Yes. I think when it comes to those units coming into the repair and replacement cycle, again, a lot of those parts on those units coming into repair and replacement are proprietary. They need to use our parts. So, you know, all we know is we are getting closer and closer to when those units start to really flow into the dealers for service. So, you know, we have seen a little bit of that over the last couple of years, but we expect it to grow. Like I said, there is a lot of units out there that will need to come back into the repair and replacement cycle. And again, on the aftermarket side for automotive, we just have a lot of opportunity on just share gains through the First Brands issue. Lots of hitching and towing electrical business that is just going to be sitting out there, all forbid, and we are, you know, we are the likely candidate there for that business, just because there has really only been two strong players in that market over the last decade. And it is a high barrier to entry business. I mean, you have got to have, you know, significant engineering design built up to cover automobiles and trucks that go back thirty years for fit and finish on the hitch and towing aspects. And then, obviously, when we get to a like this, we get a little bit more margin opportunity and control than what we would have if there were, you know, more players. So, I think our aftermarket margins will stay pretty steady. Lillian, I do not know if you have any other color there. Lillian Etzkorn: Yes. The only other thing I would add to that, Dan, is keep in mind, we have been doing investment into the aftermarket business really to support the future expansion. So the margins have been pressured from that. And in the near term, you are going to still see some of that pressure as we are investing in the facility in Texas, as we are continuing to support the investment into the distribution aspects for aftermarket. But I think longer term, clearly, expect nice solid returns with the aftermarket business, just a little bit of near-term continued headwinds. Daniel Moore: Perfect. And I will circle back with any follow-ups. Thanks. Operator: Thank you. The next question comes from Joseph Altobello of Raymond James. Your line is now open. Please go ahead. Joseph Altobello: I guess first question, Jason. Your industry outlook for wholesale shipments on the RV side is a little bit softer than what we talked about in late October. I am just curious what you have seen over the last three and a half months or so that makes you a little bit less sanguine on the industry this year. Jason Lippert: Yeah. Like I said, I think there is just still a lot of pieces to pick up. There is still a lot—the biggest answer to your question there is just there is a lot of mid and small-sized dealers still out there. A lot of those dealers are going through the question of do they want to stick around? Do they want to sell to somebody bigger? I think the bigger guys have put the brakes on a little bit in terms of acquisition of some of these smaller dealerships. So it just feels like there is a little bit of a logjam up until some of that gets sorted out. But, you know, we are taking a conservative approach. I mean, again, we feel that the industry can be a lot better. Some of it is we just need some of the macro factors to, you know, come back and improve a little bit. But all in all, you know, we are certainly coming off the bottom. We dropped to 300, 315, to 335, to 342 this year. So, you know, we are already seeing, you know, the beginning portion of coming off the cycle. It is just a matter of how quickly it is going to ramp up. And that depends on retail and, you know, the overall dealer environment out there. Joseph Altobello: Got it. Helpful. And maybe just in terms of the first quarter outlook, I think you mentioned similar to what you saw in January, call it, plus 4%. It is obviously a slowdown from 4Q plus 16%. Is that just a tougher compare? Or are you seeing other dynamics playing out here early in the first quarter? Jason Lippert: I think it is just a lot of dealer and OEM discipline at this point in time. I mean, they are being as good as I have ever seen in terms of just, you know, pumping the brakes and making sure that we are not getting ahead of ourselves and putting inventory out there that is just going to—so, you know, dealers and OEMs are ordering and building right inventory, I feel, better than I have ever seen. And I think they are just waiting for the retail numbers to pop up. Shows have been good. Traffic has been decent. There is no signs out there that would point otherwise that it would be going the other way. So we do think it is, you know, we should be, you know, up a little bit this year. But those are some of the early indicators. Joseph Altobello: Got it. Okay. Thank you. Operator: Thank you. The next question comes from Tristan Thomas-Martin of BMO. Your line is now open. Please go ahead. Tristan Thomas-Martin: Hey, good morning. Lillian Etzkorn: Good morning. Tristan Thomas-Martin: Works out well. I want to follow up on Joe's questions. So up a little bit of retail for the RV industry year over year. Is that right? Jason Lippert: I think retail and wholesale stay pretty aligned this year. We would love to see retail up again. I think some of it is just going to depend on, you know, how the macro factors play out over the next months, you know? Tristan Thomas-Martin: Okay. Jason Lippert: Tariffs will—the tariff environment not being here this year will help significantly, you know, because pricing is a little bit more consistent. We can rely upon, at the moment, where we are at with things. Tristan Thomas-Martin: Okay. And then just kind of on the change to your shipment, I am—look, I just want to summarize to make sure I am understanding correctly. So it just sounds like dealers are just continuing to be maybe a little bit more hesitant, and you still have to take on new inventory. Jason Lippert: I think they are just being—I just think they are being cautious right now. And again, we had some, you know, we had some significant weather. I mean, we always have weather in the North during this time of year, but the weather was kind of spread out all over the place. Again, you know, some of the numbers I heard, some of the bigger dealers where they had multiple days of shutdowns and, you know, 50 to 60 stores across the country. Some of them—I mean, that is a big—that is a—I mean, nobody can go in and buy RVs when, you know, that many dealerships are shut down. So I think that played a little bit of a role. But ultimately, you know, we still feel optimistic that this year can be better than last year. Tristan Thomas-Martin: Okay. And then just one more question. Can you maybe remind everybody what the kind of typical RV trade-up cycle is from a consumer standpoint? And then maybe could it be maybe a little bit quicker this time just because there has been a lot of really cheap, smaller, kind of low-content RVs that have been sold in the last couple of years. Jason Lippert: Yeah. Yeah. I think to your point, on the more entry level stuff, especially the single axle product, you are going to see quicker trade cycles than you would on, you know, a bigger motorhome or larger fifth wheel. We typically say that the trade-in cycle is three to five years. And a lot of that just will depend on the buyer and the type of unit that they have. So, you know, obviously, we built a—the industry built a lot of those single trailers over the last, you know, five years. So, you know, we think that will bode well for the industry as people start to think about continuing camping in a bigger unit. But we have seen some of that improvement already with some of our content gains in the last few months. Tristan Thomas-Martin: Okay. Great. Thank you. Lillian Etzkorn: Thanks, Tristan. Operator: The next question comes from Brandon Rollé of Loop Capital. Your line is now open. Please go ahead. Brandon Rollé: Good morning. Thank you for taking my questions. Just first on affordability, could you just talk about maybe affordability in the RV industry entering 2026 versus maybe where we were last year and how that might overall have an impact on the industry's recovery. I think this is the first year pricing has started to come back up again, but, you know, rate relief has not really been significant, at least on the consumer side. So any comments there and how that might impact your pricing? Thank you. Jason Lippert: Yeah. I think there is a lot of—there is always a lot of pricing discussions going on. There is—I think there is two big factors that usually weigh into how ASPs are going to end in any given year. And I think that the OEMs right now are really focused on driving those ASPs down through, you know, a lot of content realignment. So there has been a lot of that going on since model change to try to stay focused on bringing prices down. The only negative we have right now is just aluminum. Costs in general are up. So that is kind of a headwind for the industry. But, you know, it is at a near the five- or seven-year high there. So, but that will come back down. Right now, it is a little bit of a headwind. There is a lot of aluminum in a lot of these RVs that are built. But, you know, we are working with our customers like we always do on good-better-best philosophies. And, you know, maybe a good is good enough instead of them buying a best type of product or a better type of product component for their RV to help bring pricing into better alignment for the consumer. And then you have got, you know, you have got the third lever, which is a lot of, you know, OEM discounting and dealers discounting to try to move product and keep product moving so it does not get stale there. And I think that our industry does a better job than most industries at managing those factors. You look at the boat industry and, you know, they are kind of strapped by engine prices. The engine prices really have not come down much since COVID, and boat prices are really high, and there is not a lot the boat manufacturers can do because it is the largest ticket item for components that they buy for the boat. So I think RV is in better shape. Brandon Rollé: Okay. Great. Thank you. Operator: Thank you. The next question comes from Kevin Condon of Baird. Your line is now open. Please go ahead. Kevin Condon: Good morning, everyone. This is Kevin on for Craig at Baird. Hoping to understand and unpack the margin guide a bit better. Just thinking the 70 to 120 basis points of improvement, wondering if you could comment on or rank order some of the largest drivers of that, you know, being operating leverage on the top-line growth. Do you expect favorable mix impact and maybe the net incremental impact of tariffs? Just how you are thinking about some of those buckets contributing to that 70 to 120 basis points increase? Jason Lippert: Yeah. Well, I will start and let Lillian chime in after. But I think, you know, one of the biggest things that I mentioned earlier that we have going for us is just some of the consolidation efforts we have and restructuring we have that we started early last year on. You know, if you look at last year, like I said, we increased $380,000,000 in our top line. You know, through our acquisitions, I think we acquired 1,000 team members. We ended the year 400 team members up over the beginning of last year. So when you consider that we grew $400,000,000, added 1,000 team members, and ended only 400 from where we started, I think that shows, you know, the power of some of the consolidation efforts that we are making around G&A and overhead. So that would probably be one of the bigger levers. And obviously, that continues, you know, in just as dramatic a fashion as last year because we are going to double—you know, we are going to nearly double the amount of consolidations we are doing this year that we did last year. Lillian Etzkorn: Yep. Thanks for that, Jason. And, Kevin, building on that, so clearly, the consolidations are going to continue to benefit us. When we think about, you know, kind of the range that we have out there, part of what is still to be determined, you know, as we go through the calendar is the timing of those consolidations of those incremental eight to ten. So we have the full-year benefit of the five that we consolidated last year, which will benefit us throughout the year. And then as we cadence in the eight to ten, which will not all happen, obviously, February 1 or March 1, it will cadence over the full year. That will also drive efficiencies for 2026. Additionally, as we have the incremental revenue coming in, we have typically guided and will continue to guide that incremental margins, whether 25% are fair assumptions as you are modeling. So there is a benefit there. And really, as Jason was saying, we will continue to drive overall operating efficiencies. So, you know, as we are able to get more volume and more units through our manufacturing facilities, you have better efficiencies just in your fixed cost absorption as well. So it really is a multitude of factors there that contribute to us being able to deliver that margin expansion and, frankly, continuing us on that progression to double-digit margin, which is what we have been talking about reaching. So continued steady progress towards that goal. Kevin Condon: Understood. Thanks. And then on the—I think in the past, you have disclosed a single axle mix of shipments. Was that a metric that you offered for Q4? And I just wonder your expectations for 2026, if that is still a tailwind for the full-year outlook? Lillian Etzkorn: So for the fourth quarter, we are providing it. It is in the presentation deck in the very back of the appendix. But the fourth quarter came in at about 21%, so a little bit up from the third quarter. I think we are kind of bouncing around that 19% to 21%. Fifth wheels were definitely still strong as we reported. Jason Lippert: I think it is yet to be determined for the full year for 2026, but that 19% to 21% feels kind of like an ambient level at this point. And just to give you a little bit more color, just for January, for example, single axles were a little down over last year January. Fifth wheels were up a little bit. So that is, you know, we are seeing that content move the right way for us. And we will see how the rest of the year goes. That is just, you know, just a one-month look. But— Kevin Condon: Gotcha. Thanks so much for taking my question. Jason Lippert: Yeah. Thanks. Thank you. Operator: The next question comes from Mike Albanese of Benchmark. Your line is now open. Please go ahead. Mike Albanese: Yes. Hey, good morning, guys. Thanks for taking my question. Just kind of a quick follow-up on really the last question. If you could just comment again on RV product mix expectations. Obviously, some momentum in the fifth wheels here. I mean, do you see that more as, you know, dealers kind of rightsizing or level setting inventory? Or is this more consumer-driven momentum that, you know, could continue. Jason Lippert: Well, I mean, we hope that the mix rightsizes back more toward not just fifth wheels, but higher-contented trailers. It is just healthier for the industry. And again, we have put so much of that single axle product into the industry over the last five years that, you know, eventually that part of the market will get saturated and people will start trading up, and that mix shift will happen hopefully a little bit more dramatically. But like I said, all I can tell you is January right now and kind of what we see in the very, very near term, which we have seen single axles drop a little bit over last year same period, fifth wheels increase a little bit over last year same period in January. Talk at the shows, that the high-end buyer is there and, you know, not as impacted as some of the entry-level buyers, a little bit more willing to spend money. So, you know, that is where we are at right now. Mike Albanese: Okay. Thanks, guys. Operator: Thank you. We have no further questions at this time, so I would like to hand back to Jason for closing remarks. Jason Lippert: Yes. Again, thanks, everybody, for joining the call. And again, against a really tough act, our performance, we feel, has been very, very strong. We have got lots of good things happening this year. Again, even if the industry is flat to a little bit up, we feel like we will perform similar to last year and continue to make some of these consolidation efforts pay off on the bottom line. So thanks for joining the call. We will talk to you next quarter. Thanks. Operator: This concludes today's call. Thank you all for joining. You may now disconnect your line.
Operator: Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Fourth Quarter 2025 Operating and Financial Results Conference Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference call over to Graeme Jennings, Investor Relations for IAMGOLD. Please go ahead, Mr. Jennings. Graeme Jennings: Thank you, operator, and welcome, everyone, to our conference call this morning. Joining us on the call are Renaud Adams, President and Chief Executive Officer; Maarten Theunissen, Chief Financial Officer; Bruno Lemelin, Chief Operating Officer; Annie Torkia Lagace, Chief Legal and Strategy Officer; and Dorena Quinn, Chief People Officer. We are calling today from IAMGOLD Toronto office, which is located on Treaty 13 territory on the traditional lands of many nations, including the Mississaugas of the Credit, Anishinaabe, the Chippewa, Haudenosaunee and the Wendat Peoples. At IAMGOLD, we believe respecting and upholding indigenous rates is founded upon relationships that foster trust, transparency and mutual respect. Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures included in the presentation and the reconciliations of these measures in our most recent MD&A, each under the heading non-GAAP financial measures. With respect to the technical information to be discussed, please refer to the information in the presentation under the heading Qualified Person and Technical Information. The slides referenced on this call can be viewed on our website. I will now turn the call over to our President and CEO, Renaud Adams. Renaud Adams: Thank you, Graeme, and good morning, everyone, and thank you for joining us today. Last year was a monumental year for IAMGOLD. It is a year in which the company reported record revenues of nearly $3 billion enjoying gross margin of over 40% and generating operating cash flow of over $1 billion, which is notable $702 million generated in the fourth quarter alone. Now everyone on this call is aware that this is a historic time in the gold market, as the gold price increased nearly $1,700 per ounce over 2025 and exiting the year at just over $4,300 an ounce, which is still more than $600 an ounce lower than where we are today. So while we're not along in realizing the gold market, we believe IAMGOLD is particularly well positioned to capitalize on this market for the benefit of our shareholders, stakeholders and partners. In 2025, IAMGOLD achieved significant milestones, including record quarterly productions across all sites. The first full year of production at Côté Gold, the establishment of a framework at Essakane that enables cash movements to be made at any time of the year, and the consolidation of assets in Chibougamau-Chapais, Quebec, to position the Nelligan mining complex as among the largest preproductions asset in Canada. On the financial side, we closed out the legacy gold prepaid obligation midyear, deliver the balance sheet through the repayment of the $400 million high cost term loan and established a share buyback program that pursuit $50 million in IAMGOLD shares in December and an additional $50 million so far in 2026, and we will continue to do so, driving up our per share valuations, all things being equal. This is a company that is taking a leadership position in the industry. IAMGOLD is a modern gold mining company that is proudly Canadian with strong cash flow and significant long-term growth opportunities ahead. We mine with the mining redefined purpose in mind, putting safety responsibility and people first. We hold ourselves accountable and embrace change, and drive innovations at every level from smarter systems to better ways of working. Now there are many highlights to discuss for IAMGOLD today. So let's get into it. Looking at the highlights from the year and the fourth quarter, we start with our safety record. Over the course of the year, our total recordable injury rates was 0.60, which was down from the year prior. We are focused on advancing our critical risk management program, including an important integration of contractor into the IAMGOLD way of safety management with a goal to reduce high potential incidents. On production, IAMGOLD closed out the year with a very strong fourth quarter in which all our mines reported record gold production. On a consolidated basis, attributable gold production for the fourth quarter was 242,400 ounces, a 28% improvement quarter-over-quarter, driving total production for the year to 765,900 ounces achieving the midpoint of the company's 2025 production guidance. The strong fourth quarter operating results helped to drive down costs on a per ounce basis. All-in sustaining cost per ounce sold was $1,750 for the fourth quarter and $1,900 for the year within the guidance range of $1,830 to $1,930. As discussed last year, last quarter, costs this year have faced upward pressure due to the record gold prices directly translating to higher royalties. The impact of these royalties on cash costs continue to increase through the year to where they accounted for an average of approximately $330 per ounce or 24% of cash cost in the fourth quarter 2025. As we look ahead through this year where we will uncover opportunities to grow the value of our asset, we will stay diligent on our commitment to operational excellence and discipline. While we will not be able to control the gold price, we can control our cost structure and ensure that cost improvement opportunity come down with our production product. At Côté, we will continue to fine-tune our mining, milling and maintenance practices to position the project well for the upcoming expansion phase. With that, I will pass the call over to our CFO, to walk us through our financial highlights. Maarten? Marthinus Theunissen: Thank you, Renaud, and good morning, everyone. It was indeed a transformational year for IAMGOLD, as our solid operating results, coupled with record gold prices helped to fast track our strategy to unwind the financial leverage put in place to both Côté and allowed us to also start returning capital to shareholders in December. In the fourth quarter, the company generated record mine-site free cash flow of $626.6 million, bringing the year total to $1.2 billion. On an asset basis, in the fourth quarter, Essakane contributed $340.4 million and Cote contributed $197.0 million of attributable mine-site free cash flow. The record mine-site free cash flow was used to improve our financial position as the company's net debt was reduced by $468.8 million to $344.4 million at the end of the year, while also returning $50 million to shareholders. On the balance sheet, we completed the repayment of the $400 million term loan and also paid $50 million on our credit facility, reducing the balance to $200 million as at the end of December. IAMGOLD at $422 million in cash and cash equivalents at the end of the year and approximately $446 million available on the credit facility, resulting in total liquidity at the end of the fourth quarter of approximately $868 million. Excess cash at this account is repatriated through dividend and shareholder account payments, of which the company receives its share on its ownership net of withholding taxes. The shareholder account structure was introduced in 2025 and functions like an intercompany loan and allows for the company's portion of the dividend to repay partly using cash generated in excess of working capital requirements. The new structure allowed for cash flow in the fourth quarter, resulting from strong operating results and record gold prices to be repatriated in record time, and IAMGOLD received $291 million of payments from Essakane through the fourth quarter. Approximately $197.5 million of our consolidated cash balance was out by Essakane at the end of the year. And subsequent to year-end, these funds, combined with free cash flow generated in January was used to make further payments against the shareholder account can, and IAMGOLD received $171 million so far this year. The other notable event was the establishment of the share buyback program. In December, the company repurchased and canaled approximately 3 million shares for approximately $43 million at an average price of $16.87 per share through a share buyback program subsequent to quarter end, up to the timing of our results release, IAMGOLD has purchased an additional 2.6 million shares for $50 million. For the remainder of the year, we are planning to use the cash repatriated from Essakane in 2026 to fund our buyback program. And at a gold price of $4,000 per ounce, we estimate that this could be between $400 million, $500 million during the year. The NCIB lies with a purchase of approximately 10% of IAMGOLD's public float that was outstanding as of November 2025. All common shares purchased under the NCIB will be either canceled or placed under trust to satisfy its future obligations under the company's share incentive plan. This initiative reflects management's confidence in the company's long-term value and its commitment to disciplined capital allocation. We believe the alignment of strong cash flow generation from this account and our share buyback program represents a clear value accretive opportunity for the company and our shareholders. The company intends to use the free cash flow generated by Essakane as a base level to repurchase shares under the share buyback program as the gas is generated and repatriated over the course of 2026. Naturally, the actual amount of common shares that may be purchased if any, and the timing of such purchases will be determined by the company based on a number of factors, including the gold price, the company's financial performance, the availability of cash flows and the consideration of other uses of cash, including capital investment opportunities, returned to stakeholders and debt reduction. Turning to our financial results. On a full year basis, revenues from operations totaled $2.9 billion from sale of 817,800 ounces on a 100% basis at an average realized price of $3,549 per ounce excluding the impact of the gold prepay arrangement. The strong operating results and record gold price resulted in adjusted EBITDA of approximately $1.6 billion in 2025, compared to $780.6 million in 2024 and $338.5 million in 2023. At the bottom line, adjusted earnings per share for the year totaled $1.23 up from $0.55 the prior year. Looking at the cash flow reconciliation for the year. It is a good visualization of the major drivers of our financial position to end 2025. The significant operating cash flow are large for the delivery and conclusion of the occupy arrangements midyear, funding all capital programs at operations, significant delevering of the balance sheet, payment of a record dividend of Burkina Faso that allowed us to set up the shareholder count that we used to repatriate funds into Canada and the start of the NCIB program in December. As we look into this year, our priorities from a financial and capital allocation perspective are to deploy funds to areas where we see the most value add to our company, which includes the continuation of the share buyback program, utilizing cash flows, becoming net cash positive following the repayment of the remaining balance of the credit facility, fund our operations as outlined in our guidance to ensure they are positioned well exiting the year and ensuring that we have the financial capacity to support opportunities to improve our business. And with that, I will pass the call to Bruno Lemelin, our Chief Operating Officer, to discuss our operating results. Bruno? Bruno Lemelin: Thank you, Maarten. Starting with Cote Gold, as Renaud noted, it was a very strong end to the year for Cote with fourth quarter attributable gold production of 87,200 ounces of 124,600 ounces on a 100% basis. The success of Cote goes beyond just the fourth quarter. In its first full year of operation, Cote produced 399,800 ounces on a 100% basis, achieving the top end of our guidance estimates. . During the year, our Cote teams achieved success after success every day on many fronts, offering a stability, maintenance, environmental monitoring or workforce engagement. Cote Gold completed the ramp-up and demonstrate that nameplate throughput of 36,000 tonnes per day over a period of 30 consecutive days ahead of schedule in June. It was a very strong 2025 with Cote now adding strong 3 consecutive quarter in a row of the mine hitting its target in its trial. Focusing back to the quarter, mining activity totaled 11.1 million tonnes, 4 tonnes mined were a record of 4.5 million tonnes in the quarter with a strip ratio of 1.5:1. Mill throughput in Q4 totaled 2.9 million tonnes. Head grade for the fourth quarter was a record of 1.44 grams per tonne as a result of the combination of higher grade direct feed ore, a low strip ratio over the quarter and stockpiling of lower grade ore. The installation of the additional secondary crusher was completed in November and commissioned in December with both compressor tested and operating in parallel. As we discussed later, last quarter, we elected earlier in the year to bring in a temporary contractor aggregate crusher to supplement protest crushing capacity to improve the arability of the secondary crushing circuit. They allow the plan to achieve its throughput milestone but at a higher cost as well -- as we will discuss on the next slide. With the 2 secondary cone crushers now operating the company plans to phase out the temporary crushing circuit over the first half of 2026. Looking at costs, Cote reported fourth quarter cash cost of $1,265 per ounce and all-in sustaining cost of $1,688 per ounce. We continue to see mining and processing unit costs above where we would like them to be. A major driver of cost this year has been associated with the temporary crusher. The decision to move ahead nameplate by 5, 6 months, allowing for maximizing funds versus waiting for the installation and ramp-up of the second corn crusher in an important time for the project in the market. Looking at mining costs on an annual basis, they averaged $4.20 per tonne in 2025. We expect to see cost improvement through 2026 as further operational improvements are made, including the elimination of the contracted aggregate plan and a reduction of contractors. Mining unit costs on an annual basis averaged $3 per tonne. There is a direct relationship with the amount of ore crushed with the temporary crusher in our processing costs. We expect that the removal of the aggregate plant will reduce processing costs by $4 to $5 per tonne. Additional savings are expected as we improve the life cycle of the HPGR rollers and fine-tune our maintenance cycles. Looking ahead, 2026 is the year in which our operations team is focusing on fine-tuning Cote at 36,000 tonnes per day. This year, the operations team will be focusing on unit cost improvement to stable and efficient mining and mining practices. It is important for our team to be able to operate Cote with an expected specification before we expand the operation further. On cost, all-in sustaining costs are expected to be in the range of $1,725 to $1,925 per ounce sold which reflects an additional $50 million or about $185 an ounce of nonrecurring sustaining capital investments to improve the operating efficiency, and the long-term operating cost structure, these include the implementation of our repeat system for the course of our done, additional maintenance facilities and improved dust mitigation measures. Expansion capital this year is estimated at $85 million for IAMGOLD. As we look to grow Cote, it is clear we can accelerate basic expansion projects. This includes a strategic push back that will provide both operational flexibility in the near term and optionality for the expansion as well as the acceleration of certain expansion related improvements to the processing plant, including an additional burden in early 2027. This leads us to what is next for Cote, the Cote Gosselin expansion mine plan. In the fourth quarter of this year, we will release the details of the updated mine plan that envision a near-term expansion of the Cote plan, targeting a significantly larger or based from both Cote and Gosselin. Alongside our financial results last night, IAMGOLD announces update on mineral resources and reserves estimates. In the estimate, we saw a significant upgrading of ounces from inferred to measured and indicated at Gosselin, which now is estimated to have 6.9 million ounces of indicated ounces and 1 million ounces of inferred sources. Combining Cote and Gosselin, the Cote Gold project currently is estimated to have M&I resources inclusive of mineral reserves and on a 100% basis of 18.2 million ounces and additional mineral resources 2.2 million ounces. Work will be ongoing this year to incorporate the end-of-year drilling and then combine their minimum resources estimate and big shelves into a single model. As currently designed, Cote has the mining capacity to average an annual or mining rate of 50,000 tonnes per day versus our current main trade processing rate of 36,000 tonne per day. As part of the 2026 technical report, we will look to find the right balance between an increased processing rate with mining rates targeting the combined Cote and Gosselin. Turning to Quebec. In the fourth quarter, we saw Westwood produced a record 37,900 ounces since mine restart as the underground return high grades coupled with strong throughput in the plant. Underground mining activities in the fourth quarter average 1,129 tonnes per day, translating to 105,000 tonnes in the quarter, a record volume from underground since the mine start with an average underground mine grade of 9.87 grams per tonne. During the first 3 quarters of the year, mining activities on the ground operated to lower-grade stow and adjust blasting technique. In the fourth quarter, Westwood refined stow design, sequencing and blasting while returning to higher grade stocks as per mining plans. Mining of the [indiscernible] open pit consoled in the quarter with 134,000 tonnes of mine with a head grade from the open pit averaging 1.19 grams per tonne. The open pit life has been extended into 2027. We expect Grand Duc to contribute a similar amount of ore to the plan this year with at a slightly lower grade of between 1.1 to 1.2 grams per tonne. Mill throughput in the third quarter was 299,000 tonnes at an average grade of 4.21 grams per tonne and average recoveries of 93%. Plant utilization was 92% in the quarter, up from 35% in Q3 and in line with the average expected for 2026. As a result of the strong fourth quarter, first, on a per ounce basis declined notably. Cash costs in the fourth quarter averaged $1,288 per ounce and all-in sustained costs averaged $1,719 per ounce, well below the average of the year of around $2,100 per ounce. The cost improvement was also assisted by lower unit costs while with mining costs, mining unit cost declining due to the high volume of ore mine mill. Looking ahead, to this year, Westwood production is expected to be in the range of 107,000 to 113,000 ounces. Mill throughput is expected to average 1.2 million tonnes in 2026 with blended head grade expected to average 3.44 grams per tonne over the course of the year with a fairly flat production profile quarter-over-quarter to the year. Cash costs at Westwood are expected to be in the range of $1,500 to $1,650 per ounce sold an all-in sustained cost in the range of $1,950 to $2,100 per ounce sold. Sustaining capital expenditures guidance is $55 million primarily consisting of underground development, renewal of the mobile fleet, upgrades in the mill and general maintenance. Expansion capital is expected to increase this year to $30 million which is primarily associated with development works and risk to support the study of options to extend the mine in the eastern parts of Westwood underground that could potentially be amenable to both mining. Looking at our mineral resources and reserve update, Westwood more than replaced the vision over 2025, with 1.1 million ounces of mineral reserves to date. Further, M&I resources inclusive of mineral reserves increased by 682,000 ounces or 40% to 2.4 million ounces as of December 31, 2025, with an additional 1.5 million ounces of inferred ounces. We are looking forward to conducting additional drilling underground at Westwood this year as we believe there is still significant potential assets to the east and west of our current underground operation. Turning to Essakane and considering with the Q4, the mine reported record production of 138,100 ounces on a 100% basis equating to 117,300 ounces on our 85% mining interest. Mining in the fourth quarter totaled 9.4 million tonnes, an increase from the prior quarter with higher ore terms, mine of 4.1 million tonnes for a strip ratio of 1.3:1 in the quarter. The average grade of mine ore in the fourth quarter was the highest grade mine in the year as the mine sequence deeper into Phase 7. The mill reported strong throughput in the fourth quarter of 3.2 million tonnes at an average head grade of 1.5 grams per tonne considering the quarter-over-quarter step-up we have seen this year. The plant achieved recoveries of 88% in the quarter, which was below the 90% average for the year as the second typically sees higher graphitic carbon in the higher-grade zones, though this is mitigated with blending. Similar to Westwood, Essakane saw an improvement in cost per ounce and unit cost per tonne on the higher volumes. For the fourth quarter, Essakane reported cash cost of $1,471 per ounce and all-in sustained cost of $1,674 per ounce. As Renaud noted in his earlier remarks, royalties in the current gold market are having a measured impact on industry cost structure. And this is even more pronounced in Burkina Faso, where the new realty decree was implemented in 2025 with royalties now uncapped and tied to gold price. In the fourth quarter, royalties accounted for $460 per ounce or approximately 36% of Essakane's cash cost. Accordingly, when we look at this year, we have guided to cash costs, excluding royalties and cash costs, including royalties at the gold price assumption of $4,000 per ounce. Cash costs, excluding royalties are expected to be in the range of $1,150 to $1,300 per ounce sold and including royalties in the range of $1,600 to $1,750 million. All-in sustaining cost is expected to be in a range of $2,000 to $2,150 per ounce sold. So on the traction side, this account attributable production is expected to be in the range of 340,000 to 380,000 ounces or 400,000 to 440,000 ounces on a 100% basis, similar to production in 2025. With a production profile expected to be fairly flat quarter-over-quarter this year, mining activity will target Phase 6 and 7 and the level that is adjacent to the second main zone. Our Mineral Resources and Reserves Essakane reserves decreased by 640,000 ounces due to depletion in geology model adjustment for a total of 1.7 million ounces. However, measured and indicated mineral resources reported a 50% increase in funds, offsetting a 26% decrease in grades for a total of 4.4 million ounces in measured and indicated, an additional 853,000 ounces of inferred. We are currently studying the Block 3 project, which would add an additional 5 years of life of mine expanding Essakane until at least 2032. With that, I will pass it back to Renaud. Renaud Adams: Thank you, Bruno. I just want to take a moment to highlight the exciting development from the fourth quarter in which IAMGOLD acquired at Northern Superior and Mines d’Or Orbec consolidating their assets and properties with our assets in the Chibougamau-Chapais region of Quebec to form the Nelligan mining complex, which is now composed of the following deposit and high-value target. Nelligan, Monster Lake, Philibert, Chevrier Lac Surprise, Croteau Est. The Nelligan Mining Complex already has a significant mineral inventory of over 4.3 million measure-indicated ounces and 7.5 million inferred ounces, positioning the project among the largest preproduction stage gold project in Canada. . The close proximity of the primary deposit to each other supports a conceptual vision of the central processing facility being fed from multiple ore sources within the 17-kilometer radius. This year, we are substantially increasing our budget to allow for a comprehensive exploration program, which will look to expand and mineralized footprint of both Nelligan and Philibert while testing months lake at depth. In addition to a regional exploration program or high priority targets to further grow the potential of the project. Our teams are very excited for this project, and we will be putting the pedal to the middle to have a preliminary economic assessment on the Nelligan complex in 2027. With that, I want to thank our shareholders for your great support. We truly believe it will be an exciting year for IAMGOLD with significant value growth opportunities ahead and many catalysts ahead. And now I would like to pass the call back to the operator for the Q&A. Operator? Operator: [Operator Instructions] And our first question today comes from Mohamed Sidibe from National Bank. Mohamed Sidibe: Maybe I'll start with Essakane and with the M&I increased year-over-year and the potential extension of the mine life of that asset. How should we think about Essakane within your broader portfolio? And specifically, has the license is potentially expiring into 2029, please. Bruno Lemelin: I'll give some first comment, and I'll ask Bruno to complete more on the potential we have here. But -- we've been going really on the step by step. I thought we had a wonderful '24-'25, the team is working hard. You've seen the increase in the resources. We see more and more possibility of extension. The most important thing is what I would call the acceptance of all of it, right? So we understand the geographic and geopolitic and so forth. But the reality is we've been operating this mine pretty steady state, no interruptions for nearly 3 years now. We found and -- congrats Maarten and his team and Renaud found a very creative way to allow for cash flow. At those prices, we see a good opportunity of using this cash flow to reward our shareholders. So I think over the next few quarters, we just need to continue to be the drama and execute on our plans and continue to repatriate and reward our shareholders. And as we advance in '26, Renaud and his teams will complete some work. We definitely see an extension potential, which we need to continue to work and improve. But we're not there yet, but I think we've come a long way to make a kind of a very strategic element of our portfolio. Renaud, if you want to add any... Renaud Adams: Yes. So thank you, Mohamed, for your questions. I've been at that again, like I started with IAMGOLD second in 2014, since then, the life of mine has not stopped getting extended. So should not come too much of a surprise. What is really good is we were able to find those additional resources within the fence north of Phase 7. So we have now Phase 8 and Phase 9 and 10 north of where we are currently mining. And South, we have the low pit that is also getting -- we're seeing an extension of the current level pit that also tried to connect south of the second main zone. So there's a saddle zone and now we believe those 2 connects together. So it gives us confidence that we could be targeting at another 5 years of life of mine. That's what we're going to be coming with when we're going to start engaging with the government. It shouldn't be like too much of a problem when we first met with the off the shows in terms of having the license to be extended by another 5 years, which would bring us closer to [ 2030, 2030 ]. So we're not, again, decision to be made probably later as we advance in a year in preparations for '27 plan. But meanwhile, we expect another great year and maximum free cash flow out of the asset repatriated and apply towards the shareholder program, share buyback. So more to come. Mohamed Sidibe: Maybe I'll switch to Cote specifically on the unit cost. I think, Bruno, you touched on the milling cost potentially improving $4 to $5 by the second half 2026, could you give us a little bit more color on mining costs and where you expect to exit maybe 2026 and what we should be thinking in terms of modeling there for Cote Gold? Bruno Lemelin: Yes. So the mining costs for 2026, we are making adjustments. Some adjustments are taking time. So now we're implementing any one or some plan, there will be some testing. We should be at the year at around $370, $380 a tonne as we are getting. We brought new equipment, new drills. We are also doing the pushback, Mohamed. And by doing this pushback, there's several infrastructure that needs to be relocated like the towers for the and everything. So there's a lot of activities surrounding the mining activity, that's the reason why we see a diminishment and unit costs. However, it's going to take some time to see the long-term mining costs, not for this year. Renaud Adams: So what I could add to this is like at the early stage, we've seen some -- yes, we've seen some deficiencies, some areas that need some improvement. We put more capital this year addressing on like Bruno just mentioned, if you want to optimize your mining costs, well, you need to optimize your OE, your overall performance. To do that, you need a larger pit. You need like maintaining -- this has all been taken into account. It may not be all achieved in '26, as Bruno mentioned. But as we file and as we present our long-term plan, we will, if needed, integrate some additional improvement in '27, '28. But the objective is over the next -- with a big chunk in '26, but over the next 2 to 3 years. We really see a path forward with the possibility of reducing the cost and bringing Cote into one of the best unit costs for this large-scale Canadian. And then when you combine with the average grade and the possibility to uplift that we've seen the grade this year and the low strip ratio of Cote everything is in place at Cote as we optimize the cost to make it a very attractive overall all-in sustaining costs. We've discussed the royalty -- there's not much we could do more than we do have a provision of buyback, which we would really pay attention to as we unlock our full potential of this scenario. So we're in a good position. We appreciate that there's a lot of work to do. Bruno and his team this year, but we feel very confident that we have a path forward and we'll try to make it as much as possible this year, but it may extend a bit in '28. Operator: Our next question comes from Sathish Kasinathan from Bank of America. Sathish Kasinathan: My first question is on Cote. On Slide 11, you mentioned that the mine plan for Cote is likely to include stage capital. Can you maybe provide a bit more color on what it means? Are you still targeting the 50,000 tonnes per day run rate or maybe even more? How should we think about it? Renaud Adams: I think that the reference to the stage capital here is to being capable to focus from expansion to tailings down the road, to opening Gosselin. So what we're saying is that there is nothing need to do everything on a day 1 to make an expansion at Côté Gold. As a matter of fact, you -- the Cote itself is enough to justify the expansions and eventually Gossan. So when we say stages, we see now [indiscernible], Bruno and his team is accelerating some aspect in the pit and opening the pit and so forth. So that's going to be in place by the time. And we say '29 is a focus on the expansion, '29, '30 and we have enough tailings capacity in place. So there would be a stage in fact. So we just want to clarify that. It's not like you need to build everything and have everything in based on day 1. The capital will be aged capable to be fully funded through the free cash flow of the asset. Sathish Kasinathan: Okay. That is clear. Maybe one question on Essakane. So you received $171 million of cash this year at the start of the year, of which $50 million was spent was already use of buybacks. And you still have $219 million left from the last year's dividend declaration. So for the full year, is it fair to assume like a minimum of $390 million of share buybacks could be achieved in 2026 and depending on how much dividend is declared for this year, we could see potential upside to the number? Marthinus Theunissen: So we had $408 million of the shareholder accounts outstanding at the beginning of the year. And as you mentioned, we already received $171 million, again that back. We expect that remaining balance to be repaid by the end of the second quarter, during the third quarter. But then when we get into that period, we will be declaring the 2025 dividend where the shareholder account will be related again. So based on our projection, there would be more than enough shareholder accounts available this year to continue with the program where we can move money out of Burkina Faso every month as the asset generates free cash flow above its excess working capital. And then -- so the free cash flow attributable to IAMGOLD this year should -- you should be able to match that to buy back shares in the program. Sathish Kasinathan: Okay. Congrats on the strong quarter. Operator: Our next question comes from Anita Soni from CIBC. Anita Soni: Congratulation on strong quarter and strong year. I just wanted to ask a little bit more about Côté and Gosselin. I think you noted in the MD&A that there would be an update on the reserve -- another update on the reserves and resources for Gosselin in Q2. And my apologies if you addressed it in the opening comments, I would comment -- but... Renaud Adams: Thank you for asking, Anita on this. So it's cutting here. So sorry about that. So go ahead. Anita Soni: I was just going to say, what were you expecting to provide with the Q2 update? Renaud Adams: The -- thank you for asking this. As Bruno showed in his portion, Bruno talking about the mineral reserve and our resources. So not a surprise on the research side. It was just inflation as you know, like the big consolidating both Gosselin and Cote through. On the resources side, we've come quite a bit a long way and have delineated some but this is kind of an ongoing work. So to your point, we expect to complete probably late Q1 and maybe like we're talking about Q2 potentially, but the target is by the end of Q1, somewhere there. We would complete the resource update, if you call it, the final one that would serve for the plan. We're comfortably sitting in more than $18 million, but there is more drilling to be incorporated. There is a merge of the block models as well. We're still discussing the final price to be used and so forth, but we had this objective of the Saddle zone as well as Renaud just pointing out to me. So as you combine the block model, so you create that saddle zone that would drill as well. So it's not the final not to look at the resource update at Cote has the final word about our objective of $20 million, and we're still planning to discuss those results late Q1, early Q2. Anita Soni: Okay. And how much more drilling would that have incorporated versus what you just did? I think you converted 2 out of the 3 million ounces of inferred into M&I category. But how much more would that bring on stream. If you could just tell me like as a percentage of the drilling update? If you want to tell me they have the number of ounces that would be great to. Bruno Lemelin: We still have 29 -- 25 holes to be included. And we have also the campaign on the saddle zone that needs to be included as well. Renaud Adams: So enough -- and again, like the merge of the block model as well, like technically should also create some. So we feel very, very strong, Anita, if without giving a final number because we haven't seen it, but we feel very comfortable towards objective of $20 million. Anita Soni: Yes. And then I just want to follow up on the reserves and resources as well. I noticed the grade decline. Does that -- have you -- I'm just -- I guess, you've had positive grade reconciliation at the assets. How are you basically calculating your depletion at the asset? I'm just -- like are you just basically saying, okay, well, we -- we ended up -- we thought this ore body would be 1.2 and that being 1.5. So we're expecting the 1.5 off of the average. Is that the way you're doing it? Or did you include the positive grade reconciliation in the calculations. . Bruno Lemelin: Yes. So the -- we changed the block model and the block model that we'll be using this year has taken -- we had to do some adjustments. But moving forward, the block model is going to be Côté Gold a little bit more conservative. Therefore, that's the reason why you see that we are going down. It does not exclude the potency that we will see faster reconciliation specifically when you get those higher grades on like we were doing in Phase 7. What we're trying to cap a bit in a positive reconciliation in our future resources estimate. So we have something more about then comes over. Operator: Our next question comes from [indiscernible] from Scotiabank. . Tanya Jakusconek: Hello. Can you hear me? Renaud Adams: Yes. Tanya Jakusconek: It's Tanya. Yes. Just first of all, just at our time getting on and hearing the little beat so that my question is in queue. I have a few questions, if I could. I just wanted to follow up on Anita's question on the reserves and resources that's coming out on Cote and in Q2. So just so that I understand, so we're still targeting that $20 million out overall number. What the reserves and resources and other will show is just more of a conversion or an upgrade into the M&I and reserve category with those additional 25 holes. Is that a proper way to think about it? Renaud Adams: The way to look about it is we feel strong that when the exercise is done, we will achieve our objective of $20 million of MI and from which Bruno and the team will put the mine plan to it and convert as much as we can within an economic plan to reserve. So obviously, the reserve that we have release at the end of the year is only reflecting the all plan depleted. So we're moving from this to the new plant consolidated from which new economics might plan. So we're definitely going to see and expect a significant increase in reserve. We just need to complete the work. But the starting point will be hopefully a $20 million-plus MI resource base, and we feel very strong about the economics of those pits. So more to come, but we feel strong about a significant increase in reserves. Tanya Jakusconek: Okay. Okay. And then how should I be thinking about this capital because you talked about a lot of this capital now being spent with $85 million or thereabout at Cote this year. How should I be thinking of the study? And I think at one point, we were thinking of $100 million to $200 million in capital. How should I be thinking about the capital for all of this? . Renaud Adams: I guess if I would have all the detail, Tanya, we would have probably been a little more because we're still in trade-off. So the way to look at it is I think the growth capital that we're going to be deploying over the next few years should normally bring the pit to a point of expanded capable to provide for the -- now the mill itself, which will be the main capital of '29, '30, we're still in the trade-off and so forth. No, I do not believe you build an expansion today for $100 million to $200 million total capital but we believe that it could probably be achieved below the $500 million, but we still have to do the work. Tanya Jakusconek: Okay. I'll take a look further in depth. Just on 2 other things. Bruno, I think you gave some guidance for how the year is panning out for us quarter-on-quarter stable for both Essakane and Westwood. What about Cote? Bruno Lemelin: Okay. Fair question. Cote is going to be lower for the first half of the year because we have the maintenance plan for the HPGR change in March or April. That's going to be a 5-day shutdown. We will have supplement, find or material to feed the mill, but we're going to be running at a slower pace. We also have -- we did a very good end of the year 2025, and we took advantage of Q1 to take a lot of other maintenance. So overall, we need to expect Q1 and Q2 to be lower than Q3 and Q4. And generally, summertime at Cote is very good, like last year, Q2, Q3, Q4, we produced 36,000 tonnes per day, almost like 36,000 ounces a month in average. So that gives you a bit like the kind of seasonality that we have, like we have a seasonality due to winter conditions in Q1. In Q2, we do some planned maintenance on the HPGR, and after that, like, we are rolling until the end of the year. Tanya Jakusconek: Okay. So should I be thinking like a 45-55 or is that? Renaud Adams: Yes. I guess, anywhere between like the zone of around 40, 45, as you say. Definitely, H2 will be much stronger, season-wise, second crusher fully up and running HPGR and plus any other optimization that's going to come. So yes, I think it's fair to think that our second half could be at the 55% of the year. Tanya Jakusconek: Okay. And Renaud, I have you on for my one final question. Dividend, I mean we had talked on one of the previous conference calls that you were potentially thinking that once all this is done, the dividend plan could be implemented. Where are you on that? . Renaud Adams: I think we feel very strong that on the step by step. I mean, as Maarten discussed, I think the first thing first is on the share buyback. There is no doubt that let's call the Canadian platform would most likely be an excess cash as well in those prices, something we're going to revisit after with our Board at the end of Q2. I see how the share buyback goes. Is there an opportunity to increase the share buyback using a bit of the Canadian excess? Do we start in operating dividend. So I think we're going to have this conversation post Q2 for the second half as we realize the free cash flow on the Canadian side as well. So we feel very strong that is I can should only go towards share buyback. The question is after what is the next in a row. And I think we're going to postpone the decision for the second half of the year. Operator: And this will conclude today's question-and-answer session. At this time, I'd like to turn the floor back over to Graeme Jennings for closing remarks. Graeme Jennings: Thank you very much, operator, and thanks to everyone for joining us this morning. As always, should you have any additional questions, please reach out to Renaud and myself. Thank you all. Be safe, and have a great day. Operator: This brings to a close of today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Hello, and welcome to FirstEnergy Corp. Fourth Quarter 2025 Earnings Call. A reminder, this conference is being recorded. It is now my pleasure to turn the call over to Karen Sagot, Vice President of Investor Relations. Please go ahead, Karen. Thank you. Karen Sagot: Morning, everyone, and welcome to FirstEnergy Corp. year end 2025 earnings review. Our earnings release, presentation slides, and related financial information are available on our website at firstenergycorp.com/ir. Today’s discussion will include the use of non-GAAP financial measures and forward-looking statements, which are subject to risks and uncertainties. Factors discussed in our earnings news release, during today’s conference call, and in our SEC filings could cause our actual results to differ materially from these forward-looking statements. The appendix of today’s presentation includes supplemental information, along with the reconciliation of non-GAAP financial measures. Please read our cautionary statement and discussion of non-GAAP financial measures on Slides 2 and 3 of the presentation. Our Chairman, President, and Chief Executive Officer, Brian Tierney, will lead our call today. He is joined by K. Jon Taylor, our Senior Vice President and Chief Financial Officer. Now it is my pleasure to turn the call over to Brian. Brian Tierney: Thank you, Karen. Good morning, everyone. Thank you for joining us today and for your interest in FirstEnergy Corp. 2025 was a transformative year for our company. We executed on our plan, achieved several important milestones, and positioned FirstEnergy Corp. for long-term success in one of the most dynamic periods in our industry’s history. We delivered strong financial results across all of our key metrics. We advanced key regulatory strategies in Ohio, and we reinforced our foundation for sustainable financial growth, resulting in a positive ratings action at S&P. In addition, we are announcing a $36,000,000,000 five-year capital investment program focused on improving customer reliability and grid resiliency. K. Jon Taylor: This positions the company to deliver a core earnings per share compounded annual growth rate near the top end of 6% to 8% from 2026 to 2030. We are also pursuing significant incremental investment opportunities over the planning horizon. These include new generation investments that will provide meaningful benefits to customers in West Virginia and additional regional transmission investments that are critical to maintaining grid stability. Today, we are reporting 2025 GAAP earnings of $1.77 per share compared to $1.70 per share in 2024. Core earnings were $2.55 per share, at the top end of our revised and increased guidance range for the year, and an increase of 7.6% compared to 2024. We deployed $5,600,000,000 in customer-focused capital investments in 2025, an increase of nearly 25% versus last year and approximately 12% higher than our original plan for the year. Our distribution reliability metrics improved 10% across the system compared to 2024. Notably, this includes significant year-over-year improvement in our New Jersey and Pennsylvania service territories, where we have commission-approved investment programs. Brian Tierney: Finally, K. Jon Taylor: we declared quarterly dividends totaling $1.78 per share, a 5% increase from 2024. This growth is consistent with our plan of providing a solid dividend yield and an attractive total shareholder return. Are pleased with our performance in 2025, and we are committed to building on the success as we deliver on our long-term financial plan. Our $36,000,000,000 capital program represents a nearly 30% increase from our previous five-year plan. It requires only modest amounts of equity to fund growth, which John will talk about later. This capital program was designed through a coordinated approach that aligns enterprise strategy with insights from our five business units. It addresses state-mandated policies and local needs, and it reflects our commitment to affordability while meeting customer expectations for reliable service. The updated plan includes $19,000,000,000 of total transmission investments across our stand-alone transmission and integrated segments, a 35% increase from our previous plan. Companywide, expect our updated investment plan to translate into 10% rate base growth over the planning period. Our strategy, focused on prioritizing investments for our customers and supported by constructive regulatory jurisdictions, positions us well to deliver a core earnings CAGR near the top end of 6% to 8%, through 2030. Turning to Slide 7. We see opportunities for incremental investments that will further support our customers in the region. This includes our planned generation investment in West Virginia. Last week, we filed our request for the 1.2 gigawatt combined cycle natural gas generating facility, which will be located in Maysville, West Virginia. We ran the build-own-transfer RFP and considered that option against our self-build engineering, procurement, and construction plan. From that analysis, we determined using an EPC approach is the most prudent and cost-effective solution for our West Virginia customers. We anticipate receiving approval in the second half of the year, and we expect the new facility to be operational in 2031. Once approved by the West Virginia Public Service Commission, we will include this $2,500,000,000 investment in our financial plan. This will increase our consolidated rate base CAGR from 10% to 11%. When we announced this investment last November, Governor Morrissey challenged us to do more. Brian Tierney: I accept that challenge. K. Jon Taylor: And with approval of this project, we will seek to add additional generation in the state to support growing data center activity. Moving to Slide 8, we also see incremental opportunities in our transmission business. Our transmission operations are among the largest in PJM and encompass critical interconnections with strategic high voltage corridors and will require ongoing investment to support load growth. Began our transmission investment program in 2014. Over the last twelve years, we have deployed $17,000,000,000 to replace aging equipment and upgrade the health of the system. This work has addressed about one third of our transmission lines and major substation assets. Substantial investment will be required as approximately 70% of the lines and 30% of substation assets are expected to reach end of life over the next decade. Additionally, we have an ongoing opportunity for growth associated with the regulatory required projects, such as investments awarded to FirstEnergy Corp., as part of the most recent PJM open window process. Since 2022, our stand-alone transmission and integrated segments have been awarded approximately $5,000,000,000 in competitive transmission projects. Our ideally situated transmission system and our transmission planning expertise position us to continue our success with the competitive open window process. We expect the upcoming 2026 open window solicitation will be similar in scope and scale to what we have seen in the past years. We expect the PJM board to vote and approve the next round of projects in the 2027. At that time, we will update our investment plan to include any awards. Turning to Slide 9. We make the necessary investments in a reliable and resilient grid that drives economic growth for our communities, we are actively addressing affordability. On average, we control just 32% of the total customer electric bill in our deregulated states. The generation component represents about 60% of the total bill. Across these states, our customer bills are approximately 20% below the in-state peer average and remain at or below 2.5% of our customers’ share of wallet. In fact, with our capital plan, by the time we get to 2030, our bills are expected to remain below the current rates of our in-state peers. We are proud of the value we provide, and affordability is top of mind. We are committed to doing what we can to manage customer bill impacts. This includes continued discipline, controllable costs, which is reflected in our baseline O&M savings of 15% or over $200,000,000 since 2022. We are also working with state regulators and leaders to identify opportunities to mitigate bill increases. We are advocating for initiatives to ensure generation supply better aligns with customer demand, and we are reviewing all programs that can provide relief to customers. In Ohio, a recent legislative change reduces property tax assessments for our utilities by about $100,000,000 in 2027, which will have a positive impact on customer bills in our upcoming three-year rate plan. As we make critical investments to provide reliable and resilient service, we are committed to ensuring our rates remain affordable. I am confident in our plan, our management team, and our ability to deliver on our commitment. Our execution in 2025 was strong, and we are focused on continuing that momentum. Now turn the call over to John. Thanks, Brian, and good morning, everyone. Today, I will review our financial accomplishments and results for 2025 and plan regulatory proceedings for 2026. Brian Tierney: But spend most of my time reviewing the expectations and key assumptions in our five-year plan. As Brian mentioned, 2025 was a very important and successful year for FirstEnergy Corp. K. Jon Taylor: We delivered on key financial metrics, including core EPS, Brian Tierney: base O&M, K. Jon Taylor: capital investments, Brian Tierney: and cash from operations. Can review more details about our results, including reconciliations for core earnings and business segment drivers, the strategic and financial highlights presentation that was posted to our IR website yesterday afternoon. Core earnings for the year came in at $2.55 per share, which is close to 8% above our 2024 results, and 2% above our original guidance midpoint of $2.50 per share. This was largely driven by new base rates K. Jon Taylor: and formula rate investments. Brian Tierney: Residential customer demand that was 3% above 2024 levels, and strong financial discipline in our operating expenses that allowed us to execute on significant additional maintenance work that was originally scheduled for future years. On a consolidated basis, our return on equity in 2025 was 9.8% on rate base of $27,800,000,000. K. Jon Taylor: Versus 9.4% on $25,600,000,000 in 2024. Investments were $5,600,000,000 for the year, which are 25% above 2024 levels, and 12% above plan. Brian Tierney: These include nearly 75% in formula rate investments, with 50% in FERC-regulated transmission investments where total FEO and transmission rate base increased 11% year over year. K. Jon Taylor: Our financing plan included cash from operations of $3,700,000,000 was more than $800,000,000 above 2024 levels, Brian Tierney: subsidiary debt issuances of $3,400,000,000, a $2,500,000,000 convertible debt transaction in the second quarter. In November, we received constructive regulatory outcomes in Ohio, including in our 2024 base rate case, which paved the way for an upgrade from S&P to BBB flat at FE Corp on a senior unsecured basis. 2025 was a pivotal year for FirstEnergy Corp. in terms of delivering on our plan, K. Jon Taylor: and we remain focused on meeting our commitments to investors going forward. Brian Tierney: Turning to our regulatory strategy. Plan to file traditional base rate cases later this year in both Maryland and West Virginia. In West Virginia, we plan to file in the second quarter to reflect a $1,000,000,000 increase in rate base since 2022. Our current rates are based on a rate base of $3,200,000,000, K. Jon Taylor: an equity layer of 50% and an allowed ROE of 9.8%. Brian Tierney: In Maryland, we plan to file in the second half of the year to reflect investments we have made since 2022, K. Jon Taylor: Our current rates include rate base of nearly $700,000,000 with an equity layer of 53% and allowed return of 9.5%. In Ohio, we expect to file our three-year rate plan early in the second quarter, Brian Tierney: While we appreciate getting to a conclusion in our 2024 base rate case, are looking forward to filing under the three-year rate plan with four test years to ensure timely recovery of critical investments we need to make on behalf of our customers. All three of these cases, we anticipate requested rate increases at or below annual inflation as compared to the current residential bill, where on average, our monthly bills are approximately 20% below the in-state peer average. Lastly, in West Virginia, our pro proposed cost recovery for the generation investment consists of two phases. First, during the construction phase, we are proposing a generation surcharge based on precedent in the state designed to recover our total financing cost with a requested equity return at our current authorized return of 9.8%. Then after the power plant is placed in service, we would look to transition the recovery from a surcharge to base rates at a future base rate case. As part of the financing plan for this investment, we filed an application with the U.S. Department of Energy, seeking a low-interest loan under the Energy Dominance Financing Program. Expect approval before the end of the year, which would save customers more than $200,000,000 over the thirty-year life of the loan versus traditional financing. K. Jon Taylor: Based on our forecast, once in service, this investment is expected to have minimal impact to customer bills. Brian Tierney: Moving to our five-year plan. Our $36,000,000,000 capital investment plan is an increase of $8,000,000,000 or nearly 30% from our prior five-year plan. As Brian discussed, this program results in expected rate base growth of 10% through 2030, led by transmission investments totaling $19,000,000,000, customer-focused distribution investments to strengthen and modernize the grid. 100% of our capital plan is focused on improving customer reliability and resiliency of the system, and only consists of awarded, approved, and contracted projects. We increased transmission investments by $5,000,000,000 or 35 from our previous five-year plan. This includes transmission investments in both our stand-alone transmission and integrated segments. The plan also includes regional transmission projects from the 2025 and prior PGM open windows totaling $4,000,000,000. Total distribution investments in our distribution and integrated segments are increasing 25% or $3,000,000,000 from the prior plan. K. Jon Taylor: This largely reflects increases for reliability investments and core infrastructure upgrades, Brian Tierney: the largest increase in Pennsylvania, where we are accelerating investments under the LTIP program, and are recovered through the existing distribution system improvement surcharge. This investment plan includes targeted customer benefits both on the transmission and distribution systems and excludes the significant incremental investments we are planning in West Virginia and additional upside in transmission. Moving to core earnings, we are well positioned to deliver compounded annual earnings growth near the top end of our 6% to 8% growth rate from 2026 to 2030. K. Jon Taylor: This sustainable long-term growth starts with our $36,000,000,000 capital investment plan, Brian Tierney: with 75% in formula rate programs, and 10% rate based growth. Targeting a consolidated ROE of 9.5% to 10% through the planning period. Our load forecast includes active and contracted customers, resulting in 2% customer demand growth, which is largely driven by a 5% increase from industrials, that typically are on a demand-based not volume-based charge. As our data center pipeline becomes contracted, this will be incremental to this forecast both from a customer demand and capital investment perspective. As we have demonstrated in the past, our plan includes financial discipline with our base O&M expenses, K. Jon Taylor: with modest increases of 1% to 1.5% per year. Brian Tierney: Operating expenses will continue to be a focus of the management team, as we look to deploy technology, artificial intelligence, and continuous improvement initiatives to further help offset planned increases. Finally, our financing plan targets strong investment-grade credit metrics K. Jon Taylor: through cash from operations, Brian Tierney: long-term debt issuances, and modest levels of equity or equity-like securities. That we have discussed previously. Our cash from operation funds 65% of our total investment plan and includes a modest impact K. Jon Taylor: from expected deductions from tax repairs on the corporate alternative minimum tax. Brian Tierney: Because of our tax position, including existing AMT deductions, the expected impact of tax repairs on cash flow is less than 2% and does not change our overall plan. Our debt financing plan includes $16,000,000,000 in new long-term debt issuances with FE Corp debt as a percentage of total debt at 20% versus 25% at the end of last year. And our equity needs are up to $2,000,000,000, which includes a $100,000,000 annual DRIP program, which has historically been in place. K. Jon Taylor: We will explore all options to fund our equity needs, including hybrid instruments, Brian Tierney: and anticipate any annual common equity issuances K. Jon Taylor: including for the DRIP Brian Tierney: to be approximately 1% of current market cap K. Jon Taylor: on average through the forecast period. Brian Tierney: In closing, we believe we have a compelling story and value proposition. Our plan is strong, focused on critical investments with significant incremental opportunities. We have a proven track record of executing on regulatory strategies that are focused on the customer and provide solid returns to our investors. And we have demonstrated our ability to be disciplined with our cost structure not only to minimize regulatory lag, but to provide benefits to customers. We believe we provide a compelling low-risk value proposition to investors, with a total shareholder return opportunity of approximately 12% with upside potential. We are committed to meeting our commitments for our customers, our communities, and our investors and are excited about the future. Thank you for your time. Now let us open the call to Q&A. Thank you. We will now be conducting a question and answer session. May I ask you please limit yourself to one question and one follow-up to allow as many as possible to ask questions? If you like to ask a question at this time, you may press star 1 on your telephone keypad. A confirmation tone indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. And our first question comes from the line of Nick Campanella with Barclays. Please proceed with your questions. Nick Campanella: Hey. Good morning. Thanks for all the updates. K. Jon Taylor: Good morning, Nick. Brian Tierney: Hey. Morning. Nick Campanella: So appreciate, the disclosure, six to eight at the high end now. You David Keith Arcaro: West Virginia could be another $1,200,000,000.0 incremental to the plan and that would bring your wrap CAGR to 11%. Just what is the incremental financing that would be associated with that? Given my understanding is there is kind of a proposal for, cash CWIP. And would this kinda put you comfortably above the 6% to 8% range? You know, say by 2029, or how should we kinda think about that? Thanks. Yeah. Nick, this is John. I will take the financing piece of that. So K. Jon Taylor: you know, obviously, the cash recovery will help. Pretty significantly. So I expect that to be 15% of the total investment. We will target 50% of the total investment with the Department of Energy loan with the rest likely being new equity to fund the investment. K. Jon Taylor: And and then on the growth Nick, as as we get these incremental investment opportunities coming in, whether it is generation or transmission, we will be updating, what growth looks like, as we put those in the plan. Nicholas Joseph Campanella: Okay. Okay. So I will take 15% of that CapEx. Thank you for that. And then maybe just I guess there is just been a bigger focus on Pennsylvania from investors given the various comments out of Governor Shapiro. And I know the distribution plan across the company is up. Pennsylvania, I think you are doing $6,700,000,000.0. I also understand your rates are below average there. But just how is the increase CapEx impacting your earned returns in the state? Just relative to that 10 that you show on the slides? And do you think you are going to be going back in for a case there? K. Jon Taylor: Thanks. Brian Tierney: Yes. K. Jon Taylor: So, Nick, it is not that long that we have come out of a rate case there. And, and and the big part of that rate case was investment in the distribution system. And so the increases that we got were to fund that investment, and we are actively doing that. We have a very targeted long-term investment program there. That has been approved as well. So the focus for us in Pennsylvania has been incremental investment Nick Campanella: in K. Jon Taylor: the distribution system to drive improvements and reliability. And that is what we are seeing in the plan. So, that that is the the what our focus has been. We are going to go in when we need to again. To to reflect that increased rate base that we have been adding to since the last rate case. But the focus in both Pennsylvania and New Jersey has always been we want to see the investment coming from the company in those states to drive reliability, and that is what we are doing. And that does leave us in a position where we have to keep going in for rate cases, to update the rate base and and our cost structure as well. But you know, in whether it is in Pennsylvania, New Jersey, all of our states, we are keenly focused on affordability, and that has us focused on things like our own O&M and then other bills charges. We mentioned tax in Ohio coming down that are flowing through the rates, but you know, investment and affordability are the things that are top of mind for us in Pennsylvania. And our other states. K. Jon Taylor: Yeah. Nick, and I would just add on that roughly 45% of the that we are making in Pennsylvania is under the LTIP program. Which is recovered through the DISC surcharge. So that provides for know, interim recovery of our investments and really helps us kinda with base rate case planning and that type of thing. Brian Tierney: Thanks for all the thoughts. K. Jon Taylor: Thanks, Nick. Brian Tierney: The next question comes from the line of Shar Pourreza with Wells Fargo. Please proceed with your question. K. Jon Taylor: Hey, guys. Good morning. Morning, Shar. Morning. Brian, I just want to make sure we we have the numbers correct here. So the CapEx numbers were obviously healthy. The rate base growth is likely K. Jon Taylor: little bit closer to 10.4%, right? Just as you are adding West Virginia remind us, does that sort of get you to closer Ross Allen Fowler: to 11.4%? Because I know we are getting quoted on 11%. But I think West Virginia is probably a 100 basis points accretive to that. And then how do we sort of think about the delta between 11.4% when you add West Virginia in it and your EPS growth where you are already at the higher end. So I guess another way to ask it is, what is the amount of lag between rate based growth and the newly guided let us just say, 11.4% rate based growth when you add West Virginia in there. K. Jon Taylor: Yeah. So, Nick, as we are looking at this, you know, we are trying to give transparency and insight into what is in the plan today and then what are the things that could be added to the plan and what that those additions would look like. Your math is about right on the 10.4 to eleven point four. And we have always said we will update the CapEx plan. We will update earnings as things like and incremental transmission comes in. But what what we are not going to do is put things in there that are speculative and not approved yet and then have to take them out of the plan. So our idea is what the plan is today. What the incremental could be. And if we need to change what the earnings growth rate is, as we add things to the plan. We will do that at that time. Ross Allen Fowler: Got it. Okay. Thanks for clarifying that because I know Ross Allen Fowler: Brian, there is a lot of confusion out there with 10% versus 10.4%. There is a big difference between 10% and 10.4 And then just lastly on West Virginia, can you just expand on the incremental opportunities post the current project? So what is the potential timing there, the turbine supplies, where the DC conversations etcetera. Thanks. K. Jon Taylor: Yeah. Thanks for that, Shar. So as we look at our state K. Jon Taylor: and we look at states that are wanting us to invest in regulated generation, West Virginia stands at the top of that. I mentioned the governor’s challenge to us. To do more. He has a 50 gigawatts by 2050 goal that he is, searching for. And if we get Ross Allen Fowler: know, constructive regulatory approval here, K. Jon Taylor: we are going to be going back into West Virginia and looking at ways that we can add another 1,200 megawatts, hopefully dedicate that to data center load talking with hyperscalers, with developers about doing that. And the relationships that we are beginning now with suppliers like Siemens on the turbine side, in terms of what we are doing with the first EPC that we are going forward. We will leverage those relationships, going forward for the incremental build. But when we look at our universe of opportunity to invest in generation, West Virginia said to us, we are open for business. Want you to invest here. And as a regulated, fully integrated utility there, looking to drive economic development we want to be a key part of that for our customers and and the state of West Virginia. Ross Allen Fowler: Got it. Appreciate it. Thank you, guys. K. Jon Taylor: Thanks, John. Operator: Our next question comes from the line of David Arcaro with Morgan Stanley. Operator: Please proceed with your question. Brian Tierney: Hey. Thanks so much. Good morning. K. Jon Taylor: Good morning, David. Brian Tierney: Wondering if you could touch on New Jersey and the backdrop there, kind of expectations, you know, for, timing of your next rate case and just overall your perspective following the executive orders and some of the changes we could see ahead in the regulatory backdrop? K. Jon Taylor: Yes. So, obviously, affordability is front and center for, Governor Sherrill. We have been working with her and her staff to look at ways that we can address affordability in the states, what are items on the bill that we can either reduce or eliminate, but, again, when we were in our last rate case there, the the real focus of that was the worst performing circuits that we had and the big point of that rate case was, are we going to make the incremental investment to drive increased reliability in those circuits? We have been doing that since the last rate case, and we are seeing related improvement in reliability there, which is what New Jersey wanted from that case. So we are going to continue with that activity. We are going to work constructively with the governor and and her staff with the BPU and others to address affordability. But, ultimately, we will have to go back in for another rate case to keep that investment coming. Our rates in New Jersey are significantly below our in-state peers, and even with the investment that we have planned there, we anticipate to still be below K. Jon Taylor: our in-state peers. K. Jon Taylor: But we have to improve reliability. We are singularly focused on that. And affordability at the same time. So we are going to work constructively with everyone to time a next rate case, and and try and maintain that affordability as well. Brian Tierney: Got it. Okay. Thanks. That is helpful. And then could you touch on the outlook that is embedded in your plan for ROEs? I guess, looks like you are you are assuming, you know, basically flattish, kinda holding ROEs steady throughout the plan. I wanted to confirm that if you are around a 9.8 now and you are you are planning on just holding that essentially between 9.5 and 10 going forward. I guess, could you touch on kind of the key levers there, key moving pieces, as you are, the out the outlook for earned ROEs? K. Jon Taylor: Yes. So thank you for that, David. We are we are continuing to be in that target in that 9.5% to 10% range. Our goal is to be as close to our authorized returns as possible. Given the amount that we are investing, we are going to be going in regularly for rate cases, because of the magnitude and the investment that we are making to drive reliability. But we are confident that we will be able to stay in that nine and a half to 10% range with the flight of rate cases that we have and the investment that we are making today. Brian Tierney: Okay. Great. Thanks so much. K. Jon Taylor: Thank you, David. Operator: Our next question is from the line of Ryan Levine with Citi. Please proceed with your question. David Keith Arcaro: Was hoping you would be able to give some color around the execution ability of your $36,000,000,000 CapEx plan. To sufficient internal engineering and project management capability to deliver on the K. Jon Taylor: step up of CapEx, especially in transmission. Brian Tierney: Given labor tightness? And how are you seeing in house versus contractor labor relations to be able to deliver on this? K. Jon Taylor: Yeah. So thank you for the question, Ryan. K. Jon Taylor: We are very confident in our ability to deliver against the plan especially the transmission, side of it. We are we are having considerable growth. We have been investing in that side of the business significantly since 2014. We have the relationships with contractors, labor, suppliers, to allow us to do that. And we are ramping up those relationships as our, investment is ramping up. But project management, discipline, supplier relationships, all those things are key to us executing against our plan. And Mark Marzynski and his team on the transmission side are laser-like focused on our ability to deliver, and, and things are going according to plan there. So, it is a heavy lift, no doubt. But, we have the expertise and relationships, to deliver. So we are very confident in our ability to make it happen. Brian Tierney: On that front, are there certain to ask aspects that you are most constrained on? And are there any external Michael P. Sullivan: external markers that we could track the progress around the execution? K. Jon Taylor: I do not think so. I mean, we are starting this see on the distribution side, we are starting to see the tightness in the supplier market is starting to ease. Suppliers are looking for people that they will view as strategic partners that they can look to be, you know, delivering significant volumes of demand to them going forward. And we are obviously going to be one of those players. We have we have done things like made orders out in time, things that are no regrets. On the transmission and distribution side. And then we have Chris Beam who is working very hard on the generation side, fostering relationships with Siemens as our OEM on the key component of the generation that we have. So it is tight out there. It is not as tight as it was during COVID. But, but we believe we have the the relationships, to get us through, what we need to do to drive the growth that we have planned. Michael P. Sullivan: Okay. And then one last unrelated question. How are you assessing the potential impacts from the Maryland Lower Bills Act? And the worse, similar affordability driven legislation in that state? Ross Allen Fowler: Yeah. So K. Jon Taylor: you know, we are seeing this across our system where people are very, very focused on affordability, and we are engaging all of our jurisdictions and legislatures in that discussion. We are well positioned relative to our peers on that. We talked about on the call that Ross Allen Fowler: you know, our part of the bill in our deregulated states, it is only about K. Jon Taylor: 32% of the bill with generation being about 60%. So there are some obvious places to focus on where the increases in the bill have come on, which is why we are supportive of K. Jon Taylor: extending the, the capacity auction caps Ross Allen Fowler: I think it would be beneficial to our customers to even lower K. Jon Taylor: those caps for existing generation, and we have been supportive of things like a second auction that would that would bring new generation, to the fore, which is what is needed. So K. Jon Taylor: we have been focused on affordability on our cost structure. K. Jon Taylor: And looking for ways to engage with all stakeholders to make sure that electricity is affordable, to our customers going forward. Ross Allen Fowler: Thank you. K. Jon Taylor: Thank you, Ryan. Ross Allen Fowler: The next question is from the line of Steve Fleishman with Wolfe Research. Operator: Please proceed with your questions. K. Jon Taylor: Hey. Good morning. Thanks for the update. K. Jon Taylor: Morning, Steve. K. Jon Taylor: So just to follow-up on the West Virginia maybe just a little more specifics on what what do they actually need to approve? In this order? Ross Allen Fowler: Just just K. Jon Taylor: that the plan is needed and K. Jon Taylor: the cost levels and and, I guess, the CWIP rate making? Are those the key items that need approval? Yeah. So it is a certificate the exact timing. Michael P. Sullivan: The exact timing to, like, any rough sense of when in the second half? Ross Allen Fowler: Yeah. So K. Jon Taylor: what they are going to approve is is a certificate of need in public necessity. We are asking for the interim financing, in the plan. Where we get AFUDC, CWIP we have asked for. So what that will be during the plan, and we have also proposed what our financing plan will be for the plan both on an interim basis and and a long-term basis. And so that is why we are moving forward with the DOE approval there. I think the commission has up to, a year to act on this. We have heard that they are interested in acting much quicker than that. To get the plant online even sooner. And so we do anticipate that it will be again, I cannot be more specific than the second half, K. Jon Taylor: and we are expecting a procedural schedule on the, filing within the next month. So, they are K. Jon Taylor: I would say West Virginia is fast tracking the investment because they know how important it is to the economic development in the state. And I think you are seeing that everywhere from the governor’s interest in making sure that the investment is made right down to the commission. I think they are going to do things right, I think they are going to make sure it is it is it is needed and dot their i’s and cross their t’s, but I think they are going to be moving with dispatch. Michael P. Sullivan: Okay. Great. That is helpful. Brian Tierney: Then one other question just on the equity plans. K. Jon Taylor: Could any color on Brian Tierney: the $2,000,000,000 up to $2,000,000,000 kind of the the timing Ross Allen Fowler: of that. K. Jon Taylor: Is it kind of ratable over the period? Roughly Brian Tierney: Any color on that? K. Jon Taylor: Yeah, Steve. It is it is it is pretty much ratable over the over the five-year period. Beginning in 2026 with about 1% of our total market cap with with and that includes the the DRIP program that has been in place historically. But I I would plan on pretty ratable issuances over the five-year planning period. And, again, you know, that $2,000,000,000 includes potential equity-like securities. Know? So we will look at hybrids to kinda know, reduce the common equity issuance need. And we will look at that over this year. Brian Tierney: Okay. Great. Thank you. Ross Allen Fowler: Thanks, Steve. Operator: Our next question comes from the line of Carly S. Davenport with Goldman Sachs. Please proceed with your questions. Carly S. Davenport: Hey. Good morning. Thanks for taking the questions. Morning, Carly. Just on the, transmission CapEx piece of the plan. Can you just talk a little bit about what portion of the near-term spend, so say 2026 to 2028, is is tied to projects with right of way or siting and permitting that are in advanced stages versus still in earlier stages? K. Jon Taylor: Yeah. So everything that we have that is K. Jon Taylor: in the plan, Carly, is either approved by a commission, does not need approval, or we have clear line of sight to permitting to getting it done. So if it is in the plan, there is very high confidence that all of the approvals necessary are either received or in flight, and we anticipate getting them in the near term. So if there is a a long putt on something or or we do not have line of sight to that being in service and the dates that we are talking about it, it is not in the plan. And we have a big enough portfolio of projects. So if something happens on one project in particular, we can advance another and and do the like and have that flexibility over the planning period. But we are extremely confident in what is in the near-term part of that plan. And, if we are still awaiting approvals or the like, what we talk about with the PJM open windows, then it is not in the plan yet. Carly S. Davenport: Great. Okay. That is clear. Thank you. And then just a follow-up on on the affordability questions. I know in the slide you had mentioned that you expect bills to remain below in-state peers throughout the planning period. Is there anything specific that you can provide on a sort of percent bill inflation target that you would expect over the plan period? K. Jon Taylor: Yeah. We we anticipate it to be below inflation. So we anticipate that the share of wallet and the like will stay the same. K. Jon Taylor: But, you know, our our affordability Ross Allen Fowler: position is really one of our strengths. K. Jon Taylor: And and it is something we are going to focus on. Peep people are always concerned about oh, my bill is going up x percent. We are focused on making that as small as possible and keeping a very modest share of our customer’s wallet. As we go forward, and that that ranges significantly from places where we have you know, K. Jon Taylor: wealthier customers to K. Jon Taylor: places where we have customers closer to or the mean average income but we are very sensitive to that affordability and doing everything we can on our cost structure side. And on the build components that we are working with the various commissions on to make sure that, the impact to customers is is as low as possible. And certainly trying to keep that below inflation. Carly S. Davenport: Got it. Okay. Thank you so much for the color. K. Jon Taylor: Thanks, Carly. Operator: The next questions are from the line of Jeremy Bryan Tonet with JPMorgan. Please proceed with your questions. Michael P. Sullivan: Hi. Good morning. K. Jon Taylor: Good morning, Jeremy. Ross Allen Fowler: I just want to, sorry, clarify real quick on the CCGT financing. Michael P. Sullivan: As far as the components there. There is 50% DOE loan and then remaining 50% what what are the components there? K. Jon Taylor: Yeah. So so you are right. The the loan, we would target 50% of the total investment value. And then if we get the approval of cash recovery during the construction phase, that would fund about 15% of the overall investment, and then the rest which would be about 35%, would be new equity needs. That we would have to put into the plan. Michael P. Sullivan: Got it. Thank you for that. Ross Allen Fowler: Then just want to David Keith Arcaro: pivot towards earned ROEs at this point. I am just wondering, I guess, where you see the biggest gap versus allowed in, I guess, key focus going forward, which which jurisdictions have, you know, the earn returns? Brian Tierney: Earn returns so low, Ross Allen Fowler: authorized. K. Jon Taylor: So it is all all things you would expect Jeremy. The places where you see us going in for rate cases, are the places where our investment has driven down the earned ROE, and that is why you know, clearly why we are going in. John talked about that in his remarks. And then we have also talked about the timing for when we might go in ultimately for New Jersey. But it it is the places where we are making the incremental investments, Michael P. Sullivan: where we K. Jon Taylor: lag a little bit to the incremental investment that we are making, and we just have to refresh that by going in for for K. Jon Taylor: new rate cases. Yeah. The other thing I would say, Jeremy, if you look at our overall plan, I mean, we we are in jurisdictions that have formula rate recovery mechanisms. So 75% of our total investments are in formula rate programs. So if you think about the impact on growth risk with respect to that those programs. It it drives a healthy amount of of the growth in the plan with base rate cases being you know, less of a contributor the overall scheme of things. So, really, most of the growth in the plan is driven by the formula rate investment programs. With a lesser extent from from base rate cases. David Keith Arcaro: Got it. Thank you for that. And just a last quick one, if I Michael P. Sullivan: could. You know, the David Keith Arcaro: obviously continues to be a lot of focus on the PJM auction. Michael P. Sullivan: And how this might evolve in the future. Just wondering any thoughts you might share there in Epi’s potential role if a regular generation or otherwise you know, might, you know, become a something that Effie would look at more in the future. K. Jon Taylor: So, Jeremy, it is still early days in the stakeholder process. I think it just began, yesterday or the day before, continuing today. You know, the stakeholder process in PJM is a really, really difficult one. But the key things that we are going to be focusing on is affordability for our customers. And so as you look at the key things that are going to play out, K. Jon Taylor: in the stakeholder process, it is going to be K. Jon Taylor: how much generation are they looking for, what the timing is going to be, how it is going to be paid for, and who is going to bear the cost. Like, all the basic things that you would look for. So we are involved in the stakeholder process. We are going to continue to be involved. And and first and foremost, we are going to be looking out for affordability Ross Allen Fowler: for our customers as we work our way through that. In terms of FirstEnergy Corp. and our interest in in, K. Jon Taylor: in regulated generation. You you know, look at our states, and you have states where, Ohio just passed legislation saying that the utility cannot own regulated generation. And then I think it would be difficult for us to in places like New Jersey and Maryland. So that really leaves us then with West Virginia where we have told you what our plans are. We want to get this one approved, and then if West Virginia would like, we are interested in investing incrementally more in that state, and that leaves you with Pennsylvania. And, and, again, we do not have a path to seeing regulated generation in that state yet. But if if they would like us to consider it, we we would be willing to look at it. But our clearest path to helping with that issue is Ross Allen Fowler: one, what we are doing in West Virginia, and then, two, what we are doing in the stakeholder process at PJM. Brian Tierney: Got it. That is helpful. I will leave it there. Thanks. Ross Allen Fowler: Thanks, Jeremy. Operator: The next question is from the line of Paul Patterson with Glenrock Associates. Please proceed with your questions. Michael P. Sullivan: Hey. Good morning. K. Jon Taylor: Morning, Paul. Michael P. Sullivan: Just on the K. Jon Taylor: on the transmission, when I look at Slide 7, Michael P. Sullivan: is K. Jon Taylor: how much of this, I guess, is demand driven I mean, is that part of the 20%? Or is this Ross Allen Fowler: really pretty much just K. Jon Taylor: just you know, replacing the aging issue, the the the serve the reliability issue. And also just in respect to New Jersey is is the offshore wind thing still going on there? Is that still part of the plan that that tri collector K. Jon Taylor: project and stuff or K. Jon Taylor: should we think of that? Let me let me start with that last part. We are we are working with New Jersey and PJM to modify what portions of that plan are no regrets and will be beneficial to New Jersey and PJM even without the offshore wind component of that. So we are working to make those modifications that are agreeable to both New Jersey and PJM to make sure that, we are investing in what they want us to invest in, and it is no regrets regardless of K. Jon Taylor: the offshore wind. So that is that is in process, as we speak. K. Jon Taylor: If you look at the rest of the transmission, a lot of it is demand driven, but a lot of it is aging infrastructure as well. So if you look at the $5,000,000,000 that we have gotten from the open window process, since 2022, I I would say that is all demand driven. And so that is what are data centers doing what is happening with just demand across the PJM system. And they are responding to that. And that is, you know, clearly $5,000,000,000 of of what is in the plan that we have been awarded. And then if you look at the the rest of what we are doing, you know, we have made significant investments since 2014, but have only addressed about 30% of the system. And about you know, 60% to 70% of the system is going to have the end of its useful life in the next ten years. And so that is a huge amount of what we are spending on the, on the transmission investment. And those are things that we have to do for reliability. We have to do for economic development, and do not require a lot of incremental approvals for us to make those investments. K. Jon Taylor: Yeah. Paul, the other thing I would add is if you if you look at our data center pipeline, if you look at the 13 gigawatts that we have in the pipeline through 2035, obviously, that is not in our plan today. But each gigawatt that is added to you know, the the contracted or or or active demand would probably drive know, $250,000,000 or so of incremental capital investments on the transmission system. K. Jon Taylor: Okay. And and just in terms of the cost allocation, when it and that, I guess, that is determined by basically by by retail jurisdictions. Should we think of a lot of this CapEx being being absorbed by the new demand by the new data center demand growth or should we think about the breakdown of roughly speaking, obviously, it is kind of early, but you follow what I am saying in terms of how how people should sort of think about that Michael P. Sullivan: that that that K. Jon Taylor: I I do, Paul. So anything that is directly for that specific customer is being borne by the customer. The regional upgrades are being handled the way PJM, handled those, with, generally, the region that is benefiting from the investment is paying for the investment. So it is a traditional PJM user pays the benefit owner pays most of the cost of what is happening on a regional basis. Michael P. Sullivan: Okay. K. Jon Taylor: And then just in terms of the generation proposals that you guys have been making, K. Jon Taylor: a couple years now. K. Jon Taylor: How would you characterize the overall reception K. Jon Taylor: because, you know, it is it is changing how things are currently. This auction and what have you. Mean, you K. Jon Taylor: do you get a feeling that there is some momentum here in terms of your discussions with K. Jon Taylor: with regulators in the in the service territories about about, you know, just opening this thing up and just not relying completely on the capacity auction and K. Jon Taylor: And when do you think we might see some action some tangible action in terms of maybe making some moves on this, which would lower rates. Potentially, not your rate. You know, not not what you technically control, but would lower the wholesale price of power potentially. K. Jon Taylor: Yeah. So K. Jon Taylor: let me talk about that in regards to West Virginia in particular. I I have been doing this a long time, Ross Allen Fowler: and I have never had in my career K. Jon Taylor: a a meeting or an announcement like what we had in November in West Virginia. The overall reception was overwhelmingly positive from the governor to legislators to employees to unions, to executive members of the executive branch in in West Virginia. Just overwhelmingly positive. And so I I would just say that in the five states that we are in in terms of addressing resource adequacy, and the generation issues West Virginia is given their integrated nature, is very, very well positioned to address it from an economic standpoint and very welcoming to the investment. And that is why when we look at how we can help Michael P. Sullivan: with K. Jon Taylor: economic development and resource adequacy, West Virginia is the place where first and foremost, we have an opportunity to do that, and that is why we have filed for the first unit that we are talking about putting in there. And that is why we would strongly, consider and look forward to applying for a second unit and maybe a third and maybe a fourth if if, things continue the way they are in West Virginia. Okay. But the other areas? Michael P. Sullivan: You it is still up in here? K. Jon Taylor: I I mean, we you know the issues, Paul. I I mean Okay. States are deregulated. They thought the market would provide for it. The market is not providing for it. It is really it is tough, and that is why we find ourselves in this difficult PJM stakeholder process. But the issues are going to come down to how much do you want, when do you want it, and who is going to pay for it. And and our main interest there is making sure there is enough generation so the lights stay on, and making sure it is a affordable to our customers. Okay. Great. Thanks so much. Thanks, Paul. Operator: Our next question is from the line of Anthony Christopher Crowdell with Mizuho Securities. Please proceed with your questions. David Keith Arcaro: Hey. Just two quick housecleaning items One is to Shar’s question earlier on the the spread or the difference between Ross Allen Fowler: rate base growth and earnings growth, your CAGRs. Just what would cause that to maybe contract or expand as we move out to the forecast period? Or it is very unlikely, whether it is 240 bps or more what would cause that to change throughout the forecast period? K. Jon Taylor: I think the things have that we talked about, and it is, you know, kind of the basic things that you would think of. How much incremental investment can we have and then, how quickly can we get that recovered in rates? And it is just that it is just that simple, Anthony. And so that is why we are showing you what is in the plan. We are showing you what we think could be incremental, how big it is, when we think we might get approvals for that. And on the recovery side, you are seeing us regularly go in for rate recovery when it is not already in the 75% that is covered in formula rates the way John talked about. David Keith Arcaro: Great. And then just a follow-up to David’s question. I just missed it. Ross Allen Fowler: Did you guys state when you plan on filing your next New Jersey case? K. Jon Taylor: We we have not said, and we are we are not being cagey about that. We just have not decided. And, obviously, we will be in discussions with K. Jon Taylor: the governor’s office and the BPU about K. Jon Taylor: when is the right time for us to go in. David Keith Arcaro: Great. That is all I had. Thanks for taking my questions. Ross Allen Fowler: Thanks, Anthony. Operator: Thank you. Our last question comes from the line of Andrew Marc Weisel with Scotiabank. Michael P. Sullivan: Hey. Good morning, everyone. Ross Allen Fowler: Good morning, Anthony. This is Gillette. K. Jon Taylor: Cannot believe it is the last question, but I want to ask about two topics Brian Tierney: that received very little airtime today, data centers and Ohio regulations. First on the data centers, I see more additions to the K. Jon Taylor: contracted demand and pipeline disclosure. I appreciate the table with the detailed by Brian Tierney: state. I could be wrong. I think that is in the disclosure. Very helpful. My question is relative to the latest updates and and the recent trends, where are you seeing the most activity in which state? K. Jon Taylor: Are the latest additions going to be within this five-year plan, or are those most Michael P. Sullivan: going to be more like the early 2030s by the time they ramp up? K. Jon Taylor: Yeah. So we are seeing a lot of activity currently in in our Maryland service territory associated with the data center out outside of, out Frederick and outside of Frederick, Maryland. And then after that, we are seeing significant activity in both Pennsylvania and Ohio. Ross Allen Fowler: And you are seeing that K. Jon Taylor: sort of, you know, significant amount of activity between now and, in 2030, 2031. But then a huge amount of activity in terms of load and contracted load by that 2035 time frame, so between 2031 and 2035. So, that is those are the locations. Those are the places where we are seeing most of that data center activity. K. Jon Taylor: Great. Thank you. Brian Tierney: In Ohio, obviously, 2025 was a super busy year for you, and the K. Jon Taylor: company got through a lot of important proceedings and dockets. Looking forward, what are the priorities for 2026 in the next few years, whether that is on the regulatory side or execution, And should we expect conference calls to go almost nearly the whole time with barely any talk about Ohio for a while, should it be quiet. In that in that state? You know, the so thank you for that question. K. Jon Taylor: The one thing that we were monitoring in Ohio was the the the commission told us, since I started here, that the business as usual cases gonna go business as usual. And the legacy issues cases would be separate and and not mingled with the business as usual case. Cases. The commission held very much true to that. And so we were thrilled to be able to get what we think was a constructive order in the base rate case In the punishment phases, there was a significant K. Jon Taylor: penalty that was paid there, and and we are happy to K. Jon Taylor: settle that and get all forms of appeal of that behind us and just move on from that. So what we see is business as usual going forward, in Ohio with the legacy issues behind us. We will be going in in the near term for a three-year rate case to get that moving forward and get us firmly footed in that new regulatory regime that the new legislation has. And, you know, Ohio’s always been K. Jon Taylor: very supportive of K. Jon Taylor: wires’ investment in the state. That drive economic development and improved reliability. And we anticipate that that will continue, going forward. So it was a pivotal year for us, 2025. And, and we will be right back in for the three-year rate case and anticipate constructive dialogue with with the commission and interveners and hope to be able to settle some issues going forward but it it is nice to have, Ohio firmly focused on the future Ross Allen Fowler: and and the new regulatory regime and and, K. Jon Taylor: being a constructive standpoint that has been demonstrated with the company. And we hope Torrence and his team will keep that moving forward with the commission staff and all interveners. Thank you for the question, Andrew. Michael P. Sullivan: Okay. Good stuff. Thank you for the commentary. Thank you. K. Jon Taylor: Okay. That was the last question. I would like to thank everyone for joining us today. We strengthened FirstEnergy Corp. in 2025 operationally, Ross Allen Fowler: financially, and strategically. K. Jon Taylor: We entered 2026 with momentum, a clear business model, and a disciplined plan to work safely, improve reliability, maintain affordability, and deliver sustainable growth. We look forward to updating you on our progress as we go forward throughout the year. Thank you, everyone, and have a good day. Michael P. Sullivan: Ladies and gentlemen, thank you for your participation. Operator: This does conclude today’s teleconference. May now disconnect your lines at this time, and have a wonderful day.
Operator: Good morning, and welcome to Sabre Corporation’s Full Year and Fourth Quarter 2025 Earnings Conference Call. My name is Olivia, and I will be your operator. As a reminder, please note today’s call is being recorded. I will now turn the call over to Senior Vice President, Finance, Roushan Zenooz. Please go ahead, sir. Roushan Zenooz: Good morning, and welcome to our full year and fourth quarter 2025 earnings call. This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. A slide presentation, which accompanies today’s prepared remarks, is also available during this call on the Sabre Investor Relations webpage. A replay of today’s call will be available on our website later this morning. We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including results of our growth strategies, our AI offerings, and AI-related developments in the transactions and bookings growth, commercial and strategic arrangements, our financial guidance, outlook and expectations, pro forma financial information, free cash flow, net leverage, and liquidity, among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today’s conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our Form 10-Ks for the year ended 12/31/2025. Throughout today’s call, we will also be presenting certain non-GAAP financial measures. References during today’s call to adjusted EBITDA, adjusted EBITDA margin, normalized adjusted EBITDA, and normalized adjusted EBITDA margin have been adjusted to exclude certain items. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at investors.sabre.com. Normalized amounts have been adjusted for estimated costs historically allocated to our Hospitality Solutions business, which was sold on 07/03/2025. We are also presenting certain financial information on a pro forma basis to give effect to the sale of the Hospitality Solutions business. We have removed the impact of the $227,000,000 payment-in-kind interest that was recorded in conjunction with the refinancing activity in 2025 from pro forma free cash flow. Unless otherwise noted, results presented are based on continuing operations. Participating with me are Kurt J. Ekert, President and CEO; Michael O. Randolfi, CFO; and Gary Wiseman, President, Product and Engineering. With that, I will turn the call over to Kurt. Kurt J. Ekert: Thanks, Roushan. Roushan Zenooz: Hello, everyone, and thank you for joining us. 2025 was a challenging and dynamic year Kurt J. Ekert: in which exogenous events impacted our operational results. Despite these challenges, we remained focused on execution and met or exceeded our financial guidance in the fourth quarter and ended the year with positive momentum. Moving forward, I believe we are well positioned for strong, sustained performance. Our growth outlook today is driven by several key catalysts: continued distribution share gains, the expansion of our multi-source content platform, solid growth in both hotel distribution and our payments business, as well as improving performance in our airline technology business. As I have discussed previously, our industry is evolving rapidly, and Sabre is evolving with it. We are in the midst of a fundamental transition, moving Sabre from a GDS-focused company to an AI-native technology leader. Before reviewing 2025 performance, I have some thoughts on recent market sentiment around AI disintermediation risk—the concern that AI bots could bypass our marketplace and connect directly to suppliers. We strongly disagree. AI needs what Sabre has already built. Operator: Vast, constantly evolving data, Kurt J. Ekert: integrated content, and complex logic purpose built to solve travel’s uniquely challenging workflows. We provide the foundational transaction layer AI uses to shop, Operator: price, book, Kurt J. Ekert: and service travel. We expect this shift makes us more essential, not less. We believe Agentic AI will reshape the technology landscape, and we are positioning Sabre to lead in this next phase. As AI-native companies enter the travel ecosystem, they need Sabre’s strong foundation, which provides breadth of content, modern cloud-native platform, and AI-native APIs, which we believe positions us as the platform of choice. While we are in the early stages of sizing the AI opportunity and have not included any of the potential significant upside in our forward outlook, we are taking deliberate actions to align our talent and investments with the strategy and position Sabre for long-term growth and value creation. As part of these actions, today, we announced a series of executive leadership changes, effective tomorrow. Gary Wiseman is promoted to President, Product and Engineering, with his agreement expanded to include leadership of innovation and Agentic AI. Sean Williams is appointed Chief Operating Officer and will lead Sabre’s revenue and commercial operations functions. Andy Finkelstein steps into the role of Chief Commercial Officer, Travel Marketplace, and Dave Medrano is promoted to Chief People Officer. Separately, Roushan Mendez, who has been a superb leader during his many years with Sabre, most recently as Chief Commercial Officer, has decided to pursue another opportunity. Roushan will transition to Senior Adviser before departing the company in May. We deeply appreciate his contributions and wish him continued success. On today’s call, I have invited Gary to share our progress on delivering Agentic AI solutions to drive long-term growth and why that makes us a critical part of the evolving AI ecosystem. Now turning to slide four, for the year, we recorded double-digit year-on-year growth in normalized adjusted EBITDA and generated positive pro forma free cash flow. A key focus for us is further strengthening our balance sheet, and we made significant progress this year by paying off over $1,000,000,000 in debt, which, when combined with growth in pro forma adjusted EBITDA, reduced our pro forma net leverage by approximately 25% compared to year-end 2024. We continue to be proactive in managing our long-term capital structure. Through two successful refinancings in 2025, we have no large maturities until 2029, and over 90% of our debt now matures in 2029 or later. We also ended the year with a strong cash balance of $910,000,000, which includes $98,000,000 of restricted cash for debt repayments in 2026. While we have more work to do to reach our long-term leverage goals, these actions provide us with significant room to continue to invest and further grow our business. On the right side of the slide, our technology investments are driving positive, measurable results. AI has been a core systemic part of the Sabre technology stack for years, and we continue to lean into that advantage. In 2025, we seized the first-mover position in our industry with our introduction of Agentic APIs and a proprietary MCP server designed for the travel industry. These Agentic solutions help AI agents better understand and operate within the complexity of travel content and workflows. We also launched several industry-first AI solutions and partnerships, which Gary will touch on shortly. Sabre Payments was one of our fastest growing businesses in 2025, with gross spend on the platform increasing more than 35% year on year and producing strong revenue growth. Our travel marketplace continues to deliver multisource travel content on an unprecedented scale and drove agency wins and expansions during the year. In the fourth quarter, air distribution bookings grew 4%, which included the direct and indirect impacts from the U.S. government shutdown, and we ended the year with air bookings growth of 7% in December. Finally, we extended our leadership position in NDC by adding 15 live integrations during the year, bringing our total to 42, and we are seeing adoption ramp. We exited 2025 with NDC representing approximately 4% of total air distribution bookings, and we expect our rate of NDC bookings to accelerate throughout 2026. Moving to slide five and details on full-year 2025 results. Overall results were positive across the board. Total distribution bookings grew 1% year on year, and full-year air distribution bookings were also positive. Within airline technology, passengers boarded grew 2% year on year. Hotel distribution bookings increased 5% year on year to 42,000,000, and the attachment rate to air bookings increased over 130 basis points year on year. Gross hotel booking value transacted through the platform now exceeds $20,000,000,000 annually. These positive results drove full-year revenue growth and, combined with ongoing expense management, normalized adjusted EBITDA grew 10%. Normalized adjusted EBITDA margin improved over 160 basis points to 19%. Moving to slide six. Our cloud-native technology foundation is driving growth across our portfolio. Within airline technology, we are delivering a growing suite of modular, AI-driven solutions ranging from new tools that optimize revenue in real time to a growing suite of GenAI chat and servicing capabilities. As airlines transition to modular, offer-order-based systems, we believe Sabre is well positioned to be the vendor of choice for their transformation. With our Sabre Mosaic airline technology gaining momentum, we expect to drive positive IT Solutions revenue growth for 2026. Our travel marketplace provides a single connection to what we believe is the widest breadth of travel content in the industry. Air Expansion is the combination of our distribution expansion and multi-source platform growth strategies. Despite a challenging 2025, we ended the year with strong momentum, driven by continued share gains, growth in NDC bookings, and our new LCC solution, which is now fully launched, as well as continued growth from the Sabre Mosaic Marketplace. We expect to see a meaningful year-on-year acceleration in air bookings growth. Overall, we expect annual volume growth for both 2026 and 2027 to be in the mid-single digits. Importantly, now six weeks into the quarter, the strength we saw in December has continued and is broad-based across all regions and also within corporate travel. Lodging expansion continues to scale, delivering over $350,000,000 in annual LGS revenue in 2025, and we expect continued solid revenue growth in 2026. Finally, we believe that PaymentSuite, our integrated fintech hub, is well positioned for sustained growth. It remains one of the fastest growing areas within Sabre with strong demand for our solutions that simplify operations, increase payment flexibility, and automate risk and fraud management. I will now hand the call over to Gary, who will discuss AI and Sabre’s AI strategy in greater detail. Gary Wiseman: Thank you, Kurt. Kurt J. Ekert: Moving to slide seven. AI needs us to power results. Gary Wiseman: And we believe it is a huge opportunity for us. Let me explain why from a technology perspective. We sit on over 50 petabytes of curated travel data, and we have the greatest depth and breadth of content in the travel space. We process 14,000 transactions per second and 11,000,000,000 shopping centers per month. These unparalleled demand signals do not exist anywhere in public today. However, we enable pure-play AI companies to participate in a complex space with a simple connection to these insights. We believe we are also critical in an AI-first world because of our proprietary and constantly evolving logic. Travel is extraordinarily complex. We house over fifty years of servicing workflows, travel policies, and compliance logic across 200-plus countries and thousands of supplier-specific fare rules and partner network agreements, all built through billions of real transactions. In short, we believe we have solved for almost every single edge case that has ever existed in travel, anywhere in the world. This logic is proprietary and cannot be scraped from the web or reverse engineered. AI engines cannot independently obtain and orchestrate this logic. While chatbots can generate itineraries, they cannot book or service them reliably at scale. For example, we aggregate and normalize real-time flight results in subseconds across hundreds of sources. This is a huge technical hurdle for most AI players today. And this is why Virgin Australia, PayPal, and a growing pipeline are building on us, not around us. And finally, we have a first-mover advantage in the industry. We launched the first agentic APIs and MCP server for travel almost six months ago. This was purpose built for LLM consumption, at enterprise scale. It is in production now, while competitors have yet to unveil their agentic API. Our open, modular platform plugs into wherever travel gets sold and wherever consumers go next, which we believe is conversational commerce. In summary, we own the foundational layer AI needs to transact travel. We believe the shift to Agentic makes us more essential than ever. Moving to slide eight. I will discuss our three recent strategic partnerships, which serve to demonstrate our leadership position within AI infrastructure. We believe Sabre is becoming the essential AI infrastructure for travel, serving both established companies modernizing their stack and AI-native startups building next-generation experiences. Our three recent partnerships confirm this. PayPal and MindTrip are building with us a next-generation agentic experience unifying discovery, planning, payment, and servicing in one conversational interface. Booking, MindTrip brings the consumer platform, PayPal brings flexible payments, and agentic commerce, and Sabre brings an enterprise travel platform and agentic AI expertise. The product launch is targeted for 2026. Kurt J. Ekert: Bistrep, a Silicon Valley-based AI-native TMC, Gary Wiseman: is combining our agentic capabilities with their AI assistance to build corporate travel functionality handling complex bookings, real-time itinerary management, and intelligent policy automation through natural language interfaces. They are leveraging our travel marketplace, agentic APIs, and global network. Virgin Australia is the first airline deploying our ConcourseWare IQ solution. It handles layered questions, delivers accurate, bookable results, and goes beyond booking to managing rebooking, miles redemption, refunds, and backtracking. Virgin Australia is seeing improved experience and higher satisfaction with Concourse IQ. Additionally, we are exposing this functionality via a new Chat Manager Vita plugin for Virgin Australia. This Chatty Bitty plug-in solution is available for all of our travel supply partners. Our AI solutions help our customers compete and win in the emerging AI ecosystem. Kurt J. Ekert: Further, Gary Wiseman: we believe we are well positioned to win in the new channel of conversational travel commerce by providing comprehensive shopping, booking, and servicing capabilities to any company that is developing an agentic travel experience. Thank you. Now over to you, Mike. Thanks, Gary, and good morning, everyone. Please turn to slide 10. Kurt J. Ekert: Fourth quarter financial results were solid and generally met the expectations we shared on our third quarter call. These results reflect the continued improvement in operating trends we saw at the end of the third quarter, partially offset by impacts related to the government shutdown during the quarter. In the fourth quarter, total revenue grew by 3% year on year, consistent with our guidance of low single-digit year-on-year growth. Distribution revenue grew $27,000,000, an increase of 5%, primarily due to an increase in air and hotel distribution bookings, favorable rate impacts, and an increase in other revenue. Air distribution bookings grew 4% year on year, below the guidance of 6% to 8% we provided on our third quarter earnings call. While our previous outlook accounted for the government and military travel reductions known at Michael O. Randolfi: the time, the impacts were broader than expected due to lower inbound U.S. traffic and an increase in flight cancellations. As Kurt mentioned, we ended the year with strong momentum, achieving 7% air distribution bookings growth in December, and we anticipate mid-single-digit air distribution bookings growth in the first quarter. IT Solutions revenue of $140,000,000 was within the range of expectations we shared on our third quarter call. Gross margin of 58% was also in line with our expectations. The year-on-year decrease in gross margin was primarily due to revenue mix and FX impact of a weaker U.S. dollar. Fourth quarter 2025 normalized adjusted EBITDA of $119,000,000 increased 10% year on year, with normalized adjusted EBITDA margin expanding by 107 basis points to 18%. Normalized adjusted EBITDA growth was driven by higher revenue and continued expense management. Pro forma free cash flow was $116,000,000 for the fourth quarter, a year-on-year increase of $45,000,000. And recall, our quarterly pro forma free cash flow includes the negative impact of $19,000,000 of disbursements related to refinancing fees and interest paid earlier than previously expected. Moving to slide 11 and full-year 2025 results. For the full year, Sabre reported revenue of $2,800,000,000, up 1% year on year, driven primarily by growth in distribution revenue. Gross margin for the year was 57.2%, within our expectations. Full-year 2025 normalized adjusted EBITDA of $536,000,000 increased 10% year on year, with normalized adjusted EBITDA margin expanding by 166 basis points to 19%. Pro forma free cash flow was $57,000,000. We ended the year with a strong cash balance of $910,000,000, which includes $98,000,000 of restricted cash for debt payments in 2026. Moving to slide 12. Full-year results were largely in line with the expectations we outlined on our third quarter earnings call. Revenue growth of 1% met our guidance for flat year-on-year growth. Normalized adjusted EBITDA of $536,000,000 was above our guidance of approximately $530,000,000, driven by continued cost management. Operator: Pro forma Michael O. Randolfi: free cash flow of $57,000,000 includes $19,000,000 of disbursements related to refinancing fees and interest paid earlier than previously expected due to the refinancing activity in 2025. Turning to slide 13. In 2025, we made significant progress on our capital structure, lowering overall debt and extending our maturities. We paid off over $1,000,000,000 of debt using cash on the balance sheet and proceeds from the sale of Hospitality Solutions. Importantly, we have also extended our debt maturity profile. Following two successful refinancings in 2025, we have no large debt maturities until 2029, and over 90% of our debt matures in 2029 or later. Through growth in pro forma adjusted EBITDA and the reduction of debt, combined with our strong year-end cash balance, we have reduced our pro forma net leverage ratio by approximately 25% versus year-end 2024. We remain focused on further delevering, and I am proud of the work we have done this year. Moving to slide 14 and our outlook for 2026, including a walk from 2026 pro forma adjusted EBITDA to free cash flow. Consistent with our strategy, we are providing 2026 guidance as well as commentary on 2027 to demonstrate that we believe we are well positioned to generate sustainable, positive free cash flow over the long term. Our outlook excludes the potential upside from agentic AI initiatives, which we believe could be meaningful, but it is too early to quantify. For full-year 2026, we expect mid-single-digit volume growth, driven by continued share gains, growth of NDC bookings, and our recently launched LCC solution. We expect the growth in volumes will lead to year-on-year revenue growth of mid-single digits. We also expect IT Solutions revenue to grow in the mid-single digits for the year and to be in the range of $140 to $150,000,000 per quarter, with growth coming primarily in the back half of the year. As mentioned, we do expect that a portion of 2026 revenue growth will be driven by increasing NDC and LCC volumes, which drive incremental gross profit at a slightly lower margin. In addition to the impact of these accelerating volumes, some additional expected changes in mix as well as FX pressure, we anticipate 2026 pro forma gross margin to be in the range of 56% to 57%. We are targeting to keep pro forma adjusted technology and pro forma adjusted SG&A lines relatively flat over the next two to three years through an inflation offset program. The goal of this program is to offset normal inflationary pressures over the next two to three years. We anticipate the pro forma adjusted technology line will reflect a low-single-digit percent increase due to increased technology cost from higher volumes. We expect pro forma adjusted SG&A will decrease by a low single-digit amount for the full year 2026. Through keeping costs relatively flat, we expect strong flow-through from revenue growth to pro forma adjusted EBITDA, which is expected to be approximately $585,000,000 in 2026. We do not expect any significant change in our annual CapEx spend of approximately $80,000,000. Annual cash interest in 2026 is expected to be approximately $470,000,000. This represents a year-on-year increase of approximately $140,000,000. The increase is primarily due to Sabre no longer receiving the cash benefit from the paid-in-kind instrument Sabre had in place from June 2023 through May 2025, which provided us with the option to defer cash interest. As part of our inflation offset program, we estimate total restructuring costs will be around $65,000,000. In 2025, we recorded a $51,000,000 charge related to this program. We expect approximately $60,000,000 of cash outflows related to the program in 2026. One item to note before discussing our free cash flow guidance: going forward, we will not be utilizing the pro forma free cash flow metric as there are no further adjustments to be made to free cash flow for the sale of Hospitality Solutions. We expect 2026 free cash flow to be negative $70,000,000, driven primarily by the impact of the $60,000,000 in restructuring cost associated with our previously discussed inflation offset program. Excluding the restructuring charge, free cash flow for 2026 would be near breakeven. Looking beyond 2026, with the continued execution of our growth strategies, we anticipate the positive growth trends we have guided to in 2026 will extend into 2027. Our current expectation is also for mid-single-digit revenue growth in 2027. Driven by continued revenue growth and ongoing cost discipline, we expect sustained year-on-year adjusted EBITDA growth and, importantly, positive free cash flow in 2027. Looking at slide 15 and our expectations for the first quarter. We expect solid growth in the first quarter with volume and revenue growth in the mid-single digits. We anticipate our first-quarter revenue growth will result in higher year-on-year gross income. We expect first-quarter pro forma gross margin to be at the lower end of our expected annual range of 56% to 57%, primarily due to revenue mix and FX impacts of a weaker dollar. We expect gross margins for the remaining 2026 to be higher versus the first quarter due to the impact of higher-margin sales including media, as well as payments. Additionally, in the first quarter, we expect pro forma adjusted technology expense will be higher on a year-on-year basis, primarily due to volume growth and typical wage inflation. Moving to pro forma adjusted SG&A. We expect a year-on-year increase due to a combination of typical wage inflation and the impact of a sales tax refund benefit of $7,000,000 in the prior year that is not expected to recur. For the remainder of 2026, we expect that costs will generally trend down due to the impacts of our inflation offset program. Overall, we expect first-quarter pro forma adjusted EBITDA to be approximately $130,000,000. We expect quarterly free cash flow to follow historical seasonality and expect the first and third quarters to reflect the majority of the full-year increase to cash interest expense. For additional details, we have included a schedule of expected quarterly cash interest within our website financials, available on our Investor Relations website. Our strategy remains focused on generating free cash flow and delevering our balance sheet and driving sustainable growth through innovation. We made significant progress against these priorities in 2025. Building on the momentum we exited 2025 with, we are excited for the year ahead, and we are optimistic that Sabre is positioned to transition to a period of higher revenue growth going forward. And with that, operator, please open the line for questions. Operator: Thank you. To ask a question, you will need to press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press 1-1 again. Our first question is coming from the line of Dan Wasiolek with Morningstar. Your line is now open. Kurt J. Ekert: Hey, guys. Good morning. Nice quarter. Probably a question here for Gary. You have obviously been hard at work with your AI tool development. I can see how that strengthens your network ecosystem. I am just wondering what still needs to be done in your view on the AI front. What should we be looking for? And then in the prepared comments, you mentioned upside Unknown Analyst: opportunities from AI. I am just wondering if you maybe could provide some more color on what those might be. Thank you. Gary Wiseman: Yeah. Hey. Good morning. Thank you very much, and Kurt J. Ekert: Go ahead, Gary. Just jump right in. Gary Wiseman: So I think on the AI front relative to the travel use cases, for me, really, what is going to be the next stage here is to generally show the end-to-end experience of conversational commerce in travel. And so that is what we are doing with the partnership that you have seen with MindTrip and with PayPal, where through the MindTrip app itself, you can have a great experience in terms of building an itinerary that is personalized, that is highly relevant to your needs as you try and plan your next trip. We then come in in terms of making sure that we provide you the greatest offers in terms of how to get there, where to stay, and then, obviously, with PayPal, they then are able to help in terms of the payment, whether it is a single payment or payment over time through installments to make sure that you can actually afford that particular trip. So that has been one of the things for me that has been missing when it came to AI and a travel experience, that no one has really done that end to end yet—from the discovery, the planning, the booking, the payments, and the servicing. So that is what I am super excited to see as we go into the 2026. Go ahead, Kurt. Kurt J. Ekert: Yeah. I was just going to add. One of the interesting things that is unique about Sabre, as Gary alluded to in the prepared remarks, is we already have the full breadth of data content, intelligent shopping, servicing capabilities. Putting the front end, the agentic layer on there, as Gary would articulate, is actually not that technically complex. It is just a matter of extending our capabilities into it as a new ecosystem of agentic travel. Operator: And Unknown Analyst: thank you. And then, anything you are willing to remark on, like, opportunities that might evolve from AI in the years to come? Kurt J. Ekert: Yeah. I think the best way to think about this in my eyes is if you think back, if you are as old as I am, 30 years ago, you saw the emergence of online travel agents as a fundamentally new channel, and that had the impact of taking share away from both supplier direct and indirect channels at the time. I think what you are going to see with agentic travel—these are the agentic players as well as tech platforms—is that is going to emerge similar to the way OTAs emerged as a fundamentally new channel, probably happen even more rapidly than what you saw with the emergence of OTAs. When you think about which channels are at risk, I think it is those that are subject to an Internet or electronic experience today. So less impacted should be corporate travel and brick-and-mortar travel agencies. More impacted would be supplier direct where you have non-loyal travelers, metasearch, which is not an end-to-end experience because you are being linked off, then third would be OTAs. Obviously, OTAs are going to play in this very differently. So we think the offensive opportunity for Sabre is very substantial. Again, very hard to articulate how large that agentic sector is going to be and the pace at which it is going to play. But we believe we have a distinct market advantage in terms of speed to market today. We are looking to plant flags very aggressively. Unknown Analyst: Okay. Great. Thank you. Operator: Thank you. Our next question is coming from the line of Joshua Phillip Baer with Morgan Stanley. Your line is now open. Unknown Analyst: Thanks for the question. I think you did a great job addressing the Michael O. Randolfi: topic of agentic and AI bots. I was hoping you could do the same with just direct connects generally. One of the challenges of airlines or, and OTAs, other travel buyers, just building direct connects is the huge cost burden in establishing and also maintaining and supporting those connections. From an R&D and a developer and infrastructure perspective, does the introduction of GenAI change that economic equation at all, just thinking about lower cost of coding Josh Baer: increasing productivity of a developer? Yeah. If you could weigh in there on that topic. Thanks. Kurt J. Ekert: This is Kurt. Let me have Gary jump in first on the, what I will call, the physics of Direct Connect and how that will emerge in an agentic world, and then I will comment on the industry structure a bit. Gary Wiseman: Yes. Thank you. Thank you, Josh. So, really, this comes down to what makes us a great partner for an AI company or anything to work with rather than an attempt to really replicate what we do. We have a highly scalable marketplace, obviously, with that vast selection of travel content that we have both the contractual rights to aggregate, normalize, and display at a speed that an AI agent could not do in a real-time fashion, which is due to our volumes, which means that we can predictably cache content in such a way that individual suppliers cannot, and hence, we can cope with that look-to-book ratio that is a severe tax on suppliers’ infrastructure costs. So this is something, again, that, whether it is in a general web search or any type of shopping scenario that could be AI or not, is something that we excel at in terms of responding in subsecond times compared to what is today taking, you know, eight to nine seconds connecting directly to a supplier and shopping on their APIs independently. Operator: Okay. Kurt J. Ekert: Yeah. Thank you, Gary. And so about Direct Connect generally. For folks who enable a Direct Connect—and Sabre is an amalgam of 500 airline direct connects and thousands of hotel direct connects, for example—when you have look-to-book coming inbound and you have massive complexity, that creates challenges both for the supplier who is dealing with this inbound traffic, number two is for the person doing the Direct Connect. Very difficult to manage that environment. We have spoken previously about the opportunity for a reintermediation of some of the direct traffic. I think you will see that in some of our results going forward. With agentic AI, that problem is going to be exacerbated for both the suppliers with inbound traffic and response times, and two, for folks who may have those direct connects in place like OTAs. So I actually think the utility that we provide tomorrow in an agentic world is going to be even more important than it was yesterday. Josh Baer: Okay. That is helpful. And then I was just hoping you could unpack this inflation offset program a little bit further. What exactly is inflating? Is that just wages? Is it other costs? And what exactly is offsetting? Thanks. Michael O. Randolfi: Yeah. You know, as part of any cost, over time you have some inflation, primarily wage inflation, but then you also have contractual inflation. Technology costs tend to go up. One of our goals is to keep our key line items of technology cost and SG&A roughly flat except for some volume-related hosting costs. So we have embarked on a program basically to drive efficiency and effectiveness through our organization, with the goal of, over the next two to three years, keeping those cost items Kurt J. Ekert: relatively flat, relatively flat, such that as we grow Michael O. Randolfi: bookings and revenue, we see strong flow-through to EBITDA and EBITDA margin accretion and ultimately greater free cash flow. Josh Baer: Okay. So that is layoffs and future restructurings? Michael O. Randolfi: The way I would think about it is I would put it in three categories. One is leveraging best-in-class geographical location. Second, working with third parties who have a certain expertise and efficiencies to a greater degree, and then further embedding AI into our workforce and greater enabling our teams to be as productive as possible. And that is the focus. Kurt J. Ekert: Yeah. And I would just say, in doing this, we hold two things relatively sacrosanct. One is operational delivery for our customers, and then two is research and development. And just anecdotally, we will have more engineers working on Sabre a year from now than we do today. We are going to be ramping engineers through the year and doing that effectively through this program. Josh Baer: Okay. Thank you. Operator: Thank you. Our next question is coming from the line of Jack Halpert with Cantor Fitzgerald. Your line is now open. Gary Wiseman: Hey. Thanks for taking the question, guys. Michael O. Randolfi: Just another on the agentic AI stuff. So you have a relationship with Google for other parts of the business. Do you see any opportunity to deepen your relationship with Gemini on the agentic AI front? Are you having any conversations with other leading AI labs, Brian Evans: OpenAI, etcetera? Michael O. Randolfi: And then just secondly, on capital allocation, I know you made a lot of progress in the debt pay down this year. Moving forward, Kurt J. Ekert: you talk about Jack Halpert: how you are thinking about capital allocation for 2026 and beyond? Is the debt profile still the number one priority? Or do you feel like you are at a good level to start shifting investment more towards growth initiatives? Thanks. Kurt J. Ekert: Thanks, Jack. I will take the first question and then ask Mike to speak about capital allocation. We have a great relationship with Google. Our AI infrastructure is effectively built on Google’s Vertex and now Gemini AI capabilities. I would say what you have seen is the tip of the iceberg in terms of relationships and partnerships that are going to come in the market. We are in conversations with effectively all the meaningful large players out there, which is why we believe this is such a significant opportunity for Sabre. Let me turn it to Mike to speak about capital allocation. Yeah. First, I would start with the back part of your Michael O. Randolfi: question first. And I would say we prioritize our investment in our growth initiatives, our growth strategies, and our agentic AI push forward. So that is a priority. That has always been a priority. With regards to capital structure, we have been thoughtful with regards to our capital structure. We will continue to do so. But I think we are actually in a pretty good place today. We ended the year with $910,000,000 of cash on the balance sheet. Now, $98,000,000 of that is in escrow for some debt paydowns in March of 2026. So, really, the usable cash is $812,000,000. We expect to ultimately be generating positive free cash flow over the long run. And if you look at our maturity ladder, I think we put ourselves in a pretty good place. We have no large up until June 2029, and we have done that pretty efficiently in terms of cost. So we think we are in a pretty good place at the moment. Jack Halpert: Great. Thank you, guys. Operator: Thank you. As a reminder, to ask a question, please press 1-1. Our next question in queue is coming from the line of Victor Chang with Bank of America. Your line is now open. Roushan Zenooz: Hi, thanks for taking my questions, and good slides on the agentic AI initiatives. Maybe on the volume growth for this year, Unknown Analyst: can you walk us through maybe the cadence of it? Obviously, you are guiding mid-single-digit Roushan Zenooz: on a full year. Kurt J. Ekert: I think earlier this year, you still annualized in some of the share gains that you have. Roushan Zenooz: So what is sustaining growth in H2? Is that related to the multi-source low-cost carrier initiative? How is that working? Kurt J. Ekert: And then secondly, on NDC, you talked about that going up 4%. Can you talk a bit about where you are seeing that growth coming from? Are TMCs finally getting on board? Unknown Analyst: And maybe by region as well? Thank you. And I will have a quick follow-up. Kurt J. Ekert: Okay, Victor, thank you. Multipart question, of course, as usual. Number one is with respect to distribution volume growth for this calendar year. As we indicated, we expect to see mid-single-digit distribution volume growth for 2026 and, again, for 2027. As we indicated, in December, we saw 7% air distribution volume growth. We have seen a similar trend year to date so far. That is broad-based across all regions. It includes corporate travel, which we had indicated was actually negative last year. So much healthier market environment today. When we look at Josh Baer: this Kurt J. Ekert: in a componentized fashion, first of all, we expect that—our assumption is—the GDS market is largely flat from 2025 to 2026. So the growth that we are indicating is largely organic performance by Sabre. Number one, we expect to continue to take share. That will be the realization of share takeaways that we implemented last year. We have other things that are being implemented, and we expect to continue to win at pace. Two is NDC, which reached 4% adoption at the end of last year. We expect that to continue to scale, and I will speak about that further in a second. And then three is, we spoke last year about integration of additional low-cost carrier inventory and the launch of our multisource platform in new low-cost carrier. That is all fully in production today. It is one of the key reasons we are winning, and we expect to pick up incremental bookings from those carriers as well. With NDC more specifically, we are seeing it pretty broad based in terms of adoption by OTA and TMC. And I would say it varies by region, but it is very specific to carrier. So, for example, you might have a large carrier in South America, which has brought in NDC adoption, and if that is a top tier-three carrier, that will drive adoption for the region in total. But I would say, generally, you are at a point now where, as we indicated, we have 42 carriers live within our NDC solution. We have done a significant amount of work on functionality to basically normalize workflow differences between Edifact and NDC for the travel agent, and that is mitigating any productivity or user experience impacts that they may have had previously. So, again, we expect that to scale at pace as we go forward. Thank you. That makes sense. And maybe a quick follow-up on the restructuring. Should we expect the inflation offset program to continue, and any Unknown Analyst: cash flow impact for 2027 as well potentially? Michael O. Randolfi: Sure. So we believe the total quantum of the restructuring will be around $65,000,000. As we talked about, we had a $51,000,000 charge in 2025. The bulk of the cash flow impact will be during this year in 2026, and that is the $60,000,000 you see in our guidance slide. So in 2027, any cash flow impacts we expect would be de—could be some, but I would expect it to be de minimis. Kurt J. Ekert: Okay. Thank you. Operator: Thank you. The last question will come from the line of Jed Kelly with Oppenheimer. Your line is now open. Kurt J. Ekert: Hey. Great. Thanks for taking my questions. Unknown Analyst: Just on the free cash flow guidance, Kurt J. Ekert: can you give us an update on how your discussion is going Jed Kelly: with your debt holders and, you know, free cash flow being flat? Would love to hear an update there. Thanks. Michael O. Randolfi: Yeah. I mean, well, Jed, as you know, we just completed a significant refinancing of $1,800,000,000. That refinancing went very, very well. We did that at an interest cost of 11 and 1/8%. And the free cash flow profile today is the same as when we conducted that refinancing. So, overall, we are focused on generating positive free cash flow. We expect to generate positive free cash flow in 2027, and we have a strong cash balance. Kurt J. Ekert: Yeah. And, Jed, just keep in mind, as Mike indicated during the prepared remarks, free cash flow projection for this year includes the $60,000,000 of impact restructuring. Yeah. About a $130,000,000 year-on-year difference from the PIK moving to cash. So there is no more PIK debt that we hold today. Jed Kelly: And then I would love to hear your—I guess, because I am last, I will ask a couple. You said corporate travel is holding up pretty well. That is good to hear. Is that kind of a comp issue, or what is going on there, and where are you seeing the strength? Is it coming more from the traditional travel agencies, or is it coming from some of these new self-service players that we hear about? Kurt J. Ekert: I would say corporate travel and TMC traffic, which was trailing the market last year, we are seeing positive signs in the first part of this year. That is fairly broad, both with traditional or existing players as well as some of the new entrants. So we have good exposure to both parties. Jed Kelly: Got it. And then I guess just my final one. I appreciate all the commentary around AI. I know you have been in the travel industry for a while. When you hear all these direct connections, and you can see the market is pretty excited about it if you just look at the relative outperformance between Marriott and, like, a Booking or any third-party travel agent. I am just wondering, as we kind of see this evolve, Kurt J. Ekert: how does this differ than search, where Jed Kelly: I assume these direct connections were available for a while, but the suppliers never took advantage of search. And I guess what makes this different? Because I have to assume Google is not going to give away their search advertising business, and OpenAI is going to need a pretty big auction advertising business to pay for all their compute requirements. So just wondering how you see this evolving. Operator: Thanks. Kurt J. Ekert: Yeah. So what is interesting—what is very different about, let me compare this to metasearch—is Google Flight Search or KAYAK, for example, Michael O. Randolfi: where Kurt J. Ekert: you get to compare as a consumer many different price points and then you get launched into a different ecosystem to consummate your booking, into the supplier direct or into the OTA, for example. What we have heard from effectively every agentic player and large tech platform that we have spoken to in recent months is they want to have an integrated end-to-end experience to include changes, servicing, etcetera, which does not sound like a metasearch experience whatsoever. It sounds more like an agency experience. And so, as Gary indicated, we think we are very well positioned to enable that. When you think about this on a channel basis—and I talked earlier about supplier direct, let us say non-loyal customers, and metasearch—we have a de minimis or almost no share impact from either of those two channels today. So as an intermediary, to the extent that those channels are impacted, that will have no adverse effect on Sabre. If OTAs are adversely impacted, that is between 20–25% of our intermediary trading volumes. But we think the OTAs, especially folks like Priceline or Expedia, are very well positioned to compete there. So we look at this and say, agentic and us backing the agentic is an offensive new opportunity. To the extent there is downside risk, the downside risk to us given our ecosystem is relatively small. Jed Kelly: Got it. And then nice announcement with MindTrip and PayPal. I know the MindTrip people, pretty interesting platform they are building. Can you just expound on that? I know you said it in prepared remarks, but any additional color you can add to people on the call? Kurt J. Ekert: Yeah. Gary has been the architect of that, so I will ask him to step right in. Gary Wiseman: Yeah. So as I mentioned earlier, in terms of the way we are working together here is that MindTrip is that front-end experience, where they are using agentic capabilities in order to really allow discovery and trip planning. So let us say you want to go to Japan, you have two teenagers, one is into manga. You can tell it that, and it will start to suggest an outline of places to go, things to go and see. And then, combined with that, it will start calling us for hotel information as it is planning the itinerary to map out what a good hotel would be near a particular attraction that might interest you. And, eventually, it will start to Jack Halpert: all those Gary Wiseman: as it builds the full itinerary. And then from that point onwards, as you decide, okay, this is the trip I actually want to go for, that is where PayPal comes into the mix. So PayPal, as I said earlier, they have the instant payment option, of course, but then also they provide installment payments. As you know, travel these days, particularly international travel, can get quite expensive. So the ability to pay in installments is also, I think, a very critical part of this particular experience. And then after that, we provide the booking and the servicing capabilities. So if, during the trip, you run into issues, you need to reschedule things, rebook, etcetera, you can come back to the MindTrip app and simply tell it that you would like to change your flight. So it is really an end-to-end experience for consumers as they look to discover, plan, book, and then be serviced throughout the travel experience. Great. Jed Kelly: Very helpful, and appreciate you answering all the questions. Jack Halpert: Of course. Thank you. Operator: This concludes the Q&A portion of the call. I will now turn the call back over to Kurt J. Ekert, CEO, for any closing remarks. Kurt J. Ekert: Thank you, everybody, for the interest today. We are extremely optimistic and excited for the year and the years ahead, and look forward to sharing results with you in the next quarter and quarters ahead. Unknown Analyst: Take care. Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning, and welcome to Quad's Fourth Quarter and Full Year 2025 Conference Call. During today's call, all participants will be in listen-only mode. [Operator Instructions] A slide presentation accompanies today's webcast and participants are invited to follow along, advancing the slides themselves. [Operator Instructions] Please note this event is being recorded. I will now turn the conference over to Julie Fraundorf, Quad's Executive Director of Corporate Development and Investor Relations. Julie, please go ahead. Unknown Executive: Thank you, operator, and good morning, everyone. With me today are Joel Quadracci, Quad's Chairman and Chief Executive Officer; and Tony Staniak, Quad's Chief Financial Officer and Treasurer. Joel will lead today's call with a business update, and Tony will follow with a summary of Quad's fourth quarter and full year 2025 financial results followed by Q&A. I would like to remind everyone that this call is being webcast, and forward-looking statements are subject to safe harbor provisions as outlined in our quarterly news release and in today's slide presentation on Slide 2. Quad's financial results are prepared in accordance with generally accepted accounting principles. However, this presentation also contains non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, free cash flow, net debt and net debt leverage ratio. We have included in the slide presentation reconciliations of these non-GAAP financial measures to GAAP financial measures. Finally, a replay of the call will be available on the Investors section of quad.com shortly after our call concludes today. I will now hand over the call to Joel. J. Joel Quadracci: Thank you, Julie, and good morning, everyone. I'll begin with key highlights shown on Slide 3. In 2025, we achieved our full year financial guidance. Despite a planned reduction in reported sales, we generated strong cash flow, enabling us to make targeted investments that support long-term growth, reduce debt and provide strong shareholder returns. We also made meaningful progress advancing our revenue diversification strategy, targeted print categories, including packaging, in-store marketing, experienced net sales growth and direct mail performed well above our 2025 expectations, primarily due to higher volumes and strong operational efficiencies. Our Betty Creative and Rise Media agencies also produced highly visible work for leading brands like Aldi, Natural, CLR and Gallo. Our 2026 financial guidance, which Tony will walk through reflects this continued progress and remains consistent with our expectation to return to net sales growth by 2028. I'm also pleased that Quad's strong balance sheet and disciplined approach to managing the business have enabled the company to increase its quarterly dividend by 33% to $0.10 per share or $0.40 per share on an annualized basis, underscoring our focus on creating long-term shareholder value. Moving to Slide 4. Quad's integrated marketing platform encompasses all the resources brands and marketers need to strategize, plan, create, deploy measure and optimize their marketing efforts across all media channels from household to in-store to online. We do this through our MX solution suite, which seamlessly integrates creative production and media solutions across physical and digital channels. Supported by data-driven intelligence and state-of-the-art technology, these scalable solutions are tailored to eliminate friction at any point along the marketing journey. While our products and services are organized into distinct solution suites, they are intentionally designed to function together. This integration is a significant competitive advantage for Quad as it creates a unified ecosystem that improves marketing performance for clients. One area where this integration is delivering results is direct mail, a critical tactic under the broader umbrella of direct marketing. On Slide 5, we highlight our direct marketing agency, which we formalized in 2025. The agency provides an improved marketing experience for mailers by combining strategy and planning, audience identification and activation, creative, production and measurement services. Our DM agency leverages Quad's proprietary data stack, which we use to generate targeted highly responsive audiences. Clients also benefited from premarket testing services that validate content and designs before a single piece is printed or campaign is deployed. Uniting these often siloed services with our robust manufacturing platform enables Quad to scale personalized direct mail building on the strong DM sales momentum we gained in 2025. On Slide 6, we highlight our work with Heartland Dental, one of the largest dental support organizations in the U.S. as an example of how we are helping clients modernize the direct mail channel. Heartland Dental relies on printed direct mail as a proven growth driver and is working to improve efficiency and effectiveness by moving from broad geography-based mailings to more targeted outreach aligned with our high-value patient segments. Since winning the business in the fourth quarter of 2025, Quad has partnered closely with Heartland Dental to establish the foundation for long-term success. The team is focused on understanding objectives, assessing creative and performance and delivering postal optimization. We are developing a structured test and learn strategy designed to improve return on investment per mail piece rather than just simply minimizing cost per piece. Using our accelerated marketing insights, premarket testing, we are optimizing legacy creative while utilizing Quad's market-leading personalization platform to generate new one-to-one dynamic content. As the partnership matures, Quad plans to introduce more advanced household level targeting using our proprietary data stack. This will enable the client to shift spend toward higher-value growth audiences in key geographies and -- in parallel, Heartland Dental is using Quad's at-home Connect platform to run automated trigger-based direct mail. On the production side, Quad is looking to deliver a 7-figure postal savings for the client in the first year of our partnership by leveraging USPS' promotions and our postal optimization services creating capacity for reinvestment into Heartland Dental's growth strategy. Turning to Slide 7. We continue to invest in scaling creative and media capabilities through our Betty and Rise agencies. To support increasing client demand, we recently announced new offices in Austin, Texas and Mexico City, Mexico. The Austin office is a full-service studio, while our Mexico City office opening later this quarter, will bring Rise media experts and Betty creatives together to support clients with strength in retail, grocery and packaging design. As our agency footprint grows, so does our ability to win larger integrated assignments demonstrated by recent wins with premier brands like Scandinavia designs and Valvoline Instant Oil Change. On Slide 7, we highlight our newest integrated agency client, the Gorilla Glue Company, a leading manufacturer of tough adhesives and adhesive products. Last year, Gorilla Glue hired Betty to develop a scalable creative platform for use across the brand's broad product portfolio. The resulting campaign, which launched last month, combines real actors and product demonstrations with a hyper realistic brand character created with advanced generative AI and CGI technology. This blended approach demonstrates how Betty applies AI to unlock new creative possibilities while remaining authentic and relatable. While Betty developed the campaign, the Gorilla Glue Company worked with industry analysts from Excel Partners Group to search for a new media agency. As a result, the client named Rise as its media agency of record for both Gorilla Glue and [indiscernible] skincare brand. Rise now leads the brand's integrated media strategy, planning, buying and measurement across all digital and traditional channels. Morgan Roberts, VP of Brand Management at the Gorilla Glue Company said, -- in Betty, we see just not an agency, but a creative ally that can help us bring bold ideas to life in a way that feels authentic to the brand while helping move it forward. Rise should offer its ability to bring rigor accountability and clear measurement to our media approach, helping us connect more effectively with DI wires, professionals and everyone in between. Looking ahead, future campaigns for this client's brands will be empowered by Quad's proprietary data stack to identify and activate the highest-value audiences for its products. With creative and media working in close coordination, Rise's audience insights and experiential media planning will inform Betty's creative strategy. This consolidated partnership streamlines execution, reduces handoffs for the client and reinforces Quad's integrated model for delivering scalable, high-performing marketing programs. Transitioning to Slide 8. Quad is increasingly applying its integrated solutions to support emerging consumer packaged goods brands looking to scale their presence across big box retailers. Our extensive manufacturing and structural design capabilities enable us to execute rapid market entry while offering a wide array of displays that capture consumers' attention and educate them on product benefits. With decades of experience serving some of the biggest U.S. retailers, we know how to adjust an in-store deploys designed to meet a particular chain's distinct environments and merchandising requirements. This helps CPG brands scale quickly by introducing modified and adaptive displays to new retailers. We provide an example of this execution on Slide 9 with [ Pura, ] a fast-growing smart home fragrance company, which engaged Quad to support the brand's largest in-store retail promotion to date. Quad was involved from the outset providing integrated support across concept development, structural engineering, print production and distribution. This early integrated involvement enabled a cohesive solution rather than a series of disconnected offerings. To translate [ Pura's ] premium sensory brand into a high-traffic retail setting Quad designed a custom end cap that elevated a standard retail fixture into a home-inspired brand moment. The display featured a custom engineered diffuser that allow shoppers to experience Pure's fragrances, while maintaining display integrity and product security. After the retailer awarded Pure more shelf space, Quad designed an additional side cap display with complementary look and feel. We continue to partner in all the brands in aisle displays as well as new end cap opportunities with that retailer, and we have since deployed similar Pure displays across multiple national and regional retailers. Turning to Slide 10. In support of Quad's ongoing evolution as a company that solves marketing complexity at scale, I am pleased to share that we have expanded Dave Honan's role promoting him to President in addition to his ongoing responsibilities as Chief Operating Officer. Since joining Quad in 2009, Dave has been instrumental in strengthening our operations, margins and performance discipline. The Board and I have deep confidence in his ability to continue to drive day-to-day execution across the company. Dave and I have worked closely together for 17 years, developing a trusted, highly effective partnership grounded in a shared vision and strategy for Quad. We remain committed to continuing to build our Quad's 55-year legacy of excellence. As CEO for the past 4 years, Dave has done an excellent job overseeing operational leadership for our manufacturing platform. In his expanded role, he now extends its operational focus to the entire company. This leadership structure allows me as Chairman and CEO, to remain deeply focused on long-term strategy, innovation, partnerships and stakeholder relationships. I look forward to leading Quad flat for many years to come, and I'm extremely optimistic about what we are all building together, a company that helps brands connect with people and smarter more meaningful ways rooted into a values-driven culture that is focused on creating a better way and acting with a soul every day. Alongside this evolution, our executive leadership structure, we've taken additional steps to reinforce alignment deeper within the business. As shown on Slide 11, we have strategically aligned our marketing and sales functions under 1 leader, Executive Vice President and Chief Revenue Officer, Julie Currie. This new structure creates an even stronger connection between the company's marketing efforts and business growth priorities, helping ensure our brand demand and go-to-market activities are tightly linked to prioritize revenue generation. We want to take a moment to thank Josh Golden, Quad's former Chief Marketing Officer and wish him well as he pursues a new career opportunity. Since he joined Quad in 2021, Josh played an essential role in elevating our brand identity as a marketing experience company and in building a strong marketing organization that will contribute to our growth into the future. We appreciate Josh's many contributions to Quad. Turning to Slide 12. Quad continues to make targeted investments in artificial intelligence to drive both cost efficiency and revenue generation. Internally, AI-powered automation is improving productivity across recurring labor-intensive workflows and like scheduling, job ticket creation and automated planning for machine maintenance. Externally, Quad has infused AI across our MX solution suite to drive clients' marketing efficiency and effectiveness. For example, we continue to scale usage of AI capabilities within our audience Builder platform, underpinned by our proprietary data stack to accelerate the creation of faster, more precise audiences for clients. Rise has adopted a new agency operating system that uses AI-powered optimization and agentic AI tools to provide automated reporting with advanced measurement and insights. In addition to Betty's use of AI and creative campaigns, Betty Studios is blending synthetic and traditional photography to produce high volumes of creative assets faster and more cost effectively for clients. Moving to Slide 13. In Q4, we completed the integration of [ Andrews ] co-mail volume and high-density capabilities. Our postal optimization platform now has significantly expanded mail pool sizes and improve sortation levels, generating greater savings for our clients with postage remaining mailer single largest cost to manufacture and deliver printed marketing materials representing up to 70% of costs Quad's ability to maximize postage savings is critical to maintaining print's value in the marketing mix. As such, we remain focused on adding volume into our co-mail pools by growing our third-party co-mail partnerships. In April, Quad will hold its 25th postal conference. This one-of-a-kind industry often will feature discussions with quad postal experts, clients and USPS leadership, including Postmaster General and CEO, David Steiner. I look forward to using this opportunity to share more about our postal optimization solutions with clients while collaborating on how to best address ongoing challenges in the postal landscape. Transitioning to Slide 14. I would like to recognize our employees and thank them for their continued commitment to work. Their innovation and collaboration have created a unique company culture at Quad, which was recently recognized by 2 high-profile media outlets. Forbes named Quad to its inaugural list of Best Employers for company culture. And [ Digit A ] named Betty Agency, the best hybrid work environment as part of its work life awards. These honors reinforce Quad's ability to attract and retain top talent, which is critical to our long-term growth. Before I turn the call over to Tony, I would like to recognize a really important transition in our manufacturing network. After more than 35 years in Upson County, our plant outside Thomaston, Georgia is wrapping up production and will close in early March. I want to express our deep, deep appreciation to the employees there. Their dedication, craftsmanship and pride in their work have been central to our success for decades. I also want to thank the Upson County community for its long-standing partnership and support. As we close this chapter, we do so with gratitude for everything we accomplished together and for the legacy that remains. With that, I'll turn the call over to Tony. Anthony Staniak: Thanks, Joel, and good morning, everyone. On Slide 15, we show our diverse revenue mix Net sales were $631 million in the fourth quarter of 2025, a decrease of 5.7% compared to the fourth quarter of 2024, when excluding the divestiture of our European operations. For the full year, we achieved our public guidance range with net sales of $2.4 billion in 2025, a 4.8% decline in 2025 compared to 2024, excluding the European divestiture. The decline in our full year net sales was due to lower paper sales, lower print volumes and lower logistics and agency sales including the loss of a large grocery client in 2024, which annualized at the beginning of March 2025. Comparing our net sales breakdown between 2024 and 2025, and our revenue mix as a percentage of total net sales increased in our targeted print offerings of direct mail, packaging and in-store as well as in our QuadMed employer sponsored health care business. These increases were offset by expected declines in the print product lines of magazines and catalogs and also logistics, which is correlated with print volume declines. Slide 16 provides a snapshot of our fourth quarter and full year 2025 financial results. Adjusted EBITDA was $55 million in the fourth quarter of 2025 as compared to $63 million in the fourth quarter of 2024. And on a full year basis, adjusted EBITDA was $196 million in 2025 and compared to $224 million in 2024. The decrease in adjusted EBITDA in both periods was primarily due to the impact of lower net sales, increased investments in innovative offerings to drive future revenue growth and the divestiture of our European operations, partially offset by lower selling, general and administrative expenses and benefits from improved manufacturing productivity. Adjusted diluted earnings per share was $0.36 in the fourth quarter of 2025 and which was consistent with the fourth quarter of 2024. And full year 2025 adjusted diluted earnings per share was $1.01 and an increase of $0.16 or 19% from 2024 due to higher adjusted net earnings and the beneficial impact of a lower share count due to stock buybacks. Beginning in 2022, we have repurchased 7.4 million quad shares at an average price of $4.11 representing approximately 13% of our total outstanding common stock as of that time. This includes 1.5 million shares at an average price of $5.40 for $8 million during 2025. Quad's Board of Directors authorized a share repurchase program of up to $100 million of our outstanding Class A common stock in 2018. As of December 31, 2025, and there was $69.5 million of authorized repurchases remaining under the program. We expect to continue to be opportunistic in terms of our future share repurchases. Free cash flow was $51 million in 2025 as compared to $56 million in 2024. The $5 million decline in free cash flow was primarily due to a $17 million decrease in net cash provided by operating activities, mainly driven by timing of working capital partially offset by a $12 million decrease in capital expenditures. As we have previously shared, we will continue to generate proceeds from asset sales in addition to the strong free cash flow generated by our large printing operations, as shown on Slide 17. We generated over $870 million of free cash flow and proceeds from asset sales from 2020 to 2025, including $88 million during 2025. These asset sales include divestitures of certain noncore portions of our business as well as sales of property, plant and equipment from closed facilities. During 2025, we completed the sale of our European operations to QuadMed and we also sold 5 buildings, including the Greenville, Michigan production facility and an ancillary building in Sussex, Wisconsin during the fourth quarter of 2025. We will generate future cash proceeds from buildings we currently have for sale in Waukee, Iowa and Thomaston, Georgia. This strong cash generation fuels our balanced capital allocation strategy as shown on Slide 18. We while maintaining low net debt leverage of 1.57x as of December 31, 2025, we deepened our postal optimization offering through the April 2025 acquisition of the [indiscernible] and invested $45 million, representing approximately 2% of our net sales in capital expenditures for growth, automation and maintenance of our offerings. We also provided $22 million of shareholder returns in 2025, including $14 million of cash dividends and the earlier mentioned $8 million of share repurchases. In the first quarter of 2025, we increased dividends by 50% to $0.075 per share quarterly -- and as announced last week, our Board of Directors approved increasing dividends by another 33% to $0.10 per share paid quarterly or $0.40 per share on an annual basis. The 2026 dividend approval represents a sustainable $5 million increase in expected cash dividend payments in 2026 compared to 2025. We are pleased to return capital to shareholders through the quarterly dividend and opportunistic share repurchases. We show the results of our multiyear debt reduction strategy on Slide 19. During 2025, we reduced net debt by $42 million and from 2020 to 2025, we used our strong cash generation to reduce debt by $726 million, a 70% reduction from over $1 billion of debt on January 1, 2020. The Slide 20 includes a summary of our debt capital structure. During 2025, we were pleased to add Flagstar Bank, 1 of the largest regional lenders in the country to our bank group of 12 premier institutions. At the end of 2025, our debt had a blended interest rate of 7.0% and our total available liquidity, including cash on hand, under our most restrictive debt covenant was $299 million. Our next significant maturity of $205 million is not due until October of 2029. Given uncertainty regarding interest rates, we hold 4 interest rate swaps with notional value of $130 million and 1 interest rate collar agreement with notional value of $75 million. Including all interest rate derivatives, we have 58% of our interest rate exposure caps and with the interest rate collar, we would pay lower interest expense on approximately 62% of our debt if interest rates decline. During the fourth quarter of 2025, we completed an annuitization of a portion of the defined benefit single employer pension plan as shown on Slide 21. We annuitized $96 million of pension liability, representing 32% of the single employer pension obligation as of the time of annuitization with a $94 million distribution from the pension plan assets. This represented the pension obligations to 6,200 or 65% of the pension plan participants. We incurred a noncash settlement charge of $13 million with the annuitization. As a reminder, we acquired the single employer pension plan along with 2 multi-employer pension plans and other post-retirement obligations as part of the acquisition of World Color Press in 2010, totaling $533 million of net obligations as of the acquisition date. Since the acquisition, we have made cash contributions to these plans and taken other actions, such as the pension annuitization to reduce the net obligations by $491 million and improve the funded status of the qualified pension plan to 91% funded. As of December 31, 2025, only $42 million of net pension liability remains. We share our 2026 guidance as shown on Slide 22, and I'm pleased that our 2026 guidance represents another step on our way to our 2028 outlook for revenue growth. We expect 2026 net sales to decline 1% to 5% compared to 2025, excluding $23 million of 2025 net sales from the divestiture of our European operations. The 3% decline at the midpoint of the 2026 guidance range represents continued sequential improvement from year-over-year net sales declines of 9.7% in 2024 and 4.8% in 2025 and when excluding the impact of the European divestiture. With our typical seasonality, net sales are expected to be lower in the first half of 2026, followed by higher net sales in the second half of the year during our seasonal production peak. Full year 2026 adjusted EBITDA is expected to be between $175 million and $215 million with $195 million at the midpoint of that range being essentially equal with the 2025 adjusted EBITDA of $196 million. We expect adjusted EBITDA to follow the same seasonal pattern as net sales. Our adjusted EBITDA margin is expected to increase by 30 basis points from 8.1% in 2025 to 8.4% in 2026 due to continued disciplined cost management and changes in revenue mix. We expect 2026 free cash flow to be in the range of $40 million to $60 million with $50 million at the midpoint of that range also essentially equal with the 2025 free cash flow of $51 million. we expect increased net cash from operating activities due to higher cash earnings and timing of working capital to be offset by higher capital expenditures. In 2026, free cash flow was expected to be weakest in the first quarter due to the timing of investments in our people in the form of annual bonuses and 401(k) matching payments as well as the timing of working capital. As a reminder, the company historically generates the majority of its free cash flow in the fourth quarter of the year. With the expectation for strong cash generation, we plan to increase our growth investments while maintaining low debt leverage. Capital expenditures are expected to be in the range of $55 million to $65 million, approximately $15 million higher than 2025 at the midpoint of our 2026 guidance range, as we continue to invest in growth and automation, both in our print platform as well as in our service lines, including in-store Connect by Quad. In addition, our net debt leverage ratio is expected to decrease from 1.7x at the end of 2025 to approximately 1.5x by the end of 2026 and achieving the low end of our long-term targeted net debt leverage range of 1.5x to 2.0x. As a reminder, we may operate above this range at certain times of the year due to the seasonality of our business. We are closely monitoring the potential impacts of tariffs and inflationary pressures on our clients in addition to postal rate increases, which could affect print and marketing spend. We will remain nimble and adapt to the changing demand environment while following our disciplined approach to how we manage all aspects of our business, including treating all costs variable, optimizing capacity utilization and maintaining strong labor management. As part of these actions, we announced the closure of our Thomaston Georgia print plant in the fourth quarter of 2025 and anticipate operations ceased by the end of the first quarter. Slide 23 includes a summary of our 2028 financial outlook and long-term financial goals as we continue to build our momentum as a marketing experience company. We continue to expect the rate of net sales decline to improve as it has since 2024 and then reach an inflection point of net sales growth in 2028. We are strategically investing for the future as we expect growth in our integrated solutions and targeted print offerings to outpace organic decline in our large-scale print product lines. Excluding the large-scale print product lines of retail inserts, magazines and directories, we anticipate the business to grow at a 3% CAGR through 2028. In addition, by 2028, we expect to improve adjusted EBITDA margin to 9.4% and are planning to achieve progress towards that goal in 2026 by improving the adjusted EBITDA margin 30 basis points. We then anticipate reaching low double-digit adjusted EBITDA margins in the long term as our net sales mix of higher-margin services and products increases while continuing to improve manufacturing productivity and reduce costs. Regarding free cash flow, we expect to improve our free cash flow conversion as a percentage of adjusted EBITDA from approximately 26% based on our 2026 guidance to 35% by 2028, and and the 40% in the long term, primarily due to lower interest payments on decreasing debt balances and lower restructuring payments. Finally, we continue to expect to maintain our current long-term targeted net debt leverage ratio in the range of 1.5x to 2.0x as part of our balanced capital allocation strategy. We believe that Quad is a compelling long-term investment and we remain focused on achieving our financial goals and providing strong shareholder returns, including the recently increased quarterly dividend of $0.10 per share payable on March 13, 2026, to shareholders of record as of February 27, 2026. With that, I'd like to turn the call back to our operator for questions. Operator: [Operator Instructions] The first question comes from Kevin Steinke with Barrington Research. Kevin Steinke: I wanted to start off by asking about direct mail, you mentioned that direct mail outperformed your expectations in 2025, I believe. And you talked about the strong momentum in that targeted print category, your direct marketing agency. So -- maybe any more commentary on growth trends and kind of how you see that momentum carrying into perhaps 2026 and beyond. J. Joel Quadracci: Yes. I think it's also a chance for you to clarify the difference between DM, meaning direct mail, the product and DMAOR, the agency. So DM direct mail is sort of the letter shop kind of letter-based mail that you'll get -- and predominantly, over the course of time, a lot of it has been very generic direct mail where it's the same thing to everyone where Quad really likes to play is becoming much more personalized, driving data to increase responsiveness. And so the difference between sort of a generic letter piece and a very data-driven letter piece means a much, much higher response rate and in a relatively great response rate to the rest of the media world when you think about mix across all channels. And so that's something that people sort of sometimes don't realize that this is a very responsive channel, and we're also getting people like [indiscernible] to reenter the direct mail space because of the responsiveness. And so as the -- when we think about the DM ALR, the agency around direct mail that's the ability to tap into all the stuff that we talk about generally in our agency solutions, which is the data stack to help find that audience and become much more targeted. And because it's very household centric, the data stack is with the personalities of the household, that becomes a really powerful combination with direct mail, the product that goes into the mailbox. And so as we think forward, the more we kind of help people as an agency for DM creating innovation and taking the use of direct mail to a whole different level. we think that there'll be plenty of other combinations that make sense such as linking those efforts with things like in-store connect for advertisers or other types of marketing. And so that approach is really helping drive people towards us, but also creating direct mail where there was in direct mail and so we're excited about the approach that Scott and his team have taken and really excited about the actual sort of learnings that are happening real time and resulting in real numbers. Kevin Steinke: Yes. Okay. That's good to hear. I wanted to also ask about just the postal service had put off the postal rate increase that normally would have gone in, in January on certain categories, which I believe included catalogs -- and I think it sounds like longer-term catalog could be a really integral part of a client's marketing outreach. So have you seen any greater uptake in terms of catalogs or other channels due to the delayed postal rate increase, acknowledging the fact that rates are still up significantly over the last several years. J. Joel Quadracci: Look, I'll answer that specifically, but also more generally as it relates to what's going on with the post office because I think you know that it's 1 of my sort of favorite things to [indiscernible]. As a reminder, Postal is about 70% of the direct mailers spend. And when we talk about co-mail and all that stuff, that's our ability to work share with the post office to create much more efficiency for them which then results in great significant savings for our clients because they offer discounts if you make it more efficient. Until 2021 for over a decade, the post office was required to stick to the change in CPI as their rate increase every year. And so that created not only predictable models but really stayed in tune with how the rest of the world works because inflation is, in fact, kind of a measurement of what goes on in the pricing world for products and services. And so what they did the previous Postmaster General in 2021 post the pandemic, they were given the authority to go above that to try and fix some of the problems they have. And so what they proceeded to do was aggressively use that authority. They started increasing twice a year, once at the beginning of the year and once in the mid-time part of the year, averaging over 35% greater than inflation. Now in any industry, if you're going to significantly increase your biggest cost by 35% over inflation over a period of years, everyone would see an increase in decline. And so what's happened here, catalog has always been a very responsive mechanism. There's a whole industry around it. And there is people who are specific to catalogs and then there's a whole lot of marketers who use catalogs as a part of the media mix. We have seen accelerated decline during that period. Now the new Postmaster General, everything that we see and hear is that he'd like to change the philosophy to more of a growth philosophy. -- because raising rates, by the way, in those time period did create more revenue and they claim success with that, but that's not true growth. That's pricing used to increase revenue, which then in the following year, creates a significant decline in the volume. And then you have to raise revenue again or rates again to try and keep that revenue flat. It's kind of a spiral. And the new Postmaster General indicates that he would like to kind of think differently about the post office writ large with the growth mentality. And the evidence of that was that he did forgo an allowed increase in January. That being said, they're still on target for an increase in the second half of the year. And specific to catalogs, they did implement a test period, which allowed them to offset last year's midyear increase, but that's set to lapse. And it won't prove to be successful in driving volume because that 35% average over the rate of inflation over a period of many years, created the cost baseline that is so far ahead of where it should be, that it hasn't been able to instigate growth like we would like. And the biggest part of catalog that's been impacted would be in prospecting mailing where they're using the catalog to try and gain new customers. That's where you're not already having a transactional relationship with someone. Therefore, the responsive rate versus the customers' catalog that you said would be significantly lower. But it's still effective in driving volume. But if your cost is so far above where the baseline should be people, that's where you see a lot of the volume hit catalogs. So specific to your question, we haven't seen growth in catalogs. We've seen further decline because that baseline is so outpaced inflation but we've done a significant job of helping offset that, though, this past year with the [ Andrew ] acquisition. So we've had over a 50% increase in our multi-mall volumes, which means that much more mail gets exposed to potential discounts. We've had a 3x improvement in enhancing carrier route density levels, which is -- speaks to discounts. And we've had over a $0.075 plus postal savings per piece for enhanced carrier routes. So all in all, what that means is we've at least been able to try and offset the damage they've done. What I'm looking for what I'm hoping for is a realization that they have to spur growth through creating a more significant discount opportunity specifically for prospective mailing and hold off on trying to kill the category with significant increases. I know that's a very long-winded answer -- but I think it's really important for all constituents on the phone to understand that part of what's going on. Kevin Steinke: That's great. Absolutely. I appreciate all the insight there. I just want to ask you also about any updates on in-store connect in terms of the pipeline there or further store deployments in the works? And maybe where you stand at in terms of how much you've rolled that out currently? . J. Joel Quadracci: Yes. We've learned a lot in the last year of trying a whole new category, which, as you know, is a bet we're making that in-store media that everyone in the specifically grocery space, but retail in general, talk about activating -- and the challenge is it affects every part of a retailer's business, whether it's merchandising media selling, how the experience is through the store. So it involves every part of a company's organization which, for us, was a learning that it's going to -- it takes longer for people to be able to execute and make a decision on this. That being said, we've seen an acceleration in conversations as well as opportunities and increases in accounts that we're going to be doing and some new exciting opportunities that we'll be turning on in the near future. So I'd say that -- there continues to be what we believe is there there in in-store media as a new medium to be activated. And it's again about getting to as many eyeballs as you can so that CPGs want to make it a regular part of their budget. And so we're sort of full steam ahead here. Again, we've learned a lot that it takes a little bit longer for organizations to navigate it, but it hasn't changed for the interest that we're seeing out there. . Anthony Staniak: And Kevin, I'll just add, we've reserved capital in our CapEx guidance for 2026 for growth here in [ ICQ. ] So it's 1 of the primary drivers behind the increase in CapEx between years. . Kevin Steinke: Okay. That's helpful. Yes, go ahead. Anthony Staniak: And speaking to CapEx, in addition to that, we have money reserved for some other growth initiatives that were in the planning process of but not ready to talk about. -- but we think we'll be worth the spend. Kevin Steinke: Okay. Great. Just a couple more here on the financial side of things. When we look at the guidance ranges provided for 2026, as you noted, the midpoint implies a continued improvement in the sales trend over the previous 2 years. Just kind of curious, as you think about those ranges for sales and adjusted EBITDA. What are the factors you're thinking about in terms of maybe higher end versus lower end of those ranges as 2026 progresses? . J. Joel Quadracci: Yes, I'd say that, again, the -- on the sales side, I'll cover that, which is a little bit to what I talked about is to what degree does some of the decline that we plan for and know how to manage to what degree does Postal impact that, that could either create a higher opportunity or a little bit lower in that category. -- but then to the degree at which we continue to see momentum of direct mail in store as well as packaging, which have all been feeling good and looking good. . Anthony Staniak: Yes. I think those targeted print categories, we've said this since our Investor Day in '24. They're at a higher margin profile than our large-scale print offerings. So as the mix continues to evolve towards targeted print that will help lift our margins, which is what we're seeing this year. And then we're going to continue to watch, obviously, the cost side closely and have demonstrated actions towards that effect. Kevin Steinke: Okay. Great. And then just lastly, maybe a question about capital allocation. You continue to be at or near the low end of your targeted leverage ratio range, and it's really nice to see the significant dividend increase you announced? Should we just think about capital allocation going forward, continuing to be pretty balanced. You mentioned share repurchases. Are you still looking for maybe tuck-in acquisition opportunities or any other things you'd want to touch on, obviously, organic growth investments as well. But . Anthony Staniak: Yes, Ken. I think overall, the message for 2026 is similar to 2025. We'll look at -- if a tuck-in acquisition fits and meets our parameters, that is possible. CapEx remains important. Joel talked about not only ICQ but other growth that we could put money towards -- we do believe in providing a strong return to shareholders. We are proving out, getting towards that 2028 flip. And in the meantime, we want to reward our shareholders for being long term and part of this. So that's where the stock buybacks and the dividend come in. And then maintaining low debt leverage, we still think is is very prudent in this cycle to make sure we can weather any storms but also be available for -- have cash available for any opportunities that present themselves. So I would expect a similar type of mix and what we did in 2025. Operator: Our next question comes from Barton Crockett with Rosenblatt Securities. Barton Crockett: Let me see, just stepping back to the environment. You've given your guidance range for the year. Can you give us some sense of how we're starting in the first quarter relative to your metrics that you put out there, particularly revenue? Anthony Staniak: Yes. I mean first quarter, as we said in our prepared remarks, that's a lower volume quarter for us, especially compared to the back half of the year. I think we've started out on track with what we expected and seeing decent volumes here in February so far as well. So I feel like we're on track. . J. Joel Quadracci: And I'd add that sort of some of the noise of past year with things like tariffs and all that stuff. You sort of feel like people are a little more confident in their decisions. which is a good thing. And so we're seeing some reinvestment. Barton Crockett: Which is interesting because some of the commentary out there, particularly Pinterest was talking about marketing pullback by large retailers. You guys aren't seeing anything like that is what you're telling us. Is that correct? J. Joel Quadracci: Well, it's again, as I said last year, it's situational. But no, we -- I can say that so far, we haven't seen like significant pullback. And again, I think that in our media channel, it's been a tried and true channel for them that they know very well for many, many years. and some of the pullbacks that they've done, like 1 of the areas that got pulled back over time, and we've said this would happen is retail inserts, that a lot of the big box guys are already sort of kind of pared that back significantly, where it remains actually relatively strong is in things like grocery. And so some of the shifts that have happened in our media channels have already kind of -- some of them have played out a little more than maybe some of the stuff that's kind of rejiggering around in the bigger media mix. So at this point, again, situationally some are better, some are worse. But again, I think that because of the channels we're in, if anything, we're seeing people want to get more help in some of the ways to market and how to use audience better linking our channels to other channels and interest in things like ISC Q because part of the challenge in digital, too is, overall, people are seeing a lot of I guess, crowded nature of the channel. And in some cases, you start to see lower responsiveness. So people are always jiggering around how do they get more responsiveness. So I think certainly, with things like AI you're probably able to analyze it even better of what's working and what's not these days. and that's the quest that people are on. So will we see some other stuff as we get to the seasonally busy part of the year. Typically, at this point, we wouldn't see that from the clients. Barton Crockett: Okay. Now 1 of the things also you touched on postal, I want to make sure I understand what you have visibility into and what's still unknown. So you have visibility into January postage but is this still unknown what's going to happen midyear? . J. Joel Quadracci: Works -- I think the industry is basically accepting or expecting an increase of somewhere in the 6% to 8% range mid-year which, again, 1 of the things that happened a couple of years ago is when they surprised everybody outside of the budgeting process. The good news is that at least people have been expecting this again, aspirationally, they prefer further incentives to try and increase mail. But I think that, that 1 is kind of built in. Barton Crockett: Okay. So is it your view that it's unknown what the longer-term trajectory is? Or does it feel likely to you that we're kind of stay somewhere in this 0% to 8% kind of range. J. Joel Quadracci: That's the big question, right? You have a new regime in and there's a lot of pressure on the post office to fix itself. You'll probably see the Postmaster General. My understanding is we'll be up in front of Congress pretty soon to talk about operational issues, but he's also trying to implement sort of continuation of some of the old strategy but trying to pivot them to growth. And you can't do that unless you sort of tackle the ability for customers to pivot to growth, i.e., pricing. And so that's the part I'm really watching closely, but we don't have full visibility to at this point. Barton Crockett: Okay. All right. And then just 1 other category. I was kind of curious about the question, which is -- there's been tremendous kind of uptake among performance marketers in some of the end-to-end kind of digital Performance Max kind of black box give you an outcome online digitally solutions that are driven by scale by people like Google tied into their search and [ U2 ] properties. That seems to be an area of increased focus for performance marketers. I'm just wondering if that's creating some competitive pressures for you guys in rise and then your push into your kind of angle on performance. . J. Joel Quadracci: Yes. Well, look, we're using all of the channels for it. And within digital, we're using Google. We're using YouTube. We're using all those different services to place ads. I think that the challenge people are trying to tackle is the integration of how does it all work together. So I always talk about integration, I talk about all channels, but even within digital, people are trying to understand when I spend on Pinterest versus Facebook, what happens. I've heard varying accounts depending on the category of like how responsive really is Facebook in our advertising spend. I've heard opposite. So it's like the biggest issue people are trying to drive to is understanding when I spend in digital, where should it be and what is the true measurement. And that's what we're trying to provide them. And that, for us, has been opportunity. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to the management for closing remarks. . J. Joel Quadracci: Thank you, operator, for joining -- and everyone, for joining the call. I want to close by reiterating that Quad remains committed to our strategic vision, leveraging our integrated marketing platform to drive diversified growth improved print and marketing efficiencies and create meaningful value for all stakeholders. With that, thank you again, and have a good day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the OGE Energy Corp. 2025 fourth quarter earnings and business update call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Casey Strange, Investor Relations Senior Manager. Please go ahead. Thank you, Lisa, and good morning, everyone, and welcome to our call. With me today, I have Robert Sean Trauschke, our Chairman, President and CEO, and Charles B. Walworth, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Chuck of financial results. Casey Strange: And finally, as always, we will answer your questions. I would like to remind you that this conference is being webcast, and you may follow along at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I would like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I will now turn the call over to Sean for his opening remarks. Sean? Thank you, Casey. Robert Sean Trauschke: Good morning, everyone, and thank you for joining us today. It is certainly great to be with you. 2025 was another strong year, and a continuation of the momentum we are building and setting the foundation for a long runway of future growth with generation and transmission opportunities. This morning, we reported consolidated earnings of $2.32 per share for the year, including $2.47 per share at the electric company and a holding company loss of $0.15. This time last year, we talked about how we would deliver in 2025, and we did, including delivering earnings in the top half of guidance, filed for recovery of generation needs to meet growing demand, secured financing for long-term growth, leveraged the strong local economies to drive job growth and investment in our service area, were named an Oklahoma Top Workplace, and we were recognized by the Southeast Electric Exchange for our top-ranked safety performance. We remain committed to our North Star for reliable electricity, some of the lowest cost in the nation. We met our commitments and more, strengthened our financial position, and continued investing in reliability and growth while keeping affordability front and center for our customers, lengthening that runway for continued future growth. Since our last call, we executed a well-subscribed equity offering, filed for generation preapproval of the 300 megawatt Frontier Energy Storage Project, issued two RFPs, and a 2026 draft IRP. And as I look ahead for the remainder of 2026, we will advance our transmission strategy and finalize the opportunities from the SPP ITP, recognizing its critical role in reliability and its growing contribution to long-term investment opportunities, we will secure approval for the Frontier Energy Storage Project in both states, and we will file for generation preapproval in both jurisdictions following the results of the RFP we issued last month. We do plan to file a rate review midyear in Oklahoma, and we will evaluate the timing of an Arkansas rate review later in the year. Building on these strong financial results, we continue to invest in our future and strengthen our commitment to the communities we serve. In line with this momentum, tomorrow we will host a ribbon cutting for our new combustion turbines at Tinker Air Force Base. These new units showcase our ongoing investments and community partnerships to benefit all customers; in this case, provide vital support to our country's national defense. Over the last ten years, we have built and put into service approximately one gigawatt of generation. Tomorrow, we cut the first ribbon on the next 1.3 gigawatts of generation we will build and put into service before the end of the decade. Yesterday, we issued our draft 2026 IRP which outlines our long-term resource strategy. And we are finalizing a one gigawatt contract with one data center customer referenced as Customer X in the IRP. We will also file a large load tier, both of these by midyear. Across these initiatives, our priority remains protecting residential customers, and we have built explicit consumer protection measures into that framework. In addition, we continue to advance our transmission strategy and earlier this month, the SPP determined that several large transmission projects will be considered short-term reliability projects, meaning that OG&E was assigned a significant portion of the Seminole–Shreveport 765 kV line. After we work through the notice to construct process at SPP, we will update our investment timing and financing plans. We are discussing a number of exciting growth opportunities today, and I want to remind you that our sustainable business model's foundation is our low rates. Our relentless commitment to affordability translates to our rates the lowest in the states we operate, lower in our region, among the lowest rates in the country. And from a cost control perspective, our O&M per growth over the last decade is less than 1%. We remain committed to delivering reliable electricity to all those customers at low rates. And finally, before turning the call over to Chuck, I want to recognize our incredible employees whose dedication makes these results possible. Every day, they bring a relentless focus on efficiency and affordability, helping us deliver reliable service while keeping rates among the lowest in the nation for the communities we serve. Next week, OG&E will celebrate its 124th birthday. We are a company innovating for the future with a solid foundation built over time. With that, thank you. And, Chuck, I will turn the call over to you. Thank you, Sean, and thank you, Casey. Good morning, everyone, and thank you for joining us today. We have delivered another strong year in 2025, finishing Charles B. Walworth: at the upper end of our original guidance range, and we are entering 2026 with solid momentum. This morning, I will review our 2025 results, introduce our 2026 outlook, and walk through our long-term growth framework. Starting with full year results, consolidated net income for 2025 was approximately $471 million, or $2.32 per diluted share, compared to $442 million, or $2.19 in 2024, ending the year $0.05 higher than the midpoint is consistent with our message of delivering results in the top half of the guidance range. At the electric company, net income increased to $500 million, or $2.47 per share, up from $470 million, or $2.33 per share, driven by recovery of capital investments and strong load growth. At the holding company, the loss was $29 million, or $0.15 per share, slightly higher year over year due to increased interest expense, partially offset by a one-time legacy midstream benefit. Fourth quarter details are included in the appendix. Our service area continues to perform well. Customer growth was just under 1%, and weather-normalized load grew approximately 7%, reflecting strong local economies and the strength of our sustainable business model—low rates, reliable service, and communities that continue to attract investment. Turning to 2026, we are guiding to consolidated earnings of $2.43 per share, with a range of $2.38 to $2.48. The midpoint represents a 7% increase from the 2025 midpoint. We are also setting our long-term EPS growth target of 5% to 7% off of this higher starting point and continue to expect to deliver in the top half of the range in 2027 and 2028. Since becoming a pure-play electric company, we have consistently delivered at the high end of our guidance. Our track record of setting the bar higher and higher continues to compound into increased future earnings expectations. We reliably deliver results, and over the past ten years, we have achieved roughly 6% earnings per share compound annual growth and nearly 7% over the last five years. From a regulatory perspective, we plan to file a rate review in Oklahoma this summer with new rates in 2027. We are also evaluating a potential filing in Arkansas by year end. Looking at growth drivers, we expect customer count to increase about 1% and weather-normalized load to grow 4% to 6% in 2026. This builds on a strong five-year trend with total retail weather-normalized load up more than 24% since 2021. Turning to financing, we expect to issue approximately $300 million of debt at the electric utility this year, with no long-term debt issuance planned at the holding company. As a reminder, we issued equity last November to support the roughly $1 billion of incremental CapEx we added to our plan through 2030. This transaction, including the forward, satisfies our equity needs through 2030 under the current plan. Our balance sheet remains a key strength. We expect FFO to debt of approximately 17% through 2030. We are targeting a 60% to 70% dividend payout ratio, with a stable and growing dividend. Earnings per share growth is expected to grow faster than dividends to support this goal. As always, we will evaluate our plan each year in light of the company's growing investments. As we look ahead, 2026 includes several important catalysts. Growth in our customer base and policy changes at the Southwest Power Pool are driving increased capacity needs. In January, we issued two draft RFPs, one for bridge capacity between 2027 and 2032, and a second All-Source RFP for accredited capacity available for 2032. We expect bid selection in the third quarter followed by preapproval filings before year end. Supporting that process, we issued a draft IRP identifying approximately 1.9 gigawatts of capacity needs by 2031. About 800 megawatts of that increase is driven by SPP policy changes. This 1.9 gigawatt need is incremental to the 300 megawatts from the Frontier Energy Storage Project and we are seeking preapproval for in Oklahoma and Arkansas. On transmission, SPP has finalized its 2025 ITP portfolio. OG&E was directly assigned a significant portion of the Seminole to Shreveport 765 kV line. We were also allocated several additional transmission and substation projects. Next steps include developing refined project estimates and schedules for all of the 2025 ITP projects. In the second half of the year, we would expect to accept NTCs and add the projects to our investment plan. Taken together, we see a compelling set of long-duration investment opportunities incremental to our plan. We will be prudent by balancing affordability and execution, and we will update you on capital and financing as projects receive approvals. In closing, we remain confident in our financial plan. With disciplined execution and a clear investment roadmap, we are well positioned to deliver results in the top half of our 5% to 7% EPS growth range through 2028 with meaningful upside ahead. It is an exciting path forward, and we are proud to support the customers and communities we serve. With that, we will open the line for your questions. Operator: Thank you. At this time, if you would like to ask a question, please press 11 on your telephone. You will hear the automated message advising your hand is raised. If you would like to remove yourself from the queue, press 11 again. We also ask that you please wait for your name and company to be announced before proceeding with your question. Our first question today will be coming from the line of Whitney Mutalemwa of Wells Fargo. Your line is open. Whitney Mutalemwa: Good morning, team. This is Whitney Mutalemwa on for Shar. Hi. Good morning, Whitney. Thank you. Great quarter. So investors can see the investment plan, and you have been clear you are funding major projects such as Horseshoe Lake, but it is harder to translate that into a rate base trajectory with that more explicit disclosure and timing and recovery mechanics. What is the best way to think about rate base growth versus the investment plan? Is it fair to assume a relatively tight linkage, or are there meaningful timing recovery dynamics that make the conversion lumpy? Charles B. Walworth: Yes. So great question. So we do have a slide towards the end of our packet that has our investment plan laid out, the current plan, and we have a footnote on there that under that plan, that indicates rate base growth of about 9%. So obviously, you know, in our remarks today, we talked about a lot of opportunities that would be incremental to that. But the plan as laid out on that slide equates to 9%. Does that help? Whitney Mutalemwa: Yes. Yes. That totally makes sense. And given that backdrop, your fourth quarter materials and recent Oklahoma discussions have emphasized outsized load growth, and just a deeper large load opportunity set along with the 2026 outlook. What specifically has changed since the last update within the large load panel? Like, how much is contracted, committed versus still in the advanced pipeline stages? Robert Sean Trauschke: Yes. I do not think anything has changed. We still are in active negotiations with six to seven large load customers in various stages. What we did disclose today is the Customer X that has been identified in our IRP plans. We are finalizing those agreements, and we expect to have that filed with the commission along with the large load tariff by midyear. So in terms of what has changed, I think that is nearing the conclusion. Whitney Mutalemwa: Sounds good. Thank you. Robert Sean Trauschke: Thank you. Thank you. One moment for the next question. Operator: And our next question is coming from the line of Brian J. Russo of Jefferies. Your line is open. Brian J. Russo: Hi. Good morning. It is Brian Russo on for Julien. Hey. Good morning, Brian. Hey. Could you just talk about the, looks like moderating of weather-normalized load growth in 2026 of 4% to 6% versus the 7.2% in 2025. I was just wondering if you can maybe break down the key, you know, customer class drivers. I am sure the commercial/crypto class has something to do with it. Charles B. Walworth: Yes, Brian, you know, I think this is really indicative of what we talked about all along, in that these loads are not always, you know, super, super steady, and that there is some ebb and flow to that. So what I think I highlight in my remarks is that when you look over a little broader scale, you know, since 2021, we averaged, you know, about 5%. And, you know, going forward, that is kind of right what we are seeing this year. So, you know, in the grand scheme of things, I see us really, really quite in line with that. Again, you know, you think about it, really abnormally strong trend line relative to history. And then with the catalysts that we have going forward, clearly, that is a good positive sign going forward. Brian J. Russo: Okay. Good. So nothing structurally changed, and it is also excluding large data center customers. Charles B. Walworth: Yes. So definitely, as Sean indicated, much more certainty around Customer X as we prepare to finalize that. Brian J. Russo: Okay. Good. And could you comment on the disclosure, the IRP section of the 10-Ks regarding the Black Kettle energy storage capacity purchase agreement that was terminated due to some sort of event default? And I am just curious, not knowing the details, but does that kind of support, you know, the least cost, least risk scenario of more utility generation ownership in these two pending RFPs? Robert Sean Trauschke: I think it does, Brian. I think we have been a strong proponent of being the owner and the operator of these assets. We are good at it. And we see how they perform in extreme conditions, and we want the ball. And this situation here, I think, to your point, is exactly right. It just further validates that thesis. Okay. Great. And then just lastly, the disclosure on the $7.3 billion basic capital plan, it still Brian J. Russo: seems like you might evaluate capital prioritization, maybe pushing out some transmission and distribution spend, due to kind of create some room for some more generation capacity to manage rates and the whole affordability narrative. Is there any more detail you can provide there? Because you have not done that yet. Robert Sean Trauschke: Yes. I think we have tremendous flexibility in allocating capital. And we are certainly focused on the overall affordability metric because that is really what has been fueling this growth we are seeing in our service territory. So we are balancing all that. What Chuck was talking about, though, is as you look forward, we are going to be looking for additional generation. We are going to be working through this transmission line. When we get those finalized, we will layer those in at that point. So that is probably the data point or the time period where you have to look for, if we were to make any changes, what they would be. Brian J. Russo: Alright. Great. Thank you very much. Robert Sean Trauschke: Thanks, Brian. Operator: Thank you. And one moment for the next question. Next question is coming from the line of Aditya Gandhi of Wolfe Research. Your line is open. Aditya Gandhi: Good morning, Sean, Chuck, and Casey. Thank you for taking my questions. I just wanted to start on the 765 kV transmission line. I believe SPP came out with a $2.4 billion estimate for that particular line. Recognize you are still going through updating the cost estimates and timeline, but can you give us some initial sense of what OGE portion of that project would be relative to AEP? Charles B. Walworth: Yes, Aditya. Good morning. Thanks for the question. So I think, first of all, you laid it out exactly right. We are very early in the stages on that. The SPP just made that designation, which we wholeheartedly supported. So I think we have some work to do to get through those points. But as I mentioned in the remarks, it is that line, and there is some other associated work. So I think at this kind of preliminary stage, I see it as probably something that is on the order of 20% of our current capital plan. But, again, that is a preliminary kind of feel, and we will work with the SPP to fine-tune that and hope to get that buttoned up before the end of the year. Robert Sean Trauschke: Yes, Aditya, this is Sean. Just one other point. You know, the routing is still to be determined, and the direct routing of that line. So this will all get flushed out, and we will certainly disclose that later in the year. Understood. That is helpful. Thank you. And then I also wanted to touch on the data center contract that you are finalizing. Can you just remind us, for this one gigawatt, do you intend to meet Aditya Gandhi: those capacity needs through the RFP process that you are running right now as well as generation that is already in your plan? And then maybe can you just speak to some customer protections that you are building into that large load tariff framework? Charles B. Walworth: Yes, Aditya. Yes. So that contract, that customer, is worked into the IRP numbers that were released today. So we do intend to approach that holistically through the RFP process. In terms of customer protections, we have been very clear on this ever since Customer X has come up, in terms of customer protections that ensure that that large customer pays its fair share, has minimum terms, collateral requirements, all those types of things that you would expect. And we will be happy to share more details around that once that regulatory filing gets made. Aditya Gandhi: Great. Thank you for taking my questions. Operator: Thank you. And one moment for the next question. Our next question is coming from the line of Chris Hark of Mizuho. Your line is open. Chris Hark: Good morning, everybody. This is Chris on for Anthony. How are you? Good morning. Good morning. Morning. My question is pretty similar to the ones, but just want to get a little more insight on the customer class breakdown in that 4% to 6% number, and how much of that is being driven by Customer X and then also the retail class? Charles B. Walworth: So, Chris, we do not have a whole lot of detail broken down in our filing. But what I can tell you is that Customer X really does not come on this year. Right? So that is a little bit further out than this year. So that is not driving the 4% to 6%. Other, you know, the key areas—obviously we look at the residential—is definitely a bellwether class, and we see that as definitely steady as always. So, hopefully, that gives you a little bit of insight there. But Customer X is not in that 4% to 6% for this year. Chris Hark: Okay. Super helpful. And then the next question I have was just more about the election and with Hyatt's term ending this upcoming January next year, what are your thoughts on the turnover in the commission and the elections that are going on in your jurisdictions? Robert Sean Trauschke: Great question. So we certainly have a governor's race, an attorney general's race, and then we certainly have a Corporation Commissioner race. We have been involved and spoken to all the candidates. I think all the candidates for each one of those races would be constructive and we would be comfortable with, and we know them. And so I think essentially those races will be determined, I would expect, in the June primary, and we will probably have a good idea of who the governor and the attorney general and the Corporation Commissioner are going to be in June. Chris Hark: Thank you. That is it for me. Congrats on the year. Robert Sean Trauschke: Hey. Have a great day. Thank you. Chris Hark: You too. Bye. Operator: Thank you. As a reminder, if you would like to ask a question, please press 11 on your telephone. And one moment for the next question. Next question is coming from the line of Nicholas Campanella of Barclays. Your line is open. Michael Brown: This is Michael Brown on for Nicholas Campanella. So the question is, recently, iRunner announced a data center in Alva, Oklahoma. And we also noticed your draft IRP has 1.9 gigawatts of new needs by 2031. Can you confirm that this opportunity in Alva is in your service territory? And how are you framing what else is needed to get to ESAs with the counterparties in your territories, if it is in your territory? Charles B. Walworth: So we have had a lot of discussion since the last IRP about what large customers are in and not. And you recall we had one customer that was not in there, but just, again, trying to give folks flavor of the type of customers we have been having discussions with. So this update of the IRP does not have another customer similar to Customer X in it. Again, we are talking with other counterparties. But, again, just keeping with our prudent, conservative bent, we have not included any of those at this time. So, really, you are looking at that 1.9. Recall that last year, we were solving for 2030 capacity needs. And the way our IRP works is we have a five-year action plan, so we have essentially just shifted that out one year. And when you look at the impact of shifting it out one year, our load is up because of that, the Black Kettle resource that we talked about earlier—moving that out—that was in there before, and then just some kind of general odds and ends on the load forecast. That is what gets you to that number, as well as the SPP policy changes that were enacted this year; that was about 800 megawatts. So a pretty substantial change there too. Michael Brown: Okay. Thank you. Robert Sean Trauschke: My last question. You said you plan to have a DC deal by midway through this year. How are you thinking about current legislation impacting that? And what does this customer need, whether it is permitting or water permitting, to properly move forward with the FFA? Yes. Good question. So in terms of the first part of that, in terms of the legislation that seems to be popping up in every jurisdiction, we are certainly involved in that process, engaged in that dialogue, and we will stay focused on it to make sure that there is adequate protection for the existing customers. In terms of Customer X, what things they need to do to move forward, I think the gating item, quite frankly, is just finalizing our agreement. We are in pretty good shape. Actually, I just have one more. Michael Brown: Okay. With your rate base, Robert Sean Trauschke: I just have one more question, Patrick. I am sorry. Okay. With your base CAGR already at 9% and dilution at roughly 0.75%, and coupled with the upside CapEx, I am curious as to why your growth is better than 6.5%. Yes. I think good question. And so what we have tried to do is make sure that we lay out for you exactly what has been approved through the regulatory arenas with a financing assumption. And so that is the assumption—those are the assumptions—we put forward to you today. What we have highlighted is when we receive the final clarification and the total numbers around the ITP projects at the SPP, we will layer that in and tell you how we are going to finance it. When we receive approval for all of the generation that is coming out of these RFPs, we will show you what that is, the timeline, and how we are going to finance it and the earnings impact. So that is how we are doing that. We will layer these in, and, obviously, that will have an impact on earnings. Michael Brown: Okay. Thank you. I really appreciate that. Charles B. Walworth: Thank you. My question. Operator: Thank you. One moment for the next question. And the next question is coming from the line of Stephen D'Ambrisi of RBC Capital Markets. Your line is open. Stephen D'Ambrisi: Hey, Sean. Hey, Chuck. Thanks for taking my question. Robert Sean Trauschke: Hey, Steve. Good morning. Stephen D'Ambrisi: Good morning. I dialed in as Steve this time, so I did not get a Stephanie. Hi. I noticed that. We were not going to say anything. I figured I would let you know. Yes. So just following up on the same line of questions. Obviously, I understand that you guys are a very conservative management team, but I just want to look—you know, there are people in your service territory, it seems like, who are talking about having power secured. And just so, can you talk about what the timeline is, or what it looks like, when you will go to update the street on potential other customers other than Customer X, for example? Because it just feels like there is load out there that is substantial relative to your peak and that you may have to build for, and, you know, just want to try and understand how we have to feather that in over time. Robert Sean Trauschke: Yes. I mean, to put it in perspective, in our remarks, we said by the end of the decade, we will add 2.3 gigawatts, and then the IRP is calling for another 1.9. So it is pretty substantial. Stephen D'Ambrisi: I Robert Sean Trauschke: think what is going to happen is these large load customers, as they materialize and we have line of sight to the finish line, we are going to announce it, and just like we did with Customer X here to give you some timeline. But, you know, 1.9 gigawatts is a lot to have in by the 2031, 2032. Stephen D'Ambrisi: Yes. Stephen D'Ambrisi: Totally understand. Not saying there is not a lot, but it seems like there is even more. Stephen D'Ambrisi: Oh, I think, you know, and, you know, you have to draw the line somewhere, Steve. Robert Sean Trauschke: And we are out there all the time talking to different people. I rode the elevator this morning with somebody, and they were telling me about another opportunity. So they are out there, and we are working hard to secure them. Stephen D'Ambrisi: Understood. I appreciate it. Thanks, Sean. Robert Sean Trauschke: Thanks, Steve. See you. Chris Hark: Thank you. And that concludes today's Q&A session. I would like to Operator: turn the call back over to Robert Sean Trauschke. Please go ahead. Robert Sean Trauschke: Great. Thank you, and thank you everyone for joining us today, as well as your continued support. Take care, and have a wonderful day. Operator: This concludes today's programming. Thank you so much. You have a great day. You may now disconnect.
Operator: Greetings. Welcome to Similarweb Fourth Quarter Fiscal 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Rami Myerson, Vice President, Investor Relations. Thank you. You may begin. Rami Myerson: Thank you, operator. Welcome, everyone, to our fourth quarter 2025 earnings conference call. Joining me today are our CEO and Co-Founder, Or Offer; our Chief Financial Officer, Ran Vered, who started with us in late December 2025; and Maoz Lakovski, our Chief Business Officer, who is joining us as well. Yesterday, after market close, we released our results for the fourth quarter and published a discussion of our results in a letter to shareholders on our Investor Relations website at ir.similarweb.com. Today's webcast will be accompanied by an earnings presentation, which is new and underscores our commitment to Investor Relations and transparent communication. The webcast can also be accessed from our Investor Relations website. Certain statements made on the call today constitute forward-looking statements, which reflect management's best judgment based on the currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release and our most recent annual report filed on Form 20-F for more information on the risk factors that could cause actual results to differ from our forward-looking statements. Additionally, certain non-GAAP financial measures will be discussed on the call today. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation. Today, Or and Ran will walk through the highlights of the quarter and the full year, review the progress we are making on our profitable growth strategy and provide our initial outlook for 2026. Following our prepared remarks, we will open up the call to questions from sell-side analysts. With that, I'll turn the call over to Or. Or, please go ahead. Or Offer: Thank you, Rami. Welcome, everyone, joining the call today, and a special welcome to Ran, who joined us as our new CFO in December 2025. I will begin with our Q4 and full year 2025 highlights, then cover our strategy and the progress we made in 2025, rolling out our innovative solution and conclude with our 2026 priorities and goals. Now let's look at our Q4 2025 performance on Slide 5. Revenue grew 11% year-over-year to $72.8 million. This was below our guidance, mostly due to the timing of 2 large LLM data training contracts that did not close yet, but remain active in our pipeline. Given the size and complexity of those AI contracts, sales cycles can take longer to complete. That said, once closed, we expect them to represent a very big multiyear revenue opportunities with strong expansion potential. We are working hard to close those deals. In addition, and despite the delay of those deals, we slightly exceeded the midpoint of our non-GAAP operating profit targets for the quarter through disciplined cost management. Despite the low topline performance, we delivered our ninth consecutive quarter of positive free cash flow and achieved our second consecutive year of positive operating profit. We generated approximately $13 million in free cash flow for the year, reinforcing our commitment to profitable and durable growth. Net revenue retention for all clients was 98% and 103% for clients above $100,000. We are focused on driving improvement in these metrics in 2026 by executing our customer expansion playbook. Later on, I will expand on the drivers behind that optimism and the action we are taking. Finally, customer demand for our AI offering continued to expand. AI-related revenue reached 11% of sales in the fourth quarter, up from 8% at the end of the second quarter of 2025, driven by our portfolio rated AI solution which we also will cover later in the presentation. Turning to Slide 6 and our key messages. First, 2025 was a build deal. We build the platform to win in the AI era, while the market was dynamic we lean into the opportunity forming around AI. We accelerated product innovation and launched new offerings such as App Intelligence, which was the fastest-growing product we had in 2025. We introduced an ad intelligence, Gen AI intelligence, AI agent and MCP integrations, which is a new industry standard for AI systems to access our data. Most recently, we launched an AI studio which is an AI-powered chatbot interface that make it easier for more users to access our data and actionable insights and recommendations. These are commercial products already gaining traction. As said, in Q4, 11% of our revenue came from AI-related use case. We see AI as magnificat [indiscernible] tailwind going forward. Second, we demonstrated the strength and durability of our model with AI revenue free ex year-over-year and achieved our second consecutive year of positive operating profit and free cash flow. One important highlights is that 60% of ARR is now multiyear, up from 49% a year ago. This is an important metric as it reflects deeper customer relationship stronger alignment with our value proposition and greater revenue visibility. Most importantly, it shows that our customers are choosing to commit to our data and products for a longer period of time, which is a strong vote of confidence in the value we deliver. In addition, 63% of ARR comes from customers generating over $100,000 annually enforcing how embedded we are in mission-critical use case in the enterprise segment. Third, our data mode matters more than ever. AI models and systems are only as strong as the data behind them. Our proprietary digital data now powers enterprises, LLM and AI agents, the quality of our data has been validated by both third parties and customers. For example, we expanded our integration within the Bloomberg terminal. This positions similar well as a premium alternative data provider for institutional investors and provide another proof point or the quality of the data we provide. And finally, 2026 is transformation here. We are moving from building to scaling as AI become embedded into workflow and trusted digital data become a strategic asset. We believe similar web is well positioned to power the next generation of digital intelligence. Let me walk you through how we are executing our strategy to build an AI-driven data powerhouse on Slide 7. Our strategy is built on 3 pillars: strengthening our data not deepening enterprise relationship and third, scaling AI first integrated solution. So let's start with the first one, durable data mode. We are a leader in the digital market data. For more than a decade, we invest hundreds of millions of dollars in developing and deeping our data mode, building deep expertise in collecting and estimating digital behavior at global scale. We continue to invest in R&D to enhance the quality, accuracy and the breadth of the data sets that power our digital intelligence. We continue to expand coverage, accuracy and freshness across web, app, search ads and now chat-based channels staying at the front wherever digital traffic is shifting. This is a hard to replace assets with compounding advantage and significant long-term commercial potential. AI depends on it. It's not replacing it. Second, we are powering leading enterprise with our trusted digital data. Many of the world's largest and most sophisticated companies are already our customers. We see significant opportunity to scale those relationships by applying our proven expansion playbook. -- increasing multiproduct adoption over time and driving higher no. We already have 2 large tax customers generating over $10 million in ARR, those are broad multiuse case relationship across multiple teams and function. Both have expanded into a data agreement that powered the LLMs, positioning similar as a critical building block within the Reintec. Enterprise expansion will be a key focus area for us in 2026 and beyond. Third, we are doubling down on AI-first integrated solution. And we will continue to expand our AI portfolio to establish ourselves as a winner in the AI transformation. Our data sets are uniquely positioned to power both enterprise users and AI systems, a dual strategy built for people and for agents. Through ecosystem partnerships like [indiscernible] data is embedded directly into AI-native workflows especially for research-driven use case, just as financial data become essential for research platforms, chatbots, we believe that digital market data can play a similar role across all platforms. we expect it become a meaningful commercial growth driver. As we execute on our 3 pillars, we remain fully committed to operational excellence to drive durable, profitable and cash generated growth. As you can see on Slide 8, we made significant steps forward on our strategy in 2025. As we build similar web for the next stage in our journey. Starting with the data note. In 2025, we launched multiple new data sets to further extend our 360-degree visibility across the digital world and establish our leadership in digital data. We significantly expanded our coverage across app data, ad spend data, chatbot activity data and Gen AI visibility. These data sets are very unique -- and we believe we are uniquely positioned to provide a comprehensive view across web, app, search, e-commerce, advertising and emerging AI-driven channels and covering the full digital journey across touch points. Moving to the enterprise pillar. We delivered a solid performance in 2025. Our $100,000 customers grew 12% year-over-year and now represent 53% of ARR. Revenue for multiyear contracts increased significantly to 60% of ARR from 49% in 2024. Lastly, on our AI-first solution. We launched our innovative offering, AI Studio, AI Agent embedded across our business solution to accelerate time to insight, Gen AI intelligence model which help brands measure their visibility and sentiment across generative AI platforms and a new chatbot MCP integration, including partnerships like Manus, which opened an exciting new distribution and monetization channel. Our partnership with Manus extends our data sets into agent-driven workflow, where autonomous AI agents capable of performing complex tax activities execute marketing analysis, competitive assessment and strategic planning. Manus, which was recently acquired by Meta is one of the fastest scaling start-up in history. And this is collaboration offer us revenue opportunities to scale with it. Furthermore, Manus provides access to a much broader set of potential end users beyond our core subscriber space, expanding our term by empowering millions of users with our data. This milestone partnership reinforced our value proposition as a central data layer for the next generation of agenetic tools and serves as a strategic blueprint for more integration to come. Those are some of the steps we took to strengthen our data mode, deepen enterprise relationship and position SimilarWeb to win in the AI era. Slide 9 captures our AI data and product strategy, how we power the ecosystem, build AI First solution and expand its tradition and scale. First, we are powering LLM and AI agents. We are seeing strong traction, licensing our data directly to leading LLM companies for both pre and post training use case. This is a strategic priority for us, and we expect it to become increasingly strong revenue stream for us over time. At the same time, autonomous agents require trusted structured digital intelligence to operate efficiently that's exactly what we provide. Our data is built for both human and agent and we see accelerating demand from both. Second, we are building our own AI native solution. With Gen AI intelligence, we are helping brands to improve their Gan AI visibility and sentiment. We are seeing strong market validation on this front, including the recognition of our leadership by G2Crowd and we have recently launched it in a self-serve with adoption from hundreds of customers. We believe our data provides an important competitive advantage in this new market, and we are on a journey to become a market leader in this category as well. We are also transforming our traditional software into an agent first model launching workflow-specific AI agents across marketing and sales use case. This move customers from insights to action with a faster time to value and stronger ROI. This effort is helping us to get to many more users, grow adoption and [indiscernible]. We are very excited about the potential of our own agentic strategy. Third, we are expanding distribution at scale. Our partnership with leading LLM and agent platform such as Manus and for MCP integration, we embedding similar web directly into AI ecosystem. Our MCP is already available in cloud and will soon be integrated into ChatGPT, enabling AI systems to seamlessly access our data, so users can consume similar web insights directly within the workflows. Those ecosystems partnership unlock new customers, expand our TAM and position our digital data as a critical ingredient for AI-driven research and decision-making. We believe we are well positioned to be an AI winner with multiple commercial opportunities across data products and partnerships, and we are excited about the potential. I would like to spend a moment on the AI Studio on Slide 10 because this is more than just a new product launch. AI Studio represents a huge shift in how users interact with similar web data. Historically, our platform delivered a powerful data-driven insight, but often requires technical expertise to express value. AI Studio changed that with an AI-powered interface, user can ask a business question in plain language and in all languages and [indiscernible] receive actionable insights what used to take time and specialized skill can now happen quickly and easily. This is a major step in the [indiscernible] access to our data across teams and workflows. AI Studio expand the number of users who can average similar web, increases engagement enables faster and more seamless insight generation and unlock new monetization opportunities. The early feedback both from better customers and since launch has been amazing. We see AI Studio as a core part of our product strategy, an important driver of future growth. I encourage you to watch the demo video after the call via the link on the slide to see it in action. Let me close by reflecting back on 2025 and how it's set up for 2026 on Slide 11. 2026 was a pivotal year, we made real progress, as I said, AI revenue grew 3x and now represent 11% of Q4 revenue. That is a meaningful traction and globalization that AI is already contributing to the business. We also strengthened our durability of the model. $100,000 customer grew 12% and [ 60% ] of ARR is now multiyear, up from 49% a year ago. They give us better visibility and enforce the depth of our enterprise relationship. At the same time, we acknowledge that 2025 was not within challenge. Overall, NRR stabilized at 98%, and we are not satisfied with that level. Well, NRR our $100,000 customers was at 103%, we know we can execute better across the border base. We have taken action while sharpening our go-to-market strategy, upgrading talent, refining processes and building scalable playbook to drive cross-sell and expansion. We see a clear opportunity to convert onetime AI evaluation deals into recurring revenues and to accelerate the adoption of our newer solution across the installed base. That's why we have a strong conviction in 2026. We are well positioned to capture long-term AI spend. Our AI First portfolio is scaling, ecosystem [indiscernible] are expanding, and we are targeting high-growth segments like LLM companies, large big tech players and OEM with our own dedicated go-to-market team and focus. With Ran joining as a CFO, will also strengthen our financial discipline and public market execution. So 2025 at this stage, 2026 is of our disciplined execution and acceleration. With that, I will hand it over to Ran. Ran Vered: Thanks all. It's a pleasure to be here with you. I'll provide highlights of our financial performance and guidance for the first quarter and the full year of 2026. But before I do, let me first provide a short overview of my background, why I joined Similarweb and what are my priorities as our CFO. I'm on Slide 13. I'm very excited to join Similarweb at this junction in our journey. Or and the team have built a digital data powerhouse. And as we have discussed today, this unique asset is point to take advantage of emerging opportunities in the AI generative era. Similarweb is my first role as a tech company CFO over 2 decades. Previously, our CFO of 2 U.S. listed tech companies and most recently joined Foncia, a B2B self-intelligence Unicorn. I look forward to leveraging my experience and financial discipline to help execute our clear strategy to accelerate revenue growth to the next level, while doubling down on our commitment to expand profitability and deliver durable free cash flow. This is what I am committed to doing all while ensuring will remain disciplined capital allocators. I look forward to meeting you over the coming weeks and months. Turning to Slide 14 in our quarterly results. We generated $72.8 million of revenue, an 11% increase relative to the fourth quarter of 2024. Revenue was lower than expected due to delayed closing of 2 major LLM related agreements that were anticipated in the fourth quarter, as some noted, we remain in active discussions. Non-GAAP operating profit for the quarter was $3.4 million, reflecting a 5% margin compared to $2.6 million and a 4% margin in 2024. This was within our guidance range, thanks to disciplined cost control. Turning to the full year financials on Slide 15. I will not review each metric but will hit that despite lower revenue. Operating profit came in ahead of our expectations at the beginning of the year due to our sustained focus on disciplined execution. 2025 was our second consecutive year of positive non-GAAP operating profit and free cash flow. We are committed to generating profitable growth going forward. Good cash generation is a strong balance sheet are critical for a business in any stage of the cycle and become even more important in periods of volatility. On Slide 16, you can see that we ended the year with $72 million of cash and cash equivalents and no debt. We also have an available line of credit of $75 million. After 9 consecutive quarters of positive free cash flow. The business has a solid core and the financial flexibility to weather market headwinds, while same focus on our long-term goals to maximize shareholder value. Our capital allocation priorities over the coming years will be: First, we continue to invest in R&D at around 20% of revenues to improve our digital data and deepen our competitive moat; second, is to invest in M&A only when it meets our rigorous financial return criteria and embed our strategic goals to improve our data asset and product portfolio. Over the last 2 years, we completed several bolt-on acquisitions, including [indiscernible] matters, which boosted our app intelligence capabilities and ad metrics, which enhance as intelligence. The current packet volatility is enriching the M&A pipeline. We remain committed to a strong balance sheet that provides us through financial and operational flexibility. Turning to our outlook for 2026 on Slide 17. For the full year 2026, we expect total revenue in the range of $305 million to $315 million, representing 10% year-over-year growth at the midpoint of the range. In Q1 2026, we expect total revenue in the range of $72 million to $74 million, representing 9% year-on-year growth at the base point. On the full year, we expect our non-GAAP operating profit to be between $16 million and $19 million. Non-GAAP operating profit for the first quarter of 2026 is expected to be in the range of $0.5 million to $2.5 million. And I provide guidance for the first time at Similarweb, we are taking a deliberately prudent approach. We are resuming pockets of end market weakness persists, and we are grounding the initial outlook in the high visibility of our core business drivers, while we are encouraged by the strong demand in the pipeline for larger AI deals. After delivering the second year of [indiscernible] revenue growth, non-GAAP operating profit and positive free cash flow, we remain committed to building a more durable franchise in Similarweb. With that, Or and I ready to answer your questions. Following Q&A, Or will share some closing remarks. Operator, please open the line for questions. Operator: [Operator Instructions] Our first question is from Raimo Lenschow with Barclays. Raimo Lenschow: I had like 2 questions. And Ran, welcome to the team and all the best. One for Or, if you think about the large LLM contracts that you're signing there, but then you also look at the large customer NRR actually just came down a little bit. It's just -- do you need to think about that as an additional or somewhat as a replacement that people that said people using more LLMs going forward, that means they need to use less of their own, and that kind of impacts the NRR numbers then? Or are they not correlated? Could you speak to that dynamic going on there? And then I have one follow-up for Ran. Or Offer: Yes. I think there's no correlation between the core business when we sell our regular software when brands buying the web intelligent app intelligence to drive growth traffic online versus our motion of selling data for LLM use case. That is -- it's a different use case specifically to train LLM to be smarter, better about the world. So it's a different -- I don't think it's come on each other. Raimo Lenschow: Yes. Okay. Perfect. Okay. Makes sense. And then the one for you, one, like, obviously, with these larger contracts come through, it kind of as a CFO and as a new CFO, it's kind of difficult to guide them and how do you think about your guidance philosophy in terms of going forward, kind of if those big deals on the pipeline, is it worth maybe taking them out and they become like upside when it come through? Like how do you think about that dynamic? Ran Vered: Thanks for the question. First of all, I'm really happy to be on this call. So when we look on the guidance, we took a reasonable approach and this is one of the reason we widened the range. In prior years, the range we guided to the Street was around $3 million and now the cost of that LLM deals and the big deals, we widened the range to $10 million just because we know -- we see these fills in the pipeline but the timing of them to land is not that clear. As we say in the prepared remarks, this is one of the main reasons we lost Q4. So when I look on it, some of it with percentage is baked already into the guidelines. But when we're going to lend them, of course, this will -- we'll see how we adjust the guidance going forward. Operator: Our next question is from Arjun Bhatia with William Blair. Arjun Bhatia: Yes. Perfect. Or can we maybe just go back to the first question. I understand the 2 demand kind of drivers between LLMs and the core business are not correlated. But I think if I exclude the -- your AI revenue, it seems like the core business is slowing quite a bit. And so I'm curious if you could just help us understand what's happening there, excluding your AI revenue. Is the core NRR obviously is down. What are the challenges there going forward? And how do you sort of remediate that to get that core business back to stronger growth? Or Offer: Yes. Thank you, Arjun, for the question. First of all, I think this quarter numbers, you can see that the core business is not falling, it's still growing because you basically saw an example of a quarter when the big data deals didn't came, they slipped for another quarter and you still see a growth in the revenue. So we do see growth in the core business even without the data for LLM, but the data for LLM are very big bills and there are significant thing that in the regular business, we're selling a deal between $20,000, $30,000 at land and the expansion can be $50,000 to $60,000. Those data for LLM is significant. It's 7 figures still sometimes and then they behave very, very different and hard to predict and forecast as you can understand. And so I think -- I hope this will give you some visibility. I know maybe Maoz, our Chief Strategy Officer maybe you have anything on that topic as well on your mind? Maoz Lakovski: Yes, happy to help. And thanks for the question. We think Gerard and Rennes in very good traction. So we have 60% of the book of business, which the majority of it is still on non-AI under multiyear. So we're seeing good durability of the core local business. We need to work on the expansion [indiscernible] in order to increase NRR. We are now in the -- we are very optimistic about NNR going forward. We feel that some of the LLM onetime deals push have affected the NRR. But going forward, we are working hard to improve it, mostly focusing on the expansion. We have a great product portfolio from app intelligence, which is a very first coin order for us ad intelligence, the [indiscernible] intelligence that we are launching, and we're seeing good success with our clients. So overall, the core business of us is still growing, and we are very good in [indiscernible] run rates are solid, multiyear is their great client feedback, and we are laser focused on expanding it and [indiscernible] NRR. Arjun Bhatia: Okay. I understood. And then one for Ran. Can you -- just going back to the guidance range, I appreciate, and I think it's helpful that at least it's a wider range given some of the uncertainty around end customers and how lumpy it can be. But can you just touch on what you're expecting? What would have to materialize to hit the high end of the range versus the low end? Like what are the different scenarios that are contemplated in that wider guidance range? Ran Vered: Thanks for the question. So I think we need to land the big LLM deals. So probably this is what can drive the difference between the low end and the high end of the range. And because those deals are really big, 7 figures, Or also mentioned, and we see them in the pipeline, and we see also the engagement with the customers. I was actually when I joined, and I'm here talking with the people and see the pipeline. I really encourage by the pipeline and by the fact that we are delivering with these deals to the larger LLM. But again, I think it's mainly in terms of timing when they will end and what will be eventually the size of them. I think this is why the range is in the $10 million range. Operator: Our next question is from Ken Wang with Oppenheimer & Company. Unknown Analyst: I just wanted to check as far as the miss in the quarter, was that $4 million fully from the large AI LLM deals? And then how much of that is baked into the 1Q guide? Or Offer: Yes. So first of all, thank you for the question. So yes, the majority of the mix is because of those 2 deals that were very, very big and been in the pipeline for a long time. And we start in the hope to get them to the finish line. And looking now in the Q1 guidance, we're taking more cautious steps. And we said it's very hard to forecast them. One deal will probably come later in the year. And the other one was splitted into more small amounts and one of them dedicated. So we are confident that some of that will come in Q1, I think. I hope this will answer the question. Unknown Analyst: Got it. And so then when I think about the growth rate assuming some of it is in Q1 that kind of perhaps put your core business or your organic growth at high single digits. Is that the right way to think about it until you guys get the go-to-market motions and the product sorted out for '26? Or Offer: These big deals are taking a lot from our go-to-market as well, I think that even with -- when you have Salesforce salespeople and some of them know that there is those opportunity of very big deals A lot of efforts are going into those directions. So it's part of the organic growth and taking attention or other stuff for their big opportunity. What we did this year in order to be more disciplined around it, we built a dedicated team to go and be focused only on those opportunities to have a better forecast and execution and also try to leverage even more upside as we have only single-digit customer right now in this LLM auction, but there is probably much more customers who can approach and onboard. So I hope this dedicated team will give us better forecast and execution on that. Unknown Analyst: Okay. Fantastic. Operator: Our next question is from Scott Berg with Needham & Company. Unknown Analyst: Lucas Mecca on for Scott Berg. First, you guys made some strong sales investments heading into fiscal 2025. We understand some sales cycles that be ungated but in general, I guess, could you guys just talk about the productivity kind of throughout the year of the new investments? And then what type of additional sales investments does your fiscal 2026 guidance imply? Or Offer: Yes. First of all, thank you for the question, and I think it's a good question. So we were not very happy with the performance and the investment we did, we were hoping to get better yield from the investment that we did in the beginning of the year to try to accelerate growth. And we did see the yield of the sales getting better every quarter. But the good news that we will not need to do any investment going into this year. We took some steps to optimize the go-to-market motion. And once we saw that we're not getting the outcome we were looking for and reduce layers of management and remove some low performance and starting the year with a fully ramping, I would know more investment needed in order to drive the results we're looking into this year. Unknown Analyst: Got it. That's helpful. And then just one other question here, kind of surrounding the net revenue retention compression. -- would you say is that primarily driven by lapping the larger AI contracts from late 2024? Or just any other kind of underlying changes in gross retention or expansion trends that we should be thinking about? Or Offer: Yes, I think it's an excellent question. And the answer is yes, you're right. Because some of those big deals lapped into this year is impacting, of course, the NRR. But also if you think about last year and all these new data for LLM that is including sometimes onetime deals. They have not been reflected in the NRR because there was a onetime and NRR is on the carrying revenue. And this is why it looked like the NRR of the big accounts are dropping. But in reality, we had much more revenue because of the onetime last year. So we expect the NRR metrics to get better going forward. And also as more of those onetime trials data for LLM are maturing to ARR, of course, contribute and get better results over time. Operator: Our next question is from Patrick Walravens with Citizens Bank. Kincaid LaCorte: Great. This is Kincaid on for Patrick. Or I just wanted to know if you could give us a little breakdown of that 11% of revenue coming from AI solutions. What are the components that drive that as well as -- I understand that 2 of these LLM deals slipped from this quarter. Can you give us any info on how many did close this quarter? Or Offer: Yes. So the data for LLM deals, there was, I think, one, I need to look or two last quarter that was not as big as the one we expected that did close, that's much more smaller with new players. But overall, the AI revenue is a bucket that includes you offering, not only the data for LLM, you have the Gen AI model that we sell to brands that including their we have a chatbot partnership at the one in Manus that it's the revenue setting up the partnership and then there is like a usage-based component on top of that. So there's fewer channels inside this 11%, it's not only the data for LLMs. It's a few streams that are kind of new for us that are starting in the past 12 years because of the AI revolution. And we see those offerings and as tailwinds going into this year. Operator: Our next question is from Luke Horton with Northland Securities. Lucas John Horton: Just wanted to touch on some of the what you guys called commercial execution shortfalls. I guess, could you be a little bit more specific of this -- was this around the hiring ramp or pricing in the sales cycle or I guess, what kind of changes have you made to the go-to-market organization to improve these win rates and pipeline conversion in 2026? Or Offer: So in 2025, we increased our sellers all across the board, trying to accelerate the revenue growth. And there was a lot of noise adding a lot of people in short time and took a lot of long time to ramp them up. And we didn't see the yield we were hoping also on the enterprise side and the land and the expansion. So we had to optimize it and we get over the year. And I think as I said before, we -- going into this year, we have the right talent in place. I don't know, maybe, Maoz anything that you have to say around that as well. Maoz Lakovski: I think the key for us is that doubling down on growth opportunities. Or mentioned the team and the go-to-market investments we are making around AI, LLMs OEM, where we see a lot of growth potential. So we're doubling down really finding the go-to-market strategies. We are seeing increase in yield overall, but we're also aware of the market dynamics and uncertainty in the market. So we think we are well set for '26. We're confident in our ability to keep our guidance throughout the year. With same strong pipeline. We are optimistic about the pipeline, some large meaningful deals. We have the onetime we need to convert into the current deals and we are on it. So overall, we think we're in a good position. Lucas John Horton: Got it. And then lastly, just want to go back to the AI Studio as this is a pretty significant product for you guys. But I guess, could you give some clarity around the monetization of this if this is sort of seat-based or consumption-based or like premium tier pricing? Just any sort of information around that would be great. Or Offer: Moaz as you're in charge of pricing, you can take it. Maoz Lakovski: Yes. We're actually super excited about the AI studio. Reason being is that we see this product as a mean to get to many more users within the organization. It can help us cross the chasm and making the data insight much more available. So we are super bullish about this, and we're seeing great demand and initial traction. In terms of monetization, so at this point, we are baking some of it within the [indiscernible], but the model is twofold, it's data access and then data consumption, which means that potentially you need to have access to the specific data you want to add queries on. It could be a country, it could be a data set, but we align it to the customer needs. The second is the consumption. So we give some level of consumption within the package and then the clients can grow. We think it's a very strategic role for us, again, because we see us getting to many more users. With that, in terms of our AI strategy, worth mentioning also the Manus partnership, which we are extremely, extremely optimistic about. You see this is a huge opportunity for us to get to on typical users of Similarweb and monetize it. We're seeing a potential huge distribution into a local [indiscernible] time for us. And so between the AI studio, which is a mean to grow within our client base to the Manus example with unlocking distribution for noncore users. We are very happy that we are able to monetize and get to many more users. I hope it will help you understand. Or Offer: I would add on top of that, some of our big enterprise customers, they have unlimited users package. So we've never been about fee-based approach within about most of data access and consumption. And we hope that, for example, this AI studio in those enterprises that really have big amount of users, we can increase adoption because as we said, you can talk to the studio in any language. So you move the language barrier. You don't need to be expert on our platform and where every one of the dataset is signed. And -- so everybody can easily go ask business pain business question and get immediately the data then based on consumption. So it's very similar to concept pace for business outcome. So you have a question and you get the take for that. So we hope this will drive a good adoption and expense to this year. Lucas John Horton: Awesome. That was super helpful. Operator: [Operator Instructions] Our next question is from Adam Hotchkiss with Goldman Sachs. Adam Hotchkiss: Ran nice to meet you in this forum. I wanted to just dig in on the sales cycle comments or what is it specifically about the sales cycles that have maybe been elongated to the extent you can share? I guess I'm just trying to understand what I think needs to be done from your side to get those over the finish line. Or Offer: Yes. I think that there are some learned that we try to add many sales people in one time. So just taking the disruption of the managers and then start increasing the sales cycle. We're trying to build an outbound motion for enterprise that was very long since [indiscernible] much longer than what we used to. We are very inbound based business every year, we get more than 100 million people visiting our website and hundreds of thousands of people who register to try our solution every month, but it's a big volume. This is usually what's feeding the salespeople. And they used to a specific cell cycle and once we try to do more [indiscernible] enterprise, it was tougher and does not fit with the model that we used to. So -- and during the year, we shift our thing more to land and expand and decided to back off of this outdoor enterprise approach because most of the enterprises already been familiar or using as in the past. And this is much more efficient and much more profitable for us to lend through the inbound and then the expansion, the enterprise expansion player on the current book of business. So all of those together is kind of a little bit changed the sales cycle during last year, all those testing that we were trying to do acceleration. So it's a little bit hurt the sale cycle, and hurting the sales yield in a few quarters. But as we change and adopted, it's got better and better by the end of the year. Adam Hotchkiss: Okay. Great. And then I just want to touch on the I guess, the broader competitive landscape and customer budget landscape. I think there's a lot been made of the GEO/AIO market. And it feels like there's a lot of funding going into that space. It feels like incumbents are spending there. Is that where you're seeing most of customer retention in budgets go, given what's happening on the LLS M side? And I guess, number one, is that true? And number two, how do you feel you're positioned in that space? Or Offer: Yes. I think it's a great question and that we help and maybe also Maoz some thoughts driving strategy, but the GEO/AEO still there's no straight name for this market. Is a new market and of course, it's a red [indiscernible] there's a lot of small players there. I'm happy to say that we launched a really amazing offering in that space that is doing well. We've already been recognized by G2 it's one of the companies like Foster for software that met the market as a leader [indiscernible] the enterprise. It's a new motion. Some of the budgets go -- a lot of attention go there, for sure. I don't know if this market is big. I think it's still small and developing. I think what's more interesting is that basically a lot of attention go there because a lot of brands are losing traffic now because search is declining. So everybody is trying to understand what's going on. If it's going on to ChatGPT, if I need to invest there. But in reality, there's much bigger movement happening. Search is declining. So brands trying to close this gap by investing more on paid channels, then the paid goes up and then they need to bring some of the traffic that went to the ChatGPT. And I think that in this environment, you need a much more holistic solution to help you manage all channels. okay? Because one channel is going down, the AI chatbot a new channel going up and then you have the ad spend that is going out of control. And you need to control all of them as the CMO or the head of digital running a business is trying to win back your traffic. And I think Similarweb is the only solution right now that can give you full visibility and optimization and insights across all channels. And I think with that, our Gen AI offering is great. It's really good. But I will say that you more than only Gen AI solution, you need the ad intelligence solution, you need to [indiscernible] solution and in the benchmarking and competitive solution in all of them together, this is what Similarweb is offering. And I know Maozs maybe have any interesting [indiscernible] to say here. Maoz Lakovski: Yes. I'm fully aligned, and that's what we're hearing from the market. And I think the critical part in is we have the right to win. We are helping leaders to navigate between web and Gen AI, every CMO -- if on a CEO discussion reset e-commerce whatever business model. Everyone has this question, what should they be doing -- how should they be balancing between the traditional kind of web and the new Gen AI. So this is where we come in. So this is one thing that we are unique from any other player in this market, and we think we're going to win. Second, we are a data company. We have a meaningful data mode. Also when it comes to Gen AI visibility, and we are monetizing if we are selling it directly for our dedicated product, and it's picking up super nicely. And second, we are also feeding ecosystem. We also have an OEM play here, and we are bullish about this as well, and it's working very nicely for us. Last we have the clients. So we have the CMOs. We have [indiscernible] digital marketing, they stick with us. It seems like GEO/AEO is more than the traditional SCO. It gets more interest because these are spending much more of their time within these engines. And they are coming to us -- and honestly, there had of market education and for leadership we are playing in this game, and we are very optimistic on our ability to become a very meaningful player. And the G2 recent completion is just kind of another one that shows that we are in the right direction. Operator: This does conclude our question-and-answer session. I would like to turn the conference back over to Or for closing remarks. Or Offer: Before we conclude, I would like to highlight 4 key takeaways on Slide 19. First, 2025 was a build year with our data mode and position the company for the AI area. Second, we delivered solid growth. AI revenue grew 3x year-over-year multiyear ARR increased and we extend our track record of profitability and free cash flow. Third, our leadership in digital data become even more valuable as AI adoption accelerates. And fourth, 2026 is about disciplined execution and scaling what we build, and we have strong belief in the opportunity ahead. AI is a meaningful tailwind for data companies like us and as I like to say, we are just getting started. Thank you, everyone, on the call for your continued support. We look forward to speaking to you again over the coming weeks. Operator: Thank you. This does conclude our conference. You may disconnect at this time, and thank you for your participation.
Operator: Good day, and thank you for standing by. Welcome to the MKS Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Paretosh Misra. Please go ahead, sir. Paretosh Misra: Good morning, everyone. I'm Paretosh Misra, Vice President of Investor Relations, and I'm joined this morning by John Lee, President and Chief Executive Officer; and Ram Mayampurath, Executive Vice President and Chief Financial Officer. Yesterday, after market close, we released our financial results for the fourth quarter and full year 2025, which are posted to our investor website at investor.mks.com. As a reminder, various remarks about future expectations, plans and prospects for MKS comprise forward-looking statements. Actual results may differ materially as a result of various important factors, including those discussed in yesterday's press release and in our most recent annual report on Form 10-K and any subsequent quarterly report on Form 10-Q. These statements represent the company's expectations only as of today and should not be relied upon as representing the company's estimates or views as of any date subsequent to today, and the company disclaims any obligation to update these statements. During the call, we will be discussing various non-GAAP financial measures. Unless otherwise noted, all income statement-related financial measures will be non-GAAP other than revenue and gross margin. Please refer to our press release and the presentation materials posted to the Investor Relations section of our website for information regarding our non-GAAP financial results and a reconciliation to of our GAAP measures. Our investor website also provides a detailed breakout of revenues by end market and division. Now I'll turn the call over to John. John Lee: Thanks, Paretosh, and good morning, everyone. 2025 was a year of impressive execution for MKS in a gradually improving demand environment. Year-over-year, we delivered 10% sales growth, 20% EPS growth and over 20% free cash flow growth. We maintained strong gross margins despite trade policy dynamics while staying focused on delivering for our customers, investing in our business and proactively bringing down our leverage. We're proud of our accomplishments in 2025 and grateful for the continued support and collaboration of our customers, suppliers and employees. Our partnerships and engagement have been critical as we work together to deliver the broadest portfolio differentiated solutions that are foundational to advanced electronics in the AI era. As we begin 2026, the demand outlook across our semiconductor and electronics and packaging markets is strengthening and we are already seeing this in the ambitious CapEx plans announced by large chip manufacturers. MKS has a long track record of outperforming WFE in rising spending environments and we are in an excellent position with our broad and deep portfolio of designed in products and are foundational to semiconductor manufacturing and electronics and packaging. I'll highlight some examples as I review our financial and end market performance. Our Q4 revenue, gross margin and earnings per diluted share all came in above the midpoint of the guidance ranges we provided on our Q3 call in November. Revenue was strong across all three of our end markets. In our semiconductor market, revenue was above the high end of our guidance, driven primarily by subsystems serving etch and deposition applications in the DRAM and logic foundry markets. Our plasma and reactive gases business delivered another strong quarter. We also maintained healthy momentum in dissolved gases for advanced logic applications and in back-end applications related to high bandwidth memory. Order activity in both areas remains robust. NAND-related activity remained stable sequentially as expected. I'm also pleased to note that our semiconductor business outperformed estimated WFE growth for the full year 2025, consistent with our track record of outperforming industry spending and improving demand environments. Looking to the first quarter, we expect semiconductor revenue to be up on a sequential basis. We believe this outlook is consistent with market views a steady improvement in industry spending over the course of the year. With our global footprint, broad product portfolio and deep technical expertise, we are ready to respond to demand as it comes with solutions that solve our customers' hardest problems and enable their increasingly complex road maps. On that front, we're excited to be ramping our new supercenter factory in Malaysia in the second half of this year, which will give us added capacity and resiliency to meet our customers' needs. Turning to Electronics & Packaging. Revenue came in near the high end of our guidance. The sequential increase was primarily driven by increased flexible PCB drilling and chemistry equipment sales. The Flex market continues to largely follow seasonal patterns tied to smartphone and PC cycles. And we also saw continued momentum in orders for our chemistry and chemistry equipment solutions for advanced PCBs related to AI applications. AI is driving increasing packaging complexity, and we are uniquely positioned to help our customers with the broadest portfolio of differentiated solutions. Excluding the impact of FX and palladium pass-through, the chemistry sales increased 16% in the fourth quarter and 11% for the full year compared to the same periods in 2024, reflecting another year of healthy growth. When we acquired Atotech in 2022, we saw the importance of advanced packaging for electronic devices, well ahead of many in our industry. With AI now rapidly driving demand for more complex PCBs with rapidly increasing numbers of layers, we are seeing growth despite multiyear softness in smartphones and PCs. Looking ahead to Q1 and the anticipated seasonal impact from the Luna New Year holiday, we expect electronics and packaging revenue to be up slightly sequentially and to increase in the low 20% range year-over-year. Key drivers for our expected performance in Q1 include higher flexible PCB drilling revenue and a continued strong performance in our chemistry equipment business. In our specialty industrial market, revenues came in at the high end of our guidance. We saw sequential improvement in research and defense in certain industrial applications. Looking ahead to Q1, we expect specialty industrial revenue to decline low to mid-single digits, mainly due to the Luna New Year holiday, which impacts our general metal finishing business. Year-over-year, we expect revenue to be up in the mid-single digits, led by the industrial and research and defense markets. Overall, our specialty industrial market continues to deliver steady performance and contribute attractive cash flows. Our fourth quarter performance and outlook for Q1 underscore our strong position across our 2 key end markets. In semi, we continue to strengthen our position in supporting leading-edge foundry and high-bandwidth memory investment through our vacuum and Photonics offerings while also remaining well positioned to capitalize on large scale investment in NAND equipment upgrades expected over the next several years. In Electronics and Packaging, we are demonstrating momentum with equipment and chemistries ideally suited to support a smaller, more complex and more vertical packaging structures for AI and other emerging devices such as foldable phones. We expect this business to grow over time as we realize long-term revenue streams from proprietary chemistries moving through production lines built with our equipment. The secular drivers powering our end markets are fully intact present exciting opportunities for MKS in the years to come. Our business is in a strong position with a resilient global footprint and margins that reflect the value we deliver and strong free cash flows that we are reinvesting into the business and using to pay down debt. Lastly, we are proud to have been honored for the third consecutive year as one of America's most responsible companies by Newsweek and Statista. In honor to reflects our continued focus and commitment to our people, customers and suppliers. Now let me turn it over to Ram to run through the financial results and first quarter guidance in more detail. Ram? Ramakumar Mayampurath: Thank you, John, and good morning, everyone. We ended the year with a very strong fourth quarter. Demand increased across all 3 end markets. We delivered healthy margins, robust free cash flow and made meaningful progress on our deleveraging goals. That progress has continued into the new year with another $100 million voluntary prepayment on our term loan in February as well as further optimization of our capital structure with the recently completed issuance of EUR 1 billion senior unsecured notes as a refinancing and extension of our term loan maturities. I'll cover these topics in detail in my remarks. Let me start with the results for the fourth quarter. MKS reported revenue of $1.03 billion, up 5% sequentially and 10% year-over-year. Fourth quarter semiconductor revenue was $435 million, up 5% sequentially and 9% year-over-year. The result was driven by strengthening demand, especially in DRAM and logic and foundry applications. The sequential increase was led by plasma and reactive gases products. Year-over-year comparisons reflect more broad-based strength across many product categories. providing further evidence of an improving semi demand environment. Fourth quarter Electronics & Packaging revenue was $303 million, an increase of 5% quarter-over-quarter and 19% year-over-year. This sequential improvement reflected higher flexible PCB drilling and chemistry equipment sales. The strong year-over-year comparison reflected healthy underlying growth across chemistry flexible drilling equipment and chemistry equipment. Chemistry sales in the quarter were up 16% year-over-year, excluding the impact of FX and palladium pass-through. Marking another strong year in chemistry revenue. In our specialty industrial market, fourth quarter revenue was $295 million, an increase of 4% sequentially largely due to the improvement in our research and defense markets as well as certain industrial applications. This was partially offset by a decline in automotive. Revenue was up 5% on a year-over-year basis, supported by modest improvement across several of our key market categories. However, automotive segment remain soft. Turning to gross margin. We reported fourth quarter gross margin of 46.4%, which is above the midpoint of our guidance. While margins were down year-over-year, it was a very solid performance given ongoing impact from higher tariffs, higher palladium prices, which are passed through at 0 margins and the effect of higher chemistry equipment in our overall mix. Fourth quarter operating expenses were $263 million, slightly above the guidance range, primarily due to higher variable compensation due to stronger-than-expected results. Fourth quarter operating income was approximately $217 million, yielding an operating margin of 21%, which is above our guidance midpoint. Fourth quarter adjusted EBITDA was $249 million, yielding 24.1% margin and also above the midpoint of our guidance. Net interest expenses was $42 million. Fourth quarter effective tax rate was 1%, which was in line with our guidance. We finished the year strong with fourth quarter net earnings of $168 million or $2.47 per diluted share which is above the midpoint of our guidance. We closed the quarter with approximately $1.4 billion of liquidity comprised of cash and cash equivalents of $675 million and our undrawn revolving credit facility of $675 million. Net debt at year-end was $3.6 billion, That, combined with improving adjusted EBITDA resulted in a net leverage ratio of 3.7x based on full year 2025 adjusted EBITDA of $966 million. Quickly summarizing our full year 2025 results. Revenue was $3.9 billion, up 10% year-over-year. Semiconductor revenue totaled $1.7 billion, up a healthy 13% year-over-year, driven by plasma and reactive gases and racking products. Our service business remained a steady and meaningful growth contributor. Electronics & Packaging revenue was $1.1 billion in 2025, up a strong 20% year-over-year. Total chemistry sales increased 11% year-over-year excluding the impact of foreign exchange and palladium pass-through. Specialty Industrial revenue was $1.1 billion, down 4% year-over-year primarily driven by softness in industrial markets, including automotive. Gross margin was 46.7%, down 90 basis points year-over-year, driven by additional costs related to tariffs and product mix, including record chemistry equipment sales. We moved quickly during the year to mitigate the impact of tariffs. That impact was largely mitigated on a dollar-for-dollar basis by the fourth quarter but will still continue to impact gross margin by about 50 basis points. Full year operating margin was 20.7%, down 60 basis points year-over-year as a result of lower gross margin. However, our operating expenses as a percentage of sales was 26% and improved by 30 basis points year-over-year. Let me now turn to cash flow and balance sheet discussion. For 2025, we generated operating cash flow of $645 million, an improvement of $17 million year-over-year. Even with an uptick in capital expenses, full year free cash flow was $497 million, an increase of 21% year-over-year and reflective of a very healthy conversion rate of our non-GAAP net earnings. In 2025, we made a total of $400 million of ordinary prepayments on our term loan. This month, we made another voluntary prepayment of $100 million. Since February 2024, we have paid down over $1 billion of our debt. We continue to remain focused on deleveraging. We also closed a few key financing transactions in recent weeks. The repricing of our term loan facility reduced credit spreads on our U.S. term loan by 25 basis points and the euro loan by 50 basis points. In connection with this repricing, we increased the size of our revolver to $1 billion. Finally, our successful EUR 1 billion bond offering has allowed us to diversify our capital structure, reduce interest rates on our debt, replace a portion of our secured debt with unsecured debt and extend our maturities. Based on current interest rates, the combined effect of these actions we took in this month will reduce annual interest expenses on a run rate basis by approximately $27 million. In addition, to lowering interest rates. These transactions will provide greater flexibility for the company. Finally, during the quarter, we paid a dividend of $0.22 per share or $15 million. As we announced last week, the Board authorized a 14% increase in the next dividend, which is payable in early March. Let me now turn to first quarter outlook, we expect revenue of $1.04 billion, plus or minus $40 million. By end market, our first quarter outlook is as follows: Revenue from semiconductor market is expected to be $150 million, plus or minus $15 million. Revenue from electronics and packaging market is expected to be $305 million, plus or minus $15 million and revenue from our specialty industrial market is expected to be $285 million, plus or minus $10 million. Based on anticipated revenue levels and product mix, including sequentially lower chemistry sales due to the Lunar New Year, we estimate first quarter gross margin of 4% to 6% plus or minus 100 basis points. We expect first quarter operating expenses of $270 million plus or minus $5 million. Looking to the rest of the year, we will continue to invest in the growth of our business, but we expect operating expenses to grow at a rate lower than revenue. We estimate first quarter adjusted EBITDA of $251 million plus or minus $24 million. We expect capital expenditures to average in the 4% to 5% of revenue through 2026. We expect a tax rate of approximately 21% in the first quarter. For the year, we expect our tax rate to be in the range of 18% to 20%. Based on these assumptions, we expect first quarter net earnings per diluted share of $2 plus or minus $0.28. Propping up, MKS continues to execute at a high level meeting growing customer demand and maintaining strong profitability. We continue to prioritize making the necessary investments in the business and proactive deleveraging. We believe that we are in an excellent position to capitalize on what we expect to be a robust demand environment. With that, operator, please open the call for questions. Operator: [Operator Instructions]. Our first question comes from the line of Steve Barger with KeyBanc Capital Markets. Steve Barger: Thank you. I wanted to start with the 46% gross margin midpoint guide. How much of that is from chemistry equipment mix? And does the lower 1Q sequentially suggests an upward inflection in 2Q from higher chemistry sales volume? Or how do you expect that to play out as the year progresses? Ramakumar Mayampurath: Steve, this is Ram. I'll take that. I'll start with your second question. The answer is yes. It is due to the seasonality from lower chemistry driven by Lunar New Year and we expect the mix to improve in Q2 and further in Q3. So mix is the main reason for the 4% to 6% plus or minus 100 basis points guide. Steve Barger: Got it. And so that should be the low point of the year? Understood. And John, can we just talk about the memory shortage. It seems like that could be both good or bad for you. Can you talk about what you're seeing with NAND tool upgrades and other memory investments that could be coming. And then can you talk about what happens with consumer products just given the increase that you're seeing in the market? John Lee: Yes,Steve. So I think the customers and our customers' customers are putting a lot of the investments in DRAM, obviously, for AI, and that's causing this crunch in terms of availability of memory. I would say this, the industry is moving very fast to try to meet those demands. You see a lot of announcements of fabs going up and whatnot. And then more recently, NAND has become potentially a bottleneck as well in terms of availability. And so you saw one large chip company announced a new NAND factory, brand new greenfield us out a little ways, but that's good because it extends the ramps, as you will. In terms of upgrades, I think our customers are best to answer that. I would say this. We have plenty of capacity to meet those upgrades should they come. And as a reminder, our position in RF power for NAND vertical channel etching allows us to enjoy upgrades almost as much as greenfield. So I think NAND is something that's going to be kind of icing on the cake as that happens throughout the year and the next couple of years. Steve Barger: Got it. And then just any comment on consumer products, what the potential effect could be? John Lee: Yes. I mean I think it's going to depend on how much availability there is. I think you read some analyst reports, people are kind of thinking maybe low single-digit decreases in PCs and phones, but that really is going to be dynamic throughout the year. I think it's really going to be a function of how fast the industry can make those chips for that segment of the market. So I think if we have a little decrease in PCs and smartphones, I think it's going to be more than made up with AI. Operator: Our next question will come from the line of Jim RicchiutI with Needham & Company. James Ricchiuti: Thank you. Yes, I'm wondering if we look at the electronics and packaging business, the 20% plus growth in 2025, John, any sense as to how much of that was a function of capacity additions. And I'm curious how much of a tailwind would you anticipate this being in 2026 in this area of the business? John Lee: Yes, good question, Jim. I think what we said also is that while the electronics and packaging grew 20%, chemistry grew about 11% year-over-year. So that's great growth, too. So chemistry would be more utilization dependent. And then the rest of that growth is capacity additions from chemistry equipment as well as flex drilling equipment. So we've talked about our chemistry equipment. That's a nice leading indicator of future chemistry revenue. We're now into the fifth quarter of strong bookings and revenue for that. I think in the past, we talked about the first half of '26. Our factories are full through then. I think we're not going to guide bookings going forward in equipment, but I would say the difference between 90 days ago is we continue to see strong chemistry. So I think that continues, and that's really just something that, over time, will lead to that high gross margin chemistry revenue that will be on our production equipment. James Ricchiuti: And a follow-up just on -- you highlighted the improving demand in CD drilling equipment. How would you characterize the recovery that you're seeing in this part of the business. versus previous cycles. I know it's been a while since we've seen a decent upturn in this business. John Lee: Yes, I know you've covered ESI for a long time, Jim. I would say there was a super cycle maybe 4 or 5 years ago. This is more like a normal cycle. So probably 2 years now where it's kind of been more normalized. So we're happy to see that. I have to see that our share continues to be very strong. and that some new devices that we talked about full phones are driving more flex demand. So I think I would characterize this as not a super cycle, if you will, for Flex, but more of a normalized cycle that we have expected on a more consistent basis throughout the years. Operator: One moment for our next question. Our next question will come from the line of Melissa Weathers with Deutsche Bank. Melissa Weathers: Thank you for the question. John, I was hoping to ask you to pull out your crystal ball and get your opinion on WFE growth this year. So we've heard some pretty strong outlook from some of your customers and peers on WFE. Any sense of magnitude or how are you guys thinking about like the magnitude of growth the equipment spending could have this year? And then how should we think about that flowing through to your semiconductor system sales? John Lee: Yes. I'll pull out my crystal ball, Melissa, it's cloudy, but I guess it's a positive. A couple of our edge customers are talking about 20% year-over-year WFE growth, a couple of our listometrology customers are talking more in the mid-teens, if you will. So you put it all together, WFE will be a large grower. And I think more importantly, I think everybody is kind of assuming it's more than just a 1-year thing. It's going to be a cycle that maybe lasts longer than that. MKS has always outperformed during the upturn. That's just math. Everything is designed in already in an upturn. People are just ordering things that are already designed in. We have to ship before our customers could ship. At the same time, during a ramp our customers are going to try to build inventory. And so all that leads to outperformance. Even in 2025, when there wasn't really a ramp I believe we will have shown that we outperformed WFE even in a relatively stable 2025. And I would say in my commentary a couple of months ago, the ramp has started. We have started. Supply chain teams are working hard with our suppliers. We're in constant communication with our customers and everybody in the industry is getting ready for this ramp. And MKS, as you know, is supporting 85% of WFE. So we're going to see all of that. And we're really looking forward to meeting that demand. I think we also talked about the Malaysia plant. Which will come online midyear. And that will give us just extra flexibility in the future. But our factories today are ready to meet the demand that we see in the next year or 2. Melissa Weathers: Perfect. And then maybe following up on something you've already touched on, on the call, but the ability for the AI side of things sort of offset the -- any slowness that we could see in consumer electronics. And you talked about like the board complexity and layer counts going up for AI boards. Is there any other way to quantify like what is your revenue opportunity with or 2027 Board versus what you've seen in the past? Just any other way to frame how we should think about that content opportunity and sort of how much that could offset any weakness on the consumer electronics side. John Lee: Yes. Maybe the way to think about it is, let's say, smartphones. The number of layers and the PCBs for smartphones could be in that 10 to 12 layers, give or take, and it's increasing as well. but the HDI type of boards for AI are in that 15% to 20% already. And in addition, AI also needs multilayer boards, which are in the 30 to 40 layers. And then, of course, the substrate -- the package substrate layers. So I would say that PCs and smartphones, the number of layers is consistent. It goes up a couple of layers every cycle. The AI, we're talking about doubling the number of layers. And so we've talked about in the past that our chemistry revenue from AI in 2024 was about 5% of our revenue -- our chemistry revenue in Electronics & Packaging. And now in 2025, it's 10%. And I would say it's a sequential increase quarter-on-quarter-on-quarter in '25. So we expect AI to continue taking a larger percentage of our chemistry revenue even with a slightly muted PC and smartphone market. Operator: And one moment for our next question. Our next question will come from the line of Michael Mani with Bank of America Securities. Michael Mani: To start, I just wanted to ask about your capacity position what this Malaysia facility fully ramping over the next course of next year? How much revenue do you think that could ultimately support for your business? And if there's any way to kind of quantify how much that footprint has expanded for you over the last couple of years to be great. And then as you look out, are there any other areas where you feel like you need to invest in your capacity position? I know there's a Thailand facility that you're ramping up, I believe that's for chemistry, but anywhere else where you anticipate any supply constraints? John Lee: Yes. Thanks, Mike, for the question. I think with Malaysia, it was built as a business economy replan. It wasn't built to anticipate needed more capacity for this particular ramp. So we already have plenty of factory capacity for that. I think Malaysia is kind of think about it as future capacity needs for WFE. We haven't sized it. I would say this, we always build our factories and phases. So we have the shell and then we'll put in a certain amount of lines and product lines beginning middle of this year. And then we'll plan on what makes sense to grow there. But it will give us a lot more capacity than we have currently. I would say we've added a little bit of CapEx here and there, kind of nip and up with our factories in anticipation of this particular cycle. But we had talked about being ready for $125 billion WFE 3 years ago. and we did that. And remember that $125 billion is run rate. We always have 30% surge capacity in addition to that. So I think we're quite comfortable with our capability I think always in ramp constraints or supply chain. Our suppliers are better, they're bigger, they're ready, but the golden school effect will happen. And so that's really where our execution has always been among the best, is finding those issues and then dealing with them and delivering to our customers on time. And we've always done that through every cycle. So I'm very confident we'll have the capacity. We have the team and the supply base to help us deliver to our customers this ramp as well. Michael Mani: Very helpful. And just moving on to electronics and packaging. So as you look out over this next year, is it fair to say that most of the growth this year, if it is sustainable in this kind of double-digit growth area would be -- would largely come from more chemistry revenue now that you've seen significant equipment orders over the last couple of months that are going to be ramping in terms of utilization? And then more broadly, this kind of relates to the previous question. I think in the past, you've said that every $100 million in install equipment translates to $20 million to $40 million in chemistry sales per year for utilization. So I just wanted to ask what are the sensitivities around that? Is the revenue function much higher if it's a substrate versus will be and as your customers are talking about pushing a number of layers to over 100. Like what does that do to that attach rate for revenue? John Lee: Yes. Thanks, Michael. I think in general, our model is still the same, $20 million to $40 million is per $100 million of equipment sales. And it doesn't really change too much between particular types of boards. And it's really a function of utilization. So if that tool is running 100%, then you're getting into that $20 million to $40 million range. And then I think, in general, we're just very happy with the continued shipments of our equipment, as I said in the earlier question, it continues to get better. It continues to be consistently strong even from a quarter ago. So if that's the case, then we will have had potentially 2 good years of record level chemistry equipment shipments. Now I also think we've talked about how long does it take for a piece of equipment to turn into chemistry revenue. We've said 18 to 24 months. That's still the case. So a lot of the chemistry revenue that you saw grow in 2025 was with equipment we shipped in 2021, 2022. And so that's why I think the equipment we're shipping now will be great capacity for future chemistry going forward into -- into '26, '27 and going forward. So I just want to make sure that was clear. The chemistry revenue now is not constrained by the equipment more shipping. That chemistry revenue is growing because of the capacity we've already shipped in terms of equipment a few years ago. Operator: Our next question comes from the line of Shane Brett with Morgan Stanley. Shane Brett: I want to follow up on Mani's question. Just based on the knowledge you currently have, should we be anticipating chemistry revenue to accelerate or decelerate in 2026? And I'm asking this because I want to better figure out just how much of this chemistry revenue is associated with just higher growth AI or should be kind of benefiting from a higher installed base. But how much could be impacted by just weaker consumer electronics sales. John Lee: Yes, Shane, I think, well, there is a seasonality to the chemistry revenue, as Ron pointed out. So Q1 is for the consumer product cycle type of products is lowest. Because of Lunar New Year. And then the Consumer Products chemistry will continue to grow throughout the year. That's the consumer product cycle. To your point, if there's a single-digit decrease, then we'll see that in that chemistry revenue for that market. But at the same time, AI chemistry is really -- we are expecting that to continue to grow. All our customers that are in that AI supply chain are running capacity, they continue to add tools and add -- and bring those tools up. So I think, as I said, that's why I expect that even with a slight decrease in PCs and smartphones the AI part of the chemistry will more than make up for that. Shane Brett: Got it. And for my follow-up, on the E&P tooling side, late last year, you sort of mentioned that your book through the first half of 2026. Just how should I think about this E&P to -- your current capacity for E&P tools relative to the existing demand for these tools. John Lee: Yes. I think we've added some capacity. We didn't need to build a new factory if you -- if that's your question. And we've been able to meet the timing demands of our customers even at these elevated levels. And as I said earlier in the commentary, based on changes from 90 days ago, we continue to see these strong bookings. So I think it's going to be another strong year for equipment. And our capacity to meet the time lines need by our customers right now is sufficient. We're not constraining our customers. Operator: Our next question comes from the line of David Liu with Mizuho. David Liu: Let me ask the question. On for Vijay at Mizuho. Maybe the first one just back on WFE. I think your customers and peers have mentioned second half-weighted strength and acceleration. Do you think like we can see that and revenue hit probably a 5 handle starting in September, December? John Lee: Sorry, David, 5 handle...? David Liu: On semis revenue. John Lee: Semis revenue, I see. It's -- we're guiding 450 years. Well, I would say this, if WFE grows in that same range between 15% to 20% as many of our customers are saying, we're going to have to ship ahead of that. We're going to have to shift to build that revenue for their inventory. I think in the past, we have hit that 5 handle at the last ramp. That wasn't constraints from our factories, that's constrained some supply chain, right? And so I think that -- I think we're better at managing supply chain. I think the supply chain is better. So 5 handle would not be surprising. I just can't predict when it will be. But in order to meet a 20% WFE increase. We have to get to a 5 handle probably as MKS. Otherwise, the industry won't get to that 20%. David Liu: Got it. And then a longer-term question, I think part of the industry is beginning to look at moving to panel for advanced packaging. I'm just wondering what kind of conversations you guys are starting to have there in the advanced packaging side and if there's any sort of outlook or time line that benefits and KSI. John Lee: Yes. I think you're referring to redistribution layers going from wafer shaped to panel rectangular shape. And I think -- many customers are working on that. And of course, when they go to panel, that's MKS. We are participating in the wafer type of packaging. But our strength has always been in panels. And so that is a tailwind for MKS. But as I mentioned in the past, that's kind of 1 or 2 layers of redistribution layers, and that is still relatively small in terms of market growth for us because the HDI and MOB are growing at 10 layers a year or more each. So while it's a tailwind, I think we don't want to miss the bigger picture, which is that the number of layers of MLB and HDI and package substrates are growing much faster. Operator: [Operator Instructions]. Our next question will come from the line of Peter Peng with JPMorgan. Peter Peng: Some of your semi customers are already talking about inventory build. Have you seen that in your -- in the second half of 2025? Or are you starting to see that now in terms of inventory build? John Lee: Yes. Well, you can look at their inventory numbers and you see if it's building. But I would say this, Peter, a lot of the conversations on getting ready happened in that Q4 time frame, and they have continued to accelerate in the Q1 time frame. And so we're ramping our factories in our supply chain. And I think it will take a little while to show up as inventory build in our customers because right now, we're -- as a supply chain, we're all just getting ready to just meet the higher demand. So you'll probably see that build up in their inventory numbers over the next couple of quarters. But we are still shipping to demand at this point just because we're just in the early stages of that ramp. Paretosh Misra: Got it. And then in the lines, there's a lot of, I guess, constraints and greenfield capacities even from your end customers as you kind of engaged, is there any -- I guess, are you seeing any constraints from your customers where they just don't have enough space to move equipment yet. And so maybe you can talk about that dynamic. John Lee: I've not heard that, Peter. I think our customers are well run customers. They have large factories located globally. At the last ramp we all added capacity, got more efficient. So I don't see that as a constraint in terms of not enough space to build the tools, if that was your question. Operator: And one moment for our next question. Our next question comes from the line of Joe Quatrochi with Wells Fargo. Joseph Quatrochi: Maybe just kind of on that line of thinking on the semi business. You're guiding for kind of 3-ish percent sequential growth, and I think some of your main customers are guiding for high single-digit, low double-digit sequential growth through the first quarter. So just kind of curious if you could kind of give us the puts and takes there. John Lee: Yes, Joe, I think we're guiding based on what we -- our best view today. But I think you've been in this industry a long time. When that ramp occurs, it just accelerates fast. This is our best view today. But during a ramp, as you know, things can accelerate rapidly. And so we're going to stick to this guidance. But certainly, we give a range. And even last quarter, we gave a range and we went higher than the upper end of that range. And that's kind of a characteristic of ramps. And so this is what we see today. I would say this, if we could ship more, our customers will probably take it. So we're trying to ramp as fast as we can. Joseph Quatrochi: That's helpful. And then maybe just as we think about the ramp of the course of the year and think about just the puts and takes on gross margin, should we still think about 50% is kind of incremental gross margin leverage just thinking about the tariff dynamic as well? Ramakumar Mayampurath: Joe, this is Ram. I'll take that. The quick answer is yes. We are very pleased with the gross margin for 2025. And if it weren't for tariffs, you would have been to your point or 47%. And if you remember, last 3 quarters, we were focused on mitigating the cost of the tariffs. And by we offset the cost dollar for dollar. And going forward, we'll be focused more on mitigating the impact on the gross margin itself. So yes, the volume and the right mix will certainly get us back to the 4%. Operator: [Operator Instructions]. Our next question will come from the line of James Schneider with Goldman Sachs. James A. Schreiner: Just as a clarification initially, you talked about your semi customers citing a 15% to 20% outlook and your ability to kind of do towards the high end of that, presumably, given the mix of your customers and the mix of your business You'd also just referenced potential constraints in terms of ramping your production. Can you maybe just give us a clarity on whether you see yourselves as constrained in your ability to ship in the next quarters? Do you think you'll be able to catch up to your customers' full demand -- unconstrained demand run rate by the middle of the year at least? John Lee: Yes, I'd say this is Jim. During the beginning of the ramp, we're never the constraint because I think we have a supply chain with inventory as well. And even during the peak ramp and even after many quarters of a ramp, we have never constrained our major customers. And I think it's an industry that's always met demand as an entire semiconductor industry. And companies that don't meet demand and constrain their customers they're not around anymore, right? And so I think we have plant capacity. The challenge is getting the supply chain to ramp up. But even then our biggest customers have always been a priority and we've never disappointed them. James A. Schreiner: Very clear. And then just in terms of how we think about the forward model, you've clearly stated that you expect to grow OpEx slower than revenue, but give us a sense about the leverage you expect there, please? 2:1 or et cetera? Ramakumar Mayampurath: Jim. So if you look at -- so we will be investing. We want our OpEx very carefully, but we will be investing this year to support the growth. But in terms of leverage. That will be a focus to drive our leverage further. If you look at 24% to 25%, our OpEx dollars grew, but our OpEx as a percentage of sales was lower. So we finished around 26% for 25 and 26, we will be lower than that. Operator: Thank you. And I would now like to hand the conference back over to Paretosh Misra for closing remarks. Paretosh Misra: Thank you all for joining us today and for your interest in MKS. Operator, you may close the call, please. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.