AI Investor Insight

GLBE 2025 Q4 财报电话会议

Operator: Good morning. Welcome to the Global-E Fourth Quarter and Full Year 2025 Earnings Call. This call is being simultaneously webcast on the company's website in the Investors section under News and Events. For opening remarks and introduction, I will now turn the call over to Alan Katz, Global-E's Head of Investor Relations. Please go ahead. Alan Katz: Thank you, and good morning, everyone. With me on the call today are Amir Schlachet, Co-Founder and Chief Executive Officer; Ofer Koren, Chief Financial Officer; and Nir Debbi, Co-Founder and President. Amir will begin with a review of the business results for the fourth quarter and full year of 2025. Ofer will then review the financial results for the fourth quarter and full year in more detail, followed by the company's outlook for 2026. We'll then open the call for questions. Before I read the forward-looking statements, I'll note that we have posted an Excel-based metrics file on our IR website. This provides historical data for both financial information and KPIs that may be helpful as investors are researching the company. Please feel free to let me know if you have any feedback on this document. Moving on, certain statements we make today may constitute forward-looking statements and information within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding our future results of operations and financial position, growth strategy and plan, and objectives of management for future operations, including onboarding new merchants, expanding our offerings and introducing and integrating new solutions are forward-looking statements. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors in our annual report on Form 20-F filed with the SEC on March 27, 2025, and other documents subsequently filed with or furnished to the SEC. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this call. You should not put undue reliance on any forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Please refer to our press release issued today, February 18, 2026, for additional information. In addition, certain metrics we will discuss today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation from, as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. For more information on these non-GAAP financial measures, please see the reconciliation tables provided in our press release issued today. Throughout this call, we will provide a number of key performance indicators used by our management and often used by competitors in our industry. These and other KPIs are discussed in more detail in our press release issued today. I will now turn the call over to Amir, our Co-Founder and CEO. Amir, please go ahead. Amir Schlachet: Thanks, Alan, and welcome, everyone, to our fourth quarter and full year 2025 earnings call. 2025 was another record-breaking year for Global-E, in which we surpassed our guidance, both for the fourth quarter and on an annual level across all parameters from top line revenue down to adjusted EBITDA. 2025 was a very successful first year of our multiyear strategic plan, which we laid in front of you at our Investor Day in March as we continue to execute on our strategy and further solidify our leadership position in the global e-commerce enablement space. We believe that our outstanding results in 2025, coupled with the guidance we are providing today for 2026, showing acceleration in revenues growth from 27.8% in 2025 to close to 30% in 2026, in parallel to significant bottom line margin expansion driving our adjusted EBITDA margin to 21.9% are all a testament to the durability of our business model and to our confidence in our ability to uphold our long-term strategic goals. Furthermore, as we look beyond 2026 to the subsequent years of our multiyear strategic plan, given the enormous opportunity that lies ahead of us with a massive TAM that is still mostly greenfield and the increase in demand for our services due to the growing complexity in the global tariff landscape, we believe that our business momentum, our market and product leadership position and our various business development vectors will enable us to continue and deliver against our multiyear financial targets in the years to come across all parameters. In fact, given the strong ending to 2025 and the forward-looking outlook that we are laying out today, we believe we are slightly ahead of our multiyear plan with lots of room for growth ahead of us. Back to last quarter's results. Our merchants had a very strong holiday sales period, including the Black Friday and Cyber Monday weekend, and we achieved our first ever $1 billion GMV month in November of 2025. When I think about the fact that our total annual GMV for 2020, just 5 years ago, was $774 million, transacting over $1 billion in a single month is quite an achievement. It is a tribute to the tireless efforts and meticulous execution of all our amazing team members here at Global-E. Looking at the full quarter, Q4 was our strongest quarter ever and came in well above our guidance ranges on all metrics. We finished Q4 with a record $2.36 billion in GMV, with GMV growth accelerating to over 37% year-on-year. Revenue growth accelerated as well to 28% year-on-year, totaling $337 million in the quarter. In terms of profitability, our non-GAAP gross profit margin for Q4 was 46.8%, up 80 basis points from the same quarter of last year. And our Q4 adjusted EBITDA was $87.2 million, up 53% year-on-year for a 25.9% margin, and almost 420 basis points increase compared to the same quarter last year. In terms of the full year, 2025 was, first and foremost, another year of fast growth. GMV for the year came in at approximately $6.57 billion, up 35% with revenues for the full year at $962 million, up 28% and with adjusted EBITDA at $198.5 million, representing a 41% growth rate and a 20.6% margin for the full year. Our strong profitability growth was driven by the strong top line growth and operational leverage, partly as a result of AI deployment across different functions and processes within Global-E, coupled with our commitment to and track record of cost control and utilization of efficiencies of scale throughout the various parts of our business model. 2025 was also our first full year of GAAP profitability with a GAAP EPS of $0.39. This is another incredible milestone for us as a company, and we expect to remain GAAP profitable in future years as well. We continue to be a highly cash-generative business. We are reinvesting this cash to drive growth both organically and through strategic acquisitions as well as returning excess cash to shareholders via our share buyback program. As part of which we have already completed $72 million in share repurchases within Q4 of 2025. Moving on and before I go through our recent merchant launches, I would like to provide you with a few key updates regarding our business and our offering. First, we are seeing good initial traction with the launch of Shopify Managed Markets version 2.0, the new iteration of our white label self-service merchant of record solution on Shopify. With this exciting new build, managed markets is now fully integrated into Shopify Payments, enabling much more harmonization between global and domestic financial and operational flows, along with faster payouts, enhanced control over global product availability and compliance and more. The product is working as expected, and both us and Shopify are pleased with the progress to date. I'm also happy to say that we are working with Shopify to expand the offering to additional countries in the coming quarters as well as on many exciting new features and enhancements. With the 2.0 build out there and starting to gain traction, we believe that trading volumes on this new and innovative offering will pick up throughout the year. Second, on our Q3 call, I discussed our duty drawback offering. An important value-added service designed to enable merchants to potentially reclaim import duties on goods that are exported outside their home base as well as reclaim certain tariffs paid on return goods, depending on the sales parameters. With the rapidly changing tariff environment in the U.S. and Europe as well as in other areas of the world, we are now doubling down on this offering, which provides crucial pricing and profitability advantages for our merchants. Last quarter, we got the permit to offer import duty drawback to our U.S.-based merchants for goods that are exported out of the U.S. to international customers, further supporting them in optimizing their cost of trade in times of change. This attractive new offering is now made available for all eligible U.S.-based merchants. During the fourth quarter, we continue to make good progress also on our borderfree.com offering. We saw further growth in shopper sign-ups as well as a significant increase to the share of merchant sales attributable to the borderfree.com channel, which stands now at over 6% for merchants that are utilizing borderfree.com. Lastly, as discussed last quarter, we continue to view AI as a meaningful lever for growth, service level enhancements and efficiencies across our business. There continues to be a lot of focus across the organization on identifying and deploying use cases for AI-driven platform enhancements, restructuring some of our services and building additional ones to provide faster, better and more efficient services for the benefit of our merchants. Overall, given our unique merchant of record business model that combines trade compliance solutions and licenses, a unique data asset, robust global payments infrastructure, physical fulfillment frameworks and post-purchase services, all at scale, we view AI as a very positive factor for our business and as a driver of durable value creation over time. Let me provide you with a few examples on how we are already integrating AI into our operating model, how it's beginning to influence our sales and merchant acquisition efforts and what we are seeing as agentic commerce continues to emerge. Internally, we are leveraging AI across the organization to drive efficiencies and optimize the impact of our resources. We're seeing faster turnaround times in R&D with entire features and in some cases, even entire subsystems already designed, developed, tested and deployed through Vibe coding, speeding up time to market for new features and enhancing the efficiency of our R&D. These efficiencies are already evident in our numbers as 2025 saw around 70 basis points of reduction in our R&D spend as a percentage of revenues. We plan to continue on this path and as such, intend for all our massive growth in activity planned for 2026 to be carried out by the existing R&D team without any meaningful increase in headcount. LLM-based tools are also helping us day in and day out to speed up and automate daily tasks as well as to organize, update and deploy know-how and business information across different departments in the organization like was never possible before. A good example of this would be our internally developed and highly successful customer service chatbot. For more than 2 years now, this chatbot has been handling larger and larger portions of our incoming customer inquiries in near real time to the satisfaction of the end customers and without a need for human escalation. We are also relying on AI in our newly launched full-site localization offering. This in-house developed LLM-based value-added service allows merchants to easily and seamlessly translate the entire content of the website into different languages, including language and pricing embedded on to graphic content, while ensuring full coherency across the entire customer journey throughout the browsing, checkout and post-purchase phase. We are just launching the first 2 merchants on this new service and believe more will join in the coming quarters. Another area in which we are increasingly deploying AI-based capabilities is around product classification and restrictions management. Our proprietary LLM-based tool can now classify large product catalogs, assigning the correct customs HS code to products faster with built-in iterative learning feedback loops, achieving constantly growing levels of accuracy. Such improved processes across R&D and G&A should help us to manage and optimize spend, which in turn would contribute to the adjusted EBITDA margin expansion we expect to see through 2028. We are also applying AI to significantly enhance our sales efforts, and I believe this is a particularly compelling use case. As a reminder, our consultative sales approach requires an understanding of merchant-specific value drivers, product nuances and geographic priorities, among other things, in order to deliver the conversion improvements we are known for. Until recently, each prospect opportunity required expert research, qualification and enrichment by our BDE team before any reach out is made by a salesperson. Seeking to greatly expedite this process, during the fourth quarter, our internal innovations team developed and refined a proprietary agent built in-house from the grounds up that uses AI and a broad set of data sources and signals to support these efforts. Based on a large set of factors such as site traffic, vertical, product mix, average order value, current global e-commerce poster and more, the system is able to identify these prospect merchants and qualify opportunities with immediate high confidence value. With the system operating at scale, we are now able to fill the top of the sales funnel at a combination of speed and quality that was unimaginable prior to the AI revolution. As such, we are already seeing a meaningful increase in the number of demos run per month, which is expected to rise even further after we field the next evolution of the system, which the team is already working on. This next iteration will add an AI agent that will automate the initial recharge process with a highly tailored and customized approach. While still early, we're encouraged by the initial results and excited about the potential impact on our new merchant acquisition pipeline. Lastly, on AI. In terms of the e-commerce market dynamics, we are seeing a steep increase in traffic originating from AI-based chats, albeit from a low base. We expect to see AI-based chats continuing to grow over time as a discovery channel for our brands, and we are working through our various e-commerce platform integrations to provide seamless support for our merchants' global discovery efforts through this increasingly important channel. We have also made sure that through our integrations to the different e-commerce platforms, we are geared to support agentic commerce transactions utilizing our platform capabilities behind the scenes and have already seen a small number of transactions done utilizing these capabilities. The same holds for the newly released UCP or Universal Commerce Protocol co-created by our partners at Shopify together with Google. We view all these developments as additive to our opportunity set, supporting our merchants trading through more D2C channels everywhere around the world. As merchants look to extend agentic workflows into cross-border commerce, the underlying complexity of their global transactions increases materially, making our merchant of record services ever more valuable for them. Besides these many exciting developments, in Q4, we also saw many new brands joining the platform and going live across all geographies. In North America, we launched with prominent brands such as Nadine Merabi, Laura Geller, PopSockets and Parcel. In Europe, we launched all three iconic brands of the French SMCP Group - Sandro, Maje, and Claudie Pierlot as well as other leading French brands such as Maison Alaia from Richemont Group, Satisfy Running and Jerome Dreyfuss. We launched Stella McCartney and Amina Muaddi in Italy; Food Arc, Dunhill and Graff in the U.K.; multiple Scandinavian brands such as [indiscernible] from Denmark, [ Softwood ] from Sweden and FITJEANS from Norway and also went live with Prusa, the largest maker of 3D printers in Europe, which is based in the Czech Republic. In APAC, too, we launched with many brands during the quarter, including Tuttio, a seller of high-performance e-bikes out of Hong Kong, J&Co from Singapore, Verish and [indiscernible] from South Korea, and [indiscernible] and VESTIRSI from Australia. We also went live with multiple Japanese brands such as Remy, Danton and Sanyo, probably best known for its Hello Kitty character. Besides new merchant launches, Q4 also saw the expansion of our business with a number of brands, including Logitech, which became the first to launch on a new integration with the TikTok Shop marketplace; Zimmermann, the iconic Australian high-end women's fashion brand, which now uses Global-E also into the EU and the U.S.; and Karl Lagerfeld, Pokemon, Tom Ford, Soeur and Marc Cain, all of which added support for additional lanes during the quarter. One of the main topics, which were and continue to be top of mind for all merchants is the issue of global tariffs and the challenges posed by them. In 2025, we have witnessed tremendous changes in the global tariff landscape, mainly driven by changes in the U.S. tariffs and changes to personal import de minimis. As expected, this created some pressure on trading volumes in the short term, especially with regards to trading into the U.S. However, as we anticipated, this had a positive effect on our pipeline and subsequently on our growth in the midterm as reflected in our Q4 2025 growth figures and in our strong outlook into 2026. As the tariff landscape is expected to remain dynamic, most notably with the EU de minimis removal and tariff changes, we believe our platform, especially with regards to its merchant of record trade compliance and optimization capabilities, is making our offering even more critical for merchants into the future. Ofer will go through our detailed results and our financial outlook for 2026 in a moment. But before that, as we wrap up 2025, I do want to take a minute to acknowledge the tremendous performance from our team despite the challenges and uncertainties in the global consumer markets that we all faced throughout 2025. We believe this truly speaks to the resiliency of our model. Our performance over the past 12 months has proven once again that our business brings incredible value to our merchants and that we have a huge opportunity ahead of us. I will now hand it over to Ofer to take us through the quarterly numbers in more depth and lay out our Q1 and 2026 full year guidance. Ofer Koren: Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. As Amir just highlighted, we achieved another quarter of strong profitable growth in Global-E and ended the year at or above the high end of our guidance across all key metrics. Our strong top line and bottom line performance drove record free cash flows and Q4 continued to perform well above the Rule of 40. We are reiterating the multiyear targets presented at our Investor Day early in 2025, and we believe our strong 2025 results, along with the 2026 guidance I will discuss shortly, clearly indicate that we are on track in executing our strategy and achieving our high growth and increased profitability multiyear targets. Before I go into the details of the quarter, I'd like to remind everyone again that in addition to our GAAP results, I'll also be discussing certain non-GAAP results. Our GAAP financial results, along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release issued today. Looking at the full year of 2025, it was another year of strong growth for us, driven by both new merchant launches and existing merchant relationships. GMV and revenue grew 35% and 28% year-on-year, respectively. Non-GAAP gross profit also grew at 28%, reflecting a non-GAAP gross margin of 46.3% for the year. Adjusted EBITDA grew by 41% to $198.5 million, reaching an adjusted EBITDA margin of 20.6% on an annual basis. Furthermore, 2025 was another record year of free cash flow generation, which amounted to $281 million, reflecting a free cash flow margin of 29%. Throughout 2025, merchants operating on our platforms continue to trust us and to grow with us as reflected in the annual NDR rate of 122% and GDR rate of 96%. Drilling down into Q4, we delivered another quarter of rapid growth and robust cash generation. GMV growth accelerated during the quarter, reaching $2.36 billion of GMV, an increase of 38% year-over-year. This performance was driven by strong consumer demand, which, together with some favorable FX tailwinds supported strong same-store sales performance. Growth was further boosted by strong trading volumes of new merchants that launched during 2025. In Q4, we generated total revenue of $337 million, up 28% year-over-year. Service fee revenue was $160.9 million, up 37% and fulfillment services revenue was up 21% to $175.7 million. Service fee take rate was 6.82%, just about flat compared with both last quarter and Q4 of 2024 as expected. Fulfillment take rate was 7.44%, slightly lower than expected, driven by higher-than-expected average order value, which contributed to the strong GMV. Moving down the P&L. Q4 non-GAAP gross profit was $157.5 million, up 30% year-over-year, representing a gross margin of 46.8% compared to 46% in the same period last year. GAAP gross profit was $154.8 million, representing a margin of 46%. Moving on to operational expenses. In Q4, we continued to invest in the enhancement of our platform and in the expansion of our offerings and services, while focusing on driving efficiencies. R&D expense in Q4, excluding stock-based compensation, was $28.5 million or 8.5% of revenue compared to $24.1 million or 9.2% of revenue in the same period last year. Total R&D spend in Q4 was $33.1 million. We also continue to invest in sales and marketing to support future growth. Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation and acquisition-related tangible -- intangible amortization was $31.7 million or 9.4% of revenue compared to $29.8 million or 11.3% of revenue in the same period last year. Q4 sales and marketing expenses already reflect the updated 3P Shopify revenue share. Shopify warrant-related amortization expense was $8 million. This amortization expense should be fully gone from the P&L in January 2026. Total sales and marketing expenses for the quarter were $43.8 million. General and administrative expenses, excluding stock-based compensation and acquisition-related contingent consideration was $10.8 million or 3.2% of the revenue compared to $10.7 million or 4.1% of the revenue in the same period last year. Total G&A spend in Q4 was $14.7 million. Adjusted EBITDA for the quarter was $87.2 million, representing a 25.9% adjusted EBITDA margin, an increase of 53% from $51.7 million or a 21.7% margin in the same period last year. As I will discuss in a few minutes when we go through our 2026 guidance metrics, we are well positioned to see continued adjusted EBITDA margin expansion in 2026 in accordance with our long-term plan. As Amir noted, in 2025, we also turned GAAP profitable for the full year, driven by our rapid growth and the significant decrease in the Shopify warrants-related amortization expense. Net profit for the quarter was $62.5 million compared to a net profit of $1.5 million last year, and GAAP EPS was $0.35. Starting this quarter, we are also presenting a new non-GAAP net profit metric as can be found in our earnings release. Non-GAAP net profit for the quarter was $85.8 million compared to $52.9 million in the same period last year. Non-GAAP net profit per share was $0.49 on a fully diluted basis compared to $0.30 in the same period last year. Switching gears and turning to the balance sheet and cash flow statement. We ended 2025 with $623 million in cash and cash equivalents, including short-term deposits and marketable securities. Cash generation accelerated in Q4 with operating cash flow in the quarter at $216 million compared to an operating cash flow of $129 million a year ago. 2025 was a very strong cash generation year with free cash flow of $280.7 million, increasing 68% from 2024. Operating cash flow for the full year was $283.8 million. It is important to note that our operating and free cash flows for the quarter and the year were impacted by onetime positive effect of certain favorable working capital dynamics related to a few sizable merchants. As a rule of thumb, we expect annual free cash flows to be driven by adjusted EBITDA and typically also by some additional contribution from year-end favorable working capital dynamics. As Amir mentioned, as of the end of Q4, we have repurchased 1.8 million shares for $72 million in the quarter and had $128 million of capacity remaining on our repurchase plan. We have continued to buy and make progress on our repurchase plan during Q1 of 2026. Moving on to our financial outlook and guidance for Q1 and the full year 2026. We expect 2026 to be another year of very strong top and bottom line growth for Global-E. For Q1 2026, we are expecting GMV to be in the range of $1.705 billion to $1.745 billion. At the midpoint of the range, this represents a growth rate of 38.8% versus Q1 of 2025. We expect Q1 revenue to be in the range of $247 million to $254 million, representing a growth rate of 32% versus Q1 of 2025. Lastly, for adjusted EBITDA, we are expecting a profit in the range of $46.5 million to $49.5 million or a 19.2% margin at the midpoint of the range. For the full year of 2026, we anticipate GMV to be in the range of $8.45 billion to $8.80 billion, representing an annual growth rate of over 31% in the midpoint of the range. We expect GMV growth to remain strong throughout the year. We saw very strong same-store sales during recent months, including the first half of Q1. Our guidance assumes that same-store sales growth rates will moderate to a more normalized level for the remainder of 2026, closer to multiyear averages, in part driven by FX tailwinds subsiding. But should they remain at these elevated levels, we would be well positioned to deliver results at or even above the top end of our guidance range. Revenue for the full year is expected to be in the range of $1.21 billion to $1.27 billion, representing an acceleration of the growth rate to 29% at the midpoint of the range. Based on this outlook, 2026 will be our first year achieving greater than $1 billion in revenue. This is an exciting benchmark for any company, but we are especially excited that we are seeing a reacceleration of growth while already at scale. We expect adjusted EBITDA and adjusted EBITDA margins to expand, thanks to our increased efficiencies and operating leverage. For 2026 adjusted EBITDA, we are expecting to be in the range of $259 million to $284 million, representing almost 37% growth at the midpoint and a 21.9% margin. Our 2026 guidance reflects an acceleration in revenue as well as expansion of our adjusted EBITDA margin, which is expected to put us above the Rule of 50. In conclusion, we are well on our way to achieve the targets that we laid out at our Investor Day last March with our 2025 results and 2026 outlook, putting us slightly ahead of our multiyear plan. We see strong same-store sales growth and merchant expansions, a healthy pipeline of new logos and exciting new services that are generating interest across the e-commerce universe. We look forward to delivering another strong year in 2026. And with that, Amir, Nir, Alan and I are happy to answer questions you may have. Operator? Operator: [Operator Instructions] Your first question comes from the line of Will Nance with Goldman Sachs. William Nance: Very nice results. I wanted to maybe ask about some of the outperformance that you guys saw in the fourth quarter. It sounded like from the prepared remarks, there's an element of both stronger same-store sales as well as FX, and it sounds like that has continued into the first quarter. And I heard the assumption about assuming that the same-store sales component doesn't continue. Maybe could you drill down a bit and help kind of just delineate between sort of the FX-driven [ impacts ] versus same-store sales? I think our understanding is that the FX-related impacts fall off starting in the second quarter. So any color you can give on just help digging apart those pieces? Ofer Koren: Will, it's Ofer. Thank you for the question. We have seen very strong GMV results in Q4. And as I mentioned also in the beginning of Q1. And as you mentioned, it's driven by multiple factors. Initially, we are very happy with the new merchants that they've launched during '25 and especially in the second half of 2025, we have seen very strong results with some of the larger merchants. So I think they are satisfied, and we are very satisfied. On top of that, same-store sales have been very strong, well above our multiyear averages. This was partially driven by strong demand and also some of the large merchants that are doing very well on their business, but also from some FX tailwinds because last year or I should say, towards the end of '24, the USD has strengthened versus most currencies. This has continued into Q1 and then started to decline, and it's pretty low right now. So we do see some FX tailwinds out of that. When we look at Q1 and the entire 2026, we assume that we would still enjoy some of the FX tailwinds, and we see higher same-store sales regardless in Q1. But we also assume that this will normalize for the rest of the year, for the remaining of the year. However, if this continues, as I mentioned, we might see some upside. William Nance: Got it. That's great. And just maybe to focus on some of the other growth drivers of the business, you've given commentary in the past around pipeline. I was just wondering if you could talk through kind of any dependencies for the outlook over the course of the year in terms of customer implementations. And then just any color on sort of large versus small merchants or geographies and timing as we think about the cadence of the year. And nice results again. Nir Debbi: Will, thank you. It's Nir. The booking pipeline looks great. It looks stronger today than it did in the same period in 2025. The contribution of new in 2025 was already a record year in terms of contribution to the growth. We expect -- in absolute terms, we expect that to continue forward, a pipeline is filling up quite quickly. We are beginning to see impact from the AI-led sales tool that Amir mentioned, driving significantly more deals and demos to the top of our funnel, and we expect that to materialize throughout the year. And we also see increased demand as we expected and guided to in previous quarters from the increased complexity driven by the global tariff changes throughout '25 in the U.S. and now also with the removal of de minimis that is upcoming in Europe. Operator: And your next question comes from the line of Brian Peterson with Raymond James. Brian Peterson: Maybe for Amir or Nir, just -- you guys have a very strong value proposition, and you've been able to go to merchants and they see an uplift in their cross-border GMV. I'm curious what you think could change about that in an AI world? And if that's something that you can enable with new merchants, how should we think about putting that functionality in the hands of your existing merchants, which is obviously a very large GMV base today? Nir Debbi: I think that our -- as you mentioned, our value proposition is indeed very complex. It is a combination of robust infrastructure, trade compliance infrastructure, payments infrastructure across more than 40 legal entities worldwide. This is coupled with a very unique data asset that Global-E has, that on the back of it, AI can actually accelerate as we can train him on a unique data in order to optimize our merchants trading in data that is not available outside Global-E. Couple that with our capabilities into fulfillment and the scale that Global-E has that allows us to build a trading models that are more efficient in terms of duty drawbacks, in terms of local registration, et cetera, and the combination of it all, I think, will just benefit from AI as a driver. I don't see AI being able to replace elements of it. So we feel very confident, and we already see a lot of this positive tailwind being built and being deployed, and we see the effect on our customers' trading. Brian Peterson: Ofer, maybe one follow-up. I appreciate the guidance on GMV and revenue. I would love to understand any color you can share in terms of the take rates of the individual segments? Ofer Koren: Sure. So service fee has been pretty stable for the last 4, 5 quarters, and we expect it to remain stable in 2026 as well. Fulfillment, as a reminder for everybody, unlike service fee take rates, which are based on a percentage of GMV is based -- is actually a derivative of the business model that is a sort of per transaction basis. And as part of our business, multi-local is growing faster than our traditional cross-border model. And this has a mix of impact, which results in certain decline in total fulfillment take rate over time. Specifically for 2026, we expect overall revenue to grow only slightly lower than GMV growth. As I mentioned, we do not expect service fee take rate to change much. It might fluctuate a bit between quarters and we expect fulfillment take rates to be slightly lower. Again, you might see some volatility, but all in all, we expect them to be slightly lower compared to the previous years. Operator: And your next question comes from the line of James Faucette with Morgan Stanley. James Faucette: I want to follow up on the service fee take rate commentary. And you're clear that you expect that to be relatively stable through '26, the service fee component. Can you just talk about like how much benefit you got from maybe Marks & Spencer coming back online versus value-added services? And I'm also curious, given that if we look at the spread between your expected GMV and revenue growth in 2026, it looks to be narrower than the medium-term framework you gave at the beginning of last year. Can you just talk about like what's driving that to be a bit better maybe than you had thought a year ago? Nir Debbi: James, thanks for the question. It's Nir. In terms of the service fee take rates, we do see it stabilizing over the last few quarters, and we expect that to continue going forward. Marks & Spencer by itself did not have an effect on it. It's a matter of mix and the mix in general didn't change much, and this allowed the service fee take rates to change -- to remain stable. I think that going forward, when you look into our expectation next year and the narrowing of the gap between the GMV and service fee, I think part of it is driven by our pipeline. We have good visibility into client launching in the coming quarters. And we see that the mix that we see coming is going to be relatively in a mix that simulates what we have today, maybe slight more towards multi-local, and this is inclining into the slight broadening -- slight gap that is still remaining between our GMV growth and revenue growth. But all in all, we do believe that it's going to stabilize a bit the share of multi-local and over -- and due to that, most of the gap is being narrowed. The other part, as you indicated, we do start to see some traction with value-added services that we deployed across borderfree.com, trade compliance that started to yield some revenue. And the combination of both gives us, I would say, the ability to give a strong forecast on the growth of revenue. James Faucette: That's great. And then I wanted to follow up on managed markets. Exciting to hear the progress there. And I know you've spoken in the past about harmonizing domestic and international merchant experiences. But can you just tell us -- give us a little color what has changed mechanically in this version versus the prior implementation, firstly? And secondly, how much should we think about is embedded into the outlook from -- for 2026 from managed markets? Amir Schlachet: Sure. James, it's Amir. I'll start with the mechanics, and then I'll let Ofer give you some color about guide. But basically, there are quite a few changes and upgrades in this new iteration of managed markets. But I would say, overwhelmingly, the biggest change that drives that harmonization that you mentioned is the fact that this new build actually integrates all the services, all the financial flows and the operational flows to go through Shopify Payments versus the previous iteration, which kind of stood on a separate set of payment rails. So that really allows merchants that go on to managed markets to basically keep on operating their store and selling just like they do in their home store using the same processes, the same familiar kind of ways of conducting their business without a need to learn the workings of a completely different store. And there are many other changes in terms of their visibility and control over what can be sold, where and so on. But I would say, mechanically, that's the biggest change, and that was the big uplift on both sides, from our side and from Shopify side in order to enable this major upgrade. Ofer Koren: In terms of contribution in 2026, we expect managed market to still weigh a bit on growth in the first few months of the year as it hasn't been pushed in recent months. We do expect to see contribution for it to grow above our average rate in the back half of the year. We were still a bit cautious when we were budgeting and remains to be seen what the actual results would be, but we are cautiously optimistic. Operator: And your next question comes from the line of Samad Samana with Jefferies. Samad Samana: First one, maybe, Amir, when you were talking about the agentic commerce components where you're starting to see some early transactions, I know you said it's still small, but can you help us think through what early observations you have there? Is there a certain type of product that's getting purchased through the agentic channel? Is it a certain average order value? Just something that we can think about what it might signal for down the road, especially as consumers get more comfortable? And I guess, along that line, is there a certain geography where you're seeing it already deployed? And then I have a follow-up question. Nir Debbi: Samad, it's Nir. We do believe that agentic AI or agentic commerce is a great opportunity for our merchants. Starting at the top of the funnel as a discovery channel, where we have already seen a significant increase in the share of traffic that gets to our platform and our brands from AI chats. We expect to see AI-based chats continue to grow over time as a discovery channel for our brands. And this has grown dramatically, as I said, although from a small base, but still have grown significantly. We have also started to see in small numbers yet, agentic commerce transaction. And as part of it, we did make sure that through our integration to the different platforms, we will natively support it for cross-border transactions. So all in all, on the discovery, we already see it getting to scale. On the agentic commerce as a both transactions, we have seen a small number of transactions to date. But what we made sure is that our infrastructure and our integration and our ecosystem will be able to support it for cross-border. Amir Schlachet: And I'll just add, Samad, that I think these are still very low numbers. So it's still a bit early to draw conclusions. I think we're seeing much more experimentation now from early adopter brands. And so I think it's a little bit too early, but we are certain that this will continue to grow over time as it becomes more widely adopted, and then we'll probably see some emerging themes. But anyhow, as Nir said, we are anyhow there to support all of them on their global transactions. We'll probably see the market shape over the next few quarters and years. Samad Samana: The Excel file with the metrics was very helpful. So thank you to the team for putting that together. So the net dollar retention actually accelerated from '24 to '25, went to 122%. I was wondering a couple of things. Could you, one, help us understand, was that a function of lapping the Ted Baker comp? Or is that an organic acceleration in NRR? And if so, maybe what drove that? And how are you thinking about what's embedded in the '26 guidance from an NRR perspective? Ofer Koren: Samad, it's Ofer. Thank you for the question. We had a very solid and healthy year in terms of net dollar retention and gross dollar retention. Actually, we've been able to improve our GDR from the previous year. As you mentioned, we lost at Baker in the previous year. And above that, we've seen healthy trading with some of our leading merchants. So all in all, it was a good year in terms of net dollar retention. We expect 2026 to be a continuation of 2025. So we don't expect any material changes. And again, it might be impacted over the year from changes in same-store sales. Operator: And your next question comes from the line of Chris Zhang with UBS. Chao Zhang: My first question is on your investment priorities for 2026. Can you share with us or any new areas you're looking at that you didn't perhaps had enough of investment dollars before that you wanted to highlight? Nir Debbi: So I think there are multiple things that we are prioritizing into 2026. I think first to mention is our trade compliance infrastructure as we see more and more countries around the world take action, increasing their tariffs, removing their de minimis exemptions, which actually makes the cost of trade in global e-commerce higher. We see a huge benefit for us to continually invest in reducing those costs for our clients with advanced trading models, with the ability to do duty drawback on goods that are exported for the import duties, to do duty drawback in different countries for goods that are returned from final shopper. So a lot of investment and focus is going into reducing the cost for trade given the circumstances and this brings us a lot of demand as well as increased retention with our brands. The second is, of course, AI. We spoke quite a lot about it, but we see a continuous investment in AI in almost, I would say, every field of our activities from better utilization of our data asset in order to better optimize our clients' trading and drive a faster same-store sales into our own pipeline, top of funnel demand generation and from there even down to an outreach agent and the outreaches in order to be able to do it at scale and going into optimizing different elements around the company from value-added services such as translation services, down to allowing chats to our client on examining their data and their comparable data from Global-E to allow them to take a better decision and all the way into optimizing our R&D spend, marketing spend and other places that AI can drive. So that would be the second area where we're going to focus quite dramatically. And also, we are planning to continue and invest heavily in optimizing our fulfillment networks in order to offer best-in-class services to our clients with different price points more efficient than we have even today in order to allow them again to trade with a cost-effective structure given the changes in the global landscape. Chao Zhang: Awesome. Just a follow-up. I wanted to hear any update on one metric you shared at the Investor Day, which was the multi-local GMV. I understand it was a one-off disclosure made back in March of last year, and that was expected to be $900 million in 2025. But can you talk directionally to how the year trended versus that initial expectation and what you're seeing that going to 2026? Again, this is on the multi-local GMV. Ofer Koren: Yes. So 2025 traded pretty close to our initial expectations with regards to multi-local, and we are at approximately 15% of GMV. Looking into 2026, we expect multi-local to continue to grow, but we don't think it will outgrow the entire business by a lot. So that's what we see for now. We are very happy, and we think that this provides us a competitive advantage, and it's a great offering for our clients. Operator: And your next question comes from the line of Koji Ikeda with Bank of America. Koji Ikeda: Just one question from me here. I wanted to ask on GAAP EPS earnings. And so congratulations on being GAAP EPS profitable for the full year. And so how should we be thinking about GAAP EPS growth from here on out, especially with factors like efficiency gains that you're seeing with AI and the R&D organization? Ofer Koren: Thank you for the question. So we have been able to turn GAAP profitable, and we are very excited about that, and we expect to continue to see GAAP profitability also in the coming periods. We have provided also -- and we will continue to provide also a non-GAAP net income and EPS number, which is a very important metric in our view. Generally speaking, when you look at that non-GAAP net income, it is not -- there isn't a significant gap between adjusted EBITDA and this metric. And we expect it to grow along the lines of adjusted EBITDA. There could be some gaps. But generally speaking, directionally, this is the way to look at it. Operator: And your next question comes from the line of Billy Fitzsimmons with Piper Sandler. William Fitzsimmons: As I think about the prepared remarks and the focus on leaning into AI tools internally and automated workflows, if we look in that adjusted EBITDA guidance midpoint for 2026, can you maybe break down the expected margin expansion from simply structural scale in the business versus some of those AI-driven efficiencies that were outlined? And then secondly, any additional anecdotes or examples you could share on some of the specific ways you've increased R&D velocity with AI recently? Nir Debbi: [ Mark], it's Nir. I think that dividing the expansion in our EBITDA margins into 2026 and onwards, we do expect it to continue as we guided in our multiyear plan. Some of it -- significant part of it, by far, we can contribute to AI. I think that when you look into our R&D and our ability to continue and develop multiple new services, support the growth of the business. And as Amir indicated, virtually almost not recruiting any new headcount into our R&D is driven by AI efficiencies. We see it in the ability of writing code, deploying code, writing stories in product down to QA, et cetera. We see a lot of leverage around that. So there, I would say, a significant portion is AI-based. We do see advantages and support also for the growth in our sales and marketing. So yes, it will not replace an enterprise consultative sales manager speaking to an enterprise brand. However, a lead generation, we are increasing dramatically the input and output without actually increasing headcount because most of the work will be done by our AI prospecting tool and AI outreach tool. So -- and if we take it through the different arenas of what Global-E handles, from handling fraud to classification of products, to restriction management, trade compliance and down into even our finance group and making sure that each and every order reconciled correctly, we do see a lot of leverage coming from AI. Not all of it, of course, would be realized in 2026. So we do have a lot that is in our road map to be built this year. But out of what we put on paper for '26, a significant chunk is AI-based. Amir Schlachet: And Billy, just -- it's Amir. Just to add one point. I don't think scale and AI are mutually exclusive. There's actually a lot of dependencies between them because there are a lot of things that AI can do, but the ability to really extract tangible real value from AI is dependent on data. Data is what fuels AI and definitely the very broad and deep, and unique data asset that we have and that it continues to grow quickly over time as we scale up the business, that's what can fuel the AI models to generate that value. So I think the scale and the AI go hand in hand. Operator: And your next question comes from the line of Patrick Walravens with Citizens. Patrick Walravens: Congratulations you guys. Amir, can we dig deeper on the point that you were just starting to make, which is across the industry, people are worried about AI disruption and what is it -- what are the moats that protect your business from being disrupted by some other use of AI? I mean you just touched on data. What else? Nir Debbi: Pat, it's Nir. Thank you for the question. So there are 4 things that will continue to differentiate us and would make it virtually impossible for any model to replace what Global-E is actually doing. The first and foremost is scale. Then it's expertise and know-how, then it's a trade compliance and then it's our overall infrastructure across legal entities in more than 40 jurisdictions, coupled with infrastructure on payments, all embedded into one. So if we speak just to the first thing about our scale, this allows us to access actually Tier 1 pricing and working with the best partners and getting the best service from those partners across fulfillment, across payments, across trade compliance, and it gives us a huge pricing moat that is coming from a true differentiated cost structure that even if you develop a beautiful tool on LLM, you will not have access to, not to some of the partners for sure and definitely not to the pricing. The second we spoke about is expertise and the data asset. I think that in order to enjoy the benefits of AI, it needs to be trained on relevant data for what you're trying to do. And if what you were seeking is optimization of your trading per market across 200 markets worldwide, according to your specific dynamics to train a tool, you need to have the data, and this is unique data that Global-E has and at scale that no one else has access to. The third is our infrastructure and our MoR model. This is a heavy lifting model with a significant level of built-in compliance and risk requirement across dozens of legal entities around the world, allowing us to do business in more than those 200 markets worldwide efficiently. This includes securing and managing licenses from various governments and regulators, providing aftersales capabilities in which we need to work with multiple parties establishing a solution across trade compliance and logistics, and continue to that into our payments infrastructure with multiple PSPs working with us in best-in-class rates with a sophisticated system, allowing us to do reroutes, domestic acquiring, et cetera, across multiple destinations. All of it is business logic capabilities, set of agreements, know-how, expertise that an AI, however good the LLM is, does not have the ability to do. Operator: And your next question comes from the line of Scott Berg with Needham. Scott Berg: Super nice quarter here. I guess just one question for me, and it's on the duty clawback that Amir noted was released here in the quarter. I guess what are you hearing on initial feedback from U.S.-based customers on that solution? I'm in the belief that there's almost no reason why most of them don't adopt this at a relatively quick nature at least. And then how do we think about the impact in fiscal '26 guidance, if any? Nir Debbi: So we do hear a great feedback from clients about the capability. We need to -- we obtained the license, as we indicated late 2025, deploy the solution into a POC mode early this year, and now we are releasing it to all our clients. Initial feedbacks are great. It has tremendous effect on the cost of trading for our U.S. client base. We expect high level of adoptions once we are geared with a streamlined process that we can extend the offering simply to all our clients. For now, in the first batch that we outreached, the level of adoption is very high. We did embed it into our guidance in a certain level. We did take some conservatism as it's a new solution. But we did bake it into our guidance as we do see it contributing to our revenue within 2026 for sure. Operator: And ladies and gentlemen, this concludes our question-and-answer session. I'll hand it back to Alan Katz for closing remarks. Alan Katz: Thank you, everyone, for joining the call today. We look forward to speaking with many of you during the quarter and providing our next update on our Q1 call in May. Hope everyone has a great day. Operator: Thank you. And ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.

86天前Insight Analytics约5分钟阅读

BRSP 2025 Q4 财报电话会议

Operator: Good day, and welcome to the BrightSpire Capital Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. David Palame, General Counsel. Please go ahead, sir. David Palamé: Good morning, and welcome to BrightSpire Capital's Fourth Quarter and Full Year 2025 Earnings Conference Call. We will refer to BrightSpire Capital as BrightSpire, BRSP or the company throughout this call. Speaking on the call today are the company's Chief Executive Officer, Mike Mazzei; President and Chief Operating Officer, Andy Witt; and Chief Financial Officer, Frank Saracino. Before I hand the call over, please note that on this call, certain information presented contains forward-looking statements. These statements, which are based on management's current expectations, are subject to risks, uncertainties and assumptions. Potential risks and uncertainties could cause the company's business and financial results to differ materially. For a discussion of risks that could affect results, please see the Risk Factors section of our most recent 10-K and other risk factors and forward-looking statements in the company's current and periodic reports filed with the SEC from time to time. All information discussed on this call is as of today, February 18, 2026, and the company does not intend and undertakes no duty to update for future events or circumstances. In addition, certain financial information presented on this call represents non-GAAP financial measures. The company's earnings release and supplemental presentation, which was released yesterday afternoon and is available on the company's website, presents reconciliations to the appropriate GAAP measures and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Before I turn the call over to Mike, I will provide a brief recap on our results. The company reported fourth quarter GAAP net loss attributable to common stockholders of $14.4 million or $0.12 per share, distributable earnings loss of $35.5 million or $0.28 per share and adjusted distributable earnings of $19.3 million or $0.15 per share. Current liquidity stands at $168 million, of which $98 million is unrestricted cash. The company also reported GAAP net book value of $7.30 per share and undepreciated book value of $8.44 per share as of December 31, 2025. Finally, during this call, management may refer to distributable earnings as DE. With that, I would now like to turn the call over to Mike. Michael Mazzei: Thanks, David, and welcome to our fourth quarter 2025 earnings call. As we reflect on the past year, I'm pleased to highlight the significant progress we've made across our business. We entered 2025 focused on rotating the portfolio by addressing challenged investments while simultaneously increasing our new loan originations. Throughout the course of the fourth quarter and into the new year, we have continued to reduce watch list loans and REO property exposure. As a result of these efforts, we've improved the quality of the portfolio, ensuring a solid foundation for future growth. Perhaps most importantly, we gained considerable momentum in originations. As the year progressed, our pipeline grew steadily with loan inquiries and quoting activity increasing with each quarter. Against this backdrop, the fourth quarter ended the year on a high note and was one of our most active periods in several years. Since commencing originations at the tail end of 2024, we have closed 32 new loans for $941 million of total commitments, of which 13 loans of $416 million were closed during the fourth quarter, our largest funding quarter since restarting originations. As of December 31, the loan portfolio increased by $315 million to $2.7 billion. That equates to a 13% increase from the third quarter. We also had a very active period executing REO sales as well as resolving loans from the watch list. We made the strategic decision to accelerate the resolutions in this part of our portfolio. We concluded that the certainty associated with monetizing these assets and reinvesting the proceeds outweighed the prospective upside associated with holding the assets longer term. As a result, we took a limited reduction in book value to effectuate these sales during and subsequent to quarter end. In the fourth quarter supplemental presentation available on our website, we included 2 pages summarizing the watch list and REO activity. The materials illustrate the substantial progress made to date, along with our projected resolution time line for each of these 2 segments of our portfolio. I want to reiterate that these resolutions continue to be a major focus as they represent a critical source of capital for new loan originations. Over the coming months, our goal is to cut our current as is watch list exposure to 2 loans totaling approximately $66 million. Further, each of the remaining REO assets has a business plan for their ultimate exit. This, of course, does not reflect the possibility of any downgrades in the future. Also, as David mentioned, our adjusted DE for the fourth quarter was $0.15 per share. As discussed on previous calls, when we resized our dividend to $0.16, we noted there could be a brief period of modest coverage shortfall primarily related to the timing of capital deployment. For the full year 2025, we covered our entire annual dividend. However, as anticipated in this last quarter, our adjusted DE reflects a dividend coverage of just $0.01 shy of breakeven. Our plan is to once again cover the dividend by midyear and achieve a positive coverage by year-end. Turning our attention to the market. Commercial real estate debt capital markets are wide open with a surge of new issuance in the first 45 days. This was met with high investor demand, especially for CRE CLOs, which is driven by strong historical credit performance and attractive spreads versus other credit sectors. Along those lines, I'm pleased to report that we announced the closing of BrightSpire's fourth managed CLO. This transaction was $955 million and features a $98 million ramp as well as a 2.5-year reinvestment period, further expanding our lending capacity and flexibility. This transaction was also very well received with 19 investors participating across all offered tranches, including the sale of the lowest rated investment-grade tranche. Looking ahead at the demand side for CRE loans, we expect there will be a significant tailwind from continued increases in property sales transactions. On one side, property equity investors are anxious to see monetizations of legacy assets. While on the flip side, mortgage lenders are also encouraging borrowers to refinance or sell these same underlying assets. This is precisely what we are experiencing in our own portfolio. We are, therefore, optimistic that there will be a solid demand for loan originations as more assets change hands in 2026. In closing, allow me to reiterate and underscore our priorities for 2026. First, grow the loan book to approximately $3.5 billion. Second, to accomplish this, we must continue to resolve our remaining watch list loans and monetize the majority of our remaining REO, most notably the San Jose Hotel. Third, execute on a fifth CLO in the second half of the year to match fund our loans and further maximize our capital deployment efficiency. And lastly, in accomplishing these initiatives, we will grow earnings and reestablish positive dividend coverage by year-end. I would like to thank our team, clients and banking partners for their contributions and collaborations throughout the year. With that, I would like to turn the call over to our President, Andy Witt. Andy? Andrew Witt: Thank you, Mike. It has been a transformational year for BrightSpire and a productive fourth quarter. This year was punctuated by a robust fourth quarter originations activity. It was our most active quarter in 2025, closing on $416 million in commitments across 12 multifamily loans and 1 mixed-use loan. Repayments during the quarter were minimal and largely attributable to 2 loan payoffs. As a result, our loan book as of quarter end grew to approximately $2.7 billion, up from $2.4 billion last quarter. The portfolio is comprised of 98 loans with an average loan balance of $27 million and a risk ranking of 3.1, consistent with the previous quarter. Following quarter end, we have closed on an additional 3 loans for $118 million. We anticipate the loan book will expand to nearly $3 billion by approximately halfway through the year. Furthermore, we anticipate our loan book will continue to grow in the back half of the year, targeting at least a $3.5 billion loan portfolio by year-end. As it relates to portfolio management, during the fourth quarter and subsequently, we have been active and made significant progress. I will start with a review of watch list loans. During the fourth quarter, 2 loans were added to the watch list, both associated with the same borrower, bringing the total watch list to $220 million or 8% of our loan portfolio. As it relates to these 2 loans, our Dallas-based asset manager observed a notable shift in borrower behavior and property performance. As a result of these observations and further analysis, we decided the best course of action was to accelerate a resolution of the entire borrower relationship comprised of 3 loans, one of which was already on the watch list. Ultimately, we moved decisively, taking ownership of one property by foreclosure and working cooperatively with the borrower to market the other 2 properties. Following quarter end, 2 watch list loans have been resolved via sales processes that were previously underway. As mentioned earlier, 2 additional properties are in the process of being sold and one watch list loan property is now REO. Pro forma for the anticipated sales of these 2 properties, our watch list would consist of 2 remaining loans, a Dallas office loan and an Austin multifamily loan for a combined total of $66 million. Repayment proceeds from the resolution of these watch list loans will be repatriated and deployed into new loans. The plan for the Dallas property, which was foreclosed on post quarter end is to implement a value-add business plan, stabilizing operating performance and ultimately, to sell the property. As for the REO portion of the portfolio, during the quarter, we sold 1 of the 2 Long Island City office properties as well as the Oregon office property. At the end of Q4 2025, REO exposure stood at $315 million across 6 properties. As previously noted, post quarter end, a Dallas multifamily property from the watch list moved to REO through foreclosure, bringing the total number of REO properties to 7 with an aggregate balance of approximately $360 million. Currently, the remaining Long Island City property is under contract to be sold. We expect that transaction to close during Q1. Additionally, 2 multifamily properties are listed for sale, one located in Fort Worth, Texas and the other in Mesa, Arizona. Pro forma for the sale of these 3 properties, our remaining REO will be comprised of 4 assets totaling $266 million. The San Jose Hotel represents 50% of the remaining balance with 2 multifamily and 1 residential predevelopment property making up the remainder. We anticipate marketing the majority, if not all, of the remaining REO properties for sale during the back half of 2026. In closing, we made substantial progress throughout 2025, managing and growing the loan portfolio, particularly during the fourth quarter. The decisive actions taken this quarter should result in resolution proceeds, which will fuel continued portfolio and earnings growth throughout the course of 2026. With that, I will turn the call over to Frank Saracino, our Chief Financial Officer. Frank? Frank Saracino: Thank you, Andy, and good morning, everyone. For the fourth quarter, we generated adjusted DE of $19.3 million or $0.15 per share. Fourth quarter DE was a loss of $35.5 million or $0.28 per share. DE includes specific reserves of approximately $54.9 million. Additionally, we reported total company GAAP net loss of $14.4 million or $0.12 per share, which also included an approximately $8 million impairment charge related to the sale of our Long Island City office properties. For the full year of 2025, we generated adjusted DE of $83.6 million or $0.64 per share, representing a return on undepreciated shareholders' average equity of approximately 7.4%. Our dividend for the year of $0.64 per share was fully covered on time. Quarter-over-quarter, total company GAAP net book value decreased to $7.30 from $7.53 per share in the third quarter. We reported undepreciated book value of $8.44 versus $8.68 per share in the third quarter. As Mike mentioned earlier, we made the strategic decision to pull forward the resolution of certain watch list and REO assets, noting that resolving and reinvesting these proceeds from these investments outweighed the prospective upside associated with holding the assets longer term. As a result, we took a limited reduction in book value. During the quarter, we also repurchased approximately 1.1 million shares of stock at an average share price of $5.39, which resulted in approximately $0.03 of book value accretion. Given the strong origination momentum and improvements in the portfolio, we continue to believe the stock is significantly undervalued. Looking at reserves. During 4Q, we recorded specific CECL reserves of approximately $54.9 million. As Andy mentioned earlier, we took ownership of a Dallas multifamily property that was previously held on the watch list, resolved 2 watch list loans via sales process and have 2 properties underlying 2 additional watch list loans anticipated to close in the first half of this year. Since these loans are either resolved or will be resolved imminently, we have charged off the reserves. Our general CECL provision decreased to $88 million or 315 basis points on total loan commitments versus $127 million or 517 basis points reported in the third quarter. Our debt-to-assets ratio is 66%, and our debt-to-equity ratio stands at 2.3x. Lastly, our liquidity as of today stands at approximately $168 million. This includes $98 million of cash, of which $64 million will be received tomorrow associated with our CLO execution and unwind of the 2021 FL1 CLO. Additionally, we have $70 million available under our credit facility. This concludes our prepared remarks. And with that, let's open it up for questions. Operator? Operator: [Operator Instructions] And our first question today will come from Gabe Poggi with Raymond James. Gabriel Poggi: Mike, Andy, how do you think about the amount of -- just ballpark here, leverageable capital that sits underneath the various assets have been resolved or are in process of resolution kind of year-to-date? That's question one. And question 2 is a quick follow-up of just how do you think about the credit portfolio on a -- from a go-forward basis, you've only got now 2 4-rated watch list loans, a few assets in REO. What's the general kind of sense on where the book sits now from a 2026 credit perspective? Michael Mazzei: Gabe, it's Mike. Welcome back. Pleasure to have you. Thanks for your question. When you look at our portfolio and we talk about getting to the back half of the year where we get to positive coverage, that's really linked to your question. We have about given the foreclosure we had subsequent to quarter end, we have about $200-plus million of equity tied up in REO assets, which are basically a drag on the portfolio. The only thing throwing off anything meaningful there is the San Jose Hotel, whose NOI is probably just shy of $9 million. So really, at the tail end of the year, you get a full game in the sense that we unwind that REO as best we can and redeploy that capital into 12-plus ROE levered assets, and that's really what's going to kick us up. So to answer your question directly, about $200 million of latent capital is tied up in the portfolio right now, and we plan on getting out of that toward the end of the year. And as Andy said, a large part of that is the ROE on the San Jose Hotel. We're doing some deferred maintenance on that right now, much needed. We have a lot of things going on in San Jose during the course of the year that will help the cash flow. And so I think we're looking more towards the back half of the year for that asset. So the 2 multifamily assets that are REO just need to be stabilized like we've done with the rest of the portfolio, and we'll sell those at the back half of the year. In terms of credit and the overall portfolio, given the turnover that you're seeing, we're feeling pretty good about it. We haven't said that for a while, but we are seeing a lot of positive things happen, especially with the movement of the watch list and the REO assets that we're embracing right now. So we're pretty optimistic about the credit in the underlying portfolio. And then you look at the average loan size, we've got rid of some of the bigger assets. Our average loan size is down $30 million, maybe it's slightly less. And so we're feeling pretty good about the diversification in the portfolio. Gabriel Poggi: A nice job on the recycling or the resolving of the book. Operator: The next question will come from Timothy D'Agostino with B. Riley Securities. Timothy D'Agostino: I just want to touch on the San Jose property a little bit more. If you could just provide a little bit of color there. I know you said a couple of earnings calls ago that you're probably holding this through second half of '26 due to events like the Super Bowl, March Madness, the World Cup. I was just wondering with Super Bowl behind us, how that event went for the hotel? And are things progressing there ahead of expectations or at expectations? Michael Mazzei: Thanks for the question. No, the event went very well. The staff handled the volume incredibly well. We're doing some things in the hotel. We're upgrading the lobby, and we're upgrading the elevators and all of that takes a little bit of time. The lobby is well underway. We want to redo some of the washrooms in the ballroom and get that done. These are things that if you sold the property today, any buyer would look at those items and take those off of the sale price. So we want to get that done and get that behind us. And we also have, as you said, these major events coming up that we want to see through, including in July, we have the CrossFit National Championship there and CrossFit is using our hotel as the headquarters for that staging event. So we're looking forward to that as well. We did have some nonrecurring stuff that hit the NOI last year, some cancellation of events that fell right to the bottom line. We're not modeling that this year. Those were basically windfalls. So we're not modeling that this year. So we do expect -- right now, we're budgeting plus or minus for our purposes of our accrual, about $9 million of NOI, and we hope to punch through that as we get to the end of the year to get to more of a double-digit NOI cash flow. And then we'll consider selling the asset. But at this point in time, we're pretty comfortable. We're holding it well, well below replacement cost. We're seeing other assets trade at higher dollars per key. So we're going to be patient. But again, because we have a lot of capital tied up in that asset, it's throwing off some cash flow, but about $80 million, $85 million of equity based on the leverage we have on it today, we really want to sell that asset and redeploy into the loan book. Timothy D'Agostino: Okay. Great. And then just a quick follow-up. Could you just provide maybe a little more color on kind of the plan for the net lease and other real estate portfolio in '26? I know you touched a bunch on the loan portfolio, but it would be great to get some color there. Michael Mazzei: Okay. So the net lease is really made up of 3 components. We have a triple net to Labcorp in Indianapolis. We have a triple net to Northrop Industries in Colorado, and we have the largest part of that is the Albertsons portfolio. And nothing really is happening there at this moment. We have lease term on the Labcorp until 2030. That debt doesn't mature until 2027 and the Albertson debt not until 2028. Quite frankly, we're not really looking to grow the triple net portfolio. So if we could get into a position where we may be able to sell some of those assets, we'd consider doing it. But right now, there's really nothing going on in that portfolio. Operator: The next question will come from Chris Muller with Citizens Capital Markets. Christopher Muller: So it's nice to see originations picking up and looks like that momentum is carrying into the first quarter so far. I guess, how are you guys thinking about the pace of originations in 2026? Is 4Q a good baseline? Or will it be more back weighted in the year? Michael Mazzei: Andy, do you want to take that? Andrew Witt: Sure. Thank you, Mike. In terms of the pace of originations, we had a great quarter in Q4 with just over $400 million, and we're on track here in Q1 in terms of loans closed and those that we have visibility in execution on at just over $300 million. And we think that's probably a pretty good rate going forward, somewhere between $300 million and $400 million a quarter is what we're modeling from a go-forward perspective. Christopher Muller: Got it. That's helpful. And then just a quick follow-up. On the multifamily foreclosure that was subsequent to quarter end, should we expect to see a realized loss in the first quarter related to that? Andrew Witt: No, everything was taken in the fourth quarter, in the fourth quarter, so it came through CECL. Christopher Muller: So was that the $8 million impairment that hit the income statement? Andrew Witt: No, that's for Long Island City. So the amount of the loss was associated with one of our specific reserves in the $59 million. Operator: [Operator Instructions] And our next question will come from Gaurav Mehta with Alliance Global Partners. Gaurav Mehta: I wanted to follow up on your comments around strong demand for loan originations. I was wondering if you could maybe provide some more color on which sectors you're seeing the demand? Is it mostly multifamily? Or are you guys open to the sector as well? Michael Mazzei: We expect a lot of demand for credit in multifamily for the things that we laid out in the prepared remarks. We have seen -- we're pretty much at the end of the rope here. You've got 2021, '22 loans that are getting to the point where they have passed their first extension hurdles. Some are getting close to maturity now. We are seeing the equity getting exhausted and they want to move on. They want to get that equity repatriated back to the limited partners. So that's one of the drivers that we're seeing. The other driver we're seeing are lenders like us and what we just described in our own portfolio. We're encouraging borrowers to move assets, those same assets. And we think the confluence of those 2 things are really going to push volume in 2026. We saw a little bit of a dip in originations in the fourth quarter, and we just equate that to some of these owners were saying, hey, it's past Thanksgiving. I'm not going to put something in the market at this point in time for refi or for sale. But we're starting to see that activity pick up tremendously in January and February, especially with the conferences, the mortgage banking conferences and the multifamily conference in Vegas, that just transpired after those conferences, it's very typical to see volume pick up. So I think while transaction volume was up in 2025 over 2024, we anticipate in multifamily, the transaction volume will exceed 25 this year. So we're very optimistic about the demand for credit because we think we're just going to see a lot of assets changing hands. Operator: The next question will come from Matthew Erdner with JonesTrading. Matthew Erdner: I'd like to kind of stay on the credit side there. Spreads have compressed a good bit since this time last year. How are you guys thinking about that going forward and more competition kind of being in the space? Michael Mazzei: I've been doing this for 40 years, and there's never been a year but for a handful where we haven't had severe competition. So that's kind of business as usual. But what I'll say is I'll emphasize the points that we had around the capital markets. We just executed a CLO. The demand for that and for the army of CLOs that came out before and after us, the demand was incredible. I would have actually expected and told the team, hey, we may see spreads widen given that supply, and we saw the opposite. Every deal, the demand was better. I think the market is outperforming the corporate market. We're seeing what's going on in the BDC market, the term loan market. and what's going on in software stock prices and the concern that's having in corporate credit. And we're seeing the opposite in the CRE market. A lot of it has already been dealt with over the past 2 years, and the CRE CLO market has performed very well. So spreads have come in. Bank lenders on our warehouse lines have also brought in spreads commensurately with loan spreads. We have seen loan spreads kind of floor out here. Maybe that's because of the supply that we're seeing. So we don't anticipate a tremendous amount of more tightening in the loan spread market. But right now, as long as we're getting the ROEs that we need based on where we're financing things and the liability structure, it's okay. And we've seen that. The market has been met with a lot of demand from investors on the CRE CLO side. Matt add anything to that? We have Matt, who runs our capital markets here as well. Matthew Heslin: Yes. No, as Mike said, we saw tremendous demand. A lot of that market has kind of migrated to full multi. Our deal was predominantly multi, but with the ability to reinvest in various property types. So we're trying to keep our options open over the next 2.5 years to deploy capital where we see fit, whether it be in some limited amount in hospitality, industrial, retail. So we're trying to keep options open and deploy where it's accretive. Matthew Erdner: Got it. That's very helpful. And then a quick follow-up. The loans that you guys originated in the fourth quarter, what was kind of the timing of that throughout? Or was it pretty paced throughout the quarter? Michael Mazzei: It got pretty aggressive through the end of the quarter. A lot of deals pulled forward actually from the first quarter where borrowers wanted to close by year-end. So we did have some pull forward there. So I think we'll see the first quarter not be like the fourth quarter, but I think it will pick up during the course of the year. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Mike Mazzei for any closing remarks. Please go ahead, sir. Michael Mazzei: We're very excited about the momentum we've had coming into 2026, both from our origination side and from the resolution of the assets in the watch list and REO. We're very much looking forward to updating you on our progress on those matters in April, and we thank you for joining us today. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

86天前Insight Analytics约5分钟阅读

ERELY 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by. I'm Polina, your Chorus Call operator. Welcome, and thank you for joining the Erdemir conference call and live webcast to present and discuss the full year 2025 financial results. [Operator Instructions] The conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions]. Please note Eregli Demir ve Celik Fabrikalari T.A.S, may, when necessary, make written or verbal announcements about forward-looking information, expectation, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through the disclosure policy and has shared such policy with the public through the Erdemir website in accordance with the Capital Markets Board through regulations. As stated in related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that actual results could materially differ from estimates, taking into the account effect they are not based on historical facts but are driven from expectations, beliefs, plans, targets and other factors, which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are not longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made a revision at this particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. At this time, I would like to turn the conference over to Mr. Idil Onay Ergin, Investor Relations Director. Mr. Ergin, you may now proceed. Idil Onay: Thank you very much, Polina. Good afternoon, everyone. Welcome to our conference call and webcast of Erdemir for the last quarter of 2025. First, I will go through our Investor presentation, which you can find on our website, and you can also follow it through the webcast. Then at the end of this presentation, there will be a Q&A session as usual. Our presentation consist of two sections, as you already know. The first one is the market overview and then the financial results. So let's start with the commodity prices. On Page 3, you will see the prices of steel-related commodities and HRC. Let's take a look at coking coal, iron ore, scrap and HRC prices. In the fourth quarter of 2025, the coking coal markets experienced buyers strongest price period of the year despite weak steel demand and low profitability. During this period, coking coal prices averaged around $200 per quarter, while closing the year $218 per tonne above the annual average. Iron ore prices showed more resilience in the fourth quarter compared to the previous quarter, fluctuating between $102 and $109 per tonne and stabilizing at an average of $106 per tonne. Despite uncertainty regarding demand from China and strengthening global supply, the ability of Chinese producers to maintain production at a certain level, along with the speculative pricing kept prices mostly above $105 per tonne. It is expected that iron ore prices will remain sensitive to stimulus expectations and policy news from China in the short term. Despite buyers cautious spends, seasonal supply constraints enable suppliers to maintain a firm position resulting in Turkish imported scrap prices closing Q4 at an average of $359 per tonne above the annual average while there was no sharp decline in square prices throughout the quarter, a clear wait-and-see sentiment prevailed in the market. On the bottom right, we show HRC prices in Black Sea, China and South Europe. The global HRC market has left behind a period in which protectionist measures and trade policies became more decisive. The European Union steps to reduce import quotas and uncertainties surrounding sea import appetite while gradually increasing the bargaining power of European producers. In Asia, HRC prices remain fragile due to low demand from China and policy uncertainties, while a flat positive but cautious outlook prevails in the global HRC market. Q4 market expectations converged that as we enter 2026, the impact of protective measures will be felt more clearly and prices will be shaped by a cost-based search for equilibrium. On Page 4, you will see the production consumption, exports and import figures of Turkish steel market. In December, Turkish crude steel production rose to 3.5 million tonnes, representing a 7% increase compared to the previous month and 19% rise year-on-year, reaching the highest monthly output of the past 15 years according to the official data from the Turkish Steel Producers Association. This growth reflects resilience in domestic output despite the challenging global steel market conditions. Going back to the slide, while production and consumption rose by 3%, exports of steel products grew by 13% in volume during the year and reached 15 million tonnes. In the January, December 2025 period, the European Union continues to be the leading export destination with a 37% annual growth, while the MENA region ranked as the second largest market. Imports also increased by 9% to 19 million tonnes over the same period. As a result, the export import coverage ratio, which was 74% in 2024 increased to 78% in 2025. It was observed that the total imports were largely realized under the inward processing regime. As we shared in the last quarter's call, with the circular published by the Trade Ministry on September 16, 2025, it was made mandatory for 25% of the input of products processed to export to be supplied domestically. This change was welcomed in terms of domestic steel production. As a result, total flat product imports in December decreased to 653,000 tonnes down 23% compared to the previous month and 12% compared to the December 2024, marking the lowest monthly level recorded in the past 9 months. In the context of global steel trade policy, the European Union and other major markets have implemented or proposed enhanced safeguard measures to counteract increasing import pressures. The European Commission has moved forward towards tightening steel import quotas and increasing out-of-quota duties, including potential reductions in tariff-free quota levels and higher tariffs for excess shipments, steps aimed at protecting domestic industries and reducing reliance on imports. Asian countries, which have been the most negatively affected by this policy increased their exports to unprotected markets. So let's take a look at the financial results and the operational metrics. On Page 6, you will see the summary of our 12 months results. We achieved USD 5.3 billion revenue. Also, we generated $501 million EBITDA and $13 million net profit. On Page 7, you will see the operational indicators of our company. Following the commissioning of the last 2 investments in our current investment package in the second quarter of 2025, our crude steel capacity utilization ratio, which was 75% in the second quarter and 90% in the third quarter increased to 95% in the fourth quarter. Accordingly, sales and production levels returned to their normal levels. Strong demand, we achieved sales of 2.2 million tonnes in the last quarter, sales volumes of over 8.2 million tonnes in 2026. So let's take a look at segmental breakdown of domestic sales and export volumes on Page 8. As you can see from the pie chart, there has been a slight change between sectors when we compare it to last year's breakdown. There has been a transition from general manufacturing and auto to pipeline profile and distribution chains on a percentage basis. We see similar changes between sectors in the long products, although its share in total sales is relatively small. We achieved an export volume of 1.5 million tonnes in 2025, representing 20% export share in total sales. Although our main focus is the domestic market, we also consider export as an alternative market. On Page 9, you can find a breakdown of revenue for domestic and export sales. 79% of the revenue comes from domestic sales in line with the domestic volume. Despite import pressure in the domestic market, we achieved to generate $501 million EBITDA. We generated $64 EBITDA per tonne in 12 months. Our EBITDA per tonne guidance for 2026 stands in the range of $75 to $85 per tonne. In 2026, we expect EBITDA per tonne to increase through cost reductions and increased efficiency resulting from newly commissioned facilities, increasing HRC prices and our company's increasing sales volumes. We generated $13 million net profit in 2025 as a result of legislative amendments stating that statutory financial statements will not be subject to inflation accounting. The deferred tax income recorded in March, June and September financial statements was reversed. Despite the increase in EBITDA, this noncash item had a negative impact on net profit in Q4. On Page 10, you can see how we reached a net profit from EBITDA. One of the largest items was depreciation, which was $278 million in 12 months. The other major item in this chart was financial expenses of $206 million due to the increase in deferred tax expense following the cancellation of inflation accounting, the tax expense amounted to $706 million -- excuse me, $76 million. And other expenses, net profit was -- after the other expenses, net profit was $13 million. The inventory provision release of $26 million is not included in the EBITDA calculation since it is a one-off adjustment. While calculating the net profit, $26 million of the consolidation classification arises from additional inventory provision release. In the graph below, you can see EBITDA to change in cash bridge. Our net working capital increased compared to the third quarter due to the extension of the trade payables maturity, as we shared in our previous quarter calls. Additionally, a dividend payment of $43 million was distributed in the third quarter. Also, we spent around $483 million to investment activities in 12 months. This amount also includes CapEx advances paid for the capital expenditures and sale of commercial offices for investment properties as well. On Page 11, you will see historical trend of financial borrowings and net debt. As you can see in the financial borrowings chart, the share of short-term debt in total debt decreased to 25% in Q4 with the support of $950 million Eurobond issuance. When we look at 2025, our net working capital decreased due to the extension of the trade payables maturity. We succeeded in keeping net debt EBITDA below 2 multipliers at the end of the year as a result of increased capacity and efficiency following the commissioning of our investments. EBITDA has increased. Therefore, CapEx decreased and the multiplier remains below 2. We expect to keep the net debt-EBITDA ratio around 2 multipliers in 2026. Slide 12 represents our cost of sales breakdown. In 2025 compared to 2024 due to the decrease in coal prices, the percentage of coking coal costs decreased in the raw material basket, which is in line with the trends in raw material markets. Since we can see the costs in first quarter, costs will increase in the first quarter of 2026 due to the rising coal prices. This cost increase will be offset by an increase in sales prices. Page 13 represents the historical capital expenditures. Total CapEx was $1.1 billion in 2024 and $775 million in 2025. As a reminder, the new first blast furnace in [Technical Difficulty] gold mine, as you already know, we announced the inferred resource in November '25. We expect that reserve announcement for the gold mine to be made at the beginning of the second quarter. Investment decisions will be made after this announcement is shared. We expect that CapEx will be approximately $800 million in 2026 with maintenance and other ongoing investments. Maintenance will be around $58 million per year as usual. Investments such as solar power plants, port and crane investments and energy efficiency investments are included in the CapEx figure of 2026. As you already know, this figure is accrual based and the cash outflow will be lower due to the advanced payments. On Page 14, just as a reminder, we announced our net zero road map in 2024. There are no changes to this road map, the details of which we previously shared. The first investment in this package solar power plants are planned to be partially commissioned by the end of 2026. Now we may continue with the Q&A session. We will be delighted to answer your questions. Thank you for listening. Operator: [Operator Instructions] The first question is from the line of Fairclough Jason with Bank of America. Jason Fairclough: It is always very comprehensive. Look, a couple of related questions here about the balance sheet. So on the one hand, you've got quite a lot of cash sitting there. I mean I see $2.7 billion of cash, which feels like a very large cash balance. But on the other hand, if we look at the free cash flow over the past year, most of it's been driven by working capital and particularly the payables balance. So I guess my question is, how are you thinking about working capital from here? Do we actually need to normalize that payables balance? Or is this the new normal? Idil Onay: Jason, thanks for the question. So this is our normal level after this quarter because actually, it all depends on the raw material prices and steel prices from now on. Considering that Q1 comes clearer in terms of both price and cost, increasing figures in Q1 compared to Q4 in net working capital. So there won't be any one-offs in net working capital. So we can say that it's all depends on the raw material prices and steel prices from now on. Jason Fairclough: Okay. The other thing and a super simple one. Could you just repeat the EBITDA per tonne guidance? I heard it, but I didn't quite hear it. I think the phone cut out when you said it. Idil Onay: Guidance for -- sorry, I just missed it, guidance for. Jason Fairclough: For EBITDA per tonne for '26? Idil Onay: Yes, sure. So we expect to have EBITDA per tonne between $75 to $85 per tonne for 2026. Operator: The next question is from the line of Gabriel Alain with Morgan Stanley. Alain Gabriel: I have a couple. Following up on Jason's question on the guidance for 2026 deal, the $75 to $85, how much of that is driven by self-help, i.e., the cost savings you will be or the efficiency gains from your new investments in your production footprint? And how much of that is your underlying assumption of a margin recovery in the market? That's my first question. Idil Onay: So as you remember, by the way, I'm sure you remember that we said we are expecting full impact from our newly commissioned investments in Q1. So we will reach to the full positive impact of $40 per tonne from our NIM investments, and it will stay at that level. So almost $40 plus from investments but we're also expecting higher sales amount, tonnage, higher tonnage, higher volumes in 2026. I said above 8.2 million tonnes, but most probably it's going to be between 8.2 million tonnes to 8.4 million tonnes. So when you compare with the 2025 level of 7.8 million tonnes, it is higher. And we will also gain some EBITDA. We will increase our EBITDA from the increasing sales tonnage. But almost $40 in the first quarter, we will see the full impact of our higher efficiency because of the new investments. Alain Gabriel: And this $40 compares to how much that you've achieved in, let's say, Q4 '25, just looking at the deltas of the bridges year-on-year? Idil Onay: Roughly, we said in Q3 2025, we got $20 additional impact. And in Q4, it's roughly around $30. And in Q1 2026, it's going to be around $40. But of course, you need to take into the consideration that the market prices are not staying the same. So these additional numbers should be added to the current prices. Alain Gabriel: Yes, absolutely. Absolutely. And my second question is on the business and how it's adapting to CBAM and the upcoming safeguards in Europe. Are you still able to sell into Europe easily now? Are you diverting your tonnes elsewhere? Can you give us a bit more color how you are adapting to this new environment in Europe, which is impacting Turkey as well? Idil Onay: So when you look at the export in Q4, so you will see a slight decrease. But actually, it's intentional. It's intended to be like that because obviously, the local market is more strong right now. The demand is stronger. So normally, when you look at the previous year's results, the export share was between 10% to 15%. So that was our normal levels for long years. Only 2025 was exceptional. Our export share in the total sales to 20%. But obviously, the domestic market is strong again but demand is strong again. So internationally, we -- strategically, the company prefers to sell their products domestically. So our order book is full for 2.5 months. I'm sure you remember, normally, I say it's full for 2 months. But right now, it's 2.5 months. So we already sold almost 2 million tonnes in Q1. So I can say that the demand is really good in the local market. But of course, we will sell to European markets and other export markets. But most probably, we are going back to our previous levels of 10% to 15% in the total sales. Alain Gabriel: And then last question from my side is on the CapEx guidance of $800 million. You mentioned that's on an accrual basis. How much would that be on a cash outflow basis? Idil Onay: Actually, I guided $600 million for 2026. Alain Gabriel: Okay. That's the cash component. Operator: The next question is from the line of Meyiwa Zenande with UBS. I'm very sorry. The question is from Bystrova, Evgeniia with Barclays. Evgeniia Bystrova: Just a couple of follow-ups. So first of all, on the CapEx guidance, I think I was confused because during the presentation, you said on accrual basis, the CapEx would be $800 million in 2026. But just now you said $600 million is the cash component. Is that correct? And then -- so my second follow-up is regarding the local market. So you're saying that the local market is very strong in terms of demand. Could you please maybe break down what exactly are the drivers of such strong local demand? And if you're expecting CBAM in any way to affect the prices that you're selling into Europe at? And finally, on payables, I didn't quite get your answer. So you're saying that another inflow in Q4 was expected. And from now on, we shouldn't expect such inflows on working capital in the cash flow statement. Is that correct to understand? Idil Onay: So the CapEx for 2026 is expected around $600 million. If I said $800 million, so it's a mistake, sorry, let me correct that. For 2026, we are expecting $600 million as CapEx. So it's all included all of our CapEx, maintenance, et cetera. So as we spent $775 million in 2025, so it is decreasing because we already commissioned most of the largest investment of our company, such as blast furnaces and coke batteries in the second quarter. So the rest is just solar power plant, basically, port and crane investments and energy efficiency investments generally. These are the list of investments that we are planning. So the second question was about the sales. Actually, the main thing -- the demand was strong. The demand was quite strong for some time but we prefer export markets because of the prices. But right now, we experienced higher prices in the local market. And with the strong demand, we prefer to operate in the local market. But of course, there will be export share but we have the flexibility to change some of the European exports to the local market because we have the enough demand in the local market, obviously. So that's why we are expecting higher sales tonnages also between 8.2 million tonnes to 8.4 million tonnes for 2026. So basically, the demand was always good, but the price wasn't that good. But in this year, in 2026, we also experienced strong demand and better prices. And also, we are expecting to see higher prices in the local market. And the last question -- can you just remind me the last question about working capital? Evgeniia Bystrova: Yes. I just wanted to understand the payables move because I think after Q2, you said that basically you're not expecting another working capital inflow in the cash flow statement. However, we have seen another payables like inflow from payables in Q3 and Q4. So I'm just trying to understand what will happen in 2026. Previously, you said that current net working capital is like an optimal level for you. So is that a right understanding from me that we shouldn't expect any working capital inflows on the payables side in 2026? Idil Onay: So in 2025, we just changed the trade payables system actually. So I mean, our net working capital has changed due to the extension of the trade payables maturity. So this is what happened in 2025. But from now on, we expect stable working capital, also cash based. But as I shared with Jason, it all depends on the raw material prices and steel prices. Evgeniia Bystrova: Okay. And what -- sorry, one last follow-up. And what is the specific driver that has kept local domestic prices higher than export prices in Turkey? Idil Onay: Actually, domestic prices are not higher than export prices. Obviously, right now, European market is very protected. So every day almost, we see higher prices in the European markets. So when you compare with the Turkish prices, European prices are obviously higher. But we know that the trade Ministry is working on some kind of revisions to increase the protectionism in Turkey. So they are working to increase that 25% of obligation to use local product when they are using emerge processing regime. We know that the trade Ministry is also working on some kind of revision to increase that level and also apply that obligation to -- for the coal product as well. So -- and some other revisions and the systems, for example, they are working on ETS emission trading system in Turkey, et cetera. So we know that our trade Ministry is working on trying to increase the protectionism in Turkey. And most probably, we will hear in the second half of the year. So these will help to increase the domestic sales prices. So that's why we are trying to focus in the domestic market. Operator: The next question is from the line of Jones, Andrew with UBS. Andrew Jones: Just a couple of questions or clarification. Just firstly, I think you said to Alain that there was about $30 a tonne included in the fourth quarter EBITDA per tonne from these projects. And for next year, it's $40. So we're basically saying that we're going up from $71 plus $10 effectively as we go into the first quarter without any market movement. So your guidance of roughly $80 a tonne for next year, is that basically assuming pretty flat market spreads compared to what we saw in the fourth quarter? I've got a follow-up, but I'll stop there. Idil Onay: Okay. So yes, I said $20 additional EBITDA per tonne contribution to EBITDA per tonne in Q3, Q4, $30, and we are expecting full impact of $40 contribution to our EBITDA per tonne. But as I shared with Alain, the market prices are not staying in the same level. So in Q4, the sales prices were decreasing. So I mean, we didn't really see the $10 plus $10 between Q3 to Q4. But obviously, we will experience $40 in Q1, but it all depends on the current prices, of course, raw material prices and sales prices. Andrew Jones: That's clear. Okay. And then just on the CapEx, I mean, what's the trend in the coming years? Because obviously, the pellet tires are still going -- I mean, if we exclude any gold mine stuff, I mean, when does the [indiscernible] CapEx kick in? Like what does 2027, '28 look like? What's the general profile we're expecting there? Idil Onay: Well, we are not expecting any number, any figure higher than $600 million. So for 2026, it's going to be around $600 million. I mean, I don't think we will see even $650 million. This is our expectation. But for the next years for 2027, 2028, we are expecting similar numbers $550 million to $600 million for coming years. Operator: The next question is from the line of Ive Erica with MetLife Investment Management. Erica Ive: Just a couple of more follow-ups on CapEx of $600 million, including 6. What could it be the cash outflow given that I understand there is this accrued component? Basically, I'm asking it will be the actual cash outflow lower than $600 million. Idil Onay: Okay. Sorry, Erica, there was a technical problem. So actually, the cash number should be close to $600 million with the advance paid. So most probably, we will see close figures to $600 million as cash for investments. Erica Ive: Okay. That's very helpful. And then on the working capital balance, right? I mean, in terms of movement for the year, based as well on what you explained about payable and so on, shall we expect a muted movement, so something closer to 0 in terms of movement for the year? How should we see or a small -- still a small outflow? Idil Onay: Actually, we are not expecting anything -- any change -- any material change in net working capital in 2026. So of course, it all depends on the raw material prices and steel prices. But right now, our trade payables maturity already. We have finished the extension of the trade payables maturity. So except from this change in 2025, we are not expecting any change from the company because of the company. It all depends on the market prices. I mean there is -- I mean let me just explain why we are expecting for the market prices. So there is a maturity mismatch in our balance sheet. We sell products and pay for raw materials mainly in cash. So when the steel prices and raw materials are in an increasing trend, our work will always require additional cash and our working capital increases. So on the reverse side, there is going to be a release from the working capital. Erica Ive: Okay. That explains. Okay. Good. And last question is on net leverage. Do you have a figure in mind that you try to reach in 2026? Idil Onay: Actually, yes, it's going to be around 2 multiplier. So we achieved less than 2 multiplier in Q4. It was 1.9 multiplier net debt EBITDA level. So we believe that we will be able to keep our net debt-EBITDA level around 2 multiplier because obviously, the capital expenditures will be less and that will -- and the EBITDA also will increase. So with the help of these 2, we will be able to keep net debt EBITDA around 2 multiplier. Erica Ive: And obviously, that excludes any investment in a gold mine, I guess... Idil Onay: Yes, it is. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Ms. Ergin for any closing comments. Thank you. Idil Onay: Thank you very much for joining us. We hope to meet you again at our first quarter conference call. Have a nice day. Thank you. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.

86天前Insight Analytics约5分钟阅读

SSLZY 2025 Q4 财报电话会议

Kevin Gallagher: Good morning, and welcome to the presentation of Santos' 2025 full year results. I'm speaking today from the traditional lands of the Kaurna people of the Adelaide Plains and pay my respects to Elders past and present. I also acknowledge and recognize the support of traditional owners and indigenous people everywhere Santos operates around the world. Before we start, I draw your attention to the usual disclaimer on Slide 2. Santos delivered a strong result despite lower commodity prices with the base business continuing to demonstrate the resilience of our disciplined low-cost operating model. I'll begin with an overview of our results before handing over to our Chief Financial Officer, Lachie Harris, to present the financial details. Our Chief Operating Officer, Brett Darley, will then discuss the operational performance of our base business. Following Brett's presentation, I'll take you through our outlook and strategic priorities for 2026. Then we'll open the call up to questions. In 2025, personal and process safety performance were outstanding, with Santos ranking in the top quartile of our sector globally for personal safety and outperforming the global benchmark for process safety. Our lost time injury rate and total recordable injury rate were Santos' best on record. Process safety performance measured by the loss of containment incident rate was the best in more than a decade. While we are proud of these outcomes, we remain focused on continuous improvement, and I'd like to take this opportunity to thank all of our employees across our global operations for their hard work and commitment to continual improvement. Slide 5 summarizes our 2025 financial results. The business generated strong revenues and delivered free cash flow from operations of $1.8 billion, EBITDAX of $3.4 billion and underlying profit after tax of almost $900 million. Our gearing was 26.9% including leases and 21.5% excluding leases, notwithstanding a capital-intensive period. This performance demonstrates the value of our disciplined focus on costs, reliability and margin. Accordingly, the Board has resolved to pay a final dividend of $0.0103 per share, 48% of free cash flow from operations in the second half. Underpinned by our disciplined low-cost operating model, the base business continues to improve reliability and reduce costs. Total production for the year was 87.7 million barrels of oil equivalent, an increase on 2024, and unit production cost was the lowest in a decade at $6.78. Pleasingly, we received more than 900,000 ACCUs for Moomba CCS Phase 1. PNG LNG plant was at capacity throughout 2025. In GLNG, we saw plant reliability of more than 99.5%, and our marketing and trading team signed 3 new LNG sales and purchase agreements in the year. Compounding growth in shareholder returns is driven by consistent value extraction from the underlying portfolio and the disciplined application of our capital allocation framework. For 2025, the $0.0103 per share will be returned to shareholders in the final dividend, equivalent to 48% of free cash flow from operations in the second half, exceeding our commitment under the capital allocation framework. The total amount returned to shareholders for the year is $0.0237 per share, which is 43% of free cash flow from operations. The Board's decision to increase returns to shareholders reflects the fact that Barossa is now producing and gearing has passed its peak at a lower level than previously anticipated. Over the last 7 years, compound annual dividend growth of more than 13% has been achieved despite a period of major capital investment and significant global inflation. Santos delivered Barossa, a Tier 1 long-life asset, within around 6 months of the original planned start date and without drawing on additional budget contingency. On a project of this scale and complexity, that is a significant achievement. It demonstrates outstanding project self-execution and disciplined contractor management despite the challenges of COVID, global supply chain disruption, uncertain regulatory approvals and unprecedented litigation. Just as importantly, it demonstrates our capability to execute major development projects while continuing to run the base business efficiently, reliably and safely. We've taken a very considered approach to the final stages of commissioning to ensure offshore operations achieve a high level of reliability as quickly as possible once full production is achieved. The project has a high level of technical complexity with technology deployed to improve operational efficiency and emissions. And we're currently producing at just under half rates while we go through a sequence of compressor dry gas field change-outs, and we are targeting ramping up to full production rates in the next few weeks. Mechanical completion of Pikka Phase 1 was achieved in January, with ramp-up to plateau production rates expected around the middle of the year. Dynamic commissioning is underway at the seawater treatment plant, Nanushuk Drillsite B and the Nanushuk processing facility. The Nanushuk Drillsite B has been handed over to operations, another key milestone towards first oil. Drilling performance remains exceptional. We're now drilling the 26th well and continue to push technical limits. Two combination wells have been completed, including a record 10,000-foot horizontal section that delivers 2 bottom hole locations with a single well. Combination wells deliver savings on cost as well as rig time, accelerating the drilling schedule and getting more reservoir sections online earlier. 20 development wells have been flowed back, including 10 producers, with average expected start-up flow rates of approximately 7,000 barrels per day per well, in line with pre-drill expectations. The 23rd well delivered the highest productivity to date with expectations of flow rates of approximately 8,000 barrels per day. Once the flow rates, Barossa and Pikka Phase 1 together are expected to lift Santos' production by around 25% by 2027 compared to 2025 levels. In 2026, as these 2 major development projects are integrated into the base business and we rightsize the business, we expect a reduction in headcount of around 10% across the business from 2024 levels. Moving to Slide 10. Santos holds a unique and diversified resource base with a 17-year 2P reserves life and a 10-year 1P life, supported by almost 4.7 billion barrels of oil equivalent and reserves and contingent resources. The quality and depth of our inventory underpins our strategy to continue to backfill existing infrastructure and grow production. We are optimistic of making significant resource additions following the appraisal campaigns in the Beetaloo and Bedout Basins over the next 18 months or so. Across the portfolio, we have a deep inventory of opportunities embedded in the base business. These have the potential to leverage existing infrastructure to lift production and deliver strong returns, supporting our ambition to maintain production between 100 million and 120 million barrels of oil equivalent in the near term with clear pathways to sustain growth beyond that. Slide 11 demonstrates the disciplined low-cost operating model in action. With a relatively steady production over the last few years, we have still managed to reduce unit production costs during this period, generating strong cash flows despite falling commodity prices, resulting in our ability to increase shareholder returns over the same period. Additionally, we have delivered 2 major developments, Moomba CCS and Barossa and are closing in on the start-up of Pikka Phase 1. All of this has been achieved while maintaining balance sheet strength, improving our personal and process safety performance and lowering our emissions. Santos has already achieved its 2030 emissions target, supported by the world-class Moomba CCS project, reinforcing the role lower carbon gas can play in delivering energy security while reducing emissions. Our strategy remains clear: generate strong cash flow, reward shareholders, reinvest to backfill our infrastructure and to build new capacity and grow production and continue to operate safely and reliably. I'll now hand over to Lachie to provide an overview of our financial results. Lachlan Harris: Thanks, Kevin, and good morning, everyone. I'll step through the financial performance for 2025, which reflects a resilient base business and disciplined execution across the portfolio. In terms of our 2025 financial highlights, free cash flow breakeven from operations was $27.43 per barrel, demonstrating the ongoing cost discipline from our base business. All-in free cash flow breakeven was $58.90 per barrel. Going forward, we will target an all-in free cash flow breakeven of $45 to $50 per barrel. At this range, we will have capacity to invest in projects that add high-quality production volumes, reserves and resources and continue progressing our organic pre-FEED opportunities. Unit production costs was $6.78 per barrel, the best result in a decade, achieved with FX tailwinds and cost discipline. Total 2025 dividends of $770 million include the final dividend declared of $335 million. Slide 14 details our balance sheet strength. Pleasingly, gearing finished the year at 26.9% including leases, which is a real positive, noting we're at the conclusion of our peak capital investment phase, Barossa is in production and Pikka Phase 1 nearing production. We remain committed to a resilient balance sheet and maintaining an investment-grade credit rating as production and cash flow increase following the delivery of Barossa and Pikka Phase 1. This financial strength provides flexibility to fund growth, deliver shareholder returns and actively manage gearing. Our continued investment-grade credit ratings from Fitch, Moody's and S&P reflect Santos' disciplined capital management and low-cost operating model that has been in place since 2016. Our long-dated debt maturity profile supports financial stability with an average weighted term to maturity of 5 years. In 2025, we accelerated the final repayment of the PNG LNG project financing facility, fully repaying the debt. The early repayment reduces interest costs and removes restricted cash requirements, which helps strengthen our liquidity position. Santos now has approximately $4.3 billion of liquidity across cash and undrawn facilities. There are no scheduled debt maturities in 2026, with the next due in September 2027. During 2025, we also successfully completed a $1 billion senior unsecured 10-year bond offering in the U.S. 144A/RegS market. This attractively priced long-term capital further strengthens our funding base and supports disciplined growth from our high-quality diversified portfolio. Consistent with our capital management framework, we continue to protect and strengthen the balance sheet to safeguard our financial position through hedging strategies for both commodity and FX exposure. Hedging has been undertaken at rates well below the long-term Australian dollar FX average, providing strong protection for the balance sheet. The strength of this balance sheet is what has funded the development projects whilst provided strong returns to shareholders. Our underlying earnings show that product sales revenue remained strong at over $4.9 billion, generating EBITDAX of $3.4 billion and underlying profit of $898 million. Underlying profit is lower than the prior year, reflecting lower commodity prices and a higher effective income tax rate. Our 2025 free cash flow from operations highlights the strength of Santos' diversified portfolio, high-performing core assets, secure LNG contracts, inflation-linked domestic gas contracts and continued cost discipline. Pleasingly, we continue to maintain high gross profit margins across the portfolio, with a gross profit margin of 33.7% this year. We have delivered savings of around $50 million and continue to target an annual savings run rate of $150 million. As we have previously advised, once Barossa and Pikka Phase 1 are online, we expect our free cash flow sensitivity to increase from around $400 million for every $10 movement in Brent oil up to $550 million to $600 million for every $10 movement. As outlined earlier, we achieved record low unit production cost of $6.78 per barrel in 2025, supported by FX tailwinds and disciplined cost control. Our track record shows we continue to outperform our peers in this space with an unwavering commitment to cost discipline. In addition, we remain focused on our target of less than $7 per BOE unit production cost. Santos is Australia's low-cost operator, and that is not a slogan. It is a competitive advantage. With the production from Barossa and Pikka Phase 1 coming online, Santos is positioned to fully fund the base business and growth capital requirements. This includes exploration and appraisal, decommissioning, corporate and funding costs and investment in growth at an all-in free cash flow breakeven of $45 to $50 per barrel. Our portfolio will keep production between 100 million to 120 million barrels of oil equivalent over the next few years, but the $45 to $50 framework allows us to pre-invest in our next stage of growth, including exploration and appraisal projects such as Papua LNG, Beetaloo and the Bedout Basin. Cash flow in excess of our all-in free cash flow breakeven will be returned to shareholders at a minimum of 60%, with the remaining 40% available for degearing the balance sheet or increased shareholder returns. With a strong balance sheet, Santos has the ability to take advantages of opportunities for value-accretive growth. Thank you. And I'll now hand over to our Chief Operating Officer, Brett Darley. Brett Darley: Thanks, Lachie, and good morning, everyone. Let me turn now to the operational performance. Our base business has delivered another strong year. Safety remains a leading indicator of operating capability, and we achieved our lowest lost time injury rate on record. We are getting more from our infrastructure with reliability above 98% across PNG gas, PNG LNG plant and GLNG upstream facilities. The GLNG plant at Curtis Island achieved 99.5% reliability. A key competitive advantage for Santos is our ability to self-execute projects. In 2025, 296 wells were drilled globally. We reduced drill duration in the Cooper by 2.5 days per well, drilled a record 8,200-meter horizontal well in Alaska and completed the first triple lateral CSG well in Queensland. In 2025, PNG LNG sustained an annualized run rate of 8.6 million tonnes per annum, supported by plant reliability of more than 98% and the first full year production from Angore. PNG LNG effectively ran full for the year with upstream capacity exceeding planned capacity. We intentionally choke back some of our operated wells, a strong position that highlights the depth and flexibility of our resource base. Our Santos operated fields provided 17% of PNG LNG gas supply with upstream operated gas reliability of 98%. The Hides F2 well was completed with a safe and accelerated start-up in the first quarter -- in the fourth quarter. Initial production is averaging around 60 TJs a day, further adding volume and resilience to our supply base. Alongside strong operational delivery, we maintained our disciplined cost performance. Upstream PNG production costs decreased $0.34 per BOE compared to 2024. And overall, we delivered a 5% reduction in unit production costs. This improvement was driven by targeted initiatives, including the reorg of our supply chain and logistics services, delivering around $1.3 million in sustainable annual savings and optimization of maintenance programs, contributing more than $5 million in savings in 2025. Put simply, PNG LNG is performing. Costs are improving, and we've got a deep runway ahead of us. It's a high-quality, long-life asset in a very strong position. GLNG and our Queensland CSG operations delivered another year of strong performance. GLNG produced 6 million tonnes of LNG, shipping 101 cargoes, with more than 99.5% plant reliability. We also completed Train 2 shutdown safely and on schedule. GLNG continued to support the East Coast domestic gas market, supplying 11 petajoules through seasonal shaping and working with our joint venture partners to exercise contractual flexibility so we can continue supporting the domestic gas market in '26. Upstream supply remained stable with record production rates from Roma of 223 terajoules per day and record average production from Scotia of 105 terajoules per day, underpinned by high facility reliability. And we continue to focus on disciplined cost performance. In 2025, we completed several compressor facility upgrades, enabling the shutdown of a legacy facility. These initiatives delivered around AUD 5 million per annum in production cost savings and unlocked an additional 15 terajoules a day of incremental production. At the well level, we continue to push technical boundaries. Pump life has improved through solids handling initiatives and the rollout of our smart PCP digital program, which reduces failure rates and improves uptime. We also extended our well design capability drilling our first triple lateral CSG well and achieving our longest in-seam lateral length at 3.2 kilometers, increasing reservoir access and improving recovery. In Western Australia, our focus on reliability and disciplined execution and infrastructure-led value continues to deliver strong results. Varanus Island averaged 99% reliability in 2025. Production costs improved by around $66 million compared to '24, with unit production costs now approximately $6.15 per BOE, benefiting from strong contribution from the Halyard-2 well and FX tailwinds. The Halyard-2 infill wells is a strong example of our self-execute capability. It came online in the first quarter and has exceeded pre-drill deliverability expectations by 38%, reinforcing the value of developing reserves close to existing infrastructure. The same self-execute, low-cost tieback model underpins approval of the John Brookes 7 infill well as the next Varanus Island backfill opportunity, while the Varanus Island compression project Phase 2 has developed around 24 million barrels of oil equivalent of 2P reserves. The Cooper Basin was impacted by a record-breaking flood event on a scale not seen since 1974, affecting more than 200 wells and several upstream compressor facilities. Our focus throughout has been the safe recovery of these facilities, and I'm pleased to say production rates have now returned to pre-flood levels. We have safely reinstated about 70% of impacted wells and facilities and restored more than 2,500 kilometers of road access. Importantly, drilling activity continued uninterrupted, with 104 wells drilled and 80 wells connected during the year. As a result, 30 wells are now ready for connection in early '26 once residual flood water is received and full access to flowline routes is restored. Beyond recovery, we continue to advance the long-term potential of the Cooper Basin. Whilst the Cooper has its challenges, we've been progressing our resource opportunities, including the Granite Wash and the Pachawarra tight gas plays. Our future investments will focus on these areas that provide higher margins and contain the majority of our future resource base. We've also progressed in the planning of a new way of operating these areas with the development of the Moomba Central Optimization project. This project will transform the cost structure in the central area of the basin, and we have plans in place to change the way we are thinking about the Cooper Basin more broadly. In 2025, we also implemented our integrated remote drilling ops center, the IROC, which will improve safety and cost by taking people out of the field and reducing evaluation costs and is expected to deliver around $5.5 million in annual recurring savings. It will also improve our stimulation and completion activities, improving overall well productivity. I'll now hand back to Kevin. Kevin Gallagher: Thanks, Brett, and thanks, Lachie. If you step back and look at the global energy system, the starting point is simple, energy demand continues to rise. The transition isn't replacing one source with another. It's adding new supply to meet structural growth. Gas plays a unique role in that system. It is the only scalable, dispatchable fuel capable of supporting renewables while maintaining grid stability. That makes it a foundation fuel for economies that are growing. Asia remains at the center of LNG demand growth, with consumption forecast to expand strongly through to 2050. Santos is well positioned with advantaged supply into the region, Tier 1 customers and a track record of reliability. In a world of geopolitical uncertainty and shifting trade dynamics, that reliability carries a premium. Customers are prioritizing dependable partners. At the same time, oil demand remains resilient. Projects, such as Pikka, add competitive low breakeven supply that strengthens our portfolio and long-term cash generation. That structural demand growth is not theoretical for Santos. It's already embedded in the quality and performance of our LNG portfolio. Our LNG marketing business continues to capture value through disciplined end use customer-focused contracting. The LNG portfolio is 83% contracted over the next 5 years, with portfolio pricing realized at 14.6% slope to Brent in 2025. Our average contract price remains above peers and supports strong cash margins. Our proximity to Asian demand centers provides a structural advantage with lower shipping costs, lower emissions and faster responsiveness compared to more distant suppliers. That advantage is matched by portfolio flexibility. With multiple LNG sources, we can direct volumes into highest value markets and respond to seasonal and market disruptions. Our LNG portfolio is also weighted toward higher heating value gas, primarily from PNG LNG and Barossa, which together account for over 75% of our equity LNG volumes. Customers place a premium on richer LNG, and that is reflected directly in our realized prices relative to our peers. That demand and portfolio strength gives us a clear platform for execution, which brings me to our 2026 strategic priorities. There are 8 priorities that will guide our focus in 2026. Together, they form a single operating framework focused on safety, cost discipline and long-term value creation. I'll step through each of them. The first priority is delivering steady-state production for Barossa, establishing it as a reliable Tier 1 long-life cash engine for the portfolio. Barossa is expected to achieve full rates in just a few weeks' time. And throughout the next few months, we'll work to overcome the usual early issues on any new project to achieve the sort of reliability we see across the rest of our operating assets. The second priority is bringing Pikka Phase 1 to plateau production rate with a focus on a safe, controlled ramp-up, to steady performance. We expect to achieve this very important milestone in the second quarter, and then that focus will turn to achieving the expected levels of reliability of any other Santos asset. The third priority is delivering on PNG LNG backfill projects. PNG remains a core asset in our long-term portfolio, supported by a prolific resource base. Our focus is on sustaining plateau production through near-term backfill opportunities, including the APF pipeline tie-in and an oil infill drilling program. These are practical, very high-return projects designed to extend asset life and preserve cash generation. The fourth priority is progressing Papua LNG to final investment decision. Papua represents the next phase of development of our -- for our PNG platform and is underpinned by a net 2C resource of 1.6 Tcf. Just the other day, I was pleased to hear encouraging comments from the operator CEO clarifying the improved cost position that we are aiming to get an FID decision around the middle of the year. The fifth priority is commencing Beetaloo appraisal activities. Beetaloo is a transformational opportunity for Australia and Santos. The scale of the resource is globally significant and has the potential to reshape our long-term production profile. This is not a marginal resource addition. It is a new basin with the potential to supply both domestic and LNG markets, subject to successful appraisal. Our 2026 program is focused on proving commercial flow at scale and demonstrating the basin's development potential. Importantly, Beetaloo sits within a supportive jurisdiction that has established a clear pathway for responsible development. Alongside Beetaloo, the sixth priority is progressing the Bedout Basin appraisal program. This work expands future supply options. We've already discovered 5 fields in the basin supporting a net 2C contingent resource of 230 million barrels of oil equivalent. The integrated gas and liquids concept is about building scalable value from that emerging position. We're planning to drill up to 3 gas exploration wells in 2027 to further define that potential and optimize development concept. A future gas development could be brought back to Devil Creek gas plant to access the domestic gas market and/or toll through adjacent LNG processing infrastructure to provide access to the export markets. It's early stage, but the ingredients for a material high rate of return future production hub are there. And now that we are nearing the end of the current capital-intensive investment phase, we're keen to get back to focusing on moving this opportunity forward. Moomba CCS has established a proven operating model for large-scale carbon storage. The seventh priority is extending that capability through development of a Northern Australia CCS hub. Northern Australia is well positioned to become a CCS center, supported by significant geological storage capacity and proximity to regional emitters. We have completed critical technical work underpinning a development for Bayu-Undan, which has the potential to be one of the world's largest CCS projects. With existing wells and facilities already in place, Bayu-Undan could provide low-cost, large-scale commercial storage for regional CO2 volumes. In parallel, we are progressing feasibility work on additional storage options in the Bonaparte Basin, including G-11. That upcoming work program is focused on expanding Australian storage capacity and building a scalable hub framework. The eighth priority is to conduct a strategic review of our Australian integrated oil and gas portfolio, including the Cooper Basin, West Australia and Narrabri. This review is underway, and we will share further details at our Investor Day in May. In closing, the momentum we built in 2025, driven by strong base business performance and first production from Barossa, carries directly into 2026. With first LNG from Barossa and our execution agenda already underway, we are focused on disciplined delivery and continued value creation for shareholders. Thank you. It's now time for questions. Operator: [Operator Instructions] The first question today comes from Rob Koh from Morgan Stanley. Robert Koh: Congrats on the high quality of your results and Santos team. My first question just relates to Barossa. I wonder if you can give us any commentary on the CO2 that's coming out of the field in the early days. And then I guess related to that, looking at your climate strategy document, you're kind of looking like Bayu-Undan CCS FID readiness in about 2027. And just wondering if you could outline some of the critical path towards that, if that's correct. Kevin Gallagher: Yes. Thank you, Rob. I'm not quite sure about the first question. I'll try and answer that as I understand it. But I think you mean during the commissioning phase. So yes, there is always a little bit more CO2 emissions as you do some flaring as you're commissioning activities. But obviously, once we go into full production, it will be in line with our environmental plan commitments for the production phase. And as you probably are aware, under the safeguard mechanism rules, Barossa has to offset all of its reservoir emissions from day 1. And so that will be our plan until we are able to develop a CCS solution for that project. So we will be offsetting those emissions from day 1. In terms of the second part on Bayu-Undan, yes, we're FID-ready now. We've completed the FEED work, a little bit of work to do before we take FID. So I'd say we're FEED-complete, and there's a little pre-FID phase where we require to do basically the finalized costs and cost estimates from contractors. But the engineering design work is fundamentally done for that project. That would be an excellent project, and we're in discussions with the regulators about moving forward and trying to progress the approvals to support that project. And it's really those activities that are required before we can go to the next step and take FID. Our estimate of how long that would take. Yes, I think 2027 second half is probably realistic in terms of as quickly as we could get there. But really, it depends on how we get on with the 2 governments -- the 2 national governments in terms of getting the various approvals, cross-border approvals for the transport of CO2 and the development approvals in Timor-Leste. Robert Koh: Okay. Great. That's super helpful. My second question is on the topic of decommissioning. And just wondering -- you've given us guidance for this year. Just wondering if you can maybe give us a steer on the longer-term outlook. And then also, I guess, during 2025, I think you came in a little bit under budget at [ Newton near Exeter ], except for the cyclone impact. So I'm just wondering if you can share any kind of learnings for future efficiency of decommissioning. Kevin Gallagher: Look, first of all, I'd like to say the majority of our decommissioning activities are in Western Australia. And the team there under Jason Young have performed fantastically over the last 2 years. We've given them the challenge of expediting decommissioning in an extremely cost-efficient industry-leading way. And they've come through with lots of innovations in order to take cost out of that because as we all know, it's a cost -- every dollar you spend on decommissioning comes with no return on it, yes? So I can't think of it as investment spend. It's necessary spend, but it's not investment spend. And the guys have done a fantastic job. Over the last couple of years, I think we've liquidated something like USD 600 million to USD 700 million of liability off of the balance sheet. And as much as the liabilities have only come down a little bit in that time, that's because as we build new projects like Barossa and Pikka, they go back on to the decommissioning liabilities on our books. But of course, they're 20-plus years out. And so we're liquidating a lot of that near-term stuff. And we'll continue to do that for the next 2 or 3 years. I think anywhere from the sort of $200 million to $300 million per year is probably a good way to think about the level of activity over the next few years. You point to some of the cost underspend on some of these projects. There's been many scopes that the team have been able to deliver under budget. And I think the WA job you're referring to is about $22 million overall under budget for our scope of work last year. There are lots of learnings, and we're continually recycling some of that stuff back through the organization so that we can continue to drive the costs required to decommissioning our activities down. But the entire team -- and it's not only the operations team, it's the commercial teams looking at good commercial solutions. For example, we're able to sell a vessel rather than have to decommission it for someone else to use it last year, and that was a bit of a win for us. And you can see in the Van Gogh FPSO, the time it took from shutting the field down to that vessel exiting the country was a best-in-class. So the guys are pushing every boundary, and we're really proud of the effort of turning in there. But there's a lot of work to go over the next few years. We'll continue to drive those costs down, continue to learn. But as you know, in decommissioning, there's a lot can go wrong. So building that capability in-house is something we've put a lot of effort into the last few years to minimize that risk and minimize that cost exposure. Operator: The next question comes from Tom Allen from UBS. Tom Allen: On Santos' free cash flow sensitivity to changes in oil, when Barossa and Pikka Phase 1 are at full run rate, Santos is guiding 40% to 50% stronger free cash flow sensitivity per $10 barrel change in oil price. So the higher production volumes and lower headcount are clearly a key driver. But what else? The changes to baseline CapEx are implied there, too, or broader cost reduction initiatives? Kevin Gallagher: Yes, Tom, all of those things matter, right? And as does FX, there's a lot of variables go into that. But one of the biggest contributors is, of course, the fact that if you think from 2027 onwards, 60% of our production is LNG, 20% will be from Alaska and 20% from our Australian integrated oil and gas assets. Those higher margin barrels that are coming in from Barossa and coming in from Alaska are driving that free cash flow sensitivity in the right direction. And so from '27, I'd like to think Santos is now a company that if you go back a decade or so ago, we had a 13.5% investment in a Tier 1 asset. And at the time, we're running a sale process for that because we have balance sheet challenges at the time as an organization. If you look at us today or certainly from '27, we'll have 3 Tier 1 assets, we'll be 51% in Alaska equity, 50% equity in Barossa and we're 39.5% equity in PNG. That dominates our portfolio, and that is giving us a much higher percentage of higher-margin barrels, which is increasing that cash flow sensitivity. Tom Allen: Just on your broader options to accelerate deleveraging. So we've seen a couple of capital recycling initiatives last quarter. You sold the stakes in Mahalo and up in the Bonaparte Basin. Can you comment on broader initiatives that Santos has to accelerate deleveraging, perhaps tidy up the portfolio further? I think on the call just now, you've called out on your eighth strategic priority in regard to the strategic review, you made a mentioned at the Cooper Basin, Narrabri and WA. Anything you can share further? Kevin Gallagher: Tom, I admire your effort to get me to tell you what the answer is. I'll give you credit for that. But look, I mean, we've talked about the strategic review, but I go back to the fact that really what's driving that, and we've said all along, is once Barossa and Pikka come online, Santos' portfolio changes because as much as 60% of our production will be coming from our LNG assets and 20% from the oil project in Alaska, the other 20% is from our Australian integrated oil and gas assets. And those 3 Tier 1 assets all have high-value growth opportunities around those as well. And so what changes now is, of course, we've put in place the $45 to $50 all-in free cash flow target going forward for the organization. And within that, we still want to grow the business, right? So it's the best margin, and the highest value opportunities will win. That's where we will invest. And so it changes the way we think about what and where we invest -- what we invest in and where we invest. And so the review then is really looking at how those assets and the opportunities around those assets fit into our future growth ambitions as an organization. And I'm not going to comment on what will likely come out of that review, but we'll share that with you when we get to our Investor Day in a couple of months' time. And what I would say, of course, is we'll continue where it makes sense to clean up the portfolio to do that. We're not going to put targets out there for asset sell-downs or anything like that because we know how precarious that can be from past experience, right? But we'll continue if those opportunities come up to clean up the portfolio. We'll continue to look at that and execute it where it makes sense. Tom Allen: And maybe a follow-up. Your capital framework clearly calls out that you still need to support growth, and you've got quite a broad set of growth options. So can you clarify how you prioritize them? Will projects simply compete for capital based on their forecast returns? Or are there other drivers? Perhaps you've commented now on your future portfolio product mix, but there are other strategic drivers that will bring some projects ahead of others? Kevin Gallagher: We're going to run the business for value. I mean it's really as simple as that. And so we'll be looking at those rate of returns, the best returns projects will win every time. And obviously, we've got a very strong LNG production position. Our high heating value LNG has a very high priority and high value for us because not only does that allow us to get better prices for LNG, allow a lot of portfolio optimization opportunities that are quite seasonal to create more value. We've done a bit of that over the last year or so, and there'll be a bit of that in 2026 as well. So really, I think the best way to kind of describe what our priority, our focus is there, Tom, is that we'll be running it for value. And so it's really the best value outcomes and the best value projects that we're going to win. Operator: The next question comes from Adam Martin from E&P. Adam Martin: I suppose first question, Kevin, just on the gas market review, just any sort of thoughts, any implications for the business going forward, just on the federal gas market review there, please? Kevin Gallagher: Look, thanks, Mark -- Adam, sorry. That's a very good question and good opportunity to communicate a few things we've done. Look, I think the main thing to understand with this is that we see no material value impact to reducing third-party gas intake into GLNG. There's a couple of fields we'll continue to take gas from that were developed specifically for GLNG. But from 2027, GLNG feed gas will come predominantly from equity gas plus those strategic partner fields that we developed for GLNG. And we're working with our partners, and we've already made agreements with partners for certain mitigations in terms of contract reshaping or whatever to limit any liability type impact. But the bottom line is that it doesn't make sense to buy third-party gas off the domestic market to sell into the LNG markets. The free market is working, and those barrels would be zero value barrels. GLNG is actually a better asset without doing that. And so as I say, we see no material impact to Santos. We're going to continue drilling and developing our indigenous resource over the next few years. So you'll see that grow that -- we should expect that to grow between now and sort of 2029, 2030. And we will not be renewing the third-party contracts that still exist as they come up for renewal in a couple of years. And what does that mean now? That mean that the LNG sales will drop back a bit. The production will not be impacted at all. In fact, our production will increase over the next few years. LNG sales will come back. But in terms of margin or our earnings from that project, we don't see them materially impacted at all because, as I say, the third-party gas really is zero margin barrels or very low-margin barrels. What does that mean for the domestic market? Well, that means that some of that gas we won't be contracting can be turned back into the domestic market, and that will relieve pressure on the domestic market and in my view, should alleviate any shortfall concerns for 2027. Adam Martin: And second question, just on the Beetaloo. We've obviously seen some encouraging well performance, well cost data come out from other operators in the basin. What are you looking to do differently this time around? I think your well costs are pretty high. It was a few years ago. And obviously, flow rates are pretty low. But any changes around well design that you need to do differently just for these upcoming wells, I think it's the second half of the year, please? Kevin Gallagher: Yes. Look, I mean, I think when we drilled it, I mean, it was early days of drilling in the basin. And I have to say, it looked like a well that I drilled. It wasn't particularly impressive. But we've got better drillers there now. We've got a very experienced team, a lot of shale experience in the team. We've also seen, of course, the drilling performance of other people as that experience has been built over the last 5 years or so in the basin. So we've got -- we're in the process of contracting rigs and get everything set up for that operation. But Brett, why don't you just give an indication of how you see the drilling plans for 2026, '27 and what the plant's appraisal plan is? Brett Darley: Yes. Thanks, Kevin. So yes, there's been a lot of drilling up there. So there's been 12 wells drilled since we've drilled there last time. And ultimately, we want to make sure we learn from that. Tamboran is a partner in that block with us, and they have obviously been getting some good performance, and we'll be definitely leveraging everything we can from the other operators, including Tamboran. And we are making sure we're learning from what's happening in the U.S. as well. So we're going to embed all the learnings we can, and we've got a team focused on delivering this. It's a very focused plan. Our plan is to drill these 3 wells, fracture stimulate them as if they were production wells and produce them for 12 months plus to get appraisal results that ultimately will allow us to make an FID decision out of this program. So a very, very targeted, and we've got the best people on the job. We will have people from the U.S. involved, whether they work directly for us or through our contractors, to make sure that not only have we learned from what's happened in the Beetaloo Basin over the last couple of years, but the latest technologies from the U.S. And based on the work that we've done, we're actually very optimistic in terms of the cost of supply target that we need to achieve here for the future development opportunity. And we're targeting a total booking from the wells we drilled previously and this appraisal campaign of just under 5 Tcf of 2C resource. So it's a very significant and important appraisal program, which hopefully will result in a significant booking of 2C resource. Operator: The next question comes from Dale Koenders from Barrenjoey. Dale Koenders: Just firstly, on the cost out, the 10% reduction in headcount. Is this in the $150 million savings targeted? Is it net of inflation and other increases? Can you provide a bit more color around those numbers? Kevin Gallagher: Yes. Look, I mean, we see that as quite a natural -- well, a big part of it anyway is a natural transition, Dale, as you transition from the projects' phase, if you like, the 2 big projects we've had ongoing, it's pretty natural that your headcount goes up as you build these projects. And as they come off, a lot of those people roll off the organization, you move more into the operations phase. And some of it's more from efficiencies and technology improvements allowing us to see some headcount or FTE reductions as a consequence of that. I'd see most of that occurring over this year as these projects come online. And so yes, it's pretty short to medium term. It is included in the $150 million number. It's not in addition to. I mean that's important to clarify. But yes, we see it this year, and it's mainly a combination of rolling off from projects and some efficiency gains and improvements just through technology and different ways of working. Dale Koenders: So does that mean it's part of the $45 to $50 per barrel breakeven number and the $7 per BOE OpEx guidance? It's already included in those numbers? Or is it incremental to them? Kevin Gallagher: No, no, it's already included in those numbers. Dale Koenders: Okay. Second question, just on the strategic review. The concept of, I guess, exiting the mature high-cost assets with higher sustaining CapEx requirements to leave a higher-quality LNG core, the idea has been around for a while. Are there any other questions or outcomes or considerations you're thinking of that you can provide a bit more color and a bit more meat around the volumes of the strategic review? Kevin Gallagher: Yes. Look, I mean, what we're not saying is that we're selling anything or buying anything. I think that's very important to clarify upfront. Those may end up being outcomes that come from the strategic review. But we're looking differently at the way we think about those assets, how they compete in the portfolio going forward. If they're not going to get capital, what does that mean? If they're not going to compete against Alaska expansion and growth opportunities or they're not going to compete in near-field opportunities, including oil field drilling and PNG, how are they going to -- what are we going to do with them? What is the plan for those assets? And so everything is on the table in that review, and I look forward to sharing the detail of that at our Investor Day in May, and that our target is to complete the work. We're well advanced in that work. We've been doing it for a little while. We'll complete that work, and then we'll share it with our investors as I say, at the Investor Day in May. Operator: The next question comes from Tom Wallington from Citi. Tom Wallington: Just on Pikka, with development now largely derisked and now having line of sight to first oil and also noting that execution to date has been a standout, could you please refresh us specifically on what milestones or operating performances you might look to be seeing in terms of progressing a brownfield expansion? And just how we should think about the potential timing, noting that you talk about running the business for value and the other growth opportunities that are also competing with this particular opportunity? Kevin Gallagher: Yes. Look, thank you, Tom. Look, I mean, it's not been without our challenges, right? I mean on the execution front, it's been excellent. The drilling has been superb. Costs could have been better, right? We've got to be frank about that. I mean we're not pleased. The team are not pleased themselves that we've spent more than we intended to spend along the way in inflation in the region, the high activity levels in the region have driven inflation there above what we were expecting. So that's not been a great outcome on the cost side. But I have to say the execution of the projects, they're very high quality. I always get nervous talking about like the -- taking the victory lap before you've actually won the game. And so I'm not going to get carried away. We've got that last 5% or so or last few percent of the project to close out, and we're commissioning, and we're getting close to that. We all know that with projects, we've had a few bumps after we started up in Barossa, which is not unusual. I think something like 20% of FPSOs that have come to Australia have departed pretty soon afterwards to go back to the shipyards for one reason or another. And fortunately, touchwood, I've not seen anything like that through the hookup, and commissioning at Barossa has been pretty good, but we've had a few bumps. And no doubt, there'll be a few little things, and we've got the iron out with Alaska as well. But the team is very focused. We're running a very strong commissioning quality assurance process through this process because we want a strong ramp-up. And the key to this project is really starting up and getting the water injection plant up and running so that we have a pressure support for the reservoir because if we can start up early, that's easy. But if we can't go to full rates, if we start producing too fast. Without the water injection support, we'll end up leaving barrels behind. So it's really getting the water injection plant up and running, get the pressure support in place. And then it's all about how quickly we can ramp up to full production to plateau rates. But what I'm very pleased about is the subsurface indications are in line with all the pre-drill expectations. And of course, when you're developing anything in a new basin for the first time, that's one of the key deliverables. You can fix little things on the plant. What you can't fix is you get a bad reservoir outcome. So, so far, that's looking very, very promising. And as I said in my notes earlier on, the last well that we just tested was significantly higher in terms of its productivity or deliverability than the previous -- or the average for the wells to date. So that's very encouraging. In terms of timing, we're still on track for first oil late Q1. But really, it's not about the first oil date. It's really about the ramp-up from that because that ramp-up is determined by how quickly we get the injection system up and running and the pressure support for the reservoir. And so the plan is to ramp up across Q2, reaching plateau at the end of Q2. But of course, if we get the injection up and running and we get a few more wells drilled in that time frame, there's the opportunity that, that could be quicker, yes. Operator: The next question comes from Nik Burns from Jarden Australia. Nik Burns: First one, just a clarification on your $45 to $50 all-in free cash flow breakeven target. Just wondering how prescriptive that number is? Like does that set a hard upper limit on investment every year? Or is it an average over, say, 3 years? Just noting the fact that in 2026, it looks like you're going to come in below that number. So whether that provides some flexibility over the next couple of years to maybe lift it above that range? Kevin Gallagher: I'm going to throw that one to Lachie. That's a good one for Lachie to handle. Lachlan Harris: Thanks, Kevin. Thanks, Nik. Yes, look, we'll guide each year to the -- where we think that, that will range -- will hit on an annual basis. We're going to take a conservative approach within our well-defined parameters, but we'll guide each year to the $45 to $50. Obviously, it aligns with our gearing target of 15% to 25%. And as we said, we do have a lot of investments that we can look to optimize. So we'll give guidance every year, $45 to $50, I think, will be where we'll be targeting across the range. Kevin Gallagher: Yes. And I think we've set out to 2030, that's what our sort of forecast at this point in time would be. And I think what I would add to that is Lachie made a very good point there. 15% to 25% is our target gearing range. At the lower end of that, our interest payments are significantly lower, and that frees up more capital to reinvest in the business within that framework as well. So degearing is actually an important part of the strategy. Nik Burns: So that should mean we should be thinking that over the next 2 or 3 years, you could be well below that number as you look to target lower gearing ahead of a pickup in investment towards the end of this decade? Kevin Gallagher: Well, it could be either/or, right? I mean, it depends. I mean, we're looking -- we talked about some of the development opportunities that we're progressing through appraisal over the next couple of years. So there's no major development spend on the balance sheet in the next couple of years. But depending on the results of those, we might have one in, say, '28, for example, right? And there's nothing scheduled there right now, but whether that was something in the Beetaloo or the Bedout, who knows? We'll wait and see what the results of those programs are, and we'll make those decisions as we go. But it could be either/or, quite frankly. Nik Burns: Got it. My second question is just on Papua LNG. You talked, Kevin, about the improved cost estimates coming through from the operator. There's been some speculation. I think the JV was targeting a reduction in costs from around USD 18 billion to around USD 14 billion. Are you able to sort of quantify whether those costs are coming at around that level? Kevin Gallagher: Well, I saw a transcript the other day from Patrick, it's Tal, and he was talking in the $14 billion to $15 billion range. I think that was public. And well, it's probably now, I guess. But he did actually say that. And the financing progressing, the project financing progressing. Everything is heading in the right direction. There's a few things we still have to get ironed out. But ultimately, ourselves Exxon, Total are working towards a 2026 fit, and we'd like that to be around the middle of the year. So we're hoping that's around the middle of the year. And in that $45 to $50 guidance we've given you, we have assumed Papua is in that. We have assumed that Papua is in. That's very important. Operator: The next question comes from Gordon Ramsay from RBC Capital Markets. Gordon Ramsay: Kevin, I just picked up on this and maybe it's nothing. You previously have stated that the combined production increase from Barossa and Pikka is going to be 25% to 30% by 2027. You're now saying 25%. Is that just being conservative? There's no change there. Is there any kind of risk that you're taking into account that you might not have seen before? Kevin Gallagher: No. Look, I mean, I'd still say it's in that range, Gordon. I've been a bit conservative with the number because you guys always pick me up in that stuff, right? So as you just have done. But look, I'd say we've been a bit conservative there. But it's in that range, right? 25% to 30%. But it kind of -- am I being conservative? Yes, a little. But it's also about phasing and timing and when things come on. And we don't know. I still -- I'll always say we still don't know how Alaska will perform until it comes on. We were assuming 80,000 barrels a day. That's what we're aiming for as a plateau rate. I'm sure we'll get there. The team are confident we'll get there based on the well test. But until it's flowing, I don't want to bank it, yes. Gordon Ramsay: Okay. And just second question, I'll just follow up on Alaska. I mean, congratulations on good IPs and the dual completions that you delivering on these new wells. Can you comment on what annual decline curve you might be expecting from the Pikka wells? I know they're starting up really well, but do you have a feel for what Santos' target would be, let's say, 12 months out or 2 years out on some of these wells? Kevin Gallagher: Look, I actually can't give you that number off top of my head, Gordon. What I can tell you is that we're looking at a 5- to 6-year plateau with about -- I think it's about 2.5 -- let's say, 2 to 3 years of sustaining drilling going forward, just keeping that performing at those levels before it starts to come off plateau. So 5 to 6 years on plateau, and you're probably looking at 8 wells, 9 wells a year or whatever during that period. Operator: The next question comes from Henry Meyer from Goldman Sachs. Henry Meyer: Jumping back to Barossa. Could you share any detail on the challenges that were observed during that early commissioning and what the current state of the FPSO performance is as you ramp over the next few weeks, Kevin, you mentioned? Kevin Gallagher: Yes. Look, I mean, I think the very first thing I would say is that the processing kit is performing really well. So from a process-integrity point of view, which is often one of the biggest issues you have with a new gas plant or oil facility, we've not had leaks and things like that, which has been very, very encouraging. And so my hat goes -- I take my hat off to BWO for the quality of the process that have installed. In terms of the issues we've had, a couple of unusual ones. I think I communicated last year that we had a heat sensor software issue that caused us 2 or 3 weeks to reset the settings on each one of those, 356 of them, I think, across our facilities. And that was more of a software issue. And it's, I guess, part and parcel with the risks you take with all the high-tech stuff we have in our facilities these days. And then following that, our GRE fire water and safety -- or utility water systems, I should say, had some connection failures. That we looked at systemically, and we had to go through a program of strengthening all of those connections across the facility because we figured -- I'm not sure if that was a design error or not, but we figured it's a systemic issue that we want to address for the longer term and not take any risks on that. And that cost us 2 or 3 weeks around Christmas time. Following that, everything has been working well. I mean we've had the usual little kind of tuning type issues you get in any new facility. But there was a product issue with seals on compressors that our main equipment manufacturer issued to BWO. And we've taken the decision to run through -- to run it at half rates just now while we take compressors offline and change those seals now rather than take the risk of any failures occurring further down the line. So it's a bit like when the airlines give you a product-upgrade type alert that you ground the planes and fix them, right? So what we're kind of doing is we're taking some of the compressors offline right now, so running at half rates while we replace them, and we've got them coming on over the next 2 weeks. And then as I say, 2 or 3 weeks from now, I fully expect we'll have the potential to be pretty close to, if not at full rates, yes. Henry Meyer: Excellent. And covering a lot of ground with all the assets, maybe jumping into Cooper Basin. Kevin Gallagher: And what I should have said, Henry, just to close on that. Obviously, we've had a couple of cargoes already shipped and another one in the next few days. So we're still producing and still getting cargoes out just at a slower rate until we get the full rates in a few weeks' time. Henry Meyer: Sounds good. Cooper Basin, just any details on the Moomba Central Optimization program, the CapEx you're expecting there and improvements to cost and production going forward? Kevin Gallagher: Look, that's a really exciting project for the Cooper Basin because that is a project that certainly makes one part of the Cooper Basin become very competitive in our portfolio. And without going into great details about it, Brett, maybe you just want to give a sort of 1-minute summary of the scope and why the cost will be coming down so much with that investment. Brett Darley: Yes, thanks, Kevin. Yes. Look, we've been working on a couple of things over the last couple of years, along with our joint venture Beach, and it's really about trying to maximize the value of the Cooper Basin. Part of that is getting a resource and proving up that we can develop our -- the resources in the future, and we've made some great progress with Granite Wash and our tight Patchawarra formations around -- pretty much around our central facilities. So we've got a basin that's got hundreds and hundreds of oil and gas fields in an area the size of Wales. And what we've been trying to do is get focus on the areas that are going to provide our resources into the future and actually do it at a lower cost. So targeting starts with the rocks, and we've been spending a lot of time there, and we've been proving up the economics of those rocks. And then ultimately, that area, which is closer to Moomba around our central and northern fields, that area holds the most of our future production. But it is also our oldest facilities are least reliable, the ones that require the most manning. So that step with Moomba Central Optimization will be completely modernize the Cooper in that area -- in a very targeted area, increasing reliability, reducing costs incredibly significantly and also allowing greater flow from those areas, which we're currently constrained on producing, so debottlenecking and producing further capacity to bring that gas back to Moomba, and it will completely transform the cost base in the Cooper Basin. Kevin Gallagher: Thanks, Brett. Operator: The next question comes from Mark Wiseman from Macquarie Group. Mark Wiseman: I've just got 2 questions, one on the Beetaloo and one on the LNG marketing book. Firstly, on the Beetaloo, with an improved well design and lower well costs over time, we feel pretty optimistic that you should be able to achieve an economic outcome there. But could you provide some perspective just on pipeline and the GLNG joint venture and the willingness of that JV to process Beetaloo gas through Train 2. It has been one of the more challenging JVs in your portfolio. Is there a risk that you appraise the Beetaloo but face delays on the commercial structuring? Any insight on that would be great. Kevin Gallagher: Well, look, I mean, that's a great question, Mark. There's a lot of parts to it. In terms of timing, as Brett said, we're looking to drill the 2 to 3 appraisal wells starting second half this year through first half of next year and then put them on production for 9 to 12 months, producing them to get the information we need to fully appraise to take us to the point where we would be confident to go forward and develop. That's -- hopefully, that will get us pretty close to 5 Tcf of resource booked that we then get confident about going and developing. We've already done a lot of work in what that sort of development would look like. We've had teams going over looking at Permian developments and stuff like that to identify how to do this very efficiently in the Northern Territory and what the cost of supply would be. We've looked at that cost of supply both to GLNG and also to Darwin. We've started to work with both governments on pipeline approval processes to get the various licenses. And so we're not in that sort of loop that we have been in for a long time, say, with Narrabri, for example. Different regimes and different processes. But making sure we're not going to be held up doing those approvals over the longer term. So we're very confident in the time line. In terms of when would you be ready to take an FID, you're probably looking at earliest, sometime late '28 or something like that, probably earliest based on the time you'd be producing the wells, more like probably early '29. And if you just think of that as being a 3- to 5-year development -- probably 3, 4 years because pipeline is probably the critical path there because the rest of it is just an upstream drilling project. That's the earliest you're looking then at any sort of backfill or feedstock opportunities for, say, GLNG. Look, I'm pretty confident when it comes to GLNG that when that becomes available, the partners would obviously be very keen for any material resource to come through. It's a value -- a value-based decision-making process, I would expect. But if you start to look at GLNG's production profile through GLNG, it's still pretty strong in the early 2030s, still over 5 million tonnes per annum in the 2030s. I think it's still around about a full train in 2040s, 2045, just based on a natural decline curve for the CSG field. So it's a very strong production profile. But there is one train that starts to open up, I'd say, mid 2030s. And that would be a good opportunity for it. But you shouldn't discount the opportunity to go North, to Darwin as well because that's probably a more economic and lower cost of supply option. And of course, Santos does have EIS approval for a second train at Darwin. We're the only project that has an approval for its second train already. We have that. And so with the right partners, the right opportunities, there's also the opportunity to expand Darwin. GLNG would be a more expensive pipeline operation. But of course, you already have a train in place. So that's an advantage for GLNG. But Darwin has the opportunity to expand. And of course, if you start thinking further out to Barossa backfill, a successful Beetaloo development offers backfill opportunities, relatively low-cost backfill opportunities for Barossa in the future as well. So what excites us about the Beetaloo Basin is that it's got the potential to fill all of our LNG operations or assets in Australia for decades to come if, it's a big if at this stage, the appraisal program goes well, and we're able to develop that basin economically. Mark Wiseman: That's fantastic, Kevin. And perhaps my second question on the marketing book. You mentioned 83% contracted over the next 4 or 5 years. Is there more work to do on the LNG book? Are you -- as you gain confidence in Barossa and you start to hit nameplate there, do you layer in more contracts and reduce your spot exposure even further? Kevin Gallagher: Well, look, Mark, I mean, our plan is to try and maintain the portfolio around about the 80% to 85% contracted, leaving a bit of spot exposure in there as well. And that also allows us to do some of that portfolio optimization if we don't have it all contracted as well. So our guys have done a great job. If you look at that chart, I think, on Slide 26, you can see the actual realized prices in terms of slope to Brent, well above benchmark. And you can see on the WoodMac chart that our relative prices to our competition are significantly higher. And the guys, look, we've got a great M&T team led by Sean Pitt, a fantastic team, doing a great job, delivering a lot of value. And you can see the results in that chart. And that's a chart that's done independently of us. But we'll continue to -- I mean, I guess what Sean and the team are doing, we've got some of our portfolio contracted much longer than that, 10 years plus into the future. What we're saying is it's about 83% over a 5-year horizon. And as we keep rolling 1 year to the next, we'll continue to do short and midterm contracting opportunistically that makes sense for us. We'll continue to try and form more new partnerships with end users in our key markets, and we're building very strong relationships, long-term relationships with great partners, great customers in Japan and Korea, and we'll continue to do that going forward. Now I'm getting the hook. I believe I'm 50 minutes -- 60 minutes over to you. So I think there's 2 or 3 people left in the line that I'm not going to be able to go to. So I apologize for that, and I look forward to catching up with some of you on a road show over the next week or so. So thank you very much.

86天前Insight Analytics约5分钟阅读

RUSHA 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to the Rush Enterprises, Inc. reports fourth quarter and year-end earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, we will open up for questions. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11. Please be advised that today’s call is being recorded. I would now like to hand it over to your speaker today, W. Marvin Rush, CEO, President and Chairman of the Board. Please go ahead. W. Marvin Rush: Good morning, and welcome to Rush Enterprises, Inc.’s fourth quarter and full year 2025 earnings conference call. With me on the call today are Jason Wilder, Chief Operating Officer; Steven L. Keller, Chief Financial Officer; Jay Hazelwood, Vice President and Controller; and Michael Goldstone, Senior Vice President, General Counsel, and Corporate Secretary. Before we begin, Steve will provide some forward-looking statements disclaimer. Steven L. Keller: Certain statements we will make today are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Because these statements include risks and uncertainties, our actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended 12/31/2024, and in our other filings with the Securities and Exchange Commission. W. Marvin Rush: Thanks, Steve. As we reported in our earnings release for 2025, we generated revenues of $7.4 billion and net income of $263.8 million, or $3.27 per diluted share. In the 2025, revenues were $1.8 billion and net income was $64.3 million, or $0.81 per diluted share. I am also pleased to announce that our Board of Directors approved a cash dividend of $0.19 per share. 2025 was another challenging year for the commercial vehicle industry. Freight rates remained under pressure. Excess capacity continued to be a factor, and customers faced uncertainty around trade policy and emissions regulation. All these factors negatively impacted demand, particularly for new trucks in the over-the-road segment, and also created a more difficult aftermarket environment. Despite these conditions, I am proud of how our team performed. We remained disciplined, generated strong cash flow, managed expenses effectively, and continued investing in the long-term growth of our business. Toward the end of the fourth quarter, we began to see improvement in new Class 8 truck demand. Quoting activity and order intake both increased, and that momentum has carried into the first quarter. We believe a key driver of this improvement has been increased clarity, particularly around tariffs and the EPA’s anticipated confirmation of the 2027 NOx standard. With some of that uncertainty behind them, fleets are beginning to plan for future vehicle replacement cycles again. We also continued to expand our network in 2025. We acquired IC Bus dealerships in Ontario, Canada, with an area of responsibility that includes the provinces of Ontario, Quebec, New Brunswick, Nova Scotia, and Prince Edward Island. In addition, we added a full-service Peterbilt dealership in Tennessee with Trucks Plug Centers Nashville Central. These strategic additions strengthen our footprint and enhance our ability to support customers over the long term. During the year, aftermarket parts and service and collision center revenues totaled $2.5 billion, essentially flat compared to 2024, and our annual absorption ratio was 130.7% compared to 132.2% in 2024. In the fourth quarter, aftermarket revenues were $625.2 million, up from $606.3 million in 2024. Absorption was 129.3% compared to 133% in the prior-year period. While aftermarket conditions were challenging in 2025, we continued to see strength in key customer segments such as the public sector and medium-duty leasing. Our focus on operational efficiency, reducing dwell time, improving parts delivery, and strengthening service execution also supported our performance. Demand remained soft in January, but we are beginning to see signs of improvement. As fleet utilization increases and customers address deferred maintenance and aging equipment, we expect parts and service demand to strengthen. Looking at vehicle sales, we sold 12,432 new Class 8 trucks in 2025, representing 5.8% of the U.S. market. In Canada, we sold 338 new Class 8 trucks, representing 1.4% of the Canadian market. As I mentioned earlier, demand was soft for much of the year, particularly among over-the-road fleets. However, demand from our vocational and public sector customers remained relatively stable, helping offset some of the weakness in the over-the-road segment and highlighting the benefit of our diversified customer base. ACT is forecasting new U.S. Class 8 retail sales of 111,300 units in 2026. We believe the first quarter will represent the trough for Class 8 retail sales, and we are encouraged by recent improvement in order intake. Fleet ages remain elevated by historical standards, and we expect replacement demand to increase as the year progresses. With respect to medium-duty commercial vehicles, new U.S. Class 4 through 7 retail sales totaled 217,412 units in 2025, down 15.6% compared to 2024. Despite that decline, we sold 12,285 new Class 4 through 7 commercial vehicles in the U.S., down 8.5%, significantly outperforming the market and increasing our market share to 5.7%. In Canada, we sold 993 new Class 5 through 7 commercial vehicles, representing 6.3% of the Canadian market. We continue to be pleased with our medium-duty performance. We believe our diverse customer mix and Ready to Roll strategy continue to differentiate us from our competitors. ACT is forecasting U.S. Class 4 through 7 retail sales of 218,225 units in 2026, up slightly compared to 2025. While we remain cautious given weak order intake over the past several months and broader economic uncertainty, we are beginning to see improved quoting activity. We are well positioned to fulfill orders as customers move forward with purchasing decisions. We sold 6,977 used trucks in 2025, down 1.9% compared to 2024. As freight rates improve and prebuy activity builds ahead of future emissions regulations, we expect used truck demand to improve in 2026. Our leasing and rental business delivered another solid year. Leasing and rental revenues totaled $369.6 million in 2025, an increase of 4.1% compared to 2024. In the fourth quarter, lease and rental revenue increased 3.6% year over year. This business continues to benefit from the strength of our full-service leasing operations, supported by strong customer demand and a younger fleet. From a capital allocation perspective, we remain disciplined and continue to return capital to shareholders. During 2025, we repurchased $193.5 million of our common stock. We also announced a new stock repurchase program authorizing the company to repurchase up to $150 million of common stock through 12/31/2026. In addition, we returned $58 million to shareholders through our quarterly dividend program, a 5.6% increase compared to 2024. These actions reflect the strength of our balance sheet and our confidence in the long-term outlook for our business. Looking ahead to 2026, we expect market conditions to remain challenging in the first quarter, but we are optimistic about the remainder of the year. With fleet ages elevated and maintenance needs increasing, we expect both commercial vehicle sales and aftermarket conditions to improve as we move into the second quarter. While we cannot control the pace of the market recovery, we can control our execution. We believe we are well positioned to respond quickly and effectively to our customers’ needs as conditions improve. Historically, when the cycle turns, demand for both new commercial vehicles and aftermarket parts and service rebounds quickly, and we believe the strategic investments we have made over the past several years will help us serve customers better and gain market share. Finally, I want to thank our employees for their hard work and commitment through 2025. This was a very demanding year, and their focus and execution were critical to our performance. With that, we will open it up for questions. Operator: Thank you. And as a reminder, to ask a question, you need to press 11 on your telephone and wait for a name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Brady Lierz from Stephens. Your line is open. W. Marvin Rush: Hey, great. Thanks. Good morning, Rusty. Thanks for taking our questions. I want to maybe start, unsurprisingly, on Class 8. Brady Lierz: As you mentioned in your prepared remarks, we have seen an improvement in orders late in 2025 and here early in 2026. Can you just talk about what you are hearing from your customers? Are you expecting this to be a pretty meaningful prebuy here in 2026 ahead of the 2027 regulations? Just any clarity there would be helpful. Thank you. W. Marvin Rush: Be happy to. The answer would be cautiously, but maybe not even cautiously, but optimistic that yes, there will be a prebuy before we get into the 2027 emissions regulations. You know, based upon not just the regulations, right, but you can incorporate regulations all you want. I was around—well, you were probably still in high school back in 2010—when we went to SCR. We were supposed to have this big, you know, buy and buy. Obviously, it was the worst year in forty years. Right? We had a little economic problem going on, which—so what I am reflecting on is not just the fact that the 2027 emissions, but the fact that their business is improving. And I am not going to get ahead of myself and say it is, like, accelerating or ramping up rapidly, but it is improving, especially over the last ninety days. I do not have to tell you. You know, spot rates have been up. Five to six months ago, most people would have thought going into their contract rates were probably going to be flat. Now people are hoping to get contract rates up, you know, mid-singles. Right? That line between spot and contract has moved nicely with where spot was so much lower before. So, you know, your business has to be good. And I am not going to say it is great, but you at least need to be able to see forward. Right? And that is important. We had so much uncertainty last year with regulations, with EPA regulations, with tariffs, and everything else. So now you can focus on these regulations and do it while your business is, you know, gradually getting better. It may not be reflected in all the first quarter reports, but I think most customers feel that their business is improving. When you talk about—we are talking about over-the-road customers right now because that still is the biggest segment, even though we are more diversified than most folks when it comes to vocational and over the road. But we still need that over-the-road customer to be solid. Right? It is the biggest piece of what you do still. And so combining, you know, some—most—we do not have full clarity, but we know we are not changing it. We know it is going to be 35. The government—when I am talking about NOx and stuff—so we realize that is going to be there. You know, they have not clarified everything, but you pretty much know what the cost is. And, you know, when you are doing something like this, the cost is one thing. It is, you know, a little bit new aftertreatment systems, and I watched 2010 when every particulate filter was clogged up when we came out of SCR back in ’10. I am sure there are a lot of people that still remember that. You know, you can have issues when you come out. So I am just giving you background. So you combine the EPA issue, clarity on tariffs, which has given clarity to pricing throughout this year, which we did not have last year, and their business getting better. So I am optimistic. The issue will be this. The issue will be we are going to run out of time. So, you know, it is already—we are, what, eight days away, nine days—what is it? Ten days away, excuse me, from the end of this month. I apologize. And we will be into March already. So I do expect order intake to remain what we have seen over the last couple months in that range, if not maybe even a little more because I think people are lining up. So I do believe Class 8 order intake is going to continue solid. You have to remember, we had a five or six month run last year, a six month run that was close to being less than the last two months. Five months for sure were close to being less than the last two months. So, I mean, all that—I know it is a long-winded answer, but you folks are used to my long-winded answers. I try to give you a full perspective here. Yes, the emissions piece is there. Yes, that is important. But it is also important that people can at least see a little further in their business and have clarity, which we did not have. So the combination of the two—yeah, I think we are going to get—you know, and I think you may run into a problem with supply side, problem with tier-two and tier-three suppliers. We are not there yet by any stretch because there was a lot of backlog to fill up. But it will be interesting to see where we are sixty days from now. So, I mean, a lot of customers are realizing they better—I think some go—well, I know they are—that they better get it on board now and not wait till summer, or we may run out of—it is hard to ramp up for that shorter period of time. You know, OEMs will ramp up. There is only so much you can do when you do not have clarity past, you know, January 1, really. But I do not see—just going further—I do not see ’27 to be a huge drop off either because we are going to get started. It is going to be—we are going to get started light here in Q1. Okay? There is no question. Lighter than we were last year in Q1. So you start in a hole. So, you know, the year could be similar, maybe slightly up. It is going to be, you know, packed into the back three quarters of the year, should you say? Operator: I shut up. No. That is all very helpful Brady Lierz: color. If we could just talk about parts and service for a second. You know, typically, you see a pretty nice sequential step up in the first quarter compared to the fourth quarter. But has the severe winter weather we have seen this year impacted that at all? Just want to get any thoughts there. And then, you know, if you could just talk about some of your strategic initiatives in parts and service. You know, you have mentioned in the past growing the technician headcount. Just how are those initiatives progressing? W. Marvin Rush: Yeah. Well, I do not—I am not going to say, as I mentioned earlier, January was a tough month. When you ask about the freezes—well, we were shut down for about a week in the Dallas–Fort Worth area, and some other areas, we were—you know, down in the South, they do not know how to handle ice and snow. I can tell you it is not like—you know, it is funny that, you know, cold weather is good for your parts and service business, say, in Chicago. They are used to handling it. They have got snowplows. They do not have any snowplows in Dallas. Nothing iced over five days. Okay? We were almost shut. We really were. We were running skeleton crews. It was detrimental, let me tell you, to our southern stores in some areas. So that is why January was a real tough one. We are starting to see life, a little more life. You know, as I have said all my life, if I could just get rid of November through February—but I am from—you know, we are from the South. We were raised here. We are from Texas. And if I could just get rid of November through February, I would have, except for Christmas and Thanksgiving. But, you know, we are getting to the end of it, and, you know, we are starting to see, you know—it is typical seasonality, I would tell you. It was soft in January. It was soft in November and December, but that is seasonal. That is not something we do not deal with in the past. January was probably softer than it usually was because some of our bigger areas on the Peterbilt side were down, which are further south, got frozen up a little bit. And we do not operate—some of these places do not operate well in that. But I think it is just normal. We got hurt a little bit, but we should come out of it here as the sun comes out and heats up, as we get into March and April. I see no reason we will not, and we are seeing signs in February that things are better than what they were, which is just typical. From a strategic initiative, you know, our mobile service piece is something that we are really big on, and we continue. Last year was a big year for us from a mobile investment perspective. I can tell you we took on, like, $4 million more depreciation in mobile units last year than we had in 2024. So those are investments that we make where the payback comes back over the next five or six years as you ramp all that up. You would like to think it is all immediate, but it is not always all immediate. So we continue to ramp up that piece of our business. It is a larger piece of our business than it ever has been. It was running around 30%. Now it is running, like, mid-thirties or more of our overall business. So, going forward, we continue to believe that is going to be a big piece of what we do outside of our shops. I would say that is the most important. We did go backwards a little bit in technicians in the fourth quarter. But, you know, I think we were—you know, I am not sure exactly why. I am not going to say it was dramatic, so I am not going to make any big deal of it. But, you know, we are focused on continuing to get back to adding especially higher-level skilled technicians as best we can and are doing our best to train the young ones. You would be amazed that, you know, the turnover usually comes in those first-year, second-year folks. And we continue to have programs to work our way through that. But, yes, we will continue to try to grow technicians like we have in the past while we are still doing it profitably. You have to be careful when you are doing that because you have to be able to do it profitably, not just do it for the sake of doing it. You know, we have got some great programs from a delivery perspective. We are running pilot projects. I do not want to get into all that stuff. Some of that is what I consider proprietary. But you can rest assured we are not sitting on our hands. We never have and we never will. We will be out there running out front, hopefully. These are always getting chased, so you have to have something going on. Brady Lierz: Yep. Absolutely. Well, one final one for me, and then I will pass it along. You know, you have mentioned quite a few times just throughout this challenging freight market the last couple of years, one of your priorities has been controlling your expenses—controlling the controllable. You did a nice job of that in 2025, particularly in the fourth quarter. Can you just talk about how we should think about expenses in 2026 given both your focus on wanting to maintain that cost discipline, but also considering we are expecting the market to improve here in 2026. W. Marvin Rush: Right. Well, let me say this. If we get into really—well, I believe we are not there yet—if we can get a growth where we really feel some real growth, I am not ready to declare the claim. And I am talking parts and service growth, not truck sales. Remember, truck sales are—when you go, everybody goes SG&A, SG&A. Well, we run it different. S is attached to truck sales. G&A is attached to all the other expenses. Right? Because S is a variable commission piece driven by what truck sales are. So you sort of have to look at them in two separate buckets. Right? And that is how we do it. And, you know, I would hope that we can maintain our G&A at least close to flat. Okay? That is my plan here. Would be to do that. Now, Operator: half W. Marvin Rush: of the growth—if the parts and service business ramps up, we always talk about the fact that we will spend half of the gross profit growth. Now let me back up a second. Remember this about Q1. Do not comp Q1 to any other quarter. Q1 always jumps from Q4. Okay? You have got all your payroll taxes restarting, and the majority of our equity costs go out—half the equity costs in the company run in one quarter, and that would be in Q1. So if you look at our historical record, it will always show a jump from Q4 to Q1. So do not forget that. I would just compare it to last Q1 because that is always a jump that we have. That is what I would tell you to do, not compare it to Q4. You know, a lot of different things in Q1, like your payroll tax runs down as the year goes on, etcetera. And really, more than anything, the equity costs—the majority, not majority, but half the equity cost in the company—run in one quarter, and that would be in Q1. So, again, do not compare it to Q4; compare it to last year’s Q1. But we would hope to do a good job for now staying close to that number last year. But it is possible that it will ramp up some if our gross profits in parts and service start going up. We cannot just—you know, it takes people to do what we do. People turn wrenches. People drive and deliver parts. People do all these different things. And it is not like I am loaning money here. I am handling hard assets and stuff like that. But I would love to have that problem. So, hopefully, we will continue to see growth. And if we do not, I am planning on keeping it as flat as possible. If we stay flat in parts and service, I am planning on keeping as close as I can, with as little inflation as possible, to where we were. But we are hoping to have some growth. And, like I said, after getting out of January, seeing a little uptick here in February, which started up. But I am used to the seasonality of the business, whether I like it or not. And I just have to deal with it, and, hopefully, we will pop out in the spring like always. Brady Lierz: Very helpful. Thanks for all the color, as always, Rusty. I will go ahead and pass it along. W. Marvin Rush: You got it. No worries. My pleasure. Operator: Thank you. One moment for our next question. Our next question will come from the line of Avi Jaroslawicz from UBS. Line is open. Avi Jaroslawicz: Hey. Good morning, guys. W. Marvin Rush: Yeah. Good morning, sir. Avi Jaroslawicz: So, Rusty, as of where things are standing today—and Andrew Obin: kinda discussed it a little bit already, just there—but what are your expectations for price/cost in the aftermarket business? I think it was somewhat of a tailwind last year, just as you raised prices of inventory to match the cost increases you were seeing. But then there is a lag for when those hit COGS. So how should we be thinking of what—yeah. Should that be a headwind here in 2026? And if so, roughly, what are we talking about? W. Marvin Rush: Yeah. You could have a slight headwind as inflation—you know, with inflation slowing down. Okay? But I do not look at it as it would be monumental. There will still be inflation. It may not be quite as much. You know, inflation can be a tailwind to you when you are doing it if you can maintain. So I would tell you—what, a little bit of a headwind—but when you look at it as a percentage of the whole, it is something that, if you have a growing market, you could overcome without any—without question. So while we will have inflation, I do not expect the inflation from that perspective, from a parts perspective, to be as much as last year from what we are seeing from the suppliers and the OEMs right now. But it will be there. It just will not be quite as much. Hopefully, you know, what we are talking about is the market will get better and grow. You know, the overall market was flat—not just for us, for everybody—or even down. And for some people, whether it is independents or dealer-operated stuff, some of them were negative last year. So, you know, I am hoping that we get into a more—of, you know, as our customer base gets healthier, their spend will be more normalized. You know, you have to think about it like this, the way I look at it. These guys were over three years in a freight recession. And I have been around—I hate to say how long—but I am young. Young at heart. But I have seen a lot. You know, when it gets like that, people do not necessarily spend like they would if their business was normal, when they are in a recession. You saw companies lose money that never lost money. Well, guess what? When that is going on, you are going to put off spend. You are going to add—you know what I am doing? I am adding 5,000 miles to the oil change. You know what? I am not fixing that fender. You know what? I am not doing this. So the health of a customer is the most important thing out there. And, yes, we do a lot of vocational stuff. The over-the-road market is still the biggest piece. And this—even the small—I mean, we have been off double digits from our small customer for the last—each year for the last three years. So, you know, I—and you go, that is bad. Well, that may be bad, but right now, I am going to say, I look at it as a positive. I look at it—it cannot get much worse. Right? It is only one way to go, and that is up. So, you know, I hear you about the little bit of headwind, but I think the overall market, when I look at the possibilities, a healthier freight market is going to be way better than a little bit of headwind. And it is not overwhelming headwind either, by the way. But I still think there is going to be some inflation. There is no question. But other than that, we will be able to hold our earnings. You can see, I think we ran 37% blended parts and service in Q4, which is in line—looking back—with 37.2%, 37.6%, 35.8% actually, the last ’25. So my point being, 37% is solid. And I would hope we could maintain in that same range—blended parts and service margin—regardless of inflation. But, you know, the health of our customer base, especially the largest customer base, the over-the-road carrier—and once the big carrier gets healthy, guess what? The little carrier follows along. And that is where more of your retail parts and service comes from. Not more, but a chunk of it that has been super depressed. And so, to me, I am not trying to get—it is not there yet, but I have seen these cycles before, and I do not want to get too bullish or anything, but if things go according to historical, then I think we should be in fairly good shape to capitalize on that. Andrew Obin: That makes sense. Appreciate that. And then on the medium-duty side of the business, saw a pretty sharp drop off in sales there in Q4. Still better than the industry, but a sharper deceleration than the industry in the quarter. So, you know, how are you thinking about the shape of the medium-duty demand here in 2026? Do you think it is going to be fairly similar to what we see in heavy duty? Or W. Marvin Rush: I do not know. You know, I have some concerns around it, to be honest with you, but I have not seen the acceleration in it over the last sixty, ninety days that I have seen in the heavy-duty side. But a lot of times, you know, the medium-duty business is a lot of leasing and a lot of different customer base. Right? And tied more to the general economic activity of things going on locally in a lot of ways because it is more diversified-type products. Otherwise, leasing and box trucks and stuff—there are a lot of other medium-duty segments that we play into. So we are seeing more quoting activity right now. It has not come to fulfillment as much as the heavy has, but a lot of times, you know, it will be springtime. As we get around here going up with the NTEA and some things like—it is a big conference that comes up, the convention—things like that, where some of these things happen. So I am sure that it will line up historical. You know, I cannot sit here and tell you that we are going to sell lots and lots more. I would imagine we would be maybe based on ACT calling it pretty flat, to be honest with you. We would stay in line with the percentage of the market we are at now. But, you know, I cannot tell you I have booked it all already. That is for sure. But I can also tell you I am not afraid. We have got a pretty good salesforce out there. We represent many brands, Avi Jaroslawicz: and W. Marvin Rush: you know, we feel good. It will come. It just has not really yet for us, to be honest. But the quoting activity has picked up. You have to quote before you can order, and you have to get it ordered and get it built and get it delivered. So I am confident that we will execute in the lines of where we have historically, if not grow it. You know? I have got some stuff going on that I would like to see happen. It might allow us to even grow it, but I do not want to get out and put my skis on. Avi Jaroslawicz: Alright. Appreciate that color. And thanks for the time. W. Marvin Rush: I got you. My pleasure. Operator: Thank you. One moment for our next question. Our next question will come from the line of Andrew Obin from Bank of America. Your line is open. W. Marvin Rush: Russ, this is Steve. Good morning. Well, good morning, Andrew. Steven L. Keller: Just a question. Just going back to something you said. I think you guys were fairly Andrew Obin: skeptical, and there was a big industry debate about ACT orders last month and were they one-time in nature. It sounds like you are sort of warming up to the fact that, you know, orders could actually improve faster. Could you just unpack this for us? Just what are you seeing happening with industry orders over the three to six months? How that is going to play out? Thank you. W. Marvin Rush: Sure. I may be a little repetitive here, Andrew, but I thought I tried to answer. But we believe that, you know, once we got clarity—remember, it started on November 1. Let us get that right. When they changed the tariff rules, took effect November 1. Then we got some clarity a little later after that about, well, we are going to hold on and keep the 2027 rules in place from the emissions perspective, except for we are going to loosen up a few things here. We are going to—probably, and it has not come out yet—but the feds have said we are not going to keep all the warranties. Now, it has not been officially done, but they have communicated to customers and the like that we are going to cut the warranties back. Well, that was more than half the cost. We are going to be a little flexible on credits and how you do that. And I am not the technical expert. So you had all that go down. So that gave clarity. Right? So then customers started looking out next year. They knew they really wanted—they pulled back on purchases last year in the second half. And you cannot do that for too long, or you are going to—you have to bottle that up. Your maintenance is going to go through the roof. Age—your fleet age goes up on these big fleets. So people really started talking, I would tell you, in November. And, you know, in November, I do not remember what it was. It was 18,000–20,000 units. I cannot remember. But it was picking up, and we had a big December—38,000–40,000, I think—and then it was 30,000 last month. Well, at the same time, as I said earlier, people’s businesses—they started being able to see your tender acceptance rates came down from 98% acceptance to low 90s—even in the high 80s—which started to drive, you know, your spot market up. And it is not just weather that did it here recently. And people felt better about where they were at from, you know, in contracts going forward. There has been a little bit of tightening. Right? So that gives you—and people worry, is it sustainable? Right? The first thirty days. And now I am going out on a limb. Maybe I am going to be wrong. Maybe it is not sustained. I have a feeling that after three and a half years, it has got to be somewhat sustainable, if not gradual. Right? But sustainable, whether it is not some spike but a gradual sustainable improvement in their business. You tie that in with now you have got clarity. You know where it is going to be at the end of ’27. You may have slowed down on some purchases—some companies did—in ’25. Well, you know, that is why I think you are going to see some good order intake this month. Also, I am just guessing—it is a short month—but it will be solid. I do believe it. It is a short month because we know February, but I would expect it still to be solid, from people I have talked to. So, you know, I think what is going to happen is, as the backlogs fill—and I do not know for everybody because I have heard of one OEM that has shut down weeks here in the first quarter. Not anybody I am dealing with, I do not believe, but I have heard of one OEM that has, and I do not want to get into all that. But my point being, I know for people that I am dealing with, they are filling up. Not filling up, but you are getting orders. You are building a backlog. Most of them spread over time. So I just believe—I could be wrong—it is just my gut and maybe touch with the market, that yes, it will continue because people are feeling their business is not great, but they do not feel in the dumps. Sometimes when you have been living in the swamp—in the dumps—it does not have to get a whole lot better to make you feel better. And it has been three years of prolonged freight recession, but at least now you have to believe, you know—because remember, the first thing that happened is capacity is coming out. Everybody reads about non-CDL, or noncompliant drivers—there has been taken out here and there. And they have. But that is not an add-water-and-stir thing. But as that goes on, you take—you have less intake of trucks. Remember, we built a whole lot less trucks in the back half of ’25 than what we did in the first half. So you slow that spigot down. You start taking some of those noncompliant CDL drivers out, and you start squeezing the capacity piece. Then, all of a sudden, business starts getting a little better. Economically, it looks a little better. The ISM stuff looks better. I mean, there are a lot of things Andrew Obin: that W. Marvin Rush: tend to make me believe, along with emission regulations coming January ’27, we are going to have a pretty good last three quarters of the year. And I am not predicting doom and gloom after that, but it is a little far out for me to understand right now. I am just dealing with what I have got in the present over the rest of this year. We will talk about ’27 as we get halfway through or a little further through the year. But I feel good that it is sustainable and will lead to maybe even a better year. The problem is you start off—remember, the first quarter is going to be off. So you are starting in a hole to begin with. So you have to climb back out and then catch back up, which you should do for sure in the back half of the year—deliver more trucks than we did last year. For sure. Andrew Obin: Great. Rusty, and just a follow-up. I mean, it clearly seems that the improvement over the road is finally driving your optimism for the rest of 2026. You have alluded to other parts of the economy getting better. Can you just talk about off-highway, which has been such a moneymaker for you over the past year—sort of got you through the drought? But maybe, you know, if we could talk about, you know, sort of these corporate fleets, if we could talk about construction, if we can talk about waste. What are you seeing in those markets? Because those tend to be economically sensitive as well. But, as I said, it seems to us that your message is very clear on finally starting to see green shoots on over-the-road recovery. W. Marvin Rush: Yep. Very well put, Andrew. Yes. Seeing them on that side of the margin. Avi Jaroslawicz: Yes. W. Marvin Rush: You know, we love the diversity of our customer base. You know that. I would tell you the vocational pieces—I do not see the pickup that I see across, but I can see fairly flat to where we have been. Because we have been pretty solid in it. I have to be honest with you. So, as you said, it has helped us a whole lot over the last couple years. When there is an over-the-road freight recession, we have been really solid around that area. So I think that—let us say, I do not want to get into specifics. We might be a little softer in one segment, up a little in another segment. But when you look at vocational as a whole, I am going to say we are going to be probably flat with where we have been. I do not see any huge decrease or any—you know, we may—because some of them, we were still catching up from COVID the last couple of years, when you could not get trucks three years ago. So we have fulfilled maybe some of that or the pent-up demand. So now it is more like business as usual. But I do not see any big downtick. It is more back to business as usual. Some of the people we do business with were playing catch-up in ’24 and ’25 from not getting as much product in prior years, to be honest with you. So, you know, where they may be off a little, it is not off because they are off. It is off because they played a little catch-up, and we were able to capitalize on that. So when I look at those businesses, they are doing well, but they have caught back up to their normal replacement cycles. They got left out a little bit—some of those groups got left out back in ’22 and ’23—and then we picked them back up in ’24 and ’25. So just because someone may have bought 900 from me or something, and they are buying 750–800, that does not mean business is bad. It just means they have caught back up. Right? So you have to report. But I think, overall, we will be somewhat flat in the vocational pieces. Andrew Obin: Thank you, Rusty. It has been a while since you have been constructive about over the road. Good to hear. Thanks so much. W. Marvin Rush: Yeah. Well, it is nice to feel—even though it is the big piece, you know? But for us, vocational is big as well. So thank goodness. It is nice to feel that you have got an opportunity to maybe—you know, and I hope when I say over the road, I am hoping our small base comes back. I am a little Avi Jaroslawicz: a little W. Marvin Rush: optimistic there. I do not want to get overly anything. Wait till I talk to you in April, and I will have a whole lot better feel for what is going on—the sustainability of what we are seeing. And I am not trying to overwork it. But, like you said, it has been a while since we have been able to talk optimistically about the over-the-road business. And I am just looking forward—I think things are going to be better. So you add that with everything else we have got. In Q1, this is—we are just taking out—people get excited because they always say orders taken. Orders taken does not mean trucks delivered yet. We are the tail of the dog. A lot of times, we have to do a lot of upfitting and things like this to trucks when we get them. So that is why, when you hear me talk about, well, he took orders for us—well, that does not mean I am going to add water to the furnace and deliver them thirty days later. It could take three, four months to get them out there and get them delivered because of what has to be done, because we are the last guy that touches the end user. So, even though they are manufactured, we have upfitting places around the country where we make sure that we do all those things that customers need. A one-stop shop. That is where we like to be. Andrew Obin: Thank you. W. Marvin Rush: You bet. Operator: Thank you. And as a reminder, to ask a question at star 11, star 11. One moment for our next question. Our next question comes from the line of Cole Cousins from Wolfe Research. Your line is open. Andrew Obin: Hey, guys. Thanks for taking my questions. W. Marvin Rush: From a Class 8 Andrew Obin: pricing perspective, can you talk to what you are seeing across the market at this point? Are OEMs raising Andrew Obin: prices yet, or does it remain pretty competitive Andrew Obin: as OEMs look to protect or gain share, and maybe how do you see this progressing through the year with EPA ’27 on the horizon? W. Marvin Rush: Yeah. You probably did not do real well asking that question to the OEMs, did you? Okay. So you are asking me. You put me on the spot. I would tell you right now, we are still building backlogs. I would say, you know, there is no big discounting going on compared to where we were, but there are no huge raises now because that is one of the things. As we get later in the year, I would not be surprised to see—if supply and demand—if demand exceeds supply, you have been around long enough to know what that means. I will not even try to tell you. Everybody knows what that means. Okay? And so we are not there yet. Backlogs need to be built up. They have been drained down pretty good. People were building trucks in four weeks for you if you wanted it. So, you know, once backlogs get built up, we will let the OEMs decide, and we will be the poor guy in the middle trying to get deals done. But right now, I would say we are in the—OEMs are still in the process of getting their backlogs more healthy. So I am not going to say it is total cutthroat out there right now because it is not. But it is balanced at the moment. But if you start popping two or three more 35,000–40,000 months—which are not necessarily typical of these months coming up; in March and April, you are probably going to see demand obviously outpace supply, and I will let you take it from there. Andrew Obin: Okay. Yep. That makes a ton of sense. And just—I know we have asked a lot of questions about this—but to follow up on Brady and Andrew’s questions, maybe to put a finer point on it, how much of what you saw in December and January do you think was replacement CapEx versus growth CapEx versus some degree of prebuy activity? And if it was some degree of prebuy activity, can you maybe talk to the risk of potential order cancellations late in the year if things maybe are not as good as they seem and customers are trying to get in line ahead of EPA ’27 as backlogs start to build again? W. Marvin Rush: I feel very good about how solid what we took was. How about that? I see nobody out there trying to put placeholders. The business we took—it would take a recession or something for these folks not to take what they ordered. That is how solid I feel about it. It is not people putting placeholders. You have seen ramp-ups before where people put placeholders out there just so they can hold slots. That is not what is going on at the moment. I see none of that, to be honest with you. I see people being proactive, understanding what I just went through on the last question. They do not want to get caught in that demand-out-of-whack demand-supply piece. You know what that means. We already know what that means. So they are trying to be proactive, not just to the emissions, but also knowing that it is probably going to back up—whether you can get that second- or third-tier supplier. And that is what—I hate to say it, but you know what happens when demand outpaces supply—where price goes. Let us get real. So I think people are catching up. They probably did not purchase as much in the back half of last year because they did not. And, you know, the best way I can tell you is it is solid. I go back to—remember what I kept telling you—their business is better. I have said that three or four times also. It is not just emissions. Not just the emissions. You asked about price. I will answer it the same way. Their business is better. You have got emissions coming. You feel better. Like I said, you have been in the dumps so long—it is not a straight V, but it is a gradual climb up. You feel good about where you are at. You are trying to plan for your future. You know you are going to be in business for a long time, and you need to do the right thing. And you just put that together, and I think that is what you are going to see. That is what you are seeing, and I do not believe that activity level is going to Andrew Obin: to W. Marvin Rush: go away. It may not be 35,000–40,000 every month, but some people that are not participating are going to wake up here in sixty days if we have a couple, three more months of order intake like this and go, whoa. And that is what—you asked about price. That is when we are going to see how things move along then with that. So I would tell you that the folks that are on top of their game, feel well enough about what is going on, are doing the right things for their business plan and not waiting till the last minute to do that, knowing that there still is plenty of backlog out there still to be built. You better not wait till July would be my comment, or you might get caught, because ramping up production—I mean, Andrew Obin: these W. Marvin Rush: OEMs are having to make decisions right now, in the next thirty to sixty days, what they are going to do in the back half of the year. You have to remember that is more labor. That is more this. And it is the second- and third-tier supply chain that has been down in the last half of last year that you ask them to ramp up. They are going to go, well, how long for? And that is where you run into a problem. And that is what could happen. So, you know, if I am planning on being in business around a long time, and I am a smart player, then I am out working it right now. Okay? That is what I am doing. Because, you know, that could be an issue. It is not an issue now, but you better be looking out. You better not be living just in the moment. You better be looking out a little ways would be my comment to anybody. And I am not trying to play scare tactics. I am just telling you that you run into issues with that. And we will just—I think, if I am not mistaken, the engine’s build is the ’27 mark—not model year, but—one thing you have to remember: when you get towards the end of this year, it is about the engine. The engines all have to be built by the end of 2026 before you go into 2027. So it could be an interesting back half. Let us just say that. How about that? Andrew Obin: That makes—that is good color. I appreciate it, Rusty. And maybe if I could squeeze one last question in— W. Marvin Rush: Of course you can. You know I hate to talk. Andrew Obin: I heard you on the small accounts being down double digits for the past couple of years. It sounds like that has not really come back yet, but maybe there is some hope that it will through the year. But maybe can you talk to what you have seen from the national account level and, from a higher level, talk to some of the initiatives you guys are pursuing to grow national account mix going forward? W. Marvin Rush: Yeah. You bet we are. We always were. You know, national accounts—it is easier, more effective, and more controllable. It is hard to control what we call the unassigned accounts. That is still 30% of our business, roughly, and that is the little folks. Right? So we just want that to come back because that is going to be a higher margin. When you do national account business, understand they are national for a reason. They are not paying retail. So, while it can be a little hard on your margins, it is still more solid, sustainable, repetitive business, should I say. So you are looking for that foundation. The cream and the cherry on top comes when you get the small retail guy back in the game—the guy that is not listening to me on the phone right now. Those folks. They are still a part of what we do. But our national account business was up—not as much as we had been up, but it was up in some sides of the house—not so much in others—but overall, for last year. We will continue to focus on that. And we were up—not as much as we had. We were up by, like, overall blended, all OEMs were above 6%. So we will continue to grow that, understanding that you are blending revenue, you are blending margin, you are doing all that. We love that piece. We are going to continue to focus on that piece. It is the sustainable piece—more sustainable. It does not have the volatility of the small customer out there. So—but that is why I am hoping. But you have to get those guys—the national accounts—have to feel better, which they do. They will buy all the time. They just may not buy quite as much sometimes. We were up six years before—we were up double digits. Again, like I said, you are growing the revenue. Margin is not as high as the other. We work the blended margin. But I think everybody understands that. And we are fine with that. We will manage that piece. It is much more manageable for me than unassigned accounts because they are not assigned. You really do not know who they are. Small firms. But, hopefully, later this year, as the big guys get healthy, the little guys usually follow. But then they get growth. Then what happens is they get too good. They get too big, and we go back in the cycle again a couple years from now. So, right now, I would tell you, I am hoping that some capacity still comes out, which hits the small guy, but the ones left will be our healthier customers. And we will see some pickup in that later this year too. As rates go up, it helps everybody. Not just the big guy. It helps the little guy too. I know it is a long-winded answer there, but I hope I gave you some points there that you are going to grab hold of that make some sense to you. Brady Lierz: Yep. Okay. Yep. That is helpful. Good to hear from you guys. I will turn it back. Avi Jaroslawicz: Thank you. Operator: Thank you. I am not showing any further questions in the queue. I would now like to turn it back over to Rusty for any closing remarks. W. Marvin Rush: Hey. We appreciate everybody’s participation this morning. It is a short time before we talk again. We will talk in April. So, thank you. Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

86天前Insight Analytics约5分钟阅读

MVRBF 2025 Q4 财报电话会议

Operator: Welcome to Medivir Q4 Report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Jens Lindberg. Jens Lindberg: Please go ahead. Thank you. Welcome, everyone, to the Medivir quarterly results webcast. We look back at a very eventful quarter marked by great progress and very optimistic outlook to the future. And today, we very much look forward to sharing more details about the great progress, but also -- in our pipeline, but also how we see the future shaping up for the company. If we look back at the quarter, thanks to the recently announced directed share issue to Carl Bennet AB, we're able to add another program to our in-house pipeline as it enables us to initiate the clinical development with MIV-711 in osteogenesis imperfecta, which is a new and strategically important indication for us, and it has comparable market opportunity as we're already seeing with fostrox in liver cancer. The news also comes on the back of MIV-711 being granted orphan drug designation by the FDA. Our second in-house program, the collaboration with Dr. Chon and the Korean Cancer Study Group continues to progress very well. And among other things, the 8 hospitals that will participate in the study have been selected and are eagerly looking forward to get going with the study. And then finally, when it comes to our partnered programs, we've seen very exciting news from our partner, Vetbiolix, with the published landmark proof-of-concept study for MIV-701 in periodontal disease in dogs. But perhaps even more importantly, they have already recruited, as recently announced, 20% of the subjects in their next study, which will be the key study to confirm that MIV-701 is the first disease-modifying treatment, which is also then the critical step to unlock its blockbuster potential. If we take a look at the pipeline, we do have a broad pipeline of first-in-class programs, all of them targeting populations with significant unmet medical need and programs that have the ability to potentially transform care for patients. And today, we'll focus on 3 of the programs. Those have been highlighted here in green, 2 in-house programs and one of the out-licensed. Please note, I made a slight, slight change to the MIV-711 line as I've had some questions today. Just wanted to clarify that the next development step in osteogenesis imperfecta is in osteogenesis imperfecta patients. We don't see a need to do any sort of further healthy volunteer work as a Phase I asset because we've already done that as part of our OA program. So the next step, clinical step is in Phase II and a Phase II proof-of-concept study. Important information, and you'll see that when you access the presentation on our website. Today's presenters here in the room are apart from myself, our Chief Medical Officer, Pia Baumann; and our Chief Financial Officer, Magnus Christensen. And joining us for the Q&A is our Chief Scientific Officer, Fredrik Oberg as well. So with that, let's move into the meatier part of the session, and we'll start with MIV-711, then on the back of the recent directed share issue and what that will enable us to do. And Pia will provide a bit more background on the disease and why we think there's exciting opportunity for MIV-711 and how we see things progressing going forward. Pia Baumann: Thank you, Jens. So just start with what is osteogenesis imperfecta. And it's a mainly inherited rare disorder where 85% have a mutation in the genes that actually is what collagen 1. And this results in varying degree and severity of the disease, and it could also impact life length. There's a significant unmet need in this population because there are no systemic treatment approved, and for the disease itself, it's characterized by, you have defective bone and cartilage causing that the bones becomes fragile and stiff. It's also called -- maybe you recognize this as brittle bone disease. And this leads to that you will have frequent fractures. Depending on the type of OI you have, I will come back to that, it leads to deformities, pain and impacted mobility. So bisphosphonates are used off-label, and it's often used in growing children to reduce the risk of deformities and particularly in the vertebral spine and also to reduce pain and improve final adult length. So that is the background. We can go to the next slide. So the next slide is showing the different types of OI. And these subtypes are divided into 1, 2 and 4 primarily for those who can actually be suitable for treatment, and it's divided due to clinical severity. So I've already said that it's a heterogeneous disease, which means that there's multiple different types. And some of them are actually not -- they are little like the type 2 and the others that are in the sort of below part of this slide. So we're only going to talk about type 1, type 3 and type 4, which are the main types. And type 1 is mild, is considered mild, but it could also be very different depending on how it actually is displayed in the different patients. And this is making up around 50% of all OI, and they have usually normal height or can have a short stature depending on how severe it is in that type and actually have up to 30 fractures during a lifespan without any treatment. So when we say it's mild, it's still considerable impact on your quality of life. Type 3, which is the next one is severe with the patients having considerable reduced length or stature with deformities and severe scoliosis and can have up to 100 fractures during their lifespan. And type 4 is somewhere in between. It's called moderate and they have -- they are usually short and have variable form of deformities and scoliosis and can have up to around 50 fractures during their lifespan. So this is sort of what we have to work with in. These type 1, type 3 and type 4 would be the types that are considered also for treatment with MIV-711. We can go to the next slide. So just to put the effect of this OI mutation in context, as I said, it's causing mutation in the collagen 1 gene. And to put it in the context of what normally is going on when it comes to building and maintaining strength and functionality of our bone and also to briefly explain what molecular players, as you see here, that are involved in normal bone remodeling, which is -- it's a continuous process that essentially removes the old bone and replaces it with new fresh bone and minerals. And this is a simplified picture as you see here. And there are essentially 2 players. It's the osteoclast and the osteoblast. And then you also have an enzyme cathepsin K, which is what we are inhibiting. So the osteoclasts are the ones that are responsible for resorbing the bone. And normally, it's the old bone, right? It secretes an enzyme, that's the cathepsin K. And that cathepsin K cleaves and degrades type 1 collagen that is the main component of the bone. Then the osteoblasts are responsible for the production of new bone matrix and mineralization because when you have eaten up the old bone, you can replace it with new fresh bone. And the coupling between resorption and formation of new bone are crucial for maintaining this healthy bone, and this is the interplay that is impacted in OI. We can go to the next slide. So in OI, which affects type 1 collagen, I'm saying it a couple of times here because it's -- this is a little bit complicated. The type 1 collagen is the skeleton of the bone, and it maintains flexible strength and normal mineralization, healthy bone. It is a major component of the bone making up to around 90% of the bone matrix. And the OI mutation leads to reduced or defect type 1 collagen, resulting in this imbalance between the osteoblast and the osteoclast interplay that we showed on the previous slide. And this results in increased bone resorption and reduced formation of qualitative bone. And we have also seen in studies increased level of cathepsin K in pediatric studies, which also sort of -- is what we are trying to inhibit in order to restore this balance. We can go to the next slide. So we have the cathepsin K inhibitor MIV-711 that is highly selective on inhibiting cathepsin K. And this could, as I said, restore the balance between the bone resorption and the bone formation in OI. So by inhibiting cathepsin K, the degradation of type 1 collagen can be prevented. The increased bone degradation activity can thereby be inhibited selectively while still preserving the continuous bone remodeling that you saw on the first slide, the interplay and coupling between the osteoclast and osteoblast. This results in the restoration of the balance between bone resorption and bone remodeling to ensure best possible quality of bone in OI. So this is the hypothesis behind this. And we can go to the next slide. So as I said, there are no approved systemic treatments in OI, and MIV-711 have a different approach to those used off-label or are under investigation. So MIV-711 inhibits, as we said, cathepsin K and effectively prevents bone resorption while saving osteoclast functionality and preserves this bone remodeling. This is really, really important, this fact that we have the interplay impact. While, for example, bisphosphonates that are used off-label prevents bone resorption by killing off the osteoclast. And then you also lose the function and the coupling and the bone remodeling. And this creates a negative impact on the formation of new bone. So essentially, you keep the old bone that you have, but you inhibit more resorption. Anti-sclerostin has been investigated in OI. And recently, in December, they announced that their Phase III study had failed. It has been investigated due to the fact that it seemed to be effective inducing new bone formation and also have an indirect reduction of bone resorption. However, the benefit diminished already after 6 to 12 months due to induction of, if you call it, escape pathway or feedback loops that makes it more or less -- ineffective. So this is sort of where we are with other treatments that has been used or are under investigation in OI. So we can go to the next slide. So what do we have? What data do we have that makes us believe that MIV-711 could be very important for these patients. And that is that cathepsin K inhibition has shown significant benefit across multiple bone-related disorders. In OA or in osteoarthritis with MIV-711, it shows a statistically significant improvement in preventing bone and cartilage degradation. And other cathepsin K inhibitors have shown benefits also in osteoporosis with reduction in fracture rate and improved bone mineral density. So -- and just to say that osteoporosis itself shares commonalities with OI such as bone fragility and bone mass loss. That's why this is important as well. And we have also seen a significant and dose-dependent improvement in bone volume and quality versus placebo in osteogenesis imperfecta mouse model. So in essence, the clinical benefit that we have seen of cathepsin K inhibition, this is really supported by the proof of concept in this OI mouse model, and it indicates for us that we would have a high likelihood of success in OI. And that's why we can go to the next slide. We are now initiating or planning for a Phase II proof-of-concept study with MIV-711 in OI that eventually will inform the next pivotal development phase. This study will enroll about 20 patients randomized to 2 arms of MIV-711 with a high dose and a low dose. And the patient will be treated orally. This is an oral compound, and it will be given once daily for 12 months. And the endpoint will include biomarkers for bone resorption and bone mineral density, PK, safety, et cetera. And enrollment is planned to take place at sites in Europe, and there is a huge advantage when it comes to include these kind of patients into a clinical trial, and that is that the patients are already identified and known at the sites why we are hoping that enrollment will be really, really fast. So I will leave it there to Jens. Jens Lindberg: Thank you, Pia. And I think the feedback that we've gotten from KOLs so far is that these patients are also quite eager to participate in clinical studies due to the significant unmet medical need. So from a commercial viewpoint, if we take then the next step in terms of estimated prevalent population, candidates for treatment, et cetera, then we are looking at somewhere around roughly estimated 80,000 patients across EU, U.S., Japan and Korea. And Pia broke down earlier the subtypes, which is type 1, type 3, type 4, there is a subgroup of type 1 that are many times not diagnosed because they might be too mild. So what we're estimating is that 2/3 of patients are potential candidates suitable for treatment options and to be included in the study. So that leads to -- because of the significant unmet medical need, no approved treatment options. We had anti-sclerostin antibody failure in Q4, and Ultragenyx are looking to scale back. So the opportunity for to be the first approved treatment option is definitely still there. So when we estimate that market opportunity across the market, we're looking at least a USD 3.5 billion annually commercial opportunity. And this is in these regions. It's a bit more difficult due to prevalence not having prevalence numbers in countries like China, but there is no reason why there would be less patients in China. So that's a potential upside opportunity. As the U.S. administration has recently voted to prolong the pediatric disease designation program, we will, of course, move forward and file for that. There's precedent to receive it. And with that comes then, of course, the potential for a priority review voucher. So to sum up, we do have a highly selective cathepsin K inhibitor that across multiple bone-related disorders and including our own mouse model work in OI signals potential benefit with regards to improving bone volume, improving bone quality, preventing fractures. And as we now move with speed to initiate the Phase II proof-of-concept study, there is the potential to be the first approved treatment options in this -- for these patients. And as mentioned, the total market opportunity is significant. I would argue conservatively estimated at $3.5 billion across key markets then with other markets outside of U.S., EU, Japan and Korea as potential upside. So with that, we'll stop with regards to MIV-711, and we very much look forward to sharing further progress as we continue to work to design and get the study up and running. And we'll move to our second in-house program, which is fostrox, which continues to be just as important as it was before, and we continue to move with as much speed as we were before with regards to initiating the FLEX-HCC study as the next step. And Pia? Pia Baumann: Thank you. And I'm happy to share again that the collaboration with Dr. Chon and the Korean Cancer Study Group is progressing very well. It is super positive to see that the interest in participating in the study has been considerable. And we don't know about the process in selecting this, but we know that there are many hospitals that wanted to participate. So now 8 hospitals have been selected. Importantly, among this, as you can see on this map here, the 3 largest hospitals, Samsung, Asan and Soul Natural have all committed to this study, which is a real quality indicator. This is also a testament to the fantastic work done by Dr. Chon and his team at Bundang Hospital, and we are more than pleased with the collaboration and actually the process that is ongoing. And I'm sure you already know this, but I'm going to say it anyway, as with all studies, formal study approval processes is needed, and it's ongoing also here. And when it's completed, the investigators are eager to start recruiting patients and very much also due to the fact that there are no other studies ongoing in second-line liver cancer in Korea currently. And the unmet need, as we have talked about so many times before, after progressing or intolerance to immuno-oncology, the unmet need is super, super high. And when we know more about exact when the recruitment will start, we will, of course, communicate this with you. So as a little bit of a reminder for -- I'm sure that you have seen this a couple of times now. This is the study design. And as I said, we have 8 hospitals selected. And with these 8 hospitals, as I said before, the 3 largest ones, this really support that we will have a speed of enrollment of the patients and an ability to generate top line results already in 2027. 80 patients will be enrolled in the study. As I said, they have -- all will have received prior immunotherapy combination, and they will be randomized to either fostrox plus Lenvima or Lenvima alone. They will be assessed for response every 6 weeks with the CT/MRI scan and the primary endpoint will be overall response rate. And importantly, also, this overall response rate will be evaluated by a blinded independent committee to ensure that we really have quality results coming out from this study. So I will give it back to Jens. Jens Lindberg: And without going into this one, I will just say that there continues to be an almost complete lack of movement and progress when it comes to second-line advanced liver cancer outside of our program. So in terms of where we are and in terms of what we're moving forward, we are at the forefront and continue to aim to pace to be the first approved treatment option for these patients. Let's move into the final bit before we take the financials and the Q&A. So just a few notes and slides on the program that is called VBX-1000, which is the Vetbiolix name for MIV-701 and the progress that they have made over the past quarter. So just to provide a little bit of a background, this is also a cathepsin K inhibitor, but suitable for use -- not suitable for use in human, but suitable for use in animals. Vetbiolix, a French biotech -- veterinary biotech company in-licensed it. And they are developing it as a first step for periodontal disease in cats and in dogs. And you see picture here in terms of what it is. So basically, periodontal disease leads to a lot of pain. It leads to tooth loss, it leads to infection. There are no treatment available to stop the process today. And as it progresses through the steps, basically, surgery will be a removal of tooth, which is troublesome, painful and quite expensive, will be the final step of the process. And there are no treatments available. And MIV-711 is the one and only disease-modifying treatment candidate in development as we speak. And they recently presented the first proof-of-concept study. The study actually looked reasonably similar to the one we showed before on MIV-711 in osteogenesis imperfecta, 2-arm study, 10 subjects in each arm, high dose, low dose. But most importantly, they showed clear evidence of potential for disease-modifying benefit, significant effect on biomarkers, but also significant effect on bone parameters such as alveolar bone loss, et cetera. So very encouraging first step and no safety concerns. They are now then moving forward. And just to take a couple of seconds to talk about the potential financial upside here for us as a company. This was out-licensed a few years back. The agreement is quite backloaded in the sense that there are quite small milestones throughout the process, but a healthy share when it comes to royalty revenues and potential partnership payments if Vetbiolix out-license the compound. And the question is then how big of an opportunity is this for a potential bigger player in the animal health field. The dog population is today estimated to be 90 million in the U.S., 70 million in EU. And as many as 80% of those dogs over 3 years of age will suffer from periodontal disease. Some animals, it will be quicker and some animals, it will be slightly later. But as many as 80% will suffer from periodontal disease by the age of 3. Again, no unmet -- so no approved treatment options, providing for a significant unmet medical need. No other treatment options in development to compete with MIV-701. So for us, there is a significant financial upside, which we haven't talked about that much before, and we didn't feel it was necessary until they now move into this step because the step that they are now taking is the critical step to unlock the potential. And for us, significant upside through royalties and potential partnership -- share of partnership payments. We've done in our estimation, in our modeling the annual royalty revenues if this hits and this becomes launched as the first disease-modifying treatment option, the annual royalty revenues that we would anticipate after a global launch are equivalent to the company's current market cap. So it's a sizable upside. And it is the next step, which will basically -- no, I'm looking for a good word. It's the next step that will show whether this potential is there or not. So they have -- we recently announced that they have initiated a randomized, double-blind, placebo-controlled pilot study in dogs to confirm the efficacy. They've included 10 dogs to date out of 51 in total. So 20% of the dogs have already been included quite quickly. And Vetbiolix have announced that they are expecting the top line results already this year during quarter 4. So that will be basically the determining factor as to whether the blockbuster potential is there and if the potential for the financial upside for us. But the data that they've shown in the proof-of-concept study was quite convincing. And if you look at the size of the study here and the number of patients, it's a relatively small study, which is a testament to the -- looking for a word now, not the potential, how confident they are in the efficacy they saw in the proof-of-concept study and the likelihood of this reading out positively. So we're very much looking forward to following the recruitment process and the readout of the results. With that, I will stop on the programs, and we'll move into the financial highlights and Magnus? Magnus Christensen: Thank you, Jens. Can you please turn to Slide 27, where you can see the financial summary for quarter 4 and for the whole financial year 2025. And as always, all numbers are SEK million. The revenue in quarter 4 was a bit higher than the previous quarter and is primarily related to the out-license of remetinostat and of course, royalty income from Xerclear. Other external expenses were significantly lower in the quarter as it has been throughout the year, and it's reflecting lower clinical costs for the year. Personnel costs were slightly higher and it's primarily due to provisions for the personnel under notice of termination that we had in the quarter 4 this year. And during the period, we booked the write-down of the birinapant project of SEK 29.8 million, and this has no cash impact on the company. So it's more a book written down value. The operating loss for Q4 amounted to minus SEK 42 million, higher than last year, but is related to the birinapant write-down, as I mentioned. And the cash flow from the operating activities in Q4 was approximately minus SEK 6 million. We have a strong financial position at the year-end. We completed a rights issue, raising approximately SEK 151 million before transaction costs, which meant that our cash balance at the year-end was SEK 119 million. In addition to that, as Jens mentioned, we completed a recently directed share issue of SEK 45 million to Carl Bennett AB, enabling the continued clinical development of MIV-711 in osteogenesis imperfecta. And with this, I will hand back to Jens. Jens Lindberg: And I think that concludes the presentation. And operator, we can move into the Q&A session of the call. Operator: [Operator Instructions] The next question comes from Richard Ramanius from Redeye. Richard Ramanius: I have a few questions on which of your candidates or each of the new candidates. Could you give us some more details about the way to the market for MYB-711? What's more need to take it to an approval? Jens Lindberg: Basically, we see -- the good thing about osteogenesis imperfecta as a treatment from a regulatory pathway point of view is that the anti-sclerostin antibodies and the recent interactions they've had with FDA and other regulatory authorities, it paves the way and shows the way in terms of what is needed. So we see basically, I would arguably a 2-step approach, i.e., the first step is establishing the clinical proof of concept, which we are doing with this study. That takes us into a pivotal phase of development. So then the next phase would then be a larger, and I say larger than sort of 2020 size of that study doesn't need to be super large, but we need to continue to do some work. But the next phase would be pivotal phase. And I guess the one outstanding question that needs to work through, this is adult program -- adult and pediatric population is whether we can combine the 2 populations in one study or whether we need to run them as sub-studies or separate programs. But the next phase would be a pivotal development phase. Richard Ramanius: Okay. And could you give us some more details about the royalty agreement you have on VBX-1000? Jens Lindberg: I mean we haven't communicated any in terms of any numbers before. What we have said is that the development milestones, the regulatory milestones right now, including also approval milestones, they are small, I would even say, minor. When we made the deal with Vetbiolix, there was a focus on having a healthy share of royalties and potential partnership payments or out-licensing -- share of out-licensing from Vetbiolix. So we haven't disclosed the percentage, but it's arguably a very healthy percentage, and that's what we focused on. So when I say -- when we do the calculations on the compound having the opportunity to generate as a disease-modifying treatment for us, royalty revenue stream, annual royalty stream of -- in line with our current market cap, I am also not including milestone payments from potential partnering deals that Vetbiolix does. So if they out-license and they generate upfront, they generate milestone payments, we will also take a healthy part of that share as well. Richard Ramanius: Final question. What is the runway after the latest funding? Magnus Christensen: Richard, I mean, as I said, we have a strong financial position at year-end and with the directed issue to Carl Bennet. And as we stated in the Q4 report, we assess that existing cash resources are sufficient to cover the planned Phase II study in liver cancer and osteogenesis imperfecta. And that's according to our current plan assumptions that we have today. So I hope that answers your question. And before we said, I mean, rights issue, we had money end of '27. And with the directed issue now, of course, we have -- according to the plans, we have cash runway into 2028. Operator: The next question comes from Klas Palin from DNB Carnegie. Klas Palin: I would like to start with MIV-711 and this proof-of-concept study. Where do you stand when it comes to preparations? And perhaps also, I noticed that it's a 12-month treatment. How long -- even though Magnus indicated that your cash runway was into 2028, but how long do you think the study will take to finalize? Pia Baumann: Good questions. So when it comes to the preparations, I'm sure that you saw the press release when we got some financial from Carl Bennet, which means that we have actually planned for this study before, but we obviously need to do all the preparations that you need to do when it comes to studies. What we are doing currently is that we are pulling together a scientific expert council to get external advice. This is a disease that has many different aspects on it since it goes from pediatric until adulthood. And we need to understand thoroughly what kind of patient population we should include in order to get the results that we are requiring for proof of concept. That is the first one. The treatment time for the patient is 12 months, and that is to get to the primary endpoint that we will select. The benefit for this trial I would say that usually is not in place in other trials and particularly not in oncology trials that we have been doing before is that the patients are already there. They know who the patients are since the majority of them has been diagnosed already at birth or before birth since it's a dominant [ inheritage ] of this genetic mutation, which means that since they're already in place, you can go to those sites you want to go to and they more or less can give you the patient at once. So the enrollment time is usually really short in this kind of stats. Jens Lindberg: The other element to comment on one of the timing challenges many times in studies like this is the CMC element. One of the benefits is that we do have active product ingredient with MIV-711 since before that we can use. And so there's no need to synthesize additional. So we can cut some of the CMC processes underway as well. So we're moving forward with speed. We can -- we will be able to recruit the patients quite quickly and then they're treated for 12 months. As I think you're picking up here, we're a bit reluctant to give you a date on when the study will start because there's always -- I mean, clearly, we need to do the regulatory interaction and get the formal approval processes in place. But it's very clear from the early interactions with the scientific community and also from the patient advocacy group is that there is an eagerness for studies to happen and there is an eagerness for them to participate. So in terms of getting there, we have a nice, do you say, wind in the back with regards to support in terms of getting there. Klas Palin: Great. And just also I wonder, I mean, I guess, is this positioning -- are you positioning this treatment and your hypothesis is that this could be a lifelong therapy for these OI patients? Or how should we think about that? Pia Baumann: I would say that it depends on -- since it's so different depending on what kind of severity you have of this disease, it could be different depending on when you start, first of all. As it is currently, they start already when they are more or less up to 2 years old if they want to use bisphosphonate because that is what they use off-label in order to give them something. If you think about that, then it's all the way until you stop growing. So that is in the pediatric disease. Obviously, that is not a study we can do. So we need to have another endpoint. But when it comes to older patients, it depends on what phase they are in. And as I said, osteoporosis is a little bit similar to this disease when it comes to adults, and it starts earlier in the 40s and the 50s. And then they could need treatment all the way until they get older. So I would see it as a sequenced treatment during the time in their life when they need more support in order to keep their bones in a position that they reduce the fracture rate and degenerative pain and mobility issues. So -- but again, when you develop something, you need to do a study that you have an endpoint. And I think the development of anti-sclerostin, for example, and other treatments for osteogenesis imperfecta has really paved the way for what -- how we can look at this. And obviously, we want to learn from -- I'm not saying there are mistakes, but we are actually going to look into that very, very carefully before deciding exactly how we are going to move on with further development. Jens Lindberg: If -- I'll say the following as well, Klas, in order to -- if I were you and I would look at it from a modeling perspective, I would divide it into basically 3 on the back of what Pia said, pediatric setting, that would be a chronic treatment through as the children are growing, and I would look at the share of patients and how many will be treated in that setting. Then you have the period when they stop growing until age of 40, 50, where maybe the need will be somewhat lower, at least depending on subtypes. And then the need will increase again when you enter the later stage kind of osteoporosis stage of the patient's life. So I would arguably say the highest share of treatment among patient population in the pediatric setting and then the lower share in that middle section of life and then it increases again, maybe not to the pediatric setting share but to clearly a higher share of patients treated from that 45 to 50 and onwards. That's how I would look at it. Pia Baumann: You also need to add that some of the patients are not diagnosed until the enter osteoporosis age, right? So you might [indiscernible] think about that as well. Jens Lindberg: Does that help, Klas? Klas Palin: Yes, sure. Absolutely. And I just want to jump to VBX-1000 and just a clarification there. But I guess the deal with Vetbiolix, it spans over the patent life. And that's from -- how long is the patent life? Jens Lindberg: Yes, patent life and the patent life from an animal use perspective is long. That's a wobbly answer. And I'm saying that I know the number, and that's why I'm saying -- or the date, and that's why I'm saying long. I'm just a little bit unsure what Vetbiolix has communicated themselves externally because they've done additional patent application work on it. I'm looking at Fredrik now here to see whether he's guiding me towards, okay, well, this has been shared in terms of -- would you like to add anything, Fredrik? Fredrik Öberg: Yes, I'm not sure what they have communicated. So maybe we should be careful about that. But yes, the medical use in animals, that patent has a quite long future. Jens Lindberg: Yes. And it wasn't too long ago, it was initiated. We'll put it that way. So with regards to kind of modeling out in terms of a commercial opportunity, it does -- it's not tomorrow, there's a change, it is quite long. Klas Palin: Even though they have filed a patent, it's relevant for your deal? Jens Lindberg: Yes, yes. Yes. Short answer, yes. No hesitation on that. Klas Palin: Okay. Perfect. I have no further question, but just want to congratulate you on all the progress you have made recently. Jens Lindberg: Thank you, Klaus. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Jens Lindberg: Thank you. And to pick up on Klas' note then, to summarize, we're quite happy where we are. We look back at the very eventful quarter and the progress made and the future outlook of the company. We are moving with speed to initiate the clinical development of MIV-711 in osteogenesis imperfecta, an opportunity comparable to the size of the fostrox opportunity and the potential to be the first approved treatment options in a significant unmet medical need disease. The collaboration with Dr. Chon and the Korean Cancer Study Group is progressing very well, and the hospitals are ready and eager to get going as we have -- when we get the final approval processes in place to start recruiting patients. And our partner, Vetbiolix has taken quite massive strides towards confirming 701 as a disease-modifying treatment for periodontal disease in dogs and then unlocking blockbuster potential for the drug and for us and clearly significant value upside potential. So with that, thank you, everyone, for calling in, and have a great rest of the day.

86天前Insight Analytics约5分钟阅读

MFA 2025 Q4 财报电话会议

Operator: Greetings, and welcome to the MFA Financial Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Hal Schwartz, General Counsel. Thank you. You may begin. Harold Schwartz: Thank you, operator, and good morning, everyone. The information discussed on this conference call today may contain or refer to forward-looking statements regarding MFA Financial, Inc., which reflect management's beliefs, expectations and assumptions as to MFA's future performance and operations. When used, statements that are not historical in nature, including those containing words such as will, believe, expect, anticipate, estimate, should, could, would or similar expressions are intended to identify forward-looking statements. All forward-looking statements speak only as of the date on which they are made. These types of statements are subject to various known and unknown risks, uncertainties, assumptions and other factors, including those described in MFA's annual report on Form 10-K for the year ended December 31, 2024, and other reports that it may file from time to time with the Securities and Exchange Commission. These risks, uncertainties and other factors could cause MFA's actual results to differ materially from those projected, expressed or implied in any forward-looking statements it makes. For additional information regarding MFA's use of forward-looking statements, please see the relevant disclosure in the press release announcing MFA's fourth quarter and full year 2025 financial results. Thank you for your time. I would now like to turn this call over to MFA's CEO, Craig Knutson. Craig Knutson: Thank you, Hal. Good morning, everyone, and thank you for joining us for MFA Financial's fourth quarter and year-end 2025 earnings call. With me today are Bryan Wulfsohn, our President and Chief Investment Officer; Mike Roper, our CFO; and other members of our senior management team. I'll begin with some general remarks on 2025, touch on the macro and political landscapes and will then provide an update on MFA's initiatives to foster earnings growth and increase ROEs. I will then turn the call over to Mike, followed by Bryan, before we open up for questions. After 3 very difficult years for fixed income investors, 2025 felt like an exit from a dark tunnel. The Bloomberg U.S. Aggregate Index was up 7.3% in 2025 after being down 7.1% for the prior 3 years or just under 2.5% annually. Following a 100 basis point reduction in the Fed funds rate via 3 rate cuts in the last 3 months of 2024, we had to wait 9 months until September of 2025 for the next rate cut, which was quickly followed by 2 more in October and December. Treasury rates also declined during the year, with 2-year yields dropping 77 basis points and 10-year yields dropping by 39 basis points. More importantly, the 210 spread steepened from 32 basis points at the beginning of the year to 70 basis points at the end of the year. This positively sloped yield curve, while perhaps somewhat modest, is a welcome change from the environment we faced from 2022 to 2024. Additionally, volatility has declined. The MOVE index began 2025 at just under 100, 98.8 before briefly spiking after Liberation Day in early April to almost 140 and then trended down for the succeeding months, ending the year at just under 64. Now to put this in context, the MOVE index was above 100 for almost the entirety of 2022, 2023 and 2024. The combination of lower rates, lower volatility and a positively sloped yield curve are all favorable for the mortgage market and for our business. With recent developments in Washington, D.C. and a strong focus on housing affordability, it seems likely that government policy, while certainly never certain, will continue to be supportive for our markets. The recent initiative for the GSEs to buy $200 billion of Agency MBS, the nomination of a new Fed chair with the expectation of further rate cuts later in 2026 and the repeated mantra of do no harm with respect to the mortgage market are all constructive for our market and for our business. We are excited about 2026 as we start the year with these tailwinds at our back. In the fourth quarter of 2025, MFA continued to execute on our strategic initiatives to cap off a solid year of performance. Our total economic return in the fourth quarter was 3.1% and 9% for the full year of 2025. Total shareholder return for the year was 6%. During our last earnings call in November, I provided details on several strategic actions that we were initiating to increase earnings and grow ROEs over the coming year. I'm happy to report material progress on these fronts. While the results will take several quarters to be fully reflected in our financials, the building blocks are in place. As discussed on our last call, we have deployed over $100 million of excess cash into our target assets in order to reduce the cash drag on earnings. We acquired $1.9 billion of loans and securities in the fourth quarter, including $1.2 billion of agencies purchased early in the quarter, $443 million of non-QM loans and Lima One also originated $226 million of new business purpose loans in Q4. We have highlighted the underappreciated optionality in our outstanding securitization ladder for quite some time now. With a constructive rate environment and tight securitization spreads, we believe we will have significant opportunity to call some of these deals and relever the underlying loans, reducing our cost of funds, while also generating incremental cash to redeploy. We're also excited about the prospects for 2026 at Lima One. We hired 45 new salespeople in 2025. We are debuting a new wholesale channel, and we are relaunching multifamily lending in the first quarter of 2026. In addition, we have rolled out several best-in-class technology platforms to enhance the borrower experience and drive operational efficiencies at Lima. The results of these initiatives are not immediate, but we again feel that the building blocks are in place. A number of us visited Greenville in late January to attend Lima's annual meeting, and the energy and enthusiasm at Lima One is palpable. Growth at Lima One in 2026, we believe will contribute materially to MFA's earnings. We continue to work diligently to resolve delinquent loans in the portfolio. This can be maddeningly time-consuming, but our team has been working out delinquent loans for over a decade, the majority of which, by the way, were purchased as nonperforming loans. And our team is the best in the business at this and uniquely suited to the task. We resolved over $150 million of delinquent loans in the fourth quarter, unlocking substantial capital to be redeployed at mid-teen ROEs. We've made substantial progress in reducing G&A expenses, both at Lima and at MFA. 2025 G&A was $119 million, down from $132 million in 2024. Many of these actions take some time to be realized depending on when in the year they occur and whether or not there are severance expenses associated with them. We're confident that we will continue to make progress on expense reductions in 2026. Finally, our listeners will recall that we began a program in the third quarter of 2025 to issue additional shares of our 2 preferred stock issues via an ATM and use the proceeds to repurchase our common stock at a significant discount to book. The stock buyback authorization expired at the end of last year, but our Board has reauthorized this program, and we expect that we will continue to utilize these 2 programs when the trading window opens after we file our 10-K. While this program is modest in size thus far, this is very accretive. And importantly, because we are issuing equity in the form of preferred stock, we are not shrinking our equity base despite repurchasing common stock. In the aggregate, we believe we are taking meaningful active measures to materially increase earnings and ROEs, and we expect to begin to see these results in 2026. And I'll now turn the call over to Mike to discuss the financial results. Michael Roper: Thanks, Craig, and good morning, everyone. At December 31, GAAP book value was $13.20 per share and economic book value was $13.75 per share, each up modestly from the end of September. For the quarter, MFA again paid a common dividend of $0.36 and delivered a total economic return of 3.1%. For the full year, MFA paid common dividends of $1.44 and delivered a total economic return of approximately 9%. We were happy to report in late January that approximately 40% of our 2025 common dividends were treated as a tax-deferred return of capital to our shareholders. This is the sixth straight year that a substantial portion of our common dividends were treated as a nontaxable distribution. This preferential tax treatment is the result of meticulous tax planning and a significant fully reserved deferred tax asset that gives us additional flexibility to efficiently structure transactions to minimize or deferred tax burden for our shareholders. Though there can be no assurances about the tax treatment of future distributions, this favorable tax treatment has substantially increased the after-tax dividend yield realized by holders of our common stock. Switching back to our results. For the fourth quarter, MFA generated GAAP earnings of $54.3 million or $0.42 per basic common share. Net interest income for the quarter was $55.5 million, a modest decline from $56.8 million in the third quarter, driven primarily by lower yields on our legacy RPL/NPL loan portfolio and interest reversals associated with increased nonaccrual loans in our multifamily transitional loan portfolio. These declines were largely offset by higher interest income on both Agency MBS and non-QM loans as a result of our significant asset purchases during the quarter. In the fourth quarter, we again improved our operational efficiency with further progress on our expense reduction initiatives. Quarterly G&A expenses totaled $27 million, a $2 million decline from approximately $29 million last quarter. For the full year, G&A expenses were $119.4 million versus $131.9 million in 2024, a decline of approximately 9.5% at the high end of the 7% to 10% reduction we had previewed earlier this year. We continue to make progress on additional initiatives that we expect will bring further reductions to our run rate expenses during 2026. Distributable earnings for the fourth quarter were approximately $27.8 million or $0.27 per share, an increase from $0.20 per share in the third quarter. The increase was primarily attributable to $0.09 of lower credit-related charges, which were partially offset by $0.03 of lower gains from sales of REO during the quarter. We continue to see progress from our efforts to grow our return on equity, and we expect our DE to reconverge with our common dividend in the back half of 2026. Moving to our capital. As Craig alluded to, during the quarter, we sold approximately 163,000 shares of our Series C preferred stock and approximately 53,000 shares of our Series B preferred stock for cumulative proceeds of approximately $5 million. We used these proceeds to repurchase approximately 540,000 shares of our common stock at a weighted average discount to our economic book value of approximately 33%. Given current market conditions and the trading level of our common stock, we expect to continue to issue preferred shares and repurchase our common shares as a way to enhance returns to our common shareholders without sacrificing scale. Finally, subsequent to quarter end, we estimate that our economic book value has increased by approximately 3% since the end of the year. I'd now like to turn the call over to Bryan, who will discuss our investment portfolio and Lima One. Bryan Wulfsohn: Thanks, Mike. We acquired nearly $2 billion of residential mortgage assets in the fourth quarter. As Craig mentioned, this included $1.2 billion of Agency securities, $443 million of non-QM loans and $226 million of business purpose loans originated by Lima One. We grew our agency book by over 50% to $3.3 billion during the quarter. Most of our investments were made in late October before spreads tightened significantly. We continue to focus on low pay-up spec pools that offer some prepay protection. Our agency portfolio is comprised mostly of 5.5% purchased at par or at a slight discount to par. We've slowed purchases since the tightening that occurred in late 2025 and especially into the year after the President's directed to the GSEs to buy mortgage bonds. That said, it still remains possible to generate a low double-digit ROE on levered agency investments, and we may buy more depending on capital needs elsewhere in the business. Our non-QM whole loan portfolio remains our biggest asset class at $5.3 billion, and we had another successful quarter sourcing, buying, managing and securitizing non-QM loans. We acquired $443 million of new loans with an average coupon of 7.3% and an LTV just shy of 69%. We remain laser-focused on credit quality. We buy loans from only select counterparties and still review every loan prior to acquisition. Turning to Lima One. Lima originated $226 million of new loans in the fourth quarter. This included $83 million of new construction loans, $48 million of rehab loans, $25 million of bridge loans and $70 million of rental term loans. We continue to sell Lima's production of those longer duration rental loans at a premium to third-party investors. This quarter, we sold $45 million, generating $1.4 million of gain on sale income. Lima as a whole produced $5.7 million of mortgage banking income. Although origination volume was lower in the fourth quarter due to seasonality, we continue to make progress positioning Lima for growth. We are relaunching multifamily lending with an entirely new underwriting team, and our wholesale channel is now live. We've also made further investments in Lima's sales force and technology capabilities and expect all of these efforts to bear fruit in 2026. Moving to our credit performance. We made good progress throughout 2025, resolving nonperforming loans on our balance sheet. The delinquency rates across our entire loan portfolio ended the year at just over 7%, down from 7.5% a year ago. We did see a 30 basis point increase during the fourth quarter, which was driven primarily by several defaults in our legacy multifamily portfolio. As a reminder, we have been actively managing the runoff of that book for the past 2 years, and as we start to approach the tail of that process, we expect that delinquency rate in the legacy portfolio to remain elevated, particularly as loans pay off and its overall size continues to decline. It's important to note that these assets are accounted for at fair value, and the remaining loans were held at a $42 million discount to par at year-end. We will continue to work hard to wrap up the resolution of that book. Finally, moving to our financing. We issued our 21st non-QM securitization in December, selling $424 million of bonds at an average cost of 5.26%. Securitization spreads have tightened in recent months and remain highly attractive for regular issuers such as ourselves. And once again, I'd like to thank many of our investors who have consistently supported our non-QM program and look forward to seeing some of you at the conference next week. As Craig highlighted earlier, given the recent movement in credit spreads, we continue to relever and look at -- to relever some of our securitizations in the months ahead. We currently have $2.3 billion of currently callable securitized debt outstanding, which, in some instances, has materially delevered since issuance. We expect that calling and reissuing deals will be a significant source of liquidity for us in 2026 and will unlock appreciable equity to be deployed in our target assets in the months ahead. And with that, we'll turn the call over to the operator for questions. Operator: [Operator Instructions] And your first question comes from Bose George with KBW. Bose George: Can you just talk about where you see the run rate ROE on your EAD once these loss provisions are through? And then can you remind us also, like there's capital that's tied up with the delinquent loans, how much that's going to sort of contribute to that number as well? Michael Roper: Bose, thanks for the question. So I guess a few things. One, it's kind of hard to predict, obviously, when exactly these credit losses will be realized. Bryan alluded to in his remarks that we hold the multifamily transitional loan portfolio at a $42 million discount to par. And given the short duration of those assets, we expect that most of that is attributable to what's eventually going to flush as credit losses through our DE. I think if you think about sort of DE on a loss less basis or DE before credit charges, I think this year, it was in the 8% to 9% range. And I think as we get to the back half of next year, certainly closer to that 10%, 10.5%, 11% range is sort of the run rate. Obviously, we've done a lot of work. And as Craig alluded to, both last time and this time, a number of initiatives take some time to flush through. But if you think about the dividend on our book value, it's about 10.5%. And as I mentioned in my prepared remarks, we expect the DE to reconverge with the level of the dividend in the back half of 2026. Bose George: Okay. Great. That's helpful. And then can you just discuss the reentry into the multifamily market? Are you focusing on the different loan types? Or is the underwriting process different? Just yes, can you just talk about the 2.0 version versus the older version? Bryan Wulfsohn: Sure. So we're sort of targeting up in quality a little bit and up in unit size and value size. So when you think about the prior instance, average loan amounts might have been between 3 and 10. Now we're sort of targeting between 5 and 25. So moving up a Tier 2 in quality. And sort of the idea behind the program is it's similar to the rental loans, it's an originate-to-sell model, so to sort of capture the origination fees and then capture some servicing fee on the back end, not necessarily to put on MFA's balance sheet. Bose George: Okay. Okay, great. Craig Knutson: Thanks, Bose. Operator: And your next question comes from Doug Harter with UBS. Douglas Harter: As you think about the deals that are potential -- could potentially be called, how do you think about the returns you're generating on that capital today and where that could be redeployed into? Bryan Wulfsohn: So in terms of -- it's really depending on the deal, right? We're still -- we still could be generating a mid-teen type return on that deal. But in addition, we can unlock, say, incremental whatever, $10 million to $20 million to $30 million of liquidity sort of per deal that can then be reinvested at that -- at our target ROEs of sort of the mid-teens. So it really is -- you think about it as the existing deal is $15 million, then add another $30 million or $40 million of additional sort of equity that could be redeployed to earn another $15 million. So it's all sort of additive. Douglas Harter: Got it. And how should we think about the sizing? I mean, you mentioned the large potential that could be called. How should we think about timing and the magnitude that you guys could get done this year? Bryan Wulfsohn: So I mean, realistically, we could get done several deals in the coming quarters, which could unlock sort of, say, $50 million to $100 million of capital that can then be redeployed. So it's a this year activity. Operator: Your next question comes from Matthew Erdner with JonesTrading. Matthew Erdner: As you guys went into agency during this quarter, how should we think about capital allocation going forward as you guys do start to call some of these securities, resolve some of the loans and just get capital back? Bryan Wulfsohn: So the expectation is, given the tightening that we've seen in agencies, it would -- we will probably tend to target over time into the non-QM and BPL asset classes. You can't just necessarily go out and buy $1 billion in loans in a day. So initially, you may see some investments increased in the agency portfolio, which would then sort of wind down over time and transfer into the non-QM and BPL space. Matthew Erdner: Got it. That's helpful. And then kind of switching gears to the rental product now. What's come out of the administration, the potential institutional ban, what kind of clients are you guys dealing with? And would that have kind of any impact on your day-to-day? Bryan Wulfsohn: It's pretty unclear whether anything is going to happen, but we don't lend to the largest buyers of single-family homes to rent. So we do believe sort of whatever comes of this, theoretically, right, could be an opportunity for the more mom-and-pops to absorb some more market share, which could be beneficial to Lima One from a lending perspective. But there's still -- it's very unclear what will come of this. Matthew Erdner: Right. Right. That's helpful. Appreciate the comments, guys. Craig Knutson: Thanks, Matthew. Operator: Your next question comes from Eric Hagen with BTIG. Eric Hagen: The move to issue preferred and buy back the common, can you say which series of the preferred that you're issuing? And then more holistically, like how do you think about the shape of the capital structure and like the right mix of preferred versus common right now? Michael Roper: Yes. Eric, thanks for the question. So during the quarter, we did about 160,000 of the C and about 50,000 of the B. And if you think about the issuance, we're selling more of the C pretty regularly. As far as the capital structure, certainly, there's room in the structure to add more preferred. But that market has been somewhat closed for a while now. But given this is an ATM program, it's easy to issue at the margin. But definitely, if the market becomes more attractive, we'd be capable of adding additional preferred to the capital stack. Eric Hagen: Got it. Okay. That's helpful. Following up on the resecuritization opportunity, I mean, how tight do non-QM spreads really need to be in order for you to see like a benefit? Is there a way to sensitize the opportunity relative to where non-QM spreads are currently? And does that opportunity necessarily go away if spreads are wider? Or is there still some capital that you can draw out of that portfolio even if spreads are a little wider than they are today? Bryan Wulfsohn: So there's sort of 2 reasons the opportunity exists. One is that spreads are attractive in a lot of cases to reissue. However, just the natural delevering that occurs in the structure is also creates the opportunity. So it's just sort of an equation and spreads could -- it probably still works if spreads are even 25, 30, 40, 50 wider depending on the amount of delevering that has occurred in a deal. There might be 1 or 2 deals at the margin that are more attractive to do given that spreads are tighter. But realistically, it doesn't change our strategy materially if there was a widening in spreads from here. Eric Hagen: Right. Got you. Craig Knutson: Thanks, Eric. Harold Schwartz: Thanks, Eric. Operator: [Operator Instructions] Your next question comes from Mikhail Goberman with Citizens JMP. Mikhail Goberman: I hope everyone is doing well. Just swing it back to Lima One real quick. What are you guys' expectations for margins holding up throughout the year, total volumes throughout the year and how that sort of product mix is going to develop as you add in the wholesale and multifamily lending? Bryan Wulfsohn: Yes. I mean in terms of margins; we are seeing healthy spreads when you think about our -- the potential issuance of RTL securitization versus where coupons are today on the short-term loan. So it might be sort of low 5 handle cost of funds and rates on new loans are somewhere between 8% to 11%. So there's a very healthy spread there when you think about ROEs. When we look towards the loan sale pipeline of the term loans, given the demand, given where spreads have gone, we've seen significant premiums. If you sort of look at where it was in the last quarter, sort of north of 103. We're sort of still seeing that type of execution today in the market based upon a mid- to high 6s coupon that's originated. So that continues to be attractive. When we think about sort of the volumes of this year, we would project sort of -- we think there's a lot of potential for growth given that we did sort of 0 in the way of multifamily and didn't really have a wholesale channel in the prior year. So we think there is sort of opportunity for sort of incremental growth, and it could be material growth throughout the year. But these things are sort of just coming online in the first quarter, and it takes some time for them to get up to speed. So we do think it's more of a back half of the year is where we see that incremental growth. So it's unclear what necessarily we'll see for the full year 2026, but I think the run rate will be sort of materially higher in the back half. Mikhail Goberman: That's very helpful. Craig Knutson: Thank you. Harold Schwartz: Thank you. Operator: Thank you. And there are no further questions at this time. So I'll now hand the floor back to Craig Knutson for closing remarks. Craig Knutson: All right. Thank you, everyone, for your interest in MFA Financial. We look forward to speaking with you again in May when we announce our first quarter results. Operator: Thank you. This concludes today's call. All parties may disconnect.

86天前Insight Analytics约5分钟阅读

MVIR-B.ST 2025 Q4 财报电话会议

Operator: Welcome to Medivir Q4 Report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Jens Lindberg. Jens Lindberg: Please go ahead. Thank you. Welcome, everyone, to the Medivir quarterly results webcast. We look back at a very eventful quarter marked by great progress and very optimistic outlook to the future. And today, we very much look forward to sharing more details about the great progress, but also -- in our pipeline, but also how we see the future shaping up for the company. If we look back at the quarter, thanks to the recently announced directed share issue to Carl Bennet AB, we're able to add another program to our in-house pipeline as it enables us to initiate the clinical development with MIV-711 in osteogenesis imperfecta, which is a new and strategically important indication for us, and it has comparable market opportunity as we're already seeing with fostrox in liver cancer. The news also comes on the back of MIV-711 being granted orphan drug designation by the FDA. Our second in-house program, the collaboration with Dr. Chon and the Korean Cancer Study Group continues to progress very well. And among other things, the 8 hospitals that will participate in the study have been selected and are eagerly looking forward to get going with the study. And then finally, when it comes to our partnered programs, we've seen very exciting news from our partner, Vetbiolix, with the published landmark proof-of-concept study for MIV-701 in periodontal disease in dogs. But perhaps even more importantly, they have already recruited, as recently announced, 20% of the subjects in their next study, which will be the key study to confirm that MIV-701 is the first disease-modifying treatment, which is also then the critical step to unlock its blockbuster potential. If we take a look at the pipeline, we do have a broad pipeline of first-in-class programs, all of them targeting populations with significant unmet medical need and programs that have the ability to potentially transform care for patients. And today, we'll focus on 3 of the programs. Those have been highlighted here in green, 2 in-house programs and one of the out-licensed. Please note, I made a slight, slight change to the MIV-711 line as I've had some questions today. Just wanted to clarify that the next development step in osteogenesis imperfecta is in osteogenesis imperfecta patients. We don't see a need to do any sort of further healthy volunteer work as a Phase I asset because we've already done that as part of our OA program. So the next step, clinical step is in Phase II and a Phase II proof-of-concept study. Important information, and you'll see that when you access the presentation on our website. Today's presenters here in the room are apart from myself, our Chief Medical Officer, Pia Baumann; and our Chief Financial Officer, Magnus Christensen. And joining us for the Q&A is our Chief Scientific Officer, Fredrik Oberg as well. So with that, let's move into the meatier part of the session, and we'll start with MIV-711, then on the back of the recent directed share issue and what that will enable us to do. And Pia will provide a bit more background on the disease and why we think there's exciting opportunity for MIV-711 and how we see things progressing going forward. Pia Baumann: Thank you, Jens. So just start with what is osteogenesis imperfecta. And it's a mainly inherited rare disorder where 85% have a mutation in the genes that actually is what collagen 1. And this results in varying degree and severity of the disease, and it could also impact life length. There's a significant unmet need in this population because there are no systemic treatment approved, and for the disease itself, it's characterized by, you have defective bone and cartilage causing that the bones becomes fragile and stiff. It's also called -- maybe you recognize this as brittle bone disease. And this leads to that you will have frequent fractures. Depending on the type of OI you have, I will come back to that, it leads to deformities, pain and impacted mobility. So bisphosphonates are used off-label, and it's often used in growing children to reduce the risk of deformities and particularly in the vertebral spine and also to reduce pain and improve final adult length. So that is the background. We can go to the next slide. So the next slide is showing the different types of OI. And these subtypes are divided into 1, 2 and 4 primarily for those who can actually be suitable for treatment, and it's divided due to clinical severity. So I've already said that it's a heterogeneous disease, which means that there's multiple different types. And some of them are actually not -- they are little like the type 2 and the others that are in the sort of below part of this slide. So we're only going to talk about type 1, type 3 and type 4, which are the main types. And type 1 is mild, is considered mild, but it could also be very different depending on how it actually is displayed in the different patients. And this is making up around 50% of all OI, and they have usually normal height or can have a short stature depending on how severe it is in that type and actually have up to 30 fractures during a lifespan without any treatment. So when we say it's mild, it's still considerable impact on your quality of life. Type 3, which is the next one is severe with the patients having considerable reduced length or stature with deformities and severe scoliosis and can have up to 100 fractures during their lifespan. And type 4 is somewhere in between. It's called moderate and they have -- they are usually short and have variable form of deformities and scoliosis and can have up to around 50 fractures during their lifespan. So this is sort of what we have to work with in. These type 1, type 3 and type 4 would be the types that are considered also for treatment with MIV-711. We can go to the next slide. So just to put the effect of this OI mutation in context, as I said, it's causing mutation in the collagen 1 gene. And to put it in the context of what normally is going on when it comes to building and maintaining strength and functionality of our bone and also to briefly explain what molecular players, as you see here, that are involved in normal bone remodeling, which is -- it's a continuous process that essentially removes the old bone and replaces it with new fresh bone and minerals. And this is a simplified picture as you see here. And there are essentially 2 players. It's the osteoclast and the osteoblast. And then you also have an enzyme cathepsin K, which is what we are inhibiting. So the osteoclasts are the ones that are responsible for resorbing the bone. And normally, it's the old bone, right? It secretes an enzyme, that's the cathepsin K. And that cathepsin K cleaves and degrades type 1 collagen that is the main component of the bone. Then the osteoblasts are responsible for the production of new bone matrix and mineralization because when you have eaten up the old bone, you can replace it with new fresh bone. And the coupling between resorption and formation of new bone are crucial for maintaining this healthy bone, and this is the interplay that is impacted in OI. We can go to the next slide. So in OI, which affects type 1 collagen, I'm saying it a couple of times here because it's -- this is a little bit complicated. The type 1 collagen is the skeleton of the bone, and it maintains flexible strength and normal mineralization, healthy bone. It is a major component of the bone making up to around 90% of the bone matrix. And the OI mutation leads to reduced or defect type 1 collagen, resulting in this imbalance between the osteoblast and the osteoclast interplay that we showed on the previous slide. And this results in increased bone resorption and reduced formation of qualitative bone. And we have also seen in studies increased level of cathepsin K in pediatric studies, which also sort of -- is what we are trying to inhibit in order to restore this balance. We can go to the next slide. So we have the cathepsin K inhibitor MIV-711 that is highly selective on inhibiting cathepsin K. And this could, as I said, restore the balance between the bone resorption and the bone formation in OI. So by inhibiting cathepsin K, the degradation of type 1 collagen can be prevented. The increased bone degradation activity can thereby be inhibited selectively while still preserving the continuous bone remodeling that you saw on the first slide, the interplay and coupling between the osteoclast and osteoblast. This results in the restoration of the balance between bone resorption and bone remodeling to ensure best possible quality of bone in OI. So this is the hypothesis behind this. And we can go to the next slide. So as I said, there are no approved systemic treatments in OI, and MIV-711 have a different approach to those used off-label or are under investigation. So MIV-711 inhibits, as we said, cathepsin K and effectively prevents bone resorption while saving osteoclast functionality and preserves this bone remodeling. This is really, really important, this fact that we have the interplay impact. While, for example, bisphosphonates that are used off-label prevents bone resorption by killing off the osteoclast. And then you also lose the function and the coupling and the bone remodeling. And this creates a negative impact on the formation of new bone. So essentially, you keep the old bone that you have, but you inhibit more resorption. Anti-sclerostin has been investigated in OI. And recently, in December, they announced that their Phase III study had failed. It has been investigated due to the fact that it seemed to be effective inducing new bone formation and also have an indirect reduction of bone resorption. However, the benefit diminished already after 6 to 12 months due to induction of, if you call it, escape pathway or feedback loops that makes it more or less -- ineffective. So this is sort of where we are with other treatments that has been used or are under investigation in OI. So we can go to the next slide. So what do we have? What data do we have that makes us believe that MIV-711 could be very important for these patients. And that is that cathepsin K inhibition has shown significant benefit across multiple bone-related disorders. In OA or in osteoarthritis with MIV-711, it shows a statistically significant improvement in preventing bone and cartilage degradation. And other cathepsin K inhibitors have shown benefits also in osteoporosis with reduction in fracture rate and improved bone mineral density. So -- and just to say that osteoporosis itself shares commonalities with OI such as bone fragility and bone mass loss. That's why this is important as well. And we have also seen a significant and dose-dependent improvement in bone volume and quality versus placebo in osteogenesis imperfecta mouse model. So in essence, the clinical benefit that we have seen of cathepsin K inhibition, this is really supported by the proof of concept in this OI mouse model, and it indicates for us that we would have a high likelihood of success in OI. And that's why we can go to the next slide. We are now initiating or planning for a Phase II proof-of-concept study with MIV-711 in OI that eventually will inform the next pivotal development phase. This study will enroll about 20 patients randomized to 2 arms of MIV-711 with a high dose and a low dose. And the patient will be treated orally. This is an oral compound, and it will be given once daily for 12 months. And the endpoint will include biomarkers for bone resorption and bone mineral density, PK, safety, et cetera. And enrollment is planned to take place at sites in Europe, and there is a huge advantage when it comes to include these kind of patients into a clinical trial, and that is that the patients are already identified and known at the sites why we are hoping that enrollment will be really, really fast. So I will leave it there to Jens. Jens Lindberg: Thank you, Pia. And I think the feedback that we've gotten from KOLs so far is that these patients are also quite eager to participate in clinical studies due to the significant unmet medical need. So from a commercial viewpoint, if we take then the next step in terms of estimated prevalent population, candidates for treatment, et cetera, then we are looking at somewhere around roughly estimated 80,000 patients across EU, U.S., Japan and Korea. And Pia broke down earlier the subtypes, which is type 1, type 3, type 4, there is a subgroup of type 1 that are many times not diagnosed because they might be too mild. So what we're estimating is that 2/3 of patients are potential candidates suitable for treatment options and to be included in the study. So that leads to -- because of the significant unmet medical need, no approved treatment options. We had anti-sclerostin antibody failure in Q4, and Ultragenyx are looking to scale back. So the opportunity for to be the first approved treatment option is definitely still there. So when we estimate that market opportunity across the market, we're looking at least a USD 3.5 billion annually commercial opportunity. And this is in these regions. It's a bit more difficult due to prevalence not having prevalence numbers in countries like China, but there is no reason why there would be less patients in China. So that's a potential upside opportunity. As the U.S. administration has recently voted to prolong the pediatric disease designation program, we will, of course, move forward and file for that. There's precedent to receive it. And with that comes then, of course, the potential for a priority review voucher. So to sum up, we do have a highly selective cathepsin K inhibitor that across multiple bone-related disorders and including our own mouse model work in OI signals potential benefit with regards to improving bone volume, improving bone quality, preventing fractures. And as we now move with speed to initiate the Phase II proof-of-concept study, there is the potential to be the first approved treatment options in this -- for these patients. And as mentioned, the total market opportunity is significant. I would argue conservatively estimated at $3.5 billion across key markets then with other markets outside of U.S., EU, Japan and Korea as potential upside. So with that, we'll stop with regards to MIV-711, and we very much look forward to sharing further progress as we continue to work to design and get the study up and running. And we'll move to our second in-house program, which is fostrox, which continues to be just as important as it was before, and we continue to move with as much speed as we were before with regards to initiating the FLEX-HCC study as the next step. And Pia? Pia Baumann: Thank you. And I'm happy to share again that the collaboration with Dr. Chon and the Korean Cancer Study Group is progressing very well. It is super positive to see that the interest in participating in the study has been considerable. And we don't know about the process in selecting this, but we know that there are many hospitals that wanted to participate. So now 8 hospitals have been selected. Importantly, among this, as you can see on this map here, the 3 largest hospitals, Samsung, Asan and Soul Natural have all committed to this study, which is a real quality indicator. This is also a testament to the fantastic work done by Dr. Chon and his team at Bundang Hospital, and we are more than pleased with the collaboration and actually the process that is ongoing. And I'm sure you already know this, but I'm going to say it anyway, as with all studies, formal study approval processes is needed, and it's ongoing also here. And when it's completed, the investigators are eager to start recruiting patients and very much also due to the fact that there are no other studies ongoing in second-line liver cancer in Korea currently. And the unmet need, as we have talked about so many times before, after progressing or intolerance to immuno-oncology, the unmet need is super, super high. And when we know more about exact when the recruitment will start, we will, of course, communicate this with you. So as a little bit of a reminder for -- I'm sure that you have seen this a couple of times now. This is the study design. And as I said, we have 8 hospitals selected. And with these 8 hospitals, as I said before, the 3 largest ones, this really support that we will have a speed of enrollment of the patients and an ability to generate top line results already in 2027. 80 patients will be enrolled in the study. As I said, they have -- all will have received prior immunotherapy combination, and they will be randomized to either fostrox plus Lenvima or Lenvima alone. They will be assessed for response every 6 weeks with the CT/MRI scan and the primary endpoint will be overall response rate. And importantly, also, this overall response rate will be evaluated by a blinded independent committee to ensure that we really have quality results coming out from this study. So I will give it back to Jens. Jens Lindberg: And without going into this one, I will just say that there continues to be an almost complete lack of movement and progress when it comes to second-line advanced liver cancer outside of our program. So in terms of where we are and in terms of what we're moving forward, we are at the forefront and continue to aim to pace to be the first approved treatment option for these patients. Let's move into the final bit before we take the financials and the Q&A. So just a few notes and slides on the program that is called VBX-1000, which is the Vetbiolix name for MIV-701 and the progress that they have made over the past quarter. So just to provide a little bit of a background, this is also a cathepsin K inhibitor, but suitable for use -- not suitable for use in human, but suitable for use in animals. Vetbiolix, a French biotech -- veterinary biotech company in-licensed it. And they are developing it as a first step for periodontal disease in cats and in dogs. And you see picture here in terms of what it is. So basically, periodontal disease leads to a lot of pain. It leads to tooth loss, it leads to infection. There are no treatment available to stop the process today. And as it progresses through the steps, basically, surgery will be a removal of tooth, which is troublesome, painful and quite expensive, will be the final step of the process. And there are no treatments available. And MIV-711 is the one and only disease-modifying treatment candidate in development as we speak. And they recently presented the first proof-of-concept study. The study actually looked reasonably similar to the one we showed before on MIV-711 in osteogenesis imperfecta, 2-arm study, 10 subjects in each arm, high dose, low dose. But most importantly, they showed clear evidence of potential for disease-modifying benefit, significant effect on biomarkers, but also significant effect on bone parameters such as alveolar bone loss, et cetera. So very encouraging first step and no safety concerns. They are now then moving forward. And just to take a couple of seconds to talk about the potential financial upside here for us as a company. This was out-licensed a few years back. The agreement is quite backloaded in the sense that there are quite small milestones throughout the process, but a healthy share when it comes to royalty revenues and potential partnership payments if Vetbiolix out-license the compound. And the question is then how big of an opportunity is this for a potential bigger player in the animal health field. The dog population is today estimated to be 90 million in the U.S., 70 million in EU. And as many as 80% of those dogs over 3 years of age will suffer from periodontal disease. Some animals, it will be quicker and some animals, it will be slightly later. But as many as 80% will suffer from periodontal disease by the age of 3. Again, no unmet -- so no approved treatment options, providing for a significant unmet medical need. No other treatment options in development to compete with MIV-701. So for us, there is a significant financial upside, which we haven't talked about that much before, and we didn't feel it was necessary until they now move into this step because the step that they are now taking is the critical step to unlock the potential. And for us, significant upside through royalties and potential partnership -- share of partnership payments. We've done in our estimation, in our modeling the annual royalty revenues if this hits and this becomes launched as the first disease-modifying treatment option, the annual royalty revenues that we would anticipate after a global launch are equivalent to the company's current market cap. So it's a sizable upside. And it is the next step, which will basically -- no, I'm looking for a good word. It's the next step that will show whether this potential is there or not. So they have -- we recently announced that they have initiated a randomized, double-blind, placebo-controlled pilot study in dogs to confirm the efficacy. They've included 10 dogs to date out of 51 in total. So 20% of the dogs have already been included quite quickly. And Vetbiolix have announced that they are expecting the top line results already this year during quarter 4. So that will be basically the determining factor as to whether the blockbuster potential is there and if the potential for the financial upside for us. But the data that they've shown in the proof-of-concept study was quite convincing. And if you look at the size of the study here and the number of patients, it's a relatively small study, which is a testament to the -- looking for a word now, not the potential, how confident they are in the efficacy they saw in the proof-of-concept study and the likelihood of this reading out positively. So we're very much looking forward to following the recruitment process and the readout of the results. With that, I will stop on the programs, and we'll move into the financial highlights and Magnus? Magnus Christensen: Thank you, Jens. Can you please turn to Slide 27, where you can see the financial summary for quarter 4 and for the whole financial year 2025. And as always, all numbers are SEK million. The revenue in quarter 4 was a bit higher than the previous quarter and is primarily related to the out-license of remetinostat and of course, royalty income from Xerclear. Other external expenses were significantly lower in the quarter as it has been throughout the year, and it's reflecting lower clinical costs for the year. Personnel costs were slightly higher and it's primarily due to provisions for the personnel under notice of termination that we had in the quarter 4 this year. And during the period, we booked the write-down of the birinapant project of SEK 29.8 million, and this has no cash impact on the company. So it's more a book written down value. The operating loss for Q4 amounted to minus SEK 42 million, higher than last year, but is related to the birinapant write-down, as I mentioned. And the cash flow from the operating activities in Q4 was approximately minus SEK 6 million. We have a strong financial position at the year-end. We completed a rights issue, raising approximately SEK 151 million before transaction costs, which meant that our cash balance at the year-end was SEK 119 million. In addition to that, as Jens mentioned, we completed a recently directed share issue of SEK 45 million to Carl Bennett AB, enabling the continued clinical development of MIV-711 in osteogenesis imperfecta. And with this, I will hand back to Jens. Jens Lindberg: And I think that concludes the presentation. And operator, we can move into the Q&A session of the call. Operator: [Operator Instructions] The next question comes from Richard Ramanius from Redeye. Richard Ramanius: I have a few questions on which of your candidates or each of the new candidates. Could you give us some more details about the way to the market for MYB-711? What's more need to take it to an approval? Jens Lindberg: Basically, we see -- the good thing about osteogenesis imperfecta as a treatment from a regulatory pathway point of view is that the anti-sclerostin antibodies and the recent interactions they've had with FDA and other regulatory authorities, it paves the way and shows the way in terms of what is needed. So we see basically, I would arguably a 2-step approach, i.e., the first step is establishing the clinical proof of concept, which we are doing with this study. That takes us into a pivotal phase of development. So then the next phase would then be a larger, and I say larger than sort of 2020 size of that study doesn't need to be super large, but we need to continue to do some work. But the next phase would be pivotal phase. And I guess the one outstanding question that needs to work through, this is adult program -- adult and pediatric population is whether we can combine the 2 populations in one study or whether we need to run them as sub-studies or separate programs. But the next phase would be a pivotal development phase. Richard Ramanius: Okay. And could you give us some more details about the royalty agreement you have on VBX-1000? Jens Lindberg: I mean we haven't communicated any in terms of any numbers before. What we have said is that the development milestones, the regulatory milestones right now, including also approval milestones, they are small, I would even say, minor. When we made the deal with Vetbiolix, there was a focus on having a healthy share of royalties and potential partnership payments or out-licensing -- share of out-licensing from Vetbiolix. So we haven't disclosed the percentage, but it's arguably a very healthy percentage, and that's what we focused on. So when I say -- when we do the calculations on the compound having the opportunity to generate as a disease-modifying treatment for us, royalty revenue stream, annual royalty stream of -- in line with our current market cap, I am also not including milestone payments from potential partnering deals that Vetbiolix does. So if they out-license and they generate upfront, they generate milestone payments, we will also take a healthy part of that share as well. Richard Ramanius: Final question. What is the runway after the latest funding? Magnus Christensen: Richard, I mean, as I said, we have a strong financial position at year-end and with the directed issue to Carl Bennet. And as we stated in the Q4 report, we assess that existing cash resources are sufficient to cover the planned Phase II study in liver cancer and osteogenesis imperfecta. And that's according to our current plan assumptions that we have today. So I hope that answers your question. And before we said, I mean, rights issue, we had money end of '27. And with the directed issue now, of course, we have -- according to the plans, we have cash runway into 2028. Operator: The next question comes from Klas Palin from DNB Carnegie. Klas Palin: I would like to start with MIV-711 and this proof-of-concept study. Where do you stand when it comes to preparations? And perhaps also, I noticed that it's a 12-month treatment. How long -- even though Magnus indicated that your cash runway was into 2028, but how long do you think the study will take to finalize? Pia Baumann: Good questions. So when it comes to the preparations, I'm sure that you saw the press release when we got some financial from Carl Bennet, which means that we have actually planned for this study before, but we obviously need to do all the preparations that you need to do when it comes to studies. What we are doing currently is that we are pulling together a scientific expert council to get external advice. This is a disease that has many different aspects on it since it goes from pediatric until adulthood. And we need to understand thoroughly what kind of patient population we should include in order to get the results that we are requiring for proof of concept. That is the first one. The treatment time for the patient is 12 months, and that is to get to the primary endpoint that we will select. The benefit for this trial I would say that usually is not in place in other trials and particularly not in oncology trials that we have been doing before is that the patients are already there. They know who the patients are since the majority of them has been diagnosed already at birth or before birth since it's a dominant [ inheritage ] of this genetic mutation, which means that since they're already in place, you can go to those sites you want to go to and they more or less can give you the patient at once. So the enrollment time is usually really short in this kind of stats. Jens Lindberg: The other element to comment on one of the timing challenges many times in studies like this is the CMC element. One of the benefits is that we do have active product ingredient with MIV-711 since before that we can use. And so there's no need to synthesize additional. So we can cut some of the CMC processes underway as well. So we're moving forward with speed. We can -- we will be able to recruit the patients quite quickly and then they're treated for 12 months. As I think you're picking up here, we're a bit reluctant to give you a date on when the study will start because there's always -- I mean, clearly, we need to do the regulatory interaction and get the formal approval processes in place. But it's very clear from the early interactions with the scientific community and also from the patient advocacy group is that there is an eagerness for studies to happen and there is an eagerness for them to participate. So in terms of getting there, we have a nice, do you say, wind in the back with regards to support in terms of getting there. Klas Palin: Great. And just also I wonder, I mean, I guess, is this positioning -- are you positioning this treatment and your hypothesis is that this could be a lifelong therapy for these OI patients? Or how should we think about that? Pia Baumann: I would say that it depends on -- since it's so different depending on what kind of severity you have of this disease, it could be different depending on when you start, first of all. As it is currently, they start already when they are more or less up to 2 years old if they want to use bisphosphonate because that is what they use off-label in order to give them something. If you think about that, then it's all the way until you stop growing. So that is in the pediatric disease. Obviously, that is not a study we can do. So we need to have another endpoint. But when it comes to older patients, it depends on what phase they are in. And as I said, osteoporosis is a little bit similar to this disease when it comes to adults, and it starts earlier in the 40s and the 50s. And then they could need treatment all the way until they get older. So I would see it as a sequenced treatment during the time in their life when they need more support in order to keep their bones in a position that they reduce the fracture rate and degenerative pain and mobility issues. So -- but again, when you develop something, you need to do a study that you have an endpoint. And I think the development of anti-sclerostin, for example, and other treatments for osteogenesis imperfecta has really paved the way for what -- how we can look at this. And obviously, we want to learn from -- I'm not saying there are mistakes, but we are actually going to look into that very, very carefully before deciding exactly how we are going to move on with further development. Jens Lindberg: If -- I'll say the following as well, Klas, in order to -- if I were you and I would look at it from a modeling perspective, I would divide it into basically 3 on the back of what Pia said, pediatric setting, that would be a chronic treatment through as the children are growing, and I would look at the share of patients and how many will be treated in that setting. Then you have the period when they stop growing until age of 40, 50, where maybe the need will be somewhat lower, at least depending on subtypes. And then the need will increase again when you enter the later stage kind of osteoporosis stage of the patient's life. So I would arguably say the highest share of treatment among patient population in the pediatric setting and then the lower share in that middle section of life and then it increases again, maybe not to the pediatric setting share but to clearly a higher share of patients treated from that 45 to 50 and onwards. That's how I would look at it. Pia Baumann: You also need to add that some of the patients are not diagnosed until the enter osteoporosis age, right? So you might [indiscernible] think about that as well. Jens Lindberg: Does that help, Klas? Klas Palin: Yes, sure. Absolutely. And I just want to jump to VBX-1000 and just a clarification there. But I guess the deal with Vetbiolix, it spans over the patent life. And that's from -- how long is the patent life? Jens Lindberg: Yes, patent life and the patent life from an animal use perspective is long. That's a wobbly answer. And I'm saying that I know the number, and that's why I'm saying -- or the date, and that's why I'm saying long. I'm just a little bit unsure what Vetbiolix has communicated themselves externally because they've done additional patent application work on it. I'm looking at Fredrik now here to see whether he's guiding me towards, okay, well, this has been shared in terms of -- would you like to add anything, Fredrik? Fredrik Öberg: Yes, I'm not sure what they have communicated. So maybe we should be careful about that. But yes, the medical use in animals, that patent has a quite long future. Jens Lindberg: Yes. And it wasn't too long ago, it was initiated. We'll put it that way. So with regards to kind of modeling out in terms of a commercial opportunity, it does -- it's not tomorrow, there's a change, it is quite long. Klas Palin: Even though they have filed a patent, it's relevant for your deal? Jens Lindberg: Yes, yes. Yes. Short answer, yes. No hesitation on that. Klas Palin: Okay. Perfect. I have no further question, but just want to congratulate you on all the progress you have made recently. Jens Lindberg: Thank you, Klaus. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Jens Lindberg: Thank you. And to pick up on Klas' note then, to summarize, we're quite happy where we are. We look back at the very eventful quarter and the progress made and the future outlook of the company. We are moving with speed to initiate the clinical development of MIV-711 in osteogenesis imperfecta, an opportunity comparable to the size of the fostrox opportunity and the potential to be the first approved treatment options in a significant unmet medical need disease. The collaboration with Dr. Chon and the Korean Cancer Study Group is progressing very well, and the hospitals are ready and eager to get going as we have -- when we get the final approval processes in place to start recruiting patients. And our partner, Vetbiolix has taken quite massive strides towards confirming 701 as a disease-modifying treatment for periodontal disease in dogs and then unlocking blockbuster potential for the drug and for us and clearly significant value upside potential. So with that, thank you, everyone, for calling in, and have a great rest of the day.

86天前Insight Analytics约5分钟阅读

PHCUF 2025 Q4 财报电话会议

Daniel Schneider: All right. Well, good afternoon, good morning to everyone. This is Photocure ASA Fourth Quarter and Full Year 2025 Results. I'm Dan Schneider, President and CEO. Today with me is Erik Dahl, CFO; and Priyam Shah, our Vice President of IR. Just a reminder, the usual disclaimers are in effect for today's presentation. So I'd like to start off with the strategic priorities and initiatives of Photocure. Our strategic priorities guide how we execute and allocate resources across the company. At a high level, our strategy is centered around 3 key pillars: Strengthen the core Hexvix/Cysview business, advance blue light cystoscopy as a definitive standard of care in bladder cancer, and third, expand our reach into a broader uro-oncology and precision diagnostics space. Taking a deeper dive on the first pillar, accelerate and expand, we need to deliver on our financial guidance for disciplined growth in revenue and EBITDA in our core business and continue generating operating leverage. We also need to drive the BLC mobile strategy, ForTec, in the U.S. that hits the hospital markets or the hospitals who otherwise would have access to blue light cystoscopy. And in the EU, it's important we increase our penetration in our high priority growth markets through BLC expansion and additional image quality upgrades throughout the continent and also expand our geographic footprint, for example, most recently Spain last year, and leverage our distribution partnerships throughout the globe. In the second pillar, positioning and access, we are building the foundations for BLC as a primary precision diagnostic tool to facilitate early and appropriate use of new NMIBC therapeutics, detection, surveillance, and therapeutic monitoring. We also need to support high-def BLC technologies that are entering the market, upgrades of key OEM partners and support the efforts to allow other manufacturers into the U.S. market, whether it be reclass or other processes. And finally, partnering with Richard Wolf on building adoption in Europe for the flexible blue light cystoscopy interim solution while we continue to advance the development of the high-def 4K state-of-the-art and the world's only BLC Flex system for global use. These efforts will not only drive near-term growth, but also will solidify our long-term competitive positioning. The third pillar, acquire and transform. We're looking ahead and actively assessing opportunities within non-muscle invasive bladder cancer and other uro-oncology indications with a focus on the rapidly growing interest in precision diagnostics indications, things such as biomarkers, artificial intelligence, and new technologies, diversifying our portfolio and building upon our commercial footprint and bladder cancer expertise. Two real-time examples of this are our collaborations with Richard Wolf and ForTec to bring 4K Flex and mobile solutions by leveraging our existing global commercial infrastructure in the broader uro-oncology segment. And secondly, further in the life cycle of management as demonstrated by our recent strategic collaboration with Claritas ICS to develop the world's first and only BLC AI system. M&A is a focus in 2026 in an effort to expand our uro-oncology footprint, grow faster, and increase our ability to generate strong cash flow. So Q4 highlights. Product growth, overall, we had 9% product growth revenue, 10% on the total year ex-FX. In North America, we delivered 13% unit growth and 17% product revenue growth ex-foreign exchange, offsetting the continued Flex unit decline. Flex currently is less than 5% of our total U.S. business. The installed base of Saphira blue light equipment continued to increase with 1 tower placement and 6 upgrades in the U.S. in Q4. And I'd like to make a comment that the fourth quarter of last year, KARL STORZ was running a promotion, and we believe that some of the sales will flow into first quarter of this year as the POs have been cut. We had a fantastic 19% unit growth in the rigid surgical market, inclusive of ForTec Medical's mobile solution. As a reminder, ForTec added 6 more rigid Saphira to their national fleet in September and began deploying them, and this is all underscoring the growing demand for BLC. And the number of active accounts has now increased by 22% year-over-year to 384 active accounts, setting the stage for continued momentum into the future. In Europe, revenue was up 4%, units up 4%. We continue to execute in EU with strong growth from the DACH and Nordic countries driven by Olympus upgrades and continued execution focus. The launch early in 2025 of the Olympus Visera III equipment continues to gain momentum with now 60 new installs in the field. Upgrades throughout the world have proven to increase the usage of BLC with Hexvix and Cysview and remains a very important part of our strategy. We also generated positive EBITDA of NOK 1.9 million, NOK 8.4 million commercial EBITDA. It's our 11th quarter in a row of positive EBITDA, which continues building operating leverage throughout 2025, and we believe into 2026. A strong balance sheet with NOK 238.9 million cash and no term debt. And as a reminder, we also completed our 500,000 share buyback program last year in quarter 2. Later in today's presentation, I will share several key performance metrics underscoring the growing business of scaling and operational leverage. Important news flow in Q4 data publications, presentations, and abstracts. On November 19, we published the new budget impact model study in 4 European countries concludes that BLC use offers a clinically meaningful and economically rational approach to non-muscle invasive bladder cancer. On December 8, the impact of avoiding recurrence, the new BRAVO study abstract at SUO 2025 demonstrated cost neutrality in blue light versus white light cystoscopy comparison. In industry news, on November 28, we received a prestigious 2025 innovation prize from the Norwegian Cancer Society. The prize is recognition of our commitment to advancing cancer diagnostics and improving patient outcomes in bladder care. In partner news, on October 15, as previously announced in the Q3 earnings call in October, we formed a partnership with Intelligent Scopes Corporation, signed an agreement for a strategic partnership to develop artificial intelligence to couple with blue light cystoscopy. And on January 12 post period, new publication of Hexvix trial data from China, pivotal trial by Asieris showed that BLC significantly improves the detection of bladder cancer using modern high-def equipment. The data shows proportion of patients with additional bladder cancer lesions detected by BLC was 43.3% during the rigorous trial and the updated equipment. So let's go to segment trends. Strong unit growth in both regions. Both North America and Europe delivered continued growth. In North America, the business has significantly overcome the continued decline of Flex surveillance market, while the rigid surgical market delivered a 19% unit growth in Q4, an all-time high. In Europe, Q4 units surpassed previous Q4 high watermark as momentum continues to build throughout the region. Europe is beginning to see the impact of the Olympus Visera III upgrade rollout, particularly in the DACH, France, and Nordic countries. Sixty installs through Q4 with more in the pipeline, especially in that region of Europe. Upgrades continue to deliver positive double-digit impact. Reminder on the impact of these upgrades, 40% of the Europe is dominated by Olympus. So it's very important that this remains an important part of our strategy throughout the European continent. Turning specifically to North America. We see adjusted rigid growth increasing 19% with the addition of ForTec Mobile Solution, while Flex units are now less than 5% of total sales, which were 17% to 20% of the total North American business. There were 7 new Saphira installed, 6 upgrades, 1 new. As I mentioned, a promotional program did run in the fourth quarter and has continued into this first quarter of this year and account growth of roughly 22% year-over-year. This bodes very well for quarters ahead. ForTec Mobile Solution is now reaching 134 accounts as of the start of the service. That's plus 13 from the end of Q3 with -- and over 230 different physicians are now trained since launch, demonstrating growing momentum and demand. The ForTec Mobile Solution Saphira upgrades are key drivers to the U.S. business. Access to BLC in the U.S. remains a top priority as demonstrated by our ongoing efforts in the FDA reclassification and reimbursement initiatives. I want to repeat, supporting the growth are many discussions, presentations at U.S. medical congresses such as SUO recently in December, where there is a growing belief that BLC's ability to see more assures physicians of their ability to perform a more complete TURBT, which leads to more accurate pathology, staging, and risk stratification and ultimately helps urologists make an informed precision medicine decision. Europe also remains strong with solid growth in the DACH and Nordic countries, which is -- which make up as a majority of the revenue. The priority markets continue increasing, France, Italy, and U.K., we're seeing double-digit growth. And as I mentioned earlier, there have already been 60 Olympus upgrades in Europe through Q4 of last year. Taking a look at the U.S. specifically, significant growth of 22% in active accounts. And remind you, the definition of active accounts are accounts that have been ordered in the last 12 months. I get often asked what inactivates an account. And a lot of times, it is old standard definition of equipment that has gone down and the account is waiting to either upgrade or go to the mobile solution. So we do have ebb and flow within the active accounts, but we are up on a total net of 22%. This includes ForTec mobile accounts that are building momentum. The program already is exceeding everyone's expectations as well as accounts due to BLC upgrades. We believe the balance of the old stores standard definition blue light machines will be upgraded over the next 2 years. This is an important initiative as upgrades provide double-digit uplift in sales in those accounts. We see continued momentum in the overall interest and adoption of blue light cystoscopy with Cysview in the U.S. So the U.S. is a highly underpenetrated market for BLC with potential for exponential upside growth. This is an illustrative representation. Despite the progress we are making, we are still in the very early stages in the U.S. as the U.S. remains the single largest opportunity for Photocure and is still significantly underpenetrated with less than 10% market share today. We have a long runway for growth as awareness, access, and equipment availability expand. Bladder cancer represents a major unmet need in the U.S. Each year, there are approximately 85,000 new cases and more than 730,000 patients living with the disease. You have the total number of TURBTs and surveillance cystoscopies in the U.S. here on the upper right. And in the U.S. and Europe, there are over 700,000 surgical procedures with 1.6 million surveillance cystoscopies done in offices annually. The total addressable market for flexible cystoscopy alone exceeds USD 1.3 billion globally. The blue light cystoscopy is uniquely positioned to capture a meaningful portion of that opportunity. Add another 700,000 for rigid and the total TAM for BLC is USD 2 billion with the majority in the untapped U.S. market. We expect several catalysts, and that's what's depicted in this representation to drive the next wave of growth in the U.S. market. First, we continue to work towards improved CMS reimbursement, which we are pursuing through direct conversations with CMS and through legislative efforts in Washington, D.C., both would further support the adoption of BLC across academic and community settings. We also see the return of Flex system to the market that will enable broader access for outpatient and office-based procedures. We also see the entry of additional OEM partners, what would expand the installed base dramatically and provide more choice to urologists and all types of institutions. And finally, FDA reclassification of blue light cystoscopy equipment for which there is an ongoing citizens' petition, could be a potential milestone that would significantly lower the barriers and accelerate uptake nationwide. And finally, and probably one of the most dramatic things going on is the momentum in the macro environment as reinforced at major medical congresses and increasing publications. The expensive precision therapeutics that are hitting the market are turning to precision diagnostics like blue light cystoscopy and bladder care, it is necessary to find the right patients who can benefit. Taken together, these drivers support the long-term growth trajectory for the U.S. business that is both scalable and sustainable. The bottom line is we have a proven product, a growing clinical endorsement, and in a traded market, giving us potential for exponential upside as these catalysts materialize in the near term. Growth initiatives. As I mentioned, first, let me talk about our organic growth initiatives. We now have 134 ForTec using accounts with over 230 different users gaining experience. These are physicians and patients who otherwise would not have access to BLC. Our development partnership with Richard Wolf is progressing well, while a flexible BLC interim solution has been made available in advance of the future launch of the state-of-the-art system that has both high-def 4K. This is a $1.3 billion TAM market between the U.S. and the EU5. The third box, and the trends are clearly blowing in the favor of BLC, the momentum and pressure continues to build behind the notion of accurate diagnosis and complete resections in line with precision pathway for bladder cancer patient care. We believe BLC can play a central part in determining the precision pathway. As previously announced in the last earnings call, our recent partnership with Intelligent Scopes Corporation, a U.S.-based subsidiary of Claritas HealthTech is to develop AI software for real-time tumor detection using BLC. Through this collaboration, Photocure and ISC are combining complementary strengths. Photocure's leadership in bladder cancer detection and ISC's deep artificial intelligence expertise to build an intelligent diagnostic platform designed to improve accuracy and consistency in tumor detection. The pilot program that we underwent analyzed data from over 200 BLC procedures with over 80,000 images, demonstrating early performance and very strong performance in detecting high-risk and early-stage lesions that otherwise would not be detected. Joint development work is underway and the ENAiBLE clinical study has been initiated in both the U.S. and Europe, following which we plan to pursue both FDA and CE submissions with Photocure holding the exclusive global commercialization rights once the software receives clearance. This initiative extends Photocure's technology moat towards data-driven precision care, paving the way for future AI-enabled diagnostics in uro-oncology, importantly, it adds high-margin, scalable software component to our business model, creating durable value beyond current consumable base. And why do we feel strongly about organic BLC adoption? The environment for adoption for BLC is stronger than ever. The guidelines from AUA, EAU and various other bodies now recommend BLC and the newer guidelines are only getting stronger. The Italian Society of Urology was the most recent addition in the third quarter, which now recommends BLC for the first TURBT, the second resection, and recurrence of non-muscle invasive bladder cancer in populations of high risk. The science itself from over 300 publications in multiple well-powered randomized studies provides a wealth of clinical evidence. Over 40 independent studies have confirmed improved detection and reduced recurrence, and we have the world's largest bladder cancer registry. And then again, our OEM partners are investing on anticipated volume growth and rising ties in bladder cancer diagnostics. By upgrading their systems with rollouts of 4K and high-def capabilities, the new OEMs are increasingly wanting to enter the U.S. market to offer BLC. As mentioned earlier, publications are now providing evidence that BLC significantly improves the detection of bladder cancer using modern high-def equipment. Data shows proportion of patients with additional bladder cancer lesions detected by BLC was 43.3% during a rigorous Chinese trial by Asieris with the updated 4K high-def equipment. And there's a rapidly evolving therapeutic landscape of bladder cancer care. Another major source of tailwinds behind the interest in bladder cancer diagnostics is a rapidly evolving therapeutic landscape. Bladder cancer remains a prevalent malignancy with high recurrence despite the standard therapies. BCG is a cornerstone of treatment for non-muscle invasive bladder cancer. However, nearly half of the patients experienced relapse or develop resistance, highlighting the need for alternative strategies. Recent advancements in immunotherapy have reshaped the therapeutic landscape in bladder cancer. Immune checkpoint inhibitors restore T cell function and show clinical activity in BCG unresponsive disease. Viral vector-based approaches provide localized immune activation, while cellular platforms such as CAR-T or CAR-NK therapies offer precision targeting of tumor antigens. Concurrently, other novel delivery systems and antibody drug conjugates enhance efficacy and safety by improving tumor-specific cytotoxicity. Collectively, these strategies significantly -- signify a paradigm shift from traditional intravesical therapy towards a personalized and durable immunotherapeutic intervention. After decades of little advancements, there are now 6 FDA-approved drugs on the U.S. market, 3 were approved in the second half of last year, and there are 26 total unique therapy-focused NMIBC trials ongoing currently. That's a positive development. What it also does is raise the bar for diagnosis. As these therapies are becoming more advanced, they are also becoming more expensive and missing disease becomes even more costly. Every NMIBC case will become more complex with all the new personalized treatments and combo immunotherapies and bladder sparing options. Improving outcomes and guiding the future of management of bladder cancer will depend on precision pathways, starting with precision diagnostic like BLC along with monitoring to offer a more comprehensive approach to risk assessment, surveillance, and treatment planning in the complex NMIBC cases. Hence, our ambition goes beyond single product and organic BLC equipment enhancements. The future of bladder cancer is precision diagnostics and combining high-resolution imaging, both rigid and flexible BLC, along with the potential expansion to various other advanced cytologies, computational histology, biomarkers, artificial intelligence, and longitudinal monitoring will be critical in bladder cancer patient care continuum. Blue light cystoscopy is the foundation of that ecosystem, and Photocure is building towards an integrated future of molecular digital framework. We have spent significant time and effort in evaluating the right areas of focus to expand our portfolio offerings, and we believe that these are the targeted areas that will truly allow us to further our additional aspects of the continuum of care in bladder cancer diagnostics and management. We anticipate having more granular updates for you throughout 2026. And finally, we'll talk about Asieris, a value-generating program. Our partnership with Asieris continues to progress favorably. We have now taken in over USD 18 million in milestones across both Hexvix and Cevira programs, with the potential for additional milestones and royalties as the programs advance through regulatory and commercial goalposts. As a reminder, key points about Hexvix's commercial partnership with Asieris. Hexvix has already received marketing authorization in China. What they're waiting for is the Chinese approval for the Richard Wolf system for blue light cystoscopy. We expect the commercial launch following device approval this year. The timing of that is unknown, but we believe is imminent. The key points about the Cevira out-license approach to Asieris, so the Cevira NDA remains under regulatory review as we await clearance. We are in regular dialogue with Asieris. We are aware that Cevira is still under regulatory review, and it is following the normal information exchanges between the applicant Asieris and the NMPA. Any additional questions should be submitted to Asieris as this is their product. If and when it's approved, it would be one of the first products approved in China and before the rest of the world. Asieris has had pre-submission meetings with the EU and U.S. regulators to determine a way forward in both of these large markets. And Asieris has also disclosed they have interest in pursuing a secondary indication for Cevira, which brings additional milestone payments upon approval. I'd now like to turn it over to Erik and the financials. Erik, to you. Erik Dahl: Thank you, Dan. Please stay on Slide 16, please. In this section, the financial section, we will review the consolidated income statement, segment reports for our 2 main segments and finally, headlines from the cash flow and the balance sheet. A couple of words about foreign exchange before we get started. U.S. dollar, as I guess everybody know, weakened in the quarter, resulting in about NOK 5.6 million, unfavorable impact on revenue from foreign exchange. In Europe, on the other hand, the revenues were not materially impacted by foreign exchange. Final comment before we start on the analysis. I will always use Norwegian kroner, and please bear that in mind. If there is another currency, I will mention that. Moving on to Slide 17, the consolidated income statement. Looking at consolidated Hexvix/Cysview product revenue, for the quarter, NOK 135 million, it's the highest ever and 9% above Q4 2024 in constant currency. Including FX impact, the year-over-year growth was 5% in the quarter. Full year Hexvix/Cysview revenue was NOK 530 million, growing 10% year-over-year in constant currencies and at the top end of our guidance for the year. The revenue growth was driven by volume growth as well as price increases in both regions. Hexvix/Cysview market unit sales, in-market unit sales increased 13% in North America and 4% in Europe in Q4. For the full year, the increase in volume was 9% in North America and 4% in Europe. The sales have, to some extent, been negatively impacted by the phase down of Cysview usage in the flexible BLC setting in U.S. On the positive side, we have seen strong development in the sale and distribution by our partner, ForTec. Total revenue, including milestones was NOK 136 million in Q4, and the decline from 2024 is due to a NOK 12.1 million milestone in 2024, and we have no milestone revenues in 2025. Full year total revenue was NOK 532.6 million year-over-year, an increase of 1%, impacted by milestone revenues of NOK 34 million in '24 and none in 2025. Cost of goods sold in Q4 2025 was NOK 10 million compared to NOK 7.5 million in 2024. The increase in COGS was driven by sales volume increase as well as onetime IFRS inventory value adjustments and FX movements as well as activities to increase productivity capacity -- production capacity. And we expect COGS to move back to normal levels throughout this year and next year. Total operating expenses, excluding business development expenses was NOK 119.9 million in Q4, a year-over-year reduction of 2%. Full year operating expenses, excluding business development expenses was NOK 444 million, an increase of 2% year-over-year. The increase included investments in medical programs, merit, and inflation, partly offset by FX. Business development expenses were NOK 4 million in Q4 compared to NOK 5.2 million in Q4 2024. Operating expenses within business development are related to cycle management for Hexvix -- life cycle management for Hexvix/Cysview, our cooperation with Richard Wolf on the flexible BLC system as well as business development efforts that can diversify our business and significantly increase our growth rate. The expense level obviously may vary from quarter-to-quarter given the one-off nature of these expenses. EBITDA in Q4, excluding milestones and business development expenses was NOK 5.9 million compared to NOK 1.6 million in 2024. Full year EBITDA, excluding milestones and business development was NOK 46.2 million compared to NOK 24 million full year 2024. Depreciation and amortization, NOK 7.4 million in Q4. Main cost item is the amortization of the intangible assets related to the return of the European business from Ipsen in 2020. Net financial items was a net cost of NOK 3.9 million in Q4, driven by Ipsen earn-out payment, partly offset by interest income and FX gain. And tax expenses is a net income of NOK 1.5 million for the quarter. After tax, we have for Q4, a net loss of NOK 8 million and for the full year a net loss of NOK 1.5 million. Now to the segment performance. Next slide, please, Slide 18. For the segment reporting, we will focus on the 2 main segments, North America and Europe. The North America segment includes U.S. and Canada. And revenue for the North America increased 17% in Q4 in constant currencies. The main drivers are volume increases of 13% and increased average prices of 4%. FX impact was negative 10%. Revenues were negatively impacted by the phase down of Cysview usage in the flexible BLC setting, however, to a lesser extent than previous quarters. On the positive side, we have seen strong development within the sale and distribution of our partner, ForTec. Q4 direct costs decreased 1%, driven by FX impact, which was offsetting increases driven mainly by product -- project expenses, merit, and inflation. And Q4 contribution was NOK 10.8 million compared to NOK 7.8 million in 2024. Full year contribution was NOK 31.8 million, an improvement of NOK 10.8 million from 2024. Full year EBITDA negative NOK 14.5 million, a year-over-year improvement of NOK 6.6 million. Looking at the European business, we had year-over-year a revenue increase of 4% in Q4, mainly driven by volume in the DACH region and high priority growth markets. Direct costs decreased year-over-year 5% in Q4, driven by FTE adjustments, partly offset by merit and inflation. And we ended Q4 with a contribution of NOK 34 million compared to NOK 31 million in 2024. Full year EBITDA, NOK 76 million, a year-over-year improvement of NOK 12.4 million. As a conclusion on the segment reporting, what we see is significant growth and improved profitability in both regions. Now to the cash flow and balance sheet. Next slide, 19, please. So first, cash flow from operations in Q4, negative NOK 0.5 million. For the full year, cash flow from operations was NOK 26 million compared to NOK 76 million in Q4 2024. The full year change was mainly driven by milestones from Asieris in 2024 and negative working capital movement in 2025 due to increased product revenue year-over-year. Cash flow from investments in Q4 and full year include interest received and paid as well as investments in tangible and intangible assets, including production capacity. Cash flow from financing in Q4 and full year was negative, driven by earn-out payments to Ipsen and for the full year, also the share buyback program. In total, we paid NOK 29.6 million for the 500,000 shares we acquired in the year. This total gives a net cash flow in Q4 negative NOK 8.9 million compared to positive NOK 2.8 million in 2024 and full year net cash flow was negative NOK 55 million and in 2024, positive NOK 4.4 million -- NOK 34.4 million, sorry. And with this net cash flow, we ended 2025 with a cash balance of NOK 238.9 million. Going on to -- moving on to the balance sheet. We ended the year with total assets of NOK 707 million. Noncurrent assets was NOK 321 million at the end of 2025, and this included customer relationship with NOK 79 million and customer relationship is the intangible assets identified in the purchase price allocation for the Ipsen transaction. Noncurrent assets also include goodwill from the Ipsen transaction of NOK 144 million and a tax asset of NOK 56 million. Inventory and receivables were NOK 146 million at the end of 2025, and the increase from 2024 is NOK 16.8 million and driven by increased revenue as well as inventory. Long-term liabilities was $116.9 million and include the liability related to Ipsen transaction totaling NOK 100 million. Finally, equity at the end of the year was NOK 484 million, which is 68% of total assets. And this concludes the financial section. Thank you. Dan, back to you. Daniel Schneider: Thank you, Erik. All right. For this section, we thought it would be important to share with you 2 slides on key performance metrics, underscoring the fast-developing scale and leveraging within the core business. This graphic is on the second page of the earnings report. Over the last 3 years, we have delivered consistent profitable growth across all key operating metrics while keeping headcount flat. Product revenues increased 42%, unit volumes grew 18%, while North America rigid and mobile volumes grew 40%. The gross profit expanded 39%, while OpEx has remained relatively flat. The most notable development over this period has been operating leverage. Commercial EBITDA improved from negative NOK 35 million to a positive NOK 56 million, with margins improving from 7% to 11% and continuing. This reflects sustained procedure adoption, growing utilization and the durability of our commercial model, which is shown in the graphical format on the next page. Taken together, these trends demonstrate that we are not just growing, we are scaling. We have shown that incremental revenue increasing drops through to the EBITDA. These performance trends clearly demonstrate our ability to scale the business, all while maintaining a focused commercial footprint. So let's go into summary. So fourth quarter revenue and EBITDA overall, a solid quarter with 9% product revenue growth in Q4, 10% on the year. We now have had 11 quarters in a row of positive EBITDA. The commercial EBITDA at NOK 8.4 million ex-BD and Milestones, NOK 5.9 million, but we continue to invest in key growth initiatives that we believe will, one, position us for long-term success; two, generate future revenue growth; and three, increase our operating leverage. The Flex and surveillance market now and in the future, Richard Wolf and Photocure's joint development program is well on track and will bring Flex back to the surveillance market. We are now 15 months into development, which is going quite well, and we estimate a market readiness in 2027. In the interim, we are beginning to reintroduce interim Flex by Richard Wolf in Europe. The first cases took place in late June and early July in the U.K. and the purpose of this interim solution is to keep interest high and collect data. North American account growth of installs and upgrades in mobile. North American unit sales grew 19%. We grew our active U.S. accounts by 22% year-over-year. New and reactivated accounts by upgrades, for example, and we believe this is a great indicator of our performance. We continue to work with KARL STORZ to grow the installed base of BLC equipment in the U.S., a key priority for KARL STORZ, and we expect this to continue to expand. KARL STORZ initiated the promo program last year, and I believe it has a little bit of a lag-time in purchase orders that we will fulfill here in the first quarter of this year. The ForTec national mobile rollout continues to gain traction and contribute to our growth, creating a new business by expanding access to otherwise inaccessible accounts with a novel mobile business model. There are now over 120 accounts that have tried the solution with nearly 200 users, and the momentum continues to build, bringing BLC access to so many desperate bladder cancer patients throughout the United States. In the EU, revenue was up 4%, 3% unit growth, particularly driven by DACH and double-digit growth in the priority markets. We continue to facilitate the imaging quality upgrades in nearly -- in our nearly 600 targeted accounts, and we believe that the Olympus Blue Light upgrade will help strengthen this initiative. So far, 60 Visera III upgrades have been installed since January 1, primarily in Germany, France, Nordic, and Austria and a strong pipeline and aligned interest with Olympus exists. We have a strong cash balance of NOK 239 million. And finally, we continue to advance several business development initiatives in next-generation precision diagnostics, including the partnership with Intelligent Scope Corporation/Claritas, which is the artificial intelligence software that we're developing in real time to help in blue light procedures. So the anticipated milestones, we are guiding 7% to 11% top line growth, all while continuing to show operating leverage on our commercial business. We will continue increasing Cysview and Hexvix account utilization through upgrades, installs, and a mobile solution, in particular in the U.S. The advanced development of the next-generation state-of-the-art 4K high-def Flex system to access and unlock the potential within the next 1.2 million surveillance procedures done in the U.S. and EU5. In addition, we want to expedite the strategic partnership with ICS to develop the blue light AI system, what we believe will be a game changer in bladder cancer precision diagnostics. We'll continue to generate data and present, in particular, data on health economics, positioning blue light cystoscopy as the go-to precision diagnostic in bladder care. We also want to increase access to BLC in the U.S. vis-a-vis the citizen's petition or the alternative pathways to U.S. approvals. And finally, we'll continue to support Asieris' progress across both Hexvix and Cevira with potential to receive significant milestones. And with that, I think we can open up to questions. Unknown Executive: The first question is if you could put some flavor on the Tower development in the fourth quarter. Daniel Schneider: Yes. As I mentioned, last half of 2025, KARL STORZ initiated a promotional program. They -- we believe or what we're hearing is that it -- some of the installs they expect in the fourth quarter will flow into first quarter this year. But one thing I do want to remind everyone, we are highly focused on throughput of existing towers right now. The swell of interest in precision diagnostics and blue light cystoscopy being the foundation of bladder cancer care, it's extremely important that we're there supporting it. The second part is KARL STORZ in the U.S. has roughly 1/3 of the market. So when you think about installs and then also mobile coming in with it, we take a look at it more in terms of account growth rather than installs. And the account growth was 22% in the fourth quarter. So we're very pleased with that. Unknown Executive: The next question is about Ipsen and if there have been any discussion with them to pay a onetime amount and remove the earnout? Erik Dahl: This is Erik. Yes, they are in discussions. We have approached them. However, we didn't agree on the amount and the yield. So, well, takes 2 hands to clap. Unknown Executive: Then there are questions about the guidance. Note that there are several similar questions being submitted, which although some have been thoroughly outlined by the management in the presentation. But the first question on guidance is, in your guidance, can you clarify what continued operating leverage flow-through means? Priyam Shah: Sure. I can take that one. So the Hexvix/Cysview commercial business has a strong operating leverage. What that means is that a significant portion of incremental revenue flows straight through to the commercial EBITDA because most of the costs are fixed. We demonstrated that in 2025 with the commercial EBITDA margins going up from 7% to 11%. So every additional procedure unit sales -- sold contributes disproportionately to profit growth. That's what that implies. Unknown Executive: On your 2026 guidance, how do you see growth rate in North America versus Europe? Should we expect it to be similar to 2025? Daniel Schneider: Yes. I think you can expect it to be fairly similar. We expect growth rates in the high teens in North America, primarily driven through rigid and mobile solutions. Flex still remains a very small drag on the business as it represents less than 5% of the business, but it's still 5% of the business, and it could drop out completely, but we overcome that. In Europe, we expect, again, same sort of mid-single digit, reminding everyone that the DACH, Germany, and Austria are fairly mature markets, but the priority growth markets are expected to grow at double digits. And when I say significant, double digits in 2026. So that blended growth rate ends up being sort of in the mid-single-digit growth rate. Unknown Executive: When do you expect Flex approval? Daniel Schneider: We got to get through the development first, and that's well on track. We've seen the prototype. It's a slick system. We're super excited about it. When we announced this, we said it would be a 2-year development. We're 15 months into it. So I think the development and then, hopefully, we have a submission maybe later this year with hopefully approval in Europe for sure. And if we can find our pathway through the U.S., which we believe we can, we get a U.S. approval as well as we look into 2027. We'll give more updates as we go. The development piece is well on track, and it's super exciting. The system is very, very good 4K hi-def. But when we get to the regulatory, we'll give some more updates as we submit and move forward through the process. But we're super excited about it. And let me add one more thing to that, [ Geir ]. The market is really starting to mature for the Flex. I think 7, 8 years ago when they launched all -- the only option out there was BCG. Now with these precision therapeutics coming out, the payer world is demanding proper surveillance and monitoring of these medications that can cost up to USD 1 million. So we think we're hitting the market just perfectly right, and we're super excited about that. And we're going to have the world's only blue light flexible system and have exclusive rights to that, so. Unknown Executive: We are heading towards the end of the Q&A section, but has any new OMM scope manufacturer filed with the FDA for clearance? If not, any input as of when that will happen? Daniel Schneider: We're not aware of any yet, but we do expect it this year. Unknown Executive: Last question, and could you comment some more about the CMS reimbursement discussion and potential impact? Daniel Schneider: Yes. So this is a situation in the U.S. CMS has us in a bundled procedure payment, meaning, basically, if the procedure is reimbursed at, call it, USD 5,000, if they do a white light procedure, they get USD 5,000. If they do a blue light procedure, they get USD 5,000. But in the blue light procedure, part of the cost of that procedure is the medicine itself. So the net -- call it, the net profit is a little bit less. Now it still covers it. It's not a negative economic situation, but it is a negative profit situation. What we want to do is use the analog of the radiopharma business, which 1-1/2 years ago was decoupled. So radiopharma procedures and the product they use get separate reimbursements. We want blue light cystoscopy with Cysview to be decoupled. They would reimburse Cysview separately with a profit margin. And then the procedure would be the same procedural reimbursement, whether it's white light or blue light, it's economically neutral. So that's what we're going for. We're doing this in concert with a couple of other companies who have similar situations. We're the ones sort of orchestrating this. I remain optimistic. The goal is to get this through and get a decision potentially by late summer. And then it would -- if we're successful, this would implement in 2027. And I will tell you that it had a dramatic impact on the radiopharma business. So we believe this is a very much an impactful effort on our part. Unknown Executive: That concludes the Q&A segment, Mr. Schneider. Daniel Schneider: Thank you, Geir. All right. Well, thank you, everyone. Thank you, Priyam and Erik, for joining. Geir for consolidating questions. We look forward to seeing everyone at Q2. Have a great day.

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PTTWF 2025 Q4 财报电话会议

Leszek Iwaszko: Good morning. Thank you for standing by. Let me welcome you to Orange Polska conference call in which we will summarize our achievements in 2025. My name is Leszek Iwaszko, and I'm in charge of Investor Relations. The format of the call will be a presentation made by the management team, followed by a Q&A session. Speakers for today will be our CEO, Liudmila Climoc; and CFO, Jacek Kunicki. So I'm passing the floor to Liudmila to begin the presentation. Liudmila Climoc: Thank you. Thank you, Leszek. Good morning. Happy to welcome you at our conference summarizing last year results, and let's start. In March last year, we have presented to you our new 4-year strategy, Lead the Future. And today, I'm very pleased to say that 2025 was a strong start. We have progressed in all key pillars of our strategy and prepared a solid ground for next years. First on the line is our commercial performance that was excellent in both retail and wholesale. In retail, we uplifted both customer base and ARPO. In wholesale, we started to benefit from new important business development streams. And commercial growth is an essential pillar for value creation in our plan. Second, to mention is network. In order to win customers, we are committed to bringing first-class connectivity at home, at work, on the move. And in 2025, we significantly progressed in 5G coverage, already 85% of Polish population can enjoy 5G with better quality, higher speed, better latency. Orange Fiber is now reaching almost 10 million homes. It's 2/3 of households in Poland, and we have added 1 million last year. And the third important contributor to our results was transformation, transformation and efficiency. One of the main pillars of Lead the Future. We increased our efficiency by better cost and by better CapEx management, increasing profit margins and improving cash conversion as a result. We have initiated a new transformation program last year that brought the first results, but we expect more to come in next years. Lead the Future is focused at value creation for our shareholders. And in 2025, we clearly demonstrated it by growing our financials. I'm very proud that we delivered 47% in total shareholder return through growth of our share price and paid dividend. Speaking about the financials, let's have a look on how we have performed versus guidance. So here, you see the slide illustrating it. We did very well. Growth rates on revenue and EBITDAaL was overachieved. We promised the range of low single digits. In both cases, we achieved mid-single. We overachieved on revenues, thanks to positive dynamic in IT&IS and in wholesale, but the main engine of revenue growth is our core telco services with strong 6.5% growth. EBITDAaL benefited from strong profitability of core telco and wholesale, but also combined with cost efficiencies in. For eCapEx guidance, it is met at the low end of the range, despite lower-than-expected sales of real estate, we managed to -- we managed our investments very efficiently. As you see, our growth story is developing faster than originally expected. And let's see what were the main commercial performance drivers for this. So looking on the commercial parts, 2025 is very strong. We attracted new customers and simultaneously, we grew ARPO in all key services in a very balanced way. In convergence, both customer base and ARPO increased by a solid 4%. For fiber, customer base increased by 10% and ARPO by almost 5% and I'm very pleased with this performance in convergence and fiber as competition here continues to be the most intense. We estimate -- so that we further improved our market share in high-speed broadband. So Orange is the [ synonym ] of fiber. Mobile performance in 2025 was exemplary, almost 350,000 customers joined us with mobile postpaid offer. It's almost 4% growth. The highest number in a few years. And both segments were contributing consumer and business and also all brands were contributing to this performance. ARPO increased by less than 1%, and it is explained by a strong contribution of more than 5% growth of ARPO for main brand, which is diluted by an increasing share of the B brand in our total customer base. Pace of growth in all services is in line with what we said for us as an ambition in Lead the Future, and it is demonstrating that we have the right strategy and we are navigating well in the competitive environment in Poland. So to zoom on our commercial tools, let's move to the next slide. Our focus in Lead the Future is on building new relationships, reaching new families with our services and further using it as a pull for further growth with additional services and with conversions. In 2025, we achieved it by pursuing a bold marketing plan. We visibly improved our marketing communication, refreshing the main brand in order to reach younger segment, changed the visual identity of our prepaid products and our B brand, Nju also received a new format. We put together -- we put also higher focus on stand-alone offers. Our new multi-SIM family offer proved to be a very successful in second part of the year. We boosted content proposition for our fiber and TV offer, making it significantly more attractive. And these elements combined with AI-enabled tailored offers contributed to customer loyalty for the existing base and allowed us also to attract new customers. On the value side, we further pursued our more for more strategy. ARPO benefited from good demand for higher data plan in mobile and also higher speeds for fiber offer. Customers with higher speed options in fiber already account for almost half of our customer base. As a result, the number of Orange households where we are present with, our services was growing, reversing a multiyear trend. And this represents fundamental change for us that is also offering very promising prospects for future. This was about retail. Let's now look at wholesale on Slide 8. Last year was particularly strong for our wholesale line of business, both our own and also in our core -- FiberCo Swiatlowód Inwestycje. As you see on the slide, we have recorded a solid 13% of wholesale revenue growth, excluding legacy services, much better dynamic versus previous years. And I will mention 3 drivers that were contributing to it. First is a new fiber backhaul contract, which was bringing results in the last 4 months of 2025. In 2026, this year, it will help us to fill the gap left by national roaming contract that has expired in 2025. Second is the accelerated growth of revenues from access to our fiber network to other operators. And accordingly, growing monetization of our infrastructure. We reported an impressive 36% growth of wholesale customers on our network, a result of opening of our network for wholesale, which took place in the second part of 2024. And the third pillar driver is services, which we rendered to our FiberCo Swiatlowód Inwestycje, like lease of infrastructure delivery of services, network maintenance, they are growing in line with growing scale of FiberCo. Speaking about our 50% co-owned FiberCo. 2025 was a very important milestone here. It marked completion of the initial investment program, which was set in 2021, in line with our plan, FiberCo network reached 2.4 million households. In 2026, new program has started with fully secured financing, and we are very pleased with operational and with financial dynamics. Despite the fact that FiberCo is still at a very early stage of development, significantly investing into the network expansion. Swiatlowód Inwestycje EBITDA of last year exceeded PLN 140 million with a margin of 35%. We expect this to increase along the growing network acceleration. And obviously, we plan to strengthen it further by Nexera deal of course, subject to regulatory approval, which we are awaiting now. This acquisition is expected to be highly synergetic. Now switching to connectivity on Slide 9. In 2025, we reinforced our commitment to provide the fastest, the most reliable and trusted connectivity in Poland. And I want to start from mobile. We made big progress in 2025. Major projects of radio access modernization, which we have started several years ago is now almost finished. It is making our network more energy efficient and will enable usage of new spectrum for -- new spectrum bands for 5G. For 5G, it was the second year of rollout on C-band spectrum. We are covering now already 60% of population in Poland, meaning that we are very much advanced on the market. Rollout on 700 megahertz spectrum, aiming wide coverage has started just 6 months ago, and we are already at 64% population coverage. These both spectrum bands, we boosted 5G coverage to 85% by end of last year from below 40% a year ago. And we -- as well, we have completed the commissioning of obsolete 3G, allocating frequencies to 4G and enabling us to increase network capacity and improve the quality of services, which we are providing. In fiber, we are investing both in the reach and the coverage of the network, but also in service quality. Orange Fiber from a quality perspective was again validated by independent benchmarks where our fiber network is ranked again #1 in 2025. Fiber reach continues to grow fast. We have added another 1 million households to the coverage, reaching 10 million homes in total. It was mostly delivered by Swiatlowód Inwestycje and also by access to other third parties, FiberCo's networks. Our own build is targeting wide zones with projects supported by EU subsidies. Rollout as well accelerated in 2025, as we have invested almost PLN 90 million in this project, and it will be completed this year in 2026 with investment effort of over PLN 100 million -- PLN 120 million. Let's zoom now on transformation. With Lead the Future, we have initiated a new wave of transformation. You remember the ambition of our Transform and Innovate pillar to boost efficiency, which will be leading to improved profit margins. We will achieve it through automation, through process reengineering and opportunities which are arising from integrating AI in our operations. Firstly, in sales and customer care operations. Here, digital channels are progressing, and we see them being much more efficient and much better responding to customer expectations to be served online fast with seamless experience. And as a result, we are approaching 30% in share of digital sales with ambition to reach 35% by 2028. My Orange app is our key asset here contributing to this target. We are constantly improving it, adding new functionalities and using AI for personalization. In customer care, we are making another step change with AI agents. For instance, in 2025, we launched an agent, which helps our advisors to provide optimal remedy for technical problem solving. This reduced number of contacts and improving customer experience. We are working on more agentic solutions to be implemented in this year 2026 for better quality and better productivity. Secondly, in network operations, we improved cost efficiency last year, and we are aiming to do more. To reduce cost of service delivery and network maintenance, we use more remote tools, self-installation, boxless solutions for content and TV, and AI supported dispatching of technicians. We have started progressive decommissioning of legacy copper network targeting first areas with less customers, less usage and accordingly less profitable. And recent deregulation decision will allow us to do it at a much better speed. And finally, we are reducing costs across all our functions, making ourselves leaner and more agile. In recent months, we have made several organizational changes aiming to streamline our operations. And as a part of this process, we signed a new social plan with our social partner under which number of employees will be reduced by 12% over the next 2 years. And finally, I want to stop at the moment at our sustainability agenda and achievements. I'm convinced that growth and responsibility go together. And our actions bring a real difference and contribute to the development of Polish society and economy. And we are very proud of our progress in 2025. In today's fast-changing world, there is a growing need for education on responsible and safe use of technology. And here, we concentrate our energy, the number of beneficiaries of various digital programs was growing and exceeded 200,000 last year. And as well last year, our Orange Foundation has celebrated 20 years anniversary, a proof of our long-term commitment for society and for digital inclusion. On environmental area, in 2025, we significantly reduced CO2 emissions. Actually, we almost reached our goal, which we set for 2028. This was possible as all the electricity we consumed came from non-emission sources. And finally, in 2025, we reinforced our efforts in the area of circular economy, thanks to newly launched platform, we significantly improved the collection of used handsets. And also, we significantly increased the share of refurbished fixed devices that we distribute. It brings a positive impact on the environment, but also is improving our cost base. So this being said, I want to pass the floor to Jacek to give more deep dive on our financials. Jacek Kunicki: Thank you, Liudmila. Good morning, everyone. Let's start with the financial summary. Our financial results last year were strong and they came above expectations. We have increased both revenues and EBITDA by over 4% year-over-year and expanding operating activity is the main driver of our value creation. What is important is that this growth is built on a solid sustainable foundations. We've executed a disciplined investment plan, allocating capital to growth areas and decreasing CapEx intensity. We are confident to further optimize capital allocation going forward. As a result, we have converted the EBITDA growth to cash flows, reaching PLN 1 billion of organic cash flows in 2025. These achievements have also built solid foundations for further growth of shareholder value in the future. Let's now look at details of our performance, starting with revenues. Q4 revenues have increased by a strong 4.6% year-on-year. Please note that all key products have contributed to this achievement. Let me comment on two of them with the highest impact. First, core telecom services, which are key for our growth, value creation and margins. We're pleased with the sustainable strong performance stemming from a simultaneous growth of the number of customers in the key product areas and of their respective ARPOs. Core telecom revenues were up 5.5%, so at the high end of our midterm guidance. This was achieved versus a high comparable base of Q4 2024, when we implemented price increases for the customer base of prepaid. The second item is wholesale. It was an exceptional quarter for wholesale with 27% year-on-year revenue expansion. Q4 included the full impact of the fiber backhaul contract signed in the prior quarter in Q3. And also, it was the last quarter with revenues from national roaming. We expect to further grow the value of our wholesale business going forward. To sum up on the top line, first, we're happy with the pace of revenue growth and the key drivers of our margin. Second, revenue growth is supported by all major product lines. This includes IT&IS revenues, which have returned to a double-digit growth of sales in 2025, a dynamic that will continue this year. Let's now switch to profitability. We're pleased with a strong 6% growth of the EBITDA after lease in the fourth quarter. This was driven by a 5% increase of the direct margin. It reflected consistent margin expansion from core telco services coupled with them discussed significant contribution from wholesale. Indirect costs have increased year-over-year, but mostly because of a PLN 30 million impact coming from 2024 when we recorded a catch-up of the fiber rollout margin in the last quarter of 2024. This item apart indirect expenses grew by less than 1% year-over-year as cost pressures were contained by the savings program. Our cost transformation is accelerating. It delivered savings in workforce, network operations and G&A, and we plan to increase the savings run rate that will be visible in 2026. To recap on EBITDA. First, we delivered a strong 4% growth in the full year of 2025 with an acceleration in the second half of the year. Second, the growth is built on sustainable drivers as the increasing revenues and margins are converted to EBITDA via our high operating leverage. Let's now turn to net income on the next slide. We achieved PLN 760 million of net income last year. This included PLN 150 million provision for a 1,000 employee headcount restructuring to be done in 2026 and 2027. It is important to our transformation and it will increase our efficiency going forward. Excluding this provision, net income was on a comparable level to 2024. On the one hand, it was driven up by growing EBITDA, a factor that will consistently boost our net results going forward. On the other hand, it was brought down by 2 elements that we don't expect to repeat in the future. First, depreciation, which was driven up by purchase of the 5G license, changing asset mix and one-offs with opposite impacts in both 2024 and 2025. Here, we judge depreciation to have reached its peak in 2025. Second item is finance costs, which increased as a consequence of higher debt due to the purchase of the 5G license and higher interest on the PLN 1.2 billion refinancing, which we had made back in the middle of 2024. We expect significant growth of net income this year in 2026. As the EBITDA growth is its fundamental underlying driver while the negative impacts visible in 2025 are largely nonrecurrent. Let's now switch to capital expenses on the next page. Our economic CapEx amounted to PLN 1.8 billion. So it was at the very low end of our guidance. CapEx intensity measured as a percentage of revenues, has decreased to 13.8% in 2025, in line with our midterm ambitions. We allocated 40% of CapEx to fiber and mobile networks. In fixed, this included fiber rollout in white zones and connections dedicated to the B2B. In mobile, we have significantly progressed with 5G deployment as discussed by Liudmila a few minutes ago. Please note that this year, in 2026, we will finalize the EU subsidized fiber build, and we will reach the peak of the run rate of 5G rollout. This latter program should be nearly finished by the turn of 2028 and 2029 and both of these present us with an obvious opportunity to further decrease CapEx intensity after 2028. Let's now look at cash flow on page -- on the next slide. We generated PLN 1 billion of organic cash flows last year. This good result was achieved thanks to growing operating cash flows, and these were coming from the EBITDA, so a sustainable underlying positive driver. It was offset by less cash from the sale of real estate and 2025 was challenging in this area, and some key transactions were delayed through 2026. As a result, we expect higher inflows from this activity this year. Obviously, the free cash flow was influenced by the acquisition of the 5G license. But now we have the last of the new spectrum acquisitions for 5G behind us. So the cash flow prospects going forward are much more predictable. On the balance sheet side, the balance sheet remains very strong, and we have already secured the refinancing of the PLN 3.7 billion debt that is due next year. For the conclusion, I wanted to reflect on our value creation model shown on the next slide, which we have presented alongside with the Lead the Future strategy. Our 2025 achievements confirm that it is working well. It increased the key drivers of shareholder value creation and their underlying dynamics inspire confidence about the good prospects for the future. That is all from me, and I hand the floor back to Liudmila for the outlook and conclusions. Liudmila Climoc: Thank you, Jacek. So now coming to our priorities for 2026. We have 4 main areas and all 4 are rooted in our strategy in Lead the Future and it starts with profitable commercial growth. On consumer market, we aim to deliver a solid growth of core telco services, and we are going to achieve it through our balanced volume and value strategy in mobile, in fiber and in convergence. Secondly, we aim to achieve profitable growth in B2B. For small businesses, we will differentiate by complementing telco products with digital services, such as KlikAI web creator that we have just launched in subscription model. For large businesses, we bring new operating model that will group all our IT&IS competencies under one roof in order to unlock more potential. So commercial growth will be accompanied by high-intensity transformation to improve our profitability. As we discussed today, we have high ambitions in this area. Our commercial ambitions require a reliable and high-quality connectivity in order to answer to customer demand and accordingly investments in innovative solutions and tools that bring value for customers and for our operations. And this is the -- reflecting the way how we will prioritize on our investments, of course, keeping an eye on return. And now let's turn the page to see how this translates into financial targets for 2026. We aim to create significant value for shareholders this year. 47% in total shareholder return in 2025 is impressive, and we will make every fourth to sustain this positive momentum. We plan to grow revenues at low single-digit rate, noting that it is essential to maintain a solid dynamic of core telco. We expect another year of solid EBITDAaL growth in the range of 3% to 5%. It will be achieved through a combination of profitable commercial growth and cost transformation. Higher revenues and high EBITDA will be achieved with similar level of investments like in 2025, meaning a decrease in CapEx intensity obviously, roll out of 5G and completion of fiber project and white zones will be key for 2026. In line with the midterm objectives, we provide guidance for organic cash flow. It reflects our internal focus on these key return metrics. And we are very happy to achieve PLN 1 billion in organic cash flow in 2025, and we are aiming to generate at least PLN 1.1 billion in cash in 2026, a double-digit percentage growth as our objective speaks for itself. And looking at the midterm guidance on the next slide. As you have seen, 2025 results were good. And we also expect strong outputs in 2026. We are confident regarding our ability to reach this ambition. And as a consequence, we are more optimistic regarding the greater value in the future. And as such, we are upgrading our midterm guidance. For EBITDAaL, we are maintaining guidance of CAGR at low to mid-single digit. However, we clearly see that the current trends make high end of this range more probable. Regarding eCapEx, we are making our commitment more concrete. This -- we will spend PLN 1.8 billion per year. This means growth in revenues and EBITDA with a stable level of investments, so improving our CapEx efficiency. The combination of solid EBITDAaL growth and flat eCapEx enabled us to be more bullish regarding cash generation. We are now expect to generate at least PLN 1.4 billion of organic cash flow in 2028. This implies at least 40% growth versus 2025 level and a double-digit CAGR. This guidance clearly illustrate better prospects for future, for value creation, for our shareholders, dividend is also very important in this regard. So let's have a look on it on next slide. As presented today, we delivered our objectives for 2025, and we enjoy more optimistic future prospects. As a consequence, we recommend a cash dividend of PLN 0.61 per share from 2025 profits. This is a 15% increase versus last year. The level of PLN 0.61 per share now becomes a floor for the remaining years of Lead the Future plan. A year ago, you remember, we told you that we are working to create conditions to enable us to grow dividend, and we are very glad to be able to deliver on that, and we will continue with these efforts going forward. This concludes our presentation. And in just a moment, we will be ready to take your questions. Leszek Iwaszko: Yes. Please give us a moment. We will return for Q&A. Leszek Iwaszko: Welcome back. For Q&A session, we are joined by 4 more board members. Jolanta Dudek, Deputy CEO, in charge of Consumer Market; Bozena Lesniewska, Deputy CEO, in charge of Business Market; Witold Drozdz, in charge of Corporate Affairs; and Maciej Nowohonski, Board member in charge of wholesale market. [Operator Instructions] We have a first question coming from the line of Dominik Niszcz from Trigon. Dominik Niszcz: I have two questions, one on CapEx and the second on mobile B2B. So I would like to ask for a comment on CapEx in the context of rising prices of certain network components, you actually are not increasing your CapEx guidance in the long term, but lowering it from around 14% of revenues to at 13%. So should we understand that despite rising equipment prices, you believe there is no need for such high investment volumes as you previously assumed? And what is the price growth component in 2026? Jacek Kunicki: Thank you, Dominik. I would reiterate, yes, our CapEx guidance well, is an all-in guidance. It's not excluding any price increases or price decreases because you have some elements increasing in prices indeed and the memory chip crisis, it is resulting in some prices that might be temporarily or permanently increased. It also includes the fact that while eCapEx in '25, '24 was heavily supported by the sale of real estate, the proceeds from sale of real estate, this stream of both cash flows and CapEx support will inevitably be disappearing by the end of the plan. And it does involve a lot of effort on our side to make sure that we invest today in platforms and in systems that allow us to be more efficient tomorrow. This goes for IT expenses. And you will see by comparing the structure of our CapEx today to the structure of our assets or even to the structure of the CapEx 6 or 7 years ago that proportionately, we're investing more, and this is linked with IT transformation. It allows us to be more efficient on the side of the OpEx, but it also gives us future CapEx benefits as we will have less labor-intensive and also capital works. So yes, you will have both elements increasing our CapEx or pushing it upwards and the memory chip prices are a part of this. You will also have elements that will be relieving some of the pressure and giving us a potential to decrease CapEx. The fiber projects are near completion this year and starting from next year, this means roughly PLN 100 million less of CapEx dedicated to these type of programs. We will have the CapEx peak for the 5G rollout for 2 or 3 years and then CapEx for 5G rollout will be going down. The CapEx structure is obviously changing in according with the needs. But looking at the different projects that we have in the pipe, looking at the stage of advancement, looking at the fact that we have just finalized the renewal of the radio access network, we feel confident to be able to grow the EBITDA and revenues based on the same absolute level of CapEx. Dominik Niszcz: Okay. And second question, mobile B2C, what is the share of B2B segment in your stand-alone mobile revenues? And what is behind the current weakness in this market in your view? So is it more related to the condition and number of small businesses in Poland or rather to competitive pressure from other operators? Liudmila Climoc: Thank you for the question. I understand it's more for B2B. Yes. So from the perspective of last year, mobile was growing slightly less than in the previous year. As I will remind that in the previous year for a few years, consequently, we work on the price hikes and the growth of both ARPO and the overall revenue was for a few years at the level between 4% to 6%. Now we noticed the slowdown on the market. We are in the market. This growth, especially for the small companies is a little above the 1% for the overall '25, the situation differs segment by segment. In higher segments, we have the severe price fight between operators about the big customers, big deals. And here, we treated very selectively always having in mind that we create the value and the margin for the company and some deals are not tackled by us or even we are not going below the certain threshold that still allow us to generate the margin. So all in all, the difference between segments is very huge. We see the slowdown of the overall market according to the comparison of the results of the -- all operators, which we have till at the end of Q3 because the Q4 is not released yet fully, we see it was around the slowdown to around 1%, 1% a little plus, and we are accordingly in this market, keeping our very high market share above 32% since plenty of years. Leszek Iwaszko: Next question will be coming from the line of Marcin Nowak from IPOPEMA. Marcin Nowak: I have two questions. The first question would be about your optimism because it has been mentioned a few times during the presentation that your outlook is quite optimistic going forward. So my question is if still your guidance is more on the cautious side or more optimistic side going forward? And the second question is regarding the recent fine from the anti-monopoly office. Is it already fully covered in -- it was already fully covered in the second quarter under -- in an item below EBITDA or maybe there we should expect some more provisions related to that? Jacek Kunicki: Thank you, Marcin. Very relevant questions. I guess what we try to do is when we give a guidance, we try to give a range in which you would find the borders of our optimism or pessimism. And likewise, when we guide for EBITDA, it's 3% to 5%. So if we would be -- if we are on a cautious side, we will be closer to 3%. If we are on the optimistic side, we will be closer to 5%. I guess what -- and where we try to give you a little bit of flavor is we did not change the guidance for the midterm, and this is EBITDA -- low to mid-single-digit growth. But the optimism that we see right now, and it's not groundless, it's based on very solid trends in the B2C market is based on good positive business development in wholesale, and it's based on an accelerating pace of transformation that we're observing. That allowed us to, first, deliver the good results for '25, deliver a guidance, which is closer to mid than too low for the '26. And we do see that current trends would be with some degree of optimism point us towards the mid rather than low single-digit increase of EBITDA CAGR for the midterm. As for the cash flow, we did not change our stance. The cash flow guidance was and is at least -- it was at least PLN 1.2 billion. Now we expect to have at least PLN 1.4 billion. It means we will be working to try and make sure that we can deliver more cash, if possible. On the fine -- on the second question, Marcin, on the fine, we will not comment on an ongoing proceeding. So no comments regarding any items below EBITDA, no comments on the provision side, everything relating to risks, claims and litigations is appropriately described in the notes to the balance sheet, which you will find us publishing roughly mid-March. Leszek Iwaszko: Next question will be coming from the line of Ali Naqvi from HSBC. Ali Naqvi: You mentioned that you'll be seeing some reduction in capital intensity after your 2028, 2029 period. Could you give any kind of quantification of what that could go down to? And then your leverage is lower versus peers and the low end of the below market telcos. I appreciate you may be restricted in doing buybacks, but to keep the balance sheet more efficient, have you considered doing special cash returns, especially considering you're quite confident of the organic free cash flow you're going to generate to 2028? Jacek Kunicki: Okay. So on the capital intensity, First, we will be progressing with capital intensity reduction even before we are going to pass the peak of the 5G rollout. If you imagine us keeping CapEx at PLN 1.8 billion and growing the EBITDA by -- let's be optimistic, mid-single-digit CAGR, then it is clearly decreasing CapEx intensity. CapEx intensity means that CapEx as a percentage of revenues will be trending towards 13% by the end of the plan. And so that is step one. And then well, I think we will not guide for the CapEx in the period after the strategy. But clearly, the 5G rollout represents a few hundred million that we are spending each year. And this is something that will first decrease towards the end of the plan. And at some point in time, when we will have the 5G rollout completed. Of course, we will have other business priorities back then. But definitely, completing a rollout of 5G that is today consuming a few hundred million yearly, it does present us with an opportunity to decide do we increase investments in other areas that could be value accretive, productive? Or do we further decrease the CapEx going forward, knowing that already by that time, we will be trending towards 13% of revenues. So it's 2 phases, okay? One is relative to revenues to decrease CapEx by 2028. And then after we will have the 5G completed, we will have a decision to make, do we see other sources of good projects to invest this capital or do we further reduce capital intensity. On the shareholder remuneration, today, we are happy with a very strong balance sheet. I think it does give us ample balance sheet flexibility going forward. As far as shareholder remuneration is concerned, we haven't considered buybacks because of the limitations that you're aware of. And for the dividends, we have the policy that today's recommendation once voted by shareholders on the AGM will become the floor for the dividend going forward within the period of the strategy. And obviously, I will repeat the same message that I said 1 year ago. We will be working to create conditions that will enable us to be in a possibility to further increase shareholder remuneration in form of a dividend going forward. Leszek Iwaszko: Thank you. We do not have any more voice questions. So maybe I will read the instructions. [Operator Instructions] But there is one more question that came to us online. In the meantime, we have more voice questions, but we take those later. But the question on -- that came to us via text is, in the commentary through the Q4 results, the CEO pointed out that we are poised to generate substantial profits in the coming years from fiber backhaul business concluded in the second half of '25. Could you please say a few words about this agreement? Maciej Nowohonski: So good morning, everyone. Thank you very much for the question. And excuse me for my voice -- which definitely has seen better days, but this is in contrast to what we actually achieved on the wholesale line of business, the performance there is really satisfactory to us. I will not get down into the details of the commercial terms and conditions of the contracts that we are signing. But to give you color of what is happening on the holding market, I think, first of all, you are looking at the different markets in Europe and all across the globe, and you can compare or differentiate conditions on these markets, in Poland, particularly what strikes you probably is still the fragmentation of the market, and on this fragmented market, Orange Polska stands out in terms of the infrastructure. And we actually enjoying the basically, the success, which is purely generated from that, that we are strong in infrastructure, the market on which operators buy from other operators is large and is growing. The wholesale fiber, which normally, I would say, is connected with the wholesale activity is only a part of this market. And there is plenty of operators, which are actually interested to buy infrastructure and capacity for the transport network. And we basically respond to that constructing within the last 5 years, very strong activity and competence on that market. We are truly a partner to other operators on wholesale activity. And the result of that is visible in the contracts that we are winning on that front. So we will enjoy that particular contract for the coming years. Obviously, there is plenty of things to execute, but we are confident that we are able to do that with success. Leszek Iwaszko: Next voice question is coming from the line of Nora Nagy from Erste Group. Nora Nagy: Congratulations on the solid results. Two questions from my side, please. Firstly, on the tariff indexation, if you plan to implement it in 2026? And then if so, on which services? Jolanta Dudek: Hello, everyone. Thank you for these questions. In B2C, this year, we have implemented 2 price hikes for tariffs, first in Jan for mobile and in Feb for fixed broadband. In the meantime, we informed our customers about CPE clauses price hike for customers with indefinite contracts. So simple answer, we -- this year, we continue what has been done last year, and we have just implemented those 2 price hikes. Jacek Kunicki: And I think just to complement, I think on the price hikes that Jola mentioned were for the customer [ x ], so for the acquisitions and retentions, mobile and broadband. And the indexation obviously applies to the customer base that had eligible -- was eligible because they had the clauses in the contracts, and they were out of loyalty. Nora Nagy: Yes. And then secondly, how do you see the mobile phone services of Revolut in Poland? Shall we expect the company to focus more on the low-cost segment following the Revolut market entry? Jolanta Dudek: So as far as Revolut offer concerns, we expect that this offer will be dedicated mainly for the niche segments. And why, first of all, we do not see the impact on mobile number portability to Revolut. The second, this is the offer only limited to e-SIM. Third point, this offer has roaming packages on top and it's limited only to mobile, while home market is going to -- is focused on packages. So for the time being, we do not see the important impact on our base and on our market. Leszek Iwaszko: Another voice question is coming from line of Dawid Górzynski from PKO BP. Dawid Gorzynski: Actually, I have three questions. So maybe I will address them one by one. First one is on your assumptions behind over PLN 1.1 billion organic cash flow for this year. I wonder like what do you assume for the value of assets sold? And regarding cash CapEx, what maybe other differences between eCapEx and cash CapEx this year, if cash CapEx may be like higher than eCapEx because of some reasons. Jacek Kunicki: So for this -- thank you for your question. The PLN 1.1 billion organic cash flow. the base is what we achieved this year. The main growth driver is the growing EBITDA because we do expect to have 3% to 5% EBITDA growth, and we do expect for this EBITDA growth to convert to cash. We did not make bold, unorthodox assumptions on working capital. And we have assumed eCapEx to be flat at around PLN 1.8 billion. And eCapEx includes both the CapEx spending and also the inflows from sale of real estate. As I mentioned, last year, real estate sales were a bit below our expectations due to a challenging market and due to some key transactions being delayed even from late December. So on the one hand, the delay of the transactions gives us some boost and potential to do more this year from real estate sales than we did last year. But then on the other hand, it's not a recurring business. We really need to be prudent on our assumptions for real estate sales and for how much we are able to sell because this is a transaction by transaction and a buyer-by-buyer market. So I will go back. It's the EBITDA that is driving the better prospects for cash flow, not some wild assumptions on neither working cap nor on the real estate sales. We will obviously do our best to maximize real estate sales, minimize working cap. But the underlying driver is the EBITDA growth. Dawid Gorzynski: Second question on the Cybersecurity bill that is awaiting the sign from the President in Poland. Do you assume any impact of that bill on like potential requirement on replacing high-risk infrastructure? And perfectly, if you can quantify that impact for next year? Witold Drozdz: Obviously, we monitor closely this legislation. The deadline for signing is tomorrow. So we will see if it is signed or not. However, as it introduces some regulations that are that -- or will not introduce, but anyway, it refers to some fields of regulation that we are aware of, and it is also fully in line with the policy that we pursue for years, then we do not expect any substantial impact from the perspective of our business and results. Maybe Jacek... Leszek Iwaszko: Your third question, Dawid. Dawid Gorzynski: And yes, last question on Nexera deal and that chance or the requirement if -- do you think that the debt in Nexera will need to be repaid or it may be stood in the company? Jacek Kunicki: Thank you very much. So here, for Nexera, we are after having signed the SPA, we have not yet had the closing of this transaction. So obviously, this means that the process is really preliminary. Our intent is to keep the debt on the balance sheet of Nexera. We think that this asset will be performing much better than -- this transaction gives much better prospects for Nexera going forward. Orange Polska and APG are highly reputable buyers. We have substantial synergies of this transaction with Swiatlowód Inwestycje, we clearly have an intent to bring Nexera under the umbrella of Swiatlowód Inwestycje. So this also means that these better prospects mean better financial prospects for the company, and we will be discussing this with the financing banks. The intent clearly is to keep the debt and as much as we can of the debt on the balance sheet of Nexera. We are not in a position today to share with you exactly where we are in this process also because of an early stage. We are just after signing the SPA, we will be keeping you updated on what we have finally achieved. But definitely, the intent, the goal is to keep the debt on the balance sheet of Nexera. Leszek Iwaszko: We have one more text question. I will read it. It comes from Piotr Raciborski from Wood & Co. What impact of changes in working capital on organic cash flow? Do you expect in 2026, I guess you're -- unless you want to add the asset, but I think it was answered just a moment ago. Jacek Kunicki: Yes. I mean we will see how the business evolves. We will see how the inventory levels, the receivables will evolve over time. We will need to monitor this as we go forward. I would prefer not to disclose extremely specific assumptions, but it's -- the growth of the organic cash flow is not built on an assumption -- explicit assumption of a significant improvement or a significant decrease -- increase of working cap. It is based on the growth of EBITDA and the growth of EBITDA is coming from -- predominantly from core telecom services. So that does not imply huge requirements for working cap. And it's coming from cost transformation. And again, this is not something -- it's not sale of handsets in installments. It's not something that is requiring us to freeze up large amounts of working capital as a result of this. So this is what makes us confident going forward, is that the progression of cash flows is based on solid, sustainable, repetitive growth patterns coming from the core business. And this is what makes this growth very healthy. And this is why we think we can sustain it, not only for 2026, but we can sustain the good progress all the way up to 2028, hence, the improving prospects for the midterm guidance. Leszek Iwaszko: Thank you. We have no more questions. So thank you very much for listening, watching us, asking questions in case you wanted to meet us, please give us a note on that. Otherwise, we will come back in April with Q1 results. Thank you very much. Jacek Kunicki: Thank you very much. Liudmila Climoc: Thank you.

86天前Insight Analytics约5分钟阅读

EREGL.IS 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by. I'm Polina, your Chorus Call operator. Welcome, and thank you for joining the Erdemir conference call and live webcast to present and discuss the full year 2025 financial results. [Operator Instructions] The conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions]. Please note Eregli Demir ve Celik Fabrikalari T.A.S, may, when necessary, make written or verbal announcements about forward-looking information, expectation, estimates, targets, assessments and opinions. Erdemir has made the necessary arrangements about the amounts and results of such information through the disclosure policy and has shared such policy with the public through the Erdemir website in accordance with the Capital Markets Board through regulations. As stated in related policy, information contained in forward-looking statements, whether verbal or written, should not include unrealistic assumptions or forecasts. It should be noted that actual results could materially differ from estimates, taking into the account effect they are not based on historical facts but are driven from expectations, beliefs, plans, targets and other factors, which are beyond the control of our company. As a result, forward-looking statements should not be fully trusted or taken as granted. Forward-looking statements should be considered valid only considering the conditions prevailing at the time of the announcement. In cases where it is understood that forward-looking statements are not longer achievable, such matter will be announced to the public and the statements will be revised. However, the decision to make a revision is a result of a subjective evaluation. Therefore, it should be noted that when a party is coming to a judgment based on estimates and forward-looking statements, our company may not have made a revision at this particular time. Our company makes no commitment to make regular revisions, which would fully cover changes in every parameter. New factors may arise in the future, which may not be possible to foresee at this moment in time. At this time, I would like to turn the conference over to Mr. Idil Onay Ergin, Investor Relations Director. Mr. Ergin, you may now proceed. Idil Onay: Thank you very much, Polina. Good afternoon, everyone. Welcome to our conference call and webcast of Erdemir for the last quarter of 2025. First, I will go through our Investor presentation, which you can find on our website, and you can also follow it through the webcast. Then at the end of this presentation, there will be a Q&A session as usual. Our presentation consist of two sections, as you already know. The first one is the market overview and then the financial results. So let's start with the commodity prices. On Page 3, you will see the prices of steel-related commodities and HRC. Let's take a look at coking coal, iron ore, scrap and HRC prices. In the fourth quarter of 2025, the coking coal markets experienced buyers strongest price period of the year despite weak steel demand and low profitability. During this period, coking coal prices averaged around $200 per quarter, while closing the year $218 per tonne above the annual average. Iron ore prices showed more resilience in the fourth quarter compared to the previous quarter, fluctuating between $102 and $109 per tonne and stabilizing at an average of $106 per tonne. Despite uncertainty regarding demand from China and strengthening global supply, the ability of Chinese producers to maintain production at a certain level, along with the speculative pricing kept prices mostly above $105 per tonne. It is expected that iron ore prices will remain sensitive to stimulus expectations and policy news from China in the short term. Despite buyers cautious spends, seasonal supply constraints enable suppliers to maintain a firm position resulting in Turkish imported scrap prices closing Q4 at an average of $359 per tonne above the annual average while there was no sharp decline in square prices throughout the quarter, a clear wait-and-see sentiment prevailed in the market. On the bottom right, we show HRC prices in Black Sea, China and South Europe. The global HRC market has left behind a period in which protectionist measures and trade policies became more decisive. The European Union steps to reduce import quotas and uncertainties surrounding sea import appetite while gradually increasing the bargaining power of European producers. In Asia, HRC prices remain fragile due to low demand from China and policy uncertainties, while a flat positive but cautious outlook prevails in the global HRC market. Q4 market expectations converged that as we enter 2026, the impact of protective measures will be felt more clearly and prices will be shaped by a cost-based search for equilibrium. On Page 4, you will see the production consumption, exports and import figures of Turkish steel market. In December, Turkish crude steel production rose to 3.5 million tonnes, representing a 7% increase compared to the previous month and 19% rise year-on-year, reaching the highest monthly output of the past 15 years according to the official data from the Turkish Steel Producers Association. This growth reflects resilience in domestic output despite the challenging global steel market conditions. Going back to the slide, while production and consumption rose by 3%, exports of steel products grew by 13% in volume during the year and reached 15 million tonnes. In the January, December 2025 period, the European Union continues to be the leading export destination with a 37% annual growth, while the MENA region ranked as the second largest market. Imports also increased by 9% to 19 million tonnes over the same period. As a result, the export import coverage ratio, which was 74% in 2024 increased to 78% in 2025. It was observed that the total imports were largely realized under the inward processing regime. As we shared in the last quarter's call, with the circular published by the Trade Ministry on September 16, 2025, it was made mandatory for 25% of the input of products processed to export to be supplied domestically. This change was welcomed in terms of domestic steel production. As a result, total flat product imports in December decreased to 653,000 tonnes down 23% compared to the previous month and 12% compared to the December 2024, marking the lowest monthly level recorded in the past 9 months. In the context of global steel trade policy, the European Union and other major markets have implemented or proposed enhanced safeguard measures to counteract increasing import pressures. The European Commission has moved forward towards tightening steel import quotas and increasing out-of-quota duties, including potential reductions in tariff-free quota levels and higher tariffs for excess shipments, steps aimed at protecting domestic industries and reducing reliance on imports. Asian countries, which have been the most negatively affected by this policy increased their exports to unprotected markets. So let's take a look at the financial results and the operational metrics. On Page 6, you will see the summary of our 12 months results. We achieved USD 5.3 billion revenue. Also, we generated $501 million EBITDA and $13 million net profit. On Page 7, you will see the operational indicators of our company. Following the commissioning of the last 2 investments in our current investment package in the second quarter of 2025, our crude steel capacity utilization ratio, which was 75% in the second quarter and 90% in the third quarter increased to 95% in the fourth quarter. Accordingly, sales and production levels returned to their normal levels. Strong demand, we achieved sales of 2.2 million tonnes in the last quarter, sales volumes of over 8.2 million tonnes in 2026. So let's take a look at segmental breakdown of domestic sales and export volumes on Page 8. As you can see from the pie chart, there has been a slight change between sectors when we compare it to last year's breakdown. There has been a transition from general manufacturing and auto to pipeline profile and distribution chains on a percentage basis. We see similar changes between sectors in the long products, although its share in total sales is relatively small. We achieved an export volume of 1.5 million tonnes in 2025, representing 20% export share in total sales. Although our main focus is the domestic market, we also consider export as an alternative market. On Page 9, you can find a breakdown of revenue for domestic and export sales. 79% of the revenue comes from domestic sales in line with the domestic volume. Despite import pressure in the domestic market, we achieved to generate $501 million EBITDA. We generated $64 EBITDA per tonne in 12 months. Our EBITDA per tonne guidance for 2026 stands in the range of $75 to $85 per tonne. In 2026, we expect EBITDA per tonne to increase through cost reductions and increased efficiency resulting from newly commissioned facilities, increasing HRC prices and our company's increasing sales volumes. We generated $13 million net profit in 2025 as a result of legislative amendments stating that statutory financial statements will not be subject to inflation accounting. The deferred tax income recorded in March, June and September financial statements was reversed. Despite the increase in EBITDA, this noncash item had a negative impact on net profit in Q4. On Page 10, you can see how we reached a net profit from EBITDA. One of the largest items was depreciation, which was $278 million in 12 months. The other major item in this chart was financial expenses of $206 million due to the increase in deferred tax expense following the cancellation of inflation accounting, the tax expense amounted to $706 million -- excuse me, $76 million. And other expenses, net profit was -- after the other expenses, net profit was $13 million. The inventory provision release of $26 million is not included in the EBITDA calculation since it is a one-off adjustment. While calculating the net profit, $26 million of the consolidation classification arises from additional inventory provision release. In the graph below, you can see EBITDA to change in cash bridge. Our net working capital increased compared to the third quarter due to the extension of the trade payables maturity, as we shared in our previous quarter calls. Additionally, a dividend payment of $43 million was distributed in the third quarter. Also, we spent around $483 million to investment activities in 12 months. This amount also includes CapEx advances paid for the capital expenditures and sale of commercial offices for investment properties as well. On Page 11, you will see historical trend of financial borrowings and net debt. As you can see in the financial borrowings chart, the share of short-term debt in total debt decreased to 25% in Q4 with the support of $950 million Eurobond issuance. When we look at 2025, our net working capital decreased due to the extension of the trade payables maturity. We succeeded in keeping net debt EBITDA below 2 multipliers at the end of the year as a result of increased capacity and efficiency following the commissioning of our investments. EBITDA has increased. Therefore, CapEx decreased and the multiplier remains below 2. We expect to keep the net debt-EBITDA ratio around 2 multipliers in 2026. Slide 12 represents our cost of sales breakdown. In 2025 compared to 2024 due to the decrease in coal prices, the percentage of coking coal costs decreased in the raw material basket, which is in line with the trends in raw material markets. Since we can see the costs in first quarter, costs will increase in the first quarter of 2026 due to the rising coal prices. This cost increase will be offset by an increase in sales prices. Page 13 represents the historical capital expenditures. Total CapEx was $1.1 billion in 2024 and $775 million in 2025. As a reminder, the new first blast furnace in [Technical Difficulty] gold mine, as you already know, we announced the inferred resource in November '25. We expect that reserve announcement for the gold mine to be made at the beginning of the second quarter. Investment decisions will be made after this announcement is shared. We expect that CapEx will be approximately $800 million in 2026 with maintenance and other ongoing investments. Maintenance will be around $58 million per year as usual. Investments such as solar power plants, port and crane investments and energy efficiency investments are included in the CapEx figure of 2026. As you already know, this figure is accrual based and the cash outflow will be lower due to the advanced payments. On Page 14, just as a reminder, we announced our net zero road map in 2024. There are no changes to this road map, the details of which we previously shared. The first investment in this package solar power plants are planned to be partially commissioned by the end of 2026. Now we may continue with the Q&A session. We will be delighted to answer your questions. Thank you for listening. Operator: [Operator Instructions] The first question is from the line of Fairclough Jason with Bank of America. Jason Fairclough: It is always very comprehensive. Look, a couple of related questions here about the balance sheet. So on the one hand, you've got quite a lot of cash sitting there. I mean I see $2.7 billion of cash, which feels like a very large cash balance. But on the other hand, if we look at the free cash flow over the past year, most of it's been driven by working capital and particularly the payables balance. So I guess my question is, how are you thinking about working capital from here? Do we actually need to normalize that payables balance? Or is this the new normal? Idil Onay: Jason, thanks for the question. So this is our normal level after this quarter because actually, it all depends on the raw material prices and steel prices from now on. Considering that Q1 comes clearer in terms of both price and cost, increasing figures in Q1 compared to Q4 in net working capital. So there won't be any one-offs in net working capital. So we can say that it's all depends on the raw material prices and steel prices from now on. Jason Fairclough: Okay. The other thing and a super simple one. Could you just repeat the EBITDA per tonne guidance? I heard it, but I didn't quite hear it. I think the phone cut out when you said it. Idil Onay: Guidance for -- sorry, I just missed it, guidance for. Jason Fairclough: For EBITDA per tonne for '26? Idil Onay: Yes, sure. So we expect to have EBITDA per tonne between $75 to $85 per tonne for 2026. Operator: The next question is from the line of Gabriel Alain with Morgan Stanley. Alain Gabriel: I have a couple. Following up on Jason's question on the guidance for 2026 deal, the $75 to $85, how much of that is driven by self-help, i.e., the cost savings you will be or the efficiency gains from your new investments in your production footprint? And how much of that is your underlying assumption of a margin recovery in the market? That's my first question. Idil Onay: So as you remember, by the way, I'm sure you remember that we said we are expecting full impact from our newly commissioned investments in Q1. So we will reach to the full positive impact of $40 per tonne from our NIM investments, and it will stay at that level. So almost $40 plus from investments but we're also expecting higher sales amount, tonnage, higher tonnage, higher volumes in 2026. I said above 8.2 million tonnes, but most probably it's going to be between 8.2 million tonnes to 8.4 million tonnes. So when you compare with the 2025 level of 7.8 million tonnes, it is higher. And we will also gain some EBITDA. We will increase our EBITDA from the increasing sales tonnage. But almost $40 in the first quarter, we will see the full impact of our higher efficiency because of the new investments. Alain Gabriel: And this $40 compares to how much that you've achieved in, let's say, Q4 '25, just looking at the deltas of the bridges year-on-year? Idil Onay: Roughly, we said in Q3 2025, we got $20 additional impact. And in Q4, it's roughly around $30. And in Q1 2026, it's going to be around $40. But of course, you need to take into the consideration that the market prices are not staying the same. So these additional numbers should be added to the current prices. Alain Gabriel: Yes, absolutely. Absolutely. And my second question is on the business and how it's adapting to CBAM and the upcoming safeguards in Europe. Are you still able to sell into Europe easily now? Are you diverting your tonnes elsewhere? Can you give us a bit more color how you are adapting to this new environment in Europe, which is impacting Turkey as well? Idil Onay: So when you look at the export in Q4, so you will see a slight decrease. But actually, it's intentional. It's intended to be like that because obviously, the local market is more strong right now. The demand is stronger. So normally, when you look at the previous year's results, the export share was between 10% to 15%. So that was our normal levels for long years. Only 2025 was exceptional. Our export share in the total sales to 20%. But obviously, the domestic market is strong again but demand is strong again. So internationally, we -- strategically, the company prefers to sell their products domestically. So our order book is full for 2.5 months. I'm sure you remember, normally, I say it's full for 2 months. But right now, it's 2.5 months. So we already sold almost 2 million tonnes in Q1. So I can say that the demand is really good in the local market. But of course, we will sell to European markets and other export markets. But most probably, we are going back to our previous levels of 10% to 15% in the total sales. Alain Gabriel: And then last question from my side is on the CapEx guidance of $800 million. You mentioned that's on an accrual basis. How much would that be on a cash outflow basis? Idil Onay: Actually, I guided $600 million for 2026. Alain Gabriel: Okay. That's the cash component. Operator: The next question is from the line of Meyiwa Zenande with UBS. I'm very sorry. The question is from Bystrova, Evgeniia with Barclays. Evgeniia Bystrova: Just a couple of follow-ups. So first of all, on the CapEx guidance, I think I was confused because during the presentation, you said on accrual basis, the CapEx would be $800 million in 2026. But just now you said $600 million is the cash component. Is that correct? And then -- so my second follow-up is regarding the local market. So you're saying that the local market is very strong in terms of demand. Could you please maybe break down what exactly are the drivers of such strong local demand? And if you're expecting CBAM in any way to affect the prices that you're selling into Europe at? And finally, on payables, I didn't quite get your answer. So you're saying that another inflow in Q4 was expected. And from now on, we shouldn't expect such inflows on working capital in the cash flow statement. Is that correct to understand? Idil Onay: So the CapEx for 2026 is expected around $600 million. If I said $800 million, so it's a mistake, sorry, let me correct that. For 2026, we are expecting $600 million as CapEx. So it's all included all of our CapEx, maintenance, et cetera. So as we spent $775 million in 2025, so it is decreasing because we already commissioned most of the largest investment of our company, such as blast furnaces and coke batteries in the second quarter. So the rest is just solar power plant, basically, port and crane investments and energy efficiency investments generally. These are the list of investments that we are planning. So the second question was about the sales. Actually, the main thing -- the demand was strong. The demand was quite strong for some time but we prefer export markets because of the prices. But right now, we experienced higher prices in the local market. And with the strong demand, we prefer to operate in the local market. But of course, there will be export share but we have the flexibility to change some of the European exports to the local market because we have the enough demand in the local market, obviously. So that's why we are expecting higher sales tonnages also between 8.2 million tonnes to 8.4 million tonnes for 2026. So basically, the demand was always good, but the price wasn't that good. But in this year, in 2026, we also experienced strong demand and better prices. And also, we are expecting to see higher prices in the local market. And the last question -- can you just remind me the last question about working capital? Evgeniia Bystrova: Yes. I just wanted to understand the payables move because I think after Q2, you said that basically you're not expecting another working capital inflow in the cash flow statement. However, we have seen another payables like inflow from payables in Q3 and Q4. So I'm just trying to understand what will happen in 2026. Previously, you said that current net working capital is like an optimal level for you. So is that a right understanding from me that we shouldn't expect any working capital inflows on the payables side in 2026? Idil Onay: So in 2025, we just changed the trade payables system actually. So I mean, our net working capital has changed due to the extension of the trade payables maturity. So this is what happened in 2025. But from now on, we expect stable working capital, also cash based. But as I shared with Jason, it all depends on the raw material prices and steel prices. Evgeniia Bystrova: Okay. And what -- sorry, one last follow-up. And what is the specific driver that has kept local domestic prices higher than export prices in Turkey? Idil Onay: Actually, domestic prices are not higher than export prices. Obviously, right now, European market is very protected. So every day almost, we see higher prices in the European markets. So when you compare with the Turkish prices, European prices are obviously higher. But we know that the trade Ministry is working on some kind of revisions to increase the protectionism in Turkey. So they are working to increase that 25% of obligation to use local product when they are using emerge processing regime. We know that the trade Ministry is also working on some kind of revision to increase that level and also apply that obligation to -- for the coal product as well. So -- and some other revisions and the systems, for example, they are working on ETS emission trading system in Turkey, et cetera. So we know that our trade Ministry is working on trying to increase the protectionism in Turkey. And most probably, we will hear in the second half of the year. So these will help to increase the domestic sales prices. So that's why we are trying to focus in the domestic market. Operator: The next question is from the line of Jones, Andrew with UBS. Andrew Jones: Just a couple of questions or clarification. Just firstly, I think you said to Alain that there was about $30 a tonne included in the fourth quarter EBITDA per tonne from these projects. And for next year, it's $40. So we're basically saying that we're going up from $71 plus $10 effectively as we go into the first quarter without any market movement. So your guidance of roughly $80 a tonne for next year, is that basically assuming pretty flat market spreads compared to what we saw in the fourth quarter? I've got a follow-up, but I'll stop there. Idil Onay: Okay. So yes, I said $20 additional EBITDA per tonne contribution to EBITDA per tonne in Q3, Q4, $30, and we are expecting full impact of $40 contribution to our EBITDA per tonne. But as I shared with Alain, the market prices are not staying in the same level. So in Q4, the sales prices were decreasing. So I mean, we didn't really see the $10 plus $10 between Q3 to Q4. But obviously, we will experience $40 in Q1, but it all depends on the current prices, of course, raw material prices and sales prices. Andrew Jones: That's clear. Okay. And then just on the CapEx, I mean, what's the trend in the coming years? Because obviously, the pellet tires are still going -- I mean, if we exclude any gold mine stuff, I mean, when does the [indiscernible] CapEx kick in? Like what does 2027, '28 look like? What's the general profile we're expecting there? Idil Onay: Well, we are not expecting any number, any figure higher than $600 million. So for 2026, it's going to be around $600 million. I mean, I don't think we will see even $650 million. This is our expectation. But for the next years for 2027, 2028, we are expecting similar numbers $550 million to $600 million for coming years. Operator: The next question is from the line of Ive Erica with MetLife Investment Management. Erica Ive: Just a couple of more follow-ups on CapEx of $600 million, including 6. What could it be the cash outflow given that I understand there is this accrued component? Basically, I'm asking it will be the actual cash outflow lower than $600 million. Idil Onay: Okay. Sorry, Erica, there was a technical problem. So actually, the cash number should be close to $600 million with the advance paid. So most probably, we will see close figures to $600 million as cash for investments. Erica Ive: Okay. That's very helpful. And then on the working capital balance, right? I mean, in terms of movement for the year, based as well on what you explained about payable and so on, shall we expect a muted movement, so something closer to 0 in terms of movement for the year? How should we see or a small -- still a small outflow? Idil Onay: Actually, we are not expecting anything -- any change -- any material change in net working capital in 2026. So of course, it all depends on the raw material prices and steel prices. But right now, our trade payables maturity already. We have finished the extension of the trade payables maturity. So except from this change in 2025, we are not expecting any change from the company because of the company. It all depends on the market prices. I mean there is -- I mean let me just explain why we are expecting for the market prices. So there is a maturity mismatch in our balance sheet. We sell products and pay for raw materials mainly in cash. So when the steel prices and raw materials are in an increasing trend, our work will always require additional cash and our working capital increases. So on the reverse side, there is going to be a release from the working capital. Erica Ive: Okay. That explains. Okay. Good. And last question is on net leverage. Do you have a figure in mind that you try to reach in 2026? Idil Onay: Actually, yes, it's going to be around 2 multiplier. So we achieved less than 2 multiplier in Q4. It was 1.9 multiplier net debt EBITDA level. So we believe that we will be able to keep our net debt-EBITDA level around 2 multiplier because obviously, the capital expenditures will be less and that will -- and the EBITDA also will increase. So with the help of these 2, we will be able to keep net debt EBITDA around 2 multiplier. Erica Ive: And obviously, that excludes any investment in a gold mine, I guess... Idil Onay: Yes, it is. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Ms. Ergin for any closing comments. Thank you. Idil Onay: Thank you very much for joining us. We hope to meet you again at our first quarter conference call. Have a nice day. Thank you. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.

86天前Insight Analytics约5分钟阅读

CSR 2025 Q4 财报电话会议

Operator: Hello, everyone, and thank you for joining the Centerspace Q4 2025 Earnings Call. My name is Gabriel, and I will be coordinating your call today. [Operator Instructions]. I will now hand over to your host, Josh Klaetsch. Please go ahead. Joshua Klaetsch: Thank you, and good morning, everyone. Centerspace's Form 10-K for the year ended December 31, 2025, was filed with the SEC yesterday after the market closed. Additionally, our earnings release and supplemental disclosure package have been posted to our website at centerspacehomes.com and filed on Form 8-K. It's important to note that today's remarks will include statements about our business outlook and other forward-looking statements that are based on management's current views and assumptions. These statements are subject to risks and uncertainties discussed in our filings under the section titled Risk Factors and in our other filings with the SEC. We cannot guarantee that any forward-looking statements will materialize, and you're cautioned not to place undue reliance on these forward-looking statements. Please refer to our earnings release for reconciliations of any non-GAAP information, which may be discussed on today's call. I'll now turn it over to Centerspace's President and CEO, Anne Olson for the company's prepared remarks. Anne Olson: Thank you, Josh, and good morning, everyone. I'm here with our SVP of Investments and Capital Markets, Grant Campbell; and our CFO, Bhairav Patel. We're coming today live from our annual leadership conference, where our operating team is together to celebrate our 2025 wins and prepare to meet our 2026 goals. I'll start by addressing our strategic review. In November, we shared that our Board of Trustees is overseeing a formal evaluation of strategic alternatives to maximize shareholder value. This process was initiated from a position of strength, having transformed Centerspace into a pure-play multifamily REIT while improving profitability, operating scale and our balance sheet. Our strategic review underscores our commitment to acting in the best interest of our shareholders, and this evaluation remains ongoing. As we said when we announced this evaluation, there can be no assurance that this process will result in Centerspace pursuing a transaction or any other strategic outcome, and we do not intend to provide further details on the process in connection with the discussion of our fourth quarter earnings results today. We sincerely appreciate the thoughtful conversations we've had with shareholders thus far, and thank you for your understanding today as we keep our comments focused on our results and outlook. Centerspace's fourth quarter capped a year of progress for the company and demonstrated the health and resilience of our markets. Importantly, our results for the year showed that our portfolio and approach yields results with our same-store NOI growth of 3.5% outpacing peers on the back of steady occupancy and expense discipline. Rent growth was strong, reflecting the durability of our resident base and our exceptional focus on resident experience and optimization of revenue. Operationally, our portfolio benefits from Midwest exposure. Blended leasing spreads in the quarter were up 10 basis points. While new lease spreads were down 4.8%, renewal spreads show their highest growth of the year at 3.9% and retention of 55.2% moved the blended rate into positive territory. Retention for the full year was 58.2%, demonstrating relative affordability for our residents. Favorable absorption in Minneapolis, our largest market, led to positive blended increases of 1.1%, while in our other markets, North Dakota once again led the portfolio with blended increases of 4.5% in the quarter. In Denver, supply continues to put downward pressure on rents with Q4 blended rent trade-outs down 4.3%. Absorption in the market has continued at rates above historical norms with 2025 the second highest year of absorption in the post-pandemic era. Additionally, new construction starts in the market have plummeted, tapering deliveries, and we expect Denver fundamentals to normalize as we progress through 2026 and into 2027. Before I turn it over to Grant to comment on the state of the transaction market and review our 2025 transactions, I'd like to offer a special thanks to many of you for your well wishes for Minneapolis and our communities there and also to thank our Minneapolis team and all of our teams for their dedicated service to their communities and community members. Grant? Grant Campbell: Thanks, Anne, and good morning, everyone. In 2025, Centerspace executed a strategic transaction program that continued reshaping our portfolio while maintaining balance sheet strength. We executed $493 million of transaction activity, which included entering the Salt Lake City market, expanding our presence in Fort Collins, exiting the St. Cloud, Minnesota market and pruning our holdings in the city of Minneapolis. Over time, we have undertaken initiatives to improve our portfolio, and these 2025 transactions continue that, resulting in further diversification of our cash flow and improvements to our portfolio's average monthly rent per home, homes per community, age and operating margin. Alongside these property transactions, Centerspace demonstrated disciplined balance sheet and shareholder capital management. The company expanded its unsecured credit facility by $150 million, and we assumed $76 million of attractively priced long-term debt in conjunction with our Fort Collins acquisition, enhancing our liquidity and improving our debt profile. At the same time, we repurchased 3.5 million of common shares, reinforcing our belief in the value of our stock and willingness to explore multiple avenues to unlock value. Looking ahead to 2026, we expect momentum in many of our markets, driven by measured supply profiles, resident financial strength and strong local economies. In Minneapolis, on-the-ground fundamentals are positioned well, compared favorably to most markets in the country, and we anticipate this year to be a year of stability and growth. In Denver, solid absorption is outweighed by the volume of new deliveries from late 2024 through 2025. These supply dynamics, coupled with slow job growth and recent regulatory changes, has generally put Denver's transaction market in a wait-and-see environment. Premium assets and locations are still commanding strong pricing, including recent trades at sub-5% in-place cap rates, though the divide between premium profile and the rest of the market has widened. We believe this theme will continue until growth indicators translate into hard data, providing investors more conviction in underwriting strengthening fundamentals. I'll now turn it over to Bhairav to discuss our financial results and guidance. Bhairav Patel: Thanks, Grant, and hello, everyone. Last night, we reported fourth quarter core FFO of $1.25 per diluted share, driven by a 4.8% year-over-year increase in Q4 same-store NOI. Revenues from same-store communities increased by 1% compared to the same quarter in 2024, driven by a 1.5% increase in average monthly revenue per occupied home, which offset a 40 basis point decline in occupancy. On the same-store expense side, Q4 numbers were down 5.1% year-over-year with favorability in both controllable and noncontrollable expenses. On the controllable side, decreases in repairs and maintenance as well as administrative and marketing costs were both drivers of the improvement. For noncontrollable expenses, favorable tax assessments drove much of the improvement. Turning to 2026. We introduced our expectations for the year in last night's press release. We expect core FFO per diluted share to remain stable year-over-year with an expectation of full year core FFO per share of $4.93 at the midpoint. Guidance assumes that at their midpoint, same-store NOI increases by 75 basis points, same-store revenues increased 88 basis points and same-store expenses increased 150 basis points. Revenue growth assumes blended leasing spreads of approximately 2% with occupancy in the mid-95% range and retention of about 52%. We expect blended spreads will again be highest in our North Dakota communities, followed by Minneapolis and Omaha. That strength will bolster our Denver portfolio, where we expect spreads to be down for the year, though improving as the year progresses. Regulatory changes are expected to temper revenue growth in our Colorado portfolio with expense recoveries expected to be down nearly $1 million. Within expenses, controllables are expected to increase by 1%, while noncontrollables increased by 2%, both at their midpoints. I also want to highlight our expectation for the amortization of assumed debt, which we expect to be $1.5 million for the year. This amount will be higher in the first half of the year and then trail off in the second half upon the maturity of one of our mortgages in June. On CapEx, we expect value-add expenditures of $2.5 million to $12.5 million with recurring CapEx per home of $1,300 at the midpoint. Our guidance does not include any acquisitions or dispositions. Turning to our balance sheet. Following the Minneapolis disposition we completed in November, our leverage profile improved in the quarter to 7.5x net debt to EBITDA. We have a well-laddered debt maturity schedule with a weighted average rate of 3.6% and weighted average maturity of 6.9 years. Our liquidity remains strong with nearly $268 million of cash and line of credit availability compared to $99.2 million of debt maturing over the next 2 years. To conclude, this was a successful year for Centerspace with our results demonstrating our commitments to both operational excellence and financial discipline and positioning us well for 2026. Operator, please open the line for questions. Operator: [Operator Instructions]. Our first question is from Jamie Feldman from Wells Fargo. Unknown Analyst: This is Connor on with Jamie. Can you talk us through some of your assumptions within the 2026 revenue guide? It'd be helpful to understand your blended lease rate growth outlook and how that breaks out between new and renewals and any contribution from other income. Bhairav Patel: Sure. Yes. So let's start with the building blocks for 2026. We had an earn-in of about 80 basis points at the end of the year. So that will be the first piece that goes into revenue. We expect blended rent growth to be in the mid-1% range, resulting in about half of that showing up in revenue for 2026. And that will be offset by about a 40 basis points year-over-year decline in RUBS or about $1 million due to the change in regulations in Colorado. And then our base case occupancy is a little bit lower than it was in 2025. So that contributes about 30 basis points. So that gives you about 90 basis points of year-over-year revenue growth. From a market perspective, we expect our Midwest markets to deliver growth that is in line with what we saw in 2025 with Denver obviously remaining pressured as the absorption of units delivered in 2024 and 2025 continues. We expect renewals to once again lead the way with renewal trade-outs in the high 2% range. And we do expect new lease trade-outs to come better than 2025 in most of the Midwest markets, markets like North Dakota, Omaha and other Mountain West are not really expected to be any supply and the demand there remains robust. Even in markets like Rochester that saw some pressure in the second half of the year, we seem to be coming out on the other side, and we expect a strong showing in 2026 from that market. Minneapolis has shown like pretty solid absorption in 2025 and is expected to improve in 2026, given that the deliveries will go down significantly. So that's really what's underpinning our revenue guidance. Unknown Analyst: And maybe if we could talk a little bit more about what you're seeing in Denver. How do you see that market playing out in 2026? And any thoughts on when we could see an inflection, particularly in new lease rate growth? Bhairav Patel: Yes. So I'll start off and maybe Anne can chime in. But with respect to our base case, we expect some concessionary pressure to continue. In the first half of 2026, we are seeing on average about 2 to 4 weeks of concessions on a per move-in basis, which we do expect will continue at least for the first half of the year, and that's really going to pressure year-over-year revenue growth. Another note on concessions is any concessions we gave out in the second half also get amortized over the lease term. So we'll see some of that pressure in 2026 as well. But overall, we do expect things to improve as we go through the year and work through some of the supply there. The deliveries are supposed to be the lowest since we've -- in the last few years, but I'll hand it off to Grant to comment a little bit on that in detail. Grant Campbell: Yes. Thanks, Bhairav. Regarding supply dynamics, about 16,000 units were delivered in 2025, an additional 9,000 units will be coming online or delivered in '26. So some continued lease-up activity that, that market will need to work through. When you look at forecasted supply pipeline, new construction starts, 2027 data really falling off in terms of new deliveries. So we do think that will provide tailwinds to the market. When you look at foot traffic in downtown Denver based on a couple of different measurements, we are seeing increases at year-end 2025 foot traffic levels that are comparable to 2019 data. So that gives us some positivity that things are turning. There's also been some significant investments in bond funding without a property tax increase that has been passed for a whole host of projects across the city, parks, bike lanes, expansions to libraries, et cetera. So we do feel like the wheel is incrementally turning and looking to '27 for true tailwinds. Operator: Our next question is from Brad Heffern from RBC Capital Markets. Brad Heffern: No we're not supposed to ask about the strategic review. This is kind of strategic review adjacent. I'm wondering, is the underlying plan for the company sort of continuing in the background? Obviously, the past few years, you've sold out of tertiary markets to build Denver and Salt Lake. Is that continuing on in the background while you're looking at the broader strategic plan? Or is kind of the strategy of the company just on hold until this is completed? Anne Olson: Yes. We feel great about what we executed on strategically in 2025. We highlighted some of those in our prepared remarks. So we feel great about that. The part of the strategic review really is reviewing what we want to do with every dollar of capital. And so a little early in the year to tell and it's still ongoing with that. So no further comments on what that might mean for us as we move through 2026. Brad Heffern: Okay. And then do you have any like January or quarter-to-date leasing stats that you can give? Bhairav Patel: Yes. I can give you some details. Overall, blends were flat to slightly negative. This is not uncommon for this time of the year. Renewals remained pretty strong in the mid-3% range. So that's a positive. And we clawed back some occupancy. So there's weakness on the new lease trade-out side, which we expect, led by Denver. Anne Olson: Really small sample size in January. We have very few leases expiring this month. Brad Heffern: Yes. Okay. Okay. Got it. And then just one clarification. I feel like in the prepared remarks, you said that blends for '26 were 2%. But then, Bhairav, I think you said 1.5% later on. Maybe I heard it wrong, but just want to clarify what that number is? Bhairav Patel: Yes, I would say mid-1% range in our base case. In certain markets, it can be in the 2s. But overall, for the portfolio, we expect it to be in the mid-1% range. Operator: Our next question is from Alexander Goldfarb from Piper Sandler. Alexander Goldfarb: Anne, always good to hear North Dakota leading. We like that. Two questions here. First, I guess, going to the strategic review. Are you allowed or can you buy back stock while that process is going on? You highlighted the stock buybacks that you had performed. But are you able to go into the market or you have to complete the process before you can resume buying back stock? Anne Olson: Yes. At this point, we need to complete the process, just given the rules about what kind of information that the company has available. We do have a current authorization for buyback. At where we're trading today, I think that isn't the most attractive use of our capital. Our 2025 buybacks were executed more in the $54 range. Alexander Goldfarb: Okay. And second question is rent control regulations, legal costs, it's been a big growing topic. You outlined Denver, the situation of the contrast between St. Paul and Mini has been well documented. As you're assessing other markets, how has the experience in those 2 markets affected? Are you seeing other markets slowly roll out, whether it's overt rent control or utility restrictions or other restrictions that mean markets that formally were on your radar or existing markets where you were looking to expand, you want to dial back given the local politics or those 2 markets that I cited are really the standouts and the other markets that you either are currently in or thinking about expanding to really don't have that political risk? Anne Olson: Yes, this is a great question, certainly a hot topic. I would say across the nation, we're seeing either municipalities or states really start looking at everything, fee income, regulatory requirements, not just straight rent control. So while we're happy with the markets that we're in, we have great operations and good operating scale in both Denver and Minneapolis so that we can really absorb and do a great job of handling those regulatory changes. I would say when we're looking at new markets, business friendliness is one of our key categories that we're looking forward at. And that includes things like do they have a heavy regulatory environment? What's the taxation, both property taxes and income taxes. How are they attracting new businesses, subsidies, things like that. So when we're thinking about new markets, it's definitely, I'd say, one of the key categories that we're considering, but we're happy with the status in our current markets. We haven't seen any movement in markets like -- or in states like Nebraska, North Dakota, South Dakota, Montana to enhance any of their regulatory requirements. And we have seen some pullback on the federal level, particularly around environmental regulation. Operator: Our next question is from Ami Probandt from UBS. Ami Probandt: So far, tax refunds are trending much higher this year. So understanding that the post-COVID period is different from what we're currently having, I'm wondering if there are any parallels that you can draw to 2026 in terms of tax refunds compared to 2021 and 2022 when refunds were also elevated. Do you think that this could lead to an increase in demand or pricing power? Or is it sort of a onetime boost that doesn't really have a big impact? Anne Olson: The taxation is more about the valuation cycle coming into 2021 -- and there's a lag between when taxes go up. Sorry. Ami Probandt: I was going to say in terms of individual tax refunds, not the property... Anne Olson: Yes. This is -- that's an interesting question. I don't know that we're -- we think that it's going to impact demand. It's going to be more of a onetime item. And our bad debt looks great, and we feel good about the resident health. So we hope when we see those tax refunds that maybe we'll see a little bit more consumer demand or better consumer credit overall. I think we're going to see that disposable income on the consumer spending side, not necessarily creating any demand on the multifamily side. Ami Probandt: Got it. And my second question... Anne Olson: Usually, we're talking about property tax.... Ami Probandt: Yes. So second question, it's been a while since growth in monthly revenue per unit has been below growth in monthly rent per unit. So in the fourth quarter, rent growth was ahead of revenue growth. Did the changes in Colorado rebilling impact that? What other dynamics could be driving that shift? Bhairav Patel: Yes. In the fourth quarter, we saw some occupancy pressures. That's contributing to it a little bit, Ami. The Colorado regulations really kicked off in Jan. So we expect the impact from that to be in 2026, not really in 2025. But we did see some occupancy pressure in a couple of our markets. I mentioned Rochester as one, but I think we've turned the corner there, and we are -- we've kind of regained some of the occupancy back in Jan. So that's really what was driving the difference there. Operator: [Operator Instructions]. Our next question is from Mason Guell from Baird. Mason P. Guell: It looks like your retention rate was down both sequentially and year-over-year, and you're forecasting it to be lower in 2026. Is this due to focusing more on rates instead of occupancy? Or what is driving the lower retention rate? Bhairav Patel: Yes. We've seen it come down a little bit. Overall, from a base case perspective for 2026, we're just being measured in what we expect from a retention standpoint. We expected the same level for 2025. We outperformed a little bit. We saw a little bit of a downtick in Q4. So we're just kind of building in a little bit of, I would say, we're just being measured about retention being a little conservative to start of the year because we want to see what happens in the first couple of quarters before we adjust our assumptions there. Mason P. Guell: Great. And then your outlook for value add, it seems like it's a wider range than you previously had in your outlook and the midpoint is expected to be lower than 2025. I guess why the wider range and what's driving the lower expected value add? Bhairav Patel: Sure, yes. So from a value-add perspective, we're kind of holding back projects for a couple of reasons. I mean, one, just being extremely selective in the projects we greenlight due to the higher cost of capital and execution risk. We want to see some improvement in the marketplace before we do that. And secondly, we're holding back approvals due to the ongoing process of evaluating strategic alternatives. We would hate to begin a project that we cannot complete as a result of any decision that comes out of that review. So that's really driving the range there. On the low end, we have about $2.5 million, which is really completion of projects we've started in prior years. So at the very least, we will be starting to put capital out later this year than we typically do. That would drive the range lower. That's what you're seeing in that range. Operator: [Operator Instructions]. We have a follow-up question from Ami Probandt from UBS. Ami Probandt: So a quick one on the consumer. You mentioned no changes in bad debt. But for some of the markets where you've had consistent CPI plus renewal growth. Is there any concern about affordability? Anne Olson: We're seeing great affordability. I think our rent to income has held steady, if not lowered slightly over the course of the year. Really, that's been driven by incomes increasing faster than we're seeing rent increases. So even in those markets like North Dakota, where we're getting really great renewal spreads and seeing positive new leasing, the incomes there are growing faster than the rent amount. So we've seen really strong income growth, wage growth across our markets. Operator: Our next question is a follow-up question from Alexander Goldfarb from Piper Sandler. Alexander Goldfarb: Just quickly, a number of your markets, you guys always talk about the lack of labor, tight markets, heavy -- tough getting people to work on site. And yet I saw that your on-site comp was basically flat for the year. In fact, it was a little down in the fourth quarter. But I'm just curious what's going on there, just given, again, you guys have spoken about the tight labor markets in a number of the places that you operate. Anne Olson: I think just like we've seen, Alex, in our company, most of our vendors have also experienced less turnover. And so across our markets, there -- it is very strong employment -- very low unemployment. There's opposite of that. And -- but what we've seen is a lot less turnover, more steadiness in that employment. And so in the past, when we've had vendors and they lose someone, it's very hard for them to replace it, but people are staying in the jobs longer. We saw that in our company as well. Tenure is up and turnover is lower. So I think that really helped us in 2025, and we saw that trend throughout the year. Bhairav Patel: Yes. And specifically in Q4, Alex, there was a health reserve adjustment that came through in the last quarter when we kind of adjust our health reserves based on the projections for actual expenses. So that also contributed to that comparison on a year-over-year basis. Alexander Goldfarb: Okay. And you expect that the low turnover and to continue in '26? Anne Olson: We are expecting low turnover for us, and I think that we've seen that extrapolated out with our vendors, just more consistency in who's coming on site and their ability to service our needs from a vendor perspective. Operator: Our next question is a follow-up question from Brad Heffern from RBC Capital Markets. Brad Heffern: On Minneapolis, you mentioned in the comments, of course, been the headlines, a lot of turmoil unrest over the past few months. Did leasing activity look any different as a result? I know it's not a heavy leasing time of year, but I'm curious if you saw an impact? And then do you -- are you expecting like any sort of longer-term impact? Or did your forecast for Minneapolis for this year change versus maybe what it would have been a few months ago? Anne Olson: Yes. We -- not that we've seen any real change. I think in late 2025, we kind of assessed the state of the immigration enforcement actions. What we saw in January was -- had started a few months before. So we have seen very little activity at our communities. We do monitor. We have a system where that's reported. And it's really limited to just a couple of communities where we've seen some interruption and that interruption would be from leasing all the way to resident skips. But so far, it's been really a minimal impact. And I think the key thing, as you noted, is that there's very low turnover lease expirations in January and not a lot of people looking in January anyway. So hard to tell if there's any real impact. We would see that more once we have leasing season underway. One of the things that you may have seen about Minnesota is that for the first time, we turned the corner where we actually had good migration into the state. I think we finally cracked that U-Haul list #14 of people moving here. And so that really did offset this year. Our population growth was offset by kind of the net of lack of immigrant migration in. So we think demand is going to hold up in Minneapolis. And as Grant and Bhairav have noted, very little supply there and good projected growth across the board. So not much impact that we can see right now. And we're monitoring closely things like whether or not there'll be any moratoriums or on evictions or things like that. I think it's settled down, and it's a little bit of a wait and see on that front. Operator: We currently have no further questions. So I will hand back to Anne for closing remarks. Anne Olson: Thank you. Well, thanks, everyone, for joining us today, and thank you again to our team for our tireless pursuit of better every day. We're going to have a great time at our leadership conference here in Vegas, and we look forward to talking with you all very soon. Have a great day. Operator: This concludes today's Centerspace Q4 2025 Earnings Call. Thank you for joining. You may now disconnect your lines.

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GEI.TO 2025 Q4 财报电话会议

Operator: Good morning, everyone, and welcome to the Gibson Energy Fourth Quarter and Full Year 2025 Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Beth Pollock, Vice President, Capital Markets and Corporate Development. Ms. Pollock, please go ahead. Beth Pollock: Thank you, [ Towanda ], and good morning. Thank you for joining us to discuss Gibson Energy's Fourth Quarter and Full Year 2025 results. Joining me on the call today are Curtis Philippon, President and Chief Executive Officer; and Riley Hicks, Senior Vice President and Chief Financial Officer. Additional members of our senior management team are also present to assist with the question-and-answer portion of the call. Listeners are reminded that today's call will reference non-GAAP financial measures and forward-looking information, which are subject to certain assumptions and risks. Descriptions and reconciliations of these measures as well as related disclosures are available in our investor presentation and continuous disclosure documents on SEDAR+ and on our website. I will now turn the call over to Curtis. Curtis Philippon: Thank you, Beth, and good morning, everyone. I'm pleased to discuss Gibson's fourth quarter and full year 2025 results. I'll begin with a few highlights and then turn it over to Riley to walk through our financial results and balance sheet before I conclude the call with some closing remarks. At the outset of 2025, we established 5 strategic priorities: safety, gateway execution, growth, high-performance teams and cost discipline. Over the course of 2025, we delivered on our key objectives across each of these areas, exiting the year delivering Infrastructure segment growth and a clear line of sight to the next phase of our growth as outlined at our December Investor Day. From a safety perspective, we surpassed 10 million hours without a lost time injury and safely completed 2 major turnarounds at our Moose Jaw Facility and the Hardisty Diluent Recovery Unit. Most notably, we are proud to finish 2025 as the top-performing midstream company in North America on the key metric of total recordable injury frequency. At Gateway, we successfully executed both the dredging project and the Cactus II pipeline connection, increasing throughput to a new high watermark of 815,000 barrels per day in January of 2026 and delivering on our 15% to 20% run rate EBITDA growth objective in the fourth quarter that was established when we acquired the asset in 2023. During the fourth quarter, we sanctioned the $50 million Wink-to-Gateway integration project, which will enhance supply optionality and increase throughput capacity. The project is expected to enter service in the third quarter. The cost focus campaign was a success. In 2025, we generated more than $25 million of recurring and nonrecurring cost savings, increasing DCF per share by 8%. This efficient and cost competitive focus sets us up well for continued success. Finally, on the people front, we've built a strong team that delivered on our goals this year. This group is passionate about supporting our customers exceptionally well and is well positioned to lead us into a successful 2026. Turning to the financials. Our 2025 results reflect the successful execution of our crude oil infrastructure strategy. We delivered record infrastructure adjusted EBITDA of $622 million for the full year, including a new quarterly high watermark in the fourth quarter. Infrastructure throughput across our core terminals increased approximately 13% or 95 million barrels year-over-year. This performance was driven primarily by higher volumes at Gateway and Edmonton as well as the completion of the dredging, Cactus II and Baytex Infrastructure Capital Projects during the year. The strength and quality of our cash flows improved as we renewed several major long-term contracts all between 10 and 20 years in duration across our Edmonton and Hardisty terminals. These take-or-pay extensions increased our contract backlog by approximately $500 million. The renewals supported by high-quality counterparties included senior integrated energy companies and a multinational refiner, reinforce the strength and sustainability of our cash flows. Complementing our infrastructure growth, last week, we announced that we had entered into an agreement to acquire Teine Energy's Chauvin crude oil infrastructure assets for $400 million. This acquisition is expected to close in the second quarter of 2026, subject to regulatory approvals. The Chauvin pipeline will strengthen our Hardisty platform by extending our connectivity into the prolific Mannville Stack, adding long-term contracted cash flows and providing near-term expansion opportunities, including the Gibson Hardisty Connection Project, which was announced and conditionally sanctioned subject to regulatory approvals. The transaction was executed at a mid-7x multiple with a clear path to less than 7x as we execute on identified growth and optimization opportunities. We expect the transaction to be mid-single-digit accretive to distributable cash flow per share with the proceeds of the $215 million equity financing that closed yesterday. The acquisition will be leverage neutral with our investment-grade credit ratings confirmed by both DBRS and S&P. At Investor Day, we outlined a clear road map to deliver over 7% annual infrastructure EBITDA growth over the next 5 years. The progress achieved in 2025, combined with our recent Chauvin acquisition and its associated growth projects positions us well to execute on this plan. I'll now turn the call over to Riley. Riley Hicks: Thank you, Curtis. 2025 was a strong year for Gibson, and I'll walk through our fourth quarter and full year financial results, followed by an update on our financial position and capital allocation priorities. Our focus remains unchanged: disciplined financial management, maintaining a strong balance sheet and adhering to our financial principles. These principles helped lead us to a strong fourth quarter and a record year from an infrastructure standpoint, reflecting the quality and resilience of our crown jewel asset base. In the fourth quarter, Infrastructure delivered record adjusted EBITDA of approximately $160 million, driven by contributions from recently completed capital projects, continued strong performance across our terminal network and the full quarter benefit of the Gateway dredging work completed earlier in 2025. Touching quickly on our Marketing segment. The business continued to operate in a challenging environment during the quarter. Tight heavy oil differentials, limited crude storage opportunities and seasonal asphalt storage reduced available arbitrage during the quarter. As a result, marketing adjusted EBITDA was approximately $1 million. While this is at the low end of our previously communicated guidance range, it represents a $6 million improvement over the fourth quarter of last year. As we think about our business holistically, marketing now represents a smaller portion of consolidated EBITDA, underscoring the increasing stability and contracted nature of our cash flow profile. Looking ahead, we are reiterating our previously communicated marketing guidance range of $0 million to $10 million per quarter. Market conditions in Canada remain efficient, and we have not seen a structural shift away from crude backwardation. On a consolidated basis, Gibson generated adjusted EBITDA of approximately $145 million in the fourth quarter, reflecting strong infrastructure performance and an increase of $15 million compared to the prior year. Distributable cash flow for the quarter was approximately $79 million, representing an increase of $8 million compared to the fourth quarter of 2024. Turning to our full year results. 2025 was a great year for Gibson. Infrastructure adjusted EBITDA totaled $622 million, up from $601 million last year, driven mainly by higher volumes at Gateway and Edmonton, the success of our cost savings initiative and contributions from key capital projects coming online. Marketing adjusted EBITDA totaled approximately $15 million for the year, reflecting a challenging environment for both crude marketing and our refined products business. As a result, consolidated adjusted EBITDA was $581 million and distributable cash flow was approximately $337 million. Looking at our current financial position, we remain aligned with our financial principles, maintaining a strong balance sheet and meaningful capital flexibility. We remain prudent capital allocators focused on maximizing long-term shareholder value through investing in high-quality infrastructure projects as shown by our strategic acquisition of the Chauvin infrastructure assets. Following the announcement of this acquisition, alongside 2 actionable growth projects, we have now adjusted our 2026 growth capital outlook to reflect $100 million of organic growth capital. This includes capital related to our previously sanctioned Wink-to-Gateway integration project. The change in outlook reflects our continued focus on disciplined customer-backed infrastructure growth while ensuring we preserve our balance sheet strength. At year-end, net debt to adjusted EBITDA was approximately 3.9x, reflecting the timing of capital deployment and lower marketing contributions in 2025. With full year EBITDA contributions from recently completed projects and a reduction in growth capital to $100 million in 2026, we expect leverage to trend down lower over the course of the year. On an infrastructure adjusted basis, leverage was approximately 4x, which is consistent with our commitment to maintain infrastructure leverage at or below that level. Importantly, as part of our recent transaction, both S&P and DBRS have reaffirmed our stable investment-grade credit ratings. Our dividend payout ratio was approximately 84% on a trailing 12-month basis. Over the long term, we continue to target a sustainable payout range of 70% to 80% of distributable cash flow. On an infrastructure-only basis, the payout was 78%, which is comfortably below our target of less than 100%. As our Infrastructure segment continues to grow and become a larger proportion of our earnings, we expect our consolidated payout ratios to migrate towards our long-term range. The continued growth of our high-quality infrastructure cash flows during the year supports our seventh consecutive annual dividend increase, bringing the quarterly dividend to $0.45 per share, an increase of 5% year-over-year. We remain focused on delivering long-term value for our shareholders as we enter 2026 from a position of strength. I will now pass the call back to Curtis for his closing remarks. Curtis Philippon: In closing, we made meaningful progress in 2025 as we executed on our 5 key priorities: safety, Gateway execution, growth, high-performance teams and cost discipline. We also delivered record infrastructure results marked by a new high watermark in Q4. As we start 2026, we are once again focused on 5 strategic priorities: maintaining our industry-leading safety performance, increasing the utilization of our assets, growing our infrastructure business, advancing technology and AI-driven initiatives to drive efficiency and further enhancing the high-performance ownership culture. We also look forward to integrating the Chauvin Pipeline into our portfolio, subject to regulatory approvals. With continued discipline and focus, we are confident Gibson is well positioned for its next phase of infrastructure-led growth and to deliver on the Investor Day strategy from a position of strength. With that, I'll turn the call back to the operator to open the line for questions. Operator: [Operator Instructions] our first question comes from the line of Aaron MacNeil with TD Cowen. Aaron MacNeil: Curtis, presumably, you looked at a lot of opportunities prior to pursuing the Teine acquisition. How should we think about M&A for Gibson going forward? Would you describe this as a bit of a unique opportunity? Or was there a bit more depth to the M&A opportunity set? Curtis Philippon: We definitely look at a lot of different things. I'd say a year ago, we were very focused on Gateway execution. And it was important for us to be delivering on that significant acquisition we did back in 2023. And so a year ago, although we were looking at a lot of things, we were cautious on that. We want to make sure we delivered well on Gateway. But over the last year, we proved that we could deliver well on Gateway. I think that ability to go deliver on that project, combined with at a macro level, we look at the opportunity set out there, we see some interesting opportunities for M&A. That got us more active over the last 6 months looking at a wide range of different opportunities. In particular, we are looking for things that are crude focused, connected to our current platform and ideally just continue to drive that same contract profile, customer quality profile that we're looking for. So I think there's a few things out there we looked hard at. Chauvin is just a perfect fit. Hardisty is our backyard. That's where we've been for 70 years. It is the core crown jewel of the Gibson asset base. And so when the opportunity came up to add Chauvin to the story and help extend the reach of that Hardisty platform, that was the most attractive one that we want to act on. Aaron MacNeil: Makes sense. Switching gears and fully appreciating that you've reiterated the $0 to $10 million marketing guidance, but we're starting to observe some positive signals for this business, including higher apportionment levels on Enbridge Mainline storage levels ticking up, wider heavy oil differentials, although maybe not for the same reasons you've seen in the past. But appreciating that this is all early days, what would you sort of guide us to in terms of looking for market signals or variables that we should be looking at as we think about the outlook for the segment? Curtis Philippon: I think it's fair to say we're encouraged by some slightly wider dips and a few positive indicators out there. I would completely agree with your assessment, though this is early days. If you look at our track record over the last year, we've been firmly in that $0 million to $10 million a quarter range. I expect that's where we're going to be in 2026 as well. There's still very low levels of storage out there right now. And so each of these volatility events that happened that in the past maybe drove higher marketing earnings have a much more muted effect in an environment where you have very low crude inventories. And so I think that will persist through the year is what my expectations are. And so I think you'll see a fairly muted year for marketing. The big thing you would look for is we're still a very backwardated market. And so I think that would be the one thing to maybe watch for. If you get into a contango market, that's a significant shift. And we've been in this backwardated market for quite a long period of time. In time, that will change, and there will be contango opportunities that provide a great opportunity for Gibson to use its assets well to capitalize on that. But until you see that, I think you'll still be in that $0 million to $10 million range. Operator: Our next question comes from the line of Jeremy Tonet with JPMorgan Securities. Unknown Analyst: This is [ Eli ] on for Jeremy. Just wanted to start on the expansion opportunities at Chauvin. Can you just provide some incremental color on the timing and return profile here and how these stack up against other opportunities across the portfolio and also get you to the kind of that 5 to 7 acquisition multiple that you highlighted? Curtis Philippon: Thanks, [ Eli ]. As -- we messaged that right out of the gate, we see a number of interesting growth projects that come with Chauvin. It's one of the really attractive things about Chauvin is it really gives us a nice runway of growth projects over the next few years. But immediately out of the gates, once we're closed, there's 2 projects that we see acting on. One is the Hardisty Connection project to connect the Chauvin pipeline into our Hardisty Gibson Facility. And so that is one that we will sanction immediately after regulatory closing. We expect that is roughly a 12-month process from that period from when we officially sanction it. And then the second one is the expansion project. And the expansion project is exciting. It's -- the pipeline is currently operating at near full at sort of 30,000 barrels a day capacity. And we see an opportunity to expand that to 45,000 barrels a day and have some pretty, I think, an interesting opportunity with that. So the timing on that is realistically anywhere from 18 to 24 months from the closing of the transaction for all of the work involved with the preparation and the execution of that expansion. Overall, we've messaged that we did this acquisition at a mid-7x multiple. Those 2 projects are strong, and those 2 projects will immediately drive this acquisition into a sub-7x multiple range. Unknown Analyst: Awesome. And then I know the transaction was leverage neutral, and you have added some kind of attractive growth CapEx that you can continue to chip away at. But can you just kind of post transaction close, reframe the overall capital allocation waterfall and how you kind of see growth CapEx shaping up versus other competing priorities and maybe just whether buybacks remain part of the story longer term? Riley Hicks: Yes. Thanks, [ Eli ]. It's Riley. When we think about capital allocation, our priorities, they really haven't changed. So we think about funding our business first, which means maintaining a strong balance sheet, investing in infrastructure growth and funding our dividend. And so as we sit today, buybacks are certainly a great tool that we can have in our toolkit. But as we look at our balance sheet today, we'll need to see that kind of get back into our 3 to 3.5x range before we would start to consider those buybacks. And then they would have to compete for capital allocation with the great infrastructure projects that we see ahead of us. So we're going to continue to be prudent and disciplined and invest in our business. Operator: Our next question comes from the line of Sam Burwell with Jefferies. George Burwell: Just another one on the Chauvin acquisition. Just curious like what attributes of the asset make you most confident in being able to sanction the expansion? Is it just the amount of volumes that are currently trucked or the production growth profile or anything else? And then sort of piggybacking on to that, is there an opportunity to meaningfully take up the take-or-pay portion of the capacity on the pipeline? Curtis Philippon: Sam. What gets us excited is this is our backyard. So we know it quite well. We know the customers quite well in that area, and we know the geology in that area is driving a lot of great activity there. So the pipe is already running at near capacity. We see a very actionable path that you can expand that capacity and achieve some very good utilization even on the expanded pipe. So we feel very confident on that. As far as shifting it to a take-or-pay structure on the expanded capacity, absolutely, that's part of our strategy. We're still very early days. The transaction is not even closed yet. But I think with a midstreamer now owning the pipe, I think you see a slightly different strategy coming in now for us to be able to partner with our customers to perhaps look at different take-or-pay structures. And I would point that specifically, we see a lot of really interesting opportunities to extend the reach of the pipe and that there's a number of our customers that are currently needing to truck the last leg into the Chauvin pipe to get access to it. And we think there's a really interesting opportunity for us to help them find a netback win by extending the pipe reach and tie that in perhaps to some take-or-pay structure on the contract as well. George Burwell: Okay. That certainly makes sense. And the next one sort of touches on Venezuela. And obviously, it's still very, very early, but I was curious for your view on whether you think that more Venezuelan barrels hitting PADD III coming on to the Gulf Coast and presumably taking the PADD III slate heavier might offer you greater opportunities around more exports from Gateway of light crudes and possibly making expansion projects down there more viable. Curtis Philippon: Yes. Interesting. I think Venezuela, obviously, we're watching Venezuela closely. I think it's interesting. One, I think as everybody is saying, I think there's still a lot of question marks around what exactly plays out in Venezuela, and there's still a lot of work to do to actually see a sustained increase in production that and a sustained shift in where those volumes are going to have a meaningful impact on that. I'd say Gibson is in a unique position to see upside around that, though, both in -- if there is an impact on dips, potentially, there's an impact for Gibson's marketing business that you perhaps see from Venezuela crude coming into there. Perhaps you could make the leap to increasing activity around Gateway. One of the interesting observations some of our customers have made around Gateway is that just the -- perhaps some of the change in flows and the fact that the U.S. has a greater influence on those flows of crude coming out of Venezuela just increases the amount of ship traffic in the area that's sort of controlled by customers and sort of the entities that are out of the U.S. And that's helpful for our gateway customers for getting ease of access to ships to have efficient shipping out of Gateway. And it's a bit of a unique unexpected upside that we're hearing from our customers of perhaps some sort of shipping efficiency increasing with the Venezuela changes. Operator: Our next question comes from the line of Robert Hope with Scotiabank. Robert Hope: So I want to go back to M&A. So Teine was a nice tuck-in. How does the M&A pipeline look for further tuck-ins? Are you seeing nice deal flow? Or do you want to take a little time to integrate that asset before getting back on the hunt? Curtis Philippon: We're going to keep -- we'll keep looking at it. I think at a macro level, Rob, what I think is super interesting is that there's been such a rush towards gas assets in the overall market that I think that creates an interesting opportunity for Gibson that has a crude-focused strategy that there are some excellent crude assets out there that are potentially not the top focus for some companies that are perhaps shifting a bit more towards some gas-focused assets. And we love those crude assets. We think those crude assets with the right attributes in the right location are going to be things that are going to be great assets for the rest of our lifetime, and we'll be active in looking at those, both in Canada and in the U.S. In saying all that, we're a pretty disciplined operator. And so Chauvin was a big deal for us. We're going to be focused in 2026 on executing well on integrating that in and making sure we deliver on everything around that. And so -- we'll keep looking, but I would caution that if you look at our pace, our last big deal back in 2023, we did this one this year. I wouldn't look for us to dramatically increase the pace of M&A activity. We'll be active and look at it. It really does take 2 people to get a deal done, though. So we'll see on what actually transpires. Robert Hope: All right. Appreciate that. Switching gears. At the December Investor Day, you spoke about 7% plus infrastructure growth out to 2030. How does the Teine acquisition and the associated accretion change your thinking there? Do you view this growth outlook as significantly derisked? Or are you looking at potentially upside versus the prior outlook? Curtis Philippon: When we talked about those numbers back in December, obviously, Chauvin was fairly well advanced at that time. And so we looked at the Chauvin asset or similar type assets as part of the story of how you got to this confidence around an over 7% infrastructure EBITDA per share growth rate. And so I would say that this nicely supports and derisks and is sort of perfectly aligned with the strategy we laid out at the Investor Day, but it doesn't sort of dramatically increase that rate. We still have that same confidence that sort of above 7% is what you should be expecting. Operator: [Operator Instructions] Our next question comes from the line of Maurice Choy with RBC Capital Markets. Maurice Choy: Just wanted to come back to the philosophy of transactions. You mentioned earlier that strategically and from a risk perspective, crude focus connected to current platforms and having similar contract and counterparty profiles were important to you. Can you also speak philosophically to the financial and funding priorities when you look at some of these wide range of opportunities? Riley Hicks: Yes. Sure, Maurice. It's Riley here. So when we think about funding, obviously, we go back to kind of our financial positioning and maintaining our flexibility. And so when we looked at this one specifically, given where our leverage was, we felt it was most prudent to do a leverage-neutral transaction. To the extent our balance sheet was in a different position and we were a little bit less levered, we would have maybe thought about not doing equity and doing it fully from the balance sheet. But everything is going to be done in the context of maintaining or improving our investment-grade credit ratings. And so that's really the critical factor. That's massively important to our strategy. And so we think about funding in that context. Maurice Choy: Understood. And then maybe along the same vein here on the leverage for the year, I recall that pre-transaction around midyear this year, you would have reached your 3 to 3.5x debt-to-EBITDA target range. And I recognize that the Chauvin transaction is leverage neutral. I just wanted to know what your outlook is for this metric. Any steps you consider to be in that range, especially if marketing does stay flat this year? Riley Hicks: Yes. I think we're seeing marketing remain muted. And so likely getting back to that 3.5% range is kind of as we go through 2026 now. I will say, though, given where our infrastructure leverage is, we're quite confident with our balance sheet and where we're positioned today. Marketing is in a trough, and we still remain well below our kind of our infrastructure leverage targets. And importantly, we did discuss with both S&P and DBRS on the back of this transaction, our profile, and they're quite comfortable with where we are and reaffirmed our rating. So we will see us delever through the year, but it's likely through 2026 and not fully done in the first half now. Operator: Our next question comes from the line of Benjamin Pham with BMO. Benjamin Pham: I just go back to the Chauvin transaction and the multiple that you highlighted, the mid-7x. I'm curious, my question is more when we look at transactions in North America and even looking at acquisitions versus organic growth. We don't typically see multiples being similar in that vein. Can you share context on maybe just your observations of acquisitions and the multiples? And any specific characteristics that resulted in a quite attractive multiple for Chauvin? Curtis Philippon: On the multiple side, I think it's a fair -- it was a fair price for both ourselves and Teine. And I think from -- I don't want to comment too much on Teine's perspective, but I think I think it was important for both of us to recognize that this is a long-term agreement that we're entering into a 15-year agreement with partnering with Teine, and they were doing the same thing. And it was important -- the purchase price is one thing, but the overall relationship and having a great commercial relationship to go grow that business over the next 15 years was also very critical. And so we spent probably more time on that aspect of the transaction and talking about how we grow this business together was a key factor. And I think when you look at all that together, where we got to on price was a fair swap for both sides. Benjamin Pham: And maybe to tack on to that, I mean your overall observations, you've looked at a lot of acquisitions. I mean, is the valuations between M&A and organic growth, is that narrowing over time? Or is this nature of [indiscernible] is a very unique situation that popped up for you? Curtis Philippon: I think it will depend on the particular asset and its characteristics. This one is -- this was sort of right up the fairway directly tied into Hardisty had some unique attributes that made it made sense and with some immediately actionable growth projects that allowed us to be directly in that 5 to 7 build multiple that lines up with our organic capital. That's a great story. I think as you look forward at other M&A opportunities, it will depend on their characteristics. There will be situations where you'd consider going above that range for the right type of crown jewel assets with the right type of contract profile, but it really is on a case-by-case basis. We obviously are very focused on that 5% to 7% range is how we think about it. And we have some great use of organic growth capital that we're quite comfortable staying focused on as well if the right M&A opportunity isn't available. Benjamin Pham: Understood. And continue to Maurice's question on the balance sheet and where things were going. How do you think about perhaps balancing over equitizing this deal and delevering earlier and setting yourself up for the next wave of organic growth for M&A versus maybe just being more what you did the leverage neutral and maintaining that 5% accretion on the deal? Riley Hicks: Yes, it's a great question, Ben. And so I think when we looked at over-equitizing, what we found on a deal of this size is it really just didn't move the needle enough to make it make sense. So you're just trying to balance the accretion levels versus your balance sheet. And for this one, we could have overequitized, but it really wouldn't have moved the needle enough on leverage to make it make sense to give up that accretion. So that's kind of how we landed where it was. On maybe a bit of a bigger deal, it might have made more sense to over-equitize and delever quicker. Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Beth for closing remarks. Beth Pollock: Thanks, [ Towanda ], and thank you for joining us today. Supplemental materials are available on our website at gibsonenergy.com. If you have any additional questions, please contact our Investor Relations team. Have a great day. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

86天前Insight Analytics约5分钟阅读

EFGN.SW 2025 Q4 财报电话会议

Jens Brückner: Good morning, ladies and gentlemen. A very warm welcome to the full year 2025 results presentation of EFG International. As usual, we will be presenting our results with speeches from the management team. We have today with us our CEO, Giorgio Pradelli; and obviously, our CFO and Deputy CEO, Dimitris Politis. And after the presentations, we have enough time, obviously, for your questions. We will start with questions in the room first and then move to potential questions from the call. Otherwise, as usually, I point out the disclaimer in the presentation. And without holding up further, I hand over to Giorgio. Thank you. Piergiorgio Pradelli: Thank you, Jens, and good morning. Also from my side, a warm welcome to everyone who is here in the room with us in Zurich and to everyone who will follow the presentation via webcast. Today, I'm very pleased to be here with Dimitris to present to you the full year 2025 presentation. I think 2025 has been a very strong year for EFG. It has been a year of strong progress. The operating business is firing on all cylinders, and it has been basically a record year. We have been able to grow very strongly from organic growth. Today, or actually in a few days is 10 years from the acquisition of BSI, and we are very pleased that we have started a new series of acquisitions. We have done 3 acquisitions in the last 12 months, and we were able to report the highest ever level of assets under management. We were able to translate this growth in record revenues, and we were able to -- despite the fact that actually we had to mitigate declining interest rates and a weak dollar that, as you know, there have been for us, headwinds in 2025 and most probably will remain headwinds in 2026, but this record operating income was translated in record operating profitability. And also, we made a lot of progress in dealing with our legacy matters, and we delivered a record IFRS net profit, and we are in a position to propose a record dividend per share to our shareholders. Let us now move to Page 4 and just to give you some of the highlights of our results for 2025. As I said, it has been a year of strong organic growth, strong NNA complemented by M&A. The NNA has been CHF 11.3 billion. This is 6.8% growth year-on-year. And this is actually the second highest level of NNA growth, the highest since the global financial crisis. And I'm very pleased because we have had an acceleration in the fourth quarter. As I mentioned earlier, we were able to do 3 acquisitions in the last 12 months. Two acquisitions are already in the numbers. They amount to CHF 12 billion, and they basically are equivalent to 1-year NNA, if you wish. As I mentioned earlier, our strong growth in terms of organic has been complemented by M&A, has been translated in the highest level ever of assets under management, CHF 185 billion. This growth has been translated in an impressive, I would say, operating performance, it's almost CHF 500 million, CHF 493 million. This is 26% year-on-year. And as I said, this strong operating growth has allowed us to absorb also dealing with some of the legacy matters that we know we have to derisk. All in all, at the end, as you know, we had a positive element in the first half of the year was CHF 45 million due to insurance recovery from a legacy matter that we closed in 2022. In the second half, we had a provision of CHF 59 million for another litigation that dates back to 15, 20 years back. All in all, it's CHF 14 million. We had also another legacy topic is about insurance. Insurance, there is some volatility. Dimitris will go in more detail. But again, we have absorbed also this volatile topic, and we are able to deliver CHF 325 million IFRS net profit, which is the highest in record. And this will allow us to deliver or to propose the highest dividend ever, CHF 0.65 per share. What I think is remarkable is that this is the fifth consecutive increase in our dividend, and this obviously shows how strong our operating profit is. Moving to the next slide. On Slide 6, we can see that 2025 has been a very strong year, but this is also the conclusion of our last cycle, the cycle 2023 to 2025. And what is remarkable here, we already discussed at length 3 months ago in this room during our Investors Day, is that we were able to deliver a consistent, sustainable and profitable growth over the last cycle, but also you can go back to 2019, and you see that this has been a continuous improvement of the operating performance. Now with this, I would like to give the floor to Dimitris, our CFO and Deputy CEO. Dimitrios Politis: Good morning from me, and thank you for attending the full year 2025 results presentation. I would like to start with, as usual, with the view of the performance of EFG over the cycle. Here on Page 8, you see the performance on the profits starting from 2019 up to 2025. It is fair to say that we are concluding this cycle, the '23-'25 business cycle, which is the last one, with record profits. The profits are at CHF 325 million. We are also posting the highest ever EPS with CHF 1.03 per share, and our return on tangible equity is above 18%. One element to highlight, you'll see on the top right, is the fact that in this business cycle, what was really marked as very positive performance has been revenue performance. In the last 3 years, we've managed to increase our revenues by 31%. In contrast, in the previous cycle, the growth was only 8%. So our strategy of building volume, building AUM and defending or expanding the margin has been very successful through the cycle. At the same time, you will see that efficiency has improved. Back in 2019, the cost-to-income ratio was about 84% or even higher. Now we are below 70%. And clearly, this has led to the expansion of EPS. We started with CHF 0.30 per share. Now we are above CHF 1, which allows also what Giorgio mentioned, which is the fifth consecutive increase in dividend per share in the last 5 years. Now the next page is a bit more focusing simply on 2025, and these are the key highlights for this year. Clearly, our strong operating performance continues in 2025. Business development, 6.8% growth in net new assets. The revenue margin was at 98 basis points compared to 96 last year, and we hired or signed 79 CROs. I think what is very important is the figure at the bottom of the page, the AUM have now grown to CHF 185 billion, which is a very good starting point for this business cycle. In terms of profitability, revenue growth was 11% in the year, or 8% excluding the exceptionals. Cost-to-income ratio improved compared to last year. The cost-to-income that we post as a headline is 69.8%. And the bottom line profit, again, is at a record CHF 325 million, or CHF 339 million if we were to exclude the exceptionals. Finally, in terms of the soundness of the balance sheet, core Tier 1 is at 14%. We had a fantastic capital generation of over 500 basis points during the course of the year. LCR is very strong at 270%, and the dividend is at CHF 0.65 per share. Now zooming a bit even closer to the last 2 months, because we gave you a trading update in November, which included 10-month results. If you look at the chart, what we mentioned in November is the first bar, which is about CHF 320 million in the first 10 months. If you look at the performance in the last 2 months, we added more than CHF 60 million of bottom line in 2 months. The run rate of over CHF 30 million per month is the highest level in terms of run rate. So both in terms of profitability run rate and also in terms of revenue margin run rates, the figures are higher than what we communicated back in November of 2025. As Giorgio said, we also have 2 exceptionals in the year. On a net basis, they create a drag of CHF 14 million net in the P&L. So if we were to exclude the exceptionals, our bottom line number would have been CHF 339 million, which is a 6% increase year-on-year. In terms of other elements in the profitability, I would say that we also had limited contribution from life insurance, which brings me to the next page, Page 11. And this page is important because on this page, we try to strip out the noise and make sure that we give you a clear indication of how the core private banking business is evolving. So what you see here in the chart is operating profit. It's simply revenues less costs, and we have indicated separately the contribution from life insurance. What you will notice is that in 2025, the core private banking business delivered CHF 425 million of operating profit, which is an increase of 18% compared to the last year. This is the highest increase in core banking operating profit that we've seen in the last business cycle. What does that mean? That means that the investments that we made in the first part of this business cycle, and I remind you that there were investments that had to do with hiring in 2023 and 2024, also investment in technology that were made in that period. So all these investments are now paying off, and we're seeing the impact in P&L of those investments which were made 1 or 2 years ago. In terms of the metrics that you would follow in order to figure out whether these investments are going well or not, what I can report is that -- and you see it also in the figures is we've seen consistent strong business development. The last 2 years, the NNA growth has been above the 4% to 6% range that we actually communicated as our target. And also what we've been managing to do is turning this growth into increased profits. In terms of how you do that is clearly we need revenues and the revenue margin to be resilient. I'll come back to that later. And you also need cost discipline, and I'll also come back to that later with specific pages on it, because we've also seen that on the cost side, our saving targets have been exceeding the initial targets that we have communicated. Just to note that, as you know, we have concluded 2 acquisitions in 2025. These acquisitions had a small negative impact in P&L in 2025, simply because the acquisition costs were higher and they were only included in the P&L for a couple of months. Finally, life insurance, or the contribution from life insurance has been a lot more muted in 2025. This comes because we have also derisked our position. As you know, we have taken action already in previous years, but also in 2025 to reduce our exposure. And we also expect that going forward, the contribution from life insurance is going to be a lot lower than it used to be in previous years. The next 2 pages are the summary of the financials, so I'll skip those 2. I'll go to Page 14. So Page 14 is the usual set of numbers that matches our financial targets. These are the financial targets for '23 to '25. As mentioned earlier, we had a 4% to 6% growth range for NNA. We've been beating that the last couple of years. The revenue margin has been very resilient against our target of 85 basis points. The cost-to-income ratio has been consistently coming down. The target was 69%, and the return on tangible equity in the last 3 years now has been above the 15% to 18% target that we have set ourselves back in 2022. Finally, in terms of the targets, and this is probably the last time that we'll be seeing this page on this presentation. This is the conclusion of the '23 to '25. You will see that the performance against the targets has been very strong. I think one element that we also communicated was that we were targeting a 15% growth in profits on average during the period every year. The actual delivery has been 19%. So in terms of bottom line, which is clearly what we're aiming for, we have been doing better than what we have promised. Now going a bit more into the growth on Page 16. The growth in AUM is 12%. So we went from CHF 165.5 billion to CHF 185 billion in 2025. More importantly, the net new asset growth was CHF 11.3 billion with pretty much all cylinders firing at very good rates, which is on the next page. CHF 11.3 billion is the highest nominal amount of NNA that we've had at EFG since the great financial crisis. So in the last 15 years or almost 20 years now, this is the highest NNA of CHF 11.3 billion that we have published. Markets were favorable. As we all know, currencies were completely against us with the dollar weakening significantly. And we also added CHF 11.7 billion coming from 2 acquisitions, Cite Gestion and ISG. And in January 2026, we also announced a third one, the acquisition of Quilvest, which will add another CHF 4 billion once it is concluded. What really pleases me is the figures on the right. We've had a couple of periods where new CROs have been, call it, the sole almost contributors to NNA growth. In 2025, we've seen a reversal to a composition which looks more like what we've seen in previous years, so before 2023, about 65% of our NNA is coming from new CROs and about 35% of NNA is coming from existing CROs. In terms of the geographical split of the business development, this is on the next page, Page 17. You'll see that every single region is posting a growth which is above 4%. So every single region is at least within the 4% to 6%. And we have 2 with Asia Pacific and the Americas, which are above the 6% growth range. So in reality, overall, it's a very good performance. It's all the regions firing at very good levels, and this is a testament to our diversified business model in terms of how we deliver growth. We have also delivered growth by hiring CROs, and this is on the next page, on Page 18. Our total number of CROs at the end of 2025 was 763. This comes with 238 CROs in Shaw and Partners in Australia. And we also have 67 new CROs that joined through acquisitions in 2025. If you see in the middle, our hiring patterns, clearly, in 2023, the numbers were very high, and this came from a dislocation with Credit Suisse-UBS. Although we just hired about 1/4 of the people in that year from Credit Suisse. All the rest came from about 20 other banks. The numbers have gone down in '24 and '25. They are reverting pretty much to the levels that we have set out as our target gross hiring numbers of 50 to 70 CROs. So in 2025, we actually hired 51 CROs, and we also extended offers to sign to another 28 for a total of 79 CROs that have been hired or have been signed to hire. In terms of the AUM to CRO, this is on the right-hand side. Why is this important? This is important because it's a very good measure of efficiency. And the more you can have a higher AUM per CRO, the more efficient we become. As you see, we've been growing throughout the years. On a like-for-like basis, we were at CHF 363 million per CRO at the end of 2025. If you were to include the acquisitions, you are at CHF 342 million, simply because the acquisitions come with smaller-sized CROs given the nature. At the same time, one of the reasons that we've managed to increase this is that we've been effective in performance managing our CROs, and you see that both on the load and also on the number of CROs. Now moving a bit more to the P&L. As I mentioned earlier, we have a very specific strategy, which is about building scale, and it's also about defending or even expanding our margin. What does that mean? What is the result of that? That means that our top line has been growing, has been growing significantly throughout the last 3 years, but also our revenue mix is becoming of a high quality. If you look at what has happened in 2025, you'll notice that our commission income, which is our bread and butter, this is the highest quality revenue that we have, our commission income grew by 17%, and this is on the back of, firstly, AUMs expanding, but also us gaining 3 percentage points year-on-year on the commission margin. So we've been managing to expanding the margin on top of growing the volume. On the other hand, we've discussed many times that interest income or interest-related income can be a source of vulnerability, because the rates have been going down. Actually, what we see in 2025 is that in the second half of 2025, interest-related income is marginally up compared to the first half, which probably means that we have reached close to the bottom of that phase of absorbing rate drops throughout the last couple of years. At the same time, we've seen a lot of client activity in currencies and metals. Of course, this is linked to the increased volatility, both in currencies and metals in the last couple of years. And this has helped net other income. And clearly, we've had a more limited contribution from life insurance in the net other income as well. In terms of going back to our strategy of how we intend to grow going forward, clearly, we will have to defend margin. I'll come back to why we believe that our margin is resilient on the next page. But one thing to note is that in terms of the growth element, so the AUM, the starting point in 2026 is CHF 185 billion of AUM. The average AUM in 2025 were CHF 170 billion. So we have a 10% head start in nominal AUM as we start the year in 2026. Next page, Page 20. It's about resilient revenue margin. You will see that the revenue margin that we have in the second half of the year is at 93 basis points. When we had the Investor Day in November of last year, that figure was 92 basis points. So we have actually seen an expansion of the revenue margin in the last 2 months of the year. In terms of our expectations going forward, look, the 2 key topics are interest rates and also can we continue expanding commission margin. On the interest rates, you see the sensitivity that we show on the top right. The sensitivity is CHF 36 million of drop in revenues if all 4 major currencies lose 100 basis points in the rates. Clearly, that scenario is not realistic at least for 2026, given the information that we have. So our expectation is that the sensitivity to interest rates is now a lot more muted. Maybe we lose a basis point in 2026, but clearly, it is marginal compared to our overall level of 93 basis points of revenue margin, which is way ahead of the 85 basis points, which is the average for the last 10 years. At the bottom, you'll also see the fact and the efforts we have been making to expand our commission margin. Firstly, you see mandate penetration. It has reached 67% at the end of the year. This is against our target of 65% to 70% that we had for this business cycle. And also, you'll see that the breakdown between recurring commissions and nonrecurring commissions is also moving in the right direction. And we have now a 46% -- 46 basis point commission margin for the full year 2025. Moving on to costs on Page 21. You'll see that we have operating expenses up 6%. This is the nominal growth. But this growth also masks the fact that we've done 2 acquisitions. These 2 acquisitions account for about 2.5% of that growth. So if you were to strip that out, the real growth is 3.7%. What is more important is that the FTEs in comparable terms have been going down. So we closed the year 2024 with 3,114. On a like-for-like basis, the year 2025 closed at 3,037. So we are about 80 FTEs down. Clearly, we have added more because we've done 2 acquisitions. And the salary costs have been going down at the same time. There is growth in the personnel side because of variable compensation, and this is something that is expected. Actually, in my view, the only cost that I can accept going up is variable compensation, because it means that we're making probably 5x that revenue when it comes to revenues. So the operating leverage is very high. We had stable other expenses. So general and admin expenses were pretty much flat compared to last year, and we still carry some legal and litigation fees. Now moving to the next page, which is Page 22. This is a page on how we think about cost management. And several people in the room or on the phone call this self-help. We call it finding or creating room, so that we can grow our business. And you will see that because if you look at the chart in terms of the last bar of the chart where it's under cost management actions, you'll see that, again, in 2025, we've managed to reduce our cost by about 3% during the course of the year, and that created exactly the room to invest in hiring and other investments, which is the first bar in that chart. Actually, even the numbers like the investment is CHF 36 million and the cost saving is CHF 38 million. So that matches very well in terms of our strategy in cost and efficiency management. The only 2 reasons costs have gone up are variable compensation, the CHF 28 million that you see in the second bar. And in the fourth bar, it's also the costs that come from the acquisition of Cite Gestion and ISG. Furthermore, at the bottom right, you'll see that as also communicated in November, we have exceeded our efficiency and cost management targets under the Simplicity project. The initial target was CHF 40 million. That target was up to CHF 60 million and the actual conclusion is CHF 66 million. There have been a number of actions included in this program. It's about rationalization. It's about automation. It's about reviewing processes end-to-end. And we already have a new program, which is running for the '26 to '28 cycle with a scope of CHF 70 million to CHF 80 million of efficiency and cost savings. Moving on to the balance sheet. In terms of the balance sheet on the left, no big movements. We still have about CHF 18 billion or more than CHF 18 billion of very liquid assets on the balance sheet. Core capital ratio, CET1 capital ratio at 14%, total capital ratio of 17.3%. The loan-to-deposit ratio is at 58%, and both liquidity ratios are at very good levels, at where they were last year or even better. And finally, we bought 11.8 million of treasury shares throughout 2025. And there is a new action on the buyback. The Board decided that the buyback continues in '26 and '27 for a total of up to 9 million shares to be acquired until July 2027. In terms of the impact from acquisitions, the acquisitions cost 130 basis points on the core Tier 1 ratio. Now as Giorgio mentioned, clearly, our primary focus is on expanding the core business. At the same time, we need to make sure that we successfully derisk the balance sheet from the legacy positions that come from pretty much 20 years ago. On the left-hand side, you see the actions that we have taken on the life insurance space. We've been quite active in 2025. Two major actions. One was to dispose of the entire synthetic portfolio and the second one was to unload about 1/4 of our physical holdings in life insurance policies. I'm very pleased to say that the carrying value of that portfolio now is about CHF 260 million as at the end of 2025. It was CHF 360 million at the end of 2024, and it was over CHF 500 million when we started this business cycle. So there's been continuous derisking and the numbers are going down. Hence, I expect some volatility coming from it. But overall, I don't expect big numbers to be coming through the P&L going forward. On the right-hand side, we have the legacy litigation cases. Some are in the life insurance space. We've resolved 3 there. There's one more pending, probably end of 2026 or early 2027. And then you have the 2 exceptionals that also Giorgio described earlier. The positive one is the first one, which is the recovery from an insurance on an old matter. And the second one is the provision on a litigation case, which we took in December. On a combined basis, these 2 created a CHF 14 million drag on our reported P&L. In terms of capital, which is on the next page, Page 25, we had one of the strongest capital generations in the last few years. In terms of gross levels, we were over 5 percentage points of capital generation. On a net basis, after risk-weighted assets and dividends, the net capital generation was 1.6% for the 12 months. This is part of the capital-light model, and we do expect that we'll be running at very strong organic capital generation going forward. What you see after that is the buyback which, combined with the dividend, enhances the returns that we offer to our shareholder. And then quite a few one-off items. So the acquisitions cost 130 basis points. The provision for the litigation case was 100. And we have 2 currency impacts. One is, call it, the normal currency. And then the second one refers simply to the Tier 1 instrument that we hold. The reason we show it separately is that if we decide to call that instrument, that will come back. So although you see that the core Tier 1 ratio that we report at year-end is at 14%, effectively, if we were to call that instrument, it would have been 14.4% after we unwind. With 14% or 14.4%, we are clearly very comfortably within our 12% to 15% capital ratio that we communicated back in November. And with the combination of the strong capital generation, we look forward to discussing even more M&A activity if it fits the plans and conditions that we hold. Which brings me nicely to Quilvest. This is the last M&A that we announced back in January. You see some of the figures here. I will not spend too much time on it. The only thing I'd like to say is that it looks small. It's CHF 4 billion AUM. But the beauty of Quilvest is the very high quality of its clients. And given the fact that it has been a small bank for many years, we believe that we can expand dramatically the offering to these clients. So it is an acquisition where we are looking to make sure that 1 plus 1 makes 3 and make sure that we create value for all the stakeholders. And to close, and this is on Page 27. I think that we are at the juncture where we are officially closing '23 to '25, and we are officially opening '26 to '28. We are definitely closing 2025 on a very high note, record growth, record profitability, record momentum in the profitability that we are posting. So I think we have all the ingredients to feel very comfortable about the next cycle. The priorities for '26, unfortunately, in our business just remain pretty much the same. It's not that we're changing priorities. So it's going to be about business development. It's going to be about making sure that we maintain the high growth in the top line, preserve margin. And at the same time, that we maintain our cost discipline while we're doing all these things. And the last part is, clearly, we did 2 acquisitions in 2025. Now we need to make sure we put them to work. These acquisitions, as I said earlier, had a negative impact in 2025. They have already started having a positive impact in 2026. But it's a matter of making sure that we exploit our investments to the full potential to make sure that we further expand profitability in 2026 and beyond. In terms of the next cycle, these are the financial targets that you see on the right. And just to repeat, 4% to 6% growth in terms of net new assets, revenue margin in excess of 85 basis points, cost-to-income ratio of 68%, and a return on tangible equity of 20%. On that note, I'd like to thank you very much, and I pass it back to Giorgio for priorities and outlook. Thank you. Piergiorgio Pradelli: Thank you, Dimitris. And let us now focus on the outlook, what we can see for 2026 and beyond and what are our priorities for 2026 to 2028. I would like to start with this page. You have seen this page during the Investors Day. This is our strategic framework. And 3 months ago, we basically said that we want to continue to build on our strength. We want to continue to focus on our clients. When I think about clients, I always think about net new assets, because if we do a good job with our clients, we can increase the share of wallet and we can attract new clients. Obviously, we want to deliver the best possible content to our clients in order to increase the level of engagement and ultimately, the level of margin and operating income. And finally, we need to translate all this into a growing profitability via Simplicity and operating leverage. At the same time, we have identified 3 new areas for growth, opportunities of growth. And we spoke about branding and client experience. We spoke about commercial excellence, and we spoke about tech-enabled services and processes when we introduced the concept of the augmented CROs. Again, it's early days. We just started the new cycle and only 3 months past from the Investors Day, but we believe that we have done already quite good progress in all these 3 areas, and we would like to give you a quick update. First of all, about branding, we stated in November 2025 that brand is important for us, it's important for our clients, and we wanted to strengthen our brand. Our ambition was to become or is to become one of the top 3 Swiss private banking brands by 2028. And in terms of brand finance, we have a ranking among the top 250 brands globally. We are very pleased because the brand finance report will come out at the beginning of March, I think the 4th of March, but we are allowed to present a preview of our results, and we are very pleased because the brand value has increased in excess of 50% to CHF 629 million. And what is also very important, we have gained more than 50 places, 50 positions, and we are now 262 in the ranking, which is obviously very close to the 250 that was our original objective for 2028. So I think this progress reflects our investments in an enhanced client experience and a higher brand recognition across markets where we invested quite a lot in the last few years. Now the second area is about the technology and is about launching the augmented CRO. Obviously, these days, I'm very pleased that we brought this concept 3 months ago, because, as you know, these days, everybody talks about AI basically substituting asset managers. And in the U.S., there was also a debate whether AI will substitute players like Charles Schwab and others. We always said, and we said it 3 months ago, and we continue to believe that is that AI and technology and the human factor are complementary. And obviously, we believe that our client relationship officers are among the best in the industry, but we believe that we can improve further if we are able to give them not only great teams around them in the areas of investment solutions, wealth solutions, credit solutions and global markets, but also the best possible digital solutions. We have announced 3 months ago that we have started a cooperation with BlackRock for the Aladdin system. We are pleased to report now that this has been rolled out in Switzerland, which is our biggest region, and our client relationship officers are very pleased. We have also launched the CRO Atlas, which is basically a tool that allows the CRO to have clear insights about their clients, the portfolio, the businesses, and we expect an increased ability for our client relationship officer to increase the share of wallet and the client engagement. And again, we started to do our first steps regarding AI. We have rolled out Ally, which is our in-house AI platform to all the new locations, and we have seen that the adoption has been incredible, which obviously shows how people are interested in this tool. So we continue to go forward in this direction. It's a journey. But again, the progress in the first 3 months is very encouraging and the new CRO team, again, is very committed to make us one of the best firms also in this area. The third point is about commercial excellence, and we start seeing some improvements in terms of client engagement and share of wallet. Dimitris already mentioned that our existing CROs are improving in terms of gathering assets, which is obviously a function of attracting new clients, but also a function of improving the share of wallet. And as I mentioned earlier, content for us is very important. Obviously, we have great teams in our investment and wealth solutions that provide solutions to our clients. But clearly, it is also important to create an ecosystem with top players in the market, and we have announced yesterday a cooperation, a partnership with Capital Group, one of the biggest active asset manager in the world. And we have been cooperating already for a long time, but we have decided to deepen our partnership, and I think this is a mean in a way to further enhance our personalized offering and impartial advice to our clients, which ultimately will support basically our business. Now 3 months ago, at the end of November, we presented to you our operating model. Our operating model continues to deliver. In essence, we continue to focus on growth, translating both organic and via acquisition. We translate this growth in growing profitability. We use part of the profitability that we generate in investing in order to transform the bank for the better, and this generates attractive returns. As you have seen in 2025, we were able to deliver very attractive returns to our shareholders indeed. Now looking at 2026, I must say that the year started as 2025 ended. This situation where there is a lot of volatility and uncertainty driven from geopolitics to financial markets, and we can debate for hours about the situation. But this volatility, coupled with the attitude of our investors, which is actually quite risk-on, is quite constructive and positive for our clients, because we see that the level of engagement and the level of transactions that our clients are doing with our CROs and with our dealing floors is at very high level. And we expect this to continue as long as the overall attitude is risk-on. If we are going to have another risk-off situation like in April last year, then we will have to see and obviously react. But for the time being, the year started very, very well. And for us, the priorities, as Dimitris said, do not change quarter after quarter, but I would like to emphasize them again. Number one obviously is about maintaining our growth momentum. So net new assets and client engagement remains our top priority. Second, after NNA, we have now M&A. M&A is important. As mentioned already, we have done 3 acquisitions in the last 12 months. This is CHF 16 billion, not dollars. I think maybe earlier, I mentioned dollars. No, no, we continue to report in Swiss francs. And obviously, it is important that these acquisitions start basically being integrated and start delivering in terms of profit contribution starting in 2026. The third priority after NNA and M&A remains to defend our margin. Margin resilience is very, very important. And again, we have managed very well, I believe, in 2025 to mitigate the headwinds in terms of declining interest rates and a weaker U.S. dollar. As Dimitris says, I think that by now, the declining interest rate is like when you sail, the wind is becoming softer. So it's not really an issue anymore. I think we will be able to absorb the 1 basis point that Dimitris has indicated. The weaker dollar, this is a bit more complicated, because as we see these days, it's very difficult to predict the direction. I think there was, at the end of the year and beginning of this year, some wishful thinking by many market participants that we could see a rebound. We have not seen that yet. And so we will have to continue to focus on what we can control. And what we can control is, for sure, the net commission income and all the advisory activity in terms of investment solutions, wealth solutions, credit solutions and global markets. Next priority remains obviously to generate operating leverage. We discussed 3 months ago about the golden rule to try to grow revenues at a double rate of cost. Last year, depending on how you look at it, we were very, very close to that. I think we will continue this year and technology, for sure, will allow us to improve productivity and efficiency. And finally, we are obviously very committed to deliver for 2026, and we are very confident to meet the 2028 financial targets. Now we are entering a new cycle. We are closing, I think, today -- well, we have still the general assembly in a month. But after that, we will close the 2023, 2025 cycle once and for all. But again, it has been a fantastic ride, and we are starting the new cycle in a position of strength. And so all the initiatives -- just to be very clear, all the initiatives that I was mentioning before at the end of the day are geared in ensuring that we deliver a consistent performance, and we unlock the power of compounding, as you can see on the right-hand side of Slide 34. And again, our objective at the end of the day is to generate a double-digit net profit growth at around 15% and to achieve a return on tangible equity of 20%. So in closing and looking ahead, first of all, I would like to mention that our aspiration, our vision is to be the private bank of choice for generations of clients. I think that the momentum of the last years shows that we are already, for many clients, the private banking of choice for generations of clients. Obviously, we want to become for a bigger number of clients and to be really recognized for delivering fully personalized service and impartial advice. To close, I would like to say that 2025 has shown that we are closing the cycle with a strong momentum. And as I said, we were able to translate this in record profit and very attractive returns for our shareholders. We also made 3 acquisitions in our key markets in the last 12 months. And this, in my view, is important to be emphasized how we can successfully complement organic growth with strategic M&A acquisitions. So overall, our business model is not only, I would say, resilient, but is also geared towards profitable and sustainable growth. And this is the case today and will remain the case in the next cycle. Obviously, as a management team and all our teams at EFG that I thank here for the commitment and the dedication to EFG are fully focused on the execution of the budget, first of all, for 2026, and the 2028 strategic plan. And clearly, we are very confident to deliver value for all our shareholders. And with this, I thank you for your attention. I close here the formal presentation and hand over back to Jens to open the Q&A session. Jens, the floor is yours. Jens Brückner: Thank you, Giorgio. Thank you, Dimitris, for your presentations. As just said, we're starting the Q&A session in the room. So if we have a question, please let's start with Máté over there, so first question. Mate Nemes: Máté Nemes from UBS. I have a couple of questions. The first one would be on your comments that run rates in a number of areas were better versus what you expected at the time of the CMD that relates to the last 2 months of the year. Could you talk about what surprised positively? What are the areas that perhaps you are more positive about versus the November CMD? That's the first question. The next one would be on the litigation provision that you booked in December. Could you share more details around this? What led to this provision? What triggered this? And how do you see the case unfold from here? And the last question would be on capital and the FX impact specifically. Can you talk about your capital hedging approach? Does the 60 basis point negative impact mean that you're not applying FX hedges and there's a considerable mismatch between CET1 capital and RWAs? Dimitrios Politis: Let me start with the run rate. So I think there are two points on the run rate. The one is the actual bottom, bottom line, and we tried to show this on Page -- hold on a second. This is on Page 9 of the presentation, where you see that in the period between July and October 2025, we actually had CHF 100 million for those 4 months. And then that number went close to CHF 165 million for the 6 months. So clearly, the last 2 months have been very strong in terms of profit generation. So this is, for us, very positive. And as Giorgio said, we also see continued strength in the delivery of the profits also in the month of January of 2026. Now the second point is on the revenue margin, which is described on Page 19 of the presentation. For the second half of the year, we were at 93 basis points. Back in November, we reported that for the 10 months, we were -- or for the 4 months, which were the last 4 months at the time, we were at 92. So there, we also see an uptick, which makes us feel more positive. In terms of why things are better than what we're expecting, there are three reasons. One is the mandate penetration effort continues, and we see that translating into commission income and commission margin. The second one is that we had good client activity in the last 2 months and in January of 2026. And the third one is the pressure on interest-related income seems to be coming down. So a combination of all three is what helps us feel more comfortable and more confident that, okay, maybe we do not stay at 93 going forward, we -- it is certain that we'll have some erosion from the 93, but the starting point is a very solid starting point from which to work on. Piergiorgio Pradelli: And clearly, as you mentioned, the fact that our AUM is now 10% higher than the average of previous year is another element of support to our business. Dimitrios Politis: Now the second question was about the litigation and bear with me because there is -- I am somewhat limited in terms of the information I can disclose on that, as you can understand. Just to remind everybody, this is legacy litigation. It pertains to events that happened approximately 20 years ago and it was first disclosed in the financial statements back in 2019 in the contingent liability section. It is a complicated case. It is a case, which is now the trial is happening in London in the U.K. The plaintiff is PIFSS, which is the Kuwait state pension fund. And we have about 30 defendants in that case, including EFG and some other banks. Now in terms of more specifically about where we are in the case, the court proceedings, the court hearings started in March 2025, and they are still running. So we are in month 11 of court hearings. We do expect that the court hearing will last probably another couple of months. And we expect the verdict to come out in around the summer of 2026. Clearly, we continue to defend the case. We have very strong defenses, and we will continue arguing our case over the next 2 months still. But given the fact that we've gone through 11 months of trial means that we have gathered more information about the possible outcomes of the case. And we have now reached the stage where under the IFRS accounting rules, we can reliably estimate, and this is the reason why we posted -- we recorded this provision in our P&L and in our balance sheet in December 2025. Again, timing-wise, verdict is expected at the -- somewhere around summer of this year. And Máté, you had a question about capital, the capital impact and the currency. The way we work on currencies is that we try to match the composition of our equity with our composition of risk-weighted assets, which is a bit of a natural hedge, if you wish, which means that if currencies are moving one way, than I would expect -- so if you have an adverse effect in your equity, I expect that you get a positive effect in your risk-weighted assets and you try to match the two. So you're not managing the equity as a number, you're not managing risk-weighted assets as a number, you're managing core Tier 1 ratio as a number. This is how we think of it. But clearly, we disclosed the movement in the currency translation adjustment here because in 2025, it's a more significant number. And on the other element, which pertains to the Tier 1, it's a bit of a nod way that IFRS deals with it. Although the impact is only on the Tier 1 instrument, you cannot change that, the holding value of that instrument, you need to impact core Tier 1. That's the reason we're saying that if it gets called, that 40 basis points gets released. So our effective core Tier 1 ratio is now 14.4%, the way we think about it. Sorry for the detailed explanation. Jens Brückner: Great. And we have here the next question, please. Daniel Regli: This is Daniel Regli from Zürcher KB. I have two follow-up questions. One is on the gross margins and the development there, particularly, obviously, in H2, we saw kind of an uptick in the recurring commission margin. If you can just maybe reiterate a bit your explanations there and how far this is sustainable into the next years? And then secondly, obviously, again, on the net interest margin or the margin outlook on interest income. Just maybe help me understand a bit more how you exactly come to, let's say, 1 basis point pressure? What do you do? I think markets still expect some rate cuts in U.S. dollars as well. And then lastly, on the net new assets development, obviously, congratulations to the strong net new assets development, particularly Asia Pacific and Americas, but obviously also in Continental Europe. Can you maybe elaborate a bit more what drove the strong asset flows? And maybe also explain a bit what extent was driven by maybe some releveraging, particularly in Asia? Dimitrios Politis: So let me start with the margin question. I'll start with the interest margin or interest-related margin, and I'll point you to Page 19 of the presentation. So on Page 19 of the presentation, we show the sensitivity to rates. And what you see at the top right part of the page is that if we lose 100 basis points on all 4 key currencies, the net impact for us is a reduction in revenue by CHF 36 million. Clearly, the majority is coming from the dollar. Clearly, we don't expect that all 4 currencies will lose 100 basis points in 2026. By the way, CHF 36 million is 2 basis points. So we don't expect to lose on all currencies and even on the dollar, maybe the 4 cuts is a bit too aggressive. So we estimate that, roughly speaking, it's not going to be a 2 basis point hit but a 1 basis hit in terms of the interest-related margin in 2026. Now to your other question about commission margin, the 2 reasons why the commission margin has increased is mandate penetration, which you see at the bottom right, going to 67%. And the second part is client activity. And so we are -- we have an even higher target for mandate penetration for the next business cycle, so the one that we currently just started, '26 to '28. And we see client activity continuing. Now again, if client activity pulls back, then especially in the nonrecurring side, you will see a drop, while the recurring side should be a lot more resilient going forward. Giorgio, if you want to take the growth? Piergiorgio Pradelli: Yes. In terms of NNA, as you know, first of all, this has been our 14th consecutive semester of NNA growth. So basically, this is 7 consecutive years. And clearly, we have a methodology and a focus on growing our business, which goes beyond 2025 and will continue in the next cycle. As you have seen on Page 16, I think that what is remarkable is that the growth has been basically very strong across regions. If you see basically all the regions are within our targets. Even more mature markets like Switzerland and the U.K. are within our margin. It is a combination, as Dimitris was saying, between new CROs, but also existing CROs, existing CROs have improved their performance. It is correct what you say in the sense that we did not have, like in previous years, deleveraging. We have seen back leveraging coming in. Obviously, we believe that the fact that interest rates are coming down at the short end and the curve is steepening. This allows clients to play the carry trade and obviously, they engage much more in terms of Lombard lending. But -- and this is on Page 40 and 41. If you look at our dynamics, basically our total NNA has been CHF 11.3 billion. The increase in lending is CHF 1.5 billion. This is about 13% of the total AUM. And if you go to the following page, on Page 41, you see that at the level of the stock, if you can go on Page 41, please, you see that the level of the stock is 11%. So the growth in lending is clearly 13% of the total NNA and is in line with our normal lending penetration. So I would say, yes, we are pleased that the deleveraging has stopped. But our growth is not lending-led. Asia has been -- just to make the points of Asia and the Americas, obviously, Asia Pacific is in excess of our margin, 8.5%. And we have had growth also in terms of hiring CROs. They've been all very successful and they're doing extremely well. And the Americas also there has been a growth in all the areas. We have opened in Panama. We have focused on Brazil. So it has been across the region. Jens Brückner: Great. Do we have another question in the room at this stage? Nothing -- the gentleman there, please? Unknown Analyst: [indiscernible]. You see the strong negative reaction on the stock market today with minus 9% due to your litigation case in the U.K. You had 36% of growth in the net benefit in the first half year 2025. Now you announced only 1% of growth. Why the benefits slowed down so much? You spoke about the litigation case in the U.K., which cost you CHF 60 million, but combined to the other positive litigation case in Korea, it only was CHF 40 million? So are there other reasons for the slowing down of the net benefit? And why did you communicate only now and not in December about this litigation case? And second question about the U.S. dollar exposure in your assets. I think you have 60% of exposure in assets. Is there any trend at your clients that they want to reduce that U.S. dollar exposure due to geopolitical reasons? Piergiorgio Pradelli: Maybe I can start on the stock price. And it's the first time I hear how the stock is doing because we have, the 3 of us, a pact that before going to the presentation, we never look at the stock price. So I was not aware, but let me tell you that our job is to manage the operating business of the company. And we have been told very young, not to focus on the stock price. And if the operating company and the operating performance of the company works very well, then the stock price will follow. I cannot comment -- I will not comment about today's stock price. Clearly, as you said, the overall drag for the exceptional is CHF 14 million. It is unfortunate that the positive was in the first half and the negative in the second half, but these are one-offs and have no impact, as we discussed on the operating performance of the company. You want to mention about the timing? Dimitrios Politis: Well, the timing comes with the ability to reliably estimate and that ability and the full estimate came very recently. So the appropriate timing to release that was with the full year results today. Piergiorgio Pradelli: Maybe the other element why this exception was CHF 14 million and the fact that the net profit if you look -- I think that the question was about the difference between the operating profit and the net profit is also due to the volatility of life insurance that it was mentioned on Page 10, I think. Page 10. If you go to Page 10. You can see here the difference in terms of performance of the life insurance that in 2024 was quite strong at CHF 32 million. And obviously, in 2025 was positive, but much less strong. And clearly, again, here, these are legacy matters. We cannot influence them directly with management actions. So the combination of the drag due to the exceptionals and the fact that life insurance was lower than the previous year, this is one of the explanations. Otherwise, the operating profit, as we said, is at record level, almost at CHF 500 million. Jens Brückner: Second question about the U.S. dollar. Piergiorgio Pradelli: U.S. dollar. Dimitrios Politis: Question on the U.S. dollar. Look, we see some clients that are moving away from the U.S. dollar. So we see some clients that now are also considering other currencies. If you look at the composition of our AUM, which is at the back of the presentation, clearly, this has not moved substantially. I'm trying to get the page. Piergiorgio Pradelli: Page 41. Dimitrios Politis: Page 41. So like the U.S. dollar was 47% last year. It's still 47% of currency this year. So it is more anecdotal than actually us seeing a significant trend in terms of the currencies that our clients wish to use. Jens Brückner: Okay. If we have no follow-up, then we move to the question on the phone, please. Operator: The first question from the phone comes from the line of Hannah Leivdal from Citi. Hannah Leivdal: I have two, please, if I may. So the first one is on your balance sheet and capital position is strong. But equally, your annual report outlines the number of legal cases outstanding. So what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside feeding into this versus what is available for M&A and other growth initiatives? And my second question is on the... Jens Brückner: Sorry to interrupt. We have a hard time understanding you. Maybe can you move your microphone a bit? Hannah Leivdal: Is that better? Jens Brückner: No, that's worse. Hannah Leivdal: Oh, it's worse. How about now? Is this any better? Or this is worse? Jens Brückner: A bit, yes, better. Hannah Leivdal: A bit better? Jens Brückner: Yes, let's try. Hannah Leivdal: I'll try again and then interrupt me. So I was asking on the balance sheet and capital position being very strong, but equally your annual report outlines a number of legal cases outstanding. So I was wanting to ask what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside paving into this versus what is available for M&A and other growth initiatives? Dimitrios Politis: So I think I heard the question. So I'll try to answer to the best that I can. So the -- as you say, our current CET1 position is effectively 14.4%. And I guide you to Page 24 of the presentation because through the latest provision that we took, we have derisked the largest single risk item we had in our -- on our balance sheet. It was the -- it is the largest contingent liability that we actually have on the balance sheet. So in terms of risk profile, now I believe that we are a lot sounder than we were before. At 14.4% of core Tier 1, we have about CHF 260 million of excess capital from our own management floor of 12%. And even more importantly, I would guide you to the capital generation that we have every year. So this year, it was over 5 percentage points of gross and 1.6% on net capital, which is the result of a capital-light model, clearly for a private bank like us. So I think that given where we are, we are very comfortable with our capital position. We are generating capital which we can use for new acquisitions. And we do have also a capital buffer of CHF 260 million, which we can also use for other acquisition if we wish to do so. By the way, if you want to discuss acquisitions, it is not that the acquisitions are simply done in cash. There's always -- or usually, there is a share element included in the acquisitions that gives us even more firepower. Hopefully, I've answered the question because I could not hear you very, very well. Hannah Leivdal: Yes, that's very clear. I have another one, but I don't know if you can hear me. If it's any better? Dimitrios Politis: Just go ahead. Hannah Leivdal: Okay. Yes. So on the treasury swap margin, I just wanted to ask why did this increase in the second half despite narrowing spreads versus Swiss rates? And what was the swap volume in 2025, please? Dimitrios Politis: The reason that the treasury swap activities, the revenues from that increased in the second half is because the volume of our swaps increased. As you say -- as you rightly say, maybe the margin between the 2 currencies has not moved that much or even has narrowed a bit in the period, but it was through higher volumes of currency swaps that, that increased. And clearly, what also happened is that the NII element decreased because it's the other side of the same equation. Jens Brückner: Thank you for your question. I think we have another question on the phone, can we get that one, please? Operator: Next question from the phone comes from the line of Andreas Venditti from Vontobel. Andreas Venditti: I hope you can hear me better than my colleague just now. On M&A, you mentioned the negative profit... Jens Brückner: We can't understand you. That is even worse than before. Can we try to get the sound regulator or try again? Andreas Venditti: Can you hear me? Jens Brückner: No, not really. Andreas Venditti: Okay. Never mind. I'll come back to you, Jens. Jens Brückner: Now it's good. Now it's better. Andreas Venditti: It's better. Okay. I don't move, so I hope it's better. On M&A, you mentioned a negative impact on profits from the two small acquisitions. I guess it's a small number, but still to ask on this. Can you maybe quantify the negative impact, I guess, on the cost side, mainly from this on 2025 numbers? Dimitrios Politis: As you expect, Andreas, the overall contribution is a small single-digit negative number. And the reason it is negative is that we included the profits of Cite Gestion and ISG for a few months, like Cite Gestion was 2, 3 months. And we had some acquisition costs, which are the one-off part of doing M&A. And the balance of those 2 was negative. Clearly, both companies were profitable with actually profits growing significantly compared to the last year in 2025. It's just the timing of the acquisition and the amount of the M&A-related one-off costs that get us to this small negative result in 2025. Jens Brückner: Okay, does that answer the question? Do you have another one or it's good? I think we lost him. Is there another question in the room or not at this moment. Máté has another follow-up. Okay, let's take that one. Mate Nemes: Yes. Just one question. I wanted to ask you about the Lia AI platform that you rolled out in 2025. Could you talk about the capabilities and the exact use cases of that platform? Piergiorgio Pradelli: Yes, thank you. I think there are several use cases that we are using, in particular in the Investment Solutions area. Then there is the general, let's say, use cases that you have with a normal ChatGPT like chatbox. And clearly, the areas where we are trying to develop much more is everything related to compliance and risk. I've always been saying that right tech for us is more important at times than fintech. But these are the key areas where we are expanding. And the next level, but we are not there yet, will be how to improve the client experience because all the use cases I mentioned were more about efficiency on the backstage, and that will be the next area where we're going to focus on. Jens Brückner: Okay. I think there's no further questions on the phone. If there's nothing in the room, then I hand that back to Giorgio for the final remarks. Piergiorgio Pradelli: No. First of all, thank you for attending. Again, I would like to reiterate that 2025 has been a very strong year where we have achieved a record AUM, record profitability and record top line. Clearly, it's also a year where we have done progress in dealing with the legacy matters, and we closed successfully our 2023 and 2025 strategic cycle, and we are very confident starting in a position of strength, the 2026-2028 cycle. And as a management team, we are committed in executing our sustainable and profitable growth strategy as we have done in the previous period. With this, thank you very much for your attention.

86天前Insight Analytics约5分钟阅读

BLCO 2025 Q4 财报电话会议

Operator: Good morning, and welcome to Bausch + Lomb's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to George Gadkowski, Vice President of Investor Relations and Business Insights. Please go ahead. George Gadkowski: Thank you. Good morning, everyone, and welcome to our fourth quarter 2025 financial results conference call. Participating on today's call are Chairman and Chief Executive Officer, Mr. Brent Saunders; Chief Financial Officer, Mr. Sam Eldessouky; and President of Global Pharmaceuticals and International Consumer, Mr. Andrew Stewart. In addition to this live webcast, a copy of today's slide presentation and a replay of this conference call will be available on our website under the Investor Relations section. Before we begin, I would like to remind you that our presentation today contains forward-looking information. We would ask that you take a moment to read the forward-looking legend at the beginning of our presentation as it contains important information. This presentation contains non-GAAP financial measures and ratios. For more information about these measures and ratios, please refer to Slide 1 of the presentation. Non-GAAP reconciliations can be found in the appendix to the presentation posted on our website. The financial guidance in this presentation is effective as of today only. It is our policy to generally not update guidance until the following quarter unless required by law and not to update or affirm guidance other than through broadly disseminated public disclosure. With that, it's my pleasure to turn the call over to Brent. Brenton L. Saunders: Thank you, George, and good morning. I'm going to start by highlighting Q4 and full year results, which show we don't just talk about strategy, we execute it. Sam will put more context around our performance and provide 2026 guidance, and Andrew will cover opportunities to expand our leadership in dry eye. I'll close with a look at why we continue to be so excited about 2026 and beyond. When you hear me talk about execution today, this is exactly what I mean. In the fourth quarter, we didn't just grow. We grew smarter and faster than the market. When you see 7% constant currency revenue growth and 27% adjusted EBITDA growth, that's real operating leverage and a clear sign of our commitment to financial excellence. The discipline we built into the organization is paying off. This isn't a onetime exercise. It's the direct result of teams making better decisions, a fundamental shift in our cost structure and executing consistently across our businesses. We plan to harness that momentum to deliver on our 3-year plan. Results don't come from slides or strategy decks. They come from people who believe in what they're doing, take ownership and execute every day. That mindset across our company is what made our record performance in the fourth quarter possible, and it's a privilege to lead a global team committed to winning together. I highlighted fourth quarter growth on the previous slide, but would note that both $1.4 billion in revenue and $330 million adjusted EBITDA are a high watermark for our company that's been around for quite some time. While it's important to remember that there is seasonality to our business, which is especially true as our Pharmaceutical segment becomes more prominent, we did what we said we would do in the quarter. Our ongoing focus on selling excellence is best illustrated by our continuously expanding dry eye portfolio with Miebo generating $112 million in the fourth quarter revenue. We continue to be impressed by Miebo's trajectory and turn towards profitability as we exit the launch phase. The latest demonstration of our commitment to operational excellence and staying nimble to drive sustained, profitable growth comes from our Surgical business, where we made several strategic fourth quarter moves to position us for margin improvement. Finally, as I shared at Investor Day, our pipeline isn't theatrical. It's active in delivering. From the imminent launches to active recruitment for forthcoming trials, we're translating R&D into revenue and impact. That's what builds confidence in future growth. If there are any skeptics of our 3-year plan coming out of Investor Day, this slide is for you. We didn't overpromise in 2025, we executed, and the outcomes speak for themselves, 6% constant currency revenue growth, excluding the enVista recall, was faster than the market and at the midpoint of our planned CAGR through 2028. Adjusted EBITDA margin came in at 17.5%, with an impressive 23.5% in the fourth quarter. Importantly, margin expansion steadily increased throughout the year, putting us on a path to achieve margin targets in 2026 and beyond. You've heard me and Sam reference say-do mentality before. Here it is on paper. Financial discipline is no longer a onetime effort or a cost savings program. We've built the muscle around planning, prioritization and accountability, which puts us in a much stronger position to drive sustained margin improvement over time. People hear pipeline and think long term. What they should think is momentum because something meaningful is happening across our portfolio at all times. PreserVision AREDS3 started to ship on February 2, and Blink Triple Care preservative-free is expected to ship on March 1. CE mark submission for seeLYRA, our next-generation femtosecond laser is expected to take place next week with anticipated approval in the second half of the year. All trial recruitment is on schedule, and we recently received top line data from our first external study for our new bioactive contact lens material. We're pleased to report the study met our expectations and heightens our probability of success. Our in-house R&D team has started its analysis, which will allow us to make improvements to the lens, and we remain on track for our second external study and plan 2028 launch. When it comes to our pipeline, the future isn't waiting, it's already underway. This 2025 performance summary highlights the breadth of our offerings and shows why diversification is a competitive advantage. We've built a company that covers eye health end-to-end, and today, every part of the business is contributing. That's what durable growth looks like. The spotlight products drive that point home. They can be found behind the pharmacy counter, in the operating room or a few clicks away. Some, like Artelac, have demonstrated strong growth in important markets outside the U.S., as we implement our strategy to focus on core formulations. Others, like LUMIFY, are prime for additional exposure and opportunity as next-generation offerings are introduced. I'll now turn it over to Sam for a deeper dive on Q4 and full year financial metrics including cash flow figures that I know he is particularly proud of. He'll also provide 2026 guidance, which is aligned with our 3-year growth plan. Sam? Osama Eldessouky: Thank you, Brent, and good morning, everyone. Before we begin, please note that all of my comments today will be focused on growth expressed on a constant currency basis, unless specifically indicated otherwise. In addition, all of my references to adjusted EBITDA will exclude acquired IPR&D. As Brent mentioned, Q4 was a record quarter. We delivered the highest revenue and the highest adjusted EBITDA in the history of Bausch + Lomb. We also delivered an adjusted EBITDA margin of 23.5%, which is the highest level we have achieved as a stand-alone company since our IPO. In the quarter, we drove meaningful operating leverage with adjusted EBITDA growth of 27% on a year-over-year basis. Building on our strong third quarter performance, in Q4, we continued to deliver on the commitments we outlined at Investor Day and showed how our relentless execution will set us up to achieve the 3-year targets we outlined in November. Turning now to our financial results on Slides 9 and 10. Total company revenue for the quarter was $1.405 billion, up 7%. Full year revenue was $5.101 billion, up 5% and up 6% excluding the enVista recall. We saw revenue growth across all our segments, both in the quarter and the full year. Currency was a tailwind to revenue of approximately $37 million in the fourth quarter and approximately $58 million for the full year. Now, let's dive into each of our segments in more detail. Vision Care fourth quarter revenue of $778 million increased by 5%, driven by growth in both consumer and contact lenses. Full year Vision Care revenue was $2.923 billion, up 6%. Let me go over a few highlights. Following double-digit growth in Q4 in the prior year, the Consumer business delivered 3% growth in the quarter. For the full year, the Consumer business grew 5%. LUMIFY generated $63 million of revenue, up 24% in Q4, and $221 million of revenue for the full year, up 16%. The Consumer dry eye portfolio delivered $116 million of revenue in the fourth quarter, up 6%. The growth was led by Blink, which grew 33%. Full year Consumer dry eye revenue was $436 million, up 14%. Eye vitamins, PreserVision and Ocuvite grew by 2% in the fourth quarter and 2% for the full year. Contact Lens revenue growth was 8% in the fourth quarter and 7% for the full year. The growth was again led by DD SiHy, which was up 17% in the fourth quarter and 28% for the full year. Additionally, Ultra was up 16% in the fourth quarter and 9% for the full year. In Q4, our Contact Lens business saw growth in both the U.S. and international markets. The U.S. was up 11% and international was up 6% in the quarter. For the full year, the U.S. was up 9%, and international was up 5%. In China, Contact Lenses continued to perform well and grew by 7% in the quarter and 8% for the full year. Moving now to the Surgical segment. Fourth quarter revenue was $249 million, an increase of 3%. Excluding the impact of the enVista recall, Q4 revenue growth was 6%. For the full year, Surgical revenue was $894 million, up 4% and up 10% excluding the recall. In Q4, Implantables were up 5% and 24% sequentially. For the full year, Implantables were up 4%. Premium IOLs were up 20% for Q4 and 26% for the full year. Consumables were up 4% in the fourth quarter and 5% for the full year. Finally, Equipment was up 2% in Q4 and 3% for the full year. Revenue in the Pharma segment was $378 million in Q4, which is an increase of 14%. For the full year, Pharma revenue was $1.284 billion, up 6%. Our U.S. Branded Rx business was up 21% in the quarter and 13% for the full year. Strong Miebo execution once again led the growth. Miebo delivered $112 million of revenue in Q4, an increase of 111% year-over-year and 33% sequentially. For the full year, Miebo revenue was $316 million, which represents impressive growth of 84%. Xiidra continues to track in line with our expectations, and our team is executing our strategy. In the quarter, Xiidra revenue was $95 million and $331 million for the full year. Our International Pharma business was up 5% in the quarter and 6% for the full year. Finally, we are seeing meaningful progress in our U.S. Generics business, where we saw growth sequentially and on a year-over-year basis. In the fourth quarter, U.S. Generics was up 4% on a year-over-year basis and 24% sequentially. Now, let me walk through some of the key non-GAAP line items on Slides 11 and 12. Adjusted gross margin for the fourth quarter was 62.1%. This absorbs an impact of approximately 80 basis points related to tariffs. For the full year, adjusted gross margin was 61%. In Q4, we invested $94 million in adjusted R&D, in line with Q4 2024. Full year adjusted R&D was $371 million, up 8%. Fourth quarter adjusted EBITDA was $330 million, up 27% on a reported basis. The adjusted EBITDA margin was 23.5% in Q4, which represents year-over-year expansion of 330 basis points. As I previewed at Investor Day, we are continuing to focus on efficiencies in SG&A, and we are seeing the benefits in operating leverage. Full year adjusted EBITDA was $891 million. We are pleased with the work we've done on cash flow optimization. Adjusted cash flow from operations was $152 million in the quarter and $381 million for the full year. Adjusted free cash flow for the quarter was approximately $76 million and $32 million for the full year. CapEx for the full year was $349 million, which includes approximately $30 million of capitalized interest. Net interest expense was $95 million for the quarter and $376 million for the full year excluding a $33 million charge related to refinancing fees. The full year 2025 adjusted tax rate was 10%, which is lower than our previous guidance of approximately 15%. The lower tax rate was mainly driven by the impact of the enVista recall and other onetime adjustments. Adjusted EPS, excluding Acquired IPR&D was $0.32 for the quarter and $0.51 for the full year. Adjusted EPS in Q4 includes a onetime noncash charge of $0.08 related to a revaluation of stock-based compensation to reflect our strong performance and favorable long-term outlook for the company. Excluding this charge, EPS for the quarter was $0.40 and $0.59 for the full year. Now, turning to our 2026 guidance on Slide 16. For 2026, we expect to build on the results we have delivered in 2025 and to continue to execute to achieve our 3-year financial targets outlined at Investor Day. The fundamentals of our business and the eye care market remains strong. We expect our revenue to once again grow faster than the market, and we expect each of our segments to deliver growth in 2026. We expect full year revenue to be in the range of $5.375 billion to $5.475 billion, which represents constant currency growth of 5% to 7%. Based on current exchange rates, for the full year 2026, we estimate currency tailwinds of approximately $30 million to revenue. We expect to continue to execute our margin expansion strategy. We are setting our adjusted EBITDA guidance in the range of $1 billion to $1.050 billion. This reflects a margin of approximately 19% at the midpoint of the guidance range and adjusted EBITDA growth of approximately 15% on a year-over-year basis. We expect to drive meaningful operating leverage in 2026, with adjusted EBITDA growing at a rate of nearly 3x that of revenue. In terms of the other key assumptions underlying our guidance, we expect adjusted gross margin to be approximately 62%, and we expect investments in R&D to be in the range of 7.5% to 8% of revenue. Throughout 2025, we've taken steps to address our debt maturities and cost of debt. We expect interest expense to be approximately $365 million. We expect our adjusted tax rate to be approximately 19%, and we expect our full year CapEx to be approximately $285 million. In terms of our quarterly phasing, we continue to expect the natural seasonality of our business with the first quarter being the lowest and the fourth quarter being the highest. This seasonality is expected to become more pronounced as the dry eye franchise continues to grow. To conclude, we have laid the foundation for revenue growth and margin expansion. We started seeing early results in Q3 2025 and delivered a record quarter in Q4. This gives us a clear signal that the strategy is working. The business is proving to be on a solid path to delivering our long-term targets, and our focus for 2026 will remain on execution. And now, I'll turn the call back to Brent. Brenton L. Saunders: Thanks, Sam. I'm now going to turn it over to Andrew Stewart for a look at Miebo and Xiidra performance and an overview of the immense opportunity in dry eye. Andrew Stewart: Thanks, Brent. Miebo performance in 2025 was exceptional, with 113% year-over-year prescription growth that generated $316 million in revenue. We hit a significant milestone on January 2, crossing the 2 million prescription mark. Going forward, we expect a steady increase in prescription growth and profitability as more patients experience the therapeutic benefit of Miebo and our level of investment stabilizes. With broad market access and natural progression in the medication's life cycle, we anticipate normal seasonality from Miebo prescriptions, similar to what we see for Xiidra and other branded medications in the category. We previously shared that Miebo peak sales could reach $500 million. Based on its success, less than 3 years since launch, we now believe peak sales could exceed $600 million. I'm going to pick up on Brent's theme around execution. When describing Xiidra's 2025 performance, we said we would drive prescription growth, and that's exactly what we did. Total prescriptions grew 6% year-over-year in the fourth quarter, marking the highest quarterly total since launch. In 2026, we anticipate revenue growth and higher profitability, as we evolve our market access strategy. Xiidra and Miebo continue to have best-in-class commercial and Medicare coverage with 4 out of 5 patients covered. Ultimately, we expect both of our flagship dry eye medications to be even bigger contributors to the bottom line in 2026. Dry eye disease is one of the largest and most underpenetrated categories in eye health. Today, approximately 1 in 10 patients are actively treated with prescription therapy, leaving substantial runway for increased adoption. The global market is expected to nearly double in the next 4 years, and much of the recent prescription growth can be attributed to Miebo. For the past 2 years, eye care professionals have been able to more effectively treat patients with the first therapeutic product that can manage evaporative dry eye. This has helped lead to a 5x increase in year-over-year average weekly dry eye prescribers. The overall dry eye market continues to expand due to several factors, most notably an aging population, environmental factors and a dramatic increase in screen time. From over-the-counter products that provide symptomatic relief, prescription therapies that treat both signs and symptoms and diagnostic tools that help eye care professionals better serve their patients, our comprehensive portfolio of dry eye products is second to none and positions Bausch + Lomb to be the biggest beneficiary as more consumers and patients seek treatment. We're not just participating in dry eye, we're leading it. We have the broadest portfolio, the deepest expertise and the strongest presence in the category and in one of the fastest-growing areas of eye health. That's exactly where you want to be. Brenton L. Saunders: Thanks, Andrew. Earlier, I mentioned 2 imminent consumer launches, which tell very different but equally powerful stories. One is about evolution, taking a proven product and unlocking a much larger opportunity. The other is about acceleration, a brand we brought back to life that's now growing faster than ever. Two distinct paths, both driving meaningful upside. Let's start with PreserVision, the #1 eye vitamin brand. We partnered with the National Eye Institute for decades to help reduce the risk of progression in moderate-to-advanced AMD, which has led to continuous evolution of the product. The latest and most advanced iteration is AREDS3, which incorporates B vitamin Science. This new formulation allows us to engage patients earlier when the population is significantly larger and the opportunity is greatest. It transforms our role from treating progression to supporting the full continuum of care. Blink is a great example of what focused execution can do. We revitalized the franchise and built real momentum with 38% constant currency revenue growth in 2025, but we're not standing still. We're building on that success with an advanced preservative-free lipid-based formulation of Triple Care to reach even more consumers as demand continues to rise. These launches show how we create growth from strength, science and momentum. Our Contact Lens business has outperformed the global market for 2 straight years with 9% average constant currency revenue growth over 2024 and 2025 compared to mid-single-digit growth for the industry. Where others have faced significant headwinds, the impact for Bausch + Lomb has been less pronounced. China is a prime example. While there is some consumer softness, our lens business there grew 7% on a constant currency basis in the fourth quarter. Our consistency comes from disciplined execution and a steady, deliberate global rollout of innovation. Activity in the first half of this year drives that point home. In January alone, we launched Daily SiHy multifocal lenses in several European countries with an anticipated April launch in France. The same offering launched in Korea and New Zealand this month. In Surgical, I'm happy to report that this will be the last time we proactively referenced the voluntary enVista recall at earnings, and here's why. When we returned to market in late April, we said our plan was to reach Q1 2025 levels by Q1 2026. We met that goal in the fourth quarter, well ahead of schedule, and the strong uptake we're seeing is the result of great execution, trust and offering a product surgeons genuinely prefer. What did that mean for our Premium IOL portfolio last quarter? It helped drive 20% constant currency revenue growth, contributing to 5% constant currency revenue growth in our Implantables business. The fact that Implantables grew despite the recall is particularly noteworthy and speaks to the potential in this category. We expect to build on that momentum in 2026 and beyond as our existing premium offerings become further entrenched and new options are introduced around the world. As made clear by fourth quarter and full year 2025 results, we're not just talking about execution, we're proving it. We said what we were going to do, and then, we went out and did it product by product, milestone by milestone, business by business. The results are real and measurable. We view our progress to date as a foundation, not a finish line. The most important chapters of this story are yet to be written, but our commitment to execution makes us confident in what comes next. Our pipeline is the envy of the industry and puts Bausch + Lomb firmly on the path to sustained growth and long-term success. Let's take your questions. Operator? Operator: [Operator Instructions] Your first question for today is from Patrick Wood with Morgan Stanley. Patrick Wood: Perfect. I guess the first one, just big picture, when we're looking forward into '26 and the growth guide that we have, how are you guys thinking about the composition of that? Brent, from your perspective, what are the key areas to execute on to make that happen? And should we look at the strong momentum as we exited '25 by product line as a good inference for like where we should be hitting in terms of growth by category for '26? Brenton L. Saunders: Yes. Thanks, Patrick. Look, you heard me in the presentation using the word execution. You heard me probably mention the word execution at least a dozen times throughout the prepared remarks. And let me just try to take a step back and then come at your question. Look, as you just heard, in Q4 '25, we delivered 7% growth and the highest revenue and highest EBITDA in the history of our company, right, 172-plus years. More importantly, we delivered 27% EBITDA growth and 23.5% EBITDA margin. Yes, Q4 is seasonally our strongest quarter, but seasonality alone, right, doesn't produce that level of operating leverage. What you're actually seeing is real structural improvement in the P&L. The quarter reflects the impact of Vision 27, our program that we put in place at the beginning of the year, and we're shifting mix towards higher-margin products, improving pricing discipline, driving productivity across the organization and operating with a more fixed cost infrastructure. That means growth now drops through at a higher rate. So when we grow, we see it in the bottom line. Remember, we're only 1 year into the 3-year program that -- of Vision 27. So what Q4 shows is what disciplined execution can do. It's not a one-off result. It really is evidence of the foundational change we now have in how we run this company. Execution really isn't a slogan. It's really about the daily work of aligning the organization around clear priorities, making trade-offs and following through. It's focusing on the few things that matter and doing them consistently well. And over time, that builds consistency, and it builds credibility, both internally and externally, with all you and our shareholders. Look, I get it, trust is earned quarter-by-quarter. When we say we'll improve margins, we're going to improve margins. When we commit to advancing the R&D pipeline, we hit those milestones. And so that steady drumbeat of delivery is how we change perceptions, and most importantly, create long-term value. So as we continue to progress the pipeline, where we're making strong scientific and clinical progress, really the financial model becomes more compelling if you take a step back and think about it. We now have a platform in Bausch + Lomb that can absorb the innovation and scale it efficiently. So I think, Patrick, when you look at it, Q4 really demonstrates what strong, good execution looks like, and it shows our culture is changing, our model is improving and our leverage in the P&L is real. And most importantly, we're really early in the journey. I really do believe our best days are ahead because of the foundation we have built is stronger than it's ever been. And so look, as I think about '26, Q4 showed a lot of momentum, and we're going to ride that momentum into this year. Patrick Wood: Super clear. And then just as a quick follow-up. Miebo, now potentially $600 million, everyone was bullish about this when it first came into the market. But I would guess it's come in quite a bit ahead of certainly where we expected, probably where you guys expected, too. Are there any like key lessons for that when you're thinking about your pipeline going forward, the surprise of how well Miebo has done? What do you put that down to? And what are the kind of lessons associated with that, that you then can use for the rest of the pipeline? Brenton L. Saunders: Yes. I'll take a shot at it, and then, maybe Andrew wants to add a few thoughts as well since we have him on the call for the first time. Look, when I arrived, Miebo was finishing its what was being filed and waiting approval. And you're right, the organization had good plans for it, but nothing -- its peak sales were lower than current sales are today, right? And what we did is we upgraded the team, right? Talent matters across the whole organization, including the field force, most importantly. . We made some big investments, which some investors were skeptical of, right, because it did impact the P&L. But we said, look, we have a really good medicine here. We have a great category that's untapped. And we think that we can do something special with this Miebo because of its benefit-risk profile is so positive. And we made very strategic smart, thoughtful investment. And now, it's time to harness that. And keep in mind, Patrick, the $600 million is not $600 million. It exceeds $600 million, right? We're not satisfied at $600 million, right? That's just our latest, I guess, elevation of peak sales. But I think this thing can keep going from there. And so we have what we need. The table is set, right? We have our fixed -- as I mentioned in the previous answer, we have a fixed cost infrastructure. It's now getting leverage through that. And so don't take away from this that we're not investing in Miebo. What we are is we're holding our investments steady, so the benefit of all the growth flows through the P&L to the bottom line. But Andrew, anything else you'd add? Andrew Stewart: Yes. Look, 2 things, Brent. I think, one, when you take a great medicine, as you mentioned, something that has a phenomenal safety profile with an extremely fast, rapid onset in terms of efficacy for patients and you marry that to great execution, best-in-class field force execution and a marketing approach that I think has been second to none in the dry eye space, you put those 2 ingredients together and you have great success. And I think when we look at our pipeline for the future, taking those types of execution successes forward will be a key to how we move forward with the company. Operator: Your next question is from Young Li with Jefferies. Young Li: I guess, first one, maybe a follow-up on Miebo, really strong results and you upped the peak rev. It sounded like you're sort of holding the investment on that side relatively steady. Can you maybe comment a little bit more about the -- how that impacts the growth trajectory of Miebo? Hard to comment on steady growth, but would love to hear a little bit more about that. Brenton L. Saunders: Yes. So I mean, I think what you're going to see is continued strong growth of Miebo. I would -- Sam and I both said in the prepared remarks, I think as you think about particularly modeling 2026 or any -- frankly, any year on a go-forward basis, you have to think about the seasonality, right? Just the way copays and deductibles work in the prescription market make Q1 the softest and Q4 the strongest. And so where in the past, when you're in launch mode, you see kind of quarter-by-quarter continuous improvement, you're going to see more seasonality on a go-forward basis there. But if you look at Miebo for the year, we have big expectations for growth in Miebo and profitability. I don't know, Sam or Andrew, if you want to add anything? Osama Eldessouky: Yes. That's exactly right. And I think Young, one of the key things we talked about at Investor Day, and hopefully, you guys have seen it in our results in Q3, and then, also you've seen in Q4 is that we said we're going to be focused with more targeted investments. We built the infrastructure around the dry eye franchise and really shifting from what we refer to as the launch phase to the growth phase, which is really continuing to invest behind the franchise as a whole and making sure we're targeted with this investment to continue to drive the top line growth. Andrew Stewart: Look, I think another key theme for 2026 is as we think about our access and affordability strategy. We're coming to a point of steady state. We're comfortable with the access that we have. We're nearly 4 out of 5 patients for both commercial and Medicare have access to Miebo. And so that puts us in a great position to continuing to support patients and physicians, as they get more experience with the product and add more patients to Miebo's as we go through the year. Brenton L. Saunders: Young, did you have a second question? Young Li: Yes. That was very helpful. Yes, it would be great if I can ask a second one. I wanted to get your thoughts on sort of the state of the market as well as the competitive dynamics. Your portfolio right now has improved significantly since the IPO. You've got a really robust pipeline of products. But for this year, there's players that's coming with more supply on the contact lens side. There's new entrants on U.S. IOLs, recent launches that's ramping for Premium IOLs, capital, dry eye drugs. So just wanted to hear your thoughts on how that can impact '26? And maybe which segment faces the toughest competitive challenges? Brenton L. Saunders: Yes. So look, I think we take all competition seriously. I think if we break it down into kind of 3 -- the 3 markets you just discussed, I think pharma, while we have a real competitor there from a very strong company, I think we feel very good about our position, right? We have the #1 and #2 brand. Andrew mentioned we have very strong access for patients, and we have a lot of momentum. And we have frankly, for evaporative, inflammatory dry eye, which are the largest 2 components of the market, we have the best medicines for patients. And so I think we're established very well there in competition. If you take contact lens second, I think when you look at the state of the market in '25, the market probably grew -- data is not perfect in contact lens. It's a little harder to put together, but our numbers suggest that the market grew somewhere around 4% in 2025. For the full year, we grew 7% and 8% in the fourth quarter. So fourth quarter almost doubled market growth. A lot of that is based off of 2 things. It's our Daily SiHy putting up incredible growth, right, 17% in the quarter, 28% for the year, I believe, in the numbers. And that's driven by continued launch of modalities. And in the prepared remarks, I mentioned we're still -- the only market that has the 3 main modalities is the U.S. The rest of the world is still in launch mode. And so you're going to see a continuous speed over the next year or 2 of launching those modalities and driving growth. But Ultra was still up in the fourth quarter, 16%. So we're not creating a leaky bucket. We're doing what we need to do. And where the industry saw some weakness in Asia and China, as an example, we grew lens 7% in China in Q4 and 8% for the year. So our DTC model, we're direct with a fully integrated direct-to-consumer model in China, gives us a lot of flexibility to meet the consumer where they need to be and where they're purchasing. Southeast Asia still remains a little flat. But I suspect the market is going to grow a little better and improve overall in '26, maybe 4.5% or better. And so I think we're in a strong position. And then, of course, we're moving full steam ahead with new product launches in 2028 that we're pretty excited about. So I think our cycle of growth and in the competitive state in the lens -- contact lens market is -- I think we're in a strong position. Surgical, probably the most competitive market of the 3. But again, I look at our execution and the quality of the products we have. I mean, 4% implantable growth in 2025 is pretty damn impressive when you consider we had a significant recall of our entire enVista platform in the year, right? And so I'm not excluding anything to get the 4%. That is the actual growth. And when you look at what happened in the quarter, you have 20% premium IOL growth and 26% full year premium growth. And so that -- what I mentioned in the prepared remarks, this move to higher-margin mix products is happening in surgical. We know that surgeons do like the enVista platform and really do like our trifocal Envy. We're also launching Lux products outside the U.S., premium brands. And of course, enVista Beyond is completing its clinical trial. So we have a steady cycle of new launches and continued execution there. And I feel pretty good we can grow faster than market in all 3 businesses. And that's why we're putting up top line numbers that are faster than the market. Operator: Your next question for today is from Joanne Wuensch with Citibank. Joanne Wuensch: You gave us a little, I think they're called, Easter eggs, but I'm going to call it a nugget as that would be early, like that I'm seasonally moving forward. About the clinical data that you saw for the new material for the contact lenses, could you expand on that a little bit? And what did you see that increased your confidence? Brenton L. Saunders: Yes, Joanne, thank you. I'm going to turn it over to Yehia in a second, but I'm going to steal that Easter egg thing that, that I feel like I'm playing a video game. So that's awesome. No, look, we got the top line. The team just got it right before earlier, I think late last week or thereabout. So we're still going through the data. It's quite an immense amount of data, but we're pleased. And I'll just say this, and then, turn it over to Yehia, getting the way you develop contact lenses are different than a lot of other products. And I think we told you at Investor Day, we plan to do one external clinical study to get data to iterate. We'll do a second external study, and then, we'll do the registration and claim studies for a 2028 launch. So we're exactly where we need to be. But every time you pass one of these thresholds, your confidence about the fact you have a real product that can make a difference increases. And that's why I'm so excited about where we are right now. But let me turn it over to Yehia. Yehia Hashad: Yes. Thank you, Brent, and good morning, Joanne. Yes, we are really pleased to share the early highlights from the first clinical evaluation of our Halo daily disposable contact lens. Actually, this study was designed to assess the overall clinical performance, safety and tolerability in a controlled setting. The study enrolled about 130 participants, all of whom have completed the study. And importantly, there were no adverse events or device deficiencies have been reported. But the most important thing, this is the first time we actually apply our optical system to this, and all participants, the majority -- the vast majority of them experienced very good visual acuity. Based on the investigators even, they agreed that the lens has delivered a clear vision in almost 98.5% of subjects. So currently, we are -- as Brent mentioned, we are -- actually just got the results, and it's even ahead of schedule. And we are digging deeper doing deeper analysis to inform further optimization and also the lens design for the next external study. As Brent mentioned, we remain on track with our development timeline and targeting 2028 launch, and actually, this study increased our confidence in the platform as we are moving forward. Brenton L. Saunders: Yes. I think, Joanne, our probability of success that this is real and a real product is significantly higher than it was at Investor Day, which is why we're excited. Joanne Wuensch: Excellent. I'll ask my second question, which is you're making progress on pulling the financial levers for EBITDA expansion? As you look throughout 2026, and we think about setting up our models, is there anything we should think about the progression throughout the 4 quarters? Brenton L. Saunders: Yes, absolutely. I'll turn it over to Sam. But I said it in the prepared remarks, I think as you look at phasing, right, we've always had seasonality as long as I've been here since the IPO of Q1 being the weakest, Q4 being the highest. But I think you're going to see that be more pronounced now as a lot of that seasonality is driven by the prescription dry eye business. And as we continue to have great success with Miebo and Xiidra, they become a bigger part of our overall sales and profitability. And so that will have a larger impact on seasonality than we've seen in years past. But Sam, why don't you? Osama Eldessouky: Yes. Thank you, Brent. And Joanne, I -- let me give you a little bit more details on the phasing. But it's just important to highlight the point that Brent made, which is the whole aspect of Q1 being the lowest, Q4 as being the highest, that's the natural business. And again, as we see the progress that we're making in dry eye franchise, that's going to be even more pronounced as we go forward. So that's a very important framework as we think about phasing. But what's important here with all the work that we've done in the second -- especially in the second half of 2025, setting up our, I'll call it, building blocks for our leverage, operating leverage as we go forward, both in Q3 and Q4, and we're seeing that work. We expect that sort of to carry forward with us in 2026. So when you think about from a revenue perspective, we usually start our first quarter achievement on revenue roughly about 22% of the midpoint of the guidance. That probably remains a good starting point for 2026. On EBITDA, we -- if you look at last year achievement, midpoint was about 14%. We expect this year with all the work that will be about 18% achievement of the midpoint of the guide. So we're seeing a nice improvement because when you step back and reflect on the guidance, we're growing our -- the guidance that we provided this morning, midpoint of that is about 6% of the top line, but it's about 15% growth on EBITDA at the midpoint. So we're seeing that really leverage pull through throughout the next 2026, especially in the first half of the year. Brenton L. Saunders: Yes. I mean, I think one of the things I'm most proud about what we're starting to do is that leverage in the first slide in the deck, right -- in the quarter, right, 7% top line and 27% bottom line; guidance, midpoint of 16% -- 6% on the top line and 15% on the bottom, right? So you're seeing like 3x leverage or better in the P&L. And that's financial excellence in action, right? And so we said we're going to focus on financial excellence, and now, we're going to deliver it. Operator: Your next question is from Larry Biegelsen with Wells Fargo. Lei Huang: This is Lei calling in for Larry. Can you hear me okay? Brenton L. Saunders: Yes, we hear you, Lei. Yes. Lei Huang: My first question is on Xiidra. It looks like 2025 played out as you expected. There was some volume growth, but you had headwinds like IRA and such. How should we think about Xiidra performance in '26? You had the recent payer change at the start of the year, can we think about maybe -- but you also expect net price to be better in '26, so can we think something along the lines of maybe mid-single-digit sales growth? Is price improvement offset by volume decline? And then, I have a follow-up. Brenton L. Saunders: Yes. So, Lei, I think I'll ask Andrew to make a comment here, too. But I think you're exactly right. 2025 for Xiidra was setting a new base between a onetime payment for managed care in the IRA, right? We kind of set that new base. And now, it's important to grow off that base. And I think we will. I think that mid-single digit is exactly how we're thinking about it. But Andrew, do you want to add some comments on Xiidra '26? Andrew Stewart: Yes. Look, Brent, I think you covered the operational aspects of '25 versus what our expectations are in '26 exactly right. When we think about the totality of coverage, we're very happy there with the rates that we're able to achieve across all of our different commercial and Medicare stakeholders. Look, when you think about CVS, specifically when we're talking about coverage, they're a really important customer. We'll continue to find ways to partner with them as we do in our Consumer portfolio, as they manage a large number of Medicare lives today. And when it comes to the commercial book of business, we're eager to find ways that we can continue to work together. And right now, we have to always balance the affordability of the asset versus our ability to invest long term for the stakeholders of B&L. Brenton L. Saunders: But I think it's fair to say you'll see slower TRx growth as a result of that, but higher revenue growth. Andrew Stewart: That's correct. Brenton L. Saunders: Yes. Osama Eldessouky: And, Lei, maybe just I'll add a couple of data points to what Andrew and Brent said and just to help you as you think about your modeling and how you guys think about Xiidra. So as a starting point, it did play out exactly as we expected in 2025. But what's more important is we knew that as we start jumping into 2026, the net revenue for Xiidra will grow. So we're expecting that growth -- to see that growth. How that growth will come through is, as Brent said, it will be an element where we see a slower TRxs, but we'll see a much better net pricing. We usually talk about our, call it, gross to net roughly about the mid-70s. We start seeing that to step down to closer to the low 70s. So that net benefit you'll start seeing into how Xiidra will play out between '25 and '26. Lei Huang: That's very helpful. And then just 1 follow-up is your -- is on EBITDA margin. So at Investor Day, you talked about roughly 600 basis points of EBITDA margin through '28 to get to roughly 23% margin. That's roughly 200 basis points a year. So you guided to roughly 19% for this year. Can you just talk about your confidence for -- through 2028 on the margin? And how we think about maybe just the next couple of years, if we should think about fairly equal steps of margin improvement? Brenton L. Saunders: Yes. So I think we feel very confident about what we presented the 3-year plan at Investor Day. In fact, I would say sitting here almost, what, 8 weeks later, I feel more confident than I did. And the reason being is you saw execution improvement in the fourth quarter. Now, there's some seasonality, as I mentioned, but still you're seeing that foundational change in the P&L and the leverage that it can drive as we continue. So I think that's right. We've got a running start, right? We thought we'd end the year at around 17%. We got to 17.5%. And so we're going into the year with a running start. And there's nothing better than momentum. But I would say this. When I think about my 13,000 colleagues in Bausch + Lomb around the world, they all know our goal on this one, and everyone is focused on it. We have very disciplined project teams, many of them, lots of people working on margin improvement from commercial teams to supply chain. This is a full court press with a lot of focus inside the company. We are going to do everything we can to make sure we not only meet but potentially exceed those margin goals. Operator: [Operator Instructions] Your next question for today is from Matt Miksic with Barclays. Matthew Miksic: Congrats on a strong quarter here. I had 1 question on IOLs. So bounced back pretty nicely from the recall. It seems like 20% growth in AT-IOLs, and the feedback we get from clinicians is positive on the enVista line. Maybe if you could talk about any puts and takes that you're still kind of working through with respect to the recall? And what we should expect in terms of folks kind of getting back on board with that launch that had pretty strong momentum into the end of '24 and early '25, but kind of obviously got stopped there for several months in the middle of last year? Brenton L. Saunders: Yes, a great question. So if you really dig into it and look at what happened as a result of the recall. And as I said in the prepared remarks, hopefully, this is the last time we talk about the voluntary recall. The fact that we got back to the market the way we did, the way we communicated with customers and surgeons so openly and transparently, I think really created a bond of trust with our customers. But the reality of the market is those patients were implanted with different IOLs during the period we were out of the market, right? You don't get those patients back. You have to earn each implant back one by one, doctor by doctor. And so what happens in this market, as you may know, is for the premium IOLs, you have a much more instant sales cycle, right? A lot of surgeons can buy whatever premium IOL they want. But for monofocal, they tend to contract. And so the bounce back came faster for Envy and Aspire to some degree. But for the base monofocal lens, we still have some work to do because when we were out a lot of ASCs and practices signed contracts for monofocals that we have to wait until they expire to get that business back. And so there is still a little bit of a hangover in the monofocal portion of the market, but we'll earn that back this year. And so I think we feel very confident that it's clearly in the rearview mirror, and now, it's back on our front foot and winning trust with doctors and patients day by day. Operator: Your next question is from David Roman with Goldman Sachs. David Roman: I want to just actually maybe to focus a little bit on the consumer business. If you kind of look across the different product families there, we do see kind of a divergence in trends across a number of the different categories. Can you maybe help us think about just the direction of travel in the consumer franchise? And what we should -- how we should expect some of these different LUMIFY driving growth? Or how we should think about some of the different factors in '26 in that franchise? Brenton L. Saunders: Yes. So for the full year, we grew about 5%. There was probably about 100 basis points of destocking, remember, throughout the year. It started with -- as a kind of impact of tariffs, right, as retailers made room for -- in their warehouses for products that were tariff impacted. They destocked roughly about 2 weeks across the board and virtually across all customer classes. And so we absorbed that in the year. And so consumption in '25 was higher than sales, which is obviously a sign of destocking. I think when you look at the hero brands, LUMIFY, obviously, up 16% for the year. We launched preservative-free. And of course, we're getting ready to file LUMIFY Lux for a launch next year. So we have a nice continuous innovation stream there. Blink, a brand that we brought back to life, was up about 14% for the year, right? I think that's the number, Sam, right? So really good growth. We're launching the preservative-free for Triple Care in the second quarter or late this quarter. So again, innovation helps drive growth. But I think the area where we saw kind of a little bit more flatness is in our largest product line, PreserVision or vitamins, which were only up 2% in the quarter and in the year. And to be fair, when you think about PreserVision, right, it's a very large category. We have roughly 90-plus percent market share, so we kind of are the category. There's been no innovation there for 13 years. And the way to get growth back into that category, and I hope, significant growth over time, is through innovation. So AREDS3, which started to ship to retailers within the last week or 2, and you'll start to see really launching throughout this quarter and next, is really going to revive that market and bring it back to growth again. And I think you'll see that really play out in the back half of the year, as we build the foundation with ECPs first and then turn on consumer. And the fact that we're expanding the market, almost tripling the size of the market of who should be recommended PreserVision, I think, gives us a lot of optimism that, that category can grow again, meaningfully. Operator: Our final question is coming from Robbie Marcus with JPMorgan. Lilia-Celine Lozada: This is Lily on for Robbie. I want to circle back to the EBITDA guidance. Can you help give a bit more color and bridge us to the 19% EBITDA margin this year and walk through some of the pieces on operating expenses, especially that get you there? When I look at the fourth quarter, gross margin was a bit softer than what we were thinking. You have R&D increasing as a percentage of sales this year. And so what's driving all that SG&A leverage this year? And what gives you the confidence and visibility in that improvement? Brenton L. Saunders: Yes. Well, I think Sam is probably best to answer this. Sam? Osama Eldessouky: Sure. So, Lily, when you think about the components of how we think about the leverage and expansion in the EBITDA margin, it's really the building blocks for this is a couple of areas. One is we talked about the SG&A and the leverage that we talked in terms around -- the efficiency around our fixed cost structure and how we're bringing the fixed cost structure down. And we saw that play out very nice for us in Q4. Starting Q2, we saw that in Q4. That will continue with us as we think about '26. We also talked about the operating leverage within sort of shifting from the growth -- from the launch to the growth mode, and you're seeing that with the targeted investments that we're doing around selling in A&P. So as you think about where -- as we end 2025, just keep in mind, we -- you mentioned gross margin is soft. It does absorb roughly about 80 basis points of tariffs that we're seeing. So when you look at that on a comparable basis to '24, you have to factor that in. But now, pivoting and looking forward to 2026, we're projecting roughly about 200 basis points improvement coming -- 100 basis points coming from the gross margin moving from about 61% to 62%. Also, the SG&A will probably yield another 100 basis points of improvement. Offsetting that would be about 50 basis points of increasing our R&D investment, moving up from about 7% to roughly more towards the 7.5%. So you'll see that movement in sort of taking and that gives you the -- really the 150 basis points that we'll see jumping from our 17.5% EBITDA in 2025 to about 19% EBITDA in 2026 margin. Brenton L. Saunders: The other thing I would say, Lily, is as you think about the fourth quarter, delivering 7% top line and 27% EBITDA growth, what -- if you really peel that onion one more step, what makes me so proud that we could deliver those results as we did it with about 500 fewer colleagues than we had in the same quarter of the year before. And so you're really seeing a change in the foundational structure of our company being more efficient and really focusing on driving that leverage in the P&L to get that margin improvement. Lilia-Celine Lozada: Great. That's helpful. And then, just as a quick follow-up, can you talk about how you're thinking about reported free cash flow this year on a reported basis in 2025? I think that was about $66 million. So how should we be thinking about that trending in 2026? And what are some of the puts and takes we should be keeping in mind? Osama Eldessouky: Yes. So we're very pleased with the work that we've done throughout '25 on the cash flow in general. And I'll tell you, when we -- how we think about sort of cash flow where we ended the year roughly about 42% conversion. And you keep in mind that the business has been growing throughout 2025. And with that growth that we've seen in the business, we've taken roughly about 12 days out of working capital in terms of operationally throughout 2025. So that's really helped us with driving both on the cash flow from operation that I referenced in my prepared remarks, $152 million in the quarter, that's $381 million for the full year, and also being a positive from a free cash flow this year. So as we look forward to 2026, that progress will continue. So I expect we're going to be progressing towards the -- about 45% or so of conversion. Keep in mind, we targeted 50-plus conversion by 2028. So we're really making nice strides and nice progress towards that target. And more importantly, our CapEx is also stepping down as we communicated at Investor Day. So roughly -- in '25, our CapEx was roughly about anywhere between 6% to 7% of revenue. As we look into 2026, we expected that to be about 5% to 6%. So you're seeing that step down in CapEx spend, which provides even more support around the free cash flow. So it's really a lot of great work that's been done by the team here, and we're very proud of it, and it's a nice progress in the right direction. Brenton L. Saunders: One more question, operator. Operator: Your final question for today is from Douglas Miehm with RBC. Douglas Miehm: Brent, this is a question that has more to do -- I believe that you're going to have a strong 3 years ahead of you. Margins are going to continue to increase, et cetera, et cetera. But as we think about valuation and the multiple that should be assigned to this company over time, especially given the strength in the operations, the various businesses, your execution, et cetera, et cetera, 1 thing that's going to likely hold the company back in terms of that multiple expansion is the float. And is there anything that you can speak to us today about how you're hoping to resolve that situation? Because it looks like you're going to have a lot of good news on the operational front. But I'm just thinking from a market perspective, how you'd like to guide us. Brenton L. Saunders: Yes. So look, I agree with you. And I think one point I'll make, and then, I'll answer the question. As I said in the -- I think it was in the first question from Patrick, what's really exciting about the R&D pipeline that really starts to kick in meaningfully in '28 and beyond is that we actually have the structure or platform that allows us to absorb that innovation and scale, right, and flow through to the bottom line much more rapidly than it would have otherwise, right? The pipeline was built to enhance our existing markets and selling infrastructure. And so that really is strategically important for us as we think about launching those products in the future. But you're right, I think obviously, we hear from investors about the float. I fully agree with you. It's something that has to be resolved in time. Unfortunately, as I've mentioned many times, it's not within our control. It's a BHC issue. But if you listen to their commentary at JPMorgan earlier in January, they do plan to sell shares in time. I just don't have a timeline to provide and maybe you want to get on their call tomorrow or today end of day -- end of day today. It feels like that's a day away. But at the end of the day today and ask them as well because it's really their decision. But I do expect it to happen. I just can't give a timeline. All right. So operator, I'll just make a quick closing remark, thank everyone for joining us. Most importantly, I'd like to thank my colleagues from Bausch & Lomb around the world for their great execution in 2025, and we look forward to watching them execute and build our company in 2026. But look, as I mentioned at the beginning, I think Q4 really is another proof point in what good execution looks like. And it shows that we are immensely focused on execution. It is really part of our culture now. And we have all the building blocks we need in our bag today to deliver on our 3-year plan, and we are immensely focused on getting it right and delivering. So we look forward to keeping you updated, and we will obviously always be available to answer any questions if you need us. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

86天前Insight Analytics约5分钟阅读

EFGXY 2025 Q4 财报电话会议

Jens Brückner: Good morning, ladies and gentlemen. A very warm welcome to the full year 2025 results presentation of EFG International. As usual, we will be presenting our results with speeches from the management team. We have today with us our CEO, Giorgio Pradelli; and obviously, our CFO and Deputy CEO, Dimitris Politis. And after the presentations, we have enough time, obviously, for your questions. We will start with questions in the room first and then move to potential questions from the call. Otherwise, as usually, I point out the disclaimer in the presentation. And without holding up further, I hand over to Giorgio. Thank you. Piergiorgio Pradelli: Thank you, Jens, and good morning. Also from my side, a warm welcome to everyone who is here in the room with us in Zurich and to everyone who will follow the presentation via webcast. Today, I'm very pleased to be here with Dimitris to present to you the full year 2025 presentation. I think 2025 has been a very strong year for EFG. It has been a year of strong progress. The operating business is firing on all cylinders, and it has been basically a record year. We have been able to grow very strongly from organic growth. Today, or actually in a few days is 10 years from the acquisition of BSI, and we are very pleased that we have started a new series of acquisitions. We have done 3 acquisitions in the last 12 months, and we were able to report the highest ever level of assets under management. We were able to translate this growth in record revenues, and we were able to -- despite the fact that actually we had to mitigate declining interest rates and a weak dollar that, as you know, there have been for us, headwinds in 2025 and most probably will remain headwinds in 2026, but this record operating income was translated in record operating profitability. And also, we made a lot of progress in dealing with our legacy matters, and we delivered a record IFRS net profit, and we are in a position to propose a record dividend per share to our shareholders. Let us now move to Page 4 and just to give you some of the highlights of our results for 2025. As I said, it has been a year of strong organic growth, strong NNA complemented by M&A. The NNA has been CHF 11.3 billion. This is 6.8% growth year-on-year. And this is actually the second highest level of NNA growth, the highest since the global financial crisis. And I'm very pleased because we have had an acceleration in the fourth quarter. As I mentioned earlier, we were able to do 3 acquisitions in the last 12 months. Two acquisitions are already in the numbers. They amount to CHF 12 billion, and they basically are equivalent to 1-year NNA, if you wish. As I mentioned earlier, our strong growth in terms of organic has been complemented by M&A, has been translated in the highest level ever of assets under management, CHF 185 billion. This growth has been translated in an impressive, I would say, operating performance, it's almost CHF 500 million, CHF 493 million. This is 26% year-on-year. And as I said, this strong operating growth has allowed us to absorb also dealing with some of the legacy matters that we know we have to derisk. All in all, at the end, as you know, we had a positive element in the first half of the year was CHF 45 million due to insurance recovery from a legacy matter that we closed in 2022. In the second half, we had a provision of CHF 59 million for another litigation that dates back to 15, 20 years back. All in all, it's CHF 14 million. We had also another legacy topic is about insurance. Insurance, there is some volatility. Dimitris will go in more detail. But again, we have absorbed also this volatile topic, and we are able to deliver CHF 325 million IFRS net profit, which is the highest in record. And this will allow us to deliver or to propose the highest dividend ever, CHF 0.65 per share. What I think is remarkable is that this is the fifth consecutive increase in our dividend, and this obviously shows how strong our operating profit is. Moving to the next slide. On Slide 6, we can see that 2025 has been a very strong year, but this is also the conclusion of our last cycle, the cycle 2023 to 2025. And what is remarkable here, we already discussed at length 3 months ago in this room during our Investors Day, is that we were able to deliver a consistent, sustainable and profitable growth over the last cycle, but also you can go back to 2019, and you see that this has been a continuous improvement of the operating performance. Now with this, I would like to give the floor to Dimitris, our CFO and Deputy CEO. Dimitrios Politis: Good morning from me, and thank you for attending the full year 2025 results presentation. I would like to start with, as usual, with the view of the performance of EFG over the cycle. Here on Page 8, you see the performance on the profits starting from 2019 up to 2025. It is fair to say that we are concluding this cycle, the '23-'25 business cycle, which is the last one, with record profits. The profits are at CHF 325 million. We are also posting the highest ever EPS with CHF 1.03 per share, and our return on tangible equity is above 18%. One element to highlight, you'll see on the top right, is the fact that in this business cycle, what was really marked as very positive performance has been revenue performance. In the last 3 years, we've managed to increase our revenues by 31%. In contrast, in the previous cycle, the growth was only 8%. So our strategy of building volume, building AUM and defending or expanding the margin has been very successful through the cycle. At the same time, you will see that efficiency has improved. Back in 2019, the cost-to-income ratio was about 84% or even higher. Now we are below 70%. And clearly, this has led to the expansion of EPS. We started with CHF 0.30 per share. Now we are above CHF 1, which allows also what Giorgio mentioned, which is the fifth consecutive increase in dividend per share in the last 5 years. Now the next page is a bit more focusing simply on 2025, and these are the key highlights for this year. Clearly, our strong operating performance continues in 2025. Business development, 6.8% growth in net new assets. The revenue margin was at 98 basis points compared to 96 last year, and we hired or signed 79 CROs. I think what is very important is the figure at the bottom of the page, the AUM have now grown to CHF 185 billion, which is a very good starting point for this business cycle. In terms of profitability, revenue growth was 11% in the year, or 8% excluding the exceptionals. Cost-to-income ratio improved compared to last year. The cost-to-income that we post as a headline is 69.8%. And the bottom line profit, again, is at a record CHF 325 million, or CHF 339 million if we were to exclude the exceptionals. Finally, in terms of the soundness of the balance sheet, core Tier 1 is at 14%. We had a fantastic capital generation of over 500 basis points during the course of the year. LCR is very strong at 270%, and the dividend is at CHF 0.65 per share. Now zooming a bit even closer to the last 2 months, because we gave you a trading update in November, which included 10-month results. If you look at the chart, what we mentioned in November is the first bar, which is about CHF 320 million in the first 10 months. If you look at the performance in the last 2 months, we added more than CHF 60 million of bottom line in 2 months. The run rate of over CHF 30 million per month is the highest level in terms of run rate. So both in terms of profitability run rate and also in terms of revenue margin run rates, the figures are higher than what we communicated back in November of 2025. As Giorgio said, we also have 2 exceptionals in the year. On a net basis, they create a drag of CHF 14 million net in the P&L. So if we were to exclude the exceptionals, our bottom line number would have been CHF 339 million, which is a 6% increase year-on-year. In terms of other elements in the profitability, I would say that we also had limited contribution from life insurance, which brings me to the next page, Page 11. And this page is important because on this page, we try to strip out the noise and make sure that we give you a clear indication of how the core private banking business is evolving. So what you see here in the chart is operating profit. It's simply revenues less costs, and we have indicated separately the contribution from life insurance. What you will notice is that in 2025, the core private banking business delivered CHF 425 million of operating profit, which is an increase of 18% compared to the last year. This is the highest increase in core banking operating profit that we've seen in the last business cycle. What does that mean? That means that the investments that we made in the first part of this business cycle, and I remind you that there were investments that had to do with hiring in 2023 and 2024, also investment in technology that were made in that period. So all these investments are now paying off, and we're seeing the impact in P&L of those investments which were made 1 or 2 years ago. In terms of the metrics that you would follow in order to figure out whether these investments are going well or not, what I can report is that -- and you see it also in the figures is we've seen consistent strong business development. The last 2 years, the NNA growth has been above the 4% to 6% range that we actually communicated as our target. And also what we've been managing to do is turning this growth into increased profits. In terms of how you do that is clearly we need revenues and the revenue margin to be resilient. I'll come back to that later. And you also need cost discipline, and I'll also come back to that later with specific pages on it, because we've also seen that on the cost side, our saving targets have been exceeding the initial targets that we have communicated. Just to note that, as you know, we have concluded 2 acquisitions in 2025. These acquisitions had a small negative impact in P&L in 2025, simply because the acquisition costs were higher and they were only included in the P&L for a couple of months. Finally, life insurance, or the contribution from life insurance has been a lot more muted in 2025. This comes because we have also derisked our position. As you know, we have taken action already in previous years, but also in 2025 to reduce our exposure. And we also expect that going forward, the contribution from life insurance is going to be a lot lower than it used to be in previous years. The next 2 pages are the summary of the financials, so I'll skip those 2. I'll go to Page 14. So Page 14 is the usual set of numbers that matches our financial targets. These are the financial targets for '23 to '25. As mentioned earlier, we had a 4% to 6% growth range for NNA. We've been beating that the last couple of years. The revenue margin has been very resilient against our target of 85 basis points. The cost-to-income ratio has been consistently coming down. The target was 69%, and the return on tangible equity in the last 3 years now has been above the 15% to 18% target that we have set ourselves back in 2022. Finally, in terms of the targets, and this is probably the last time that we'll be seeing this page on this presentation. This is the conclusion of the '23 to '25. You will see that the performance against the targets has been very strong. I think one element that we also communicated was that we were targeting a 15% growth in profits on average during the period every year. The actual delivery has been 19%. So in terms of bottom line, which is clearly what we're aiming for, we have been doing better than what we have promised. Now going a bit more into the growth on Page 16. The growth in AUM is 12%. So we went from CHF 165.5 billion to CHF 185 billion in 2025. More importantly, the net new asset growth was CHF 11.3 billion with pretty much all cylinders firing at very good rates, which is on the next page. CHF 11.3 billion is the highest nominal amount of NNA that we've had at EFG since the great financial crisis. So in the last 15 years or almost 20 years now, this is the highest NNA of CHF 11.3 billion that we have published. Markets were favorable. As we all know, currencies were completely against us with the dollar weakening significantly. And we also added CHF 11.7 billion coming from 2 acquisitions, Cite Gestion and ISG. And in January 2026, we also announced a third one, the acquisition of Quilvest, which will add another CHF 4 billion once it is concluded. What really pleases me is the figures on the right. We've had a couple of periods where new CROs have been, call it, the sole almost contributors to NNA growth. In 2025, we've seen a reversal to a composition which looks more like what we've seen in previous years, so before 2023, about 65% of our NNA is coming from new CROs and about 35% of NNA is coming from existing CROs. In terms of the geographical split of the business development, this is on the next page, Page 17. You'll see that every single region is posting a growth which is above 4%. So every single region is at least within the 4% to 6%. And we have 2 with Asia Pacific and the Americas, which are above the 6% growth range. So in reality, overall, it's a very good performance. It's all the regions firing at very good levels, and this is a testament to our diversified business model in terms of how we deliver growth. We have also delivered growth by hiring CROs, and this is on the next page, on Page 18. Our total number of CROs at the end of 2025 was 763. This comes with 238 CROs in Shaw and Partners in Australia. And we also have 67 new CROs that joined through acquisitions in 2025. If you see in the middle, our hiring patterns, clearly, in 2023, the numbers were very high, and this came from a dislocation with Credit Suisse-UBS. Although we just hired about 1/4 of the people in that year from Credit Suisse. All the rest came from about 20 other banks. The numbers have gone down in '24 and '25. They are reverting pretty much to the levels that we have set out as our target gross hiring numbers of 50 to 70 CROs. So in 2025, we actually hired 51 CROs, and we also extended offers to sign to another 28 for a total of 79 CROs that have been hired or have been signed to hire. In terms of the AUM to CRO, this is on the right-hand side. Why is this important? This is important because it's a very good measure of efficiency. And the more you can have a higher AUM per CRO, the more efficient we become. As you see, we've been growing throughout the years. On a like-for-like basis, we were at CHF 363 million per CRO at the end of 2025. If you were to include the acquisitions, you are at CHF 342 million, simply because the acquisitions come with smaller-sized CROs given the nature. At the same time, one of the reasons that we've managed to increase this is that we've been effective in performance managing our CROs, and you see that both on the load and also on the number of CROs. Now moving a bit more to the P&L. As I mentioned earlier, we have a very specific strategy, which is about building scale, and it's also about defending or even expanding our margin. What does that mean? What is the result of that? That means that our top line has been growing, has been growing significantly throughout the last 3 years, but also our revenue mix is becoming of a high quality. If you look at what has happened in 2025, you'll notice that our commission income, which is our bread and butter, this is the highest quality revenue that we have, our commission income grew by 17%, and this is on the back of, firstly, AUMs expanding, but also us gaining 3 percentage points year-on-year on the commission margin. So we've been managing to expanding the margin on top of growing the volume. On the other hand, we've discussed many times that interest income or interest-related income can be a source of vulnerability, because the rates have been going down. Actually, what we see in 2025 is that in the second half of 2025, interest-related income is marginally up compared to the first half, which probably means that we have reached close to the bottom of that phase of absorbing rate drops throughout the last couple of years. At the same time, we've seen a lot of client activity in currencies and metals. Of course, this is linked to the increased volatility, both in currencies and metals in the last couple of years. And this has helped net other income. And clearly, we've had a more limited contribution from life insurance in the net other income as well. In terms of going back to our strategy of how we intend to grow going forward, clearly, we will have to defend margin. I'll come back to why we believe that our margin is resilient on the next page. But one thing to note is that in terms of the growth element, so the AUM, the starting point in 2026 is CHF 185 billion of AUM. The average AUM in 2025 were CHF 170 billion. So we have a 10% head start in nominal AUM as we start the year in 2026. Next page, Page 20. It's about resilient revenue margin. You will see that the revenue margin that we have in the second half of the year is at 93 basis points. When we had the Investor Day in November of last year, that figure was 92 basis points. So we have actually seen an expansion of the revenue margin in the last 2 months of the year. In terms of our expectations going forward, look, the 2 key topics are interest rates and also can we continue expanding commission margin. On the interest rates, you see the sensitivity that we show on the top right. The sensitivity is CHF 36 million of drop in revenues if all 4 major currencies lose 100 basis points in the rates. Clearly, that scenario is not realistic at least for 2026, given the information that we have. So our expectation is that the sensitivity to interest rates is now a lot more muted. Maybe we lose a basis point in 2026, but clearly, it is marginal compared to our overall level of 93 basis points of revenue margin, which is way ahead of the 85 basis points, which is the average for the last 10 years. At the bottom, you'll also see the fact and the efforts we have been making to expand our commission margin. Firstly, you see mandate penetration. It has reached 67% at the end of the year. This is against our target of 65% to 70% that we had for this business cycle. And also, you'll see that the breakdown between recurring commissions and nonrecurring commissions is also moving in the right direction. And we have now a 46% -- 46 basis point commission margin for the full year 2025. Moving on to costs on Page 21. You'll see that we have operating expenses up 6%. This is the nominal growth. But this growth also masks the fact that we've done 2 acquisitions. These 2 acquisitions account for about 2.5% of that growth. So if you were to strip that out, the real growth is 3.7%. What is more important is that the FTEs in comparable terms have been going down. So we closed the year 2024 with 3,114. On a like-for-like basis, the year 2025 closed at 3,037. So we are about 80 FTEs down. Clearly, we have added more because we've done 2 acquisitions. And the salary costs have been going down at the same time. There is growth in the personnel side because of variable compensation, and this is something that is expected. Actually, in my view, the only cost that I can accept going up is variable compensation, because it means that we're making probably 5x that revenue when it comes to revenues. So the operating leverage is very high. We had stable other expenses. So general and admin expenses were pretty much flat compared to last year, and we still carry some legal and litigation fees. Now moving to the next page, which is Page 22. This is a page on how we think about cost management. And several people in the room or on the phone call this self-help. We call it finding or creating room, so that we can grow our business. And you will see that because if you look at the chart in terms of the last bar of the chart where it's under cost management actions, you'll see that, again, in 2025, we've managed to reduce our cost by about 3% during the course of the year, and that created exactly the room to invest in hiring and other investments, which is the first bar in that chart. Actually, even the numbers like the investment is CHF 36 million and the cost saving is CHF 38 million. So that matches very well in terms of our strategy in cost and efficiency management. The only 2 reasons costs have gone up are variable compensation, the CHF 28 million that you see in the second bar. And in the fourth bar, it's also the costs that come from the acquisition of Cite Gestion and ISG. Furthermore, at the bottom right, you'll see that as also communicated in November, we have exceeded our efficiency and cost management targets under the Simplicity project. The initial target was CHF 40 million. That target was up to CHF 60 million and the actual conclusion is CHF 66 million. There have been a number of actions included in this program. It's about rationalization. It's about automation. It's about reviewing processes end-to-end. And we already have a new program, which is running for the '26 to '28 cycle with a scope of CHF 70 million to CHF 80 million of efficiency and cost savings. Moving on to the balance sheet. In terms of the balance sheet on the left, no big movements. We still have about CHF 18 billion or more than CHF 18 billion of very liquid assets on the balance sheet. Core capital ratio, CET1 capital ratio at 14%, total capital ratio of 17.3%. The loan-to-deposit ratio is at 58%, and both liquidity ratios are at very good levels, at where they were last year or even better. And finally, we bought 11.8 million of treasury shares throughout 2025. And there is a new action on the buyback. The Board decided that the buyback continues in '26 and '27 for a total of up to 9 million shares to be acquired until July 2027. In terms of the impact from acquisitions, the acquisitions cost 130 basis points on the core Tier 1 ratio. Now as Giorgio mentioned, clearly, our primary focus is on expanding the core business. At the same time, we need to make sure that we successfully derisk the balance sheet from the legacy positions that come from pretty much 20 years ago. On the left-hand side, you see the actions that we have taken on the life insurance space. We've been quite active in 2025. Two major actions. One was to dispose of the entire synthetic portfolio and the second one was to unload about 1/4 of our physical holdings in life insurance policies. I'm very pleased to say that the carrying value of that portfolio now is about CHF 260 million as at the end of 2025. It was CHF 360 million at the end of 2024, and it was over CHF 500 million when we started this business cycle. So there's been continuous derisking and the numbers are going down. Hence, I expect some volatility coming from it. But overall, I don't expect big numbers to be coming through the P&L going forward. On the right-hand side, we have the legacy litigation cases. Some are in the life insurance space. We've resolved 3 there. There's one more pending, probably end of 2026 or early 2027. And then you have the 2 exceptionals that also Giorgio described earlier. The positive one is the first one, which is the recovery from an insurance on an old matter. And the second one is the provision on a litigation case, which we took in December. On a combined basis, these 2 created a CHF 14 million drag on our reported P&L. In terms of capital, which is on the next page, Page 25, we had one of the strongest capital generations in the last few years. In terms of gross levels, we were over 5 percentage points of capital generation. On a net basis, after risk-weighted assets and dividends, the net capital generation was 1.6% for the 12 months. This is part of the capital-light model, and we do expect that we'll be running at very strong organic capital generation going forward. What you see after that is the buyback which, combined with the dividend, enhances the returns that we offer to our shareholder. And then quite a few one-off items. So the acquisitions cost 130 basis points. The provision for the litigation case was 100. And we have 2 currency impacts. One is, call it, the normal currency. And then the second one refers simply to the Tier 1 instrument that we hold. The reason we show it separately is that if we decide to call that instrument, that will come back. So although you see that the core Tier 1 ratio that we report at year-end is at 14%, effectively, if we were to call that instrument, it would have been 14.4% after we unwind. With 14% or 14.4%, we are clearly very comfortably within our 12% to 15% capital ratio that we communicated back in November. And with the combination of the strong capital generation, we look forward to discussing even more M&A activity if it fits the plans and conditions that we hold. Which brings me nicely to Quilvest. This is the last M&A that we announced back in January. You see some of the figures here. I will not spend too much time on it. The only thing I'd like to say is that it looks small. It's CHF 4 billion AUM. But the beauty of Quilvest is the very high quality of its clients. And given the fact that it has been a small bank for many years, we believe that we can expand dramatically the offering to these clients. So it is an acquisition where we are looking to make sure that 1 plus 1 makes 3 and make sure that we create value for all the stakeholders. And to close, and this is on Page 27. I think that we are at the juncture where we are officially closing '23 to '25, and we are officially opening '26 to '28. We are definitely closing 2025 on a very high note, record growth, record profitability, record momentum in the profitability that we are posting. So I think we have all the ingredients to feel very comfortable about the next cycle. The priorities for '26, unfortunately, in our business just remain pretty much the same. It's not that we're changing priorities. So it's going to be about business development. It's going to be about making sure that we maintain the high growth in the top line, preserve margin. And at the same time, that we maintain our cost discipline while we're doing all these things. And the last part is, clearly, we did 2 acquisitions in 2025. Now we need to make sure we put them to work. These acquisitions, as I said earlier, had a negative impact in 2025. They have already started having a positive impact in 2026. But it's a matter of making sure that we exploit our investments to the full potential to make sure that we further expand profitability in 2026 and beyond. In terms of the next cycle, these are the financial targets that you see on the right. And just to repeat, 4% to 6% growth in terms of net new assets, revenue margin in excess of 85 basis points, cost-to-income ratio of 68%, and a return on tangible equity of 20%. On that note, I'd like to thank you very much, and I pass it back to Giorgio for priorities and outlook. Thank you. Piergiorgio Pradelli: Thank you, Dimitris. And let us now focus on the outlook, what we can see for 2026 and beyond and what are our priorities for 2026 to 2028. I would like to start with this page. You have seen this page during the Investors Day. This is our strategic framework. And 3 months ago, we basically said that we want to continue to build on our strength. We want to continue to focus on our clients. When I think about clients, I always think about net new assets, because if we do a good job with our clients, we can increase the share of wallet and we can attract new clients. Obviously, we want to deliver the best possible content to our clients in order to increase the level of engagement and ultimately, the level of margin and operating income. And finally, we need to translate all this into a growing profitability via Simplicity and operating leverage. At the same time, we have identified 3 new areas for growth, opportunities of growth. And we spoke about branding and client experience. We spoke about commercial excellence, and we spoke about tech-enabled services and processes when we introduced the concept of the augmented CROs. Again, it's early days. We just started the new cycle and only 3 months past from the Investors Day, but we believe that we have done already quite good progress in all these 3 areas, and we would like to give you a quick update. First of all, about branding, we stated in November 2025 that brand is important for us, it's important for our clients, and we wanted to strengthen our brand. Our ambition was to become or is to become one of the top 3 Swiss private banking brands by 2028. And in terms of brand finance, we have a ranking among the top 250 brands globally. We are very pleased because the brand finance report will come out at the beginning of March, I think the 4th of March, but we are allowed to present a preview of our results, and we are very pleased because the brand value has increased in excess of 50% to CHF 629 million. And what is also very important, we have gained more than 50 places, 50 positions, and we are now 262 in the ranking, which is obviously very close to the 250 that was our original objective for 2028. So I think this progress reflects our investments in an enhanced client experience and a higher brand recognition across markets where we invested quite a lot in the last few years. Now the second area is about the technology and is about launching the augmented CRO. Obviously, these days, I'm very pleased that we brought this concept 3 months ago, because, as you know, these days, everybody talks about AI basically substituting asset managers. And in the U.S., there was also a debate whether AI will substitute players like Charles Schwab and others. We always said, and we said it 3 months ago, and we continue to believe that is that AI and technology and the human factor are complementary. And obviously, we believe that our client relationship officers are among the best in the industry, but we believe that we can improve further if we are able to give them not only great teams around them in the areas of investment solutions, wealth solutions, credit solutions and global markets, but also the best possible digital solutions. We have announced 3 months ago that we have started a cooperation with BlackRock for the Aladdin system. We are pleased to report now that this has been rolled out in Switzerland, which is our biggest region, and our client relationship officers are very pleased. We have also launched the CRO Atlas, which is basically a tool that allows the CRO to have clear insights about their clients, the portfolio, the businesses, and we expect an increased ability for our client relationship officer to increase the share of wallet and the client engagement. And again, we started to do our first steps regarding AI. We have rolled out Ally, which is our in-house AI platform to all the new locations, and we have seen that the adoption has been incredible, which obviously shows how people are interested in this tool. So we continue to go forward in this direction. It's a journey. But again, the progress in the first 3 months is very encouraging and the new CRO team, again, is very committed to make us one of the best firms also in this area. The third point is about commercial excellence, and we start seeing some improvements in terms of client engagement and share of wallet. Dimitris already mentioned that our existing CROs are improving in terms of gathering assets, which is obviously a function of attracting new clients, but also a function of improving the share of wallet. And as I mentioned earlier, content for us is very important. Obviously, we have great teams in our investment and wealth solutions that provide solutions to our clients. But clearly, it is also important to create an ecosystem with top players in the market, and we have announced yesterday a cooperation, a partnership with Capital Group, one of the biggest active asset manager in the world. And we have been cooperating already for a long time, but we have decided to deepen our partnership, and I think this is a mean in a way to further enhance our personalized offering and impartial advice to our clients, which ultimately will support basically our business. Now 3 months ago, at the end of November, we presented to you our operating model. Our operating model continues to deliver. In essence, we continue to focus on growth, translating both organic and via acquisition. We translate this growth in growing profitability. We use part of the profitability that we generate in investing in order to transform the bank for the better, and this generates attractive returns. As you have seen in 2025, we were able to deliver very attractive returns to our shareholders indeed. Now looking at 2026, I must say that the year started as 2025 ended. This situation where there is a lot of volatility and uncertainty driven from geopolitics to financial markets, and we can debate for hours about the situation. But this volatility, coupled with the attitude of our investors, which is actually quite risk-on, is quite constructive and positive for our clients, because we see that the level of engagement and the level of transactions that our clients are doing with our CROs and with our dealing floors is at very high level. And we expect this to continue as long as the overall attitude is risk-on. If we are going to have another risk-off situation like in April last year, then we will have to see and obviously react. But for the time being, the year started very, very well. And for us, the priorities, as Dimitris said, do not change quarter after quarter, but I would like to emphasize them again. Number one obviously is about maintaining our growth momentum. So net new assets and client engagement remains our top priority. Second, after NNA, we have now M&A. M&A is important. As mentioned already, we have done 3 acquisitions in the last 12 months. This is CHF 16 billion, not dollars. I think maybe earlier, I mentioned dollars. No, no, we continue to report in Swiss francs. And obviously, it is important that these acquisitions start basically being integrated and start delivering in terms of profit contribution starting in 2026. The third priority after NNA and M&A remains to defend our margin. Margin resilience is very, very important. And again, we have managed very well, I believe, in 2025 to mitigate the headwinds in terms of declining interest rates and a weaker U.S. dollar. As Dimitris says, I think that by now, the declining interest rate is like when you sail, the wind is becoming softer. So it's not really an issue anymore. I think we will be able to absorb the 1 basis point that Dimitris has indicated. The weaker dollar, this is a bit more complicated, because as we see these days, it's very difficult to predict the direction. I think there was, at the end of the year and beginning of this year, some wishful thinking by many market participants that we could see a rebound. We have not seen that yet. And so we will have to continue to focus on what we can control. And what we can control is, for sure, the net commission income and all the advisory activity in terms of investment solutions, wealth solutions, credit solutions and global markets. Next priority remains obviously to generate operating leverage. We discussed 3 months ago about the golden rule to try to grow revenues at a double rate of cost. Last year, depending on how you look at it, we were very, very close to that. I think we will continue this year and technology, for sure, will allow us to improve productivity and efficiency. And finally, we are obviously very committed to deliver for 2026, and we are very confident to meet the 2028 financial targets. Now we are entering a new cycle. We are closing, I think, today -- well, we have still the general assembly in a month. But after that, we will close the 2023, 2025 cycle once and for all. But again, it has been a fantastic ride, and we are starting the new cycle in a position of strength. And so all the initiatives -- just to be very clear, all the initiatives that I was mentioning before at the end of the day are geared in ensuring that we deliver a consistent performance, and we unlock the power of compounding, as you can see on the right-hand side of Slide 34. And again, our objective at the end of the day is to generate a double-digit net profit growth at around 15% and to achieve a return on tangible equity of 20%. So in closing and looking ahead, first of all, I would like to mention that our aspiration, our vision is to be the private bank of choice for generations of clients. I think that the momentum of the last years shows that we are already, for many clients, the private banking of choice for generations of clients. Obviously, we want to become for a bigger number of clients and to be really recognized for delivering fully personalized service and impartial advice. To close, I would like to say that 2025 has shown that we are closing the cycle with a strong momentum. And as I said, we were able to translate this in record profit and very attractive returns for our shareholders. We also made 3 acquisitions in our key markets in the last 12 months. And this, in my view, is important to be emphasized how we can successfully complement organic growth with strategic M&A acquisitions. So overall, our business model is not only, I would say, resilient, but is also geared towards profitable and sustainable growth. And this is the case today and will remain the case in the next cycle. Obviously, as a management team and all our teams at EFG that I thank here for the commitment and the dedication to EFG are fully focused on the execution of the budget, first of all, for 2026, and the 2028 strategic plan. And clearly, we are very confident to deliver value for all our shareholders. And with this, I thank you for your attention. I close here the formal presentation and hand over back to Jens to open the Q&A session. Jens, the floor is yours. Jens Brückner: Thank you, Giorgio. Thank you, Dimitris, for your presentations. As just said, we're starting the Q&A session in the room. So if we have a question, please let's start with Máté over there, so first question. Mate Nemes: Máté Nemes from UBS. I have a couple of questions. The first one would be on your comments that run rates in a number of areas were better versus what you expected at the time of the CMD that relates to the last 2 months of the year. Could you talk about what surprised positively? What are the areas that perhaps you are more positive about versus the November CMD? That's the first question. The next one would be on the litigation provision that you booked in December. Could you share more details around this? What led to this provision? What triggered this? And how do you see the case unfold from here? And the last question would be on capital and the FX impact specifically. Can you talk about your capital hedging approach? Does the 60 basis point negative impact mean that you're not applying FX hedges and there's a considerable mismatch between CET1 capital and RWAs? Dimitrios Politis: Let me start with the run rate. So I think there are two points on the run rate. The one is the actual bottom, bottom line, and we tried to show this on Page -- hold on a second. This is on Page 9 of the presentation, where you see that in the period between July and October 2025, we actually had CHF 100 million for those 4 months. And then that number went close to CHF 165 million for the 6 months. So clearly, the last 2 months have been very strong in terms of profit generation. So this is, for us, very positive. And as Giorgio said, we also see continued strength in the delivery of the profits also in the month of January of 2026. Now the second point is on the revenue margin, which is described on Page 19 of the presentation. For the second half of the year, we were at 93 basis points. Back in November, we reported that for the 10 months, we were -- or for the 4 months, which were the last 4 months at the time, we were at 92. So there, we also see an uptick, which makes us feel more positive. In terms of why things are better than what we're expecting, there are three reasons. One is the mandate penetration effort continues, and we see that translating into commission income and commission margin. The second one is that we had good client activity in the last 2 months and in January of 2026. And the third one is the pressure on interest-related income seems to be coming down. So a combination of all three is what helps us feel more comfortable and more confident that, okay, maybe we do not stay at 93 going forward, we -- it is certain that we'll have some erosion from the 93, but the starting point is a very solid starting point from which to work on. Piergiorgio Pradelli: And clearly, as you mentioned, the fact that our AUM is now 10% higher than the average of previous year is another element of support to our business. Dimitrios Politis: Now the second question was about the litigation and bear with me because there is -- I am somewhat limited in terms of the information I can disclose on that, as you can understand. Just to remind everybody, this is legacy litigation. It pertains to events that happened approximately 20 years ago and it was first disclosed in the financial statements back in 2019 in the contingent liability section. It is a complicated case. It is a case, which is now the trial is happening in London in the U.K. The plaintiff is PIFSS, which is the Kuwait state pension fund. And we have about 30 defendants in that case, including EFG and some other banks. Now in terms of more specifically about where we are in the case, the court proceedings, the court hearings started in March 2025, and they are still running. So we are in month 11 of court hearings. We do expect that the court hearing will last probably another couple of months. And we expect the verdict to come out in around the summer of 2026. Clearly, we continue to defend the case. We have very strong defenses, and we will continue arguing our case over the next 2 months still. But given the fact that we've gone through 11 months of trial means that we have gathered more information about the possible outcomes of the case. And we have now reached the stage where under the IFRS accounting rules, we can reliably estimate, and this is the reason why we posted -- we recorded this provision in our P&L and in our balance sheet in December 2025. Again, timing-wise, verdict is expected at the -- somewhere around summer of this year. And Máté, you had a question about capital, the capital impact and the currency. The way we work on currencies is that we try to match the composition of our equity with our composition of risk-weighted assets, which is a bit of a natural hedge, if you wish, which means that if currencies are moving one way, than I would expect -- so if you have an adverse effect in your equity, I expect that you get a positive effect in your risk-weighted assets and you try to match the two. So you're not managing the equity as a number, you're not managing risk-weighted assets as a number, you're managing core Tier 1 ratio as a number. This is how we think of it. But clearly, we disclosed the movement in the currency translation adjustment here because in 2025, it's a more significant number. And on the other element, which pertains to the Tier 1, it's a bit of a nod way that IFRS deals with it. Although the impact is only on the Tier 1 instrument, you cannot change that, the holding value of that instrument, you need to impact core Tier 1. That's the reason we're saying that if it gets called, that 40 basis points gets released. So our effective core Tier 1 ratio is now 14.4%, the way we think about it. Sorry for the detailed explanation. Jens Brückner: Great. And we have here the next question, please. Daniel Regli: This is Daniel Regli from Zürcher KB. I have two follow-up questions. One is on the gross margins and the development there, particularly, obviously, in H2, we saw kind of an uptick in the recurring commission margin. If you can just maybe reiterate a bit your explanations there and how far this is sustainable into the next years? And then secondly, obviously, again, on the net interest margin or the margin outlook on interest income. Just maybe help me understand a bit more how you exactly come to, let's say, 1 basis point pressure? What do you do? I think markets still expect some rate cuts in U.S. dollars as well. And then lastly, on the net new assets development, obviously, congratulations to the strong net new assets development, particularly Asia Pacific and Americas, but obviously also in Continental Europe. Can you maybe elaborate a bit more what drove the strong asset flows? And maybe also explain a bit what extent was driven by maybe some releveraging, particularly in Asia? Dimitrios Politis: So let me start with the margin question. I'll start with the interest margin or interest-related margin, and I'll point you to Page 19 of the presentation. So on Page 19 of the presentation, we show the sensitivity to rates. And what you see at the top right part of the page is that if we lose 100 basis points on all 4 key currencies, the net impact for us is a reduction in revenue by CHF 36 million. Clearly, the majority is coming from the dollar. Clearly, we don't expect that all 4 currencies will lose 100 basis points in 2026. By the way, CHF 36 million is 2 basis points. So we don't expect to lose on all currencies and even on the dollar, maybe the 4 cuts is a bit too aggressive. So we estimate that, roughly speaking, it's not going to be a 2 basis point hit but a 1 basis hit in terms of the interest-related margin in 2026. Now to your other question about commission margin, the 2 reasons why the commission margin has increased is mandate penetration, which you see at the bottom right, going to 67%. And the second part is client activity. And so we are -- we have an even higher target for mandate penetration for the next business cycle, so the one that we currently just started, '26 to '28. And we see client activity continuing. Now again, if client activity pulls back, then especially in the nonrecurring side, you will see a drop, while the recurring side should be a lot more resilient going forward. Giorgio, if you want to take the growth? Piergiorgio Pradelli: Yes. In terms of NNA, as you know, first of all, this has been our 14th consecutive semester of NNA growth. So basically, this is 7 consecutive years. And clearly, we have a methodology and a focus on growing our business, which goes beyond 2025 and will continue in the next cycle. As you have seen on Page 16, I think that what is remarkable is that the growth has been basically very strong across regions. If you see basically all the regions are within our targets. Even more mature markets like Switzerland and the U.K. are within our margin. It is a combination, as Dimitris was saying, between new CROs, but also existing CROs, existing CROs have improved their performance. It is correct what you say in the sense that we did not have, like in previous years, deleveraging. We have seen back leveraging coming in. Obviously, we believe that the fact that interest rates are coming down at the short end and the curve is steepening. This allows clients to play the carry trade and obviously, they engage much more in terms of Lombard lending. But -- and this is on Page 40 and 41. If you look at our dynamics, basically our total NNA has been CHF 11.3 billion. The increase in lending is CHF 1.5 billion. This is about 13% of the total AUM. And if you go to the following page, on Page 41, you see that at the level of the stock, if you can go on Page 41, please, you see that the level of the stock is 11%. So the growth in lending is clearly 13% of the total NNA and is in line with our normal lending penetration. So I would say, yes, we are pleased that the deleveraging has stopped. But our growth is not lending-led. Asia has been -- just to make the points of Asia and the Americas, obviously, Asia Pacific is in excess of our margin, 8.5%. And we have had growth also in terms of hiring CROs. They've been all very successful and they're doing extremely well. And the Americas also there has been a growth in all the areas. We have opened in Panama. We have focused on Brazil. So it has been across the region. Jens Brückner: Great. Do we have another question in the room at this stage? Nothing -- the gentleman there, please? Unknown Analyst: [indiscernible]. You see the strong negative reaction on the stock market today with minus 9% due to your litigation case in the U.K. You had 36% of growth in the net benefit in the first half year 2025. Now you announced only 1% of growth. Why the benefits slowed down so much? You spoke about the litigation case in the U.K., which cost you CHF 60 million, but combined to the other positive litigation case in Korea, it only was CHF 40 million? So are there other reasons for the slowing down of the net benefit? And why did you communicate only now and not in December about this litigation case? And second question about the U.S. dollar exposure in your assets. I think you have 60% of exposure in assets. Is there any trend at your clients that they want to reduce that U.S. dollar exposure due to geopolitical reasons? Piergiorgio Pradelli: Maybe I can start on the stock price. And it's the first time I hear how the stock is doing because we have, the 3 of us, a pact that before going to the presentation, we never look at the stock price. So I was not aware, but let me tell you that our job is to manage the operating business of the company. And we have been told very young, not to focus on the stock price. And if the operating company and the operating performance of the company works very well, then the stock price will follow. I cannot comment -- I will not comment about today's stock price. Clearly, as you said, the overall drag for the exceptional is CHF 14 million. It is unfortunate that the positive was in the first half and the negative in the second half, but these are one-offs and have no impact, as we discussed on the operating performance of the company. You want to mention about the timing? Dimitrios Politis: Well, the timing comes with the ability to reliably estimate and that ability and the full estimate came very recently. So the appropriate timing to release that was with the full year results today. Piergiorgio Pradelli: Maybe the other element why this exception was CHF 14 million and the fact that the net profit if you look -- I think that the question was about the difference between the operating profit and the net profit is also due to the volatility of life insurance that it was mentioned on Page 10, I think. Page 10. If you go to Page 10. You can see here the difference in terms of performance of the life insurance that in 2024 was quite strong at CHF 32 million. And obviously, in 2025 was positive, but much less strong. And clearly, again, here, these are legacy matters. We cannot influence them directly with management actions. So the combination of the drag due to the exceptionals and the fact that life insurance was lower than the previous year, this is one of the explanations. Otherwise, the operating profit, as we said, is at record level, almost at CHF 500 million. Jens Brückner: Second question about the U.S. dollar. Piergiorgio Pradelli: U.S. dollar. Dimitrios Politis: Question on the U.S. dollar. Look, we see some clients that are moving away from the U.S. dollar. So we see some clients that now are also considering other currencies. If you look at the composition of our AUM, which is at the back of the presentation, clearly, this has not moved substantially. I'm trying to get the page. Piergiorgio Pradelli: Page 41. Dimitrios Politis: Page 41. So like the U.S. dollar was 47% last year. It's still 47% of currency this year. So it is more anecdotal than actually us seeing a significant trend in terms of the currencies that our clients wish to use. Jens Brückner: Okay. If we have no follow-up, then we move to the question on the phone, please. Operator: The first question from the phone comes from the line of Hannah Leivdal from Citi. Hannah Leivdal: I have two, please, if I may. So the first one is on your balance sheet and capital position is strong. But equally, your annual report outlines the number of legal cases outstanding. So what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside feeding into this versus what is available for M&A and other growth initiatives? And my second question is on the... Jens Brückner: Sorry to interrupt. We have a hard time understanding you. Maybe can you move your microphone a bit? Hannah Leivdal: Is that better? Jens Brückner: No, that's worse. Hannah Leivdal: Oh, it's worse. How about now? Is this any better? Or this is worse? Jens Brückner: A bit, yes, better. Hannah Leivdal: A bit better? Jens Brückner: Yes, let's try. Hannah Leivdal: I'll try again and then interrupt me. So I was asking on the balance sheet and capital position being very strong, but equally your annual report outlines a number of legal cases outstanding. So I was wanting to ask what gives you confidence that you won't have to take more provisions for those? And how do you think about the amount of capital you're keeping aside paving into this versus what is available for M&A and other growth initiatives? Dimitrios Politis: So I think I heard the question. So I'll try to answer to the best that I can. So the -- as you say, our current CET1 position is effectively 14.4%. And I guide you to Page 24 of the presentation because through the latest provision that we took, we have derisked the largest single risk item we had in our -- on our balance sheet. It was the -- it is the largest contingent liability that we actually have on the balance sheet. So in terms of risk profile, now I believe that we are a lot sounder than we were before. At 14.4% of core Tier 1, we have about CHF 260 million of excess capital from our own management floor of 12%. And even more importantly, I would guide you to the capital generation that we have every year. So this year, it was over 5 percentage points of gross and 1.6% on net capital, which is the result of a capital-light model, clearly for a private bank like us. So I think that given where we are, we are very comfortable with our capital position. We are generating capital which we can use for new acquisitions. And we do have also a capital buffer of CHF 260 million, which we can also use for other acquisition if we wish to do so. By the way, if you want to discuss acquisitions, it is not that the acquisitions are simply done in cash. There's always -- or usually, there is a share element included in the acquisitions that gives us even more firepower. Hopefully, I've answered the question because I could not hear you very, very well. Hannah Leivdal: Yes, that's very clear. I have another one, but I don't know if you can hear me. If it's any better? Dimitrios Politis: Just go ahead. Hannah Leivdal: Okay. Yes. So on the treasury swap margin, I just wanted to ask why did this increase in the second half despite narrowing spreads versus Swiss rates? And what was the swap volume in 2025, please? Dimitrios Politis: The reason that the treasury swap activities, the revenues from that increased in the second half is because the volume of our swaps increased. As you say -- as you rightly say, maybe the margin between the 2 currencies has not moved that much or even has narrowed a bit in the period, but it was through higher volumes of currency swaps that, that increased. And clearly, what also happened is that the NII element decreased because it's the other side of the same equation. Jens Brückner: Thank you for your question. I think we have another question on the phone, can we get that one, please? Operator: Next question from the phone comes from the line of Andreas Venditti from Vontobel. Andreas Venditti: I hope you can hear me better than my colleague just now. On M&A, you mentioned the negative profit... Jens Brückner: We can't understand you. That is even worse than before. Can we try to get the sound regulator or try again? Andreas Venditti: Can you hear me? Jens Brückner: No, not really. Andreas Venditti: Okay. Never mind. I'll come back to you, Jens. Jens Brückner: Now it's good. Now it's better. Andreas Venditti: It's better. Okay. I don't move, so I hope it's better. On M&A, you mentioned a negative impact on profits from the two small acquisitions. I guess it's a small number, but still to ask on this. Can you maybe quantify the negative impact, I guess, on the cost side, mainly from this on 2025 numbers? Dimitrios Politis: As you expect, Andreas, the overall contribution is a small single-digit negative number. And the reason it is negative is that we included the profits of Cite Gestion and ISG for a few months, like Cite Gestion was 2, 3 months. And we had some acquisition costs, which are the one-off part of doing M&A. And the balance of those 2 was negative. Clearly, both companies were profitable with actually profits growing significantly compared to the last year in 2025. It's just the timing of the acquisition and the amount of the M&A-related one-off costs that get us to this small negative result in 2025. Jens Brückner: Okay, does that answer the question? Do you have another one or it's good? I think we lost him. Is there another question in the room or not at this moment. Máté has another follow-up. Okay, let's take that one. Mate Nemes: Yes. Just one question. I wanted to ask you about the Lia AI platform that you rolled out in 2025. Could you talk about the capabilities and the exact use cases of that platform? Piergiorgio Pradelli: Yes, thank you. I think there are several use cases that we are using, in particular in the Investment Solutions area. Then there is the general, let's say, use cases that you have with a normal ChatGPT like chatbox. And clearly, the areas where we are trying to develop much more is everything related to compliance and risk. I've always been saying that right tech for us is more important at times than fintech. But these are the key areas where we are expanding. And the next level, but we are not there yet, will be how to improve the client experience because all the use cases I mentioned were more about efficiency on the backstage, and that will be the next area where we're going to focus on. Jens Brückner: Okay. I think there's no further questions on the phone. If there's nothing in the room, then I hand that back to Giorgio for the final remarks. Piergiorgio Pradelli: No. First of all, thank you for attending. Again, I would like to reiterate that 2025 has been a very strong year where we have achieved a record AUM, record profitability and record top line. Clearly, it's also a year where we have done progress in dealing with the legacy matters, and we closed successfully our 2023 and 2025 strategic cycle, and we are very confident starting in a position of strength, the 2026-2028 cycle. And as a management team, we are committed in executing our sustainable and profitable growth strategy as we have done in the previous period. With this, thank you very much for your attention.

86天前Insight Analytics约5分钟阅读

TAVHY 2025 Q4 财报电话会议

Operator: Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the TAV Airports Investor Day live webcast to present and discuss the 2025 full year financial results. [Operator Instructions] The conference is being recorded. At this time, I would like to turn the conference over to Mr. Serkan Kaptan, CEO; and Mr. Karim Ben Salem, CFO. Mr. Kaptan, you may now proceed. Vehbi Kaptan: Thank you, Maria. Hello, and welcome to all. Thank you for joining our 2025 full year webcast presentation. I would like to start by giving you the highlights of the year's traffic first. The year was unfortunately marked by many geopolitical developments. These, of course, have affected especially the Middle Eastern traffic negatively. We have lost about 3% of our international traffic due to the geopolitical developments during the year. Strong lira was also a headwind during the year because it makes the Turkish holiday more expensive in euros or dollars. Bodrum, especially Bodrum, felt these affects the most during the year. Antalya, however, is more dominated by all-inclusive package tourism, coupled with competitive ticket prices, this makes the destination more affordable. A shorter and milder winter season also supported the traffic in Antalya. So the international traffic still managed to grow slightly at 1%. You may recall that at the beginning of the year, we have a shifted season where we had cold spring days and were suffering from a decreased traffic. And in summertime, due to the unexpected Iran-Israel clash, we suffered some traffic, but because of the milder winter season and late winter season, we managed to increase the traffic in September, October and till mid-November and managed to grow slightly around 1% for Antalya. In Izmir, which has mostly outbound Turkish traffic or visiting diaspora traffic, we see a strong lira working in our favor. The same goes for Ankara. Ankara is also being supported by the growth of AJet, which has recently based 2 new aircraft in Ankara, where we will realize strong growth in Ankara for 2026. Ajet is growing in Ankara as part of its hubbing strategy. As you know, they are based in Sabiha Gokcen in Istanbul, the secondary airport, but established their second base in Ankara, connecting almost all central Anatolian traffic via Ankara to international destinations. This strategy is working well. We have seen the output last year in 2025 with 14% international growth. And this year, we see that this growth continues very robust. The fleet growth of the other two low-cost carriers, the Turkish low-cost carriers such as Pegasus and SunExpress is also supporting both Ankara and Izmir. SunExpress mainly grows in Izmir and Pegasus continue growing in Ankara. Almaty international traffic also grew by 7%. This is because of the grounded A321neos in the airport. They continued suffering the Pratt & Whitney engine failure for the A321 and growth was limited to 7%. Normally, we would expect it to grow much more than the 7%. This is because of the high GDP per capita of the country compared to the size of the aviation sector. This year, we believe that we will realize much higher percentages on international growth in Almaty. Georgia, Georgia is also very popular with Turkish, Israeli and Russian tourists and their traffic has increased a lot this year. In 2025, in Georgia, we had a growth of 16%, and we believe that this robust growth will continue in 2026 as well. We see a boom in Georgia, both in terms of tourism and also becoming a regional gateway to other destinations. We have high single-digit growth for the rest of the portfolio, which is a great performance compared to the peer airports as well. So when we look at the January results of 2026, we see that the traffic came in very strong in most of our assets. All international assets grew very high percentages. We see the effects we talked for 2025 in the Turkish airports. The strong Turkish lira is affecting Antalya and Bodrum negatively and Izmir and Ankara positively. We have a strong winter, I would say, for Antalya. That's why the demand was low in January, but we hope the recovery to be very quick soon. And the growth of low-cost airlines is also affecting Izmir and Ankara in a positive way. Almaty made a strong start to the year with domestic aircraft diverted to international routes. The 15% international growth is closer to the real potential of the airport. Because of, again, the engine problems of A320 in Almaty, Air Astana and the other local carriers diverted their flights more to international. You will see a decreasing trend in domestic, whereas we have an increasing traffic trend in international. That's how we made the 15% growth in January. There is also a very strong travel demand between China and Almaty, which doubled when we compare the traffic to the last year and became the largest source market for the airport in January. So Chinese traffic is coming. Georgia's spectacular growth continued in January, too. In Georgia, in January, we had a growth of 19%. We believe that we will have this continued trend as well. We had 31% growth in Macedonia because as we reported last year, we were missing almost half of Wizz Air's fleet due to the neo engines. And now we have new 320 -- 321s based in the airport as of November, which has a 30% higher seat capacity because the 320s are replaced by 321neos, which brings this 30% higher seat capacity. All in all, 12% international growth was for January is a strong start for the year. But of course, January is a low month. It's a low season. These are off-season numbers and do not carry a lot of weight when we compare the 12 months. We have a more conservative passenger guidance than the numbers on this table, which we'll talk about on our guidance slide as well. So when we looked at the growth of source market slide, it shows how our passenger mix has shifted over time, especially since the pandemic. One big difference is the drop in visitors coming from Russia and Ukraine. With the sanctions in place, Russians have to fly in Russian aircraft to Turkey. Earlier, you may recall that mostly Western aircrafts were used for Russian aircraft flying to Turkey. But due to their lack of aircraft, they also started -- they decreased their flights to Turkiye, and we have lost 3.7 million Russian passengers due to the sanction. On the Ukrainian side, we had 2.7 million passengers before the tragic war, but because of the war, there is no civil aviation in Ukraine presently. We don't have any flights between Ukraine and Turkiye, but we have, of course, some Ukrainian passengers flying via Poland. We believe that we have made up for some of the loss in Ukrainian traffic with Polish traffic, which has increased significantly. You can see the growth of Poland on the chart, which also includes Ukrainian travelers flying through Poland, as I stated before. Russians used to be the #1 source market for our airports. So if the sanctions are lifted, Russians could again become #1. Bear in mind that in our forecast, in our guidance, we didn't include any sanction to be lifted. It is the status quo continuing on as per our disclosures. Compared to the last year, the best performing markets were Turkiye and North Cyprus due mostly to the strong lira. UAE, Netherlands and Kazakhstan underperformed the most, unfortunately, again, mostly due to the same reason and due to the geopolitical development. With that, I will now hand over the presentation to Karim to go over our financials. Karim Salem: Thank you, Serkan. Coming to the financials in euros and starting with revenue. It continued to be above traffic growth for the full year, and it is the continuation of the trend in previous quarters. One of the reasons for that is that, as you may know, we do not consolidate Antalya. The consequence of it is that it is in our passenger numbers. And actually, it pulls traffic growth downwards, but it is not in our reported consolidated revenue. We only consolidate the net income after purchase price amortization. So when it comes to commenting the main highlights by category and starting with catering, we had significant growth in catering revenue this year related to BTA new Antalya operations. So BTA Antalya operations also boosted the area allocation revenue, which contributed to revenue growth being above passenger. Coming to ground handling, where 73% roughly of our revenue is in Turkish lira. Our OpEx continues to increase with TL inflation. And thanks to the great management team that we have at Havas, we have been able to reflect this cost to our prices. Ground handling as a segment was also strong in our foreign airports. So ground handling was overall another factor in revenue surpassing the passenger growth. The new concession in Ankara was also strong with an additional EUR 19 million in terms of year-over-year revenue growth. In 2025, we have 2 quarters of Ankara operations under the new concession terms, but we will operate the full year 2026 under the new concession, which brings an even better perspective for 2026 regarding Ankara, sorry. The nonfuel aviation revenue growth was in low teens. The jet fuel business is also in aviation revenue that was affected by fuel market volatility and a weak U.S. dollar. Lounges continue to grow, especially in the U.S. and in Kazakhstan. And despite the closure of some unprofitable Spanish lounges, which we discussed earlier this year, we had strong growth there as well. Looking at the like-for-like duty-free spend per pax, excluding Antalya and Almaty, it is up 9% from last year. Almaty kicked off right before Q3 last year. So we are feeling the full year impact kicking in for 2025. And all in all, our duty-free revenue went up by a solid 17% for year 2025. Finally, we have car park revenue that didn't grow this year because we shut down the Oman parking operations. And one last point regarding Havas related to bus operations, Havas closed down the Adana station this year, which is the reason why you are seeing a small dip in the bus services revenue. Coming to OpEx, if we look into the operating expenses before EBITDA, these expenses continue to stay below revenue, and we continued to expand our EBITDA margin. We had a drop in jet fuel costs and a flat cost of services renders. Maintenance and utility expense growth was muted, and we had flat other operating expenses. Operationally, BTA's New Antalya operations and the new Ankara concession supported margin expansion. And just as in the third quarter, in the fourth quarter, too, a lot of assets delivered strong operating leverage. If we adjust for the impairment expenses made in the last quarter of 2024, we had higher depreciation expenses compared to last year which was due to the first full year of the new terminal in Almaty, sorry, and the end of the old concession in Ankara as well as Ankara's rent expenses for the new concession, BTA Antalya's rent expenses and TAV Operation Services lounge rent expenses in New York. In equity accounted investments, the cash picture is much better than what the numbers in equity accounted investments suggests. From Antalya One, we got a dividend of EUR 72 million this year versus a dividend of EUR 68 million last year. So in terms of free cash flow, the performance is actually better than last year. The combined EBITDA of Antalya One and new Antalya is EUR 135 million this year. It has to be compared to an EBITDA of EUR 127 million last year. Nevertheless, due to the amortization of the purchase price in Antalya One, higher deferred taxes in both and higher depreciation and finance expenses in New Antalya due to the opening of the new terminal, we were not able to show it this year under the equity accounted investment line. Coming to ATU, it had higher EBITDA this year, mostly because of Antalya, but it made a lot of investments, so its finance expenses increased. And for TGS, we see the effect of less third-party sales and the end of the pandemic compensation that we already evoked in the past. Getting down the P&L and reaching the net income line at the end, we continue to have overall strong EBITDA growth with margin expansion in the fourth quarter as well. So we had higher D&A, which we discussed earlier. Equity accounted investments had EUR 54 million more deferred tax losses compared to last year and EUR 12 million more of purchase price amortization in Antalya. The operations in Antalya, as we discussed, they are actually very strong. We have EUR 36 million more FX losses this year, which are mostly due to the appreciation of the euro and which are noncash. And with the canceling of inflation accounting in tax accounts, we accrued deferred tax losses due to the appreciation of euro versus Turkish lira. Most of this effect was actually in New Antalya and in Ankara due to the new investments made in these 2 assets. The canceling of inflation accounting increased the tax loss carryforward of these 2 assets, which had a somewhat neutralizing positive effect on deferred tax. And we used the legal revaluation right in Ankara, which was a benefit of EUR 11 million. So pretty sophisticated technical topics. But all in all, for the year, we had EUR 119 million of total noncash effect on the bottom line. If you adjust for the increase in negative noncash one-offs, the net income for 2025 becomes even EUR 170 million, which is only 7% below last year. We can see this large clearly in our free cash flow, which is standing at EUR 223 million for 2025 with a strong 44% growth over 2024. There are many moving parts in our financials, but definitely, free cash flow is the number which shows the clearest picture. We are generating a significant amount of cash for the year 2025. Coming to debt. You know that this has been an indicator that we have definitely been following over the past couple of years and especially in 2025 in connection with our guidances. With very strong cash generation throughout the year, we reached our long-term net debt-to-EBITDA guidance with an amount that finally comes out at 2.89x EBITDA for year 2025. In the fourth quarter, we had the currency-protected deposits mature and turn into cash. We had working capital improvements in many assets and the revaluation of the Almaty put, which was before standing at EUR 54 million and which is now coming out at EUR 91 million. All in all, our consolidated net debt dropped versus both last year and the last quarter. Normally, the fourth quarter is and should be seasonally weak. So the net debt drop over the previous quarter is quite a strong performance from our side. Coming to the next page. On dividend, the main highlight there is that as we have guided the market in 2025, we are restarting the distribution of dividends this year. We are planning to distribute TRY 1.3 billion, which corresponds to 50% of our IFRS net income converted to Turkish lira amount as of yesterday's exchange rate. We have invested heavily this year, and we will continue to invest at the service of our growth and our development next year as well. Against this backdrop, the decreasing of net debt and the resumption of dividend shows the strength of our balance sheet and our high capacity for cash generation. So I switch to Page #10. As many of you have followed, we were able to extend our Tbilisi concession until the end of 2031 in January. We pay fees to the state. We eliminate this and we pay a flat 30% of our passenger fees as the new lease for that 5 years period. The airport grew with a passenger CAGR of 13% during the last 20 years and EBITDA CAGR was 21%. It's a very high-growth market and a very robust operation. We are very happy to continue to serve Georgia with Tbilisi Airport for another 5 years beyond 2027. So if I go to Slide 11, Ankara Esenboga Airport. We were always guiding you that Ankara's profitability will jump with the new concession and its EBITDA would reach to EUR 45 million. On 24th of May 2025, last year, this -- the new concession of Ankara started, where we have enriched passenger fees and no cap in the collection of the international passenger fees. This is the first year of the new concession, and we have reached EUR 45 million of EBITDA with a 67% growth over the last year. This made with only a 14% year-on-year international passenger growth due to the new concession, which is much more profitable compared to the first concession. We have only seen the half year effect this year because of the new concession. As I said, it started as of 24th of May 2025. In 2026, we will see the full year effect. In the beginning of the call, I also talked about AJet's two new aircraft to be based in Ankara, which grew January traffic by 30%. So everything is looking good for Ankara for 2026. On the next slide, this is related to ATU. ATU is in Antalya now. Antalya, as you know, is a 40 million passenger airport involved with 32 million international passengers. You see the effects of ATU's Antalya operations. ATU operation also started end of April. The full operation with all terminals started mid-September. So we don't have the full year effect of ATU. It started end of first quarter. There is very high revenue growth versus next year, which is mostly due to Antalya. Year-over-year EBITDA growth was also very strong in the third quarter. EBITDA growth was not as strong in the fourth quarter because of some start-up costs and continued ramp-up. As I said, we took over late September, the existing facility, and we didn't have the chance to furnish and redo the shops or change the look or bring in new merchandise for the stores. But this year in 2026, it will be a full year effect. You will see this. Opening of the new stores and the refurbishment of existing spaces will continue until the summer. It started, but it takes time. So next year's offering, 2026 offering, both in terms of area and the number of products offered will be better than 2025. The spend per passenger in Antalya increased from EUR 6.5 per passenger to EUR 7.9 throughout the year as we continue to open more and more shops throughout 2025, and this will continue in 2026 as well. On the chart to the right, you see the spend per passenger over there. Almaty's first full year of operations and addition Antalya decreased our overall spend per pax. For Antalya, you see that per pax spending increased. But when we add up Almaty full year effect and so, if you look at the overall one, the spend per pax seems to decrease because in Almaty, we have departures and arrivals, duty-free, but at arrivals, we have limited sales that tracks the overall spend per pax to a lower amount. But if we had not added these new operations to the calculation, the like-for-like SPP would actually be EUR 10.3. So we can say that the duty-free spend per pax of the existing operations grew by 13% in 2025. You can see this growth also in our consolidated duty-free commission revenues, which grew by 17% in '25. So I would like to talk about the guidance, the realization of 2025 guidance and the expectation for the guidance. Karim discussed already about our financial results in detail. Here, you can see the results against the guidance that we had provided in the beginning of 2025. I won't go over the items one by one, but we can say that in all items, except for the CapEx, we were able to achieve our guidance targets. In CapEx items, we are slightly below our guidance, which is good, which resulted in less cash outflow from the company. In Almaty, due to the harsh winter conditions, we were behind schedule in terms of investments, in terms of CapEx. for the second phase. And due to the market conditions, we postponed some investments of Havas to '26 and '27. So it again makes us very happy to have achieved our targets for another year. For 2026, in this table, you also see our new guidance. We are looking for another great year. Growth will continue. Our base case is for the passenger traffic to be in between 116 million to 123 million passengers, whereas we expect international traffic to be between 78 million to 83 million passengers. So revenue in accordance with the traffic numbers should be between 180 to -- sorry, EUR 1.888 billion to EUR 1.988 billion. EBITDA should be between EUR 590 million to EUR 650 million. And in 2026, we will be the second year of Almaty second phase investment and the first year of Georgia expansion investment. Due to the heavy CapEx, the second phase of Almaty and the new investment for Georgia, we estimate that the CapEx to be spent will be maximum of EUR 330 million or less for 2026. I think that's all for the presentation. Operator: [Operator Instructions] Karim Salem: So I will start with the first questions received, and I'm starting with questions received from [ Melis Pojarr ] from Oyak Securities. The question being, first question being regarding guidance 2026 CapEx, could you please briefly quantify on an airport basis? Well, on that question, if the question is about, let's say, breakdown of CapEx by activity airports, what I can say is that we can say that roughly 30% of the CapEx is allotted for the second phase of investments in Almaty. Then you have another 20% to 25%, let's say, of the CapEx, which should correspond to the investments in Georgia and as part of the extension of the concession as was evoked, presented, I mean, in mid-January and reevoked a couple of minutes ago by Serkan. And then for the rest of the CapEx, we are planning solar panel investments for Ankara. We should have growth CapEx for BTA, but also for other service companies, and the rest should be maintenance CapEx. I have another question, still from [ Melis Pojarr ]. What is the reason behind 25% year-on-year decline in cost of services rendered in Q4 2025? And for that question related to the specific line of cost of services rendered, I can say that the decline is related to, I would say, several topics. Main one is corresponding to TAV IT projects. Actually, they classify some of their costs here in the cost of services renders and it has decreased. We also have an effect of the closing of Spanish lounges here as well, and it was already there earlier in the year. And we also have decreases in other companies, too, with different reasons for each company. I mean we have -- I mean, apart from TAV IT projects and Spanish lounges, we have many reasons, actually, it's very split. Vehbi Kaptan: So again, a question from [ Melis Pojarr ], Oyak Securities. What are the tenders in your radar right now? Will you attend alone? And what are the airports current and targeted KPIs? We are always looking for growth opportunities in our core geography, as we always say. Our main criteria are growth prospects and sound legal infrastructure when selecting the opportunities. You know that we were prequalified for Montenegrin airports, but we did not bid in the tender, although it was a project that we looked at extensively. The preferred bidders in the tender were announced, but the results were contested. So we are following further developments there. Egypt has started its privatization. And the first project on the privatization pipeline is Hurghada touristic Airport. in the range of 10 million passengers. And this project started with prequalification process. We are submitting our prequalification. And naturally, we are evaluating the pros and cons of this project as well. Of course, there are many other projects that we are evaluating, but the business development pipeline in our business sometimes takes years. So it's best not to put too much weight on possible new tenders unless we officially disclose that we are participating in a certain tender. Karim Salem: I'm moving with a question from Julius Nickelsen from Bank of America. Thank you, Julius. The question is the following. Could you please provide any indication on where net income should go in 2026? And should we assume that the EUR 120 million of noncash one-offs to reverse during 2026? Well, that is, I mean, one of the most important questions, of course, for 2026, and we cannot provide net income guidance because, I mean, first of all, this is the very bottom line of the P&L, and therefore, it includes, let's say, the most important level of volatility. It includes every flows, everything that flows in our P&L. And on top of this, there are many moving parts, generally speaking, below EBITDA. And I can also add that the legislative framework also shifts very quickly, especially in connection with our Turkish activities. Having said that, I think that I can quickly elaborate on the fundamentals of this movement would be useful, but I'll be very quick about two fundamentals that could make things move on one side or the other in 2026 regarding our net income. First one is inflation accounting measures and second one is FX variations. Inflation accounting measure related to the fact of taking into account, let's say, Turkish lira inflation in the way our balance sheet is revaluated and FX variation related to the way we operate in various currencies and mainly in euro, USD and TL versus the way we report, so in euros. So for these two fundamentals, we are definitely lacking long-term visibility, but just like many institutions, I would say, and for 2026 as well, even though I would say that the situation is improving, especially from the outlooks in terms of inflation for the full year of 2026. But it is still hard to give, let's say, guidance on this topic for 2026. Then another question from Julius. Any reason why EBITDA from Almaty was down 35% in Q4 2025? Is there any impact from the investments? Well, this topic has been addressed in a way during the presentation. One of the main reasons actually why it was down was the movement in FX, in euro-USD FX because you know that the main currency in which Almaty operates is USD, and it went up 10% year-on-year, meaning that when you are comparing Q4 2025 to Q4 2024, there was an appreciation of euro by 10%. And the other reason is volatility, generally speaking, in the fuel market, again, on a year-on-year basis, Q4 2025 compared to Q4 2024, and it led to lower volumes. We identified the matter Q4 2025. But I mean, going beyond this topic, we had disclosed previously that we will be shifting the revenue and EBITDA mix of the Almaty airport from fuel to aviation through tariff increases over the next couple of years. And this process is going as planned. And of course, I mean, this downward trend, we have followed it again. But the most important is that we are having a path forward with moving from a fuel-centric airport to an aviation-centric airport. Vehbi Kaptan: Thank you. So another question from Julius Nickelsen, Bank of America. How should we think about the relatively wide range of your guidance? What scenario represents the lower end of the guide on traffic and EBITDA? What needs to happen for the upper end of the guidance? So we are located in a fast-growing region, but this growth unfortunately comes with risks as well. The main of these risks being geopolitical developments. As everybody has followed, there were numerous geopolitical events throughout the year, and we lost 3% of our international passengers at 2025 due to these developments. We are still being affected by the grounded A321s with the Pratt & Whitney engines, especially in Almaty. The guidance were provided -- we provided balances our base case for strong uninterrupted growth with these kind of numerous exogenous risks in the region. And I switch to the questions of Cenk Orcan from HSBC. The traffic outlook within your 75 to 83 international passenger guidance, 4% to 11% year-on-year growth. How do you expect your Turkish airports and Antalya in particular, to perform? What is your Turkish tourism, the foreign visitors outlook this year? We talked about these a bit during the presentation. Last year, we had several factors affecting traffic, one of which was the real value of the Turkish lira. This especially affected Bodrum and Gazipasa the most and Antalya, the less. Strong TL and the growth of low-cost carriers had positive effect on Izmir and Ankara, and Ankara was especially strong with the growth of AJet. Most of these trends have not changed in 2026, but we hear of some renewed low-cost interest in Bodrum. So Bodrum could have a better 2026 compared to 2025. The foreign airports would probably continue to outperform Turkish airports in 2026 as well. And North Macedonia could be outperformer because there are new A321s base with 30% higher capacity versus the previous A320s. The second question is also about the traffic outlook. 2025 was strong domestic passenger growth at key airports in Turkey and your traffic guidance implies 0 to 5% growth in 2026. Any specific factors for normalization this year? For the domestic passenger figures, they improved due to higher ticket price caps implemented in 2025 and the increase appeared substantial because of the base year effect and the cost increase in 2026, the price cap loses its attraction for the airlines. For this reason, our base case is for domestic traffic not to be as strong as last year in 2026. Of course, material increase in price caps could change that picture. What we try to mean is that in Turkiye, as you know, we have a price cap for domestic fares. When it is low, the airline's tendency is to utilize the aircraft more in international routes or lease the aircraft outside. If the price cap is favorable to the airline, if it's higher, they rather use it in domestic routes because there is a demand, and we have an immediate effect in the growth of the domestic passengers. Karim Salem: One more question about Almaty tariffs. So the question is the following. 2025 presentation shows a lower blended average international pax fee than the 2024 presentation, $10.7 versus $13.8 for non-Kazakh airlines. Is that because $10.7 for 2025 now includes local airlines? Well, this question connects to previous presentations, and we only have provided back then the tariff for non-Kazakh airlines. And indeed, it was $13.8, as you correctly noted. However, now starting from 2025 to make a more comprehensive picture, let's say, we have now included local airlines in the calculation, thereby presenting a blended passenger fee for both Kazakh and non-Kazakh carriers. And this is the number that can be used with the departing international passenger numbers. So it's a much more useful number for everybody actually. As you can see, it increased from [ $10.3 ] in 9 months to $10.7 in full year. So it's getting along with the tariff increases that we are getting. We also got security fees, which are $5.41 for non-Kazakh and KZT 2.815 for Kazakh international passengers as part of our tariff increase process, which is, as I said previously, continuing. So now I have a question from Ashish Khetan from Citi. It relates to Ankara, sorry. Ankara EBITDA has increased significantly in 2025. Do we expect further improvement in 2026 or the full benefit of increased fee and end of guarantee structure has been materialized in 2025? Well, the answer is yes. We only have the effect of the new concession for 2 quarters in 2025. So definitely in 2026, we will have it for the full year, what we call the full year effect, and this will definitely be a boost to our profitability, the profitability of the Ankara Airport. Another point is that the AJet airline, formerly AnadoluJet is continuing to grow in the airport and providing a very important traffic growth driver at international level, especially. So all in all, we have -- we feel very good tailwinds at Ankara level, and it should continue for the full year of 2026. Other question from Ashish regarding personnel costs. How do you see personnel costs increasing in 2026 with inflation easing out? Well, I guess the question mainly relates to Turkish staff costs for 2026 since we are talking about inflation. For staff costs in Turkiye, the main moving parts will definitely be in 2026. First of all, the Turkish minimum wage rate increased rates. And then we will have a second factor, which is the average number of employees. Vehbi Kaptan: Okay. Question from Gorkem Goker, Yapi Kredi Yatirim. In what ways and how any potential end of Russia-Ukraine war would impact your operations on aggregate in light of last couple of years' realizations? Due to the sanctions imposed on Russia and the ongoing war in Ukraine, our airports are experiencing a loss of 27% of Russian traffic and 100% of Ukrainian traffic compared to 2019. Any potential resolution in this situation, coupled with the lifting of the sanctions would be beneficial for passenger numbers across all our airports, particularly in Antalya. If Ukrainian civil aviation comes back, that would also be a positive, but that could take more time. In Antalya, the proportion of Russian passengers is a key driver of overall spend per passenger as Russians are among the highest standards within the non-Turkish passenger mix. Additionally, our ground handling company, Havas, used to serve a higher number of Russian charter flights, which carry higher service charges compared to the scheduled flights by nature. The absence of these charter flights has affected Hava's EBITDA margin. Therefore, any potential end to the Russian-Ukrainian war would also positively impact Havas margins. I think that concludes our Q&A session, too. Thank you for joining us. Thank you all for our webcast, and we hope to see you in events or in Istanbul physically soon. Bye. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant evening.

86天前Insight Analytics约5分钟阅读

LZB 2026 Q3 财报电话会议

Operator: Good morning, everyone, and welcome to the La-Z-Boy Fiscal 2026 Third Quarter Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mark Becks, Director of Investor Relations and Corporate Development at La-Z-Boy. Mark, the floor is yours. Mark Becks: Thank you, Jenny. Good morning, everyone, and thanks for joining us to discuss our fiscal 2026 third quarter. Joining me on today's call are Melinda Whittington, La-Z-Boy Incorporated's Board Chair, President and Chief Executive Officer; and Taylor Luebke, SVP and CFO. Melinda will open and close the call, and Taylor will speak to segment performance and the financials midway through. After our prepared remarks, we will open the line for questions. Slides will accompany this presentation, and you may view them through our webcast link, which will be available for 1 year. And a telephone replay of the call will be available for 1 week beginning this afternoon. I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors, as well as other key information detailed in our SEC filings. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website and includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck. With that, I will now turn the call over to Melinda. Melinda Whittington: Thanks, Mark. Good morning, everyone. Yesterday, following the close of market, we reported our strong January-ended third quarter results. These results are proof that we continue to strengthen our enterprise and increase the agility of our business. Highlights for our third quarter included total delivered sales of $542 million, up 4% versus prior year. In our Retail segment, both written and delivered sales increased 11% versus prior year. And we opened 4 new company-owned stores during the quarter, bringing us to 16 new company-owned stores in the last 12 months and 4 closed. In our Wholesale segment, delivered sales grew 1% versus prior year. And we made continued progress on our distribution and home delivery transformation project with the completion of our Western U.S. phase of the network. Our GAAP operating margin was 5.5% and adjusted operating margin was 6.1%, coming in toward the high end of our guidance range. And we again generated strong operating cash flow of $89 million for the quarter, increasing 57% versus last year's comparable period. Amid the ongoing challenging consumer environment, we continue to create our own momentum, led by retail expansion. As I noted, total written sales for our company-owned Retail segment increased 11% versus last year's third quarter, driven by new and acquired stores. Written same-store sales, which exclude the benefit of new and acquired stores, decreased 4% for the quarter. Continued challenging traffic, consistent with our industry, was partially offset by strong in-store execution, including higher conversion rates, average ticket and design sales. Within the quarter, same-store sales trends were strongest in January, turning positive versus a year ago until widespread adverse weather slowed traffic in late January and continuing into early February across much of the United States. While we don't believe these weather events will impact overall furniture demand, we do expect some timing effects carrying into our fourth quarter deliveries as consumers reengage on planned purchases. Separately, for Joybird, total written sales for our third quarter decreased 13% compared to a year ago as this consumer segment continues to be particularly volatile against the current macroeconomic backdrop. During the quarter, we also progressed our strategic initiatives. We successfully integrated our 15-store acquisition in the Southeast region of the United States. We formally announced the planned closure of our U.K. manufacturing facility, where production will cease by the end of the fiscal year. We completed the sale of our Kincaid upholstery business just after the close of our third quarter. And we signed a letter of intent for the sale of our noncore wholesale casegoods businesses, American Drew and Kincaid, targeted to be complete by the fiscal year-end. Stepping back, I'd like to spend a few more minutes highlighting some of the structural improvements our team has achieved through these current initiatives and highlight the progress made as we advance our Century Vision strategy for our next 100 years. We are pleased to have successfully integrated our acquisition of the 15-store network in the Southeast region. This transaction was our largest single retail acquisition in the company's history, adding $80 million in annualized retail sales and $40 million net to the total enterprise. The seamless integration into our company-owned network reflects the collective efforts of many internal stakeholders, and the stores are performing well. Independent store acquisitions are an important part of our Century Vision strategy as they are immediately sales and profit accretive and provide ownership of a new market with potential white space opportunities. We will continue to pursue these types of acquisitions as they become available. Opening new La-Z-Boy stores is also a key lever to growing our Retail business and expanding our brand reach. In addition to completing our largest ever acquisition this quarter, we also are achieving the most significant period of new store expansion in our company's history. We opened 4 new company-owned stores in the quarter. And in the last 12 months, we opened 16 new stores, while closing 4. In total, we've added 29 net company-owned stores over the past year. Our total network of stores, including independently owned, has expanded to 374. And our current proportion of company-owned stores is now at an all-time high of 60% of the total network. We see opportunity to grow the La-Z-Boy store network to over 400 stores as we broaden our brand reach and delight and inspire even more consumers. We expect to open 16 new stores in total for this fiscal and continue at a pace of opening roughly 10 stores a year for the next several years. Momentum in our Wholesale segment also remained solid as we delivered our seventh consecutive quarter of sales growth in our core North American La-Z-Boy wholesale business, and we continue to grow our strategic compatible distribution with key partners like Slumberland and Rooms To Go. Wholesale customers value the strength of the La-Z-Boy brand, the enduring quality and the differentiated product functionality offered by our North American manufacturing capabilities. Our vertically integrated model with approximately 90% of upholstered products produced in the United States remains a key competitive advantage as we navigate the current challenging macroeconomic environment and has served as our foundation throughout our 99-year history. We're making meaningful progress on building an even more agile supply chain through our multiyear distribution and home delivery transformation project. During the third quarter, we completed the Western U.S. 1/3 of this project, serviced by our new Arizona centralized hub. And we recently broke ground on our new Dayton, Tennessee centralized hub, which will serve our Eastern region. This transformation will improve an already strong consumer experience, ensure faster speed of delivery and enable an expanded delivery reach. And in aggregate, we expect this project to deliver between 50 to 75 basis points of Wholesale margin improvement, up to 50 basis points to the entire enterprise once completed. As part of our strategic road map to expand brand reach, leveraging our iconic brand, we are creating integrated strategies for our retail and marketing teams. These strategies have enabled more cohesive and focused plans for our store network, improving execution and reducing redundancy. As a result, we are better positioned to capture consumer demand, improve responsiveness and navigate the volatile environment with greater discipline and agility. Our new brand identity continues to receive positive media attention. In December, La-Z-Boy was cited by Ad Age as one of the top 5 rebrands of 2025. The mention went on to say, La-Z-Boy's brand refresh felt like a full-bodied exhale, designed to make comfort feel as intentional as its famously cushy chairs. We plan to continue building off this success and expanding brand relevance with new and innovative ways to delight and inspire our consumers. Lastly, during our third quarter, we drove further progress in optimizing our portfolio and enabling focus on our core vertically integrated North American upholstery business. We formally announced the planned closure of our U.K. manufacturing facility, where we expect production will cease by the end of our fiscal '26. And we have solidified alternative sourcing for this business, leveraging our global supply chain network to ensure we are well positioned to grow with our new customer base. We also completed the sale of our Kincaid upholstery business just subsequent to our fiscal third quarter-end. We were pleased to transition this business in full to its new owners who are former employees of the company. And finally, we signed a letter of intent for the sale of our noncore wholesale casegoods businesses, American Drew and Kincaid. Importantly, these changes will not impact our ability to offer casegoods as part of beautiful whole home solutions for consumers in our La-Z-Boy stores, Comfort Studios and branded spaces. In fact, these changes will enhance our offerings in the future, opening up broader sourcing and driving efficiency in the process. We expect these final casegoods initiatives to be substantially complete by our fiscal year-end in April. And now, let me turn the call over to Taylor to review the financial results in more detail. Taylor? Taylor Luebke: Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a GAAP and adjusted basis. We believe the adjusted presentation better reflects underlying operating trends and performance of the business. Adjusted results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slides. On a consolidated basis, fiscal 2026 third quarter sales increased 4% from prior year to $542 million as growth in our Retail and Wholesale business were partially offset by lower delivered volume in our Joybird business. Consolidated GAAP operating income was $30 million and adjusted operating income was $33 million. Consolidated GAAP operating margin was 5.5% and adjusted operating margin was 6.1%. The change was largely driven by investments in our distribution and home delivery transformation project. Diluted earnings per share totaled $0.52 on a GAAP basis, and adjusted diluted EPS was $0.61. As I move to the segment discussion, my comments from here will focus on our adjusted reporting unless specifically stated otherwise. Starting with the Retail segment. For the third quarter, delivered sales increased 11% to $252 million, driven by acquired and new stores. Retail adjusted operating margin was flat versus a year ago at 10.7% as accretion from acquisitions was offset by investment in new stores and fixed cost deleverage from lower delivered same-store sales. For our Wholesale segment, delivered sales increased 1% to $367 million versus last year, driven by modest growth across the majority of our businesses, including our core North America La-Z-Boy wholesale business. Adjusted operating margin for the Wholesale segment was 6% in the third quarter versus 6.5% last year, driven primarily by investments in our distribution and home delivery transformation project and unfavorable foreign exchange rates. For Joybird, reported in Corporate and Other, delivered sales were $36 million, down 3% on lower delivered sales volume. Joybird operating loss increased versus the prior year, primarily due to fixed cost deleverage on lower Joybird delivered sales. Moving on to our consolidated adjusted gross margin and SG&A performance for fiscal 2026 third quarter. Consolidated adjusted gross margin for the entire company increased 10 basis points versus the prior year third quarter. The increase in gross margin was primarily driven by the shift in consolidated mix towards our Retail segment, which has a higher gross margin rate than our Wholesale segment, partially offset by investments in our distribution and home delivery transformation project. Adjusted SG&A as a percent of sales for the quarter increased by 80 basis points compared with last year, also due to the shift in consolidated mix towards our Retail segment, which carries a higher fixed cost structure relative to Wholesale, as well as fixed cost deleverage on lower delivered same-store sales. Our effective tax rate on a GAAP basis for the third quarter was 31.3% versus 25.1% in the third quarter of fiscal 2025. The year-over-year increase was primarily due to nondeductible operating losses and onetime charges related to our supply chain optimization actions in our U.K. business. We expect our tax rate to normalize in fiscal 2027. Turning to liquidity. We ended the quarter with $306 million in cash and no externally funded debt. Our balance sheet remains strong, supported by the consistent cash generation of our operating model even as we absorbed a significant acquisition in the quarter. We generated a strong $89 million in cash from operating activities in the third quarter, increasing 57% versus last year's comparable period, with improved working capital and an increase in customer deposits. We invested $18 million in capital expenditures during the quarter, primarily related to investment in new La-Z-Boy stores, as well as remodels, manufacturing-related investments, and spending related to our distribution and home delivery transformation. We also completed our 15-store acquisition in the Southeast region at the beginning of the quarter for a total of $86 million. We continue to believe that the best use of our cash and the highest return on investment is prudently reinvesting back into the business. As such, we remain committed to disciplined investments in new stores, acquisitions, and our distribution and home delivery transformation project to profitably grow our core business. Regarding cash return to shareholders, year-to-date, we returned $55 million to shareholders through dividends and share repurchases, including $28 million paid in dividends and $27 million in share repurchases. Also, in the quarter, we resumed more normalized share buybacks of $14 million, which leaves 3 million shares available under our existing share repurchase authorization. We expect consistent share repurchases ongoing, assuming ordinary business and economic conditions. We continue to view share repurchases and our dividend as an attractive use of our cash and positive return to shareholders. Capital allocation in fiscal 2026 is tilted more towards the business through investments in the recent 15-store acquisition and our distribution and home delivery transformation project. Longer term, our capital allocation target remains consistent to reinvest 50% of operating cash flow back into the business and return 50% to shareholders in share repurchases and dividends. Before turning the call back to Melinda, let me highlight several important items for fiscal 2026 and our fourth quarter. We expect fiscal fourth quarter sales to be in the range of $560 million to $580 million and adjusted operating margin to be in the range of 7.5% to 9%, reflecting a continued cautious view on the macroeconomic backdrop, as well as the short-term impact of recent adverse weather events. We expect to open 5 new company-owned stores in the fourth quarter, bringing us to 16 for our full fiscal year. We expect capital expenditures to be in the range of $80 million to $90 million. This includes investments for new stores and remodels, our distribution and home delivery transformation project, and continued manufacturing-related investments. And as a reminder, we expect the financial benefits of our strategic initiatives to have an annualized impact of approximately a $30 million net sales decrease and an adjusted operating margin improvement of 75 to 100 basis points to the entire enterprise. This represents the combined impacts of our 15-store acquisition, our casegoods exit, our planned closure of the U.K. plant and our management reorganization. We expect the benefit of all of these initiatives when they are substantially completed by the end of this fiscal year. And these impacts do not include the additional long-term margin improvement we expect from our distribution and home delivery transformation project. And note, at this time, we do not expect these strategic initiatives to have a material onetime gain or loss to the enterprise. Lastly, we expect our tax rate for the full year to be in the range of 27% to 29%. And with that, I will turn the call back to Melinda. Melinda Whittington: Thanks, Taylor. The furniture industry and broader macroeconomic environment continue to be challenging. What has not changed is our iconic brand and the ability to delight and inspire millions of consumers. As a testament to our enduring impact and cultural relevance, La-Z-Boy Incorporated has been recognized by Time Magazine as one of America's most iconic companies for 2026. This unsolicited award reflects the lasting connection generations of families have built with our beloved brand over our 99-year history. As we look ahead, we'll continue to honor our heritage of comfort, customization and quality, while evolving to succeed in any environment. We will continue to leverage our vertically integrated model with approximately 90% of upholstered products produced in the United States, create our own momentum and position ourselves to disproportionately benefit when the industry does rebound. This, combined with our mission of delivering the transformational power of comfort, will enable us to drive value for all stakeholders. I'd like to thank our dedicated employees for their continued commitment to bringing our beloved products into more homes. And I wish everyone the best in the year ahead. Now, I'll turn the call back to Mark. Mark Becks: Thank you, Melinda. We will begin the question-and-answer period now. Jenny, please review the instructions for getting into the queue to ask questions. Operator: [Operator Instructions] Our first question is coming from Bobby Griffin of Raymond James. Robert Griffin: I guess, Taylor or Melinda, I wanted to dive in kind of on some of the strategic kind of actions you guys have taken so far. And congrats on the speed of getting a lot of those underway. Taylor, can you maybe level set us that margin improvement that you're referencing, what base year should we use? Because when you look back in fiscal year '25, we were about a 7.6% EBIT margin. Then it starts to slide, given you start to do some of the distribution changes. So like level set us on where we should think about the improvement off of what base. And then, I got some follow-up questions on that. Taylor Luebke: Yes, Bobby. So when we announced these strategic initiatives, and you're right, we're really pleased with the progress we've made over a very short period of time with selling our upholstery business, as well as solidifying our plan for the U.K. supply. The 75 to 100 basis points that we put out there was based on, call it, the trailing 12 months of the enterprise results at the point of quarter 2. So you can think of that as the right basis on which we expect to deliver that. Robert Griffin: Okay. And is there any -- like when we think about completing that by the end of FY '26, and then we can do the simple math on adding that to the trailing 12, is there any offsets that would keep all that savings from flowing through? Like is there an investment piece that you would need to use for advertising or anything like that? Or is that really going to be dropped down to, call it, the bottom line? Taylor Luebke: Bobby, we put it out there because we expect to realize it, again, against a pretty -- a generally consistent kind of macro consumer backdrop is how we look ahead. So our intent is it flows through, all else being equal. Robert Griffin: Very good. Okay. That's helpful. And then Melinda, I want to maybe dive in on the comments you made about developing more agile business post some of these changes. What do you think that gives La-Z-Boy as you think about kind of navigating the next 3 to 5 years in today's kind of consumer environment? Is it quicker product development? You can move faster on stores? Like just anything there to kind of help us think about how that could change the business and how you go to market? Melinda Whittington: Yes. Thanks for the question, Bobby. I guess, at a couple of levels -- I'll start with some of like the transformation work on our supply chain. 99 years of building product in the United States for the North American consumer, we're quite good at it. But the consumer preferences change, the -- where it makes the most sense to position your supply chain, the way that people want to be compensated and are motivated, those are all things that we constantly look at and have evolved over time. And so, I think the distribution transformation project is just one of those examples where we had a fairly organic network to support our stores. But as the stores footprint has changed so dramatically, we had a huge opportunity to just rethink that process. And in the end, not only is that going to deliver bottom line savings to the company and to the shareholder, but it's going to be an even more enhanced consumer experience. Broader delivery ranges is one example, and a better employee experience as well, because it will be efficient. On the consumer side, as I think about our store network and then our in-home consumer insights, we are constantly evaluating how to have the right product, the right messaging and the right shopping experience for the consumer. All things must begin with the consumer. And our broader retail ownership and omnichannel experience give us more control of that. So it's staying in touch with kind of where the puck is heading, making sure we're predicting that and then being responsive to that. So I guess, I'd say, kind of building the machine to constantly evolve over the future. Operator: Our next question is coming from Taylor Zick of KeyBanc Capital. Taylor Zick: Melinda, maybe just to start here, I kind of wanted to ask about the cadence of trends during the quarter. You provided some good commentary already, but just kind of knowing that there was improved trends in the prior year post election and then you noted some January impacts as well. But any color you can kind of provide on maybe what the underlying trends were in your third quarter versus your second quarter? Melinda Whittington: Yes. I would start by saying the consumer remains choppy, right? So we've talked about that for a while that the consumers are broadly -- we have a bifurcated consumer that we have some that are really -- it's aspirational to step into our brand and invest in quality, and so we sharpened price points. At the same time, we still have a very strong consumer interested in whole room solutions and upgrades and really investing in their home with us. So with that said, if I look back over Q3, to your point, over 2 years, Q3 was actually positive. And looking across the 3 months in our quarter, January was our strongest, actually turned positive on a same-store sales basis until -- and then was impacted by weather right here at the very end. I'll step into sort of the President's Day that began our fourth quarter. We're actually quite pleased with how President's Day came out. Our results -- our trends were positive versus a year ago. So I think that speaks well. But at the same time, we continue to manage prudently, just knowing that -- and we believe the consumer is still pinched and probably will be for a while, and ultimately, the product is discretionary. So we feel good about the momentum we're making, but we continue to be prudent in how we go forward. Taylor Zick: Great. That's super helpful. And you answered my second question already. Maybe, Taylor, I can squeeze one in for you. Maybe on the 4Q guidance here, your 7.5% to 9% operating margin puts margins down a little over 100 basis points despite a higher mix of retail and some of your strategic actions within the portfolio. Can you kind of just help us understand the puts and takes there? I know some of the pressures from the short-term headwinds from the distribution and home delivery redesign coming through. But is there anything else we should keep in mind for fourth quarter? Taylor Luebke: Taylor, thanks for the question. No, actually, we still feel really good about the growth potential, as well as margin potential, of the business. And as Melinda had mentioned in prepared remarks and otherwise, we continue to manage through the near-term challenges and the choppy consumer, but also build for the future with our retail expansion, our distribution projects, as well as our, call it, strategic initiatives. Overall, on margin, we've had good momentum on our Wholesale. Retail continues to hold at a strong double digit, which incredibly pleased about. There is just the near-term headwinds of traffic continues to be challenged, which adds deleveraging impacts on our larger fixed cost basis. So we continue to hone our operations and manage in the near term, but also deliver some of these bigger transformative things for the long term and deliver margin improvements ongoing behind the likes of the strategic initiatives we mentioned to Bobby [indiscernible], the 75 to 100 basis points, as we enter into our fiscal '27, as well as the 50 basis points to the enterprise, which is the longer-term benefit of our distribution and home transformation project. Operator: [Operator Instructions] Our next question is coming from Anthony Lebiedzinski of Sidoti & Company. Anthony Lebiedzinski: So Melinda and Taylor, you both mentioned that the consumer environment is choppy, certainly nothing terribly new there. But as we look at the guidance for 4Q, can you perhaps try to separate how much of the guidance is tied to weather issues versus the macro environment? Melinda Whittington: Anthony, I think how I'd broadly look at it is, we don't -- we're not expecting any big change in sort of the consumer environment in Q4 relative to what we've seen throughout most of this fiscal year. And the only piece of a little bit of conservatism in there versus just a continued trend on the consumer is just this weather impact that hit sort of right at the end of our Q3 and into our Q4, and you saw that in -- impacts in the written. And so, by the time that consumer reengages -- again, we saw some of that with strong President's Day. But by the time that consumer reengages both in our stores and then with our wholesale customers, and that turns into orders and restocks and deliveries, I think that puts a little bit more pressure on Q4 than we otherwise would have. Taylor Luebke: Net of it, if I could just chime in, Anthony, we don't believe we've lost -- us or the industry lost furniture sales other than it's a timing impact on -- some may phase out into quarter 1, based on when that consumer decides to reengage in their shopping journey. We're ready to meet demand and delight and inspire them when they come in our store. Anthony Lebiedzinski: Got it. Thanks for that great color. So, on the Wholesale side, you guys highlighted Slumberland and Rooms To Go. As you look forward here, I mean, do you see further opportunities to expand your brand reach on the Wholesale side? Would love to get your thoughts on that, and how you're thinking about the opportunities there? Melinda Whittington: Yes. Strategic partnerships are a very important part of our business and our growth plan going forward as well. While we certainly disproportionately focus on our own retail because we can own that entire consumer experience and obviously own more of the financial benefits as well, we also recognize that strategic partners are a way of reaching consumers that we otherwise are never going to reach in a very fragmented market. We happened to call out Slumberland and Rooms To Go just because they are great examples of -- Slumberland, we've done business with for decades and continue to partner and grow with them in strategic ways that are good for our brand and compatible distribution across multiple outlets. And similarly, Rooms To Go is a vibrant growing operation that reaches a lot of consumers, particularly in the Southeast, and is a newer partner that we've added just over the last couple of years. If I look at -- in even just, call it, the last 12 months, we have continued to add some big strategic partners. I think we've called out Farmers down in the Southeast, which reaches a consumer that's not serviced today by our Furniture Galleries, and that was -- these are hundreds of store kind of networks. We opened up Living Spaces, which is a very sophisticated retailer out West. So we have seen those opportunities. And so, I think there are still opportunity. That said, I think our bigger growth potential in the next several years is to continue expanding with those strategic partners as opposed to adding a ton of strategic partners. It's important to us to work with folks that are really going to appreciate the brand and not create too much conflict out there that just doesn't end up making sense. Instead, we want to make sure we're reaching consumers where they want to shop and continuing to expand our brand. Anthony Lebiedzinski: That's very helpful. And my last question is with regards to Joybird. So the sales there have continued to trend below the rest of the business. How are you guys thinking about Joybird, not just for the next couple of quarters, but maybe longer term? Any updated thoughts on Joybird that you may have? Melinda Whittington: Yes. Joybird is tough. We really -- we've done the work to believe in it. It resonates with the consumer. It fits well into our portfolio as a -- and our aspiration to be a vertically integrated branded retailer. It's a good strategic green shoot. While it's small, it's mighty. But we are continuing to see a particularly volatile consumer there. That consumer is younger, more urban-focused and just disproportionately impacted by some of the macroeconomic challenges. So we continue to take actions towards getting that business rightsized to grow profitably, and we'll continue to work through and monitor that. Operator: And we have another question in from Bobby Griffin of Raymond James. Robert Griffin: Melinda, I just wanted to maybe circle back on the U.K. You called out you have an alternate source of product there lined up. Just maybe, like, now with kind of the changes there, do you still look at the opportunity there the same that was historically as when it was the prior kind of a pretty big single customer for you guys? And I understand there's been some retail transition there, but the new retail partner is actually larger. So how does that setup look going forward? And what is ultimately the potential there? Could that get back to the same level as before and with maybe even better margins, given the new setup or structure? Melinda Whittington: Yes. Thanks for that question, Bobby. You're right. It's been, gosh, a little over 2 years ago now, where [ FCS ], which was a publicly traded company and our biggest customer globally, which is kind of crazy given the relative size of our international business, but was actually bought out by a private company that chose not to work with brands anymore. And so, we pretty quickly pivoted. We had long-time discussions with DFS, which as you astutely noted, is 3x, 4x bigger than FCS and probably a better fit for our brand and our customer base. But between FCS and DFS, they'd always required exclusivity. So we are well underway with DFS. They continue to be super pleased. We've had some introductions where they've called out that we've been one of their fastest-growing, if not the fastest-growing introduction they've had. But at the same time, it just -- it's taking a while. It's taking longer, frankly, than we probably forecasted to just get up to the kind of run rates of where we were with FCS, particularly given that U.K. economy and the macroeconomic environment is also quite challenged. So we are super pleased with DFS. They are pleased with us. We are continuing to grow that business, and we want to serve that consumer. That said, at the kind of volume levels that we're seeing through this multiyear transition, it just didn't make sense to have a fully dedicated plant there in the U.K. So, as we leverage our overall global network, we think we're getting that rightsized. We think we get that cost structure right as well, so it makes sense for us, it makes sense for DFS and it makes sense for the consumer to grow that business. And we actually think, to your point, it will accelerate it -- accelerate that growth. And then, historically, our U.K. business margins were fairly consistent with other wholesale that we would see like in our core North America, and we anticipate being able to get back to those kind of ranges over time. Robert Griffin: Very good. And then, does the new setup from the manufacturing side of things or the sourcing side, does that allow other international type growth opportunities any different than before? Just anything there? Melinda Whittington: No change. Yes, no change. We still have -- yes, we still have the opportunity there. Again, international expansion, less of a focus area for us right now just because that core North America business has so much opportunity. But no, we're not losing any optionality more broadly. Operator: We have now reached the end of our question-and-answer session. I will now hand back over to Mark for any closing comments. Mark Becks: Thanks, Jenny. We'll be in our offices for the rest of the day to handle any follow-up calls. Thanks, and have a great day. Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.

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