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Operator: Good morning. Welcome to The Wendy's Company Earnings Results Conference Call [Operator Instructions] Thank you. You may begin your conference. Aaron Broholm: Good morning, and thank you for joining our fiscal 2025 fourth quarter earnings conference call. After this brief introduction, Ken Cook, Interim Chief Executive Officer and Chief Financial Officer, will provide a business update; and then Suzie Thuerk, Chief Accounting Officer and Global Head of FP&A, will review our fourth quarter results, share capital allocation priorities and our 2026 outlook. From there, we will open up the line for questions. Today's conference call and webcast includes a presentation, which is available on our Investor Relations website, ir.wendys.com. Before we begin, please take note of the safe harbor statement that appears at the end of today's earnings release. This disclosure reminds investors that certain information we discuss today is forward-looking and reflects our current expectations about future plans and performance. Various factors could affect our results and cause those results to differ materially from the projections set forth in our forward-looking statements. Also, some of today's comments will reference non-GAAP financial measures. Investors should refer to our reconciliations of non-GAAP financial measures to the most directly comparable GAAP measure at the end of this presentation or in today's earnings release. If you have questions following today's conference call, please contact me. I will now hand the call over to Ken. Ken Cook: Thank you, Aaron, and good morning, everyone. I want to begin by recognizing our franchisees, restaurant teams and company employees for their ongoing commitment to the Wendy's brand. Together as One Wendy's, we are strengthening the foundation to deliver long-term profitable growth for the company and our franchisees. This morning, I'll start by discussing our fourth quarter results and full year highlights, then provide an update on Project Fresh. And lastly, I'll share our 2026 outlook before passing it over to Suzie to talk through the financials in more detail. Starting with the fourth quarter. While results were in line with our expectations, we know that we have a lot of work to do to improve performance. With Project Fresh underway, we have the right plan in place to strengthen our U.S. business. As we shared on our last earnings call, we expected fourth quarter system-wide sales to be down significantly, and they were. Global system-wide sales declined 8.3%, driven by our U.S. business, where marketing spend was down significantly as a result of front-end loaded ad spending in 2025 and sales trends throughout the year, in addition to a tough comp with our SpongeBob collaboration in the prior year and our decision to shift the launch of our new chicken sandwiches into 2026 to ensure excellent execution. A bright spot for the U.S. was the rollout of our chicken tenders and new sauce lineup, which delivered strong customer satisfaction scores, demonstrating the power of focused execution. Turning to our international business. Performance remained strong with system-wide sales up 6.2% in the fourth quarter, its 21st consecutive quarter of growth. International expansion remains a key priority, and we continued our momentum, opening 59 new locations in the fourth quarter. New restaurant openings came from key stronghold markets such as Canada and Mexico as well as new markets such as Armenia and Scotland, both of which delivered strong sales following their launch. From a profitability perspective, total company adjusted EBITDA was $113.3 million and adjusted EPS was $0.16. Turning to our full year performance. 2025 was a challenging year, but it was also an important year as we began laying the foundation to rebuild. Global system-wide sales declined 3.5%, driven by U.S. same-restaurant sales, highlighting the need for change across many areas of our business, including heightened focus on both operations and marketing effectiveness. We are encouraged by the operational improvements throughout our U.S. company-operated restaurants, which are making a difference for our customers. These efforts have driven increases in customer satisfaction scores, including improvements in accuracy, friendliness and overall satisfaction. And same-restaurant sales at U.S. company-operated restaurants outperformed the broader U.S. system by 310 basis points. Many franchisees have already begun implementing similar improvements, and we expect adoption to accelerate throughout 2026. We also made significant progress scaling our digital business throughout 2025 with U.S. digital sales growing 12.4% versus the prior year and bringing our full year U.S. digital mix to an all-time high of 20%. We've continued to make improvements to the Wendy's app, including a redesigned home screen and gamification features, which drove higher customer engagement and record conversion rates. Next, our international business continued to be a strong growth engine throughout the year, delivering an 8.1% increase in system-wide sales with growth across all regions and 159 new restaurant openings. Net unit growth was up over 9% with 121 net new restaurants in 2025, marking a new record in the history of our international business, a clear sign that our international strategy is working and that investments in on-the-ground local resources, including regional franchisee recruiting, marketing and the globalized supply chain are delivering benefits. We achieved growth in both existing markets like Canada and Mexico as well as entry into 7 new markets, including Australia and Romania, expanding our total number of international markets from 31 to 38. This is a meaningful proof point that the Wendy's brand resonates across the globe as we execute our globally great locally loved strategy. We also secured new development agreements to build a total of 338 new restaurants that will drive international growth in the years to come. Turning to our cash flow and capital strategy. We generated $345 million of cash flow from operations in the year. We optimized our capital deployment to match our growth strategy by reducing U.S. build-to-suit spend by over $20 million in the year as we shifted our focus to profitable AUV growth. As a result, we delivered $205 million of free cash flow for the full year. Returning cash to shareholders also remains a key priority, and we returned $330 million to shareholders through dividends and share repurchases, up more than $48 million from the prior year. Lastly, we established our One Wendy's approach to the business and are actively working to strengthen the system by focusing on franchisee economics and improving the customer experience. Over the last year, we've learned a great deal. We've invested in deeper data and insights on our customers, and we've improved visibility to restaurant level performance. We now have a clear picture of what needs to improve in our marketing, menu and operations and how to optimize the store footprint within our system. Project Fresh is our turnaround strategy to clearly address these issues, and we are implementing it with urgency. 2026 will be a rebuilding year for Wendy's. We are making the right decisions to strengthen our foundation for the long term. Project Fresh is structured around 4 strategic pillars: brand revitalization, operational excellence, system optimization and capital allocation. Together, these initiatives will strengthen the business and accelerate our progress in the years ahead. Let me take a moment to share some of the specific actions underway. The first pillar of Project Fresh is revitalizing the brand to reestablish Wendy's as the highest quality choice in QSR, which centers around improving how we connect and engage with customers in more relevant and distinctive ways. Our focus this year is restoring relevance and rebuilding trust with customers through disciplined execution and marketing. To understand exactly what our customers are looking for, we completed a comprehensive consumer segmentation study that used a needs-based approach to identify the key drivers that influence when, why and where consumers choose to eat. We've pinpointed where Wendy's quality positioning has the strongest appeal and are focusing our marketing and menu efforts on the consumer segments identified that represent the greatest growth opportunity. Our efforts are targeted towards their specific need states while consistently reinforcing Wendy's leadership in food quality and value. We have translated these insights into a brand essence framework, a North Star that serves as guiding principles for the entire organization. This framework clarifies how we set priorities, elevate our brand, communicate our value and enhance the customer experience. Going forward, it will guide not only our marketing approach, but decision-making around menu and operational priorities throughout the organization, enabling better alignment and execution in everything we do and keeping us focused on being squarely better than anyone else in QSR. Our learnings have already informed a new marketing and menu approach, which has significantly strengthened our marketing calendar for 2026. We're taking a balanced approach across core, innovation and value offerings, supported by improved messaging that connects with customers in socially and culturally relevant ways. In addition, we've established a more disciplined programming structure to ensure a steady stream of new news that keeps the brand top of mind and supports higher customer frequency while providing restaurant teams adequate time to train and execute with excellence. We're taking meaningful action to strengthen our everyday value offerings, centering on a new strategic platform as opposed to short-term promotions. In January, we built on the brand equity of Biggie and launched new Biggie Deals as our everyday value architecture, a tiered structure at $4, $6 and $8 price points, this isn't a limited time offer. It's a permanent value platform to broaden our appeal, give customers more choice and capture incremental eating occasions like snacking at attractive price points. On the premium side of our menu, the segmentation study reaffirmed that Wendy's quality remains a core differentiator compared to competitors, and we're focused on highlighting that for more consumers. Quality leadership starts with our core menu. Our hamburgers are what Wendy's is famous for, and we will bring consumers' focus back to what makes Wendy's different and special. Our brand was built on serving the best-tasting hamburgers in QSR using fresh, never frozen beef, and we will reestablish that position in 2026. This starts with a new Cheesy Bacon Cheeseburger launching next week, and you'll continue to see hamburger innovation as we move throughout the year. Additionally, we were pleased by the strong response to the launch of our chicken tenders, and we are continuing to build on that momentum by leveraging the quality of our product to expand our chicken offerings. Next week, we're bringing new and exciting news to our chicken menu with the launch of a Chicken Tenders Ranch Wrap. In 2026, we will prioritize meaningful innovation across both hamburgers and chicken, focusing on launches that restaurants can execute with excellence while reinforcing our quality positioning. In addition to a new menu approach, we are elevating the effectiveness of our marketing and optimizing our mix by allocating more spend towards digital, social and streaming platforms. We are increasing culturally relevant marketing in these channels, leveraging our consumer segmentation insights and new data and analytics capabilities for more targeted messaging. Maintaining top-of-mind awareness is important for Wendy's. We've significantly increased our always-on social engagement, and that awareness will translate into traffic over time. As we continue to incorporate learnings to enhance the menu, strengthen our marketing calendar and improve messaging and media effectiveness, we expect momentum to build sequentially as we move through 2026. Moving on to our next 2 pillars of Project Fresh, operational excellence and system optimization, both of which are centered on elevating the customer experience and improving franchisee economics. Well-run restaurants drive sales and profitability, and our U.S. company-operated restaurants continue to serve as a powerful proof point that demonstrates the benefits of strong operational execution. Our U.S. company-operated restaurants outperformed the overall system by 310 basis points in 2025, demonstrating that when we execute with excellence, our customers respond. Throughout the year, our operational initiatives drove improvements in customer satisfaction scores, including accuracy, taste and friendliness. Operational excellence starts with what we call people activation, which is about having the right capabilities and experience in our restaurants. We completed this initiative across U.S. company-operated restaurants last year, which strengthened our company-operated restaurant teams, and we have been sharing these learnings with franchisees. We've made progress on rolling out enhanced training and have implemented a new learning management system specifically designed for restaurant employees. We are partnering with franchisees to extend the performance management strategy implemented at U.S. company-operated restaurants more broadly across the system. This ensures accountability to a consistent cycle of planning, managing and evaluating operational performance by restaurant teams to improve the customer experience. Our field operations team is central to scaling people activation and enhanced training across the U.S. system. Based on the benefits we saw last year, we're further expanding our field operations team in 2026, allowing them to spend more time in restaurants, providing greater support, coaching and training in close partnership with franchisees. Our franchisees have responded positively to these operational initiatives, recognizing their direct benefit to customer satisfaction and sales. We expect further adoption of these initiatives to positively impact results as we move through 2026. We're also continuing to add capabilities to our restaurant technology that will make it easier for our restaurant teams to execute with excellence. We're focused on improving order accuracy, a critical driver of customer satisfaction. And this month, we'll begin rolling out software enhancements to our kitchen order screens to streamline the preparation process and make it easier for our restaurant teams to deliver the right order every time. We're also completing an initiative to modernize our restaurant architecture, enabling a substantial increase in product and promotion testing, reducing deployment time lines for new product launches and allowing us to bring innovation to life faster and more efficiently across the system. Turning to system optimization, which is about having the right footprint in each market to improve franchisee economics and enhance the customer experience. By closing consistently underperforming restaurants, we are enabling our franchisee partners to increase focus on locations with the greatest potential for profitable growth. Since we announced this program in November, we have been working with our franchisees to evaluate restaurants on a store-by-store basis and make collaborative decisions to optimize performance across the U.S. system as One Wendy's. Under this program, we expect approximately 5% to 6% of U.S. restaurants to close, including 28 restaurant closures that occurred during the fourth quarter of 2025 with the remaining closures expected during the first half of 2026. We are also working with franchisees to better align operating hours to demand, particularly for the morning daypart. While many restaurants perform well at breakfast, we recognize it may not work in every restaurant as certain markets have customer dynamics that do not support a thriving breakfast business. To strengthen franchisee profitability, we're providing more flexibility around operating hours for the morning daypart, which allows them to reallocate resources towards the greatest potential for growth across daytime, evening and late-night occasions. This positions the morning daypart to perform where it matters most, delivering greater value for customers while supporting franchisee profitability, and we continue to believe that breakfast is an important daypart for the U.S. system. Moving forward, we will provide updates on our progress. The fourth pillar of Project Fresh is disciplined capital allocation, prioritizing investments with the highest return opportunities while sustaining our international expansion momentum. We are redeploying resources from U.S. development initiatives towards driving profitable AUV growth. This includes investments in field team resources to better support operational excellence in our restaurants, restaurant technology to improve workflow and digital infrastructure investments to improve our data capabilities that support marketing effectiveness and digital mix growth. We also remain committed to returning cash to shareholders through our quarterly dividend. This balanced capital allocation strategy ensures we're investing in the growth initiatives that will drive long-term value creation while maintaining our commitment to shareholder returns. We are acting with urgency to execute our Project Fresh turnaround plan. While turnarounds take time, we're making bold decisions together as One Wendy's that will create a better future for all stakeholders. Now turning to our outlook. 2026 is a rebuilding year, centered on the initiatives of our turnaround plan. Our outlook reflects the results of the decisions that we're making to strengthen the system and position the business for long-term success. We expect improvement in our performance as Project Fresh initiatives take hold. Our outlook also reflects the impact of a 53rd week, planned system optimization actions, including restaurant closures and the optimization of operating hours and the impact of challenging weather in the first quarter. As a result, we anticipate global system-wide sales to be approximately flat to the prior year and expect U.S. same-restaurant sales to improve as we move throughout 2026. Moving to international. Our international business remains an important growth engine, and we're building on the strong momentum we achieved in 2025. We expect continued robust net unit growth and anticipate approximately the same number of international net new units in 2026 as in 2025. We anticipate adjusted EBITDA to range from $460 million to $480 million, which reflects the impact of system optimization and higher G&A expense compared to the prior year, driven by a reset of incentive and stock compensation. We expect adjusted EPS in the range of $0.56 to $0.60 per share. Finally, we expect free cash flow of $190 million to $205 million. Before I close, I'll turn it over to Suzie to provide more details on our fourth quarter results and outlook. Suzie, over to you. Suzanne Thuerk: Thank you, Ken, and good morning, everyone. I'll begin with our fourth quarter results, then provide more details on our outlook for 2026 before closing with our capital allocation priorities. In the fourth quarter, global system-wide sales declined 8.3% on a constant currency basis, and U.S. same-restaurant sales declined 11.3%, driven by marketing spend, which was down significantly in addition to a tough comp with our SpongeBob collaboration in the prior year. This was partially offset by continued strength in our international business with system-wide sales growth of 6.2%. The decline in U.S. same-restaurant sales was driven by a decrease in traffic, partially offset by a higher average check. Same-restaurant sales at our U.S. company-operated restaurants outperformed the U.S. system by 410 basis points, driven by improvements in customer experience. Many of our franchisees have already begun implementing operational improvements, and we're making progress scaling these initiatives across the broader system as we execute on our Project Fresh turnaround plan. The outperformance at company-operated restaurants was also supported by strong delivery growth and benefits from the continued rollout of digital menu boards and Fresh AI automated ordering technology. Our U.S. digital sales grew 2% compared to the prior year, driven by continued growth in our loyalty program, bringing U.S. digital mix to an all-time high of 20.6% in the fourth quarter. Shifting to our International segment. The Wendy's brand continued to demonstrate strong momentum globally, delivering system-wide sales growth of 6.2% in the fourth quarter, driven by new restaurant openings across key growth markets. Growth was led by Asia Pacific and Latin America with strong performance in key markets such as the Philippines and Puerto Rico. We continue to see healthy underlying brand strength in Canada, gaining share in the QSR burger category throughout the year despite broader QSR traffic softness and a challenging competitive environment during the fourth quarter. Overall, our international results underscore the strength of our global growth model, enabled by the investments we are making in regional capabilities, which continue to drive a robust development pipeline. Now moving to the P&L for the fourth quarter. Total adjusted revenue was $439.6 million, a decrease of $19.7 million compared to the prior year. This was driven by lower franchise royalty revenue due to the decline in U.S. same-restaurant sales as well as lower franchise fees. Global company-operated restaurant margin was 12.1% for the fourth quarter and U.S. company-operated restaurant margin was 12.7%. U.S. company-operated restaurant margin declined compared to the prior year, primarily due to a decline in traffic, commodity inflation and labor rate inflation. These were partially offset by an increase in average check and labor efficiencies. Adjusted EBITDA was $113.3 million, which was down $24.2 million versus the prior year, primarily driven by lower net franchise fees, lower franchise royalty revenue and the decrease in company-operated restaurant margin. Adjusted earnings per share was $0.16 in the fourth quarter. Moving on to cash flow and our balance sheet. On a full year basis in 2025, we invested $140.3 million across capital expenditures and our build-to-suit development program. Capital expenditures included $52.4 million in technology initiatives such as digital menu boards and continued investments in our app and digital capabilities to enhance the customer experience and enable more targeted effective marketing. We also invested $69.6 million in restaurant development across company-operated new builds and investments in our build-to-suit program. Turning to free cash flow. We generated $205.4 million of free cash flow for the full year. Our free cash flow enables us to fund strategic investments while continuing to return capital to shareholders. Through the end of fiscal year 2025, we repurchased 14.4 million shares for approximately $200 million. In total, we returned $330 million to shareholders through dividends and share repurchases, an increase of over $48 million compared to the prior year. In the fourth quarter, we issued $450 million of whole business securitization notes using the proceeds to repay $50 million of debt, which matured in December of 2025 and refinanced $350 million of securitization notes maturing in September of 2026. The weighted average interest rate for the newly issued notes is 5.4%. We ended the year with $340 million of cash on the balance sheet and a net leverage ratio of 4.8x. Now turning to our financial outlook for 2026, which reflects the 53rd week in the fiscal year as well as the impact of the actions we are taking today to execute against our strategic plan that will drive long-term profitable growth. We expect global system-wide sales to be approximately flat for the full year. This reflects roughly 2% growth from base business improvements and international expansion and a 2% benefit from the 53rd week, offset by a 4% impact from our system optimization initiatives. Turning to the shape of the year. We anticipate U.S. same-restaurant sales for the first quarter to be down year-over-year with sequential improvement throughout the year as initiatives to revitalize the brand and improve operations begin to take hold. We expect U.S. company-operated restaurant margin of 13%, plus or minus 50 basis points. This includes our outlook for labor inflation of approximately 4% and a commodity cost increase of approximately 4%, reflecting the continued inflation in beef prices as well as investments to improve the quality of our products, including upgraded chicken fillets and new buns. We expect G&A to be approximately $295 million. The increase versus the prior year is primarily driven by resetting our incentive compensation plan and higher stock compensation as we lap the favorable impact from the departure of the company's previous CEO in 2025. We expect adjusted EBITDA of $460 million to $480 million, reflecting the resetting of incentive and stock compensation and the impact of lower adjusted revenues related to our system optimization initiative. Below the operating line, we expect approximately $140 million of interest expense, reflecting the impact of debt refinancing in the fourth quarter of 2025 as well as a tax rate of approximately 30%. Taking all of these items into account, we expect adjusted EPS in the range of $0.56 to $0.60 per share. Free cash flow is expected to be between $190 million and $205 million, reflecting disciplined capital allocation, including capital expenditures and build-to-suit investments between $120 million and $130 million. Moving on to capital allocation. Our first priority continues to be investing in the business. As we've outlined in our Project Fresh initiative, this means prioritizing AUV growth in the U.S. and net unit development internationally. As a result, we're reducing capital allocated to our build-to-suit development program by approximately $20 million compared to the prior year. Our second capital allocation priority is paying an attractive dividend. And today, we announced our regular quarterly dividend payment of $0.14 per share, reinforcing the importance of the dividend within our capital allocation approach. Our third priority is maintaining a strong balance sheet. We continue to target a net leverage ratio of 3.5 to 5x adjusted EBITDA. We do anticipate remaining near the top end of our range in 2026 as we implement our Project Fresh initiatives, but expect a natural reduction in our leverage ratio over time as we realize the benefits of our turnaround. Our fourth priority is returning excess cash to shareholders through opportunistic share repurchases. We currently have approximately $35 million remaining on our existing share repurchase authorization that expires in February 2027. In closing, our fourth quarter results aligned with our expectations for a challenging quarter. We will maintain financial discipline to support the company and franchisees as we advance our turnaround efforts. We are taking deliberate actions to strengthen our financial foundation and position the system for improved performance and long-term value creation for our shareholders. With that, I'll now turn it back to Ken. Ken Cook: Thank you, Suzie. 2026 will be a rebuilding year, and I am confident that we will execute on our Project Fresh initiatives to strengthen our foundation and position Wendy's for long-term success while delivering strong growth in our international business. We are focused on controlling what we can control and leaning into what Wendy's can do better than anybody else, delivering the highest quality food in QSR. We have all the ingredients needed to be successful, an iconic brand, a great team, passionate franchisees, improved capabilities and a strategic action plan to deliver results. I'll now hand it over to Aaron to share our upcoming Investor Relations calendar. Aaron Broholm: Thank you, Ken. On March 10, we will participate in the Citibank Global Consumer and Retail Conference in Miami. And on March 11, we will be in New York City for the UBS Global Consumer and Retail Conference. If you are interested in joining us at one of these events, please contact the respective sell-side analyst or equity sales contact at the host firm. We will now transition to the Q&A part of the call. Due to the high number of covering analysts, please limit yourself to one question only. Operator, please queue up the first question. Operator: [Operator Instructions] The first question comes from David Palmer of Evercore ISI. David Palmer: Lots of great detail on this call. I guess when it comes to operations at digital, you have a lot of initiatives there. But I feel like when it comes to turnarounds in this space, it really comes down to that initial jolt around marketing and menu. And you had a pretty good idea towards the end of this last year with the tenders and it felt like a pretty good product. And so I'm just wondering how you're thinking about this year, the approach, the ideas, the execution on the marketing side. Help us imagine how things are going to evolve there in ways that you think might be more effective? Ken Cook: Yes. Great question, David. So I'll start by talking a little bit about what gives us confidence that the turnaround plan will work. The results that we delivered are well below our potential for sure. But we have all the ingredients needed to be successful. We have an iconic brand, determined employees, passionate franchisees, better data visibility and capabilities than we've ever had. We have great food, and we're approaching that all with a One Wendy's mindset. Secondly, we understand the problem. We got away from what made us great. We allowed ops to drift, and we focus too much on sales overnight and discounting versus brand over time. We made some decisions that optimize the short term, but we're changing all that. We now have a clear North Star, which is our brand essence, and that will help us reestablish Wendy's as the highest quality hamburger in QSR. Also, we're executing the right plan, Project Fresh. In terms of revitalizing the brand, we know who drives our business, and we know how to bring them in. We do have a new approach to both menu and messaging that you've already seen take hold in 2026. And we're focused on ops, deploying the playbook that we use to improve operational excellence in our company restaurants to the system. Additionally, we're making the right long-term decisions in terms of system optimization, optimizing our restaurant footprint, which will help improve franchisee economics. So turnarounds take time. We'll see the ops metrics change first, followed by brand metrics and then traffic and sales. In terms of the calendar approach, which you mentioned, what's going to be different, there's going to be a lot of things that are going to be different. We have a new menu calendar framework. We've divided the year into 8 periods to make sure we provide sufficient new news throughout the calendar. We're marrying that up with top-of-mind culture events to make sure we stay socially and culturally relevant to our customers. And we're focused on the target segments. We did a lot of customer segmentation work. We now know who drives our business and we know who to focus on, and we know who not to focus on. So both those pieces are important. One learning from 2025 around value, we swung the pendulum too far towards limited time price promotions instead of everyday value. We had this fantastic Biggie platform that we've now made even better with our Biggie Deals platform around $4, $6 and $8, multiple price points, giving consumers more choice. And we will continue to upgrade the quality on our menu across the board. We have new chicken sandwiches rolling out. We're going to do some things on the hamburger side and a lot more hamburger innovation. If you look back at 2025, we had 0 hamburger innovation in 2025. That is changing in 2026, starting actually next week with the launch of our new Cheesy Bacon Cheeseburger. So a lot of things are different. We're learning a lot and applying those learnings as quickly as possible. Operator: The next question comes from Jake Bartlett of Truist. Jake Bartlett: Yes. I'm hoping you can expand on that a little bit and some of the learnings, your work with Creed UnCo, the segmentation study that you did. What did you learn maybe a little more specifically that you didn't know before in terms of who your target customer is and who you thought it was before and who it actually is and how that's informing the approach going forward? Ken, you mentioned that we've already seen some of the changes to the approach. I just -- maybe just remind us what we've seen so far on that front? Or are you kind of referring to what's going to -- what we're going to see next week with the launch of the new burgers and the wrap? Ken Cook: Yes. Thanks for the question, Jake. In terms of the customer segmentation study, that was the first phase of the Creed UnCo engagement. So first phase and foundational in terms of a proven playbook. We completed that study in December. And the good news is Wendy's does have a very strong brand perception, very strong. But from a customer perspective, this -- the needs-based approach helps us move beyond the what to the why. So segmenting customers based on need, why they are coming to Wendy's. Is it the quality of our food? Is it the price? Is it the abundance, convenience, snacking, what occasion are they coming in for? Is it for a dinner with family? Is it for a frosty to celebrate a kids game, all of those things, better understanding the why. Then that allows us to value the segments and divide them up into who is our primary target, who is our secondary and who should we not focus on at all because they represent very small pieces of our overall customer base. This validated some things we already knew and did provide some new insights. But it helped us put the spotlight on so what? What are we going to do about these things? A couple of learnings and validations from the study where a big segment of our customers come to Wendy's for an everyday quality upgrade, especially hamburgers and our fresh never frozen beef. When we look back at 2025, we had 0 hamburger innovation. We didn't talk about our hamburgers and we didn't innovate on those. So that's changing this year. We're going to have several hamburger -- premium hamburger LTOs starting next week with the launch of our Cheesy Bacon Cheeseburger. So -- that's a learning. That's a big difference. We also will be making quality upgrades across the menu. In a couple of months, we'll launch our new and improved chicken sandwich lineup, so both classic and spicy. Really excited about that, giving customers this everyday upgrade compared to what they can get from the competition. Another learning was a big segment of our population comes to Wendy's for our sides, the sweet and savory aspect, our sides, our Frosty's and this snacking occasion. So again, reflecting backwards, that helps explain why Girl Scout Thin Mints was such a success in 2025. We also have a new and improved collaboration with Girl Scout Thin Mints Frosty launching next week. So really excited about that. And we will incorporate some of the sweet and savory dynamics in our March Madness campaign here next month. And then 468, that snacking behavior did help inform the construct of our new Biggie Deal platform, putting that $4 price point in there. So if you're coming to Wendy's and you don't want a full meal, you want to get a quick snack, you can do that through that $4 price point, but also having a $6 and $8 for people who want more abundance, more value was really important. Another confirmation was really a large percentage of visits to Wendy's are on plant. When somebody leaves the parking lot or their driveway, they don't know where they're going to eat. And so that highlighted the importance to us to keep Wendy's top of mind and make sure we're in the consideration set. So you've seen us significantly increase our social activity to help drive awareness, so we stay in the consideration set when people are coming to Wendy's. As importantly as who we are going to focus on, then we look at where we're not going to focus. So there's a very small portion of our customers are considered what I would call it adventurous heaters. So these people want very unique flavor profiles, kind of extreme innovation. And again, they represent a very, very small percentage of our total. We shouldn't focus on them. When we look backwards at 2025, some of the collaborations we did were focused on this segment of the population and weren't broadly appealing enough to significantly move the needle for us. So we're going to move away from that. So I guess, in summary, what we've learned helps us target the customer segments we want to win with and it helps us be more relevant to them in terms of the menu choices we make, the messaging and the operations and is foundational to the brand essence that we've developed. Operator: The next question comes from Margaret-May Binshtok of Wolfe Research. Margaret-May Binshtok: I just wanted to ask, I remember you guys talked about expecting October to be the trough for the year. Could you give some color on the cadence of comps through November and December? And what do you see exiting the quarter into January? Ken Cook: Yes. Great question, Margaret. So yes, October was the trough for us. November and December were better than October, which is great. In terms of -- as we exited 2025 and entered 2026, we did see some improvements in early January. And then in the middle of January, we launched our new Biggie Deal platform, which we are really excited about and pleased with so far. But then we were met with some significant weather disruption. We ended January down about 8% in terms of U.S. SRS. We do expect the full first quarter to be a little bit better than that. So we're excited about the established value platform and the fact that we're talking about it in terms of Biggie, this distinctively Wendy's asset. Next week, we have the Girl Scout Thin Mint Frosty, which now has both a swirl and a fusion option, which we think is really going to resonate with our customers. We have leveraging the Chicken Tenders launch in the fourth quarter. We're innovating off that. We have a new Chicken Tenders Ranch Wrap that launches next week. And then back to hamburger and premium high-quality hamburgers, we have Cheesy Bacon Cheeseburger that launches. So -- all of these things are what makes us excited about 2026. We will build throughout the year. We've talked about 2026 being a rebuilding year. 4Q of 2025 is the trough, and we expect to improve throughout the year as we execute on our Project Fresh initiatives. Operator: The next question comes from Brian Mullan of Piper Sandler. Brian Mullan: Just a question on the system optimization efforts. With 5% to 6% of the U.S. system closing in the first half of the year, I guess, can you just talk about how exhaustive this process is, how flexible of an approach you're taking with franchisees? Meaning will this really be all the units that the franchisees have any desire to close and you'll be done after this? And then kind of just related to that, could you just comment on how this would impact the rental income line in '26, if you could put some parameters around that in the context of the guidance. Ken Cook: Yes, happy to. So system optimization is really about improving franchisee economics and improving the customer experience. We established a disciplined process with our franchisees to approach this restaurant by restaurant, working with them to make the best decisions that strengthen the system in the long term. Under this program, we closed 28 stores in the fourth quarter. The AUVs were -- had significantly lower than our overall average, which is to be expected. And we do expect to close around 5% to 6% of our U.S. restaurants under this program with the majority happening in the first half of 2026. We started with our list of restaurants. We also went out and had a process where franchisees could submit the restaurants they want. We've done a very robust process evaluating trade area, operational metrics, the profitability, leveraging the new data we have on restaurant level economics. And we expect 5% to 6% of the U.S. system to be impacted by this. In terms of the impact on total sales, in total, system optimization, we expect to have about a 4% impact on global system-wide sales, and we expect this to have about a $15 million to $20 million drag on adjusted EBITDA for the full year, which is inclusive of everything under that program, including the rental income. Suzanne Thuerk: Yes. The rental income for 2026 will be relatively flat. Obviously, it takes time to work with landlords and achieve what will be a win-win for both the franchisees and the Wendy's Company for those sites that we're in. So that will take a little bit longer to see the rental income impact versus the closures. Operator: The next question comes from Jeffrey Bernstein of Barclays. Jeffrey Bernstein: Great. Ken, for a turnaround to work in a franchise model, it's obviously very delicate. It seems like it's kind of a house of cards here, and it's all about the franchisee buy-in. So my guess is over the past 90 days, you've had a fair amount of discussions with those franchisees. I know it's a question that's come up before. But with the challenging fourth quarter and a rebuilding year in '26, I'm just wondering if you can share kind of current sentiment. I'm sure there are positives and negatives, but whether franchisees are aligned in terms of your approach to improving the comp, whether they're keen to push more value, whether there's any change in sentiment on unit growth, just an overarching discussion or perhaps color on just how franchisees are embracing the turnaround strategy. Ken Cook: Yes. Thanks for the question, Jeff. Under the One Wendy's approach, franchisees are appreciative of the flexibility that we've been providing and our willingness to make these decisions to help improve overall franchisee economics. Under the One Wendy's mindset, we know that the success of our company depends on the success of franchisees and vice versa, which is why we elevated franchisee economics as a key priority for us. Sales deleverage puts pressure on franchisee economics, and that is what we're seeing now. There's a wide range of situations in the U.S. We're working with franchisees on a case-by-case basis, partnering and leaning in where we can and then executing on the Project Fresh pillar around system optimization, optimizing the footprint. In terms of one thing I've learned over the last couple of months as we've executed these and begun down that path is the importance of communication. So we have -- obviously, we're making a lot of changes to the system around menu, around marketing, around operations, around system optimization. Communication is critically important in that. So we have significantly increased how frequently we're communicating with the franchisees. I was actually on a call with franchisees yesterday as part of the One Wendy's approach, giving them a preview of the things that they were going to hear on the earnings call today. Pete and I were with franchisees 2 weeks ago, walking through all the details of system optimization, allowing them to ask questions in a very open environment. Lindsay was on a call with franchisees a couple of weeks ago, walking them through the new approach to menu, messaging and how that was going to impact operations at the restaurant level. So that's critically important. Franchisees are appreciating the flexibility that we're giving and us working hand-in-hand with them to help improve overall franchisee economics. Operator: The next question comes from Danilo Gargiulo from Bernstein. Danilo Gargiulo: Can I want to go back on to the segmentation study. And frankly, I'm a little bit surprised to hear that the learnings of the customer segmentations where the relevance of the beef platform, the fresh never frozen. I think you mentioned also snacking, which I think are a core part of the DNA of the brand for a long time. So I'm wondering if you can maybe talk about the -- if there was some institutional knowledge that has been lost within the organization over time. And if you can maybe expand on the internal turnover, employee engagement scores. Conversely, if you think that the real opportunity here is translating the inside or already inside the organization into actionable initiatives, is your current organizational structure and G&A investment sufficient to support that? Ken Cook: Yes. Great question, Danilo. So I think you're right. We had a combination of things that we knew that were validated through the Creed UnCo study and the customer segmentation study. And we did have some new insights, a combination of those things. But the focus is really on what are we doing about it. And I think it highlighted over the past, we had lost our focus a little bit on who the target segments were and how we're approaching menu and messaging. So now with this refocused emphasis on everyday quality upgrades and making the menu better and highlighting the quality of our food relative to the competition, that will inform the menu strategy. It will inform the marketing strategy and how we tell our story to consumers. We have stood up a new -- as a result of this, we have instituted a new marketing framework, a process that provides discipline and consistency. We've divided the year into 8 periods to provide sufficient new news from a product perspective and new news that's relevant to our target segments. Regular cadence for the restaurant teams that enable them to train appropriately and operate and execute these with excellence. And it helps us maintain balance in terms of core innovation and value. Window 1, we launched Biggie Deals. So very -- taking a very distinctive Wendy's asset, expanding that for the customer into this permanent value architecture, so we have everyday value that the customers can depend on and then talking about that. It does inform our decisions in terms of product quality enhancements. Chicken sandwiches, significant improvement in quality on a core menu item that we've had for 30 years. We'll provide our customers an everyday upgrade versus what's on the market today. We're also having a bun upgrade coming soon, which we'll use on all our premium sandwiches. And another learning was making sure that we have this common thread of quality throughout everything that we do. And so you'll see that come to life in the product innovations that we have on the menu as well as how we talk about those throughout. It does take some time to build the foundation properly. The team is making a lot of progress, and we expect the benefit of these to increase throughout the year. Suzanne Thuerk: And Danilo, I might add from an investment standpoint in G&A, we have strong free cash flow and our #1 capital allocation priority is investing in the business and our outlook for 2026 reflects those investments. Ken mentioned on the call, investments in field teams to better support our operational excellence in our restaurants. We saw that work with investments we made in 2025, and we're offering more investments in field resources in 2026 as well as international investments to support net unit development internationally. Operator: The next question comes from Dennis Geiger of UBS. Dennis Geiger: Wondering if you could talk a little bit more about the Project Fresh rollout and maybe thinking about the timing for the franchisees to have a lot of the capabilities that the company stores have currently. I want to make sure maybe that that's the right way to think about it, Ken. And just curious how we think about that, how we think about that timing and ultimately, thinking about that gap in comp performance and kind of narrowing that gap as the franchisees improve their performance as this rolls out. Ken Cook: Yes, Dennis, it's a great question. Let me start by saying I'm very proud of the U.S. operations team. When you look at company restaurant performance versus the system, outperforming by 310 basis points in SRS for full year 2025 is really impressive. When you dive a level below that and see overall satisfaction was up 370 basis points year-over-year for company restaurants in the fourth quarter. When you look at accuracy, friendliness and taste, all of those elements were up over 300 basis points. So a great, great results from them. And how we did that, great operations start with having great teams. People activation is about having the right capabilities and experience in our restaurants. And so it starts there and then enhancing the training, making sure that we're training all our employees on hospitality and how to how to serve the guests with excellence. We mandated that for restaurant teams to make sure we were delivering quality and brand standards across the system. And then we implemented a very methodical approach to performance management and continuous improvement, making sure that each restaurant was focused on the 1 or 3 things that they had the opportunity to make the biggest improvement in, making sure we had disciplined action plans in place, making sure we had an accountability process behind that, where the district manager would come visit and review the progress that they were making. And then that combined with daily operating plans to make sure the entire restaurant team was focused on executing the action plan. So -- we activated that in company restaurants in early 2025 and then started seeing big results in the second half of 2025. If you look at the first quarter, there was about a 20 basis point difference between company restaurant SRS in the system. That grew to a little under 2% next quarter and then 400 basis points plus in the back half of the year. In terms of deploying that to the system, franchisees have been receptive to this. We have 20% of franchisees who have fully adopted the program that we rolled out, and we're working on deploying it with the rest of them right now. So I would expect to see the improvement to really start to take hold in the second half of 2026. But also remember, we keep pushing on our company-operated restaurants to continue to get better, right? There's no finish line here. We want to get a little bit better every single day. So we want to have some healthy competition in the system and see where we end up. Operator: The next question comes from Gregory Francfort of Guggenheim Securities. Gregory Francfort: I just wanted to ask about breakfast. Can you remind us how many stores have it today? And the flexible changes, how would you expect that, I guess, to impact that number over time? And then you talked about redeploying those hours into late night. Just any framing for the expectations for franchisees? Is this -- they're open up to midnight now and they still open until 2:00 a.m. going forward? Just any thoughts on strategy-wise, how that helps. Ken Cook: Yes. So breakfast remains an important daypart for the system. The large majority of the system is going to stay in breakfast. We're not pulling out. We're working with franchisees right now to finalize those exact numbers, and we'll share updates as we go along. This is really a common sense decision, taking learnings from the past 6 years that we've been in breakfast plus taking into consideration the current environment. And ultimately, it was the right thing to do. It helps improve franchisee economics. And when they do make changes on the breakfast side, it enables them to start serving lunch earlier and focus their labor on dayparts with the highest potential, lunch, dinner and late night. Late night was actually our best-performing daypart in 2025, and we think we have an opportunity to build on that. Even if you think about it just from a general manager perspective, if that general manager is getting spread throughout the day, if you take some hours off of that morning daypart, it allows them to focus more on dinner and late night. So that's how that will work. We have a right to win in breakfast. If you look at the food that we serve, the Breakfast Baconator, the Burrito, which is my personal favorite, we upgraded our beverage lineup in 2025, hot brew, cold brew and sparkling energy and continue to focus on executing the local playbooks to help those restaurants succeed. In terms of the system-wide sales impact, the -- our estimated impact for breakfast is included in that 4% system optimization number that we provided. And again, we'll provide updates as we continue to work with franchisees and finalize the plans. Operator: The next question comes from Jim Salera of Stephens Inc. James Salera: Ken, I was hoping you could offer some thoughts maybe at a higher level on how your expectations for QSR as a whole is going to progress this year. We've seen the industry pressured, obviously, around traffic and consumer being still very kind of value conscious kind of continuing the trend from last year. Is the LTO framework that you set up this year more of kind of sharpening your elbows to take more of a piece of a smaller pie? Or is it aimed at really driving consumers that may have lapsed from traditional QSR occasions and pulling them back into the category? Ken Cook: Yes. Thanks for the question, Jim. We expect the consumer to remain challenged throughout 2026. So we don't expect any big changes there, which means it does end up being a share gain primarily. So we're really pleased with the way that we've set up the year. So launching this new Biggie Deals platform was important for us. It provides customers value that they can rely on every single day. The way we're talking about it, giving customers more choice, this $4, $6 and $8 price point, $4 Biggie bites attracts customers who are looking for that lower price point and the customers that we've identified who come to Wendy's for more snacking occasions. And then we've intentionally designed the tiers of this to provide more value as you move up that chain. So $4, $6 and then $8, the $8, you get 2 sandwiches, fries and a drink. So full meal, 2 sandwiches, highest quality beef, highest quality food, fresh never frozen beef. So excited about that and a lot of abundance. And we're talking about it. So this is the first time we've advertised our Biggie platform since 2024. We do expect this to improve our worthwhile pay metrics and don't think we need to go deeper to kind of chase the price point below where we've set it now. The other thing that I would say is really refocusing our efforts on the Wendy's quality difference. We'll see that from the operations perspective. If you look at what we're doing, rolling out the action plans from company restaurants to the system. When you look at system optimization and potentially closing 5% to 6% of the worst-performing restaurants in the U.S. that -- all those things are going to improve the customer experience, combined with a new marketing approach that highlights the value or the quality that Wendy's brings to the table, we think that will help us continue to improve comps as we move throughout 2026. Operator: The next question comes from Andrew Charles of TD Cowen. Andrew Charles: The dividend payout ratio is approaching 100% in 2026, at the high end of your target leverage ratio. So I'm curious what levers do you have in plan to sustain the dividend should the sequential U.S. sales improvement not to materialize the slope you expect or more investments required in the turnaround? Ken Cook: Yes, it's a great question. We're committed to the dividend. We have a very balanced capital allocation policy. Priority #1 is investing in the business. We invested $140 million in CapEx in 2025. We'll invest another $120 million to $130 million of CapEx in 2026. We still have a lot of cash on the balance sheet, $340 million, which provides us the flexibility to potentially acquire restaurants under the system optimization pillar if we decide to. And then we have the $100 million -- approximately $100 million of dividend funds to pay out. Still deliver very strong cash flow, $200 million in 2025, $200 million in 2026, and we still have a $300 million revolving credit facility. So feel good about overall liquidity, feel good about the flexibility that we have, and we are focused on executing the Project Fresh turnaround. Operator: The final question today comes from Lauren Silberman of Deutsche Bank. Lauren Silberman: I wanted to go back to the comp side. I know that January is challenging with weather. I'm just trying to understand like underlying trends and what you're assuming as we move through Q1. And then it seems like the guide implies comps of 1% to 2%. So can you just help us understand like the magnitude of the sequential improvement that you expect as we move through the year? Ken Cook: Yes. Thanks, Laura. So yes, it's -- January was a bumpy month. We did see improvements to start the year. So we saw some incremental improvement from where we exited 2025 into 2026. And then we were faced with significant weather disruption. January was down 8%. We do expect Q1 to come in a little bit better than that as we continue to see the benefits from the new Biggie platform as we continue to see the benefits from the new products that we're launching next week. And as we continue to sharpen our messaging that really appeals to our core consumer. In a couple of months, we'll launch a new chicken sandwich lineup that's significant upgrade from where we are today and gives customers an everyday upgrade relative to what's available in the market. We think that will be another boost. And then as all these things work together, all the levers of Project Fresh, system optimization as operational excellence initiatives take hold and our new and improved approach to menu and messaging, we expect sales to continue to improve as we move throughout 2026. Aaron Broholm: That was our last question of the call. Thank you, Ken and Suzie, and thank you, everyone, for joining us this morning. Have a great day.
Operator: Good morning. Welcome to Alithya's Third Quarter of Fiscal 2026 Results Conference Call. I would now like to turn the meeting over to Alithya's management team. Please go ahead. Unknown Executive: Thank you, Sylvie. Good morning, everyone, and thank you for joining us today for Alithya's Third Quarter of Fiscal 2026 Results Conference Call. The press release, along with the MD&A containing condensed financial statements and related note was published this morning and is now accessible on our website. The webcast presentation can also be found on our website in the Investors section. Please be advised that this call will contain forward-looking statements, which are subject to various risks and uncertainties that may cause actual results to differ materially from those anticipated. These statements include our estimates, plans, expectations and statements regarding future growth, operational results, performance and business prospects that do not solely relate to historical facts. These statements may also refer to future events, including expectations around client demand, business opportunities, leveraging our services, IP, AI and expertise to meet clients' needs, exceeding in a competitive market, achieving our 3-year strategic plan and deploying our smart shoring capabilities. For more information, please refer to the cautionary note included in our presentation and the forward-looking statements in Risks and Uncertainties section of our MD&A, which are accessible on our website. All figures discussed on today's call are in Canadian dollars, unless stated otherwise, and we may refer to certain indicators that are non-IFRS measures. Please refer to the cautionary note included in our presentation and to the non-IFRS and other financial measures section of our MD&A for more details. Presenting this morning are Paul Raymond, Alithya's President and Chief Executive Officer; Bernard Dockrill, Chief Operating Officer; and Pierre Blanchette, Chief Financial Officer. I'll now turn the call over to Paul Raymond. Paul? Paul Raymond: Thank you, Dominique. Good morning, everyone, and thank you for joining us today. Before diving into the results, I want to begin by thanking our team for their continued discipline and commitment to our clients' success. Their focus and resilience are core to our ability to deliver mission-critical projects for our clients as we advance our long-term strategy. We remain fully committed to our transformation towards higher-value services, and this shift is underway and continues to be in demand by our clients. While our third quarter faced some headwinds, the team has stayed focused on our long-term goals of enhancing key areas of the business, improving execution and building the foundation for sustained profitable growth. So here are my 3 key takeaways from the quarter. First, the bookings. An important leading indicator, our bookings were over $130 million in Q3 with several key renewals as well as new engagements in strategic areas that include our AI-driven capabilities. This was accomplished while maintaining a healthy pipeline of opportunities and growing our U.S. business. Second, financial discipline. We generated positive net earnings and strong cash flow and maintain a trailing 12-month adjusted EBITDA of $52.6 million. Our adjusted EBITDA to debt ratio now sits at 1.9 as we continue to reduce our debt. Our capital allocation priorities remain focused on long-term value creation for our shareholders, and we continue to execute in alignment with that mindset. And third, our spin-off. We're announcing the signature of an agreement to spin off our equity interest related to the Datum Consulting Group in consideration for a minority stake in a venture, which will be led by Amar Bukkasagaram, Senior Vice President, Data Solutions of Alithya. This strategic partnership will be focused on bringing specialized AI-based solutions to the health care industry. This initiative reflects our assessment that these assets will reach their full potential with a dedicated structure and greater operational focus, enabling them to scale more rapidly and generate stronger returns. We see this as the best path to unlock value while staying aligned with our strategic road map. And with that, I'll now turn it over to Pierre for financial highlights of the quarter, followed by Bernard with an update on operations. Pierre? Pierre Blanchette: Good morning, everyone. I will now address our financial results for the third quarter of fiscal 2026. Consolidated revenue came in at $115.2 million, down $0.6 million or 0.5% on a year-over-year basis. Gross margin as a percentage of revenue reached 31.7% in the quarter, down from 32.3% last year. Let's look at our performance by segment, starting with Canada. Revenues in Canada reached $54 million in the third quarter, down $7.7 million or 12.5% on a year-over-year basis. The decrease in revenues was due primarily to reduced revenues from public sector contracts, certain clients projects reaching maturity, partially offset by revenues from the acquisition of XRM Vision. Our gross margin in Canada as a percentage of revenues increased compared to the same quarter last year, mainly due to a proportionately larger decrease in the use of subcontractor compared to permanent employees, a positive margin contribution from XRM Vision and a reduction in revenues from lower gross margin clients in favor of value offerings, partially offset by a slight decrease in utilization rates. In the U.S., revenues increased by $6.2 million or 12.7% to $55 million. This increase is due to revenues from the acquisition of eVerge and organic growth in Enterprise Transformation Services, partially offset by an unfavorable U.S. dollar exchange rate. Gross margin as a percentage of revenue for our U.S. operations decreased compared to the same quarter last year, primarily due to lower utilization rates, partially offset by the increase of use of smart shoring capabilities and a proportionately larger decrease in the use of subcontractor compared to permanent employees. Last year, it is important to note that our utilization rate was higher due to a larger number of projects reaching their go-live phase. In our International segment, revenues increased by $1 million or 19.2% to $6.2 million. This was primarily due to organic growth in Enterprise Transformation Services and a favorable foreign exchange rate. The gross margin as a percentage of revenue decreased year-over-year, mainly due to one client project coming to maturity, which historically had a higher gross margin. Now looking at SG&A expenses. We are continuing to focus on optimizing our cost structure to ensure greater efficiency and long-term performance. In the third quarter, SG&A totaled $28.5 million, a decrease of $0.3 million or 1% year-over-year. This sets our SG&A as a percentage of revenue at 24.7% for the quarter compared to 24.9% last year. On a sequential basis, SG&A expenses decreased by $2.8 million from $31.3 million, mainly stemming from variable compensation. Looking at our adjusted EBITDA, we are reporting $10 million or 8.7% of revenues in Q3 compared to $10.3 million or 8.9% of revenues last year. This slight drop is due primarily to a decreased gross margin driven by lower revenues, partially offset by decreased SG&A. Net earnings for the third quarter was $0.7 million, an increase of $4.4 million compared to the same period last year. This variance was primarily due to the decreased impairment of goodwill recorded in Q3 last year. To conclude on our profit and loss, our adjusted net earnings came in at $5.1 million or $0.05 per share compared to $5.7 million or $0.06 per share for the same quarter last year. Finally, turning to our cash flow and financial position. Net cash from operating activities was $25.5 million, a year-over-year increase of $13.8 million. This resulted primarily from $17.4 million in favorable changes in noncash working capital items and $7.4 million of other noncash adjustments and net financial expenses. As part of our capital allocation strategy, we pursue our normal course issuer bid, which allows us to purchase our shares under certain conditions set by the TSX. As at December 31, 2025, 347,000 shares were repurchased for cancellation. In connection with the Datum transaction that Paul alluded to earlier, we will be repurchasing close to 2.5 million Class A shares from Amar. The proceeds from this repurchase will be used to fund the working capital needs of Dayton. As at December 31, net debt was $101.9 million compared to $94 million as of March 31, 2025. This is primarily due to an increase in long-term debt related to the acquisition of eVerge, offset by the repayment of $21 million in the third quarter. Our leverage ratio stands at 1.9x net debt over our trailing 12-month adjusted EBITDA compared to 2.3x for the second quarter. We are comfortable with this leverage position. Even with the acquisition of eVerge in June 2025, we were able to reduce our leverage ratio, demonstrating our ability to generate positive cash flow and deleverage following an acquisition. I will now turn things to Bernard for our operational highlights. Bernard Dockrill: Thank you, Pierre, and good morning to everyone with us today. I would like to begin by thanking the Alithya team for their continued commitment to executing on our 3-year strategic priorities. As Peter just shared, the results of these efforts has generated improvements in many of our key metrics in most segments of our operations. Bookings for the quarter were $130.9 million. This translates into a book-to-bill ratio of 1.14 for the quarter and 0.9 on a trailing 12-month basis. The book-to-bill ratio for the quarter is 1.26 when revenues from the 2 long-term contracts signed as part of an acquisition in the first quarter of fiscal year 2022 are excluded and 1.0 on a trailing 12-month basis. Bookings in the Canadian operating segment were $62.1 million, $56.6 million in the U.S. operating segment and $12.2 million in the International segment. New bookings include a $9 million U.S. engagement with University Hospital in Newark, New Jersey, under which Alithya will implement Oracle Cloud, inclusive of ERP, HCM payroll, supply chain and EPM. UHNJ is a public academic health center, which is a first for Alithya in the U.S. public health care space. We also secured additional Oracle Cloud work with a large international organization. Our teams are delivering advisory and project services to drive a global HCM implementation across a highly complex multi-country, multicurrency environment as part of a transformation with multiple integration partners. This win underscores the depth of our expertise and our ability to execute in some of the most challenging settings. Bookings also included over $52 million in renewals as we continue to extend our work within our key long-term accounts, specifically in Canada and international. These renewals span industries in which we have a strong footprint and a proven track record, including financial services and energy. From a pipeline perspective, the volume of new opportunities remains healthy as we continue to drive cross-selling activities focusing on our core industries. We are witnessing positive momentum in commercial and business services from our increased focus in this sector and our recent acquisition of eVerge, which added relevant capabilities, including Salesforce. I'd now like to take you through our performance for the quarter within our 2 key operating segments. Starting with our U.S. segment, where we continue to grow our revenues, achieving 12.7% year-over-year growth as a result of our acquisition of eVerge. Our integration continues to go well, and we delivered our most significant Salesforce project since announcing the acquisition, implementing manufacturing cloud for more than 600 sales users in North America for a global manufacturer. We're also seeing our industry-first model generate positive momentum. Alithya is being called upon as a trusted adviser for complex engagements, where our deep industry expertise, our collaboration with market-leading partners and our proprietary accelerators enable us to create value for our clients. For instance, for a global manufacturer of wax-based products, we successfully migrated their finance and supply chain operations to the cloud, leveraging our proprietary Food Express accelerator from Microsoft D365. The project included the introduction of Copilot and AI agents as well as enhanced business intelligence capabilities. We began with the U.S. deployment and Alithya is now kicking off the implementation in Belgium. Additionally, we continue to see new revenue streams as companies recognize that unlocking the full value of generative AI and agentic AI starts with modernizing and connecting their core systems. One example is our work with Gorilla Glue, where we have led the modernization of their contact center by combining the latest Microsoft technologies with our customer experience capabilities, creating a flexible platform that helps them to adopt Agentic AI and elevate the customer experience. In summary, our U.S. segment now accounts for 48% of our total revenue, up from 39% when we began our current 3-year strategic cycle as we take advantage of the opportunities available in this larger market. Turning to Canada and more specifically the Quebec market. We continue to shift our activities, stepping away from lower-margin contracts that compete primarily on price and redirecting our efforts toward more specialized transformational services where we provide greater value to our clients and differentiate based on our expertise, partnerships, accelerators and leverage our Smart Shore delivery network. During the third quarter, we deepened our collaboration with AWS as we see opportunities to support organizations transitioning to cloud-based solutions. Our successful cloud migration project with Beneva that I've discussed on prior calls is one example of this shift and serves as a launch pad to unlock new opportunities for Alithya. This project is also a great example of how we use Gen AI to increase our productivity and elevate our output quality. Our migration factory offering harnesses AWS AI-powered tools to speed up problem resolution, ensure consistent application structures and accelerate our delivery time lines. Leveraging AI increases our efficiency, differentiates our services and delivers greater value to our clients. As with many transformations, we are experiencing an adjustment period with a shift to more profitable services that is impacting revenue in Canada. This is being partially offset by steady performance outside of Quebec in the nuclear and financial services sectors. We have a strong presence and continue to expand our work with key clients. Although revenue growth in Canada is taking time to materialize, we are seeing positive signs as gross margin as a percentage of revenue improved compared to the same quarter last year. Turning to our Smart Shore operations. We now have 13.9% of our professionals located in our Smart Shore centers, where we have access to top talent with an attractive cost structure. The acquisition of eVerge not only added critical mass in these geographies, it also brought a strong leadership team in India, further strengthening our global execution capabilities. Before turning things to Paul for closing remarks, I would like to highlight our recent recognition from Microsoft Copilot Specialization, validating our expertise across Microsoft 365 Copilot. This achievement reflects our ongoing investment in key partnerships that enable us to deliver complex solutions for our clients and how our teams are driving effective AI adoption across our portfolio. We are encouraged by the momentum we're building, and we remain confident in the resilience of our business over time. Paul? Paul Raymond: Thank you, Bernard. So again, a defining theme of our third quarter was financial discipline. The past period was marked by strong bookings, improved cash flow generation, debt reduction and growth in our U.S. operations. All these strengthen our flexibility to pursue strategic growth opportunities. So we remain focused on creating long-term value and actively pursuing a range of opportunities to drive meaningful outcomes. And among those opportunities is the announcement to spin off certain of our AI-based IP assets, along with the associated support professionals into a new strategic partnership. Before heading into question, I'd also like to comment on the impact of Gen AI in our industry as this seems to be an area of concern for some. The early promise of major efficiency gain hasn't fully materialized for many companies as organizations look to maximize return on their technology investment. They're recognizing that strong foundations, particularly around data quality and security are essential to unlocking the value of AI, and that's where we step in. Alithya is increasingly recognized as a trusted partner for complex digital transformations, particularly those leveraging the latest technologies from our market-leading partners. And this recognition is a direct result of the strategic focus that we put in place several years ago and our continued shift towards services that differentiate us in a global market. We're building a stronger, more focused Alithya, one that competes on differentiated values, trusted advisory and the ability to help our clients leverage AI-enabled mission-critical tools across the organizations. So thank you for your attention. And with that, we'll go to questions. Sylvie? Operator: [Operator Instructions] First, we will hear from Kevin Krishnaratne at Scotiabank. Kevin Krishnaratne: A couple of questions on the U.S. So it looks like after a couple of quarters of pretty decent organic growth there, it kind of came in softer this quarter. I know in your press release, you talked about a slower 3Q versus last year. Can you just click into what's going on there? Was there some deals that are getting pushed out? Are you following industry trends? Anything on the competitive front? Just curious because you did have some good momentum heading into this quarter and then it kind of got a little bit softer this quarter. Paul Raymond: Yes, sure. Thank you for the question, Kevin. And very, very simple answer. Last year, if you remember, we had a record number of go-lives in January. Basically, when people roll out ERP systems, very often, the go-live date is January 1 because it's beginning of the calendar year and fiscal year. So we had a record number of go-lives in Q4 last year, January. So basically, leading up to that, that means a lot of work in Q3. So many of our people work through the holidays. And so utilization was significantly higher last year. So without that kind of we're able to come out at about the same level in terms of revenue. So the issue was more timing, right? So just difference in timing on project deliveries impacted utilization in Q3, which meant that revenues are down a bit. But again, we're not concerned. We believe it's a timing issue. Kevin Krishnaratne: Okay. On -- maybe switching to the M&A on your eVerge performance, it looked like relative to Q2, there was a step down there, $7 million this quarter, $8.6 million in the previous quarter. Is that typical of that business? What was happening there? I would have thought that you would have seen a bit of a pickup sequentially. Paul Raymond: I'll let Bernard comment on that one, but we're not seeing -- maybe, Bernard, do you want to add. Bernard Dockrill: Nothing specific to highlight there. The type of work we're doing there with eVerge is projects, it's Oracle implementation, Salesforce implementations. But nothing to highlight that happened in Q3. As I mentioned in my comments, we're really happy with the integration. We're seeing some very strong capabilities. One of our strategies in our 3-year plan was to diversify some of our Oracle capabilities into other industries, and they have done that. I mentioned commercial and business services really and more specifically construction and engineering. Some of the capabilities they had and some investments we've made are generating very positive results. So all in all, the eVerge integration is going -- and delivering to our expectations. Paul Raymond: Maybe just to add on that, one of the reasons why eVerge was very interesting was just to what Bernard was saying. One of the industries that we're seeing as growing significantly that will not be displaced by AI is engineering. The infrastructure replacement globally is drawing a lot of investments as countries are trying to replace aging infrastructure and build new infrastructure. And we're now positioned very well in that industry for these large engineering and construction firms. Kevin Krishnaratne: Got it. Good to hear. So maybe just the last one for me, just on the Datum transaction. I know it's less than 5% of revenue, but can you give us any parameters on that? What was the revenue growth, the gross margin and EBITDA margin profile on that asset? Paul Raymond: Sure. So Datum, we acquired back several years ago, was very good for us from a revenue and margin perspective for several years. What we're seeing is that we were developing many IP assets and underleveraging them. We're a services company first. So we use AI accelerators to help us provide our services better, faster, more efficiently. But some of these assets, we believe, have a lot of potential value in a more of a software-focused structured organization, like many of the start-ups that we're seeing that are focused on AI products. And we think there's more value for us to spin that off in that context and to be part of that. So this is new for us. It's the first. We'll see how it goes, but we think that was the best way that -- we think we were stifling growth of that company within the organization. So we see this as an opportunity for growth. Kevin Krishnaratne: Got it. To be clear, so like very high gross margin -- is it like a software margin? Or what did it kind of look like at least from a gross margin perspective? Paul Raymond: We didn't share that, Kevin. We haven't shared that information. But yes, very good gross margins. Operator: Next question will be from Jerome Dubreuil at Desjardins Capital Markets. Jerome Dubreuil: First, thanks for the update on AI. Good to see that's still on track despite what we're seeing in the public markets. I want to focus a bit on Canada. I want to know where we are in terms of your migration to the focus on higher value. What inning are we in? Are we kind of second inning there? Are we mostly through it? I know there's challenges with some of the government levels as well. If you can just comment on that to help us understand where -- when the tides can turn. Bernard Dockrill: Thanks for the question. And yes, it remains focused as part of our 3-year strategy here is to change the profile of our work, specifically in Quebec. And these are -- some of these especially government contracts were longer-term contracts. So as they come up for renewals, our strategy is to approach them differently and make sure they have a margin profile that's acceptable to us. So it's not an exact science of does it go away? Does it renew on that. So I'd say we're kind of in the middle of the process here. I'm happy with the results we're seeing on the gross margin side as we're really more focused. The other thing is the ramp-up of the -- as we transition and shift to some of the higher-value work, landing these projects and then ramping the skill sets up takes a little bit of time as well. So even as we land the new projects, it's a quarter or 2 before they take impact on the results. But overall, I think we're executing to our strategy. I'd say we're somewhere in the middle of kind of where we started and progressing to what we had set forth in our 3-year plan. Operator: Next question will be from Gavin Fairweather at ATB Cormark. Gavin Fairweather: Maybe just to close the loop on Datum. Can you elaborate on the minority stake that you've retained in that business and talk about the size of that and also talk about how you came up with the -- presumably the cash amount that you're going to receive on the close of that acquisition, how you value that business? Paul Raymond: It's a minority stake, Gavin. It's under 25%. Gavin Fairweather: Okay. And presumably you're receiving cash for that sale? Pierre Blanchette: Can you repeat the question, please? Gavin Fairweather: Presumably, you're receiving cash for this -- I don't think I saw it in the press release. Can you talk about the -- how you value the business and the cash that you're going to receive? Paul Raymond: We're not receiving cash, Gavin. This is -- we're contributing some of our assets to that new company. And in exchange for that, we're getting just under 25% of the equity. Gavin Fairweather: I see. Okay. Maybe for Bernard. Paul Raymond: And sorry, and as part of that, we're also purchasing 2.5-ish million shares from Amar are going to be used to -- as the -- for cash for the company to operate. Gavin Fairweather: And then on that [indiscernible] Holdings, are there other assets in that company? Or is that just to hold that? Paul Raymond: Correct. Yes, there are other assets in that company and other partners as well. Gavin Fairweather: I see. Paul Raymond: And as -- when everything is finalized, that's going to be made public. It's just we're not completely finalized yet. Gavin Fairweather: I see. Okay. That's helpful. And then maybe for Bernard, can you just discuss kind of -- you did talk about U.S. utilization in the quarter and some of the puts and takes there. But maybe just looking forward into your Q4 and Q1, how are you thinking about utilization? Do you see kind of demand and billings coming back given recent bookings? Or are you thinking about doing some work on capacity to improve utilization there? Bernard Dockrill: Gavin, thanks for the question. And as you know, we don't provide guidance looking forward on that. The utilization, as Paul mentioned, in Q3, we had a really hot December last year and January with those go-lives. And it's also a typical vacation period. So if you think in Q3 of fiscal '25, our folks were not on building, they weren't taking a vacation. So that kind of a double whammy that we hit in this quarter with fewer go-lives at this time. We were kind of more in a normalized state for that. But that was really the impact that you saw this quarter. Operator: Next question will be from Vincent Colicchio at Barrington Research. Vincent Colicchio: Yes. Paul, I'm curious, how are bookings trending in early Q4? Paul Raymond: Vince, thanks for the question. Again, we're not providing guidance. All I can say is that we have a strong funnel. We've mentioned in the past that things are taking longer from a cycle. But as you saw from Q3, we had very strong bookings. And a lot of those were annual renewals as well. So we have clients where we know we're going to have work for the next year. So I think there's -- I keep coming back to this, but I think the concern about AI replacing our business are understandable, but I think it's oversimplified. If I look at AI, it's eliminating tasks, not outcomes, right? It automates research, drafting, analysis, some coding. But clients don't hire us for that. They hire us for accountability for owning complex transformations, end-to-end, integrating AI into mission-critical systems, managing risk, security, regulatory stuff change. So that doesn't disappear. That accountability doesn't disappear with AI. It actually becomes more valuable. So we like the bookings that we had in Q3. We like our funnel, the opportunities that we have, and we love the business that we're in. Vincent Colicchio: So -- are you -- on the labor side for AI skill sets, are you seeing any challenges in terms of meeting demand? Paul Raymond: Not so far. Actually, if anything, AI is reducing labor, right? So I think many organizations are still experimenting with AI -- very few are successful at really scaling it in a way that delivers real financial impact. But when you look at what we do, like coding now, a person can do 10x what they used to do. And instead of coding, it's reviewing code and validating that it's okay, doing integration work, analysis work. So all these things, I think our people are becoming more productive, which means we need less people. We just need different folks, but we're spending a lot of time on training and developing our folks to be able to use those tools, like Bernard mentioned, our new certification from Microsoft on Copilot. I mean, we're leading the pack there. So we like the position we're in. Vincent Colicchio: And last question. Could you update us on your acquisition priorities and what your pipeline looks like? Paul Raymond: Pipeline is still very healthy. As you saw from Pierre's presentation, we've shown that we can leverage up, use our cash and leverage down real fast after. So we completed 2 acquisitions last year. They've been paid off. Our debt is below where it was. So we're under 2x EBITDA from our debt ratio. So we're in a great position to execute on that. But no, we like our position. Operator: [Operator Instructions] Next, we will hear from Rob Goff at Ventum. Rob Goff: So I understand where Q3 of '25 was like a blowout quarter like a really, really tough comparison for you. How would you describe Q4 of '25? So in terms of looking forward, should we be considering that Q4 '25 was equally difficult as a benchmark or a bogey? Bernard Dockrill: Yes. So thanks for the question, Rob, it's a good pickup there. As I mentioned, the go-lives, they went live January 1. Of course, these projects go into a hypercare state after they go-live. So some of that effect that you saw in Q3, naturally -- it's a bit of a headwind there as we look at Q4 fiscal '25. Paul Raymond: It's a tough comparison, especially with the go-lives, you always recognize the contingencies because we delivered the projects on time, on budget. So you reverse contingencies, those all hit as a positive hits on the P&L. So yes, it was a good quarter last year. Very good quarter last year. Rob Goff: Very good. In terms of things outside of the backlog, can you talk about the health of your pipeline or any proof of concepts? Bernard Dockrill: Thanks, Robert. As I mentioned in the script there, I think we're seeing new opportunities come into the pipeline that are aligned to the strategic vision that we have of higher-value transformational projects. So we're happy with what we're seeing there. The backlog has stayed at relatively consistent at 14 months there. So we're really -- that is leading us to where we are, but the pipeline of new opportunities is executing as we expected. Operator: Ladies and gentlemen, at this time, we have no other questions registered, which concludes our conference call for today. We would like to thank you for attending and ask that you please disconnect your lines. Have a good weekend.
Operator: Good morning, and welcome to Grupo Rotoplas' Results Conference Call. Please note that today's call is being recorded. [Operator Instructions] Today's discussion contains forward-looking statements. These statements are based on the environment as we currently see it, and as such, there may be certain risks and uncertainty associated with such statements. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, further events or otherwise. Please allow me to remind you that the company issued its earnings press release yesterday after market close. It can be found in the Investors section of its website. Also, the presentation for the call and the webcast link are in the Investors section. Today's call will be hosted by Mr. Carlos Rojas Aboumrad, Chief Executive Officer; and Mr. Andres Pliego, Chief Financial Officer. I will now turn the call over to the speakers. Carlos Rojas Aboumrad: Good morning, everyone. Thank you for joining us today. During 2025, we remained committed to what has always defined Rotoplas. Creating solutions that solve real water challenges and make a meaningful difference in people's lives. At the same time, this was a year where we stayed focused on efficiency, discipline, and execution across the business. During the year, we navigated a challenging operating environment, particularly in Argentina and in Mexico. In Argentina, market conditions remained depressed, while in Mexico, we faced strong rainfall and softer construction activity, alongside continued regional volatility. Yet, the fourth quarter showed resilient sales, improved profitability, and a stronger performance overall. Revenue stabilized, margins expanded, and we exited the year with better momentum than we had entering it. That discretionary improvement is important because it did not depend on a macro recovery. It came from structural changes in how we run the business. Throughout the year, we made a deliberate choice to focus on what we control, strengthening our operating model, improving efficiency, and allocating capital toward businesses that generate higher quality and more predictable returns. I'll walk you through the progress -- through that progress using the evolution of our four strategic pillars that we presented in December, because this framework explains how we are reshaping the company and why we are confident about the trajectory we're seeing. The first pillar is profitable growth and core expansion. Here, the focus was straightforward: reinforce the foundation of the business and make it structurally more efficient. For example, during the quarter across Mexico and Central America, we focused on gaining share through more targeted commercial strategies and region-specific pricing, while strengthening execution and maintaining strict cost control. We simplified processes, reduced operational complexity, and aligned our organizational structure with current demand and dynamics. The objective was not to do more, but to do better. At the same time, we continued developing better solutions centered on the end user, always prioritizing quality of life and ensuring that our products directly improve the daily experience of people. A good example of this approach is Peru, where we advanced our blow moulding capabilities. By modernizing production technology and improving plant efficiency, we lowered unit costs and enhanced our ability to differentiate in the market. Over time, this has created a leaner and more productive organization. The business today operates with greater focus on consistency, and that is showing in stronger commercial execution and better performance in our core markets, particularly as we moved through the second half of the year. The core is healthier, more agile, and generates the cash flow that supports the rest of the portfolio. That operating discipline gives us flexibility regardless of market conditions. The second pillar, water innovation and market disruption, is where a great transformation is taking place. We are steadily evolving from being primarily product manufacturing -- manufacturer into a solutions and services company, with recurring relationships and greater revenue visibility. This shift is strategic because services, while improving customer experience, they reduce cyclicality and improve the quality of our earnings. More importantly, these solutions are designed around the customer journey, helping us understand adoption, retention, and long-term needs, so we can create better businesses by staying closer to the customer. During the year, our services platform continued to gain scale and operational maturity. bebbia closed the year with more than 168,000 subscribers, strengthening its position in the residential segment. Through bebbia, we're not only providing purified water, but also improving the overall customer experience by simplifying access, eliminating the need for single-use plastic and uncomfortable water jugs, and making safe water more convenient and reliable for families. Also, the business improved in its economy, reflecting better efficiency and operating leverage as the platform scales. This confirms that the model is not only growing, but doing so in a disciplined way. At the same time, RSA continued to build momentum in water treatment and recycling. The business delivered strong growth in the quarter and is increasingly supported by recurring maintenance and long-term service contracts. That creates deeper customer relationships and much better visibility compared to one-off project work. These solutions also help our customers reduce their environmental impact, comply with regulations, and operate more efficiently while addressing water scarcity through the treatment and reuse. In doing so, not only strengthen our business, but it also create measurable positive impact in the communities we serve. Together, bebbia and RSA are shifting our mix towards recurring revenues and more stable cash flows. That is why we continue directing a growing share of our investment towards these platforms. The third pillar is tech and talent enablement. We view technology as an operational capability, not a support function. Through the year, we embedded digital tools and AI directly into day-to-day workflows across sales, planning, service, and finance. These initiatives are helping us remove friction, automate repetitive tasks, and improve the speed and quality of decisions. In parallel, we invested heavily in our people, training more than 1,500 employees and delivering close to 5,000 hours of targeted upskilling in digital analytics and operational capabilities to ensure our teams can fully leverage these tools in their daily work. We believe our collaborators are our greatest asset, and we are committed to preparing them for the future by continuously developing their skills and creating an environment where they can grow alongside the company. In parallel, we continue evolving our talent base toward more specialized and analytical roles. The objective is to create an organization that can scale without adding complexity or fixed costs. What we see today is a company that is more data-driven, faster in execution, and structurally more productive. These capabilities are becoming a competitive advantage because they allow us to grow efficiently and respond quickly to changing conditions. Our fourth pillar is sustainability and efficiency through capabilities. For us, sustainability is not a separate program or a reporting exercise. It is embedded in how we operate. The same actions that improve efficiency also reduce environmental impact. When we optimize logistics, we lower emissions. When we digitize processes, we reduce waste. When we use resources more intelligently, we improve both cost and footprint. At the core of this approach is our commitment to creating solutions that solve water challenges, help customers operate more sustainably, and ultimately improve lives through better access, treatment, and the use of water. This approach is already translating into measurable outcomes. During the year, we reduced Scope 1 and Scope 2 carbon intensity by 26% and lowered absolute water consumption by 6%, reflecting the operational efficiencies we're building in our plants and our processes. Also, if you join our water, our AGUA Day, you know that we launched our AGUA strategy. This new strategy strengthens standards across our operations and supply chain and deepens engagement with customers and communities. The important point is cultural. Sustainability is part of everyday decision-making. That positions us to remain relevant and trusted over the long term as expectations from regulators, customers, and investors continue to evolve. We can look, especially at the fourth quarter, we see our four pillars coming together. The external environment did not change materially, yet performance improved across several parts of our business. Execution was sharper, services gained traction, and the organization operated with greater discipline. That combination translated into better results and confirms that the improvements we are seeing are structural. As we close the year, Rotoplas is more focused, more efficient, and increasingly service-oriented company. We strengthen the foundation first, and that positions us to convert the future into profitability much more effectively. Thank you for your continued trust. I will now turn it over to Andres to walk you through the financial results. Andres Pliego: Thank you, Charlie. Good morning, everyone. Let me walk you through the P&L for the quarter, and then I will briefly touch on regional and solutions performance before moving to the balance sheet. Starting with revenues, as Charlie mentioned, we returned to positive top-line growth, driven primarily by recovery in product sales in Mexico and a strong momentum in our services platform. This performance helped partially offset the challenging macro environment in Argentina. During the quarter, services revenue grew 83% year-over-year, while product sales declined 3%. It's important to highlight that excluding Argentina, product sales would have grown 13%, reflecting a solid performance in the U.S., Peru, and Central America, even in the context of a stronger peso, as well as a gradual recovery in Mexico during the fourth quarter. Given the uncertainty and volatility across the region, our focus has remained firmly on variables we can control, particularly cost discipline, expense management, and cash flow generation. Our operating mindset continues to be centered on operational discipline and doing more with less. On costs and expenses during 2025, we executed a strategic workforce restructuring aimed at increasing productivity per employee. This process was supported by training initiatives and the integration of AI-enabled tools, allowing us to evolve our operating model towards more specialized and higher-value profiles. At the gross margin level, the fourth quarter margin does not yet reflect the full benefits of these initiatives. This is mainly due to the impact of MXN 101 million from hyperinflation accounting in Argentina, which resulted in a non-cash increase in cost of sales, driven by the measurement of beginning inventory. Where the impact of our efficiency initiatives is most evident is in SG&A. Operating expenses declined meaningfully. As a percentage of sales, they went from 38% to 33%, reflecting tighter cost control and stronger execution. The main efficiency drivers included: marketing optimizations with improved segmentations and higher return on investment across campaigns, the implementation of a formal budget control framework, requirement structured review, and approval for incremental spending, strict control of travel expenses, prioritizing only business-critical travel, optimization of digital software-related expenses, including better contract management and allocations of IT costs. Overall, operating expenses remain under strict control, resulting in a leaner and more sustainable cost structure that positions us well to expand margins as market conditions improve. At the same time, we continue to strengthen our operational base while selectively building new capabilities to support long-term growth. As a result of this discipline, we achieved a significant year-over-year increase in quarterly EBITDA. More importantly, we closed the full year with a 1% increase EBITDA, despite a 1% decline in sales, underscoring the resilience of our operating model. Finally, at the net income level, financial expense declined 60% year-over-year in the quarter, mainly due to the positive effect of hyperinflation accounting in Argentina. As a result, we reported a net income of MXN 91 million for the quarter, compared to a loss in the fourth quarter of 2024. Let me provide more color by region. Mexico, which represents 59% of group sales, delivered a recovery in product volumes during the quarter. This was supported by a more competitive regional commercial strategy designed to strengthen our market positioning in a challenging demand environment. The strategy focused on gaining greater regional competitiveness, complemented by seasonal promotional campaigns, including Ofertas Azules in November, which helped accelerate volumes. Importantly, this pricing and promotional strategy was executed without sacrificing margins. Moving to Argentina, the country represents 17% of total revenues, and demand remains very weak, with inflation dynamics continuing to pressure margins as price pass-through remains limited. In this context, the company prioritized cash discipline over growth, ensuring sustainability of operation through internal generated cash. Throughout the year, we implemented productivity improvements, zero-based budgeting, and workforce restructuring. However, persistently weak demand limited recovery, resulting in a negative EBITDA for the year. Additionally, in accordance with IFRS 29, we recorded a non-cash hyperinflation accounting adjustment in the fourth quarter that reduced EBITDA by MXN 75 million, driven mainly by inventory remeasurement. This adjustment has no impact on cash flow or operational cash generation. In the United States, which represents 10% of sales, quarterly revenues were almost flat in Mexican pesos, but increased 9% year-over-year in U.S. dollars, driven by stronger performance in the municipal and chemical verticals. EBITDA was positive for the third consecutive quarter, supported by SG&A productivity initiatives and continued gross margin expansion. On a full year basis, EBITDA was positive, reflecting a sustained turnaround driven by operational productivity and improved inventory management across branches. In our other markets, Peru, Central America, and Brazil, which together represent 13% of group revenues, we delivered a double-digit growth and margins improvement, underscoring the strengthening of our diverse portfolio. We continue advancing these markets with steady, disciplined, and profitable execution. Turning to segment performance, we have already covered products, so I will focus on services. The services segment represented 15% of quarterly sales and continued to deliver double-digit growth, with a clear acceleration in the fourth quarter, mainly driven by water treatment and recycling projects in Mexico. This acceleration was largely supported by year-end budget executions across corporate customers. Within services, bebbia continued to scale, adding 9,000 net subscribers during the quarter, reflecting a sustained demand and improving unit economics. During the year, we completed the migration of our full technology platform, including e-commerce, field services, and CRM systems. We also rolled out new functionalities to enhance the customer experience, such as online appointment scheduling and real-time technician tracking, strengthening service levels and operational efficiency. In Brazil, our water treatment operations maintained solid momentum. Quarterly services EBITDA was positive, with a 5% margin, reflecting continued improvements in unit economics, mainly across bebbia and wastewater treatment plants. As a result, the full-year EBITDA margin improved from negative 38% in 2024 to negative 8% in 2025. Still negative, but we're clearly on the path toward profitability. Overall, the segment made tangible progress, supported by scale and improved operational efficiency. Moving to the balance sheet, financial discipline and cash flow generation remained key priorities for the company. Ongoing cost control and working capital discipline strengthened our balance sheet during the year, resulting in a 9% reduction in net financial debt and a 23-day improvement in cash conversion cycle. As a result, net financial debt to EBITDA improved from 3x to 2.7x year-over-year. This performance was supported by a reduction in debt, tight cash management, more efficient working capital practices, and a selective approach to strategic CapEx. Operating cash flow increased 81% year-over-year, reflecting stronger execution and disciplined expense management. From a liquidity perspective, our cash position increased 18%, reinforcing our focus on maintaining a sound and flexible financial profile. Total financial debt closed the year at MXN 4.5 billion, a 5% decrease versus December 2024. This includes MXN 463 million in short-term debt, mainly related to working capital needs, and approximately MXN 4 billion in long-term debt corresponding to our fixed-rate sustainable bond. Finally, the blended cost of debt remained stable at 8.6%. Capital expenditures represented 4% of annual sales, reflecting a 25% year-over-year reduction consistent with our focus on capital discipline. Investment during the year was highly selective and primarily allocated to services platform in Mexico, mainly supporting the development of water treatment plants and the acquisition of bebbia systems. Our capital allocation approach remains anchored in strengthening the businesses while preserving flexibility. Within services, most investments are tied to secure contracts or committed customers, which allow us to redeploy capital with clear visibility and disciplined return thresholds. Let me briefly review how we closed our 2025 ESG targets. Overall, we met or exceeded two targets, two closely broadly in line, and two finished below our original ambition. We achieved or surpassed our goals on people with access to sanitation and CO2 intensity, Scope 1 and Scope 2 per tonne of processed resin. We're particularly proud of our emissions performance, driven by renewable energy sourcing, manufacturing efficiency initiatives, and the transition to new storage production technologies, which resulted in a 26% reduction year-over-year and a 32% reduction versus our 2021 intensity baseline. Our customer experience, we closed the year with an NPS of 81 in products and 60 in services, resulting in a weighted average of 79, while 98% of Tier 1 suppliers were assessed on sustainability criteria. We fell short on female representation in the workforce and cubic meters of purified water, which remain focus areas as we move into the next strategic cycle. Looking ahead, as Charlie mentioned, the AGUA strategy marks the next phase of our sustainability agenda, building on past progress and providing the framework to define priorities, set targets, and report progress going forward. To highlight a few milestones in the fourth quarter. In fourth quarter 2025, Rotoplas achieved an A rating in CDP Climate Change, placing us among a very small group of companies in Mexico and globally. We also expanded sustainability training for distributors in Peru, strengthening community access to water in Mexico through our Rotogotas de Ayuda program, and closed the year with more than 1,000 IoT-enabled rainwater harvesting systems installed in schools through Escuelas con Agua. This program, a partnership with the Coca-Cola Foundation and other organizations, now benefits more than 330,000 students. Before moving to Q&A, I would like to reiterate that we remain focused on what is within our control, guided by a clear, do more with less operating mindset. Despite the challenging external environment, fourth quarter performance showed sequential improvement, allowing us to close the year with higher EBITDA, alongside with a stronger leverage ratio and an improved cash position. Looking ahead, we continue to operate with the same level of financial discipline, reinforcing a solid foundation that supports sustainable growth and margin improvement over time, while maintaining a prudent leverage profile. Thanks once again for your time and interest. We're now happy to take your questions. Mariana Fernandez: Thank you, Andres, and thank you, Charlie. We have a couple of questions already. The first one from Orlando Alcantara, who also has a couple more, but I'll read the first one first. He says, Hi, Rotoplas team. Congrats on the results. My first question goes on the side of Mexico. We could observe substantial acceleration in the product segment on this quarter, breaking the negative growth we observed through the year. I imagine some strategies have been implemented to achieve this milestone. Can you elaborate more on this? Carlos Rojas Aboumrad: Hi, Orlando. Hey, thanks for joining. Yes, there -- definitely some strategies have been implemented. We've evolved both the attractiveness of our offer and we've also evolved our pricing strategies. We're able to do pricing in a more specific way regionally. And so we did see both improvement because of pricing and because of volume, but volume not necessarily because market growing. And it was more generated by us. Anything else, Andres? Andres Pliego: No. Mariana Fernandez: Okay, so I'll move to the second question from Orlando. My second question goes on the surprisingly breakeven of the service segment, observing the first positive EBITDA margin since 4Q '20. Should we consider this milestone in our model as a structural shift for the following quarters and years? What was done exactly to structurally shift OpEx and COGS this quarter? Carlos Rojas Aboumrad: Yes. So thanks also for that question, Orlando. As you know, we've been working for a long time on the services segment. It's a segment that we started from the ground up. It required a lot of investment, and it's gotten to that point where it's breakeven now. I think the trend was fairly clear. We will continue to prioritize, to some extent, growth of the services business. So, we expect for the services segment to stay very close to breakeven going forward. And as we grow this segment as much as we can, the opportunities are for us to take, and so we will make our best effort to take as much of it as possible. Anything else, Andres? Andres Pliego: Sure. Just probably add that, the strict cost and SG&A control that we have implemented has definitely benefit these two, well, wastewater treatment and bebbia, mainly. So that was a significant push for them to reach profitability, and that will stay, right? So, those economies of scale start to be noticeable as we continue to grow. So that's structurally for sure. Thank you, Orlando, for your question. Mariana Fernandez: I'll move to the third and final question from Orlando. He asks, I observed some efficiency at the working capital level, especially on inventories for Argentina. Is something internally being done to soften macro uncertainty? Andres Pliego: So thank you, Orlando. Inventories in Argentina were pretty high starting in 2025, so we did make a push to -- well, let me go back a second. So the main purpose for Argentina last year was for them to be cash flow neutral in for the year, right? So we prioritized the cash that they generated with their own resources. So they had a tough year because they had to basically be cash flow neutral with their own operations. And that had to be done mostly with working capital. So they made a lot of efficiencies in inventories. So they tried to reduce inventory significantly, reduce accounts receivable, and improve the accounts payable. So, there were significant changes in those three lines of the balance sheet. That also happened in Mexico and other regions. In Mexico, we also were very efficient with inventories and very efficient with accounts receivable. So it was an additional effort this year to be very well or very lean in terms of working capital. I don't know, Charlie, if you want to add anything. Carlos Rojas Aboumrad: No. Mariana Fernandez: Very good. So we'll move to the next one. Regina Carrillo from GBM. She has two questions, so I'll read the first one. 4Q showed positive EBITDA in services. Can we expect full year 2026 services EBITDA to return to positive? Carlos Rojas Aboumrad: Yes. Hi, Regina. Thanks for joining, and thanks for your question. As I mentioned, we do expect services to continue to be at the breakeven level, as we will grow as much as we can, but we will do so while having the EBITDA of services as close as possible to breakeven. Mariana Fernandez: And I'll read the second one. So after three consecutive positive quarters on EBITDA in the U.S., what do you think would be the long-term EBITDA margin target for this business? Carlos Rojas Aboumrad: The long-term EBITDA margin is very different from what we will have this year. This year, we expect it to be at similar levels we have today. So very, very slightly above breakeven. But we are developing a business for you know, generating closer to 15% EBITDA margins in the long-term future. We're identifying other opportunities that can drive that margin even further up. But the expected margin that, at least for this business, is 15%, going forward, long term, right? At the moment, we're focusing similar to other new businesses, which is mainly services. We're focusing on growth. Andres, anything else that you'd like to share? Andres Pliego: No, thank you, Regina, for your questions. Mariana Fernandez: I'm sorry. We'll move to the next one from Felix Garcia, from Apalache Research. Hi, thank you very much for taking my questions. Just two from my side. First, looking ahead to 2026, what would you say are your top priorities? Growth, margins or cash generation? Carlos Rojas Aboumrad: Hey, thanks for your participation and question, Felix. You asked a really tough one. It's a bit of a balancing act. I think we need to have always our purpose in mind of, you know, having the biggest impact we can with providing more and better water for people. This requires growth, but the macroeconomic situation also requires us to focus very much on strengthening our balance sheet. So cash is incredibly important at the moment. We are focusing on bringing net debt to EBITDA to levels below 2x net debt to EBITDA ratio. As long as we can do that, the priority is always growth and the highest possible impact we can have. Andres, what's your.... Andres Pliego: Well, I completely agree. Probably just to add that different businesses are in different stages, you know? So, as Charlie has mentioned, for services and bebbia in particular, the idea is more on growth and, as opposed to the products businesses, which will be more on margins, for example. But overall, I agree with Charlie. I guess the short-term objective is cash generation, reduce leverage, and so we will work towards a balancing act, as Charlie mentioned. Mariana Fernandez: Thank you. We'll move to Felix's second question, and he asked, regarding bebbia, how are you balancing commercial expansion with user quality and profitability per subscriber? Carlos Rojas Aboumrad: Yes, so regarding bebbia, the time is much larger than what we're currently serving, so the opportunity is still very large. We are not in a position where we need to sacrifice subscriber quality. What's very important is that we focus on the promise that we make to our customers, for them to have a great experience and to have the best quality of water. And so as long as we can focus on being able to deliver on that with an increasing amount of subscribers, the amount of subscribers we can get is still very, very high, and this is only the Mexican market. So we're not yet concerned with any challenges in growing bebbia in terms of having to sacrifice on the quality of the business for growth. Andres? Mariana Fernandez: Perfect. So we'll move to the next one from David Seaman from Alpha Cygni. Hi, can you elaborate on your plans to take bebbia to additional markets? Carlos Rojas Aboumrad: Hey, David. Thanks for joining. Yes, so again, the market size in Mexico is still very large, the total addressable market, and so we're still focusing on Mexico. We are looking at other markets, to start planting seeds, but the focus really has to be on developing the platform. The platform, there's more and more tools available to make sure that we can have, offer a great experience to customers in a much bigger amount of customers and geographical locations. So the focus still is on developing the platform. Andres, anything else? Andres Pliego: Thank you, David. Mariana Fernandez: So we'll move to Rodrigo Salazar's question from AM Advisory. His question is related to services. You already mentioned that growth was driven by water treatment plants, but could you help us understand what specifically changed in the quarter? Was it a significantly higher number of units added, the signing of a few unusually large contracts or something more structural in the business? And should we view this level of sales and EBITDA as a sustainable going forward or was there any one-time effect that boosted performance in the quarter? Carlos Rojas Aboumrad: Thank you, Rodrigo, for joining. Regarding the stability, water treatment plants is a fairly stable business. It has recurring revenues. There are sometimes projects that may bring some variability from quarter-to-quarter, but not from year-to-year. Then water treatment plants that supported this number were many different water treatment plants. So it wasn't one big one, and that it's a one-off. We are increasing our revenues by servicing new segments. And that will continue as we continue to understand better this business, we're identifying better opportunities. Now, we did mention that a big impact was from growth in water plants -- water treatment plants, but we did see also growth, significant growth in bebbia, no? Andres, is there anything else that you'd like to share? Andres Pliego: Yes, probably just adding that, no, no particular one-offs, no. So it's, it takes more time to close contracts, so I guess the push towards the end of the year was significant. But we do see these levels to continue, no? I mean, adding to what Charlie is saying, so nothing in particular. Carlos Rojas Aboumrad: Also, just taking on what Andres had mentioned earlier, there were significant improvements in our expenses in this business, which is structured. Mariana Fernandez: Thank you both. The next question comes from Martin Lara from Miranda Global Research. Good morning. Thank you for the call, and congratulations on these results. Could you please provide the CapEx guidance for 2026 as a percentage of sales? Andres Pliego: So thank you, Martin. So the CapEx guideline will be very similar to what we did in 2025. We will continue to be very strict, very return-oriented -- cash-on-cash return-oriented. And also focusing on the sort of, how we call it, the pay-as-you-grow CapEx, which is mostly services, right? Which is mostly bebbia and water treatment plants. So in terms of guidance as percentage of sales, it should be fairly similar, I would say. No non-material changes for this year. So we will continue to invest in the business, to do our maintenance CapEx, and to do the growth CapEx for the services business. So nothing in particular for the change as percentage of revenues. Mariana Fernandez: Perfect. So we'll wait a couple of seconds to see if we have another question. So, this is a comment about the Rotogotas de Ayuda. I congratulate you on continuing to implement the program and all those involved who make it possible. bebbia, the increase in users is good news, and now the challenge is not only to increase it, but to keep them with a quality service, which we will evidently be doing so. RSA, I've noticed you continue to grow in your goals. I congratulate you. So I don't know if you want to make a comment on the Rotogotas de Ayuda or something else. Carlos Rojas Aboumrad: Thanks for recognizing that. It's a tremendous initiative. We're very proud of it because what we're developing, and it's becoming more clear that it's feasible, is that as we help more our communities, that generates demand. Customers show commitment to Rotoplas because of, obviously, the quality of our offer, but also because of our commitment to our communities. And so it's a value-generating group where we support communities, and customers support us, and that continues happening. So thanks for the recognition. Mariana Fernandez: Yes. Thank you very much for your comments and your questions. Andres and Charlie, I don't know if you want to say something else before we close the call, we finish the call? Andres Pliego: Thanks for your support. Thanks for joining. I'll see you guys in a couple of months. Mariana Fernandez: Thank you. See you soon, and you may now disconnect.
Operator: Thank you for standing by. This is the conference operator. Welcome to the IGM Financial Fourth Quarter 2025 Analyst Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions]. I would now like to turn the conference over to Kyle Martens, Senior Vice President, Corporate Development and Investor Relations. Please go ahead. Kyle Martens: Thank you, Rocco. Good morning, everyone, and thank you for joining us. On the call today, we have James O'Sullivan, President and CEO of IGM Financial; Damon Murchison, President and CEO of IG Wealth Management; Luke Gould, President and CEO of Mackenzie Investments; and Keith Potter, Executive Vice President and CFO of IGM Financial. Before we get started, I would like to draw your attention to our cautions concerning forward-looking statements on Slide 3 of the presentation. Slides 4 and 5 summarize non-IFRS financial measures and other financial measures used in this presentation. On Slide 6, we provide a list of documents that are available on our website related to IGM Financial's fourth quarter and fiscal 2025 results. And with that, we'll take us to Slide 9, where I'll turn it over to James. James O'Sullivan: All right. Thank you, Kyle, and good morning, everyone. 2025 was clearly a strong year for IGM Financial. Growth in client assets across our compelling lineup of wealth and asset management businesses, including in our core businesses of IG Wealth and Mackenzie demonstrated strength and momentum during the year. This broad-based success drove IGM's adjusted earnings per share up 17% year-over-year to a record high of $4.61. 2025 was also a year where we had the opportunity to showcase the embedded growth within our strategic investments with the announcement of 2 important transactions later in the year. The Rockefeller transaction, which Keith will speak to in greater detail was an important business milestone and with the value of our equity interest nearly doubling in 2.5 years, our investment decision of 2023 has clearly been validated. Our participation in the transaction was guided by the key principles of supporting the positive evolution of Rockefeller's ownership structure, while maintaining IGM's significant influence and privileged position as the second largest and only wealth manager in the company's cap table. Our support of the transaction demonstrates our long-term strategic perspective on Rockefeller. The Wealthsimple transaction, another long-term strategic investment reflected its explosive growth and significant shareholder value creation. Our strategic investments continue to elevate IGM's diversified growth profile, complementing the strength and momentum in our core businesses. Turning to Slide 10. With clear momentum across our businesses, 2026 will be a year of capitalizing on accelerating growth and our financial strength. At IG Wealth, the focus remains on extending our success in the high net worth and mass affluent client segments, leveraging our segmented advice model and increasingly embracing AI-powered tools to further elevate the adviser and client experience. At Mackenzie, we will maintain our focus on product innovation, expanding distribution reach and investing in our client and adviser experience as we continue to build on our strengths in advanced data analytics and artificial intelligence to further elevate investment excellence. And across the 6 wealth and asset management businesses, we continue to pursue opportunities to work collaboratively across businesses to elevate our capabilities and create collective value. We refer to this as the benefit of horizontal connectivity. Shifting now to capital allocation, with strong business momentum and fundamentals, combined with clear financial strength we enter 2026 positioned to meaningfully increase capital return to shareholders. During December, we launched a normal course issuer bid for up to 5% of our shares outstanding. And over the past 2 months, we've been quite active. Our intention is to repurchase the full 5% over the remainder of the year. And yesterday, our Board approved a 10% increase in our quarterly common dividend. The increase demonstrates the management team and the Board's confidence in our financial position and growth trajectory. Before passing the call over to Damon and Luke to discuss more details on their businesses, I'll shift briefly to the fourth quarter, starting on Slide 11. Q4 adjusted earnings per share of $1.27 was another record high. During the quarter, IGM was once again recognized for our efforts as one of Canada's top 100 employers and among Corporate Knights Global 100 most sustainable companies. Turning to Slide 12 on the operating environment. After a 15% year in 2024, IG and Mackenzie's average client return was nearly 12% during 2025. Notwithstanding the evolving global economic environment, the strong market returns, along with easing inflation during the year are supporting a constructive backdrop for our businesses as we start 2026. Slide 13 demonstrates the earnings growth across our Wealth and Asset Management segments, with consolidated 2025 adjusted net earnings, up 16% year-over-year, including a 21% increase in the fourth quarter. Slide 14 highlights our asset growth on a look-through basis, which in aggregate grew by 17% at the IGM level with contributions from each of the 6 businesses. I'll turn it now over to Damon to speak to the Wealth Management segment next. Damon Murchison: Thank you, James, and good morning, everyone. Turning to Slide 16 and Wealth Management's fourth quarter highlights, including IG Wealth, Rockefeller and Wealthsimple. I've been speaking about the momentum at IG Wealth more than a year now. And in the fourth quarter, that momentum accelerated. Our quarter end AUM&A of $159 billion was a record, up 13% from Q4 of last year. Our gross flows of $4.8 billion and sales of $4.5 billion were both Q4 records and demonstrated strong year-over-year growth. New client growth inflows of $1.6 billion grew almost 19% versus Q4 2024 with 81% of those flows coming from mass affluent and high net worth clients. The quarter also delivered strong total net inflows of $694 million and net sales in the IGM product or IGM product of $347 million, representing the 6 consecutive quarters of positive net flows in sales. Our momentum continued in January with adjusted net inflows of $102 million and strong net sales into IGM product of $704 million. Of note, our total net inflows during January of $3.4 billion included $3.3 billion inflows from our institutional clients related to our strategic investment in Rockefeller. We view these flows as further evidence that our investment is truly strategic and as James just spoke about, an example of horizontal connectivity. One of the drivers of our success has been our ability to share our views with both current and prospective clients across leading financial planning and investment topics. For the third consecutive year, we ranked #1 and earned media share of voice among both national banks and independent firms continue to confirm that our voice is being heard. Lastly, both Rockefeller and Wealthsimple continue to deliver growth. I'll speak to more of this on upcoming slides. Moving to Slide 17. On the left-hand side, you can see solid growth in our adjusted flows with record gross inflows across all periods, which are supporting our strong net inflows. The graph on the right demonstrates the strength of our business and ability for our advisers to work with their clients as a dollar average cost into the market. This slide also represents a visualization of the returns that our business is reaping from investments that we've made in the past. These investments have elevated our competitiveness in the marketplace in both client and adviser experience. This business is built to gain market share, and we fully expect that our advisers will continue to gain both share of wallet and market share in their respective communities. Turning to Slide 18. This provides our view into our operating results, which continue to provide great insight into the strength of this business. Moving to Slide 19. Our gross inflows from new acquired clients demonstrates the new client acquisition force that IG Wealth has become. During 2025, gross inflows from newly acquired clients of $5.3 billion represented 17% growth over the prior year, with almost 79% of these inflows coming from mass affluent and high net worth claims. Turning to Slide 20. This showcases the growth that we've delivered in both our mortgage and insurance businesses with mortgage funding up 23% year-over-year and new annualized insurance premiums up 16% versus 2024. We continue to see strong growth prospects in both of these businesses. Now let's turn to Slide 21 and talk about Rockefeller's progress. Client assets grew by 31% year-over-year, driven by organic growth, inorganic growth as well as the markets. Over the last 12 months, organic growth has driven $10.2 billion in client assets, while the addition of 76 advisers during 2025 has supported inorganic growth of $15 billion in client assets over the same period. We are as confident as ever in Rockefeller's ability to continue to execute on their growth-oriented business model. Now let's move to Slide 22 and talk about Wealthsimple as they continue to deliver. Over the last year, Wealthsimple has grown their AUA by 74%, with fourth quarter delivering sequential growth of 10%. At the same time, Wealthsimple has increased their clients served by 24% year-over-year, ending the year with 3.2 million clients. Wealthsimple continues to demonstrate an ability to attract new clients and grow client share of wallet at the same time. So with this, I'll turn the call over to Luke Gould. Luke Gould: Great. Thanks, Damon. Good morning, everyone. Turning to Page 24, you'll see highlights from Mackenzie and the Asset Management segment for the quarter. During the fourth quarter, we continued our momentum across a number of dimensions. We ended the quarter with record high assets of $244 billion, up 2% in the quarter, driven by investment returns for our clients and net sales of $1.5 billion. Our net sales were once again up meaningfully from last year with momentum across channels and overall sales were $1.5 billion. Importantly, in the top right, we have highlighted the continued momentum in retail, where we continue to have positive flows and meaningful year-over-year improvement. I'll give a bit more color on the coming slides. We've also highlighted another $2 billion in institutional awards during the quarter that are expected to fund during early 2026. Also earlier this month, we reported our January sales results, this was our second best January investment fund net sales in the last 25 years with significant momentum in retail, where gross purchases were up close to 100% and net sales of $134 million were up meaningfully from 2025. We've been very busy bringing innovative and compelling products to market with 23 new products launched in 2025. And in the bottom right, we're pleased with a lot of our sales momentum coming from products launched during the last 36 months. You can see we've highlighted 4 new products launched in Q4, which extend our privates, our quant and our value offerings. And at the very bottom, you can see both ChinaAMC and Northleaf continue to generate good growth. ChinaAMC's investment funds are up 28% from last year, while Northleaf continued to have strong fundraising of $5.8 billion during '25 and $1.5 billion during the quarter. Turning to Page 25, you can see the trend in the history of Mackenzie's investment fund net sales. At the bottom left, we've introduced Mackenzie's overall annual net sales results of this slide to provide an opportunity to showcase the breadth across client segments. This $6.7 billion in full year 2025 is an all-time high for us with several awards from institutional investors and financial service partners across several geographies. And on the top left, you can see January 2026 was our second best net sales in the last decade, and Q4 in the middle was our third best in the last decade. And these improvements in 2025 were driven by retail. On the right-hand side, you can see the last 12-month trailing trend with good momentum in retail and overall. And we believe that we have winning conditions entering 2026. And as our sales organization leans in opportunities, we're confident in the continuation of the strong upward momentum. Turning to Page 26 at the top left, you can see our net sales segmented between retail and institutional and by delivery vehicle. We've once again circled the improvement within our retail investment funds, which accounted for a large majority of our improvement from Q4 -- relative to Q4 '24. Now on the right-hand side, we provide a snapshot of our top 5 net selling actively managed investment funds, including both mutual funds and ETFs. We wanted to highlight that increasingly active equity ETFs are among our top net sellers with the launch of a full suite of active equity ETFs over the last 2 years. And here you can see that [ MIQE ], our Mackenzie GQE International Equity ETF was our second best-selling fund. We want to highlight that we have a pricing philosophy of being clear, consistent and competitive everywhere, and our management fees are the same on our active ETFs as on the traditional mutual funds. In the bottom left, you can see that we've been gaining ground and we are poised to break through the overall industry last 12-month trailing net sales rate. Now turning to Page 27. you can see performance and our net sales for our retail investment funds by boutique. Across the slide, looking near the top, you can see compelling performance relative to peers across multiple boutiques. If you look towards the middle, you'll see continued exceptional relative performance at our global fund equity boutique as well looking through the boutiques you'll see strong performance across time frames for our Greenchip, Cundill and multi-asset boutiques. I do want to highlight at the bottom looking at investment fund flows in the quarter. Our global Quant equity boutique put up strong net sales in Q4, but we believe we're just getting started as we trailblaze with quant in retail. Their holistic quant all-weather approach that marries AI with HI has delivered performance track records that are leading and impressive, not just in terms of the returns, but also in terms of the consistency of alpha across different environments. Turning to Page 28. A few comments on the Chinese investment fund industry. On the left, you can see the industry grew by 14% over the last year and 3% in the quarter, driven by the strong market rebound in Q3 as well as continued industry net flows. On the right, we're pleased with the continued strong performance of ChinaAMC relative to peers, with a second-ranked market share on long-term funds of 6.7% of the industry, up from 6.2% last year. Turning to Page 29, you can see the strong growth in ChinaAMC's AUM. Overall AUM remained just over RMB 3 trillion and is up 22% from last year. The investment funds increased by 1% in the quarter and net outflows on money market fund partially offset the net sales into long-term funds. Last, on Page 30, you can see another very strong quarter of fundraising at Northleaf, with $1.5 billion of raising in the quarter. Over 2025, fundraising was strong across private equity, private credit and infrastructure resulting in $5.8 billion of fundraising. This was the best year Northleaf has had in fundraising since we commenced our partnership in 2020. I'll now turn the call over to Keith Potter. Keith Potter: Thank you, Luke, and good morning, everyone. On Slide 32, you can see key highlights for Q4. Adjusted EPS was $1.27, up 21% year-over-year and excludes Lifeco's other items and gains on partial sales of investments in associates. We returned $263 million to shareholders in the quarter, including $130 million in share repurchases. As James commented, we expect to return more capital to shareholders in 2026 and 2025 through higher level of share repurchases, including the use of proceeds from the Rockefeller transaction, which contributed to unallocated capital of approximately $1 billion. In December, we filed an NCIB for 11.8 million shares which is 5% of the outstanding and our intent is to repurchase the maximum permitted under the bid. We also increased the dividend in the quarter from $0.5625 to $0.62, and prior to the increase, the last 12 months trailing cash dividend payout rate was 57% and 50% on a run rate basis. And as we go forward, we will review the dividend if the payout is below 60%, while giving consideration to our overall capital allocation priorities and general market environment. We also closed on our incremental $100 million investment in Wealthsimple and finalized the Rockefeller transaction, I'll speak to in a few moments. And finally, in 2025, expense growth came in at 4.2%, in line with guidance, and we expect growth of 4% in 2026. Turning to Slide 33. You can see our AUM&A and flows trend, we achieved solid asset growth during the fourth quarter with ending AUM&A up 2.5%, while average balances increased 5.4% relative to Q3 and 14% year-over-year. On Slide 34, you see how higher assets drove solid revenue growth and a 21% year-over-year increase in adjusted EPS at the IGM level. Drilling down to the operating company level, Slide 35 presents key profitability drivers for IG Wealth Management. And on the left, you can see that average AUM&A was up 4.8% from last quarter. And related to the strong asset growth, our advisory fee rate declined 0.7 basis points during the quarter, primarily driven by clients moving up well and fast. On Slide 36, IG's overall earnings of $166.9 million in Q4, up 23.4% year-over-year on revenue growth of 12.5%, demonstrating strong growth and positive operating leverage in the business. On point 2, other financial planning revenue continues to demonstrate growth, supported by momentum in the mortgage and insurance business. And on point 3, IG operations support and business development expenses were $165 million in the quarter, up 0.7% year-over-year and up 1.6% for the full year, which is lower than guidance. Moving to Slide 37. We have Mackenzie's AUM by client and product type as well as net revenue rates. And on the left, you can see average AUM was up 5.4% versus Q3, and on the right, the third-party rate excluding Canada Life decreased primarily due to the onboarding of $2.6 billion in institutional SMA and ETFs during Q3 and Q4. And as we look forward to Q1, we expect this rate to drop approximately 2 basis points for mix shift driven by institutional onboarding, the strength of our wealth management partnerships and having 2 less days in Q1. And the changes in the Canada Life rate was driven by a few items, including a rebalancing mix shift, a onetime annual fee true-up and admin fees that remain stable as AUM increases. Turning to Slide 38. Mackenzie earnings of $60.4 million are down slightly year-over-year. One of the main drivers is net investment income and other, that was $8.5 million last year versus $2 million this quarter, primarily from seed capital gains and excluding this earnings would have been up 6%. Operations support and business development expense growth of 9.5% was primarily driven by higher wholesale compensation from improving net sales that Luke commented on as well as other variable items. And as a reminder, wholesale compensation is expenses paid and it is not capitalized and amortized. Turning to Slide 39. On operations and support and business development expense guidance. Overall, we expect expense growth of 4% in 2026. I will note that starting Q1 2026 certain investment management advisory expenses at Mackenzie that are primarily variable with AUM and revenue will be reclassified to sub-advisory expenses from operations and support. These expenses were $7 million in 2025. And beginning in Q1, it will be retrospectively reclassified from operations and support to sub-advisory expenses. So pro forma these reclassifications, we expect our operations and support and business development expenses to grow by 4%, continuing to balance prudent expense management while growing our businesses. Slide 40 has ChinaAMC results. On the right, you can see ChinaAMC's earnings of $22 million. It was impacted by seed capital losses in the quarter and onetime items. Adjusting for this Q4 it would have been in the range of Q4 2024 through Q2 2025 and in line with our expectations. Slide 41 has earnings contribution from companies in each segment. I'll make a few comments here. First, Rockefeller had strong earnings of $12.2 million, with growth coming from their core family office business as well as significant contributions from their strategic advisory M&A practice and other transactional activities, which can vary from quarter-to-quarter. Excluding the contribution from the variable revenue, earnings would have been closer to $6 million to $7 million, which builds from last quarter earnings of $2.9 million. For Northleaf lease, Q4 earnings of $8.8 million benefited from a year-end tax true-up and a couple of onetime items. Looking forward, $4.5 million to $5 million net of NCI is a reasonable expectation for average quarterly earnings in 2026 with expected quarterly variability. And I would remind Q1 could be somewhat higher due to annual incentive fees. Turning to Slide 42 for further details on the Rockefeller transaction. As we announced in October, we participated in Rockefeller's recapitalization transaction which saw our investment nearly double in value as compared to the value at the time of the initial investment in April of 2023. The transaction had a few components, including the recapitalization, which included equity, debt and adjustments to the management incentive programs as well as a cash distribution to existing investors. A meaningful outcome of the transaction is IGM receiving pretax proceeds of $394 million from the sale of a small portion of our investment and the receipt of a distribution to existing investors, combining the sale of a portion of our interest and impact of the long-term equity incentive program. IGM now holds 17.2% interest in Rockefeller valued at CAD 1.16 billion. We supported the goals of the transaction by selling a small portion of the investment, while remaining the second largest shareholder and only wealth manager in the capital stack with this investment remaining long term and strategic to IGM. As we look forward to 2026, we expect Rockefeller and the overall transaction to contribute to IGM's adjusted EPS growth. First, we expect proceeds from the transaction to support our NCIB share repurchases and the amount would represent a notional annualized earnings contribution of approximately $27 million or $0.12 per share. Second, we expect Rockefellers contribution to IGM's reported 2026 earnings to be approximately breakeven and excluding the potential impact from certain equity incentive programs to be positive and in line with 2025. And for context earnings will include incremental interest expense and certain expenses related to equity incentive programs have made great period-to-period variability given the expected accounting treatment under IFRS. And we will provide updates in future quarters on this. I would note that in Q1, it could be slightly negative due to seasonally higher expenses and then move to breakeven and positive for the remainder of the year. Overall, we expect the combined performance of Rockefeller and the impact of the transaction to contribute to EPS growth in 2026 and accelerate into 2027. On Slide 43, we demonstrate significant progress on execution against our capital allocation priorities we returned $263 million in capital to shareholders in Q4 while increasing unallocated capital of $1 billion, including the proceeds from the Rockefeller transaction. Also, our leverage ended the year lower at 1.37x. As mentioned, the Board approved a 10% quarterly dividend increase of $0.62 per share, reflecting IGM's strength on strong strategic positioning of our underlying businesses, and we currently expect to maximize our share buybacks under the new NCIB. Slide 44 presents a framework for how management views the buildup of IGM's indicative value. The methodology behind us is consistent with the sum of the parts disclosure we've used in the past, that builds up an indicative NAV per share of over $82. We've introduced this view to provide a perspective on the value of our collective businesses given the strong momentum at IGM. I just note that we derive the indicative value of our core operating companies using an average PE multiple from a diversified group of wealth managers for IG and asset managers for Mackenzie as of market close on Wednesday. The indicative value of our strategic investments is based on our historical approach to disclosures. This valuation framework demonstrates the embedded value at IGM Financial. That will end our prepared remarks and we'll open it up for questions. Operator: [Operator Instructions] And today's first question comes from Scott Fletcher at CIBC World Markets. Scott Fletcher: The market narrative over the last few days has really been around AI disruption and the wealth managers were sort of -- we're not immune to that. Just wanted to get your thoughts on AI and wealth management and how you see the rapid development impacting both on the wealth and the asset management sides of the house? James O'Sullivan: Sure. Scott, it's James. I'll start and then I'll have Damon and Luke make a comment. Maybe the most important thing for me to say at the outset is that the last couple of days to serve as a reminder that every move in the market does not represent a change in value, but it does represent a change in price. We're going to integrate AI tools, we are integrating AI tools. And we're doing it to build and deliver an even better adviser experience and an even better client experience. We have a substantial project underway as we speak on AI. And I expect, Scott, we're going to have meaningfully more to say on this topic during the first half of this year. With that, a few comments from Damon and from Luke on each of wealth management and asset management. Damon Murchison: So Scott, for IG, we really truly see this as an opportunity for us that we are a little bit unique in the industry. We believe we have a world-class tech stack. And we have global partners that we partner with that are all investing heavily in AI, and our tech stack is integrated. So it's really the trifactor. We've got a clean data. We've got integrated across all systems and tools and they're AI-enabled. So what really that's going to allow us to do is significantly improve our adviser and client experience, and we're looking at it, leveraging our segmented model. So both the corporate channel and the entrepreneurial channel. We're focusing on many different things. One example would be pre-during and post meetings with clients, how can we leverage AI to make sure that the meetings are sharper. Our adviser more prepared. What we're talking about is more relevant personalized for the client. At the end of the day, it's going to be -- it's going to mean for us, we're going to be able to do more meetings and better quality meetings driving better client outcomes. So that's what we're focused on from an IG perspective. Luke Gould: Yes. Look, I'll just follow up with a few comments related to asset management. First, I'd say people pay us for Intellect, for process and for investment edge. So technology and any tools that can harness that are critical to us. I'd say when you look at Mackenzie. First, we've got our quant team and we've also had quant capabilities embedded into our multi-asset team. And we view this as giving us a competitive advantage. We believe we are a world-leading and do have something really special here. Beyond that, I'd say when it comes to AI, we've been integrating these tools into our investment processes everywhere, fundamental equity, fixed income, et cetera. And this is just a natural evolution in how investment management is delivered. But I'd say this is fundamental to what we do to actually incorporate technology and where we stood up to capitalize on. Scott Fletcher: Great. Really appreciate the commentary there. And then I just had a second question on the Rockefeller transaction and taking some of the chips off the table there. Certainly realized a nice return. So wondering if there's any desire to sort of take a similar approach with any of the other investments or if this is really just unique to the transaction here? James O'Sullivan: Yes. It's James. I'll share a few thoughts on Rockefeller and then more -- perhaps more broadly. I think Rockefeller, Scott, emerges from this transaction with really a remarkable shareholder base that it now includes a number of families globally that I can tell you are committed to its long-term success. And I think very importantly, and I've said this before, what I love about Rockefeller is they do not need to reinvent the wheel every year. They need to continue to do what they've been doing now for 8 years. They need to do it with focus, with determination, with excellence. So for us to almost double our investment in 2.5 years, repatriate kind of pretax, almost $400 million to Canada for share buybacks. It represented a great opportunity. And of course, we sit here today, still as the #2 shareholder, the only strategic in the capital stack, and I can assure you our interest remains strategic and long term. I will use the opportunity to share with you that any further purchase would have to be both what I would call risk smart, we claimed that phrase in 2023, and it would have to be earnings aware, that is mindful of how we trade. But I think we've now completed 2 transactions with Rockefeller very consistent with these principles. And subject to those principles, we'd be pleased to own more in the future. To your broader question on whether we take chips off the table or sell more of anything else. I think the short answer is no. I think our ownership position in ChinaAMC is long term stable. Wealthsimple, if anything, I would see us potentially deploying some capital depending on how it evolves strategically. And similarly, with Northleaf, we've restructured the 2020 deal to ensure that the founders and the key employees are long-term owners of the exact same instruments as us being common shares, and we will be purchasing a little bit more of Northleaf both this year and in the coming years. So no, I'm not looking to -- I think we've got -- I really think, Scott, we're sitting here with the businesses we want. We don't need to look further afield if we want to deploy further capital kind of strategically in businesses. We've got a lineup of 6 great businesses, and that's where we'll be looking. Operator: And our next question today comes from Tom MacKinnon with BMO Capital Markets. Tom MacKinnon: Yes. Just further clarification as to how we should be looking at the Rockefeller going forward. Should we just assume that your earnings that you've got out of Rockefeller, net of NCI in 2025 are going to be the same as 2026? Or are they going to be 0 and you're just going to make up for that loss of earnings through share buybacks? Just a little bit, if you can clarify? Keith Potter: Sure, Tom. It's Keith here. Yes, what I'd say is, there is an equity incentive program that can create variability. We'd say the earnings we'd expect, excluding the variability would be in line with 2025. So you can think about that being approximately $10 million. It makes that variability, may have a negative impact, and we'd say it would be closer to breakeven for the entire year. And to your other point, I would comment that, yes, we will be repurchasing shares of the proceeds, and you can think about that being worth about $0.12 per share, close to $30 million in notional earnings coming from Rockefeller and the overall transaction. Tom MacKinnon: Okay. So it seems $10 million outlook for Rockefeller for 2026? Keith Potter: Yes, I think, Tom, that would be a good number to use. Tom MacKinnon: Okay. And then -- okay. Now just further digging into the AI disruption that we're kind of seeing, especially with wealth managers. You mentioned here, AI tools really helping your advisers serve their clients better. But AI tools are clearly increasing clients capabilities as well. So -- when we look at that, what does that mean for the general model? I mean does that mean we would potentially get more do it yourself? What does that mean for fees when someone can do some of the stuff on their own? And do they not necessarily need to be paying an adviser to do all the other stuff that they can sort of ChatGPT with. So just comments with respect to that because we've really seen the wealth managers hurt more on this. And I take your point that the market does overreact, but comments with respect to what I just said would be great. Damon Murchison: Yes, Tom, it's Damon. So I guess you're asking will AI replace advisers. And you could look at it as AI could replace certain types of advisers, particularly those that just focus on investing people's money. You're just focusing on investment people's money and market commentary, chances are AI is going to be able to do it cheaper, faster and at scale. So that's how we look at things. And just a reminder, at AI -- at IG, that's not what we do at all. What we focus on is multigenerational family dynamics and planning. We focus on complex tax optimization, estate structuring, legacy planning, business succession planning. We work with our clients. We were on our fifth generation of clients. We build trust. We build relationships. A lot of what we do is emotional coaching in life situations. That cannot be replaced by AI at all... Tom MacKinnon: Well, I would argue that estate planning could be replaced by AI? Damon Murchison: Certain type of estate planning, not complex estate. Tom MacKinnon: So some of your -- some of the services that you provide could be AI replaced? Damon Murchison: Well, once again, we're talking about complex situation. So a simple situation, some of it yes, for sure. But complex, we do not believe so. And in totality, well, we believe this is going to just allow us to better demonstrate what good advice means to the marketplace. I mean, if you were to ask me, why are we growing so fast now, how are we getting so many clients? This is how we're doing it. There is a significant need out there in this industry to make the complex simple and help us plan our lives because our lives are far more complicated than they have been in the past. And that's what IG delivers. James O'Sullivan: And Tom, it's James. I'd just add that, I mean, the way I think about this is I think you've got a look kind of wealth management model by wealth management model and ask the question, how do advisers add value in that model? And kind of how wide or not is the moat that they create as a result of how they add value? And so in models where advisers across the country are just picking stocks. I don't view that as -- I really don't view that as adding sufficient value to create much of a moat. But what I've always loved about IG including before I was here, is that this is a model that's really been thoughtful about the division of labor. What should the house do? What should the adviser do? Where should we leverage third parties. And I think it's evolved to the point where compared to some other models, the IG model, led by planning. I really do think creates a bigger moat than some other models where the value add, I just view as significantly narrower. I take your point on fees, Tom. I mean -- but I'd also say that this industry has been dealing with the headwind of pressure on fees now. Well, certainly, the entirety of my career. But I'd say that has been -- as headwinds go, that has been a moderate headwind, and I think the trilogy of kind of rising markets, net sales opportunity and the opportunity for positive operating leverage over time have allowed us to continue to grow the business. And I expect that to continue. But I think this is definitely going to sharpen the focus on the wealth management model and just how much value add is each adviser contributed to the client and that relationship. And I think relatively, we are well positioned. And as I said earlier, we're going to be coming back to you and your peers in a few months with a lot more to say on this topic because it's an important topic. Operator: Our next question is from Bart Dziarski with RBC Capital Markets. Bart Dziarski: Congrats on the strong quarter. Just following up on the wealth management topic and AI. So I hear your comments and color, but you did increase your expense growth guidance in that segment. So last year, you were calling for 2.5% growth, this year looks like 4% growth. Is that a defensive posture? Or is that an offensive posture in terms of the spend in that business? James O'Sullivan: That's an interesting point. I don't know, Bart, that I'd read too much into it. I mean I was sharing with the Board yesterday that what I love about Damon and his leadership team is they don't play in quarters or years. They've actually got a multiyear plan for this business. And when expenses are running a bit hot, he can tap on the brakes when we see a little bit of runway, he can kind of press on the gas. And so I really wouldn't read too much into the 4% other than -- it's just -- we really did want to establish our credentials, if you will, as an organization that was serious about respecting the shareholders' money. And I think we've done that. But in the current environment including the current level of inflation as it relates to services that we consume in this business, 4% kind of felt about right for now, subject to, as I say, some ongoing work, some very important ongoing work that we're doing to see how we can, if anything, accelerate our deployment of the AI tools. Damon? Damon Murchison: Yes. I would agree with James. And I would just say that there are major projects go that extend beyond AI with total cost reporting and a number of regulatory things that we have to get accomplished this year that everyone has to get accomplished in the industry this year as well as it's our 100th anniversary. So we've got a lot of things on the go at IG that we're very excited about. Bart Dziarski: Great. That's very helpful. And then just on the market volatility, so you also agreed price and value can be quite disconnected sometimes. But we have seen Robinhood had come down 50%, that's a pretty meaningful move. And so just as a read-through to Wealthsimple, how are you thinking about the kind of stability of the mark there in light of that move? James O'Sullivan: Yes. It's James. I'll start and then Keith will add. I mean let me start by just saying, Bart, that with each kind of passing Board meeting, my confidence is growing that Wealthsimple is really establishing themselves as a prominent part of Canada's financial sector. And so from an operational perspective, the beat goes on. I can't promise a straight line here, but I can tell you the direction of travel for that asset is up. And I'll also share with you that the -- it's a very highly integrated and expansive platform. And when I think of the Wealthsimple platform, I start with the trade platform. I then think about the Invest platform. It also has kind of outstanding save crypto and work platforms, but it's a remarkably integrated, expansive and nimble platform. The Wealthsimple transaction closed, I believe, Keith, in December. And in some respects, Bart, this is the difference between public markets and private markets, right? I mean in private equity or private markets, generally, if there was a large trade in December, you would -- no one would even think of trading -- changing the mark kind of 6 weeks later. And I think it's back to the point that you just reaffirmed that we do from time to not time need to remind ourselves that there is a difference between price and value. Keith? Keith Potter: Yes. No, I agree with everything James said. And to James' point, we marked this in December. It is quite a diversified platform. You think about where growth is coming from for Wealthsimple. It's coming from a broad group -- a broad diversified growth. It's as James said, it's the trade platform. It's the Invest platform, it's the Banking and Safe platform and reading the media that Wealthsimple is not nearly reliant on crypto like some other players in the industry. So it's a Canadian company built for Canadian clients, and they're growing quite well, and we're looking that forward to what they're going to do in the future here. Operator: And our next question today comes from Graham Ryding with TD Securities. Graham Ryding: Just to follow up on that. Is there any color you can give us on -- it seems like is the piece that's sort of weighing on some of those U.S.-based comps that might be a read-through for Wealthsimple. Can you give us some context for how significant crypto is in terms of that sort of AUA mix within Wealthsimple or how diversified that AUA is? Just trying to get some comfort that the overhang on crypto is not overly material for Wealthsimple? Keith Potter: Yes, it's Keith. I'll -- I can say that crypto is a very small component of their AUA, but we're not going to get into details of the mix. They're private company, but I can give you that comfort. Graham Ryding: Okay. And then most of my questions have already been asked. But just on the Rockefeller piece, if I missed it, I apologize. But can you give us some context on why you decided to sell down a piece of Rockefeller? Was it opportunistic perhaps just to generate some proceeds to fund buybacks going forward? And how should we think about your longer-term positioning in Rockefeller? Would you be open to selling down again? Or are you committed at this level? James O'Sullivan: Yes. We were at 20% and change, and we're now at 17% and change. A chunk of that, frankly, is the settlement of a management incentive plan. The result of which is management very, very happily or meaningful shareholders in this company. And the delta small portion of that move from 20% to 17% or a portion of it does represent a sale. We could have sold more. We chose not to. We actually chose to reinvest some of what we could have taken to kind of bag in the business, to be clear. But the bit that we did sell, I would really say it was an accommodation, by that, I mean, there are some high-profile global families that wanted into this capital stack, and we wanted them in the capital stack. So this is kind of how it shook out. To be clear, over time, I would like to own some more of Rockefeller. But as I said earlier, there's 2 principles that any transaction is going to have to be faithful to, any transaction will have to be both kind of risk smart as we coined it in 2023, and it's going to have to be earnings aware, which means that it's going to have to be mindful of how we trade. We have a very limited ability to do things that our shareholders don't see value in or cannot reflect within a reasonable period of time in our share price. But I actually think the opportunity to do something that's both risk-smart and earnings-aware with Rockefeller in the coming years will be real. And on that basis, we would desire to own more. Operator: [Operator Instructions] Our next question today comes from James Gloyn National Bank Financial. Jaeme Gloyn: First question just on the dividend. As you -- I believe commented that you will look to review it with payout ratios below 60%. Is that -- I just want to clarify or understand the time line. Is that an annual review? Or is it something you'll review more regularly quarter-to-quarter? Keith Potter: Yes, Jaeme, it's Keith here. I think you can expect more of an annual view. We expect and we've guided to growing earnings at 9% per year. And on an annual basis, we'll -- you can expect that to be the moment in time that we do review. We all know that we -- in the industry we're in, our business can be cyclical, but that would be a reasonable expectation on an annual basis. Jaeme Gloyn: Okay. Great. Maybe a question for Luke in the Mackenzie business. Obviously, quant and multi-strategy doing very well, but a couple of other platforms, not so much. Can you talk about perhaps some of the strategies or what you're doing in Mackenzie to get it a stronger turnaround of Bluewater or Ivy or something -- a couple that are maybe less robust on the net flows perspective. Luke Gould: Yes. Great question, James. So on Page 27, we've got a boutique approach. What it means is we seek to stuff that's relevant and compelling in every market environment and for every client need. Some of the boutiques invariably find themselves in environments that don't favor their approach and favor their style. They remain disciplined to it. And we obviously coach to make sure that they're leading in their investment edge. Right now, for Bluewater for growth, there's a few of them that have had soft performance and we remain behind these teams, coaching them and making sure that they're doing what they told clients they're going to do and making sure we're raising the bar and investment excellence everywhere that we've got quality across all of our boutiques. And that when the market environment comes, it suits their particular approach that they're delivering on it and have a clear client expectations everywhere and all the time. But yes, we are very pleased with this particular approach that we've got a lot of stuff right now that where we've seen some net redemptions in Bluewater based upon the performance over the last 24 months. We actually have a lot of stuff that's being leaned in on, and right now, there's more people selecting Mackenzie than in the history of the company when you look at the gross purchase activity. Jaeme Gloyn: And then last, just to maybe come back to the AI team one more time. How much of a friction point do you think the regulatory environment would present in terms of either advisers or IPS construction, things of that nature? Like how much would regulatory environment create a friction for that type of disruption? Damon Murchison: Jaeme, it's Damon. I think from a regulatory standpoint, the regulators would be open to working with wealth managers to integrate AI as long as you'd have the technology and the infrastructure and the internal controls to back it up and make sure that you have quality control. I think they would be all for it, because it would improve client outcomes, and that's what the regulators are focused on. And quite frankly, we've had discussions with them on a number of topics, including AI. So we're excited about the future here. Jaeme Gloyn: Yes. I think I meant more around would there be any hurdles for potential AI disruptors from a regulatory standpoint, but if they're supportive for you, I'm sure they're supportive of all that as well. Operator: And our next question is a follow-up from Bart Dziarski with RBC Capital Markets. Bart Dziarski: Just a follow-up on the dividend. So the growth rate of 10% is above your EPS 9% plus target. So I just want to check, is that a signal in terms of confidence in your EPS growth outlook? Or am I reading into that too much? James O'Sullivan: Well, I mean, -- we're very committed to our 9% medium-term target to be sure. But I think what it really reflects is that this company's financial condition has never been stronger. And we took our board through it in some detail yesterday. If you look at the client assets, look at revenue, look at earnings, look at unallocated capital and look at what's becoming objectively a very low leverage ratio. The financial condition has never been stronger. And so I think we -- the 10% became a number that was well justified. I'm also -- we're also mindful that it's been a while since we increased our dividend. And if you have this kind of financial strength and that level of confidence in your medium-term EPS the difference between 9% and 10%, particularly in a year where you plan to buy back as much stock as we do. The run rate kind of delta or carry is pretty small, and it's very manageable. Operator: And that concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any closing remarks. James O'Sullivan: Great. Thank you, Rocco. And we'd once again like to thank everyone for joining us on the call this morning. And Rocco, with that, we can end this morning's call. Operator: Yes, sir. Thank you. That brings a close to today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning, ladies and gentlemen, and welcome to the Galiano Gold Full Year 2025 Results Release Conference Call. [Operator Instructions]. This call is being recorded on Friday, February 13, 2026. I would now like to turn the conference over to Matt Badylak, President and CEO of Galiano Gold. Please go ahead. Matt Badylak: Thank you, operator, and good morning, everyone. We appreciate you taking time to join us on the call today to review Galiano Gold's Fourth Quarter 2025 results that we released yesterday after market close. We will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary notes and risk disclosures in our most recent MD&A as well as this slide of the webcast presentation. Yesterday's release details our fourth quarter 2025 financial operating results. They should be read in conjunction with our fourth quarter financial statements and MD&A available on our website and filed on SEDAR+ and EDGAR. Please also bear in mind that all dollar amounts mentioned on the conference call today are in U.S. dollars unless otherwise noted. With me on the call today, I have Michael Cardinaels, our Chief Operating Officer; Matt Freeman, our Chief Financial Officer; and Chris Pettman, our Vice President of Exploration. This presentation, I'll initially provide a brief overview of the quarter. Mike will discuss operations and touch on our updated mineral reserve and resource statement, Matt will discuss the financials, and then Chris will review the recent exploration success his team has had at the AGM. I'll then provide some closing remarks and open the call for Q&A. Here on Slide 5, we can see the team continue to build momentum during the fourth quarter towards an improved operational outlook in 2026. Let me walk you through some highlights on this slide. Safety remains our top priority, and I'm proud to report that, again, no lost time injuries were reported for Q4, maintaining a strong safety record and demonstrating our unwavering commitment to our workforce. Turning to production. We produced 37,500 ounces of gold in Q4, up 15% from the 32,000 ounces produced in Q3. As you can see from the chart, this marks the fourth consecutive quarter of improved gold production at the AGM with Q4 production 80% higher than Q1 and full year production totaling 121,000 ounces, in line with our revised production guidance. Importantly, mill feed growth improved quarter-over-quarter and throughput in December exceeded the targeted 5.8 million tonne per annum run rate. From a financial perspective, cost control remains robust on site with all-in sustaining cash costs reducing quarter-on-quarter to $2,033 per ounce and ending the year in line with the guidance range. Revenue came in at a record $160 million, up 40% quarter-over-quarter from $114 million. This was driven by higher production and improved gold prices. Our balance sheet remains solid with cash balance remaining stable despite increasing our rate of spend on stripping at Nkran and making a $25 million deferred payment Gold Fields. During the quarter, we also established a $75 million revolving credit facility providing us with further financial flexibility to continue to invest in our operations, particularly as we advise stripping at Nkran and invest heavily in exploration activities in 2026. The inclusion of a Maiden Underground mineral resource reshapes the future potential resource growth at the asset. We have planned an aggressive exploration program for 2026, targeting the expansion of these underground resources and reserve growth at Esaase through conversion drilling of inferred ounces. The momentum we have built throughout the year positions us strongly to meet our production guidance target of between 140,000 to 160,000 ounces this year, which is a 25% increase from 2025 levels. Mick will provide more color on this later. And with that, I'll hand it back -- I'll hand it over to Mick to discuss operations in more detail. Michael Cardinaels: Thank you, Matt, and good morning, everyone. Turning with safety. The previous quarter's improvement continued without any lost time or recordable injuries in Q4. We finished the year with a lost time injury frequency rate of 0.24 and a total recordable injury frequency rate from 0.48, both per million hours worked. In terms of mining and production, Esaase mining restarted in the early November and is currently ramping back up production in Q1 2026. Late wet season rains had a slight impact on mining movement but the necessary switch to concentrate on production from Abore in 2025, provided positive movements in terms of mined ore tonnes and the average grade of ore mine increased 9% compared with the previous quarter. Nkran pre-stripping continued ahead of buying with 23% more material moves compared with Q3 including some small quantities of oxide ore, which are being identified during the mining process and opportunistically blended with Abore fresh ore to supplement the plant feed. An additional excavated fleet is expected to be operational before the end of Q1 2026 to continue the expansion of Cut 3. We plan to mine in excess of 30 million tonnes this year, which is 3x the movement of 2025 for an approximate spend of between $100 million and $120 million of development capital. This maintains a Nkran Cut 3 is scheduled to deliver steady state ore production from early 2021. On Slide 8, we can see the processing performance. Ongoing modifications in the circuit to fully optimize the performance after the commissioning of the secondary crusher continued in Q4 and yielded further positive results. Milling rates increased approximately 7% compared to Q3 with December production achieving an annualized rate at the target 5.8 million tonnes per annum. Mill feed grade also improved approximately 9% compared to Q3, with an average of 1 gram per tonne for the quarter. The increased grade and feed plant also had a positive impact on plant recovery with Q4 achieving an average of just about 91%. The increased grade, throughput and recovery all culminated in an increase in gold production for Q4, up 15% versus Q3's production of 32,500 ounces to 37,500 ounces. We finished the year producing just over 121,000 ounces, which was in line with our revised forecast. Overall, you can see a production increase for each of the last 4 quarters, showing a strong positive trend of performance across all of our metrics. On Slide 9, we are providing information on the guidance. Looking forward to 2026, we once again expect the majority of all supplier to come from the Abore pit, where we have made modifications to our reserve pit design to take advantage of higher gold prices. This will result in a slightly slower ramp up of gold production in 2026, but enables us to further increase the recovery of our resource. Ratings will continue to increase with depth in Abore as we've seen in the last quarter of 2025. Production will be somewhat weighted towards the latter half of the year and continue into 2027 as we recover the higher-grade material at depth. We expect a range of between 60,000 to 70,000 ounces in the first half of the year and 80,000 to 90,000 ounces in the second half of the year. We are providing production guidance for the full year in the range of 140,000 to 160,000 ounces at an all-in sustained cost of between $2,000 and $2,300 per ounce. I will now hand over to Matt Freeman to discuss Q4 financial results. Matthew Freeman: Thanks, Michael. Good morning, everyone. As Michael has outlined in the fourth quarter was the strongest operation in 2025 and assisted by the very strong price of gold, we generated record revenues of $160 million and generated cash flows from operations of $56 million. Our headline earnings numbers continue to be impacted by the losses on hedges, but we now have only 60,000 ounces left to settle, which represents a lower percentage production in '26, therefore, allows us to more fully participate in the price of gold going forward. Adjusting the unrealized losses on hedges to be settled in 2026, we recognized adjusted net income of $0.15 per share. From a treasury perspective, the balance sheet remains very healthy with over $100 million in cash even after paying the first deferred payment to Gold Fields. Additionally, we're pleased to close a $75 million credit facility, which remains undrawn but will provide us with additional liquidity should the need arise. This Slide 11 illustrates that our operating costs remain consistent period-on-period and has generally been well controlled by the site. In particular, you can see processing costs have consistently fallen in a unit basis through 2025 as the throughput has improved. CapEx remains focused on critical projects such as the tailings dam raise. AISC, as expected, fell significantly compared to the previous preceding quarters in 2025. This is primarily due to the higher production levels that demonstrate to leverage our margins up to high production. We've guided AISC for 2026 to between $2,000 and $2,300 per ounce that period, much of the elevation compared with Q4 2025 due to the growing royalty burden with the consistently high gold prices being forecast in '26. Ultimately, this is good for the business, but it does increase AISC in a manner which is beyond our control. The chart demonstrate the increasing royalty burden we've seen through 2025 as a result of a significant increase in gold prices, but it also demonstrates the unit cost we can control and continue to fall as production improves. As many of you know, a new royalty regime has been proposed by the Ghanian government. So we'll assess that impact on AISC if it finally becomes enacted. As noted in my opening remarks, we have been able to maintain a strong cash position at around $100 million. We're very happy with this given -- we've now settled the first deferred payment to Gold Fields, continue to ramp up stripping activity at Nkran having invested approximately $35 million in 2025 and have made our first annual income tax payments in Ghana. As we look forward, we do expect 2026 to be another year of investment in the mine with further acceleration of stripping at Nkran and the final deferred payment to Gold Fields. From this year, it's a real inflection point because the 2027, we'll be past the fixed payment of Gold Fields and fully exposed to the gold price. This means even assuming the new royalty regime comes into play as proposed where there's a significant reversion in gold prices, the company will be well positioned to generate significant cash flows for shareholders. And with that, I'll turn the call back over to Mick to run through our updated mineral reserve and resource statements. Michael Cardinaels: Slide 14. The key highlights for this year is the declaration of our Maiden Underground resource. Resources for Nkran and Abore have been limited to the current reserve pit shells to allow us to target higher-value underground ounces in our underground maiden resource definition. As we look to the future for both pits transitioning to underground operations. Chris will outline the potential for reserve expansion that we see at Esaase over the next 12 months. In the table shown is a summary of our MRMR as at December 31, 2025. For detailed tables, please refer to the appendices and the recent news releases. Here on Slide 15. This section through the Nkran deposit shows the current reserve shell and the newly defined underground resource stopes. As you can see, we have a strong correlation between drilling density and stope generation, which gives us a great deal of confidence that this resource will likely expand with additional drilling. On Slide 16, we show a comparable long-section view for the Abore deposit. And again, it shows a similar story that stopes are able to be generated where we have drilling data. And because like Nkran, these mineralized systems are open in multiple directions. There is a likelihood that additional drilling will also yield additional underground resources here at Abore. And with that, I will turn the call over to Chris to outline the recent exploration successes at the mine and future exploration finance. Chris Pettman: Thanks, Michael. Q4 was another busy quarter in exploration as we ended the year making a concerted effort to maximize the amount of infill and step-out drilling at Abore completed by the end of December in order for results to be included in the Maiden Underground resource outlined by Michael. I'm very pleased with the team's ability to safely and cost effectively deliver an additional 10,950 meters of Abore in partnership with our drilling contractors in Q4. As we've discussed in prior quarters, drilling results in Abore were excellent in 2025, leading to the expansion of the program to include a total of over 33,000 meters by the end of the year. Q4 drilling continues to deliver excellent results, including expanding the high-grade zones at Abore Main, Abore North, further proven continuity of high-grade mineralization of Abore South and expanding the footprint of mineralization up to 200 meters below previous drilling as outlined in our January 22 press release. Some of the highlights of intercepts of this drilling are shown here on Slide 17. Slide 18 shows a gram-meter long section of Abore with Q4 drilling locations and intercepts along with areas where high-grade mineralization has been expanded and continuity improved at Abore South, Main and North pits. This image also shows the location of 4 step-out holes drilled between 100 and 200 meters below existing drilling. These holes were designed to test for continuations of the Abore granite and further high-grade mineralization. All 4 successfully intercepted mineralized Abore granite showing once again that the Abore system has significant growth potential. Particularly encouraging is Hole 448, which intercepted 87 meters of granite containing 3 zones of mineralization at grades of 2.5, 3 and 3.4 grams a tonne over 27, 11 and 15 meters, respectively, in an area that is 200 meters below Esaase drilling and open in all directions. That Hole 448 is shown in cross-section here on Slide 19, along with Hole 444 which intercepted a wide high-grade zone consisting of 30 meters at 4.4 grams a tonne and 18 meters of 2 grams a tonne immediately below the previous open-pit resource. This is a really good example of the room we have to grow the mineral resource in 2026, while we have confidence in Abore of the driver of future value at the AGM. Exploration work in 2026 will focus on continuing to build on momentum generated by the success of the 2025 program. With an initial budget of $17 million, work will focus on the 3 primary growth objectives as we look to support a potentially transformational life of mine update in 2027. We see significant opportunities to grow the underground resources and reserves at Abore where we're planning for a minimum of 30,000 meters of drilling in 2026. At Esaase, we will be focused on growing the open-pit reserves and higher gold prices with up to 35,000 meters of conversion drilling. We will also continue to advance our portfolio of greenfield targets where our focus will remain on early-stage work and drill testing of targets in the Nsoroma area located approximately 6 kilometers southwest of Nkran. First pass drilling in 2025 confirmed the extension of the Nkran shear through this area, along with favorable host rocks, quartz veining and alteration patterns, and we remain enthusiastic with the potential discovery of new open pit resource in this area. At Abore, we will continue to aggressively test for continuations of mineralization through step-out and infill drilling designed to increase the underground mineral resource while also conducting targeted conversion drilling to increase the indicated resource available for inclusion in a potential Maiden Underground reserves in 2027. Slide 21 here shows a long section through Abore with the locations of Q4 drilling and the new underground resource showing all grades greater than 2 grams a tonne. High priority targets for '26 are shown by these yellow stars. As part of our short to medium-term exploration strategy, we will also be working in conjunction with the mining team to advance the necessary studies and workflows for potential development of an underground portal and exploration drilling at it, that will be used to conduct future underground delineation drilling and deeper exploration target testing. Due to the density of existing drilling below the current mineral reserve for Esaase, we are uniquely positioned to realize immediate reserve growth at higher gold prices without additional drilling, allowing us to add value to the AGM quickly in the current gold price environment. In order to maximize that value, exploration will be returning to Esaase in 2026 with a campaign of conversion drilling designed to convert additional inferred resources to indicated category at a gold price of $2,500 ahead of the 2027 of MRMR and LOM. Here on Slide 22, we're showing the cross-section through Esaase with an example of a target area for conversion drilling in 2026 and is indicative of our targets across the entire deposit where drill density limits the extent of the indicated resource. Our 2026 program is well underway with rigs active at both Abore and Esaase, and we anticipate 2026 will be even busier than 2025 for our exploration team. But we are well resourced and well positioned to deliver significant value to the AGM to resource reserve growth this year. Back to you, Matt. Matthew Freeman: Thank you, Chris. In closing, I'd like to reiterate that -- I would like to reiterate that the positive momentum built through 2025 places us in good steps to realize meaningful production growth in 2026 and to execute our medium- and long-term organic growth plans. Our steadily growing production profile, execution of the final deferred payment to Gold Fields and expiry of hedges late this year, resulting in a near-term inflection point in cash flow generation, which should subsequently drive shareholder value. Beyond this, we have developed a robust exploration strategy and clearly understand where further expansion of mineral reserves and resources will come from. I'm excited about the potential for mine life extension beyond the 8 years as we look to include underground mining and target expansion of open pit reserves. Our strong cash balance access to the revolving credit facility allows us to aggressively invest in exploration while comfortably funding waste stripping activities at Nkran. Also, a reminder that Galiano has highly leveraged the gold price and remains Ghana's largest single-asset gold producer, with production increasing by approximately 25% in 2026, line of sight to reserve expansion and high gold and record gold prices, the potential for value creation for our shareholders remains high. With that, I'd like to turn it back to the operator, and open up for questions. Operator: [Operator Instructions]. Your first question comes from Vitaly Kononov with Freedom Brokers. Vitaly Kononov: Yes. I have several questions for the production heavily weighted towards the second half of 2026, whether the key execution risk we should monitor and how confident are you achieving the ramp up profile? Matt Badylak: Well, I think the key risks that we see obviously is we're aware of the fact that throughput has an important role to play here. And we're really pleased in terms of the way that the crusher has ramped up over the second half of 2025 and are comfortable that crushing circuit will help deliver nameplate production in the range of 5.8 million tonnes per annum. The other thing, I think that we -- Mick touched on here is the fact that we are expecting grades to increase steadily as we continue to mine through lower elevations of Abore. And those 2 factors will be driving that production higher in 2026, and as we said, slightly weighted to the tail end of the year as well. Vitaly Kononov: Thank you. Well, given the downward revision to the guidance that was provided earlier in 2025, it was lower down. How does that impact your 5-year outlook from now on? Michael Cardinaels: Well, we expect to, as I said, have a slightly lower production profile than 2026, but we expect to ramp up further in 2027, more in line with previous guidance in terms of production levels. Vitaly Kononov: Just the last one. Following the Maiden Underground resources at Abore and Nkran, what should we expect initial -- when should we expect the initial economic studies published for those mines? Michael Cardinaels: We'll be working on, as Chris mentioned, additional drilling to supplement the underground resource that was just released, and we will be working through the studies this year with the aim of having something available in 2027. Vitaly Kononov: So that will be early -- well, released with the annual results of the next year, right? Michael Cardinaels: That's correct. That's the plan this point in time, depending on the... Operator: [Operator Instructions]. There are no further questions at this time. I will now turn the call over to management for closing remarks. Matt Badylak: Thank you, operator, and thank you for everyone who dialed in and took questions or asked questions. Thank you for your time today. I wish you a happy Friday and a good weekend. Thank you very much. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in ask that you please disconnect your lines.
Marlon Samuel: Good morning, and welcome to the Enbridge Fourth Quarter 2025 Financial Results Conference Call. My name is Marlon Samuel, and I am the Vice President of Investor Relations and Insurance. Joining me this morning are Greg Ebel, President and CEO; Pat Murray, EVP and Chief Financial Officer and the heads of each of our business units. Colin Gruending, Liquid Pipelines; Matthew Akman, Gas Transmission; Michele Harradence, Gas Distribution and Storage; and Allen Capps, Renewable Power. [Operator Instructions] Please note, this conference call is being recorded. As per usual, this call is being webcast, and I encourage those listening to follow along with the supporting slides. We will try to keep the call to roughly 1 hour. And in order to answer as many questions as possible, we will be limiting questions to one plus a single follow-up if necessary. We will be prioritizing questions from the investment community. So if you are a member of the media, please direct your inquiries to our communications team, who will be happy to respond. As always, our Investor Relations team will be available following the call for any follow-up questions. On to Slide 2, where I will remind you that we will be referring to forward-looking information on today's presentation and Q&A. By its nature, this information contains forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We will also be referring to non-GAAP measures summarized below. With that, I will turn it over to Greg Ebel. Gregory Ebel: Thank you, Marlon, and good morning, everyone, and thanks for joining for our Q4 call. First off, let me welcome Matthew Akman in his new role as EVP and President of Gas Transmission and Allen Capps to his new role as Head of Corporate Strategy and President of Power and introduce Marlon Samuel as the new VP of Investor Relations. Their backgrounds and experience have positioned them exceptionally well for success in these roles, and I know they look forward to working with you. Today, we'll recap another successful year, followed by an update on our opportunity set through the end of the decade before providing updates on our 4 businesses since our last quarterly earnings call. Pat will then walk through our record financial results, capital allocation priorities and give a refreshed view of our annual investment capacity. Lastly, I'll end the presentation with a few reminders on Enbridge's first choice value proposition before we open the line for any questions from the investment community. We had another great year of record financial results, exceeding the midpoint of our 2025 guidance for both EBITDA and DCF per share, marking the 20th year of achieving or exceeding our annual financial guidance. As we announced in December, we have now increased our dividend for 31 consecutive years, extending our status as one of the few dividend aristocrats in our sector. Our debt-to-EBITDA remains within our leverage range of 4.5 to 5x, maintaining our strong investment-grade credit profile while growing our investment capacity. From a growth and execution standpoint, we sanctioned $14 billion of capital across all businesses and placed $5 billion of assets into service during the past year. Our growth backlog has grown 35% since our Investor Day last March, underlying the ongoing and extended business and earnings growth opportunity we have before us. We continue to develop our relationship with our Whistler JV partners, acquiring a 10% interest in the operating Matterhorn Express pipeline. We also announced a historic investment in our West Coast pipeline system by 38 First Nations groups, allowing Enbridge to create alignment with indigenous communities and helping to advance economic reconciliation while actively recycling capital. Operationally, our assets remain highly utilized during the quarter with the mainline transporting approximately 3.1 million barrels per day on average. Our gas systems were also highly utilized in the quarter. And in recent weeks, we saw a number of all-time peak demand days for both our Gas Transmission and Gas Distribution and storage assets. To provide a couple of impressive stats, Texas Eastern recently hit new peak records, transporting over 15 Bcf per day in January. And in our utilities, Enbridge Gas Ohio hit its third highest throughput day in the company's 128-year history. And in the severely energy infrastructure short in New England, our Algonquin pipeline saw 9 of its top 25 all-time volume days this winter, underlying the need for energy affordability creating expansions of natural gas infrastructure in that region. At the utilities, we reached constructive settlements at both Enbridge Gas, North Carolina and Enbridge Gas, Utah and filed a new rate case at Enbridge Gas, Ohio. Lastly, we successfully extended contracts on a number of LP assets. And once again, our gas transmission assets had another 100% contract renewal rate with customers on our major pipelines. So now let's dive into exactly where we allocated our growth capital in 2025. Taking a look at the map, you can see we won more than our fair share of opportunities this past year, sanctioning over $14 billion of capital in 2025, putting us ahead of where we forecasted during last year's Investor Day. In Liquids, we FID-ed over $4 billion of projects, locking in the majority of opportunities we laid out for the Western Canadian Sedimentary Basin growth within the year. In Gas Transmission, we sanctioned projects supported by natural gas fundamentals, including industrial and data center demand, the LNG build-out, our customers' storage needs and deepwater offshore opportunities. Total capital secured in Gas Transmission during the year was approximately $4 billion, making significant progress on the $3 billion to $5 billion of opportunities we expected to sanction within 6 to 18 months of our Investor Day. In the utilities, we continue to invest approximately $3 billion of foundational capital per year to expand our systems and keep them safe and reliable. And finally, in Renewable Power, we've added $3 billion of capital to support technology and data center operations for companies like Meta. This places us well ahead of the timing we outlined at the Investor Day, where we showed $3 billion of late-stage opportunities with potential FIDs between 2026 and 2027. In total, our power and natural gas projects currently under construction are now completed, support over 7 gigawatts of power generation across multiple businesses. I think it's safe to say that just under a year since Enbridge Day, we have made tremendous progress on the commitments we laid out and continue to work hard to advance additional accretive projects. Continuing the momentum from 2025, our teams are busy advancing opportunities from our unsanctioned backlog. With fundamentals supporting expansion in each of our 4 businesses, we expect to reach FID on another $10 billion to $20 billion of growth projects over the next 24 months that will enhance energy security and affordability in North America and beyond. Gas Transmission has the largest opportunity set of our core franchises, driven by industrial and power demand, along with growing LNG exports and storage. Potential projects include expansions on Vector, Valley Crossing, Texas Eastern, Algonquin, opportunities in the U.S. Southeast and the Homer City redevelopment as well as additional storage expansions at Tres Palacios. In Liquids, supported by the WCSB production growth and overall global demand, we continue to advance opportunities, including MLO 2 and 3 and expansions to our regional oil sand assets. We'll continue to invest about $3 billion a year in our gas utilities to support new customer connections as well as opportunities driven by new power demand, including data centers. And in renewable power, we will remain opportunistic advancing projects to support demand driven by hyperscalers and other large tech companies and/or those seeking power from lower carbon sources. Now let's jump into the BU updates, starting with the Liquids segment. In light of recent geopolitical events, let's take a step back and remind everyone of our irreplaceable Liquids footprint. Our mainline is a vital connection between the growing production in the Western Canadian Sedimentary Basin and the refiners in PADD 2 and PADD 3, which are consistently drawing higher volumes of Canadian heavy crude. We saw strong demand throughout the year on the mainline, which was apportioned for all but 3 of the last 12 months, delivering on average 3.1 million barrels per day. In fact, the mainline was also in double-digit apportionment in January and February of 2026. Given Enbridge's unique asset footprint and our expectation that the low-cost established WCSB production and demand continues to grow, we do not expect any material impact from the recent geopolitical events involving Venezuela. In Q4, supported by growing production, we sanctioned the first phase of mainline optimization, which will add 150,000 barrels per day of additional egress out of the basin. The project also includes a 100,000 barrel per day expansion on Flanagan South and is expected to cost USD 1.4 billion and enter service by the end of 2027. As part of MLO1, the majority of our customers elected to extend their Flanagan South take-or-pay contracts beyond 2040. We're also commercializing mainline optimization Phase 2, which could add another 250,000 barrels per day of incremental egress in the 2028 time frame. Customers remain very interested in moving this project ahead, and it showcases the benefit of existing assets in the ground as this project leverages underutilized capacity on assets such as Line 26, Dakota Access and Chicap. MLO3 is also making progress. And although we're not in a position to provide much detail right now, the project will create further significant egress opportunities to support our customers well into the future. A quick update on Line 5. The U.S. District Court recently ruled in our favor, preventing the State of Michigan from taking further action to shut down Line 5. And the U.S. Army Corps of Engineers issued their final EIS, another step in the right direction for the Line 5 tunnel project. In our Gulf Coast and Permian franchise, the 80,000 barrel per day expansion of Gray Oak pipeline entered service in 2025 and the remaining 40,000 barrel per day expansion is on track to enter service in the first half of 2026. Lastly, we continue to expand our storage footprint at the Enbridge Ingleside facility as well as explore additional service offerings off the docks at Corpus Christi. Now let's turn to our Gas Transmission business. Our Gas Transmission franchise is well positioned to serve growing energy demand across the continent, and the team is currently working on a number of exciting projects. These opportunities will address a range of demand drivers, including electric and gas utilities, LNG exports and emerging data center powered needs. Currently, we're advancing over 50 potential data center opportunities that could require up to 10 Bcf per day of natural gas, and we expect to begin sanctioning these additional projects throughout 2026 and more in 2027. In the Permian, our JV investments in natural gas infrastructure are set to offer over 11 Bcf per day of long-haul capacity and are supported by over 2 Bcf of storage capacity at Waha. We're announcing today that along with our partners, the sanctioning of Bay Runner, an extension of the Whistler pipeline, which will supply gas to Rio Grande LNG facility in combination with previously announced Rio Bravo Pipeline for total capacity of up to 5.3 Bcf per day. We have also upsized the Eiger Express pipeline from 2.5 Bcf per day to 3.7 Bcf per day, driven by growing demand for natural gas transportation out of the Permian and supported by long-term customer contracts. Lastly, we're extending our U.S. gas transmission modernization program another year into 2029 and to highlight that the Appalachia to Market II project is now in service. 2025 represented a milestone year for gas distribution and storage as it was the first full year of operations for the U.S. gas utilities as Enbridge Gas. In Ontario, we continue to efficiently run Canada's largest natural gas distribution company with new rates in effect at the beginning of 2025. In Ohio, we received a somewhat disappointing rate case decision in the middle of the year, but maintained Enbridge Gas Ohio's allowed ROE at 9.8% on a slightly higher equity component. Since some time had passed since the original filing, we filed a new rate case at the end of 2025, updated with refreshed operating and financing costs. In Utah, we reached a supportive rate case settlement with rates in effect on January 1, 2026. And in North Carolina, we received a supportive outcome as well with rates in effect in November 2025 and welcome the addition of new major capital project riders to allow us to meet our customers' growing needs and realize a quicker return of capital for our investors. Finally, with growing power demand in all jurisdictions, we are finding increased need for access to low-cost gas feedstock for up to 5 Bcf per day of power generation and associated demand growth. This will further grow our utilities well into the next decade. Now I'll move on to the Renewables segment. Building on the Clear Fork Solar project, which reached FID in mid-2025, we are excited to extend our partnership with leading technology companies like Meta Inc., sanctioning Cowboy Phase 1 and Easter Wind, supplying over 500 megawatts of renewable power to support data center operations. Cowboy Phase 1 is a 365-megawatt solar and 135-megawatt battery energy storage project in Wyoming with the output secured by a fixed offtake agreement and the battery component of the project secured by a fixed toll agreement. The full output has been secured by a MAG 7 technology company. The battery system will be supplied and operated by Tesla, the leading supplier in North America and can be expanded up to 200 megawatts after the approval from the utility, which is expected in the first half of 2026. This project's CapEx is USD 1.2 billion and is expected to enter service in 2027. Easter is an onshore wind project being built near Amarillo, Texas, with a capacity of 152 megawatts. This USD 400 million project is secured by a renewable power purchase agreement with Meta. In total, our power partnership with MAG 7 companies is set to provide over 1 gigawatt of renewable generation to support operations and add new generation to the local grids. Looking ahead, we still have over 1 gigawatt of projects in the queue that we're advancing, remaining opportunistic while continuing to ensure these projects will realize mid-teen returns. Providing an update on 2 of our projects under construction, I'm happy to announce that the first phase of Sequoia Solar entered service in December, and our Courseulles Wind project in Europe remains on track to enter service in 2027. With that, I'll now pass it over to Pat to go over our financial performance. Patrick Murray: Good morning, everyone, and thank you, Greg. I'm pleased to report again record fourth quarter and full year EBITDA, DCF and earnings per share. Compared to the fourth quarter of 2024, adjusted EBITDA is up $83 million. DCF is up $0.06 and EPS increased $0.13. In Liquids, strong mainline volumes, annual escalators and lower power costs led to year-over-year increase in the segment, net of earnings sharing. We experienced a strong fourth quarter in our Gas Transmission business with incremental contributions from the acquisition of an interest in Matterhorn and placed the Venice Extension into service. As well, we saw favorable spreads at Aitken Creek and had exciting recontracting on our U.S. Gas Transmission assets. The gas distribution segment is up relative to last year, driven by rate escalation, customer growth in addition to colder weather and strong storage results in Ontario, higher rates in North Carolina and recovery of capital investments in Ohio also increased the EBITDA. In Renewables, results were lower compared to last year due to the absence of investment tax credits relating to the Fox Squirrel Solar project, which we put in service in Q4 of '24. Lower maintenance costs due to increased buying power at our gas utilities and lower current income tax driven by investment tax credits and benefits from U.S. tax legislation changes further increased DCF per share year-over-year. I'm also pleased to reaffirm the 2026 guidance that we put out in early December. We continue to be confident that we'll achieve our full year EBITDA expectations between $20.2 billion and $20.8 billion and DCF of between $5.70 and $6.10 per share. Our growth is driven by $8 billion of new assets expected to enter service throughout the year and across enterprise cost savings initiatives. So far, in '26, the mainline has been apportioned in January and February, as Greg noted, and we've experienced colder-than-normal weather in most of the eastern parts of North America, providing a strong start going into the year. As a reminder, Q1 and Q4 are typically our strongest quarters, primarily driven by the higher earnings attributable to our gas utility franchises during winter periods, the absence of heat restrictions on our liquids assets as well as more peak days in gas transmission. Now let's discuss our capital allocation priorities, which also remain unchanged in '26. We're committed to continued equity self-funding and benefit from the natural stability of our regulated assets and predictable cash flow streams. On the leverage front, our balance sheet remains strong. Our debt to adjusted EBITDA sits up 4.8 and our 4.5 to 5x range remains unchanged. Core to our value proposition, we will continue to sustainably return capital to shareholders through dividends with $40 billion to $45 billion of distributions expected to be paid out over the next 5 years, all underpinned by growing regulated and contracted cash flows. And our 60% to 70% DCF payout target range remains unchanged as well, with us sitting right around the middle of the range today. To fuel long-term growth, we'll continue to target accretive brownfield projects supported by strong energy fundamentals. With the project additions this quarter, our current backlog now sits at $39 billion and extends through 2033, highlighting our ability to execute on the opportunity set we laid out in front of investors back in last March. With that, let's look at our annual investment capacity and how that also continues to grow. As our cash flows grow, so does our annual investment capacity, which now sits between $10 billion to $11 billion annually, supporting investments in growth projects across all 4 of our core business units. Our balance sheet strength gives us the ability to pursue $6 billion to $7 billion of organic growth projects annually, in addition to the $4 billion of foundational capital that will support our utility growth programs, gas transmission modernization and liquids mainline capital investment. We continue to realize improving returns, showcasing our efficient use and deployment of capital. That's evident in our improving return on capital employed, which has consistently tracked upward these past number of years via optimizations of our business, annual cost savings from scale and technology advances and accretive M&A. These returns are further compounded by the project slate we sanctioned in 2025. On average, the growth projects have strong return on capital employed with an average of approximately 11% across all organic projects. Securing strong return projects, combined with cost and revenue optimizations on existing assets creates a compounding effect, which will continue to grow our investment capacity into the future. With that, I'll turn it back over to Greg to close out the presentation. Gregory Ebel: Well, thanks very much, Pat. And as you've just heard, it was a busy quarter, capping off an incredible year, and I'm proud of the rapid progress our teams have made since our last Enbridge Investor Day. In an ever-evolving North American energy landscape, Enbridge continues to be very well positioned to realize ongoing growth. Our disciplined capital allocation approach and our low-risk business profile continues to drive consistent long-term shareholder value and a first choice investor proposition. Supported by long-term agreements and regulatory frameworks, Enbridge generates predictable cash flows, which have enabled 31 consecutive years of dividend increases. And going forward, we expect to achieve 5% growth through the end of the decade, supported by our now $39 billion of secured growth capital. Our scale and diversity provides us with capital optionality that few in our industry possess, and we will continue to evaluate accretive investments across our entire footprint. With that, I'll open the call to questions. Operator: [Operator Instructions] Your first question comes from the line of Sam Burwell from Jefferies. George Burwell: Noticed that the investment capacity increased by $1 billion, which makes sense. But the longer-term post '26 growth trajectory still looks around 5%. So just curious how those 2 reconcile. And also curious if there might be maybe some underappreciated upside in '27, '28 EBITDA growth given that 2026 was a little bit of a softer year, but you've got a lot more capital entering service in 2027. Gregory Ebel: Yes, I think it's fair. I think TheStreet consensus still is probably like 3%. So as we've said, we're very confident in getting to the 5% number. obviously, that capacity grows with EBITDA growth. And as we bring in more projects, I think it reconciles with that, right? So as we spend more capital, you need more capacity. We've got the more capacity with the EBITDA growth. So I'm not sure, Pat, I don't know if there's anything to add on that front. Patrick Murray: Yes. I mean I think that we've always assumed that if we put projects in on time, on budget with good returns that, that capacity would continue to grow. And so that was baked in or acknowledged as we thought about our growth rate through the end of the decade. And we just get more and more confident, as Greg said, with the backlog of strong returning low-risk projects that we'll be able to meet that. So I don't think it just helps TheStreet to understand that we've got a fair amount of capacity here as we move forward. Gregory Ebel: As I said, we're comfortable with the 5% growth. I guess if -- what other dynamics out there are we looking at? Obviously, from where we were a year ago, the Western Canadian Sedimentary Basin situation looks positive, more production there, better attitude from governments about the competitiveness of Canada and seeing production grow there. So I guess that could create some opportunities. And you're already seeing that in MLO1 and MLO2. And as we said, the possibility of an MLO3. Gas transmission, I think you just heard us talk today about you'll see more FIDs here in the next year and into 2027 as well. Gas Distribution, you make a good point there. I think we bought those gas distribution assets in the U.S., we were looking at 8% type rate base growth through the end of the decade, and now it's closer to 10% rate base growth. And then I wouldn't be surprised if we exceed our power CapEx estimate that we laid out at the last Investor Day, and you see that already as we -- as customers are looking for electrons. I don't really care what color the electron is. They're looking for electrons, and you've seen us cut deals here announced today with Meta and MAG 7 players. So all that plays into it. We're moving a big ship here, of course, at $20 billion and a couple of hundred billion dollars enterprise value. But I think you're on the right track and actually pleased to see TheStreet looking for more on top of the 5% as to wondering how we're going to get to the 5%. George Burwell: Okay. Yes, that's a big ship indeed. And I appreciate your comments earlier on Venezuela, but I just wanted to drill down a little bit more on that. I mean, is it fair to characterize the framework being all right, there's growth in the WCSB. That growth will, in all likelihood, fill up TMX. And then after that, any growth that materializes and there should be growth that's already baked into the cake as projects going to be sanctioned, that needs to clear via your full path to the Gulf Coast, and that's what gives you confidence in advancing MLO2 and then mentioning MLO3 today. Gregory Ebel: Well, I think I'll let Colin chime in, but I think there are several aspects to it. A, there continues to be a need on the Gulf Coast for heavy crude even, and we don't underestimate it, even if you see Venezuela barrels come in, and I think the smart consensus is called that maybe 400,000 or 500,000 barrels. There continues to see Canadian crude export it. But we're continuing to see an increase of the utilization of the mainline. As you heard us say, all but 3 of the last 12 months, we saw apportionment and big start of apportionment, I think, going back to even before TMX started up in January and February. So I think producers want to go south first, Colin. Colin Gruending: Yes. I think so. Sam, I think your framework is roughly right. And maybe there's a West Coast solution in there in a bigger way someday. But in the meanwhile, and in this uncertain environment, I think our historic playbook of iteratively expanding the mainline is a winning formula and kind of fits the pistol of customers on both the supply push and demand pull end of things for -- to try to find certainty. And MLO2 solves that 2028 egress bottleneck that's going to emerge. So its advantages that it's in service in '28. But I think you got your framework roughly right. And just watch that Canadian supply growth and disposition Gantt chart that we're filling in. Operator: Your next question comes from the line of Rob Hope from Scotiabank. Robert Hope: Given the project backlog, which could include $10 billion to $20 billion of projects sanctioned here over the next 2 years, how do you think about the potential to exceed the $10 billion to $11 billion of annual investment capacity and relying on other sources of funding to capture what is an increasingly growth-rich environment? Gregory Ebel: Yes. I mean Pat can add in here, but I think we feel very good about it. Rob, even added those projects, they don't all happen instantly, right? Even our $39 billion current backlog runs through 2033 kind of time frame. So fits very much in that. And remember, that capacity will also grow as EBITDA grows, right? So to put it in rough terms, every dollar we raise in EBITDA is going to create capacity of $4 to $5 in debt capacity. So I think we feel very good about that. Now that being said, we're always looking at recycling capital. You saw us do that last year in a very smart way and one that I think helps our overall business, such as Dawn project where we sold 12.5% of the West Coast pipeline to some 35, 40 indigenous nations. So there's opportunities like that, that we look at. So I feel very good with where we are from a balance sheet perspective. But yes, I always look at recycling capital to help create that buffer and allow us to continue to add more to the backlog. Robert Hope: That's great. I want to go back to Venezuela. So it doesn't appear that Venezuela slowed down MLO2 at all. However, when we think about MLO3 and the timing for that project, could we need to see increased clarity on either increased exports out off to the Gulf Coast, what the Venezuela situation looks like? Or do you think in any case, Canadian crude will find a home in the Gulf Coast and that MLO3 has a good chance of moving forward? Gregory Ebel: Well, I think it's a bit of the all above. The only other addition I would add there with MLO3, what we really need to see is actually the change in policy in Canada that meets the desires that the Prime Minister has articulated by increasing oil and gas production. So those changes are spoken about pretty openly. And that's what has to come first, right? Production growth first, pipeline second. So I think that's a big element of it. But Colin, I know we haven't got a lot of details out there on Line 3 yet -- or MLO3, but do you want to speak to that? Colin Gruending: Yes. So let's call it MLO3, but you could probably call it MLO126 because we've expanded the mainline a lot of times. And we just simplified the numbering to keep it simple for current vintage of participants. But -- and there's -- we're developing multiple options for MLO3, small, medium, large, depending on what industry needs. I think on Venezuela, listen, it's early days and certainly, the longer-term outcome there is uncertain. But we'll see how quickly Venezuela grows its production, then we'll also need to evaluate what portion of that increased supply growth comes to the U.S. Gulf Coast. It's on VLCCs for the most part, and some of it may well stay on the water and feed the global refineries it has historically, but perhaps at a higher price for that country. I think that's one of the objectives. Also remember, Rob, that there is probably another 400,000 barrels a day of U.S. Gulf Coast heavy refining capability on top of what's being utilized today. And also don't forget about the inevitability of re-exports of Canadian crude off the U.S. Gulf Coast in meaningful scale over time. So listen, the U.S. Gulf Coast is the world's best heavy refining market and Canadian crude is a meat and potato part of the diet there. So I think it's still going to work pretty well all around. Gregory Ebel: Yes. Rob, I'd say there's multiple ways for us to win. So it's a good question. I think Colin's laid out some great ones here. And the Venezuela piece is a supplement to Canadian heavies, not a replacement. The other thing I think you should think about is if there is more of that kit on the Gulf Coast used with Canadian heavies, maybe that means less light Permian needed on the Gulf Coast, which would mean more of those light barrels would actually probably get exported. Guess where those get exported? From Ingleside. So I think it really underlines the Swiss Army knife as Colin likes to call it, of the super system we've created down there really to find ways for Enbridge liquids system to win in all scenarios. Operator: Your next question comes from the line of Theresa Chen from Barclays. Theresa Chen: Greg, on your last point about potential expansion capability or pushing further WTI volumes out of Ingleside should the Gulf Coast refining heavy up their crude feedstocks. Curious to hear what kind of expansion capability do you have there beyond what you sanctioned thus far? And to what extent would that necessitate expansion of your own pipeline feeding that facility versus barrels potentially going on competitor's pipelines in that area? Gregory Ebel: Yes. Remember, we have pieces of Cactus and Gray Oak. So those lines are seeing some expansion. In fact, some Gray Oak expansion continues to come on next year. Remember, we've added some storage capacity at Ingleside. And then, of course, last year, picked up some more dock space. So I think we're in good shape. And in fact, optimizing the utilization of the VLCCs, Aframax, Suezmax on the right dock, if you will, so that you fully utilize via the bigger dock, the VLCC docks as well as the smaller docks. So Colin, any other pieces to add there? Colin Gruending: Yes. No, astute question, Theresa. We have lots of headroom at Ingleside, right? We acquired neighboring docks from Flint Hills. We've got lots of permitted headroom on the docks. We've got lots of land. We're still constructing right now tanks. We could do more of that, and we're 3/4 of the way through the Gray Oak expansion and can do more there, too. So that's a big long-term opportunity that we'll continue to realize for many years as the Permian grows again. Theresa Chen: Understood. And on the heels of so many questions about the geopolitical backdrop, understanding that the situation is still evolving. And with your commercialization efforts on MLO2 and 3, how should we think about how the discussion of the marginal all-in rates are coming to terms is -- as the projects come to fruition late decade and beyond? And how do those economics compare versus the current committed and spot rates on mainline as we think about the upcoming renegotiation for the system, the ROE color over the next couple of years? Colin Gruending: Are you asking about the competitiveness of our tariffs on the expansions basically? Theresa Chen: I'm asking about like how the tariffs -- the discussion of where those tariffs are on the expansions under development changed since we've had incremental rerouting or expected rerouting of Venezuelan barrels to the Gulf Coast. I imagine no from MLO2 because that is into the PADD II market. I mean, those refineries are not going to see a drop of Venezuelan crude. But from MLO3, if that is a Gulf Coast oriented pathway, how does that change your economic thinking on terms? Colin Gruending: Yes, I got you now. So yes, no, I don't think there's much to talk about here. Our tolls are competitive. They need to be competitive. They're often cost informed, right, especially as we socialize some of those tariffs to all mainline shippers. And remember that our expansions are optimizations. And so therefore, they're inherently efficient. So those tariffs should be in the money and very competitive. Gregory Ebel: And color, Theresa, just for clarity, like MLO2 is a full path. You're getting all the way to the Gulf too. So yes, you're getting demand pull and supply push into PADD II, but also all the way down to the Gulf too. And I think that's some of the great thing about the MLOs, they're modest incremental builds that allow producers to kind of witness the market as it develops and have that insurance egress, but also keep a keen eye on the geopolitical side of things. And that's one of the great things about it as opposed to, say, committing to a big greenfield that's probably post 2028. Operator: Your next question comes from the line of Aaron MacNeil from TD Cowen. Aaron MacNeil: I don't want to understate the Venezuela risks, but maybe for fun, I'll just take the other side of it. Not only have we seen apportionment on the mainline, but the level of apportionment has increased pretty meaningfully over the last few months. Has mainline demand surprised you to the upside? And have you observed sort of an increased sense of urgency from your customers given the high apportionment in February? And to the extent that you have a view, how are you thinking about Alberta storage levels going forward? Colin Gruending: Aaron, I mean this has been going on for 30 or 40 years, right? My whole career, I think we've seen strong demand for the mainline for a whole bunch of reasons. I'm not going to list them out here. But I think in the last couple of years, I think Canadian supply has probably surprised the consensus view to the upside a little bit. There's been a number of optimizations like we're doing upstream by our customers, really high return, quick cycle, attractive economics just to get more out of their existing -- they're basically re-rating their kit. And so I think that has probably surprised the consensus view, maybe us a little bit, but I think we've had a lot of conviction in the thesis the whole time. And it's in part why we designed the mainline tolling deal the way we did so that we could hustle for customers and participate in some of that upside. But as this continues and as Greg said, hopefully, the Canadian political deal continues and accelerates in light of the potential of Venezuelan competitive threat, and we can see more of this. Gregory Ebel: I think the other thing, Aaron, there's a good lesson in here, and you made the strong point about Western Canada. We've always had strong conviction, as Colin says, but I think the other aspect out there on the macro side that the market seems to underestimate is the power of consolidation and those major producers coming together and their ability, therefore, to wring out better economics and actually production at an economic rate. And that lesson needs to be considered as we think about the Permian, where, as you know, we've seen big consolidation there by really the best players on the planet in terms of oil production. And I fully expect they're going to find ways to grow that production at economic rates, which, again, I think is positive for Enbridge Systems, both north and south. So yes, good point. Aaron MacNeil: Maybe switching gears to Gas Transmission. You mentioned the $10 billion of projects in the near-term opportunity bucket. Can you just speak to the growth rate of the segment currently. Obviously, it significantly exceeds the corporate average. And how sustainable do you see that sort of outsized growth rate for the segment specifically. Gregory Ebel: Well, Matthew is here and he's looking at his chop. So I'll let him go at it. Matthew Akman: Yes. Thanks for the question. I think the big picture is everyone is starting to come on to the same page that the most important issues in energy these days for average people, which are affordability and reliability are going to be solved by natural gas. And so we see a long runway. There's, I think, a huge pent-up undersupply of pipeline capacity across the country. And that's the starting point. And then you layer on top of that the power demand and data centers that everyone is talking about. And of course, the export trends and looking to double exports out of the Gulf Coast. So we're extremely well positioned on all of those fronts. We talked this morning about some of the expansions out of the Permian and the Eiger upsize and the Bay Runner extension. But I think you can expect us also, as Greg alluded to, to be adding to our growth table in GTM on a few fronts in the near term. I don't know if you saw, but we just finished an open season on Vector into Wisconsin, a lot more demand there for power and natural gas for utility distribution. Texas LNG1, which we're very close to, has made great progress lately on both offtake and financing. You might have read about that. And storage demand appetite is voracious in the Gulf Coast. We have some more expansion opportunities there in the near term. So those are just some of the things I think you could expect us to be talking about pretty soon and adding to that near-term growth table. Longer term, when you look at all of our regions up and down the entire nation from the Northeast to the Southeast and pretty much all points in between, we see tons of opportunity in the Northeast, we have a relatively small expansion going on in Algonquin, but there's appetite for large expansion there. And you're starting to see things thaw in terms of permitting and the realization that it just doesn't make sense to have 40% of power generation come from oil -- burning oil in a cold snap or $150 gas, and we're the solution to that. And in the Southeast, just population growth and obviously, economic growth, and we have a couple of pipelines into there. We've been expanding SESH and we have Sabal Trail. So yes, we're just seeing fantastic opportunities all the way up and down the country. And I think you can expect to see growth out of us there in the near term and for many years going forward. Gregory Ebel: I think from a capital allocation perspective, it also allows Pat and I to make sure we get to pick the projects that actually provide the best returns and be very picky about the regions. And if they don't meet the returns that are going to get our growth rate or accelerate our growth rate, we don't have to allocate capital there. So it's a pretty nice setup from an investor perspective, but also from a capital allocation perspective. Operator: Your next question comes from the line of Maurice Choy from RBC Capital Markets. Maurice Choy: Just want to pick up on that last question about returns. Slide 14, you've discussed the enhancing of asset returns with 2025 organic projects about 11% and 2026 just under 10%. When you think about your $10 billion to $20 billion of projects over the next 24 months, are we expecting these projects to have similar 10% to 11% levels? Or are the project mix so vastly different that might be outside of this range on a portfolio basis? Patrick Murray: Yes, thanks for the question, Maurice. I think our view would be that given the amount of opportunities we have in front of us that they're probably going to average up that as we go through time here, whether it's our renewable projects that we've talked about being in those mid-teens, high-quality projects, strong returning in GTM. We haven't had as many liquids projects entering service as we will over the next 3 or 4 years, and those are some of our strongest projects as we go through things and then balanced out, of course, by the utility. So I think we're very confident that we can continue to improve returns and not only from the projects we're sanctioning, but from optimizing the base assets that we have as an organization, whether that's through things we've done on the mainline volumes, whether that's through cost, technology. So I think it's kind of a two-pronged approach, not just returns on new projects, but also on the base assets. Gregory Ebel: I think the other thing we think about is risk-adjusted returns as well because obviously, the utility doesn't earn those similar returns. But even there, we've seen in some recent rate cases to get slightly thicker equity and ROEs on that equity. So I think we try to balance both of those, which is one of the reasons why you can increase the dividend 30 years solid without being concerned about being whipsawed back and forth by whether geopolitical or economic cycles or politics. Maurice Choy: That makes sense. If I could take one step further in all our discussions about Canadian politics, given the Davos speech, geopolitical events, even the upcoming USMCA negotiations, have there been any signs in your regular engagement with the Canadian or Alberta governments on how they may support major energy infra projects, including perhaps backstopping cost overruns or financing? Gregory Ebel: Well, I have not heard that on the latter. But obviously, there's been lots of signs and signals. I think what we're looking for is actually concrete actions. So the MOU between the Government of Alberta and the Government of Canada was very encouraging. That's several months ago now, and the world keeps changing, right? So I think it's not so much about the signals and the speeches. It's more about the actions and the results that I think is what our customers are looking for, what our investors are looking for and what we're looking for. So yes, very positive on the signals very positive on the Prime Minister's comments about growing oil and natural gas. In terms of backstopping, that's an interesting one. I guess you could say there's things like loan guarantees that happen for certain stakeholders. I don't see that happening for the -- for private sector players. But some of these projects that are really big, you're going to need some type of commitment of stable policy and maybe backstopping until it's built, if you will. But we do that in the Northeast, too. Our Northeast utility customers, Northeast United States, given some of the starts and stops we've seen there on the policy-wise, we're not going to take the financial risk on development of projects. We're quite happy once we get the go-ahead to take the risk on building them. But we're not going to take the risk of them being stopped before they go into service or frankly, even FID because some of these projects, you're spending hundreds of millions of dollars before you even get regulatory approval. Maurice Choy: Understood. Just to clarify there, you're comfortable with the project development and your ability to deliver, but the policy protection and durability there that's the biggest crux of this. Gregory Ebel: Yes, that's exactly right. So many projects and the larger the project you want to go, you're talking many years, right, which you can get changes in policy and politics. I don't think investors or the infrastructure companies should be taking on all that risk of the development in jurisdictions that have historically created a challenge. Like again, I look at the Northeast United States, we've had projects where we would have spent several hundred million dollars and with the stroke of a pen project doesn't move forward. You saw that in Northern Gateway. We spent $600 million, combo of shareholder money and customer money and the rug was pulled out from underneath. So that's not the type of risk that we're looking to take on at this time. We don't need to with all the other opportunities. Operator: Your next question comes from the line of Jeremy Tonet from JPMorgan. Elias Jossen: This is Eli on for Jeremy. Just wanted to dive a bit deeper on the power demand opportunity set. Obviously, you've talked about the focus is on best returns. But we've seen some of your peers go for chunkier power solutions, including some behind-the-meter opportunities. Just in the context of this growing investment capacity, how should we think about whether you'd consider these larger power-focused projects and then what those returns might look like? Gregory Ebel: Yes. I think we're quite comfortable with finding the opportunities associated with power at GTM and GDS. I think as you look at GTM, sometimes I think it gets overlooked. But whether it's Line 31 in Louisiana or this AGT built or SESH or the TVA project, those are all chunky ways to play the power game. GDS, as you saw this morning, we're talking about 5 Bcf of gas infrastructure potential for power demand growth. And that's on top of the things like over 1 gigawatt of power infrastructure we put in place for Duke. You've seen us do things like that in Ohio, Novva Data Center in Utah. So I think there's ways to play there. And then importantly, of course, the renewable side. And I'll go back to -- I don't think most of our customers are that focused on the color of the electron these days. I think they're focused on the electron and some 3 gigawatts in the last couple of years that we've signed up for. We've been thinking about this a long time. In 2022, we bought Tri Global with a great background of large renewable projects that you can see us bringing into service. And you can't ask for better customers than Meta, than Amazon and Google, all of which we're playing. So don't see us going into the IPP, the gas IPP business. I mean maybe there's some bespoke opportunities here and there, but we like the long-term contracts that we're able to get with renewables, 15-, 20-year contracts, which are different than contracts often that you see in the IPP world of say, a decade or so. So the risk profile fits us better in the way we're going at this. And Allen is here, he may want to add to it as well. Allen Capps: I'll just mention one thing, too, that with the tax credit situation in the U.S., we've got over 2 gigs of safe harbored opportunities in the renewable space that should keep us busy for the next 3 years. So we have a really strong opportunity set on the solar, the wind and also the battery side as well. So we're excited about that, and I think we'll focus on that from a power perspective. Elias Jossen: Awesome. Appreciate the color. And then maybe pivoting to the kind of B.C. storage opportunity landscape. Can you just talk a little bit about some of the storage economics out there and what you're hearing from customers? I think sometimes the storage opportunity gets overlooked, but I imagine it could be pretty sizable for you guys. So just any messaging there. Matthew Akman: Sure. It's Matthew. So I think storage not just in BC, but across our entire footprint is a major theme. And the demand growth continues from obviously, LNG and then the power side. So we have in storage a significant expansion going on up in B.C. right now at Aitken, 40 Bcf. The market there is very attractive. And in Canada, a lot of that is going to be based on the factors that have driven storage in B.C., which is the appetite for LNG that's picked up the market there. And we're looking for, obviously, strong stakeholder and government support for further LNG exports out of Canada. There's been talk of expansion of LNG Canada, maybe a second phase and other projects. So we see strong organic growth on the rates we're getting and then obviously, just the expansion. And when you combine those, we're expanding by 20% to 30% across our storage footprint. And then when you combine that with just steadily increasing storage rates from these fundamental trends that you asked about, we're seeing great organic growth out of our storage business for the next few years. Gregory Ebel: The other thing, Eli, and Matthew, I think you'd agree is that we're seeing really interesting contracting where we still -- look, contracts for storage tend to be in the kind of 2- to 5-year range typically, but we're seeing big chunks of our storage being contracted for the long term as well, in some cases, up to a decade. So it's fitting the risk profile, sort of fitting the return profile. And as you point out, I think Aitken Creek does get overlooked. I mean it's the only major gas storage play that you've got in British Columbia at a time when, as you've seen on the Gulf Coast, as LNG projects come in, it's a pretty exciting opportunity for us. So I appreciate the question. Operator: Your next question comes from the line of Robert Catellier from CIBC. Robert Catellier: I just wanted to see if you could follow up on your answers to Maurice's question and provide some updated views on the progress that you're seeing in the Alberta, Canada MOU and setting the right investment conditions for a pipeline to the West Coast? Gregory Ebel: Yes, Rob, thanks for your question. I think what we're looking for, there's 2 important milestones that have been out there for a while that are coming up close. The April time frame where the Government of Alberta and Canada, I think, are trying to come to a solution on industrial carbon charge, stringency, et cetera, on those matters. That's going to be super important for our customers, producers to get a feel for whether or not Canada is competitive enough for them to continue to see the kind of growth that we've been seeing. So that's the key one. We continue to provide them advice along with others in the industry, SOBO, TMX, et cetera, on pipeline opportunity in the -- to the West Coast. But again, that's just on an advisory perspective. So I think there's -- I think there's a fair number of things still to come. But April is what I would look at to see if there's actually a solution, a competitive solution to the carbon issue for Canadian producers. Robert Catellier: I agree with that. Colin Gruending: Robert, sorry, I was just going to layer in. I think there's a lot of kind of media headlines around the West Coast pipe being kind of one of the Ps and then pathways being a second P. But grossly undercovered is the third P, which is, I think Greg -- getting production up to fill a West Coast pipe. And I think those are the signals that are dear to the equation that we should all be watching for. Gregory Ebel: And again, Rob, the nice thing is I think in the meantime, while we wait, I think we've got great solutions for our customers in MLO1 and 2. And if they get this right, obviously, 3, and we know somewhere down the road, perhaps additional pipelines in other directions. But again, I think the insurance egress we're offering there is an important one for our customers until the skies are a little clearer, if you will, on that P for production that Colin mentioned. Robert Catellier: Okay. That's helpful. I guess we'll have to wait and see how it evolves. My second question was, I wondered if we could have a progress update on wood fiber and how costs are tracking there versus expectations. Matthew Akman: Sure. Rob, it's Matthew. No major updates there. We remain on track for late '27 in service. We've made good progress on construction recently. We're about 60% complete on the project. 12 of the 14 modules are now on site. So we just have a couple left there, put in a new flotel in December. So everything tracking to plan and no updates on cost or in service. Operator: Your next question comes from the line of Manav Gupta from UBS. Manav Gupta: Congrats on the dividend hike. Investors always appreciate it. My question here is there's a lot of focus on Canadian heavy sour volume growth, but what is also growing out of Canada is light sweet crude, particularly if you look at some of the projections that CNQ is making. And one project which I find very interesting, which you kind of have been working on is trying to get like 250,000 barrels more to DAPL. I think you probably have to reverse the line that is going over there and then you probably work with it [ Ity ] to get more crude to DAPL. Can you talk a little bit about this particular project that gets more probably sweet crude from Canada into the U.S. refining system. Colin Gruending: Sure, Manav. And good observation, right? A lot of talk on heavy and less on light. So MLO2 is kind of a 2 for that way. It deals with the light, right, as you've talked about the path and then heavy on the mainline. And you're exactly right. That is the path we would move lights down the mainline and then reverse a cross-border pipeline that currently flows south to north to be north to south and connect it with Dakota Access Pipeline, which has some headroom and then that this Canadian crude would not displace Bakken producer headroom. So it fits nicely into that DAPL underutilized asset, of which we own a portion of and then moves that light crude down into Patoka and then back up to Chicago and to feed those PADD II refining markets and probably more markets than it does today. So there's a few embedded win-wins here, Manav. Manav Gupta: Perfect. My quick follow-up is and just -- you talked a little bit about it, but generally, what we are seeing is a lot of these behind-the-meter solutions come up and pipes are being -- laterals are being built, but we do believe not enough storage in terms of gas storage is being built, particularly around data -- where the data centers are coming up. So can you talk a little bit about gas storage opportunities in key target markets around the data centers. So if you could talk a little bit about that and how Enbridge could benefit from it? Matthew Akman: It's Matthew. I think you're on point there. If you look at how peaky some of the power prices have been in certain of the regions pretty much across the country. That's just going to continue to get worse unless we have more storage, obviously, and pipeline capacity. So those are some of the big opportunities. I think the storage itself is going to kind of be where the geology is. And we're really bullish on that, and that's why we're expanding. We're going to be up to 120 Bcf of storage in both the Gulf Coast and in B.C. over the next 2 years. Those are great positions and further expansion potential, as I alluded to. We're seeing storage rates that are very supportive of strong economics and returns. I think the contract duration is also extending, which is nice. And also the customer base is further diversifying. And so that is coming right further and further into our wheelhouse in the way we like to do things at Enbridge, longer contracts, strong double-digit returns and low or no commodity exposure. So we got a good position where we are, and you'll look forward to more expansions on those. Gregory Ebel: I think Michele, you might want to add. Sometimes it's forgotten, we have a nice unregulated storage position in our Gas Distribution business in the Great Lakes as well. And obviously, that's an area where you see both industrial growth, data center growth as well, too. Michele Harradence: Yes, that's right. I mean we have about 300 Bcf of storage in the Great Lakes region just in Ontario, and we have another 50 or so. So I think it's 290 of which we have about 110 unregulated at Dawn and 180 that's regulated. Then we have another 60 Bcf in Ontario. And of course, we have Wexpro, which is an important asset in Utah, all of which is really helping on the affordability front to Matthew's point about volatility, I mean, Dawn saw very stable prices in the last few weeks when we saw things escalating elsewhere. But in terms of expansion capability, we're looking across all of the GDS systems for more storage. We think it's incredibly important for our customers. And then on the unregulated side, we just keep chipping away. We added a BCF last year. We've got 4 Bcf we're adding to Dawn this year. We've got a number of projects in the pipeline. We see a lot of potential to keep adding to that and the same sort of dynamics that Matthew discussed about longer-term contracts, good contracts, exactly what we like. Operator: Your next question comes from the line of Ben Pham from BMO. Benjamin Pham: I had a couple of follow-up questions on the renewal power sleeve of your business. You mentioned the 1 gig you're working on the 2 gig safe harbor. Can you add context on the total development portfolio that you have in gigawatts? And what are your plans in terms of do you want to replenish it or not going forward? Allen Capps: Yes. Thanks, Ben. So right now, I mean, the total gross generation that we have when you include the growth is about 7.4 gigawatts. That's on a gross basis. I say that just because we do have some JVs that would dilute that a bit. But I think on a net basis, we're like 4.3 gigs if you include all of the growth that we have in the portfolio right now in the existing and what we have actually in service and up and running. But the point I was trying to make is that in a time where tax credits are a bit challenged with some of the -- with what's facing us probably in July 4, we've got a portfolio of diversified projects that meet well over 2 gigs of opportunity that we think all of which are -- have a lot of veracity and we think have a good shot at going into FID and ultimately into service, and that will keep us full for the next 3 years. Gregory Ebel: Ben, if your question is around would we pick up additional assets. I mean, I guess we could look, but that's not something we're looking at right now. We've got a nice backlog of stuff, as Allen said. And then post '28, we'll see where we are on whether power prices move up and/or there's change in policy and stuff, but a good setup right now for the coming years and through the decade. Benjamin Pham: Yes. I just want to clarify some of those numbers. So that 4.3 gigawatts, that's in service at this operation? Allen Capps: Yes. If you take what's in service, that's our net basis. So basically, some of our stuff is in JV. So on a net basis, our interest. If you take what's in service today plus what we've FID-ed and what we have under construction, you get to 4.3 gigs. Benjamin Pham: Okay. And then -- so then beyond that, you don't have lease agreements and land that -- some of these renewable companies have 10, 20, 30 gigawatts of sites that they're developing. I was more curious about that number. Allen Capps: Yes. Ours is more like about a little over 2. And if you think about it, when you think about the $1 billion to $1.5 billion of capital that we're targeting to spend on an annual basis, that's right in the sweet spot for us, like I said, over the next 3 or 4 years. Benjamin Pham: I got you. Maybe there's a left question on this on Ontario. You've -- in the past, you've all electric transmission, you got out, looks like the promise may be looking at competitive bidding projects. Is that something Enbridge will be potentially interested in going back in? Allen Capps: Well, you know we have the Gichi-gami project that we're looking at right now and which is a wind project. And we're bidding into the -- we bid into the ISO. They're waiting to hear back whether or not our bid was successful. That's something we're focused on in Ontario. Again, I'll just say this, one of the things on the Canadian side is it's a very competitive market and that sometimes people are willing to take returns that are lower than what we would. So we always have to focus on capital allocation. Our business unit competes against the other business units here on a healthy basis. So we have to make sure that we have good return projects. And sometimes it can be a bit challenged, but we think the Gichi-gami project could be a real good one if it does land. Gregory Ebel: But specific to electric transmission, I don't see us getting back into -- we were only there for a brief period of time, worked out okay on the sale. But electric transmission is a very different risk profile, and I would not hunt currently in Enbridge's opportunities. Benjamin Pham: Okay. Got you. I was specifically referring to that subsea transmission project that the government is looking at. Operator: And we have reached the end of our question-and-answer session. I will now turn the call back over to Marlon Samuel for closing remarks. Marlon Samuel: Great. Thank you, and we appreciate your ongoing interest in Enbridge. As always, our Investor Relations team is available following the call for any additional questions that you may have. Once again, thank you, and have a great day. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Welcome to the Colliers International Fourth Quarter Year-end Investors Conference Call. Today's call is being recorded. Legal counsel requires us to advise that the discussion scheduled to take place today may contain forward-looking statements that involve known and unknown risks and uncertainties. Actual results may be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements in the company's annual information form as filed in the Canadian Securities Administrators and the company's annual report on Form 40-F as filed with the U.S. Securities and Exchange Commission. As a reminder, today's call is being recorded. Today is February 13, 2026. And at this time, for opening remarks and introductions, I would like to turn the call over to the Global Chairman and Chief Executive Officer, Mr. Jay Hennick. Please go ahead, sir. Jay Hennick: Thank you, operator, and good morning. I'm Jay Hennick, Chairman and Chief Executive Officer of Colliers. Joining me today is CFO, Christian Mayer. Our call is webcast and a call deck is available in the Investor Relations section of our website. 2025 is an exceptional year for Colliers, repeat, an exceptional year for Colliers, reflecting the strength of our diversified platform and our successful expansion into other high-quality recurring professional services. Today, more than 70% of our earnings come from these resilient businesses, approaching 75% once recent acquisitions are included. Our fourth quarter results were in line with expectation and were up nicely over last year, which itself was a very strong year-over-year performance. Last week, we achieved another milestone, agreeing to acquire Ayesa Engineering, a world-class business and a rare opportunity at this scale. This acquisition meaningfully expands our avenues for growth, strengthens our ability to scale organically, pursue further acquisitions and cross-sell engineering capabilities across our global client base. Once closed, Colliers Engineering will rank among the top 30 global engineering firms with expanded presence in Europe, Latin America and the Middle East. Operationally, in commercial real estate, we had another solid quarter. Capital markets continued its rebound, especially in the U.S. and leasing activity held steady with strength in both office and industrial. Demand for outsourcing solutions, including property management, valuation and other advisory also grew nicely as clients continue to look for trusted and experienced partners with global execution capabilities. Engineering delivered another strong year of growth with internal performance and meaningful contribution from acquisitions. Growth will accelerate even further once Ayesa joins the platform. Investment Management ended the year with over $108 billion in assets under management, reflecting deep investor confidence in our investment strategies across the entire Harrison Street Asset Management platform. Throughout the year, we continued investing in leadership, talent and innovation across the board, reinforcing the entrepreneurial culture that defines Colliers. Our partnership model remains a key competitive advantage with meaningful inside ownership across the board, keeping leaders fully aligned with our clients, our investors and our shareholders. We enter 2026 with strong momentum once again and a healthy pipeline. We expect another year of solid internal growth, ongoing contributions from recent acquisitions and a meaningful uplift once Ayesa closes. Over the past 5 years, despite challenging and often unpredictable conditions, Colliers doubled its size, delivering compound annual growth rates of more than 15%. And based on what we see today, we expect similar performance again in 2026. Our strategy is working. Our teams are performing, and we're extremely well positioned for future growth and value creation. Before I turn things over to Christian, a brief comment on AI, which is all the rage. At Colliers, we see AI as a productivity and growth enabler. It is helping us automate routine work, improve efficiency, expand margins, allowing our professionals to focus on higher-value advisory services that are complex and rely on judgment, expertise and trusted relationships. AI also strengthens our data advantage, combining our proprietary information with advanced capabilities through our partnership with Google Cloud and other third-party providers to deliver better insights and better execution for clients. Importantly, AI enhances rather than replaces our business across all 3 segments. judgment, accountability, qualifications and licensure as well as important client relationships remain central to how we operate. Put simply, it makes our professionals even better at what they do for our clients. While recent share price movements suggest AI near-term impact may be overhyped, we believe its long-term value is as an enabler and is truthfully meaningfully underappreciated as future potential for Colliers and its future. Let me now turn things over to Christian. Christian? Christian Mayer: Thank you, Jay, and good morning. Please note that the non-GAAP measures discussed on this call are defined in our press release and quarterly presentation. All revenue growth figures are presented in local currency terms. For the fourth quarter, we generated revenues of $1.6 billion, up 5% year-over-year with growth across all segments. Overall internal growth for the quarter was essentially flat and was impacted by a strong prior year comparison. On a full year basis, internal revenue growth was up a solid 5%. Adjusted EBITDA was $245 million for the quarter, up 6% over last year, in line with revenue growth. Fourth quarter Commercial Real Estate segment net revenue was up 7%. Capital Markets revenues increased 13%, led by strong activity and market share gains in the U.S., where we saw our investments in recruiting and multi-market connectivity driving continued market share growth in a recovering market, albeit slower than we all would like. Growth in EMEA and Asia Pacific was modest against a strong prior year comparative. Leasing revenues were up 3%, also led by the U.S. in the office and industrial asset classes, again versus a strong prior year comparative. Outsourcing grew 8% in the fourth quarter with our valuation practice driving the growth. Segment net margin was 15.8%, up 50 basis points year-over-year on operating leverage from higher transactional revenues. Our Engineering segment net revenue was up 8%, led by recent acquisitions. End market demand continues to be strong, especially in infrastructure, transportation and environmental consulting, offset by a temporary slowdown in certain project management operations in the quarter. The net margin was 12.4%, slightly lower than last year on lower overall productivity. Our revenue backlog is strong across the segment and provides excellent visibility for the year ahead. Investment Management net revenues increased 6%, driven by a recent acquisition. The net margin declined slightly to 42.5% as we continue to integrate our operations under the Harrison Street Asset Management brand. These strategic investments are crucial for strengthening our capital formation capabilities and unifying nonclient-facing functions. We expect these costs will continue to impact our margins through the first half of 2026. Our IM segment raised $2.1 billion in new capital commitments during the fourth quarter and $5.3 billion for the full year, in line with our expectations. Fundraising momentum was solid as we enter 2026 with several funds currently in the market, including our latest flagship infrastructure fund, which launched in December. Our fundraising target for 2026 is $6 billion to $9 billion as we accelerate the pace of attracting institutional and private wealth investors looking for differentiated alternative investment solutions. Year-end AUM, as Jay mentioned, was $108 billion, flat relative to September 30, with new capital raised offset by asset sales in older vintage funds and accompanying returns of capital to our LPs. As in the past, we anticipate our LPs will reinvest a significant portion of the returned capital into our new funds. Now turning to our balance sheet. Our leverage declined to 2x as of December 31, with the benefit of strong seasonal cash flows. The recently announced Ayesa acquisition will add approximately 0.7 turns of leverage on a pro forma basis. The USD 700 million equivalent purchase price will be funded from our revolving credit facility, which currently has over $1.1 billion of available capacity and will be euro-denominated, bearing interest at a very attractive rate of approximately 4%. As Jay noted, we are entering 2026 with strong momentum. Across our company, there's a tangible sense of optimism about our strategy, the investments we are making, the increasingly resilient profile of our revenues and the avenues for growth in each of our diversified segments. In that spirit, we are introducing our outlook for 2026 as follows: in commercial real estate, we are expecting low teens top line growth and a modest increase in net margin, predicated on a continuing recovery in Capital Markets. It's important to note that even with this growth, our capital markets activity will remain well below prior peaks. Our Engineering segment is expecting mid-single-digit internal growth and the impact of acquisitions, including Ayesa, resulting in total top line growth of over 25%. This growth is supported by a strong backlog and favorable trends in infrastructure, urbanization and energy transition, along with increasing data center demand. Investment Management net revenue growth is expected to be in the low teens, with growth led by higher management fees as fundraising continues to accelerate. Putting it all together, we're expecting mid-teens growth in all 3 of our key operating metrics. That concludes my prepared remarks. Operator, can you please open the line for questions? Operator: [Operator Instructions] Your first question comes from the line of Tony Paolone from JPMorgan. Anthony Paolone: I would like to start with engineering and just a bit on the organic growth there. As you roll that up, if I think about that business, I think about it being like an hourly rate, number of professionals and the number of hours worked. Can you talk about just like what's happening with some of those trends organically and where you're finding success or not and sort of those revenue synergies as you roll this up? Christian Mayer: Yes, Tony, I'll take that. As we mentioned, demand for our services is strong across all the end markets. In terms of the questions you're asking pricing and hours and things like that, we're seeing opportunities to increase pricing. There is strong demand for our services. We're getting nice increases from institutional, public sector and private sector clients. In terms of professionals, we're hiring. The market is still tight for qualified engineers, but we are growing our workforce to meet the demand. Our backlogs are strong, as I mentioned in my prepared remarks, and that is driving our utilization. We have business in infrastructure, power, transportation, property and building work with programmatic clients and distribution and retail. These activities are all going strong and will drive our hourly work and our ability to increase the utilization of our staff and our margins. Jay Hennick: Let me add, Tony, a couple of things that just maybe simplify some thoughts. Probably 60% of the Engineering business is what I would categorize as design which is design of all types of solutions, which is not hourly based, although we do manage our labor on an hourly basis, but it is not priced to clients on the basis of an hourly rate. The balance of the business is more, I would say, closer akin to project management. Once the design is complete and needs to be executed upon, it's closer to an hourly rate kind of structure. So we love that business because the design aspect allows us to generate higher margins, yet the hourly rate portion or the project management portion is something that is certain. It is long term. For example, we have some clients where the execution of the project may be 10 or 12 years where we're allocating x number of people for a long period of time to oversee the completion of the work. So it's a very interesting business opportunity for us. It's a very good business. And as Christian said, there's a shortage of engineers virtually everywhere in the world, which is driving up pricing. We'd like it to drive it up a little bit more, but it is driving up overall pricing because it's hard to get qualified engineers. So I thought I'd add that a little editorial. Anthony Paolone: No, that's really helpful because it kind of ties to the follow-up where I was going to go with just some of these concerns around AI and thinking about if the -- if everything gets more efficient and they could do more work quicker, does that have any implications on sort of the billable hours or just the TAM of revenue? Or are there just other ways to charge? I mean, just trying to think about how that could be disrupted by. Jay Hennick: Well, for sure, on the design piece of the business, automation of all kinds, including AI helps drive our margins up because our professionals can do the mundane, the menial tasks faster and get to the real value-add stuff. So we see some real advantages from that aspect of our business. Operator: Your next question comes from the line of Daryl Young from Stifel. Daryl Young: I wanted to start with a question just on capital allocation and specifically where the share price is today and your thoughts on buybacks or an SIB? Jay Hennick: I'd love to buy back stock right now. But we have lots in the pipe, including Ayesa, as you know. And we believe more behind that. So we're watching our capital carefully. It's very easy to do an equity offering and dilute shareholders, but that's never been our MO. We're in the business of creating long-term shareholder value. So buying back stock is not really in the -- as a corporate matter is not really in the plan. But on a personal level, it might be in the plan. Daryl Young: Okay. And then switching to Investment Management. Some of the integration cost pressures have gone on a little longer than I think I originally had expected. Is the scope of what you're doing there changing and evolving? Or maybe just a little bit more color on the continuation of those pressures. Jay Hennick: Well, we don't really see them as pressures, but it will continue again in '26. Christian will add a few little tidbits in a minute. But we're actually getting a little more ambitious on some of the initiatives as we bring everything together. And we're liking where we're coming out. So we're going to continue to do what we think is right in terms of creating a spectacular platform under a unified brand. Christian, do you want to add? Christian Mayer: Daryl, I'd just add that we have been messaging for some time that we're going to be incurring additional costs to integrate and bring together this business. And as I mentioned in my prepared remarks, which is consistent with what I've been saying previously, we do expect this to continue through the first half of 2026 until we sort of complete the work and realize some of the benefits of the work we've been doing. Operator: Your next question comes from the line of Erin Kyle from CIBC. Erin Kyle: I wanted to start maybe on the macro here. And if you can just give us some more detail on what you're seeing from a macro perspective as it relates to the capital markets pipeline here? And then maybe just elaborate a little bit on what's baked into that 2026 guide and whether it depends on some additional rate cuts here. Christian Mayer: Yes. Erin, we're not counting on rate cuts in terms of our outlook for capital markets. Capital markets is benefiting from a pent-up supply or pent-up demand and pent-up supply of transactions. As you know, transaction activity has been slow for a number of years, and there's a lot of people in the market that want and need to transact, and that's starting to turn into revenues for Colliers. So that's really what we're seeing. We had strength in 2025 in capital markets, and we expect that to continue in 2026 with more transactions happening at all price points across all markets. '25 was led by the U.S. I think the U.S. will continue to be very strong. And hopefully, volumes will pick up in EMEA and Asia Pac, which have been a little bit slower. Erin Kyle: Could you just remind us what the U.S. exposure is specifically in Capital Markets as maybe a percentage of that business? Christian Mayer: About 50%. Erin Kyle: Okay. That's helpful. And then I just wanted to clarify on the Engineering segment. What was the internal growth in the quarter and for the year? I don't think I saw it in the slides this quarter. Christian Mayer: Yes. Engineering internal growth was roughly flat on the quarter and 5% on a full year basis. Operator: Your next question comes from the line of Stephen MacLeod from BMO Capital Markets. Stephen MacLeod: Lots of great color so far. I just wanted to ask just a little bit about the sort of AI trade we're seeing going on in the marketplace right now, the stock marketplace that is. Jay, you referenced some of it in your prepared remarks, but I was just curious if you could give maybe a few examples of how you intend to leverage AI in the future. Maybe you gave a little bit of color there. And then I guess, separately from that, where you might see some potential risks to the business, if any? Jay Hennick: So let me just sort of start with -- we don't buy and sell commodity real estate or lease commodity real estate. I heard somebody musing yesterday about selling condos. That's very different than what we do. Our professionals are handling high-value complex transactions, multiple variables. They need their judgment, they need experience, they need relationships. So AI is not going to impact their business other than to make them better at what they do. And as I said, we have -- there's sort of 3 buckets there that are interesting and valuable to our professionals. One is our own data sets, and we have significant data sets that we've accumulated over many, many years, market by market, category by category, real estate asset type by real estate asset type. And all of that is including valuation information, including real estate, property management data sets. All of those are valuable in our computer systems, et cetera. We've also entered into this partnership with Google Cloud, who have the biggest real estate, it's an exclusive partnership. We're the only ones in the industry. And they have unique and probably the most real estate -- commercial real estate data out there. And so we're leveraging that as well as their capability at doing what they do, which I think is sort of top drawer. And our existing software suppliers are also moving in the way of AI in a rapid format. So when you bring all of those things together and you integrate that -- and by the way, this is going to be a long-term process. This is not going to be turned on this year and you're in business. This is going to be a 2-, 3-year process to maximize the value. We -- we're trying to be very pragmatic about it. We're focusing on higher-value output first. But there's all of that data that we will be able to arm our professionals with that we will be able to allow them to advise clients better as they make decisions. The second piece, as I talked about, is how do we get rid of the redundancy, increase the efficiency. There's so much that has over the past. And this is not this year, and it's not because of the fancy phrase called AI. We've been automating processes for years now and in areas like valuation and other areas where there's just a lot of mundane tasks. What AI is allowing us to do is accelerate that process. And we think that we'll become way more efficient. We'll be able to reduce our costs, not just our IT costs, but also labor across the world, and that's going to only drive increased margins. So we're quite excited about both of them. Our CapEx this year around IT is bigger than it's ever been before in terms of our history by a meaningful amount. Our teams are centralized and excited about the possibilities. And what we have to do as good stewards of capital is make sure that they're staying focused on the biggest opportunities for us rather than shotgun approach. So we're quite excited about all of this. But let's just put it into the -- this is just what we do for a living. This is what we do to enhance our business. And there are so many other areas we're going to continue to grow our business. This is just going to make us better. It's going to increase our moat even more. It's going to create more value for our professionals. And all of that just leads to a better, stronger long-term business called Colliers. Stephen MacLeod: Yes. That's great color, Jay. And it sounds like it's going to be a net benefit, absolutely. I just appreciate the color just given the backdrop. So that's why I asked. Just maybe one more question, more surgical, I suppose. But just on the Investment Management business, just as you work through the investments you're making this year and coming at the other end, better positioned to capital formation and things like that. Christian, could you just talk a little bit about sort of where you see margins going once the investment into the unified platform has been made? Christian Mayer: Yes. You're going to see margins decline in 2026 to the high 30s net margin area. And then in 2027, we're expecting to return to our historical average margin in the mid-40s. So that's essentially with fundraising, as we outlined, starting to accelerate and with these integration efforts behind us. Operator: Your next question comes from the line of Julien Blouin from Goldman Sachs. Julien Blouin: So Jay, it sounds like we should be thinking of the Ayesa acquisition kind of similarly to Englobe and that it sort of gives you this foothold in Europe and elsewhere from which you can grow and sort of roll up other businesses. I guess as you think about identifying those next sort of tuck-in targets, is it primarily on the basis of the geographies you want to be in? Or is it the additional capabilities that you're most interested in adding to the platform? Jay Hennick: Well, the simple answer is both, obviously. But we have capability across the platforms everywhere, stronger in some places and weaker in others. But let me zero in on Ayesa for a second. The beauty of that deal for us, when you cut through it all is they were founded in '64 by the same family. The management team there is absolutely spectacular. They have spent since 1964, building sizable platforms in Spain, Mexico, Europe, the Middle East, markets where we did not have a presence in. And so yes, looking at it like Englobe is a great example, except in the case of Englobe, as we consolidate the industry, we're doing it only in Canada. Now we have the opportunity to do the same thing in multiple markets. And so our M&A teams here and at Ayesa are very excited about what they can do with their existing platforms, which themselves are extremely profitable with strong management teams already in place. So we see lots of future growth coming there. And as we look -- as we continue to look at that business, we see other areas where we can do similar things. And again, I want to emphasize, which didn't come out in my initial comments. Our partnership philosophy is making a huge difference. We're a permanent capital source. We're partners with the operators that run these businesses every day. Yes, we have significant equity stakes in the business. Yes, we have -- we drive all of their growth initiatives, but they finally have a partner that can help them execute on plans, help them integrate acquisitions, sort of follow some of the things that we've done for the past 30 years. And there are other potential targets out there that could continue to accelerate our growth in engineering. So it's not over now, but it's an area that we alluded to on previous conference calls over the past 12 or 18 months, but I think there's more opportunity to be pursued. And there's similar opportunities in our other segments as well. So our philosophy of 3 segments, each of them high-value, recurring professional services, high cash flow generation is working and has worked for 30 years. So we have a way of operating, which we think is unique. We think our -- we differentiate ourselves in the marketplace when it comes to being an ideal partner for some of these great businesses. And our job, I think, in many ways is to just find that great business with the great management teams that are hungry to take the business to the next level. And that's what we focus on so much when it comes to M&A. Julien Blouin: That's really helpful, really helpful context. And then, Christian, I think you referenced a temporary slowdown in certain project management operations in the quarter and lower overall productivity is, I think, how you stated it. Can you maybe elaborate on what drove that? And sort of what gives you confidence that these pressures won't recur as we move into 2026? Christian Mayer: Yes. We had lower activity levels in project management operations in our legacy local project management business in EMEA and Asia Pac, and we think that was a temporary onetime thing. So comfortable that is going to be behind us. And then as it relates to margin, the Engineering business does have a lot of hourly labor attached to it. Utilization is extremely important. And when you're in the holiday season, that sort of thing, it does impact the utilization and productivity of staff. So it's -- I mean, it's really a very minor change in margin, not something to be concerned about as we look ahead. Operator: Your next question comes from the line of Himanshu Gupta from Scotiabank. Himanshu Gupta: So on Commercial Real Estate, I mean, you have low teens growth expectation in 2026. Can you break it down between Capital Markets and Leasing businesses? Christian Mayer: Sure. So the segment, as you said, is low teens revenue expectation for growth. In terms of Capital Markets, we would be looking at high teens, which is a slight acceleration from what we had in 2025, but we have a lot of visibility and confidence in the sort of return of transaction velocity there. Leasing would be something in the mid- to high single-digit area in terms of growth year-over-year. So really, the growth you're seeing in Commercial Real Estate is focused around Capital Markets. Himanshu Gupta: Got it. And then on leasing specifically, can you comment on industrial and office leasing expectation? I mean, is there any outlier within like regional breakdown or within asset class for leasing? Christian Mayer: You hit the nail on the head there, Himanshu. Office and industrial were strong in the fourth quarter in the U.S. in particular. I think those classes are going to continue to be relevant in terms of they are our largest asset class that we provide service in. So those 2 asset classes will continue to drive growth as well as others like data center, in particular, would stand out there. So it's going to be based on those areas. Himanshu Gupta: Got it. And then switching gears, fundraising target of, I think, $6 billion to $9 billion this year. What platforms are you expecting this level of fundraising? I mean, can you unpack this? Like how big is the infrastructure fund? What other funds will contribute to that level of fundraising? Christian Mayer: Well, as I mentioned, we had the first close on our new vintage infrastructure fund in December of 2025. So that is a big driver of fundraising. The alternative fund at Harrison Street Fund X had its first close last year. earlier in the year. So additional activity on that fundraise. And then we've got a number of products in the market, existing open-ended vehicles and as well as new products that we're introducing to the market. So a lot of different areas of focus and credit as well is another vertical. So it's going to be broad-based. Himanshu Gupta: Got it. Very helpful. And my last question is, can you speak to the performance of funds within your IM segment here last year? Was the performance of these funds in line with your expectations and how they are helping you to do more fundraising? Christian Mayer: Fund performance has been strong, Himanshu. So we continuously rank in the top quartile for fund performance across the alts, credit and infrastructure space. In fact, our flagship open-ended vehicle, the Harris Street Core Fund exceeded the ODCE Index by 100 basis points in 2025, which the team is very proud of. So doing well. Operator: Your next question comes from the line of Jimmy Shan from RBC Capital Markets. Khing Shan: So Christian, just on the leverage, you're going to be on a pro forma basis at 2.7x. Is it your plan to get back to the 2x leverage where you've historically been? And how do you plan to do so? Christian Mayer: Yes. Jimmy, that's the plan. That's always the plan when we lever up for a larger acquisition. We've done so in the past with Harrison Street, with Englobe and now with Ayesa. So the plan is to generate strong operating cash flow again in '26 like we did in 2025 to grow our EBITDA organically. The combination of organic EBITDA growth and cash flow generation is a powerful delevering effect, and that's what we expect to happen here as we progress toward the end of the year. Khing Shan: And then my second question, I'm sorry to go back to this AI, Jay, but it seems, I guess, that your view is that not only do you not think AI will be a disruptor and it's actually going to be a margin enhancer. Is that a fair interpretation? Or am I going too far, is number one? And then do you see at all any possibility across the various services that you provide that you can actually see some fee pressure as a result of AI? Jay Hennick: So I don't see any fee pressure at all. I see the exact opposite than that. I think it's a disruptor, not to our business, but to our mindset. It is -- the great thing about this is it has opened up everybody's eyes to accelerate automation and integration across the organization faster than we otherwise would have, I think. The -- internally, and we're a very low CapEx business. We generate huge cash flows in our business. We're allocating a lot more capital to IT because of all this all this new focus on AI. And as we get deeper and deeper into this, we realize more potential opportunities for the way we do business and the information we can provide to our professionals. So I'd say we're quite excited about it. But I think it's only additive to our business long term. I can't see any area where it's not. If you were selling commodities, cookies, something like that, yes, okay, great, you can use AI. But these are complex transactions. They need licenses in many cases across the board. You need personal relationships. You need all the things I've talked about. And if we can make our professionals better and have more information at their fingertips, they're going to be able to execute transactions faster with more information to the buyers and sellers and leasing, which is a big component of our business is even more complicated in many respects given the types of leasing that we're now doing, data centers and other very complex transactions. So I see it as a benefit, an enabler is probably the best word I could use. Khing Shan: I have one more quick one on Ayesa. The EBITDA for 2026 is around $63 million, $64 million. Is that what's embedded in your '26 guidance? Jay Hennick: 7 months of that, yes. Khing Shan: 7 months of the 2026 EBITDA. Jay Hennick: Yes. Operator: Your next question comes from the line of Stephen Sheldon from William Blair. Matthew Filek: You have Matt Filek on for Stephen Sheldon. I wanted to start with one on Ayesa. It looks like that business has historically grown faster and operated at higher margins than your broader engineering platform. So I was just wondering if you can give us a rough sense of your growth expectations for that looking ahead and talk about what drives that stronger margin profile. Christian Mayer: Well, the growth in that business, we referenced a 13% CAGR over the last 10 years. Obviously, the business now is at a scale where it becomes more difficult to grow organically at those kinds of rates. Certainly, we expect that high single digits are achievable organically going forward. And that's what we're focused on. In terms of its margin profile, it provides high-value services, design, site supervision, project management consulting on very sophisticated products and projects in high-demand end markets. And these are public sector, public transit, water, energy, energy transition end markets that can command higher margins. The team at Ayesa have said, for example, they're big in desalinization in the Middle East. And obviously, that's a very profitable component of their business. They've got expertise in water, in Spain, in Mexico, and they've capitalized on it in the Middle East. And I think the team has extremely disciplined pricing and disciplined execution on their projects. And they've demonstrated that over the last decade as well and being able to consistently deliver superior margins on their business. Matthew Filek: Got it. I appreciate that additional detail. And then I just had one on producer headcount in capital markets and leasing. In the event transactional volumes were to have a more meaningful recovery in 2026 than you've assumed in your guidance, do you feel appropriately staffed to capture that upside? Or should we expect some incremental hiring? Jay Hennick: Well, we're very active in recruiting across the board and have been over the past number of years. So we feel like we have what we need, but we're quite active in specific areas or specific specialties, white space where we can capitalize even more. Christian Mayer: And I think the productivity of our existing producers is not at peak levels today. So they have capacity to generate more revenues with the same professional headcount. Operator: Your next question comes from the line of Frederic Bastien from Raymond James. Frederic Bastien: Just want to go back to Ayesa. I hope I said it correctly. But obviously, limited very, I guess, no overlap whatsoever from a geographical standpoint with the business and it sounds like they have niche expertise that you can probably leverage to your other operations, specifically in water. Was that kind of behind the underwriting assumptions like that over -- beyond the 12 months of the first -- the acquisition period, you're going to be able to cross-sell a lot of the Ayesa services to your other regions? Christian Mayer: Yes. Frederic, the transferability of skills is something that we do look at whenever we make an acquisition. And in the case of Englobe, they happen to have water expertise in terms of irrigation, drinking water, sanitation in Canada. And those skills are transferable and being transferred to our U.S. business to help grow that part of their operations. So certainly, with Ayesa's capabilities in desalinization and other areas in the water space, that will be something we'll look at. Frederic Bastien: Okay. Cool. That's great to hear. And then I don't know if you mentioned it, Christian, but did you mention how much you ended up fundraising in 2025? Christian Mayer: Yes, it was in my prepared remarks, let me turn back $5.3 billion on the full year, I believe. Operator: Our last question comes from the line of Maxim Sytchev from National Bank Financial. Maxim Sytchev: Christian, I was wondering if it's possible to get a clarification on organic growth for engineering. Was it a gross or net basis, number one? And then I guess if you can provide any color in terms of how the year started to trend, I presume we should be anticipating a recovery there. Christian Mayer: The first part of your question, the internal growth was on a net basis, net revenue basis. And I think your second part of your question was about growth trajectory into '26. Maxim Sytchev: Yes. Christian Mayer: Yes. I mean, as I said in my prepared remarks, we have strong backlogs supporting our revenue outlook for the year. And we have mid-single-digit internal growth as a result as our expectation. We also have the impact of 3 tuck-in acquisitions that we did just in the last couple of months as well as the annualization of a few acquisitions last year. So that, together with the Ayesa transaction, which we expect will close in Q2, brings us to the overall revenue growth outlook of 25-plus percent. Maxim Sytchev: Okay. Makes sense. And then just one quick clarification around Harrison Street. So the dip in the margin to kind of high 30s. So what's driving that exactly? Is it sort of system integration, personnel? Can you maybe just explain a little bit from an operational perspective and how that will -- that trajectory will rebound on a prospective basis? Christian Mayer: Yes. We're conducting a lot of work on our IT systems integration, bringing the platform together. So a number of different systems projects underway to make that happen, a number of headcount additions, which have occurred over the last 6 months and will occur going forward and then also some planned efficiencies that we are working through today, which will yield cost savings -- run rate cost savings once we hit the latter part of the year. Operator: There are no further questions at this time. I will now turn the call over back to Mr. Jay Hennick. Please continue. Jay Hennick: Thank you, everyone, for participating in our fourth quarter and full year conference call, and we look forward to the next one. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and have a nice day.
Stefaan Gielens: Good morning, everybody. Welcome to the annual results presentation of Aedifica. We will start the session right now. We have more or less 1 hour available, and I do apologize because we really have back-to-back meetings today. So we don't have much time to really go beyond the 1 hour that we've scheduled. As usual, the results will be presented by Ingrid, CFO, and myself. And we will walk you, first of all, through the slide deck, a couple of selected slides from somewhat bigger deck that you will find available on the website and then afterwards, take your questions. So not to lose any more time, starting the presentation. And as a quick introduction before Ingrid will take over and walk you through the numbers, a quick view on what really happened in 2025 and how we perceived 2025. And I think the best way of explaining it is by having a quick look at this slide, looking at what we were planning to do and what we really did. I think one of the first things that, in our view, are quite important is that the investment market and the project development market in healthcare real estate is back up and running. We see clearly a more dynamic market. We'll go into that and the reasons why, but we also see it in our own numbers and what we have been doing. So we have been refueling development pipelines, acquiring standing assets more than we expected, so for close to EUR 300 million. And we do see clearly, compared to 2024, that this number is going upwards. Looking at deliveries coming out of our development pipeline, we were more or less on target with 1 or 2 of these projects that have been delivered just after the new year, but we are actually more or less on target. Now compared to 2024, this is a lower number in nominal value, but it basically reflects the market. In the past couple of years, we haven't been refueling the pipeline as we were used to, but we're now back in a phase where we are refueling the pipeline and these project completions in the future will become more contributing to the growth of the portfolio and the top line. And then asset rotation, there, we did what we wanted to do. The must-have to us was divest the Swedish portfolio because as we explained, it was not contributing in a similar way as other geographies to the EPS of the company. So this was a matter of capital recycling. But towards the summer of 2025, we stopped really pushing hard on divesting because we were live in the market with the Cofinimmo transaction, and that comes in the very near future with a quite ambitious divestment and asset rotation program. So this for 2025 was no longer one of our top priorities. But I think the main thing that comes out of this slide is that we clearly see the changes in the healthcare real estate market that we wanted to see a more dynamic and liquid market, which is basically quite promising for the future. Now this being said, over to Ingrid, so she can present the financials. Ingrid Daerden: Okay. Good morning. So we will have a look on the income statement. First of all, the EPRA earnings, they are up by 4%, driven by an increase of 8% in the operating result, mainly coming following an increase of the net rental income. We also worked on a further improvement of the EBIT margin, so we can show a strong EBIT margin at 87%. The financial charges went up compared to previous year, although we can still have a very low cost of average cost of debt at 2.1%. The increase is mainly related to the fact that there was a slightly higher average amount of debt outstanding in the course of 2025. The low average cost of debt is related to the hedging that the company has in place. At the end of 2025, the hedge ratio still stands at 88%. Then you have the corporate taxes. That's the line where you see most of the variance. So it's mainly related to the change of the fiscal system in the Netherlands, the ending of the FDE regime. In 2024, there was still a one-off refund from previous years of EUR 4.2 million. And this year, we recognized in the account accruals for corporate income taxes in the Dutch entities for EUR 4.84 million, explaining the difference in corporate taxes that you see between the 2 reporting years. So this leads then to the EPRA earnings of EUR 244 million or EUR 5.15 per share. Then we move over to the net result. So the changes that are included from going from the EPRA earnings towards the net result are noncash elements, mainly related to the changes in fair value. So this year, we can show changes in fair value for the investment properties of EUR 75 million. This is the most pronounced in countries like the Netherlands, U.K. and Ireland, where we saw strong increases in the valuation of the investment properties. In the Netherlands, mainly driven by the indexation, U.K. and Ireland supported by a strong tenant cover. Then we have the gains and losses on disposals. So this is not a new element. You have been seeing this in our income statement since the end of Q1. It's related to the disposal of the portfolio in Sweden, which was sold with a small discount of 3.9% compared to the latest fair value, but the amount also includes the recycling of the historical currency translation from equity into the income statement. We will now dive a little bit more into detail on the rental income. So globally, for the portfolio, rental income is up with 7%. When we look on a like-for-like basis, we see an increase of 2.7%. This can be split in between 2.6% coming out of the rent indexation. Then we have positive rent reversion of 0.4%, mainly supported by some contingent rents in the U.K. And then there is a slightly negative impact from the currency translation in the like-for-like of minus 0.3%. When we look at the individual countries, you can see that in most countries, the like-for-like is very close to the indexation that we see in each of those countries. What is standing out is the U.K. related to the contingent rents. This year, we also had a historical catch-up of contingent rents, representing GBP 3.2 million. This is not included in the like-for-like. So in the like-for-like, this figure of 4.7%, it's only contingent rents that are related to the previous 12 months that are included. The second country that is standing out is the Netherlands, where we still had strong indexation and we're also able to increase the rental income on some assets related to the fact that we changed the lease agreement more to a B2C model. Moving over to the debt-to-asset ratio. So at the end of 2025, we can report a debt-to-asset ratio of 40.8%. It was slightly below our expectations related to the fact that there is an increase in the fair value of the investment properties. Our financial policy remains unchanged. So that means that we target a debt-to-asset ratio in the low 40s, and we consider 45% as a maximum. The debt outstanding at the end of the year represents EUR 2.5 billion. We still have a good balance between financial resources, debt resources coming from bank facilities and the debt capital markets. In 2025, we have mainly been focusing on refinancing with the banks and adding new financing to the debt portfolio as well for a total amount of EUR 585 million. The tenors on those maturities are between 3 and 7 years, and the average credit spread is around 110 basis points. We have also been working on extensions. So often credit facilities, they have extension options at the discretion of the lender, and we were able to extend those and keep the same conditions in place. And lastly, as a third point, I would like to add that we increased our treasury note program. So there was an additional EUR 100 million that was added to the program, and that was also fully used by year-end. So this allows us to have strong KPIs regarding the debt. So currently, we have a BBB rating with S&P. There is a positive credit watch related to the transaction that has been announced between Aedifica and Cofinimmo that if the transaction can be executed following expectations, there is a probability that the credit rating would improve towards BBB+. Our interest coverage ratio is strong at 6.2x. The covenant stands at 2x. We have a net debt-to-EBITDA of 7.8x, very few encumbered assets. Most of the financing is still done on an unsecured basis. And 53% of our financing is related to sustainable financing. Most of the cases is sustainability linked KPIs that are integrated in the credit facilities. When we have a look on the debt maturity profile. So there, you can see that there's not a lot of refinancing that needs to be handled for 2026. There are some debt maturities starting to kick in, in 2027 and 2028. The timing of the refinancing of those can have an impact on the average cost of debt for 2026. But we still have a lot of headroom on the committed credit facilities, so more than EUR 740 million. This allows us to be able to be in a position where we can say that the financing needs for the company are covered until May 2027 and with a weighted average debt maturity of 3.4 years. Hedge ratio, as I just mentioned, still high at 88%. It will stay at that level until the end of 2027. Then you see it gradually declining in 2028 and 2029. So what we will do is the same policy as we have been following in the past, where we will add additional swaps to the hedging portfolio based on opportunities that we see in the market. Handing over to Stefaan. Stefaan Gielens: I'm going to walk you quickly through the portfolio slides, but focusing on what I think is probably the most interesting thing, and that is about the operator performance. But starting with the portfolio itself, a quick helicopter view on a couple of things. No surprises here. This is totally in line with everything you've seen in the past. Focus of Aedifica's� portfolio is clearly on seniors housing, so elderly care, senior housing. Numbers haven't really changed compared to previous year. The geographical footprint of the group, there has been some change, namely that we divested Sweden in the first quarter of 2025. As I mentioned already, that was a matter of capital recycling. And that now for the first time, I think Spain is popping up with a very small 1%, but we have been delivering a couple of projects in Spain in 2025. And looking at the future, we are focusing a lot on being more active in the Spanish market. Otherwise, absolutely similar image to previous years, the 4 somewhat bigger countries, each around 20%; Belgium, Germany, the U.K. and Finland. And then the Netherlands coming in at 11% and Ireland, where we started investing in 2021, now standing at 7%. Our tenants. Now this slide, once again, is not really showing you anything new compared to previous years. So it still shows a very strong mix of the somewhat bigger European players like Clariane and Colisee in our portfolio with a lot of local heroes. If I'm not mistaken, the top 10 is exactly the same as it was in 2024. We have a big focus, as you know, for historical reasons on the profit sector in Europe. This sector has been growing and consolidating in the last 10 to 15 years. But we have exposure to not for profit and public operators up to 10%, out of which the Finnish municipalities, 4%, they're popping up on this slide are within the top 10 of our operators today. And then I think what I was referring to earlier on, and in my view, the more interesting slide. So what is happening with the operators in Europe. First, look, occupancy, underlying occupancy, resident occupancy, we have been showing these numbers now for, well, I think, 1 or 2 years. What we do see now end of 2025 is a very strong occupancy throughout the whole portfolio. Looking at the average for the mature care homes in our portfolio, we're above 90% now at 91%. Maybe explaining a couple of things. Mature care homes, we are applying a very simple and straightforward definition. A mature care home is a care home that is trading for more than 2 years. And if that is the case, it enters into these numbers. Secondly, we have been working very hard on improving the coverage, and you will see the numbers at the bottom of the slide in the 5 countries for which we are now showing occupancy numbers, we are reaching almost 100% coverage. So this is not a selected part of the portfolio to show you the best possible occupancy. It is really giving a true image of what is happening in the portfolio. Finland is still not on this slide, but even in Finland now, we made a breakthrough in 2025. We're now starting to collect numbers from a couple of operators. As soon as we reach -- well, statistically relevant coverage, we will start also showing you numbers for Finland. But the numbers that we have for Finland are absolutely in line with what we see for the rest of Europe today. Maybe when looking at the countries themselves, as I said, strong performance throughout the portfolio. But one thing which to us, well, it came as a quite positive surprise even though we had the signs already before is Germany. Germany now at 90% in the portfolio. You know that we have been doing a lot of development activity in Germany pre-2022 with deliveries coming in also after 2022. We now see that the ramping up is really coming to maturity and that the German portfolio also in terms of occupancy is absolutely in line with the rest of Europe. So that's quite strong and positive news also looking at the future. But then something that we now added for the first time is a bit more information about rent covers in our portfolio. You know that we, in the past, already mentioned the U.K. numbers, but now we're adding 3 other countries. Once again, before we dive into these numbers on the back of a quite high coverage. So this is not a selected number of a couple of care homes to show you the best possible situation. It really is reflecting what we see happening in the portfolio. Maybe singling out, first of all, the U.K., you have comparable numbers in the past for the Aedifica� portfolio. It remains a historically high, absolutely very strong rent cover of 2.4. These are numbers on 30 September, but LTM for the last 12 months. It's even a bit higher than it was in the number that we mentioned at the end of '24, 2.3. So the U.K. operated market keeps showing an incredibly strong performance. Then looking at the other countries, Ireland, for the people that attended our Capital Market Days in Dublin, I think, in early 2025, we already mentioned there that we see rent covers in Ireland around 1.7. We're now at 1.8. Once again, a very strong rent cover knowing that we started doing business in Ireland back in '21 by acquiring a couple of standing assets, but soon after we start building the portfolio more to development, in this case, more forward purchasing deals. So this is a fairly young portfolio with mature assets, but fairly young. But what we do see in the portfolio in Ireland is that ramping up is going at quite remarkable speed, meaning that for most of these Irish care homes, 12 months after delivery of the asset, we already see occupancy rates going above 80%, in some cases, even reaching 90%, whereas in the rest of Europe, you probably would start to see these numbers after 2 years. So even when we consider them to be mature, we do see that they come in at somewhat lower numbers and keep growing afterwards. Ireland is really doing much better than the rest of Europe. And on top of that, showing a very strong rent cover. And then you have Belgium and Germany, the 2 countries where we have been explaining in the recent past that we do see operators bottoming out. We're now in Continental Europe, should not expect to see a 2.4 rent cover in the near future because these are countries where there's a lot more public money going into the financing of the operators. But as we mentioned, these countries were clearly bottoming out. What we do see nowadays, and once again, it comes in as a quite strong message is that on the back of the increased occupancy and lots of other signs that we had in the German market, we now also see a very good rent cover in Germany of 1.6. To put things into perspective, you probably know that over the past 10 years, when asked about rent covers and underwriting criteria, we each time said that what we use as a rule of thumb is that when we are underwriting new contracts, we would like to see a rent cover of at least 1.5. Now Germany is back above the 1.5, at 1.6 and Belgium is actually very close to the 1.5. So you do see, I think, on average, quite strong -- very strong to good rent covers throughout the portfolio in Europe. Once again, Finland, because we don't have the data coverage comparable to what we see in the rest of Europe. So I'm not going in too many details, but the limited numbers that we see are definitely not deviating from what you see on the slide. So I think it is really becoming a European trend, occupancy back at almost pre-COVID levels and rent covers growing back to normal territory, even strong territory with differences between some of the countries where in some countries, it goes a bit slower than in other countries. But I think that we do see an operator performance in Europe, which is totally recovering, and it is starting to show in operator activity in Europe. To add or to mention one example recently in Germany, where we have seen Domidep taking over Vitanas. So we do see a lot of signs of an absolutely improved operating climate in Europe. Then going forward to -- well, in this case, lease maturity, I'm not going to spend too much time on this. You know that we have a quite long WAULT and that today is standing at 18 years with a 100% occupancy rate. We really only have a couple of buildings which are vacant today. It's I think also a result of a quite active and proactive asset management that we have been applying certainly in the '22, '23, '24 years. We're transferring buildings to other operators if and when needed, but it results in a very strong occupancy rate. And -- but also maybe pointing out that we are basically activating our asset management in countries like Finland, where on average, the WAULT is a bit lower. It has to do with initial duration of lease contracts that are more around 15 years. But we're making a lot of efforts to make sure that we keep the WAULT also in these countries at a quite high level, resulting in the fact that only 1% of our total portfolio will -- at least 1% of the leases for the total portfolio will come to an end in the next 5 years. So basically, I think that we've managed the portfolio quite well in that respect. And then valuation. Pretty much the same message as in the past. What we do see now is that when you look at the average fair value yield for the whole of the portfolio, we're now at 6%. So we're actually stabilizing around this 6%. If you look at what happened in 2025, you will see that we've seen like-for-like value increases around 1.3%. If you just look at the last quarter, it's plus 0.4% to 0.5% with a couple of countries outperforming. The Netherlands coming in with 4.9% has also to do with the fact that inflation was much higher in the Netherlands compared to, for instance, Finland, where inflation was actually quite low in 2025. But also the U.K., and I think that is still reflecting the exceptionally high operator performance in the U.K. market. But what we do see in all of the countries are clear signs of a market that has bottomed out and is basically already starting to turn to growth again also in terms of value. Some of the countries, we do see pluses and minuses. But on average, a lot of signs that the market is back on its feet. And adding to that, that this is also being underpinned more and more by market evidence because we do see a more active investment market. So it's not just valuers making up their minds. I think we start to see more and more evidence in the market. And then a slide that also is very important to us because this should reflect what we think will happen in the market. It is becoming a more active investment market with lots of potential because operators are back, rent payment capacity is improving. And as we announced at the beginning of 2025, to us, that means that we want to rebuild our development pipeline, and it's actually what we're doing. If I'm not mistaken, end of 2024, we were around EUR 160 million, EUR 170 million. We're now back at EUR 276 million. You do see that we have been quite active in Ireland. I just mentioned that ramping up is going so fast. So there's a clear demand for new capacity in Ireland, and it shows in the numbers. Our pipeline in Finland, where, as you know, we are full developers is growing again. So after a couple of years where we were slowing down, we're building up the pipeline again, and we're doing it on the back of the criteria that we want to see happening. So that means yield on cost of 6.5% and development margins around 15%. And based on those criteria, we're building up the pipeline in Finland today. We remain active in the U.K. given the strong operator performance, but I flagged before, we remain cautious in the U.K. because we want to avoid building the portfolio on the top of the market when prices are relatively high, which is, I think, to a certain extent, the case in the U.K. today. And maybe adding, which is not reflecting in this slide yet, but as I mentioned, that we do see a lot of interesting things happening in the German market that just after the year's end, we signed a first new project in Germany. So you do see a lot of potential to build up the portfolio. And then going to the right side of the slide, it's not just about volume, it's also about getting interesting yields. So we are now at a 6.5% initial yield on cost for the whole of this pipeline, whereas I think end of '24, we were around 6%. And if you go back a bit further in time, it was more around 5.5%. So you do see the market becoming more active, more dynamic, and you do see yields and value potential, which we clearly can achieve in this market already today. So basically, looking back at 2025, actually quite happy with the year, not just in terms of our own results, but more specifically in terms of operators' performance, clearly improving in Europe and becoming -- we're reaching promising territory. And also when we look at investment and development activity, we see a lot more potential in this market. Now then looking forward to the future before handing over to Ingrid, I think it's quite clear that what will be probably catching all the attention in 2026 will be the result of our exchange offer on the Cofinimmo shares. I'm not going to walk you through these slides. You know it. I think that the only -- and the main thing right now is to flag that we are in the middle of the initial acceptance period. Talking to a lot of people and well, coming across a lot of support in the market. So our feeling is that things are going absolutely well at this point in time. You know why we are doing it. So we explained the whole rationale behind this operation. I can only confirm and repeat what, by the way, also is in the prospectus today. But add to that, that we do really believe that this operation comes at the right point in time because we do see the European healthcare market opening up again, and we do see European operators improving their performance. So I think it is absolutely the right point in time to create this platform that is operationally and financially stronger than the 2 companies in a stand-alone situation. But that then is my bridge to Ingrid so that she can explain what are potential scenarios for the future for Aedifica, either stand-alone or combined with Cofinimmo. Ingrid Daerden: Okay. So this year, it was a little bit particular situation, I would say, to give guidance to the market on our financial outlook for 2026. So how did we approach this? So first of all, we had a look on the business plan and Aedifica�based on the current portfolio. On that basis, we can say that we have a stand-alone budget, excluding any impact of transaction costs related to the project, the exchange offer. Based on the assumptions that we have in that model, we come to a rental income of EUR 370 million. This is an increase of 2.5% compared to 2025. I think that I need to add as well that in our pipeline, as you might have seen, we are expecting deliveries for 2026 of EUR 160 million, but they will be delivered in the course of the year. So during the first 3 quarters, we are expecting approximately EUR 35 million to be delivered. And then in the fourth quarter, it will be EUR 50 million. So the increase in rental income coming out of the deliveries will be spread out over the year. Then we have a new investment target, EUR 300 million, in line with what we have been announcing this year. But also in this investment target, an important part of it will probably be related to new projects. So for the announcements that we made in 2025, 75% were projects that are added to the pipeline and hence, only later onwards start to contribute to the rental income. So for this budget, we made the assumption that part of it will kick in around the summertime, part of it will rather only contribute for 3 months to the rental income for the part that is related to the acquisitions. And we also included an assumption on asset rotation. So it's a little bit a standard amount, I would say, EUR 100 million. If you take into account the portfolio of EUR 6 billion, that will be spread over the year in the form of disposals. Then other assumptions that we included and an important one is the average cost of debt. We see it still standing at 2.1% in 2026. This is based on the credit facilities that we currently have in place. Depending on what we will be doing for refinancing, there might be some impact on the average cost of debt. I'm hinting on the fact if we would go to the bond market, something that we had on the planning, taking into account the average debt maturity that is standing around 3.4 years. So going to the bond market, that would have an impact on the average cost of debt because we are doing the refinancing earlier than that currently is foreseen in our budget, and that is also needed from a liquidity perspective. Then we have the assumptions on the exchange ratio. So there, you can see that we are cautious on sterling. So in the past, usually, we had sterling standing at EUR 1.15. So currently, in the budget is EUR 1.13. If we would assume that current sterling would be trading at EUR 1.15 where it currently stands, this would lead to EUR 0.03 additional earnings if you have a full year impact. Then the debt-to-asset ratio, we do not include in our budget any assumptions on changes in fair value. So that means if the valuation of the existing portfolio remains flat, our debt-to-asset ratio probably will be around 42% by year-end. Taking into account all of these assumptions, we are expecting that the EPRA earnings will be above EUR 247 million and the EPS will be above EUR 520 per share. Having said that, I must add to this that probably this stand-alone budget is more like a theoretical exercise because most likely, we will be in the second scenario, where we will take control of Cofinimmo at the end of Q1. So what will be our priorities under that scenario? So first of all, we will have the first consolidation that will start at the end of Q1. So normally, the capital increase is expected to take place on the 30th of March. So there will be, for 2 weeks, contribution to the income statement coming out of the consolidation. We will work on the integration. So the scoping, planning and the execution; we are targeting to do most of the work in 2026. And it will also allow us to start working on the synergies where we do expect that the full run rate impact will occur in the course of 2027. We will also focus on the disposal of the healthcare asset disposals, the EUR 300 million that are related to the approval of the competition authorities. So that will also be one of the priorities in 2026. And then we have the intention to work on a legal merger in the second year half of 2026. So this legal merger will allow us to take 100% control of Cofinimmo and to delist Cofinimmo. So taking into account all of these elements, we do not know the exact holding percentage that we will have during the first consolidation exercise, makes it difficult for us to give EPS guidance for 2026 for the combined entity. So there, we will come back to more detailed guidance for the combined entity at the publication of the half year results, which will happen in the beginning of September. But what we can say is that the dividend policy of Aedifica� remains unchanged. So that means that we will continue to distribute 80% of the recurring consolidated EPRA earnings towards the shareholder in the form of a dividend. Stefaan? Stefaan Gielens: Yes. Okay. I think that we are now coming to the end of the presentation part of this session. Maybe to allow you to have a bit more time to ask questions, I'm not going to make a long speech about the conclusion. I think it was quite clear. We do see a much improved healthcare real estate market. We are quite confident about the future potential, both of the combined entity, Aedifica, Cofinimmo and the market itself. Stefaan Gielens: But this being said, let's switch to the Q&A. [Operator Instructions] So if you have questions, now it's time to start raising your hands. Ingrid Daerden: Steven Boumans. Steven Boumans: I have a question there. You are very constructive on the investment market. Do you also imply that the EUR 300 million stand-alone gross investment target that is a bottom? And second, to what extent could we see some yield compression for the portfolio in '26? Stefaan Gielens: Okay. The EUR 300 million that was mentioned in the stand-alone is, in my view, indeed more a minimum than maximum. So I do believe that there is more to be done in the market, both in terms of asset deals, rebuilding the development pipeline and perhaps even M&A. So yes, I do think that if -- well, we could do probably more. That's one thing. Secondly, yield compression. Yes, always difficult to predict that. This being said, I think that we more or less are now at yields that I think makes sense and will be there for a bit longer time. It might depend from one market to another that there might be some first signs of yield compression kicking in. Sometimes wondering whether that is not happening today in Spain, for instance. But given our expectations in terms of long-term interest rates, I do not see a lot of yield compression kicking in, in the near future. But as I said, the market is really shifting into a much more dynamic mode. So we'll have to see what really happens. Ingrid Daerden: Aakanksha from Citi. Aakanksha Anand: So three questions from my side. The first one, mainly on the acquisition opportunities in the market. So I guess you mentioned that there is an increasing number that you're seeing. Markets are more dynamic now. I just wanted to understand what are the main drivers for the increasing number of deals that are coming to the market now? Is it just because operators want to offload into the property companies, so propcos? Or is it increasing distress in the market? Or is it just the fact that operators are -- the profitability of operators is improving, and that's making it more attractive for more players to enter into the market? So that's first part of the question. And the second part would be on the acquisitions. What are the top 3 geographies where you are most keen on acquisitions? That's the first question, and I'll take the other two as we go along. Stefaan Gielens: Okay. First of all, so the drivers of this increased activity in the market, to me, are definitely more positive drivers and not negative drivers. So it's not distressed. It's much more the fact that operator performance is improving. And some countries definitely are trying to do something about the lack of capacity. Now for instance, the indication I gave about the Irish market, the fact that ramping up is going so incredibly fast is a clear indication that there is need for more capacity. And this, combined with operator performance that is improving, it means that operators are turning back themselves to growth. They want to build more capacity because they can do it right now and they can turn it into a profitable business model. So it is really a quite, I think, positive trend that we see returning to the market. On top of that, we do see increased -- well, first signs of an increased M&A activity in the operator world. We have already been approached by some operators asking us if we would be ready to accompany them in those type of operations, if there is some real estate that they want to take out of the balance sheet when acquiring competitors. So these are things that basically we didn't see in '22, '23 and '24 and that are now more and more popping up again. So it's definitely not distressed situations. It's much more -- well, the market shifting to really growth again. And then the top 3 countries, that's always a tricky question. But today, top of mind, I would clearly say Ireland, Spain and then U.K. and/or Finland, maybe a slight preference still for the U.K. Why do I say Finland? Finland is because we're full-blown developers. And we do see that development activity potential is increasing and allowing us also to make -- well, operator -- sorry, development margins, healthy development margins again in Finland, which in the end is creating equity, allowing us to leverage on that. So I think that these are basically the countries that we do believe are very interesting today. I should add that I'm actually becoming more and more positive for Germany, but it's more the cycle that it starts to go upwards in Germany again. So that's, I think, also a lot driven by timing, not waiting too long before you start building up positions in a country and you have to do it at the right point in time. So Germany might be at the right point in time if what we see happening confirms in 2026. Aakanksha Anand: Okay. That's very clear. The second question will be just on the yield on cost on the pipeline. So it has definitely improved to by about 40 bps compared to last year. So what are the main drivers here? Is it just the tenant profitability improving and you're being able to charge higher rents? Stefaan Gielens: I think in the end, that's probably the most straightforward answer. I have been explaining in the recent past that when we look at the market, basically, what we've seen in Europe is a total disbalance between our cost of capital, cost of construction that went up a lot and then rent payment capacity that was in most of the countries under pressure. And what we do see now is in lots of countries that rent payment capacity is very healthy again and increasing. So -- okay, I think also the cost of capital is slightly improving. So given the fact that buildings have become more expensive, we have a certain cost of capital urging us to go for certain yields. So yes, the third factor being rent payment capacity, and that has clearly improved. So I think that, that is the main driver today in terms of new developments. Aakanksha Anand: Perfect. And the third one, I think Ingrid mentioned lease agreements changed to B2C. I think that was for Netherlands. Could you just put some more color around that? Is it something more country-specific or something we can see more of an increase? Ingrid Daerden: Why I mentioned it is because it did have an impact on the like-for-like. So those are 2 independent living assets where we went to a model that is B2C, that is related and creating additional rental income for the company because we are invoicing directly to the tenant, but it also involves some increase in the maintenance charges that will come to the company. But it is a model that we are exploring a little bit. So something that could be part of our business model, but it will remain marginal in the portfolio as a whole, I would say. Stefaan Gielens: Yes. I think, Aakanksha, at this point in time, it's very country specific. So it's clearly something that we see a lot happening in the Netherlands where also other domestic investors are stepping more into B2C models, but always teaming up with an operator. So there is a third party involved, which is the operator, which is providing care, but this is more independent living where the investor landlord really signs a lease with the resident. What we did in the Netherlands is because we -- these are actually buildings that we acquired a couple of years ago, where we had a master lease with an operator, not for-profit operator. But they, for reasons of their own, they wanted to get out of the master lease, but keep focusing on providing care in these buildings, whereas we -- well, clearly, if we could take over their position, that would immediately for us result into higher rental income with also more operational costs. But in the end, it seems to be a very profitable operation. And it is actually totally in line with lots of investments that we see being done by domestic investors in the Netherlands. So it is a bit of an experiment, promising experiment, but at this point in time, very typical of the Dutch market here. Ingrid Daerden: Frederic Renard from Kepler Cheuvreux. Frederic Renard: Maybe a question on the underlying occupancy rate within your nursing homes. Can you help me reconcile a bit the high occupancy rate that you disclosed in Belgium with the relatively low rent cover of 1.4x. That's maybe -- and linked to that, I would like -- well, you know that Colisee changed its shareholder recently. I'd like to see a bit if you had been able to discuss with Blackstone among other recently. Stefaan Gielens: Yes. Okay. No specific -- Belgium, in the end, the rent cover is not only depending on occupancy. It's actually also depending on the revenue that the operators are getting out of it and cost management. So what you see in Belgium today is the market bottoming out at a rent cover, which is not excellent, but definitely not poor or bad either. But where there is room for improvement and improvement, and this is answering your question, I see it coming mostly from managing staffing costs. So what we do see in Belgium in some assets happening today is something that in the past, you've also seen in Germany and even if you go back a bit further in time in the U.K. is that they have to turn too much to agency workers, which come in at a much higher cost compared to employees and for which they are not really being refinanced, knowing that in Belgium, wages of care takers are actually being refinanced through the social security system. So that is something that the Germans were able to address, the U.K. also, where there is room for improvement in Belgium at this point in time will automatically lead to an improved rent cover. And then secondly, but it is more of a political thing, I think that also my opinion, but once again, which could lead to a lot of improvement in terms of rent covers also in Belgium has to do with the pricing flexibility. I think that in certain parts of the country at this point in time, the prices are overregulated and basically slowing down operators in trying to adjust their revenue to the real cost they are experiencing. So in a nutshell, this is why even at the higher occupancy, you see somewhat lower rent covers in Belgium. But there is a clear path forward to improve these rent covers in Belgium. And then your second question, sorry, you have to remind me quickly. Frederic Renard: On Colisee specifically. Stefaan Gielens: Colisee. You mentioned Blackstone, but we haven't entered into a dialogue with Blackstone at this point in time. But what I can say about Colisee is that we had a dialogue with the local management of Armonea in Belgium, which was a very, let's say, constructive dialogue. So as far as I can tell today, but it's not -- at this point in time, nothing more I can disclose because I do not want to, well, intervene in perhaps ongoing conversations at another level. But we had -- let me repeat what I just said. We had a very constructive dialogue with the local management team in Belgium. So I think that we did what we needed to do and that we stabilized the situation. Frederic Renard: Okay. But I guess you know that at some point, they will try to force you to lower [indiscernible], but we'll see later on. Stefaan Gielens: As I just said, we had the dialogue with them. I'm smiling at this point in time, so you don't see a lot of problem I face here. Ingrid Daerden: Valerie Jacob from Bernstein. Valerie Jacob Guezi: I've got three, if I may. The first one is on your 2026 stand-alone guidance. You're guiding for 2.2% like-for-like growth, stable cost of debt and some net investment. So I just wanted to understand why your guidance is so conservative, if there is something I am missing here. Stefaan Gielens: Okay. Well, I'll take the first part. I think conservative, it's coming from the fact that we have been very conservative in budgeting the portfolio growth. So as I keep repeating, we do see a more active and dynamic market. But we know from experience in the past that you can, at the end of the year, show a very high number in terms of new deals that you have been announcing throughout the year. But it is more the point in time that they become cash flow generating, which is important in terms of your guidance. So yes, I expect that we will be very active in terms of investment and refueling the pipeline, already indicated that the EUR 300 million that we mentioned is perhaps also even or even so conservative. But the real impact of that is something that you will see once all of these new deals start generating cash flow in the portfolio. And that's not on the 1st of January. That will be spread throughout the year. And then secondly, maybe adding to that is that we come out of a period where the pipeline hasn't been refueled a lot. So we have to get back to cruising speed. And to me, cruising speed means that you have a constant flow of deliveries coming out of your pipeline at interesting yields. This is what we're now building up again. And on top of that, you have your ongoing investment activity throughout the year. So once you reach that cruising speed, you will see more impact on the top line. So I think it's more of a timing issue as far as I am concerned. But Ingrid? Ingrid Daerden: Yes. What I would also like to add is, like I said in the beginning, this is a little bit of a theoretical budget because if you would have put in on a stand-alone basis, a much higher assumption on the investments. Because in reality, we think we will invest much more, but we also think that we will take control of Cofinimmo and there will be capital recycling, allowing to finance and to redeploy that capital and to finance the new acquisitions. If you just put it into a model, much more investments, then your DTA goes up or you have to add in as well a capital increase. So you have to think about the stand-alone budget as a theoretical exercise with the EUR 300 million, which is in line with what we did in the previous year and what we are very confident that we can realize in 2026 as well. But for us, the most plausible scenario is the second one, where we will take control of Cofinimmo, where we will be working on the divestments that we have been announcing to the market, and we will redeploy that capital. And then it mainly comes to the timing issue element that Stefaan just has mentioned earlier. Valerie Jacob Guezi: Okay. My second question is about your investment strategies. I mean you are doing a lot of very small development of just like EUR 10 million, EUR 20 million. And I just wanted to understand how you think about this type of deal versus scaling the platform with some large portfolio deal. I mean, you're trading close to NAV now, so you could even raise equity. So I just wanted to understand how you balance the size and the profitability of all your sort of potential investments. Stefaan Gielens: Okay. It's actually a very straightforward answer here. We know from experience that the existing platform with our decentralized model with country teams is giving us access to a lot of local deals and very often also to very interesting deals, meaning relatively higher yielding or when talking about development offering, development margins, which basically are creating equity and allowing us to leverage on that. It's something that has been a strength of Aedifica�in the past, and we want to keep that strength, absolutely. So we're going to keep doing this using the network that we have throughout Europe. But I do agree with you, also looking at the challenges that we will have if this Aedifica�, Cofinimmo combination comes through and the quite ambitious divestment program, including the noncore of Cofinimmo that we also will have to scale up in terms of somewhat more sizable M&A type of deals. So looking at the future, it will be a combination of both. Ingrid Daerden: Vivien Maquet from the Degroof Petercam. Vivien Maquet: Two questions on my end. Maybe first, I did not get it right, but you mentioned that you want to avoid building the portfolio in the U.K. at the top of the market, but you also mentioned that it is your third perfect geography. So I just wanted to get a bit of clarity here. And does it mean that you also see risk of price correction? Because if you think it's the top of the market, then you will assume maybe a risk of price correction. Stefaan Gielens: Yes. Maybe taking that one, first of all, maybe underlining, I'm still a firm believer of the U.K. market. So I was not sending out any negative messages about the U.K. But it's just -- actually, it's always all in the timing. We have acquired a U.K. portfolio back in 2018, 2019 from an investor that wanted to step out of the market because they were afraid of Brexit. Okay, that was a bit of a mixed portfolio, but we managed it and brought it to a higher level of quality. And then we started adding a lot of new buildings and mostly through development of forward deals. And that has been very profitable. What we do see now is that the U.K. market and certainly the operator performance is at a very high level, but it remains at a very high level. I do not see at this point in time any indication of a price correction in the very near future. I would actually say that if you look at how active certain U.S. healthcare REITs have become in the U.K. that you could even make a case that prices might go up or at least performance and activity in the U.K. market might even go up, et cetera. But we're long-term thinkers. And what we want to do is when we look at the metrics of our portfolio, we also look at what is the average cost per room, the average cost per square meter, the average rent per unit, things like that is we keep an eye on that also. So we want to avoid doing too many deals that maybe today from a strictly financial perspective seems interesting, but when you look at all of these other metrics, come out as quite expensive deals, where you know that if the market would correct at a certain point in time, those are the deals where probably you will feel the pain afterwards. So that is what we're trying to manage carefully. And this being said, repeating again, still very positive about the U.K. market. But if rent covers in the U.K. would come down to 1.8, that still is a very, very strong rent cover. But if you're buying a lot of assets that really are depending on the rent cover of 2.4, even at 1.8, you will feel the pain. So that is what we're trying to avoid. Vivien Maquet: Okay, clear. Then a question on the disposals, the EUR 100 million, I assume it does not include any Belgian assets. And maybe can you provide an update on the identification of the EUR 300 million portfolio? Are you working mostly on your, I would say, stand-alone portfolio or any update there would be great. Stefaan Gielens: Yes, maybe the EUR 100 million you were referring to in the stand-alone scenario, as Ingrid said, that's a quite theoretical approach. And basically, what we do see as normal asset rotation for Aedifica�stand-alone is that we -- 1% to 1.5% of the total portfolio every year should rotate and then you get to these type of amounts. In real life, we think that the base case is much more the one where we do combine Aedifica�and Cofinimmo, and then you have this, what you were referring to commitment towards the Belgian competition authorities of having to dispose EUR 300 million of Belgian assets. Do we have -- there's not a lot I can tell you at this point in time for lots of reasons, also keeping in mind that we are in the middle of an acceptance period. And I should clearly avoid telling you anything which is not already publicly known and in the prospectus. But this being said, I confirm what I've been telling the market before. When we were talking to the competition authorities about this, we did some market sound ourselves, of course, very limited to just talking to a couple of parties we know. And we got positive signs that there is interest for these type of portfolios. So that was confirming -- sorry, reassuring for us. And then secondly, yes, we have built a case where Aedifica�stand-alone has identified a portfolio, which we can use to accelerate things if need be and if the opportunity would arise. But after taking control of Cofinimmo and certainly after the legal merger with Cofinimmo, legal merger that we see happening in the second half of 2026, we can, of course, look at the whole of the portfolio. And in any case, think that the divestment will not take place before the summer of 2026 and might take place towards the end of 2026, and that will be after the legal merger. Vivien Maquet: Okay. Then two quick questions on the guidance. First, on the 42% debt to assets, you assume as of 2025, that does not include any revaluation. Ingrid Daerden: No, it doesn't. Vivien Maquet: okay. And then it does not include any potential agreement you will get with Armonea either, right? Stefaan Gielens: I think it does, to be quite honest. Ingrid Daerden: Very difficult to answer that question for us. But let's say that I'm not expecting additional impact coming out of such a kind of agreement. Vivien Maquet: So if you have an agreement, that will be already [indiscernible] and therefore, should not [indiscernible] negative on your guidance, right? Ingrid Daerden: Yes. Stefaan Gielens: But as I said to Frederic earlier on, we had a quite constructive dialogue. So I think we know where we will land, and we know it already today. So it's, yes. Vivien Maquet: Indeed, just to know if it's already in the guidance or not. Ingrid Daerden: Stephanie Dossmann from Jefferies. Stephanie Dossmann: Maybe just a follow-up on the disposal side because just to clarify something, are you able to dispose of assets in the Cofinimmo portfolio ahead of the merger if you agree legally, I would say, with Cofinimmo's management? Stefaan Gielens: Yes, of course. Not today, after taking control and then we have to agree between the 2 companies because basically, in the period between us taking control, which will be mid-March, if everything goes according to plan, of course, and the legal merger that we see happening somewhere in the second half of 2026. In that intermediate period, you still will have 2 companies with their own governance, but with a controlling shareholder, it will be like a group, parent company being Aedifica�, subsidiary being Cofinimmo. Yes, we can agree within the group to team up together to do this. That's possible yes. Stephanie Dossmann: All right. So I don't know if you can give some color on the disposal of the offices. Do you have advanced discussions on those? Stefaan Gielens: Yes. The offices -- sorry. yes. The only thing I can tell you today is that we -- and when I say we, I am really talking Aedifica�at this point in time. We did get a lot of inbound from parties in the market that were making clear that they could have some sort of interest in the portfolio, being it part of the portfolio or the whole of the portfolio, which basically was also a very pleasant surprise to us. But we did not engage at this point in time into any really material discussions. I think it's -- we need to wait until we are in this group situation. But we clearly do have some ideas of what could be possible. That's absolutely the case. Stephanie Dossmann: And will it be piece by piece or as a portfolio? Stefaan Gielens: The only thing I can tell you is that we've got interest -- well, as I said, inbound, just people telling us that when you start acting, please talk to us. And that really goes from the whole portfolio to parts of the portfolio and I guess, also for asset per asset. Stephanie Dossmann: All right. Fair enough. On the rest of the disposals targeted, I mean, the EUR 300 million committed. Will it be more on peripheral assets or to lower exposure to specific operators, such as, of course, the big one you have in your portfolio? Colisee, [indiscernible], Korian? Stefaan Gielens: Once again, very -- I think what you should expect to see is that, that will be a portfolio that reflects the reality of the Belgian Aedifica�portfolio today. So I think more or less answering your question, yes. Stephanie Dossmann: Yes. And maybe on the coming merger or the offer actually, what indicators do you watch to anticipate the tender level, I mean -- and the outcome of the initial period? Do you have feedbacks? I mean, what key indicators do you look at, proxies and so on? Ingrid Daerden: Yes, indeed, we have proxy advisers who give us some informal indications. So... Stephanie Dossmann: Can you say something more? Stefaan Gielens: We are communicating a lot at this point in time also towards retail and towards institutional shareholders. As I mentioned, I think, at the beginning of the session, the feedback that we get is straightforward positive. So that's one thing. We will have to see whether people then tender or not. We keep an eye also on the stock price, of course. And I think the stock price also has a clear indication that the market is a true believer of this combination. So I should turn it in the other way. We do not get any negative feedback or pushback in any way at this point in time. Stephanie Dossmann: Okay. Maybe just the last one, very quick. If I'm correct, there was a slight expansion in the yields in Belgium. What is related to? Stefaan Gielens: Yes. No, no, that could be the case. I think it is really, as you said, a slide. So it could be just a rounding. But this being said, what we do -- basically, what we have seen in the latest quarters is that, well, inflation increasing rents are driving valuation at this point in time because what we do see is that there's not a lot of yield decompression going on either. So yields are more stabilizing. But when you dive into one specific part of the portfolio, it could just very well be a mix -- what we do see in lots of countries with perhaps the exception of the U.K. and the Netherlands where it clearly is a very strong positive. Lots of other countries, it's a combination of pluses and minuses. There might be corrections for certain assets, but there also are upward corrections for other assets So it could be just the impact of these pluses and minuses at a certain point in time. But we do not see anything specific happening with the yields in Belgium. I could say on the contrary, there was for the Belgian market, a quite big deal being done a couple of weeks ago by a listed REIT acquiring from the biggest profit tenant in Belgium at a yield of 5.75. So that is really underpinning the valuation. I think there are still people willing to ask questions, but we are basically out of time. Can you -- I do apologize for this, but as I said, we are a little bit in a situation of having back-to-back meetings today. But if we couldn't address your question, please feel free to reach out to Delphine. We will come back to you ASAP. And once again, my apologies that we can't make more time available at this point in time. I thank you very much for your attendance, and we're pretty sure that we will be in touch in the very near future. Okay. Thank you all. Bye-bye.
Kati Kaksone: Good morning, everybody, and welcome to Terveystalo's Q4 and Full Year 2025 Results Call and Webcast. As usual, we'll go through the results with our CEO, Ville Iho; and our CFO, Juuso Pajunen, and we'll follow that with a Q&A. My name is Kati Kaksonen, I'm responsible for Investor Relations and Sustainability here at Terveystalo. We'll take the questions via the phone lines first and then follow with questions via the webcast at the end of the presentation. Without further ado, over to you, Ville. Ville Iho: Thanks, Kati, and good morning from cold and beautiful Helsinki. Let's dive into Terveystalo results 2025. It's again time to take a couple of steps back and look at how we performed last year. Sort of the big headline here is profitability and efficiency. If one looks at our performance, financial performance, we are delivering all-time high profitability. And as you can see later, across all of the segments, they are improving. If one looks at profitability, things are great. If one looks at quality of our services, things are great. On the other hand, of course, you can see that we are living in a market, which is not favorable. But that only underlines the efficiency of our operational and financial engine. We are able to produce robust results even during headwinds. Healthcare Services is post-cyclical industry. And now we can see in our services -- frequency of use of services, we can see a decline even though number of customers served during the year was the same as during 2024. But strong financials, declining revenue due to macro and post-cyclical nature of our business, very strong improving quality. Double-clicking into the performance of our 3 different P&Ls. Healthcare Services improving with a declining revenue, Portfolio Businesses improving with declining revenue and Sweden improving with declining revenue. All of these signaling the same story. Market is difficult, but we have been able, through our actions, to improve operating leverage, efficiency, improve our engines. And as you can see from a longer trend, clearly, the best results ever produced by Terveystalo, thanks to dedicated, focused work in our operations. Given the circumstances, the focus of our actions are, of course, tilt more and more towards customer and growth. In headlines, the agenda is intact, and we concentrate in Healthcare Services, of course, still in digital transformation, getting even more efficiency, productivity into our processes. But as I said, even more focus in customer value, generating growth through all of the segments, consumers, Kela 65 and insurance customers are focus areas where we are gaining ground. Occupational health care, we are investing heavily in renewing our products and services. We have 2-year program started last year, and we will invest EUR 20 million in products and services and renew those. And once the market turns, of course, we are stronger than ever. In Portfolio Businesses, we have said that we will fix the profitability and then we step into the growth. And from the results, you can see that we have delivered the profitability turnaround. And as you saw from our actions before year-end, we signed the deal on acquisition of Hohde in dental services. So we are really delivering on growth as well going forward. We are investing into that one. Sweden, similar kind of story. We have -- through our program, we have fixed the profitability. We are pleased with the results. Against very difficult market, we have improved the profitability. And now we are ready to invest and grow that part of the business as well. Hohde deal is a major milestone for Portfolio Businesses and specifically to dental. In our earlier CMD, we said that dental is part of our core offering. We will invest into that one. We will grow that one. We will double the business with -- while doubling the profitability. And this is a major milestone in that journey, not surprising, but a very logical one. The joint combination of Terveystalo Dental and Hohde will be a really, really strong and high-quality player, generating ever more value for our customers, for our corporate customers and consumer customers alike. And we are, of course, very excited and proud of this step. We have been leading digital transformation in outpatient care for quite some time, and we continue on that journey. If one looks at this transformation in a little bit more structured way, we can distinguish 3 different modalities that we continue investing in. So we have a more traditional hybrid integrated care continuum, which is still going to be physician-led. And there, we invest in better integration, higher efficiency, better toolkit for professional and better customer experience and patient experience for our customer. There, we have just launched a major new platform for professionals called Ella. So that's our professional interface whereby they are able to process appointments and care continuums in higher quality, higher efficiency manner. The info and data is more structured and steps logical and transparent, when a patient is moving from one step to another in care continuum. This will be further enhanced this Ella platform and scale during this year. But we can already see tangible results in -- after the launch. In the middle part, we are talking about algorithm-led digital health retail modality. And there, really the automation and no touch, very low click type of operation is the key. So when you enter into our services, you come from web app, then you are engaging with automated AI-assisted care and patient steering engine, then you are steered either to a traditional modality or to digital appointments either to more traditional chat type of service, which we will make more and more efficient or just recently launched semi-automated AI-assisted appointment modality where actually the target is that the whole appointment chain can be processed by a professional at the end of the development by single click. And this is really fast, really available service area, which we will further invest into. We have fast development pace in the area and investments yield results. Final domain in the transformation is insight-centric proactive care, where best example in our implementations now is MedHelp platform, which we will introduce during Q1 for occupational health customers, clever insights, clever use of data, activation of patients and customers in right time and situations and getting -- making a major step from reactive traditional health care modality into proactive insight-driven. The semi-automated appointment is exciting stuff. As I said, we just launched a couple of weeks back, this new chain of appointment activity from patient point of view. As I said, you enter into the services through -- typically through a app. Then you are engaging with the AI-assisted care steering engine, then that's directing you into -- if the diagnosis scenario is relevant, it will guide you into AI-assisted appointment cycle, where actually at the end of the development, when we are developing this one during this year further, professional is able to approve the diagnosis only by single click. And then you get your diagnosis, you get your guidance to whatever is the right action to do at the end of the cycle. Really exciting, complementing our already really efficient digital platform and providing us a direction to the future and further potential for better customer value, higher availability of services and at the same time, higher efficiency and profitability. With that one, over to Juuso. Juuso Pajunen: Thank you, Ville. So let's talk about our financial performance. Obviously, it's already 100 minutes old report, so you know the numbers by heart. So let's start actually from the journey. Three years ago, I was standing here first time on telling quarterly results of '24 -- '22. And at that point of time, we had annual EBITA percentage of 8.4% and we thought that we are brave when we say that by '25, we will reach 12% EBITA. Actually, we reached that one already 1 year ahead of time, delivering 12.8% in '24. And this year, '25, we are delivering 14%. And now everything you see in these numbers, what comes to efficiency signal and proves that point that we have made a sustainable strong change in our operating model, and we are as efficient as one can be. And with Ville's description on the customer journey, one-click customer journey, we can still improve our efficiency. So where we are today is that in quarter 4, we are in all efficiency metrics strong. We have improved our EBIT. We have improved our margins. We have improved our EPS. We have not done that at the cost of our client satisfaction. Our appointment NPS is 87.6, which is extremely strong. Our medical quality indicator [ PEI ] is at all-time highs also. So we are efficient, we are impactful, and we are delivering financials. But at the same time, it is fair to say that we have revenue headwinds. Let's go through those ones a bit more in detail when we go on to the segment level. But all in all, quarter 4 highlights, we are strong, we are efficient, but we have market headwinds, and we will address those ones. If we then look on the whole group, we have positive margin development. So like I explained, we have the strength especially in our efficiency metrics. The revenue was under pressure in all segments, and we'll go then through on the segment levels. What we have in the megatrends is basic or in our trends. We have the outsourcing portfolio. We have the occupational health visits and the connected customers. So all of that one is actually a continuation already from Q3. Then when we are looking at the adjustment items, we had EUR 12.7 million. It is good to understand that majority of these ones are related on our efficiency actions, on our ongoing projects where we have taken an extra push in Q4. And a material part of those ones are consulting fees that are based on success. So they wouldn't be here unless we have been successful. And thus, of course, when the consulting assignments have now, especially in Sweden and material parts ended, we are in a positive place on that one. Then on top of that one, we had a write-off related to divestment of child welfare services. That one has actually now closed in 1st of February. So it will be totally out from our numbers starting 1st of February '26 onwards. That is a noncash related impairment. And then on top of that one, we had a tax dispute that contributed to these ones. So one-offs pushing our reported EBIT lower, but still also that metric is in a strong place. If we then go deeper and we start looking at Healthcare Services. So here, margin improvement, clear. Annual margin improvement, also strong, but we have the headwinds in the revenues. Visits are 7.6% down when adjusted for the 1 working day more in the calendar. And then we have other impacts slightly positive. But all in all, the revenue is 5% down. We will go a bit deeper into the visits and the volume growth in the following slide. But all in all, we have a strong plan, but we are also a post-cyclical company and post-cyclical by the industry logic. So we are just now under pressure, but with the efficiency that we have in our platform, we will turn this one around and with all of the actions we have in place. And the underlying megatrends have not gone anywhere. So this is by nature, seasonal and macro-driven. So as a post-cyclical company, the trends are continuing. We can split it now into different buckets. We have the seasonality. This is roughly 70,000 fewer upper respiratory infections during the quarter, and that has now continued in January and in February. So the current flu season is weaker than in ages. That one contributes a certain amount. We can't impact that one. It comes and it goes. Then we have the macro level item, which basically means that as a post-cyclical company, the macro catches us later. So companies -- when you have a continued sluggish macroeconomic environment, companies tend to invest less in their people, but they started -- that's the final place where you want to cut on your investments. That's why it hits us a bit later than in some other industries. And that one we can work on. We can concentrate on client value, we can concentrate on delivering highest possible impact with an efficient motor, but we can't hide away the fact that when companies start reducing their investments at one point of time, it also impacts us. But we have a clear action plan, both on how we capture back the growth irrespective of the macroeconomic environment and then how we utilize our efficient motor when we capture that growth. So we are in a positive place in that one from a plan perspective, and we are confident that we deliver on that one. The public sector has been now remembering that we talk about the Healthcare Services, where the capacity sales is a minor part of the total offering. It has been in a weak position for a long time because of the wellbeing counties, first setting them up, then chasing costs. But now the environment starts to stabilize little by little, and we have seen some positive signals. But at the same time, it is still fairly unpredictable market on which I come later on the coming slides. And then we have the positive momentum from the consumer. We have both the insurance market, where the number of insured continues to grow slightly, but also we have a strong market share and really appreciate offering for the insurance companies. And then the Kela 65 has produced positive volume growth and continues to deliver positive volume growth for '26. So all in all, we know what is happening. We have our action plan, and we will deliver according to that action plan. Then if we look Portfolio Businesses, we have a clear profitability improvement that has continued. We also -- it's good to acknowledge that previous year Q4 was a difficult one. And now we are obviously clearly improving on that one. The revenue was contracting because of the outsourcing contracts according to plan. It's also good to note that we have been very solid in steering those contracts and running those contracts, and they have now started to deliver also profits, which have been contributing Q4 results. Staffing, this trend is still partly of our own selections earlier, but at the same time, the market continues to do difficult. We have seen some positives in the total market environment, and we have been gaining market, but wellbeing counties are still in the cycle, where they are evaluating how they operate in the future. Dental and the private continues to be the positive part of this story. We have been able to grow the top line, grow the bottom line, and we are trending the right direction. And then you have seen our investment in Hohde. If we then look on Sweden, the market continues -- continue to be difficult. It's good to note that the operational efficiency is improving. We are ramping up on the EBITA percentages. We have on the EBIT percentages slightly declined on a noncash related impairment item, actually positive impairment from previous year Q4. So all in all, we are in plan. We are delivering. We are bringing the efficiency up, which we have done. And now we are in a place where we can start to utilize also this platform in an efficient manner and start ramping up the revenues. And the pipeline there is strong for the future. So we are confident on Sweden. But obviously, then the market conditions and the employment levels continue to be challenged also in the Swedish market. If we then talk about investments, I think that in here, what is happening is exactly what we have told. We have said that we are ramping up our investments in digital, and we are also doing physical investments. On the digital part, Ville explained about Ella, about the one-click journey. Those are a couple of the highlights. We have the MedHelp cooperation that we launched last year in the second half is now starting to deliver actual output during Q1 in '26. So what is important to note that when we do an investment, the investment cycle is fairly short from start of the investment to actual use of the digital asset is happening. Ella, it is the UI for the professionals. It's already in use by hundreds of doctors and the next phase rollouts are now happening actually as we speak. MedHelp, we have now -- we are now in a status where we have started to introduce it to our clients, and we are in the first rollout in Q1. So also this one is progressing. It is not a promise in the future. It is an action today. And that one, we will continue. We will continue in investing both organic and inorganic growth also in the future. And now with the M&A agenda, we have the Hohde transaction, a couple of smaller bolt-ons and so on. And then on the focus part, we divested the child welfare. That leads to cash flow. I have nothing new to say on this topic, but would have not been repeated for the past 12 quarters or whatever. We continue to deliver cash. Whatever we do in the bottom line, we do in the bank accounts also. EUR 207 million cash flow, slightly soft. There's a timing component on the accounts payables. Last day of the year was now a banking day, and we are responsible towards our vendors who are -- most of them are small and we pay on due dates. Pushing one day forward, those payments would have made actually a visible number change on this number, but that's not how we operate. Leverage 2.1 continues to be all-time low. When we want to invest, we can invest. We have the powder in our leverage ratios. And once again, referring back to Hohde that one is under the competition authority approval, so not yet visible in the leverage ratio until we gain approval and then we both get the business on to our end and hand over the money to sellers. Looking back on our financial targets. We have 3 targets. EPS growth, 10% per year. We also told that '25 will be clearly better than that 10%. We are now at 0.73, 29% up. Net debt to EBITDA being below 2.5, but can trail above it when an M&A occurs, we are 2.1. And then the leverage dividend -- attractive dividends, at least 80% of the net result, EUR 0.64 proposed by the Board of Directors, meaning 88% of the net profits as a total and 33% handsome growth on the dividend for year, assuming, of course, that AGM approves it. And so we do what we promised to do. We have delivered on each of these metrics once again. Then before going into the guidance, it is good to have a few words on the demand environment. When we talk about this picture, what we are saying is that the demand environment is anticipated to improve gradually by the end of '26. So the '25 arrows describe where we are starting the journey this year and '26 is like a balance sheet item. The arrows are describing where we expect to land at the end of this year. So what is happening now is that if we look public sector, it is yellow, and at the same time, we have continuous modest positives. We have some big ones. We do know that there's some big ones in the tender pipeline. There was one that we [indiscernible] won in Q4 last year. But at the same time, the predictability is fairly low. wellbeing counties are now polarizing and how they start to behave is always -- has been always difficult to predict. And for that reason, we are in the yellow part on that one. But still, I need to highlight that there are lots of positive big signals around there that could merit further positives in the future. Consumer market, we have a positive situation, maybe a bit more in dental. And in the total consumer market for '26, we are still positive. This is mainly contributing the Kela 65 and related. In insurance, it is a market where insurance penetration slightly grows still. At the same time, insurance companies are getting better and better on steering their customers and impacting the market. So it is a positive market. But at the same time, last time, the dynamics was the dark green arrow upwards. So we think that, that momentum is not as strong as it was earlier. When it comes to occupational health, we have a strong plan. We had a difficult '25. We are addressing all of our issues. We are confident that we are getting into growth. But now the market will remain challenged during '26 in total. And Sweden, we are seeing that the improvement for '26 is in the pipeline. So with this type of market dynamics, we come to our guidance. Our guidance for '26 is EUR 135 million to EUR 165 million of adjusted EBIT, '25 EUR 156 million. So basically, we are guiding a corridor, where we have room to improve, but also based on the market conditions, we can be weaker than this year. The estimates are basically built on a gradually improving market environment or demand environment. We already know as a fact that first half upper respiratory diseases will be clearly below previous year. You have seen how it behaved in Q4. You can go to see our open data sources to see how January, February up to week 7 have been behaving or up to week 6 at the moment, have been behaving. So we know as a fact that it will be a difficult flu season for the first half of the year. And then we are expecting for the second half normalization. So with all of that one, it means that our first half will be below '25 due to the market environment, due to the upper respiratory diseases. But when we go forward, then we are seeing gradually improving markets. Portfolio Businesses will continue to reduce by some EUR 20 million on the revenues on an annual basis. And then finally, our guidance is not including material acquisitions. That includes Hohde transaction also. We do not know when it closes, and it's not included in these numbers. So with all of this one, I think we are going for a, in absolute terms, solid '26. But of course, in relative terms, there are also scenarios where we can be weaker than in '25. With these ones, let's invite Kati back on to the stage and let's start the Q&A. Kati Kaksone: Thanks, Juuso. I think that we are now ready for questions. Do we have any questions from the phone lines? Operator: [Operator Instructions] The next question comes from Sami Sarkamies from Danske Bank Markets. Sami Sarkamies: I have a couple of questions. We'll be taking this one by one. Firstly, starting from the outlook for this year. First question would be that why do you expect first half to be down from last year in terms of profits? I guess market conditions were pretty difficult already in the second half last year, but we didn't see profitability falling below the comparable period. So why is first half more challenging than second half last year? Juuso Pajunen: Well, if I start and Ville can complement. So if we look at the current status, we do know that the upper respiratory diseases are clearly below Q1 '25, which was clearly above average. So at the moment, that one is already a material visible and known headwind. Then the second component is that if we look our connected employees and the behavior of the employers, the connected employees continue to be some 4% down compared to Q1 '25, and that one contributes to difficulties in H1. And then the current macroeconomic environment, at least for January has not materially improved from the Q4 last year. So the employers are still clearly in the cost saving mode. So with all of these ones and against a very strong first half in '25, this is our expectation that in EBIT perspective, we will be below previous year. Ville Iho: And then -- yes. The only thing I would add is sort of summing up all of the dynamics in the market. What we see today is frequency of use of the services is down basically in all of the segments. So that is the main contributor. It's cyclical and then it's sort of upper respiratory morbidity type of impact. And it will, of course, turn around, but what we see today in the market is negative, especially against Q1 last year. Sami Sarkamies: Okay. And my second question regarding outlook would be, can you elaborate on the key uncertainties because we are looking at a pretty wide guidance range for this year? Juuso Pajunen: Yes. So basically, when we look the guidance and its parameters, the one component is kind of gradually improving demand environment. So the different type of variables in there is that what is the -- in the economic outlook, what will be the status of Finland and obviously, to a certain degree, Sweden's economy, how the employment behaves and how that one impacts on the employers' behavior. So that is one component. Then the consumer purchase power is the second component, which is relevant for us in our private out-of-pocket segments. So these ones put different type of scenarios in the table. In the positive momentum, as you know, we are efficient 20% EBITDA company. We can leverage the positive momentum in a very strong manner, but also if the current trend and the sluggish environment continues, it catches also us. So this is the clear external component. Then the second one is the seasonality related to upper respiratory diseases. That one, obviously, nobody knows how next August starts and how that one behaves in real life. So only way to predict is assuming regression to mean. Ville Iho: Yes. Maybe still to add, if one looks at us being a little bit negative on Q4, if one flips that one around, once the revenue and frequency of use of services come back, as Juuso said, operating leverage and efficiency is on such a high level that, of course, then it will really yield. But as sort of a very simple answer, it is the demand and specifically frequency of use of services, which is the -- it's not unknown, but that will then dictate on which end of the spectrum we will end in our guidance. Sami Sarkamies: So the lower end of the guidance range that would assume basically no recovery in Finnish macro, consumers not consuming and then, let's say, weak flu season during the second half of this year? Juuso Pajunen: Yes, that's a fair interpretation. Sami Sarkamies: Then you mentioned that you're still having 4% lower connected employees. I think that was also the case 6 months ago. So there's been no progress on that front. Can you elaborate on why you haven't been able to improve your market position even though that has probably been one of the key targets? Ville Iho: Well, if I start, I would say that the -- first of all, as I said, there's a 2-year program whereby we are investing EUR 20 million into our products and services, and we are making good progress in that program. One needs to understand the dynamics, how companies are making decisions and how long those processes are. So even though the operations, our commercial actions and our products have partly been upgraded, partly been already renewed, it takes some time until we can see that one in, first of all, connected employees use of services and profitability in that segment. But I'm really pleased in how [ Laura ] and our new team is now taking the challenge and pushing us forward. We have tangible things that we have already been able to deliver to our customers and with good response. During Q1, we'll have sort of best in the industry platform delivered to our customers in occupational health care. We have been able to -- a little bit history, last year was difficult from many angles. We had billing issues, et cetera, et cetera. We have been able to rectify those. And with all of these sort of soft points, we are or will be very soon clearly the market leader. And over time, the demand will be there. Sami Sarkamies: Okay. Then I wanted to touch on the one-off costs you had in Q4, EUR 30 million. I think you were not supposed to have this anymore after sort of the Alpha program. I understood that these are mostly related to Sweden, which doesn't generate any results at the moment. So can you elaborate on what kind of return on investment we will see this year if you have paid about EUR 10 million as sort of consulting success fees related to Sweden? Juuso Pajunen: No, let's first kind of correct. Sweden is by far not EUR 10 million on that one. You will see actually the final page of the report, you see also the adjustment items per segment. We have EUR 3.5 million in Sweden for Q4 and EUR 5.6 million on the full '25. So that is just to be clear that Q4 numbers, we have a component in Sweden. We took an extra push that included roughly 40 employees. In the admin part, we have digitalized, centralized and taken a huge leap in the admin part in Sweden, and that has yielded both a success fee component and a restructuring component. That was above our expectation, but that one will also basically improve our competitive advantage or competitiveness in the market and make us very, very efficient on that one. So I think that is a money well spent when we show that we can make money in Sweden. Then for Sweden to reach its full potential, it will require also positive development in the top line that for the full potential is definitely needed. Then if we look on the other adjustment items, we have an impairment related to divestment of child welfare roughly EUR 4 million. And then we had a tax dispute that is in the ballpark of EUR 2 million. And that is visible above EBITA because it has been seen as a cost -- operating cost on our profitability. So with all of those ones, Sweden program has ended. We have a minor program ongoing in the portfolios. And then we have the program Ville has in -- stating continuous 2-year program in occupational health competitiveness. That one is the occupational health program we have been talking about in Q3 and/or actually maybe already after Q2 release. And that one will continue. That is the only kind of worth mentioning program when we are going to '26 and '27. Sami Sarkamies: My final question would be on the dividend proposal. You're raising the payout ratio from 84% to 88%, even though we may be looking at a down year when it comes to earnings. What is the logic here? Because you're also doing M&A. So why you're sort of upping the payout ratio? Juuso Pajunen: Well, if we look now the numbers, so basically, first of all, we are confident for '26, we are confident for our future. We have a balance sheet that is clearly below our leverage target, even if you assume that would have happened already on 1st of January this year. So first of all, we have a capability to do so. We have one of our financial targets as an attractive dividend to our owners. It doesn't limit our growth opportunities. And at the same time, now if you look the child welfare, it is accounting-wise negative, but cash flow-wise, positive. And if you just kind of calculate from there, I think 88% is totally merited. Ville Iho: Yes, maybe just to complement, it's very much, as Juuso said, down to confidence. So now we are talking about headwinds in the market. One needs to remember that the underlying megatrends in our business, combined with the efficiency that we have been able to build into the machine over time will generate improving profits. And this is 1 year in a chain of years with positive outlook. Operator: The next question comes from Anssi Raussi from SEB. Anssi Raussi: I have a few questions left. I have to continue on Sami's question about the outlook for 2026. So of course, we have been discussing about your operational improvement throughout 2025 and your Q4 EBITA and EBIT grew quite significantly year-over-year. So then if we think about '26 and your comments about improving market towards the end of the year, so is the missing piece here pricing? Or -- because, of course, you have been talking about defending or gaining volumes in 2026 and that being maybe the most important focus area. Juuso Pajunen: So maybe if I start, the current market environment is not such that pricing or hefty price increases would be a topic in our toolbox. So that -- the competitive environment is such that pricing will be clearly in a different place compared to '23, '24 where we had also kind of high inflation or post high inflation environment. So that you could, in your narrative argue that, that is some kind of a missing piece in the total. Then what comes to the Q4 year-on-year improvement, it's good to note that in Q4 previous year, we had the onetime bonuses that we paid to all employees. We had the collateral labor agreement component also coming to all employees. So our Q4 '24 was not in a way as weak as it looked like from outset. So if we take an operational performance, we had a strong performance in Q4 '25, but you shouldn't take just kind of a comparison Q4 '24 to Q4 '25 without taking that mental adjustment, then you see that we didn't take any more that significant leap as the numbers indicate. Kati Kaksone: And maybe just to add on that. So the volume remains to be the key component. So in the first half, we're not going to be seeing improving numbers in the volumes because of the reasons that we already discussed. So the -- increasing the connected employees within the occupational health care will take some time. That will not be visible in the first Q1, especially. And then we have the other volume drivers at the moment going against us. But we do expect those trends, especially the connected employees to gradually then increase towards the end of the year. So that's the operating leverage driver there. Anssi Raussi: Those are good clarifications. Maybe I continue on diagnostics, which volumes declined. I think it was almost 12% in Q4, which is clearly more than the number of physical appointments. So of course, you mentioned your customers being in savings mode maybe right now, but is this only due to occupational health care customers downgrading their service packages? Or was there also something else relating to your own operations? Ville Iho: Yes. That's part of the answer, which you mentioned. Then looking at just sort of diagnosis mix when we are lacking a certain part of our upper respiratory diagnosis, and then, for example, MRI scans are less. So there are sort of clear logical explanations looking at sort of a core mix of the service needs that impact the volumes in diagnostics. Juuso Pajunen: I didn't fully capture your number logic. So just a reminder that we were basically workday adjusted 7.6% down. And even if you take that workdays in there, it was 1.6 positive. So we are, give or take, 6% down while the revenues are 5% down. So actually, we have a positive pricing/mix component in Healthcare Services. Then if we look the total group revenues and you compare that one to the visits, then you are kind of combining 2 different topics that are not fully in sync. In total -- in the total group numbers, we have the reduction in staffing, which is not visit related and the reduction in outsourcing business, which is not visit related. And then we have the reduction in Sweden where we don't record the visits either. So you need to be a bit careful when you are taking those bridges. Anssi Raussi: Okay. Yes, I was just looking at this number of diagnostics in Q4 year-over-year now. I think -- Juuso Pajunen: Yes. Anssi Raussi: -- but yes, that's clear. And maybe final question and a simple one on your guidance as you guide EBIT. So could you give us an assumption how depreciation and especially amortization will develop in '26 compared to '25? Juuso Pajunen: Well, basically, if we look on the amortization, obviously, we don't guide those numbers. If I hint you on the mathematics, you can go to balance sheet. You have seen that we have increased our investments, especially in digital items. Those ones will gradually hit the amortization in the income statement in the coming years. So you can fairly easily take the notes and you can see there the increases, decreases and you can from there deduct. But obviously, increased investment base will mean at one point of time, increased amortization. Anssi Raussi: Yes, try to see some Excel then. Juuso Pajunen: Yes, let's take it offline. I can show you some Excel skills. Operator: [Operator Instructions] The next question comes from Joni Sandvall from Nordea. Joni Sandvall: A couple of questions left for me. Maybe a question on the EUR 20 million investment that you are taking to address the changing needs of customers. So how much OpEx base is going to increase because of these actions in '26 and '27? Juuso Pajunen: So basically, let's put that one that the EUR 20 million is a collection of investments already made and investments coming. It includes, for example, the MedHelp investment that you see directly from our balance sheet also and then it is a further pipeline that we are doing. So I think that the proper view is once again to take on our tangibles, take the balance sheet, see the increases in there. And in our depreciation and amortization description, I think we say that the amortizations are 3- to 5-year period depending on the asset we are generating. So then you can from there evaluate the OpEx impact coming into the future or the amortization impact coming there in the future. And then if we take a look on the total OpEx, obviously, these investments would be investments unless they improved our revenue or reduced our cost base. And all of these ones are positive investments as such. Of course, then the quality improvement is an important factor and so on. But in the end, the idea of investment is to contribute in our profitability in the future. Joni Sandvall: Yes. Then the second question on the Hohde acquisition. How confident you are actually of the approval of this from the market authority, given it consolidates the market quite a lot. Ville Iho: Of course, we -- it's not in our hands, but maybe we can say that we made a very, very thorough analysis on the competitive landscape and what type of overlaps we have based on different experts and sources. And we are very confident in our plan. But then again, not in our hands, it's authority who makes the call. Juuso Pajunen: Yes, I think that Ville explain it through. Then of course, if you want to make your own assessment, it's fairly easy to look at the market dynamics, you see that we will -- even by doubling the revenues, we will be #2 in the market and our market share wouldn't probably start with #2. So from that perspective, of course, when you look at the total process, you can evaluate yourself how confident you are, but we are confident. Ville Iho: Yes. And that specific reason was one of the drivers us to start investing into this area. We saw that with our sort of average market share as high as it is, dental services is very good, a nice complement to our existing services and there we have room to grow, as Juuso explained in market share numbers. Kati Kaksone: Okay. I believe we don't have any further questions from the phone lines, but please we'll take one from the audience now. Roni Peuranheimo: Yes. Roni Peuranheimo from Inderes Oyj. Maybe about the insurance customers still, the growth rate declined here a little bit, and you see that the demand isn't as strong as it was earlier. So maybe what's behind this? I think it went from dark green to lighter green. Ville Iho: Yes. We take a couple of steps back. First of all, the insurance coverage continues to grow, which is positive. So the underlying element for growth are there for the future. Then as we equally know, insurance companies with the health insurances, they have been struggling with their profitability. They have implemented certain kind of steering mechanisms, which you also alluded to and gates and guardrails in how they are then sort of allowing services to steering guiding services for their customers. And all in all, even though we can be pleased with our own progress and our sort of success in gaining market share, the overall market reacts to a couple of years of very high morbidity and certain type of services sort of gain through insurances and this whole sort of equation and combination yields to sort of a flattish development during sort of first part of the year and then the recovery in the second. Roni Peuranheimo: All right. Then about the public market, you had there the yellow or flat demand and you mentioned that you see some positives. So is there also some clear possible negative drivers in '26? Juuso Pajunen: Yes. I think that in the total, the difficulty with public sector is to predict it at the moment. I think that I've been standing throughout the 3 years here quite many times saying that now it opens up. And at the same time, it has not opened up. There are so many things that are not in our hands and the predictability makes it a bit difficult. So we have positive signals. You may have seen us winning a process with Hohde in December with a positive revenue impact and so on, and we are gaining -- winning contracts. But at the same time, wellbeing counties are polarizing at the moment. There are those like Pirha who went for the big outsourcing that unfortunately, Pihlajalinna won and who are willing to take progressive measures jointly with public sector -- private sector. And then at the same time, there are those ones who are still very cautious. And how that dynamic plays out is simply difficult to predict. But we are positive in the total opening up, and we are confident that it will happen, but putting a timeline on that one is the reason why it is on yellow. Ville Iho: Yes. And back to your point, is there a downside? We are starting from such a low demand and very passive buying behavior. So it is quite difficult to see further downside in this business. Roni Peuranheimo: All right. Then one more about the occupational health care. You emphasized the post-cyclical nature and given that the Finnish unemployment the macro still weakened last year. So -- and you also mentioned that you anticipate growing connected employees. So maybe talk a little bit about how much the growth is in your own control versus the macro and maybe about your sales pipeline at the moment. Ville Iho: So if we start from sort of dynamics, as I said earlier, there's a lag in how we see the numbers against our actions, specifically in this segment. And I'm pleased with the progress of our program. Our win rates have been improving already during Q4, Laura and the team and the commercial team in there, they are doing a good job. What we cannot so much impact is frequency of use and the scopes of the services, which will then follow more the cyclical nature of this one. Now the companies have been in saving mode. They are also in a situation where you have a great supply of employees in almost all of the industries. So they are not sort of under pressure to improve the benefits for their employees. And this is cyclical, and we have seen this one happening many times. When the things -- when things turn, of course, this will turn as well. So a lot of this one is in our own hands, specifically when we think about the number of connected employees, use of the services more on the corporate side and more cyclical. Kati Kaksone: Thanks, Roni. We still have a couple of minutes time, so I'm going to be a bit selective on the questions that we have received from the webcast. Maybe let's talk a little bit about the drivers and the dynamics in the Healthcare Services. Could we please open up a little bit the drivers of the high profitability in the current Healthcare Services segment? And is that improvement sustainable in the longer term? Juuso Pajunen: Now we need to split that one into 2 different components. Is the improvement sustainable, meaning that can we improve quarter-by-quarter or year-on-year like we did from Q4 '24 to Q4 '25? No, we can't. In Q4 '24, we had in the underlying numbers, the onetime items, or the onetime bonuses that I referred earlier. And that one makes the improvement slightly better looking than it in real life is. Then on absolute level, we are in a positive place. We have a huge operating leverage. So from that perspective, when we get back on growth, when we get the yields on our occupational health projects that one will contribute to our profitability also. So there's 2 different answers, but the operating leverage is the key when you are looking to future. We have much to gain in this segment. Ville Iho: Yes. And as I said earlier in the presentation and comments, exactly as Juuso said, we have been able to improve profitability against lower revenue line, very, very weak macro. Operating leverage has been improving, strengthening the efficiencies there. So that will then yield improving results once we get the revenue line in order. That's very clear. And in that sense, it is sustainable, again, coming back to the fact that underlying megatrends are positive for demand of the Healthcare Services. Kati Kaksone: Then finally, a couple of words on the M&A landscape. Do we see any activity beyond the current ongoing transactions? And what are the most attractive segments that we are currently looking at? Juuso Pajunen: If I start and Ville can complement. I think that the M&A market activity has been gradually increasing throughout '25. It was very low in '23, '24, maybe especially in '24. And now we see that the market starts to be active. You can view it from different angles. There's IPO activity in Helsinki. There's transactions happening throughout Nordics and Europe little by little. So now there starts to be a market and little by little, of course, then you can start picking that what are the value-creating opportunities you want to capture. We have been continuously stating in our agenda that we have selective agenda in portfolios. Well, now we have obviously the Hohde in there, which will be hopefully close during this year. And then we have stated that in Sweden, for example, gaining scale and gaining efficiency -- after gaining efficiency, gaining scale would make sense. So that has been the other place that we have highlighted that we could look. And then obviously, in Healthcare Services, we are always checking out the smaller bolt-ons that would complement our white spots like we did in ophthalmology when we acquired Pilke in December. Kati Kaksone: Thanks. With that, any last words before we close the webcast Ville? Ville Iho: So again, great quality, great efficiency, great profitability, market under pressure, underlying trends supporting long-term growth with sustainable improvement agenda with us. So looking positively forward into H2 this year and specifically '27. Kati Kaksone: Thanks. With that, have a great rest of the day and/or upcoming weekend. Thanks for joining. Ville Iho: Thank you. Juuso Pajunen: Thank you.
Operator: Good morning, and welcome to H&R Real Estate Investment Trust's 2025 Fourth Quarter Earnings Conference Call. Before beginning the H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts or projections and the remarks that follow may contain forward-looking information which reflect the current expectations of management regarding future events and performance and speak only as of today's date. Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, and actual results could differ materially from the statements in the forward-looking information. In discussing H&R's financial and operating performance and in responding to your questions, we may reference certain financial measures, which do not have a meaning recognized or standardized under IFRS or Canadian generally accepted accounting principles and are, therefore, unlikely to be comparable to similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H&R's performance, liquidity, cash flows and profitability. H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same. Additional information about the material factors, assumptions, risks and uncertainties that could cause actual results to differ materially from the statements in the forward-looking information and the material factors or assumptions that may have been applied in making such statements, together with details on H&R's use of non-GAAP financial measures are described in more detail in H&R's public filings, which can be found on H&R's website at www.sedarplus.com. I would now like to introduce Mr. Tom Hofstedter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstedter. Thomas Hofstedter: Thank you, operator. Good morning, everyone. With me today are Larry Froom, our CFO; and Emily Watson, COO of Lantower. We'll jump right into it, and I'll hand it over to Larry. Larry Froom: Thank you, Tom, and good morning, everyone. Overall, given the headwinds we faced with multifamily supply concerns, a weak office market, the tariff war creating general market uncertainty and a weaker Canadian economy, we are very pleased with our results and in particular, the 1.6% growth in same-property net operating income on a cash basis for the year ended December 31, 2025, compared to the same period last year. FFO for the year ended December 31, 2025, was $1.21 per unit a 1.4% increase over the $1.20 for the year ended December 31, 2024, a great result considering the headwinds I just mentioned, and the fact that we have property sales of approximately $527 million over the 2-year period from January 1, 2024, to December 31, 2025. Breaking down our same-property net operating income on a cash basis between the segments: Residential segment was up 1.1% for Q4 2025 compared to Q4 2024 and was up 1.2% for the 2025 year over the 2024 full year. Emily will provide more details on Lantower's results shortly. Our Office segment, same property net operating income on a cash basis increased 1.5% for both Q4 2025 compared to Q4 2024, and for the year 2025 over the 2024 year. Our office occupancy at December 31, 2025, was 96% with an average remaining lease term of 5.2 years. We expect vacancy to increase in 2026 with RBC's lease of approximately 189,000 square feet at 330 Front Street, maturing on December 31, 2025. We are in negotiations with several prospective tenants for part of the space. Our office portfolio at December 31, 2025, consisted of 15 properties. Four of these properties were classified as held for sale at December 31, 2025. Two of which were sold in January 2026. Hess Tower is expected to be sold at the end of this month and 25 Shepherd is expected to be sold in the second half of 2026. After the sale of these 4 properties, the pro forma office segment will comprise 12% of our total real estate assets. Retail segment same-property net operating income on a cash basis increased 4.4% for Q4 2025 compared to Q4 2024 and was up 7% for the 2025 year compared to 2024 due to occupancy gains at River Landing and ForEx. Our net investment in ECHO and 23 Canadian retail properties were sold in January 2026, and we are expecting to sell the remaining 3 Canadian retail properties in March of this year. The only remaining retail assets will be the commercial component of River Landing and is expected to comprise 4% of our total real estate assets. Industrial segment same-property net operating income decreased 9% for Q4 2025 compared to Q4 2024 and decreased 3.7% for the 2025 year over the 2024 year. Industrial occupancy decreased from 98.9% at December 31, 2024, to 90.7% at December 31, 2025. Our 3 industrial developments totaling approximately 360,000 square feet at H&R's ownership share have all been leased. Two of the leases totaling approximately 204,000 square feet will commence in Q1 2026 and the third will commence in Q4 of 2026. Our FFO and AFFO payout ratios were a healthy 50% and 60%, respectively, for the year ended December 31, 2025. The proceeds received from the sales announced to date have been used to repay debt. Our pro forma debt to total assets at the REIT proportionate share are expected to be 41.8%, and the pro forma debt to EBITDA is expected to be 8.7x coverage. With that, I will turn the call over to Emily for an update on the Lantower Residential segment. Emily? Emily Watson: Thank you, Larry, and thanks to all of you for joining us. I'll begin with an overview of our fourth quarter performance in the operating environment across our multifamily platform before turning to market trends, development progress and operational strategy. However, I want to start by stepping back for a moment because the fourth quarter marked an important inflection point not just for Lantower, but for the multifamily sector more broadly. 2025 did not unfold like a typical year due to elevated supply causing slower momentum and softer job growth further depressing pricing power across many Sunbelt markets. That context matters because it frames how we think about our -- both our fourth quarter results and the setup for the years ahead. Against that backdrop, our portfolio performed as expected and in several respects, better than we anticipated. Collections remained strong and resident retention remained high, while new lease pricing remained pressured in certain markets, renewal performance continued to provide stability supported by a resident base that remains employed and financially healthy. Wage growth continues to track over 3% and our average rent-to-income ratios remain near 20%, reinforcing affordability and supporting consistent renewal behavior. Importantly, fewer than 10% of our move-outs during the year were tied to home purchases, the lowest level we've seen historically, underscoring the structural affordability advantage of renting in our market. What materially changed as we exited the year was not demand. It was supply. After several years of outsized deliveries, new competitive supply is now declining meaningfully, with forecast indicating a reduction of 36% in 2026 compared with 2025. With that shift, while that shift did not immediately translate into pricing power in the fourth quarter, it did begin to stabilize fundamentals beneath the surface. Same-property NOI from residential properties in U.S. dollars increased 1.1% on a cash basis for the 3 months ending December 31, 2025, primarily due to lower property operating costs, including repairs and maintenance, insurance and bad debt expense. This was partially offset by a decrease in rental income at H&R Sunbelt properties, primarily due to a decrease in occupancy. Same asset occupancy ended the quarter at 92.8%, a decrease of 2.2% from the prior year and down 1.8% from Q3. Sunbelt blended lease trade-outs were negative 3.2% in Q4, an improvement of 30 basis points over Q3 and a 280 basis point improvement over Q4 2024. New lease trade-outs in Q4 were negative 12.4% and renewal lease rates increased 4%. January blended trade-outs for the Sunbelt were negative 3.6%, a 70 basis point improvement over January of 2025. Our Sunbelt portfolio fair market value is supported by a third-party appraisal and recent market transactions, thereby maintaining a weighted capitalization rate of 4.9%. This level remains consistent with Q3 and reflects ongoing institutional confidence in the sector due to compelling long-term fundamentals, including robust population and employment growth, business-friendly environments, and durable migration patterns that underpin lasting value creation. Turning to development. Our new Dallas assets continue to progress well. Lantower West Love is 90% occupied and Lantower Midtown is 84% occupied on track to stabilize in early Q2. Both communities are outperforming competitive market absorption averaging 21 leases per month versus industry standards of roughly 12 per month since initial move-in. Each was completed on time and on budget, underscoring the discipline of our development execution. Our REDT Projects remain on budget. We are on schedule to receive first move-ins at Lantower Bayside in Tampa in March of 2026 and first move-ins at Lantower Sunrise in Orlando in April with completion expected mid-2026 for both assets. In addition, Lantower currently has 9 Sunbelt developments in the pipeline totaling approximately 2,900 suites at H&R's ownership interest. Multiple sites are fully permitted and ready for construction, and we are advancing design, drawing and permitting on the remainder. These projects reflect our conviction in the long-term growth of our Sunbelt markets and our ability to capitalize on favorable land positions as construction costs stabilize. As we look ahead, we took an important step to position the portfolio for its next phase of growth. Beginning April 1, 2026, we will transition to a third-party property management model through partnering with Greystar. This evolution reflects our focus on improving operating leverage, reducing fixed overhead and increasing strategic flexibility across the residential platform. By externalizing day-to-day property management, we retain continuity at the property level with the majority of our on-site associates expected to transition while enabling the platform to scale more efficiently. This structure allows us to pursue additional multifamily investments in additional high-growth Sunbelt markets without incurring the cost and complexity of expanding a property management organization. We will retain a focused internal team dedicated to asset management, development and strategic oversight, ensuring continuity of leadership, investment discipline and long-term value creation. In closing, our fourth quarter results reflect a portfolio that remains fundamentally found in an environment that has been anything but typical. While near-term pricing pressure persist in certain markets, the structural setup for multifamily housing is improving. Supply is moderating, affordability remains compelling and resident behavior continues to support stable occupancy and cash flow. Combined with a more scalable operating model and disciplined capital allocation, we believe Lantower is well positioned to navigate the next phase of the cycle and deliver durable value creation over time. Finally, I want to thank our Lantower team for their focus, adaptability and commitment through a challenging year and their continued commitment to the Lantower portfolio success. And with that, I'll turn the call back to Tom. Thomas Hofstedter: Thanks, Emily. Operator, you can open up the call for questions, please. Operator: [Operator Instructions] The first question comes from Sam Damiani at TD Cowen. Sam Damiani: Good morning, everyone. Tom, there hasn't been any new disposition signings or announcements since last November. Just wondering if you could comment on the efforts, the initiatives and why it's been quiet on that front now for 3 months? Thomas Hofstedter: No special reasons, just seasonality. End of the year, we did a lot. Christmas time comes, the market slow in December, January, as you know, it's currently February. So I know it's your favorite question. We're not jumping on to do sales just for the sake of doing sales. We will expect to -- we have on the market some assets that are there now that are going on now. We expect to realize some sales out of Caledon. The government has to take the land for the 413 Highway expansion. We expect to hear some news on 26 Wellington that was going in the market, 25 Sheppard, we expect to hear some news. The deals just take time, nothing unusual. We're still proceeding with selling our -- the properties that we circled, and we are totally optimistic that we'll get to the finish line. Sam Damiani: Okay. And then just on the 310 to 330 Front, I think that asset was in discussions for sale last November, the tenant in one building is obviously vacated. Is that no longer under active discussion for disposition? Thomas Hofstedter: It's no longer under active discussion. We decided to go ahead and the office market has gotten better. We have a large chunk of contiguous space of basically full building that very few or nobody in the market downtown has. So we're optimistic on our ability to lease that out sometime this year. And at that point in time, after we successfully stabilize the property, we'll probably be looking to sell it. Our game plan hasn't changed at all. Maybe we circled have moved around by a few months. But at the end of the day, in a year from now, we totally expect to have our industrial division, our Lantower division probably our Calgary, [ Bow and DC ] assets. And for the most part, we sold most of those remaining assets probably by the end of the year. Sam Damiani: Okay. Last one for me. Just on the fair value reductions in Long Island City. Like have you seen market transactions that have prompted you to go through the process to test those values and record those big fair value losses in Q4? Thomas Hofstedter: Well, It's -- when you have an asset like that where the -- which... Sam Damiani: Jackson Park and mostly... Thomas Hofstedter: So the Jackson Park, we had an appraisal -- third-party appraisal, which I was very, very verbal on and vocal on that I didn't agree with. We had reluctance from -- previously from the auditors to write down something where we had a third-party appraisal. Subsequent to that, we've now achieved our own third-party appraisal, even though we have an appraisal at a higher amount from our partner, Tishman, and we elected to bring it down to where we feel the value always was. It was more or less an accounting issue where the auditors didn't allow us to bring it down to where we thought the value was, not that the value has changed. Operator: [Operator Instructions] And the next question comes from Jimmy Shan at RBC Capital Markets. Khing Shan: So maybe just to start off on Lantower for Q4. I did notice there was a -- the NOI increased a decent amount from Q3. I was kind of wondering what was behind that quarter-over-quarter growth? Emily Watson: Mostly seasonality had a lot to do with the Q4. We had some true-ups in our real estate taxes that gave us some lift in the Sunbelt and an extra payroll in Q3 that we don't have in Q4, just kind of the timing of those things. And then Jackson Park has some seasonality as well from their leasing velocity that they typically have in the August -- June to August in Q3. So really not anything different. It's just mainly driven by the seasonality and some real estate trips. And partly, we won several appeals that also had some -- we budget for what the consultants tell us kind of what the -- where they think and they just came in a little bit better than what we had anticipated. So some true-ups in Q4. Larry Froom: I'll just add to what -- sorry, Jimmy, just to what Emily is saying. I think in U.S. dollars, the same-store assets increased by $3.2 million Q4 over Q3. So as Emily is saying about half of that is due to the Sunbelt and about half of it is due to Jackson Park. What Emily was referring to the realty taxes and some amendments. The reason it's not in our MD&A is because we had the same kind of value in Q4 of 2024. So -- but Q4 over Q3, you see that pick up. And then of course, there's ForEx that's just adding to that difference of the $3.2 million. Plus overall, just something that's not same asset in the whole residential is Midtown and West Love of ramping up occupancy are now starting to contribute to NOI. And so that is also leading to an increase in overall NOI from Lantower. Khing Shan: Okay. That all makes sense. And then in terms of the decision to outsource the property management to Greystar, I guess, is the plan going forward to continue to scale the portfolio? Because intuitively, I would have thought that outsourcing it means or not remaining internal mean you can't really see a path to scale in that portfolio. Maybe what's the thinking around the decision there? Emily Watson: Yes. I would disagree with that actually. In a previous company, I had 30,000 units and outsourced to Greystar along with some others. And it really requires you to be able -- well, it allows you to be far more nimble where you want to invest. You're not tied to I have to have critical mass if you can chase returns a little bit easier to maximize. But what it really allows you to do is leverage their buying power. And that goes from everywhere -- anywhere from their pay-per-click on marketing to paint costs across the across the portfolio. So even if we got to a 30,000, 50,000 unit property -- portfolio, we're still not going to have the buying power of a company that has 1 million units. So we saw a lift when we outsourced River Landing a few years ago, and we anticipate that we'll see similar cost savings as well. And just one nugget to -- our discount on paint, for instance, is only 40% with Sherwin-Williams, whereas theirs is 85%. To really just extrapolate kind of every turn, there's buying power that will hit, but I expect every line item on our financial statement. And it will allow us to be able to be laser focused on asset management and driving results and not as people-intensive to be able to really move a little bit faster on scaling the portfolio. Khing Shan: Okay. Is the plan to scale the portfolio though, going forward? Thomas Hofstedter: The word scale is interesting. We do plan for selling some of our assets more for regional reasons from an asset management perspective, not to scale down an asset to sell assets, out more just for operation. Khing Shan: Sorry, say it again, are you going to -- you're planning to sell a few assets? Thomas Hofstedter: We are planning on selling some of the portfolio where we don't like -- where Emily and the company don't like the geography or where we don't feel comfortable with the growth. And so we will, over time, be selling some assets, trading some assets in and out. We will maybe be developing some assets. The external on property management is different in Canada than the United States. United States -- it's a very mature business. It's not extremely profitable at the management fee level versus Canada, which is much more expensive. So it's very common in the United States to farm out management fees for the reasons Emily mentioned, but also because it's relatively cheap. So we're not -- going internal doesn't save you a whole pile of money on management fees as it does in Canada, and it gives you the flexibility to sell assets without having to worry about human resources. But when I say sell assets, it's really an asset management function. It's really rotating out of cities or markets or regions that we don't see the growth in and rotating back into stronger markets. Larry Froom: And just to be clear, given our cost of capital, we're not planning on acquiring any new assets. The only assets we may acquire would be if we did a 1031 exchange replacing assets we sold. . Khing Shan: Okay. And then lastly, just on the asset sale. Tom, you had mentioned before through the $2.6 billion that you think you could potentially sell. So you've -- you're close to doing $1.5 billion. I guess there's $1.5 billion left. Is that still a good number to think about? I know there are a lot of moving parts and markets unknown, but is that still the target for 2026? Thomas Hofstedter: No. We'll see where we are by the end of the year. The target for '26 is what I mentioned beforehand. It's more -- and I can't say they're all going to get done because some of them are beyond our control such as Caledon, but we do expect Caledon [ Guyanese ] we do expect; 26 Wellington, we do expect; 25 Sheppard, we do expect Phase 1 of the Cove. I can't say which of those will actually get to the finish line or not get to the finish line, but the magnitude of those assets as you can -- and I can't tell you if Caledon is going to be buying all the lands, which could be $300 million, $350 million of value or $150 million of value. So I don't really have a handle on it because it's out of our control, but the magnitude of the land based on the assets that I just mentioned that are up for potential disposition are substantial. Khing Shan: What would be the range of value? Thomas Hofstedter: You know what? It could be as low as $500 million and easily in excess of $1 billion. Operator: We have no other questions. I will turn the call back over to Tom Hofstedter for closing comments. Thomas Hofstedter: Thank you, everybody. Have a wonderful long weekend. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Operator: Good morning. My name is Sylvie, and I will be your conference operator today. Welcome to Interfor Corporation's Fourth Quarter 2025 Results Conference Call. [Operator Instructions] During this conference call Interfor's representatives may make forward-looking statements within the meaning of applicable securities laws. Additional information regarding the risks, uncertainties and assumptions of such statements can be found in Interfor's most recent press release and MD&A. And I would like to turn the call over to Mr. Ian Fillinger, Interfor's President and CEO. Mr. Fillinger, you please go ahead. Ian Fillinger: Thank you, operator, and thank you, everyone, for joining us this morning. With me on the call, I have Mike Mackay, our Executive Vice President and Chief Financial Officer; and Bart Bender, our Senior Vice President of Sales and Marketing. I'll start off by providing a brief recap of 2025 and then pass the call to Mike and Bart to cover off Q4 and the outlook. 2025 was another year marked by historically weak lumber prices and significant market volatility. Yet we continue to execute with discipline and strengthen the company in several important ways. I thought a few notables were worth mentioning. We took steps to reinforce liquidity and extend our financial runway, which Mike will speak more to. We also took decisive portfolio actions, adjusting operating postures at several mills and permanently closing 2 high-cost facilities in the U.S. South, which were indefinitely curtailed in 2024, ensuring our production profile is better aligned with demand. Across the platform working capital performance remained a highlight, logistics and lumber inventories were reduced significantly, a meaningful achievement in a down cycle. We advanced the final phase of our Thomaston mill in Georgia with commissioning of the new sawmill expected in early March. We anticipate this asset will be a top decile performer and a key contributor to our long-term cost structure. And importantly, employee turnover continued to improve, reflecting the work our teams are doing on engagement and retention. 2026 will be hard to predict. However, we're well positioned to deal with uncertainty. We've implemented clear, measurable balance sheet guardrails to ensure resilience through the cycle and a commitment to directing free cash flow toward debt reduction targets. We also defined cost structure targets benchmark to trough cycle pricing, ensuring that further price weakness can be absorbed without eroding liquidity, and that we can continue to create long-term value even in constrained markets. Till we have more clarity on the economic impacts of political developments in both the U.S. and Canada, we remain prudent in our approach to capital allocation. Our foundations are strong. Our footprint is diversified, and we continue to see opportunities to improve the business without large capital commitments. With that, I'll now turn the call over to Mike to walk through the quarter in more detail. Mike Mackay: Thanks, Ian, and good morning, everyone. I'll begin by providing comments on the fourth quarter earnings, followed by an overview of our recent balance sheet initiatives and then end with some guidance on go-forward capital allocation priorities. . From an earnings standpoint, Interfor posted negative $29 million of adjusted EBITDA in the fourth quarter. These results reflected weak lumber market conditions, ongoing trade measures and production curtailments across the platform. Nevertheless, our results in the fourth quarter were an improvement compared to the negative $36 million of adjusted EBITDA we posted in the third quarter after normalizing for the large noncash duty expenses that impacted that period. The sequential improvement was driven by several offsetting factors. From a sales perspective, realized selling prices were weaker on average due to slightly lower market pricing in most regions as well as a full quarter of higher countervailing antidumping duties as well as the introduction of a 10% Section 232 tariff in October. From a cost perspective, however, production cost per unit improved by 4%, as higher conversion costs as a result of our downtime were more than offset by positive inventory valuation adjustments as lumber prices began to improve towards the end of the year. Despite the negative adjusted EBITDA, cash flow from operations was breakeven for the quarter due to a notable recovery of working capital driven by reduced inventories and lower receivables. Notably, looking back over the last 3 years of this prolonged market downturn, cash flow from operations has been positive in each of 2023, 2024 and 2025, totaling just over $300 million over that 3-year period, even amidst the very weak lumber market conditions. This reflects focused efforts on working capital management, as Ian alluded to, tax recoveries and ongoing initiatives to improve our cost structure and optimize the operating platform. Turning now to the balance sheet. While admittedly, our leverage is not where we'd like it to be at this point in the cycle, we continue to take proactive actions to help us weather the storm of the current volatile markets. During and subsequent to the quarter, we completed a series of complementary financing transactions, including our previously announced equity raise as well as several new net debt-neutral refinancing initiatives. Taken together, these initiatives bolster our liquidity, effectively clear out our debt maturity runway for 2026 and 2027 and provide us both the time and flexibility to make the appropriate operating decisions if necessary. At the end of the year, our net debt to capitalization ratio was 36.5%, and we had pro forma available liquidity of $482 million. This level, combined with anticipated divestiture proceeds over the next year or so, will provide significant financial flexibility to navigate ongoing volatility. These divestitures include the ongoing sale of our B.C. Coast forest tenures as well as anticipated sale of real estate at our former Summerville and Meldrim facilities in the U.S. South. Turning lastly to capital allocation. Following the completion of several major capital investments in recent years, culminating with the completion of our Thomason project in Q1, we're continuing to anticipate lower spending going forward. Total capital spend for 2026 is expected to be between $75 million to $80 million and preliminary estimates for 2027 are expected to be in the range of around $60 million, focused almost entirely on maintenance. In terms of capital allocation, as Ian alluded to, any free cash flow will be directed solely towards leverage reduction. The timing to reduce this leverage will ultimately depend on lumber prices and market conditions. However, our priority in the near term remains simple and clear. We're encouraged by some early signs of improvement in the lumber markets in recent weeks, though our planning assumptions remain conservative. With that, I'll now turn the call to Bart to provide some commentary on the markets. Barton Bender: Okay. Thanks, Mike. Good morning, everyone. As we look ahead to 2026, the economic environment remains uncertain. Trade and geopolitical developments continue to introduce incremental risk could slow both interest rate easing and broader economic activity. That said, the U.S. economy continues to show resilience around growth and employment. Current expectations suggest that meaningful interest rate easing could shift to later in 2026. From a housing perspective, affordability continues to be challenged. Mortgage rates are expected to remain at or near levels at least in the first part of 2026. Repair and Remodel largely influenced by home purchases is expected to remain relatively flat at the current levels. Turning to supply. We're beginning to see the impact of production curtailments across the industry. Some curtailments are formally announced, many are not. One useful indicator is shipments of Canadian lumber into the U.S. markets. Over the last 6 months, shipments annualized to approximately 8.5 billion board feet compared to just over 10 billion in 2025 and 11.5 billion board feet in 2024; that's a material drop in supply. And that, when you couple that with the curtailments in the U.S., altogether, these reductions are starting to balance the lumber markets. Market activity suggested destocking was taking place with our customers for the back half of 2025 as really there was no incentive to carry any extra inventory in the marketplace. This would mean that mills were not seeing true levels of demand, which given supply reduction should be interesting, as we enter the seasonally higher lumber consumption months of spring. Logistics has been relatively stable. However, the recent winter is impacting service levels and causing some delay in shipments. We expect that demand for lumber was also impacted during these weather events. As always, Interfor will continue to monitor our customers' needs and adjust our production levels accordingly. With that, I'll turn it back over to you, Ian. Ian Fillinger: Thanks, Mark. Operator, we're ready to take any questions. Operator: Thank you, sir. [Operator Instructions] First question will be from Matthew McKellar at RBC Capital Markets. Matthew McKellar: Just wanted to follow up on Bart's comments about some delays in shipments. It sounds like logistics were kind of stable before that. How significant is the disruption you're seeing today? And you gave a sense that things can normalize fairly quickly? Or do you expect some tightness there for some time to come? Barton Bender: Yes. It's not at a prolonged situation. I think the winter weather that you saw kick in into some unusual places and also the usual places in the North have caused some railcar delays and some truck delays, which will impact shipments, but those will clear out in a couple of weeks, 3 weeks. So I'm not expecting anything prolonged. Matthew McKellar: And then you seem to take quite a bit of downtime in the Pacific Northwest in Q4. Have you been able to restore your operating stance in that region to start 2026 with how prices have trended? Ian Fillinger: Yes, Matt, Ian here. Thanks for the question. We are adding incremental hours in the Pacific Northwest right now. And the way we do that is obviously, you look at the pricing that's available to those operations, build the order file that's cash positive over a multi-week period and then slowly bring hours into the operation. So I would say it's a very conservative risk adverse adding of hours that really it depends on pricing, demand and order file. So there is -- there are hours that are increasing slightly but not at a rapid pace at this point. Operator: Next question will be from Ketan Mamtora at RBC Capital Markets. Ketan Mamtora: Ian, Bart, maybe to start with, can you give us some perspective of what your channel inventories are at the moment? And what is your sense of inventories in the channel at the moment? Barton Bender: Yes. Thanks, Ketan. Yes, as far as our view of the dealer and distribution channels across our lines, they appear to be on the lean side with some recent volatility, making it a bit harder to decipher. But there seems to be little willingness to build any inventory as Bart had alluded to, just given market uncertainty at this time. So I would -- that would be our best view at this point, Ketan. Ketan Mamtora: And then your inventories, Ian? Ian Fillinger: Yes. We're comfortable with our inventories. We've got them very lean and we're running the operations relative to the sales price and the demand on the order file. So yes, very good and comfortable position in the inventory. There's no access around any kind of materiality in any one of our regions across the company. So very, very tight at this point. But appropriate given where the market is at. Ketan Mamtora: Got it. And then as we think about the first quarter, Ian, how should we think about your production in the first quarter? I know in Q4, you all had talked about 250 million board feet of sort of curtailments. Is there a way to think about Q1? Ian Fillinger: Yes. I would guide to the early part of Q1 here is some small incremental hours particularly in the South and the Pacific Northwest that are happening now. But Ketan, going out further, we're just -- we're reviewing it on a week-to-week basis and just making sure that we're not adding hours and building inventory. So it's really got to have the right price and the right order file in front of it. So incrementally, hours are up a bit for the first part of Q1 to be determined for the last part here. Ketan Mamtora: And then just last question... Ian Fillinger: Very cautious right now. Ketan Mamtora: Understood. That's helpful. And then just last one for me. On the balance sheet side, do you think everything that you had to do kind of to get into a position where you think that, that's comfortable for you? Do you think that's behind you are there other options that you all are considering? You've got duty deposits. Is that an option to kind of monetize? Mike Mackay: Mike here. I think the moves we made here in the last quarter, including the equity raise have been very meaningful is how we think about them, really cleared out the maturity runway in the next few years, in our view, in terms of flexibility and in terms of whatever market conditions come our way. So I think in a large part, it's been completed. I would say they were proactive moves on our part to get ahead of it and anticipate the downside scenarios. . Duties wise, I think with all the ongoing uncertainty around this file and moving pieces politically, it's probably lower down the list of things to consider, but do feel the other moves we made have really moved the dial substantially here. Ketan Mamtora: Fair enough. That's very helpful. I'll jump back in the queue. Good luck. Operator: [Operator Instructions] Next question will be from Sean Steuart at TD Cowen. Sean Steuart: Mike, I want to follow up on the balance sheet. On the debt side, you did a lot of -- made a lot of progress this quarter. You're getting amendments from creditors on the covenant calculations. I guess what I'm trying to square up here is beyond the minimum liquidity requirement, can you give some context on concessions you guys are giving with -- to get those amendments? And I'm thinking in terms of any incremental increase in your overall borrowing costs? Are there any sensitivities around that you can give us? Mike Mackay: Yes. Sean, good question. I would say, as I addressed on the last question. This is really proactive measures on our side. There would be -- our new notes are obviously priced a little higher than our existing structure. But overall, if you look at our interest costs, they're in the 6.5% range. So there would be some incremental borrowing costs that come with this, but nothing too meaningful in a couple of million dollar range type of thing, Sean. So I wouldn't say there's concessions, the equity raise I would say, went a long way for our lenders in terms of showing we're willing to do to help ourselves. And so I think that was all part and parcel with this package. Our new issuance on debt is really looking at funding some maturities that are coming our way. So we have some of it fall off as we go ahead here under the normal course. Sean Steuart: Okay. It's encouraging to see that progress. Can you give us a sense, Mike or Ian, the cadence of the asset sales, both the tenures and the idle sawmill sites. The cadence of those proceeds and overall magnitude that you're targeting? Mike Mackay: Yes, I'll take that one, Sean. So for the B.C. Coast, I think our guidance previously was in around $30 million to $35 million, that still stands. I think we've always said on this file, it's timing that's a little more uncertain. But I think for planning purposes, that's really a fair number to look at over the next 12 to 18 months. The asset sales, a little more hesitant to give some guidance there. We're in an active marketing process right now. I would say it's meaningful, though. So order of magnitude in and around the same as the B.C. Coast, but I don't want to get too much more specific, those properties are in attractive geographic areas in growing cities and so pretty meaningful real estate divestiture proceeds. Also, 12 to 18 months will probably be a decent guidance for that, Sean. Sean Steuart: Okay. One last question. Ian, you touched on the following -- or the lower labor turnover, presumably you're referring to the U.S. South there, can you put some numbers around that, that I know that's been a challenge for the industry for the last several years, but any numbers you can put around changes in that turnover rate? Ian Fillinger: Yes, Sean, it has been. And it has been 2 years in a row where we've reduced our turnover rates, particularly in the South as the focus mills that we've identified as the mills that needed the most help to make progress on that. But Overall, in the South, I believe it's around 3% or something improvement. But in some of the focus mills were there were higher turnover rates, those are in double-digit percentage improvements through the retentionary initiatives that we put in place. So yes, really good progress by our operating and HR teams to address that. Well, obviously, lots of work still to do, but 2 years of trending in the right way has been encouraging. Operator: [Operator Instructions] And at this time, Mr. Fillinger, we have no other questions registered. Please proceed. Ian Fillinger: Okay. Thank you, operator. As always, Mike, Bart and I are available to respond to any further questions as is Bryan Fast, our Director of Investor Relations. Thank you, everybody, for attending, and look forward to talking to you next quarter. Have a great day. Operator: Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.
Operator: Good day, ladies and gentlemen. Welcome to the CAE Third Quarter Financial Results for Fiscal Year 2026 Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Mr. Andrew Arnovitz. Please go ahead, Mr. Arnovitz. Andrew Arnovitz: Good morning, everyone, and thank you for joining us today. Today's remarks, including management's outlook and answers to questions, contain forward-looking statements, which represent our expectations as of today, February 13, 2026, and accordingly, are subject to change. Such statements are based on assumptions that may not materialize and are subject to risks and uncertainties. Actual results may differ materially, and listeners are cautioned not to place undue reliance on these forward-looking statements. A description of the risks, factors and assumptions that may affect future results is contained in CAE's annual MD&A and MD&A for the 3 months ended December 31, 2025, which is available on our corporate website and on our filings with the Canadian Securities Administrators on SEDAR+ and the U.S. Securities and Exchange Commission on EDGAR. On the call with me this morning from CAE are Calin Rovinescu, Executive Chairman; Matthew Bromberg Matthew, the company's President and Chief Executive Officer; and Constantino Malatesta, our Interim Chief Financial Officer. After formal remarks, we'll open the call to questions from financial analysts. Let me now turn the call over to Calin. Calin Rovinescu: Thank you, Andrew, and good morning, everyone. Before Matt and Constantino take us through the Q3 results and discuss the transformation plan, I want to briefly add my perspective. Q3 was a solid quarter, all things considered, despite the Civil business experiencing a somewhat softer order activity than expected. Defense, on the other hand, had a stronger quarter than expected, and we're increasing our outlook for that segment. In my view, a quarter like this reinforces why we firmly believe that having two strong businesses with leading positions in attractive markets like our Civil and Defense segments makes so much sense for CAE. As you'll hear from Matt, we're starting to implement the several phases of our multipronged transformation plan with a focus on sharpening our portfolio, disciplined capital management and capital allocation, and improved performance through operational excellence and cost transformation. We expect this plan to lead to increased earnings and cash flow and long-term sustainable value creation. We've already made certain important organizational changes to several areas of our company. We've identified several opportunities for network rationalization and potential noncore divestitures. We've reduced capital expenditures and are building a plan for improved utilization and returns from our simulators. Specific targets resulting from the transformation plan are expected to be made available after next quarter so that you will be able to more closely monitor our progress. As we said on the last call, CAE's culture over the last years has centered primarily on growth, and it's now time to harvest that growth. The Board and I are strongly supportive of the disciplined data-based approach that Matt and the leadership team are undertaking, challenging the status quo while protecting what is core to CAE. We are closely aligned with both the direction and pace of the transformation and fully recognize that some of the actions required to strengthen the business will have some near-term revenue impact. We're comfortable with that trade-off as we position the company to become more resilient and to deliver stronger returns with more disciplined capital allocation. And with that, Matt, over to you. Matthew Bromberg: Thank you, Calin, and good morning, everyone. Q3 was a solid quarter despite the softness in Civil. Our performance reflects a more balanced portfolio, improved cost discipline, a focus on program management and better cash flow collection. I'm very proud of the team for delivering these results ahead of our expectations, especially while advancing the transformation plan. Even in the planning phase, the transformation plan is influencing our decisions with respect to portfolio focus, capital discipline and performance. For instance, focusing our capital on core opportunities is further reducing our fiscal 2026 CapEx outlook, and our focus on working capital has improved free cash flow. Combined, we've achieved our full year deleveraging target ahead of schedule and further strengthened our balance sheet. While there is still much to do, these early improvements give us confidence in the strategy and in the opportunity ahead. Over the past 90 days, I've met with over 100 investors to discuss CAE's performance and to review the transformation plan. In these discussions, 4 themes resonated. First, CAE competes in an industry with strong tailwinds. We operate at the intersection of Civil Aviation and Defense, two markets with durable long-term growth drivers. We have world-class technology. We have unparalleled customer relationships. And most importantly, we have exceptional employees across the organization. In our Civil segment, we are the market leader in simulator development and sales, and we operate the largest independent training network in the world. In Defense, we operate around the world locally and with a strong core of capabilities in simulation, training and mission rehearsal. In this segment, we are the largest independent Defense training company in the world, and we have unparalleled breadth of platforms and capabilities. These are strategic assets that give us long, consistent runway. Second, we developed simulation and training solutions for more than 220 aircraft platforms. That's more than anyone in the industry. We bring unmatched depth in system engineering, hardware, software integration and image generation. Moreover, we have some of the most -- some of the world's most comprehensive databases for geospatial environments, aircraft, airports, sensors and operational performance. Third, I've been struck by the level of trust, our Civil Aviation and Defense customers place in CAE. Our customers trust CAE with their most valuable assets, their pilots, their aircrew, their passengers and the military personnel. That trust reflects the critical role we play in ensuring readiness in moments that truly matter, and it underscores the responsibility we carry as a company. And finally, building on the strong foundation, the transformation plan will establish a more consistent, higher-quality business that generates higher margins and higher cash flow. The transformation plan has three focus areas: portfolio sharpening will simplify our portfolio and focus our resources on what we do well. Tighter capital discipline will ensure that every investment meets strategic and financial targets and that capital, R&D and all expenditures will be assessed against a balanced scorecard to ensure awards, sales, profit, cash flow and return on investment thresholds are all met. And finally, performance improvement will streamline the business and focus on every element of operations from engineering to production, from sales to free cash flow. Some of these actions will have near-term revenue impact as we ramp and move through the transformation, and that is expected. Now I want to briefly touch on our most recent leadership changes. As we announced earlier this quarter, Ryan McLeod will be joining CAE as our Chief Financial Officer. Ryan brings deep experience in operational finance, capital discipline and transformation execution. His background and approach align closely with the priorities we are driving across the company. His culture will fit exactly with what we are and where we want to go, and I'm very much looking forward to partnering with him as we move into the next phase of CAE's transformation plan. But I also want to take a moment to recognize Constantino Malatesta. Over the past 1.5 years, Constantino has served as an interim CFO during a period of significant change for CAE. His leadership, his judgment and his steady hand have been instrumental in strengthening financial discipline and maintaining stakeholder confidence. And on a personal note, he has made my own transition into the role as smooth and effective as possible. I'm very grateful for his hard work, his continued support, and I really enjoy working with him. Thank you, Dino. In summary, we operate two strong businesses, and I see clear opportunity to do more. Returns are below where they should be and capital intensity across CapEx, R&D, SG&A is higher than warranted. Over the past 6 months, our analysis has confirmed these observations and sharpened our view of the opportunity ahead. And this is precisely what our transformation plan is designed to address. I'll come back to that in a moment, but first, I'll ask Dino to walk through the financial results. Constantino Malatesta: Thank you, Matt. I appreciate the kind words. Good morning, everyone. Third quarter consolidated revenue of $1.25 billion increased 2% year-over-year. Adjusted segment operating income was $195.8 million, up 3% from $190 million in the third quarter last year, and adjusted EPS was $0.34 compared to $0.29 a year ago. During the quarter, we incurred $7.3 million of transformation-related expenses, primarily recorded in SG&A. These costs are included in adjusted segment operating income and adjusted EPS and reduced adjusted EPS by approximately $0.02. Net finance expense this quarter amounted to $54.1 million, down from $56.6 million in the third quarter last year, mainly due to lower finance expense on long-term debt due to a decreased level of borrowings during the period. This was partially offset by higher expenses on lease liabilities. Income tax expense this quarter was $29.6 million for an effective tax rate of 21% on a statutory and adjusted basis compared to an adjusted effective tax rate of 29% in the third quarter of fiscal 2025. We continue to expect a run rate effective income tax rate of approximately 25%, reflecting the expected geographical mix of earnings and ongoing tax legislation reforms from various jurisdictions. Net cash flow from operating activities was $407.6 million this quarter compared to $424.6 million in the third quarter of fiscal 2025. Free cash flow was a solid $411.3 million, above the $409.8 million recorded in the third quarter last year. This underscores continue discipline and operational strength. Capital expenditures totaled $50.6 million this quarter with approximately 75% invested in growth. Reflecting tighter capital discipline, we now expect full year capital expenditures to be more than 10% lower than last year, driven by a further reduction in Civil CapEx, which is now expected to be approximately 30% lower year-over-year. Our net debt position at the end of the quarter was approximately $2.8 billion for a net debt to adjusted EBITDA of 2.3x at the end of the quarter, surpassing our goal to reach 2.5x net debt to adjusted EBITDA by the end of the fiscal year. Now turning to our segmented performance. In Civil, third quarter revenue decreased 5% year-over-year to $717.2 million. Adjusted operating income decreased 6% to $141.8 million, resulting in a margin of 19.8%. These decreases were driven by lower simulator sales and lower utilization in our trading centers and were partially offset by the contribution from sales of used simulators across the network. Civil adjusted segment operating income this quarter includes $4.9 million of transformation-related expenses, which impacted the adjusted segment operating income margin by approximately 70 basis points. Training center utilization was 71%, down from 76% in the prior year period, and we delivered 15 full-flight simulators compared to 20 last year. This primarily reflects lower demand for commercial and business training and simulator deliveries versus the same period last year. In Defense, revenue increased 14% year-over-year to $534.9 million, while adjusted segment operating income increased 38% to $54 million, delivering a 10.1% margin, which marks the first time in over 6 years, the Defense margin has been at or above 10%. This performance was driven by higher activity and profitability on new higher-margin program awards and the ramp-up of recently awarded contracts in the U.S. and Canada, reflecting a more favorable mix of products. Defense adjusted segment operating income this quarter includes $2.4 million of transformation-related expenses, which impacted the adjusted segment operating income margin by approximately 40 basis points. With that, I will turn the call over to Matt. Matthew Bromberg: Thanks, Dino. Before turning to the outlook, I want to highlight a few recent developments that underscore momentum across both Civil and Defense segments. In Defense, we continue to see strong demand across allied markets, supported by this multigenerational increase in Defense spending. Our Defense & Security segment has unique capabilities and global reach. We operate through strong locally rooted businesses in the United States, in Canada and across key international markets. And this allows us to serve sovereign customers with credibility, proximity and trust. That combination of global scale and local presence positions us to capture international opportunities. A good example is our partnership agreement with Saab announced in November on the GlobalEye Airborne Early Warning platform. Saab is a well-established global aerospace and defense company serving government customers across many markets. Our agreement on GlobalEye underscores how leading OEMs and airframers view CAE as best-in-class at what we do as a critical enabler to the effectiveness and competitiveness of their platforms. For Saab, CAE's training and simulation capabilities enhance the operational value of the platform and strengthen its appeal to sovereign customers and operators. Programs like GlobalEye illustrate how CAE partners with leading OEMs to deliver long-tenured integrated training solutions. On GlobalEye, CAE is uniquely positioned to provide integrated training that combines the cockpit, front-end flight training with back-end mission systems training. We do so by leveraging CAE's ability to integrate simulation, mission rehearsal and system engineering across the full operational life cycle and across the entire platform. Combined with our global footprint, this enables CAE to deliver scalable training franchises deployable across allied markets. Looking ahead, CAE expects to benefit from Canada's defense spending as international platforms are selected in partnership with leading OEMs across air, maritime and multi-domain environments. Beyond Saab, CAE works with a broad set of partners, including Lockheed Martin, General Atomics, Leonardo, Airbus and many others. These partnerships are expected to support CAE's role as a long-term provider of mission-critical training, simulation and mission rehearsal capabilities to sovereign customers. We intend to continue broadening our relationship with key strategic partners over the next few years. Also during the quarter, we announced our selection to deliver Australia's Future Air Mission Training System, a highly significant and competitively awarded program for CAE. This award is another example of CAE's differentiation in large complex integrated flight training programs, where we bring together simulation, training and mission rehearsal into a single integrated training ecosystem. With an initial 10-year period of performance and a value of more than $270 million, this contract positions CAE shoulder to shoulder with the Australian Defense Force. It represents a meaningful step forward in advancing next-generation air mission training capabilities for Australia. More broadly, this award underscores an important characteristic of integrated flight training programs. They are not transactional in nature. They provide long-term visibility, deep customer relationships and establish scalable platforms that expand as customer needs and operational concepts evolve. These programs are supported by dedicated CAE teams, many of whom will spend the majority of their careers working on the same tenured program working side-by-side with uniform personnel. The Australian Future Air Mission Training Program and as another example, the Canadian Future Air Crew Training Program, or FACT, are just two of many opportunities and examples where CAE can provide the front-end and the back-end training solution. These are infrastructure-like businesses that leverage all of our capabilities to benefit the war fighter. Now turning to Civil. In Civil, we had a highly successful Singapore Airshow, where we signed 8 agreements for more than $160 million, and that reflects CAE's position as a long-term training partner across Civil Aviation. Taken together, these announcements underscore the durability of our customer relationships, the relevance of our global training network and our ability to support operators across regions, aircraft types and business models. While we continue to lead the industry in today's training requirements, we are also looking to the future. Over the past quarter, we announced that our training solutions have been selected by two of the pioneering companies in advanced air mobility or eVTOL emerging space. We are proud to be selected by Joby Aviation and Embraer Eve Air Mobility. We are partnering with Joby and Eve to enable an entry into service underpinned by CAE's track record of innovation, integration and certification. CAE has a long history of industry firsts, and this emerging aviation segment is just another proof point. Joby and Eve have put their confidence in CAE to help establish the training standards for this new category of aircraft. It's my observation that while these companies are focused on developing cutting-edge and disruptive aircraft technologies, they want to leverage our experience and our footprint in end-to-end training. CAE has fielded more than 220 aircraft platforms, as I mentioned before, and operates in every corner of the globe, more than any other provider. And once again, our Prodigy image generator is a key differentiator. It allows us to deliver high fidelity visualization required for complex low-altitude operations in urban environments, where situational awareness and accurate visual clues are critical. Taken together, these developments reflect our focus on maintaining our customer-centric relationship with existing operators while also providing -- developing new partnerships to ensure CAE continues to lead in the evolving markets. We'll continue to do so where we can differentiate through our intellectual property, our global infrastructure and our standards. And as we do this, we will maintain focus on the heightened financial expectations that we have set for the entire organization. Now looking ahead to the balance of the year. CAE's business portfolio is becoming more balanced. And for the year on a consolidated basis, near-term softness in the Civil segment and strength in the Defense segment largely offset each other, leaving us in the range of where we expected to be overall. We still expect the fourth quarter to be our strongest of the year in Civil. However, our outlook for the year has softened with mid-single-digit percentage decline in annual adjusted segment operating income compared to last year. Overall, we expect an annual Civil adjusted segment operating income margin in the 20% range. This change is driven by three factors: softer-than-expected market conditions, U.S. dollar translation impacts and the rationalization of our commercial simulator network. The network actions are being accelerated to align capacity with current and expected demand and are intended to improve utilization, returns and resilience over time. In parallel, we are reinforcing a more disciplined operating and commercial culture, supported by strengthened processes and a more structured go-to-market approach, including the use of a balanced scorecard for capital allocation and commercial decisions. We are prioritizing opportunities that meet our return thresholds and capital objectives while maintaining our leading market position. And as a result, some previously forecasted full-flight simulator orders and deliveries have shifted to the right. While our near-term outlook reflects the factors we've discussed, the long-term fundamentals in the aviation market remains strong. Boeing and Airbus each have backlogs that extend roughly a decade at current production rates. And when combined with other major OEMs, the global commercial aircraft backlog totals approximately 17,000 aircraft, providing multiyear visibility for the industry. Business jet OEMs similarly report healthy backlogs representing several years of deliveries and activity in the fractional ownership market continues to strengthen. These fundamentals reinforce our confidence and our bullish view on the secular outlook for aviation. In Defense, our performance year-to-date has been stronger than we expected. We now expect the Defense adjusted segment operating income to grow by more than 20% year-over-year compared to the low double-digit percentage growth we previously guided. We expect the annual adjusted segment operating income margin for Defense to be approximately 8.5%. Defense budgets allocate substantial and growing resources to training, simulation and mission rehearsal, areas where CAE has long-standing capabilities and competitive positioning. While not all the spend is directly addressable, it highlights the size and strategic relevance of the opportunity in front of CAE. Given the geopolitical environment and this multigenerational commitment to increase spending across NATO and allied countries, Defense spending will grow at a much faster rate in the future than we've seen historically. And Canada's commitment to spend $82 billion in Defense over the next 5 years with a long-term ambition to reach roughly 5% of GDP by 2035 are very important tailwinds for CAE. These commitments will last for decades. For CAE, this is an opportunity. With our capabilities aligned to training, simulation and mission rehearsal, where a meaningful portion of Defense spending flows and a sovereign incredible footprint across many allied markets, we're uniquely positioned. With our strong Montreal-based engineering and manufacturing facility, we're uniquely positioned. With our worldwide footprint, we're uniquely positioned. And with our industry-leading capabilities and technology, we're uniquely positioned. Now let me pivot and talk about the transformation plan. Before I get started, this is not a sprint. It's not a loose run. It's more of a marathon. It's going to take time. But we've been training and we're getting ready, and we're going to start moving quickly forward. This quarter reflects progress in the planning and evaluation phase of the transformation plan. As I mentioned earlier, we're already seeing benefits in our cash flow and leverage ratio. These benefits are a direct result of the team's focus on a sharpened portfolio, improved capital discipline and our performance-driven operating model. In particular, we have launched a process to explore strategic alternatives for noncore assets. We've commenced rationalizing our Civil training network to rightsize it for market demand, and we are looking at every aspect of our operating model, starting with a shared service outsourcing initiative launched last week. The work is advancing well, and we expect to have the evaluation phase substantially complete by the time we report year-end results in May. At that point, we will provide an outlook for next year together with some specific longer-range targets and a clear articulation of how the transformation plan all comes together to benefit the company. We launched the transformation plan in November and established a transformation program office with dedicated executive leadership. The team is currently managing a range of initiatives, each evaluated based on a balanced scorecard and each aligned to one of our three priorities: portfolio focus, capital discipline and performance excellence. Our governance cadence is rigorous with detailed line-by-line status reviews with the entire executive management committee meeting -- committee every 2 weeks, and this will ensure execution and results. The plan will leverage our market position, our leading Civil network and our unique technology foundation to transform CAE into a higher-performing business with improved margins, stronger free cash flow and better returns on investment. Now let's go into a little bit more detail. First, our portfolio refocusing. We have completed our business and asset review, and have identified several noncore assets representing approximately 8% of revenue. For each of these assets, we will explore strategic alternatives. We have already identified several potential transactions, engaged advisers and will quickly move through our execution phase. Announcements will be made when the strategic direction becomes clear with a suitable strategy, a suitable counterparty and open market and of course, with economics and timing that enables value creation for CAE. Second, it's our focus on capital discipline, and that starts with taking a rigorous bottoms-up view of the balance sheet to ensure that every dollar of capital employed is delivering maximum value. This includes aggressively removing non-value-added costs from the business. We are also applying a significantly higher bar for returns and payback periods on all newer projects -- new capital projects. These process changes are already yielding benefits as we are reducing our CapEx and R&D forecast, as Dino indicated. However, the most significant near-term opportunity lies in the Civil training network. Today, we operate 373 full-flight simulators globally, of which 250 are for commercial airline training. The performance across this network varies meaningfully. Our data shows a clear distribution. We know where every simulator is, and we know how it performs. Clearly, there's an upper tier of strong performers, but a lower tier of underperforming assets and a sizable middle market that could be further optimized. As we assess the underperforming tier, we see significant opportunity to rationalize our commercial airline training capacity. As mentioned, we will move approximately 10% of deployed commercial airline simulators. As we do this, we will look at our footprint for other opportunities to relocate devices and improve utilization and returns. As I've mentioned, these actions take time. These actions require us to work through customer contracts and commitments to find suitable alternatives for their training. We also need to work through facility leases and local regulation. So overall execution is expected to take between 12 and 24 months. As we move through this process, some near-term revenue impact is expected. Mitigation plans are in place and customer focus is at the forefront. In parallel, we see opportunities to unlock additional value by selectively integrating elements of our business aviation and commercial aviation training networks, where it will be optimal to combine capabilities and footprint, we will do so. The objective is a training network that is rightsized for the market and its expected growth, supported by a leaner cost structure and a stronger go-to-market execution. Given that the training network represents a material portion of our capital base, these actions are central to driving higher margins, stronger cash flow and improved returns on capital. We are also conducting a comprehensive view of our R&D portfolio to ensure alignment with strategy and return thresholds. Projects that do not meet the bar will be ended or curtailed, and we expect R&D investment to moderate over time. We are demanding greater rigor and discipline around capital approvals. We revised our corporate policies and procedures, in particular, as it relates to CapEx. These changes tighten the standards under which capital investments are approved. As a result, any material capital decisions elevated in my office raising the bar in returns, cash flow and capital efficiency. Finally, we have raised the bar in our bidding and commercial decision-making, applying more rigorous standards that prioritize returns, free cash flow, pricing discipline and are aligned with our current network strategy. We're being more selective by design, reflecting a clear focus on value creation rather than just volume. Taken together, these changes we are putting in place are more about metrics. They represent a shift in culture. In addition to tightening capital accruals and bid discipline, we are reinforcing execution and accountability day-to-day. We are increasing ownership for nonworking capital with a clear expectation and tighter discipline around inventory management, billing accuracy and timely collection of receivables. And that leads to performance. We're focusing on embedding the same disciplined balanced scorecard approach we apply to capital allocation and commercial decisions to everything we do. We're simplifying the organization, tightening accountability and increasing the operating cadence. We recently signed a global partnership with a world-leading enterprise transformation provider to implement a shared service operations model for selected back-office functions. In the initial phase, we are transitioning approximately 80 finance and HR processes into a modernized global shared service operation. This provides CAE immediate access to best-of-breed processes and Gen AI-enabled tools. And we expect to deliver meaningful reductions in corporate administrative costs while improving the scalability, execution and quality over time. Free cash flow has strengthened during the quarter, driven by greater discipline around noncash working capital. In Civil training, account receivable improved steadily, primarily due to reductions in aide receivables and tighter collection practices. Even at this early stage of the transformation, we have reinforced clearer ownership it's due to weekly tracking and implemented stronger enforcement mechanisms. And as a result, utilization of our revolving credit facility declined, contributing to lower interest expense for the quarter. More to come. And looking forward, we're developing a Factory of the Future road map, designed to build the simulator of the future and strengthen our competitive edge. This work is focused on modernizing how we design, how we produce and how we deliver simulators by improving our production processes, logistics, supply chain, quality and delivery across the products organization. In parallel, we're laying out the groundwork for a modular open architecture product strategy that will allow us to build more scalable, upgradable simulators and insert new technologies more efficiently over time. While these initiatives are not yet in execution, they're deliberate elements of our longer-term road map and are intended to help CAE outpace competitors through lower complexity, shorter lead times and a more modern, efficient production model. We are also strengthening accountability by more directly aligning executive compensation with the objectives of the transformation. This work began early in my tenure with discussions with the Board starting roughly 6 months ago, recognizing that calibrating these changes thoughtfully takes time. You should expect a clear and more direct linkage between compensation and outcomes, metrics such as return on capital, free cash flow generation, margins and earnings per share are expected to feature prominently across both short-term and long-term incentive programs. And more importantly, it's not just about senior leadership. Over time, we expect these same performance standards and scorecard-driven priorities to cascade more broadly through the organization. So incentives at multiple levels reinforce the behaviors required to improve returns, strengthen cash generation and deliver sustainable value creation. To sum up, we are challenging assumptions, we are executing with discipline, and we're maintaining a clear focus on improving returns. The actions we are taking are grounded in data and designed to position CAE for stronger performance over time. We benefit from powerful fundamentals across both end markets. As I've mentioned, in Civil Aviation, we are positioned for long-term growth in our market, driven by global air travel demand, fleet expansion and pilot requirements. And in Defense, we're seeing multigenerational growth supported by sustained increases in Defense spending across allied nations in training, simulation and mission reversal, and that will play an important part in international readiness. I look forward to sharing the details of our transformation plan and again, specific longer-term targets and our fiscal 2027 outlook when we report our full year results in May. Thank you. Back over to you, Andrew. Andrew Arnovitz: Thanks, Matt. Operator, we'd now be pleased to take questions from financial analysts. Operator: [Operator Instructions] Your first question comes from Fadi Chamoun with BMO. Fadi Chamoun: Matt, I think you'll probably realize for us on this side of the equation, we're not known for patients. So I'm going to ask you a few questions about kind of the longer-term perspective that you're providing today. So can you kind of help us understand where the goalposts are 2, 3 years down the road? Can the Civil business generate solid mid-teen return, lower ROIC return? What is the range of kind of broadly speaking, ROIC target that you think could be achievable as you undergo all of these kind of changes over the next 24 months? And a couple of quick follow-ups. Can you share what the revenues of the 25 simulators or 10% of capacity that you intend to retire in the commercial full-flight simulator side? And when you look at, I mean, utilization in the low 70s, the orders lagging full flight simulators deliveries, can Civil grow EBIT in the next 12 months? Or is this going to be -- with the disruption that you're doing in the short term, it is going to be a bit of an off year basically as we get to the other side of this transformation. A lot there, but any quick color you can share would be great. Matthew Bromberg: Thanks for all the questions. Let me try and take them one by one. First, from a longer-term perspective, we're still looking at how each one of these initiatives will impact the portfolio, and that takes time, and we want to be cautious so that we don't over or undercommit to you and the other analysts. However, I go back to the longer-term fundamentals of our industry. On the Civil side, and this is what matters, the industry grows at 4% to 5% every year over the long term. There are disruptions. There are geopolitical disruptions, there are supply chain challenges. We've seen it before, and we'll see it again. But if you step back from an annual disruption, that's the long-term trajectory of the Civil market. And we CAE play a unique role. We're the world leader in full-flight sims, production, development, deployment, and we have the largest independent training network in the world. So long term, those fundamentals are strong and will continue. And on the Defense side, which I think is unique, we see the same outlook. For the first time in my career, we see 4% to 5% of long-term outlook in Defense as well, and we're uniquely positioned to capitalize on that. You asked secondly about how returns will evolve over time. Give us some time to look at it. It's a complex set of equations, and we have to look at each asset. We have to look at each strategy, and we have to make sure that we understand the impact. But I will answer your question about utilization and what the reduction in the Civil training network would do. If -- and let me emphasize this, Fadi, if I could take out all those sims immediately, and I can't. Remember, I said it will take anywhere from 12 to 24 months to do it. And if I retain all the customer volume that's in there, and that is our intention, but that requires a lot of negotiations, then Civil utilization would go up to 75%, 400 basis points. Now I can't take them out overnight, and I need to work on retaining them, but that's the impact on utilization. So when you look at those assets, the 25 simulators, they're clearly the underutilized, underperforming assets to our network, but they consume resources. They consume capital, they consume real estate and they consume inventory. And so by doing this, we'll strengthen the focus of the network, and then we'll attempt to better utilize, better sweat the other assets to improve utilization and focus. And remember, it's not just about utilization, it's about the contract. We have a variety of different contractual mechanisms. And so you need to look at the profitability and the revenue that comes out of that, all that's in front of us. So Fadi, thanks for the question. Operator: Your next question comes from Krista Friesen with CIBC. Krista Friesen: Maybe just to follow up on the last one there. Have you started to have these conversations with your Civil customers in terms of rationalizing the network? And how have those been going? And do they seem amicable to the consolidation of some of these changes? Matthew Bromberg: Yes, it's a great question. Thank you for asking it. We have started the conversations, and each one requires a tailored approach. And I remind you, when we built the network, every full-flight simulator in the training center was built for a reason. And over years, operating strategies, airline strategies, demand for travel changes. And so taking a pause in the network and looking at it is a rational, appropriate thing to do. If we step back from individual conversations, what we're really doing is sizing the network for today's demand. We overbuilt the network. It's too large for the demand that we see today. And so we're going to reduce the size of the network to accommodate today's demand and the expected growth we see. Now each one of those conversations with airlines requires time and patience. We're a very customer-centric organization and initial conversations are positive, but we have more work to do. Thanks for the question. Krista Friesen: And if I can just ask a follow-up. It sounds like 2027 will be a noisy year just as you go through some of these transformations. But how are you thinking about free cash flow for 2027? Is there an opportunity there just as CapEx starts to come down? Matthew Bromberg: Yes. Let me turn that over to Dino. Constantino Malatesta: Thank you, Matt. So definitely, our focus will be continued strong free cash flow generation. I'm really proud of what we delivered in the quarter, and we're maintaining that focus highlighting some of the things that Matt said, focus on inventory management, payable management; focus on collections of ARs. It really will be continued discipline, and we are committed and expecting to generate strong free cash flows in the future and continue to be below the leveraging 2.5x net debt to adjusted EBITDA on a continued basis. Matthew Bromberg: And thanks, Dino. Let me just add, as we generate strong free cash flow and potentially proceeds from some of the portfolio actions that we're taking, the first initiative will be to invest and fund the transformation. A strong balance sheet and strong cash flow will allow us to put those resources to work. Each one has a business case, each one has to meet our expected return thresholds, but that's priority one. Obviously, second priority is to make sure we continue to delever, and that will take some time. And after that, when we have the luxury to do so, we'll revisit what to do with the free cash flow. Operator: Your next question comes from Konark Gupta with Scotiabank. Konark Gupta: Matt, I wanted to dig into the nature of the assets that you have identified, the noncore assets, 8% of revenue. Is it safe to presume that most of these assets, maybe all are in the Civil segment or they're in Defense as well? And I mean, when these assets come out of the system, have you identified how much of the margin drag these were causing? And what can we expect post divestitures? Matthew Bromberg: Yes. Thank you for the question. So there are assets, businesses in both the Civil and Defense side, to be clear. And these are good businesses. These are really good businesses. But as we look at where we do well and where we want to focus our resources, these businesses will do better with another owner. And so that's what we're focused on. And each individual asset business requires us, again, as I mentioned in my comments, to have the right counterparty, the right strategy and the right economics for CAE. And so we'll give you more details on each one as we get more confidence in the future state. Thanks for the question. Konark Gupta: I appreciate that. And if I can follow up. I think you mentioned about real estate a few times in the past. With the simulator rationalization and these noncore asset sales, are you taking out some of your real estate portfolio as well? I mean, whether it's leased or owned? Matthew Bromberg: Yes, I appreciate the question. We're looking at it, and the intention is to do that. We have a very large real estate portfolio. But as I mentioned also, we have to look at leases, we have to look at the base space where the simulators go and see what the opportunities are. And that will be more of the details that will come out in subsequent quarters. But absolutely, we want to look at the real estate portfolio as well as the asset base. Operator: Your next question comes from Cameron Doerksen with National Bank. Cameron Doerksen: Maybe a question on, I guess, the market outlook. Obviously, Civil continues to be a little bit of a challenge for yourselves. Just wondering if there's, I guess, any light at the end of the tunnel here? I mean, are there, I guess, any indications that you see on the horizon that maybe some of the Civil Aviation training demand might pick up? Or is it kind of the same as what we've seen in the last couple of quarters? Matthew Bromberg: Yes, I appreciate the question, and I've spent a significant amount of time with the team looking at the Civil market. I think we over-indexed ourselves looking at specific metrics. I think if you step back, you have to look at the entire market, aircraft deliveries, grounding, supply chain issues, air traffic control disruptions. It's a complex weather metrics and we all look at it. From my perspective, this is the market. We're sitting at it. We're not trying to reach some destination, this is the market. And as I mentioned earlier, we overbuilt the network. So we're going to resize the network for the market demand we have today, and that positions us well for the future. And as I mentioned just a couple of moments ago, as we resize the network and stabilize ourselves for the growth, the market will grow long term at 4% to 5%. It has for the past 20 years, it will for the next 20 years. But I'm not in a position to predict exactly what next quarter will look like. The demand that we're seeing today is softer than we expected, but this is the market, and we expect to size everything around it. So I appreciate the question. Cameron Doerksen: Okay. That's great. And maybe just a quick follow-up on the, I guess, the divestitures. I mean, have you actually had early conversations with any potential buyers of some of these businesses? Just trying to get a handle on what the timing of a sale of some of these businesses might be. I mean, is this something that could happen in the next 12 months? Matthew Bromberg: Yes. I appreciate the question. I've run portfolio transformations before, and we have a very experienced team. You have to move slowly through this process and you have to move cautiously to the process to make sure you get everything ready. So it's 18 to 24 months is typically what these transformations take, and we're not going to rush it. And so it's too early to talk about buyer interest or discussions or any of those details. But again, as each individual business gets more mature in its own process, we'll start to make those announcements when we're ready. Operator: Your next question comes from Kristine Liwag with Morgan Stanley. Kristine Liwag: Just wanted to follow up on Defense. Margins were pretty good in the quarter. And so I was wondering, is this a function of the low-performing contracts finally rolling off? Are there any left? Or what did you have a particular gain on sale or -- sorry, incremental benefit from a more profitable contract. So a little bit more details on what's happening in the Defense margin would be great.? Matthew Bromberg: Yes. Look, I appreciate the question. It's a combination of things. It is good focus on existing programs. And going forward, we're going to talk about growth. We're going to talk about margin expansion. There's still some of the legacy programs left to wind down, but I'm confident that the team continues to maintain its focus on execution. In addition, it's been really good focus on cost controls inside the Defense business, and that is also helping performance. The Defense business has an infrastructure and cost base just like the Civil business and focusing on those cost controls is paying dividends. In addition to that, as we look forward, we're going to try and sign contracts that will have margin accretion opportunities, and we've talked about that before. These things are all combining. But in this particular quarter, we had a contract mix that provided some tailwind that we don't expect to reoccur. And that's why we provided guidance for the year that's going to be 8.5% margin. That's solid improvement, and that's not a stopping point. That is a pause in the journey of driving this business to where I expect to achieve, which is like any other strong Defense business between 10% and 11%. We'll provide that guidance at the end of the year on how long it will take to get there, but don't view this quarter as where we are yet, just view it as a combination of those three factors. So I appreciate the question. Kristine Liwag: Great. And if I could follow up, Matt, your background is from U.S. Defense companies. When you look at CAE's Defense portfolio and you assess its strength, it is the largest training Defense company in the world. How do you assess its strength? What do you think its role is? And when you start looking at potential $1.5 trillion U.S. budget, the Europeans are spending a lot on Defense too. Where do you think CAE sits in that broader picture? Matthew Bromberg: Yes, it's a great question. So let me answer it from a few dimensions. First, when Defense money is spent, anywhere from $0.07 to $0.10 out of every dollar is related to simulation training and mission rehearsal. That money comes out of both procurement dollars and operational maintenance dollars. So that puts us in a fantastic position. Not all of that is addressable to us because often training is done organically, meaning by the Defense department, but a lot of it will be available to us. Secondly, we have a very large international footprint. That's unique. There are many Defense companies that wish they had the international presence we do in terms of facilities and teams on the ground working side by side, and they have strong relationships. Just a couple of weeks ago, I was in Germany at our Stolberg facility, celebrating its 65th anniversary working side-by-side with the German Air Force. That is a fantastic facility, and that creates fantastic relationships and puts us in a fantastic position. So I think we're well positioned geographically to capture the opportunities you've talked about. And as I mentioned earlier, we're unique in the industry that we have 220 different platforms that we've developed over time. That's a combination of Civil and Defense. So when someone comes to us and wants to develop a new simulation system, a new mission training center, we're uniquely positioned to do that. We know more about hardware and software integration, how to combine front-end and back-end training, and how to have the best final output that uniquely positions us as well. We do one thing. We do training, simulation and mission rehearsal. And then finally, our ability to do programs like FAcT and the Australian program I mentioned, it's an end-to-end training solution. So we bring our training centers, our training simulation capability. We train integrated flight training, flight ops. We train, we bring courseware. And taking the requirements to train a war fighter, to train a pilot, it's complex. We know how to decompose those, we know how to execute them, and we do it better than anyone else. Thanks for the question. Operator: Your next question comes from James McGarragle with RBC. James McGarragle: I just wanted to follow up on one of the comments in the prepared remarks. Obviously, you're looking for higher return, higher margin type of business. So on one hand, being more selective is going to help you get higher returns, higher margins. But how do you also think about being more selective while driving absolute levels of free cash flow growth and kind of capitalizing on all the secular opportunity available to you? Matthew Bromberg: Yes. Could you, sorry, repeat the question? I didn't quite follow. I apologize. James McGarragle: Yes. No worries. So just in the prepared remarks, you mentioned you're looking at higher return and higher margin type of business. So obviously, being more selective is going to help you get higher returns and higher margins. But just how do you look at being more selective while also driving higher absolute levels of free cash flow growth and kind of capitalizing on the secular opportunity available to you? Matthew Bromberg: Okay. Yes. Thanks for the question. I think I follow where you're going. First, being more selective in our capital decisions obviously means we'll spend less of our free cash flow on future capital deployments. That's the first step. And we will make decisions based on a more balanced scorecard. We will try to ensure that every asset meets a higher set of return thresholds, and that's going to reduce CapEx and that's going to improve cash flow. Secondly, we're doing the same thing in our research and development portfolio. I mentioned we're doing a bottoms-up review of every project. We have a significant number of research and development projects, too many. And so we're going to look at the ones that we're executing. And if they're core, strategic, we'll maintain it, but focus on disciplined execution. If they're not, we'll curtail them or wind them down. And then going forward, we'll be more selective about where we spend money on research and development. That will improve our free cash flow. And then finally, in a big part, it's about solid sustained performance execution, ensuring that we write the right contracts, that we collect quickly and that we focus the entire team on free cash flow. That includes inventory management as well. That's new focus for the company. It's not an overnight change. But as I indicated, we're already seeing the benefits of focus on account receivable collections, and there's more to come. So everything across the transformation plan will improve our free cash flow. Thanks for the question. James McGarragle: And then just a quick follow-up. How are you thinking about your ability to pass on higher pricing? Is there any flexibility to drive higher pricing with your customers and long-term partnerships? Just trying to understand how quickly you can use price as a driver of better returns across your customer set? Matthew Bromberg: Yes. I appreciate the question. I've been asked this question a lot. We don't operate with a catalog. We don't operate out of a storefront. We negotiate agreements with airlines, and they're sophisticated, very important customers. What matters to me and the team is that we get the right value for what we provide, whether it's a full-flight simulator or a training center and then they get the right value out of what they buy. We have long-term agreements and lots of joint ventures. And so it's not a catalog, it's not a storefront, but focusing on getting value for what we provide and making sure we make the right decisions going forward, that's front and center. Operator: Your next question comes from Benoit Poirier with Desjardins Capital Markets. Benoit Poirier: Matt, could you maybe talk about the opportunity to improve pricing through a dynamic approach, but also about the opportunity to leverage synergies between Civil and Defense. I'm just curious to know where you are in this journey. Matthew Bromberg: Okay. I appreciate the question. As I mentioned earlier, pricing with sophisticated airline customers is a complex endeavor. It's not a catalog. It's not a shared app of some nature. It's how we create relationships that go many, many years. And so we'll look at providing, as I said previously, the right value to the customers and ensuring that we get the right value back for what we provide. That's what we're going to focus on. When you think about utilization, our focus is to improve it. We want to sweat those assets. We want to harvest them. We want to improve utilization, and that will improve everything about the business. It will improve our return on invested capital. It's going to improve the utilization of the assets. It's going to improve free cash flow. And there are a variety of tools that we'll explore in doing it. So sorry, can you repeat the second part of -- Oh, the question was Defense and Civil, yes. So on Defense and Civil, we already have many opportunities to work closely together. As I mentioned in our remarks, the core of our engineering capability and our manufacturing capability is here in Montreal. And that's important because we leverage this large infrastructure, which has higher Civil volume than Defense volume to reduce the cost and improve the efficiency of delivering Defense products. And on the other side, we leverage Defense product development, which is often several years ahead of where the Civil market needs to improve the technology that sits in our portfolio. The hardware, software integration, the system engineering, in some cases, the image generation required for military products can be several years ahead of where we need it for Civil products, and we've done that in the past. What we want to do is do more of that. We want to leverage the demanding nature of Defense products, simulation, training, mission rehearsal, live virtual constructive environments. We want to leverage all that development and use it to benefit the Civil side of our business, and we want to leverage our Civil infrastructure, supply chain, factory to improve the cost effectiveness of the Defense solution. I do firmly believe in having a balanced business, and I think they work well together. A lot of that opportunity is in front of us, and we're focused on unlocking it, but it's a great question, and thank you for it. Benoit Poirier: Okay. And maybe just a quick follow-up on the balance sheet. You ended the quarter with a strong leverage ratio of 2.3x ahead of the plan. You mentioned the desire to reinvest, put those resources to work you need to deliver. But with the upcoming strong free cash flow, it looks like you'll be in a position to discuss about capital deployment opportunity, not far away. So any thoughts about where do you see an optimal leverage ratio for this type of business and your -- maybe the preferred avenues when it comes to capital deployment to shareholders? Matthew Bromberg: Yes. Let me have Dino first answer, and then I may add a couple of comments. Dino, please? Constantino Malatesta: Thank you, Matt. Thank you, Benoit, for the question. So definitely, the expectation is that we do maintain the leverage ratio to be below 2.5x. And we do want to continue to reduce debt and of course, reduce the interest costs. So that will be very much a focus on our side. I think Matt said it earlier, right, we want to deliver -- continue to deliver strong free cash flow. The cash generation will help us position ourselves for the future, right? We want to continue and operationalize the transformation costs -- transformation plan and the costs associated with that. So we are looking at that. We're looking at being below 2.5x and maintaining that. That's our expectations, and we'll continue that focus. But really, it goes back to a disciplined approach, both to noncash working capital, CapEx, raising the bar and making sure that the decisions that we make meet that balanced scorecard approach. Matthew Bromberg: Yes. And I'll just add, I'd ask everyone internally and externally to get -- allow us to get a few quarters under our belt. It wasn't too many quarters ago, and we had a lot of pressure in this company because of our balance sheet. So we want to ensure we have sustained repeatable processes. We want to fund the transformation plan. We want to focus on the right investments when they matter and go forward. So it's great that we all see we're in this inflection point, but let's ensure that we continue to execute and build sustainable cash flow generation for the future. Operator: Your next question comes from Sheila Kahyaoglu with Jefferies. Sheila Kahyaoglu: Congrats on all the things you have going on. It looks like you're going to make a lot of progress. Maybe just on the pilot hiring. In the U.S., at least, it looks like it's rebounding a little bit towards the end of 2025 after a pretty dismal summer. So -- but it still seems like conditions are pretty soft within the Civil business. How much of that softness is coming from commercial versus business aviation customers? Matthew Bromberg: Thanks, Sheila. Appreciate the compliment, and I appreciate the question. I think, as I mentioned earlier, we over-indexed on pilot hiring. We need to step back and look at the overall industry. There are many ratios and metrics that we can look at aircraft deliveries, aircraft grounding, pilot hiring, crew ratios. There are many factors that disrupt that, bankruptcies and incidents around the world. It's a global industry. As I look today at the softness, it's more on the commercial side than on the business side, but the markets are tied together. The demand for pilots on the commercial side affects directly the demand for pilots on the business side and the demand for new pilot training. It's a combined ecosystem as people progress up through the aircraft types. So as I said earlier, this is the market. This is where we are. We're going to size our deliveries. We're going to size our network for the market, and we're going to make sure that we're ready to capture the opportunities as the growth occurs. It's almost like we're -- I hate to use a bad analogy, but it's like on The Wizard of Oz and we're on Yellow Brick Road, and we think there's something out there. Now, we're there. This is the market. We want to position the network. We want to position our factory. We want to position our customers so that we can grow together. And that's why I step back from a quarter-over-quarter point and say, if you look at this market, it's going to grow at 4% to 5% a year. We're the market leader in full-flight sims, and we have the largest training network. We're just going to size it for where we are today. Thanks, Sheila. Sheila Kahyaoglu: Got it. And if I could ask a follow-up to Kristine's question on Defense margins. I understand this is the new baseline we should be working off of with the problematic contracts fully rolled off. I guess from here, how do we think about timing of new contracts anniversary-ing and resizing, repricing the portfolio? Matthew Bromberg: Yes. Let me clarify. I didn't say or I didn't mean to say that we've rolled off the old contracts. We're still in execution, and there's time in front of us. What I want to emphasize is that the team is focused on program management, program execution, ensuring that we control costs. As we've been doing for the past couple of years, we'll continue doing it forward. When we look forward, we want to embark and sign contracts that will be value accretive to the business that have high return thresholds, higher margins and higher cash flow. That takes time. I've been doing this for a long time and Defense dollars take many years to be awarded. And even when they're awarded, it takes many years to flow to contractors. So Q3 is not a new baseline. As I indicated, we plan to end the year at about 8.5% margin, and our focus is on steady continued margin expansion in the Defense business, which is going to be based on executing these legacy contracts, focusing on the new contracts and more importantly, controlling costs because that's within our control and our timing. And so that will be more of the guidance we provide at the end of the year. Operator: [Operator Instructions] Your next question comes from Anthony Valentini with Goldman Sachs. Anthony Valentini: Matt, just to stick on the Defense margin conversation for a second. You know better than anybody else that the international margins for the Defense primes are typically -- significantly higher than domestic work. And you pointed to the fact that you guys have higher mix to international, which is exciting, obviously, on the growth side, given everything that's happening. But I guess I'm curious if there's something structural that will limit you guys in having higher mix to this higher international margin, and therefore, you guys can achieve margins higher than the Defense primes. Or if it's the right way to think about it that, that mix to international means that the margin potential is actually better than what the Defense primes achieved given they're only 80% or 90% domestic. Matthew Bromberg: Yes, I appreciate the question. When you're looking at Defense markets, yes, generally, international margins can be higher, but there's other factors to consider. You have to consider the award channel. Is it a foreign military sale award channel? Or is it a direct commercial sales channel? You have to consider the product. When we sell our commercial products to the Defense world, and we do, we sell many commercial full-flight sims into the Defense world because they're used by Defense players, they come with commercial margins. But where we sell bespoke Defense products, that's different. We also have development work versus production work. So I don't think you can generalize and say Defense margins are significantly higher to use your term, they're not. What we want to do is develop the right mix and the right contract portfolio, and that's where we're going to focus going forward. It comes back to as we continue to improve our overall Defense margins, we're going to provide guidance on how we see it increasing. I don't think it will be an overnight change in Defense margins. It's going to be methodical, controlled improvement in our performance based on everything I mentioned. Anthony Valentini: Okay. That's incredibly helpful. Maybe on the -- quickly on the Civil side, I think, obviously, you have no control over what's happened historically. But a few years back, there was an initiative to consolidate some facilities and some simulators. And I know that's been a huge part of your transformation strategy, and you guys are talking more about that today, and it sounds like it's going to become more efficient. But how do investors get confidence around this not being something that is like cyclical, a part of this business that will need to happen every few years and get comfortable that like this is the last time that they're going to have to go through this type of thing. Like is there anything that you guys have learned as you were going through and identifying that you think you can make this kind of be the last time? Matthew Bromberg: I appreciate the question. I can't focus or comment on what happened previously, but I can tell you what we're doing today. What we're doing today is sizing the market for today's demand. That's important. What we're doing today is we're going to be disciplined about putting new sims in place. It's going to reduce our CapEx. It's going to reduce the growth of the network, and we're going to sweat the assets. We're going to utilize them. That requires a completely different operating model, a different cadence and different KPIs and all that is being deployed. And so the final thing I'll say is that's why we increased the threshold for capital approvals to make sure that I see them so we can control the outflow. So there's many elements to how we're going to control and monitor this. And that's the elements that we put in place that we've talked about. So I'm not going to speak to the past. I tell you where we are and where we're going, and we're going to control it. We're going to be disciplined. Operator: This concludes question-and-answer session. Matthew Bromberg: Yes. Thank you, operator. I see we've overrun here a bit. I want to thank all of the participants today for joining us and for their questions. And I'll remind you that later today, a transcript of today's call, including the Q&A session, will be made available on CAE's website. Thanks very much. Have a good day. Operator: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Derek Dewan: Hello, and welcome to the GEE Group Fiscal 2026 First Quarter ended December 31, 2025, Earnings and Update Webcast Conference Call. I'm Derek Dewan, Chairman and Chief Executive Officer of GEE Group, and I will be hosting today's call. Joining me as a co-presenter is Kim Thorpe, our Senior Vice President and Chief Financial Officer. Thank you for joining us today. It is our pleasure to share with you GEE Group's results for the fiscal 2026 first quarter ended December 31, 2025, and provide you with our outlook for the fiscal 2026 full year in the foreseeable future. Some comments Kim and I will make may be considered forward-looking, including predictions, estimates, expectations and other statements about our future performance. These represent our current judgments of what the future holds and are subject to risks and uncertainties that actual results may differ materially from our forward-looking statements. These risks and uncertainties are described below under the caption Forward-Looking Statements Safe Harbor and in Thursday's earnings press release and our most recent Form 10-Q, 10-K and other SEC filings under the captions Cautionary Statement regarding forward-looking statements and forward-looking statements safe harbor. We assume no obligation to update statements made on today's call. Throughout this presentation, we will refer to the periods being presented as this third quarter or the quarter, which refers to the 3-month period ended December 31, 2025. Likewise, when we refer to the prior year quarter, we are referring to the comparable prior 3-month period ended December 31, 2024. During this presentation, we will also talk about some non-GAAP financial measures. Reconciliations and explanations of the non-GAAP measures we will address today are included in the earnings press release. Our presentation of financial amounts and related items, including growth rates, margins and trend metrics are rounded or based upon rounded amounts for purposes of this call and all amounts, percentages and related items presented are approximations accordingly. For your convenience, our prepared remarks for today's call are available in the Investor Center of our website. Now on to today's prepared remarks. The challenging conditions in the hiring environment for our staffing services have been ongoing since the second half of 2023. These stemmed from what is now widely acknowledged as the substantial overhiring that took place in 2021 and 2022 in the immediate aftermath of the pandemic and the macroeconomic weakness and uncertainties related to persistent inflation and high interest rates that followed. The near universal cooling effect on U.S. employment and businesses use of contingent labor and hiring of full-time personnel have persisted and resulted in volumes below once prior norms. Many of the businesses we serve, continue to implement layoffs and hiring freezes rather than adding new employees. Companies and businesses continue to cautiously assess the economy and market conditions to ensure their investments in technology and human capital are strategic and sustainable. Another setback for us this quarter was the acquisition of one of our larger clients and movement of its business to an affiliate of the acquirer. This was a high-volume, lower-margin account, which somewhat lessened the negative impact on our results. Also, on the brighter side, our direct hire revenue, which has the highest gross margin at 100%, was up 8% in the quarter and appears to be on course so far for a better fiscal 2026 versus fiscal 2025. We also expect the use of contingent labor to stabilize this year as we are aware that some businesses are beginning to initiate new projects, which may be expected to lead to more job orders and full-time and contingent staffing placements. Artificial intelligence, or AI, is gaining ground at an accelerated pace and is further complicating the HR and project planning opportunities and risks facing virtually all companies, including consumers of our services. We believe these conditions are contributing to decreases in job orders for both contract and direct hire placements, also negatively impacting our financial results. Conversely, we are implementing and incorporating AI into our own business and strategic plans in order to digitize, streamline, enhance and accelerate our recruiting and sales processes. Another closely aligned AI goal of ours is to provide our clients with the necessary human resources to implement and support their use of AI and help them increase speed, efficiency and profitability. These initiatives are a high priority for us, and our goal is to begin seeing returns later this year. Our contract staffing and direct hire placement services are currently provided under our Professional segment. The operations and substantially all the assets of our former Industrial segment were sold during fiscal 2025 and have been reclassified as discontinued operations and excluded from the results of continuing operations we're presenting today unless otherwise stated. Our consolidated revenues were $20.5 million for the quarter. Gross profit and gross margin were $7.4 million and 36.1%, respectively, for the quarter. Consolidated non-GAAP adjusted EBITDA was negative $97,000 for the quarter. We reported a net loss from continuing operations of $150,000 or $0.00 per diluted share for the quarter. We continue to aggressively take action to adjust and enhance our strategic focus, growth plans and financial performance and results, including streamlining our core operations and improving or adjusting our productivity to match our current lower volumes of business. This has helped us improve our results despite lower business volume. We took measures to reduce our SG&A during the second half of 2025 by an estimated amount of $3.8 million, which helped us achieve the $736,000 reduction in SG&A in the fiscal 2026 first quarter versus the prior year first quarter. As we announced early last year, we completed the acquisition of Hornet Staffing in fiscal 2025 and have increased our focus on VMS and MSP sourced business, including the use of special recruiting resources and acceleration of the integration and use of AI technology into our recruiting, sales and other processes. We anticipate achieving continuing improvements in our productivity and restoring profitability as soon as practically possible. Our goal remains to be profitable again in fiscal 2026. In addition to these near-term initiatives, we are working closely with our frontline leaders in the field to support them as we all continue to aggressively pursue new business in addition to growing and expanding existing client revenues. We are seeing some positive results from these efforts. As the uncertainty and volatility currently gripping our economy and labor markets lessen, I am very confident that we are positioned to meet the increased demand from existing customers and win new business. I want to reassure everyone that we fully intend to successfully manage through the challenges I've outlined and restore growth and profitability as quickly as possible. GEE Group has a strong balance sheet with substantial liquidity in the form of cash and borrowing capacity. The company is well positioned to grow organically and to be acquisitive. We also continue to believe that our stock is undervalued and especially so based upon the recent trading at levels very near and even slightly below tangible book value. And that there is good opportunity for upward movement in the share price once we are able to operate again in more normal economic and labor conditions and restore profitable growth. Management and our Board of Directors share the responsibility and are committed to restoring growth and profitability, which will lead to maximizing shareholder value. Before I turn the call over to Kim, I want to update you on recent activity since our press release issued on January 22, 2026, in response to Star Equity's public commentary regarding an indication of interest in our company. Since then, management and the Board have met to review and discuss multiple unsolicited expressions of interest in the company and continue to evaluate various strategic alternatives to enhance shareholder value. As we indicated in our press release on January 22, 2026, our Board of Directors in accordance with its fiduciary duty will consider any bonafide offer regarding a business combination, acquisition or other transaction that it believes will enhance shareholder value. Once again, I wish to thank our wonderful dedicated employees and associates. They work extremely hard every day to ensure that our clients get the very best service and the most important ingredient for our company's future success. At this time, I'll turn the call over to our Senior Vice President and Chief Financial Officer, Kim Thorpe, who will further elaborate on our fiscal 2026 first quarter results. Kim? Kim Thorpe: Thank you, Derek, and good morning. Consolidated revenues from continuing operations for the quarter were $20.5 million, down $3.5 million or 15% from the prior year quarter. Contract staffing services revenues for the quarter were $17.8 million, down $3.7 million or 17% from the prior year quarter. As Derek mentioned, one of our former larger high-volume, low-margin clients was acquired and moved its business to an affiliate of the acquirer at the beginning of the fiscal first quarter. This accounted for $2.6 million of the declines in our consolidated A contract services revenues this quarter. Absent the loss of this single customer, consolidated revenues declined $3.8 million -- I'm sorry, 3.8%, forgive me. On the brighter side, direct hire revenues for the quarter were $2.7 million, up $200,000 or 8% from the prior year quarter. In addition, for January 2026, the first month of our current fiscal second quarter, we recorded direct hire revenue of $1.2 million, which exceeded all of the individual prior months in this fiscal year. Gross profits and gross margins for the quarter were $7.4 million or 36.1%, respectively, compared to $7.9 million and 33% from the prior year quarter. The improvement in our gross margin is mainly attributable to the increase in direct hire placement revenues, which have 100% gross margin as well as a higher mix of direct hire placement revenue relative to total revenue. Also contributing to a lesser extent is an increase in prices and spreads on some of our professional contract services businesses. While the loss of the high-volume, low-margin client we spoke about, caused the majority of our revenue reduction this quarter, it also contributed to the improvement in our business mix and gross margin on our remaining professional contract services business. Selling, general and administrative expenses for the quarter were $7.7 million, down $700,000 or 9% from the prior year quarter. SG&A expenses as a percentage of revenues for the quarter were 37.6% compared with 35.1% for the prior year quarter. In response to the realities of our present environment, we continue to prioritize and focus heavily on streamlining our core operations and providing our productivity to match our current lower volumes of business. As Derek just mentioned, we reduced our SG&A during the second half by approximately $3.8 million on an annual basis, which helped us achieve our overall SG&A savings of $736,000 in our current quarter versus our prior year quarter, improving our results despite a lower volume of business. I also want to reemphasize Derek's earlier point that our plans and goals are intended to restore profitability during fiscal 2026. In addition to the initiatives Derek reported, we are in the beginning stages of updating and further integrating our ERP and APCO tracking systems and certain other key operating systems and processes. We also intend to consolidate certain of our legal entities later this year in order to further reduce administrative and compliance costs. These -- the ultimate goals of these longer-term initiatives with the others is to help us increase speed, accuracy and efficiency throughout our operations and ultimately to get an SG&A ratio of 30% of revenue or less. Our loss from continuing operations for the quarter was -- our net loss was $150,000 or 0% per diluted share as compared with a loss of $684,000 or $0.01 per diluted share from the prior year quarter. This improvement primarily is due to cost reductions and productivity improvements, of course. Our EBITDA, which is a non-GAAP financial measure, was negative $303,000 for the quarter as compared with negative $513,000 for the prior year quarter. Adjusted EBITDA, also a non-GAAP measure, was negative $97,000 for the quarter as compared with negative $304,000 for the prior quarter. As of December 31, 2025, our current or working capital ratio was 5.3:1. Our liquidity position remained very strong with $20.1 million in cash, an undrawn ABL credit facility with availability of $4.2 million, net working capital of $23.9 million and no outstanding debt. Our net book value per share and net tangible book value per share were $0.45 and $0.22, respectively, as of December 31, 2025. To conclude, while we're disappointed with our results and remain cautious in our near-term outlook, we remain resolved to restore profitability and are preparing for the longer term, including making modernization improvements and enhancements, such as updating our core financial and operating systems and the integration of AI across all of our businesses. Having completed our acquisition of Hornet Staffing in fiscal 2025, we also intend to continue to pursue other acquisitions, albeit in a very disciplined, prudent manner with particular emphasis on businesses focused on AI consulting, cybersecurity and other IT consulting. Before I turn it back over to Derek, please note that reconciliations of GEE Group's non-GAAP financial measures discussed today with their GAAP counterparts can be found in the supplemental schedules included in our earnings press release. Now I'll turn the call back over to Derek. Derek Dewan: Thank you, Kim. Despite the macroeconomic headwinds and staffing industry challenges impacting the demand for our services, we are aggressively managing and preparing our business to mitigate losses, restore profitability and be prepared for an anticipated recovery. What we hope you take away from our earnings press release and our remarks today from our strategic announcements is that we are moving aggressively not only to prepare for a more conducive and growth-oriented labor market, but also to restore growth by continuing with the execution on both organic and M&A growth plans and initiatives. We will continue to work hard for the benefit of our shareholders, including consistently evaluating strategic uses of GEE Group's capital to maximize shareholder returns. We are very pleased with our 2025 acquisition of Hornet Staffing and the value and opportunities it brings and have identified other acquisition opportunities that we believe can offer additional growth and profitability platforms for us. Before we pause to take your questions, I want to again say a special thank you to all our wonderful people for their professionalism, hard work and dedication. Now Kim and I would be happy to answer your questions. [Operator Instructions]. Kim Thorpe: We have a few questions coming in. We will take them in the order that they come. If you'll bear with us for a moment. Our first question, which I will read, what incentives would need to be put in place for management to consider a value realization event, sales, special dividend, et cetera? And my answer to that question is we -- management has employment agreements that already provide those incentives. So there are no additional incentives that would need to be made in that regard. Our second question, is an activist investor takeover the only route towards getting a return for shareholders, the only path to value realization at this point? Well, of course, not. We will -- as we said in the press release, the Board and management are both committed to do what's in the best interest of the shareholders. And we have some other questions coming up that we'll talk a little bit about what Derek mentioned toward the end of his prepared remarks. If the -- here's a question, if the company was sold at a comparable multiple to BGSF's -- I'm sorry, BGSF's recent sale of their professional division and [ Peres ] enterprise value to revenue, there would be about 150% upside to the current stock price. Why is the company not actively pursuing this, especially in light of the recent star equity exchanges and pursuing along the current path -- and I'm sorry, along the current path has not recognized any value for shareholders. Derek, do you want to comment on this? Derek Dewan: Sure. So as you're aware, in many cases within a public company, there's nonpublic information and actions being taken that have yet not been disclosed. So as we stated in our press release at the last part of the earnings release, we do evaluate any proposals to maximize shareholder value. And someone, I think in this question, you mentioned 150% increase versus the current stock price. I would say that, that's extremely low, and that would be not what we believe is fair value for our shares. And if there is an offer, we anticipate it'll be much better than that. Kim Thorpe: Okay. The next question is for someone that's concerned about the lower value of the stock having been in place for some time. When is it time for dramatic and intentional changes to be made to correct that? We agree with that. We're working on a number of new things. So that's the answer to that question. And then the next question, can you provide more color on what multiple offers you mentioned included? Derek Dewan: We can't at this time, but they are being evaluated, and we will respond appropriately. And also keep in mind that -- that's just one facet of maximizing shareholder value. We are also internally focused on, as Kim said earlier, cost reduction, profitability improvement. Case in point, our direct hire business increased 8%, which in the industry, if you look at the peer group, is very good. That's 100% gross margin business. And our January month was also higher than the prior 3 months in the first quarter. So organically and internally, we're improving. As you can see, the EBITDA improved and net income improved, and we anticipate as we go further into the fiscal year, more improvement. Kim Thorpe: I believe that's it. Those are all the questions. Derek Dewan: Thank you very much for joining us today. That concludes our call.
Operator: Good morning, and welcome, everyone, to Beyond Air Financial Results Call for the Fiscal Quarter Ended December 31, 2025. [Operator Instructions] And now I'd like to turn the call over to Corey Davis of LifeSci Advisors. Please go ahead. Corey Davis: Thank you, operator. Good morning, everyone, and thank you for joining us. Earlier today, we issued a press release announcing the operational highlights and financial results for Beyond Air's third quarter of fiscal 2026 ended December 31, 2025. A copy of this press release can be found on our website, beyondair.net, under the News & Events section. Before we begin, I would like to remind everyone that we will be making comments and various remarks about future expectations, plans and prospects, which constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Beyond Air cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. We encourage everyone to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's most recent Form 10-K and Form 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website beyondair.net. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, February 13, 2026. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. With that, I'll turn the call over to Steve Lisi, Chief Executive Officer of Beyond Air. Steve, go ahead. Steven Lisi: Thanks, Corey, and good morning to everyone. With me here today is Dan Moorhead, our new Chief Financial Officer. It has been a pleasure working with Dan over the past several months. He brings a proven track record as a proactive CFO with demonstrated success supporting commercial organizations through periods of rapid growth. I also look forward to his active engagement with the investment community as he becomes fully integrated into the role. Also joining us today is Bob Goodman, our Chief Commercial Officer. Bob assumed the role in October after previously joining Beyond Air as a Board member back in June. Let me start my prepared remarks by saying just how pleased I am to speak with you today and provide an update on what has been a productive and meaningful period for our company. We have achieved several significant milestones, strengthened our balance sheet to support continued commercial execution and made the strategic decision to sell our NeuroNOS subsidiary in exchange for equity in the acquiring company and up to $32.5 million in upfront development and commercial milestone payments. We believe these recent events have strengthened our ability to execute our commercial strategy and create long-term value for our shareholders. Let me walk you through these updates in greater detail. Starting with our core business. Revenue in the fiscal quarter increased 105% year-over-year to $2.2 million. This represents continued progress as we scale adoption and expand awareness of LungFit PH in clinical settings. We now support more than 45 hospitals across the United States and internationally that have adopted our first-generation LungFit PH system. Customer feedback has been encouraging with retention exceeding 90% and more than half of customers under multiyear agreements. We believe this installed base positions us well to support continued revenue growth from our first-generation system while preparing for the anticipated FDA decision for our second-generation system. Our commercial team continues to refine its targeting strategy, prioritizing hospitals most likely to adopt a LungFit PH today and expand usage following approval of the second-generation system, which we expect to receive before the end of calendar 2026, subject to regulatory review and clearance. We are making steady progress building relationships with clinicians, administrators and health care systems. Our current objective is to continue expanding Gen 1 system utilization through calendar 2026 in the U.S. and internationally, while preparing for the potential launch of our second-generation system once approved. As previously discussed, Gen II system is designed to offer reduced size and weight, simplified operation, extended service intervals, improved backup system functionality and very importantly, compatibility with both air and ground transport. We believe these enhancements will expand the addressable market relative to Gen I and support broader adoption over time. At this point, I'm going to pass the call over to Bob Goodman, who has made excellent progress since taking the reins as Chief Commercial Officer about 4 months ago. Bob? Robert Goodman: Thanks, Steve. And let me begin by saying I share Steve's enthusiasm about the opportunities ahead for Beyond Air. I as well believe that LungFit PH is the best-in-class nitric oxide solution globally. Feedback from U.S. customers and international partners on system performance and customer support have been extremely positive, providing a solid foundation for continuous growth. We have national group purchasing organization agreements with Premier and Vizient, which together provide access to nearly 3,000 hospitals across the United States. As awareness of LungFit PH increases, we expect additional opportunities at the GPO and integrated delivery network level in 2026. As previously announced, we have been working with TrillaMed to support our engagements with the federal health care systems. I'm pleased to announce that together with this valued partner, we completed the first sale of LungFit PH to a VA Medical Center. This initial commercial sale to the VA hospital system establishes an important foothold, opening potential pathways for future orders and broader adoption across the system and provides access to the largest health care network in the United States. Internationally, we continue to see strong engagement from our distribution partners. Over the past several months, we've expanded our global LungFit PH distribution network with new agreements in Canada, Germany, Brazil, Austria, the Netherlands and Sri Lanka, bringing total international coverage to 40 countries. As we broaden our global footprint, we are laying the groundwork for long-term growth and positioning Beyond Air to serve a significantly larger addressable market. It is important to note that we are live in a few hospitals with LungFit PH and have already begun to see repeat orders for accessories from several countries. Taken together, these commercial, operational and strategic developments give me confidence in the trajectory of the business. What also gives me confidence are the people at Beyond Air. The dedication of this team is second to none, and I've been in this business for decades. This includes all the aspects of the team from clinical support from marketing to customer service to engineering, to finance, to regulatory to quality, et cetera. Our people are fully engaged and dedicated to the vision of improving the lives of patients and medical staff with LungFit PH. I also want to emphasize the advantages that Steve mentioned earlier on our second-generation system. From my time spent with customers and potential customers in the United States, I believe that the Gen 2 system addresses everything on the wish list from clinicians and hospitals. I'm extremely confident that I, along with the team here, will execute on our vision of becoming the global nitric oxide leader. Now I'll turn things back over to Steve. Steven Lisi: Thanks, Bob. Turning to Beyond Cancer. We recently announced that our abstract was selected for the 2026 AACR Annual Meeting, which is taking place from April 17 to 22 in San Diego, California. As previously announced, the study enrolled 10 subjects at doses of 25,000 and 50,000 parts per million of nitric oxide gas delivered over 5 minutes intratumorally. These patients all had metastatic disease and were heavily pretreated. All subjects had a life expectancy of less than 12 months. We have already reported that the safety profile observed to date is acceptable. The data presented at AACR will include updated overall survival data for which median survival has not yet been reached as of October 1, 2025. We remain dedicated to pursuing the Phase Ib combination study with anti-PD-1 therapy, and we will communicate more details as we progress. With respect to NeuroNOS, our neurology-focused subsidiary, on January 13, 2026, XTL Biopharmaceuticals announced a binding letter of intent to acquire NeuroNOS in exchange for Beyond Air's approximately 85% ownership interest. Consideration includes a 19.9% stake in XTL, $1 million in cash and milestone-based contingent payments totaling up to $31.5 million. Following closing, NeuroNOS is expected to serve as XTL's flagship platform for autism and neuro-oncology development. We believe this agreement provides the potential to create meaningful value for our shareholders by enabling NeuroNOS' pipeline to advance with dedicated focus and funding through XTL Bio. We will not provide additional commentary beyond public disclosures while the transaction remains pending. To conclude, the $5 million financing completed in January 2026, together with the previously announced promissory note and equity line of credit for up to $32 million with Streeterville Capital that we announced in November 2025, provide resources to support commercial execution and readiness for the second-generation LungFit PH system. We remain focused on disciplined execution and delivering advanced nitric oxide solutions to clinicians and patients around the world. Now I will turn it over to our CFO, Dan Moorhead. Daniel Moorhead: Thanks, Steve, and good morning, everyone. I'm excited to join my first call since being appointed CFO about 7 weeks ago. I still have a lot to learn but I'm incredibly impressed by what the team has achieved, not just over the past year but even within the past few months. The progress has been extraordinary, and I see a bright future ahead as the team continues to execute on our growth strategy. Our financial results for the third quarter of fiscal year 2026, which ended December 31, 2025, are as follows: Revenue for the fiscal quarter ended December 31, 2025, increased 105% to $2.2 million compared with $1.1 million for the fiscal quarter ended December 31, 2024. On a sequential basis, this represents a 21% increase compared with last quarter. Gross profit increased to $300,000 for fiscal third quarter 2026 compared to a gross loss of $200,000 for the same period last year and a gross loss of $300,000 in the prior quarter. Turning to operating expenses. We continue to see reductions across SG&A, R&D and in our supply chain as a result of cost reduction initiatives taken in the past 12 months as well as the decrease in R&D costs related to our Gen II device, which are mostly behind us since the PMA was filed with the FDA. Total operating expenses for the fiscal third quarter of 2026 were reduced to approximately $6.9 million, which is down from $10.7 million for the same period last year. This translates to a 36% reduction year-over-year and a greater than 60% reduction from the high of $17 million at its peak. Research and development expenses were $2.4 million for fiscal third quarter of 2026 as compared to $3 million for the same period last year. As I mentioned earlier, the year-over-year decrease was primarily driven by lower development costs associated with our Gen II device with the remaining reduction attributable to a decrease in headcount and related costs. SG&A expenses for the quarters ended December 31, 2025, and December 31, 2024, were $4.5 million and $7.7 million, respectively, a decrease of 42% year-over-year. Almost all of the decrease of $3.3 million was from a reduction in employee-related costs. Other expense was $1 million compared to $2.4 million for the same period a year ago. The decrease in expense of $1.5 million was primarily attributed to the prior period loss associated with the extinguishment of debt of $1.9 million. Net loss attributed to common stockholders of Beyond Air was $7.3 million or a loss of $0.85 per share basic and diluted compared with $13 million or a loss of $2.96 per share basic and diluted. Please note that the per share results for both periods were calculated to reflect the company's 1-for-20 reverse stock split, which became effective on July 14, 2025. Net cash burn for the quarter was $4.3 million, which is a reduction of over 40% versus a year ago. We believe our overall cash burn will continue to reduce as revenue grows and will only get better until we get approval and start building inventory in preparation for the launch of Gen II. As of December 31, 2025, we reported cash, cash equivalents, restricted cash and marketable securities of $17.8 million. Subsequent to the end of the third quarter, we completed a $4.5 million equity financing net of issuance costs, and we believe this capital provides us with a cash runway into calendar year 2027 and potentially to profitability provided we continue to hit our current revenue estimates and continue to control costs. With that, I'll hand the call back to Steve. Steven Lisi: Thanks, Dan. Operator, we'll take questions now. Operator: [Operator Instructions] Our first question comes from the line of Mike King with Rodman & Renshaw. Michael G King: I have a couple of questions, if you don't mind. I just wonder if you could talk a little bit more about the sales process. I mean I think it's a great breakthrough that you've got sales into the VA system or VA hospital, I should say but it brings up the topic of the VA system, as you mentioned. How do you penetrate systems rather than a single hospital at a time? What needs to happen in terms of the sales process or the RFPs or things like that, that can see us knocking off more than one health care facility at a time? Steven Lisi: Yes, go ahead, Bob. You take this one. Robert Goodman: Yes, sure. And then you can definitely provide any color if you like, Steve. Thank you. Yes. So Mike, yes, with the VA system, we're on, as you know, and our product is being offered through the ECAD system. So that catalog actually makes it an easier approach for our customers to get to us directly. It's outside of an RFP process but we're -- yes, we're still able to actually compete with other RFPs that come up through -- there's a couple of different ways of the VAs contract with vendors. But -- so yes, so we have access that way. So it's great. Michael G King: Okay. And in your formal comments, you mentioned words to the effect that you're identifying facilities most likely to acquire the system. How do you -- how do you -- or can you say how you identify them? And maybe help us understand how you're targeting those facilities? Robert Goodman: Yes. So we've done a really good job standing up our commercial organization, both in the U.S. and internationally. And right now, what we're doing is we're focusing and not to say an overhaul but more of an exactness with our people and our process and our technology. So different prospecting tools with good intelligence and good CRM rigor to follow up with the customers and taking the process of real good demand generation where we're getting top of the funnel looks at our customers and having really good pipeline discipline so we could get in front of the right customers and then have our people, the people part of it in the right places at the right time with the right coverage. So we have that right reach and frequency getting in front of these customers and just getting in front of more and more. So we have that touch. So yes, we've been really refining that and the customers are really responding well for our ability to get in front of them. Michael G King: That's great. Has there been any appreciable change in the length of the sales cycle? Robert Goodman: Yes. I mean that pretty much Mike still remains the same. At the real front end, if you get kind of real lucky based off of the timing of a contract that might be expiring and that customer is really, really organized and you can knock out a real quick demo and evaluation, you could do that in that 4- or 5-month time frame. But it's really in that right around 6 to 9 months, and it could be longer. But what we're doing is a good job identifying the customers and again, reaching out to them and finding out where they're at with their contract and making sure that they see the value of our product. And with that, we're hoping that, that might restrict things just a bit. But we're really organized and our clinical teams are out there in the field with our sales teams to make sure that we're in front of them as early as possible. Michael G King: Okay. And I apologize, one more quick one. How do you segment or can you segment the next-gen system so that this is typical of a lot of businesses where a next-generation chip, let's say, is coming out or something and the sales cycle kind of concertina effect where the purchaser may hold off until the next-gen system is available. Is that a concern? Or are you segmenting a different market with the new system? Robert Goodman: Yes. So we're focusing right now, as you'd expect, on our first-generation product, and it's been really, really well received, the version 24 of Gen I. So -- and we're focusing on the non-transport systems, okay? And we're being really well received there. As there's natural conversations within the market for the transportation systems, that's a later on Gen II conversation, and we're really kind of breaking away from those conversations but being aware that these are systems that are going to want to be working with us in the future. Operator: The next question is from the line of Marie Thibault with BTIG. Marie Thibault: Welcome, Bob and Dan. I wanted to quickly just check in on anything -- any communications you've been having with the FDA on the Gen II process. Just speak to your confidence in the timeline, I think you said by end of calendar year. And then what will be needed to do post clearance in terms of building inventory, kind of a time line we might think about before you can go into a formal launch and ramp. Steven Lisi: Okay. Thanks, Marie. Well, I'll comment on the FDA side. So we've been having fairly constant communication with FDA, and we're very happy with the interaction. we don't really see any major hurdles. Everything that FDA has asked for, we'll provide them. It shouldn't be a problem. And I'm sure there'll be -- the process will continue with the FDA, and we'll continue to answer the questions as we go forward. We still are waiting on the work to be completed with our contract manufacturer, so we can be inspected. And that's essentially in our minds, what the gating factor will be from a timing perspective. So we feel highly confident in the timelines that we provided given the state of affairs today. I don't know if I gave you the answer you need or if there's other things you want to ask. Marie Thibault: Yes. Yes, that's great to hear. And then I guess I'll ask a quick follow-up here on the international side. I know you've got some great partnerships and some efforts going on there. So any wins or any catalysts to think about on the international side? Steven Lisi: Sure, Bob, do you want to take the international question? Robert Goodman: Yes, sure. So we have had some recent wins, which is great. And I think as you know from the past calls, it was all about setting up and getting our distributors armed with our demo devices so they can get in front of the systems. But then there's the whole part of the process with whether it's Europe or Middle East or Australia, where it's mostly tenders compared to the U.K. or Portugal where there's a national frame or you get that hunting license like Germany and APAC where you can go direct. So with all those different regions, yes, no, we've had wins. And on top of having wins, we're now actually seeing customers reorder filters. So the product is being deployed into hospitals now, which is great, and we're starting to, again, get that stickiness. So it's fantastic. Operator: Our next question is from the line of Justin Walsh with Jones Trading. Justin Walsh: Wondering if you can provide any color on what attracted XTL Biopharmaceuticals to be interested in the NeuroNOS opportunity? And then how, I guess, collaboration or working with them will look going forward, given that you still have a stake in that company? Steven Lisi: Thanks for the question. So yes, Justin, look, XTL was a company looking for an asset, and there were multiple choices for them. I think what excited them about this opportunity is the science. I mean there's been 2 papers, landmark papers published about the work done by Dr. Amal, who's a scientist and the innovator behind this approach to treating autism as well as glioblastoma. I just want people to recognize that the functions of nitric oxide in the brain are numerous. So I think that's what attracted them to this. There's a clear path to human studies. I think a lot of the work that's been done by the NeuroNOS team has given that clarity to anybody who's taken a look under the hood. So I think it's just a matter of providing the FDA what they require, which is pretty straightforward. It's just a matter of getting that work done. So with XTL coming up with funding, they'll be able to bring this into humans. So I think the attractiveness was great science, clear path to human trials. And as everyone on this call probably knows, translating efficacy from rodents to humans is something that's difficult to predict but we'll find out. And I think that's what attracted and we're going to get there and do that study and figure out if the efficacy translates. And if it does, we're looking at a potential treatment for autism and glioblastoma at this point. So it's very exciting, just a little bit early for Beyond Air to maintain and fund. So this is why the transaction was done, and we're very happy that a lot of this transaction for Beyond Air is us getting a 20% stake in the new entity. That's the confidence we have that this is going to be in human trials. And we have confidence on the safety side for sure. The efficacy side, we'll see what happens. Operator: The next question is from the line of Jason Kolbert with David Boral Capital. Jason Kolbert: Can we talk a little bit about COGS and how COGS performed in the quarter? And over the next couple of years, what do you think a sustainable COGS is? Steven Lisi: Dan, do you want to take that one? Daniel Moorhead: Sure. We tend to see Gen I, again, we think we're in the -- and Steve can help me on this. I'm still pretty new on it. But we expect COGS long term as we get to scale in the 60% range and moving up towards 70% with the Gen II product. But in the near term, again, with revenue levels growing but growing at a more moderate pace until we hit the Gen II launch, again, I think you're going to see it pretty close to that what you saw in Q3 and continue to grow from there. But long term, I think that gives you a little profile, and I'm guessing you guys have possibly talked about that in the past as well. Steven Lisi: And just follow up on what Dan said, if you don't mind. Yes, I think Dan is right in what he says but I would -- there are a couple of factors. And like Dan said, he's barely 2 months in. There are a couple of factors that we're still trying to figure out with respect to the margin on, and that will be from a pricing side of the market. So I think that goal of 70% with the Gen II is a great goal. That's target. If it's 65%, 65%, that's not the end of the world for us. But I think that's our target, and I think we'd like to hit it. And target with Gen I would be to get close to 60%. But again, I think a Gen I is more of a 50s type thing. But again, it's going to depend on how the price shakes out in the market at the end of the day. And that remains to be seen. You had a follow-up, Jason? Jason Kolbert: Very helpful. Can you talk also about SG&A and how sensitive the sales cycle would be to increasing SG&A, hiring additional salespeople? How does that impact kind of revenues? What I'm trying to do is get a handle on more capital deployed in SG&A, does that translate into more revenues? Steven Lisi: Well, Jason, I mean, you had [Audio Gap] Operator: The next question is from the line of Yale Jen with Laidlaw. Yale Jen: Just in the press release, you mentioned that for the Gen II, there has a potential of extending the service intervals. Could you elaborate a little bit more on that specific aspect? Hello, can you hear me? Operator: Yes. Please standby ladies and gentleman, we are experiencing technical difficulties. Our conference will resume momentarily. Please remain on line, our conference will resume momentarily. Please remain on line, your call will resume momentarily. [Technical Difficulty] Steve, you're now reconnected, please continue. Yale Jen: I believe in the press release, you mentioned that the second gen will have the potential of extending the -- make a longer service intervals. Could you elaborate a little bit more specifically on this particular aspect? And then I have a follow-up. Steven Lisi: Thanks, Yan. Appreciate that question. So the current system, the first-generation system, every 1,000 hours, we need to bring it in for service. So that can be that can -- it could be a slight disruption for the hospital if they're using a couple of thousand hours a year per machine. So we might be in there every 6 months rotating machines. So it's a smooth process but it's an expensive process for us, right? So we just come in, drop them a new machine and pick that one up and bring it in for service. So it's not very frequent but it's something we'd like to improve upon. So with the second-generation machine, we think that service interval will be pushed out to at least 3,000 hours before we need and potentially longer. So testing is still going on. We haven't reached that juncture yet where the reliability testing that we're doing has stopped. So it's still ongoing. So we're past the 3,000-hour mark at this point, which means it's at least 3x longer before we have to go in. So if we were going in every -- at a hospital, let's say, we're going in every 10 months, now we're going in every 30 months on average before we have to swap out the machine. So that's -- it's certainly better for the hospital from that standpoint, although I don't think the swap outs are really a problem for them because our team does a great job and it runs so smooth. But from a gross margin perspective, I think that's the impact that you heard about earlier on a question when Dan and I were responding to the gross margins between Gen I and Gen II. Yale Jen: Okay. Great. And maybe just touch on that to this one a little bit, which is that would this be needed -- you mentioned you're still testing for maybe even longer interval for the service needed. Would that be required before you submit for the Gen II review? Or that's something that could be -- the Gen II review without having this particular aspect? Steven Lisi: No, this is -- so there is a reliability hurdle with FDA. We've already passed that hurdle. So anything that we get is just more of a guide for us for service with our customers. That's really what it is. So it's not a gating factor for FDA approval. Yale Jen: Okay. Great. Maybe one more question. So on the oncology side that since you guys already have a little bit more cash in hand, should we think about the Phase II -- Phase Ib study potentially to start later this calendar year? Steven Lisi: Well, I don't know when it will start, Yale. We're certainly speaking with people and looking at that. So I don't want to commit to a time line at this point. While we do have a nice balance sheet at this moment in time, I think we need to focus the balance sheet on the commercial operations at this point. So it would probably not be something that Beyond Air would commit to fully fund a study like that. Maybe once we are more comfortable with our path to profitability, that could be a different conversation that we have internally. Yale Jen: Okay. And congrats on the good quarter in terms of the top line. Operator: Thank you. At this time, we are showing no further questions in the queue. And this concludes our question-and-answer session. I would now like to turn the call back over to Steve Lisi for any closing remarks. Steven Lisi: No, I'd just like to thank everybody for dialing in today. Bye-bye. Operator: Thanks, everyone, for their time today. You may now disconnect your lines at this time, and have a wonderful day.
Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Rithm Property Trust Fourth Quarter 2025 Earnings Call. [Operator Instructions] Thank you. I would now like to turn the call over to Emma Hoelke, Deputy General Counsel. You may begin. Emma Bolla: Thank you, and good morning, everyone. I would like to thank you for joining us today for Rithm Property Trust's fourth quarter and full year 2025 earnings call. Joining me today are Michael Nierenberg, Chief Executive Officer of Rithm Capital and Rithm Property Trust; and Nick Santoro, Chief Financial Officer of Rithm Capital and Rithm Property Trust. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Rithm Property Trust website, www.rithmpropertytrust.com. If you've not already done so, I'd encourage you to download the presentation now. I would like to point out that certain statements made today will be forward-looking statements, including any statements regarding illustrative portfolios or earnings. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement. With that, I will turn the call over to Michael. Michael Nierenberg: Thanks, Emma. Good morning, and happy Friday, the 13th. Thanks for joining us on Rithm Property Trust, our fourth quarter earnings call. Just a few things. While investment activity remained light away from a small investment that Rithm Property Trust made in the Paramount transaction that our parent, Rithm announced in December, the balance sheet, cash, the company remains in great shape. During the fourth quarter, we also announced a reverse split of our shares on a 6:1. So when you look at it today, obviously, with the stock trading something between $15 and $16 versus where it was, I think it was something around $2, right? We feel like it's going to hopefully attract more interest in the stock with a higher -- obviously, a higher share price, recognizing that we did do a reverse split. As many of you know, and we've said this repeatedly, we took over the management contract of what was formerly known as Great Ajax in June of 2024 with the intent of making it a dedicated commercial real estate vehicle as well as an opportunistic investment vehicle. What we did then is we repositioned the company. We cleaned up the balance sheet. We raised capital. And today, we remain focused on what I would say is a potential recap of the company along with earnings and dividend growth. We have a clear path, which depends on capital formation to be clear, to take the company from flat earnings to a future state where the company is earning something between $1.60 and $1.70 per share and trades, give or take, about a 9% dividend yield with a book value of approximately $20. That all depends on; one, the recap; and two, where you actually raise the capital. The plan for the vehicle would be to acquire multifamily loans from our operating business, Genesis, which we have already identified those -- that pool of loans along with other commercial real estate investments, so there will be no J-curve as we think about earnings growth and where we're going with the vehicle. Today, as we know, many REITs, BDCs and other capital vehicles are not trading well. And while we will be patient, we hope to accomplish this when the markets stabilize. I'll now refer to the supplement, which we have posted online, and I'm going to begin on Page 3. So when you look at the company today, obviously, there's a pretty active investment pipeline. The company today sits with, give or take, about $100 million of cash and liquidity. Total equity in the vehicle is $300 million. And when you look at our trading price, which I think is something around $15, the company is trading at roughly, give or take, something around 50% of book. When we look at the vehicle, it is externally managed by Rithm. So when you look across the firm, we have a ton of real estate investment professionals and others, which are here to support the vehicle and support the growth. As you all know, we've done this before when we started New Residential back at Fortress in 2013, and we hope to achieve the same level of growth and success from an earnings perspective and a growth perspective in this vehicle as we go forward. When you look at financial highlights, earnings were flat. We took over this thing, as I pointed out in June of '24, where the company wasn't making any money. You look at Q4, GAAP earnings, $2.5 million. EAD is kind of $500,000 to the negative, which leads to a per diluted share of $0.06 negative. Book value, as we pointed out, was about $300 million or $31 per diluted share. Common stock dividend that we pay, we're going to continue to pay that dividend is 8.7% from a dividend yield perspective. And then as I pointed out, cash and liquidity is, give or take, about $100 million. Really, the whole play here is you have a clean balance sheet, you have a clean company, you have a dislocated sector in the real estate space. You have many commercial REITs, which are underwater because they have either liquidity issues, or they have a balance sheet that continues to need to get cleaned up. For us, we're going to be patient. We're not going to keep this vehicle outstanding forever. But while saying that having a clean vehicle where we want to recap this similar to what Blackstone did around BXMT with Cap Trust, I think it was -- that is our ultimate goal here as we look to grow the vehicle. And it's not just about growth; it's how do we make our shareholders' money. We do think that this and then some of -- a lot of the capital vehicles, including Rithm and RPT are trading at extremely low valuations. So hopefully, they write themselves. But as we think about this vehicle, we will be patient. We are sitting on cash and liquidity. We do want to do a recap. And we think from an opportunistic standpoint, we have the assets that will now take this business to grow earnings to something between $1.60 and $1.70 per share, assuming that we do a recap of the vehicle. When you look at the portfolio on Page 6, what are we going to do with it? We speak about multifamily loans, our Genesis business, which we bought from Goldman in 2022. At that time, they were doing $1.7 billion of production. This year, I think we're projecting we're going to do something between $6 billion and $7 billion of production. We're going to be growing our multifamily lending business. We are seeing some potential opportunities in that space even around acquiring licenses to become a Fannie, Freddie servicer or originator in the multifamily space. So that's something that we're currently working on. Obviously, we're making a big push in the commercial real estate space. We announced the acquisition of Paramount. We love that transaction. It will take a little bit of time, but we're really excited about where we sit there, our entry level, our basis and where we're going to go with that company. And then when we think about opportunistic investments, we've been very good at identifying them and acquiring them through the course of our careers, but taking the company back to 2013 on the New Residential/Rithm level. When you look at Page 7, we talk about our ability to source, whether it be at the Rithm parent level, whether it be at Genesis, whether it be at Paramount. Obviously, we announced the closing of Crestline who -- in December. And then along with our partners at Sculptor, we have a lot of opportunity to source product. Looking ahead at the opportunity on Page 8, Commercial real estate, we love the office story. I know there's -- yesterday, obviously, with the AI story, a lot of the commercial real estate REITs got hit. The one thing I want to point out from a company perspective, both at the Rithm level and at RPT, we have a very diversified business. If you look at Rithm's earnings in the fourth quarter, we produced north of $400 million in earnings available for distribution. We have certain things that performed extremely well, other things where we had, for example, higher amortization in our mortgage company. But net-net, when you look at that business and you look at our diversified earnings streams, whether it would be at Rithm, Rithm Property Trust, we're very good at -- in my opinion, at creating diversified earnings streams that if one lever is not being working great, another lever will work great. So when you look -- when we look at the opportunity here for RPT, obviously, commercial real estate, we like a lot. There will be other things in the opportunistic space that we think are going to be highly accretive to what we're going to do in this vehicle as well, and we look forward to executing around that. So with that, I'll turn it back to the operator. We'll open up for some Q&A. Operator: [Operator Instructions] And your first question comes from Craig Kucera with Lucid Capital Markets. Craig Kucera: I think the Paramount transaction at Rithm Capital closed for about $1.6 billion and was generating about $300 million in NOI. Will RPT be receiving a slice of that NOI going forward? Or how should we think about the earnings impact or accretion from that investment? Michael Nierenberg: You should -- I would think about it more as something that's probably -- it's back-ended. It's a pro rata share of what Rithm did on the balance sheet. So when you look at it, RPT has $50 million of the Paramount deal in -- on its balance sheet, and it will be pro rata versus Rithm. Craig Kucera: Okay. That's helpful. And just thinking about the loans that you're originating at Genesis, which I believe would be accretive to Rithm relative to where you raised capital last year. Are you exploring -- feeding Rithm with more of those types of loans? And I guess when you talk about your future state on a larger capital base, is that sort of a wait for the common to kind of get closer to book value? Or kind of where -- what's the path there? Michael Nierenberg: So Genesis, which I pointed out is going to do roughly $6 billion to $7 billion of production we expect this year. There's obviously plenty of loans that go into both the Rithm balance sheet. Obviously, if we're successful around a capital raise for RPT, there'll be loans that we've identified. So as I pointed out, there is no J-curve. The loans would go right on to the balance sheet, and you'd see a real pop in earnings at the RPT level. We also source third party. I mean we're actually developing more and more channels around sourcing third-party loans in that very same space, whether it would be on multifamily or in some of the very -- the kind of sponsored type loans that Genesis does. The other thing I would point out there, we have a funds business, obviously, and we have either funds or SMAs with -- whether it be with sovereigns around the globe or we also have a vehicle. We launched a fund on one of the wirehouses that's actually taking some of that product. So we have a number of different capital vehicles that are actually acquiring, whether it be Genesis loans and/or similar type loans from other originators, and we expect that to continue. Regarding your question on the capital side, Rithm sits with anywhere from typically $1.5 billion to $2.5 billion of cash and liquidity on balance sheet at most times. Obviously, our stock is trading at a discount to book. I don't anticipate us issuing equity here. Unless there's something that's highly accretive for what we're trying to do as an organization. So -- yes, that would be my comment around the equity side. Craig Kucera: Okay. That's helpful. Michael Nierenberg: Thank you. Operator: Your next question comes from the line of Henry Coffey with Wedbush. Henry Coffey: It's good to be on the phone with you all. So timing, I mean, I think that's the only question at this point. Getting RPT over book value, that's a big jump. Is there a tolerance for finding other sources of capital, be they preferred or common that would allow you to move ahead with the recap plan? Or are we just going to have to kind of wait? Michael Nierenberg: I think timing is a good one. I would respond to markets. So you say timing, I say markets. The answer is -- the short answer is yes. I mean there's third-party capital that wants to be part of the vehicle. Is it possible at some point that we bring in third-party capital alongside the vehicle as it exists today? I think the short answer is yes. But while saying that, we're not going to leave this vehicle outstanding trading as where it does forever. So it's a timing thing. We want to make sure that we don't want to do something that's highly dilutive. If you recall last year, we did a pref in and around this. The company is sitting with some cash and liquidity. We also have what I would call liquid floaters on balance sheet. So to the extent that we found something more accretive, it's likely that we would sell those down and then invest in something else. But it's a timing thing. It's a market thing, and it's also -- I would expect us to continue to add more third-party capital to our lives. Henry Coffey: And then basically, just to kind of reiterate, the primary source of loans is going to be multifamily and what Genesis generates mainly higher-yielding repositioning loans? Or you'll be doing some more traditional multifamily lending as well inside of RPT? Michael Nierenberg: I think it's -- right now, what we've identified as a pool of assets, I think it's something around $1 billion of assets that would go right into the vehicle, obviously, subject to Board approvals. And once that happened, you'd see an immediate pop in earnings. So that's the way I would view it. Could there be other types of loans? The answer is yes. But for now, you look at the Genesis loans from a levered perspective, they're well north of 15%, and I think they'll be highly accretive to what we're doing in the vehicle. Henry Coffey: All right. I look forward to moving forward with you on this. Michael Nierenberg: Good to hear your voice, Henry. Have a good weekend. Operator: [Operator Instructions] And your next question comes from the line of Jason Stewart with Compass Point. Jason Stewart: Interesting opportunity at Genesis. Obviously, Genesis is not a forced seller. You do know the quality of the loans you're familiar with them. But could you talk about the pros and cons of buying from a Genesis versus a third party who might be more of a motivated or forced seller in the market? Michael Nierenberg: We do both is what I would say. The short answer is the more we could do, the better. Based on our third-party fundraising, we have -- I'm not going to call it insatiable demand, but we have a tremendous amount of demand for this product, both in our funds business on the Rithm balance sheet because obviously, there are higher coupon earners as well as into the Rithm Property Trust. So it's going to be a combination of everything. We've already set up flow agreements with a number of originators. We are -- the one thing I would point out is we're extremely mindful of credit as we source product from other third parties. And one thing I like about our Genesis business is that the gentleman who runs at Clint Arrowsmith, as you've probably spoken with in the past, does a great job around credit, his background, he comes from a bank as a credit officer. That's really, really important. So while we could turn on the jets and grow origination, we got to be mindful of our credit box, and that's something that we also have to think about as we source from third parties because you see this in this business, once things get -- and I'm not singling anybody else, but once things get a little bit where this product is probably the most in demand from what I would call our LPs and what we want to do on balance sheet. You just have to make sure you don't have any missteps around the credit side, and that's something that we're extremely mindful of. But the long-winded -- my short answer to my long-winded explanation is we are going to source from third parties wherever we can as long as we're comfortable with the credit. Jason Stewart: Got it. Okay. And you mentioned banks. I would have expected banks to have been sort of rate dislocated sellers in this market. Is that something you're seeing an opportunity to acquire, especially since it's multi? Or is that opportunity past? Michael Nierenberg: You're not seeing a lot of bank selling is what I would say when I talk about the banks, we launched a fund on one of the wirehouses on the bank platform. And that's -- again, that's creating more demand for the product that Genesis is making and some of our non-QM products. So I think the banks are probably better buyers. What you've seen from the banks, the regional banks pulling back, right? We've seen that over the course of the past couple of years, which has created this great opportunity for Genesis and some of our other lending businesses to grow production. Jason Stewart: Okay. Got it. One big picture question. You mentioned the Fannie, Freddie licensing. Is the ultimate goal here to be able to go end-to-end sort of from an intermediate loan to permanent financing through the GSEs? Is that the vision for RPT down the road to have that license and create the customer relationship end-to-end? Michael Nierenberg: Yes, if we could do it, for sure. I mean when you think about the power of the franchise, look at Genesis. Genesis could go and they can make a loan to a builder in, let's just say, in the build-to-rent space. The mortgage company, Newrez, can then put a -- work in conjunction with Genesis and provide loans, for example, to those -- to that community of builders or it could be in either a builder that's buying, building and selling on a go-forward basis. So a lot of our thesis and what we're trying to do across the board is to be able to capture as much wallet as we can from our customer base. You look even at the mortgage company, which has over 4 million customers, are there other products that we could offer them that are going to generate earnings for our shareholders, and we're working on cards and other things that we hope to roll out here in the near future. So that is an example, but end-to-end is something that we're trying to do for sure. Jason Stewart: Appreciate it. Michael Nierenberg: Thanks, Jason. Operator: There are no further questions at this time. I will now turn the call back over to Michael Nierenberg for closing remarks. Michael Nierenberg: Have a great holiday weekend, everyone. Thanks for your support. Thanks for dialing in and be safe. Speak to you soon. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Capgemini Full Year 2025 Results Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Aiman Ezzat, CEO. Sir, Please go ahead. Aiman Ezzat: Thank you. Good morning. Thank you for joining us for the Full year 2025 results call, and I'm joined, of course, by our CFO, Nive Bhagat. So Capgemini delivered a solid set of results for 2025. Operating margin and organic free cash flow were on target and revenue growth finished above the upgraded guidance. In a demand environment that remained largely unchanged, our underlying performance strengthened quarter after quarter with momentum improving across regions, businesses and sectors. We won where clients invest in cloud, data and AI and digital business process services. We captured where it matters most to clients, the large transformation programs. For the year, revenues were EUR 22.46 billion, representing 3.4% growth at constant currency with around 2.5 points of scope impact. Bookings were EUR 24.36 billion, which represents a solid 1.08 book-to-bill for the year and a strong 1.21 in Q4, which is really an evidence of sustained commercial traction driven by a higher number of large deals. We demonstrated the strong resilience of our operating margin at 13.3% and organic free cash flow at EUR 1.95 billion in spite of cost pressure due to a higher bench in Continental Europe. Normalized EPS stands at EUR 12.95, plus 5.8% year-on-year. In line with our dividend policy, the Board will propose a EUR 3.4 per share dividend at the Annual General Meeting. So in a fast-changing environment, we also took strategic steps to lead in AI, Intelligent Operations and to reinforce our position on Sovereignty, and I will discuss these market trends shortly. So we finished the year on a strong note with another improvement in our underlying growth in Q4. Constant currency growth was 10.6% in Q4, including a scope impact of about 6.5 points, driven primarily by WNS and Cloud4C. Now stepping back and focusing on the underlying trend, we clearly see the benefits from the actions implemented over the last quarter. All regions improved between Q1 and Q4. North America recorded the strongest acceleration, while U.K. and Ireland and APAC and LatAm improved on an already solid performance. France gradually improved, but it remains challenging at year-end. The recovery in the rest of Europe was more pronounced and is now back to growth. The improvement is also visible across sectors, which all have significantly improved since the beginning of the year, even manufacturing is now stable year-on-year, excluding M&A impact. Finally, from a business perspective, Operations and Engineering recorded the strongest acceleration, both at constant currency and organically with double-digit growth in digital BPS across both Capgemini and WNS. One of the highlights of 2025 is the strength of our ecosystem of technology partnerships. Today, more than 2/3 of our bookings are associated with our top 12 technology partners. And in a world driven by cloud data and AI, cyber and sovereignty, clients are looking for solutions combining ecosystem of technology partners and services provided by relevant transformational focus, leveraging industry domain and functional expertise. I also want to highlight specifically the Defense sector, which continues to enjoy double-digit growth in 2025. And as the leading European player, Capgemini is uniquely positioned to capture this structural growth opportunity. I do expect to see further acceleration in the next 2 to 3 years as Europe ramps up its defense programs. So we expect good growth to continue in H1. For Q1, in line with traditional seasonality, constant currency growth should be in the range of 8.5% to 9.5% in constant currency with around 6.5 points of contribution from M&A. So quick words about our 2025 ESG policy achievements. So again, here, we demonstrated continued improvement in corporate responsibility with major progress on our ESG road map. So let me highlight a few points. From an environment standpoint, we accelerated towards our target of being net zero across all scopes by 2040, reaching 100% renewable electricity for all operations. We also made notable progress in gender balance. Proportion of women in the global workforce reached 40.5%, up 7 points since 2019. And for women among executives, leadership position, we reached 30.5%, up 13 points since 2019. Finally, on governance, we made further progress around cybersecurity with a CyberVadis score of 990 out of 1,000, positioning us as the leader in our industry. Now let's focus on our growth engine. And of course, let's start with AI. So AI in the enterprise has become a reality. Maturity is increasing about its possibilities, but also about what it will take to achieve real adoption and measurable results. So 2026 is really the moment of truth for AI, the moment where AI must transition from [indiscernible] to measurable business impact embedded in core operations, delivering value through AI-powered transformation. As we move to transformation, there is a growing awareness that the foundations are not yet in place, whether we're talking about infrastructure, data, standardized governance, risk and compliance frameworks. In practice, clients face siloed legacy systems preventing AI workflow orchestration, poor data availability and quality preventing AI performance and fine-tuning and legacy workloads running on-premise and preventing AI compute at scale. Finally, it's about human AI collaboration and trust. This is where the real complexity lies. This is our playing field. All this complexity, this is where we can drive real transformation requiring strong business acumen, domain knowledge, transformation capabilities, data and AI and technology depth. And in this context, Capgemini has the right capabilities and set up to deliver AI transformation to our clients, leveraging appropriate ecosystem and partnerships. Now let's take a couple of examples to make that more concrete. So just -- the first client example is a client who want to identify its procurement activities end-to-end to be more competitive. So from strategy and sourcing to procure to pay and end-to-end processes. So we are currently building a suite of 7 Agentic products that will provide market intelligence, assist buyers in the sourcing phase, analyze supplier responses to tenders, automate food cost calculations, simulate cost scenarios, analyze cost variances, consolidate forecasting, draft contracts and automate value tracking. As you see, the scope is pretty comprehensive. And the product is targeted to deliver tangible impact in the short term, strengthen working capital by optimizing payment terms, reducing inventory exposure and improving the cash impact of procurement, decrease operational and purchasing costs through automation and smarter decision-making and lower process execution costs and reduce reliance on manual efforts across procurement workflow. We can already document EUR 27 million of savings to date to what has been achieved. Our second client was facing issues of data center reliability with significant financial impact up to hundreds of thousands of dollars per minute of downtime of outage in addition to reputation damage. We developed a physics-informed AI model, identifying abnormal variation to predict and prevent equipment catastrophic failures, and alerting platform integrated with existing order workflow that's not requiring any operator training and a global and unified view of equipment operation, relationship and performance, feeding back operational and design improvement. Implemented and live, our solution has successfully prevented and mitigated catastrophic events, saving our customers millions and millions every year. And just one key metric, we have avoided around 50 critical incidents prevented per year. Now moving on to the second vector of growth, which is Intelligent Operations, which we consider still to be the largest showcase for Agentic AI. WNS was acquired in that context to provide the scale and vertical expertise required to lead in this market. The integration is proceeding as planned and should be operational in H2. I can confirm that the benefits are on track. Let me remind you, annual run rate of revenue synergies of EUR 100 million to EUR 140 million by the end of 2027 and annual run rate of cost synergies of EUR 50 million to EUR 70 million also by the end of 2027. The go-to-market activities as expected, are vibrant, and we have today 100 cross-selling opportunities identified. The Intelligent Operations pipeline of opportunities also growing with some very large deals in pursuit. With Intelligent Operations, we are leveraging AI to reshape and run entire areas of client business operation to achieve end-to-end strategic value creation by combining cost efficiencies and enhanced business outcomes. Happy to report that we closed our first mega deal of over EUR 600 million for a large global company, covering multiple functions and processes based on a true Agentic AI-led transformation solution, delivering significant cost reduction and enhanced business outcome and operating on a non-FTE based commercial model. So this is the largest of several contracts signed in the last 4 months with some potential extensions of scope. And this is a clear proof that the Intelligent Operations strategy is working and will be one of our growth pillars in the coming years. Let me move on now to sovereignty, where we see a significant appetite from clients to help them develop and implement their sovereignty strategy. This has become a huge topic in today's multipolar world. I took this as proof -- I take it as proof, this striking figure. Over 50% of services contracts will include some sovereignty requirements by 2029, up from 5% in 2025 according to Gartner. And sovereignty is not a monolithic framework, but is composed of 4 key dimensions: Data, operations, technology and regulation, and no one can really be sovereign across the full value chain. Now it is clear that as the largest European player, we are the driving force in developing offerings, ecosystems and partnerships to help large organizations implement sovereignty enabling solutions adapted to their needs and environment. We reinforced our solutions portfolio with the acquisition of Cloud4C, providing hyperautomated, AI-ready, locally governed cloud operation with sovereign compliant monitoring, disaster recovery, cybersecurity and continuity and in addition, with specialization across some industries and sovereign compliance frameworks. Now we are leveraging Cloud4C setup to create a European-hosted mirror platform to operate our European customers' sovereign workload. This is a perfect complement to our Bleu SecNumCloud JV with Orange in France. We are also leveraging our core partners, sovereign solution. We made 3 announcements in the past week with Google Cloud, AWS and Microsoft in addition to the sovereign technology partnership signed with SAP in November. Now we are extremely well positioned to capture the growth trend on sovereignty. Now the market is moving fast. And while a few areas have been softer in recent years, the opportunity set ahead of us is really compelling, especially in AI, Intelligent Operations and Sovereignty, as I have outlined earlier. We are executing a clear plan with selective strategic M&A, disciplined investment and a sharper focus on where we lead. Today, we are accelerating also our capability shift in order to deliver on the growth agenda. This will translate in a number of country-specific workforce and skills adaptation initiatives, leading to an estimated EUR 700 million restructuring over the next 2 years. These Fit for Growth local initiatives strengthen our competitive position and support sustained and profitable growth. For 2026, our targets are clear: Constant currency revenue growth of around 6.5% to 8.5%, with inorganic contribution of around 4.5 to 5 points. Operating margin of 13.6% to 13.8%. Organic free cash flow of around EUR 1.8 billion to EUR 1.9 billion, including the estimated year-on-year increase of around EUR 200 million in restructuring cash out. In 2026, we're going to demonstrate our ability to set the group on a new profitable growth agenda around AI, Intelligent Operations and Sovereignty. And this will further reinforce the group's financial profile. We are clearly pivoting the group to be the catalyst for enterprise-wide AI adoption, more to come during the Capital Markets Day in May. Thank you for your attention, and I now hand over to Nive. Nivedita Bhagat: Thank you, Aiman, and good morning, everyone. Let me start with the headlines for FY '25. We delivered a solid top line at EUR 22,465 million, which is up plus 1.7% on a reported basis and plus 3.4% at constant currency, placing us above the top end of the outlook we upgraded in October. This shows that our growth initiatives put in place over the year yielded results despite a mixed environment. On profitability, we protected the operating margin at 13.3%, stable year-on-year and in line with the guidance we set. Holding the operating margin despite the challenges we have faced in Continental Europe is proof point that our operating model is more resilient than ever before and shows the continued effectiveness of our cost discipline. Net profit group share ended at EUR 1,601 million with basic EPS at EUR 9.46. Normalized EPS, which strips out the other operating income and expense items was EUR 12.95, plus 5.8% year-on-year. Finally, we delivered organic free cash flow of EUR 1,949 million, in line with the around EUR 1.9 billion target we set at the beginning of the year, a strong testament to our financial discipline and focus. Let me take a moment to talk you now through the shape of the year. Growth rates gradually improved quarter after quarter at constant currency, but also ex M&A. Underlying growth strengthened further into Q4 and after taking into account the scope impact of around 6.5 points, our constant currency growth reached 10.6%. I'm happy to confirm that the organic growth in Q4 was therefore around 4%. To this effect, there is an error on Slide 27 of the pack. Now reflecting on the acceleration since the beginning of the year, what gives us confidence is that this wasn't a single sector or single region spike. We saw broad-based improvement across all businesses, regions and sectors. Currency impact was negative at 370 bps, so that's minus 370 bps in Q4 and minus 170 bps for FY '25. Based on current rates, currency headwinds should continue into Q1 2026 at slightly over 4 points and then settle at minus 1 to minus 1.5 points for the full year 2026. In summary, while the demand environment has remained largely unchanged, our current momentum is clearly stronger than it was a year ago. Turning to bookings. This was EUR 24.4 billion for the year with a very solid EUR 7.2 billion in Q4. In constant currency, our bookings are up plus 3.9% for the year and plus 9.1% in Q4, which mirrors the improvement in revenue momentum we just discussed. The book-to-bill of 1.21 in the quarter and 1.08 for the year is strong by historical standards, and this reflects 2 things. We continue to win in clients, new strategic priorities, particularly data and AI, and we won a higher number of large deals, which brings some added visibility. As Aiman said earlier, our portfolio investments from cloud, data and AI to digital core modernization, Sovereignty and Intelligent Operations continues to show good conversion, which sets us up well for the future. From a sector perspective, the improvement extended into Q4 on a like-for-like basis. This is also visible in manufacturing, which was stable in Q4. This solid performance was complemented by the contribution of WNS and Cloud4C acquisitions, which was mostly visible in the services, financial services, energy and utilities and consumer goods and retail sectors. Turning now to the full year, again at constant currency. Financial services and TMT sectors were the most dynamic in 2025, growing plus 9.2% and plus 7.7%, respectively. With the exception of manufacturing, which remained slightly negative, all the other sectors posted low to mid-single-digit revenue growth in 2025. Geographically, Q4 showed a step-up in underlying trends in our largest regions. North America improved and rest of Europe returned to positive growth. Growth rate improved in France, although still negative in Q4. The scope impact from WNS and Cloud4C is most visible in North America, United Kingdom and Ireland and in Asia Pacific and Latin America. In Q4, this is lifting these regions' already solid growth rates to around 20% on a constant currency basis. For the full year at constant currency, revenues in North America increased by plus 7.3% year-on-year. This has been fueled by continued underlying acceleration throughout the year with strong performance of financial services and to a lesser extent, in the TMT and manufacturing sectors. United Kingdom and Ireland region grew plus 10.5%, primarily driven by robust underlying momentum, notably in the financial services, TMT and public sectors. France revenues decreased by minus 4.1% in a challenging environment as illustrated by the persistent weakness of the manufacturing sector and the contraction of the energy utilities and the consumer goods and retail sectors. In the Rest of Europe region, revenues declined by minus 0.7%. The good performance of the public sector and the growth in Energy & Utilities and the services sectors were offset by a weak manufacturing sector. Finally, revenues in the Asia Pacific and Latin America region grew plus 13.8%, driven by financial services as well as the solid traction in the consumer goods and retail and TMT sectors. On profitability, North America operating margin expanded 40 bps, so that's plus 40 bps to 16.9%, while U.K. and Ireland held a strong 18%, which is 170 bps below a record 2024, which remains a very healthy level. Operating margin in France stands at 10.9% compared to 10.2% last year. As commented in H1, this improvement has been driven by one-off items. Excluding these one-offs, there has been no improvement in the underlying margin. Asia Pacific and Latin America was 12.6% at plus 20 bps and the rest of Europe ended at 11.4% at minus 60 bps. Across our businesses, the Q4 sequential uplift was also visible. Growth rates improved across all business lines on a constant currency basis, but also ex M&A. Strategy and operations, which has no M&A impact, improved significantly. This came with some contrast across regions as we have seen during previous quarters. The other highlight is Operations and Engineering. Let me unpack this as both WNS and Cloud4C are reported here. Starting with digital BPS, this is clearly the fastest-growing business. We have double-digit growth on a like-for-like basis across both Capgemini and WNS. Cloud Services and Engineering are also now positive. Moving on to the full year at constant currency. Applications and Technology grew plus 4.6%. Operations and Engineering, plus 4.9% and Strategy and Transformation at plus 2.4%. In terms of head count evolution, head count closed at 423,400, up 24% year-on-year and 19% since end of September, primarily reflecting the WNS integration. WNS is also accretive to our offshore leverage. Offshore leverage moved from 60% in September to 66% at the year-end. This is up plus 8 points year-on-year. Attrition was slightly down to 14.9% on a last 12-month basis before we incorporate WNS data in 2026. Let's now look at the operating margin bridge. Gross margin was 27.1%, down 30 bps year-on-year. This primarily reflects a prolonged soft market in Continental Europe. In this context, I would like to point out that our gross margin has been significantly more resilient than in any other previous down cycle. Additionally, in the current demand environment, we have tightened our selling expenses by 20 bps and our G&A by 10 bps. The net result is operating margin stable at 13.3% within the range guided for the year. Moving on to financial results. With the interest expense of the new bonds and lower interest income on cash, we moved from a net interest income of EUR 13 million last year to a net expense of EUR 30 million this year. On income tax, the effective tax rate is down year-on-year to 24.6% at the back of some noncash positive one-offs, which I did mention in H1. Now looking from operating margins to the bottom line. As anticipated, other operating income and expenses are up year-on-year at EUR 784 million. The restructuring costs amounted to EUR 205 million, in line with our comments in July. And with the acquisition of WNS, our acquisition and integration costs are at EUR 97 million. This takes the operating profit to EUR 2,199 million, which is 9.8% of revenues, down from 10.7% last year, given those noncore items. After financial and tax effects previously discussed, group net profit stands at EUR 1,601 million, down 4.2%. Basic EPS is EUR 9.46, down minus 3.7%, while normalized EPS was EUR 12.95, up plus 5.8% year-on-year. On cash generation and capital allocation, we generated EUR 1,949 million of organic free cash flow, stable year-on-year and in line with our around EUR 1.9 billion target. This year, again, the conversion of our net profit to organic free cash flow is clearly above 1 at 1.2x. In terms of our capital allocation, in 2025, we deployed around EUR 4.9 billion, approximately EUR 3.8 billion on WNS and C4C, EUR 1.1 billion on shareholder returns, which was split between EUR 578 million of dividends and EUR 542 million of buybacks. The employee shareholder program led to a EUR 0.3 billion capital increase, leading to a net outflow of EUR 4.6 billion. On the balance sheet, we redeemed the EUR 0.8 billion bond in June and then successfully completed a EUR 4 billion bond issue in September. We closed the year at EUR 5.3 billion of net debt. And as anticipated, the net debt-to-EBITDA ratio stands at 1.66, and this compares to 0.7x a year ago. And as a reminder, this was 2.8x post the Altron acquisition. In 2026, as we integrate WNS, we expect limited M&A and will accelerate our buybacks, which is consistent with the EUR 2 billion share buyback program announced in July. On that note, Aiman, I hand back to you. Aiman Ezzat: Thank you, Nive. So before we move on to the Q&A, let me briefly acknowledge the current market volatility that reflects the perception and uncertainty of AI-related impacts. So what matters, however, is unchanged. Capgemini fundamentals are solid. Our strategic priorities are clear, and our teams remain fully focused on our clients' needs. Now listening to our large Global 2000 clients, their needs are rooted in who they are, complex organization that requires end-to-end transformation capabilities, global execution at scale, deep industry expertise, technology-agnostic integration and rigorous regulatory compliance governance. These structural needs do not disappear with AI, they become even more essential. And that makes Capgemini's role integral as organizations navigate the future. The adoption of AI and GenAI will drive sustained profitable growth for the group and value for all our stakeholders. In 2026, we'll affirm our critical role in making AI real for our clients. With that, let's open the Q&A and to allow a maximum number of people in the queue to ask questions, I kindly ask you to restrict yourself to one question and a single follow-up. Operator, could you please share the Q&A instructions. Operator: [Operator Instructions] And the first question comes from the line of Laurent Daure from Kepler Cheuvreux. Laurent Daure: Congratulations for the fourth quarter first. So two questions for me. As you can guess, given the increasing scope impact in the fourth quarter, it's a bit tough for us to reconcile the numbers. I know you will not share with us the organic performance by regions, but I was interested to see if you could provide a bit more insight of the underlying organic trends in the main regions between the third and fourth quarter. In other words, if you've seen further improvements in U.S. and U.K. or if the improvement mostly come from a better Europe? And then my follow-up is probably going to talk more during the CMD on that. But when you discuss with clients, their midterm ambition and their potential budget, I would say, 3, 4 years out, when they look at the additional business regarding AI versus the savings that you will bring to them, do you see them having in mind a reduction of their budget? Or what is their stance at the moment? Aiman Ezzat: Listen, underlying organic and -- Nive can add precision to that. I mean, for me, everything is trending in the positive direction. I mean, definitely in North America, we continue to see further acceleration, which really underlines the recovery. U.K., France has improved and rest of Europe has improved. So -- and on the organic number, just to remind you, Nive said that the organic number is around 4% in Q4 overall for the group. Nivedita Bhagat: And I think just to add, geographically, Q4 has showed a step-up in underlying trends across all our regions. So North America has improved. Yes, rest of Europe has returned to positive growth. And of course, we have seen some improvements as far as France is concerned as well. Aiman Ezzat: Okay. On your second question, I don't think clients are thinking this way about reduction, et cetera. Clients are looking at how critical it is for them to adopt AI and where it can have an impact, both from a strategic perspective and from this. They are not thinking about, okay, I'm going to save money, I'm going to reduce my spend, et cetera. They're looking about how can I get real value out of AI, and they're ready to put the money on the table to make it happen because they consider that as being critical to their future in terms of transformation. I don't think we have -- I have seen clients discussing in 3, 4 years down the line, when I do the -- will I reduce my IT cost or will I reduce my spend on AI, et cetera, anything like that. Laurent, I don't think we are there. I think clients are really around where is the value creation. This is moving fast, how I can adopt it, where can I deploy it? How do I get benefit out of it, whether it's savings, time to market, innovation, better customer relationship, et cetera. And this is really what focus is a lot more than predicting what they will do in 3 or 4 years. I mean you see the uncertainty that's creating in many industries, including in ours by AI and really people are dealing with that more than trying to plan, am I going to save money and reduce my IT budgets in 3 or 4 years. Operator: We will now take the next question. And the question comes from the line of Nicolas David from ODDO BHF. Nicolas David: Congrats from my side as well for this very strong end of the year. My first question is regarding the Q4 to Q1 trends you are describing. Could you help us understand if in Q4, you saw some kind of exceptional budget flush or elements which prompt you to expect an organic growth at the low to mid-range of your guidance you described for Q1, a bit below what you saw in Q4? Or is it just comps or a bit of caution? And second question is, when you discuss with clients and you are signing contracts about identification of workflows, could you help us understand if those projects are done and those identification projects are done inside the traditional cloud business software with tool provided by the software providers, the legacy software provider? Or are they designed using new entrants tools or tools that you are developing yourself around the historical application layers? Aiman Ezzat: Okay. Listen, on the Q4 to Q1, it's more, I think, the seasonality that basically that you see that's going to impact thing, okay? I mean we'll always build some caution in what we say around where we head, but we are quite confident around the growth that we see in front of us. I mean, no specific concern that we see in terms of the business going into Q1. On the project, I think it's all of the above. Because, as you know, everybody wants to put their AI agents, their AI models, drive the consumption towards them. So whether you talk about software vendors and the Agentic layer, you talk about the hyperscalers and you talk about all the new entrants like OpenAI, Anthropic, Mistral, et cetera. All of the above work, they're all winning some business. We work with all of them. And the question is what is the pertinent solution for the client based on what he needs and who, at the end of the day, based on the strategy, whether it's short term or medium term, based on who has been the most convincing to them in terms of what they are pitching, and this is really what the clients go. But in a number of cases, they're also experimenting. Many clients have not have a long-term strategy, deciding of saying this is what I will do, this is my line and I will not move from it. And I think -- if people evolve and bring the right solution that are really pertinent to the client, to the client industries and specific environment, that is what they will adopt. What we have the client is navigate through some of that and ensure that they actually get real value because this is not about what solution or what agency going to adopt is how to make it happen in your critical processes, how to ensure that they're enterprise scale, how to ensure that they are safe, how to ensure that you can trust, how to ensure that the human AI model works. That's really where the complexity lies. But at this stage, we don't see clients saying, I will go this way or this way. I think it's still pretty open. Nicolas David: All right. But based on what you see, you believe that incumbent software player can be relevant in this move. Aiman Ezzat: Yes. I mean, again, I heard a number of technology CEOs talk about it, including from the hyperscalers recently. I mean, the thing about the death of software, I think, is a bit premature. The question is, what value are you bringing? If you don't evolve, I mean, same thing in our industry. If you don't evolve, software vendors don't evolve, then they will have a lesser role to play in the future. But you have to evolve to be able to embrace and bring the value to clients. At the end of the day, what clients are looking is not should I buy a software, should I buy an [indiscernible], I want value delivered. Who can help me deliver tangible value. That's what they're looking for. And if you play in there, then you have a role to play. If you don't contribute to that, then you get commoditized and basically downplayed over time. Simple. Operator: Your next question today comes from the line of Sven Merkt from Barclays. Sven Merkt: Your guidance for 2026 is obviously very solid, but still below the exit rate of Q4 on an organic basis. Can you help us to square this? And was there anything exceptional in Q4? Or have you just baked in significant conservatism into the guide? I noticed you called out still a complex macro environment earlier. And then secondly, a lot of focus, obviously, on helping your clients adopting AI. But can you speak a bit more about your internal road map to adopt AI to drive efficiency and what financial impact that could have over the long term? Aiman Ezzat: Okay. So listen, the guidance, I mean, when you start the year, I mean, we still have an environment that's basically not the most stable environment. So yes, we're going to have some conservatism as we start the year, and we'll see how the year plays out. But when you see the geopolitics, discussion around tariffs and a number of hot points across the world, you're going to have to be cautious and not just replicate what we see in Q4 of saying this is how the year is going to look out. So we see a solid H1. We have good views on H2, but we know there's still fluctuations that can happen along the year. If I go to your -- to the folks, I think it's a very good question around how we're adopting AI. So first, there is 2 key areas. In addition, we talked a bit about what we're doing with clients, 2 key areas. One is our operations, second thing in our delivery. So in our delivery, we are pushing. And it was slow because some of it is linked to our client environment. We work mainly in our client environment. If they don't provide us the tool, et cetera, we cannot really take advantage of that. And then there is client conservatism about what we use, what impact it's going to have, is it safe, et cetera, before just going for the savings. We start to see some more accelerated benefits in some areas. I cannot -- so it's not across the board still, but we really start to see pockets where we're gaining maturity, clients are gaining maturity and where we see we can progress faster. I mean, typically, if you take our offering in Intelligent Operations, that's what we do. I mean we are basically telling the client, we take this over, we're going to do the Agentic transformation. And of course, by doing that, as you imagine, we go up the experience curve quite quickly because we are adopting internally in our delivery model, how to make that happen. And we have a number of success. I talked about a couple of examples, but there's a number of others. So we are going up that experience curve area by area, business by business to see how we can accelerate the adoption. And of course, we're pushing for a strong acceleration this year, okay? The second part is in our Operations. And here, we have developed and created an internal platform data. So what we push to our clients, we have done it. We have built all the LLM layers above that with one of the technology partners, one of the large technology partners. And we are now -- have started developing the different Agentic layers. HR agent, sales agent, finance agent, proposal agent. So we are deploying internally what we're preaching to our clients. I think we'll probably dive more in detail around the number of these elements at Capital Markets Day and talk about what the impact that we see in terms of the future as we both adopt and deploy more of the solution also at clients. Operator: Your next question today comes from the line of Frederic Boulan from Bank of America. Frederic Boulan: If I can just stay on the AI debate. So the bear case on the IT services industry, as you know, is around the negative impact from cutting efficiency, massive simplification in software deployment. Can you share with us what you think the market is missing and how CAP can maintain its relevance in that new ecosystem? And if I can get a follow-up around pricing. I mean, is there any specific area where you do see significant price pressure from more efficient delivery supported by GenAI? Aiman Ezzat: So listen, again, I recognize the market is looking for clear evidence that AI is already translating into tangible value, whether it's gross margin or both. And for me, shifting the perception is not about making promise, it's really about execution. And that's really what we're focusing on. We're focusing on execution around growth, around margin, on cash flow, also providing more and more visibility and understanding about the trajectory in terms of how AI is progressing. We are embedding AI across all our offerings. So we are redesigning our offering in a certain way. So it's by design, not telling people see how you can use AI to improve things. Basically, we are designing how AI should be used. And I think this is what really where everybody is going and where we're helping our clients to go. You have to redesign your processes, the way you work and everything around the impact of AI. But I can tell you really when I -- besides examples, when I really talk to clients, the level of adoption we're still at the beginning. And because the transformation is complex, this is not easy things to do. And our best response to some of the fears in the market today is on delivering value, delivering value, explaining where we are winning, explaining the partners with whom we're signing who basically talk with them around how we're delivering value and how we need them and some will come in the near future, additional ones. So it's really about proof points. I mean this is our best response is proving that this works, that we're able to create value across the value chain of what we're doing in Capgemini. On the pricing, I don't think there's any change. There's not a specific area of pricing pressure. The environment is competitive. And of course, as you demonstrate more value creation potential, you, of course, can be able to generate better margin in certain areas. And I think this is really what we are focusing on. Operator: And the next question comes from the line of Mo Moawalla from Goldman Sachs. Mohammed Moawalla: And it's encouraging to see the revenue inflection. On the revenue growth, first of all, I just wanted to sort of clarify how is the kind of discretionary spending environment? To what extent did you get a bit of sort of budget flush effect? And then looking forward, you talked about some encouraging pipeline on intelligent operations. Is that something that's sort of baked into the guidance in terms of -- or is that sort of going to be as part of the conservatism you talked about? And then secondly, while the kind of growth is inflecting, we are seeing this kind of erosion on the gross margin. Can you sort of just help us understand that dynamic going forward? And that should we sort of anticipate that continuous kind of erosion in gross margin as pricing environment remains tough and you're kind of having to see some deflationary effect from AI? And is that sort of then what can you do on the OpEx side to try to kind of manage that impact on the operating margin? Aiman Ezzat: So first on the revenue growth. No, I mean, I don't consider there was any budget flush coming into Q4. I think it's really real growth that we have driven and improving across the board, as we said, even manufacturing now is not a headwind anymore because even excluding M&A, manufacturing has become flattish. So it's all trending in the right direction. From Intelligent Ops, we will never bet to include in our forecast some very large deals. So in our guidance, we will never bet on large deals. The other thing, just remember so that we don't get -- we understand the full impact of that. Some of these deals, as we say, these are complex deals. I mean we're talking about clients ending up a chunk of their operation and trusting us to run them and to transform them. So this is not -- it takes time to be able to close some of these deals. And the second thing, it takes time to transition. So the revenue doesn't come immediately. So a deal that we have today in the pipeline will have minimal impact in 2026, will have full impact in 2027, okay, just so that to you have a back of the envelope idea on that. Nive, on the gross margin. Nivedita Bhagat: Yes. On the gross margin, clearly, of course, this primarily reflects a fairly tough -- prolonged tough market that, of course, we've had in Continental Europe. And I think that's really one of the reasons why the gross margin is where it is. Now having said that, I think the gross margin has been far more resilient in this down cycle than any previous down cycle. And I think if I go back into the past, if I looked at the period of the financial crisis, I think we were down about 180 bps. If I look at COVID, we were down about 120 bps, whereas this time it's 30 bps. So not to sound defensive, but to say, I think we've been pretty resilient through this period of time despite, of course, 7 quarters of negative constant currency growth, just as a reminder. Now coming back, though, to the margin levers, I think, I've always said that the mix and portfolio mix is our biggest area of focus when it comes to that improvement. So that's an area of focus that will continue to happen. And all these investments we've made through our acquisitions, through the portfolio to what we see is going to help with that growth going forward. But additionally, yes, our Fit for Growth initiatives that Aiman just talked about will address some of that and will address some of the margin accretion from that perspective. And we will also, of course, continue to look at everything in terms of our operational parameters. So whether it's SG&A and looking at onshore/offshore, looking at what we do with our pyramid, et cetera, all of those aspects, we will continue to look at very strongly. So the focus is very much an improvement to gross margin as we go ahead, Mo. Operator: Your next question today comes from the line of Michael Briest from UBS. Michael Briest: Can you talk a little bit more about the Fit for Growth program? What your ambition is with the EUR 700 million restructuring envelope? And then thinking about head count more broadly, Obviously, you're using AI internally. WNS, there's an opportunity there around automation. Can you talk about how you expect head count to develop through the course of the year? And then just on the follow-up would be that EUR 600 million deal that you announced, Aiman, congratulations. How does that sort of fit into the GBP 100 million to GBP 140 million revenue synergies? It seems early to have won something so soon after the deal closed. But you mentioned the full pipeline. Can you give some more context on that and how quickly you can get to that GBP 100 million plus synergies? Aiman Ezzat: Okay. For the Fit for Growth program, I mean, listen, recognition that, first, I mean, you have seen that over the last few quarters, we get some -- we had some challenging environments in Europe, okay, across a number of countries. Some of them are linked to sectors. But also, we are anticipating some evolution from the technology and notably from AI in terms of evolution around some capabilities. So I think -- and we have to do quite a bit of reskilling also in some areas to be able to prepare our workforce for the future. So this is really what this Fit for Growth program is about. This is about basically realigning some capabilities with where we see now the opportunities coming up, whether they're Intelligent Operations, AI, Sovereignty or some other pockets which are emerging where we need to invest. So what we did is basically said we have to move fast. The market is moving fast, and this is about basically doing fast, something that we could do over several years is that we don't have time to waste. We really have to act fast, and we took the decision to be able to accelerate what we do traditionally over time to do it at a much faster pace. So that's for the Fit for Growth program. On the head count, you're always going to have both aspects. Growth drives head count. And at the same time, we're pushing very hard on AI and automation. Doing large Intelligent Operations deal adds us head counts. On the other side, we also drive a lot of productivity in some of the existing contracts. So the 2 will change. So think in the specific year, how the account is going to evolve will depend very much on the mix of business that we're going to win, how much is onshore, how much is offshore, et cetera. I think what -- the way I would look at it is I definitely expect that over the midterm, what we will see is an increase of revenue per head count. Right now, basically by embarking a large BPO business from WNS, we reduce effectively that because the revenue per head in this type of business is lower. But over time, I definitely expect a trend where with the leverage of Agentic AI, et cetera, we will be driving the revenue per head up. And on Intelligent Operations, we always said, I remember, since you have been following us for a long time, we did all the accretion in terms of revenue, the synergy of revenue on the IGATE deal on one deal, on one client. And here, basically, yes, we are. We're going to be able to do probably on some of the couple of large deals, a large part of the revenue accretion. It's going to take time for some of this to be able to ramp up. And just in addition to some of these large deals, also don't neglect the cross-selling opportunities. I mentioned 100 cross-selling opportunities. When you see the size of both businesses on our side, on their side, 100 cross-selling opportunities is a lot of deals. Some of them are small, but some of them are pretty large. I think I answered your three questions. So we'll be taking one final question as we're coming almost up to the hour. Operator: Your final question comes from the line of Balajee Tirupati from Citi. Balajee Tirupati: Congratulations, Aiman and Nive, on a strong close to 2025, also on winning the mega deal. If I can start with Intelligent Operations, first question there, could you share at this stage, how is the maturity of pipeline of similar mega deals looking at this moment? And also what your thought is about the sustainability of the double-digit growth you're seeing in Intelligent Operations? And if I may also ask a second question on evolution of AI tools and plug-ins. I do appreciate enterprises are still in early stage of adoption and the readiness is probably at nascent stage as well. So are you seeing or expecting the scope of productivity gains possible increasing and broadening the context not limited to, but for example, comment from Palantir around achieving complex for migration in as little as couple of weeks. How you would expect analyst community to reconcile with that? Aiman Ezzat: So first, I mean, listen, the pipeline, as you know, when you get to large deals, I mean, the closing time is always somewhat difficult to be able to estimate because they can go on for months and months and months before we're able to get to that. But the pipeline is good. We have some very large deals, but we also have some deals which are multi-steps. There's a client with whom we signed the first step around 2 or 3 functions at the end of last year. And now we are basically looking at scope expansion already this year, probably in the first half and maybe another one again later in the year. So they don't all come as one single deal. Sometimes they come as multiple steps in terms of closing some of these deals. But we have good confidence about ability to sustain double-digit growth when we see the pipeline and the deals that we have. I've good confidence for the near future to sustain the double-digit growth around all that business. On the AI tools and productivity gains, the productivity is coming bit by bit. Whenever I talk to clients, everybody has some nice cases when I ask them at scale. I think there have been interviews with CIOs of large banks recently. When you say what they say, we're still at the beginning because the reality is that besides generating code on an LLM and really trying to integrate that into an enterprise that's very complex with legacy systems, siloed data and all the like, it's a lot more complex. So it takes more time. And yes, there is a gap between CEO's expectation, I can tell you and what his team is able to deliver today. So everybody is trying to accelerate, but there is challenges. On things like Palantir, I think, again, people end up with the headline and they don't dig in detail, okay? And whenever we see something else, we take it seriously. We take it seriously about what is happening, are we missing something, et cetera. And we dig in detail, and we really understand what it is. I think you need to get some people maybe in your organization or other to really dig in detail about what it is. It is -- yes, there is advancement in certain areas. When you look really into the detail of what it is and to what it applies, it's not going to make your SAP migration in 2 weeks, okay? So don't stay on the headline, dig a little bit more in detail. As I say, we take things seriously. We did it. And we understand what exactly what is behind. There is advancements in some areas, but it's not stratospheric in terms of suddenly you can do SAP migration in 2 weeks, okay? That's the headline that people took and that headline is significantly wrong. And some of what they do, really the way it shows applies more to an environment of SMB data than it applies to large corporations, okay? I love to go into the detail around that, but I assure you, we are not concerned after digging. Thank you very much. I appreciate, of course, the exchange and all the questions and looking forward to interact with you over the coming days and weeks. Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by. This is the conference operator. Welcome to the TC Energy Fourth Quarter 2025 Results Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Gavin Wylie, Vice President of Investor Relations. Please go ahead. Gavin Wylie: Thank you. I'd like to welcome you to TC Energy's Fourth Quarter 2025 Conference Call. Joining me are Francois Poirier, President and Chief Executive Officer; Sean O'Donnell, Executive Vice President and Chief Financial Officer; along with other members of our senior leadership team. Francois and Sean will begin today with some comments on our financial results and operational highlights. A copy of the slide presentation is available on our website under the Investors section. Following remarks, we'll take questions from the investment community. Please limit yourself to two questions. And if you're a member of the media, please contact our media team. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information, please see reports filed by TC Energy with Canadian securities regulators and with the U.S. Securities Exchange Commission. Finally, we will refer to certain non-GAAP measures that may not be comparable to similar measures presented by other entities. A reconciliation is contained in the appendix of the presentation. With that, I'll turn the call to Francois. Francois Poirier: Thanks, Gavin, and good morning, everyone. 2025 was a defining year for TC Energy. We laid out a clear set of strategic priorities and we delivered. First, I'm exceptionally proud of the team's safety performance, our best in 5 years, and that is directly enabling our strong operational and financial results, reflected in our 9% year-over-year increase in comparable EBITDA. Importantly, in less than 18 months since we spun off our Liquids business, we have replaced nearly all of its EBITDA with high-quality natural gas and power projects. On execution, we placed $8.3 billion of projects into service on schedule and over 15% under budget. That same focus is evident at Bruce Power, where Unit 3 remains on track for a return to service this year. As we enter 2026, we're building on our strong base business performance, consistent execution and disciplined capital allocation that continues to deliver solid growth, low-risk and repeatable performance. Driven by LNG exports, rising power generation and increasing reliability needs for local distribution companies, we expect North American natural gas demand to increase by 45 Bcf per day from 2025 to 2035. This is equivalent, for context, to adding the entirety of the European gas market over the next 10 years and demand is materializing real time. As the only major energy infrastructure company focused solely on natural gas and power across Canada, the U.S. and Mexico, we have an advantage to capture outsized value from our diversified portfolio. We serve 7 LNG facilities representing 30% of North American LNG feed gas across 3 countries. We serve 170 power plants positioned near high-growth markets like PJM and MISO. And we are approximate to 60% of projected U.S. data center growth. We are also the only midstream company to have a stake in the world-class nuclear facility, Bruce Power, in a market where electricity demand is expected to grow by 65% through 2050. Our competitive position combined with this compelling backdrop is creating for us a broad set of opportunities across geographies, customers and each of our strategic growth pillars. In the fourth quarter, we advanced $5 billion of projects at various stages. We placed $2 billion of assets into service on time and under budget, and we expect to place approximately $4 billion into service this year. We continue to optimize our capital plan, shifting $0.5 billion of capital forward into 2026 to capture in-year EBITDA while creating capacity for higher return growth in the outer years. We added $600 million of new projects in the fourth quarter, including additional NGTL expansion facilities and a brownfield U.S. compression expansion project at a 5x build multiple. We continue to advance commercial discussions with customers across a diverse set of high-quality opportunities moving roughly $2 billion of late-stage derisked opportunities into our pending approval bucket. With recent sanctioning and ongoing optimization of our opportunity set, our high conviction pending approval portfolio now sits at about $8 billion. Sean will walk you through how this will impact our capital spend through the end of the decade. Outside pending approval, we see an additional $12 billion of projects in origination, supported in part by our recent nonbinding open season on Columbia Gas that was 3x oversubscribed. That $12 billion represents a relatively conservative view. It doesn't, for instance, include potential developments like Bruce C, where feasibility and early development work are progressing. Importantly, the projects we're pursuing are consistent with our targeted build multiple range of 5 to 7x. Collectively, this progress reinforces our confidence in 2026 to fully allocate our $6 billion annual target in net capital expenditures through 2030. And I believe our opportunity set gives us the optionality to surpass this level of investment sanctioned this year for the latter part of the decade. Wide-scale electrification, ongoing coal retirements and the rapidly growing energy needs of AI and data centers are driving a significant and sustained increase in North American electricity demand. Our strategy has been very intentional to capture this growth without increasing our risk exposure. Our primary focus is on brownfield and corridor expansions that leverage our existing footprint to primarily serve investment-grade utility customers, particularly in regions where we hold long-standing incumbent positions. Notably, the majority of the 10 Bcf per day of expected growth in power demand is concentrated in markets that directly overlap our footprint. Recent project announcements like TCO Connector, Northwoods, Pulaski and Maysville, are all strong examples of this strategy and practice. Our resilience is anchored by long-term take-or-pay contracts that further benefit from a diverse and durable set of demand drivers. This low-risk strategy positions us well to deliver sustained value for our shareholders, and this same opportunity extends to Bruce Power, which I'll turn to next. Bruce Power's top focus remains delivering the highest level of reliability, availability and safety performance across all 8 units. Alongside the major component replacement program, the team is executing a proactive targeted initiatives to strengthen the reliability of critical equipment. The net benefit of these initiatives is improving plant reliability and availability that has a meaningful financial impact. Every day a unit remains available, it leads to roughly $1 million per day of incremental revenue for TC Energy. And as shown in the chart on the right, Bruce Power's availability has steadily improved with expected availability in the low 90s percent range for 2026. As realized power prices also trend higher, we continue to strengthen our financial performance. And with that, I'll turn it over to Sean to walk through the numbers. Sean O'Donnell: Thanks, Francois. Good morning, everybody. In the fourth quarter, TC delivered 13% year-over-year growth in comparable EBITDA. It was a solid quarter to end an exceptional year. Our pipeline businesses set new all-time high delivery records, a direct result of our team's outstanding focus on safety and operational excellence. In our Power and Energy Solutions business, Bruce Power achieved 86% availability, which includes the planned outage on Unit 2 and is in line with our expected annual availability in the low 90% range for full year 2025. On the right-hand side, we show our comparable EBITDA bridge for the quarter. You'll see that we generated almost $3 billion in EBITDA. Let me walk you through the components of how each business helped us get there. Starting with Canada Gas. EBITDA increased by $110 million due to higher incentive earnings and flow through depreciation on both the NGTL and Mainline systems. In the U.S., EBITDA increased by $188 million, primarily from our Columbia Gas settlement as well as additional contract sales and higher realized earnings related to our U.S. natural gas marketing business. In Mexico, EBITDA increased by $163 million, which was a 70% increase relative to last year due to the completion of Southeast Gateway. The increase from Southeast Gateway was partially offset by currency and tax items, which remain well managed within our overall financial hedging framework. And finally, in our Power and Energy Solutions business, equity income from Bruce Power was lower quarter-over-quarter. That is primarily from Unit 4 being off-line for its MCR program at the same time, Unit 3 is off-line for its MCR program. We also saw lower availability due to planned maintenance outages which was partially offset by higher contract price. In summary, it was a strong quarter due to high availability and EBITDA contributions from the assets our teams helped place into service in 2025. With the $4 billion in projects expected to go into service in 2026, including Bruce Unit 3's return to service, we continue to see strong EBITDA momentum heading into 2026. Shifting to our investment outlook and our capital allocation dashboard. We have a few new features to highlight here in order to bridge you from our last call in November. In November, we shared that by the end of 2026, we expected to have fully allocated our $6 billion annual target through 2030, with project build multiples in the 5x to 7x range. We have made the progress we expected towards that objective. In the past few months, we've added approximately $2 billion of high conviction derisked projects, which are shown in the gray bars. This brings our late-stage pending approval opportunity set to approximately $8 billion. That increase is net of the $600 million of new projects announced earlier today, along with ongoing optimization and high grading of our capital program. As the pending approval bucket continues to grow, we have been successful in pulling forward capital by 1 to 2 years, as shown in the arrows on the top of the page. We are optimizing short-cycle maintenance capital into our 2026 plan, which earns an immediate return on and of our invested capital. To give you a sense for other optimization opportunities that our teams are finding, we have pulled forward the in-service date of our NKY Gate Enhancement to late 2027 and have several other opportunities under evaluation. This not only adds EBITDA to our 2028 outlook, but also creates investment capacity for growth capital in the later part of the decade. Looking ahead, we will continue to evaluate similar NPV positive capital optimization opportunities where it makes sense to accelerate EBITDA and optimize balance sheet capacity that we can redeploy in future periods. To wrap up the capital outlook, I'd like to highlight that the increase in our pending approval bucket, together with our $12 billion of additional opportunities in origination, we anticipate capital investment to not only approach our $6 billion target, but as Francois mentioned, to potentially surpass this level toward the latter part of the decade, consistent with our messaging in prior quarters. Turning to our long-term financial outlook on Page 13. This chart, as we presented in November, continues to reflect the solid trajectory we see this year and looking towards 2028. We are reaffirming both our 2026 outlook with comparable EBITDA of $11.6 billion to $11.8 billion, as well as our 2028 outlook, where we are positioned to deliver comparable EBITDA of $12.6 billion to $13.1 billion. This sustained performance in the fourth quarter and this outlook both underscore the strength and repeatability of our base business. Turning to the right-hand side. I'm pleased to share that our Board of Directors has declared a first quarter 2026 dividend of $0.8775 per common share, which is equivalent to $3.51 per share on an annualized basis. This results in a 3.2% year-over-year increase, which is within our 3% to 5% range, and represents the 26th consecutive year that TC Energy has delivered dividend growth to our shareholders. We continue to be proud to deliver this growth year after year as part of our total shareholder value proposition. I will wrap up by summarizing why our portfolio is increasingly 1 of 1 amongst our peers. TC Energy is delivering strong total shareholder returns while operating one of the largest, most straightforward and focused capital backlogs in the sector. Perhaps most importantly, we're doing that with lower-than-average execution risk in the fastest-growing energy markets in North America. We have the largest portfolio of natural gas and power investment opportunities relative to our size through the end of the decade. Importantly, our growth projects continue to be underpinned by long-term contracts regulated frameworks and strong counterparty quality. We're growing in the deepest growth markets, and we are growing in the right way with respect to our well-established risk preferences. We are deploying capital where we see the highest risk-adjusted returns, extracting more value from existing infrastructure, and remaining disciplined on project selection and capital allocation. As a result, TC Energy offers a compelling lower risk investment proposition, durable growth, execution strength and attractive risk-adjusted returns. With that update, I'll pass the call back to Francois. Francois Poirier: Thank you, Sean. Now as we begin 2026, our strategic priorities remain consistent with what drove success over the last 2 years. We will continue to, firstly, maximize the value of our assets through safety and operational excellence. And this year, we're adding -- we're going to do so while leveraging commercial and technological innovation, including the use of artificial intelligence. Second, we're going to prioritize low risk, high return growth, including placing projects in-service on time and on budget or better. And based on what we're seeing in our project development pipeline, we expect this year to sanction $6 billion of net annual capital expenditures through 2030 and have visibility to increasing that level of investment for the latter part of the decade, and all consistent with targeted build multiples in the range of 5x to 7x. With a diverse set of high conviction late-stage projects, we expect continued durable growth with clear visibility to disciplined capital investment through the early part of the next decade. And thirdly, we will maintain financial strength and agility to support long-term value creation. Building off the momentum from strong operational performance, consistent execution and disciplined capital allocation, I'm confident in our ability to continue to deliver solid growth, low risk and repeatable performance. Operator, we're now ready to take questions. Operator: [Operator Instructions] The first question today comes from Praneeth Satish with Wells Fargo. Praneeth Satish: Based on the recent open season announcement, it seems like average project sizes that you're looking at are getting larger. Please correct me if I'm wrong, but the projects now appear to be moving kind of well past the $1 billion mark. So in that context, I wanted to revisit balance sheet capacity, and I know you show capacity out through 2030 on the slide deck. But can you give us an early sense of what 2031 looks like? How much of that year is already committed? How much is pending, waiting for approval? And how much is true white space? Because I imagine most of the projects, once these large projects, if you sanction them today, will have 2031 in-service dates. So just trying to get a sense of that long-term balance sheet capacity. Tina Faraca: Praneeth, this is Tina. I'll kick off and then turn it over to Francois. We are continuing to see a deep pipeline of opportunities of all scope and scale. And as you look at the projects that we have in origination, primarily focused on power generation opportunities, we've got about almost $12 billion in the pipeline of projects that run the gamut from, say, $200 million to over $1 billion. The open seasons that you mentioned, our focus there is to really try to aggregate as much of the demand as possible so that we're not advancing multiple projects and able to bring larger scale projects into service. And so those open seasons that you mentioned, one, the Columbia open season, where we launched a 500 million a day open season with 1.5 Bcf of bids that came in. We're going to be working to aggregate that and determine what is the right path forward for that project. On Crossroads, a great example of the value of steel in the ground. We have a pipeline there that capacity is about 250 million cubic feet a day, looking at expansion there of about 1.5 billion. So a lot of great opportunities we're progressing, but again, a wide range of scope and scale. Those open seasons, our approach to that is getting those across the finish line this year, so we can move into execution going forward. Francois Poirier: And Praneeth, on the extension of our capital program, some of the projects we're pursuing are, as you mentioned, with 2031 and even 2032 in-service dates. Some of the projects that we've sanctioned, we're being asked by customers to move earlier, as they're being responsive to their data center customers and other customers. And some of the projects we're looking at are even shorter cycle than that. So the beauty of our capital program is that we've got visibility and duration out several years, and it is starting to spill into the early 30s, and that just gives us more confidence in our ability to continue to deliver on that 5% to 7% compound annual growth of EBITDA. Praneeth Satish: Got you. That's helpful. And maybe just turning to the Crossroads project. I know you're an open season, but maybe if you could just talk about the strategic rationale there? Is it primarily data centers, coal-to-gas switching? And then we know of at least one other midstream operator that's targeting similar markets. So just any high-level color on the competitive dynamics. Yes, just trying to get -- and the other question here is given the scale of it, could this project create a pathway to additional projects over time? Tina Faraca: Yes, Praneeth, the Crossroads expansion project is driven primarily by power generation requirements or gas for power generation that could take the form of data center demand, coal-to-gas or electrification. Several of our large electric utilities are looking for additional capacity to support some of the projects in the Midwest. Other customers are looking for more supply diversity. So looking at Appalachia supply and Mid-Con supply, et cetera. So it kind of -- it's taking all shapes and forms there. But the interest level has been really picking up in that area. And if you think about our footprint in the Midwest, I think it's really second to none. And you look at the growth in the Midwest, we're excited about capturing those opportunities. Francois Poirier: Maybe to add to Tina's comments on that, Praneeth. It's a good reminder that we have 13 pipelines across the United States. A lot of our growth has been driven by our Columbia and ANR systems, but we are looking at growth projects across the entire fleet and the entire footprint of our projects in all 3 countries. Operator: The next question comes from Theresa Chen with Barclays. Theresa Chen: Also had a question related to one of your recently highly successful open season. On Columbia, Tina, your comments on how this project could evolve going forward. Can you just remind us what is the expansion capability on the system at this point? And what are the gating factors to upsizing the original scope? Tina Faraca: Thanks, Theresa. We had advertised this open season as a 0.5 Bcf opportunity set. But because of the significant demand of 1.5 Bcf. We're looking what is the best way to optimize that capacity and try to satisfy as much of the demand as possible. What we want to do is look for that sweet spot where we are still competitive in the market and can address as many of the customer requirements as possible. So early days yet as we're continuing the negotiations with all of the customers, but the plan would be to sanction that project this year. Theresa Chen: And Francois, when you mentioned the projects coming under budget by 15%, can you just talk about what has allowed this to happen? And to what extent is that repeatable with your current investments underway. And just as we think about spending and balance sheet capacity on a go-forward basis, I would love to get your thoughts here. Francois Poirier: I appreciate the question, Theresa. We were obviously very prudent with project planning and having high-quality estimates for our projects. Clearly, we had a bit of a tailwind over the last few years as contractor capacity was a bit looser than we had anticipated during the planning process so that we had some tailwinds when we came to actually signing up some of those contracts. So the combination of those things allowed us to deliver really impeccable execution, in addition to the fact that we had our own internal initiatives to look for value wherever we can, using AI and using best practices to make sure that we're being as competitive as possible. I expect our execution to continue to be excellent going forward. And the double-edged sword of having large contingencies being returned to the mother ship, if you will, is that you've lost an opportunity to put in another growth project if the capital was held on to for the 3 or 4 years it takes between sanctioning and in service. So you're going to see us maybe challenge ourselves and be a little bit more aggressive and proactive in our estimation going forward. We want to make sure that we're not missing out an opportunity. It is such an opportunity-rich environment. But having said that, we now, in our processes, invest a lot more capital upfront in developing higher-quality estimates, making sure that our project planning is far more advanced than we ever have in the past before we sanction something. So I fully expect our high-quality execution to continue in the future. Operator: The next question comes from Rob Hope with Scotiabank. Robert Hope: So it's interesting to see how the shape of the capital expenditures through 2030 has changed since Q3 with a pretty good step-up in 2030. So when you think about the kind of, we'll call it, white space in '28 and around those years, how do you think about layering on short-duration projects? Or how quickly could you be comfortable in going above that $6 billion to $7 billion capital range in the outer years? Francois Poirier: Yes. Thanks for that question, Rob. I'll start, and I'll ask Sean to provide some color. Part of the reason like in 2028, we have more white space than we had a quarter ago is that we took advantage of some optimization that is NPV positive to bring forward some of our maintenance capital on which we earn a return from '27 and 2028 into 2026, where we still had some spare capacity. That does 2 things. It brings forward EBITDA growth earlier into our growth delivery. But secondly, it creates capacity for additional growth projects in the future. So you're going to see us continually optimizing and smoothing out that portfolio. Things are unfolding as we expected with respect to the sanctioning of projects. As we mentioned in prior quarters, the size of projects is increasing. So we had to go and reoptimize some of our projects as part of utility bid processes. The PUCs are providing more clarity around what they expect in terms of routing clarity in order to sanction projects. So the utilities themselves have been very prudently making sure that they can meet those requirements. But we see, for example, 2 sizable projects we're competing for that we expect to be awarded here over the next few weeks to a couple of months. So things are proceeding as planned. Sean O'Donnell: Rob, it's Sean. I'll -- please, go ahead. Robert Hope: No, no, go please. Sean O'Donnell: I was just going to tack on a little bit of the balance sheet. I'm sitting here next to Tina and Greg, and yes, there are projects. We're talking about kind of by weeks and months. And candidly, '25, '26, '27, we're given the balance sheet continued time to breathe. And it creates capacity. And like I said -- as Francois said, we're maybe a month away from having better visibility on that '28, but the balance sheet continues to appreciate that time for that optionality in '28. Sorry, on to your question now. Robert Hope: Sorry. Maybe just in terms of kind of the $12 billion of additional projects in origination, based on the commentary that the Columbia project could be sanctioned this year, how do you think about the conversion of moving that into the pending approval? And could we see some of these $12 billion even being sanctioned in '26? Francois Poirier: I think where we launch open seasons, typically, we're having conversation with potential customers before we even launch them. So we have a fair degree of confidence that there's market interest. The purpose of the nonbinding open seasons is to confirm that interest and allows us to optimize the size of the projects, as Tina mentioned. So when we talk about Ohio, when we talk about Crossroads, those are in that $12 billion bucket. They are not in the pending approval bucket, which is restricted to 90-plus percent probability projects. And we still expect projects like that to be sanctioned this year. So that all together, when you put it all together, is what gives us confidence that not only are we going to fill all of the white space to $6 billion out to 2030, but there's a very good chance we're going to be looking to go above that $6 billion level, starting in '29 or more than likely '29, but possibly also '28. Operator: The next question comes from Maurice Choy with RBC Capital Markets. Maurice Choy: Just wanted to pick up on your early response on growth rate. You've accelerated $500 million capital this quarter. And it sounds like there are more opportunities like these to pull forward projects by 1 or 2 years. Would these generally lead to a higher growth rate than 5% to 7%? Or are these filling up white space and therefore meant to be supportive of your 5% to 7% rate? Sean O'Donnell: Maurice, it's Sean. Good question. The $500 million that we're pulling forward, they will contribute to EBITDA. But I'll tell you, that's -- we're going to be in range. Those are healthy numbers, but not big enough to kind of move our range at this point in time. Maurice Choy: But we need to pull forward more than $500 million in the coming quarters, at least in the ending year, would it be upgradable to some extent? Sean O'Donnell: If we're successful in pulling together sizable dollars, then we'll revisit that, of course. But at this point, we are within range on the '28 and '27 pull forwards. Maurice Choy: Got it. Makes sense. And then just to finish off, I wonder if you could just help us compare and contrast the characteristics of the $8 billion projects pending approval and the $12 billion that are in the origination. And specifically, what I'm hoping to understand is, by geography, gas versus nuclear, are the returns quite similar or are some of them green versus brownfield? Sean O'Donnell: Maurice, it's Sean. I'll maybe kick that one off to make sure we were clear on the characterization of what is pending versus what we have in flight. As Francois said, what we have in plan for pending are what we characterize as 90% or more likely, very advanced, fully documented, typically requiring only management or Board-level approvals to sanction. That is the characterization of our pending. As it relates to kind of a heat map and distribution of the pending, maybe I'll turn that over to Tina to give you a sense for where those dollars are coming from. Tina Faraca: Thanks, Sean. As we talked about earlier, given we're in 3 countries, and we have multiple pipelines spanning coast-to-coast, border-to-border, we're seeing opportunities across our entire portfolio in the U.S. in particular, where we see the bulk of the growth those opportunities are really focused primarily in the Midwest. But we are seeing, as we just noted, projects developing along our West Coast systems, our East Coast systems, really all over the map there. In terms of your question on brownfield versus greenfield, our approach has always been to leverage our footprint wherever possible to produce the most economic, efficient build with minimal disruption. So this won't change going forward. Maurice Choy: I noticed there's no mention about nuclear in any of these responses. And do these numbers have the remaining MCRs or even Bruce C in any of them? Francois Poirier: So the MCRs are included in those numbers, but Bruce C is not. Bruce C is still in early stages of development. And so that would be upside to even the $12 billion of advanced projects in advanced BD. Operator: The next question comes from Zack Van Everen with TPH. Zackery Van Everen: Maybe starting on the power and data center side. I know your historical and continued plan has been to focus on the utility customers. I was curious if the more recent political push to keep utility rates flat, has changed any of those conversations and maybe push you guys more towards supplying gas to the mobile power solutions. Francois Poirier: So I'll start at a high level here, Zack, and ask Tina to provide some proof points. As I talked about in my prepared remarks, particularly in the U.S., we really are focusing in front of the meter with our utility customers. To the extent a data center wants to get serviced directly for gas and is willing to provide a long-term contract that is consistent with what we get from the utility customers, we will, of course, contemplate those. We're not looking at any power project development and ownership behind the meter at this time. But Tina, any additional color? Tina Faraca: Yes. Our strategy is really working. We are continuing to have close collaborations with our utilities to develop those solutions that a reliable and cost-effective, and in most instances, serve more than one type of load, not just data center load. You mentioned some of the cost allocation issues, Zack, and there are jurisdictions such as Wisconsin that are tailoring their regulatory framework to better balance system reliability with cost recovery. So we're seeing a lot of utilities figuring it out to kind of say the phrase there, but there are opportunities with many of these utilities where those cost issues are being reconciled. Zackery Van Everen: Got you. That makes sense. And then maybe one on Gulf Coast demand. We continue to see LNG facilities pull more and more from the Northeast as much as they can to the Gulf Coast. Was curious if you could remind us of the ability to expand ANR and/or Columbia Gulf and what that could look like as far as size and timeline if there is demand to expand those pipes? Tina Faraca: We placed 8 LNG projects into service in the last few years, Zack. We've got 2 more that are under construction our [ Gap ] West project and on the East Coast of Canada, our Cedar project. So we've put in about almost 10 Bcf per day of LNG opportunities, primarily in the U.S. What we're seeing right now is a lot of the growth in the Louisiana Gulf Coast has already contracted for much of their pipeline capacity, including on our projects. But to the extent there is an opportunity or a need for additional egress from Appalachia in particular, our pipes are well suited to do that with our Columbia Gulf and our ANR systems. At this time, we're not seeing that draw, but we stand ready to support that when it does show up. Operator: The next question comes from Ben Pham with BMO. Benjamin Pham: I was wondering if you can comment on the stickiness of your 5 to 7x EBITDA build multiple on new projects. And particularly, what internal -- external factors do you need to see that to be sustained? Francois Poirier: So when we look at, obviously, our pending approval projects, which are in the 90-plus percent category, even when you look at the advanced BD group of $12 billion, Ben, we're still looking in aggregate at a 5 to 7x EBITDA build multiple. So the return profiles that we've been able to sanction projects at in the last couple of years are sticking. And the general dynamic is that the utility space has continued to be very creative at finding more brownfield expansion capacity. The data centers have learned that being flexible in their location to go where those efficient deliveries are available has helped us do that. And so we fully expect the return profile in aggregate to be in that 5 to 7x range. And it's got to do with our ability as a company to execute with excellence. We've been able to enter into strategic joint ventures with OEMs and sometimes even with contractors. And what's being reinforced here is the value of pipe in the ground and the value of incumbency has allowed us to continue to earn premium rates of return relative to history. Benjamin Pham: Okay. Got it. And maybe second question just going back to some of the questions on the balance sheet capacity. You mentioned the size of your projects increasing, customers looking to accelerate projects, but you need the balance sheet to [ debreath ] in the next couple of years. How are you guys thinking about the asset recycling equation of it? Just kind of where valuations are right now in the pipe sector. And then maybe also thoughts on JVs such as the Columbia one. Sean O'Donnell: Ben, it's Sean. I'll take that one. As we talk about asset recycling, I'll just point you to Crossroads as an example, right? Probably a project nobody asked us about 2 years ago. And just the value of incumbency, the value of optionality, it gets better every quarter, right? So we're in the process of re-underwriting, have been for several months, re-underwriting every asset so that we know where the growth projects are, right? And are we best served to capture them? Or if over the next kind of couple of years, we want a capital rotate, we know exactly where the growth projects are on any asset we might want to rotate. So it's just understanding the new dynamics, the new growth projects on every asset we have. And we've got a couple of years, right, probably before we have to make that FID decision above $6 billion towards $7 billion. So we've got time. And we're just -- we're tuning up our capital rotation inventory. It's quite simple, while we grow cash flow on those assets. Operator: The next question comes from Aaron MacNeil with TD Cowen. Aaron MacNeil: Maybe just to build on Ben's question or get some additional clarification. You've talked about the balance sheet capacity, potential uptick in spend in 2028 or 2029. What's your just higher level evolved thinking about how to finance a potential step-up in the spend profile? Like I guess, I'm getting a sense that you may be able to do that organically or should we still expect some form of external financing if it's equity or asset recycling? Francois Poirier: Thanks for the question, Aaron. It's Francois. I'll take this one. It's very important for us as heavy deployers of capital to have efficient cost of capital. So we want every tranche of our capital structure to be investment grade. As you know, we're heavy users of hybrid and subordinated capital. So with the 2 notches below senior unsecured capital, we want to continue to maintain our credit rating in that BBB+ or equivalent range. Right now, the long pole in the tent in terms of credit metrics is the 4.75x debt-to-EBITDA. So that's important to us. But as Sean mentioned, we've got time to get there. And the first way to get there is the dollar you don't spend is the best approach. So we're going to look to outperform and deliver our projects under budget as the first source. The second source is getting more EBITDA out of your existing assets. And we're just at the front end of using technological innovation and to allow us to do that. We've got a couple of very promising pilot projects that have allowed us to monetize capacity in different parts of our system that we weren't even aware we had. There's obviously complex algorithms that allow us to be aware of capacity to sell in the short term when it's really very, very valuable. So there are a number of things we can do through commercial innovation and technological innovation. We're going to do those first because obviously, growing cash flow without raising internal or external equity is going to be the most efficient way to do that. And we have a couple of years to pursue those before we have to make any decisions. Aaron MacNeil: Okay. No, that makes a ton of sense. Maybe just switching gears to Canada. I can appreciate that it's not a focus of the quarter. But can you give us an update on the Canadian Mainline settlement that should happen later this year? And just given tightening fundamentals for Canadian Natural Gas egress even with LNG Canada Phase 1 ramping, is there any appetite to expand capacity on the system as part of that settlement? Is it in the $12 billion bucket? Maybe just any updates there would be helpful. Tina Faraca: Yes, thanks. I'll take that question. The current Mainline settlement is in effect until the end of 2026. And this current settlement has really been a win-win as evidenced by the strong system flows we've had lower tolls for our customers and the returns we're seeing on the Mainline. We've been in discussions with our customers over the last several months on a post-2026 settlements with more meetings planned over the coming months, but we're very optimistic we're going to see an opportunity to extend that settlement as we continue those discussions. Multiple factors that are taking into effect when we are in those discussions, including the ability to invest capital. And so as the settlement progresses and moves into actuation there, we'll give you more updates. But right now, our plan is to develop another win-win solution to meet the customers' needs. Operator: The next question comes from Manav Gupta with UBS. Manav Gupta: Like one question with a subpart. But basically, I'm trying to understand, can you -- right now, you obviously have one unit down at Bruce, but going past 2031, we see significant free cash flow inflection from Bruce as all units are up and running and life is extended by multiple decades. So if you can talk about the free cash flow inflection that happens post-2031 with all units of Bruce running. And then the question we sometimes get from investors is if you do decide to move with Bruce C, that would be a significant spend, would you expect some kind of government support, government bonds, what would be the financing in place for -- if you would decide to move ahead with Bruce C? Greg Grant: Sure. Thanks, Manav. It's Greg Grant here. So just as it pertains to Bruce C. So I'll start there. We are continuing to work with some of our pre-FEED studies, includes technology selection, preconstruction work. And we do have funding in place for that. So that actually has been provided by the federal government, and we're currently working on our next tranche of funding from the ISO in Ontario. So that will kind of take our funding to the end of the decade, but it's self-perform funding through that mechanism. Great point, as you talk about cash flow near the end of the decade, we had a great slide on the last quarter material that talked about that inversion point where we've been investing about $1 billion a year into Bruce. By the end of the decade, you'll see about $0.5 billion starting to come back, and then that's upwards of over $2 billion once the MCR program is complete. So when you look at a nuclear construction project, that's going to take 10 to 15 years as you think about the next phase of Bruce C and the units we'd be adding. So $2 billion plus of cash flow and then a long construction period, you're actually going to be able to not only self-fund should we choose to and finance it within Bruce, but also pay distributions. So if you think we're well positioned within Bruce to handle the financing and deal with the expansion, but also just a great management team, and really excited about the opportunity as we see the support for nuclear in the province. Operator: The next question comes from John Mackay with Goldman Sachs. John Mackay: I want to go to the $6 billion to $7 billion kind of annual range you guys are talking about, is that -- particularly in the context of looking at 2030, which is already pretty full and some of these bigger projects, you might be FID-ing soon that could have some capital kind of hitting in 2030. Should we think of that $6 billion to $7 billion as a kind of average over several years, but you'd be willing to go above it in a single year if you're not able to move some of the timing around? Maybe just talk through some of those dynamics with, again, how much of 2030 specifically looks relatively full at this point? Francois Poirier: I appreciate the question, John. As you've heard me say in many times in prior quarters, the first filter we run this through is our human capital and our ability to execute our projects on time and on budget. I can tell you that, that work is more or less complete. We just concluded Board meetings over the last few days, where we presented our human capital plan and execution plan and readiness to upsize our capital program with the Board. And I can tell you, we stand ready for a ramp-up in the size of our capital program going forward. At this point, in terms of the individual bars in each year that are in the pending approval bucket, we haven't -- we don't really go through the optimization and smoothing out of our capital until it's been approved. So I wouldn't be too fussed by a peak in an individual year. We can smooth things out. We can move some capital forward, some capital back. And we still have room in my view, to add capital in the 2030 year, if required. So as our cash flow grows and as our readiness and our human capital also grows, you're going to see the program steadily grow. And so starting in that '29 year likely and then in '30 and '31, you'll see us sustainably be above $6 billion, and I won't put any limitations on where it's going to go at this point. The opportunity set is there, and we're going to pursue what are generationally the highest returns I've seen in my 35 years in the business. Operator: Next question comes from Keith Stanley with Wolfe Research. Keith Stanley: I wanted to ask on the Crossroads pipeline. So you referenced it's 250 million cubic feet a day today. How would you expand that by 1.5 Bcf a day? Is that a lot of new build construction in looping? And then on the demand side of the project, is it primarily targeting Indiana demand in Northern Indiana? Or are you trying to get to the Chicago hub or somewhere else with it mainly? Tina Faraca: Thanks, Keith. On the first question, what we would do is leverage our existing corridor to increase the capacity of that system. So again, we like our brownfield in corridor approach so primarily depending on the volume that we put under contract would be likely moving and/or compression along the existing corridor. That again will be dependent on the volume. As far as the location, it's all of the above. We're seeing demand across that entire corridor but also outside of that corridor. So Crossroads can facilitate volumes into ANR or from ANR and facilitate volumes from Northern Border or to Northern Border. So it's a unique pipeline that will allow us to basically wheel capacity between multiple pipelines and not just focus on the market along that pipeline. Keith Stanley: Got it. Second one, just -- sorry if I missed this, but the gray bar pending approval capital buckets, how much of that relates to negotiated rate pipeline projects versus more regulated investments like NGTL? Tina Faraca: The most prevalent deals we are working on for -- in that bucket or in the U.S. And for the most part, those will be negotiated rate contracts given the size and the demand components of those. So the majority of that would be negotiated rate contracts. Operator: Ladies and gentlemen, this concludes the question-and-answer session. If there are any further questions, please contact Investor Relations at TC Energy. I will now turn the call over to Gavin Wylie for any closing remarks. Gavin Wylie: Yes. Thanks, everybody, for participating this morning. As the operator mentioned, if there were any questions that we were unable to get to for the call, please do contact myself or the Investor Relations team. We'll be happy to walk through. We thank you very much and appreciate your interest in TC Energy and look forward to our next update with our first quarter results. Thank you. Operator: This brings a close to today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning, ladies and gentlemen, and welcome to Hydro One Limited's Fourth Quarter 2025 Analyst Teleconference. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Wassem Khalil, Director of Investor Relations at Hydro One. Please go ahead. Wassem Khalil: Thanks, Shannon. Good morning, and thank you for joining us for our quarterly earnings call. Joining me on the call today are our President and CEO, David Lebeter; and our Chief Financial and Regulatory Officer, Henry Taylor. On the call today, we'll provide an overview of our quarterly results, and then we'll answer as many questions as time permits. As a reminder, today's discussion will likely touch on estimates and other forward-looking information. Listeners should review the cautionary language in today's earnings release and our MD&A, which we filed this morning regarding the various factors, assumptions and risks that could cause our actual results to differ as they all apply to this call. With that, I'll turn the call over to our President and CEO, David Lebeter. David Lebeter: Thank you, Wassem. This morning, I'll provide an update on our recent activities and accomplishments during the quarter. Then Harry will take you through the financial results. As I look back on 2025, I can't help but reflect on the growth in energy demand that's forecasted for Ontario over the next 25 years. This growth is driven by new homes, businesses, electric vehicle manufacturing and charging, mining, agriculture and advanced manufacturing, and it's reshaping the province's economic landscape. For Hydro One, this represents both a responsibility and a tremendous opportunity, a responsibility to build in a safe and fiscally prudent manner, the infrastructure that will power Ontario's communities and businesses and create long-term value for our shareholders. We are acting now by delivering reliable power where it's needed the most when it's needed. By building the lines that enable Ontario's success, we are positioning Hydro One for sustainable growth, supporting local jobs, businesses, Ontarians, strengthening the Ontario-based supply chain and delivering reliable electricity to all our customers. We are connecting power and possibilities for the people of Ontario. I'm happy to report that we had another strong year for safety in 2025. And as we all know, a safe workplace is an essential foundation of operational excellence. As of this month, we have worked 20 consecutive months without a high-energy serious injury or fatality. And in 2025, our recordable injury rate was 0.68 per 200,000 hours, well below the world-class benchmark of 1. These achievements reflect the professionalism of our crews across the province and highlight what is possible when we work together to achieve a common goal. The extreme weather events in December put our operational capabilities to the test. We experienced two back-to-back storms affecting more than 250,000 customers. In response, our teams mobilized quickly, safely restoring power under exceptionally challenging conditions. We were there when our customers needed us the most, and we didn't stop until every customer was restored. Our focus on reliability, operational excellence and customer service continues to translate into strong customer satisfaction results. In 2025, residential and small business customer satisfaction remained strong at 88%. Commercial and industrial customers rated us at 82%. Transmission customers gave us 79%. While we recognize there is more work ahead, these results demonstrate meaningful progress towards positioning Hydro One as a trusted energy partner, a partner whose investments deliver tangible value to its customers. In 2025, we continue to invest in the infrastructure needed to support the province's rapid electrification and economic expansion. We deployed approximately $3.4 billion of capital and in service approximately $2.9 billion of assets, reinforcing our commitment to build a resilient, reliable and future-ready grid. At the same time, we remain highly disciplined as stewards of the customers' dollars. Through our energy -- through our enhanced focus on productivity, we generated approximately $254 million in savings across capital and operating expenditures. This reflects our commitment to fiscal prudency, optimizing every dollar we invest to generate the most value for our customers. As I mentioned earlier, Hydro One is playing a central role in enabling Ontario's growth through the development of new large-scale transmission infrastructure. We continue to work collaboratively with partners to develop and build the critical lines to support this growth. In November, we were designated to develop and seek all necessary approvals for the construction of a new priority 500 kV double circuit transmission line between Bowmanville and the Greater Toronto area. The line will support economic growth in the region and deliver clean electricity from the first four small modular reactors in the Darlington nuclear facility. It is expected to be in service in the early 2030s. We also filed a leave to construct, our Section 92 application with the Ontario Energy Board for a 230 kV double circuit transmission line in the Niagara region in Southern Ontario. The line will run from Thorold to Welland, supporting capacity and reliability in the region's clean energy future. The approximately $311 million project is expected to be completed by 2029. Subsequent to the quarter, we were designated to develop and seek all necessary approvals for the construction of the Greenstone transmission line in Northern Ontario. The project will be a 230-kilometer single-circuit transmission line that will be designated for future expansion. The line will enhance reliability for Northern communities and support economic growth in the mining sector. This project is expected to be in service in 2032. Lastly, earlier this week, Hydro One was designated to develop and seek all necessary approvals for the construction of the Barrie to Sudbury Transmission Line. The project will be approximately 290-kilometer long, single-circuit, 500 kV transmission line and is expected to be in service in 2032. Development work on a single -- on a second single circuit 500 kV transmission line will also be carried out to support new generation opportunities in Northern Ontario. All of these projects -- across each of these projects, our 50-50 First Nations equity partnership model ensures that proximate First Nations share directly in the value created by the transmission line components. I also want to highlight the successful completion of the Chatham to Lakeshore transmission line in 2024, which represented the first project to be completed through our 50-50 First Nations equity partnership model. As of earlier this month, all 5 partner First Nations have secured financing and are now equity partners, marking a milestone in how well -- marking a milestone in how we advance reconciliation, community partnerships and economic inclusion. None of this progress is possible without the dedication of our employees. They are the heartbeat of Hydro One and their commitment drives our success. I am pleased to share that the collective agreement that was reached with the Society of United Professionals on January 13, 2026, was ratified by the union members earlier this month. The collective agreement covers engineering, supervisory and other professional roles and takes effect from October 1, 2025, and runs through March 31, 2028. I want to thank both bargaining teams for negotiating in good faith to reach an agreement that supports employees, customers and long-term health of our company. Before I pass the call to Harry, I want to acknowledge the Hydro One's recognition as one of Canada's best employers for 2026 by Forbes and Statista. The ranking is based on recommendations from employees and professionals who view Hydro One as a desirable employer. These rankings are derived from independent surveys of more than 37,000 Canadian-based employees working in companies with a minimum of 500 employees in Canada. We are proud of the culture we continue to build, one rooted in inclusion, empowerment and a sense of belonging. Our teams feel heard, valued and motivated to excel. Just as importantly, we share a strong sense of purpose. The work we do matters to this province and to everyday Ontarians who rely on us. That commitment fuels our culture and drives our success. With that, I'll turn things over to Harry to discuss our financial results. Harry, over to you. Henry Taylor: Thank you, David. Good morning, and thank you all for joining us today. As David highlighted, we had a very strong finish to the year, and we look forward to continuing to deliver on our commitments in 2026. In the fourth quarter, we delivered basic earnings per share of $0.39 compared to $0.33 in the fourth quarter of 2024. On a full year basis, earnings per share were $2.23 compared to $1.93 in 2024. Our net income in the quarter was higher by 16.5% compared to the same period from a year ago. The key drivers behind the result this quarter include revenue growth driven by volume growth in transmission and distribution as well as OEB-approved 2025 rates and also lower OM&A costs, primarily due to the lower corporate support costs. Now these were partially offset by reductions in revenue net of purchased power due to regulatory adjustments, primarily resulting from higher earnings sharing, which we account for in the fourth quarter, a higher interest expense due to an increase in long-term debt outstanding and higher income tax expense due to the increase in pretax earnings. On a full year basis, our net income was higher by 15.8% with the key drivers of the increase being higher revenues net of purchased power due to OEB-approved 2025 rates as well as higher average monthly peak demand in transmission and growth in customer count and energy consumption in distribution, partially offset by the accounting for the higher earnings sharing mentioned earlier and also lower OM&A costs, primarily due to lower work program expenditures as well as lower corporate support costs. Now these positive drivers were partially offset by higher depreciation, amortization and asset removal costs due to the growth in our capital assets, higher interest expense and higher income tax expense. Both our transmission and distribution segments performed well this year. And as a result of our efforts, we were pleased to share approximately $166 million with our customers through the reduction in future rates. On the productivity front, we are happy to report that our efforts in the year resulted in us achieving approximately $254 million in productivity savings. This achievement continues the trend we have delivered in prior years and reinforces our commitment to keeping costs as low as possible. The savings were delivered as absolute reductions in spending, reduced unit costs or greater noncustomer revenue, all of which flow back to our customers in the form of reduced rates in our next rate period. Our fourth quarter revenue, net of purchased power decreased year-over-year by 5.2% Transmission revenues decreased by 2.8%, primarily due to regulatory adjustments, including the higher earnings sharing. These were partially offset by stronger average monthly peak demand and increased revenues from OEB-approved 2025 rates. Distribution revenues, net of purchased power decreased by 10.1%, mainly due to the regulatory adjustments, including higher earnings sharing and lower revenue associated with mutual storm assistance costs recovered from third parties. These were offset by increased revenues from OEB approved 2025 rates, higher energy consumption and higher customer count. On the cost front, operating, maintenance and administration expenses in the quarter decreased by approximately 30.8% year-over-year. In the Transmission segment, costs were lower by 37.5%, mainly due to lower corporate support costs and lower work program expenditures attributable to facilities maintenance and vegetation management. In the Distribution segment, costs decreased by 25% due to reduced mutual storm assistance costs and lower fuel costs of Hydro One Remotes as well as lower corporate support costs. These were partially offset by higher work program expenditures, including emergency restoration and vegetation management. Depreciation, amortization and asset removal expenses for the fourth quarter were essentially unchanged year-over-year. With respect to our financing activities, we saw a 10.8% increase in interest expense year-over-year. This was mainly due to the increase in our outstanding long-term debt following the additional issuances we executed during the year, partially offset by capitalized interest. During the quarter, Hydro One issued $1.6 billion of medium-term notes. This consisted of $1.2 billion of 3.9% notes due in 2033 and $400 million of 4.8% notes due in 2056. In 2025, Hydro One issued a total of approximately $2.7 billion in medium-term notes to support our capital program and to refinance maturing debt. All of the issued notes were completed under our sustainable financing framework. Our balance sheet continues to be in excellent shape, along with our creditworthiness. Our FFO to net debt ratio as at December 31 was 14.2% and remains well above the threshold limits the rating agencies use to trigger a credit rating review. Turning to taxes. Our income tax expense in the quarter was $30 million compared to $17 million in the same quarter last year. The increase year-over-year was primarily due to the increase in pretax earnings. As a result, our effective tax rate this quarter was 11.4% compared to 7.8% a year ago. On a full year basis, our 2025 effective tax rate was 14% compared to 13.4% realized in 2024. We continue to expect our effective tax rate to be between 13% to 16% for the remainder of the JRAP '23 period. Looking at our capital expenditures. In the fourth quarter, we invested $939 million, which was an increase of 17.5% over the same period in 2024. The increase resulted from investments in our Transmission segment. specifically the Waasigan transmission line, the St. Clair transmission line and other major development projects as well as higher spend on distribution customer connections. These were partially offset by a lower volume of line refurbishments and a lower volume of wood pole replacements in both the transmission and distribution segments. On a full year basis, capital expenditures were approximately $3.4 billion, representing an increase of 9.9% compared to 2024, primarily due to the items mentioned earlier. Looking at our assets placed in service. In the fourth quarter, we placed $1.3 billion in service for our customers, which was an increase of 19.1% compared to the prior year. In the Transmission segment, we saw an increase of 26.4% year-over-year, primarily due to timing of assets placed in service for station refurbishments and replacements as well as investments placed in service for customer connection projects. These were partially offset by the absence or overlap of the in-service addition relating to our Chatham by Lakeshore transmission line, which was placed in service in 2024 as well as a lower volume of line refurbishments and wood pole replacements. In the Distribution segment, in-service additions increased by 2.6% from the prior year due to investments in the broadband initiative and the advanced metering infrastructure or AMI 2.0 system. These were partially offset by a lower volume of wood pole replacements and line refurbishments. For the full year, we placed approximately $2.9 billion of assets in service for our customers, which was an increase of 17.8% compared to full year 2024. And that year-over-year increase was mainly due to the higher distribution and service additions. Looking ahead, we continue to expect earnings per share to grow between 6% and 8% annually for this rate period using the normalized 2022 EPS of $1.61 as a base. Finally, I'm also pleased to report that our Board of Directors declared a dividend of $0.3331 per share payable to common shareholders of record on March 11, 2026. With that, we will open the phone lines and be happy to take questions. Wassem Khalil: Thank you, David and Harry. We'll now open the call for questions. The operator will explain the Q&A polling process. We ask that you limit your questions to one question and one follow-up. If you have additional questions, we request you rejoin the queue. In case we can't address your questions today, my team and I are always available to respond to follow-up questions. Please go ahead, Shannon. Operator: [Operator Instructions] Our first question comes from the line of Robert Hope with Scotiabank. Robert Hope: Question is on the IESO launching the new competitive procurement for transmission in the province. How do you think future large-scale transmission projects could fall under this program? And how does Hydro One position itself in a competitive environment? David Lebeter: Robert, thanks for that question. As you know, the IESO has just kicked off that process, and they're still taking input from the different participants who might bid into that market such as ourselves. So we're hopeful that they're going to come up with realistic criteria for determining which transmission lines do go into the competitive process. I feel fairly comfortable saying that it probably won't include lines that are time constrained, need to be built quickly or infrastructure on our existing right of ways that we use the same corridors that we do. What they will be looking for, I anticipate is transmission lines, we have a bit longer runway because we all know the competitive process takes more time and they're greenfield for the full length, which eliminates a lot of conflict. But we've been participating, as I said, providing feedback on our thought process. I know others have, and we look forward to hearing what they can bring forward later on this year. Robert Hope: Appreciate that. And then sticking with the government. So the Ontario launched the expert panel on local electric distribution, the [ Pulse Panel. ] What would you like to see come out of this? And do you think we could see increased consolidation on the back of this? David Lebeter: Yes. I think there is a potential for increased consolidation further out, but that isn't the government's intent when I talk to them. What they were trying to do is make sure that all the local distribution companies, whether they be large, such as ourselves or the small ones are adequately financed to make the investments they need to make in a system, which is, in many cases, end of life and in many cases, not for the economic activity or the growth that it needs to support. So I'm looking forward to the results of the panel. I think it will be positive for this industry. I do expect it will identify some local distribution companies that do have funding challenges, which may lead to consolidation. But as I said, that wasn't their original intent. And I think it will give a clearer picture of the state of the electric -- the distribution system in Ontario. Operator: Our next question comes from the line of Maurice Choy with RBC Capital Markets. Maurice Choy: I just wanted to ask about the 5 partner First Nations that have secured financing for the Chatham to Lakeshore line. I recognize that there are different First Nation groups across different projects. So not all these projects have the same 5 partners. But was there any indication in your process that would suggest to you that we wouldn't have the same outcome across all your backlog projects? David Lebeter: Maurice, David Lebeter. It was a very good process. We had many, many long conversations with the partners. I believe if you were to speak with them, they would say they're very happy with the partnership and where they landed with the financing they were able to arrange. And I don't see any indication that this will get more challenging as we move across. There are 129 different nations in the province of Ontario. And of course, given the transmission build that we have, we're going to be interacting with many of them. But the goal was to set a foundation or a template, if you like, that we can replicate across the province. And we've gotten support from our First Nations partners in doing that. It makes it easier for them, makes it easier for us, which allows the projects to move forward faster and creates certainty for everybody in what they can expect as we move forward. Henry Taylor: And Maurice, it's Harry here. I would just add, Chatham by Lakeshore was a watershed both for us, for our First Nations partners, but also the financial institutions supporting the nations. I think everybody learned through the process of the 5 nations, there are 4 different providers of capital, one of which is not supported by a federal or provincial guarantee. So everybody learned a lot, and we're pretty optimistic as we look ahead to our future partnerships that things will get easier and we know what to do, how to do it, what the processes that the different institutions use, et cetera. So we are really excited about the opportunity and the potential for our partnerships and the support that they -- our partners receive from different elements of the communities. Maurice Choy: Maybe as a quick follow-up to that. Is there a way to size up the capacity that they have given that your backlog is just growing right now from 10 to 14 right now. And if they participate across the transmission projects at a 50% rate, you have an ability to issue equity. Do they have the similar ability? Or is it capped at some point? David Lebeter: Maurice, what we've seen is a great expansion in the market of people willing to lend to the nations on these types of projects. These are, as you know, low-risk projects, so they're ideal for them to go out and borrow money. At this point in time, we don't see any concerns, but it's certainly something everybody is keeping an eye on, and I'll just reiterate, the expansion of the capital market that's willing to support these type of projects was really impressive to see. Maurice Choy: That's great news. Maybe just to finish off, obviously, as a regulated utility, managing affordability is part of your day-to-day operations. So nothing new there. But ahead of your JRAP filing, I wonder if you could just give us some color on your early engagement with some of the stakeholder groups, what their sentiment is like, what they're willing to accept in terms of rate increases? Or are they going to prioritize investments in? Henry Taylor: Maurice, we have engaged in 2 rounds of -- well, customer engagement, laying things out quite clearly in terms of what we're proposing and what the impacts on. And we have been very happy with the results. We see very strong support for the investments we're proposing to both expand the capacity of our -- both distribution and transmission networks, but also support improved reliability. So the bill impacts are explicit in our customer engagement, and we put them through exercises of trade-offs. It isn't crazy, but the support for significant investment has been both reassuring and comforting for us. So I can't give much more for that. You'll see a lot of the details in our rate application, which we will be filing late summer, early fall this year. David Lebeter: Maurice, if I might just add on top of that. The last time we went out, we did about 40,000, 45,000 customer interviews for JRAP '23. For JRAP '28, we reached out and connected with over 100,000 customers. So we think we got a really strong feedback from that group. We have a good understanding what they want. And a lot of these investments are focused on improving reliability and expanding capacity. These are investments that communities, citizens and businesses value. Maurice Choy: Is there a way to compare the sentiment and tone between the '23 and '28 JRAP engagements? Henry Taylor: It's largely the same in terms of the support for what the proposals are. And that's across all customer segments. So we have residential. We also have small commercial industrial, large commercial industrial, and then there's another group as well. And consistently, the support is there. I think statistically, we're down a little bit, but it's still more than -- more than 2/3 or something are supportive or very supportive and willing to -- they understand the bill impacts and still support it. Operator: Our next question comes from the line of Mark Jarvi with CIBC. Mark Jarvi: Just wanted to follow up on the last question and answer. Obviously, with the transmission lines being awarded to you, there's certainly a timeliness and urgency of that. Just when you think about the other things that you could flex in your budget, you're planning for next JRAP when you talk to customers, what's sort of the dialogue around deferring some sustaining CapEx? Obviously, reliability is important. I'm just wondering what they're thinking in terms of growth versus reliability trade-offs right now. David Lebeter: When we do the customer interaction, we actually tell them what the investments are going to do, whether they're going to create reliability, whether they're enabling non-wire solutions, whatever that happens to be. And given the growth that we're going through right now, our asset planning team is really pushing anything that isn't urgent out. We don't want to be spending money where we don't need to because we want to recognize the impact on the bills. So it's really our investments are focused on the areas that the equipment is at end of life or the reliability isn't up to standard. It's a lower reliability. We want to improve that or there might be economic growth in the area that's being held back because of capacity. Those are the sort of investments we're doing. Where we can delay and the way we do this is we can put a monitoring on the equipment, so we have a better understanding of what's happening. We can change our maintenance regime. So we look at it more frequently or touch it more frequently to keep it going or in some cases, we're able to change the loading on a circuit or a system that helps prolong the life. So we're trying to extend the life so we get the maximum value out of every asset we have and put the dollars where they're most needed. Mark Jarvi: Makes sense. And then Harry, maybe you can comment in terms of the incremental capital you plan to spend in '26 and '27, how might that impact earnings? Like I'm not sure if you get a recovery on that. Does it create a little bit of a drag with higher financing costs? Just how does that higher CapEx translate to earnings over the next couple of years? Henry Taylor: It's a limited impact, Mark. We will have some incremental interest expense; however, we've been able to achieve some really good coupons on the bonds that we're issuing. We're actually ahead of where our expectations were for this year -- we were for last year, and I'm hoping we will for this year. Most of it will not go in service. Most of the incremental will not go in service this year. So we won't be earning anything on it. But we do not think it will create any drag. It's why we're sticking with the guidance that we previously published. Operator: Our next question comes from the line of John Mould with TD Cowen. John Mould: Maybe just going back to your [ OM&A ] profile. On an annual basis, it was down about $100 million year-over-year. Can you give us a little more color on, I guess, a, what the lower corporate support costs were? And then b, how should we think about your OM&A run rate going forward, just given your assets in service at the end of 2025? Henry Taylor: John, it's Harry here. The reduction were driven twofold from a corporate and more broad period. One, we had a pretty significant severance accrual in last year for a voluntary separation program that we ran at the beginning of this year. And that paid off in terms of reductions in both corporate but also field costs. In addition, with our growth in capital expenditures and in-service assets, we capitalized some corporate overhead support costs, all in line with the OEB approved model. So between the overlap of the severance, the reduction in salaries and benefits and corporate costs and capitalization of more on a year-to-year basis, we saw that significant reduction. The run rate will be used this year as a base and start to move. Our productivity initiatives are certainly paying off and helping us, less in corporate, although they're there, but also in field as well. And so I'm confident our OM&A cost run rate will not suddenly spike back up, if you will, that this is a sustainable level. David Lebeter: John, it's David. You can take a look at the Joint Rate Application '23 filing, you'll see the approved envelopes that we got for the OEB. We are going to live within those envelopes. So you can use that as a proxy for our run rate for the next two years. John Mould: Yes, that's great. And then just on M&A, in the past, you've mentioned a willingness to consider M&A outside of Ontario, but limited to neighboring jurisdictions. Wondering what you're seeing in that in the market in terms of potential opportunities that might fit within the criteria you've laid. David Lebeter: Yes. We haven't seen anything. We've got lots of work on our plate in Ontario. As I said in other calls, we're not outside Ontario looking for opportunities. But if the right opportunity came along, and it wasn't going to distract us from our primary focus, which is building the 14 transmission lines and running our distribution system in Ontario, we would certainly take a look at it. But we don't have anything on our plate right now, and we're not actively looking. Operator: And that does conclude our Q&A session for today. I'd like to turn the call back over to Wassem Khalil for any further remarks. Wassem Khalil: Thank you, Shannon. The management team at Hydro One thanks everyone for their time with us this morning. We appreciate your interest and your continued support. If you have any questions that weren't addressed on the call, please feel free to reach out, and we'll get them answered for you. Thank you again, and enjoy the rest of your day. Operator: Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Have a great day.
Operator: Thank you for standing by. This is the conference operator. Welcome to the Cameco Corporation Fourth Quarter 2025 Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Cory Kos, Vice President, Investor Relations and Communications. Please go ahead. Cory Kos: Thank you, operator, and good morning, everyone. Welcome to Cameco's Fourth Quarter and Annual 2025 Conference Call. I would like to acknowledge that we are speaking from our corporate office in Saskatoon, Saskatchewan, Canada, which is on Treaty 6 territory, the traditional territory of the Cree people and the homeland of the Metis. With us today are Tim Gitzel, Chief Executive Officer; Grant Isaac, President and Chief Operating Officer; Heidi Shockey, Senior Vice President and Chief Financial Officer; and Rachelle Girard, Senior Vice President and Chief Corporate Officer. Tim will provide some commentary to start the call, and we will open it up for your questions. Today's call will be approximately 1 hour, concluding at 9:00 a.m. Eastern Time. Our goal is to be open and transparent with our communications. So if we do not have time to get to your questions during this call or if you would like to get into detailed financial modeling questions about our quarterly and annual results, we'd be happy to respond to any follow-up inquiries. There are a few ways to contact us with additional questions. You can reach out to the contacts provided in our news release. You can submit a question through the send us a message link in the Investors section of our website or you can use the Ask a Question form at the bottom of the webcast screen, and we'll be happy to follow up with you after this call. If you join the conference call through our website event page, there are slides available, which will be displayed during the call. For your reference, our quarterly investor handout is also available for download in a PDF on our website at cameco.com. Today's conference call is open to all members of the investment community, including the media. During the Q&A session, please limit yourself to 2 questions and return to the queue. Please note that this conference call will include forward-looking information, which is based on a number of assumptions, and actual results could differ materially. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today, except as required by law. As required by securities laws, we also need to make you aware that during today's discussion, the company will make references to non-IFRS and other financial measures. Cameco believes these measures provide investors with useful perspective on underlying business trends and a full reconciliation of non-IFRS measures is available at www.cameco.com/invest. Please refer to our most recent annual information form and MD&A for more information about the factors that could cause these different results and the assumptions we have made. With that, I will turn it over to Tim. Timothy Gitzel: Well, thank you, Cory, and good morning, everyone. Thank you for joining us to discuss Cameco's fourth quarter and full year 2025 results. Earlier this week, the U.S. Government Department of Energy requested a meeting in Washington, D.C., which turned out to be overlapping with our earnings call this quarter. So due to the exceptional circumstances, I'm recording these introductory comments just before we release, and then I'm catching a plane to Washington. Needless to say, continuing to advance our landmark partnership agreement signed last fall with the U.S. government to build Westinghouse reactors remains a priority. So I'll lead in with my remarks and hand off to Grant, Heidi and Rachelle for the Q&A portion of today's call. We're into the second week of February now, but I'll start by wishing everyone a belated Happy New Year. As I reflect on this past year, on one side of the coin, we saw ongoing geopolitical turmoil, incredible volatility and general uncertainty seemingly at every turn. But on the other side of that same coin, we also saw resilience, people, institutions and industries adapting, refocusing on the fundamentals and continuing to make meaningful progress on long-term decisions despite the noise. I'm reminded that progress like this doesn't happen overnight. It's built through consistency, strong communities, great people and a lot of discipline. If I were to summarize the past year in the context of our business and our strategy, I would say that 2025 reflects disciplined execution across the organization. Disciplined because we remain anchored to our long-term strategy, we've learned to look past the distractions of near-term volatility and shifting market themes. And I believe the execution shows up clearly in our business today. Cameco has invested across the fuel cycle, and we are delivering meaningful value to our owners, customers, partners and communities. We operate world-class uranium mines in what we call Tier 1 because they're proven to be Tier 1, not only in terms of the quality of the deposits, but the established economics of the operations. Beyond our flagship mining assets, we also maintain proven Tier 2 operations that are currently in care and maintenance, providing future flexibility. Our long-term production plans are further supported by our advanced exploration projects and by some of the best uranium exploration properties on the planet. We operate refining, conversion and fuel fabrication businesses with the decades of expertise required to be a long-term partner that customers can rely on. We continue to explore our way into next-generation enrichment through our investment in global laser enrichment, where tangible progress is advancing the technology for use in tails re-enrichment. And through our investment in Westinghouse, not only have we added more fuel cycle and reactor lifecycle expertise, we have insight into the future of nuclear fuel demand like never before. Through that investment, we are continuing to advance deployment of the industry-leading Gen III plus AP1000 reactor in Western markets. It's a proven construction-ready design and not unproven concepts, so it aligns with our focus on disciplined execution. Turning to our results. The quarter and the year reflect a strong finish to 2025, supported by robust contributions from all segments of the business, improved realized pricing and continued value creation from our investment in Westinghouse. As anticipated, the fourth quarter was an important contributor to full year performance, reinforcing the benefits of our long-term contracting strategy and our measured approach to production and supply. Looking more broadly at the market, 2025 marked another year of accelerating momentum across the nuclear fuel cycle. On the demand side, we saw an inflection not because of a single data point, but because policy, fundamentals and contracting behavior increasingly moved from rhetoric to action. Governments, utilities, industrial energy users and the public have recognized nuclear's essential role in delivering secure, reliable and carbon-free baseload power. On supply, however, we're not yet seeing a comparable inflection. Long-term contracting volumes in 2025 remain below replacement rate levels, reinforcing the need for continued discipline. Utilities are focused on securing dependable supply in an environment where secondary supplies are thinning and potential new production faces long lead times, inflationary pressures and geopolitical uncertainty. While long-term contracting activity increased late in the year, we are simply not prepared to satisfy that demand at today's economics, which do not support sustainable supply. Our discipline is intentional. History tells us that real price discovery occurs when contracting levels reach or exceed replacement rates. We continue to negotiate contracts and unlock value by selectively adding to our long-term portfolio while preserving significant uncommitted volumes to be priced when more demand comes to the market. The pounds we are adding have pricing terms that provide downside protection, but allowing us to retain exposure to improving demand. To start 2026, we have commitments to deliver an average of about 28 million pounds of uranium annually over the next 5 years. Average realized prices continue to improve, reflecting the strengthening long-term market environment. We ended the year with approximately 230 million pounds committed under long-term contracts. Considering the reserves and resources we have in the ground, we are preserving significant uncommitted productive capacity to deploy as fundamentals continue to strengthen. That alignment between long-term contracting and our supply sourcing remains a cornerstone of our strategy. Touching briefly on the results we released this morning. We reported -- our annual revenue increased to about $3.5 billion in 2025, up 11% compared to 2024. Adjusted EBITDA was about $1.9 billion, which was up 26% from the previous year and adjusted net earnings of just under $630 million represent a 115% improvement compared to 2024. Needless to say, we are very pleased with the outcome. The theme of disciplined execution can be seen in our financials with discipline, providing us with the flexibility to manage risk, support operations and respond to opportunities as markets evolve. Our balance sheet remains a core strength, ending the year with approximately $1.2 billion in cash and short-term investments, $1 billion in total debt and strong liquidity supported by consistent cash flow generation. Operationally, in our uranium segment, we produced 21 million pounds on a consolidated basis in 2025, exceeding our revised annual guidance. Cigar Lake once again demonstrated its world-class performance producing above expectations, while McArthur River and Key Lake delivered in line with our revised plans following the development delays earlier in the year. Importantly, while production volumes from our Canadian mines were lower than initially planned, our supply flexibility and long-term planning of our supply sources allowed us to meet delivery commitments and continue to capture value. Our supply levers include inventory, loans, spot purchases when appropriate and committed long-term purchases like the production we buy from our JV Inkai asset in Kazakhstan. In 2025, despite a rocky start to the year and a pause in production in January last year, JV Inkai met its annual production target. We took delivery of 3.7 million pounds, representing our share of 2025 production as well as 900,000 pounds that remained in Kazakhstan from our share of 2024 production. Our Fuel Services segment delivered another strong year as well, including a record UF6 production at Port Hope. Pricing in the conversion market remains at historically high levels. supported by tight supply, growing demand and a renewed focus on security of supply. With the tension stemming from a supply deficit and conversion, we continue to add long-term contracts with pricing that underpins the sustainability and the value of our operations. Our investment in Westinghouse continues to exceed the acquisition case expectations. In 2025, Westinghouse delivered strong underlying performance, including a significant increase in adjusted EBITDA. We received cash distributions related to both the strong results as well as an additional distribution in 2025, tied in part to its participation in the Korean nuclear project in Czech Republic. While we do not expect comparable distributions in 2026, the Korean consortium continues to advance the Dukovany project, which Westinghouse will be involved in along with work on another 2 reactor project at the Temelin site in Czechia. Westinghouse's outlook remains strong and reinforces the long-term value of our investment. During the fourth quarter, we announced a strategic partnership between Cameco, Brookfield, Westinghouse and the U.S. government aimed at accelerating the deployment of Westinghouse reactor technology. Backed by at least USD 80 billion in planned investment from the U.S. government, this initiative underscores the growing alignment between policy, energy security and the only proven nuclear technology that is ready to deploy today. Following the term sheet signed in October, constructive discussions are continuing in support of reaching a definitive agreement. As I said, I'm on my way to Washington for the ongoing discussions literally as you listen to this call today. For Cameco, this partnership also supports long-term demand across the fuel cycle, and enhances our insight and ability to meaningfully participate in the global nuclear build-out. Looking ahead, we expect growth across the nuclear fuel cycle to continue, driven by electrification, decarbonization and energy and national security priorities. These are all themes you've heard us repeat call after call. But it's important to reinforce them because they reflect the durability we have not seen before in nuclear. And as the focus on the sector grows, commitments will increasingly be measured by delivery. Plans for future uranium supply, along with headline grabbing narratives, promising greenfield conversion and novel enrichment technologies continue to attract attention. But the next phase will be defined by execution. Execution is the proof behind commitments and the foundation of trust. And this is where Cameco's experience, assets and discipline matter. In 2026, we expect to produce between 19.5 million and 21.5 million pounds of uranium and between 13 million to 14 million kilograms of uranium product in our Fuel Services division. JV Inkai is planning to ramp up to its full capacity of 10.4 million pounds this year, our share of which is 4.2 million pounds. That's accounted for as a committed purchase along with other long-term purchase commitments. We plan to buy up to 3 million pounds, keeping in mind that we expect to use our various supply levers efficiently, so we're not forced to buy in the spot market if it doesn't make sense. We expect to deliver between 29 million and 32 million pounds of uranium in 2026 with an average realized price between CAD 85 and CAD 89. Fuel Services deliveries are expected to match production at 13 million to 14 million kgU. And our outlook for our share of adjusted EBITDA from Westinghouse is approximately USD 370 million to USD 430 million, representing continued strong performance, albeit lower than in 2025. Remember that back in the second quarter of 2025, we accounted for the significant payment related to the Korean reactor built in the Czech Republic, which was USD 170 million for our share related to that specific project. It's a good reminder that as new build activity gains momentum, you can expect some degree of lumpiness in the results from Westinghouse with these big reactor projects pushing forward. So to conclude, we believe the risk to supply continue to be greater than the risk to demand, we believe that Cameco as a disciplined operator with proven Tier 1 assets, integrated capabilities across the nuclear industry and a strong balance sheet, is well positioned to deliver long-term value. So thank you for your continued interest and support. And operator, the team is now ready to take questions. Operator: [Operator Instructions] The first question today comes from Brian Lee with Goldman Sachs. Brian Lee: Maybe first off, just around this new guidance framework for the Westinghouse business. I think that makes a lot of sense given all the activity that's happening and how it's not going to be linear. But can you maybe give us some sense of the framework or ballpark range of what kind of the financial impact of each project is? And presumably, you're talking about 2 packs because it does seem like the Westinghouse guidance for 2026 is including -- it says in the MD&A, one project going forward in the U.S. this year. So maybe just thoughts around how we should think about the sizing of the financial impact from each of these projects? And then maybe any color around potential projects in Bulgaria, Poland, maybe even Canada as well? I have a follow-up. Grant Isaac: Yes. Thanks, Brian. It's Grant. I'm going to maybe start with your second question, and then we'll work backwards into the specific guidance. I mean, Westinghouse continues to be a very exciting space for us. We see nothing but enormous upside for the leading gigawatt scale Gen III reactor. We think the opportunities continue to grow. So we remain very disciplined as Cameco. We don't put stuff into the forward guidance until it is at FID. But let's just think about what's on the docket. When we look at the U.S., I think everybody knows about the $80 billion project to build 8 to 10 reactors in the United States. But don't forget, there were a number of conversations in flight with utilities who had been working with the Department of Energy's Energy dominance financing group. So we're not talking 8 to 10. We're talking about a bigger number in the United States that are under consideration, perhaps another 10 in addition to the U.S. government program. We know that Canada wants to build 4 gigawatt scale reactors at Bruce Site C, but we also know that they're talking about another 10 at the Wesleyville site, so potentially 14 there, added to 10 plus 10 perhaps in the United States. We know Poland wants to build AP1000s. They picked it for a 6-reactor program. We know Bulgaria wants to build AP1000s. We know Slovenia is having a very good look. We know Slovakia is having a very good look. And of course, we participate in every Korean new build, and Tim in his comments flagged that not only have the Koreans advanced the Dukovany site in Czechia, but are also looking to advance the Temelin site with another 2 reactors. And then we could even expand it a little bit further and talk about new builds in other jurisdictions, parts of the Middle East, Saudi Arabia, United Arab Emirates. The point being the upside case for energy systems is very, very significant. And we're seeing a lot of activity in that area. But many of those are not at FID yet, and so they're not in our guidance. What we wanted to do was very prudently say, look, Westinghouse is a mature investment for us now. We guide the Cameco core on an annual basis. We're going to guide the Westinghouse core on an annual basis and then kind of provide a framework for how each of these reactors plug in. And that framework that we've shown in the past on a per reactor basis, and good of you to note that you generally build them in 2 packs, you don't build them as 1, so multiply by 2. But on a per reactor basis, you're looking at something around $400 million to $600 million EBITDA for every reactor that gets built. That's through the engineering and procurement part of the Westinghouse scope. So we almost invite folks, you choose how many reactors you think are going to go forward in that framework and the years. And you can see the big lumpiness that comes from it. So we're just going to guide on a more systematic core-related basis. And then when you look at the Westinghouse guidance in 2026 and you compare it to 2025, it's actually up over our initial 2025 guidance with, of course, the swing factor in 2025 being the royalty payment on the Dukovany units in Czechia. But the Westinghouse core continues to perform as expected, reactors being saved, reactors being restarted, reactors going through subsequent license renewal plus the nearly 70 reactors under construction right now, let alone those that are on the drawing board, I guess our point, Brian, is Westinghouse just continues to be extraordinarily well positioned for the tailwinds in the nuclear space. Brian Lee: That's great. I appreciate all that color, Grant. And then maybe just my second question around kind of the modeling assumptions here. When I look at the average realized pricing outlook for 2026 in uranium, it appears pretty flattish at the midpoint year-over-year. Can you maybe speak to why there isn't a bit more appreciation happening there? Maybe just it's the timing of contracts, but I would have thought that you'd see some movement on that line given how pricing has generally been on an uptrend in recent years. Grant Isaac: Yes, Brian. So let's shift to the other end of the spectrum and talk about uranium a little bit. This is what discipline looks like. You've heard us say for the better part of 2 years now that as we're in a market that is beginning to understand that more uranium is required and needs to be -- needs to come to the market. And you can just see that from the uncovered requirements wedge. If you look at that wedge of uranium that the fuel buyers have not yet bought, that wedge is as big as it's ever been. There is a significant amount of demand that has to come to the market. And that says to an incumbent producer that now is the time to be disciplined. Now is the time to let that demand form and let it come to the market. And those who have been watching the market know that we have not achieved replacement rate across the industry yet. In fact, we're well below replacement rate. And we, as Cameco, have been in every cycle, and we know that when you're at replacement rate or above, that's when real price appreciation comes. I provide that as context because we've been saying we're being very fussy in the amount of volume that we're willing to place and we're being very fussy with the terms and conditions that we're willing to part with future materials. So no surprise. We just haven't been layering in the big volumes because while we're being fussy, not every utility is prepared to agree to our terms and conditions. So you're not seeing that pickup in the near term because we're preserving those pounds for when more demand is coming to the market. That's our disciplined marketing strategy, and it's also reflected in the disciplined pace at which we then produce into that demand. So this is what discipline looks like. This is how you capture long-term value. This is not the moment to be locking in huge volumes because we think more demand has to come. And as that demand comes, it's going to probably price stronger uranium, and that's when we want to do more contracting. And then that's when you'll see a lot more exposure to rising prices. Operator: The next question comes from Alexander Pearce with BMO Capital Markets. Alexander Pearce: So an easy question to start with, Grant. Given [indiscernible] absence from the call, do you think you're getting close to finalizing the agreement? Or would you expect maybe we could see something in the next kind of quarter? Or could it be a bit later in the year? Grant Isaac: Yes. Just a bit of context around the agreement with Cameco, Brookfield, Westinghouse and the U.S. government. Obviously, we announced a definitive term sheet at the time of announcement. And then there was work to do on the definitive agreement, and that continues. What the conversation is really about is these 3 projects underneath that are advancing. There's a lot of momentum behind them. The first one is identifying where the 2 packs are going to go and the model that they're going to be built under. And that's work being done by the Department of Commerce and the Department of Energy. And we're only sort of involved around the edges and figuring that piece out. The second big project is identifying what the order of the long lead items would look like. So there's been a separation, if you will, between the normal process of identifying a site and figuring out the model it's going to be built under and then ordering long lead items. Those 2 have been separated because everybody is working backwards from the Trump executive order that says 10 large nuclear power plants have to be under construction by 2030. So if you wait and do step 1 first, identify all of the sites and identify the model and then you order long lead items, you won't achieve the executive order. We're obviously heavily involved in the conversation about ordering the kit for 10 reactors right now upfront. And then the third project, of course, is just securing the financing to come from Japanese as part of the foreign direct investment commitment. So this isn't about negotiating the definitive agreement. This is about fulfilling all of these next steps, very exciting conversations about what the order for long lead items would look like. I think if we allowed ourselves to be optimistic, we do believe there's a good chance that we will see a long lead item order as part of this program in 2026. And in fact, that will probably coincide with long lead item orders on other programs as well. So 2026 is set to be a pretty transformative year where announcements turn into action on the gigawatt scale new build section. Alexander Pearce: Thanks Grant. So would you suggest that there could actually be some upside to the '26 guide then if everything comes into place and you get the 2 units, et cetera, et cetera? Grant Isaac: Yes, perhaps there could be. I mean we built a little bit of that into the guidance for Westinghouse, but that's sort of on a small order basis. This concept of separating long lead items from figuring out where each 2-pack is going to be built in the model actually kind of reverses the framework that we put out for thinking about how every AP1000 flows revenue and margin and cash flow. And that is normally, you would start to do the engineering work. You would sign the FEED 1, which is tens of millions of dollars and then the FEED 2 contract, which is hundreds of millions of dollars, all leading to a final investment decision, which would then trigger the procurement side of the business, the ordering of the long lead items, that really important procurement process that Westinghouse provides oversight and guidance and quality assurance and all of that on. With the separation of the long lead items from identifying where the reactors are going to be built, we actually could see the procurement revenues and margins beginning to flow first. And so that will be something that we'll watch for in 2026. And obviously, we'll be very vocal about what that means to the Westinghouse business should we find ourselves in a position of securing orders for -- substantial orders for lots of reactors and their long lead items. Operator: The next question comes from Orest Wowkodaw with Scotiabank. Orest Wowkodaw: Could we spend a few moments just talking about the production outlook at specifically McArthur River. I'm surprised to see the potential impact here in '26. It looks like your guide would suggest that output could be as much as 4 million pounds below the 18 million pounds design. What -- I guess, can you give us more color what's going on there and whether this issue is expected to be resolved this year? Or could this continue into future years? Grant Isaac: Yes, Orest, great question, and we'll spend a little bit of time on it, of course. So if you think about McArthur River, even with the guidance we put out for 2026, it makes McArthur the second largest uranium mine in the world by quite a margin. So between Cigar and McArthur, this is a lot of uranium production that Cameco is responsible for. And it really reflects just how strong the production team is there. So we announced in September of 2025 that we were seeing delays at McArthur River. And we also said at the time that you can't divorce our plans to produce from where the market is at. And so when we look at today's market that's not at replacement rate, a market where we think a lot more demand has to come. That's a market where we're not yet placing growth pounds or expansion pounds or extension pounds because the demand just simply hasn't been there. Pricing has been getting stronger and stronger on very limited demand, but ultimately, that demand hasn't been very strong. So that then informs how we think about our production plan. So we look at McArthur River. We look at those delays that we announced in September 2025. And the 2025 production just hit the top end of that revised guidance in 2025, which was good. But ultimately, we just stick to the plan that we put in place in September 2025. We have no incentive right now to accelerate it in any way. So that's not what we're trying to do. We're not trying to take any heroic action at McArthur River. We're just systematically working on the mine development that's required as we move into new zones. And we're not being incented by the market. We're not being told by the market with volumes of demand that it's time to do anything different than systematically go ahead and do that. So we are seeing a bit of a tail on the 2026 guidance. But ultimately, McArthur has produced at 18 million pounds before. It's produced at 20 million pounds before. It has a license to go to 25 million pounds. McArthur is an extraordinary asset. We are just timing it and pacing it as part of our demand strategy and our disciplined strategy, and that's all that this reflects. Orest Wowkodaw: And could that -- based on that incentive, could that then potentially continue into '27 and beyond if you don't see the market improve? Grant Isaac: Well, the market is improving, and we don't guide 2027 and 2026. But -- but our confidence that the team is working on a path to ensure that the development is there for the production when we want it, that confidence is there. It's just in 2026 as we're looking at a market, and I'd just remind everybody on the call, term contracting in 2025 ended up being 116 million pounds, well, well short of replacement rate. That tells us more demand has to come to the market. And so we just -- we watch that very carefully. We never front-run demand with supply. And then that is reflected in our -- in the decisions we make about the pace at which we develop our assets. And to the extent that you believe more demand is coming, which means a stronger pricing environment is coming, these pounds are worth more in the future than they are today, which encourages us to remain very disciplined on that plan. Orest Wowkodaw: Okay. And does that also mean that the expansion to 25 million pounds likely comes later rather than sooner? Grant Isaac: Well, not necessarily. We're doing the work and continue to do the work to fully understand what's required at both the mine as well as the Key Lake mill for when we make the decision to go to a higher level of production. Remember, when we sign long-term contracts, we typically don't start delivery for until 2 years and beyond. It always gives us a built-in runway to respond with our production. And what we're doing ahead of that in a market that we feel is getting stronger and stronger and more demand has to come, but hasn't quite hit replacement rate yet, what we're doing is making sure we understand everything that needs to be done at the mine and mill in order to achieve that higher level of production once it's priced accordingly. So I would just delink the two. One is just the plan of mine development from the plan for mine expansion, but we have not made that decision yet and we don't have any time frame for making that decision. That decision is ultimately up to the fuel buyers collectively. And it's ultimately up to them bringing more demand to the market in order to signal that it's time to expand. Operator: The next question comes from Ralph Profiti with Stifel. Ralph Profiti: Grant, the MD&A, and just going back to the last question, did bring up some technical risk highlights around McArthur River Zone 1 and Zone 4. And as you talk about this slow proactive managing of these risks, I just want to get a little bit of sense on the technical risks around sort of production capability limits in the short term and whether or not you would still characterize some of the technical limits as being transient and temporary? Or is this more of a mine development risk that could take sort of multiyears to figure out versus production capability irrespective of what the market is telling you? Grant Isaac: Yes. Ralph, I think I understand your question to be, are we flagging risks that would prevent us from, say, being on a disciplined production strategy? So in the MD&A, we are identifying the factors that led to that announcement in September of 2025 that we weren't going to meet our plan at McArthur River. So that was things like encountering a clay zone that was proving to slow down the rate at which we install freeze capacity and therefore, build up a frozen ore inventory, and that was slowing down the rate at which we were developing into that zone. Once we fell behind that plan, our strategy doesn't encourage us to try to catch up. So we're just working systematically at the development that has been, I would say, rephased or repaced as a result of those risks. So those risks have not changed, and they've not gone up. They're not suddenly -- it's not suddenly a riskier environment. It's just our response to it is measured with the market. And should we see a market that starts to bring more demand and more demand bring stronger and stronger price discovery, like it is right now, we're continuing to see strengthening floors and strengthening ceilings in market-related contracts. We're continuing to see that long-term price go up. If we see an acceleration of that process, that's what would encourage us. to accelerate the mining plans at McArthur River. But these are linked. The pace at which we bring production on also sends a signal to the market. And right now, the signal we prefer to send is that production is matched to the demand that's in the market as opposed to trying to front run it. Ralph Profiti: Thanks Grant. And kind of my follow-up is along the same lines because you and Tim talked about discipline and the balancing act of contract layering, existing 230 million pounds and the reserve base that backfills that. At what point are we going to see potential chemical run into sort of stresses on being able to production backfill the next, say, 10 or 15 years of that contract book and the growing demand. At what point does that become stressed? Grant Isaac: Well, Ralph, the way we look at this market with a historic wedge of uncovered requirements in front of us and which is, I think, one important part of the macro story. The second important part of the macro story is the ability of the global uranium supply stack to respond. And I mean both the primary production stack and the secondary stack, both are declining significantly while demand is strengthening, while there's a big wedge of demand still to come to the market. Ralph, this just sounds like an incredible opportunity for an incumbent producer. It sounds to me like a very constructive pricing environment. And so when you say stress, it really is sequencing the plants to match the demand that's going to come to the market. We're very confident, the demand needs to come. We've seen it can be delayed, it can be deferred, but it ultimately can't be avoided. As that demand comes, as utilities bring demand into the early 20s, mid -- or early 30s, into the mid-30s into the market, and we capture that demand, Ralph, that gives us lots of time to prepare our assets, to prepare our existing Tier 1 asset. And remember, our Tier 1 asset base is not running at full capacity. It gives us lots of time to prepare our Tier 2s in care and maintenance, which aren't even running today. It gives us lots of opportunity to consider where do we have brownfield expansion from those Tier 1s and Tier 2s -- and it gives us a lot of time to consider what the development needs to be for additional new production. But ultimately, it's about being disciplined and not trying to front run that because as we've seen time and time again, those who build up productive capacity and don't have a home for it end up jamming it into the spot market where it's absolutely value destructive for investors in uranium. So for us, it is about staying disciplined. When we see that sort of tightness in the market, Ralph, it gets reflected in higher prices of uranium. That's the dynamic that gets us very excited. Operator: The next question comes from Lawson Winder with Bank of America. Lawson Winder: Grant, thank you for your comments today and the update. If I could, I'd like to come back to the Westinghouse EBITDA guide. And then if there's time, just follow up on your fuel services guidance. But just on the Westinghouse guide, kind of a basic question here. But I mean, if you look at the midpoint of this guidance versus the midpoint of the 2025 guidance, it's up 5%. And while I respect that you have changed the way that you're guiding, I mean, the prior guide was for 6% to 10%. Is there just one thing you can point to that you would say attributed to that roughly 1% below the prior range? Grant Isaac: Well, I would say if you look at what was driving the lower end of that range, and you'll remember us talking about this quite a bit, it really was around the core of the business. So what are the drivers around the core? Where do you get pickup in the core from the existing fleet? And it really was things like reactors that were shut down being restarted, reactors that were going to be shut down being extended. And then it was reactors going through subsequent license renewals and therefore, doing the work required to run for another 20 years. And also, we've seen an uptick in reactors that are now interested in uprates or super uprates, all growing that sort of core business of Westinghouse. That interest in reactors being restarted, saved, upgraded, extended has not gone down. It's, in fact, only gone up. But of course, the processes to get there, the time required to get the licenses and the permits to go through the regulatory approvals, maybe has taken a little bit longer than expected so that the orders, the immediate orders and the immediate work to do that hasn't picked up quite as quickly. That just means Lawson, it's still in front of Westinghouse. It doesn't mean it's lost. It doesn't mean it's underperforming our demand expectations. It's just the subsequent license renewals and the uprates are just not happening as fast as maybe we would like, but they're still happening because they need to happen. And in fact, we're seeing more of that interest flow into orders entered going forward. So we just continue to be very excited about Westinghouse's position in the core. Unknown Executive: I think I might add to that, Lawson, that the new build business is really lumpy, and that forward guidance over the 5 years, it's going to move from year-to-year. So it was a 5-year guidance. And because of the lumpiness that we're seeing that every year. And I think we'll see -- continue to see that going forward. So it's not necessarily going to be a direct straight line in terms of growth. Lawson Winder: Okay. That's super clear. And then if I could just get your thoughts on the conversion markets. Your fuel services guidance is one thing. And then there's your fuel services contract book. And so you noted 83 million -- sorry, 83 million kilograms of conversion under contract versus 85 million last year. And we're looking at a conversion market that is experiencing an obvious global shortage. I'd be curious to get your thoughts on why the lack of contracting and conversion just given the backdrop. And then when we think about Cameco's current capacity, is Cameco now close to achieving run rate for the expanded capacity at Port Hope on fuel services and conversion? Grant Isaac: Conversion is a fairly good analog for uranium. So I'm going to spend a little bit of time on it when we think about its contracting. Totally agree, the conversion market is tight. Totally agree that, that tightness is likely to sustain for a while and totally agree that this should be signaling more conversion capacity coming into the market from the West. So all of that makes perfect sense, Lawson. Remember, when you think about contracting in the nuclear fuel cycle, price matters, and it's easy to point to a historic conversion price. But you know what else matters is tenor. What matters is how long can you secure on an escalated basis those historic prices. And the important analog is you actually only get one chance to sell new capacity because once you commit your capacity, it's no longer new and you don't have the kind of opportunity or power in the market. So for us, conversion is about not just it's at historic price, but now it's about capturing that historic price for as long as possible. And so if there's the next step in the conversion market, we want to see the tenor stretch out in conversion contracts. We want to see this historic pricing, not for a 3-year window or a 5-year window, but we want to see it for a 10- or a 15-year window. We want to see that market stretch out. So when you think about this notion that we're being fussy right now, we've got these incomparable set of strategic assets, strategic mining assets, conversion, fuel fabrication. We want to maximize the value of these assets. And we want to maximize them over a longer term. So -- because we know new capacity will come into the market. And when it does, that new capacity, by definition, will actually probably have price downward pressure. So we want to capture new contracts that protect us and our owners from the downward pressure that will come from new capacity. So if we're holding out in the conversion space, it's not holding out on the price side, it's holding out on the tenor side. And the analog to uranium is you only get one chance to sell new capacity in uranium. And so we see those in the -- that are potentially new entrants to the uranium side are saying, "Okay, well, yes, we're going to sell under long-term contract, but we're only going to sell for 3 years, and then we're going to renegotiate a new contract after 3 years at a higher price." And you probably won't. You only get one chance to place that new production. So don't squander it. So when we look at the conversion market, we're in a unique window. We're in a window where price is strong. And now it's a matter of capturing this historic pricing for as long as we can, knowing that the Converdyn plant is going to come back online, knowing that we are going to increase production at Port Hope in order to capture some of this demand and knowing that there's -- there remains pressure on Springfields to restart and pressure on the Orano plant to get to full capacity. When there's more capacity in the market, there's less leverage. We just want to take full advantage of our very unique position with our incomparable suite of strategic assets. Operator: The next question comes from Craig Hutchison with TD Cowen. Craig Hutchison: Just given the huge push in the U.S. to secure domestic nuclear fuels chain and critical minerals with partners like Canada, I was just wondering beyond your historic partnership with Westinghouse last year, are there other opportunities for you guys to work with the U.S. government across the fuel chain, whether that's your conversion business, global laser re-enrichment or even a potential restart of your Tier 2 assets if there's -- you could establish long-term floors? Grant Isaac: Yes, it's a great question. When you think about Cameco, our long-term relationship with the U.S. government has always been very strong. For many years, we were the largest producer of uranium in the United States. If our mines and mills are running in the U.S., we will again be the largest producer of uranium in the United States. The U.S. government has always been interested in our GLE, Global Laser Enrichment project as reflected in the tails re-enrichment program that we have with the Department of Energy, which is a very exciting opportunity to actually secure a source of U.S. uranium and U.S. conversion for the future by simply re-enriching a stock of depleted UF6 that sits as a liability right now for the Department of Energy. So there's always been a lot of interest. And of course, the U.S. government has a unique demand outside the civilian nuclear space, and that is demand for Navy propulsion fuel, which is demand that's going to find its way into the market right at this time when that gap between demand and supply is very significant. You're going to see national programs looking for naval propulsion fuel. And by the way, folks, that's the same uranium and conversion. It's the same UF6 that needs to go into the civilian program. So we've always had very strong relationships in the U.S. But at the moment, there's a bit of a narrative that U.S. origin uranium, for example, is at a premium. And it just isn't right now. I mean we fail to see evidence that utilities are really willing to pay a premium for U.S. origin. They want Western uranium, but not necessarily U.S. And again, it goes back to my answer previously, you only get one chance to sell new capacity. So when we think about those Tier 2s and we think about restarting them, we think about maximizing the value of bringing that capacity back and the leverage that we have in pricing that capacity because once up and running, you got cash and noncash costs and you've got payroll and all of that stuff, you get one moment to place that capacity. So if we see a U.S. interest in U.S. origin go up, nobody is better positioned than we are to capitalize on that. Craig Hutchison: Okay. Great. Maybe just a quick follow-up on GLE. Are there any kind of milestones you want to point to this year in terms of just derisking, I guess, the science behind the process? Grant Isaac: Science behind the process is derisked, Craig. So when we announced achievement of TRL6, think about it in the context of what that marks is we can confirm that, that technology enriches uranium to that 99.6 Sigma level of nuclear reliability that is critical in order to say that you've got a technology that folks are willing to contract with. So what remains now is TRL 7, 8 and 9, which are where you prove up that this level of reliability can be deployed at a commercial scale for CapEx and OpEx that make it competitive in the Western uranium space. So for us, it is about focusing on these next steps, TRL7 and beyond and focusing, in particular, on the DOE tails re-enrichment project. Others will focus on LEU and high-assay LEU. We will focus on the tails re-enrichment because that's effectively an aboveground mine, producing, what, 4 million to 5 million pounds of uranium a year, 2,000 tons of conversion at a time when uranium and conversion are scarce and getting scarcer. That seems like the best place for us to focus. And nothing I would point to expected in 2027. But of course, we would update on a quarterly basis if there were -- if there was anything notable about it. It just continues to be an exciting tails re-enrichment project. Operator: The last question today comes from Mohamed Sidibe with National Bank. Mohamed Sidibe: Just maybe on the Westinghouse guidance and completely understandable on the lumpiness of the new build segment. Just wanted to get a little bit more clarity on the core business segment. I think you noted that you remain excited about that. I know you guided in the past to about 6% to 8% core business revenue growth there. Is this something that we can still think about over the next couple of years as things are getting advanced in that segment? Grant Isaac: Yes. The core does continue to be exciting. I'll just -- I'll go back and restate a few of the factors that we watch for. Obviously, that core business is fuel fabrication and it's reactor services; 2 really general ways to think about it. Where does the demand come from? Well, every reactor that was shut down that's being restarted is more demand. Every reactor that is going through a life extension is more demand. Every reactor that not only is going through a life extension, but looking for operating very significant more power out of those reactors is more demand. And then, of course, there is other core elements to think about the Springfields project in the U.K., which we continue to evaluate, we continue to assess. We continue to see what the strongest business case would look like, but that would exist in the core of the business. That would be upside to the core of Westinghouse. And then, of course, you can't forget the AP1000 new builds because every new build becomes 80 to 100 years of core business. So when we look at the core, we see a lot of upside. We're very excited about Westinghouse's position as the leading OEM for light water reactor technology. And we just really like what their position as having the leading Gen III plus light water reactor means for the core going forward. So our enthusiasm has not diminished at all. Mohamed Sidibe: That's great. And just on the fuel services, if I could ask maybe on the unit cost of sales there on the year-over-year guidance increase. Is there anything that's in plan to try to get back the cost within the 2025 range within that segment? Unknown Executive: What I would say about that is we're just seeing some general inflationary pressures definitely in that segment. And so really, it's going to just kind of be looking at the level of production and the mix there of the various products because there's a number of products that go into that segment. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Grant Isaac for any closing remarks. Grant Isaac: Yes. Thank you to everyone who is able to join us today. We really appreciate it. Obviously, we believe we're exceptionally well placed to support the next chapter of nuclear growth while protecting and extending the value of our assets and shareholders. We continue to see pricing dynamics that are very constructive for an incumbent producer and 2026 will be an exciting year for us. So have a wonderful weekend. Operator: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Greetings, and welcome to Marcus & Millichap's Fourth Quarter and Year-End 2025 Earnings Conference Call. As a reminder, this call is being recorded. I will now turn the conference over to your host, Jacques Cornet. Thank you. You may begin. Jacques Cornet: Thank you, operator. Good morning, and welcome to Marcus & Millichap's Fourth Quarter and Year-End 2025 Earnings Conference Call. With us today are President and Chief Executive Officer, Hessam Nadji; and Chief Financial Officer, Steven DeGennaro. Before I turn the call over to management, please remember that our prepared remarks and the responses to questions may contain forward-looking statements. Words such as may, will, expect, believe, estimate, anticipate, goal and variations of these words and similar expressions are intended to identify forward-looking statements. Actual results can differ materially from those implied by such forward-looking statements due to a variety of factors, including, but not limited to, general economic conditions and commercial real estate market conditions, the company's ability to retain and attract transactional professionals, company's ability to retain its business philosophy and partnership culture amid competitive pressures, the company's ability to integrate new agents and sustain its growth and other factors discussed in the company's public filings, including its annual report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2025. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can make no assurance that its expectations will be attained. The company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. In addition, certain financial information presented on this call represents non-GAAP financial measures. The company's earnings release, which was issued this morning and is available on the company's website represents a reconciliation to the appropriate GAAP measures and explains why the company believes such non-GAAP measures are useful to investors. This conference call is being webcast. The webcast link is available on the Investor Relations section of the company's website at www.marcusmillichap.com along with the slide presentation you may reference during the prepared remarks. With that, it's my pleasure to turn the call over to CEO, Hessam Nadji. Hessam Nadji: Thank you, Jacques. Good morning, and welcome to our Fourth Quarter and Year-End 2025 Earnings Call. I'm pleased to report MMI's continued recovery from one of the most complex and prolonged market disruptions on record with 2025 revenue growth of 8.5% and adjusted EBITDA improving to $25 million compared to $9 million in 2024. The fourth quarter particularly showed the strength of our resolve and execution as we set out to beat the exceptional 2024 fourth quarter, which had been propelled by a significant drop in interest rates. Despite entering the fourth quarter of 2025, without the benefit of lower interest rates, I'm proud to report that we beat a tough comp by 2% on the top line and significantly improved profitability. We drove these results through elevated client outreach, tapping our extended lender network, and taking advantage of key market improvements despite the absence of lower interest rates. A larger-than-expected resurrection and closing of deals that had been delayed or canceled early in the quarter, and a lift in urgency among our private clients deciding to take advantage of bonus depreciation by year-end were key factors in the late-stage rally. Although the bonus depreciation provision of the new tax law does not phase out, its advantage became a stronger motivating factor in getting deals closed in the final period of the year. I'm also pleased to report that 2025 marked the strongest growth in our sales force in 7 years with nearly 100 net additions of brokerage and financing professionals. Various initiatives to combat the unusual pandemic and post-pandemic forces that have elevated our new agent dropout rate culminated in this critical return to growth. The additions include a steady cadre of experienced individuals and teams that continue to choose MMI as the ideal platform for taking their career to the next level. We are very encouraged by last year's hiring results and a strong candidate pipeline going into 2026. Throughout 2025, we maintained our market leadership position by transaction count completing nearly 9,000 transactions totaling over $50 billion in volume. This translates to more than 35 transactions per business day, reinforcing a consistent expansion of client relationships and enabling our team to move capital across markets and property types. Looking back, 3 key factors impacted our performance in 2025, all of which also bode well for the outlook in 2026. First, capital markets and investor sentiment improved, particularly in the second half of the year after recovering from the initial shock of Liberation Day. Despite a cautious federal reserve that lowered rates at a much slower pace than anticipated, lender spreads compressed by 75 to 100 basis points and loan-to-value ratios expanded. Many lenders have repaired balance sheets, restructured and are resolved a large portion of maturities and have more capacity as transaction volume has picked up. Second, momentum in our private client and middle market segments picked up last year as prices finally began to adjust and regional banks and credit unions became more active. MMI's $1 million to $20 million transaction count and revenue each grew 12% as we started to reestablish our traditional advantage in these segments. This part of the market not only comprises the vast majority of commercial property stock and transactions, but it is also poised for more activity as a narrowing bid-ask spread releases pent-up supply from sellers who previously were hanging on to assets. Third, our financing business continues a strong trajectory with revenue up 23% in 2025 after growing 26% in 2024. This solid pace is the result of our expanded cadre of experienced financing professionals and the team's ability to access over 420 separate lenders last year. Our team of nearly 100 finance professionals is interconnected through our proprietary technology, which is integrated with our expansive lender relationships. This tech-enabled combination secures the most optimal financing options available in the marketplace. MMCC and IPA Capital Markets closed over 1,600 transactions for a volume of nearly $12 billion, which includes a $2.3 billion portion placed with Fannie Mae and Freddie Mac primarily through our strategic alliance with M&T Bank. Agency financing has been one of the fastest-growing segments of our business. Thanks to the talent acquisition and rapidly growing collaboration we have managed to pull off between our finance professionals and our sales teams. The only segment that was off last year was our larger transactions valued at $20 million or more, which declined by 13%. This is primarily driven by a tough comparison to 2024 when our institutional segment led the recovery with a 28% revenue increase, including an 88% surge in the fourth quarter of 2024. Institutional apartment sales, which showed exceptional strength in 2024, eased as the acute flight to safety limited the buyer pool for lower-tier assets and secondary markets. While our IPA division is well positioned to continue expanding in the institutional arena, some volatility is to be expected as a number of metros grappled with oversupply. The ripple effect of high vacancies, particularly for multifamily in these metros is leading to a rise in underperforming assets that are not yet priced to clear the market. In summary, we're pleased with the significant improvement in the company's key metrics. However, we are laser-focused on driving further momentum in the pace of recovery and capturing the substantial growth runway ahead of us. We entered 2026 with greater clarity on the path to achieving this, thanks to a largely recalibrated marketplace and our unwavering conviction in our client value proposition. Building on that strengthening position, we remain disciplined in our approach to strategic investments while maintaining prudent cost controls. The investments we have made over the past several years in talent retention and acquisition, technology infrastructure and branding are beginning to show leverage as the revenue tide turns. As I've mentioned on previous calls, the expensing of capital investments has been an outsized drag on earnings since the start of the market disruption in 2023, given the hampered revenue production of the past few years. As market conditions and broker productivity improve, so will the production level of the talent pool we have retained and added to over the past several years. As a critical part of our technology strategy to leverage AI and drive efficiency, the company's centralized back office and marketing center called Brokerage Transaction Services or BTS is intensifying its reliance on third-party services at a lower cost, while we also begin to leverage various AI applications to our benefit. These efforts are concentrated in financial analysis, document generation, underwriting and lead scoring. All of these efforts are showing promising results, but need significant advancements in the AI capacity and the use of historical data mining for accuracy and scalability. We expect and fully embrace the opportunity that AI has opened for massive efficiency in virtually all aspects of property analysis, underwriting client targeting and outreach, an era of higher throughput at a much lower cost is emerging, and our goal is to lead this tremendous productivity gain over time. However, we do not expect AI to disintermediate the function of a value-added broker, given the expertise, building by building nuances and buyer seller relationships that ultimately drive the commercial real estate industry. In our view, the broker of the future will be armed with an array of additional analytics with more efficiency in a way that will help clients create value. At the same time, value-added offerings such as our auction services and loan sales division continued to gain traction, generating direct incremental revenue and increasing sales and financing opportunities through collaboration with our sales force. Looking ahead, we entered 2026 with greater optimism driven by several positive market fundamentals. Interest rates, while still elevated, have stabilized, which provides a more predictable valuation benchmark. Simply stated, values have to adjust to the new normal in the cost of debt, and they're doing so. The price corrections over the past 3 years, combined with a major pullback in new construction are creating compelling investment opportunities, especially on a replacement cost basis. Cap rates are up 85 to 110 basis points on average since 2022, and prices are down roughly 20% on average. This, combined with lower all-in interest rates driven largely by lower lender spreads should further bolster investor demand and capital flows in 2026. Despite expectations of a more accommodative federal reserve, inflation pressures and trade-related variables will likely limit the Fed's ability to significantly lower rates. While the labor market is slowing faster than expected, the incoming Fed chair will most likely face the same obstacles to lowering rates. Nevertheless, we expect last year's transaction market improvements to continue as time narrows the bid-ask spread and facilitates the sale of many delayed trades. 2026 is a milestone year for all of us at MMI as we celebrate the company's 55-year anniversary. Many aspects of the company's culture that retain and attract the best of the best in brokerage, financing, management and support functions, find their cornerstones in the company's founding principles that still drive us today. These include bringing efficiency and value, liquidity and certainty to an otherwise fragmented market, measuring our success by our clients' results, and creating long-term and rewarding careers for all team members at Marcus & Millichap. As we mark this important milestone, all eyes are on the future and our quest to lead in an ever-changing industry. Our multi-pronged growth strategy includes expanding our leadership in the private client market, further penetrating the institutional segment through IPA, and accelerating the scaling of our financing, auction, loan sales and client advisory services. Given our disciplined approach to acquisitions, recent attempts to acquire additional financing boutiques, appraisal and valuation firms and complementary adjunct businesses such as investment management and cost aggregation have not yet come to fruition. However, they will in time, as the company is committed to providing an array of additional services that align with our dominance in investment brokerage and financing. Our ultimate goal is to enhance our offerings to a client base we have come to know extremely well throughout the years. Powering this vision is MMI's stellar balance sheet with nearly $400 million in cash, reinforcing our ample purchasing power for strategic acquisitions, which we continue to pursue. Most recently, we have engaged in multiple large-scale explorations that would enable us to expand our financing business more rapidly. We're proud to have balanced strong liquidity and purchasing power with a consistent return of capital to shareholders with $47 million provided in dividends and share repurchases executed in 2025. As we look to the future, we are excited about a new real estate cycle and the vast opportunities ahead for expanding our market presence and revenue diversification to enhance long-term value. And with that, I will turn the call over to Steve for more details on our results. Steve? Steve Degennaro: Thank you, Hessam. Total revenue for the fourth quarter was $244 million, an increase of 2% compared to $240 million for the same period in the prior year. As Hessam mentioned, year-over-year comparisons in Q4 are against an exceptionally strong fourth quarter last year. For the full year, total revenue was $755 million, up 8.5% compared to $696 million last year. Breaking down revenue by segment, real estate brokerage commissions for the fourth quarter were $205 million, moderately exceeding last year's tough comp and accounting for 84% of quarterly revenue. We completed 1,902 brokerage transactions with a total volume of $11.8 billion for the quarter. While transaction dollar volume was lower by 4%, transaction deal count was up by more than 9% over last year, and the average commission rate was 1.7%. The relative increase in private client transactions contributed to a 7% decrease in the average fee per transaction given the higher mix of smaller deals. For the full year 2025, revenue from real estate brokerage commissions was $633 million compared to $590 million last year, an increase of 7%. We completed a total of 6,038 brokerage transactions, up 11%, with total volume of $35 billion, up 3.5% compared to prior year. For the year, average transaction size was $5.8 million compared to $6.2 million in the prior year, reflecting the pickup in private client activity. Within brokerage for the quarter, our core private client business accounted for 65% of brokerage revenue or $133 million up from 59% and $120 million in the same period last year. Private client transactions grew 13% in volume and 10% in transaction count. For the full year, Private Client contributed 64% of brokerage revenue or $406 million versus 62% and $366 million, an 11% increase in revenue year-over-year. For the fourth quarter, middle market and larger transaction segments together accounted for 31% of brokerage revenue at $65 million compared to 38% and $77 million last year. The year-over-year change in revenue is attributed to a decline in transactions and dollar volume in these segments of 8% and 14%, respectively, and is largely a result of fewer large transactions. Large transactions significantly outpaced the market last year, creating a very tough year-on-year comp. For the full year, middle market and larger transaction segments combined represented 32% of brokerage revenue or $200 million compared to 34% and $203 million last year. Revenue from our financing business was $33 million during the fourth quarter up 6% year-over-year from $31 million last year. The growth reflects an 8% increase in transaction volume totaling $3.7 billion across 507 financing transactions, which was a 19% increase year-over-year. The average origination fee was down nominally due to an increase in larger deals closed in the quarter. For the full year, financing revenue was $104 million, a 23% increase compared to last year. This growth was driven by a 33% rise in transaction count totaling $11.9 billion in volume, a notable increase of 31% year-over-year. Our overall performance reflects the continued momentum and progress and scaling of our finance platform and success in recruiting amended producers over the past several years. Other revenue, primarily from leasing, consulting and advisory fees was $5 million in the fourth quarter compared to $6 million in the same period last year. For the full year, other revenue totaled $19 million compared to $22 million in the prior year. Turning now to expenses. Total operating expenses for the fourth quarter were $229 million, a 2% decrease from last year on higher revenue, demonstrating our continued focus on operational efficiency. For the full year, operating expenses were $769 million, up 5.5% over 2024 though lower than our revenue growth rate of 8.5%. Cost of services for the quarter was $155 million or 63.3% of revenue compared to 63.2% last year. For the full year, cost of services totaled $470 million or 62.3% of revenue, up slightly from 62% last year. SG&A expense for the quarter was $71 million or 29% of revenue compared to $76 million in the same period last year, a decline of 7%. For the full year, SG&A totaled $286 million or 38% of revenue, an improvement compared to 40% of revenue in the prior year. Our ongoing expense discipline is aimed at enhancing operating efficiency and leverage and improving profitability. For the fourth quarter, net income was $13 million or $0.34 earnings per share. This compares to net income of $8.5 million or $0.22 per share in the prior year, a significant EPS improvement of 55% year-over-year. For the full year, net loss was $1.9 million or $0.05 per share, which, as a reminder, includes an $0.08 per share charge for a legal reserve we took in the third quarter. This compares to a net loss of $12.4 million or $0.32 per share in the prior year. The improvement in operating results in the year marks a meaningful inflection point, signaling renewed momentum across the business. Regarding the legal matter, we disclosed with Q3 earnings, there is no material update to report, and we remain fully committed to pursuing relief through the appeal process. Adjusted EBITDA for the fourth quarter was $25 million, up 39% compared to $18 million in the same period last year. Full year adjusted EBITDA was $25 million compared to $9 million in the prior year. Adjusted EBITDA for the full year would have been $4 million higher, if not for the legal reserve recorded in the third quarter which highlights the substantial progress in operating performance over the prior year. Moving to the balance sheet. We continue to be well capitalized with no debt and $398 million in cash, cash equivalents and marketable securities, a $17 million increase over last quarter. The growth in cash was achieved while also returning $29 million to shareholders during the quarter through a $10 million dividend paid in October and $19 million of share repurchases, underscoring the strength of our cash generation as well as our disciplined capital allocation approach. Earlier this week, we announced that our Board declared a semiannual dividend of $0.25 per share or approximately $10 million payable on April 3, 2026, to shareholders of record on March 13, 2026. During the year, we repurchased shares totaling $27 million at a weighted average price of $28.77 per share. Since inception of our dividend and share repurchase programs nearly 4 years ago, we have returned approximately $217 million in capital to shareholders. Looking ahead to 2026, we see several positive catalysts for our business, which Hessam summarized. First quarter revenue is expected to follow the usual seasonality trend and be sequentially lower than Q4. While we are encouraged by the prospect of continued momentum in the New Year, our cautiously optimistic outlook is tempered by ongoing macroeconomic and geopolitical uncertainties that could moderate the pace of transaction activity. Cost of services for the first quarter should follow the annual reset and be in the range of 60% to 61% of revenue. SG&A for the first quarter should reflect an increase year-over-year in absolute dollars, consistent with higher agent support tied to improved revenue performance in 2025 and continued investments in technology and central services to support our sales producers. As for taxes, the effective tax rate for the quarter and the year is expected to be in the range of 50% to 60%. We remain committed to our balanced capital allocation strategy, which includes investing in technology and talent, pursuing strategic acquisitions and returning capital to shareholders. Our strong balance sheet provides us with significant flexibility to pursue these objectives while maintaining our competitive position. With that, operator, we can now open the call for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Blaine Heck with Wells Fargo. Blaine Heck: Hessam, as you alluded to, the broker group has been under a lot of pressure this week, driven by concerns about AI displacement within the business and impacting the CRE sector more broadly. You talked about some of the changes that you guys have already made. But looking forward, I guess, which segments of your business could be impacted, whether that's certain deal sizes or business units? And do you think your focus on the Private Client Group gives you guys more or less protection from AI disruption? Hessam Nadji: Blaine, good to have you on the call. I was happen to be just on CNBC a few hours ago on this very topic because it's getting a lot of media attention, especially as it has impacted the Commercial Real Estate Services segment in the last 48 hours or so. And my view and I think that of many in the industry is that AI is here to stay. And there's almost countless ways that AI is going to improve the manual processes that are so labor intensive in our business, whether it's underwriting, data gathering, data parsing, document generation and really all the production-related components of our business, which is significant. If you think about the number of times a broker needs an asset analysis, a submarket analysis, a metro analysis even before a first meeting with a client, even before they've really gotten to know the client. The need to be educated in that first interaction itself creates a tremendous amount of labor. And we're excited about finding scalable ways for AI to make that process a lot more efficient and a lot less costly, frankly, so that we can reallocate capital to other ways that the company can advance forward and more R&D as well as improving our margins. That's a given. The big question mark is what happens in the second wave of AI? I believe right now, we're in the first wave of really this initial level of replacing a lot of manual tasks and labor-intensive tasks. The second wave is more interpretive in my view. And that's where the intelligence that would be expected from AI would start to have a gray area with the expertise and the personal experience and interpretation skill set of a good broker. In commercial real estate, trying to scale that interpretive capability of AI becomes a lot more challenging because the data is disorganized. You have to have micro historical data to feed to the AI that is not a cookie-cutter across various markets, not a cookie-cutter across various asset types. And therefore, the notion that even in ways that they -- for-sale housing market, the residential housing market, is far easier to commoditize in terms of analyzing or digitizing the valuation models or the buyer selling matches that you can do for the for-sale housing market are very hard to transfer over, I think, in a cookie-cutter fashion to commercial real estate. And one commentary I made on CNBC when I was on a few hours ago is that you can build the exact same asset, exact same size, features and characteristics and open for business on the exact same day across the street from each other. And 10 years later, from an investment perspective, those could be entirely different cap rates, entirely different NOIs based on the way that they're managed, the capital improvements and so on. So that's where the complexity of just how much interpretive power can be extracted from AI given its reliance on accurate historical data and the learning that the algorithms would have to do. To answer your question, I do believe that the notion of fee pressure because of the commoditization of the data is going to be out there for a while. I think every disruption that we can think of in the last 20 years which initially was perceived to threat intermediary value-add work and brokerage value-add work has actually helped the brokerage business. Think about it. This is deja vu for me being in the thick of the inception of the Internet and Marcus & Millichap really being on the forefront of embracing the Internet and embracing electronic portals because we thought it would actually enhance our value proposition and not destroy it. We were one of the founding investors in the LoopNet in the late '90s, for example. So this goes back a while for us. And we take it very seriously from the standpoint of evaluating the threat to our value proposition and at the same time, really focusing on the ways we can take advantage of it. You could argue, Blaine, that a single tenant net lease that is far easier to underwrite, I mean people say that, but even a single tenant net lease requires really good underwriting. By the way, you got -- you got to go look at the real estate. It's not really a bond, but closer to a bond than, let's say, a shopping center or an office building or even a multifamily rental building. And those easier to underwrite and more homogenous assets could get further down the road of being impacted by AI and requiring less of the broker touch. However, I go back to -- and this is another thing we discussed on air a few hours ago. I go back to the relationship component, the due diligence component and the art of keeping the buyer, the seller and the lender into a deal from a psychological perspective, the art of managing the vendors that are on the critical path of removing contingencies or the due diligence, I don't think robots are going to go around and do that anytime soon. So I really believe that we're headed for the next generation of reinventing the broker as we went through in the early 2000s because of the Internet and because of digitization of information availability, but I think it's going to make us better. And it's going to make the industry more selective and focus on the talent of the individual in their interpretive and people skills rather than commodity data gathering. Sorry for the long-winded answer, but I'm very passionate about this one. Blaine Heck: No, that's very helpful perspective and well said. Shifting gears, you guys had very strong growth in broker count this quarter. I guess a few questions around that. First, was this something that you had visibility into given your recruitment efforts? Were you expecting that level of growth this quarter? Or was there something that drove kind of a surprise to the upside? Second, are there any specific specialties you targeted in that growth? You've been kind of hiring more experienced brokers that can handle larger transactions, but I kind of would have expected a larger average deal size this quarter if that was the case. And then just third, how should we think about your plans to grow headcount as we look forward into 2026? Hessam Nadji: Very important topic. As you know, and we have messaged multiple times, we've been under so much pressure because of the disruption created by the pandemic into our multi-decade tested system and really almost a unique feature of the company in the way that we have been successful in attracting new talent with no experience, training them, supporting them into becoming market leaders. That has driven the company for so long up until 2020. And that whole component of our system was badly disrupted because of the pandemic and then the market volatility that ensued just elevating the dropout rate of the individuals that we hired really from 2020 on. First on -- because the market was shut down and in-person training was not possible. And then because the market had such a huge run and then a big crash. So that volatility makes it very hard to train new people into the business. And we made a concerted effort over the last 3 years to increase the channels of bringing in talent, qualifying the talent. Not only have we increased the inflow of candidates. We've really upgraded the filtering of those candidates, whether it's campus recruiting, whether it's our internship program that we have more than doubled in size and organized with a very specific curriculum across the country. The expansion of the William A. Millichap Fellowship program, all of which have been very successful. We started those 3 years ago. So it takes time for all these kinds of initiatives to produce tangible results. Everything in the business has a bit of a lag time which is frustrating, but a reality. And we did have visibility to it going into 2025, senior management felt very strongly that the underpinnings had time to get laid and work, and it was time for us to expect better actual tangible results in 2025. It became a major focus for our local market leaders that run our offices and our division leaders, our Chief Revenue Officers and all the way to myself. So we began to build a stronger candidate pool and again, with tougher standards of bringing in talent. The experienced talent that joined in 2025 usually would face a bit of a transition from whatever brand they came from. We don't expect them to repeat their 3- or 4-year, 5-year average immediately when they get here. There's normally a 6- to 9-month transition time before they rebuild the pipeline with us. So that's probably why you were questioning whether that cadre of the new sales force additions would have already brought some business with them. I believe that we're going to see some of that in 2026 as a benefit of the experienced folks we hired in 2025. Going into the New Year, we are not letting up on any of the initiatives we put into place in order to produce the results we produced in 2025. Our expectations are very high going into the year just as they were in 2025. And if anything, our systems, the expansion of our recruiting team, which is under new leadership, are all going to help maintain the momentum. Blaine Heck: Okay, great. Very comprehensive. Last question, you also mentioned continuing to explore strategic transactions. I wanted to see whether you think this latest market disruption and fear over AI displacement might bring about some opportunities for kind of lower cost acquisitions and how you're thinking about the risk reward of external growth given the current kind of concerns over disintermediation from AI. I guess, has anything changed with respect to your appetite for add-ons or maybe the profile of those potential expansion opportunities? Hessam Nadji: Nothing has deterred our strategy for attracting new talent, attracting boutiques and regional firms that I believe would thrive within the MMI platform. The introduction of AI as more of a business factor enhances that. It doesn't, in my mind, or as part of our strategy, diminish it at all. And I did want to really summarize for all of our shareholders and our analysts the attempts that we've made to diversify the platform going into 2022, 2023. And those include companies that we looked at in the appraisal valuation business, the cost aggregation business, even investment management was explored with a couple of opportunities that had come up. And the common theme that I've shared before was that going into '23, '24, there was so much near-term uncertainty. And there was some -- on our part in being able to forecast the first 2, 3 years of performance of an acquired target. And there was so much reliance in both the valuation and the terms of the target companies on guaranteed value upfront, that became the biggest obstacle that we felt very uncomfortable with and some of the deals that we looked at, given the near-term market uncertainty. As that fades and we really believe it has faded. And as I mentioned and Steve mentioned in his commentary, we're more optimistic about 2026 as the market gets closer and closer to an operating environment that we would consider fairly normal. Our confidence would be higher in that the first few years of an acquisition become somewhat more predictable than '23, '24 and '25 certainly were. And in retrospect, Blaine, I'll have to say that the decision to pass on the vast majority of those deals was the right thing to do. Knowing what has transpired and frankly tracking them and still being in touch and knowing how they fared. So I think we did our job in terms of being diligent with our shareholders' capital. But the desire to diversify this platform in a way that's value add to our existing sales force and the core customer base we've already gotten so close to is very much there, if anything, is even more energized as the market certainty and clarity returns. Operator: Our next question comes from the line of Mitch Germain with Citizens. Mitch Germain: Just following up on the M&A question. Is it just market uncertainty? Or has it also been a function of either price or a cultural fit that has prevented some of these transactions from getting over the finish line? Hessam Nadji: Mitch, I'll take that one, and Steve could add some comments as well. Really, all 3. Culture has been the least problematic because we already do a lot of due diligence upfront as to who we want to approach that we feel is like-minded and would have compatible cultures. We really haven't gotten too far down the road with a lot of targets that didn't have a good culture. There is only one I can think of meaningful size where we had to get to know them and get to know their culture, and that became in and of itself as well as a major gap in valuation expectations and in then terms, a big hurdle, we just couldn't get our heads around, even if you can get the numbers resolved. But the bid-ask spread has been wide from our standpoint. There are others who are more aggressive and maybe more willing to take risk back in '23, '24 and we weren't on a case-by-case basis. And then as I mentioned, the gap in terms of guaranteed value versus earn-out. We are very focused on bringing on talent that wants to be a part of MMI for at least 7 to 10 years or longer. And we're not really looking to become somebody's retirement plan. And what we face is a big challenge, Mitch. I think you're very familiar with this based on our previous conversations is that the vast majority of our targets are boutiques and regional firms that have 1 or 2 founders, that started a brokerage group or a team that became somewhat of a company. And those founders just having had some decades behind them are not really the revenue producers in most of the cases and their current revenue producers would not participate in an acquisition from a capital event perspective. So it's like, what are you really paying for? And in our fragmented core business, the pool of targets of any size that have a diverse revenue kind of stream sources of revenue stream are fairly rare to find. That's why our experienced producer recruiting has been much more successful. And -- but again, we have organized ourselves in a way where we're targeting specific spaces, specific companies and specific groups, whether it falls under experienced professional recruiting or a quasi-acquisition. Steve, anything to add? Steve Degennaro: Yes. Mitch, that's exactly where I was going to go. The guarantee and not wanting to be founder's retirement plan, that is certainly a very real factor in the brokerage business, perhaps a little bit less so in some of these adjacent spaces, but still, it's a strong, strong consideration that has kept us from consuming a handful of these deals. Mitch Germain: Are you able to -- have you been able to increase your cross-sell from your financing division to your brokerage? Where does that stand today? Hessam Nadji: Yes. That's a definite, yes. The best example, is in our IPA Capital Markets segment where we brought in a very experienced finance professional, teamed them up with some of our most experienced sales teams. The one case that I can think of right away is our IPA Capital Markets for Multifamily where we brought in the Eisendrath Financial (sic) [ Finance ] Group in 2022 and paired them up with our top 5 or 7 IPA sales teams across the country and their collaboration and joint efforts in winning business and serving the clients for both the investment sales component and financing and then in some cases, refinancing of other properties has been very successful in a short amount of time. Other examples include another IPA Capital Markets team that we brought on board in New York that has collaborated with a number of our investment sales teams. Our loan sales division, Mission Capital is actively either responding to leads that our sales force uncovers by talking to lenders or the other way around. And I'm also happy to say that within our auction business, the channel that auction has opened, both for aging inventory that is not effectively selling through conventional marketing and now can be put on an auction platform. And frankly, our Head of Auction would say that's too limiting of how the auction channel can be helpful to a seller even in the front end of deciding to market an asset, the right asset that is. So both of those types of scenarios are now creating cross-selling between auction, loan sales and our conventional finance division and our sales force. Mitch Germain: Got you. How do you envision 2026 performance with regards to, obviously, the market has been fairly unstable. And it appears that outside of this whole AI noise that's been impacting the share price, the market itself, going into 2026, it things like it appears as if allocations are increasing, people have accepted the new pricing paradigm. Definitely things like -- it seems like there's a little bit less volatility. So do you think that, that will begin to resonate in the financial performance of MMI, particularly in the early part of the year. It's been a little bit of a kind of unstable start where you're kind of starting at a deficit in earnings and then kind of in the fourth quarter, working your way back up. Do you think that some of those losses are going to begin to narrow now that the environment stabilized a bit? Hessam Nadji: Here's how I'll respond to the question, Mitch. I'll say that going into the early stages of 2026 is the best start of a calendar year since 2022. I will definitely say that because the factors that you mentioned have all occurred in the resetting of the prices, the acceptance that a Fed miracle is not around the corner, to bring interest rates way back down and basically be the Hail Mary for the pressure on values, reversing after the Fed to increase rates by 500 basis points. All those kind of processes that take the market a couple of years to process and recalibrate are, for the most part, behind us. That is not to say that 2026 or the current environment is a normal operating environment. We still have a bid-ask spread. We still have very fickle investor sentiment where the cautiousness because of the unexpected events of 2025, i.e., Liberation Day and the tariff effect, the 6-week shock to the capital markets that we absorbed last week, has a lot of our clients asking ourselves, what's around the corner? What else could happen? And the fact that the interest rates have been sticky around the 4% yield on the 10-year treasury hasn't been all that constructive. We really don't see a surge in activity and a big boost in investor sentiment unless the 10-year gets closer to 3.5. And so expecting it to be range bound around that 4% and expecting this sort of measured incremental improvement in market sentiment and therefore, activity is, I think, is reasonable for 2026. Certainly, not a hockey stick where we can declare the end of uncertainty and announce the beginning of certainty because they're still just these lingering tentacles of what's happened because of the Fed action, because of the inflation pressure and still price discovery. Mitch, there are multiple markets where we're just beginning to see the level of distress, what I'll call situational distress, not systemic big portfolios being sold off by lenders at big discounts, but actual individual assets, small portfolios with situational distress where the property was purchased with very aggressive financing, very aggressive underwriting, and that didn't materialize in the near term loan is terming out or a longer-term loan is maturing. Those assets all need rescue capital or they have to be sold at a significantly lower price than they traded last time. And our team is actively working with countless owners on working out those situations that aren't yet translating into immediate transactions but will in the next 12 months, 12 to 18 months. So it's not a smooth normalized environment where it's still a lot of troubleshooting. Deals are taking longer. Our marketing time lines have not come in that much. And what we benefited from was just increasing our exclusive inventory through a lot more focus on being out talking to clients and really trying to make a market. So a lot of the incremental improvement, which we're frustrated with because it should be even better is coming from the fact that most of it was created by sweat and blood, not so much a hockey stick relief type of a trend in the marketplace. Steve Degennaro: Yes. And I'll just add, Mitch, that as we've talked about, there's a certain amount of fixed costs that are sort of embedded into our business model, loan amortization on capital to attract and retain producers. But as the revenue -- it only really takes even modest revenue growth before you start seeing operating leverage in the -- flow down through our financials. That's not a forecast of any sort, but just a reminder that as revenue starts to recover as the market starts to recover, revenue follows the impact on our operating income has a pretty solid flow-through. Operator: We have no further questions at this time. Mr. Nadji, I'd like to turn the floor back over to you for closing comments. Hessam Nadji: Thank you, operator, and thank you, everybody, for participating on our call. Thank you for the questions, Blaine and Mitch. We look forward to seeing a lot of you on the road. This concludes our fourth quarter call, and we look forward to having you on the next earnings call. The call is adjourned. Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.