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Operator: Hello, and welcome to the Ingersoll Rand Inc. Fourth Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Matthew Fort, Vice President, Investor Relations. You may begin. Matthew Fort: Thank you, and welcome to the Ingersoll Rand Inc. 2025 Fourth Quarter Earnings Call. I'm Matthew Fort, Vice President of Investor Relations. And joining me this morning are Vicente Reynal, Chairman and CEO, and Vikram U. Kini, Chief Financial Officer. We issued our earnings release and presentation yesterday afternoon, and we will reference these during the call. Both are available on the Investor Relations section of our website. In addition, a replay of this conference call will be available later today. Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide two for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, both of which are available on the Investor Relations section of our website. On today's call, we will review our company and segment financial highlights and provide our full-year 2026 guidance. For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants. At this time, I will turn the call over to Vicente. Thanks, Matthew, and good morning to all. Beginning on slide three, we ended the year on a strong note, delivering low single-digit organic order growth for both the fourth quarter and the full year. Additionally, our return to organic revenue growth reflects positive momentum heading into 2026. We're also very pleased with the momentum we continue to see on our recurring revenue initiative. Vicente Reynal: Which exceeded $450 million in 2025, with a backlog of recurring revenue of approximately $1.1 billion in future revenue from existing contracts. This is a clear demonstration of how we continue to make great progress towards achieving our recurring revenue target. Turning to inorganic growth, our disciplined approach to M&A continues to be a key driver of our success. Our acquisition pipeline remains robust, with a strategic focus on enhancing our existing portfolio. Finally, our teams remain nimble through the use of IRX and continue to leverage our economic growth engine to outperform in the markets in which we serve. On slide four, our inorganic growth flywheel remains robust, underpinned by strong pipeline and disciplined deal execution. The value creation flywheel remains the core engine of performance, delivering durable free cash flow and enabling consistent high-return capital deployment. In 2025, we demonstrated both efficiency and precision in our execution, investing $525 million across 16 transactions, which collectively generated approximately $275 million in annualized inorganic revenue. These high-return acquisitions average a 9 times presynergy multiple and expanded our technological capabilities, demonstrating that our M&A engine continues to help us drive above-market growth. And we're off to a great start heading into 2026, with nine additional transactions currently under LOI. In January, we completed our first acquisition of 2026 with Synomics, a leading manufacturer specializing in technologies that optimize workflow solutions to improve throughput, accuracy, and suitability across multiple life science and markets. The dynamic acquisition advances our life science strategy by combining complementary technologies to deliver high-value end-to-end laboratory solutions. Now I will hand it over to Vikram U. Kini who will share an update on our financial performance for Q4 and the full year. Vikram U. Kini: Thanks, Vicente. Starting on slide five, orders showed continued strength in the fourth quarter, up 8% year over year, or up 1% organically, with both our ITS and PST segments delivering low single-digit organic order growth. Consistent with normal seasonality, fourth quarter book-to-bill finished at 0.93 turns. As Vicente mentioned earlier on the call, we finished the year strong with revenue up 10%. Organic revenue grew 3% year over year, which included both positive price and volume. We delivered fourth quarter adjusted EBITDA of $580 million and adjusted EBITDA margins remained strong at 27.7%, reflecting the durability of our operating model with year-over-year margin pressure primarily driven by tariff impacts and intentional commercial investments for growth. Corporate costs were $31 million, our Q4 adjusted tax rate was 21.2%, and adjusted earnings per share was $0.96 for the quarter, up 14% year over year. Moving to the full year results on slide six. Orders were up 9% year over year, or up 1% organically. Heading to 2026, we are well positioned, finishing 2025 with a book-to-bill above one and both the ITS and PSC segments delivering low single-digit organic order growth for the full year. Total revenue was up 6% year over year, while organic revenue finished the year down 1% due in large part to tough first-half comps, with a clear improvement in trajectory as the year progressed and positive momentum exiting 2025. For the full year, our results exceeded the upper end of our prior guidance range for both adjusted EBITDA and adjusted earnings per share. The company delivered adjusted EBITDA of approximately $2.1 billion, an adjusted EBITDA margin of 27.4%. And adjusted earnings per share for the year was $3.34, up 2% year over year, including a full-year adjusted tax rate of 22.8%. On the next slide, cash flow for the fourth quarter was $462 million. With $3.8 billion in total liquidity, our balance sheet remains a strategic asset, enabling continued investment in high-return opportunities. Leverage continues to be well under two times even as we continue to strongly deploy capital in 2025, including $525 million in M&A, $1 billion in share repurchases, and $32 million in dividends. This performance reinforces our ability to effectively deploy capital while maintaining top-tier balance sheet flexibility. Now I'll hand the call over to Vicente, who will go over our segment results. Vicente Reynal: Thanks, Vikram. On slide eight, ITS orders finished up 9% in the fourth quarter. Book-to-bill for the quarter was 0.93 and finished above one for the full year. The segment delivered organic orders growth in the low single digits, making all four quarters of positive organic order growth in 2025. All three regions, Americas, EMEA, and Asia Pacific, saw positive organic order growth for the full year. Revenue grew 11% year over year, including organic revenue growth of 3%. Adjusted EBITDA margins finished at 28.9%, which was down year over year, largely driven by the dilutive impact of tariffs and continued commercial investments for growth. For more detailed breakdown, organic orders at a regional level for Q4, Americas was up low single digits, EMEA was down mid single digits, and Asia Pacific was up low double digits, driven by China up low single digits and the rest of Asia up mid twenties. Compressor organic order trends were in line with the regional trends just mentioned for Americas, EMEA, and China. This marks the third quarter in a row where we saw organic quarter growth in China, underscoring our agility through the effective use of IRX and the success of our demand generation activities delivering consistent growth in what remains a very challenging market. In our innovation in action section, we're pleased to introduce the latest aeration technology for wastewater applications developed by one of our recent acquisitions. This advanced technology has been integrated with one of our high-efficiency blowers, allowing us to deliver increased oxygen while reducing power consumption. This combination allows us to achieve up to 34% energy savings, creating a strong return on investment for the customer. This initiative demonstrates our commitment to leveraging both established and new acquired technologies to offer greater energy efficiency to our customers and expand our aftermarket revenue opportunities. Turning to slide nine. Q4 orders in PST were up 6% year over year with a book-to-bill of 0.96. Organic orders were up 1%, including our life science businesses, which delivered mid-teens organic order growth. For the full year, PST delivered organic order growth of 2%, with a book-to-bill of one time. We're also pleased to highlight that both our technologies and life science technologies businesses saw positive organic order growth for the full year. Additionally, we are encouraged by the acceleration in the organic order momentum as the second half of the year finished up mid single digit. Fourth quarter revenue finished up at 8% year over year, with organic revenue growth of 4%. PST delivered adjusted EBITDA of $127 million, which was up 19% year over year with a margin of 30.4%. Adjusted EBITDA margin improved 280 basis points year over year, demonstrating continued strong execution against the relatively easy comp from 2024, which is up 40 basis points year over year. For our PST innovation in action, we're showcasing our award-winning EasyJetFlow product from our life science business. EasyJetFlow is a disposable, single-use mixer designed for biopharma production, featuring a sealed transfer system that improves safety by reducing cross-contamination risks and shielding operator from airborne powders. When paired with Easy Biopipe bags, it allows for fast turnaround without the need for cleaning or validation while delivering straightforward operation for quicker powder dissolution compared to competitive alternatives. As we move to slide 10, we're issuing our full-year guidance for 2026. Total company revenue is expected to grow between 2.5%-4.5%, driven by organic order growth of 1% at the midpoint, 1.5% growth from M&A, which includes a carryover from all transactions completed in 2025, as well as the previously announced Synomics acquisition, and 1% FX tailwind. Total adjusted EBITDA for the company is expected to be in the range of $2,130,000,000 and $2,190,000,000. Corporate costs are planned at $170,000,000 and are expected to be incurred evenly per quarter throughout the year. Adjusted EPS is projected to fall within the range of $3.45 and $3.57, which is approximately 5% growth at the midpoint. We anticipate our adjusted tax rate to be approximately 23%, net interest expense to be about $230,000,000, and share count to be approximately 394,000,000. Free cash flow to adjusted net income conversion will be around 95%. The phasing of revenue, adjusted EBITDA, and adjusted EPS is expected to be consistent with what we have seen in prior years as outlined in the table. In addition, based on our guidance at the midpoint, we expect EPS to grow at a similar mid single-digit growth rate in both the first and second half of the year. Finally, on slide 11, as we wrap up this part of the call, I'm confident that our strong finish in 2025 puts us in an excellent position for success in 2026. We maintain agility and readiness to adapt to the ongoing changes in the global market landscape. Our teams have consistently demonstrated resilience and high level of execution, achieving strong results in these very complex environments. We remain disciplined with our approach of capital allocation, leveraging our robust balance sheet to generate durable earnings growth and long-term shareholder value. Finally, I would like to thank our employees for your ongoing dedication and commitment to embracing an ownership mindset. Thank you for your help in delivering another robust quarter and full year. Now I will hand the call back to the operator and open it for Q&A. Operator: Thank you. If you would like to withdraw your question, simply press 1 again. As a reminder, we ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Michael Patrick Halloran with Baird. Your line is open. Vikram U. Kini: Morning. Vicente Reynal: Start of the and then the guidance Vikram U. Kini: What sort of end market trajectory is embedded in the guidance? And then the shorter cycle side of your businesses, are you seeing any signs of change? And what would this businesses that you would look at to internally for leading indicators on your side? Vicente Reynal: Sure, Michael Patrick Halloran. Let me start with the end market commentary first. As it relates to what we are currently seeing in the market, which is the basis of our initial guide here. You know, portfolio continues to demonstrate resiliency as you have seen. I mean, as a reminder, 40% of our revenue is aftermarket, which tends to be very stable. And from a high level, some end market commentary, life sciences is progressing and improving sequentially. As a reminder, we demonstrated order growth with orders in the mid teens during the Q4 performance and kind of to kind of double click on the life sciences more, you know, pharma and biopharma production. We continue to see very good funnel and booking activity both in the U.S. and outside the U.S. Our medical device business, which is there in region for region, is driving some very good funnel activity. I was actually with the team in China last week, and there is just a lot of good potential to serve our customers in China, for example, on the medical device side. In the lab, analytical diagnostic equipment market, very good pipeline activity, given some of the U.S. reshoring of drug discovery and development and the need for automation to mitigate reshoring cost. Therefore, the acquisition that we made with Synomics, which plays very well in that end market. On the general industrial side, we have seen more stability, especially in 2025, as we have passed the peak of uncertainty related to tariffs. And that being said, we are cautiously optimistic about the improving trends moving into 2026. You know, a long cycle project perspective, we have not seen any kind of dramatic changes as the funnel remains very healthy. And I think the other important point of note is we are continuing to remain very encouraged about the recurring revenue. You know, in terms of some of the indicators that you were asking, Michael Patrick Halloran, I mean, PMI for us continues to serve as a good overall gauge for short cycle businesses, and we are optimistic about the uptick we recently saw in the U.S. PMI here in January. However, we think it is too early to call a meaningful inflection as a result of just one data point, which has been down for such a long period of time, and therefore the reason why we took a prudent approach here as we started year 2026. Vikram U. Kini: Thanks for that. So it sounds like the guidance itself assumes just the current trajectory continues as opposed to some sort of inflection up in any of the pieces? And then related to that, are there any end markets that you are specifically worried about this year? Maybe better put, if you look at the last couple of years where there have been headwinds, do you think those persist into 2026, or are we at the point where we have at least flushed out a lot of the headwinds? I know the China piece has been a headwind from a market perspective, but you have turned to growth. Any other things there you would point to or areas you would point to? Vicente Reynal: Yeah. So related to the guidance, exactly as you said, Michael Patrick Halloran. We are not embedding any market recovery here, and very stable sequentially here from what we are seeing today. So that is what we are embedding in the guidance. In terms of the end some of the headwinds, as you very well as we can articulate it, you know, whether, you know, RNG, electric vehicle, photovoltaic, a lot of that is behind us. And I think also the good news here too as well as I mentioned on the early remarks, our team in China now three quarters of delivering positive organic order growth the past three quarters in a row. Not what the market is doing, but also speaks loudly as what the team is doing. I was with the team in China last week, and it is very impressive, the amount of innovation and technology and new end markets and new solutions that they are launching in order to penetrate the market and see that organic growth. Thanks, Vicente. I appreciate it. Thank you. The next question comes from Julian C.H. Mitchell with Barclays. Operator: Barclays. Your line is open. Julian C.H. Mitchell: Hi. Good morning. Just trying to understand the seasonality through the year a little bit better. So is it fair to assume the guidance is based on roughly that one point of organic revenue growth year on year fairly evenly through the year? And then on EPS growth, I think you mentioned mid single digits year on year in both halves. Are you starting out first quarter around that mid single-digit EPS growth as well? Thank you. Vikram U. Kini: Yeah. Julian C.H. Mitchell, I'll take that one here. So as far as the organic growth comment, first and foremost, starting with Q1, we expect Q1 organic to be, I would say, flat to maybe very slightly down. But then as we move through the balance of the year, we expect I would call it comparable low single-digit organic growth for Q2, Q3, and Q4. So, you know, as Vicente said here, a bit of normalization perhaps as we get from Q2 to Q4, but no meaningful market recovery, anything like that necessarily baked into the guide. As far as the EPS question, generally, the way you are characterizing it is a fair way to think about it here. And as we indicated, we expect to see a relatively even earnings growth on a quarterly basis and particularly on the first half versus second half as well. Julian C.H. Mitchell: That is helpful. Thank you, Vikram U. Kini. And then maybe my follow-up would be on the EBITDA margins. So I think the guidance embeds full-year EBITDA margins are flattish and is the way to think about that maybe a small decline year on year in the first half because of price/cost and then that flips around. And in light of some of the commentary in the last sort of eight hours or so, maybe help us understand kind of the scale of the price/cost headwinds that you have been seeing, whether dollars or margin percent? Vikram U. Kini: Yeah. Sure. Julian C.H. Mitchell, I'll start. You know, as far as the margin profile and kind of the way you have talked about it, you are completely correct. I think even as we talked about on our last earnings call, we did expect some headwinds on the margin front, particularly in the first half of the year, particularly as we lap kind of some of the annualizing of the tariffs. So that is largely impacting 2026. And then, clearly, as we move to the second half of the year, we would expect some of the results of what I will call in-year pricing actions, some of the productivity measures as well as some of the controllable, I would say, actions that we have taken internally to drive a better margin profile into the back half of the year. You know, as far as the price/cost piece of the equation, let me just start by saying, one, I think the fourth quarter largely played itself out as expected. Worth noting, though, that I think the team's executed really well, which you saw specifically in that Q4 performance. And as far as the price/cost equation and things of that nature, kind of going back to my earlier comments. One, we do expect price/cost to be positive for the full year. Now if we take that in terms of the two components, first half and second half, like I said, price/cost expect to be a bit more constrained in the first half of the year given the timing of the tariff impact. However, we do expect to be price/cost neutral in the first half. And then we expect to see that margin expansion take hold in the second half for the factors I kind of earlier described. Julian C.H. Mitchell: That is great. Thank you. Operator: Thank you. The next question comes from Jeffrey Todd Sprague with Vertical Research. Your line is open. Vikram U. Kini: Hey. Thank you. Good morning, everyone. Hey. Just a couple of things. First, just back on the short cycle. We have all seen the PMI. Vicente, I just want to kind of clarify a little bit, though. Are you not seeing any actual pickup in short-cycle pockets, whether it is tools or small compressors or the like, sort of question number one. And then does the guide actually anticipate volumes turning positive by the time we get to the back half of the year? Obviously, you have been running on negative volumes, positive price for what the better part of eight quarters here, I guess. Vicente Reynal: Yeah. No, Jeffrey Todd Sprague. We are seeing some pickup in the short cycle clearly. I mean, as you saw from the order rates as we delivered here in the fourth quarter, and we see somewhat of the momentum continuing here as we enter 2026 and into January. So the order momentum, I will say, continues. I think what the remark that I made is that PMI just turned above 50 in the U.S. for the first time in 38 months or so in January. And we are just saying, hey. That is only one data point. But we are seeing definitely that better momentum and kind of inflecting point. We just want to see more data points of kind of continued better market performance. Vikram U. Kini: Yeah. And, Jeffrey Todd Sprague, in terms of your Oh, go ahead. Yeah. Yeah. Go ahead. Sorry. I was just question on the volume side of the equation. You know, again, the best way I would probably describe this is we do expect volume performance to improve as we think about the second half versus the first half. You know, I think it is probably closer to probably somewhere in the flattish realm if you kind of think about it as we get to the back half of the year and as we exit the year. But, you know, as Vicente said here, we have not baked any, what I will call, meaningful recovery per se in. And, obviously, as markets continue to hopefully improve, we would expect that to be an area for potential outperformance in the future. We just obviously want to see it materialize first. And just a follow-up on capital deployment, if I could. It is not clear to me you have capital deployment in the guide. The share count number maybe we can get close to that just on the annualization of what you did on the repo. I do see interest expense coming down a little bit, though. I do not know if that is rates or cash generation and debt reduction. Can you just clarify what, if anything, is in the guide from a capital deployment standpoint? Yeah. Sure, Jeffrey Todd Sprague. I would say the approach is very consistent with what we have historically. So, essentially, I will take the pieces here. One, from the share count perspective, you are just seeing the annualization of the actions already taken in 2025 where we did approximately $1 billion of share repurchase. So you are just seeing that now materialize into the share count piece of the equation. From an M&A perspective, consistent with how we have historically kind of guided, you are seeing the M&A impact is just the carryover of acquisitions completed in 2025 as well as the one deal that we have completed here thus far in 2026, which is the Synomics acquisition that Vicente indicated. As far as the balance of the equation, whether it be in interest expense or things of that nature, I would say it is fairly consistent with 2025 levels. So everything there is generally as we have historically indicated and guided. Jeffrey Todd Sprague: Great. Thanks. Operator: The next comes from Joseph John O'Dea with Wells Fargo. Your line is open. Vicente Reynal: Hi. Good morning. Joseph John O'Dea: Can you dig in a little bit on the acquisition opportunity set when you talk about 400, 500 bps of annualized revenue expected to be acquired in 2026. Just in terms of the composition of the pipeline right now. Sounds like primarily in the bolt-on side of things. But anything that could be in the larger side as well. You know, what that would mean, what your appetite is for anything in that kind of larger category. Vicente Reynal: Sure. So the opportunity in the funnel remains really strong. You know, already executed one acquisition with Synomics. And currently have nine companies under LOI. I will characterize the pipeline still as being bolt-on in nature. But there is definitely a couple that we have been cultivating for quite some time that could be on the larger purchase price or maybe a $1,000,000,000 or so. But again, the current pipeline is bolt-on in nature today. But we are definitely seeing a lot of good activity and particularly on what I just referred to. I mean, the cultivation process continues to remain very strong, and we are seeing better movement here too as well. Joseph John O'Dea: And then on the recurring revenue side, I think this has gone from $200,000,000 a couple years ago to $300,000,000. It is now over $450,000,000. Just a little bit of color around what is kind of driving some of the traction there, where you are most pleased, and then how you think about the opportunity in 2026? And sort of where that could get to? Vicente Reynal: Yes. Absolutely. I mean, we are very excited about some of milestones that we achieved here in 2025. Not only the $450,000,000 of revenue, which as you very well said, a couple years ago was approximately $200,000,000, but the fact that we now have approximately $1.1 billion in future revenue from existing contracts in what we call in the backlog or in the bank. So that gives us good confidence here as we can continue the ramp. We always said that will not be linear and will require continued ramp to achieve our long-term investor day target. And we will provide update to that on our next investor day. But I think we are seeing the good resiliency from the team, not only as we expand into some of the regions, but as we expand the recurring revenue into many other technologies. But we are pleased with the performance so far, and the teams are working very hard to continue to accelerate. Joseph John O'Dea: Thank you. Operator: The next question comes from Nigel Edward Coe with Wolfe Research. Your line is open. Thanks. Good morning, everyone. Julian C.H. Mitchell: I hope it was well. Lots of details so far. Vikram U. Kini: Nigel Edward Coe, I just wanted to go back to your comments on 1Q being flat to maybe slightly down relative to the, call it, 3% organic posted in 4Q. So that would imply a pretty significant kind of Q over Q deceleration. So just wondering, are there any timing of shipments that benefited 4Q that informs that view? And then just maybe if we could just dimensionalize the price and investment spending that you are highlighting and any sense on how we should think about ITS margins again, the first half versus the second half? Vikram U. Kini: Yeah. Sure, Nigel Edward Coe. Let me take the first one. So as far as I would say the revenue from Q4 to Q1, remember, I would characterize what you are seeing really as normal seasonality. You know, if you look at typically speaking in any cadence of the year, you typically have Q4 as typically our strongest quarter of the year, typically characterized by a lot of the shipments in some of our longer cycle project businesses. You know, that business typically has a little bit more of a stronger orders profile in the first half of the year, a little stronger shipment profile in the back half of the year. 2025 was very much in line with that. So I think what you are referring to here as far as kind of the sequential move between Q4 and Q1, very standard. And in fact, I would say the revenue and earnings seasonality that is baked into our 2026 guide is almost, you know, it is actually exactly what you saw in prior years. So, again, I would characterize that as standard and nothing atypical compared to what you have seen in prior years. You know, as far as the price/cost and really more so the investments, you know, obviously, we have not necessarily quantified the exact number here for you. But what I would characterize it as is a couple of kind of moving factors, and we can also talk about kind of the ITS margin profile as well. You know, I think in terms of the investments, it is the same continued, I would say, commercial investments that you have seen us talk about historically. So whether that be at the corporate level, things around centralized demand generation, things of that nature, some of the kind of normal course investments for growth, as well as within the actual business, really much more front-end commercial, engineering and NPD-related innovation, if I will say, commercial-related investment. So again, I would say that is a continued trend and theme. You have seen us be very consistent with that in 2025 as well. I think 2026 is much more of a, I will call it, continuation in that respect. As far as the margin question, I think you asked about ITS. Yeah. I think the best way to kind of describe it here is our expectation for ITS margins is that on a total-year basis, we do expect to be relatively flattish year over year on a full-year basis. That is largely driven, I would say, by the two factors that we have mentioned here. The tariff-related expenses, really the carryover there. We are offsetting with price, but, obviously, that is still kind of dilutive from a margin perspective, as well as the, I would say, continued targeted commercial investment for growth. Vicente Reynal: PST, Vikram U. Kini: we do expect to be up, you know, triple-digit margin expansion, in the sense, really, frankly, strong operational execution. I would say the continued integration and execution on some of the acquired assets and then what I would say is probably slightly easier comps, particularly in the first half of the year, comparatively to the rest of the business. And then we obviously highlighted kind of corporate costs at a total company level, which we expect to be roughly even per quarter through the course of 2026. Nigel Edward Coe: Vikram U. Kini, that was great color. And just a quick one on the PST orders. Obviously, momentum in life sciences. I think you said up mid teens. But that implies there was a significant decline in other business units. Wondering if you could just touch on that quickly. Vicente Reynal: Yeah. Sure. So, I mean, basically, very happy and excited with what we are seeing on the life sciences side. You know, the precision technology also delivered fairly nice, which is about 60% of the total segment. And that business is performing in line with what you have seen in the ITS. So the last piece is basically the aerospace and defense business, which is down due to order timing. Nothing unexpected as the business is generally moving sideways from 2025 to 2026. But that was basically kind of the offset in the segment. Nigel Edward Coe: Oh, got it. Okay. Thanks, Vicente. Vicente Reynal: Yeah. Thank you. Operator: The next question comes from Nicole Sheree DeBlase with Deutsche Bank. Your line is open. Yeah. Thanks. Good morning, guys. Vicente Reynal: Good morning. Operator: Can we just start with when you look at the full-year guidance for organic flat to up 2%, are you looking for something similar magnitude in both PST and ITS? Vikram U. Kini: Sure, Nicole Sheree DeBlase. I'll take that one. Yeah. I think the simple answer is it is comparable. Right? I think in terms of the overall, I would say we expect a slightly healthier overall full year from PST as compared to ITS. Obviously, that kind of blends to the midpoint, if you will, of what you see as far as the overall guide. But yes, I think relatively comparable trajectory. I think about the sequential movement from Q1 into the back half of the year. Operator: Okay. Understood. Thanks, Vikram U. Kini. And then can we just dig a little bit more into what you are seeing from a longer cycle project perspective? Vicente, you had talked about for several quarters in 2025, like delays in decision-making activity or decision-making process from your customers. How did that kind of go in the fourth quarter and into the early part of 2026? Thank you. Vicente Reynal: Yeah. I mean, I will say that the positive side is that the long cycle project funnel continues to be very, very active. We saw even some resurgence of adding more into the funnel as we were kind of gravitating here at the end of the year and a very good start here into the beginning of 2026. In terms of the delays in decision-making and kind of what we call about the elongation, that kind of continues to still be there. But the good news is that projects are not getting canceled. And we continue to see some good momentum. So, again, it continues to build upon basically seeing that the funnel continues to grow, which bodes well for us as we come here into 2026 from an order perspective. Operator: Thanks, Vicente. I'll pass it on. The next question comes from Nathan Hardie Jones with Stifel. Your line is open. Vicente Reynal: Good morning, everyone. Good morning, Nathan Hardie Jones. Vikram U. Kini: Guess I will just start off with question on the EBITDA guidance. I mean, it is pretty clear you are not planning on much in the way of volume growth. You get a little bit of addition to EBITDA from M&A. It does not seem to really embed any cost actions or any product in the guide, can you talk about any you have there for cost out or for productivity gains during 2026? Vicente Reynal: Yeah. Sure. That is an Vikram U. Kini: start with that one here. So, you know, I think the guide does include some requisite, I would say, productivity or cost actions. Let me kind of take those in pieces here. So clearly, I would say the headwind from a margin perspective, kind of earlier stated, is really the kind of the carryover of the tariffs. Right? So even though there are pricing actions that are offsetting on a full-year basis, that still is a little bit of a headwind from a margin perspective. Despite that, you are still seeing that we are growing earnings per share in a requisite comparable manner, quarterly or first half, second half. You know, the driver of that or the kind of the offset tends to come from some of those cost actions. So, first and foremost, you have seen in our financials here that we have taken some proactive restructuring actions in 2025. Those will continue to materialize into savings into 2026. I would say payback periods on those actions are very much in line with what you have seen us do historically. So that clearly is, I would say, kind of the first item. The second one is what I would call the kind of normal course productivity. So that would be, you know, direct material as well as kind of I2V. Remember, those tend to follow, I would say, the phasing of revenue very similarly to what you have seen in prior years. So those do tend to have a little bit more of a second-half weighting, but that is just because they follow kind of the shipments. And then the other piece, you know, Nathan Hardie Jones, would be that we are, you know, obviously taking, I would say, some targeted pricing actions in the course of the year like we typically do. Those will obviously be taken, you know, business by business, region by region through the course of year, and you will start to see some of that materialize in the revenue base, particularly as moving to the second half of the year. So I would say those are kind of the moving factors here that are, I would say, offsetting both some of the tariff-related headwinds, some of the, I would say, reinvestments that you are seeing from a commercial growth perspective, as well as some of the increased corporate costs on a year-over-year basis. For that. And then I guess in terms of forward-looking indicators, you talked about PMI marketing, you know, good reading in January in the U.S., obviously. You guys just have over the last few years talked about marketing qualified leads as an indicator for your own business. Can you talk about what that is telling you in various regions and whether that is giving you any more confidence in the order rates in the short term here. Thanks for taking the questions. Vicente Reynal: Yeah. Sure, Nathan Hardie Jones. So absolutely. I mean, I think our marketing qualified leads is part of core of what we track ourselves internally by region, by product line, even by end market. Continue to see some fairly good momentum on how the marketing qualified leads continue to grow. Now a lot of that is because of, obviously, our kind of self-help engine on how we reach new customer accounts, so roughly half of those marketing qualified leads are coming in from new customer accounts as we try to obviously continue to take share. So that is why we are seeing some good acceleration in terms of MQL continue to be strong. But as I said before, decision-making is kind of this elongation. But, again, all indicators, PMIs, and MQLs, looking to be on the proper trend as we see. Sit here. Jeffrey Todd Sprague: The next question Operator: comes from Christopher M. Snyder with Morgan Stanley. Your line is open. Joseph John O'Dea: Thank you. When we look at the pickup in Christopher M. Snyder: Q4 organic growth, was this more so driven by momentum in the short-cycle businesses? Or did some of the longer cycle orders in the backlog begin to convert? And I ask because I noticed that this was the first quarter since 2024 where organic sales outpaced orders. So maybe it is signaling some level of backlog release. And I am just wondering if could that remain a tailwind for the business into 2026? Thank you. Vikram U. Kini: Yeah. Christopher M. Snyder, great question. So, you know, I would start with, first and foremost, the Q4 performance we saw, I would say, had a requisite component of both what I would say the base business or short cycle inclusive of aftermarket and recurring revenue as well as the long cycle. I go back to my earlier comment that the second half of the year, particularly Q4, tends to be a heavier shipment quarter, particularly on the long-cycle project side of the equation. Q4 2025 was no exception to that. So I think that probably speaks to the drivers of that 3% organic kind of pickup that you saw. And then as far as the organic orders versus organic sales, probably the simplest way I would probably describe that is the book-to-bill, first of all from a full-year perspective, slightly over one. So one, we are encouraged by the fact that you have seen some backlog build, which I think also provides some of that increased visibility, but also just some of that backlog that we can execute as we move into 2026. I think as far as the absolute book-to-bill in Q4, slightly below one, again I will call it very standard, just again because of the long-cycle nature and dynamics of the shipments we see. So again, I think to your point, encouraged by what we saw in Q4. And, you know, clearly, we continue to kind of watch leading indicators and see that hopefully continue here as we move into 2026. But encouraged by the contribution of both Christopher M. Snyder: Thank you. I appreciate that. And then maybe just to follow-up. Vikram U. Kini: short cycle and the project side in Q4. Christopher M. Snyder: Could you provide some color on what is expected for the life science organic growth in 2026 within the guide. And it seems like obviously still really good momentum there with the Q4 order rates up mid teens. But anything to call out on the slope of organic growth. Because I do imagine that the comps into 2026 are getting a good deal more difficult than they were in 2025 on the organic growth side. Thank you. Vikram U. Kini: Yeah. Sure, Christopher M. Snyder. As far as the guide, we are not going to kind of break the PST component into the different components. But what we can say here is I think the way you have described it is exactly the way we are thinking about it. One, definitely encouraged and Vicente kind of provided a little bit of color on kind of the drivers we are seeing at the kind of differing components of the life sciences business. So I think we are incredibly encouraged by what we are seeing, whether it be on really in the biopharma side or even kind of the legacy kind of Ingersoll Rand Inc. medical business we have had in terms of some of the improving trends. You know, clearly, you know, we talked about the aerospace piece, which is really kind of moving sideways from 2025 to 2026, which is kind of a little bit of that, I would call, more of the offset comparatively speaking as it is kind of just part of that overall umbrella of businesses. So I think the simple answer here is I think we continue to be really encouraged. The other piece I would mention here is the fact that the bolt-on M&A kind of playbook is really taking root as well in our life sciences portfolio. You see a number of bolt-ons in 2025 that will obviously become organic here at parts during the course of 2026, which we think will continue to contribute. And then the Synomics acquisition that we just did here in January, which we think is a very attractive kind of nice additive complementary bolt-on to our existing kind of life science portfolio. So, again, I think your point is very valid. I think the comps clearly are there, but I think we are still encouraged by the momentum we are seeing, which you saw in the Q4 order rate. Jeffrey Todd Sprague: The next question comes from Operator: Stephen Volkmann with Jefferies. Your line is open. Christopher M. Snyder: Hi. Good morning, guys. Happy Friday. Just a couple very quick ones for me. I am curious. It seems like valuations are kind of going up across the board, not just yours, but I am presuming in the M&A funnel as well. Just does that change anything in terms of how you manage your capital deployment? Jeffrey Todd Sprague: No. Vicente Reynal: No, Stephen Volkmann. I mean, we continue to actually, as you have seen, do really well with the presynergy multiple. In 2025, we average roughly 9.2 times, to be exact, the presynergy multiple. Even the one that we acquired here in January continues to be in that kind of range. So I think we are continuing to be very encouraged with what we are seeing now. But in our case, as you know, our M&A flywheel is differentiated in the sense that a lot of these transactions are sole source. Cultivation happens. Family-owned companies. So I think we have a bit of an advantage here for us to be able to continue with that and be able to have a very good price multiple. Stephen Volkmann: Got it. Thank you. And then just with respect to kind of the order cadence, is there anything that you can see now that would make that different in 2026 relative to kind of the last couple of years? Vikram U. Kini: Yeah. Sure, Stephen Volkmann. So we obviously do not guide on orders, but I think the simple way to think about it here is we do not expect anything here to be dramatically different in terms of, I will just say, the book-to-bill being one on a full-year basis and typically a little bit healthier than that in the first half and a little below on the second half just given normal seasonality and some of the dynamics I mentioned on our long cycle. So nothing at this point we would point to that we expect to be dramatically different. Stephen Volkmann: Super. Thank you, guys. Jeffrey Todd Sprague: Thank you. Operator: The next question comes from Joseph Alfred Ritchie with Goldman Sachs. Vikram U. Kini: Thanks. Good morning, guys. Vicente Reynal: Good morning, Joseph Alfred Ritchie. Vikram U. Kini: Can you just touch on the margin profile of the recurring revenue business, the $450,000,000 that you referenced, Vicente. I recall you guys talking about a gross margin profile that was north of 60%. I am just wondering if that is actually coming through as expected and maybe that will be question number one. So, yeah, I think in general, Christopher M. Snyder: Sure, Joseph Alfred Ritchie. Let me start with that. Vikram U. Kini: the recurring revenue business, whether it be what we call package care or all these other components, yes, it is, across the entire enterprise, typically a higher margin profile comparatively speaking to, I would say, the balance of our kind of normal course business. Now that being said, yes, margins can play in that range that you are speaking to. You know, what I would probably tell you here, though, is we are also making sure that we are taking that opportunity to reinvest appropriately in the business. I have mentioned a few times some of those commercial reinvestments, even on the recurring revenue side. You know, a lot of our commercial reinvestments are in areas like service technicians and things of that nature to make sure that we can continue to grow our recurring revenue base on a go-forward basis. So, you know, again, I think generally yes, margin profiles that play in and around areas that you have mentioned. But also certainly reinvest to make sure we can drive future growth. Jeffrey Todd Sprague: Got it. Vikram U. Kini: Got it. So the way to think about it is that, like, when you get the full run rate, you will see probably a more accretive margin profile than what you are seeing today coming out of the business because of some of the reinvestment that you are doing. Is that a fair way to characterize it? Jeffrey Todd Sprague: Yeah. Yeah. No. That is what I heard. Vikram U. Kini: Yeah. And then I guess the following question is I look. I know that the M&A that is not completed is not part of the guide. But given your expectation that you will do about, you know, potentially four to five points revenue contribution this year. Jeffrey Todd Sprague: What is the Vikram U. Kini: like, first-year margin profile look like for the things that you are looking at that you are hoping to complete in your pipeline today? Yeah, Joseph Alfred Ritchie. I will start here. So obviously, a bit speculative because, quite frankly, year to year and deal to deal, the margin profiles can clearly be a little bit different. You know, probably the best way I would describe it is that, as Vicente said here, one, purchase multiples are quite prudent. The ability to derive double-digit returns, if not mid-teens returns by year three, and as such, take multiple turns out from controllable cost action synergies, things of that nature, clearly is still the playbook. You know, if I had to put, you know, a broad kind of sweeping statement around it, you know, the acquisitions that are maybe upon acquisition maybe in the lower twenties margin profile, but ones that we see pretty direct path to being in line with, if not better than, segment average margin profile is probably a best way to maybe explain it. But, clearly, each acquisition is a little bit different. And, frankly, you have seen acquisitions that are immediately accretive upon acquisition in certain cases. So, again, not all made equal. But that is probably the best way I would describe it. Helpful. Thank you, guys. Operator: The next question comes from David Raso with Evercore ISI. Your line is open. Vikram U. Kini: Thank you. I was Stephen Volkmann: interested to see the ITS organic orders in the quarter that EMEA was down mid single digit. Just we have heard generally more constructive things out of Europe, and I am just curious if you are seeing was that sort of a comp? Sort of temporary? I am just trying to see where those areas that, you know, things that were down maybe, you know, are inflecting a little bit or just a unique dynamic. Can you explain the Europe? And I have a quick follow-up. Vicente Reynal: Yeah. No. It was just, I mean, nothing to read into it. I mean, just project timing, basically. And that was basically, I mean, but, again, we continue to be really encouraged. I mean, you saw our EMEA business was basically driving very nice positive order growth for the full year. So even in ITS, with that Q4 commentary being negative, still for the full year was up orders, kind of, positive, low single-digit organic. Vikram U. Kini: From a full-year perspective. David Raso: So that is what I was curious. I mean, do you see that business as up? Do the order rates back up in Europe, or are they truly running at negative level? Because, I mean, year to date, we do not have the K yet, but year to date, the revenue have been up in EMEA within ITS. I am just curious if there is Jeffrey Todd Sprague: Sure. Sure. Yeah. But mhmm. Vicente Reynal: No. Not an issue in the fourth quarter. No. I mean, again, some countries are doing better than others. I mean, Mediterranean countries like Spain, Italy, France seem to be actually growing faster than the Central European, like Germany at this point in time. But, obviously, a lot of good activity that we see moving through for the Central European countries as we move forward. But yeah. David Raso: And then for a follow-up, maybe I missed it, but we are now essentially almost halfway through the quarter. Organic sales currently running to your flat to down a little bit? Jeffrey Todd Sprague: Or David Raso: you are just kind of giving that guide and see how the rest of the quarter plays out? You just sound a little more positive in the start of the year than the down Joseph John O'Dea: you know, flat to down first quarter organically. Christopher M. Snyder: Yeah. David Raso, I will take that one. So, yeah, I think the best way to say it here is that I think as we have moved through January, and I will probably reflect a little bit more on the orders Vikram U. Kini: side of the equation. Generally playing itself out as expected, nothing that we would consider to be atypical, whether it be from seasonality perspective or even moving into 2026. So, you know, again, nothing that has happened thus far that would say anything different from either the guidance or kind of even the commentary that Vicente provided earlier. David Raso: Alright. Thank you very much. Jeffrey Todd Sprague: Thank you. Operator: The next question comes from Andrew Edouard Buscaglia with BNP Paribas. Your line is open. Vikram U. Kini: Good morning, everyone. Good morning, Andrew Edouard Buscaglia. You made a comment earlier on China, just that it is improving and that has been a little bit of a change, let us say, in the last quarter or two. Christopher M. Snyder: And other companies are kind of talking about that a little bit more. Where can you get more specific about where you are seeing this Vikram U. Kini: improvement and yeah, how you see that playing out in 2026? Vicente Reynal: Mhmm. Yeah. I mean, I think the improvement is really coming from a lot of the launch of new products and technologies that our team is doing into the market. So taking also acquisitions that we have done in the U.S. and also Europe and taking that technology, localizing it, and then selling in China for China. So a good combination of really what I would call a lot of that self-help initiatives that our team is driving more so than there is an overall market improvement in China. So I think the encouragement, you know, I spent the last week with the team in China, is just seeing that, is that the level of innovation and the level of speed on understanding how we can combine technologies to create differentiated solutions for our customers is pretty unique. You know, we gave one example about the blower combined with aeration. That is actually something new that now the team in China is launching. Gives them a competitive advantage against other companies and, again, taking technologies that we acquired in the U.S. and localizing and driving that in China, for example. Jeffrey Todd Sprague: Yeah. Nigel Edward Coe: More company-specific stuff. Jeffrey Todd Sprague: Yes. Vikram U. Kini: Yeah. And I know you sound encouraging on life sciences. And, again, that is kind of something Christopher M. Snyder: other companies are getting a little more constructive on for 2026. Vicente Reynal: You know, I want to Christopher M. Snyder: touch on ILC Dover only because with these acquisitions, sometimes they go quiet and the growth Andrew Edouard Buscaglia: sort of moderated or I do not even if I want to say slowed, but for that business specifically, I just want to check. Are we is this could this be a source of sneaky upside if this acquisition kind of comes back and are there things you have done to it where we could potentially see it contributing to both overall growth and margins this year? Vicente Reynal: Yeah. I mean, we definitely have done a lot and encourage, you know, whether it is the setup with putting new leaders, the creation or kind of creating the P&L that were needed to really drive execution, the investments that were needed to really penetrate in some of the better end markets and things of that nature. We have done a lot of work. And what we have done here is then created a platform for the acquisition. And now so far, we have done four into that kind of platform that we have. So it is just a lot of work that we have done and that we continue to push hard to do better. Jeffrey Todd Sprague: Yeah. Okay. Thank you. Operator: The next question comes from Andrew Alec Kaplowitz with Citi. Your line is open. Jeffrey Todd Sprague: Hi. Good morning. This is Natalia on behalf of Andy Kaplowitz. Morning. Operator: It was the first question that I will ask. Trying to be nitpicky here, but historically, you got to 100% FCF conversion. This year, your guidance is under 100%. Is there anything holding you back in terms of free cash flow guidance? Any color you can provide there? Vikram U. Kini: Sure, Natalia. I will start with that one. So, I think first from us, I think if you kind of look over the course of the last few years, we have been in that kind of low to mid-90s realm. So I think 95% free cash flow conversion is, I would say, not just even consistent, but even, frankly, a touch better than what you have seen in the last few years. Now that being said, clearly, closer to 100%, I think, is clearly the, I would say, the goal, if you will. You know, I think there is not necessarily anything holding us back. I do think that, you know, clearly, not just earnings growth, but I would call it working capital efficiency probably continues to be one of our kind of major areas for opportunity as we move forward. Not surprisingly, areas around inventory and things like that, particularly coming out of 2025 where some of the tariff dynamics created some inventory build and things like that, is really probably our biggest source of opportunity as we move through 2026. But, no. I would say, generally, otherwise, we expect very consistent cash flow conversion, if not even slightly better than what you have seen in the last couple of years? Operator: Got it. That is helpful. And then, just curious about just industrial energy efficiency in the sense that when I think about compressors consuming energy in a factory, can you maybe talk about the customer payback that you are seeing right now? Has that improved over the past year? Where do you see it going? Color on there would be helpful. Vicente Reynal: Yeah. Sure, Natalia. I will say that as price of electricity continues to rise, then that, for sure, will drive better performance in terms of that return on investment for the customer. So we continue to see these paybacks clearly under two years. You know, I mentioned me being in China. I was actually visiting a very large customer in China where compressors were consuming roughly 50% of the total energy at that facility. Now this is a very, very, very large customer. Shows you the conversation was all about that. It was all about how can we help them connect that compressor and fine tune it to reduce that energy and therefore drive more efficiency for that customer. So I think it is encouraging to see that, obviously, we have the right solutions here. Jeffrey Todd Sprague: Alright. That is helpful. Thank you. Operator: That is all the time we have for questions. I will turn the call to Vicente Reynal for closing remarks. Jeffrey Todd Sprague: Thank you, Sarah. Vicente Reynal: So as we wrap, I just want to say thank you for the continued interest in Ingersoll Rand Inc. and, more important, thanks again to all of our employees. Our ownership mindset and the culture of ownership is what creates a differentiation of us. Our team thinks and acts like owners every day because they are. And so we remain focused on disciplined execution, very thoughtful capital allocation, and building a company designed to perform across the cycle. So thanks again, and we will talk soon. Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
Operator: Hello and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Essent Group Ltd. Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to Philip Stefano, Investor Relations. Philip, please go ahead. Thank you, Tiffany. Philip Stefano: Good morning, everyone, and welcome to our call. Joining me today are Mark Casale, Chairman and CEO, and David Weinstock, Chief Financial Officer. Also on hand for the Q&A portion of the call is Chris Curran, President of Essent Guaranty. Our press release, which contains Essent’s financial results for the fourth quarter and full year 2025, was issued earlier today and is available on our website at essentgroup.com. Prior to getting started, I would like to remind participants that today’s discussions are being recorded and will include the use of forward-looking statements. These statements are based on current expectations, estimates, projections, and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially. For a discussion of these risks and uncertainties, please review the cautionary language regarding forward-looking statements in today’s press release, the risk factors included in our Form 10-Ks, which was filed with the SEC on 02/19/2025, and the other reports and registration statements filed with the SEC, which are also available on our website. Now let me turn the call over to Mark. Philip, and good morning, everyone. Earlier today, we released our financial results for the fourth quarter and full year of 2025. Our strong performance this year was driven by positive credit trends, and the benefit of higher interest rates on both persistency and investment income. These results demonstrate the strength of our buy, manage, and distribute operating model in generating high-quality earnings, which has enabled us to take a more strategic approach to capital management. For 2025, we reported net income of $155 million or $1.60 per diluted share. For the full year, we earned $690 million or $6.90 per diluted share while generating a return on average equity of 12%. As of December 31, our book value per share was $60.31, an increase of 13% from a year ago. As of December 31, our mortgage insurance in force was $248 billion, a 2% increase versus a year ago. Our twelve-month persistency on December 31 was 86%, with roughly 60% of our in-force portfolio having a note rate of 6% or lower. Over the last several quarters, persistency has been relatively flat reflecting higher mortgage rates and a smaller origination market. As a result, we believe that over the near term, earned premium and insurance in force growth will be modest. The credit quality of our insurance in force remains strong, with a weighted average FICO of 747 and a weighted average original LTV of 93%. Our portfolio default rate increased modestly quarter over quarter reflecting normal seasonality and the continued aging of our insurance in force. Looking forward, we believe that the substantial home equity embedded in our in-force book should mitigate ultimate claims. Outward reinsurance continues to play an integral role in operating our business. At 2025, 98% of our mortgage insurance portfolio was subject to some form of reinsurance. During 2025, we entered into a quota share with a panel of highly rated reinsurers providing forward protection for our 2027 business. We remain pleased with the execution of our reinsurance strategy, ceding a meaningful portion of our mezzanine credit risk and diversifying our capital resources. On the Bermuda front, Essent Re continues to be a very effective platform in deploying capital and generating additional earnings for Essent. For 2025, Essent Re earned nearly $80 million in third-party net income while ending the year with $2.3 billion in risk. In addition, during the fourth quarter, Essent Re entered into quota share reinsurance agreements backed by funds at Lloyd’s to reinsure certain property and casualty risks. These agreements are effective in 2026 and we expect $100 million to $150 million written premium with approximately two-thirds to be earned in 2026 at a combined ratio consistent with a diversified P&C reinsurance company. Looking forward, we believe that P&C will be an ongoing opportunity to generate supplemental earnings for Essent Re. On the title front, we remain focused on activations, leveraging our lender network, and building out our transaction management system. However, as a primarily centralized refinance platform, our title operations are unlikely to have a substantial impact on earnings unless there is a material decrease in mortgage rates. Our consolidated cash and investments as of December 31 totaled $6.6 billion with an aggregate yield for the year of 3.9%. New money yields on our core portfolio in the fourth quarter were nearly 5%, holding largely stable over the past several quarters. We continue to operate from a position of strength with $5.8 billion in GAAP equity, access to $1.3 billion in excess of loss reinsurance, and $1.3 billion in cash and investments at the holding companies. With the full year 2025 operating cash flow of $856 million, our franchise remains well positioned from an earnings, cash flow, and balance sheet perspective. We remain committed to a measured and diversified capital strategy, which enabled us to return nearly $700 million to shareholders in 2025 between dividends and repurchases. During the year, we repurchased nearly 10% of the shares outstanding at 2024. Furthermore, I am pleased that our board has approved a 13% increase in our quarterly dividend to $0.35 per share starting in 2026. Now let me turn the call over to David. Thanks, Mark, and good morning, everyone. David Weinstock: Let me review our results for the quarter in a little more detail. For the fourth quarter, we earned $1.60 per diluted share compared to $1.67 last quarter and $1.58 in the fourth quarter a year ago. Considering Essent Re’s expansion into the Lloyd’s market, as Mark noted, we began to assess the performance of all third-party reinsurance as an operating segment in the fourth quarter. Mark Casale: To reflect this change, David Weinstock: GSE and other mortgage risk share is no longer aggregated with U.S. mortgage insurance, and all third-party reinsurance is now disclosed as a separate reportable segment called Reinsurance. All prior period segment information has been recast to conform to the new segment presentation. My comments today are going to focus primarily on our results of our Mortgage Insurance segment. There is additional information on Reinsurance and Corporate and Other results in Exhibits D and E of the financial supplement. Our Mortgage Insurance portfolio ended the fourth quarter with insurance in force of $248.4 billion, a decrease of $452 million from September 30, and an increase of $4.7 billion or 1.9% compared to $243.6 billion at 12/31/2024. Persistency at 12/31/2025 was 85.7%, compared to 86% at 09/30/2025. Mortgage Insurance net premium earned for the fourth quarter 2025 was $213 million. The average base premium rate for the Mortgage Insurance portfolio for the fourth quarter was 41 basis points, consistent with last quarter, and the average net premium rate was 34 basis points, down one basis point from last quarter. We expect that the average base premium rate for the full year 2026 will be approximately 40 basis points. Our Mortgage Insurance provision for losses and loss adjustment expenses was $55.2 million in 2025, compared to $44.2 million in 2025 and $37.2 million in the fourth quarter a year ago. At December 31, the default rate on the Mortgage Insurance portfolio was 2.5%, up 21 basis points from 2.29% at 09/30/2025. For the full year 2025, we recorded a net provision on the Mortgage Insurance portfolio of approximately $145 million, with higher defaults reflecting the seasoning of the portfolio. Mortgage Insurance operating expenses in the fourth quarter were $34.3 million and the expense ratio was 16.1%, compared to $31.2 million and 14.4% last quarter. For the full year 2025, operating expenses for the Mortgage Insurance segment totaled $140 million, and we expect that operating expenses for the Mortgage Insurance segment will be approximately $145 million for the full year 2026. At December 31, Essent Guaranty’s PMIERs efficiency ratio was strong at 169% with $1.4 billion in excess available assets. Consolidated net investment income and our average balance of cash and investments available for sale in the fourth quarter were largely unchanged from last quarter due to our share repurchase activity. The consolidated effective tax rate for the full year 2025 was 16%, including the impact of $2.1 million of favorable discrete tax items. For 2026, we estimate that the annual effective rate will be approximately 17% excluding the impact of any discrete items. As Mark noted, our total holding company liquidity remains strong and includes $500 million of undrawn revolver capacity under our committed credit facility. At December 31, we had $500 million of senior unsecured notes outstanding, and our debt-to-capital ratio was 8%. In the fourth quarter, Essent Guaranty paid a dividend of $280 million to its U.S. holding company. As of January 1, Essent Guaranty can pay ordinary dividends of $246 million in 2026. At quarter-end, Essent Guaranty’s statutory capital was $3.6 billion with a risk-to-capital ratio of 9.1 to one. Statutory capital includes $2.6 billion contingency reserves at December 31. During the fourth quarter, Essent Re paid a dividend of $100 million to Essent Group. Also in the quarter, Essent Group paid cash dividends totaling $29.5 million to shareholders, and we repurchased 2 million shares for $125 million. In January 2026, we repurchased 713,000 shares for $44 million. Now let me turn the call back over to Mark. Thanks, David. In closing, our 2025 results demonstrate Essent’s resilient financial performance in a challenging housing market. Mark Casale: We delivered a strong return on equity and book value per share growth while retiring nearly David Weinstock: 10% of our share count through value-accretive repurchases. Mark Casale: The normalization of credit continues, but our high-quality portfolio remains positioned for a range of economic scenarios as we explore new opportunities. We believe this disciplined strategy serves the best interest of our stakeholders and positions Essent to create long-term shareholder value. David Weinstock: We will now open for questions. Operator? Operator: At this time, if you would like to ask a question, press star and the number one on your telephone keypad. To withdraw your question, simply press star 1 again. Your first question comes from the line of Mihir Bhatia with Bank of America. Please go ahead. Mihir Bhatia: Good morning. Thanks for taking my question. Maybe just let us start with the decision to enter the Lloyd’s market. I guess, you know, why now? Maybe talk a little bit about the strategy Mark Casale: That you are doing there, what type of assets you are looking to underwrite, maybe just help us understand what exactly is happening there both strategically and operationally. Thank you. Mihir Bhatia: Sure. Thanks for the question. I would say it has been in process for a while. We have been studying ways to expand Essent Re. So think of it, Mihir, more Essent Re expansion versus we are jumping into a new line of business. When you take a look at Essent Re, it is a valuable asset. I mean, over the years, it has done the affiliate quota share. They have written a lot of really high-quality GSE risk share business. They have a nice MGA where we assist 10 other David Weinstock: Larger insurance companies to write GSE credit share risk. Mihir Bhatia: But because of when you combine all three of them, we are sitting there with a $1.7 billion balance sheet, single A rated from AM Best, A- S&P. It is one of the larger reinsurance companies in Bermuda. David Weinstock: And because of the changes over the past several years, one, Mihir Bhatia: Just investment yields went up. A lot of asset leverage within P&C. We are on the MI side, we are generally one to one. In P&C, you could be two to one, in some cases, three to one. So there is nice asset leverage. Clearly, that is a lot more valuable when yields go up. Second, S&P a couple years ago now changed their capital David Weinstock: Capital rules. So there is a lot more Mihir Bhatia: Capital, I would say, efficiencies when writing P&C on top of MI to kind of get that diversity benefit. Right? And third, it is clearly not correlated to the consumer. Those, I would say, attributes probably eighteen months ago is when we started to look at it. So, you know, we have been looking at various ways. And we thought Lloyd’s was a very efficient way for us to kind of step into the market. $50 million of FAL. It is Lloyd’s itself. It is kind of a self-contained market, very, very capital efficient. The $50 million that we are putting in is actually sitting on Essent Re’s balance sheet, so there is no additional capital required. I think that is important for folks to realize. And it is really well diversified. So I would say 87% of the business roughly is in insurance versus reinsurance. Our top, you know, 40-plus syndicates that we are backing and reinsuring, and it is generally well diversified across most lines. Less, you know, we kind of made a conscious decision to be a little less weighted towards property cat just because of the volatility there, and that is one where, you know, we still have more, I would say, more work to do. We hired a small team, and they are very experienced in the P&C business, very technical. So they have actuarial backgrounds, which we like. We are very technical. Right? We talk a lot about unit economics and balance sheet and all those sort of things. So they kind of fit our style. And we will continue to build that team out. It is not going to be very material, and so I do not want Mihir Bhatia: To play this up that we have entered into a new business. It is not transformational. It is very measured because that is how we like to do things. And as we learn over time, remember, one of the advantages we have at Essent because we are kind of a founder-operated company, we all own a lot of shares. We have a long-term view. And I was in London a few times last year, and I met most of the syndicates that we are backing within the top 10. And I looked at them and said, you know, do we want to invest with them? Because that is essentially what we are doing. I know we will recognize it as premiums, but think of it also as kind of almost like a big matching line. So we will certainly update you guys with the leverage, and with that platform, we also have the opportunity to write whole quota share with larger reinsurance companies, kind of like how we do it on the MI side. And the relationships that we have there may be a way for us to partner with some over time. Again, not really in the 2026 forecast. We will see how it goes. But a pretty measured approach, but, you know, similar to title, which is still kind of in that incubation phase and starting to do, you know, we are starting to see some real good signs. They are just nice call options for our investors. So it is not, you know, it is not like we are going to buy back less shares. It is a way for us to learn the business. We will continue to attract talent to the organization both in Bermuda and the U.S., and if there is a time, and we realize where we are in the cycle. We know entering into, you know, kind of it is a little softer David Weinstock: In certain segments of the market. That is fine. You are never going to, we are not trying to time the Mihir Bhatia: Market. We look at this as an opportunity. Again, longer term, five to ten years, if successful, it will generate supplemental earnings for the company and help us. It is like another tool I have to grow book value per share. Mihir Bhatia: Got it. That is helpful. Thank you. Maybe just switching to the MI business for a second. The David Weinstock: Right. Mihir Bhatia: I know you do not manage to market share, so this really is not a Bose Thomas George: Share question. But, you know, you look at it and you are, I think of those that have reported so far, you are the only Mark Casale: One that has got NIW lower quarter over quarter. So is that just a reflection of you not liking the returns in the market? Is there a conscious decision to pull back in certain parts of the market or risk grades? Help us understand what is happening there. Mihir Bhatia: Yeah. I would not read too much into it. You know, you have heard me say before, it kind of ebbs and flows. For the year, we were 15. I always say we are kind of the 15, 16. We really try to optimize the unit economics. We have not, you know, I want to say we backed off a couple things earlier in the year. You know, you had the tariffs coming. You know, we probably cut some of the tails, and that is probably a little bit of that. That is okay. I mean, you look at, if we went back and if we were two points higher in share for the last three years, it all comes out in a wash. And there is really no price-volume trade, especially the better credits. It is just not there. We would rather take that dollar and give it back to shareholders, and I am telling you, I am warning investors because this is just a price game. And if we are, like, bottom in share and the number one or two guys $5 billion ahead of us in this market, I hear it is price. And we are not, again, everyone has their own strategy. We think a dollar, rather than put it into a loan at a super low premium, I will give it back to shareholders. So we are fine. And then, you know, we will weave in times of dislocation like 2020. We wrote the most market share. So, you know, longer term, market share is really a result of some of the things you do. We are very, I would say, when you kind of take a look at us, again, some of the advantages we have. Look at our gross premium yield. It is the highest in the industry, like three points higher than the average. It is pretty high, and run that over a $250 billion, it is pretty meaningful. So those are real economics to the company. Look at our gross, and this will all be available, I guess, when all the Ks come out. But look at our gross operating expenses relative to our peers. Add back the ceding commission. Right? Because everyone looks and talks about net expenses. It is really gross expenses, which is cash going out the door. There is a form of leverage there. We outperform the industry. And so when you think about, and it is a relatively sizable advantage versus a few. That expense efficiency allows us to build a team in Bermuda. It allows us to build out title. Those are things, again, since we manage the business so well, these are ways for us to kind of create competitive advantages, clearly on the technology side with EssentEDGE. You know, we have been monetizing AI now for, you know, seven years. We have not done the new AI, but the machine learning and what we are doing and the EDGE is flat out artificial intelligence. But we are monetizing. We are not just talking about it. You can see that in our premium yield. That is another good example of how we are thinking about the business. So, again, back to market share, I would rather have better unit economics at a smaller share than the other way around. Bose Thomas George: Got it. Thank you for taking my questions. Operator: Your next question comes from the line of Bose George with KBW. Please go ahead. Mark Casale: Hey, guys. Good morning. Actually, just a follow-up on that last question. Bose Thomas George: Your gross premium yield has been 41 basis points for a few quarters. You guided to 40 next year. Is that just kind of a rounding issue or anything tied to market returns? Mark Casale: It has been, no. It has been 41 for a while, Bose, and just think about it, it actually was lower than that. And I was actually looking at it the other day. It was lower than that in kind of the 2021–2022 period. And remember, if you think about 2022, when I commented how low pricing was, there was kind of a reversal, and pricing kind of came up in the industry and it kind of rolls through, because remember you are talking about insurance in force. So it is tough for, there is not a lot of transparency for analysts and investors on what the premium yield is upfront. You can kind of sense though, if you look at kind of where gross premium yields were for all the companies two quarters ago, four quarters ago, that will give you a good hint, a leading indicator as to what people are pricing at on the front end. So I think for us, it actually went up when pricing went up. And clearly pricing, it has been relatively stable. But as that pricing starts to, you know, compress, and it has compressed a little bit in 2025. But the compression is not really competitively oriented, you know, there is a little bit of that, but it is really driven by credit. You know, when we look at the credit that is coming in, like, 757 FICO, you know, we rounded it up, but our LTV in the fourth quarter was shy of 92. So that is, all of a sudden, if you think about the old-fashioned rate card, you are in that one quadrant where it is super good credit quality but lower premium. So that is driving a little bit of it. So I would not get too fussed about it. I mean, once the homeowners that are on the sidelines come back and we get kind of that 740–745, 93 LTV, you will see that pricing come back up. And that will work its way into the yield. So it is a way for us to give you guidance to run the models. Bose Thomas George: Okay. Great. That is helpful. Thanks. And then you noted that insurance in force growth is likely to be modest. I mean, this year was 1.9% year over year, which is already in the modest camp. So is it going to be, do you think it is going to be sort of below that level or kind of in that range? Mark Casale: I think within that range. Again, I do think longer term, I hate to say longer term, but it is longer term that housing will continue to grow. There will be renewed growth, Bose. I mean, the demographics, you know, 4 to 5 million in that age group, kind of 28 to 32, are coming into that homeownership camp every year. But the lack of, you know, given where rates are, the lack of affordability, a little lack of supply, they are just on the sidelines. And when they come off the sidelines, I do not know. But when they do, it is going to be a bigger spike than people think. I just, my crystal ball does not work in those types of increments. I think we are well positioned. So, again, from an Essent perspective, credit is relatively benign still. And as long as credit stays benign, and we can continue to produce the type of cash flow we are producing and really just use that to return to shareholders, we are kind of paid to wait, so we are fine with that. So, again, modest growth. Again, that is a little bit of us trying to guide investors and analysts to what they should expect because the numbers are the numbers, and we would rather kind of underpromise and overdeliver than the reverse. Bose Thomas George: Okay. Great. Thank you. Operator: Again, if you would like to ask a question, press star 1 on your telephone keypad. Your next question comes from the line of Douglas Harter with UBS. Please go ahead. Bose Thomas George: Thanks, and good morning. Mark, can you talk about what you are seeing in your delinquency activity and whether you are seeing any difference across the vintages, especially the vintages that maybe have a little bit less embedded home price appreciation? Mark Casale: Yeah. Good question. You know, it is not really. I mean, we have 20,000 defaults. If you break it out by vintage, if you break it out by state, if you break it out by lender, if you break it out by servicer, nothing really stands out. I mean, Florida is a little higher because we had some hurricanes. And I would say that the Florida book is probably our higher premium book, but there is a little bit more risk there. We are fine with that. We love the unit economics in Florida and Texas. But no, it is really, we are always looking for something, but we have not really seen anything. And even the pre-2022 book, and I always like that. We always call it kind of the two books. Right? It is the pre, you know, it goes halfway through 2022 and before is one book and then the newer book, which was at elevated Philip Stefano: HPA, Mark Casale: And higher interest rates. We are not seeing much of a difference there. That is probably a more normal, high LTV MI type portfolio, and we are not seeing anything there too. I mean, you are going to see noise and we still see it with forbearance, which ultimately is a good answer for borrowers, but it does create some noise in terms of the defaults and the ins and outs. Again, roughly 800,000 loans. There are only 20,200 defaults. I think it was 18,000-plus twelve months ago. So it is really, benign is maybe too light of a word, but we are not really too fussed about where defaults are. It comes down to unemployment, Doug. I mean, at some point, if it rains, like, every blade of grass is going to get wet. So we keep our eyes on unemployment. That is where we are always looking for pebbles. It will happen. Something will hit us at some point. We are just not seeing it in the, obviously not seeing it. In fact, the credit coming in has never been better. We are not seeing it, and I know you follow a lot of them too. We do not see it in a lot of consumer finance. We are not seeing it in the cards. FHA is pretty elevated. But other than that, we are very, very happy with the portfolio and the performance of the book. And even then, if default rates do spike at some point, look at where our claim rate is. So the embedded home equity helps a lot. I think our claim rate is probably right around 1% ever to date. So, I mean, there are some good protections. And I think it is a little underappreciated by the community, which is fine. I mean, again, if you look at just where we are at book value, it is all cash. We do not have a lot of debt, and there is not really a lot of credit given for future value of the cash flows. And do not forget, these future cash flows are pretty well hedged. Right? I mean, we own that first loss piece, but the mezz piece is pretty well hedged out. So we have a high degree of confidence in the present value of those future cash flows. Hence, that is why we are buying back shares. That is why we pay a dividend. And if we did not have that confidence, we certainly would not be funneling cash outside the company. Douglas Michael Harter: Great. I appreciate the answer, Mark. Thank you. Mark Casale: You are welcome. Operator: Your next question comes from the line of Richard Shane with JPMorgan. Please go ahead. David Weinstock: Hey, guys. Thanks for taking my question. So it is interesting. Obviously, I have done this a while and followed a bunch of different companies, and I am thinking about comments from two other founder-run businesses that I recall over time. And one Douglas Michael Harter: Is in the David Weinstock: Middle market lending space, and the comment was basically, there is no spread for a bad loan. Conversely, if you are making a massively diversified card-type portfolio, you are ultimately sort of seeking an efficient frontier. You accept the fact that you are going to have losses. They are not idiosyncratic. Operator: It strikes me David Weinstock: That you guys sort of try to balance both. But ultimately, your business is an actuarial business. Mark, you have Operator: Sort of David Weinstock: Provided this cautious outlook. And I am curious Operator: If you think it is because you cannot capture price David Weinstock: In the context of what you are concerned about in terms of credit. Is that the right way to think about this? Mark Casale: Yeah. I mean, I think that is, I do not think you are off. We are never going to be the market leader, and part of this is we do not have to be. You know, our incentives, go look at the incentives, they are all in the proxy statement. Just read the incentives. People do what they are incented to do. I am incented to grow book value per share. One hundred percent of my long-term incentive is growth in book value per share. We are not incented on market share. We are not incented on NIW. We are not incented on insurance in force. So we do not come in every day saying we have to grow NIW. Look at the incentives around the industry. Some do. They are going to make different trade-offs. I am not saying we are right and they are wrong. It is just different. People do what they are incented to do. We like, over the long term, to optimize our unit economics. So what yield are we charging, what is our loss, what is our capital? Because over time, if you write good unit economics, that will flow through your P&L. And conversely, if you do not, that will also flow through the P&L. And, again, bottom line is we want to grow book value per share. That is our incentive. That is why we are doing it. And as a founder-run company and owning a lot of shares, and a very, I would say, very supportive and constructive board of directors, a lot of them have been with me from the beginning, we all sing from the same hymn sheet. So it is not like they say you have to grow, they are with us in terms of how we will slowly grow, and I think it is a long-term boring story with Essent. But since we have been public, Richard, we have grown book value per share 18%. Our total stockholder return is close to 12%, which is equal to the S&P 500. It is more than the S&P 400 mid-cap by, like, three points. Longer term, am I going to win in the next two weeks, or a month or a quarter? David Weinstock: I do not know. I do not care. Mark Casale: I want to win long term, and the company wants to win long term. And I think that is, so when we come in every day, and we do come in every day and we meet and we talk, it is really like where do we want the business to be five years from now, ten years from now. We like to work backwards as to, and when we look at that in the context of do we invest in title, do we invest in Essent Re, do we try to be number one in market share, we balance a lot of that stuff. So, again, it is our way. It is not necessarily the right way. But, as a large owner of the company, I feel very comfortable with the direction and how we are managing the company. Got it. That helps. And just to sort of delve in a little bit more, pricing has not really changed that much, but you are a little bit more cautious. Is there something that you are thinking about specifically in terms of housing credit that shifted? And, again, you know our views on the world. So I am curious what your credit outlook is here. It is a good question. I would not, like I said, the market share ebbs and flows. Like I said at the beginning, I would not read too much into it. It is not like we made a credit call and we went to 14% market share. It is nothing like that. It is really around kind of on the margin and optimizing unit economics. You still do a lot of testing and pricing elasticity. Our view is, you know, I think you will know when we are cautious on credit. Trust me, you will know. I would not, it is not a credit call. It is more around what is the best dollar. Is it used to repurchase shares or look at other opportunities, or is it to grow NIW? And I think our view is, given the strength of our balance sheet, given the liquidity advantage we have with Essent Re, we can lean in when things get, you know, when the market looks, you know, when people are a little bit more scared of the market, and we feel like we can get more pricing. Right now, given where pricing is, it really has not moved. We are just comfortable kind of being at the bottom of the pack. It does not really impact. If we were, like I said earlier, larger, it would just require more capital. And that dollar of capital is probably just better at this point in our life cycle and where the market is, not forever. We think returning it to shareholders is really the best investment decision. And the fact that we retired 10% of the shares, that is a large number. If that continues, I would expect it to continue this year, all else being equal. We bought back $44 million in January. And if we are kind of where we are at in terms of the market, it would not surprise me to see that level continue. And that just means a lot of our larger shareholders get to own more of the company, and they get to own more of a fantastic business. So I think it is a good thing. So do not read into it a credit. It is not really, I am not making a credit call, and I know your views. Richard Barry Shane: Appreciate that, and I really do appreciate the answer and the conversation. Thank you, guys. David Weinstock: You are welcome. Operator: That concludes our question-and-answer session. I will now turn the call back over to management for closing remarks. Mark Casale: I would like to thank everyone for calling in and joining the call and the questions, and have a great weekend. Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Good morning. My name is Jamie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Dauch Corporation fourth quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. As a reminder, today’s event is being recorded. I would now like to turn the floor over to David Lim, Head of Investor Relations. Please go ahead, Mr. Lim. David Lim: Thank you, and good morning. I would like to welcome everyone who is joining us on Dauch Corporation’s quarter earnings call. Earlier this morning, we released our 2025 earnings announcement. You can access this announcement on the Investor Relations page of our website, www.duke.com, and through the PR Newswire services. You can also find supplemental slides for this conference call on the Investor page of our website as well. To listen to the replay of this call, you can dial (855) 669-9658, replay access code 577-1070. This replay will be available through February 20. As for upcoming investor conferences, we will be at the JPMorgan 2020 Global Leverage Finance Conference on March 3, and we will also attend the Bank of America 2026 Global Automotive Summit on March 17. We look forward to seeing you there. Now before we begin, I would like to remind everyone that the matters discussed in this call today may contain comments and forward-looking statements that are subject to risks and uncertainties, which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed. For additional information, please reference Slide 2 of our investor presentation or the press release that was issued today. Also during this call, we may refer to certain non-GAAP financial measures. Information regarding these non-GAAP measures as well as of the non-GAAP measures to GAAP financial information is available in the presentation. With that, let me turn things over to our Chairman and CEO, David Dauch. Thank you, David, and good morning, everyone. Thank you for joining us today for our first earnings call at the new Dauch Corporation. As a newly combined company, we warmly welcome our new Dauch associates to the team. Together, the future is even brighter as we join together strength of two great companies into one robust global automotive supplier, and again, welcome to the Dauch and GKN team members. On this call, we will discuss our financial results for the 2025, our full year of 2025, and our guidance for 2026. Joining me on the call today is Chris May, our Executive Vice President and Chief Financial Officer. To begin my comments today, I will review the highlights of our fourth quarter and full year 2025 financial performance. Next, I will also cover a number of our achievements in 2025, then I will discuss the completion of our transformational Dauch acquisition and the benefits that these two companies bring together. After Chris covers the details of our financial results, we will open up the call for any questions that you all may have. Let us begin. We concluded 2025 on a positive note with good momentum. We delivered strong fourth quarter and full year adjusted EBITDA margin growth, reflecting solid performance as we made positive operational progress throughout the year, generating over $200,000,000 in adjusted free cash flow in 2025. Our 2025 fourth quarter sales were approximately $1,400,000,000. For the full year, sales were approximately $5,800,000,000. From a profitability perspective, adjusted EBITDA in the fourth quarter was $169,000,000 or 12.2% of sales. For the full year, adjusted EBITDA was $743,000,000 or 12.7% of sales, up from 12.2% last year. We experienced margin improvement in both our metal forming and our driveline business units as we remain focused on operational efficiency. David Lim: Our adjusted earnings per share in the 2025 was $0.07 per share. David Dauch: For the full year, adjusted earnings per share was $0.53 per share. Adjusted free cash flow was $70,000,000 in the quarter, and $213,000,000 for the full year in 2025. For 2025, we delivered on the financial targets that were outlined last February while navigating a very volatile macro environment. It was a solid performance by our team as we managed factors under our control and remained focused on the fundamental pillars of our company, technology leadership, operational excellence, and quality. Now let us talk about some exciting business news, and please refer to Slide 4 in our investor deck. We are very happy to announce that we will supply our innovative SmartBar product to Scout Motors. This is in addition to the front electric drive units and the electric rear beam axles that we announced last year. This is significant not only for our advanced technology capabilities, but also demonstrates that OEMs can come to us for a variety of products to enhance their vehicles’ drive characteristics. In addition, our Asia team received Cherry Automotive’s Best Supplier Award of the Year for 2025. This is a very prestigious award as it recognizes suppliers for outstanding quality and reliable delivery. We are very honored to receive this recognition from Cherry. Finally, we earned several GM supplier quality excellence awards as we continue to meet or exceed GM’s rigorous quality performance criteria. Our focus is to operate at a high level and satisfy customer expectations, globally. David Lim: As we manage our day-to-day business, we simultaneously complete a transformational and historical acquisition for our company. The acquisition of the Dauch Group plc and its subsidiaries GKN Automotive and GKN Powder Metallurgy. This transaction officially closed on 02/03/2026. This acquisition creates a leading global driveline and metal forming supplier and we now have significant size and scale, a comprehensive powertrain-agnostic product portfolio from BMAX will support North American global light trucks, side shafts on substantially all global automotive product segments, electric drives for future growth, and metal forming components serving the automotive and industrial markets. These products can support electric, hybrid, and ICE powertrains. We diversified our customer base and balanced our geographic presence across the globe anchored by our strong truck franchise here in North America, and a significant global presence inside Jeff’s. We have compelling industrial logic with an estimated $300,000,000 in synergies associated with the deal with an expected full run-rate achievement by the end of year three. And we expect high margins, earnings, and cash flow potential as a result of this strategic combination. From a business perspective, our strategy has been consistent. We continue to strive to improve and optimize our operations, drive profitability and free cash flow generation, and manage factors under our control. With the acquisition, our focus is achieving efficient integration, delivering the full value capture potential of the transaction, and achieving our financial and operational targets. Synergy realization is a core priority. We established a dedicated integration office early, led by senior leaders from both legacy organizations, to drive accountability and execution. The teams are filling market basket of ideals and making fantastic progress across numerous cost-saving verticals. Approximately $300,000,000 of identified synergy opportunities span SG&A, purchasing, and operations. We expect to achieve a 60% annual run rate by the end of the second full year with the majority realized by the end of year three. Importantly, we anticipate exceeding $100,000,000 in run-rate savings by the end of the first year, positioning us well to drive value. Before I hand the call over to Chris, let us talk about our 2026 financial outlook. 2026 will be no less interesting than 2025. In our view, trade policy discussions will continue as USMCA becomes finalized later in the year, and once finalized, OEMs can then fine-tune their respective product planning and plant loading decisions. We want to clearly underscore that it is very important and very difficult to speculate the outcome of these discussions. Hence, we will manage our business accordingly. As such, from an end market perspective, we assume 2026 North American production at approximately 15,000,000 units, Europe at approximately 17,000,000 units, China at approximately 33,000,000 units, and global production at approximately 93,000,000 units. Slide 7 illustrates the company’s 2026 financial outlook. Our outlook takes into consideration a partial year contribution from Dauch. And recall, we just closed the transaction on February 3. We are targeting sales of $10,300,000,000 to $10,700,000,000, adjusted EBITDA of approximately $1,300,000,000 to $1,400,000,000, and adjusted free cash flow in the range of $235,000,000 to $325,000,000. In the longer term, our priorities are to realize strong synergies from our Dauch acquisition in combination, generate solid adjusted free cash flow, strengthen our balance sheet, advance our agnostic product portfolio, position the Dauch Corporation for sustained profitable growth, and return capital to our shareholders. In addition, to mark this transformational moment for our company and its shareholders, we recently announced we changed our name from American Axle Manufacturing Holdings Inc. to the Dauch Corporation, or Dauch. The name is not just my family name. It is a brand that stands for clarity, confidence, and a commitment to performance with a legacy of leadership that has helped shape engineering and manufacturing. It represents a responsibility to our stakeholders, a dedication to operational excellence, and a willingness to take bold steps as we strive to exceed today’s standards and capitalize on tomorrow’s potential. Our new brand honors the strength and shared entrepreneurial spirit of both AAM and GKN, while signaling our commitment to performance with staying power. Under the unified brand, we are a premier driveline and metal forming supplier serving the global automotive industry, built on the same foundational pillars of technology leadership, operational excellence, and quality that my father built AAM on. These remain the brand foundation of who we are today, and, as our brand platform states, our company is built to perform. I am proud of the team, what we have accomplished, and looking forward to a positive and productive 2026. That concludes my formal remarks. Let me turn the call over to our Executive Vice President and Chief Financial Officer, Chris May. Chris? Operator: Okay. Thank you, David, and good morning, everyone. Chris May: I will cover the financial details of our fourth quarter and full year 2025 results and our 2026 outlook with you today. I will also refer to the earnings slide deck as part of my prepared comments. So let us go ahead and begin with sales. In the 2025, our sales were $1,380,000,000, which were flat compared to the 2024. Slide 8 shows a walk of fourth quarter 2024 sales to fourth quarter 2025 sales. Volume, mix, and other lowered sales by $2,000,000, pricing was $6,000,000, and the sale of the commercial vehicle axle business in India, which occurred in mid-2025, lowered sales by $27,000,000 in the quarter. Metal market pass-throughs and FX increased net sales by approximately $38,000,000 as both were higher year over year. For the full year of 2025, our sales were $5,840,000,000 as compared to $6,120,000,000 for the full year of 2024. The primary drivers of the decrease were volume and mix, and the sale of our India commercial vehicle axle business, partially offset by favorable FX and metal markets. Now let us move on to profitability. Profit was $140,900,000 in the 2025 as compared to $154,300,000 in the 2024. Adjusted EBITDA was $169,000,000 in the 2025 versus $160,800,000 last year. You can see a year-over-year walk-down of adjusted EBITDA on Slide 9. Although sales volume and mix declined in the quarter, we realized a positive adjusted EBITDA of approximately $5,000,000 due to mix effect. R&D expense continued to be favorable and was slightly lower year over year. And performance was $8,000,000 favorable. For the full year of 2025, our adjusted EBITDA was $743,200,000 and adjusted EBITDA margin was 12.7% of sales. For the full year, this was a 50 basis point margin improvement from 2024. Let us move on to interest and taxes. Net interest expense was $50,800,000 in the 2025, compared to $37,300,000 in the 2024. The increase in interest expense in 2025 as compared to 2024 was primarily due to the issuance of new debt in connection to the acquisition of Dauch, which was held in escrow until the closing in February 2026. In the 2025, we recorded an income tax benefit of $10,000,000 compared to an expense of $6,800,000 in the 2024. Taking all these sales and cost drivers into account, our GAAP net loss was $75,300,000 or $0.63 per share in the 2025 compared to a net loss of $13,700,000 or $0.12 per share in the 2024. Adjusted earnings per share, which excludes the impact of items noted in our earnings press release, was $0.07 per share in the 2025 compared to a loss of $0.60 per share for the 2024. For the full year of 2025, our adjusted earnings per share was $0.53 versus $0.51 per share in 2024. Let us now move to cash flow and the balance sheet. Net cash provided by operating activities for the 2025 was $120,500,000 compared to $151,200,000 in the 2024. Capital expenditures, net of proceeds from the sale of property, plant, and equipment, for the 2025 were $66,000,000. For the full year, we finished at $250,900,000 or 4.3% of sales. Cash payments for restructuring for the 2025 were $2,800,000 and cash payments related to our Dauch acquisition were $25,900,000. Reflecting the impact of these activities, we generated adjusted free cash flow of $70,100,000 in the 2025. For the full year of 2025, we generated adjusted free cash flow of $213,000,000 compared to $230,000,000 in 2024. From a debt leverage perspective, we ended the year with net debt of $1,800,000,000 and LTM adjusted EBITDA of $743,000,000, calculating a net leverage ratio of 2.5 times at December 31. This is down from 2.8 times a year ago on 12/31/2024, driven by our cash flow generation and proceeds we received from asset sales. During the quarter, we completed our financing for our acquisition of Dauch and funds were still held in escrow at December 31, pending the closing of the transaction. You can see the results of the financing activity on our balance sheet. Our strong cash generation and successful financing activity in 2025 allowed us to support the Dauch acquisition closing as planned. Before we move to the Q&A portion of the call, let me provide some thoughts on our 2026 financial outlook. This year will be exciting as we bring two iconic automotive suppliers together. In our earnings slide deck, we have included walks from our 2025 actual results to our 2026 financial targets, and you can find those starting on Slide 10. We note that the 2026 figures represent a full year of Dauch Corporation, previously AAM, and only a partial year contribution for Dauch. We did not close the transaction until February. In addition to the regional production assumptions that are in our press release and deck, assume GM’s large pickup and SUV production in the 1.3 to 1.4 million unit range. As for financial guidance, we are targeting a sales range of $10,300,000,000 to $10,700,000,000 for 2026, which provided a breakout on the walk of the Dauch contribution to sales for a full year plus the portion applicable to the prior period to the closing date. From an EBITDA perspective, we are expecting adjusted EBITDA in the range of $1,300,000,000 to $1,400,000,000. Let me provide some color on the key elements of our year-over-year EBITDA walk that is on page 11. This chart walks Dauch Corporation’s standalone year-over-year variances and then adds the portion related to the Dauch acquisition. As it relates to the standalone variances, expect EBITDA to be impacted by volume and mix at normal contribution margin rates. R&D optimization should continue and drive approximately $10,000,000 to $20,000,000 annual savings. We anticipate continued cost reductions and operational productivity efficiency gains, and you can see year-over-year performance improvements as a net favorable $40,000,000 to $50,000,000 on our walk. We currently expect a headwind for metal market and FX, in particular due to the strengthening of the Mexican peso. We then expect Dauch to contribute approximately $600,000,000 for the year, which represents a full cost margin of approximately 12.1%. And very importantly, synergy P&L flow-through is forecasted to contribute $50,000,000 to $75,000,000 in adjusted EBITDA in 2026. This equates to a run rate of greater than $100,000,000 by the end of year one, as momentum builds throughout the year. For our full year guidance at the midpoint, this performance drives a third consecutive year of margin improvement. As for adjusted free cash flow, we are targeting approximately $235,000,000 to $325,000,000 in 2026. At this point, the main driver of this range is primarily to align within the EBITDA range. However, as you know, there are many puts and takes that drive cash flow. Our assumption for CapEx is 4.5% to 5% of sales to support multiple upcoming launches, including for our large GM truck programs. We expect core operational restructuring-related cash outposts in the range of $110,000,000 to $150,000,000, as the former Dauch restructuring initiatives are in their final year of completion, and for the closure of select former AAM facilities. Lastly, we expect cash costs associated with synergy capture to be in the range of $100,000,000 to $125,000,000 for 2026. Taking a step back, when you read through all of the details, you will see an expectation of margin growth and, even after absorbing restructuring and synergy costs, real positive cash flow available for debt repayment from our operations in the first year of this transformational transaction. We do not provide quarterly guidance. We do want to provide some perspectives on timing in 2026. As it relates to the revenue cadence for the year, due to meaningful January downtime at key customers and only a partial quarter for Dauch sales contributions, we anticipate the first quarter to be our weakest quarter. In addition, we expect normal seasonal cash outflow in the quarter. Let me provide you with some key housekeeping items for modeling purposes. I know many have been reviewing and analyzing published Dauch financial data. However, I just want to remind you that we are on different accounting standards. Dauch is IFRS and Dauch is US GAAP, and each company has different adjustment definitions. And you cannot simply add the two figures together, as the differences are significant and have been part of our planning since day one. Please see our previously published proxy materials for additional insights. We expect approximately 243,000,000 fully diluted shares outstanding for 2026. We expect normal variable contribution margin on product sales for the new company in the 25% to 30% range, essentially the same as prior. We expect annual cash pension contributions of approximately $40,000,000 to $50,000,000, primarily related to legacy Dauch plans. At this time, use approximately a 30% tax rate for book and cash taxes and assume $150,000,000 to $170,000,000 for 2026. Given the size of this transaction and the fact we just closed less than two weeks ago, there will be significant effects from purchase accounting, transaction costs, and other activity in the 2026. We look forward to sharing all this related information with you at our first quarter earnings call. All that said, we are very pleased with how we finished 2025, and we are already starting to see the benefits of our newly sized and named company in 2026. With synergy value capture gaining momentum and the depth of our talent and products, the opportunity is right before us to attain strong financial results as we integrate together. This puts us on the road to deliver best-in-class financial metrics with a more balanced future capital allocation profile. It is a very exciting time at Dauch Corporation. Thank you for your time and participation on the call today. I am going to stop here and we are happy to take your questions. David? Thank you, David and Chris. We have reserved some time David Lim: to take questions. I would ask that you please limit your questions to no more than two. So at this time, please feel free to proceed with any questions you may have. Operator? Operator: And at this time, we will begin the question-and-answer session. If you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our first question today comes from Joseph Robert Spak from UBS. Please go ahead with your question. Joseph Robert Spak: Thanks. Good morning, everyone. Chris May: Maybe just to start, if you sort of help us Joseph Robert Spak: at a high level of what you sort of see going on at the Chris May: individual businesses? Because, you know, for a year for the old American Axle, Joseph Robert Spak: looks like it is down 2% minus maybe 1% of that is the Chris May: sales are down 1%. So what are some of the assumptions there? Joseph Robert Spak: And then for Dauch, you know, I know you are sort of saying about $5,400,000,000 full year, then you do not have the one month. But it looks like there is not really, you know, some growth going on there either. So, maybe you could sort of just tell Chris May: about what happened in that business Joseph Robert Spak: in the ’25 where we did not see the financials yet and then what the outlook is even beyond this year. Chris May: Thanks. Yeah. Good morning, Joe. This is Chris. And at this point in time, Dauch is still not completed or published their full year 2025 results. So we will not be able to comment on their full year results. However, in terms of what we are seeing from a sales for both companies, generally, I would say, very similar, meaning our core assumptions, as you know from a North America perspective, are down slightly from 15,300,000 units to fifteen twenty twenty six. That is our guidance that we have shared with you. Relatively flat in the European market. From our T1 truck production for legacy Dauch Corporation, you see down slightly year over year. And then you have sort of a net backlog and attrition that is relatively, I would say, flat within the year. So that sort of transitions our sales 25% to 26% on a relatively flat basis. Operator: Okay. Joseph Robert Spak: Maybe one follow-up on that, if you could give us Chris May: the GMT1 assumption you are looking for ’26? And then the second question is really a clarification because I thought I heard you say Joseph Robert Spak: you know, even after the restructuring and this integration cost, you are generating real free cash, Operator: But Chris May: I mean, I am thinking you are excluding those from your free cash flow. So I am a little confused because it looks like there is a cash use ex those payments. Joseph Robert Spak: And then I guess just on those payments as well, is this really just a ’26 issue? Do we think Chris May: like, are there still restructuring and synergy integration costs beyond this year? Joseph Robert Spak: Thanks. Operator: Yes. Let me, I will work through each of those pieces. Chris May: Our T1 assumption for calendar year 2026 at this point in time is 1,300,000 to 1,400,000 units. And as you know, both companies do supply into that vehicle. And Joe, as you think about the cash flow question, I guess maybe it is probably easiest to look at maybe our supplemental deck that reconciles to our GAAP numbers in the tables of our release or our earnings deck. You can see really subtotal there, line generating true free cash flow for the company. Subtract that out, obviously, restructuring costs and synergy integration costs. Synergy integration costs, yes, I would expect to continue into 2027. And, as we have always stated, from those perspectives, we expect to spend a total of $300,000,000 to implement our synergies, front weighted to the first two years. From a core restructuring cost, I would expect that to drop significantly, as Dauch is in the, or the legacy Dauch business is in the final throes of their significant restructuring that they have been going on in past couple of years. And as a standalone Dauch Corporation, we are closing a couple of facilities that should be done here in 2026. Okay. But just, like, when you include those payments, like, you are burning cash this year. Right? I expect from operations to be net-net after those payments we will generate cash flow. So, for example, just using the high end for a moment. We have $325,000,000 of adjusted free cash flow. At the high end of our synergy integration costs, $125,000,000. At the high end of our restructuring costs, $150,000,000, which would generate $50,000,000 of cash flow for the company in 2026, available for debt repayment and other capital allocations. I expect our core operations to generate cash flow after restructuring and synergy costs. Sorry then. Then what is this, what the, sorry to get bogged down. So what is the cash payments for acquisition cost that is in that? So think of that as all the closing costs for the transactions that were completed on February 3. So that was funded through financing, that was funded through our cash build last year. That is really the closing of the transaction. All the fees, etcetera, associated with that. Really nothing to do with the core operations of the company. David Lim: Sure. Chris May: Thanks. Operator: Our next question comes from Tom Narayan from RBC. Please go ahead with your question. Hi. This is Thomas Scholl on for Tom. Thanks for taking the question. For those $300,000,000 in synergies from the Dauch combination, I think you have given a rough estimate that 50% are from purchasing, 30% from 20% from operating efficiencies. My question is, do you think there is any room for upside there, particularly in the operating efficiencies category, after you have been able to see the Dauch plants now that the deal is closed. David Dauch: Yes. Tom, this is David Dauch. The answer to that is yes. I mean, obviously, we are committed to the $300,000,000 that we identified earlier, as we had publicly communicated multiple times that had to go through a third-party audit before it could be published. And so we are highly confident we can deliver that $300,000,000. As we have said all along, we think the synergy realization will be front loaded towards the SG&A side of things and some of the initial purchasing initiatives. On the backside will be more of the balance of the purchasing Chris May: as well as the operational side. David Dauch: We were also limited in getting into the plants when we did the $300,000,000 initially. We have now had the opportunity to get to the plants, and we see some Chris May: opportunity to enhance potentially that number. But at the same time, we need to get to all the plants and do the full review before we can make any adjustments to where we are. But, again, David Dauch: highly confident we will deliver the $300,000,000, and we will see if we can increase that on a go-forward basis, but we will do that on a quarterly basis as we announce our financials and get more knowledge and familiarity with their business. Operator: Okay. Got you. And as a quick follow-up, looks like your 2026 adjusted EBITDA estimate for the combined entity pretty consistent with the guidance you gave back in June 2025. Even though Dauch has released its 2025 preliminary results that exceed its third quarter guidance. I guess in addition to what you have on Slide 9, give a little more color on what potentially drove estimates lower than what you might have expected? Chris May: Is it, like, if it is a function of those IFRS adjustments, Operator: would you be able to quantify the impact of that? Thanks. Chris May: Yes, certainly. In terms of what we are providing here today, by the way, very consistent with our thought process all along. There is nothing new here, what we are sharing with you today, generally speaking. But in terms of the IFRS adjustments, they are meaningful differences between what Dauch reports and what Dauch especially reports on their adjusted numbers. So, for example, in their revenue numbers, they include Christopher John May: adjusted Chris May: equity share of their joint venture, it is fifty-fifty, which is unconsolidated. Those sales are grossed up for almost $750,000,000, would be a sizable difference between the two. So you cannot add our sales together if you are using their adjusted sales. And from an EBITDA perspective, that would include things such as how they treat the joint venture. You have pension differences. You have lease differences. You have R&D differences. The delta can be upwards of $100,000,000 difference. Again, all part of our planning, all the figures that we shared with you previously. But the differences are meaningful. Operator: Okay. Great. Thank you. Yep. Thank you. Our next question comes from James Picariello from BNP. Please go ahead with your question. Chris May: Hey, guys. This is Jake on for James. Just want to follow up on, I just want to follow up on Joe’s question on free cash. David Lim: So at the adjusted, at the midpoint of your adjusted free cash guide, which rubs out acquisition costs, cash flow is about $70,000,000, versus standalone Axle in 2025. So how do we get from here to the previous, you know, to the targeted $600,000,000? Thank you. Christopher John May: Yes, certainly. Chris May: Terms of where do I think your question and your spirit is how do we go forward past ’26 in terms of driving our cash flow. Well, it will come in a variety of different buckets. If you take our midpoint at $2.80 example, you have yet another $250,000,000 plus of synergies that will come into play over the next couple of years, to get to our $300,000,000 from where we are heading EBITDA flow-through here in 2026. That would be one. Two, your interest expense will continue to decline post 2026. Remember, and that should be cash interest. Taking your heaviest load of that, of course, in year one. And as you know, we are fully set up from our financing standpoint from that perspective. See CapEx, we have articulated through the process, we would expect CapEx somewhere between overall the combined companies going forward, roughly between 4–5%. A little bit at the top half of that range in 2026. As you know, we are launching the next generation of the GM full-size trucks. Dauch has a few programs as well that they are launching. But, again, that would moderate a little bit. And then once you get into some, I would say, Christopher John May: opportunities Chris May: to evaluate income taxes over time, that is clearly not something that can happen in year one. Potentially some opportunities there. And I would say we would expect to see working capital optimization as we go forward as we bring these two companies together and streamline all those over the next year or two. I mean, that is a main driver of this piece. And then, obviously, from just a true cash flow piece, your restructuring steps down significantly, as I said earlier, into ’27 and beyond. David Lim: Thank you. That is very helpful. And then how are you guys accounting Operator: for Dauch’s equity income in your P&L? Thank you. So that will be reported as equity income. Chris May: Inside of our P&L. It is included in our adjusted EBITDA number. It will be in the range of $65,000,000 to $75,000,000. And that is for our 50% share. Operator: And if that, yeah. If that answers your question, we will move on to Edison Yu from Deutsche Bank. Please go ahead with your question. Federico Merendi: This is Linya on for Edison. Hi. I just wanted to, hi. Quantitatively, I was wondering if you can help us frame sort of the Dauch business directionally on an apples-to-apples basis after adjusting for the accounting differences in terms of, you know, your outlook for 2026 and how that sort of compares to 2025? Just, you know, on the underlying core operations? And then my second question is sort of similar to that first question, but specifically on the China JV business. Can you maybe help us sort of understand your expectations for that market? And then the relative performance there from the JV? Chris May: Yes. Winnie, I will take the first crack at, in terms of, again, ’25 to ’26, as you know, as I mentioned, Dauch has not published ’25 figures. But big picture-wise, we operate in very similar markets and are seeing similar demands from a volume perspective. And also in terms of their restructuring, they have had even heavier restructuring investments they made in the calendar year 2025. That is stepping down a little bit here this year. We will start to see some of those benefits transition into our P&L in ’twenty six and clearly more meaningful into 2027 on the call. Core operations of the company. From the JV side of the house, obviously, this is a significant JV size. Revenues are nearly $1,500,000,000. It is almost exclusive inside of the China market. You would watch that performance continue to be strong and steady. It would mirror a little bit to the macro movements of the China market. So if you track volumes from that perspective, that is helpful in terms of how you think about our joint venture. And as you know, I shared with you what our equity portion is flowing through our EBITDA, but I would also expect a sizable dividend associated with that. Federico Merendi: Got it. Thank you. If I may just squeeze in, just for, like, you know, modeling purposes, how are you still planning to report your statements going forward? Is it going to be sort of all integrated, or are you thinking about, like, a different way of segmenting the business? Chris May: Winnie, I am sorry. I did not hear the first part of the question. Can you repeat that, please? Federico Merendi: Yes, in terms of the segments that you are going to report on a go-forward basis. Chris May: It all segments? Yes, we will update you at the first quarter on our segment reporting. But currently, as you know, today we are driveline and metal forming. I expect you will see something similar, but we have to finalize that piece. We will share that with you in the first quarter. Federico Merendi: Great. Thank you. Operator: And our next question comes from Itay Michaeli from TD Cowen. Please go ahead with your question. Chris May: Great, thanks. Good morning, everybody. David Lim: Good morning. Just want to go back to cash restructuring of $110,000,000 to $150,000,000 this year. I am curious if you can dimension the savings from that particular line item. Is that already reflected or a large part of it reflected this year? Or is there sort of another incremental payback for that we should think about for next year? Chris May: Yes. Yigal, this is Chris. So this is, again, over two thirds of this relates to, I would say, the ongoing campaign of restructuring that Dauch has seen. Several of their factories moving from high-cost countries to lower-cost countries is the final piece of that. You have seen some flow-through in benefits, most likely in ’25. You will see some in ’26. But, again, concluding here in ’26, you should see a good benefit in ’27 associated with that. In terms of the other third, which is the American Axle side where we are closing a couple facilities that we started last year and will conclude here this year, you would start to see that really benefit here in the year following, meaning ’27. Terrific. Thank you, Chris. Then just as a quick follow-up, David Lim: are you able to share any kind of, like, pro forma debt, net debt, like, post the closing of transaction? Chris May: Yes. Look, I would say, obviously, we are still completing some of the final pieces of the close since it was only ten ago, but we would expect sort of roughly in the ballpark range of about $4,200,000,000 at sort of day of closing, if you will. That is, again, very consistent with what we planned on, and our cash flow generation and financing activity supported that. So David Lim: Great. Perfect. That is all very helpful. Thank you. Operator: And, ladies and gentlemen, at this time, we will be closing our question-and-answer session. I would like to turn the floor back over to management for any closing remarks. David Lim: Great. Thank you to all who participated on this call, and we appreciate your interest in Dauch. We certainly look forward to talking with you in the future. Thank you. Operator: And with that, we will close today’s conference call and presentation. We thank you for joining. You may now disconnect your lines.
Operator: Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kinsale Capital Group, Inc. Q4 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Before we get started, let me remind everyone that through the course of the teleconference, Kinsale Capital Group, Inc.’s management may make comments that reflect their intentions, beliefs, and expectations for the future. As always, these forward-looking statements are subject to certain risk factors, which could cause actual results to differ materially. These risk factors are listed in the company's various SEC filings, including the 2023 Annual Report on Form 10-K, which should be reviewed carefully. The company has furnished a Form 8-K with the Securities and Exchange Commission that contains the press release announcing its fourth quarter results. A reconciliation of financial measures in the call today. Kinsale Capital Group, Inc.’s management may also reference certain non-GAAP. GAAP to these measures can be found in the press release which is available at the company's website at www.kinsalecapitalgroup.com. I will now turn the conference over to Kinsale Capital Group, Inc.’s Chairman and CEO, Michael Patrick Kehoe. Please go ahead, sir. Michael Patrick Kehoe: Thank you, operator, and good morning, everyone. Bryan Paul Petrucelli, our Chief Financial Officer, Brian Donald Haney, our President and COO, and Stuart Winston, Chief Underwriter, are joining me this morning for the call. In the fourth quarter, 2025, Kinsale Capital Group, Inc.’s diluted operating earnings per share increased by 26% and gross and net written premium grew by 1.8% and 7.1% respectively over the fourth quarter 2024. For the quarter, the company posted a combined ratio of 71.7% and a full year operating ROE of 26%. Our book value per share increased by 33% since the year-end 2024, our float increased by 23%. Overall, E&S market conditions in the fourth quarter continued to be competitive with a level of competition and our growth rate varying from one market segment to another. As we have noted for the last year or so, much of the recent headwind to Kinsale Capital Group, Inc.’s overall growth rate is due to the shrinking of our Commercial Property division, which writes larger catastrophe-exposed accounts and operates in one of the more competitive segments of the market. This decline in premium comes after several years of extraordinary growth. Excluding the Commercial Property division, Kinsale Capital Group, Inc. had growth in gross written premium of 10.2% for the quarter and 13.3% for the year. Given the success of Kinsale Capital Group, Inc.’s disciplined underwriting and low-cost business model over the last 17 years, we have confidence in our ability to generate best-in-class returns and growth while maintaining a strong balance sheet with conservative loss reserves. It is always important to maintain underwriting discipline but especially so when the market competition is intense. Likewise, it is in a more competitive moment in the insurance cycle that Kinsale Capital Group, Inc.’s enormous expense advantage is most impactful. Kinsale Capital Group, Inc. last year had an expense ratio under 21% and many of our competitors tend to run in the mid-30s or higher, some even above 40%. Given the customer's focus on low cost, it is hard to overstate the significance and the durability of this advantage. Another competitive advantage that we speak about frequently is technology. We consider tech to be a core competency of ours, alongside underwriting and claim handling. We own our one core operating system, which we custom built for our operation. And we do not have any legacy software going back 20, 30 years, or longer. In addition, we have spent years developing our analytics capabilities, with a growing team of actuaries and data scientists who use our data and data we acquire to discern insights and improve decision-making and profitability in our business. Further, over a year ago, we began a company-wide push to introduce and promote the use of AI in our operation. We are making consistent use of these tools in our technology and analytical teams. We are also using AI extensively in other areas of the company, particularly underwriting. Every employee in the company has access to an enterprise AI license, we have dozens of bots and agents being used every day in our business process yielding interesting productivity gains even at this early stage. Many of these AI innovations will be quickly integrated into our custom enterprise and the continued gains we expect for both productivity and improved segmenting and pricing of risk are material. Lastly, given our recent growth rate, we are returning more excess capital to shareholders, mostly through the $250,000,000 buyback authorization that we announced in December. Subject to a variety of considerations, we generally expect to deploy this authorization over the next year or so. Likewise, we announced an increase in our quarterly dividend to $0.25, up from $0.17. Note that even with this activity, Kinsale Capital Group, Inc. still maintains a conservative level of capital well above that required by both regulators and rating agencies. I will now turn the call over to Bryan Paul Petrucelli. Bryan Paul Petrucelli: Thanks, Mike. As Mike just noted, we continue to generate great bottom line results with net income and net operating earnings increasing by 27% and 25%, respectively, quarter over quarter. The 71.7 combined ratio for the quarter included four points from net favorable prior-year loss reserve development compared to 2.6 points last year, with less than one point in CAT losses this year compared to 2.2 points in the fourth quarter of last year. Gross written premiums grew by 1.8% for the quarter, while net written premiums grew by 7.1%. The growth in net written premiums was higher than gross due to an increase in the retention levels when we renewed our reinsurance program at June 1. We produced a 20.8% expense ratio for the full year compared to 20.6% last year. The other underwriting expense piece of the ratio, which is the best measure of the operational efficiency of the business, was 10.5% for the year and about 0.5 better than 2024. On the investment side, net investment income increased by 24.9% in the fourth quarter over last year as a result of continued growth in the investment portfolio generated from strong operating cash flows. Kinsale Capital Group, Inc.’s float, mostly unpaid losses and unearned premiums, grew to $3,100,000,000 at the 2024. Up from $2,500,000,000 at the 2024. The gross return 4.4% for the year and consistent with last year. New money yields are averaging around 5%, with an average duration of four years on the company's fixed maturity investment portfolio. And lastly, diluted operating earnings per share continues to improve and was $5.81 per share for the quarter, compared to $4.62 per share for the 2024. I will now turn the call over to Stuart Winston for underwriting commentary. Stuart Winston: Thanks, Brian. So the level of competition in the E&S market differs by underwriting group, with some areas experiencing more competitive pressure than others. We continue to see soft pricing around D&O and some other professional lines, and while large shared and layered commercial property lines experienced heightened competition during the quarter, we were able to realize growth in other property lines like small business property, high value homeowners, inland marine, personal insurance, and agribusiness property. Casualty remained a strong area of growth for the quarter. This growth was led by our commercial auto, agribusiness casualty, general casualty, entertainment, and excess casualty divisions. We will continue to explore new products and enhance our current offerings within these growing areas to capitalize on opportunities throughout the year. Overall, new business submission growth, excluding unsolicited submissions, was up 6% for the quarter. We continue to see a decline in new business submissions in the Commercial Property division that handles large shared and layered deals, however, most divisions are still seeing submission growth with about half of those seeing double-digit growth. Excluding Commercial Property, new business submissions were up 9% for the quarter. Our lines of business are experiencing varying levels of competition and pricing pressure, the combined pricing trend is in line with the Amwins index, which showed a rate decrease of 2.7% compared to a 0.4% decrease in Q3. Although large commercial property placements continue to experience strong rate pressure, other property lines like small business property and inland marine and casualty lines like commercial auto, excess casualty, and general casualty present opportunities for meaningful rate increases. We remain confident about our position and opportunity in the E&S market. Our low-cost model provides a durable advantage that helps us remain competitive in both hard and soft market environments. This advantage combined with our broad risk appetite, best-in-class service standards, fast turnaround times, and the ability to quote more than 70% of all new business submissions enable us to gain market share and deliver strong returns for our investors. And with that, I will hand it back over to Mike. Michael Patrick Kehoe: Thanks, Stuart. Operator, we are ready for any questions in the queue now. Operator: Star then the number one on your telephone keypad. Your first question comes from Michael Wayne Phillips with Oppenheimer. Thank you. Good morning. I guess I wanted to talk on the commercial property. Michael Wayne Phillips: Down pretty hard this quarter. Was that a change from what you were seeing last quarter? Or maybe did I misinterpret thought you were talking about an inflection there. Were there something else that happened Brian Donald Haney: that caused that to go down harder than what you said in last quarter? Thanks. Stuart Winston: Yeah. It seems I think what we mentioned in the last call in September, October, it seemed like it was stabilizing a little bit. And then November, December, there was an influx from London and some MGAs in that large layered and shared space that caused the deceleration in growth. Michael Wayne Phillips: Okay. And I guess, any thoughts on how that might proceed at least for the Brian Donald Haney: I do not know, the foreseeable future this year? Is that going to stay where you saw in November, December? Michael Patrick Kehoe: You know, this is Mike. It ebbs and flows month by month. But I would just say, in general, at some point after the next couple of quarters, it should stabilize. Brian Donald Haney: Okay. Thanks. Thanks, Mike. Stuart, last quarter, you said the excess casualty rates were holding strong, and you mentioned it again this quarter. I guess if we specifically I do not know how much of your commercial casualty is commercial auto. Can you say what percent is and maybe a little bit more on what you are seeing? And you said commercial auto rate were moving up. What are you seeing there in terms of the loss trends? And again, just how much of that is commercial auto when your excess casualty? Stuart Winston: It is actually a pretty small percentage in our actual excess casualty book. And even with our commercial auto division, without getting into the details, it is actually there is no primary auto and it is a small portion of excess wheels. Michael Wayne Phillips: Okay. Yeah. Thank you. Brian Donald Haney: Yeah. That is all I had. Thank you very much. Okay. Thanks, Michael. Operator: Your next question comes from Andrew E. Andersen with Jefferies. Hey. Good morning. On the submission figure that you Brian Donald Haney: quoted of up 6%, I think you added excluding unsolicited submissions. Is that like, for the 6% in Q3, or is that a different methodology now? Stuart Winston: That is the same. That is the same. Brian Donald Haney: Okay. Thanks. And then could you maybe just talk about what you are seeing in business retention ratios? Not Bryan Paul Petrucelli: so much the retention for versus reinsurers, but just year-over-year business retention and maybe just some color on how you are thinking about any flow back to the admitted market that you may be seeing in either property or casualty? Michael Patrick Kehoe: Yeah. Andrew, it is Mike. We are I think our renewal retention is in the very low 70% range. And that has been pretty steady. We do not see a big movement there. And in terms of move to standard lines, I would just say it is a very dynamic marketplace overall. There is always business moving back and forth. We do not see any uptick in movement away from the E&S market. Brian Donald Haney: Overall. Operator: Your next question comes from Michael Zaremski with BMO. Brian Donald Haney: Hey. Good morning. Thank you. Just wanted to make sure I am teasing this out correctly. Is the most of the decel and the growth rate on Mark Douglas Hughes: on premiums is coming from property kind of larger account shared and layered. If that is correct, maybe you can kinda help us with kind of what percentage of the portfolio at this point is made up of that type of business at this point. I know it has been shrinking, Michael Patrick Kehoe: Yeah. Mike, this is Mike. We are going to publish that next week in our K. If you look at our investor slide deck on the Internet, we break out all the divisions. I think it is through the 2024, and that will be updated at the same time with the 2025 stats. But it is essentially the Commercial Property division. It was our largest division last year. And they are larger accounts, and they are just subject to a much more intense level of competition. I think Stuart mentioned the fact that all of our other five or six property divisions are experiencing pretty robust growth. They are just off a smaller premium base at the moment. Mark Douglas Hughes: Okay. Yeah. It. So I just want to, you know, just because I think we are probably focusing too much on this division's kind of cyclicality, but I just you know? So is it fair for us to we want to kind of get ahead this trend for 2026, I think, you know, the consensus in the market is that you know, large account property stays similarly soft to 2025. So, you know, I guess, unless you think I am off, we should just kind of assume that Bryan Paul Petrucelli: this Mark Douglas Hughes: this portion of your business is still material, and we should kind of make sure we are accounting for further potential shrinkage in this part of your business for next year. Is that fair? Michael Patrick Kehoe: Yeah. I mean, it is a very competitive market. And so I think what you saw in the fourth quarter again, the specific numbers are going to ebb and flow, but the fact that we are in a hyper-competitive environment there, think will continue over into 2026. Bryan Paul Petrucelli: Okay. Mark Douglas Hughes: And then, pivoting to the casualty, you know, look you are seeing kind of a stabilization of the trend line there. Excellent. You know, but appears to be loss ratios. Are you specifically for casualty, you know, pricing and submission, is that kind of a are we trough there on those KPIs? You know, I am assuming pricing still competitive, or is there still kind of incremental pricing competition on the casualty side? Thanks. Michael Patrick Kehoe: Yeah. I would say, in general, we are in a competitive moment in the insurance cycle, with the level of competition varying quite a bit from one, if you will, market segment to the next. The Commercial Property we have been talking about, the larger Southeastern wind accounts, that is an example of one of the most competitive areas. And then Stuart, a few minutes ago, listed a number of areas where we are still seeing very reasonably strong premium growth and upward movement in pricing. So we feel very positive about the business overall, given our underwriting and our cost advantages. One of the reasons we broke out that Commercial Property in our press release and in our comments Brian Donald Haney: is just to reiterate that Michael Patrick Kehoe: that is a little bit of a unique market segment and division for us in that it grew tremendously over the prior several years and now we are kind of giving back a little bit of that outsized growth. But if you pull that out and look at the rest of the business, it is still running not just great margins, but 10% growth in this competitive environment I think is quite positive. Mark Douglas Hughes: That is helpful. Thank you, Michael. Operator: Your next question is from Christian Getzhoff with Wells Fargo. Mark Douglas Hughes: Hi. Good morning. Thank you. Any quantification you could provide on how much better in terms of percentage points the underlying combined ratio is commercial property and kind of the rest of your business? And I am trying to get a sense of how much a variation we could see just from business mix shift is. If I do, like, simple calc, I think property is down to 20% versus the 2024 at the start of 2025. So I am just trying to get a sense of what that gap is. Michael Patrick Kehoe: Yeah. We are not going to be able to provide that on a conference call. But when our K is published next week, there are some accident year exhibits that break out occurrence casualty, claims-made casualty, and property. And then when our statutory statement is filed in a couple weeks, that gives you even more granular loss data on an accident-year basis by statutory line of business, so you can really get into the weeds there. Think that would be better. But I would just say overall, I would remind all of our investors certainly that it is a strategy of ours over the 17 years we have been in business to post loss reserves in a conservative fashion. And if you look at our history, every year we have had favorable reserve development in our GAAP financials. And so hopefully, we are building a lot of confidence among the investment community. We have also commented that over the last couple of years, for future claims, we have been quicker to release IBNR, so reserves from the short-tail lines of business like property, and we are being a little more cautious on the long-tail lines like casualty. But again, that is a good thing. We are still posting best-in-class financial results, but we are doing it with a high level of conservatism in our reserving practices. So hopefully, investors take some comfort in that. Mark Douglas Hughes: Got it. Thank you. And then for my follow-up, how big of an opportunity are data centers for Kinsale Capital Group, Inc.? Are you guys writing that business currently? And I guess any general market commentary on how the competition and the terms and conditions are developing in that area? Stuart Winston: Yeah. It is not a meaningful percentage of our book of business in property or casualty. The layers. So, the limits required on those placements is just not where we are competitive. Bryan Paul Petrucelli: Thank you. Operator: Your next question comes from Mark Douglas Hughes with Truist. Bryan Paul Petrucelli: Morning, Mark. Brian Donald Haney: I think, Stuart, you had mentioned in November and December in property, you saw an influx Bryan Paul Petrucelli: from London and MGAs. Anything in casualty on that front? Did you see a little more competitive pressure across the board? Stuart Winston: There has always been competition from the MGAs and fronting companies on the casualty side, no real increase in the quarter. Bryan Paul Petrucelli: Yeah. When you look across the industry as a whole, it seems like casualty has meaningfully decelerated from Q3 to Q4. Is that pricing? Is that competition? Is it business going to other carriers or nonpublic carriers? Stuart Winston: I think it is just the normal durability in the market. Brian Donald Haney: Mark, between quarter to quarter. Bryan Paul Petrucelli: Very good. Very good. Brian, you have talked about the expense ratio. How much impact this quarter just from the mix shift, maybe lower ceding commission from lower property Michael Patrick Kehoe: Yes. I think we did not break out the components by quarter. Bryan Paul Petrucelli: Mark. But Brian Donald Haney: portion of the expense ratio related to net commissions was relatively constant with the third quarter. Bryan Paul Petrucelli: I think we mentioned and I have mentioned in the past, when looking at quarter by quarter, there is a fair amount of variability. So we are sort of guiding you to the Mark Douglas Hughes: annual metric. Bryan Paul Petrucelli: But again, I commented in my remarks that the other underwriting component Bryan Paul Petrucelli: of the expense ratio did improve by about a half point year over year. Brian Donald Haney: Okay. Bryan Paul Petrucelli: So one could assume mix might account for Bryan Paul Petrucelli: a little bit of an uptick in the expense ratio? Bryan Paul Petrucelli: Yeah. Exactly. Yeah. Bryan Paul Petrucelli: And then how about the kind of new business trends excess Stuart Winston: versus Bryan Paul Petrucelli: primary? Has there been any material shift in that if excess is more attractive? Is that you leaning into that, or is it still more balanced? Stuart Winston: It is still pretty balanced. It has stayed, the mix has stayed pretty similar since day one. Bryan Paul Petrucelli: Very good. Thank you. Michael Patrick Kehoe: Thanks, Mark. Thanks, Mark. Operator: Your next question comes from Joseph Thomas Tumillo with Bank of America. Stuart Winston: Just Bryan Paul Petrucelli: quick question. I know, obviously, social inflation increased litigation. This has been much more prevalent in the larger accounts, but I was not sure if that was starting to migrate at all. Bryan Paul Petrucelli: Know, more towards the area you guys typically play in. Do you have any comments there on how that environment is kinda shaping Michael Patrick Kehoe: Joe, this is Mike. There is plenty of claims and litigation activity in the small account market like there is in larger accounts. So small accounts definitely are not immune from that. I do not know that there is any pronounced change in recent months, but it is the litigation industry in the United States is large and growing and the plaintiff attorneys are entrepreneurial as hell looking for new ways to drive claims and serve their clients. So we are vigilant for sure. Scott Heleniak: Okay. Great. And then just kinda just as a follow-up, a quick question. Know you guys talked about kind of leaning into a bit more AI in your prepared remarks. Just kinda wondering if you can scale up more on that where you kinda see more of the opportunities or where you are most excited for AI really to be deployed within the business, whether it is on claims, underwriting, or what have you. Kind of for the next year or so? Michael Patrick Kehoe: Well, I think broadly speaking, AI in the business operation allows you to Mark Douglas Hughes: automate tasks Michael Patrick Kehoe: that are repetitive and whatnot. And so it is cost savings, opportunity. It is an opportunity to drive better customer service. It is an opportunity to reduce errors in a business. You know, we had, give or take, a million submissions last year. So hundreds and hundreds of thousands of quotes and policies, so automation is something we have been working on for ten years. AI is just a powerful new tool in that regard. But I would say, in our analytics and our IT area, it is probably being used most effectively today in terms of writing code and testing code and converting unstructured data to structured data, etcetera. I mean, it has got a lot of use cases, but the two things we are focused on: one is driving automation in our business, and two is to get smarter about how we segment and price risk. Bryan Paul Petrucelli: Okay. Thank you. Brian Donald Haney: You bet. Your next question comes Operator: from Rowan Meyer with RBC Capital Markets. Stuart Winston: Hey. Good morning. At the Investor Day last month, you guys highlighted a bunch of new products that were launched in last year. I was wondering if we could maybe talk about how much growth is new products versus existing Brian Donald Haney: any new plans for 2026. Michael Patrick Kehoe: Well, we are going to publish in our K the breakout of our written premium for 2025 by underwriting division. And that will be out, I think it is next week. So if you look at the Agribusiness casualty, agribusiness property, personal insurance new, but we have expanded into the homeowner space there so you could look at that. Stuart Winston: Yeah. A lot of the new products in 2025 were enhancements to existing products, so it is not going to be split out within divisions. But there is an element to growth with those. Michael Patrick Kehoe: Yeah. But generally, new products, we roll them out. It is kind of a methodical rollout. And so it is really over a series of the first couple years that they start to be meaningful. If you look at the Small Business Property division, I think last year, that was $100,000,000 of premium, give or take. And Scott Heleniak: nothing. Yeah. Yeah. Right? So, you know, it does take time, but Michael Patrick Kehoe: it has been a big part of our growth story really for 17 years. Stuart Winston: That is great, man. Thank you. And I wanted to just ask on the leverage and the you guys have highlighted your underlevered risk peers on a number of metrics, and I think it is on your debt to cap, you are below kind of the long-term target you have talked about. Brian Donald Haney: It is a nice step up in the capital return in the last 18 months, but why not do more now the competitive environment the way it is? Michael Patrick Kehoe: Well, with the capital allocation strategy, with the buyback in particular, we are, in effect, shrinking the denominator and increasing the ratio. We are pursuing it through the denominator, I guess you could say. Brian Donald Haney: Yeah. That makes sense. And then I guess just one more. Can we talk about the Stuart Winston: the durability, the softness in the property markets? And what did it take to actually push this competition out? Michael Patrick Kehoe: Well, keep in mind, we are talking about intense competition in these larger Southeastern wind accounts in particular. But in our agribusiness property, inland marine, high value homeowners, personal insurance, small business property, they may have all grown in the double digits in the quarter. So it is just a reminder that the market does not move monolithically. It is a whole series of individual segments that kind of ebb and flow independently. Mark Douglas Hughes: That is great. Thank you so much. Operator: Your next question comes from Bob Huang with JPMorgan. Scott Heleniak: Hello. It is Bob Lee from JPMorgan. So first question, Mark Douglas Hughes: some other public insurers that have large or newer E&S specific have been reporting payment growth or submission growth that is running much higher than where you are now. So is there evidence in your minds that they might be taking some flow that used to go to you? And I know in the past, you have identified MGA as the main source of competition, but I was just wondering if you are seeing more competition from traditional market as well. And as you know, small commercial units and technology is a focus for many of your peers. Stuart Winston: Yeah. Pablo, this is Mike. Michael Patrick Kehoe: I would answer that question this way. We are bullish on our opportunity. We are working hard to grow. But we are in a much more competitive environment overall, and so you have to be careful in balancing the growth with the profitability of the business. Cannot really speak for other companies and what they are doing, but I would say our investors should have a lot of confidence that Kinsale Capital Group, Inc. is producing not only very strong margins, but that we are continuing to grow and take market share with the one caveat that we have got one large division that, if you will, is going through a little bit of a unique correction. But overall, if you look at the disciplined underwriting model and the low-cost platform, we are confident we are going to continue to grow, take market share, and deliver very quality returns at the same time. Mark Douglas Hughes: Alright. Thanks, Mike. And I guess just following up in on the expense advantage. Right? So I guess, philosophically, how do you think Kinsale Capital Group, Inc. demonstrates or exercises that advantage in this market? Right? So effectively, are you willing to write at ROEs below 26%, but still above your minimums, or is your approach to sort of let the market do what it does and you will just, you know, on printing 26% ROEs for the foreseeable future. Michael Patrick Kehoe: Well, we manage our under each product line to a I would call it a low 20s ROE or greater. Stuart Winston: And Michael Patrick Kehoe: of course, in an insurance company, you do not know the cost of goods sold immediately. Right? So there are some assumptions there. Those assumptions, I think, lean into the conservative side. And so historically, we have outperformed our target. I do not think that would change overnight for sure. But like every business, we balance growth and profitability. It is just that we are always going to prioritize generating that low 20s ROE or better. And then where the specific return goes quarter by quarter, of course, is subject to claim activity and the weather and all sorts of things. But I think we have got a long-term track record of producing pretty attractive margins and I would expect those to continue. Mark Douglas Hughes: Alright. Thank you for your answers. Andrew Scott Kligerman: Your next question comes from Andrew Scott Kligerman with TD Cowen. Mark Douglas Hughes: Could you provide a little more clarity on the casualty lines and the rates that you are getting on the new business and the degree to which those rates are ahead of lost costs or maybe even not ahead of lost costs? Michael Patrick Kehoe: Andrew, that is a tough question to answer. Stuart Winston: On a conference call like this because, again, we have got 25 different underwriting divisions Michael Patrick Kehoe: they are operating in very unique market segments in terms of the coverages they sell, the industries that we target, and, as Stuart mentioned, our commercial auto is experiencing strong price increases. Management liability, I think those rates are probably down. Non-medical professional liability, they are down. The Commercial Property division, clearly, those rates are down in the quarter. So we kind of directed in our comments to look at the Amwins pricing index. I think that is a good composite of what Amwins is a very large wholesale broker. They see a ton of business. And I think they have got a really interesting window into pricing trends across the industry. And I think that is probably the best point of reference we can guide you to. Mark Douglas Hughes: That is very fair. And I guess what I was trying to get at even with that question is you have got pressure in property. It sounds a little mixed in casualty on rate. And I mean, and I get that the 75% combined ratio in part is due to your expense ratio, but your loss ratio is out it is exceptional. Michael Patrick Kehoe: So Mark Douglas Hughes: given what the mosaic is with pricing right now, should we expect the underlying combined of 75 to drift up gradually over the course of the next year, two years, three years? Michael Patrick Kehoe: We do not really offer guidance going out like that. I would just say we are in a competitive environment. Some of our results on an annual basis are driven by things we do not directly control, Brian Donald Haney: like the weather or what have you. Right. Michael Patrick Kehoe: In general, we are managing to a low 20s ROE or better. We are very conservative in setting aside loss reserves to pay claims that are reported in the future. Right? So investors should have a lot of confidence in our balance sheet. We have got competitive advantages that are, in my opinion, quite significant. If you look at if we have a 15 percentage point cost advantage, and we are in a commodity business where the customers want and focus on cost sometimes over and above everything else in the transaction. So I think that is probably the best guidance we can offer. We are bullish on our opportunity. It is a competitive environment. We are quite conservative in the reserving. And the actual results are going to ebb and flow quarter by quarter, but I think our investors should expect us to generate very high and attractive returns Brian Donald Haney: for the foreseeable future. Mark Douglas Hughes: Got it. Thank you, Mike. Okay. Your next question comes from Operator: Michael Zaremski with BMO. Mark Douglas Hughes: Hey. Thanks. Now switching gears a bit to home insurance. I thought one of the new items that came out of your recent investor day was the opportunity there, kind of, I think you talked about maybe it being up to 10% of your revenues even, over time. If as long as it is not too competitive and you are willing to share any color, any thoughts on kind of how that is shaping up in terms of nuances on the types of policies you are offering in the states, and the trajectory of growth there? Thanks. Stuart Winston: Yeah. This is Stuart. The homes product definitely a long-term project for us. We are starting small, the crawl, walk, run mentality that Mike mentioned earlier, and we are the to expand exists, we are going to take that opportunity to expand and do so profitably. And we are in probably four or five states. Five states for homes. And that continues to expand. Michael Patrick Kehoe: The manufactured homes are in 15, yeah, about 15 states, and we are expanding the g Stuart Winston: geography within the state, diversifying away from coastal there. Brian Donald Haney: And then we write high value homes in another sluggish phase. So Michael Patrick Kehoe: it is an ongoing process, but we are bullish. There is you are seeing across the industry a little bit more premium being pushed from the standard to the non side in the homeowner space. Brian Donald Haney: And, you know, obviously, we are leaning into that in order to Michael Patrick Kehoe: try to take advantage. Mark Douglas Hughes: And just as a follow-up, it sounds like this is both high value and not high value. Are these, like, atypical, like, a standard market policies in terms of just much higher deductibles or different exclusions? Is there any broad brush you can paint? Thanks. Stuart Winston: Yeah. It is a mix. I mean, it could be a pretty standard policy, but there is also some in tough areas that might have nonstandard exclusions in there. Operator: Your next question comes from Mark Douglas Hughes with Truist. Bryan Paul Petrucelli: Yeah. Thank you. What do you make of the idea that AI might take over some of the brokers’ role? Do you think that is likely? Is that the way to get efficiency? Is to go more of a direct route, or is that just a vanity at this point? Michael Patrick Kehoe: Look. I mean, the short answer, Mark, is we do not know. I have always been impressed with Pat Ryan's commentary around the fact that the customer needs an adviser and an advocate. Brian Donald Haney: And I do not think that changes with AI, but I do think AI is going to drive Michael Patrick Kehoe: it is a new tool for the whole economy. And I think businesses in P&C, but really in every industry, are going to have to lean in and use this tool to get better at what they do and serve their customers. So Bryan Paul Petrucelli: Appreciate that. Thank you. Brian Donald Haney: Your final question comes from Bob Huang with JPMorgan. Operator: Bob, your line is open. Mark Douglas Hughes: Hi. Yeah. Sorry. It is Pablo again from JPMorgan. So I guess first question, Bryan Paul Petrucelli: with growth slowing, like, it Mark Douglas Hughes: is there an opportunity on your end to take up reinsurance retentions and therefore just retain more premium economics? Is that something you are actively considering? Michael Patrick Kehoe: Yeah. Pablo, it is Mike. We have looked at retentions in our reinsurance program, look at it every year, and we are constantly making adjustments Brian Donald Haney: to Michael Patrick Kehoe: settle on what we think makes the most sense for the company and managing volatility and that type of thing. So, yeah, absolutely. Our program renews on 6/1, so we will be starting that process here in the next month or so. Mark Douglas Hughes: Alright. Thanks, Mike. And then last question for me. So if we just focus on your book ex large account, right, growth has been slowing there too. It is still a good level, but it has been slowing. So I think it was 22% in 2024, and 2025 is 13%. So I realize this line of questioning might be too simplistic, but is that slowed down more a reflection of pricing or submission flow? And if both, how would you break down the attribution? Michael Patrick Kehoe: I would characterize it as mostly a function of increased level of competition. And as the competition increases, if you are a disciplined underwriting company, you just have to be a little more cautious. Maybe the submission flow is down slightly, but ex Commercial Property, I think it was 9%. I think maybe two years ago, maybe a mid-teens. Mark Douglas Hughes: Yeah. Michael Patrick Kehoe: So, yeah, it is down a little bit, but still pretty robust. And the 13% growth overall ex Commercial Property, I think it is pretty strong if you look at how all the public brokers that have reported growth rates, I think, tend to be kind of low to mid-single digits. So I think it speaks to the competitiveness of our model even in a competitive moment in the cycle. And, hence, that is why we continue to be bullish on our opportunity. Scott Heleniak: Alright. Thank you, Mike. Michael Patrick Kehoe: K, Pablo. Operator: There are no further questions at this time. I will now turn the call back over to Mr. Kehoe for any closing remarks. Michael Patrick Kehoe: All right. I just want to thank everybody for participating, and we look forward to speaking with you again in the near future. Have a great day. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Or less Gomez with HSBC. Please go ahead. Carlos Gomez: Hello, good morning and thank you for taking my question. I wanted to ask you about your exposure to Ruta del Lima the the corporate in Lima. Whether you see any potential for recoveries from that particular credit if you have an exposure? And second, to what degree do you think that Operator: the Carlos Gomez: positive performance of the economy of business has been helped by the withdrawal from the pension fund. And could that be a break on activity when they are finished this year or next? Thank you. Alejandro Perez-Reyes: Maybe, Eduardo, I don't want to do Yes. Yes. I can Carlos Gomez: represents less than 1% of our portfolio. It's a position which currently provision at 80%. We're not accruing interest And are currently a couple of arbitration processes in The US that if if successful, we think that Alejandro Perez-Reyes: it would take a long time, but it will be benefit to the actual position that we have. Do expect in the near short term a payment that could be somewhere in the round between 5–10% of the of the of the of the bond. So and we do not expect further deterioration in the position that we have right now. Alejandro Perez-Reyes: Marcelo, would you take your first Sure. So, hi, Carlo. Going to the part of the question. The withdrawals on the pension plans, of course, have different types of impact. Withdrawal has been of 25,000 million or PEN25 billion in U.S. terms. We at BCP have captured a little north of 11,000,000,000 of those 25,000,000,000. The payments are gonna continue until this until March, actually. There's the last payment is in March. And the effect in the economy it will it depends on how much goes to consumption. But it certainly does help GDP We have a calculation that again, they need understanding that not not necessarily everything is gonna go into in consumption, would be around 0.4% of of the impact on on GDP potentially if everything went to Alejandro Perez-Reyes: to to Alejandro Perez-Reyes: consumption. And if you think about the impact on our Alejandro Perez-Reyes: business, Alejandro Perez-Reyes: we expect for 2026 an impact of around 0.5% on loans I'm sorry, on deposits on local funding that's a positive result. And in the credit part, it could have a negative impact of around 0.4%. Those are our calculations thinking about 2026. I mean, all in all, the the short term effect are positive, certainly not negative. I think the main issue is the long term effect on pensions and the Peruvian economy. But in the short term, the the the impacts are not that material. And probably an an a small addition also reduction in cost of risk in a specific segment Operator: particularly Alejandro Perez-Reyes: mid and higher segment individuals. Carlos Gomez: Very clear. Thank you. Thank you. Next question comes Sorry, Carlo. Jafarago here. Just to clarify, Eduardo Monteiro from Bracitico took the question regarding Ruta Del Lima. Alejandro Perez-Reyes: Because the only subsidiary at Credicorp Ltd. that has a position with Ruta del Lima which is less than 1% of our portfolio of Pacifico is Pacifico. BCP or near BCP nor any other subsidiary has a position in root of the limit. Sorry. Alejandro Perez-Reyes: And we were in the last quarter. Carlos Gomez: That was that was good underwriting. Thank you. Alejandro Perez-Reyes: Thank you. Operator: Our next question comes from Daniel Boss with Safra. Please go ahead. Daniel Vaz: Thank you, and hi, everyone. Congrats on the the full year results and also guidance. Thank you for the guidance on 2026. I'm looking to the loan growth if we compare to '25. You already grew 8.5% if you exclude the impacts on the FX and also the Bolivia And I'm seeing your 26% guidance also like around 8.5%. And I look at Peru's GDP around 3.5%, domestic consumption close to 5%. And also, if we take into consideration that you're accelerating in Mibanco, NPLs and multiyear lows BCPs, consumer lending also growing above 10%. I mean, what are we missing here What is currently holding overall credit below the double digit level? I mean, what would need to change for you accelerate more meaningfully? Maybe, I don't know, middle market corporate loans or other segment that's pushing you behind. And if I may have a second follow-up, Are you planning to open Yape's P and L in separate from BCP, so we can have a clear and cleaner vision on the efficiency ratio and and etcetera. For the yep. Thank you. Alejandro Perez-Reyes: Hi, Daniel. This is Alejandro. I'll I'll take the first question and thanks for asking the question because it will give us an opportunity to clarify something. The guidance we've just given is for all of Credicorp. And there is one particular book, which is the Bolivia book, where we are expecting a big a potentially big impact from exchange rates. So basically, we we believe Bolivia is in the right direction But in order to move forward, probably gonna have to have some devaluation of the currency. And if that were to happen, that would impact our book. And that is considered in the eight and a half. If you take BCP and Mibanco alone, we're expecting double digit growth for this year. In loans. And at actually, constant exchange rate, it's a little bit higher, around 11% for for the year. So we are expecting and seeing an acceleration in the market. We expect that to continue and loan growth should be very strong this year. But there's this particular headwind in Bolivia that will have an impact on the whole of Alejandro Perez-Reyes: Credicorp. When it materializes. Alejandro Perez-Reyes: Regarding the Yape, maybe maybe maybe regarding the Yape question. The the issue here is that Yape is within BCP. So Yape as a institution does not exist. So what we're currently so it's very hard to come up with a financial pure financial statement. But what we're working on is in order to provide you with more information, is working on how to be to provide more more information but all all within the transparency, we've always provided to the market. So that's how work in progress and we may came up come up with something in that line in the future. Daniel Vaz: All right. Thank you. Thank you, Alejandro. Thank you, everyone. Alejandro Perez-Reyes: Thank you. Three months. Yeah. Operator: Our next question comes from Andre So to with Santander. Please go ahead. Alejandro Perez-Reyes: Good morning to all. Thank you for the presentation. My first question is Alejandro Perez-Reyes: regarding your logo guidance, but specifically connected this to YAPI. Yuri Fernandes: Are you already including in this 8.5% something from JAPI? How much we can expect JAPI to contribute to lending of Credicorp in 2026? And if you can elaborate on the ramp up that you are seeing towards the multi installment in the consumer loans and also the pilots that you are conducting in SMEs? Alejandro Perez-Reyes: Alejandro? Yes. Sure. The numbers Alejandro Perez-Reyes: do include it. Let let let's remember that Yapi's meeting is in BCP's book. So so when I was talking about this double digit growth in BCP, I I was including already the amount from from Yape. As for the growth, we are expecting the book to grow fast in the in the coming years. The number we're expecting I mean, we're we're not giving guidance for the number of of the the specific book, but it should probably triple in the next couple of years. So that's the speed of which it's growing. Having said that, it's still a small portfolio for credit corp's whole whole book. Okay? So it it is growing fast. And it has a good margin, so probably a bigger margin than other other books, but it's still gonna be a smaller proportion of the whole book of the of the group. In in the coming years. Yuri Fernandes: And in terms of expenses, cost of income is always tricky because there are there are multiple variables involved, but what are you looking to in terms of total expense growth in 2026? Alejandro Perez-Reyes: You're talking about Yuri Fernandes: Credicorp? Or Credicorp. Right? Well, yes and a half. Yes. Alejandro Perez-Reyes: Okay. So we we we actually got for cost to income as as so and as I mentioned, we're expecting cost to income to reduce in the coming year We you look at the guidance we've just given, the upper side of the guidance is below the result of this year. We're seeing a lot of acceleration on the income of some of these initiatives. So on the expense side, we are gonna continue to invest in all of these not only disruptive initiatives, but also of the ongoing business and and improving our capabilities to better serve the clients, you know. So yeah. Yuri Fernandes: Okay. And then finally, on on on capital, when I look at at 14%, core equity Tier one, Mibanco at 17%, How do you feel about those numbers considering the cycle both in terms of improved asset quality, but also faster loan growth Where do you guys feel comfortable for the for what is coming ahead? Alejandro Perez-Reyes: Sure. The the way in which we usually work is we have internal limits of 11% for BCP and 13 and a half for Mibanco. And we I'm sorry? 14 and a half. Yeah. 14 and a half for Mibanco. And what we do is Alejandro Perez-Reyes: in March, Alejandro Perez-Reyes: we declare dividends and take the CET1 close to those levels. So the number you're seeing right now is pretty high because we've been building capital throughout the year. Alejandro Perez-Reyes: We will reduce it Alejandro Perez-Reyes: toward those levels in March. It has to be approved by by the board and by the shareholders meeting. But that idea and so in that case, we will go back to those levels We do see increasing loan growth, but it's already in our numbers there shouldn't be any problems with capital. Going forward. Yuri Fernandes: Perfect. And just with here, so that money is going to go is going to the holding company. And and from the holding company, your the intention is to distribute to shareholders. Alejandro Perez-Reyes: Exactly. So the way which it works is the the the policy is we basically send all excess capital Alejandro Perez-Reyes: to the holding company. Alejandro Perez-Reyes: Usually, this happens in March. And then in April, the credit or the holding company will propose a dividend and then and then declare it. An ordinary dividend. And what we're aiming for I mentioned in our call, is Alejandro Perez-Reyes: an Alejandro Perez-Reyes: increasing ordinary dividend each year. And we're in line to being able to do that. And then depending on how the year goes, we might give a second extraordinary dividend, but that is dependent on the conditions of the year. Alejandro Perez-Reyes: I know you need this subject to approval. Exact. Governance approval. Yuri Fernandes: Perfect. Thank you very much. And congratulations on the results. Alejandro Perez-Reyes: Thank you. Operator: It appears there are no further questions at this time. I will now turn the call back over to Gianfranco Ferrari Chief Executive Officer, for closing remarks. Yuri Fernandes: As we look ahead to 2026, Alejandro Perez-Reyes: I'm very confident in our positioning. We're entering the year with a healthy pipeline across businesses. An improving trade environment, and a clear strategic focus. We expect loan growth of around 8.5% supported by retail momentum at BCP and continued expansion at Mibanco. Alongside stable and healthy margins. With NIM expected to remain in the mid- to high 6% range. Asset quality is improving. And we expect the cost of risk to remain within our target range. Supporting risk adjusted profitability. Our focus remains on three priorities: scale and monetize our digital ecosystem expanding inclusion and accelerating new revenue streams. Leverage synergies across businesses, through data, talent and shared platforms to unlock growth and efficiency. Execute with discipline applying clear profitability thresholds and long term value creation across core and disruptive initiatives. These are not new things, They reflect the strategy we've been executing on consistently. And they're paying off. We're seeing tangible results across our platforms, with fee income expected to grow at low double digits. Continued progress in efficiency and sustained investment in digital capabilities. Thank you for your trust in Credicorp Ltd.. We look forward to speaking with you next quarter. Operator: Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.
Operator: Good morning, and welcome to Sixth Street Specialty Lending, Inc. Fourth Quarter and Fiscal Year Ended December 31, 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded on Friday, February 13, 2026. I will now turn the call over to Ms. Cami Senatore, Head of Investor Relations. Thank you. Before we begin today's Cami Senatore: call, I would like to remind our listeners that remarks made during the call may contain forward-looking statements. Statements other than statements of historical facts made during this call may constitute forward-looking statements, are not guarantees of future performance or results, and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in Sixth Street Specialty Lending, Inc. filings with the Securities and Exchange Commission. The company assumes no obligation to update any such forward-looking statements. Yesterday, after the market closed, we issued our earnings press release for the fourth quarter and fiscal year ended 12/31/2025, and posted a presentation to the Investor Resources section of our website sixthstreetspecialtylending.com. The presentation should be reviewed in conjunction with our Form 10-K filed yesterday with the SEC. Sixth Street Specialty Lending, Inc. earnings release is also available on our website under the Investor Resources section. Unless noted otherwise, all performance figures mentioned in today's prepared remarks are as of and for the fourth quarter and fiscal year ended 12/31/2025. As a reminder, this call is being recorded for replay purposes. I will now turn the call over to Bo Stanley, Chief Executive Officer of Sixth Street Specialty Lending, Inc. Bo Stanley: Thank you, Cami. Good morning, everyone. Thank you for joining us. Bo Stanley: This marks my first earnings call as CEO, and I am energized by the continued strength of our platform and the discipline our team has maintained through a dynamic 2025 and into 2026. Before we dive into the financial results, I am pleased to introduce Ross Bruck, who is joining us on this call today for the first time in his capacity as Managing Director and Head of Investment Strategy. Ross was one of the first members of our direct lending investment team, having joined Sixth Street more than a decade ago. He has had roles across the Sixth Street platform in both the U.S. and Europe, applying his deep underwriting expertise to various credit investment strategies. Ross brings a unique perspective that bridges complex asset-level underwriting with a strategic lens on market opportunity. His appointment reflects our commitment to elevating our internal talent to drive disciplined investment decisions, and we are excited to have his voice on these calls. For our prepared remarks, I will review full-year and fourth-quarter highlights and pass it over to Ross to discuss investment activity in the portfolio. Our CFO, Ian, will review our financial performance in more detail, and I will conclude with final remarks before opening the call to Q&A. After the market closed yesterday, we reported fourth-quarter results with adjusted net investment income of $0.52 per share, or an annualized operating return on equity of 12%, and adjusted net income of $0.30 per share, or an annualized return on equity of 7%. Adjusted net investment income of $0.52 per share exceeded our base dividend of $0.46 per share, providing base dividend coverage of 113%. As presented in our financial statements, our Q4 net investment income and our net income per share, inclusive of the unwind of the non-cash accrued capital gains incentive fee expense, were $0.53 and $0.32, respectively. The difference between adjusted net investment income and adjusted net income of $0.22 per share in Q4 was primarily driven by $0.12 per share of unrealized losses from idiosyncratic credit impacts and $0.10 per share of prior-period unrealized gains that reversed this period and moved into this quarter's net investment income related to investment realizations. For the full year 2025, we generated adjusted net investment income per share of $2.18, representing an operating return on equity of 12.7%, which exceeded the top end of our guidance range we communicated throughout the course of 2025. Adjusted net income per share was $1.76, corresponding to a return on equity of 10.3%. From an economic return perspective, which is calculated using movement in net asset value plus dividends paid in the year, we delivered a return of 10.9%, representing our tenth consecutive year of double-digit economic returns, highlighting the durability of our business across different credit and interest rate environments. Consistent with our ongoing messaging regarding the importance of earning one’s cost of capital, our 2025 net income ROE and economic return both exceeded our estimated cost of equity of 9%. It is hard to have a thoughtful conversation about the market today without spending real time on enterprise software and the impact of AI, so we are going to address this directly in our prepared remarks. We have been thinking deeply about these issues for quite some time, and consistent with our investment framework, we have taken a forward-looking approach in how we underwrite and manage risk. Longtime followers will know that our team has been investing in technology-related businesses for more than two decades, and we have navigated multiple periods of significant change. In each case, there were predictions of the demise of incumbents or the erosion of margins. With hindsight, those shifts tended to expand addressable markets and create opportunities for those who could distinguish between durable and fragile business models. That insight is where we will focus our commentary today. What we are not going to do is resort to hyperbole about the portfolio or describe our performance with words like impeccable. We generally find that kind of language not particularly credible because credit outcomes are always idiosyncratic. More importantly, this is not about congratulating ourselves on historical performance, which has been good from a credit lens and is clearly reflected in the cumulative net realized gain and loss metrics in our financial statements. Our job has always been about the forward. It is about how business models evolve from here under a new cost curve in a different competitive landscape. Throughout cycles, we have maintained an intensive focus on the durability of business models grounded in deep understanding of specific business unit economics, sector-specific ecosystems, valuation discipline, and the resulting margin of safety embedded in our investments. The reality is that capital is never a long-term moat for a business. It is merely a tool. At its core, AI levels the playing field for additional competition because the cost curve is shifting down. Bo Stanley: Capital intensity Bo Stanley: was never the primary barrier to entry for a business, and replacement cost is not a concept we have ever felt was applicable in assessing the intrinsic value of a software company. So rather than AI being a moat that protected businesses and their margins, we see AI as leveling the playing field on development costs that does not fundamentally change the intrinsic moat that protects a business. Existing enterprise software companies should benefit from this shift in the cost curve if they are well managed and have limited technical debt. They can use these tools to accelerate product development and enhance their value proposition. The moats in software are what the customer is actually purchasing as a product: a single source of truth, ongoing maintenance and customer service, security, governance and compliance, and often transaction enablement. In many ways, these customers are also effectively purchasing an insurance policy: a guarantee these tools will work reliably for mission critical applications where the cost of failure is far higher than the cost of the software. The vast majority of our portfolio companies today have a mass incumbency advantage. They own the distribution, they own the customer relationship, and they possess deep domain expertise. These moats—data integration, network effects, and regulatory complexity—are incredibly difficult for a new entrant to come in and displace, even in a world where it is faster and cheaper to write code. If we did our job correctly, we ignored purchase prices and market valuations, and looked at how durable the business model was to support the credit thesis. This has always been our lens. As credit investors, we do not participate in the growth or the upside of equity valuations. We are focused on the durability of an asset and its cash flows. We are not saying the tails might not be wider on the margin for ill-prepared business models and management teams. But, generally, we think this is an equity valuation problem. We believe many software businesses will likely have less pricing power given the change in the cost curve and, therefore, may see less revenue growth. Less growth means fundamental valuations of these assets are lower, but that does not mean they are not generally creditworthy. If you look at the credit spreads since the beginning of the year of public enterprise software companies, how little they have widened—about 10 to 20 basis points on average—compared to the compression in the TEV multiples—about two to three turns, or about 15% on average—it illustrates this point. For more levered private software companies, we see broadly syndicated loan spreads about 50 to 100 basis points wider versus the beginning of the year. The market is rerating the equity risk, but the credit remains resilient. By focusing on the moats that drive durability, we assess not just where the business stands today, but how well it is positioned to withstand and even benefit from AI-driven change. With some credit investors focused on historical results, our underwriting has been forward looking from day one. This emphasis on future durability rather than past performance is a core differentiator in our investment process and underpins our confidence in the resilience of the businesses within our portfolio today and in the future. Turning to our portfolio in aggregate, our borrowers continue to demonstrate strong credit statistics characterized by consistent revenue growth and expanding EBITDA margins. As of year end, the weighted average LTV within our portfolio company was approximately 41%, remaining broadly stable year-over-year, as steady earnings growth offset lower equity valuations in the broader market. Our view of LTV is based on our own fundamental valuation of these companies, which incorporates the rerating of enterprise values to reflect current market conditions. We believe the resilience of our portfolio, reflected in LTM revenue and earnings growth rates of approximately 9% and 12%, respectively, for our core portfolio companies, is a testament to our discipline of allocation of capital and our ability to apply a nuanced lens to asset selection across market environments. We understand many of our peers map the industry exposure differently from us, with a specific software classification which is intended to illustrate enterprise software exposure. We do not view software as a stand-alone industry, but instead, we view it as a mission-critical tool that enables a broad range of end users. For that reason, our industry disclosure is organized by end market, such as healthcare, business services, and financial services, rather than by specific products or delivery mechanisms used to serve those markets. We believe this is a better approach to risk management, as the primary driver of credit performance is the health and demand of the end market being served rather than the technology used to deliver the service. At this moment in time, however, we felt it beneficial to our stakeholders to provide a more comparable figure to our peers. We have mapped our portfolio to enterprise software exposure that comprises approximately 40% of our total portfolio by fair value. The credit statistics of this portfolio are largely consistent with the overall portfolio, including a weighted average LTV of 40%, LTM top line growth of approximately 9%, and LTM earnings growth of approximately 15%. As we have said for several quarters, we have remained disciplined in our credit selection in what has been a tighter spread environment. Periods of market volatility and uncertainty play to our strength, and we would love to see an environment where we can put more capital to work. We ended the year at 1.1 times debt to equity, presenting us with $246 million in investment capacity before we reach the top end of our target leverage range. This compares to ending leverage of our peers in Q3 of 1.22x, near the upper end of the target range for BDCs. Our liquidity represented approximately 33% of our total assets, and we had nearly six times coverage on our unfunded commitments available to be drawn by our borrowers based on contractual requirements in the underlying loan agreements. This compares to a peer median of approximately two times as of September 30. Our robust liquidity combined with our capital available means that we have substantial investment capacity and flexibility during these uncertain times. Further, our capital base is permanent in nature. As noted in our November shareholder letter, unlike other structures of BDCs, we are not subject to redemptions or outflows and believe as a result, we are able to take advantage of opportunities created by market dislocations. These times of market volatility have been the environments where we have shown that the Sixth Street platform excels and creates shareholder value. There is significant change happening in our ecosystem, and we have always performed better on a relative basis in changing and dynamic environments. Our expertise spans the firm, from our investing teams across direct lending, growth, digital strategies, and infrastructure to our technical leadership of our engineering team, Chief Information Officer, alongside our Vice Chairman and pioneering AI strategist, Martin Chavez. Ultimately, we believe that as the market enters a more complex era, we remain uniquely positioned to lean into volatility and extend our track record of outperformance. Moving back to our financial results, reported net asset value per share at year end was $16.98 compared to $17.11 in Q3, and $17.09 at year end 2024, the latter two after giving effect to the supplemental dividends declared for those periods. Factors contributing to net asset value movement during Q4 include the over-earning of our base dividend through net investment income, which was offset primarily by the reversal of net unrealized gains from investment realizations during the quarter, the impact of widening credit spreads on the valuation of our portfolio, and portfolio-specific events. Ian will discuss movements in net asset value in further detail. Yesterday, our board approved a base quarterly dividend of $0.46 per share to shareholders of record as of March 16, payable on March 31. Our board also declared a supplemental dividend of $0.01 per share relating to our Q4 earnings to shareholders of record as of February 27, payable on March 20. The supplemental dividend was capped at $0.01 per share this quarter in accordance with our distribution framework. As a reminder, we limit the payment of supplemental dividends such that any decline in net asset value over the preceding two quarters, inclusive of any supplemental payment, does not exceed $0.15 per share. We have maintained this framework since we declared our first supplemental dividend in 2017, to prudently retain capital and stabilize net asset value in periods of market volatility. I will now turn the call over to Ross Bruck for the market outlook and investment activity. Thanks, Bo. Ross Bruck: I would like to start by layering on some additional thoughts on the direct lending environment and, more specifically, how we are positioned for the opportunity set we are anticipating this year. Our base case is that the investment environment for 2026 will be characterized by the continued imbalance between the supply of private capital and the demand for financing, resulting in sustained levels of competition and tight spreads for regular-way, on-the-run transactions. In contrast to what is implied by terms across our market, we believe that asset selection today remains complex. Fluctuating macroeconomic conditions, geopolitical paradigm changes, and rapid technological advancements create significant crosscurrents. With this backdrop, we remain focused on driving investment activity through our differentiated and thematically oriented originations engine and our deep underwriting capabilities, in each case leveraging unique capabilities from across the Sixth Street platform. Our asset selection prioritizes businesses with positions in their value chain, and resulting unit economics that are robust in the face of potential headwinds. Additionally, we remain focused on thoughtful structuring and deal documentation, providing us with the tools to actively manage credits during our investment period to preserve capital and generate incremental economics for shareholders. While we remain highly selective in investing capital, we see two potential upside nodes for accelerated originations. The first is capitalizing on generalized market volatility to finance businesses in which we have high conviction, at attractive risk-adjusted returns. By maintaining a strong balance sheet through the cycle, we are well positioned to be a capital solutions provider in times of uncertainty. The second is an acceleration in the market correcting rebalancing of capital. As noted in our November shareholder letter, we anticipated higher redemptions from non-traded BDCs, which began to materialize at the end of 2025. We view this capital reallocation as a healthy development for the ecosystem. While we expect this rebalancing to extend over a prolonged period, we recognize that this trend may accelerate given less predictable retail capital flows. We are pleased with our level of originations to close out a strong year for funding activity. In Q4, we provided total commitments of $242 million and total fundings of $197 million across five new portfolio companies and upsizes to four existing investments. For full year 2025, we provided $1.1 billion of commitments and closed on $894 million of fundings. To characterize our funding activity in Q4, 97% of our investments were in first lien loans, underscoring our commitment to investing at the top of the capital structure. All five new investments were cross-platform transactions where we leveraged the expertise of Sixth Street’s investment teams to execute on opportunities that offered compelling risk-adjusted returns. During the quarter, we further diversified our end market exposure with five new investments spanning four distinct industries. On funding trends for the year, nearly half of fundings were off the run—in what we consider lane two, challenged businesses with good asset bases, and lane three, good businesses with challenged capital structures. We also had an approximately even split in 2025 between sponsor and non-sponsor investments, highlighting the importance of our thematic investment approach in sourcing across both of these channels. From a portfolio yield perspective, our weighted average yield on debt and income-producing securities at amortized cost decreased quarter over quarter from 11.7% to 11.3%, with the majority of this decline, or 33 basis points, attributable to lower underlying base rates. Despite market credit spreads remaining tight from a historical perspective, we continue to maintain discipline and focus on transactions with Ross Bruck: 30 basis points range across all four quarters of the year. In Q4, our weighted average spread on new investments was 691 basis points, which compares favorably to the 551 basis points reported by our public BDC peers in Q3. Moving on to repayment activity, we experienced a moderate slowdown in payoffs during the fourth quarter to finish off a record year. Total repayments in Q4 were $235 million across eight full and two partial investment realizations. Total repayments were $1.2 billion for the year, representing the highest annual repayment activity since inception. In 2025, portfolio turnover was 34%, well above our three-year average of 22%. This significant volume of repayment activity contributed to $0.64 per share of activity-based fee income in 2025, representing the highest level of fee income since 2020. Refinancing was the dominant theme during the fourth quarter, driving six of eight repayments in our portfolio. Four of these six were refinanced at lower spreads, including one in the BSL market and three in the private credit market, highlighting the realization of our investment thesis as these credits improved during our hold period. The other two resulted in the repayment of our existing investment, followed by the opportunity to continue lending to the business through a new-money term loan. As evidenced by this quarter’s activity, we will continue to selectively participate in refinancings where we believe the investment represents an appropriate use of capital for our business, where we can leverage our expertise into uniquely insightful underwritings. Moving on to credit statistics, across our core borrowers for whom these metrics are relevant, we continue to have conservative weighted average attachment and detachment leverage points of 0.4 times and 5.3 times, respectively, with weighted average interest coverage of 2.1 times. As of Q4 2025, weighted average revenue and EBITDA of our core portfolio companies were $449 million and $127 million, respectively. Median revenue and EBITDA were $159 million and $48 million. Finally, the performance rating of our portfolio continues to be strong, with a weighted average rating of 1.13 on a scale of one to five, with one being the strongest, compared to last quarter’s rating of 1.12. Our very limited exposure to a second-lien term loan in Alcogen, which we acquired as a de minimis position, was added to nonaccrual status during the quarter, representing 0.01% of our total portfolio by fair value. Total nonaccruals remained unchanged at 0.6% by fair value as of December 31. With that, I would like to turn it over to Ian to cover our financial performance in more detail. Ian Timothy Simmonds: Thank you, Ross. Q4, we generated net investment income per share of $0.53, resulting in full-year net investment income per share of $2.23. Our Q4 net income per share was $0.32, resulting in full-year net income per share of $1.81. Ian Timothy Simmonds: We experienced an unwind of $0.05 per share of capital gains incentive fees in 2025, resulting in adjusted net investment income and adjusted net income per share for the year of $2.18 and $1.76, respectively. At year end, we had total investments of $3,300,000,000.0, total principal debt outstanding of $1,800,000,000.0, and net assets of $1,600,000,000, or $16.98 per share, which is prior to the impact of the supplemental dividend that was declared yesterday. Our ending debt-to-equity ratio was 1.1 times, down from 1.15 times in the prior quarter. Our average debt-to-equity ratio increased from 1.1 times to 1.17 times quarter over quarter. Ending leverage was lower than average leverage during Q4 driven by the timing of repayments occurring near quarter end. For full year 2025, our average debt-to-equity ratio was 1.17 times, down slightly from 1.19 times in 2024. We continue to have ample liquidity, with approximately $1,100,000,000 of unfunded revolver capacity at year end against $199,000,000 of unfunded portfolio company commitments eligible to be drawn. In terms of upcoming maturities, we have reserved for the $300,000,000 of 2026 notes due in August under our revolving credit facility. After adjusting our unfunded revolver capacity as of year end for the repayment of the 2026 notes, we continue to have significant liquidity that exceeds our unfunded commitments by 4.2 times. We remain focused on our established cadence in accessing the debt market annually to maintain our funding mix. Pivoting to our presentation materials, slide 10 contains this quarter’s NAV bridge. Walking through the main drivers of the change in net asset value, we added $0.52 per share from adjusted net investment income against our base dividend of $0.46 per share. There was a $0.10 per share decline in NAV from the reversal of net unrealized gains from paydowns and sales. The impact of widening credit spreads on the valuation of our portfolio had a negative $0.03 per share impact to net asset value. Other changes included a $0.04 per share increase in NAV from net realized gains on investments and a $0.12 per share reduction to NAV primarily from unrealized losses from portfolio company-specific events. Moving to our operating results detail on slide 12, we generated total investment income of $108,200,000.0, down slightly compared to $109,400,000.0 in the prior quarter. Walking through the components of income, interest and dividend income was $95,500,000.0, up from $95,200,000.0 in the prior quarter. Other fees, representing prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns, were also higher at $10,900,000.0 compared to $6,800,000.0 in Q3, driven primarily by prepayment fees earned on our investments in Merit and Arrowhead. Other income was $1,900,000.0, down from $7,400,000.0 in the prior quarter. Net expenses, excluding the impact of the non-cash accrual related to capital gains incentive fees, were $58,200,000.0, down from $58,400,000.0 in the prior quarter. Our weighted average interest rate on average debt outstanding decreased from 6.1% to 6%. This was the result of a decline in base rates quarter over quarter. As a reminder, our liability structure is entirely floating rate, which means our cost of debt will move in the same direction as interest rates. Included in our earnings release yesterday was the announcement of the formation of Structured Credit Partners, or SCP, a joint venture between both BDCs managed by Sixth Street and two BDCs managed by The Carlyle Group. The investment objective of the JV is to invest equity into newly issued broadly syndicated loan CLOs, managed by Sixth Street or Carlyle. By combining the investment capabilities of both platforms, this partnership enhances diversification and expands investment flexibility for Ian Timothy Simmonds: SLX. Ian Timothy Simmonds: We believe the unique structure will be highly accretive for earnings, providing access to a core Sixth Street competency in a fee-free format, as SCP will not charge any management or incentive fees on the underlying CLOs or at the joint venture level. We believe SCP will generate returns in the mid-teens on capital invested, which will be accretive to our overall asset-level yields. SLX’s total commitment to the joint venture is $200,000,000. Looking ahead to 2026, we continue to focus on the evolution of the interest rate environment and new-issue investment spreads and their combined impact on normalized earnings. As a core tenet of our dividend framework, we established our base dividend level using the forward interest rate curve to assess durability through cycles. As it relates to new-issue investment spreads, our disciplined capital allocation and focus on asset selection can alleviate pressure from compression under various competitive environments. Based on that assessment, we believe the earnings power of our portfolio remains well aligned with our existing base dividend. We believe the anticipated returns from our newly established JV will also provide support to our earnings profile. Based on our model, which incorporates the forward curve, reflects leverage in the middle of our target range, and assumes spreads on new investments remain broadly stable, we expect to target a return on equity on net investment income for 2026 of 11% to 11.5%. The lower end of this range reflects normalized activity-based fees, while the upper end reflects activity-based fees above our three-year historical average. Using our year-end book value per share of $16.97, which is adjusted to include the impact of our Q4 supplemental dividend, this corresponds to a range of $1.87 to $1.95 for full year 2026 adjusted net investment income per share. At year end, we had $1.21 per share of spillover income. We will continue to monitor this figure closely as part of our ongoing review of our distribution strategy. With that, I will turn it back to Bo for concluding remarks. Bo Stanley: Thank you, Ian. I will close by tying together a set of themes we have been consistently communicating in shareholder letters and on recent earnings calls. For several quarters now, we have been very vocal that the sector has been over-allocating capital into a tighter spread environment. We have also been clear that as reinvestment spreads compressed and the forward curve rolled over, sector ROEs would come down. While net investment income may decline slightly further based on the current shape of the forward curve, we believe we are approaching trough earnings for the space, absent any credit losses. As anticipated, the natural outcome of this misallocation is a reallocation of capital. We believe that the market is in the early innings of a gradual market rebalancing. As Ross mentioned, this began to materialize in December with a meaningful increase in redemptions from the perpetually offered non-traded BDC vehicles. Over time, we expect capital to migrate towards managers and structures that can consistently earn their cost of capital and away from those that cannot. Should we see capital continue to pull back, whether due to generalized AI fears or broader macro uncertainty, we are very well positioned with significant liquidity and a robust balance sheet to capitalize on the opportunity set. These periods of market retreat and heightened volatility represent the greatest environment for SLX to fully leverage the breadth and depth of the broader Sixth Street platform. Our firm’s extensive sector expertise, flexible and diverse capital base, and integrated investment capabilities enable us to provide differentiated bespoke capital solutions. Coupled with our technical underwriting and thematic investment approach, this unique combination has historically allowed us to outperform during periods of market instability or uncertainty. Our average net income ROE during years of heightened volatility has been nearly 14%, outperforming the average net income ROE of our peers during that period by over 600 basis points and our own average ROE in more benign periods by 200 basis points. Should the investment environment present a similar opportunity, we have the necessary resources and structural advantages to generate differentiated risk-adjusted returns and create lasting value for our shareholders. With that, thank you for your time today. Operator, please open the line for questions. Operator: Thank you. If you would like to ask a question, please press 1-1. If your question has been answered and you would like to remove yourself from the queue, please press 1-1 again. Our first question comes from Brian McKenna with Citizens. Your line is open. Brian McKenna: Okay, great. Thanks. Good morning, everyone. So just my first question, how much of the portfolio has turned over since 2022? And then if you look at the mix of loans today, what year or two were the majority of these assets originated in? Sure. Thanks for the question, Brian. So as we have stated before, we have less exposure to pre-2022 vintages than our peers. I think today, we set it about 20% to 25% of NAV. The vast majority of our portfolio we originated in post the rate hiking cycle in 2023 and 2024. We have been less active of late as the markets have gotten tighter. But, yeah. So about 20% of NAV before 2022, which is much different than our peers. Bo Stanley: Okay. That is helpful. And then I guess somewhat of a related question. I appreciate all the detail on software and how Sixth Street is thinking about the sector and where we go from here. But I think what the market might be missing is that there is going to be a very large new set of deployment opportunities, really across a number of subsectors over time, in and around what is happening with AI. So thinking through how you invest and why, and I know you are thoughtful about that. But I would just love to get your thoughts on how you see the deployment environment evolving here over the next few years, and what this ultimately means for the evolution of your portfolio. Bo Stanley: Yeah. Sure. It is a great question. Look. I think, first of all, we did try to provide a framework of how we are thinking about the sector given a lot of the noise related to enterprise software and its effect on direct lending and its effects on portfolios. Hopefully, people found that helpful. It sounds like you did. What I would tell you is we are thematic investors here at Sixth Street and have always been. And the great thing about being thematic investors, themes rotate often. Eighteen to twenty-four months is the general gestation period of a theme, and we are constantly rotating across the platform, looking at things on a relative value basis to find the best risk-adjusted return and to find those durable moat businesses that we talked about in the earnings script. We have never thought of software as a sector, and as such, we have always had rotating themes in and out of the sector. And I think that is really important because over the past two to three years, our team has been focused on the impacts that AI have on the ecosystem and where businesses are going, and we have been rotating our capital to those businesses we think are going to be the beneficiaries in the future. Those are the ones that I talked about that have the strong moats, that are able to invest in product, and what we ultimately think will expand the TAM of the market. So we are pretty excited about that. On top of what we think is going to be a misunderstanding, generally, and we are seeing that already, of the threats and the opportunities. I want to be clear. We think there are going to be winners and losers here. There are going to be businesses that are fragile that will, over time, be disintermediated by AI. But there are going to be businesses that are systems of record, that have strong data moats, most importantly, own their customers, are going to be able to invest in product and drive TAM, and we are looking forward to being providers of capital to those winners. Brian McKenna: Very helpful. Thanks so much. Operator: Thank you. Our next question comes from Finian O’Shea with Wells Fargo Securities. Your line is open. Finian Patrick O'Shea: Hey, everyone. Good morning. Operator: So Finian Patrick O'Shea: move over to the JV. Will these look like more BSL CLOs, just sort of true third party that you and Carlyle already have big platforms in? Is this something like more of a typical JV where it is a little more senior-type direct lending, or you are selling stuff down to it from the book as it matures? Bo Stanley: Good question, Finn. I am going to address at just what the criteria was for us to invest in this JV and then pass it over to Ross and Ian, who were very instrumental in working through this for that question. I think it is a very good question. But the two important criteria are: it has to be clearly accretive to our shareholders on a returns basis and on a relative value basis to other options that we see. That is one. And then two, it has to overlay with the core competencies of our platform and what we do well here at Sixth Street. And this hits both of those. Ross, do you want to address Finn’s question directly? Ross Bruck: Sure. Thanks, Finn. So in terms of the underlying collateral, these will be broadly syndicated loan CLOs. We do not anticipate the CLOs holding private credit either originated by us or third parties, and we would expect that on the liability side, they would be financed like traditional BSL CLOs, as you mentioned, that ourselves and Carlyle already have large platforms originating and managing. The main exception to third-party CLOs will be there will be no management fees at either the CLO or the joint venture level. A typical third-party CLO, you know, fees are 40 to 50 basis points of assets, or about 400 to 500 basis points to the equity. So that is the real differentiator in driving accretion for shareholders of the BDCs that are participating in the joint ventures. Great. Thanks, Ross. Bo Stanley: Okay. Finian Patrick O'Shea: That is helpful. Or, sorry, Ian. Were you going to Bo Stanley: Nope. Finian Patrick O'Shea: Okay. What about, like, already I missed the number. I am sure you said it. On spillover, but it is something reasonably high. How do you address the spillover problem that sort of true BSL CLO equity brings? Bo Stanley: So it is a good question, and I think we have made the comment multiple times about monitoring spillover income. And it is something that we think about deeply about how we can generate the best return on shareholder value Finian Patrick O'Shea: taking that into account. Bo Stanley: There is not one factor that matters the most, but we take them all into account, Finian Patrick O'Shea: including where we are trading, how much of that spillover needs to be distributed in the near term, what our prospects for over-earning are. Your point is a really good one on the BSL side. I think Bo Stanley: just to address that more directly, it is going to take us some time to ramp Finian Patrick O'Shea: the JV. So we talked about a commitment of $200,000,000. That is not $200,000,000 today. So this is not going to create an impact on spillover income in the next quarter or the next two quarters. This is going to be something that happens over time. Bo Stanley: And as you saw, Finian Patrick O'Shea: spillover income can move quarter to quarter. Our supplemental dividend framework was really designed to help us manage that without sacrificing stability in NAV. Bo Stanley: It will be something that we Finian Patrick O'Shea: that will develop, and we will be monitoring that as we go. But I do not have a Bo Stanley: specific answer on Finian Patrick O'Shea: whether that changes our approach. I think it is just another factor that we include in our assessment. Bo Stanley: And why will it Finian Patrick O'Shea: take a lot of time—for operation reasons, or because you want to, you know, the arb is really tight Ross Bruck: kind of thing and you want to Maxwell Fritscher: manage it to that. Finian Patrick O'Shea: Well, just think about the general sequence and cadence of CLO creation. We are not looking to create a CLO with, in our case, $200,000,000 equity commitment today. That is going to allow us to create multiple CLOs. Bo Stanley: Cool. Thanks so much. Thanks, Finn. Operator: Thank you. Our next question comes from Arren Cyganovich with Truist Securities. Bo Stanley: Thanks. Good morning. I was wondering if you could talk a little bit about the investment pipeline and some of the disruption that we have seen from the public software space, and Ross Bruck: that is impacting any of your Bo Stanley: I know it is quite early thus far, but just curious if you have had any conversations with sponsors. Actually, we have had a lot of conversations over the last few weeks, as you would imagine, with sponsors. I think sponsors are trying to understand the landscape of who is going to be providers of capital in this market and who is not. I would say it is too early to see if there is going to be a pickup in pipeline from this disruption. I think we are well suited, as I mentioned in the script, to take advantage of any dislocation. These dislocations are really what our platform is built for, so we stand ready and able to take advantage of that. As far as the generalized pipeline, I think the pipeline is decent. We had good activity in Q4, as you saw a pickup in M&A activity, particularly on the sponsor side. Last year, our non-sponsor to sponsor origination was around 50/50. So 50% non-sponsor versus sponsor. We were certainly focused on origination away from the regular channel. We were allocating our capital to transactions that we believed earned our cost of equity. But we are encouraged by the pipeline, certainly encouraged if this dislocation continues. Whenever there is a lot of uncertainty, that is the period that we generally step in and take advantage of. Ross Bruck: Thanks. And then Bo Stanley: the unrealized losses were—they were not too high, 1% impact to NAV. What was driving some of those impacts to your portfolio companies? Ian Timothy Simmonds: Yeah. Sure. So this is Ian. Arren, there was about $0.03 per share that was attributable to Bo Stanley: spreads. Ian Timothy Simmonds: And then on the credit side, there were some specific reversals. So Carrot, which is a public equity name that we hold, Maxwell Fritscher: the market price at $9.30 was higher than what it was at 12/31, so that creates Ian Timothy Simmonds: a reversal of previously unrealized gains. And then there was an impact from a restructuring at IRG and a couple of other portfolio companies that were less impactful individually. Operator: Got it. Thank you. Bo Stanley: Thank you. Operator: Our next question comes from Kenneth S. Lee with RBC Capital Markets. Your line is open. Bo Stanley: Hey, good morning, and thanks for taking my question. Just one on the SCP JV again. I am wondering Ross Bruck: you could talk a little bit more about some of the motivations here. Are you seeing particular opportunities within the BSL markets? Kenneth S. Lee: Just want to flesh that out a little bit more. Thanks. Ross Bruck: Ken, this is Ross. So, to echo Bo’s comments, we are constantly on the lookout for how we can leverage core competencies of the Sixth Street platform for shareholders. As you know, we have leveraged the expertise of our structured credit team for some time now, investing in CLO debt with a very strong track record in that asset class. We have been thinking about ways to do more beyond CLO debt, and we developed this structure, which Carlyle happened to be considering on their end simultaneously. And so the motivations are: we think the risk return generated by fee-free CLO equity is really attractive within a portfolio context for SLX. It is not so much picking a specific market environment in which we think the arb is more attractive or less attractive. The idea, as Ian alluded to, is that we are going to deploy this equity capital sequentially in CLOs over time, creating very high diversification across borrowers and across vintages. And so those are some of the key motivations. Kenneth S. Lee: Gotcha. Very helpful there. Just one follow-up if I may. Wonder if you could just talk a little bit more about what you are seeing in terms of spreads on new investments. There is a little bit of a delta quarter to quarter, but just wondering whether that is driven more by mix rather than any kind of spread compression or widening. Bo Stanley: Yeah. Generally speaking, we have seen spreads pretty stable throughout the course of 2025 and expect that in 2026. We took maybe a bit of a pickup given the broader markets recently. But I think we were within a 50 basis point band across the four quarters last year. Again, speaking to the breadth of our platform and our ability to find things off the run, thematically. But, broadly, we see stability. We are not anticipating any real change in that going forward. Our hope is, if capital continues to reallocate in the sector, that spreads will continue to widen a bit, but we have not seen that as Kenneth S. Lee: Gotcha. Very helpful there. Thanks again. Bo Stanley: Yep. Thank you. Thank you. Operator: Our next question comes from Sean Paul Adams with B. Riley Securities. Ross Bruck: Hey, guys. Good morning. Could you provide just a little Ian Timothy Simmonds: more color on the restructuring for IRG Sports? Bo Stanley: Yes. I will take that one really quickly. IRG Sports is a business that we have been an investor in for nine years now, I believe. We concluded the sale of one of the operating assets during the quarter that was actually above our NAV. We have been in the process of marketing and selling the other operating asset. We have marked that to what we believe is the mid-range of the bids that we have today and feel good about that. Hopefully, it may actually do a little bit better than that. Got it. Thank you. Operator: Thank you. Our next question comes from Paul Conrad Johnson with KBW. Ross Bruck: Hey, good morning. Thanks for taking my questions. Most of mine have been asked, but I am curious, on the 40% software exposure, Maxwell Fritscher: has that come down, or has that been—where has that gone over time? Has that been pretty consistent over time? And based on current market conditions, where would you expect that to trend, with your pipeline and your selectivity currently? Bo Stanley: Yeah. So I will take that. Given that we have always mapped to the end market, and I think we have provided a framework why we think that is the right way to think about risk because that is ultimately what you are underwriting, we do not have historical statistics. We actually took a look at the portfolio, wanted to provide some clarity given the market context, and mapped the portfolio to broadly what we believe people in the space are defining as enterprise software. What I would say anecdotally: I would believe that has come down marginally over the past couple years, in part because we were seeing a decline in unit economics across the software space post the COVID pull-through of demand. And I think that is one of the things that is really important to note that people are losing sight of, is that valuations in software companies are coming down in part because unit economics are slowing. There is a little bit of cannibalization of AI budgets and enterprise software budgets that are causing some of that. There is not disruption and dislocation from AI taking market share yet, though. But as we saw those unit economics coming down and, frankly, more capital in the private market which are over-indexing probably to software, and certainly private credit to software, we were just less competitive in the regular-way LBO financing for software companies. A lot of the businesses that we did invest in in the software space over the last couple years were off the run, direct to company, or very thematic in some of the areas that we were rotating to. So we do not have the exact numbers because we have never tracked it that way. What I would tell you is, anecdotally, it has come down marginally over time because we were less competitive. As far as the future, we are going to invest where we feel we can invest into defensible businesses that meet our criteria. I am hopeful on the margin that we are more competitive in the regular-way financings for the winners in the future, but that will remain to be seen. Maxwell Fritscher: Thank you very much, Bo. That is all for me. Kenneth S. Lee: Thanks. Operator: Thank you. Our next question comes from Robert James Dodd with Raymond James. Your line is open. Ross Bruck: Hi, guys. I have Ian Timothy Simmonds: some questions about the JV, but I think I will follow up with you on those. On the spread question going forward, if I can, Robert James Dodd: I mean, in your guidance and your prepared remarks, you are saying you expect spreads to remain tight. So does that mean that you think that the market AI software concerns are going to blow over? Because, obviously, right now, software spreads in the liquid market—obviously, we cannot really see them in the private credit market yet—but those are, you know, 150 basis points wider, give or take. And that is not just the explicit software—kind of healthcare IT, anything where software is the product—spreads are materially wider, but you expect them to be tight for the year. So can you reconcile me? Do you expect it to blow over, or how do those two things align? Bo Stanley: Thanks for the question, Robert. Look. Our base case coming into the year Bo Stanley: is that Bo Stanley: the credit spreads are going to be stable and not increasing. What I would tell you is it is too early to tell if the dislocation in software and in the BSL market—and I think for performing BSL for software names that, you know, we said it in our script, is closer to 50 to 100 basis points. I think you are quoting more broadly software and some of the more challenged names— Robert James Dodd: Yep. Bo Stanley: That up it out to 150. Overall, that should be support for the ability to find risk with a better spread environment than in the past. But I do not think that is our base case now. I think the markets are still generally awash with liquidity and capital. That could reverse. We saw redemptions in the non-traded BDC sector pick up in Q4. I cannot imagine that they are going to slow down any in Q1. I think we think that is a gradual shift of reallocation of capital in the sector, which is healthy. Over the long arc, we believe the space needs to earn its cost of equity. Spreads need to widen. That is going to take time. Our base case is not that they are going to in the near term, but that could change very quickly. I do think over the long term, they have to. Robert James Dodd: Got it. Thank you. One more if I can, and I will let you—I mean, Bo Stanley: software and technology has been a core part of the Robert James Dodd: platform for a considerable period of time, and the personnel backgrounds even before that. How long has there been, say, an AI risk section in an investment committee memo or an investment committee meeting? I mean, it is not like I think AI risk suddenly appeared over the last three months. So how long has that been a core part of your underwriting for the software-as-a-product, rather than software-as-an-end-market, kind of businesses? Bo Stanley: We have been thinking about how AI impacts the ecosystem both positively and negatively really over the past three years. And, as I mentioned, working thematically to reposition the portfolio and our new activity to the areas that we think are both most protected and can benefit from those. The other great thing about Sixth Street and our platform is we have a purview of what is going on in the ecosystem. It is not just in direct lending. Robert James Dodd: It— Bo Stanley: you know, we have a growth franchise that starts to see businesses just post kind of venture, and we have folks that are looking at things in the broadly syndicated market, also on the distressed market. So we have this perfect purview of what is going on across the ecosystem, and that allows us some early signals of where we should be focusing our capital and where we, thematically, should be thinking about positioning our portfolio. So it has been for quite some time that our team has been working on this and thinking through it. You know, and so Kenneth S. Lee: yeah. Bo Stanley: Yep. Robert James Dodd: Thank you. Operator: Thank you. Our next question is a follow-up from Brian McKenna with Citizens. Your line is open. Brian McKenna: Great. Thanks for the follow-up. Just two more unrelated questions, if I may. So how much of your software and related exposure is sponsor versus non-sponsor? And then one for you, Ian. If you look back at the last decade as a public BDC, what has been the low end of the initial target range for ROE? What did the operating environment look like during that period, specifically as it relates to base rates and spreads, etc.? And then where did the ROE come in for that period? Bo Stanley: Might be easiest if I answer your questions Ian Timothy Simmonds: to me first. We have provided guidance, excluding this year for 2026. We have done it on 11 prior occasions. Our actual operating ROEs Robert James Dodd: have ended up above our guidance range in eight of those years, Ian Timothy Simmonds: and the other three years we have met the midpoint of those ranges. And so that is across a period from 2015 to 2025. You had different periods where base rates were elevated in 2018. You had some dislocation from energy markets on the broader market in 2014–2015. You had COVID. I am not as familiar with what our peers do on the guidance side, but we have been providing guidance now for—this is our twelfth year of providing guidance. Bo Stanley: And then just going back quickly to your question on sponsor versus non-sponsor in the software space. We do not have it broken down for the software space, but I would venture to say that it would mirror the broader portfolio that has traditionally been close to 35% non-sponsor versus sponsor. Of course, of late over the last eighteen months, that activity has been closer to 50/50. Brian McKenna: Super helpful. Thank you, guys. Bo Stanley: Thanks. Operator: Thank you. I am showing no further questions at this time. I would like to turn the call back over to Bo Stanley for closing remarks. Bo Stanley: Well, thank you, everybody. Thanks for the great questions today and for listening to us. I also want to thank everybody in this room for the tremendous amount of work preparing for this every quarter and wish everybody a great long weekend. Thank you. Operator: Thank you for your participation. You may now disconnect. Bo Stanley: Good day.
Operator: Good morning, ladies and gentlemen, and welcome to the Cooper-Standard Holdings Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. During the presentation, following company prepared comments, we will conduct a question and answer session. At that time, if you have a question, you will need to press 11 on your telephone keypad. To withdraw your question, as a reminder, this conference call is being recorded and the webcast will be available for replay later today. I will now turn the conference call over to Roger Hendriksen, Director of Investor Relations. Roger Hendriksen: Thank you, Jenny, and good morning, everyone. We appreciate your continued interest in Cooper-Standard Holdings Inc., and we thank you for taking the time to join our call today. The members of our leadership team who will be speaking with you on the call this morning are Jeffrey S. Edwards, chairman and chief executive officer, and Jonathan P. Banas, executive vice president and chief financial officer. Before we begin, I need to remind you that this presentation contains forward-looking statements. While these statements are made based on current factual information and certain assumptions and plans that management currently believes to be reasonable, these statements do involve risks and uncertainties. For more information on forward-looking statements, we ask that you refer to Slide 3 of this presentation and the company's statements included in periodic filings with the Securities and Exchange Commission. The presentation also contains non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures are included in the appendix to the presentation. With all of that out of the way, let me turn it over to Jeffrey S. Edwards. Thanks, Roger, and good morning, everyone. We certainly appreciate the Jeffrey S. Edwards: opportunity to review our fourth quarter and full year 2025 results and provide an update on the outlook for 2026. So let us begin on Slide 5, and I would like to highlight some key data points that are reflective of our continued strong commitment to operational excellence and driving increasing value for our shareholders. In 2025, we continued to deliver world-class results in terms of product quality, program management, and service for our customers. This is reflected by our 99% green product quality scorecards and 98% green program launch scorecards. Even more importantly, we had our best year ever in terms of employee safety. For the full year 2025, our safety incident rate was just 0.24 per 200,000 hours worked, surpassing our previous best from 2024, and well below the world-class benchmark of 0.47. We are especially proud of our 31 plants that completed the year with a perfect safety record of zero reportable incidents. The dedicated teams in these plants continue to affirm that our long-term goal of zero safety incidents is achievable. And as we usually do, a shout-out to our plant managers here. Well done. And we really appreciate their personal commitment to our total safety culture. And for those of you that do not realize, about 85% of our 21,000 employees report into those plant managers. So amazing leadership, and keep up the great work, guys. Next, some more information regarding operations. The combined efficiency improvements in our plants and lean initiatives in our supply chain generated $64 million in cost savings during the year. In addition, we realized $18 million in year-over-year savings primarily related to the salaried reduction action we implemented in 2024. As a result of the increases in operating efficiency and cost savings, we achieved a solid 24% improvement in operating income for the year. We are proud of the way our team was able to respond to and overcome the continued inflationary headwinds we experienced throughout the year and the fourth quarter impact from a customer supply chain disruption that significantly reduced production volumes on one of our top platforms. In addition, we continue to deliver industry-leading world-class service and quality products to our customers. They are definitely rewarding us with additional business. In 2025, we received a total of $298 million in net new business awards, which we expect will support a solid trajectory of profitable growth in future years. So in summary, by many measures, 2025 was our best operational performance in company history. We were pleased to deliver full year results above our original operating plan and at the high end of the updated guidance range we gave you in October, despite the significant production disruption experienced by our top customer on our top vehicle program during the fourth quarter. We expect to continue to build on the successes of 2025 to drive further margin expansion and increasing value for all of our stakeholders in 2026 and beyond. Let us turn to Page 6. None of the achievements I just mentioned would be possible without a world-class culture and commitment to doing business the right way with uncompromised honesty, transparency, and integrity. We were pleased in 2025 to again receive numerous awards for excellence in product quality and customer service, as well as broad recognition for our continued achievements in culture and sustainability. I could not be more proud of our global workforce and their joint commitment to a culture of achievement, excellence, and integrity. And I would like to thank all of our employees and our board of directors for their continued hard work, accomplishments, and support in 2025, and for setting the stage for an even more successful 2026. I will now turn the call over to Jonathan P. Banas to review the details of our fourth quarter and full year financial results. Thanks, Jeff, and good morning, everyone. In the next few slides, I will cover the details of our quarterly and full year financial results, put some context around some of the key items that impacted our earnings, and then provide some color on our cash flow, liquidity, and balance sheet. So let us turn to Slide 8. On Slide 8, we show a summary of our results for the fourth quarter and full year 2025 with comparisons to the prior year periods. Fourth quarter 2025 sales totaled $672 million, an increase of 1.8% versus 2024. The improvement was despite the negative impact from a customer supply chain disruption that significantly reduced production volumes on one of our top platforms. The volume and mix, which is net of customer price adjustments and recoveries, was more than offset by favorable foreign exchange, mainly from the euro. Adjusted EBITDA for the fourth quarter 2025 was $34.9 million, or 5.2% of sales. This compares to $54.3 million, or 8.2% of sales in 2024. The decrease was primarily driven by the short-term industry disruptions impacting volume and mix and efficiencies, as well as inflationary and compensation-related costs year over year. On a U.S. GAAP basis, we generated net income of $3.3 million in the fourth quarter. This included a $45 million deferred tax asset valuation allowance release and $11.5 million in excluding these and other smaller noncash items, we recorded an adjusted net loss of $31 million, or $1.73 per diluted share for 2025, compared to an adjusted net loss of $2.9 million in 2024. For the full year 2025, our sales totaled $2.74 billion, an increase of 0.4% versus 2024. The modest improvement was primarily due to favorable foreign exchange and net customer pricing and recoveries, which served to offset the lost sales related to customer production disruptions and other unfavorable volume and mix that occurred during the year. Operator: Adjusted EBITDA Jeffrey S. Edwards: for the full year 2025 came in at $209.7 million compared to $180.7 million for the full year 2024. This result for 2025 was at the high end of our most recent guidance range and in line with the estimates of the analysts who follow us most closely. Improved manufacturing and supply chain efficiencies, especially in the first three quarters of the year, savings from restructuring initiatives, and favorable foreign exchange more than offset the overall impact of weak volume and unfavorable customer price adjustments. On a U.S. GAAP basis, full year net loss significantly improved to $4.2 million from a net loss of $78.7 million in 2024. After adjusting for special items and the related tax impacts, we incurred an adjusted net loss for the year of $30.9 million, or $1.73 per diluted share. This is also a significant improvement when compared to the adjusted net loss of $56.7 million, or $3.23 per diluted share recorded in 2024. From a capital expenditure perspective, we spent $48 million during 2025, or 1.8% of sales, similar to our capital investment level in 2024. We continue to optimize asset utilization throughout the company and focus our spend on customer launch readiness and new business growth. Moving to Slide 9. Roger Hendriksen: The charts on Slide Jeffrey S. Edwards: 9 and 10 quantify the significant drivers of the year-over-year changes in our sales and adjusted EBITDA for the fourth quarter and full year, respectively. For sales in the fourth quarter, favorable foreign exchange increased sales by $14 million. This was partially offset by unfavorable volume and mix of $3 million. As mentioned, this category includes the impact of customer disruptions as well as net customer price adjustments and recoveries. In terms of adjusted EBITDA, volume and mix was a net benefit of $4 million in the quarter, as the overall mix of production and net pricing and recoveries in the quarter helped offset the negative impact of customer production disruptions. Manufacturing and purchasing efficiencies drove just $1 million in savings during the quarter, as efficiency was negatively impacted by trap costs and reduced fixed cost absorption levels caused by those customer production disruptions, as well as higher-than-launch volumes on a couple of new programs. Savings from restructuring initiatives resulted in an additional $1 million of cost improvement and a slight tailwind on raw materials amounted to $1 million in the period. These improvements were more than offset by million dollars of general inflation, such as wage and energy cost increases, while the nonrecurrence of some one-off positive items from the prior year and higher incentive compensation expenses year over year combined for the rest of the walk. Moving to Slide 10. For the full year, favorable foreign exchange increased sales by $12 million while unfavorable volume and mix net of customer price adjustments and recoveries reduced sales by $2 million. For full year adjusted EBITDA, $64 million of improved manufacturing and purchasing efficiencies, $18 million of restructuring savings, $10 million of favorable foreign exchange, and $2 million of lower material costs were all positive factors. Offsetting these positive items were $25 million in higher wages and other general inflation, and $17 million in unfavorable volume mix and net customer price adjustments. Other includes a minor amount of tariffs yet to be recovered, just due to timing, higher incentive compensation year over year, increased SG&A primarily due to share price appreciation, and a collection of other smaller items. Moving to Slide 11 and an update on our liquidity and our balance sheet. We were very pleased to end the year with strong free cash flow of $44.6 million in the fourth quarter, and importantly, positive free cash flow for the full year as we indicated we would of $16.3 million. Net cash provided by operating activities in the fourth quarter was $56 million, a decrease of $18 million compared to the same period last year due to the lower cash earnings in the quarter. Capital expenditures were $11.7 million in the quarter as we continue our intense focus on cash preservation and optimizing asset utilization. We ended the year with total liquidity of over $352 million. As of 12/31/2025, we had cash on hand of $191.7 million and an additional $160.9 million of availability on a revolving credit facility which remained undrawn. Based on our current outlook for production volumes and expectations for continued operational efficiencies and margin expansion, we expect that free cash flow in 2026 will again be positive. We believe our current cash on hand, expected future cash generation, and access to flexible credit facilities will provide ample resources to support our ongoing operations, make required interest payments, and execute planned strategic initiatives. Before we wrap up, I wanted to offer some thoughts on managing our debt maturities and how we are looking at our financing options going forward. We have continued to monitor the debt markets and consult with our advisors in anticipation of a potential refinancing of certain of our outstanding debt. We have made significant progress on evaluating potential paths forward. While the timing for the initiation of any refinancing action will be market dependent, we continue to target a refinancing transaction in the near future. That concludes my prepared comments. So let me hand it back over to Jeff. Thanks, John, and to wrap up our discussion this morning, I want to share a few thoughts regarding our outlook for 2026 and why I remain extremely optimistic about our opportunities this year and beyond. If we could move to Slide 13. The first reason for optimism is our continued success in executing our strategic plans, based on the four key strategic imperatives you see on this slide. Since we first defined these imperatives a couple years ago, the alignment and the focus of our teams has enabled us to drive significant improvements in virtually every aspect of our business. And importantly, our operational improvements in our manufacturing facilities and investments in innovation are translating to improved financial results. Turning to Slide 14. The charts on this slide clearly illustrate strong trends in margin expansion and improved cash flow, despite revenue declining due to lower industry production volumes over the past three years. As we have significantly reduced our fixed cost and continue to optimize manufacturing and purchasing efficiencies, we believe we can further accelerate margin expansion as our top line begins to grow. And we believe that both of our product segments are well positioned to grow significantly over the next few years. Turning to Slide 15, the strategy for our Fluid Handling Systems segment looks to unlock the full potential of the organization by expanding geographically in association with key fast-growing customers, leveraging the growth trends in hybrid vehicles to expand content per vehicle, and launching new innovative products and technologies including thermal management solutions and our award-winning EcoFlow family of integrated coolant control products. Please turn to Slide 16. As the global leader, our Sealing Systems strategy is focused on sustaining the operational excellence that has reestablished the financial strength of the business and leveraging global expertise in engineering, design, and manufacturing to drive profitable growth in both our existing and new markets. We are using digital tools and world-class engineering capabilities to make the design and validation process for new products faster and more efficient, supporting our customers in developing markets that tend to have a shorter product development cycle. Paying close attention to the voice of the customer, the Sealing team is quickly bringing additional innovative products and technologies to market that we expect will add value for our customers and enable the company to expand content per vehicle and drive market share gains going forward. Turning to Slide 17. For both of our segments, China represents a key part of our profitable growth strategy. And as you know, Chinese OEMs are expanding aggressively into many global markets and are expected to gain significant market share by 2030. As a key part of our strategy, CPS expects to grow and gain share alongside Chinese OEMs, leveraging our world-class technology and service, and the relationships that we have established over twenty years of operating in China as well as our outstanding locally led team. Currently, Chinese OEMs represent approximately 36% of our revenue in China, while Western OEMs and their joint venture partners represent approximately 60%. Based on the recent new business awards already in hand and developing target business, we expect to grow our business with Chinese OEMs to more than 60% of our revenue by 2030. In addition, given our existing available production capacity, we believe we will be able to scale our business with Chinese OEMs with minimal incremental investment resulting in very favorable returns on invested capital. In the near term, we expect our total revenue attributable to China will grow at a CAGR north of 15% between 2025 and 2028. Roger Hendriksen: Further, Jeffrey S. Edwards: to Chinese OEMs globally we currently expect to triple our total sales over the next five years as we support them in their growth within China as well as their expansion into other key markets around the world. Turning to Slide 18. Roger Hendriksen: Our positive Jeffrey S. Edwards: outlook for sales growth that exceeds the market is supported by continuing new business awards. I mentioned at the beginning of the call we received nearly $300 million in net new business awards in 2025. Of the total awards, 74% of the new awards were related to the value-add innovation we have introduced into the market. Products like FlexiCore and Flush Seal in our Sealing segment and our portfolio of low-permeation tubes and quick connects in the Fluid segment are delivering value for our customers and driving new business wins. Roger Hendriksen: Similarly, Jeffrey S. Edwards: 74% of the new awards were related to battery electric or hybrid vehicle platforms, which is an indication of how closely our product offerings and innovations are strategically aligned with the fastest-growing segments of the market. Finally, consistent with our China strategy, we just discussed 51% of the net new business awards were with Chinese OEMs. We are certainly proud to be the supplier that our customers turn to for quality components, consistency of delivery, and collaboration on critical design and development of new technologies. And now we are also the supplier continuing to support for their global expansion goals. Further, we expect some of our latest innovations such as our EcoFlow switch pump and our integrated coolant flow manifold, which we are currently marketing to our customers in China, will drive even more business wins in 2026. So far, we are off to a strong start of the year with several new awards already in hand, and we expect to keep the momentum going throughout this year. Turning to Slide 19. Our world-class service, technology, and innovations continue to allow us to partner with customers on some of their most important high-profile vehicle platforms. On this slide, we show our top 10 platforms for 2026 based on expected revenue. These 10 programs represent approximately 45% of our planned revenue for the year based on current production volume estimates and an expected average content per vehicle of approximately $190. Importantly, seven of these 10 platforms offer multiple powertrain options, which allows for flexibility and reduces risks related to fluctuations in production volumes driven by trends in consumer preference or changing regulatory environment. Let us go to Slide 20. To conclude this morning, let me provide a little color on the guidance we published in our press release yesterday afternoon and also provide a few comments on our longer-term financial outlook. Our expectations for 2026 are for increased profitability and for further margin expansion. Leveraging an increase in sales of around 3% based on the most recent industry production outlook, we expect continuing launches of new higher-margin business will be a positive driver again during the year. We are confident that the combination of increasing operating efficiencies and the ramp up of higher-margin business will enable us to hit our near-term strategic target of double-digit EBITDA margin for the full year in 2026, with the first quarter likely to be the weakest in terms of margins and cash flow, but building steadily throughout the remaining three quarters of the year. Over the longer term, we continue to believe we are only at the beginning of an exciting period of growth and prosperity for Cooper-Standard Holdings Inc. The actions we have taken and the successes we have achieved over the past four years have clearly made us better and stronger. We believe we are better positioned than ever before to leverage future increases in production volume, although we believe we can continue to expand margins even in a flat or stable production environment. We are also better positioned to expand into high growth markets and partner with new dynamic customers who have aggressive growth plans around the world. And we are already doing that. We believe the benefits of these new and expanded relationships will become more evident in the coming years as those new programs launch. Based on current estimates for the global production volumes for 2026 to 2028, we believe the implied growth in our expanding margins will enable us to reduce our net leverage ratio to something in the range of two times or lower over that time frame. Additionally, we believe and are confident that we will triple the return on invested capital of our business by 2028. So you can see why we are excited about the opportunities and outlook in 2026 and for the next several years beyond that. I want to again thank our employees for their hard work and commitment to helping make Cooper-Standard Holdings Inc. a premier automotive supplier and the first choice of all of our stakeholders. I also want to thank our customers around the world for their continued trust and partnership. This concludes our prepared comments. Roger Hendriksen: Kenny, can we open it up for Q&A, please? Operator: Yes. Thank you, ladies and gentlemen. We will now begin the question and answer session. If you have a question, please press the star followed by the one. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Kirk Ludtke from Imperial Capital. Line is now open. Roger Hendriksen: Hello, Jeff, John, Roger. Appreciate the call. Jeffrey S. Edwards: Hey, Kirk. Hi, Kirk. On Slide 20, the guide, the bridge to the Kirk Ludtke: $280 million of adjusted EBITDA, is there lean as the big contributor there? Are there any significant initiatives worth mentioning that is included in that $90 million, or is it more or less business as usual? Jeffrey S. Edwards: More the latter, Kirk. This is John. It is business as usual for the team. They do this very, very well as Jeff positioned at the beginning of this call. As far as continuous improvement, whether it is in the manufacturing side of the business or the purchasing supply chain side, and as you can see from this bridge, they are signed up for considerable commitment again this year. But nothing in and of itself is unusual within that $90 million. Kirk Ludtke: Okay. Thank you. And then volume mix and price, are the new products, EcoFlow, etc., are they included in that $10 million? Jeffrey S. Edwards: This is Jeff, Kirk. Everything that I talked about on the call today related to that net new business number that we have just booked last year in 2025, and obviously what we did in 2023 and 2024 that is in launch or already launched, it would be all inclusive. And to your comment about the teams and lean, just to give you an idea of our confidence in that $90 million, as we head into 2026, we have already identified well above 90% of all of that. And that is the highest number in a decade in terms of already identified and being worked on. So the confidence level of the team executing that is very high. A lot of work gets done months in advance each year, and that list is very good and certainly is being managed on a daily basis by the two presidents of those businesses. Kirk Ludtke: Got it. Thank you. It is very helpful. And then on the volume mix bar, that includes the new products. It includes the shift to hybrids, all of those trends you have talked about? Jeffrey S. Edwards: It does. Kirk Ludtke: Okay. Jeffrey S. Edwards: And obviously, as we put together our three-year business plan, as you know, 2026, 2027, and 2028, we have just completed it. So all of the business, the new business, for 2026 is already being produced in our factories. For 2027 and 2028, the booked business there exceeds 95% already. So it makes it pretty easy for us to forecast what is coming out and what is going in and what those margins are, and that really drives the Kirk Ludtke: level of Jeffrey S. Edwards: clarity and transparency around our three-year plan for our business. So it is clear what we are going to do in 2026, 2027, and 2028. Of course, the issue that always is is what is the volume and mix going to be. Otherwise, we are pretty predictable in terms of what we are going to deliver. Kirk Ludtke: Got it. Okay. I appreciate it. And then with respect, I know you are probably limited as to what you can say about this, but with respect to the F Series, is that back to normal as far as you are concerned? Jeffrey S. Edwards: Hey, Kirk. It is John again. We are reading the kind of the same news you are and based on the releases, some volumes are coming back online. You are right. We will not get into too much detail or speak on behalf of our major customer. But we are seeing production continue to ramp up and the releases are holding there. Kirk Ludtke: Okay. So that could continue to be a drag in the first part of the year. Jeffrey S. Edwards: This is Jeff, Kirk. I do not know that is going to be a drag. I think it is moving in the direction that we have predicted. And I think the customers predicted. So I would just leave it at that. Kirk Ludtke: Okay. I appreciate it. Thank you, and good luck. Okay. Jeffrey S. Edwards: Thanks, Kirk. Thanks, Kirk. Operator: Thank you. Your next question is from Michael Patrick Ward from Citigroup. Your line is open. Jeffrey S. Edwards: Hi, Mike. Jeff, maybe another way around the F Series discussion. Michael Patrick Ward: What are you seeing with your Jeffrey S. Edwards: schedules from the manufacturers? Does that differ from what we are seeing like with IHS? Michael Patrick Ward: It sounds like the first quarter is part of what you are looking at with your cadence of earnings, is relatively soft production. But I think most manufacturers are talking about acceleration in the second half. And is that what you are seeing, particularly at some of those key models? Jeffrey S. Edwards: Yeah. I saw the transcript like you did, in terms of what the customer was predicting for 2026 in terms of F Series production. The 150,000 units over and above 2025 that was just discussed publicly. I will tell you that that would represent probably 60,000 units above what we have in our plan, Mike. Now the question becomes when those are going to be built, produced. There is additional shift that was talked about. There was line speed that was talked about. So I do not have any insight into that. As our releases get adjusted accordingly, then that will reflect. But I can tell you that there is potential increase of 60,000 units if those 150,000 increase year over year happen. It is not a secret. Our content per vehicle is $450 on those vehicles, so we can do the math. Michael Patrick Ward: Yeah. It is a big number. It is, yeah. I think Ford is in the same boat you are. I think they are just in all fairness to Ford and to you, I think they managed the situation better than expected in April. And I Roger Hendriksen: think that they are still trying to figure out Michael Patrick Ward: on the supply side and the cost benefit and everything else. But inventory is in great shape. Right? So right now, schedules are sticking from what you have seen. Is that correct? Jeffrey S. Edwards: That is what we have seen. Yes. That is what we have seen. We are cautiously optimistic. How about that? Roger Hendriksen: Yeah. Michael Patrick Ward: The Ben Griggs: Magna this morning reported that it got a pretty good lump sum of cash for some of the BEV stuff. How do you expect to see it? Lump sum, piece price, all of the above? Have you seen any big cash contribution yet or lump sum cash inflow yet, or do you expect one in 2026? Jeffrey S. Edwards: Yes and yes. So we finished some negotiations in 2025. And those are behind us. And we have got others that we are expecting to go through in 2026. And it seems that most are talking lump sums, Mike. That is my Ben Griggs: Interesting. Jeffrey S. Edwards: That is my view as I sit here today anyway. Ben Griggs: Yep. That is good news. That is different than in the past. John, is there any sense of urgency to get the refi done before the March when you become current? Jeffrey S. Edwards: Mike, what I have talked about in the past is we certainly would prefer to get something done prior to the first lien and third lien notes coming current. Those milestones are May and March, respectively. So you think about it in that kind of time frame. Certainly, we do not want to have that added pressure of the notes coming current. Ben Griggs: Well, good luck. It sounds like it is getting tight. So thank you. Thank you very much. Michael Patrick Ward: Alright. Thanks, Mike. Operator: Thank you. Your next question is from Nathan Jones from Stifel. Jeffrey S. Edwards: Good morning, Nathan. Nathan Jones: I guess I will start with some questions around the net new business wins. Obviously, very strong in 2025 again, on the back of some good net new business wins in 2023 and 2024. You talk about what is in the 2026 guide from net new business wins in 2023 and 2024, and how we should think about those layering in over the next few years? Jeffrey S. Edwards: Yeah, Nathan. This is Jeff. So I can tell you that the $300 million that we booked in 2025 that we just discussed Ben Griggs: this morning Jeffrey S. Edwards: those typically take a couple years, call it between two and three years on average, to roll into the portfolio. The $400-plus million that we expect to book in 2026 will be similar. Now keep in mind that 51% of that net new business was China, and it is a lot faster to the market than is traditionally seen by our other customers. So I would just temper it by saying that. It could be faster. It will be faster related to the China portion than the rest. So we are very positive about what has happened in 2023, 2024, and 2025. Obviously, the margin expansion, our ability to execute those launches, it is really showing up in our financials. And I expect based on all the new business that we just booked in 2025 and our targeted business for 2026 across both Fluids and Sealing will continue to drive the type of margin expansion that we have talked about in our longer-term strategy numbers for 2030. Ben Griggs: I guess given the Nathan Jones: net new business wins from 2023 and 2024, depending on how long they take to start reading into revenue, maybe potential for Ford to catch up some production this year. The revenue guidance looks maybe a little bit lower than we were expecting, and I think some of the other folks that cover you were expecting for 2026. Can you talk about what some of the offsets may be after that? You should have some tailwinds from FX. Is the bottom end of that range really a bit conservative? Just any further color you could give us on that. Jeffrey S. Edwards: Well, we stick with the S&P numbers for the market, Nathan. So I will read you what the slide says. North America, we were at 15.3 in 2025, we are going to 15.0 in Roger Hendriksen: 2026. Jeffrey S. Edwards: Europe at 17.0 in 2025, we are going to 16.9 in 2026. China is down from 33 to 32. South America is up from 3.0 to 3.2. So the fact that we are generating the additional revenue year over year that we are with the down volume that is being predicted by the people that predict, it is actually a pretty amazing story from a margin expansion, and that is what we tried to show you on the slides that we walked through today. And if you look at the midpoint, 2.8% on top line, up significantly over what we just finished 2025 on a down market, EBITDA from $210 million to $280 million on a down market. Sounds pretty good to me. But obviously, if we get more volume than what is being predicted by S&P towards the end of last year, then these numbers are going to be a lot better. So anyway, I guess time will tell. Nathan Jones: Yeah. The EBITDA growth is great. Maybe Jeffrey S. Edwards: just the last one on free cash flow. Nathan Jones: It has come down a little bit from 2023 to 2024 and 2024 to 2025. I know you said you expect it to be positive again in 2026. Any more color you can give us on an expectation of around where you expect free cash flow to come in or what kind of conversion of EBITDA or something like that, which Ben Griggs: think about as we are thinking about free cash flow. And thanks for taking the questions. Jeffrey S. Edwards: Yeah, Nathan, thank you. It is John again. We give you a lot of the main components of our free cash flow build on the guidance table. So you can see from last year to this year, we are going to invest more in capital expenditures, certainly, about $15 million or so at the midpoint. We do expect cash taxes to go up based on increasing profitability around the world. So that will be a drain on free cash flow as well. But then with the new business that we have just been discussing, there is an element of getting ready to launch new programs. So we see investments in tooling to support net new business wins. With the global perspective on this, some of those get recovered right around the time the tools are approved for production. Others are amortized over the life of the program. So we are seeing some balance sheet tie-up of working capital for some of those amortized programs when you think about tooling. And then with the typical build in revenue, you do have an increase in working capital as well. If sales are up $60 to $100 million or so, you will see more accounts receivable building by the end of the year than you have got today. You typically need to have a little bit more in the inventory throughout the cycle. We do a good job of bringing it down at year-end. But with a higher revenue base, you expect some working capital tie-up overall. So that is why you will see the year-over-year comp on cash flow being generally what it is on the page. Ben Griggs: Great. Thanks for taking the questions. Jeffrey S. Edwards: Okay. Thanks, Nathan. Operator: Thank you. Once again, please press star one. And your next question is from Brian DiRubbio from Baird. Your line is now open. Ben Griggs: Good morning, gentlemen. Just a couple of cleanup questions. Jeff, I want to make sure I heard this right. You said today, 36% of your revenues Jeffrey S. Edwards: are from Chinese OEMs, and you want to get that to 60% of total revenues Ben Griggs: in the next five years? Jeffrey S. Edwards: What we were talking about was the shift from Western OEM business to the Chinese OEM business. And so our focus over the course of the next three years will be to increase the percentage of our Chinese OEM business in China to that number. Ben Griggs: That is what we are talking about. Jeffrey S. Edwards: Okay. So it is not a total revenue number. It is just within your Asia Pacific revenues Ben Griggs: that is going to move from 36 to about 60? Fair? Jeffrey S. Edwards: That is correct, Brian. Obviously, the Western OEMs have all announced significant volume reductions. The Chinese OEMs have announced significant volume increases. As that portfolio Ben Griggs: shifts Jeffrey S. Edwards: that is what we are booking, and so that is why, and I wanted to make sure you understood, the 51% of our net new business that we booked in 2025 was exactly that. So to add to the credibility of that transformation. Back five years ago, Brian, I think we had 90% Western OEM business and 10% Chinese OEM business. And we have transitioned all of that to what I just said. So it has really been a tremendous effort by the teams there to adjust to the market and to win new business profitably, and to get our innovation into that market in a way that is being valued not only for the locally produced vehicles, but also those vehicles that are being exported around the world, especially to Europe, has our parts on it. So we are very excited about that. We still have some open capacity in China that we will fill up over the course of the next couple years. So that is why I also mentioned that the return on invested capital kicker that we get from launching all that new China business with very little investment also is helping to put the numbers in front of you that we have for 2026 through 2030 in other conversations. Ben Griggs: Got it. So is that, I think it is just your total mix between Chinese OEs and U.S. And again, just trying to get a sense of the mix shift of your business over the last couple of years. It is really just looking at 36% of just Jeffrey S. Edwards: that general Asia Pac bucket is China and the rest would be Western OEMs. Ben Griggs: Correct. Jeffrey S. Edwards: Okay. Ben Griggs: Great. And just want to stick on China just for one more question. Jeffrey S. Edwards: You know, what contract protections do you have with those Chinese customers in terms of your products staying on that platform for a number of years, both either just for production perspective and, obviously, what IP protections do you guys have in China? Jeffrey S. Edwards: Yeah. We have been at this for a couple decades now. And so I think we have built the type of relationships that make us believe that we can make decisions with those particular partners. And I do not mean all 130, but the ones that we have chosen to do business with, we trust, and they trust us. Ben Griggs: We have, Jeffrey S. Edwards: we have promised that we would put innovation into the product in China. We have. We have had zero incidents of any issues with intellectual property. And we will continue to, like everybody, trust that if we find an issue, we will work it out. But it has not been a problem to date. And as I said, our product is really critical to the overall consumer satisfaction level, Brian. Our Sealing business: you drive your car through the car wash, you better not get wet. Our Fluid business: you park it in your garage or in your driveway, there better not be a spot underneath there. So it is really a big deal to the Chinese OEMs that that level of performance is there day one. They are not willing to take risks as they export and build brand loyalty around the world. They want those products to be world-class quality and of the highest level that we can engineer them. So that is the bond. That is the relationship. That is why our products are working, and that is why the relationship has never been stronger and why we are convinced between now and 2030 that we will continue to grow at a very high rate with fantastic margins. We have earned that, and we are delivering that. And the customers trust us. Ben Griggs: Got it. And just final question for me, as we think about the guidance for 2026, what of the various variables you can think about—raw materials, production schedules, so on and so forth—would have the biggest impact, positive or negative, Ben Griggs: on your guide? Jeffrey S. Edwards: Yes. I guess this is Jeff. I would tell you that volume and mix is always number one answer to that question. We have done a very good job with our Ben Griggs: contracts. Jeffrey S. Edwards: And the ability to index if there are raw material fluctuations. So those days are behind us in terms of having volatility really associated with raw material fluctuations. So that for Cooper-Standard Holdings Inc. is not such a big deal. I would say this year, like last year, there is still some question around Ben Griggs: tariffs. Jeffrey S. Edwards: That is more for our Fluid business than it is for our Sealing business, Brian, but that is probably there on the list as something we will have to work our way through. Sounds like midyear again, but who really knows? Ben Griggs: That is how I would answer the question. Jeffrey S. Edwards: Appreciate all the color. Thank you so much. Ben Griggs: Okay. Can you see there are no more Operator: Yes. It appears that there are no more questions. I would now like to turn the call back over to Roger Hendriksen. Roger Hendriksen: Thanks, Jenny, and thanks to all who participated this morning. We appreciate your time and your continued interest. If there were questions that did not get asked or you wanted to have some follow-up conversations, please feel free to reach out to me directly, and we will make sure that that can happen. This concludes our call. Thank you very much. Operator: Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect your lines.
Operator: Good day, and thank you for standing by. Welcome to the Eversource Energy Fourth Quarter and Full Year 2025 Earnings Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rima Hyder, Vice President of Investor Relations. Please go ahead. Rima Hyder: Good morning, and thank you for joining us today on the full year and fourth quarter 2025 earnings call. During this call, we will be referencing slides that we posted on our website. As you can see on Slide 1, some of the statements made during this investor call may be forward-looking. These statements are based on management's current expectations, and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. We undertake no obligation to update or revise any of these statements. Additional information about the various factors that may cause actual results to differ and our explanation of non-GAAP measures and how they reconcile the GAAP results is contained within our news release, slides we posted last night and are in our most recent 10-Q and 10-K. Speaking today will be Joe Nolan, our Chairman, President, and Chief Executive Officer, and John M. Moreira, our Executive Vice President, CFO, and Treasurer. Also joining us today is Jay Booth, our Vice President and Controller. I will now turn the call over to Joe. Joseph R. Nolan: Thank you, Rima, and good morning, everyone. And thank you for joining us today for our year-end earnings call. I am pleased to report that 2025 was another year of strong execution across the organization. Our team delivered excellent operational performance, continued to advance critical infrastructure needs for our customers, leveraging technology solutions to lower O&M costs, and remained focused on providing safe, reliable, and affordable service to customers and communities we are proud to serve. We also made meaningful progress working collaboratively with state policymakers, regulators, and stakeholders to address critical priorities like affordability while remaining focused on reliability. This remains a top priority for Eversource Energy. Our goal is to ensure state leaders have the tools they need to support customers and that we have the regulatory clarity to make the investments essential to balancing affordability and reliability. These challenges can only be solved through true partnerships, working together face to face with shared goals. Moving to Slide 4. Let me take you through some of our 2025 accomplishments. Starting with our financial performance, I am proud to report that we delivered on our commitment of non-GAAP earnings with full-year earnings per share of $4.76. We also paid dividends of $3.01 per share to our shareholders, representing a 5.2% increase. Moving on to Slide 5. In 2025, our employees once again demonstrated their commitment to operational excellence. Throughout the year, we delivered high levels of service reliability, responded effectively to several significant weather events, and continued making progress on projects that strengthen the resiliency and sustainability of our electric, natural gas, and water systems. As a result, we had top decile performance for both the MAIFI and the SAIDI metrics. That demonstrates our investments vastly improve reliability for customers. With this high level of performance, our electric customers, on average, experience an outage only once in nearly two years. We successfully deployed over $4,000,000,000 in capital investments in 2025. Our team has advanced grid modernization initiatives, expanded customer energy efficiency programs, and continued supporting the region's long-term decarbonization goals. These efforts reinforce our role as a trusted partner for New England's clean energy future and demonstrate our ability to execute consistently across a broad set of priorities. Our advanced metering infrastructure, or AMI, program, has officially reached over 100,000 smart meter installations in Massachusetts, a significant milestone in this multiyear effort to upgrade more than 1,500,000 meters statewide and deliver more modern tools with greater functionality that will benefit customers. On the regulatory front, we obtained several constructive decisions that will support ongoing infrastructure needs, including rate outcomes and cost recovery mechanisms that align with our infrastructure investment needs. We advanced key grid modernization initiatives, progressed on storm cost proceedings, with 98% of our $2,000,000,000 in deferred storm cost in current rates or pending cost prudence reviews, and we continue to engage with policymakers on the affordability and reliability implications of the region's energy transition and address load growth. Our commitment to building strong regulatory relationships is enabling productive dialogue in all three state jurisdictions. The outcomes we obtained last year reflect a shared recognition of the importance of modernizing the distribution system while keeping customer affordability at the forefront. Last month in Massachusetts, we worked with Governor Healey's administration to implement a rate relief plan for electric and gas customers, which is a constructive step in support of affordability for Massachusetts customers. The plan provides customer discounts in February and March during peak winter usage. The discounts are partly funded by the state and we will gradually recover our portion of the discounts over the lower-usage period this year. This approach aligns with our efforts to smooth bill impacts for our customers. Strengthening our balance sheet was a top priority for us in 2025, and over the last twelve months, ending September 30, we have delivered an improvement of more than 400 basis points in our FFO-to-debt ratio at Moody's as a result of the cash flow enhancements previously outlined. Maintaining this improvement will be a continued key focus area for us in 2026. In January 2025, we broke ground on the Cambridge underground substation, a $1,800,000,000 investment which is the largest underground substation in the nation, a critical investment in strengthening the electric system that serves one of the fastest-growing and most energy-intensive areas of our region. Construction on this project continues to progress very well. We completed the construction of the onshore substation for the Revolution Wind Project late last year, and as Ørsted recently announced, the project is expected to achieve first power within the coming weeks. Ørsted has also stated that construction of Revolution Wind has resumed since the preliminary injunction on the recent stop work order was granted, and the project is 87% complete. Currently, given the latest construction updates and cost estimates, we do not need to change the contingent liability that we recorded in 2025. Another one of our proud accomplishments for the seventh year in a row was that Newsweek recognized Eversource Energy as one of America's Most Responsible Companies. This recognition highlights our excellence in environmental, social, and corporate governance areas. This recognition is a reflection on the hard work and dedication of nearly 11,000 Eversource Energy employees who do the right thing every day and I want to sincerely thank them for that. Moving to Slide 6. As we look at 2026, our priorities remain clear and well aligned with the needs of the region. First, we will continue to deliver top-tier operational performance for our customers. Maintaining high reliability, enhancing customer experience, and ensuring the safety of our workforce and the public are our core commitments. Second, we will advance our infrastructure investment program, including grid modernization, resiliency projects, and targeted upgrades that support reliability today while enabling the clean energy transition of tomorrow. The service we provide is critical, and replacing the aging infrastructure and addressing capacity requirements to meet demand growth is extremely important for our customers. John will discuss in greater detail our new five-year capital investment plan of $26,500,000,000. This new plan increases our necessary infrastructure investment over the next five years by $2,300,000,000. The majority of this increase is aimed at electric and natural gas distribution investments to address aging infrastructure needs under multiyear projects such as the Electric Sector Modernization Plan, the underground cable modernization program, as well as complying with applicable state safety regulations. Third, we will continue to actively pursue our constructive engagement with regulators and stakeholders in each of our states. New leadership in government brings fresh perspectives, new conversations, and new opportunities to partner in shaping the future of energy in our region. In Massachusetts, our smart meter initiative is a cornerstone of that future, offering customers more insight, more control, and more connection to the way they use energy. Last year in Connecticut, we reached an agreement to sell Aquarion Water Company. This decision followed a thoughtful and disciplined review of our investment portfolio. We were disappointed with PURA's initial decision; we will continue to work with them on the judge's remand. The commission recently announced that we can expect a revised draft and final decision in March. Aquarion is a well-run business with a strong local team, and this transaction positions the water system for continued investments under a dedicated water operator while also delivering value to our customers and shareholders. In addition, as this business is still part of Eversource Energy, we have provided PURA with notice of intent to file a rate case for Aquarion, consistent with our responsibility to seek appropriate recovery for ongoing investments that ensure safe, reliable, and sustainable water service for customers. We will also begin our first rate review in Connecticut for CL&P in about eight years. We see that as an incredible opportunity to show how we are providing best-in-the-industry reliability and that those investments are valuable to customers. Another key item for us is our recovery of storm costs. We expect to receive a decision from PURA on our Connecticut storm cost prudency review in July, which would allow us to begin the legislative-backed securitization process. Importantly, securitization enables timely cash collection, improving our FFO-to-debt metrics while reducing near-term bill impacts for customers. This year, we are also looking at how we thoughtfully and responsibly use artificial intelligence, which is helping us reimagine how we work, from safety to line inspections to system planning to customer service and even leveraging AI in how we prepare and respond to regulatory proceedings. Using AI to optimize our system operations can reduce costs for our customers. And finally, we will continue to execute with financial discipline. We remain committed to a strong balance sheet, prudent capital deployment, and delivering stable, predictable long-term value for our stakeholders. I want to thank our employees across the organization for their commitment, professionalism, and exceptional work throughout 2025. Your dedication is the foundation of everything we do, and it positions us well for another productive year ahead and continued long-term success with a keen eye on enhancing our earnings and derisking our business profile. 2026 will be a truly transformational year for us. As we operate within a changing regulatory landscape and navigate affordability concerns, we are driving forward on several major fronts. We are executing relentlessly on completing our offshore wind commitments, enhancing storm cost securitization, and managing a potential sale of Aquarion. At the same time, we remain laser focused on delivering top-decile operational performance across our systems to continue to deliver on our customers' expectations. This combination of strategic execution and operational excellence positions us to achieve earnings growth towards the upper half of our 5% to 7% long-term EPS range by 2028. I will now turn the call over to John to discuss this long-term growth trajectory, as well as our results. Thank you. Thank you, Joe, and good morning, everyone. This morning, I will review 2025 full-year earnings results, provide a regulatory update, share our updated five-year capital investment plan, and provide our 2026 EPS guidance, our five-year financing strategy, and our long-term earnings growth expectation. Let me start on Slide 8 with a review of our 2025 earnings results. Our GAAP results for 2025 were earnings of $4.05 per share, compared with GAAP earnings of $2.27 per share in 2024. GAAP results for 2025 include a net loss of $75,000,000, or $0.20 per share, related to an increase in our liability for expected future obligations to Global Infrastructure Partners as part of the 09/30/2024 sale of South Fork Wind and Revolution Wind projects, net of tax effects associated with the sale of these projects. For the quarter, our GAAP as well as our non-GAAP earnings results were $1.12 per share, compared with GAAP earnings of $0.20 per share for 2024, and non-GAAP earnings results of $1.01 per share for 2024. As a reminder, GAAP results for the full year 2024 included a net loss of $2.30 per share related to the divestiture of our offshore wind investment recognized in the third quarter of last year, as well as a loss on a potential sale of Aquarion Water, which we recognized in 2024. Excluding those after-tax losses, our non-GAAP earnings were $4.76 per share for the full year 2025, as compared to $4.57 per share in 2024. As you may recall, our revised non-GAAP earnings guidance for 2025 was in the range of $4.72 to $4.80. Breaking down the 2025 full-year earnings by segment, electric transmission earned $2.09 per share in 2025 as compared with earnings of $2.30 per share in 2024. The improved results were driven by continued investments in our electric transmission system to address service reliability and demand growth. Our electric distribution earnings were $1.80 per share in 2025 as compared with earnings of $1.77 per share in 2024. The higher results were due primarily to increased revenues from base distribution rate increases for Eversource Energy's Massachusetts and New Hampshire businesses, partially offset by higher O&M, interest costs, depreciation, and property taxes. The natural gas distribution segment earned $0.97 per share in 2025 as compared with $0.81 per share in 2024. The improved earnings results were due to base distribution rate increases at Eversource Energy's natural gas businesses and continued investment in our gas system to replace aging infrastructure with a focus on safety. These higher revenues were partially offset by higher O&M, which included a $12,200,000 charge as part of NSTAR Gas' settlement agreement with the Attorney General's office in December 2025, as well as higher depreciation, interest, and property tax expense. Eversource Energy Parent and Other reflected a GAAP loss of $0.42 per share in 2025 as compared with a GAAP loss of $2.46 per share in 2024. These results include the impact from our offshore wind divestiture and the potential Aquarion sale that I discussed earlier. On a non-GAAP basis, Eversource Energy Parent and Other loss was $0.22 per share in 2025 as compared with a non-GAAP loss of $0.16 per share in 2024. This higher loss was primarily driven by increased interest costs offset by the benefit from a settlement with the Massachusetts Attorney General for the recovery of previously incurred EGMA integration costs, as approved by the DPU, and to a lower effective tax rate. That wraps up 2025, a solid financial year despite the challenges we faced. We are proud to have delivered another year of recurring non-GAAP earnings and dividend growth. Turning to our updated five-year capital plan for 2026 through 2030, as shown on Slide 9, reflects our utility infrastructure investments by segment. As a reminder, this plan includes only those projects that we have a clear line of sight on from a regulatory approval perspective. Over this five-year period from 2026 through 2030, we expect to invest approximately $26,500,000,000 in our regulated electric and natural gas businesses, representing a $2,300,000,000 increase as compared to our prior five-year plan and a $1,500,000,000 increase from 2026 through 2029, the overlapping period. The $26,500,000,000 does not include Aquarion Water, which would amount to an additional $1,300,000,000 over this five-year period. This infrastructure investment plan and reliable service will allow us to continue to provide customers with safe support, load growth, and address our state's clean energy objectives. Looking at the $1,500,000,000 increase from a segment standpoint as shown on Slide 10, electric distribution is the largest driver of the increase at $696,000,000. Our updated capital forecast now includes over $11,000,000,000 of electric distribution investments, with a continued focus on system resiliency and top-tier electric reliability for our customers. This level of investment is primarily driven by the Massachusetts Electric Sector Modernization Plan as well as over $300,000,000 remaining for the AMI program in Massachusetts. The next driver of the increase in our capital investment plan is natural gas distribution at $523,000,000. The updated capital forecast plan includes nearly $7,000,000,000 of natural gas distribution investments, centered around reliability and safety. Contributing to this increase are a variety of mandatory safety regulations that recently became effective, which represents approximately 25% of the growth in this gas distribution plan. Our transmission plan increased by $233,000,000 for the overlapping period. The revised plan includes over $7,000,000,000 of infrastructure investments over the next five years. These investments include replacement of aging infrastructure to harden the system, and increase resiliency during extreme weather events, as well as innovative substation and other infrastructure projects undertaken for reliability and load growth. Rounding out our capital plan, investments in technology and facilities, which increased by $75,000,000 and now is forecasted at $1,200,000,000, including cybersecurity investments, AI tools to enable our employees to work more efficiently, and tools to protect customer information. As shown on Slide 11, the transmission capital plan includes future ESMIP substations towards the end of the five-year forecast period. For this reason and to address load growth for the New England region, the plan includes sizable transmission investments for NSTAR Electric, which will have the largest transmission rate base in our service territory, projected at nearly $8,000,000,000 by 2030. The resultant impact to rate base from the updated capital investment plan is shown on Slide 12. The customer-focused core business investments included in the capital plan results in an 8.3% growth in rate base from 2024 through 2030. On the regulatory front, we had another busy year with encouraging results. Our key 2025 regulatory proceedings are highlighted on Slide 13. Highlighting some recent outcomes, starting with Massachusetts, we received approval of our PBR rate adjustments with a $55,000,000 increase for NSTAR Electric implemented on January 1 and a $10,000,000 increase for NSTAR Gas effective 11/01/2025. Also in Massachusetts, we received approval to implement a settlement agreement that included the recovery of EGMA acquisition and integration costs and to solve some longstanding regulatory matters related to pension and other deferred cost recovery items. EGMA integration costs at $82,000,000 will be recovered over a ten-year period and will be implemented as part of our next EGMA rate case. The pension and other costs settlement will result in a onetime bill credit for NSTAR Electric customers in 2026 of approximately $20,000,000. This impact was recognized in 2025. Lastly, in Massachusetts, we successfully worked with the Attorney General's office on a settlement which was approved by the DPU for the NSTAR Gas rate base roll-in, which resulted in a $45,000,000 base rate increase and a onetime customer credit of $12,200,000, which will be effective in 2026. This impact was also recognized in 2025. In Connecticut, we continue to pursue the sale of Aquarion Water with PURA. In January, the Superior Court overturned PURA's denial of the Aquarion sale and sent the transaction back to PURA on remand to address some items. The court agreed with our argument that the first decision was legally incorrect, finding that PURA lacked the authority to reject the legislatively mandated governance structure of the newly created Aquarion Water Authority. On February 4, PURA issued a new procedural schedule that includes briefs, a proposed decision with an opportunity for written exceptions, and a final decision to be issued on March 25. We will continue to engage with PURA and all stakeholders as the process moves Rima Hyder: ahead. Joseph R. Nolan: We recognize the uncertainty surrounding the Aquarion sale and our priority is to ensure that Aquarion continues to make necessary system investments to maintain reliable service for customers. As a result, we have submitted a notice of intent to PURA disclosing our plan to file a rate case for Aquarion, seeking a preliminary rate request of $88,000,000 in additional revenues. This rate request is necessary so that we can support the system long term in the event that PURA does not approve our application for the sale of Aquarion. Let me now talk about our financing needs over the next five years. Without the Aquarion proceeds, we anticipate incremental financing needs and we are reviewing a number of alternatives to ensure we continue to fund the business efficiently. Looking at Slide 14, you can see our financing activities. Overall, we need to fund $27,800,000,000 of infrastructure investments, which includes Aquarion and dividends in the range of $6,700,000,000 to $7,200,000,000 for a total cash need of $34,500,000,000 to $35,000,000,000. Over the next five years, we expect cash flows from operations to be in the range of $24,200,000,000 to $24,700,000,000, which would fund nearly 70% of our cash needs. We are looking at approximately $8,500,000,000 to $9,000,000,000 to come from incremental debt and other financing solutions. Within this range, we are looking at various alternatives for these solutions, such as junior subordinated notes, minority interest sale, or minority-like capital structured financing transactions. These alternative financing solutions would qualify for equity content in the range of $1,300,000,000 to $2,500,000,000. We expect a decision from PURA regarding storm prudency that would allow us to move forward with securitization and anticipate proceeds of up to $1,500,000,000, providing roughly 3% of the cash inflows. Should an Aquarion sale occur, we would use the proceeds to lower the need for these alternative financing solutions. If we do not close on Aquarion, we would look towards these alternative financing solutions to meet our financing needs. The remaining cash needs would come from equity issuances of roughly $800,000,000 to $1,100,000,000. It is important to note that this equity need is not impacted by the Aquarion sale. As Joe stated, we continue to be laser focused on improving our balance sheet. As you can see on Slide 15, we have followed through on our commitment to cash flow and balance sheet improvements, with over 400 basis points of enhancement on the FFO-to-debt metrics at Moody's and 300 basis point improvement at S&P for 2025. Assuming no Aquarion sale, our financing plan for the five-year forecast is built to maintain at least 100 basis point cushion over the S&P and Moody's downgrade threshold each year. Next, I will turn to our 2026 earnings guidance on Slide 16. Our guidance this year does not assume that the Aquarion sale will occur, and therefore, we have included water segment earnings as part of our full-year guidance. With that said, we are projecting earnings per share in the range of $4.80 to $4.95 for 2026. For 2026, we expect earnings growth to be more moderate due primarily to the timing of key regulatory outcomes. Importantly, we view the 2026 headwinds as transitory and not reflective of the underlying strength of the business or our long-term growth outlook. These outcomes include the potential sale of Aquarion, the recovery of storm costs in Connecticut as well as in New Hampshire. The positive drivers impacting our guidance this year include transmission investments to improve system resiliency and to address increased electric demand, distribution rate increases thanks to our PBR mechanisms in Massachusetts and now in New Hampshire, and our strong focus on managing O&M expense. These positive drivers are expected to be partially offset by higher depreciation and property taxes from increased investments, higher interest costs, the impact of share dilution, and a higher effective tax rate. Turning to Slide 17. As we move into 2027 and 2028, we expect a meaningful inflection in earnings growth driven by improved regulatory outcomes, recovery of storm costs, completion of alternative financing opportunities, and distribution rate adjustments, including the result of CL&P rates request in 2027. As a result, while 2026 reflects a year of transformation, we see clear upside starting in 2027 and continuing throughout the forecast period. We are projecting the five-year long-term earnings per share growth rate to be in the range of 5% to 7% based off of our 2025 non-GAAP recurring EPS of $4.76 per share. We remain confident in our ability to deliver earnings growth towards the upper half of our long-term target of 5% to 7% by 2028. Just to be clear, this expectation would be off of the expected 2027 earnings results. In closing, our long-term fundamentals remain firmly intact. We have line of sight to improving our earnings as we move beyond 2026, supported by constructive regulatory progress, capital investments moving into rate base in a timely manner, and continued focus on disciplined execution. Importantly, from an earnings growth perspective, these drivers provide increasing visibility into 2027 and beyond. Adding to this is a resilient, regulator portfolio of investments, a steadily improving balance sheet, and a clear strategy for long-term value creation. We are confident in our ability to deliver sustainable growth and enhance shareholder value over time. I will now turn the call back to Rima for Q&A. Rima Hyder: Daniel, we are ready for our Q&A now. Thank you. Operator: Thank you. And wait for your name to be announced. To withdraw your question, please press 11 again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. We will now open for questions. Our first question comes from Shahriar Pourreza with Wells Fargo. Your line is open. Hey, guys. Good morning. Morning, Shahriar. Morning. Morning, Joe. So just really quickly, first one is, obviously, Joe, your growth trajectory is Shahriar Pourreza: predicated on the balance sheet and funding, and you say, like, obviously, financing is somewhat flexible. If you sort of get the Aquarion sale approval on March 25 and storm cost recoveries, that will obviously eliminate the hybrids, but could that also take out some of the straight equity? And could that situation so post sale and storm cost recoveries be accretive to the five to seven since you are already at the upper half under a base assumption and a lot of your funding needs will be eliminated. Thanks. Joseph R. Nolan: Yeah. I am going to let John touch on that. Hey, Shahriar. So to start off with how are you, to start off with, we, you know, the approach we are taking just to your point, given the uncertainty around the Aquarion deal, is, you know, we have given you all kind of a range of potential alternatives. As I said in my prepared remarks, that level of $800,000,000 to $1,100,000,000 of common equity issuances does not is not impacted by whether or not the Aquarion transaction is completed. Where we have the flexibility is in the debt and the alternative financing to your point. I do expect us, as you know, we have not issued any junior subordinated debt. So the expectation is with or without Aquarion, we do expect to go to market with that instrument. Shahriar Pourreza: And that is despite storm cost recoveries? Joseph R. Nolan: Yes. Storm cost recoveries will come in in 2027. And given the procedural schedule that PURA just issued, with a final decision by July, we probably will not be able to do the securitization and get the cash in the door until Q3 timeframe of 2027. So that is why we feel that even with an Aquarion sale moving forward, we still need to go to market with these junior subs. As you know, it is accretive to issuing straight equity. And yeah, yeah, let me just leave it at that. Shahriar Pourreza: Yeah. And your five to seven. So, obviously, in that situation, you would need less funding and your base assumptions already at the higher end of five to seven. Correct. Yes. Exactly, Shahriar. Joseph R. Nolan: Correct. So where we have the leverage, a push and pull is Aquarion happens, then the alternative financing solutions will be pulled back. So I would view it this way. With an Aquarion deal closing in a timely fashion, it moves our growth rate for the outer years to a much better spot. Shahriar Pourreza: Alright. That is perfect. Okay. And then just last another obviously uncertain here is Revolution Wind. I guess, where do we stand on potential post-close liabilities to Ørsted? And at what point does that liability end? So like, at EEI, you guys mentioned first power was the cutoff point. So does that mean that if the project reaches first power, even if the BOEM lawsuits are still ongoing, you are off the hook? Yeah. You know, thank you. You know, I will tell you, from Joseph R. Nolan: we have not had this level of clarity around some of the uncertainty, certainly in my tenure as CEO. We expect first power in the next couple of weeks. That is not the trigger, though. The trigger is COD. We deliver it just as we did with South Fork. We feel very comfortable with the number that we are carrying now. I am watching weather as we speak, and we expect that sixtieth turbine to head out to the lease area. And we will have first power in a few weeks. So it is going very, very well. All the land construction that we were responsible for was done. So, you know, you take Revolution Wind and the clarity around that and the end being very near. You take the Aquarion decision coming in March, whether it is approved or not, at least it is bringing clarity. You have got storm costs recovery. You have got a decision coming in July. We already have the securitization vehicle in place. So all of these things, coupled with the rate base roll-in that we got in Massachusetts, we feel very, very comfortable about our future. Shahriar Pourreza: Got it. Perfect. Thanks, guys. Have a good morning. Joe, one more. Yeah. Good. Just to be clear, Joseph R. Nolan: we do not have any liability to Ørsted. Our obligation is to GIP, just for Shahriar Pourreza: Right. Right. Right. Right. Joseph R. Nolan: Thanks, guys. Yep. Operator: Our next question comes from Carly S. Davenport with Goldman Sachs. Your line is open. Morning, Carly. Hey, morning. Carly S. Davenport: Thanks for taking the questions. Maybe just a follow-up on the sources and uses of cash. Maybe could you just dive in a little bit more on what could potentially make sense from a minority interest sale standpoint and how you might consider structuring that in the context of regulatory approval needs. John M. Moreira: Yeah. Sure, Carly. This is John. So that is we are looking at, as I said in my formal remarks, we are looking at many alternatives. I would say from a minority interest sale, we, you know, we are looking at kind of a traditional equity and pseudo-equity interest. Joseph R. Nolan: Or a kind of think of it as a minority interest capital structure deal. It is a little bit different than a true minority interest in the equity position at a line of business or at one of our utilities. So I think it is a little premature for us to start talking about the level of details because that would be, you know, we are not looking to do that immediately. It is just something that we have on the table or, as I like to refer, it is the tool that we have in our toolkit. Carly S. Davenport: Great. Okay. That is helpful. Thank you. And then you are still highlighting a billion dollars of upside to the new capital plan tied to Connecticut AMI. Obviously, a lot going on in Connecticut at the moment, so just kind of any sense of when you think from a timing standpoint, you could get some resolution on that and potentially see that start to roll into the plan? Joseph R. Nolan: Yeah, sure. So we expect that we will be meeting in Connecticut on AMI. All we want really is to get, you know, a waiver of the prudence standard and then we will have to update the implementation schedule. And that meeting is going to be next week. So we are optimistic that we can at least get additional clarity around, number one, the Joseph R. Nolan: desire and the rules of the road down there to make it fair Joseph R. Nolan: for us to make that investment. But we are not going to make the investment until we feel comfortable with the recovery mechanism. As you know, we have got a lot of money on the line down there right now, and we want to get our storm costs back. We have got a CL&P rate case. And if AMI is important to them, we certainly are ready to implement. You know, I am thrilled to tell you that 100,000 meters have been put in in Massachusetts. Joseph R. Nolan: It is going very, very well. Joseph R. Nolan: And I think it is going to be a great opportunity for the customers of Connecticut to be able to enjoy the benefits of AMI. And I think that we are in a good position to be able to deliver on that. And, Carly, I would just add that that billion dollars that we have on the slide, you need to, at this point in time, view that as a placeholder. That number from a cost perspective is kind of stale. So the team is looking at updating that. As Joe mentioned, we do have some discussions happening next week, and we will file a revised cost estimate for that program. Carly S. Davenport: Great. That is really clear. Thank you for the time. Operator: Thank you. Our next question comes from Bill Apicelli with UBS. Your line is open. John M. Moreira: Good morning, Bill. Hey, Bill. Hey, good morning. Just going back one step to something you guys said earlier. And I think make sure I understand it. When you guys say that the, you know, upper half toward the upper half, I guess, one that just to be clear, that means, you know, into the upper half in 2028. And then and when you say you mean rebasing that essentially off of the 2027. Right? So you are not there is no risk of rebasing, you know, off the 2026, which is obviously a lower number. Right? When you say you sort of off of 2027, you are referring to more normalized earnings power in 2027. And then growing into the upper half into 2028. That is the intention there? That you are spot on, and that is why in my formal remarks, I made it perfectly clear as to what the base year was. So we will, you know, the expectation is we are going to be at the upper half, which implies over 6% off of the earnings that we deliver for 2027. Operator: Alright. Understood. John M. Moreira: And then as far as the tax benefits from South Fork and how much of that is reflected in earnings for 2026? And what is the runway there? From an ITC standpoint, associated with our tax equity ownership, zero. We have not dipped into that bucket yet. So we still have roughly $500,000,000 that we will be utilizing in the coming years. And quite honestly, you know, that it will allow us to be, for all intents and purposes, a noncash taxpayer, certainly at the federal level, for the next several years and hopefully towards even the tail end of our forecast period. Okay. And then so you are utilizing other credits that are available to you this year to preserve Operator: Correct. John M. Moreira: I mean, yeah, we always have puts and takes from a credit standpoint, a tax standpoint. As I continue and as I have highlighted throughout 2025, we were able to harvest a bit more than what we were planning on. And I also guided you all that do not expect it to be at the same level for 2026. So and then, Bill, I just want to clarify that the IT credits that we are yet to utilize, those do not generate a P&L impact, just to be clear. So that is strictly a cash. Operator: Right. John M. Moreira: Okay. Understood. And then I guess the last question, just, you know, any other, you know, color you can give on drivers, you know, into 2027 because of sort of the importance of that? You know, obviously, the CL&P case, is there anything else you can sort of frame out when we think about, you know, how earnings will shape up in 2027 over this 2026 number you gave today? Sure, Bill. And thank you for raising that question. To address that topic, we did introduce a brand-new slide that I hope you find, everyone finds useful. It highlights those major drivers and the timing of when we would expect to start materializing. So if you look at that slide, Slide 17 in the deck that we disseminated, we have the Aquarion transaction. We have the storm case. We have the Aquarion rate case. We have the securitization, and we have Revolution getting behind us. All key overhangs that we have had for a long time will now be solidified in 2026. Operator: Great. John M. Moreira: So the 2027 enhancements will be, obviously, if Aquarion closes, the CL&P rate case. As we continue to forecast, we will likely file that case midyear of 2026 with a rate adjustment kicking in midyear of 2027. And the storm cost prudency securitization transaction will happen, you know, around 2027. So those are the major drivers that will give us the momentum from a growth standpoint into 2027 and beyond. Alright. Thanks very much. Operator: Thank you. Our next question comes from Sophie Karp with KeyBanc Capital Markets. Your line is open. John M. Moreira: Good morning, Sophie. Rima Hyder: Sophie. Good morning. Thank you for taking my question. Sophie Karp: So Rima Hyder: I guess I am wondering, can you give us some sense when is the COD on the Revolution Wind going to occur after you have first power, Sophie Karp: like which you will have in a few weeks? Like, what is the timeline there? And then just will you press release that? Will we know that, or it is going to wait till the next time, therefore? John M. Moreira: Yeah. You know, we are targeting the second half of 2026. We are very, very pleased with the progress. As you know, we have pulled that schedule in significantly. It continues to improve. I see nothing standing in the way of that schedule only getting better. And, you know, the only situation that we worry about is weather and something that none of us can control. But so 2026 at this point, yeah, and as we get more clarity, as we get first power another week or two, I think that, you know, Ørsted actually has the lead, we are not really the one that is able to disclose that. You know, we will give updates to the market. Sophie Karp: Got it. Got it. Okay. Thank you. That is all I had. Operator: Yep. Thank you. Thank you. As a reminder, to ask a question, please press 11 on your telephone. Wait for your name to be announced. Again, that is 11. Our next question comes from Paul Patterson with Glenrock Associates. Your line is open. John M. Moreira: Morning, Paul. Good morning. So Paul Patterson: just to sort of and I apologize for being a little slow on this. With the Aquarion sale, what is the difference if you get it or you do not? In terms of the incremental amount of equity or equity hybrids that we are talking about. Could you just spell that out for me? I just I am not completely clear. I apologize. John M. Moreira: Sure. So once again, Paul, this is John. No change to what we just rolled out as our equity needs, $800,000,000 to $1,100,000,000 from a pure play equity raise. Where we have the flexibility is in the other alternative financing. We were assuming that in the current transaction to get $1,600,000,000 of the equity portion of the sale of Aquarion. So that is what you should think about as being the impact. And also, we will put them on notice, you know, if we do not transact, we will file for rate case to improve those earnings down there as well. I mean, it is a phenomenal asset. We made the decision to exit that business to improve our balance sheet. That was a decision that we made. But if, in fact, we do not exit it, it still is a very, very good business. Paul Patterson: Yes. I see that you also, on the Eversource Gas benefit in the fourth quarter, that if I read the press release correctly, it was in the parent. I was just wondering, could you how much was that? And Operator: and why is it in the parent and not in the gas business? Or Paul Patterson: what am I missing? John M. Moreira: Okay. Very, very good question, Paul. So those are costs that we had incurred several years ago when we were integrating EGMA. It is not NSTAR Gas. EGMA. And per the settlement agreement that we executed back when we acquired the company back in 2020, it did provide similar to what we have been granted in previous M&A transactions in all three jurisdictions, quite honestly. Okay? Those costs, those integration-related costs were incurred by the parent company as the source of funds. So those costs are at the parent company. We recorded the benefit at the parent company to reimburse the parent. The recovery, the dollars will come in from EGMA customers, because the EGMA customers are the customers that are reaping the benefits of that. Operator: Okay. Thank you. I am showing no further questions at this time. I would now like to turn it back to Joe Nolan for closing remarks. John M. Moreira: Thank you all for joining us today. 2025 was a solid execution of our business plan. Our team delivered top-tier reliability for our customers, we advanced major strategic priorities, we enhanced our financial condition, and we strengthened the foundation of the business. As we move into 2026, we are carrying that momentum forward with a clear focus on derisking our business profile, resolving the key open items ahead of us, and positioning the company for sustainable long-term growth. We are firing on all cylinders to finish this work, and I am confident that the disciplined execution you have seen from us this year will continue as we deliver on the commitments we have made to our customers, communities, and shareholders. Thank you very much. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Healthcare Realty Trust Incorporated Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed with the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Ronald M. Hubbard, Vice President of Investor Relations. Please go ahead. Ronald M. Hubbard: Thank you for joining us today for Healthcare Realty Trust Incorporated’s fourth quarter 2025 earnings conference call. A reminder that except for the historical information contained within, the matters discussed in this call may contain forward-looking statements that involve estimates, assumptions, risks, and uncertainties. These forward-looking statements represent the company's judgment as of the date of this call. The company disclaims any obligation to update this forward-looking material. A discussion of risks and risk factors are included in our press release and detailed in our filings with the SEC. Certain non-GAAP financial measures will be discussed on this call. A reconciliation of these measures to the most comparable GAAP financial measures may be found in the company's earnings press release for the quarter ended 12/31/2025. The company's earnings press release and earnings supplemental information are available on the company's website. I would now like to turn the call over to our President and CEO, Peter A. Scott. Thanks, Ron. Joining me on the call today are Robert E. Hull, our COO, and Dan Gabbay, our CFO. Also available for the Q&A portion of the call is Ryan E. Crowley, our CIO. 2025 was a transformational year at Healthcare Realty Trust Incorporated 2.0. When I joined the company, it quickly became apparent we had an opportunity to become the clear leader in the outpatient medical sector. We have the best-in-class portfolio, we have scale in the right markets, and we are aligned with leading health systems. We also had the makings of a great team but needed to execute better and be more ambitious. In a short period of time, we have added talent across the organization that further differentiates our platform. I am immensely proud of the team and how they rose to the challenge during this critical time. We have more to do and it will not always be a linear path, but our mission is simple and unwavering: to operate and make decisions every day to drive long-term shareholder value. To that end, I wanted to provide an update on the three-year strategic plan we published in July. Within the plan, we outlined the key steps being taken to overhaul all facets of the organization. I am pleased to report in just a few quarters we are tracking ahead of schedule. First, the revamp of the asset management platform is complete. We have a new leadership team that is spearheading improved alignment between asset management and leasing. In addition, we have incorporated a new leasing model to drive ROI across the portfolio. The heightened rigor for achieving the best possible economic returns is manifesting into better results. Under the new platform, cash leasing spreads have improved 60 basis points, tenant retention has improved 220 basis points, and we see a meaningful uptick in our lease IRRs and lease payback period. The end result, as we repeat this quarter after quarter, will be a higher quality earnings stream and improved earnings growth. Second, we have successfully achieved our target of $10,000,000 run-rate G&A savings. Our total G&A expense now sits at $45,000,000 and ranks favorably to peers. We also improved our property NOI margins by 60 basis points and believe there is additional margin expansion to attain over the coming years. Third, we have completed our ambitious asset disposition plan. We have sold $1,200,000,000 of assets at a blended 6.7% cap rate, both numbers exceeded the high end of our expectations. We exited 14 noncore markets, and have improved our overall geographic footprint into high-growth MSAs. We are confident we have the premier outpatient medical portfolio, Operator: confirmed Peter A. Scott: by the nearly 5% same-store NOI growth number that we generated in 2025. Fourth, our balance sheet initiatives are complete. For the first time in years, we have much needed financial flexibility, and modest balance sheet capacity for capital allocation. We have reduced net debt to EBITDA nearly a full turn to 5.4x. We have extended our debt maturities and increased our liquidity. And our outlook has improved to Stable from both Moody’s and S&P. We also took the long overdue step to rightsize our dividend, something HR 1.0 struggled with for over a decade. Our dividend is appropriate, well covered, and under the right conditions, able to grow in the future, while at present offering a nearly 6% current yield to our shareholders. Fifth, we have strengthened our corporate governance and leadership team. We streamlined our board to seven individuals. I believe we have one of the highest quality boards in the REIT industry, and I am very fortunate to have them on our team. I would also like to officially welcome Dan Gabbay as our CFO. Dan and I have known each other for twenty years, both as colleagues and then as a trusted adviser. He brings an exceptional blend of financial acumen, Operator: strategic insight, Peter A. Scott: and capital markets expertise to the organization. Let me shift now to our 2025 results, which surpassed expectations across the board. Normalized FFO was $1.61 per share, exceeding the midpoint of our original guidance by $0.03. Same-store NOI growth was 4.8%, exceeding the midpoint of our original guidance by 140 basis points. We executed approximately 5,800,000 square feet of leases and we are off to a strong start in 2026 with our health system dialogue at an all-time high. Turning to capital allocation priorities. As you are aware, outpatient medical transaction volume increased significantly in 2025 and we were fortunate to take advantage of this developing trend. Private investors clearly see the same positive backdrop we see: increasing patient and tenant demand, combined with a severe lack of new supply. Notwithstanding the positive backdrop, we are realistic that our current cost of capital and discount to intrinsic asset value limits external growth. Therefore, our capital allocation approach will remain incredibly disciplined as we invest balance sheet capacity, free cash flow, and capital recycling proceeds. This targeted approach includes number one, redevelopments. We are prioritizing redevelopment projects within our existing portfolio. We see attractive yields on cost of approximately 10%, and this is a significant source of NOI upside. Number two, returning capital to shareholders through stock buybacks, and have authorization to purchase more. In January, we purchased $50,000,000 of stock. At our current stock price, we trade at a 9% plus FFO yield. Number three, joint venture transactions. As we look at external growth opportunities, we are fortunate to have existing joint venture partners who want to increase their investments in outpatient medical. We will only pursue a JV transaction if we can create earnings accretion through a combination of investment returns and advantageous fee arrangements. As a reminder, other than redevelopments, we do not include any accretive capital allocation opportunities in our guidance. Finishing now with our 2026 guidance and the value creation opportunity. The midpoint of our normalized FFO guidance is $1.61 per share. On the surface, this could be perceived as underwhelming due to the implied flat year-over-year growth. However, embedded within the midpoint of our guidance is approximately 5% core earnings growth, which offsets the necessary dilution we proactively incurred from our back-end weighted 2025 dispositions and deleveraging. With our noncore dispositions now behind us, and our balance sheet in great shape, we are well positioned to maximize our go-forward earnings growth potential. When you combine this with our upside from multiple expansion, and attractive dividend yield, we see a compelling opportunity to deliver long-term value for our shareholders. I will now turn the call over to Robert E. Hull who will expand more on operations and leasing. Thanks, Pete. We finished the year strong, capping a robust year of leasing activity and showing early signs of operating improvement from our revamped asset management platform. For the year, we executed 5,800,000 square feet of leasing, including 1,600,000 square feet of new leases. Annual escalators across all leasing activity average 3.1%, lifting the portfolio average to 2.9%, a 7 basis point increase over last year. The weighted average lease term was nearly six years, improving our portfolio average. Tenant retention for the year was 82%, and same-store absorption of nearly 290,000 square feet translated to over 100 basis points of occupancy gain. During the quarter, we executed 1,500,000 square feet of total leasing. Tenant retention was strong at nearly 83%, our eighth consecutive quarter over 80%, and we saw same-store occupancy improve over 20 basis points. At our redevelopment properties, we have seen a 1,000 basis point increase in the lease percentage since the end of the third quarter. This increase was driven by solid demand across a number of our projects, including a 64,000 square foot lease with Saint Peter’s Health at a redevelopment in Upstate New York. The backdrop for industry fundamentals remains strong, supporting a steady flow of prospects into our 1,300,000 square foot pipeline. Demand in the top 100 MSAs continues to outstrip supply and completions as a percentage of inventory remain near all-time lows. Additionally, robust investment by health systems in outpatient services is an ongoing positive trend. Shifting to the operating platform. We have completed our transition to an asset management model. As Pete mentioned, we have seen early signs of improvement in lease economics as our revamped platform creates greater accountability closer to the real estate to drive better results. As we look ahead, maintaining financial discipline around leasing, further refining operating processes, and improving tenant satisfaction are important objectives for our team and the sustainability of these results. This new platform also emphasizes developing and maintaining key relationships with our health system partners. Recent efforts have led to a meaningful uptick in lease activity with a number of these systems. A few examples worth noting include in Connecticut, we executed 65,000 square feet of leases with Hartford HealthCare, backfilling the Prospect Medical space. We received this substantial credit upgrade and we retained the full $3,000,000 of NOI. With this transaction, our relationship with Hartford Health has grown to nearly 250,000 square feet. Across 15 buildings, our portfolio is 94% occupied. And in Memphis, Baptist extended 15 leases totaling nearly 170,000 square feet for eight additional years. In addition, they signed three new leases totaling 25,000 square feet with a blended term of ten years. Our portfolio with Baptist is now 99% leased. The Baptist deal is just one example of how a reinvigorated platform is leading our health system partners to want to do more with us. Systems are releasing space early and expanding tenancy in our buildings. On top of this, of the 1,400,000 square feet of single-tenant expirations in 2026 and 2027, we have already executed renewals or are in the lease documentation phase for over half of this space, with more to come. Included in these renewals are a 154,000 square foot eight-year renewal with Tufts Medicine in Boston. The existing lease with Tufts was scheduled to expire in 2027. Three lease extensions totaling 142,000 square feet with Advocate Health in Charlotte for an average of seven years. The cash leasing spread was in excess of 5%. And a 39,000 square foot renewal with Medical University of South Carolina in Charleston that was set to expire in late 2026. I want to congratulate our team on a great finish to the year. Coming into 2026, our team is executing on our strategy extremely well, positioning us for further occupancy gains that will drive meaningful NOI growth. I will now turn it over to Dan to discuss financial results. Thanks, Rob, and thank you, Pete, for the introduction. It is nice to meet everyone over the phone, and I look forward to meeting in person over the coming quarters. This morning, I will provide some additional color on fourth quarter 2025 results, our capital allocation activity, and our initial 2026 guidance outlook. But before that, I will quickly introduce myself. As Pete mentioned, we have an extensive history working together as colleagues, and at his prior firm, where I served as an adviser to the company on several strategic transactions. My twenty-year career in investment banking will be an asset as we instill greater financial discipline in the organization, and continue to restore our financial credibility with shareholders and the analyst community. As some of you already know, I have worked closely with most REITs in the health care sector, advising on equity and debt strategies to minimize cost of capital and advising on transformative mergers and acquisitions. This will enable me to bring another strategic perspective to our C-suite. I have also had the pleasure to work with some current members of the Healthcare Realty Trust Incorporated team dating back nearly a decade. And while it has only been a few short weeks, I have had the opportunity to get better acquainted with the entire executive management team and our highly experienced board. I am extremely impressed with the caliber, professionalism, and execution mindset of this team. They have quickly transformed the operating platform, improved portfolio quality, and reset the outlook for the company. I am honored to work alongside them in my new role. And with that, I will turn back to our results. 2025 ended strong. In Q4, we reported normalized FFO per share of $0.40 and same-store cash NOI growth of 5.5%. Additionally, FAD per share was $0.32, resulting in a quarterly dividend payout ratio of 75%. Our outperformance this quarter was driven by 103 basis points of year-over-year same-store occupancy gains, 3.7% cash leasing spreads, and continued property-level and G&A expense controls. As a result, we are proud to have delivered full-year normalized FFO per share of $1.61, FAD per share of $1.26, and same-store cash NOI growth of 4.8%. Turning to capital allocation. Q4 remained active with nearly $700,000,000 in dispositions. Proceeds were primarily used to pay off our 2027 term loans. Inclusive of our bond repayment earlier this year, we repaid $900,000,000 of debt and extended maturities on our remaining term loans and credit facility by 12 to 24 months. Leverage decreased to 5.4x from 6.4x at the beginning of the year, ahead of target and the timing laid out in our strategic plan. Going forward, we will be prudent and opportunistic deploying capital. In January, we utilized $50,000,000 of disposition proceeds to repurchase 2,900,000 shares, and we have $450,000,000 remaining under our current authorization. Overall, the Healthcare Realty Trust Incorporated team delivered results ahead of or in line with all metrics discussed in our July strategic plan, allowing us to be more front-footed as we position into 2026. Turning to 2026 guidance, which you can find on Page 30 of our Q4 supplemental report published last night, we are forecasting normalized FFO per share of $1.58 to $1.64, representing $1.61 at the midpoint. These results are driven by lease-up and positive releasing spreads in our core portfolio, which we expect to generate same-store cash NOI growth of 3.5% to 4.5%. G&A is anticipated to be between $43,000,000 and $47,000,000, in line with the strategic plan. Sources of capital for the year will include modest asset sales, proceeds from a note receivable maturing in early 2026, and free cash flow post dividends of approximately $100,000,000 at the midpoint of our guidance. Uses will include our asset-level capital plan outlined in our guidance, and includes the $50,000,000 already utilized towards share repurchases. Recall that our guidance does not include any additional acquisitions, developments, or incremental share repurchases. Finally, I would like to call out a couple items related to our balance sheet. First, we assume the $600,000,000 bonds due this August will be refinanced with new bonds in the low 5% coupon area midyear, as compared to the existing coupon of 3.5%. Second, we published an additional press release last night disclosing our new $600,000,000 commercial paper program. Similar to other REITs in the sector, accessing the CP market will allow us to further diversify our capital sources, and reduce our interest costs compared to our line of credit. The size is in line with other REITs and consistent with rating agency frameworks for our mid-BBB ratings. Last but not least, we expect full-year leverage in the mid-5x net debt to EBITDA range, although figures can fluctuate modestly from quarter to quarter. With that, I will turn the call back to Pete for any closing remarks. Thanks, Dan. I would like to finish by thanking our incredible team for their tireless efforts and laser focus on delivering excellent results. They did not miss a beat during Winter Storm Fern, despite the impact in Nashville. I am energized and excited every day working with this team. With that, operator, let us open the line for Q&A. Operator: At this time, I would like to remind everyone in order to ask a question, please press star then the number 1 on your telephone keypad. We request that you limit yourself to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Our first question comes from the line of Juan Carlos Sanabria with BMO Capital Markets. Your line is open. Juan Carlos Sanabria: Hi. Thanks for the time, and welcome, Dan. Peter A. Scott: Just curious on the same-store NOI guidance for 2026. You obviously had a strong year for 2025. But just curious on the implied decel on the 2026 guidance and the piece parts or assumptions assumed in that same-store NOI, whether it is occupancy, retention, etcetera. Yeah. Let me spend some time on that, Juan. I mean, obviously, 4.8% is a pretty strong number that we posted in 2025 and again, we also have some absorption benefit. I think we all saw the over 100 basis points of absorption we experienced, which is certainly a significant benefit within our same-store pool. And that aided us getting up close to 5%. I would say this, as we think about the 3.5% to 4.5% for 2026, look. We are going to push the envelope across the four main drivers, and those drivers are escalators, retention, absorption, and cash leasing spreads. From an escalators perspective, which is really the primary driver of our same-store growth, it is probably 75% or greater of the same-store number we achieve every year. We are averaging 3% or greater at this point in time on all lease deals we are signing. From a retention perspective, which limits downtime and capital we have to put in our assets if we can retain tenants, we are trending towards the mid to low eighties on that, probably closer to mid eighties than the low eighties when you look at the last couple quarters. And that is going in the right direction for us. I think from an absorption perspective, we do expect more absorption this year as well. And we think that will certainly benefit our numbers. It is a little soon to give exact figures on that, do not know that it will be 100 basis points, like we did last year because we are at 92% now, but certainly expect to see positive absorption as we work our way through the year. And then the last piece of it, which gets a lot of airtime, and appropriately so, on cash leasing spreads. That is actually probably the smallest driver overall when you think about same store. But I think it is more important because, from an industry health perspective, I think it gives you a sense as to where things stand from a supply-demand perspective. And today, demand is much greater than supply. And our cash leasing spreads have ticked up the second half of the year. And like I said, we are going to look to push the envelope as much as we can. Juan Carlos Sanabria: And so then just on the CapEx piece, curious if you can give any guardrails with regards to FAD relative to the $1.61 normalized FFO expectation for 2026? Operator: Yeah. Peter A. Scott: Juan, it is Pete again. And in the future, I will probably have Dan answer most of these. But given it is his first call, I will weigh in a bit on this. If we are flat from an FFO perspective, and I think everyone is pretty aware of the pieces as to the core earnings growth and then, obviously, the necessary dilution we took from deleveraging and the asset sales. If we are flat from an FFO perspective, I would assume we are flat from a FAD perspective as well. We ended last year in the $1.26 range. And we have actually given the maintenance capital number within our guidance page as well to help everybody triangulate on their modeling and forecast. So I would assume the same thing for FAD that we are assuming for FFO. Operator: Your next question comes from the line of Nicholas Philip Yulico with Scotiabank. Your line is open. Nicholas Philip Yulico: Thanks. I think you talked a little bit about this in terms of the last question about absorption potential. I just wanted to be clear that you said some of that potential. Was that just the same-store number? Or is that also you know, applying to redevelopment leasing and maybe if you can just give us an update on how to think about redevelopment project timing, delivering, lease-up and how that ultimately could create some earnings benefit beyond this year? Peter A. Scott: Yeah. For sure, Nick. It is Pete again. What I quoted before was purely in the same-store bucket, and I am glad you brought up the redevelopment portfolio because I think that is going to be a big driver of total portfolio occupancy increasing over the coming years. And I think you mentioned that in your pre-call note last night. As I think about redevelopments, we think it is a great way for us to allocate capital. I was very intentional in listing that first in the prepared remarks. In the fourth quarter of last year, we had a sequential 500 basis points increase within the redevelopment portfolio from leases signed. I do not know if it was totally clear in our prepared remarks, but we did sign a very big new lease deal in January with St. Peter’s Health up in Upstate New York. And so we would expect probably another 500 basis points of incremental lease-up to show up in our supplemental at the end of the first quarter. And so I would say we have really, really good momentum. And this is the key driver to meeting or exceeding the three-year earnings growth framework. Those leases we are signing now, the real benefits do not start until 2027, but I would say our confidence level in our earnings framework is certainly increasing as we continue to lease up within that bucket. Again, I am glad you brought this up. Whatever I quoted from an absorption perspective is just to the same-store pool, and we would like to do even better in the redevelopment bucket. Nicholas Philip Yulico: All right. Yes. Thanks, Pete. And then second question is just going back to acquisition potential. I know you talked about stock price not being exactly where you wanted to be to fund that. But can you also just talk about like just a profile of potential acquisitions? Because clearly, there is this sort of issue where you are dealing with cap rates that are low in some cases when you are which is good for selling assets, but it makes it difficult to buy assets. I do not know if there is also a profile of what you are looking at that would enhance your yield and future growth from acquisitions when you decide to do it? Thanks. Peter A. Scott: Yeah. Well, two pieces to that, Nick. The first is if we do no acquisitions or stock buybacks this year, which our guidance does not incorporate any of that. We would actually end up in probably the low fives from a net debt to EBITDA perspective or below our target. Right? So there is a little bit of balance sheet capacity. It is modest, but it is probably in the $200,000,000 to $300,000,000 range. That varies based upon buyback versus any kind of JV acquisition opportunity we could look at. But just to be clear, as we think about JV deals specifically, I mean, we do have partners that would like to grow with us. We do have constraints on how much we can grow. I just pointed out the finite amount of capital we have unless our stock trades at a materially better level than it does currently. But as we think about the yields we would like to get on capital that we put out, our implied cap rate is somewhere in the low 7s. And we would not look to allocate any capital to even a JV transaction unless we felt like the yield to us, even if we are funding it with balance sheet capacity, is greater than our implied cap rate. I mean, that is just going to be an arbiter that we are going to look at. So, hopefully, that gives investors comfort that we are not looking to go out and do a bunch of 5.5% cap rate deals just for the sake of doing deals. We are going to be incredibly disciplined in how we put money out and make sure we are getting the best returns possible on that money. Operator: Your next question comes from the line of Seth Eugene Bergey with Citi. Your line is open. Nick Joseph: It is Nick Joseph here with Seth. How are you thinking about the dispositions going forward? Obviously, you were able to execute on a lot at good pricing and faster than expected. So what is the plan from here? Is it more being on offense with dispositions or for any potential? How are you thinking about the portfolio? Peter A. Scott: Yeah. We are carefully using the O word within the office here at the moment. That came up a lot last quarter, and I am not sure it helped us. But I would say from an asset sale perspective, let me just hit on it from two different perspectives. So we have got $175,000,000 of sales embedded within our guidance for this year. Within that, though, is about $70,000,000 of deals that are closing early this year that were part of our $1,200,000,000 disposition plan. They just leaked over into the beginning of 2026, and we were pretty clear that some could leak over into this year, but we expect to have all of that done in the very, very near term. In fact, one is done and one is imminently about to close within that $70,000,000. The other is a $45,000,000 loan that is expected to get repaid late March. And so after that, you really have about $60,000,000 of dispositions baked into our guidance. And if you recall last quarter, I said we would consider selling some noncore, non-income producing assets as well. We do have a pretty significant land bank that I think is undervalued currently within our stock price. I think there are a lot of things undervalued in our stock price, but certainly, that is one of them. So you should assume we would look at certain things like that. But then stepping back, what is not in our guidance? Would we consider selling core real estate? I would say we would consider selling anything that is going to maximize value to our shareholders. So nothing is off the table. But at the moment, that is not baked into our guidance. Nick Joseph: That is very helpful. Thank you. And then just given how active you have been as part of the transaction market, are there any insights either from buyers or competition that you have seen change over the last, call it, six to nine months? Peter A. Scott: Maybe I will start. I will ask Ryan to quickly comment, our Chief Investment Officer. I would say the biggest change that we have seen over the last year has been the availability of debt, the pricing of debt, and obviously, the LTVs that buyers are able to achieve. That has been probably the biggest benefit to why transaction volumes have picked up. I will also say that the perpetuation of demand exceeding supply, continued absorption just nationwide, in outpatient medical assets has certainly piqued the interest of private capital. And there is no shortage of private capital that is looking to enter this space or increase their exposure into this space. And I think you have seen that in some of the volume numbers that are out there. I will ask Ryan to maybe comment on cap rates for a second. Ryan E. Crowley: Sure. We are beginning to see more assets come to the market and those are pricing at cap rates in the high 5s to low 6s, while core plus is pricing in the low 6s to upper 6s depending on property attributes. And, of course, value-add properties are primarily IRR driven, not cap-rate driven. But as Pete alluded to, buyer demand remains high, and the transaction volumes have been really elevated in the space. Operator: Your next question comes from the line of Austin Todd Wurschmidt with KeyBanc Capital Markets. Your line is open. Austin Todd Wurschmidt: Thanks. Good morning, everybody. Pete, you have discussed in the past just how precious capital in this business is, and your intent to target high retention. I think kind of putting a goal or maybe a stretch goal out there of 85% or better. What are you guys assuming as far as retention this year? And how much visibility, I guess, beyond single-tenant deals you described, do you have into the remaining expirations for this year? Thanks. Peter A. Scott: Yeah. Hey, Austin. The expiration question did come up a call or two ago. And I will say that has been top of mind for us, and I would expect to see a significantly improved lease expiration schedule when we come out with our next supplemental, especially working our way through the 2026–2027 expirations. I mean, we have a pretty good line of sight at this point into those, as you would expect. With regards to the multitenant portfolio, I would say that we are expecting to be kind of in the 80% to 85% range. It will ebb and flow a little bit. In the third quarter of 2025, we were at, I think, 88%. And this past quarter, we were at close to 83%. That kind of blends to 85%. So I think the 80% to 85% number is probably a pretty good assumption that we have embedded within our guide for this year. That is helpful. And then, Peter or Rob, you guys footnoted and also flagged the 64,000 square foot lease in January of new lease. Was there any additional new leasing component to the nearly 1,000,000 square feet that have been signed year to date? And then can you just kind of talk about how negotiations are moving along for the 1,300,000 square foot pipeline? Thanks. Peter A. Scott: Yeah. I will have Rob jump in and talk about that deal. Obviously, I mentioned that one quickly, and he could talk about new leasing in general. I mean, that is with Saint Peter’s and we just had a ribbon-cutting ceremony with them up at that building. They took some other space as well in the building too, and hopefully have some appetite to grow even more. But it is a big lease, and we are excited to be expanding our exposure with them. Rob, why do you not talk generally about the million square feet, though? Robert E. Hull: Yeah. I think the million square feet certainly is off to a strong start. There is additional new leasing inside of that million square feet that we have executed this quarter, as well as a number of renewals, some of which I covered in my prepared remarks. But I think in general, we are extremely encouraged by the level of activity that we are seeing. We expect that to continue as we move forward. The 1,300,000 square foot pipeline that I did mention is an active pipeline that is growing every day. Our team is continuing to add to that, and that will certainly feed our new leasing expectations in 2026. And we are just very optimistic on demand as you can imagine. Health systems continue to move services from the inpatient setting to the outpatient setting, which is driving a lot of that demand. And we think that we are well positioned to continue to capture that. Operator: Your next comes from the line of Michael Patrick Gorman with BTIG. Your line is open. Michael Patrick Gorman: Yeah. Thanks. Good morning. Pete, maybe just a couple of questions here on the CapEx number. I appreciate the guidance. I am just curious, when we think about the stabilized portfolio and all the work that you have put into it as we move through 2026, do some more leasing, get the asset management program for a full year here. Is that kind of 15% of NOI the right range for the maintenance CapEx, second-gen leasing CapEx number on this platform going forward? Peter A. Scott: Yeah. I would say it is probably 15% to 20% is a little bit of a wider range that I would go with. But I think you are right. We have been achieving 16%, 17%. So maybe I am just being slightly conservative with bucketing that into the 15% to 20% range. But I think that is a good run-rate number. I would say if your retention continues to go up, I would expect that number to perhaps even tick down a little bit. But, obviously, look, we are making a concerted effort to invest capital back into our portfolio, and that was one of the reasons why we decided to rightsize our dividend a couple of quarters ago to take that additional retained earnings and reinvest it back into redevelopment. We think that is probably the highest and best use of our capital right now. So what I quoted before was purely just a maintenance capital number, and we are certainly investing above and beyond that at the moment. I think that will obviously be a more near-term investment that will eventually tail off, in a couple years. But we think it is the right place to invest capital today. Got it. That is helpful. You certainly made it clear kind of the discipline that you are putting forward when you are thinking about deploying capital. I am just curious again with the improvement that you have managed to generate on the asset management side, maybe some success that you are seeing on the redevelopment side. Does that expand the scope of opportunity that you are willing to look at whether it be in the JV structure or on balance sheet in terms of the type of assets that you would be comfortable bringing into the portfolio now with the confidence that you have on the asset management side? Peter A. Scott: Yeah. I mean, look. As I think about how we would bucket assets between what we would acquire and what we would do on balance sheet, I think we have got plenty of value-add on balance sheet at the moment, and that is our redevelopment portfolio. And, again, we enhanced our disclosures last quarter. People can track the progress that we are making there. So we have a report card every quarter to see how we are doing, and I would say we got a pretty good grade in the fourth quarter on that. With regards to the external growth, I think you have got capital that is more wanting to chase core and core plus right now that, frankly, we do not have the cost of capital to allow us to do that on balance sheet alone. So I think for the current time being, we are going to do any type of acquisition primarily through JVs. Right? And like I said, we have got partners that want to grow in this space. We do have some advantageous fee arrangements that allow our going-in yield to be much better than what the cap rate is for the transaction. And that is where our focus would be today on any kind of external growth. But again, there is a finite amount of capital we have with that to put to work this year. And we will compare that to what is our FFO yield from a share buyback perspective. What are we looking at from a redevelopment perspective? But it all goes back to our balance sheet is in much better shape, and we have much needed free cash flow from the dividend adjustment to reinvest into our portfolio. So we are in a much better position nine months henceforth from when I began to actually be able to talk about these things. Operator: Your next question comes from the line of William John Kilichowski with Wells Fargo. Your line is open. William John Kilichowski: Pete, maybe if I still back to your strategic plan and I look at some of these pages, you laid out $90,000,000 of NOI up and RTO portfolio and then another $50,000,000 of NOI from expansion. Due to these processes, I guess I am curious how much of that do you feel like was captured in 4Q, what is included in guide, and then what is sort of longer term down the road, if you could help us bucket those. Peter A. Scott: Yeah. That is a good question, John. Let me see if I can give a couple of pieces on that. As I said in my prepared remarks, we are tracking generally ahead of schedule. And that would also be attributed to how we are thinking about the $50,000,000 of NOI upside. But just to be clear, within our strategy deck, we just assumed $20,000,000 to $40,000,000 of NOI within the first three years just because there is a lag. You spend the capital. You sign leases. But the commencement of those leases and when you get the full run-rate benefit just takes time. Right? So as I would think about the $20,000,000 to $40,000,000 and the leasing we have done, it is not just what we did in the second half of 2025, but also to start the year in 2026. As Rob mentioned, we have got about a thousand basis points of incremental lease percentage within that bucket. So that is a long preamble to basically get to I think we have probably identified about $15,000,000 of the $50,000,000 at this point in time through the leasing activity we have done since the strategic plan went out. So that is probably about a third of the $50,000,000 of upside. But when you think about that relative to the $20,000,000 to $40,000,000 that was in that earnings framework, we are probably about halfway there. And I would say that is good progress, and it is ahead of schedule. I am not expecting it to be a benefit to 2026, purely because of the reason I gave before. You sign a lease, it takes a while to do the build-out and for that to commence, but we should start to see pieces of it build up in 2027 and then further benefit in 2028. William John Kilichowski: Got it. Very helpful. And then you answered this partially in the last question, but just kind of flushing out here on the guidance is no further buybacks. But is that simply a yield question for you when determining does incremental dollars go there versus even maybe more deleveraging, although we have got some extra asset sales that are going towards the revolver? And then, as you are considering JVs, as you mentioned, is it simply what is most accretive, or would you probably tilt towards the JV as you look to grow the business as long as that is greater than your implied? Just would love to get your thoughts there. Peter A. Scott: Yeah. Look, I think it is going to be a combination of the three. We think about capital allocation priorities. I know for a fact it is redevelopment that we will spend money. So it is really what about the other two? And I would say that we will look at both of those. I would like to think we can accomplish a bit of both, but stock buybacks, we do not control where our stock trades. So hard for me to give you an exact number there, but I will say we have turned on at least the underwriting engine here with one of our partners to certainly look at deals that we can do within JVs. And, again, as I said, you should expect any yield that we would get would be greater than the implied cap rate we trade at right now. William John Kilichowski: Got it. Thank you. Operator: Your next question comes from the line of Michael Strojek with Green Street. Michael Strojek: Thanks, and good morning. Have you seen any change in the number of office repositionings across your markets? Is there any trend there, either up or down in terms of just shadow supply from traditional office? Peter A. Scott: Not nothing of note, I would say. No. I would say that, no. We have not. You have heard stories of one-off opportunities where people have been successful in that. But I would say, generally, that shadow sort of supply, we are just not seeing it in our markets, and with the space that we are leasing. We are doing a lot of health system leasing where they are growing critical service lines inside of those buildings that require certain parking ratios, certain building design. And so I think for what we are doing, that is generally not a factor in our day to day. Michael Strojek: Makes sense. One on the balance sheet then. As interest rate swaps begin to burn off later this year, what sort of mix between fixed and floating rate debt are you targeting? Peter A. Scott: Yeah. I am going to let Dan take that one. Dan Gabbay: Yeah. Thanks. Finally got one. Appreciate it. It is the first one. It is a great question. I think you have seen the balance sheet repair the company has undergone over the last nine to twelve months just from the dispositions. I think that is something particularly important to protect that balance sheet and our leverage levels. I think when you think about fixed and floating mix, especially with the new commercial paper program, we are always looking to be most efficient with our balance sheets. We are also looking to extend our maturities overall. We have got some good term loans and bonds in that cap structure right now. I think a floating rate mix is, generally speaking, mid-single digits to upper-single digits proportion with respect to our overall debt, especially as we are spending money on redevelopments this year. So something we will be prudent about. May fluctuate up and down, but you are not going to see us go all floating rate debt all of a sudden. Michael Strojek: Great. Thanks for the time. Peter A. Scott: Thanks. Operator: Your next question comes from the line of Michael Carroll with RBC Capital Markets. Michael Carroll: Yes. Thanks. Pete, I want to circle back on your comments regarding the joint venture. I mean, it sounds like the conversations are pretty far along. I am not sure if it was just with one of those partners or if it is a broader group. But what could these deals look like? I mean, would Healthcare Realty Trust Incorporated create some type of fund to go pursue deals? Or could Healthcare Realty Trust Incorporated contribute assets into the fund to expand it and be a little bit more active? I guess, how do you think about Michael Carroll: Yeah. Peter A. Scott: Michael, maybe I would say specifically that our comments have been on existing joint venture arrangements we have today, where we could look to grow and where our partners want to grow, and we already have those ventures effectively solidified. So we are not talking about a new joint venture at the moment. But, frankly, since you bring it up, I think that it is something that we will continue to consider. I think we have some real opportunities we could do with our current existing partner, and we would like to grow with them. They would like to grow with us. But we certainly could look to expand that. It is tough to compete in this space today with all the private capital that is looking to chase deals, and our private counterparts that are GPs and have raised a lot of capital from those LPs are having the time of their lives buying assets right now. I talked a bit about this in my prepared remarks about private capital seeing a lot of benefits to investing in this space. We see it too. And so we cannot just go out and buy core, core-plus assets on balance sheet. Our cost of capital would get, I think, impacted quite significantly to the downside. Right? So we would have to figure out ways to manufacture better returns. And it is something we are actively considering. But at the moment, we would do deals with our existing partner or partners, and we have very good structures lined up with them and a good dialogue. Michael Carroll: Great. And I do not know if it is premature to talk about this yet or not, but that private capital that is looking to get into the MOB space, what type of returns are they typically targeting? Are they just looking for the stability and have kind of a lower unlevered IRR hurdle they are typing and achieving? I guess, how are they thinking about the space? Ryan E. Crowley: Maybe I will answer that. Sure. It really runs the spectrum. I mean, if you are looking at a value-add JV with institutional capital, they are targeting high leverage, upper teens IRRs. But there is also plenty of institutional foreign and domestic capital in the space that is looking for very core product with credit, long-term wallets, very high acuity, newer vintage. They are targeting much lower returns than that. So it runs the full spectrum depending on the institutional capital you are talking about. Michael Carroll: Great. Appreciate it. Congrats, Dan, for joining the team. Dan Gabbay: Thanks. Bye. Operator: Your next question comes from the line of Michael William Mueller with JPMorgan. Your line is open. Michael William Mueller: Yes. Hi. So for the two questions, I guess, what is the typical scope of the redevelopment that is on your redevelopment page? Looks like they average about $10,000,000 to $15,000,000 each. Is it any square footage, lightening, brightening, just what in general? And then the second question, Pete, you talked about the areas where you have kind of met or exceeded expectations so far with the turnaround. Can you talk about any aspects of it or areas you may have run into more obstacles or things were more challenging than you originally thought? Peter A. Scott: Well, maybe I will start with the second question first. I will tell you since I have joined this organization, every interaction I have had with people here has been a positive one. And the toughest part of that is when you have to tell somebody that they can no longer be a part of this team and no longer be a part of the exciting things we have moving forward. That is not fun. And that is unfortunately something that we have had to do. But it has been a very necessary thing in order for us to get our cost structure in line and get our earnings growth and trajectory headed in the right direction. I probably underestimated how difficult that was going to be. And I am being totally open and honest with everybody on this call on that one. With regards to the typical scope, I would say the average project is probably in the $10,000,000 area, and it is probably in the $200 to $300 per foot overall. And you are really taking a building from a much older vintage, and you are improving all the common areas. You are improving the elevators. You are improving the built out of the space with regards to each one of these individual tenants. I mean, it is a significant reinvestment into an asset that probably has not been invested into for, call it, twenty to twenty-five years. And so it is really soup to nuts taking something that is much older vintage and converting it to, I would not call it the equivalent of a new development, but it gets pretty darn close to it, and you get some really good rental rate pickup. If you go back to our strategy deck, we actually put a really good example of the projects we are doing in White Plains and the amount of leasing we have been able to generate with White Plains Hospital there, which is a Montefiore subsidiary. And we did soup to nuts on that, and it looked fantastic. You skin the outside. You put new windows in. You are putting all new systems in, and you are bringing it up to basically brand-new product. Michael William Mueller: Got it. Okay. Thank you. Operator: Your next question comes from the line of Omotayo Tejumade Okusanya with Deutsche Bank. Omotayo Tejumade Okusanya: Yes. Good morning, everyone. Appreciate all the hustle on the operational improvement and the capital allocation discipline. Dan, congrats. Welcome aboard. Always good to have a fellow HBS guy in a seat like that. Question wise, curious on the build-to-suit side of things. Again, just given how strong demand seems to be at this point with a whole bunch of hospital systems. Kind of curious on the BTS side, what that is looking like. Whether we can expect to see more activity on that front. Peter A. Scott: Yeah. Hey, Tayo. And by the way, for someone that completed the Antarctica Marathon, Ronald M. Hubbard did not do you any favors putting you towards the tail end of our Q&A list. I dialed in late, not Ron’s fault. Omotayo Tejumade Okusanya: Yeah. Peter A. Scott: Yeah. I know. Well, next time, we will get you a little further up. That was quite an accomplishment. You looked a little cold in some of the pictures I saw, but congrats. Omotayo Tejumade Okusanya: Thank you. Peter A. Scott: Build-to-suits. Yeah. Build-to-suits are happening. I would say developments, generally speaking, you do not see spec development happen right now in the outpatient medical space. And I just do not know of any capital that is looking to chase spec development. So development that gets done is definitely heavily preleased. So I do not know that I would call that a build-to-suit, but I would put it in a similar category. I think the challenges with new developments today, and it is really one of the reasons why you have seen the deliveries and starts come down considerably, is costs have gone up so much the last three to five years, especially coming out of COVID, that the rental rates needed to get to the return necessary for a developer to want to start that project is pretty significant. So you have to have a health system or a tenant willing to step up and pay much higher rental rates than what is in place right now. And so if they get done, great. I think there is plenty of demand to allow for some development to happen in the space. I do not think you are going to cannibalize existing product from that. If anything, we would like to try and draft off of those rental rates that are required in order to get those types of deals to pencil. So they are happening out there in select markets, in select circumstances, but they are happening a lot less than they have been in the past. Omotayo Tejumade Okusanya: Gotcha. That is helpful. And then my second question, again, you do see some of the health care actively selling out of MOBs. Again, the argument being they are trying to move to higher growth asset classes. I mean, what is your rebuttal to that? Given this viewpoint that MOBs are also benefiting or should also be benefiting from the changing U.S. demographics? How do you think about the space? And when you think five years out, are we dealing with an asset class where the earnings growth profile has improved materially just given some of these secular demand drivers that are happening. Peter A. Scott: Yeah. Probably a good question, I think, maybe to end on. Look. I think this is a pretty significant value creation opportunity, and that is really what got me excited to take on this job and move to Nashville. As you think about where we trade, it is probably somewhere in the 10x to 11x FFO at the moment. And I think, personally, that kind of multiple is typically reserved for companies or sectors that are struggling. Right? Let us just be pretty candid about it. And, frankly, I think that kind of multiple significantly undervalues our platform. Right? As I said in the prepared remarks and as Dan said, we have entered 2026 front footed. Fundamentals in outpatient medical are strong. Our portfolio is best in class with our dispositions now complete. Our balance sheet is a source of strength. We have overhauled our team, and we are posting strong results. Right? I also think it is important to just note the way we look at it. We think we are in a subsector of one. There is not one direct peer out there in the public markets. There are those that have exposures to this space, but do not have 100% exposure to it like we do. So we are starting to expand our thoughts about our peer sets and looking at other property types with similar earnings growth characteristics. And based upon this, we think that there is expansion in our multiple that could be in front of us if we continue to execute on the strategic plan. And we think that that will create value for shareholders. So that is our mission, and that is what we are focused on right now. Omotayo Tejumade Okusanya: Fair enough. Good luck. Peter A. Scott: Thank you, Tayo. Operator: I will turn the call back over to Peter A. Scott for closing remarks. Peter A. Scott: Great. Well, look. We thank everybody for joining the call today, and we look forward to seeing all of you in person, at least many of you in person, in Florida in a couple weeks at the Citi Conference. Thanks very much. Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Good morning, and welcome to Mercer International Inc. Fourth Quarter 2025 Earnings Conference Call. On the call today is Juan Carlos Bueno, President and Chief Executive Officer of Mercer International Inc., and Richard Short, CFO and Secretary. I will now hand the call over to Richard Short. Richard Short: Thanks, Shannon. Good morning, everyone. Operator: Thanks for joining us today. Richard Short: I will begin by touching on the financial and operating highlights of the fourth quarter before turning the call to Juan Carlos to provide further color into the markets, our operations, and our strategic initiatives. Also, for those of you that have joined today’s call by telephone, there is presentation material that we have attached to the investors section of our website. But before turning to our results, I would like to remind you that we will make forward-looking statements in this morning’s conference call. According to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, I would like to call your attention to the risks related to these statements, which are more fully described in our press release and in the company’s filings with the Securities and Exchange Commission. Our operating EBITDA for the fourth quarter was negative $20,000,000, up $8,000,000 when compared to the third quarter’s results. This change in performance was largely due to stable production across all our mills and the benefits of our One Goal 100 program. However, market headwinds, including pricing, weak demand, and elevated fiber costs in both Germany and Canada, continue to weigh on our overall results. The current quarter’s EBITDA also includes a non-cash inventory impairment of $23,000,000. In the fourth quarter, we recognized total non-cash impairment charges against our long-lived assets of $216,000,000, or $3.22 per share. $204,000,000 of this was against the assets of the Peace River mill, a requirement under U.S. GAAP that reflects the ongoing weakness in the hardwood pulp market. We also recorded a $12,000,000 impairment in our solid wood segment related to the sale of obsolete equipment. Given the challenging hardwood pulp market conditions, there are a number of strategic initiatives underway with the goal of returning the Peace River mill to profitability. These include expanding softwood pulp production, exploring government support for incremental energy generation, and a carbon capture project. Unfortunately, U.S. GAAP does not allow for the inclusion of these initiatives in the impairment assessment. Juan Carlos will provide more detail on these initiatives shortly. Our pulp and solid wood segments both reported negative quarterly EBITDA of $11,000,000 in the fourth quarter. Additional segment disclosures are available in our Form 10-Ks, which can be found on our website and that of the SEC. In the fourth quarter, NBSK markets weakened due to the sustained uncertainty of the global economy. As a result, our softwood sales realizations decreased to $707 per ton, down from $728 per ton in the third quarter. The NBSK net price in China saw a small decline to $601 per tonne, a $19 decrease from the third quarter. We observed a more significant drop in the North American NBSK list price, which averaged $1,568 per ton in the fourth quarter, a reduction of about $132 from the third quarter. The European NBSK list price remained stable at an average of $1,498 per ton. Hardwood markets in China showed improvement in the fourth quarter, largely due to stronger demand and increased domestic fiber costs. Meanwhile, demand and pricing in North America remained steady. Overall, our hardwood sales realizations were flat at $528 per ton quarter. Richard Short: The average price gap in China between softwood and hardwood pulp narrowed by $56 per ton this quarter to approximately $130 per ton. The average net price for eucalyptus hardwood in the fourth quarter was $540 per ton, which is an increase of $37 from the third quarter. In North America, the average list price was flat compared to the third quarter at $1,198 per ton. As mentioned previously, the fourth quarter included a $23,000,000 non-cash inventory impairment primarily driven by low pulp prices and high fiber costs. Of this amount, approximately $15,000,000 was attributed to softwood inventories and the remainder was against hardwood inventories. Pulp sales volumes in the fourth quarter increased by 20,000 tons to 472,000 tons. Pulp production remained relatively stable in the fourth quarter at 460,000 tons. However, if we adjust for planned downtime, our production volume improved by about 20,000 tonnes. We had a total of 21 days of planned maintenance at our Stendal mill in the fourth quarter, which reduced production by 42,000 tonnes, compared to the third quarter when we had a total of 20 days of planned downtime at the Celgar and Rosenthal mills, which reduced production by about 21,000 tons. In 2026, we do not have any planned maintenance downtime in Q1. In Q3, Rosenthal will be down for 14 days and Peace River will be down for about 10 days. In Q4, Celgar will be down for 20 days. Overall, we expect to see almost 50 days less planned maintenance downtime compared to 2025. For our solid wood segment, lumber pricing in the fourth quarter modestly decreased compared to the third quarter in the U.S., as weak demand was only partially offset by reduced supply. In Europe, pricing was stable in the fourth quarter compared to the third quarter. The Random Lengths U.S. benchmark price for Western SPF Number 2 and Better averaged $422 per thousand board feet in the fourth quarter, a decrease from $477 per thousand board feet in the third quarter. Today, that benchmark price for Western SPF Number 2 and Better is around $448 per thousand board feet, a $46 increase from the fourth quarter of 2025. In the fourth quarter, lumber production decreased by about 6% to 109,000,000 board feet from the third quarter. This was primarily due to reduced sawlog availability and reduced production during the holiday season. Similarly, lumber sales volumes decreased to 103,000,000 board feet, a drop of about 7% from the third quarter, which mirrored the lower production. Electricity sales in the fourth quarter totaled 202 gigawatt hours and pricing was about $105 per megawatt hour, which is about the same as the third quarter. Fiber costs for both our pulp and solid wood segments were relatively steady in the fourth quarter compared to Q3. In Q1 of 2026, we are expecting fiber costs to increase in both Canada and Germany, caused by supply constraints resulting from reduced sawmilling activity. In addition, Germany will also be impacted by seasonal demand for fiber from the biofuel industry. Our mass timber operations within the solid wood segment had modestly higher revenues in the fourth quarter compared to the previous quarter. In Q4, the elevated interest rates in the U.S. continued to be a drag on overall market momentum. However, our mass timber business has developed a healthy order book. Today, the order book totals about $163,000,000, which compares nicely to our order book of approximately $80,000,000 at the end of Q3. We currently expect our 2026 mass timber revenue to be about $120,000,000. We continue to make progress on our One Goal 100 program. As a reminder, this initiative focuses on cost reduction and operational efficiencies, with a target to improve our profitability by $100,000,000 by 2026 using 2024 as a baseline. We realized approximately $30,000,000 in cost savings and improvements in 2025. In the fourth quarter, our aggregate liquidity improved by over $54,000,000 to $430,000,000, comprised of about $187,000,000 of cash and $243,000,000 of undrawn revolvers. This improvement in our liquidity was the direct result of our working capital management and cost reduction activities. In the fourth quarter, we invested a total of $ million of maintenance capital across our facilities. We reported a consolidated net loss of $309,000,000 for the fourth quarter, or $4.61 per share, which includes the non-cash long-lived asset and inventory impairments, which aggregate to roughly $239,000,000, or $3.57 per share. In the third quarter, we reported a net loss of $81,000,000, or $1.21 per share. That ends my overview of the financial results. I will now turn the call over to Juan Carlos. Thanks, Rich. Our operating results continue to be undermined by significant market headwinds. The ongoing downcycle conditions forced us to recognize non-cash Juan Carlos Bueno: asset impairments, including a write-down of our Peace River mill’s fixed assets. And while these non-cash impairments will understandably dominate headline results, the fact is that underlying operational performance improved quarter over quarter. Cost reductions, efficiency improvements, and working capital reductions contributed to the $54,000,000 improvement in our liquidity, and we remain focused on improving the controllable drivers of performance. This focus is highlighted through our One Goal 100 program. Launched in Q2, it has yielded about $30,000,000 of concrete results for the full year, and we are on track to achieve our goal of $100,000,000 in improvements by 2026 when compared to our 2024 baseline. As Rich mentioned, the non-cash impairment of our Peace River mill was the result of us being subject to U.S. GAAP rules. Unfortunately, these rules do not allow us to take into account two very important projects that our team has been working on for a couple of years already: our carbon capture project and the expansion of the mill’s fire energy output with support of the government, projects that will be transformative for the mill. Previously, we had announced our plans to install a carbon capture demonstration unit at our Peace River mill in the fourth quarter as part of a joint development project with Svante Technologies. I am pleased to report that the pilot plant is operating, and the results so far are very encouraging, both in terms of the efficiency as well as purity of the CO2 being captured. The results of the six-month testing period of this demonstration unit will be instrumental in our decision-making process for future phases of this project. This venture is not only important for the Peace River mill, but will be one of the steps in our journey to transform our pulp mills into biorefineries with multiple sustainable revenue streams. Turning to the overall business environment, the trade war headwinds have created an unprecedented level of market uncertainty that persists even though current tariffs appear to be stable for now. We are expecting further tariff uncertainty as CUSMA is to be renegotiated in June. The majority of the trade-related impacts we have faced are due to the indirect impacts of tariffs and trade uncertainty. As it stands today, the only tariff barrier we are facing is a 10% tariff on our European lumber imports into the U.S. This does, however, compare favorably to Canadian imports, which today face an average combined tariff and duty rate of approximately 50%, varying by company. As a result, we have already seen Canadian lumber curtailment announcements and expect more to come. This is creating a reduced supply of residual chips for pulp mills and is putting pressure on fiber costs. We feel our Celgar mill is well positioned given its ability to access the U.S. fiber market and our ability to harvest and process whole logs. Nonetheless, we are experiencing some fiber cost inflation as expected. As mentioned, our main import from the U.S. into Canada is wood chips for our Celgar pulp mill, which today amounts to about 45% of the fiber consumption of the mill. We feel this is a competitive advantage for us, and we have the ability to grow this percentage going forward if required. Most importantly, there are no counter-tariffs applied to this fiber. Our EBITDA of negative $20,000,000 reflects 21 days of planned maintenance downtime at our Stendal mill, low prices in most of our markets, and high fiber costs. Overall, NBSK pulp markets weakened in the fourth quarter, including in North America, reflecting the indirect effects of the evolving tariff environment. Specifically, North American fluff pulp, previously shipped to China primarily for diaper applications, is now subject to a 10% tariff. Consequently, Chinese manufacturers are pivoting to other products, and displaced North American fluff pulp is now being redirected into paper applications, adding supply pressure and weighing on the North American market. Chinese NBSK prices were also under pressure as weak paper prices pushed certain producers to opportunistically substitute and run their machines more slowly. Meanwhile, European NBSK prices were relatively stable. Now turning to hardwood, prices in China increased in the fourth quarter driven by improving demand and higher domestic fiber costs. Meanwhile, in North America, hardwood prices were flat. Looking ahead, we expect to see some modest NBSK and NBHK price improvements in Q1 in both Europe and China, while North America is expected to be stable. However, trade uncertainty continues to be an overhang on this business, and until trade restrictions are reduced, the supply-demand dynamic will be heavily influenced by the supply side. In total, our pulp production was flat at 460,000 tons compared to Q3. This result reflects an overall production improvement given that we lost roughly 42,000 tons due to Stendal’s Q4 planned maintenance shut compared to only 21,000 tons of planned downtime in Q3. Our lumber production was down about 6% relative to Q3 due to reduced production during the holiday season and the availability of sawlogs. Overall, we are pleased with our lumber production. Pulp fiber costs were essentially flat relative to Q3. In Canada, our wood cost did not change, but in Germany, the increased demand for pulp logs and sawmill residuals and lower supply of sawlogs pushed fiber prices up slightly for both our pulp and sawmills. Looking ahead to Q1, we expect fiber cost to increase meaningfully for both our pulp and sawmill businesses. Our pulp business will be impacted by reduced sawmill residual availability, and our German pulp mills will also face increased seasonal competition for wood chips from biofuel producers and reduced sawmill chip supply. In Germany, we expect harvesting levels to improve as the lumber market improves, while in Canada, lower fiber availability will keep price pressure on fiber unless the demand side of the equation changes. The business environment for our solid wood segment was consistent with Q3. It continues to be held back by a weak European economy and the impact of high mortgage rates, with seasonal construction slowdown in Q4 creating modestly weaker pricing in the U.S. lumber market. The stagnation of the European economy continues to dampen the demand for pallets, and the result of this very adverse business environment is the main reason behind the $11,000,000 EBITDA loss of our solid wood segment in Q4. Given the many economic forces affecting U.S. construction activity, U.S. lumber pricing could be volatile in the short term, while demand is expected to remain weak in Q1. In contrast, we expect modest upward pricing pressure in the European market, primarily due to increasing sawlog prices. Any meaningful long-term improvement in either the European or U.S. markets remains dependent on improved economic conditions and lower long-term interest rates. Our flexible sawmill production capabilities enable us to be competitive in all lumber markets. We intend to continue to maintain a strong presence in Europe and the U.S., serving the quality-sensitive Japanese market. In Q4, 41% of our lumber volume was sold in the U.S. Looking forward, we believe the U.S. lumber market will be driven by favorable homeowner demographics. This, combined with reduced North American lumber capacity, will create a supportive supply-demand dynamic in the midterm. European shipping pallets markets remain weak, with pricing staying generally flat due to the overhang of the European economy, particularly in Germany, and we are expecting generally stable pricing in 2026. Biofuels Richard Short: were Juan Carlos Bueno: up almost 10% relative to Q3 due to seasonal demand, and the prices may still increase slightly. With regards to our mass timber business, revenues were up roughly 6% compared to Q3. We continue to see a steady volume of incoming project inquiries in terms of both number and total dollar value of projects. As a reminder, the projects we are bidding on and winning today are meant to be constructed in average about nine months from now, or well into 2026. We expect 2026 revenues to be more than double what we had in 2025, or above $120,000,000. As a result, we will begin ramping our Conway facility to two shifts in early Q2 and expect to do the same at Spokane late in the year. Today, our mass timber backlog of projects sits at about $163,000,000, practically twice where we were at the end of Q3. It is clear that a large portion of the growing interest in mass timber is coming from data center hyperscalers. The appeal to this group is the speed of construction, which can be about a third shorter than traditional construction methods, as well as the carbon sequestration benefits that only mass timber brings. More importantly to Mercer International Inc. is that our industry-leading North American capacity leaves us well positioned to meet this growing demand. As a result, we are confident in this business being a growth engine for Mercer International Inc. in the short term. We have roughly 30% of North American cross-laminated timber production Operator: capacity. Juan Carlos Bueno: A broad range of product offerings, including design assist and installation services, and a large geographic footprint with manufacturing sites in the Northwest as well as the Southeast, giving us competitive access to the entire North American market. In closing, market weakness is expected to persist in 2026, and as a result, our priority is on maintaining strong liquidity. To do this, our strategy includes further cost reductions, lower capital expenditures, and other working capital measures, along with a commitment to rebalance our portfolio of assets that combined will improve our balance sheet. Above all, we are committed to prudent financial management. In light of the ongoing economic uncertainties and our focus on liquidity, our planned CapEx spend is about $60,000,000 to $80,000,000 in 2026, and this capital budget is focused on maintenance, environmental, and safety projects. The headwinds facing our industry have proven to be both longer and more severe than many anticipated. However, our experienced management team has navigated through previous commodity downturns, and I am confident that our short-term strategy will allow us to weather this storm. I also believe that the current market conditions validate our long-term strategy that focuses on transforming our pulp mills into biorefineries, with additional revenue streams that can not only help balance our product mix, but grant us further resilience during pulp downcycles. Our work on our lignin project pilot plant in Rosenthal is a great example, as is the carbon capture pilot plant in Peace River, and the work that we are doing in Stendal on sustainable aviation fuel. As 2026 progresses, we will remain focused on those elements of our business that we can control while implementing our short-term strategy. Thank you for listening. I will now turn the call back to the operator for questions. Thank you. Operator: Thank you. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Please standby while we compile the Q&A roster. We will now open for questions. Our first question comes from the line of Roger Spitz with Bank of America. Your line is now open. Yes. Thank you very much. Hopefully, you can hear me okay. Roger Spitz: The first question, Rich, is can you say how much headroom that you have under any of your maintenance covenants as of December 31? Richard Short: Yeah. So we have got—yeah. I do not have the number in front of me, but we are comfortable that we are well under the covenants at the end of the quarter, but we will expect them to tighten as the year progresses given the weak outlook. Roger Spitz: Great. And then secondly, I do not know if you want to comment in addition to 2026 CapEx, but cash interest, cash taxes, and any working capital view, inflow or outflow? Richard Short: So we are expecting taxes to be negligible this year, interest to be around 120, and you heard Juan Carlos with the CapEx number 60 to 80. Roger Spitz: I am sorry. I must have misspoke. I was thinking about working capital inflow or outflow. Richard Short: Oh, it will be a net outflow, probably around $100,000,000 to $150,000,000 at this point. Roger Spitz: It will be an outflow of 100, 150 million? What would be driving that? Richard Short: We are going to have—well, obviously, it is the interest, the CapEx, and probably a small net outflow on working capital for the year. Roger Spitz: Oh, okay. I was just thinking working capital itself as opposed to for some taxes and CapEx. Are you including that in when you gave the 100 to 150? Richard Short: Yep. Roger Spitz: Okay. So I have got to net that out. Okay. Got it. Thank you very much. Operator: Thank you. Our next question comes from the line of Sean Steuart with TD Cowen. Your line is now open. Sean Steuart: Hoping you can give us some updated thoughts on potential asset recycling opportunities, Sean Steuart: as a measure to, I guess, expedite potential deleveraging of the balance sheet? And with some flexibility on available liquidity here, any thoughts on asset closure potential and maybe costs that would be associated if you are taking potential pulp lines down. Juan Carlos Bueno: Yes, Sean. In terms of asset sales or restructuring, it is a subject that we have been analyzing and working on for quite some time now. Obviously, we are very conscious that in the very trough conditions that we are working in right now, the possibility of claiming reasonable value for any particular asset in this cycle is not the right time. But we are obviously looking into that as we focus on our core assets and see our way through this trough, but that is at the center of our debt reduction plans without a doubt. Sean Steuart: Okay. Thanks for that detail. And with respect to the build-up of the order file for mass timber, which is encouraging, can you give us a sense of expected margins associated with that uplift in sales? Juan Carlos Bueno: Yes. What I can say in that sense is when you look at 2025, which was relatively low, we were basically Sean Steuart: working with small projects all around. Juan Carlos Bueno: That year, even though it was a low sales result, it was a neutral cash flow. So the business was able not to be a drag despite the fact that it was still low on sales. Now for this year, obviously, we expect that to change, with sales, as we said, north of $120,000,000 Sean Steuart: and Juan Carlos Bueno: positive profitability and, obviously, with the contribution to cash. So we are still in the single digits, as this business has the potential to grow up significantly with the asset base that we have, considering that this $120,000,000 that we are talking about is with Conway ramping up to two shifts only around April or so in the second quarter, and Spokane only ramping up to the two shifts maybe by the end of the year. So for the majority of the year, we would be running, let us say, on average, a shift and a half. So, again, still single digits under that. But once we are running in two shifts on both facilities, obviously, we would be looking at a double-digit profitability for that business. And we are very encouraged by the growth that we are looking at. Notwithstanding the fact that we have $163,000,000 in the order book that we mentioned earlier, a part of that is obviously going to happen in 2026. But we already have quite an important piece of business for 2027 in that order book. So again, it is filling up very nicely, and we are very confident of the growth that we will have in this business. Sean Steuart: Okay. That is great detail. Thanks for the context. That is all I have. Operator: Thank you. As a reminder, to ask a question at this time, please—next question comes from the line of Edward Bruckner with Barclays. Edward Bruckner: Hey. Thanks for taking the question this morning. My first one is on Peace River. Is there any thought Richard Short: to Edward Bruckner: potentially closing the mill Edward Bruckner: and if so, what is the timing of doing something like that? And are there any approvals from the government or hurdles that you have to go through to close a mill like that. Juan Carlos Bueno: Well, on Peace River, what we are working on is our transition from less hardwood to more softwood. That is central and foremost because we believe that we can extract much more value from the mill if we produce softwood over hardwood. And we are well underway on that road. Remember this was a mill that was 80/20 to hardwood. Right now, it is 70/30. And by the end of this year, we expect it to be 50/50. And it makes a big difference because we make money on softwood. We do not make money on hardwood, obviously depending on the price of hardwood. Beyond that, when you look into the work that we are doing or that we have been doing, we mentioned these energy projects. Those would be very important contributors to the bottom line of Peace River. There is government support for those. And also the carbon capture, which is further down the line. That is probably two years ahead of us, or three years ahead of us, and that would be another important contribution to the profitability of the mill. So we do have a way through for this mill, and are working actively with the government to support these projects to support the mill, so that we can keep it Sean Steuart: and make this Juan Carlos Bueno: vision a reality. Edward Bruckner: Got it. And then my second question, just given the difficult market environment as well as potential cash burn for 2026, any new thoughts on productivity with the maturity wall coming up in 2027? And then also, I guess, in 2028 as well. Richard Short: So, Edward, how are we thinking about the ‘28s and ‘29s? Is your question? Edward Bruckner: Well, yeah, and the revolver maturity ahead of that. Right. Okay. Richard Short: So the revolvers—we are talking to the banks, the banking groups for both the ‘28s and ‘29s. We have got some runway there, so we are happy with that given where we are in the cycle. We have been talking with our investors, so I think we are comfortable with where we are with those. And maybe if I could just pivot a little bit. I just wanted to clarify that our expectations around working capital for this year—I think I misunderstood Roger’s question. Expect a modest cash outflow from working capital in 2026. Edward Bruckner: Got it. Thank you. Edward Bruckner: Thank you. Operator: Next question comes from the line of Cole Hathorn with Jefferies. Your line is now open. Richard Short: Good morning. Thanks for taking my question. I would just like to follow up on the market dynamics from here. And if we stick to Cole Hathorn: softwood pulp to begin with, Sean Steuart: we started to see some supply disruptions with, you know, Indonesia, Richard Short: reducing harvesting permits, might impact the hardwood pulp market. We have seen hardwood pulp Sean Steuart: narrow the gap to softwood quite nicely. I know inventory levels are still high, Cole Hathorn: but we have also got in Europe SCA out with a price hike. I am just wondering how do you see the outlook for the market Cole Hathorn: Is there Cole Hathorn: more scope for upward pressure now that the gap to hardwood has narrowed? Juan Carlos Bueno: Cole, I think you are absolutely right. These latest developments in Indonesia are very significant. The impact, or the known impact, of APRIL/RGE taking 150,000 tons out of the market as downtime is important. The uncertainty, whether APP’s 1.4 million mill startup might be delayed, also important because that could take away 650,000 tons of hardwood in 2026. Sean Steuart: So, yes, there is Juan Carlos Bueno: all this impact of rising chip prices in Vietnam and China, and that is happening as we speak, as you well point out. And given that, as you said, now the delta—we reported that the delta between hardwood and softwood, $130 at the end of the quarter—well, it is now $100. So with hardwood pushing up, we do believe that there is a pretty likelihood that we will see improved prices beyond what we have in our forecast, and/or at least much quicker than what we anticipated. We understand that we are now getting into the Chinese New Year. We understand that that means everything slows down a bit, and we have to wait until after New Year’s to see what the effect is. But I think, if anything else, those very, very recent developments tend to indicate a potential upward pressure on prices for both hardwood and, inherently then, for softwood piggybacking on it. So, yeah, it is rather positive. Cole Hathorn: Let us hope we see that reflect in the futures in the next couple of weeks. Shifting on to the lumber side and particularly, I am thinking about Europe. Now you called out higher sawlog costs and also pulpwood cost, well, I suppose wood chip cost for the pulp mills. It is always less clear how wood cost dynamics develop. I would just like a little bit more color. What are you seeing into Q1? Is this just lack of harvesting that is driving up sawlogs and Richard Short: and wood chips and pulpwood. Cole Hathorn: And do you see any kind of turn in this market, or is this a kind of a structurally we should be higher for longer? And the reason I ask that is you have obviously got the Nordic sawlog and pulpwood prices coming down. So I am just wondering how the Central Eastern European wood basket is performing. Yeah. Juan Carlos Bueno: Yeah, Cole, that is a very interesting dynamic as we are living it right now. Let me start with one of the elements that have a big impact on all of this, and that is the German energy policy. They incentivize the burn of wood for energy purposes, for pellet production, and those kinds of things. And what that creates is obviously a huge market for pellets and biofuels. Because the winter has been as hard as it has been, the prices of pellets have increased dramatically, and therefore they are able to pay any price for residuals, whether it is wood chips or sawdust. They are on the lookout for anything they can buy. That has an impact on us because when we buy wood chips for our pulp mills, we are now competing with these absurd pellet prices and values that they can pay that are obviously much higher than what we normally pay. So that is one of the elements that is impacting right now our wood chip costs in Germany. Now when it comes to the pulp logs, or the other residuals that we buy from other sawmills, that is dependent on the harvesting in Germany. And the level of calamity that Germany was expecting last year did not happen. So the harvest that was planned did not happen, and the result of that was a significant shortfall in terms of availability of sawlogs totally in the market. So there you have it. We have less output from sawmills, many of them running at slower speeds or cutting shifts. We suffered the consequences of it in Friesau, had to slow down production at times during the quarter, because there was simply not enough wood to go by, again as a result of this much, much lower harvesting levels, and that creating a pinch. So those are the two main issues behind the fiber dynamic that we see in Germany. It has been different in Scandinavia. There has been a big storm over there, a big need to pick up what was left over of that storm, so a bigger inflow of fiber. Now the fact that Scandinavia will have now lower prices would at least allow for a little bit less pressure from Scandinavia as they were obviously looking at Germany or surrounding countries for supply before. Now they have plenty to work with what they have over there, so that eases a little bit of the pressure that we will get in our home turf. But overall, it is still a very tough business environment. That is why we expect fiber prices to increase until we see proper harvest levels come back and after we get through the seasonal aspects of biopellets and biofuels. Obviously, we are in the middle of winter. Once that winter passes, the demand for pellets recedes, and prices will naturally come down. That is a normal cycle for pellets. So that is a little bit of the pressure points. Cole Hathorn: That is helpful. And maybe if I just run forward with that, hopefully, the cost to your pulp mills come down in the summer periods as the pellet demands decline and hopefully harvesting volumes increase. For the sawlogs, I suppose the other dynamic is price of your products. Potentially, we get pulp prices higher, which would be supportive, but on the lumber side, we have some green shoots, I suppose, with, like, IFO commentary in Germany. There is, off a very low base, construction industries looking a little bit better. Is there anything to call out there? Are you seeing any lead indicators on the chemical side, or the auto side, or anything on the construction that is giving a little bit more confidence maybe into the second quarter, into the summer period as well. Edward Bruckner: That is a very good question, Cole. And probably one of the things that Juan Carlos Bueno: everybody speaks about is, in the case of Germany, the investment that the country has decided to make in matters of defense, with very significant increases versus what had been budgeted in previous years. That is something that will move the German economy as a whole. That is something that we believe will have some impact. However, that impact is not going to be all of a sudden. That is a relatively slower pace of growth that we will see coming, but an important one, for a country that has been stagnant and stuck in a recession for already three years, which, again, is very uncommon for Germany. So we do see that there is a little bit of hope in that regard, that there is a little bit of improvement coming, but it is not something that would happen overnight. We just see a gradual improvement over there, whether it is in construction activity. Obviously, we keep an eye very much on the U.K. That is a market that we serve quite a bit, that has been very good for us and where we dedicate a lot of resources and energy. Our prices in the U.K. tend to be higher than what they are in Germany, so that is a market we privilege. Just as the market in Japan, we do as much business in Japan as we can, as obviously the margins there are even better, and we are able to deliver the high-quality product that they need. The U.S. remains to be the valve. When prices are high and they are trending higher, we can pivot to the U.S., and we have done that many times before. Richard Short: I think in Edward Bruckner: in Juan Carlos Bueno: times that we sell more volumes to the U.S., we are close to 60%, 55 or more of volume into the U.S. We are right now at 41%. But the prices over there are increasing, and despite this 10% tariff that we have, as we mentioned before, we believe we are pretty competitive into that market. So I think there is some positive momentum on prices overall in lumber for the year. That is what we would tend to expect. Cole Hathorn: Thank you. I will get back in the queue. Operator: Thank you. Our next question comes from the line of Dominic Gerster with Aperture. Your line is now open. Richard Short: Hi there. Cole Hathorn: Thank you for taking my question. Could you please comment on the extension of your Juan Carlos Bueno: two RCFs, how those discussions are going with lenders, and when you are expecting those to be concluded. Roger Spitz: Well, we know these are going to be more expensive. Richard Short: I think the banks have their things that they want to change in the indentures, but I would say, overall, the conversations are going well. Dominic Gerster: Thank you. That is helpful. And do you have any indication of when you are hoping to set this up? Juan Carlos Bueno: Timing wise? Richard Short: That is a good question, but before the end of Q2, for sure. Dominic Gerster: Understood. And then one final question. Anything on size you can comment? Will they be the same size as the current facilities? Any additional color would be helpful. Richard Short: Yeah. I think that is one thing we are talking about. I think there is a bit of a push to reduce overall capacity slightly, but not to a level that we are uncomfortable. But, obviously, more liquidity for us is better. Dominic Gerster: Understood. Thank you. Operator: Thank you. Our next question is a follow-up from Cole Hathorn with Jefferies. Your line is now open. Cole Hathorn: Thanks for taking the follow-up. I just wanted to ask around the point you made around pellets and the energy Edward Bruckner: consumption. Cole Hathorn: We are seeing industries lobby more and more to prevent imports and trade barriers. And when there is a dislocation, it does seem like the priority of use should first be for wood sawn wood products, then the downstream pulp industries before you get into energy. Is there any lobbying ongoing by the pulp and paper industry to prioritize that to keep your raw materials a little bit lower rather than get pushed out by energy? It is the first one. And secondly, there has been a lot of debate now around lower CO2 costs in Europe, and the CO2 prices come down. Does that position you a little bit more favorably, or was it not really an item of consideration? Juan Carlos Bueno: Cole, very important questions, and the answer to the first one is absolutely yes. We are absolutely contrary to the policy of the German government of Sean Steuart: promoting Juan Carlos Bueno: the use of wood for biofuel purposes straight off. It does not make any sense in our minds. We privilege very much the fact that we need to extract the highest value of the harvests that we make, and it should only be based on residuals that the pellet industry should operate on. And there has been a lot of lobbying effort on that end. Unfortunately, there are a lot of forces that Dominic Gerster: that Juan Carlos Bueno: are not necessarily aligned. There are other interests from other parties that are contrary to ours. But we stand by our belief that, from a pure environmental perspective and value capture perspective, the right thing to do is what we are promoting and what we are advocating for. In terms of the CO2, as you say, yes, that is another part of the equation that we emphasize and that we have a line of communication with government on a regular basis to make sure that the fact that we have biogenic Dominic Gerster: carbon Juan Carlos Bueno: in our operations, that we have electricity that we generate by biomass sources, it is all taken into consideration when looking at all these CO2 emissions and credits and whatnot. And we are actively advocating for the proper allocation of those credits and the maintenance of those credits over time, rather than a reduction of them, precisely on the back of the type of business that we run that is very much in line with what the government is pushing for in terms of environment protection. Cole Hathorn: And then I have a question from an investor here that we are asking to everyone that has sawn wood business in Europe that were not able to give me a perfect answer, and I hope you can just kind of add some color to it. It might be too far out. Cole Hathorn: But what we are seeing at the moment is we are seeing steel prices move up higher because of CBAM, plus we are seeing import tariffs on steel driving ultimately steel prices higher. We are also seeing cement prices higher. Historically, there always used to be this good correlation between sawn wood, lumber, steel, and cement because you are all involved in the construction material space. Do you see longer term any form of kind of pricing umbrella that might shift the industry to use more wood, considering it is only 5% of building materials outside of the Nordics in Europe? Is there something that you are tangibly seeing now or that you see in the future? Or is this just a too long-dated positive to be relative in your near-term thinking? Juan Carlos Bueno: I think the evolution of the use of wood for construction substituting steel and concrete is something that we will see coming. That is already happening. It just happens to be a very small fraction of the pie. Obviously, steel and concrete is the bread and butter of the construction industry and has been for decades, and changing that ship takes time. But when you look at Europe in particular, let us talk about mass timber in Europe where we do not participate. That is a business that grows double digit per year. It is growing, I think, at 11% per year now. So there is an important growth on that element, and that, again, is substituting concrete and steel. When you look at that same growth in North America, we are talking about 22% to 24% per year. And that is why we believe so much in the future of our mass timber business in North America, because there is a tremendous push for it, and there are all the reasons, whether it is in construction cost, environmental, just the speed of construction, the amount of labor that you need. Think about North America right now with all the political environment that we are facing, deportations and whatnot. Labor for construction is a very significant issue, and we offer a solution for that problem. The amount of labor that is needed for mass timber construction is absolutely a fraction of what normal construction projects with concrete and steel would demand. So there is an alternative. There is a solution. It is more cost effective now without any doubt to construct or build with mass timber, but it takes time for developers and architects to understand mass timber. This is not something that everybody knows about. It is something that only with time and experience people will believe and catch up on it. But, again, the 20% growth year over year is already proof that there is a good chance that we will see that market flourish and that umbrella, as you say, shifting a little bit and giving some space for mass timber to develop and substitute traditional construction methods. Richard Short: Thank you. Operator: Thank you. And this concludes the question and answer session. I would now like to hand the call back over to Juan Carlos Bueno for closing remarks. Juan Carlos Bueno: Okay. Thank you, Shannon, and thanks to all of you for joining our call. Reach out. IR are available to talk more at any time, so do not hesitate to call one of us. And otherwise, we look forward to speaking to you again on the next earnings call in May. Bye for now. Operator: This concludes today’s conference. Thank you for your participation. You may now Dominic Gerster: disconnect.
Odd-Geir Lyngstad: Good morning, and welcome to Elkem's Fourth Quarter Results Presentation. My name is Odd-Geir Lyngstad, and I'm responsible for Investor Relations in Elkem. Today's presentation has been extended because Elkem has reached a significant milestone to sell the majority of its Silicones division to Bluestar. But before we present the details of that transaction, we will take you through the fourth quarter results. As usual, we will go through the highlights for the quarter and give you an update on the markets and the first quarter outlook. CEO, Helge Aasen, will take us through the first part of this presentation before CFO, Morten Viga, will present Elkem's fourth quarter results in more detail. We will open for Q&A after the presentation of the sales of the Silicones division. So with that, I give the word to CEO, Helge Aasen. Helge Aasen: Yes. Thank you, Odd-Geir, and good morning, and welcome, everyone. So as already indicated by Odd-Geir, we have the pleasure of announcing that we've entered into a sales agreement with China National Bluestar, our majority shareholder for a sale of most of the Silicones division. This transaction will be settled through a redemption of all of Bluestar's shares in Elkem. And as already mentioned, we will come back to the details later in the presentation about this transaction. The result for the quarter was relatively strong given the current market conditions. And I think we can say that as most of our competitors in Europe have temporarily or permanently curtailed production, while we have, throughout the quarter, maintained close to full capacity utilization. The EBITDA for the fourth quarter ended up at NOK 890 million, which gave an EBITDA margin of 12% for the group. And if you exclude Silicones, which is reclassified as assets held for sale and which will now be sold, the operating income was NOK 4 billion with an EBITDA of NOK 485 million, which is then also representing a margin of 12%. We have been able to partly mitigate low demand and declining sales prices with cost improvements, both on raw material costs and other operational costs. And that is, of course, still ongoing. In the quarter, Silicon Products was impacted by lower sales prices. However, we do see higher ferrosilicon prices in the EU due to the safeguard measures restricting imports of ferroalloys into the EU. Carbon Solutions had lower sales in the fourth quarter due to continued idling of steel and ferroalloy capacity, which we have seen across many main operating regions. In the quarter, Silicones delivered further profitability improvements, which is primarily due to higher sales prices towards the end of the year in Asia Pacific and generally strong performance on cost improvements. The share redemption in connection with the sales of the Silicones division will impact Elkem's equity. And due to that, the Board has proposed not to distribute a dividend for 2025. So before we go on to present the market update and results, I'd like to say a few words about ESG. At the end of last year, it was unfortunately marked by a tragic accident at one of our plants in France. On the 22nd of December, an explosion occurred at an R&D facility in our Silicones facility in Sanfo, just outside Lyon. We had 4 colleagues injured and sadly, 2 of them later passed away from the injuries that were sustained. Internal and external investigations are still not finally concluded. But of course, regardless of that, I can only say that this is a very tragic setback in our efforts on safety work. And obviously, such an event right now overshadow other achievements within our ESG work. But we continue to get good ratings on ESG assessments in general as is illustrated on this slide. And moving on to trade barriers. This continues to impact markets and is also having an impact on Elkem, both directly and indirectly. EU's safeguard measures that came into effect in November last year, unfortunately, exempted Norway and Iceland. So we are outside of the EU safeguard measures. I think that's been broadly covered in the media. However, we have received country-specific quotas, which puts us in a rather beneficial position compared with most other countries. Those quotas are approximately 70% to 75% of historic sales. And this has been combined with the pricing benchmark of EUR 2,400 as a reference when you calculate the tariffs for sales, which exceed the quotas. So far, ferrosilicon prices are up about 20% since this was implemented. And if these measures are effective, we will -- we expect to see further price increases. Then moving on to the U.S., countervailing duties have been imposed on silicon, silicon metal, imported from several countries, including Norway. And the preliminary CVD rate is close to 17%. In addition, there are also antidumping duties announced, which is close to 4%. So that brings the total tariffs now that was 5%. Then we have the Trump tariff, 15%. And then we put this on top of that, we are now up to around 40% on silicon metal exported from Norway to the U.S. So the basis for the CVD duty is based on CO2 compensation and the allocation of CO2 quotas, which Norwegian companies receive under the EU carbon scheme. Of course, our position is that EU's policies on CO2 quotas and CO2 compensation do not constitute countervailable subsidies, harming the U.S. domestic industry as there is no CO2 tax in the U.S. So the case is expected to be finally decided in June this year. And so far, I think we can say that we've been fairly successful in navigating and adapting to unpredictable trade dynamics, while we are leveraging a global business model and strong -- with strong cost and market positions. Here, we have included a summary of Elkem's performance over the past years and how that compared to our communicated financial targets. So if we look at the 3 last years, we have seen deteriorating market conditions due to lower economic activity, global overcapacity and a very, I would say, big reshaping of global trade. So despite these challenging conditions, Elkem has met the financial targets over the cycle, very much due to our diversified business model and strong operational execution. And of course, we have continuous cost focus. So since 2020, we have delivered a compound annual growth of 5%, which is in line with our target. And the EBITDA margin during the same period was 16%, which is also within our target range. And if you exclude Silicones from these numbers, the performance is even better with a compound growth in operating income of 6% while the EBITDA margin was 21%, exceeding the target range. Then we move on to the market update and the outlook. So let's have a look at some of the key markets and market trends and indications -- indicators, I mean, automotive is an important sector for Elkem, driving demand for many of our products as silicon is essential in electronics, in batteries and in aluminum, lightweight components. Markets, particularly in Europe, have declined and the outlook remains weak. Soft demand combined with import pressure from China. A new minimum price mechanism in the EU on imported Chinese electrical vehicles could offer some protection; remains to be seen. In the U.S., the outlook for 2026 is also relatively soft due to the pressure on affordability and an overall weak demand for EVs. Construction is another key market for Elkem, for Elkem silicon-based products, which go into high-performance concrete, building materials and other infrastructure. It seems that Europe is seeing a gradual recovery in the sector, but the performance is varying significantly across countries and different segments. The U.S. industry is also relatively soft, but data centers, power infrastructure and institutional projects are showing growth. The PMI number is normally a good indicator for the economic sentiment and global PMIs show a mixed but stable picture. Manufacturing remains soft, but the downturn seems to be easing now. The U.S. stays in mild expansion, supported by improving output, though underlying demand and export orders remain soft. Europe is a mixed picture with the German economy continuing to contract, keeping the broader Eurozone picture rather subdued. If we look at the specific markets for Elkem and start with the silicon. As illustrated on the graph, the silicon reference prices remained on a low level during the quarter. Year-to-date figures for November 2025 show that exports from China to Europe increased significantly compared with last year. And this, combined with, I say, generally weak demand have put quite significant pressure on prices in the EU. In the U.S., silicon prices increased slightly in the fourth quarter, but also here, the demand is relatively low. Prices are, however, expected to rise in 2026 due to tariffs, antidumping duties and a tightening domestic supply. In China, silicon prices are affected by challenging market conditions. Power prices are increasing and sales prices for silicon remain on a low level. A little bit positive is that production curtailments are expected from several producers. Moving on to ferrosilicon. As you know, we have many of the same underlying drivers as the silicon metal. The overall picture for Elkem is also here marked by weak demand. But as mentioned earlier, we've seen an increase in reference prices by around 20% following the implementation of the safeguard measures in the EU. And in addition, the EU has announced a tightening on the safeguard measures for steel. The annual tariff-free import quotas will be reduced. And the out of quota duty will be doubled to 50%. So as these measures will take effect, it is expected that steel production in the EU will increase. I think Outokumpu reported a similar picture yesterday. This could also have a positive impact on the demand for ferroalloys and electrode materials supplied by our Carbon division. In the U.S., ferrosilicon prices were marginally down in the fourth quarter due to weaker demand. And in China, ferrosilicon prices remain on a low level despite further production cuts to address overcapacity. Then the market for carbon products, obviously much smaller than the market for silicon and ferrosilicon, and there are no available reference prices here. Demand for carbon products differ by region, influenced by steel primarily, which again drives consumption of ferroalloys and aluminum is also an important driver. This was -- yes, global steel production actually declined by 3% in the fourth quarter compared to the year before, primarily driven by lower activity in China, where production actually decreased by 9%. In Europe, the production increased by 4%, while North America remained stable. So this means that the steel and ferroalloy markets continue to be challenging and affecting Carbon Solutions. The effects are partly mitigated by our specialized product offering in carbon and a diverse geographic presence, which gives us a natural hedge and creates quite a stable situation, which you have seen on historical financial figures. Then lastly, Silicones. Anti-involution measures are underway in a number of sectors in China, also in silicones, so addressing overcapacity. The DMC price in China rose by about 23% from around RMB 11,000 per tonne by the end of the third quarter, up to RMB 13,600 by the end of the fourth quarter, primarily driven by various anti-involution measures, curbing over production and then leading to an increasing in sales prices. The demand still within China remains on a weak level, particularly due to the construction sector. In the EU and the U.S., demand for commodity silicones was low in the quarter, mainly impacted by shifting tariff policies. So moving on to the outlook for the first quarter. As mentioned, trade regulations and protective measures are likely to continue to affect Elkem's markets and contributing to ongoing uncertainty. However, I think Elkem is well positioned due to our geographic presence and strong market and cost positions. Silicon products still facing subdued demand. We are temporarily reducing capacity in Norway to -- mainly to manage inventory levels. And the EBITDA effect of that is expected to be somewhat negative, but with a very positive cash flow effect. Carbon Solutions is expecting a slight improvement in sales volumes. But again, due to already mentioned the situation in steel, et cetera, the overall demand remains on a relatively weak level. Silicones prices in China have increased due to the reduced supply, while the fundamental demand situation remains on a lower level than what we've seen historically. The division will, of course, benefit from higher sales prices anticipating that yes, that these actions will be maintained on production reduction. So I think with this, I'll give the word to Morten to take you through the financials for the fourth quarter, and then we'll come back to the transaction afterwards. Morten Viga: Thank you very much, Helge, and good morning, everybody. It's certainly a pleasure to go through the results for the fourth quarter in more detail. Our operating income for the quarter was NOK 7.3 billion, which was down 14% compared to the fourth quarter last year. And we saw a reduction in all 3 divisions, and this is mainly explained by lower sales prices. Elkem's EBITDA for the fourth quarter was NOK 890 million, and this was 24% lower than the fourth quarter last year, but slightly higher than in the previous 2 quarters. The reported group EBITDA margin was 12%, which is somewhat below our long-term target of 15% to 20%. However, it's clearly important to bear in mind that sales prices in key markets, particularly in silicon and ferrosilicon have been at or close to all-time low levels. And as such, we believe that Elkem's EBITDA is clearly supported and held up by good operational performance and strong underlying cost positions. There were no particular one-offs affecting the EBITDA in this quarter. As usual, we have provided an overview of some of the main financial numbers and ratios on this slide. I will certainly not go into detail on all of them, but it is important to note that the Silicones division has been reclassified as discontinued operations and assets held for sale. And as you know, now we are announcing this transaction. But Silicones has been a part of Elkem's structure during the quarter, and the division is affecting Elkem's key financial numbers. And for that reason, we will mainly focus on the financial numbers for the group, including Silicones. In the table to the right, you can see comparable figures, however, for Elkem with and without Silicones. Including Silicones, the group EBITDA was NOK 890 million, and the realized effects from the currency hedging program was minus NOK 21 million reported in segment other. Other items amounted to minus NOK 68 million, and the main items were gains on power and currency derivatives of plus NOK 64 million and restructuring expenses of minus NOK 20 million and other items of minus NOK 111 million, mainly consisting of dismantling and environmental expenses. Net finance expenses were minus NOK 192 million. The main items were net interest expenses of minus NOK 130 million and currency losses of minus NOK 48 million. We have been able to reduce the interest expenses from minus NOK 187 million in the same period in '24. Income tax was positive with NOK 6 million due to tax deductions and changes in the tax losses carried forward. So let's then take a look at the divisions, and we start with Silicon Products. The silicon and ferrosilicon market clearly remain difficult with low sales prices, and this is also affecting the division's result in the fourth quarter. Total operating income amounted to NOK 3.2 billion for the quarter, which was a reduction of 14% from NOK 3.8 billion in the fourth quarter of '24. The reduction was largely due to lower sales prices, particularly for silicon and ferrosilicon. The EBITDA amounted to NOK 294 million, which was a significant reduction of 53% from the fourth quarter last year. And the reduction is also here primarily driven by lower sales prices, but this is then partly balanced by lower raw material costs and higher sales volumes. The specialty segments, particularly foundry alloys and materials maintained strong performance also this quarter due to Elkem's very strong market positions. Sales volume was 8% higher compared to the fourth quarter last year, and we had a higher sales volumes across all product lines. The Carbon Solutions division has presented extraordinary good results over a long period and continue to deliver good margins. However, this quarter was impacted by lower sales volumes. The operating income came in at NOK 735 million, which was down 20% from the fourth quarter last year. EBITDA amounted to NOK 174 million, which is a reduction of 38% from the corresponding quarter in '24. But the reduction in operating income and EBITDA can be explained by decline in sales volumes. We have also seen a reduction in sales prices, but this has been partly offset by extraordinary cost improvements. Sales volume was down 11% compared to fourth quarter last year. The Silicones division, where the majority now is being sold to Bluestar has delivered improved results in the fourth quarter, mainly due to cost improvements. Total operating income was NOK 3.6 billion. That's down 14% from the fourth quarter of last year. And the decline is primarily due to lower commodity sales prices during the quarter. EBITDA, on the other hand, improved by 6% from the corresponding quarter last year, and it reached almost NOK 400 million. The decline in sales prices and sales volumes was more than offset by good cost reductions and lower raw material costs. Sales volumes was down 3% compared to the fourth quarter last year, and this is mainly due to lower commodity sales across the geographical regions. Let's now have a look at some of Elkem's key financial ratios. The earnings per share, EPS, was negative with NOK 0.21 per share in the fourth quarter, and that brings the EPS year-to-date to minus NOK 1.05 for the year. We are, of course, not satisfied with this, but clearly, the EPS has been negatively impacted by net losses from the Silicones division, which we are now selling. If we exclude Silicones from the '25 numbers, Elkem's EPS for the full year would have been plus NOK 0.61 per share. The balance sheet remains very solid and total equity amounted to NOK 24 billion by the end of '25, and that equals an equity ratio of 51%. By the end of the fourth quarter, Elkem had a net interest-bearing debt of NOK 11.9 billion, and this gives a debt leverage ratio of 3.5x based on last 12 months EBITDA. The sale of the Silicones division will impact Elkem's equity and debt, and we will revert to that later. The equity will be reduced by share redemption and the net debt will also be reduced from NOK 11.9 billion to NOK 9.8 billion as Bluestar will take over NOK 2.1 billion of the debt. This will then increase Elkem's leverage based on pro forma numbers. But the plan will be or is to raise additional equity and conduct a refinancing of the main bank facilities after closing of the Silicones transaction. As I said, we will get back to more details on this under the presentation of the Silicones transaction. As mentioned in the previous quarters, Elkem's focus has been on cash generation and disciplined capital spending in response to the very challenging market conditions that we are experiencing now. And we have delivered on our promises. In the fourth quarter, the cash flow from operation was plus NOK 829 million, a clear improvement compared to previous quarters. And this is explained by lower CapEx and positive working capital changes. In the fourth quarter, total investments were down to NOK 674 million. Reinvestments were down to NOK 530 million, which amounted to 75% of depreciation for the quarter. And for the full year, reinvestments amounted to NOK 1.5 billion, which equals 58% of depreciation. Strategic investments were moderate, NOK 145 million in the fourth quarter, taking the total number to NOK 328 million for the full year. So let me wrap up this presentation by summarizing the main headlines and takeaway. First of all, trade regulations and protective measures are likely to continue affecting Elkem's markets. Elkem is, however, very well positioned due to strong market and cost positions and a diverse business model. Silicon Products is still facing weak demand, but the division is benefiting from cost improvements and higher ferrosilicon prices after the implemented EU safeguard measures. Carbon Solutions benefits from good cost positions and a geographically diverse customer base. And clearly, the division is excellently positioned when there is a market recovery. Our Silicones business delivered further profitability improvements in the fourth quarter and is well positioned if current price levels are maintained. As I said, the Board has proposed not to distribute dividend for 2025, and this is due to the share redemption in connection with Elkem's sale of the Silicones division. So then I think that summarizes the Q4 presentation, and then I hand the word back to Odd-Geir. Thank you. Odd-Geir Lyngstad: Okay. That concludes the presentation of the fourth quarter results. So thanks to Helge and Morten for taking us through the results and the presentation. We will now go on to present the divestment of the Silicones division and CEO, Helge Aasen and Morten Viga will then take us through the rationale for the transaction, the structure and the approval process for the contemplated divestment. And we will then open for Q&A after this part of the presentation. So with that, I'll give the word back to you, Helge. Helge Aasen: Thank you. Yes, it's been a quite a long process. It's now about a year since we announced the strategic review to sell the Silicones division. And we are very satisfied to present to you today a transaction that we think will benefit all our stakeholders. So before going into the details of the transaction, I'd like to put this into a historic perspective. I mean transformational changes are not new to Elkem. In the company's long history dating back to 1904, continuous portfolio optimization has been part of the course. And in order to adapt to new market environments, seize growth opportunities, consolidate the market or gain more financial room to maneuver, we have on this slide illustrated some of the major transactions that have shaped this company over the years and made it to what it is today. The current chapter that we are about to close started in 2011 with Bluestar's acquisition of Elkem from Orkla. During Bluestar's ownership, Elkem has had a strong development in product diversification and not at least in revenue growth. I mean we have quadrupled the revenue in that period. We've strengthened our market positions. We have emerged as a more cost-effective company and -- than we were, back in 2011. And we've also invested significantly in expanding and upgrading our facilities. Just in Norway alone, we have invested more than NOK 10 billion over the last 10 years, which makes us the European silicon major. And we play a critical role in strategic value chains. It's been a very exciting journey. I've been part of it myself personally. Taking over Bluestar's global silicones business headquartered in France. We took the first part in 2015 and then the silicones business in China in connection with the IPO in 2018. And obviously, that's a particular highlight when Bluestar relisted Elkem on the Oslo Stock Exchange in 2018 after the Orkla takeover, where Elkem was delisted in 2005. And we had actually been listed since 1913, when Orkla delisted the company. So we have a long history here in Oslo on the stock exchange. And significant achievements have been made, and we are proud of that. Today, Elkem is a fully integrated silicon-based manufacturer, all the way from quartz mining to high-end downstream applications in silicones. The company has global positions and each of the 3 divisions are major players within their respective industries and markets. Silicon Products being a global producer and provider of silicon, ferrosilicon and a number of specialty products derived from those -- from the starting point. Carbon Solutions is a leading producer of electrode paste and specialty products for the metallurgical industry. And Silicones, which will now be sold to Bluestar is also a fully integrated silicones manufacturer with focus on specialties and strong global positions. So combined, our divisions have leading cost and market positions delivering and have delivered strong results over the cycle, with a geographically resilient and diverse business model. And I think we should also underline that Elkem is a supplier of critical materials to the green and digital transitions with a strong focus on sustainability. And of course, these efforts will continue regardless of the transaction being announced today. So with such a successful development, I guess the obvious question is why do we undergo such a significant transformation now. And I would say, first of all, it is related to growth potential, and the fact that the current structure and financial capacity of Elkem is not adequate to support the growth opportunities that we see for Elkem's business portfolio going forward. We have #1 positions in carbon materials, in silicon, in foundry alloys, microsilica. And a sale of the Silicones division will now ensure a better capital allocation in order to accelerate organic growth and also enable us to pursue attractive M&A opportunities within these business areas. It will also leave Elkem with more resources for innovation and improve the prospects to strengthen our financial profile through reduced volatility and lower capital intensity. In short, we believe that this transaction will put us in a significantly stronger position to develop these 2 divisions. The fact that Bluestar will take full ownership of Silicones through this transaction, we also think will significantly improve the future opportunities for the Silicones division. It will enable access to a significant investment capacity that would not have been possible in the Elkem structure. In addition, Silicones will benefit from deep strategic synergies within a global chemicals major with improved ability to innovate across the whole value chain. Silicones will also be in a better position to adapt to local market dynamics and accelerate growth in specialty products and in key global markets. So in short, we are confident that this agreement with Bluestar delivers the most favorable outcome for Elkem's employees, shareholders and other stakeholders, while we position ourselves with the remaining metals and materials division and the Silicones division for future growth. This is an overview of the transaction structure and the timeline. So Elkem will sell the majority of the Silicones division to Bluestar. The sale includes all Silicones' assets, excluding Yongdeng, it's a silicon metal plant in China; Ruossillon which is an upstream silox plant in France; and India, a small downstream facility in silicones. The transaction will be settled through the redemption of all of Bluestar's 338 million shares in Elkem. There will be no cash payments by Elkem nor Bluestar. The minority investors, which today have 47.1% of the shares will then assume 100% control of the listed company, Elkem ASA. And through the contemplated transaction, Elkem and Bluestar will solve important long-term strategic goals regarding development and ownership. The transaction is conditional upon shareholders' approval at an Extraordinary General Meeting, waivers and approvals from lenders and other customary approvals. We have obtained pre-commitment from Folketrygdfondet, Must Invest, AS, DNB Asset Management, Nordea Investment Management and Perestroika to vote in favor of the transaction. These investors have also underwritten NOK 1.5 billion equity capital raise. Elkem will call for an EGM today. The EGM is expected to take place on the 9th of March, and we will seek lenders' approval of the transaction before the EGM. After a 6-week formal creditor process, the closing is then expected to take place by the end of April. We are planning to arrange a capital markets update after the summer to present our plans and strategy for the company going forward. Where are we now? Is this -- are you taking over now? Or is it -- this is my last slide. I think, yes, this slide summarizes the outcome of the contemplated transaction. So upon completion, Bluestar will be the owner of all Silicones' assets, except the units that will be retained by Elkem. And since 2018, Silicones' share of EBITDA has been 32%, while the share of EBIT has been negative. The divisions that will constitute Elkem going forward have since 2018 represented 68% of EBITDA of more than 100% of EBIT by offsetting the losses from Silicones. The performance since 2018 demonstrates the potential to strengthen Elkem's financial profile going forward through improved earnings. Yes. I think, Morten, you can take the rest. Let's share the burden of this very nice presentation. Morten Viga: Share the pleasure I would say. Certainly, it's a magnificent day in the history of Elkem. So I'm very happy to continue. So the settlement of the transaction will be made through redemption of all Bluestar's share in Elkem ASA. The decision is subject to 2/3 vote by minority shareholders at the upcoming AGM on the 9th of March. And the minority shareholders will then effectively exchange the 47.1% they hold in the sold Silicones assets with Bluestar's 52.9% in the remaining Elkem. Bluestar will not hold any shares or have any formal roles in Elkem after completion of this transaction. And a new Board of Directors will be elected in connection with the closing of the contemplated transaction. So what is new Elkem all about? Well, after the transaction, Elkem will consist of Silicon Products and Carbon Solutions. And this will certainly then result in a much more focused pure-play metals and materials company. The Silicon Products division has 12 main production sites and has all around the world and has delivered an average EBITDA margin of 22% from 2018 to 2025. Carbon Solutions also has a global business model with 6 main production sites, which have delivered an average EBITDA margin of 27% over the same period. So Elkem will remain a global player with plants all over the world and clearly with #1 positions within these 2 business areas and with very strong and resilient value chains. We will certainly continue to focus on innovation and customer support with strong R&D centers as an embedded part of our value chain. And we believe that this will be even more important going forward due to increased focus on supply chains and the secure supply of critical materials. We also have very strong positions in terms of renewable energy and energy efficiency. And we also believe that this will be a strong competitive advantage going forward. In this transaction, we will keep 3 of the Silicones' plants, which will not be sold to Bluestar. The Roussillon upstream Silicones' plant in France will be a prolonged -- will serve as a prolonged part of the upstream silicon metal value chain. And as such, it will secure demand from -- for our production in Norway. For India, which is a very small business and for Yongdeng, which is a silicon smelter in China, but belonging to the Silicones division, we will explore other alternatives, and we will get back to that in due time. This slide contains a profile of the new structure's historical financial performance. I will certainly not go into detail on all these numbers. But you will see that the historical performance has been volatile as the markets have been volatile, but we have delivered profitability, which is clearly above the average profitability of Elkem Group in the same history. Since Elkem was IPO-ed back in 2018, the remaining business that we will keep has represented 55% of the group revenue, but it has also represented 67% of the EBITDA. And as a matter of fact, it has represented more than 100% of the historical group EBIT. So we believe that it is a very good part of the portfolio that we are bringing further. And that means that we will have a stronger and more profitable Elkem going forward, and we will certainly also focus a lot on cash flow generation based on very good underlying market and cost positions. As mentioned previously in our presentation, we believe that Elkem's positioning will be significantly improved after the transaction. Going forward, the operational and business focus will be on our #1 positions in Silicon Products and Carbon Solutions. And these divisions have demonstrated a very strong ability to deliver solid profitability throughout the cycle with an EBITDA approaching 20% since 2018 and with a strong cash flow generation. So where do we stand today? We, certainly, Elkem's remaining divisions, we have gone through a cyclical trough in terms of turnover, yet we have still delivered profitability and good cash flow throughout 2025. And we clearly believe that with the completion of this transaction, we are very well positioned to deliver increased turnover, higher earnings over time. From 2018 to 2025, Silicon Products and Carbon Solutions together have delivered on an average an EBITDA of around NOK 4 billion throughout the cycle, which is significantly higher than the 2025 numbers. Compared to 2025, we expect a gradually improving market in 2026. And over time, we expect that we should at least be back in line with historical earnings at a minimum. Based on the current outlook, we anticipate an underlying top line growth of more than 10% in 2026 compared to 2025. This is driven by a better mix and higher volumes. Our relative competitiveness versus competitors in our main markets is stronger than ever before, and we are confident that we will gain market shares with good profitability. Higher prices should certainly provide the company with strong operating leverage and also based on today's cost base. Historically, rising revenues have led to increased margins, which is natural given higher volumes and prices. In addition, we have a long track record, and we will continue with that of achieving significant cost improvements in our core business model. And we plan to return to the market with specific cost-cutting measures over the coming quarters as we will streamline the new organization. One of the important factors in the transaction is that we will also significantly reduce our capital intensity through the sale of Silicones, which has clearly been the most capital-intensive part of our portfolio. We expect for the new portfolio around NOK 1 billion in ongoing annual investments, and that is clearly significantly below the average level during the last 5 years. And this also should enable a higher return on capital employed going forward than the historical numbers. In line with our strategy of being a well-capitalized company throughout the cycle, we have also decided to raise new equity from solid investors upon completion of the transaction. We're very happy to see the good support from current shareholders, and we believe that our new financial process has a -- would give a stronger resilience than the historical Elkem. So even though the markets remain, for the time being, challenging and uncertain, we believe that we are in an excellent position to deliver profitable operations, good cash flow even under quite challenging conditions. And over time, as illustrated, we are also comfortable that we have a position that can deliver results at least in line with our historical performance. I should be humble about timing. Normalization, full normalization will probably take some time and our markets will keep fluctuating. But as the markets will settle, we are very well positioned to deliver strong revenues and profitability. And as I said, we will certainly focus on maintaining a strong and efficient balance sheet over time. And we will also, in the future, get back to delivering attractive dividends to the shareholders when the time is right. Finally, I think it's also worth mentioning that the transaction and the streamlining of Elkem in the coming years will enable profitable expansion and growth. And once the transaction is completed, as we said, we will also then after the summer vacation, get back with a capital markets update, elaborating more on our future financial targets and strategic priorities. As we said, the sale of the Silicones division is settled by share redemption with no cash payments. We're planning also, as said, an equity issuance following the closes of the contemplated transaction to ensure a robust and efficient balance sheet. And a number of key current investors have already fully underwritten a NOK 1.5 billion equity capital increase. And with this capital increase, the new pro forma leverage will be 3.6x based on the last 12 months EBITDA. The equity capital raise is subject to certain terms and conditions to be completed following the closes of the contemplated transaction. But what's important from the company's perspective is that there is no uncertainty related to the equity raise and to the financial position of the company going forward. We believe this will be a very strong structure. And certainly, our target is to maintain a strong credit position and a flexible balance sheet, qualifying for investment grade. The transaction is conditional upon approval from certain Elkem lenders and the waiver and approval process is now being initiated. After transaction closing, we plan then to conduct a full refinancing of main credit and loan facilities, and we will get back with more information on that in due time. So then a few words about the approval process from the minority shareholders. The contemplated transaction is conditional upon the approval by Elkem's General Meeting. We will then call for an Extraordinary General Meeting today to be held on the 9th of March to approve the contemplated transaction and the redemption of Bluestar's shares in Elkem. Bluestar will not vote on the agenda items relating to approval of the contemplated transaction as they are part of the transaction. But Folketrygdfondet, Must Invest, DNB Asset Management, Nordea Investment Management and Perestroika have pre-committed to vote in favor of the share purchase agreement, and that is representing approximately 30% of the eligible voting capital for this matter. And as I also said, these investors have collectively underwritten NOK 1.5 billion in new equity capital, subject to market terms. The Board of Directors in Elkem will certainly also ensure to take into consideration of the minority shareholders in relation to the equity capital raise. With respect to the share redemption, Bluestar is entitled to vote and has undertaken to vote in favor. Hence, shareholders holding 67% of the share capital eligible to vote on that item have undertaken to vote in favor of the share redemption at the EGM. And subject to being approved by -- or subject to approval by the EGM and other closing conditions, where there are really no major ones, the contemplated transaction is expected to close late April or early March this year -- May. Thank you, Helge. Elkem's management and the independent Board have thoroughly assessed available options in a long time before entering into these -- or into exclusive negotiations with Bluestar, and we clearly believe that this is the best option, and it's a very good solution. To safeguard the interests of the minority investors in Elkem, the Independent Board has also obtained a fairness opinion from DNB Carnegie, which has concluded that the contemplated transaction is fair from a financial point of view when considering the valuation from the perspective of the Independent Board and its shareholders. So to summarize, we certainly believe that this transaction will be beneficial to all stakeholders, and it will position Elkem as a focused pure-play #1 metals and materials company. This will certainly allow us to pursue tailored strategies aligned with our division's unique strengths and market positions. Elkem, post the transaction, will hold leading positions within operations, technology, market, product technology, et cetera. We will continue to have attractive positions in all relevant geographies. And we clearly also see potential value-accretive M&A opportunities when the timing is right. As a supplier of critical materials to the green and digital transformation, we have developed strong customer relations based on very capable in-house R&D resources, and we will continue to strengthen that going forward and make sure that it's sustainable, both from a financial and an environmental point of view. As I said, Elkem's target is clearly to maintain a robust financial profile over the cycle with a very strong focus on solid cash conversion. And we believe that this will, over time, provide the necessary flexibility for growth and development of the company. So I guess that concludes our presentation, and then I'm happy to leave the word back to Odd-Geir again, who will facilitate the Q&A session. Thank you very much. Odd-Geir Lyngstad: Thank you for that, Morten. We will then open up for Q&A. We have received some questions on the webcast and including some on e-mail. But since there are a few people present here today, I would like to take the opportunity to see if there are any questions from the audience. And the best solution is probably if you just say the question and then I'll repeat for the webcast. So please feel free. If there are no questions from the audience, we'll take a few of the questions that are on the webcast. And the first question is related to the Roussillon and the part of the Silicones' assets that are not part of the transaction. And questions are if -- what is the EBITDA for the Silicones part that are not part of the transaction where obviously, the Roussillon plant is the main item. What was that in '25? And I mean, the part of EBITDA that we are not selling to Bluestar? Helge Aasen: I don't think we have -- this has been an integrated part of the Silicones operations in France. Obviously, we have looked at what is going to look like going forward, but I don't think we have a specific number on 2025 EBITDA for this part. Morten Viga: No, you're absolutely right. This has been an integrated part of the Silicones business in France. So we don't have a precise number on that. We believe that we will have a -- how should I call it, a neutral to positive profitability going forward. Helge Aasen: I should add that this -- to keep that asset obviously gives us a very stable outlet for silicon metal and value uplift on silicon metal into the European market. It's also very important for Bluestar to have a stable source of silox for their downstream operations. And we have entered into a long-term agreement that I think will be very beneficial for both parties. Odd-Geir Lyngstad: And then we have a question related to debt and EBITDA and where do we see the net debt to EBITDA for the remaining Elkem after the NOK 1.5 billion equity raise? Morten Viga: Well, then we will be at a net interest-bearing debt of approximately NOK 8.3 billion. And as I said, we will be at approximately 3.6x EBITDA on a leverage. There will probably be an additional equity raise, which can change or lower that also somewhat. Our target is clearly to generate cash flow going forward, which enable a further deleverage of that number. Odd-Geir Lyngstad: While we are into kind of equity raise, there is also a question about the agreed equity price issue or the conditions of the equity offering, if you're able to provide any further details on that? Morten Viga: More details on that will be provided later. I think the important issue today is that we have underwritten NOK 1.5 billion in new equity, very happy with the support from major shareholders, which clearly see this as a very good and attractive investment. And then we will provide more details on the structure and terms later in the process. Odd-Geir Lyngstad: We have also received a question on the price exchange between Elkem and Bluestar and therefore, the implied EV of the sold assets. Morten Viga: Yes, that's a good question. I think we have provided all the relevant information. And of course, there are many ways to regard this. From our perspective, what's important is that we clearly believe that this is very attractive as seen from the minority interest and from the company's perspective. I think that has also been confirmed by opinions made by ABG and by DNB Carnegie. And as I also said, the important thing is that we now have secured a very, very good business structure for the future of Elkem and also a very good ownership structure. Odd-Geir Lyngstad: Very good. Given the fact that we are seeking to enable the capital allocation to accelerate growth in Carbon Solutions and Silicon Products, are there any concrete opportunities that you are assessing? Helge Aasen: Definitely, we have been looking at that for a long time. And I think that's a very good topic for the Capital Markets update that we will come back to in a few months. So let's get past this next milestones with the EGM and the closing of the deal. And then I think that will be a very, very interesting topic to discuss. Odd-Geir Lyngstad: And also the last question goes more into kind of the future and the prospects for '26. We have guided on improved margins and results for '26. And the question is if you can elaborate a little bit on what is market related and what is cost efficiency related when it comes to that improvement. Helge Aasen: I don't think we should go into those details on that now. But obviously, we are now reducing Elkem's organization and simplifying the business model. And it's a very good opportunity to streamline organization. So we have already been working on that for a while. So there we'll definitely be taking measures to reduce cost through efficiency improvement. And then regarding the market, I think we're positive on the outlook. I think Q1, I mean, we have said there's still a lot of uncertainty. We don't guide beyond Q1. I think Q1, you can expect that to be in line with Q4, and then we are positive going forward. Odd-Geir Lyngstad: Thank you very much. I don't have any further questions, and there doesn't seem to be any from the audience. So that concludes our presentations here today. So thank you very much for attending, and thank you to Helge, Morten for taking us through the 2 presentations. Helge Aasen: Thank you. Odd-Geir Lyngstad: Thank you. Morten Viga: Thank you.
Operator: So hello, everybody, and thank you very much today for attending Terumo's financial results for the third quarter of the fiscal year ending March 31, 2026. Today, before proceeding, I would just like to give an overview. And Mr. Hagimoto-san, CFO of Terumo will give an explanation followed by time for question and answer, making a total of 45 minutes for today. For this webinar, there is simultaneous interpreting available via the Zoom where you may listen to English or Japanese in either direction. Please do use the globe button at the bottom to choose English or Japanese. The materials displayed on screen will be English only. If you require English disclosure materials, please refer to Terumo's web page. If there are any problems during the -- we will let you know by e-mail if there are any problems with connection throughout. Also, there is just one disclaimer before beginning. All of the explanation that we are about to give is based on current results. And all of these -- they are based on assumptions using information available to us at the time. Accordingly, it should be noted that actual results may differ from those forecasts or projections due to various factors. So with that, I would like to hand over to CFO, Mr. Hagimoto, for an overview of the financial results. Thank you. Jin Hagimoto: Hello. This is Hagimoto, CFO of Terumo. Let me walk you through the highlights of our financial results. Thank you very much for your participation today. So this is the highlights of our financial results for the third quarter of the fiscal year ending March '26. First of all, the highlights, strong earnings results exceeding guidance. So for revenue with the highest ever results, both for the quarter and the third quarter year-to-date. We had strong sales led by North America with 9% growth excluding the FX impact. In particular -- revenue reached record highs, both for the quarter, in particular, demand growth in North America remained strong, resulting in a year-on-year increase of 9%, excluding FX impact. With regard to profits, operating profit -- adjusted operating profit and profit for the year all reached record highs on a Q3 year-to-year basis. Although we recorded certain onetime expenses from the first half of the fiscal year, our globally implemented pricing measures and appropriate cost control enabled us to deliver results that exceeded the pace assumed in our '25 guidance -- fiscal '25 guidance. Please note that the start from -- started from this quarter, the consolidated results with the Leverkusen plant and OrganOx, both of which were acquisitions announced earlier this fiscal year. Next slide, please. So moving on to our P&L performance. Revenue reached a record high of JPY 831.6 billion on a Q3 year-to-date basis. The expansion of global demand continued with the Cardiac and Vascular Company and the Blood and Cell Technologies company serving as the main drivers. Operating profit and adjusted operating profit also achieved growth exceeding that of revenue, reaching record highs of JPY 144.9 billion and JPY 173.5 billion, respectively. While the tariff impact began to materialize partway through the second quarter and continued to affect results in the third quarter as anticipated, we were able to offset these impacts through ongoing pricing measures and disciplined cost control, resulting in progress that exceeded our performance forecast. On a stand-alone Q3 basis, the operating profit margin declined. This was mainly due to the recognition of onetime expenses in the second half of the year, as explained during our second quarter earnings announcement. Next slide, please. So this is the year-on-year OP variance analysis for quarter 3. I will explain the Q3 year-to-date results on the next page. However, there are 2 major movements to highlight for Q3. The first is the impact of tariffs. In this chart, the tariff impact is included within gross margin and pricing. And as a breakdown of the gross margin effect, the tariff impact amounted to a negative JPY 4.2 billion. At the same time, pricing measures contributed a positive JPY 3.5 billion, partially offsetting the negative impact from tariffs. The second point is the recognition of profit and loss from newly acquired businesses. The Leverkusen plant recorded a loss of JPY 1.6 billion, while OrganOx contributed a profit of JPY 0.5 billion. Regarding the Leverkusen plant, we will take a disciplined and cautious approach to capital expenditures for production line preparations and proceed step-by-step as the certainty of customer contracts increases. Next, this slide shows the quarter 3 year-to-date OP variance analysis. Overall revenue growth driven by the continued expansion of demand made a significant contribution. The GP increment by sales increase was driven primarily by overseas TIS, mainly in North America as well as Global Blood Solutions, particularly in the plasma business. With regard to the gross margin pricing measures in the Cardiac and Vascular Company made a significant positive contribution to profit. However, as the impact of tariffs became more pronounced, this positive effect was partially offset. So while the negative effect from tariffs increased in quarter 3, on a year-to-date basis, the positive effect from pricing more than offset the tariff impact. SG&A has increased due to business expansion and remained largely in line with our assumptions. R&D expenses decreased slightly year-on-year. This was due not only to the impact of impairment losses on capitalized R&D recorded last year, but also to a review of R&D priorities and a disciplined focus on selective themes. Going forward, we will continue to invest in priority areas. As for foreign exchange, the impact was negative both on a flow and stock basis compared with the previous year. Next slide, please. I will now explain the performance by company. First, let me start with C&V, the Cardiac and Vascular Company. Revenue increased 8% on a local currency basis with strong performance continuing globally, particularly in North America. By business segment, growth was driven by TIS and Terumo Neuro contributing to revenue growth for the company overall. TIS was primarily driven by North America with solid performance continuing across all product categories. Volume growth contributed more significantly than pricing measures. In Terumo Neuro, strong growth continued in both China and Japan. The profit margin improved to 26%, supported by various initiatives, including pricing measures, profitability improvement and a review of unprofitable regions. However, due to negative impact from foreign exchange on a stock basis, the profit margin for Q3 on a 3-month basis declined year-on-year. Next slide. Pharmaceutical Solutions drove both revenue and profit growth for the company overall. This was led by domestic CDMO business as well as the strong performance of projects overseas. On the other hand, revenue declined in the Hospital Care Solutions and Life Care Solutions businesses. In Hospital Care, revenue decreased due to the impact of the business transfer in Q1 of the previous year as well as supply issue affecting the product. This supply issue has now been resolved, and the business is on the recovery trend. In addition, pricing measures implemented since April are progressing steadily. With regards to profit, earnings increased supported by the efficiencies of pricing measure and disciplined cost control. Regarding the acquisition of the Leverkusen plant announcement in May last year, this has been included in our consolidated results starting from Q3. On this page, figures and presented -- figures are presented excluding the acquisition impact to illustrate trends in the existing businesses. Performance, including the Leverkusen plant is shown in the bottom right of the slide. As mentioned briefly in the profit variance analysis section, the P&L impact related to this acquisition in Q3 has no impact on revenue, while the impact on profit was negative JPY 1.6 billion. We are currently working on production line start-up and production transfer. Since the acquisition was announced, we have received a significant number of inquiries from pharmaceutical companies overseas, particularly in Europe and the United States and are actually promoting the business to secure new projects. Next slide, please. Revenue increased significantly driven by strong growth in plasma innovations within Global Blood Solution. As the rollout of the Rika to existing consumers has already been completed, our focus in the plasma businesses will shift toward acquiring new customers going forward. In addition, our core business constituted to perform well, supported by the successful award of a tender for the [indiscernible] for whole blood collection system in Asia during Q3. The Global Therapy Innovations revenue increased as demand for cell collection -- associated with cell and gene therapy expanded, particularly in North America. Profit increased driven by improved profitability resulting from expanded sales of Rika as well as ongoing disciplined cost control. We have implemented production at -- adjustment related to Rika from Q3. However, due to efficient operation in production lines, the impact has been smaller than initially anticipated and profit margin has improved. Looking ahead to the next year, production adjustment may be implemented as needed, but we expect the impact in our P&L to be limited. Next slide. Following the completion of its acquisition as a wholly owned subsidiary on October 29, 2025, OrganOx has been included in our consolidated results starting from this Q3 earnings announcement. Results from November and December are consolidated with Q3 revenue of JPY 2.9 billion and adjusted operating profit of JPY 0.5 billion. This illustrates the growth trend, we are also disclosing Q3 year-to-date performance on a year-on-year basis. Revenue increased by 50% year-on-year and the profit margin improved significantly from 13% to 21%. This was driven by increase in number of liver transplant procedures as well as expansion of OrganOx consumer base. Looking ahead, the market for organ preservation using normothermic medicine perfusion (sic) [ normothermic machine perfusion ] or NMP is expected to continue expanding. Next slide, please. In the Americas, demand continued to expand, and we achieved double-digit growth on local currency basis. All companies delivered strong growth with TIS, Pharmaceutical Solutions and Global Blood Solutions serving as key drivers to leading global revenue growth. In Europe, TIS and Terumo Neuro continued to deliver stable growth. In addition, strong performance of projects that drove a significant increase in revenue in the Pharmaceutical Solutions business. In Japan, the CDMO business performed well with Pharmaceutical Solutions contributing to revenue growth. With C&V, Terumo Neuro continued to achieve double-digit growth. In China, revenue increased as Terumo Neuro continued to grow, supported by expanded market access resulting from VBP in Asia strong performance of TIS revenue growth and C&V. Next slide. With less than 2 months remaining until March, the full year outlook for the fiscal year is now coming into view. What I would like to reiterate is that our business based on our existing operation is steadily progressing towards the achievement of GS26 in the next fiscal year, supported by strength of our underlying fundamentals. In the current fiscal year, we are -- we recorded acquisition-related costs and other onetime expenses. The main item of onetime expenses that can be reasonably anticipated at this point are outlined on the Page 18 of this presentation. These initiatives reflect our commitment to improving profitability as we work toward achieving GS26. And the structural reform, we believe are necessary. These measures include initiatives to optimize our workforce overseas, which are expected to result in annualized cost savings of approximately JPY 3 billion from the next fiscal year. We position all of these costs as strategic investment aimed at supporting future growth. We continuously review our business portfolio and conduct strategy reviews to drive growth. While the business environment is constantly evolving, we will actively manage these changes to achieve final year of '26. That concludes my presentation. Thank you very much for your attention. Operator: [Operator Instructions] Otaka-san will be joining from the head of the management as a part of the management team joined with Hagimoto. Kohtani-san from Mizuho, you will be the first person to ask. Motoya Kohtani: So this is from Mizuho. Can you hear me okay? Yes. So on 18 -- Page 18, you were talking about the amortization. This is JPY 2.6 billion. And I think at the beginning of the period, it was JPY 4 billion. And if I look at the related costs in quarter 3, I think you said these were supposed to amortize in the first part of the fiscal year. So that amount seems to have -- has been brought ahead to the fourth quarter for the amortization fees. And so it looks to me for next year, I think the goodwill for next year also taken into consideration. So I'm just looking has the evaluation of inventories changed and the goodwill costs seem to be -- over the long period, seem to be slightly down from what was originally planned. But it seems to me that those costs seem to have swelled slightly. Unknown Executive: Kohtani-san, thank you very much for your question. So as your understanding is correct, this is pre-PPA, and we -- these were -- these amortization costs for the current fiscal year are JPY 4 billion, and they had been shared provisionally tentatively. But for the final amortization and depreciation expenses, we used an external organization to reevaluate these and the result of that external evaluation was that the -- we had previously expected them, so they are below our initial expectations. And it says at the bottom of here, the inventory step-up of inventories. This was when we made the purchase, these were reevaluated. The costs were reevaluated under the IFRS rules. So the inventory period had -- they've been distributed across the inventory period. So there's no impact on cash flow. But on the PL, they have to be recorded on the -- so they are JPY 4 billion and JPY 7 billion for next year. But for -- they will not, however, be from... Motoya Kohtani: Okay. So for these -- in these 2 years, these fees will occur. But after that, there will be very lower good rent -- goodwill fees. So it will be in the black in terms -- we will be getting closer to being in the black in terms of amortization? Unknown Executive: Yes. We had expected it to be JPY 9 billion, but it was actually JPY 65 billion in terms of those amortization fees that came with the purchase of OrganOx, but we expect that to be lower than previously predicted. Motoya Kohtani: And secondly, a final question. The -- I just wanted to ask about the -- at the Rika -- share of Rika, I think, probably will be about JPY 50 billion of total revenues. And I think there are some supply chain issues. But if we look at this now, I think it will be about JPY 30 billion, JPY 40 billion in terms of the portion of revenue. So is this the effect of deploying Rika later has had some effect, I think. So could you give me this JPY 50 billion that you had previously predicted for Rika? Why is that late? Why is that late to come online? So also I think MAYUMI a [ completer ] product is also late in deployment. So could you just let me know on that front? Unknown Executive: So for Rika, the revenues for Rika we haven't disclosed those at present. But when it comes to the -- there was some late deployment -- there wasn't any late deployment of Rika. So as I explained last time, it has been extremely efficiently utilized. And so the -- is lower than our initial assumption for the portion of net sales. But there is no particular -- no, there is no delay in the deployment of Rika. And we are currently improving the product and deploying promotions to increase customer inquiries -- acquire customer take-up. So there's nothing particular to add regarding Rika, but it is proceeding on plan steadily. So the -- and comparatively, it is not a particularly large-scale customer in question where we are expanding our promotions. And so we are looking forward to further development. And so this is one pillar of our growth pillars -- one of our main growth pillars and the development is proceeding as planned. Thank you very much. Operator: The next question will be Tokumoto-san from SMBC Nikko Securities. Shinnosuke Tokumoto: Yes. This is Toto speaking. I hope you can hear me. Unknown Executive: Yes, we do. Shinnosuke Tokumoto: Okay. My first question goes back to Slide 12 about your projection beyond -- on and beyond next financial year. And there are some -- you are also reducing some costs, also saving some labor cost, personnel costs. But can you just once again share any projects that you are planning to implement for the next financial year? I mean, passing the prices over to customers, you talked about that will be implemented, but inflation is not going away. I think -- can you talk about is this becoming more difficult. You also talked about profit improvements overseas. But can you share any other projects locally or in any regions that you can share? Kojiro Otaka: Well, thank you very much for your question. Let me pick up your question about price point and our programs overseas. And my colleague, Hagimoto-san,CFO, may jump in if necessary, but let me just start off. First on pricing point. We are just passing the prices based on the inflation based on our terms in agreements. And we will continue to do that as we've been doing already and go beyond next financial year. We are also getting some impact from customs and we are actually putting surcharge as the -- to absorb the impact of the tariffs. So we will continue to work on those price initiatives beyond next financial year. And you also asked me about the restructuring in overseas. We have in Q4, P18, Slide 18, as it shows on the QA, we are planning to have JPY 1 billion in onetime costs for project reduction severance of the people. This is onetime cost in FY '26, and we are expecting the positive impact to continue beyond FY '26. Jin Hagimoto: Let me just add one comment. We -- within FY '25, we are running several different projects, and we will also have some positive impacts from pricing initiatives. We, of course, are managing that. But the price programs, I cannot share -- disclose any specific numbers, but market is going inflation and we are increasing prices based on, if not higher than inflation. So we will be passing the prices because we are delivering added values. And as a company, we are just looking at having more values added so that we can increase the prices faster than the inflation. We'll continue to do that. And on the other hand, there are kind of reduction negatives like restructuring projects. These are the initiatives that we are running for this year as well as last year as onetime costs. And but our programs in FY '26, the very final year of GS26, we are making sure there's not going to be negative ripple effect at the end of the year in FY '25 and '26. So all those negatives that we need to deal with, we need to consume, including the onetime negative cost, we wanted to have them just done it and done it all at once. Shinnosuke Tokumoto: Okay. I just want to clarify about restructuring, JPY 5 billion in overseas. And this is some number that we didn't see in Q4, but you just added as you have made the decision to implement. Unknown Executive: Well, I've been -- we've been talking all through about necessity to go through the restructuring, but we have more precise numbers. So we decided to post it here. Shinnosuke Tokumoto: Okay. Understood. So I think Germany, Leverkusen, you also mentioned about that. But can you just share about what kind of approaches you are getting? There's going to be some time before the production lines go up running. But after negotiation, what will be the timing in which you will be starting to recognize revenue from that plan? I think that's one of the assessment points for assessing value for your stock. So can you talk a little more about the recognition of Leverkusen plant? Unknown Executive: Well, we do have signed an NDA with them. We are being discussing with multiple different potential customers. For PS business, as you can see on this slide, in this financial year, we are just a mid-digit growth. This growth is substantially very good. And we are getting good reputation for stable supply reliability. And for revenue, is that going to be profitable? We would like to share those perspective and deliver those targets in the next midterm plans. Operator: Next, Citigroup, Yamaguchi-san from Citigroup Securities. Hidemaru Yamaguchi: Yes. Can you hear me? This is Yamaguchi from Citigroup. Well, for quarter 3, if we look at quarter 3 alone, the gross profit ratio seems slightly down. But the product mix, is the tariffs the biggest impact on this on the product mix or... Unknown Executive: Yes. So on the right-hand side, are you referring to gross profit? Well, OrganOx, the purchase of OrganOx has also had an impact. But the weakening yen in quarter 3 has also had an impact as well -- so the -- it's one -- this has affected the gross profit rate by 1 point, I believe. But the tariffs, I think these 3 impacts have been impacting the gross profit ratio. Hidemaru Yamaguchi: Also -- sorry, the CFO was just talking about these one-off costs. So the next he says OrganOx. You've already explained that. But apart from other for these one-off costs, these -- in next year, do you think there will be any other significant one-off costs or one-off losses? Unknown Executive: Yes, I think your understanding is largely correct. Of course, in the -- included the balance sheet, we -- having made all the necessary investments, we believe that this is what we can expect to harvest. But we do want to improve profitability. Initiatives for improving profitability will be implemented in this period. So for '26 financial '26 as the final year of GS26, we hope to end in a clean manner. That's all from me. Thank you. Operator: Next question is Yoshihara-san from UBS Securities. Tomoko Yoshihara: It's Yoshihara from UBS Securities. I do want to ask a question about Rika. And in the second half, you are planning to do production adjustment, but the impact was not that big, if I understood correctly. But your customers, if we are hearing your customers' comment, market was soft, market share also shifted quite a bit. It seems like you are also getting some headwinds and production also, you mentioned about production may be adjusted next year. But I know this will be very difficult for you to make a comment about your customer, but can you share a little more details about this Rika business and how you see it's going to go? And also, you talked about the acquisition of new customers and when this business has just started. You were looking into potentially a very big customers who are not your customer back then. But you also talked about having approach -- approaching to small to midsized customers. Has something that changed in terms of the target customer base? Can you talk about that, please? Unknown Executive: Well, thank you very much for your question. So CSL or any other competitors may make some comments, but we will refrain from making any comments about what's represented by the competitors. But we are just competing -- making some progress so we can compete with CSL. And in next financial year, we are expecting to see -- we are not expecting a shrinking revenue from innovation. So we are expecting very stable revenue source. And your question about expansion of customer base, I'm sorry, maybe this was not clear in our explanations. But our approach to big potential customers, nothing has changed. So it will be incremental on top of it to expand our opportunities working with small to medium-sized customers as well on top. Tomoko Yoshihara: My second question is not directly related maybe to your financial performances, but your fundamental, I think, is quite doing well. But you are also having some challenging time over the last 1 year. Can you share examples of contentious discussions you may be having within that top management team. If there's none, that's also fine. But are you also looking into -- because there could be an option for you to buy back some of your shares back. Can you just talk about that as an option? Unknown Executive: Well, thank you for your question. I will refrain from any comment about share buyback in this meeting. But we are not happy with the stock price of today. That's how we see it also. And how we, including OrganOx, right, or -- so we want to send the message that people will hopefully be understanding that we are making investment for the better future. So we will continue to run those programs in the future as well. And we -- the share prices are decided with many different factors. There is no single answer, no solution, one bullet to increase the share prices. But I think we can maybe send our message more clearly, loudly so that we get to have a chance to explain why and what we are doing. And so this is actually a big topic within our top management meeting because we are -- we will be performing well. We will be hitting the target in GS26, but we also need a good job communicating with the people in the marketplace. Operator: Next, Morgan Stanley MUFG Securities, Hayashi-san, please. Ryotaro Hayashi: This is Morgan Stanley, Hayashi. Can you hear me okay? Unknown Executive: Yes, we can hear you fine. Ryotaro Hayashi: So my first question is regarding TBCT. And I believe that from your data, I have calculated that in the third quarter, the net sales apart from FX impact are about 20% up in terms of revenues. And I think with the Rika production adjustment with that in mind, in quarter 3 that has been taken into account. But your production lines is what I'm talking about are able to absorb that negative impact or able to manage that negative impact you were saying. So I just would like to hear some more details about what kind of response, what kind of effect that's had on how are you going to absorb that drop in. I think that you have already taken into account the production adjustments. But the Leverkusen plant I think revenues could go up possibly. Could you give me some color on that, please? Unknown Executive: First of all -- so thanks. In terms of net sales versus revenues, first of all. The Rika has contributed significantly to the increase in revenues. But for the other elements, for other products, those are also having favorable sales. Particularly in Asia, we have secured a tender in Asia, which has contributed greatly to increased profits, increased revenues. And the effect of those increased revenues and the production adjustment in terms of yield and improving production -- yield and production, I think, will bear out positively in our operating profit from now. Ryotaro Hayashi: But I think in November, in your explanation in November, you were saying that the quality was too high and there were -- on the business side, you were talking more about the business side -- it's -- I feel it's slightly different -- there's a bit of a disparity with what you explained in November. What in November, what were you predicting? And this time now, why is the minus lower? Is it to do with Rika? Unknown Executive: Yes. So let me add into that. So regarding the -- you're referring to the consumables for the Rika business. Well, the net sales and the forecasts, those come down, then the inventory level, I think, will -- we don't need to create that beyond need. So we would do some production adjustment. However, of course, for the actual distribution of the accumulation of inventories, that does bring down profits. But in terms of activities to increase productivity, then the production cost, if we're able to bring that down. So that's why we didn't have such a big minus in our revenues this time, that would be... Ryotaro Hayashi: Right. So the net sales for Rika has gone to plan, but the margin has the -- any negative impact on the margin has been brought down to a minimum. Is that correct? Unknown Executive: Yes. Well, what fluctuates is the -- if we look at the PSI, then these -- to keep the stock at a certain level, we have adjusted production. So overall, the structural impact is -- has been absorbed as offset by our higher production efficiency and production adjustment. Ryotaro Hayashi: Understood. Okay. My second question is to do with OrganOx. And I think there are 3 companies involved in OrganOx. In the third quarter, then the JPY 2.9 billion sales, that is -- is that in line with your initial predictions, forecast? I think for the full year, JPY 9 billion a year is what you were predicting. And in quarter 4, I think that has I think -- are you on target in terms of the pace for OrganOx's results? Unknown Executive: Yes. Well, thank you. In November and December, those 2 months have passed. Compared to the previous year, it is a very high level of growth on a year-on-year basis. But in the -- what we were initially expecting in quarter 3, we have gone perhaps beyond that slightly. But sorry, it's gone down compared to our prediction due to a slowdown in donors, available donors. But the demand remains extremely strong for OrganOx. So I think it is -- the growth trend is on target, and it was a slight depression in quarter 3 due to a lack of donors. Ryotaro Hayashi: So in quarter 4, it will go back to the original trajectory. Is that what you're expecting? Unknown Executive: Yes, that is our prediction. It will return to the expected trajectory for quarter 4. Operator: The next question is Tony Ren from Macquarie. Tony Ren: Can you guys hear me? Unknown Executive: Yes, we can hear you well. Tony Ren: Okay. Perfect. So my question is also about OrganOx on Slide #10. So based on the data on this slide, I calculated that the revenue increased about 46%, but the adjusted operating profit increased about 136%, so more than doubled. Did you do any cost improvement over there? Did you try to reduce any cost in manufacturing, SG&A or R&D-related expenses there? Unknown Executive: So thank you very much for your question. So this is a result of the sort of OrganOx organic growth. So we did not do any specific approaches at this point in time. This was all activities that was already planned by OrganOx prior to our acquisition. So what we do believe is that, as we mentioned earlier, OrganOx's business structure is a very highly profitable structure. And as the revenue grows, there is room for profit improvement. What we want to also materialize is that the overall capabilities that Terumo as a group has by combining those kind of skill sets or the manufacturing capabilities of OrganOx, some of the technologies that we have with Terumo, we do hope that we can also accelerate this kind of growth in the profitability. Tony Ren: Okay. So it is a matter of growing the revenue base and therefore, able to cover the fixed cost. Unknown Executive: Yes, exactly. Tony Ren: Okay. Perfect. Yes. My second one, very quickly, I just want to go back to the CSL, your customer CSL situation, right? I mean, obviously, we know that they had a lot of changes this week. Are you foreseeing any future impact because of the changes at your largest blood plasma customer in the U.S.? Unknown Executive: So obviously, we cannot comment on CSL's specific situation. But from our point of view, we do believe that the demand for Rika and the disposables that sort of our revenue stream is not significantly impacted. So our understanding is that we will continue to provide the Rika disposables to CSL. There may be some discussions about the volume in the future. But at this point in time, we do not see significant changes in our projections. Operator: Nomura Securities, Mori-san, please. Takahiro Mori: This is Mori from Nomura Securities. Can you hear me? Well, there are 2 questions I'd like to confirm. First is regarding the Rika. So the profitability of this compared and the growth trajectory, I would like to know whether that will change or not. But -- so this is regarding the -- there is no change to our projections and our initial projections have not been changed for Rika's growth trajectory. Secondly, in your explanation, you talked about achieving GS26. You made several references to that. But what items need to be achieved for GS26 to be achieved? What are the criteria for achievement in order to fulfill GS26? Unknown Executive: Thank you very much for the question. So we have our financial objectives, 3 financial objectives. These are since these were announced in December 2021, which would get double-digit growth for revenues in the late double digits. Secondly, would be the profitability rate, 20% of operating profit ratio of which. And the third is ROIC, 10% ROIC. That is the -- excluding the impact of M&A. But I think for ROIC of 10%, we want to achieve that as another key pillar. And so it's not that if one of those is okay. All 3 of these financial objectives needs to be achieved for us to deem that GS26 has been achieved. Takahiro Mori: Right. So within segments and the profits within each separate segment, if you want to -- GS26 needs to be achieved across segments. Is that correct? Unknown Executive: Yes. Depending on the business segment, then there are some variations, but we have all company financial targets as overall, which need to be achieved for us to declare GS26 to be achieved. Operator: Next question goes to Saito-san from JPMorgan Securities. Naoko Saito: I am sorry about that. My name is Saito from JPMorgan Securities. I hope you can hear me. Unknown Executive: Yes, I do. Naoko Saito: Sorry about that. So just wanted to talk about the slide, you analyze the operating profit ups and downs. I wanted to ask some detailed questions on the price and the expected price revenue. You talked about custom tariffs and prices in details. But the other things -- the other include the impact from inflation that you discussed back in Q2. You talked about some COGS impact, negative impact because of inflation. So I would say majority of the impact was coming from M&A transaction. Just wanted to see if there are all those details included in this analysis. Unknown Executive: Well, thank you for the question. Depreciation -- COGS from depreciation and M&A is adjusted values. So that's JPY 591 million and JPY 439 million actually includes M&A adjustments. So that's not counted in that JPY 103 million, which is about the impact from revenue increase. Revenue increase is also getting impact on tariffs, inflation, product mix are all encompassed within that JPY 103 million. Naoko Saito: Okay. You also mentioned about product mix. Is there any specific business that you saw quite a big change in product mix, especially for Life Care and Pharmaceutical Solutions, the factories are using -- you are using Japanese factories. Are the margin structures changed or not changed? Can you just add a little more comment about those? Unknown Executive: On your question about Life Care, there is not much of a big change on profitability structure. For Pharmaceutical, the revenue is growing. And as it goes up, we can just absorb fixed cost as a leverage. And so that would be the part in which we are seeing the positive impact. Well, the other -- this might be way too much in details. But on -- the plasma business is expected to grow. Then the revenue, if you look at JPY 103 million, the impact will count on driving that JPY 103 million up higher. So if you look at the business structure as a whole, that mix impact will be negative. So there's that kind of structural details. Operator: So we will end Q&A there as that is the end of the allotted time. That marks the end of today's presentation. Thank you very much for your participation. Here, we close the event. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Welcome to Camurus' Q4 Report 2025. [Operator Instructions] Now I'll hand the conference over to CEO, Fred Tiberg. Please go ahead. Fredrik Tiberg: Thank you, Einar, and hello, everyone. Welcome to our fourth quarter earnings call and full year. As customary, please note our forward-looking statements, which I will assume that you have read. So moving over to the agenda, we will begin today's call with an introduction and business highlights, followed by financial, commercial, and R&D pipeline reviews before finishing off with the key takeaways and Q&A. With me in the call today is Anders Vadsholt, Chief Financial Officer; and Richard Jameson, Chief Commercial Officer. So a quick overview of Camurus. We are a rapidly growing commercial stage biopharmaceutical company focused on developing and delivering innovative long-acting treatments for people living with serious and chronic illnesses. We have become a global leader in opioid dependence therapy with our products, Buvidal and Brixadi. Our commercial reach covers Europe and Australia, and we are now expanding into the U.S. as we gear up for upcoming product launches. At the core of our offerings is the FluidCrystal technology, which supports advanced long-acting injectable treatments and has proven successful through both our commercial and clinical results and collaborations. Alongside our meaningful investments in the R&D pipeline, we have maintained sustainable profitability since 2022, placing us in a good position for ongoing growth. Now turning to full year highlights. In 2025, we achieved several significant milestones that further strengthened our leadership in opioid dependence treatment and our ongoing expansion. We continue to build momentum with Buvidal and Brixadi, expanding their reach and impact across key regions. Importantly, the first of our new wave products, Oczyesa, received regulatory approval for acromegaly in both EU and the U.K. Supporting our strategic expansion into the U.S., the commercial infrastructure is now firmly established, positioning the company for upcoming launches and long-term success in this critical market. During the year, we also entered a strategic license agreement with Lilly, opening new opportunities in the long-acting incretin therapy space. The year also marked substantial improvements in sustainability performance, evidenced by high external ratings and reinforcing our commitment to responsible and sustainable business practices. As a testament to the performance of our teams, full year revenues for 2025 continued their positive trajectory, reaching SEK 2.3 billion. At the same time, profit before tax increased to just above SEK 0.9 billion, accomplished while maintaining significant investments in R&D and expanding the U.S. operations. In the fourth quarter, results demonstrated a balanced performance with an overall positive conclusion for the year. Brixadi royalties in the U.S. showed strong year-on-year growth of 47% and increased 82% at constant exchange rate. Buvidal sales declined temporarily due to FX headwinds and the change in our U.K. distribution model. The launch of Oczyesa in Germany represented a notable milestone as it is the first European country to introduce this product to patients with acromegaly. Turning to R&D. We resubmitted the NDA for Oclaiz, which the FDA now has accepted with a PDUFA date in June. Additionally, we reported compelling Phase Ib results for CAM2056. [Technical Difficulty] Operator: [Foreign language] Yes, and now we seem to be back again. Yes, and we're back. You can continue now, Anders. Anders Vadsholt: Okay. Thank you. Camurus reported quarterly revenue of SEK 464 million, down from SEK 553 million, a 16% decline compared to the same period last year, while quarterly product sales reached SEK 342 million, reflecting a 27% decrease. This reduction is primarily due to a change in the U.K. distribution model. Consequently, we repurchased SEK 93 million worth of inventory from our U.K. wholesaler. Quarterly royalty income from Brixadi sales in the U.S. increased by 47% year-on-year, reaching SEK 122 million. A potential milestone payment from Braeburn relating to Brixadi sales is now expected in 2026. Full year revenue reached SEK 2.27 billion, up from SEK 1.87 billion, representing a 21% growth or 30% at constant exchange rates. Product sales increased by 6%, while the Brixadi royalty income increased by 87%. When reviewing operating costs, marketing and distribution expenses decreased by 12% during the quarter, but increased 7% over the year. The annual increase was mainly driven by the commercial rollout of Buvidal in Europe and Australia as well as company's expansion in the U.S. In R&D, we observed a 20% -- 25% reduction in cost during the quarter and a 24% reduction for the full year. This reduction results from the completion of clinical trials of CAM2029 and CAM2056 with new trials scheduled for 2026. Some costs related to the SORENTO study have been deferred to 2026. The increase in general and administrative expenses is primarily due to a change in Camurus' internal cost allocation model. And additionally, we have boosted our investment in digitalization throughout the organization. The operating result for the quarter decreased 32% to SEK 113 million, while the full year results increased with 86% to SEK 874 million. Buvidal sales and Brixadi royalty income mainly drove the increase. Looking at the quarter's cash flow. The cash position increased by SEK 211 million, mainly driven by the operating activities, which contributed SEK 111 million and a change in working capital, adding SEK 144 million. Investment reduced cash by SEK 46 million, resulting in a net cash position of SEK 3.7 billion, a 30% increase from previous year. Moving to 2026 financial guidance. The key considerations for the guidance are anticipated market dynamics and competitive developments, pricing conditions, and the reimbursement landscape, clinical progress and regulatory outcome, and not least the current macroeconomic uncertainties. We expect an increase in OpEx to be primarily caused by organizational expansion and increased R&D activities. An additional SEK 200 million will be allocated to expanding U.S. operations in preparation of the planned Oclaiz launch mid-2026. And R&D expenses are expected to increase by roughly SEK 150 million. We provide guidance on revenue and profit. We have shifted from reporting profit before tax to operating results. Revenues consist of product sales, including royalties and milestones. Potential license income from new and existing development partners are not included. Our full year 2026 outlook is as follows: Revenue guidance is SEK 2.6 billion to SEK 2.9 billion, an increase of approximately 21%, operating result in the range of SEK 0.9 billion to SEK 1.2 billion, an increase of approximately 20%. The numbers are reported or measured at constant exchange rate. With that, I would like to hand over to Richard. Richard Jameson: Thank you, Anders. So I'll start with Camurus markets. As already stated, invoice sales were impacted due to a onetime accounting adjustment associated with the change to the U.K. distribution model at the end of the period. Importantly, though, across markets, the underlying in-market growth remained solid, growing at 5% quarter-on-quarter with notable performances from Australia, which continues to grow from a high base and Buvidal is maintaining its leadership position in the long-acting buprenorphine segment. And in the Nordics, where Buvidal continues to gain market share, which has increased by the competitor withdrawal from the market. And the U.K. showed improved growth, mainly from the criminal justice system as NHS England funding is reaching those treatment centers. On a full year basis, overall growth was 17% at constant exchange rate versus 2024 with a growth spread across geographies. Those markets with high Buvidal penetration, such as Australia, the Nordics, grew at 15% from their high basis. A positive contribution was achieved from the larger European markets that have lower penetration due to access issues. These markets grew in the region of 21%. And at the end of '25, there are an estimated 7,000 patients currently in treatment with Buvidal, a net gain of 3,000 patients in the quarter. There remains a significant growth opportunity to Buvidal and notably in those larger European markets. As I already mentioned, in countries where funding and access hurdles have been addressed, penetration is high. In Australia, Nordics, Scotland and Wales, Buvidal share ranges from 26% to 70% with an average of 35% of all patients, and we expect continued growth in 2026. In the larger markets where access is currently limited to Buvidal, Buvidal has gained single-digit share of patients in treatment. So it represents a significant opportunity when the funding and infrastructure issues are addressed. In England and France, the main challenge remains the prioritization for funding in this area. In Spain and France, there are restrictions on Buvidal access, either which patients are approved for treatment or limitations on the treatment setting where Buvidal can be prescribed. We achieved a notable success in Q4 where we reached agreement in Spain with the Spanish Ministry of Health to remove restrictions on the patient populations for Buvidal, allowing access to the large methadone segment. And in Germany, physician remuneration remains the hurdle. Additionally, we continue to expand geographically in other markets where our focus is penetration to deliver double-digit growth in 2026. Now to address the challenge -- access challenges in these high potential markets, the teams are focused and delivering on critical policy affairs programs that call for and drive improved patient access. On the next slide, there are some examples of the outcomes already achieved from these programs and the growing support from across stakeholder groups for broader access to long-acting injectable buprenorphine, which we expect to drive growth in 2026. So take these in turn, in the U.K., the Home Office Select Committee, the Justice Committee, the Independent Review on Drugs and a recent report from the Experience in Wales have all called for improved access to long-acting injectable buprenorphine. We are already seeing good access in prisons, though challenges remain in the community setting, and we have ongoing discussions with the Department of Health to address this. In France, reports from both the senate and the assembly have similarly made calls for improved access and some progress has been made in funding for Buvidal at both the national and the regional level. In Germany, again, there's wide stakeholder support from physician societies, patient organizations, and policymakers such as the drug policy group in the Bavarian Parliament for change in the remuneration system to allow access to innovative treatments. The progress on this is slow. However, it is understood that there are ongoing discussions on this topic with the regional and federal associations of physicians and the health insurers. In Spain, as mentioned already, restrictions on patient access have now been removed. With this growing policy support for better access, we continue to work with payers to find ways to deliver on changes that will allow more patients to benefit from the advantages Buvidal brings. Now moving across to the U.S. Brixadi continued its strong performance in the year with Q4 royalties of SEK 122 million, up 10% from previous quarter and 40% -- 47% year-on-year. For the full year, Brixadi royalty grew 113% at constant exchange rate versus '24. According to our estimates, Brixadi has captured at least 30% of the long-acting buprenorphine segment. In the U.S., this segment, the long-acting buprenorphine segment is now above SEK 1 billion in annual sales. Looking ahead to '26, continued market penetration is expected. The key areas of focus remain conversion of patients from daily sublingual buprenorphine. Note there are an estimated 2 million patients that access treatment on sublingual buprenorphine in a year. Also improving access for patients outside of treatment or in the criminal justice setting. And we -- and Braeburn, our partner, continues to communicate the evidence base and the clear value proposition of Brixadi. So overall, we remain optimistic about the prospects of Brixadi in the U.S. and the potential for significant growth in the coming years. And in parallel to this, we are preparing for the launches of Oczyesa in Europe, the first monthly subcutaneous octreotide medication that enables convenient self-administration for patients and enhanced octreotide plasma exposure. The European launch has now been initiated in the Wave 1 countries that have an estimated 4,000 to 5,000 acromegaly patients currently treated with first-generation SRLs. The response to Oczyesa from physicians and patients has so far been encouraging with a positive view on the product profile and the clinical data and market research shows a high willingness to switch to Oczyesa from current SRLs. In our first launch market, Germany, we've seen a strong start with the uptake in the first month of launch an estimated 20 patients, which is about 1% share and high patient engagement with the advantages of the simple self-administration. In addition, initial feedback from other payers has been favorable and pricing is now approved in the U.K. and Norway, where we're now ready to launch. And with the resubmission of the NDA for Oclaiz, we're also gearing up, as Fredrik said, for the U.S. launch mid-2026. The team is launched ready with a clear understanding of the market, a developed go-to-market strategy that includes market access, advocacy, and distribution plans. During the review time of the NDA, we will take the opportunity to build the sales leadership, followed by the sales team's onboarding and look forward to the execution of the launch plan if approval is granted. And on this, I will hand back to Fredrik. Fredrik Tiberg: Thank you so much, Richard. I will continue with a brief summary of the R&D advancements in the fourth quarter. So starting out with the progress in the octreotide depot program for acromegaly, gastroenteropancreatic neuroendocrine tumors and polycystic liver disease. The overall clinical program for CAM2029 is nearing completion across indications. We have successfully wrapped up the ACROINNOVA program, which delivered strong results from 2 pivotal Phase III studies and an open-label extension. In gastroenteropancreatic neuroendocrine tumors, SORENTO study is making solid progress and remains on track for reaching the critical readout of primary efficacy results in the second half of the year. Additionally, the open-label extension of the POSITANO study continues to advance following the achievement of positive results for the primary endpoint during the core phase of the study. Now moving over to development update by indication. In acromegaly, we received significant milestones. Oczyesa, as we mentioned before, was approved both in the European Union and the U.K. in 2025, marking a major regulatory success in the year. Following this, we launched Oczyesa in Germany in the fourth quarter and broadening out our commercial presence in Europe. Turning to the U.S. We resubmitted the new drug application for Oclaiz to the FDA on the 10th of December after receiving green light from our contract manufacturer partner. And the FDA accepted this after the year as a Class 2 review, setting a PDUFA date target of 10th of June 2026 and positioning Oclaiz for potential U.S. approval and market entry shortly thereafter. Moving over to GEP-NET and the ongoing Phase III study. As you know, SORENTO is the largest clinical study to date for GEP-NET using a somatostatin analog, directly comparing CAM2029 with current standard of care. The study is progressing according to plan with a target of 194 progression-free events required to reach the primary endpoint readout in the second half of the present year. Importantly, compared with earlier trials with SSAs in this indication, SORENTO has enrolled patients with more advanced disease, including a majority of Grade 2 and Grade 3 neuroendocrine tumor patients. As we await the results, our teams remain focused on robust study conduct, rigorous data cleaning, and maintaining the highest study quality to enable rapid and reliable top line result announcement. The upcoming results will represent a major milestone for Camurus, marking the culmination of nearly 5 years of patient treatment and study efforts. Commercially, this represents a significant opportunity for the company with global peak sales estimated around USD 2 billion currently. Finishing off with the CAM2029 in polycystic liver disease, where we have in the process of completing the 30-month POSITANO extension phase, as mentioned before, our regulatory and clinical teams have prepared an end of Phase II meeting with the FDA scheduled for March to discuss the design of the pivotal Phase III study. In summary, we achieved significant progress with 2029 across the 3 indications, and we anticipate an eventful period ahead. Moving over to the early pipeline. A clear highlight of the fourth quarter was the positive top line results from our Phase Ib study of the monthly formulation of semaglutide CAM2056 in patients with overweight or obesity. This study featured a randomized comparison to the current weekly semaglutide formulation as well as dose escalations. The results exceeded our expectations and showed that CAM2056 achieved faster and greater reductions in body weight and blood glucose compared to Wegovy with a similar safety and tolerability profile up to the highest dose. This slide summarizes the Phase Ib study design for CAM2056 with the 5 dosing regimens across 80 patients using both randomized and dose escalation parts. The study allowed us to compare directly against weekly semaglutide and to define the optimal initiation and titration strategy for a monthly formulation. On the next slide here, as you can see, CAM2056 delivered substantially greater reductions of body weight and A1c compared to the weekly semaglutide over the treatment period. By day 85, that is after 3 months of treatment, Group 4 achieved a 9.3% weight reduction with CAM2056 versus 5.2% with weekly semaglutide dosed according to label. And A1c declined by 0.44% versus 0.12%, which is in the significant clinical domain. The data clearly demonstrates the potential of FluidCrystal based formulation of semaglutide. And going forward, our next steps will be to build on the promising Phase Ib results, we are actively preparing for a Phase IIb study planned to begin in the second half of the year. In parallel, our R&D teams are preparing the final product presentation, which will feature a new auto-injector pen device to enhance dosing convenience for patients. The positive outcomes from the study not only support continued development of CAM2056, but also provide strong validation for the FluidCrystal technology platform. As such, these results reinforce the potential of using FluidCrystal technology for additional long-acting incretins as well as other peptide-based therapeutics, including in our ongoing collaborations with Lilly and the partnership -- the new partnership with Gubra. So with this, it's time to wrap up with some final comments. And I think we can say that 2025 was a year where Camurus made significant progress with major R&D milestones, solid growth, and high profitability. This year we aim to -- this year with that, I mean, 2026, we aim to expand our market leadership in opioid dependence treatment, launch Oczyesa and Oclaiz for acromegaly in Europe and the U.S., pending, of course, FDA approval, and move SORENTO to positive data readouts. New clinical trials will also begin for promising candidates like CAM2056. For further growth and diversification of our business, we will invest in our partnerships, intensify business development to secure new collaborations and potential strategic acquisitions. Our solid financial, operational, and scientific base gives us a clear path to sustainable value creation, and we are well positioned to make 2026 a transformative year. And with that said, I will thank you all for listening, and let's move over to Q&A. Operator: The first question comes from the line of Romy O'Connor from Lanschot Kempen. Romy O'Connor: Two questions, if I can. The first, in the annual report, it says that the core component phase of the SORENTO trial is now set to be completed in H2 '26. Can you clarify what this core component is? And is the top line data still then estimated for mid to late 2026? And the comments on the new auto-injector pen device. Can you provide any more color on this? Is this just for the CAM2056 asset? Fredrik Tiberg: Thank you, Romy. Well, with the core phase, we mean the randomized part of the study. So to the point where we can start reading out the data. And as to the injector -- auto-injector for CAM2056 that we are working to develop, we have been working with this for quite some time, and it will be a new device adopted specifically for CAM2056. Does that answer your questions? Romy O'Connor: Clear. Thank you so much. Yes, it does. Operator: The next question is from Gonzalo Artiach from Danske Bank. Gonzalo Artiach Castanon: Gonzalo Artiach from Danske Bank. Thank you for taking my questions. I have a couple of them. The first one, I'm trying to understand the FX impact, especially in the U.S. Could you give us some color on this on FX impact that you see there in the U.S., to trough is 17% headwind, if I understand correctly, on USD to Swedish krona, so how did you end up with 35% headwind? And the second question is on your 2027 goals. Have they changed based on how 2025 closed? I see that you guys still target 100,000 patients with Buvidal, but do you have any words on margin development? Are you still targeting around 50% for 2027? And anything on top line goal for that year would be appreciated. Fredrik Tiberg: So I think I'll leave the first question over to Anders when it comes to the dollar rate and its impact on our FX rates. Anders Vadsholt: Yes. So we've had a lot of fluctuation in the currencies during the year, primarily in the Australian dollar and the U.S. dollar, as you state. So it all depends on when we book, it is more a technical thing, when you book the invoices and so on, that's where you see the effect. But we have seen a decrease over the year from January all the way to December. So yes. Fredrik Tiberg: Gonzalo, can you give me just -- is that -- can you repeat the second question? Gonzalo Artiach Castanon: Yes, it's on your 2027 goals or targets that you have disclosed in the past. And what do you have to say in terms of your margin approach? Are you still targeting around 50%, your EBIT margin? And on the top line, any words on that also? Fredrik Tiberg: Yes. So we established the vision for 2027 in 2022, and we are working concisely and with a high dedication to achieve that. Obviously, there is still ways to go, but we are -- we maintain our goals currently, including the margin goals of approximately 50%. I want to highlight that this is and remains a vision for the company. Operator: The next question comes from Pauline Hendrickson, from Van Lanschot Kempen. Pauline Hendrickson: My question has already been answered. Operator: The next question is from Christopher Uhde from SEB. Christopher Uhde: So my first question is just whether -- to what extent your guidance range might reflect any concern about ongoing FX headwinds because, obviously, it was a headwind for your '25 delivery and you cut the guidance partly as a result. And obviously, it's only going to get worse. So you're fighting with one hand tied behind your back. That's my first question. Fredrik Tiberg: Anders, do you want to comment on? Anders Vadsholt: Yes. So -- yes. So we have definitely taken the currency exchange risk into consideration when providing the guidance. So -- and then we've made a thorough analysis on several expectations for the development. And also, I would say, when we look into the U.S., this year, we predominantly have income. Next year, we're also beginning to have some expenses because of the buildup. So it's -- now it's a more natural hedge. But of course, we are very much exposed to the U.S. dollar. Christopher Uhde: Okay. That was the first one. Secondly, I noted that you had mentioned the milestone from Braeburn in 2026. So is it fair to assume that that's in guidance? And can you give us an indication of the size? Is it similar to the last one you got from them? Fredrik Tiberg: So yes, good question. Obviously, we did not realize the milestone in 2025. So that -- but there are good reasons to expect the first milestone. We haven't received any sales milestones yet from the collaboration, but it's good -- there are good reasons to expect it in 2026. The size, you could say, I don't think we have given any exact size. It's the smaller of the 3. So -- and the total amount is $75 million. Christopher Uhde: Okay. Great. Thanks. That's helpful. Then my next question is on -- so SORENTO, is it in the -- likely to be in the early or late second half at this point, do you think? Fredrik Tiberg: I think there is still some uncertainty about that. I mean it depends on the accrual rates month-by-month and quarter-by-quarter. And of course, it's very difficult because it's an event-driven trial, it's very difficult to give exact predictions and it may vary between how patients were enrolled. We have, of course, our models, but they do give quite a big wide interval still. So we will get some more updates here, of course, in the early part of the year. And the more data we get, the better we are able to give an idea about when exactly we can start to read out and -- close and start to read out data. Christopher Uhde: Okay. Those are my sort of housekeeping questions. Then I have a question on revenue per patient because last 9 months, you can see a dip for Buvidal of about 25%, it looks like. How much of that is actual price pressure versus FX? And I have other questions if it's okay. Fredrik Tiberg: I'll leave it over to Richard to explain. Richard Jameson: Yes. So I mean, there's -- the first answer is the price is pretty stable across our markets. We're maintaining that without a problem. So there is obviously a country mix depending on the volume there because there are different prices in different markets and then the rest will be down to FX. Christopher Uhde: Okay. And -- all right. So then, I guess, just if you could -- is there a little bit more you can give us in terms of what's going on in the U.K. and Germany in terms of the status, and France, I should say, you did comment a little bit, but do you have any hints on whether momentum is gathering, let's say, for Germany, for example, with remuneration reform? Richard Jameson: Yes, sure. And good questions. I'll start with Germany then, is the one you mentioned there. So yes, I mean, as I said, there's quite a lot of support for change in this remuneration system. It's something that we cannot be involved with as an organization, but we understand there is ongoing and advancing discussions between the both national and federal physicians associations and the health insurances to change that, so they can open up access. And we've seen the growth -- there was a report came out of the Bavarian -- the drug strategy group of the Bavarian Parliament calling for the same thing. So I think there's growing momentum there. It's a bit unsure how we can say when the outcome will come, but we know there's ongoing discussions. And for the U.K., to answer your question there, it's -- we know Wales and Scotland are going very well. They have high penetration. They have funding available. England is our challenge. But again, there, there's clear demand from across many groups, as I said, from criminal justice, from health care, from health care professionals, and patients to have funding. We've seen the NHS England who are responsible for treatment in prisons making a significant commitment to funding over -- that started mid this year, mid-'25 and is continuing. And hence, we're seeing the growth we're seeing in the U.K. coming mostly from prisons. We know the U.K. government have now announced a 3-year funding settlement for public health, including a ring-fenced proportion for opioid dependence treatment. So we're in dialogue with the Department of Health, NHSE and other stakeholders to identify ways that the funding can be allocated to long-acting buprenorphine to meet the demand that's there. Christopher Uhde: Okay. That's very helpful. Can you -- is it possible to kind of give us gating events that remain for these things to happen in both Germany and U.K. and France, like specific events that -- so we... Richard Jameson: I think that's very difficult. This is policy change. And with the remuneration, we're not involved in that. So it's very hard to be able to judge when the timing on those things are. Operator: The next question is from Viktor Sundberg, Nordea. Viktor Sundberg: Yes, continuing maybe on the U.K. I guess this is perhaps the main uncertainty going into 2026. Can you give a bit more insights into if there's any stocking left at distributors that could impact sales here in 2026? And just remind us maybe if -- yes, when funding is expected to trickle down to clinics to improve the sentiment in the U.K.? Richard Jameson: Yes, sure, sure. So there's no more stock in the channel to answer that one quickly. Then the answer -- I mean, the NHS year runs from April to March. So the latest announcement from the government will come from April. How long that would take for the funding to reach the clinics is a moot point. We know that this year, there was an announcement, and it's been very slow in reaching the clinics, which is one of the reasons that it's been a bit slower than we anticipated after the announcement. So we're obviously doing everything we can to encourage responsible people to make that available to patients as soon as possible because there is a clear unmet need and patients are waiting to go on to treatment with Buvidal. Viktor Sundberg: Okay. So maybe it's more towards the end of 2026 or second half. Is that fair? Richard Jameson: I don't think we can say that now. I think there is potentially it could come. We know there's been a delay in '25 and people are putting pressure on that, so it could come earlier. Viktor Sundberg: Okay. And just on guidance also, could you specify a bit more what you mean with pricing conditions and reimbursement as something that could impact guidance, both on the upside and downside? And what the most important points here is also on -- in the U.S. here to keep in mind when you talk about competitive development that you mentioned in your guidance? Markus Johnsson: Yes. When it comes to pricing, of course, it is our current understanding of the pricing landscape, both for, of course, most importantly, for Buvidal and Brixadi. And we don't see that there is a big differences from year-to-year, at least not from 2025. It's relatively stable landscape there. When it comes to Oczyesa, I mean, we don't have that many uncertainties either because we got the approval, of course, in Germany of the price, and we have proceeded now with Norway and other markets. So I think that's what we mean. We are relative -- we are building it on our current understanding of the pricing situation and the reimbursement willingness in our different markets. Viktor Sundberg: Okay. And I just had a final one also on FluidCrystal maybe in general. You have had a lot of data pointing to that FluidCrystal also enhances existing drugs bioavailability in your trials. And I guess we saw evidence of this again in your trial with semaglutide. But have you done any more analysis on that on your semaglutide data supporting that bioavailability is higher with FluidCrystal enhanced semaglutide versus Wegovy? And do you expect this efficacy advantage to be sustained in your next trial? Do you get both long-acting, but also increased efficacy here for this product? And also maybe related there, what would be the difference here in the Phase IIb trial? Is it just more patients or any other key changes that we could expect? Fredrik Tiberg: That's a really good question. I mean when it comes -- I don't think we have talked about bioavailability specifically. What we referred to was that we had the same Cmax concentration with -- at a much higher dose with -- well, at a 4x higher dose with CAM2056 as the now approved product. So that's -- we have obviously done a lot of analysis on the relationship between our different variables in the study and time and so forth. Going to the Phase IIb study, the main question will be to see how the weight reduction is developing over longer period of time. So it will be a significantly longer study. And we will also look at some details around the dosing mechanism, although we have now identified what we believe is the optimal dosing regimen. So we will definitely produce new data that will be presented in various different settings, on the PK/PD and relationships. But for the specific question about the study, it will be a longer study, and it will be a controlled study in the first case. And then in parallel with that, we will do the Phase III preparation development. Operator: Next question from Oscar Haffen Lamm from Stifel. Oscar Haffen Lamm: A couple of questions on my side. The first one, maybe on the guidance for 2026. Could you give us a bit more granularity on your expected contributions from Buvidal, Brixadi, and Oczyesa in this guidance? Fredrik Tiberg: Yes. I mean we are -- as we said in the report, we are expecting Buvidal to continue to grow in the region of what we saw in 2025. So I think that's clear. We also have a view that we're expecting good performance from the U.S. and Braeburn with Brixadi development. So that's, of course, a very important component of the development or the expected development for 2026. I think we have to say that Oczyesa, of course, is going to be launched in a few markets, but it's going to be early in the launch cycle compared to the developments that we have, of course, for -- in the opioid dependence area. So the contribution there will be low. And I think we should focus on the big components. And then, of course, we have excluded any potential revenues from ongoing development programs. And they are as always digital. So we thought it was better to leave them out. But there is, of course, the potential of some upside in that range. Oscar Haffen Lamm: Okay. Then another question. You maintain your objective of 100,000 patients on Buvidal by the end of '27. This will obviously mean a strong acceleration in the next 2 years, maybe higher than what you've shown in the past. So my question is, I mean, where will this growth come from? Are you already seeing some signs of acceleration in Europe, for example? Fredrik Tiberg: I'll leave that to Richard. Richard Jameson: Yes. I mean, as I said, we saw growth of 20% plus in the big European markets, so Germany, U.K., France, and Spain, and that's the big opportunity here. We're working very closely with a whole group of stakeholders to try and improve access here. Some of those could be quite material if successful, that will give access to many more patients. So that's why we believe the 100,000 is still possible in that time. But it is predicated on some -- solving some of those funding challenges that we're facing, which we're making good progress in doing. Oscar Haffen Lamm: Okay. Thank you. And just one last question. What is currently the proportion of Buvidal sales are coming from the U.K.? I don't know if you've already disclosed this or not. Fredrik Tiberg: I don't think we have disclosed it, and we're typically not giving the relationship between different markets. Operator: Next question is from Georg Tigalonov-Bjerke from ABG Sundal Collier. Georg Tigalonov-Bjerke: This is Georg from ABG. I have a couple of questions as well. So first, I'm wondering if you can give any insight to where the German patients adding roughly 20% year-over-year growth are coming from? And then secondly, regarding Oczyesa, when do you expect to launch in France, Spain, and Italy? Fredrik Tiberg: So when -- the first question you had, was that regarding Buvidal? Georg Tigalonov-Bjerke: Yes, regarding, I mean, what kind of German patients, I mean, are you getting or adding at the moment that were... Fredrik Tiberg: Okay. Yes. I'll leave it to Richard. Georg Tigalonov-Bjerke: The year-over-year growth, 20%. Yes. Fredrik Tiberg: I'll leave it to Richard. Richard Jameson: Yes. So it's a mix. There's patients in the criminal justice setting that are outside the remuneration challenge, which we see growing. There are other physicians who are more open to prescribing a long-acting and in the community setting, and that's coming from there. So it's a mix. I can't say there's one specific segment or other. Prisons is key, but also so is the community setting. Fredrik Tiberg: And when it comes to the other question, I mean, we are starting in the Wave 1 countries. In parallel, we are doing our market access work for the rest of Europe. And we will kind of announce -- as you have seen for Buvidal, we have added countries now for -- we are in our 7th year, and we are still adding new countries in the markets. But I wouldn't say that we are expecting to see France on board, for instance, until at the earliest next year. Operator: Next question from Dan Akschuti from Pareto Securities. Dan Akschuti: Just 2 more questions from my end. And one would be if you could share any comments with regards to your communication with Eli Lilly. Is that frequent on a monthly basis, for instance? And are they happy with the data? And the second question would be just on the inventory there that you got back for the U.K. How long is the shelf life for that? Or can you reallocate that to other geographies if the U.K. would take more time? Fredrik Tiberg: Yes. So on the first question, I have to say that we -- through our contractual relationship with Lilly, we have -- are not able to communicate too much about the progress on important things that are material to the company, we will progress and communicate. So I think the information that is available now is what we can say about the current state of that collaboration. So on the second question, Anders? Anders Vadsholt: Yes. So yes, we can definitely sell the product continuously. So it's -- yes, so there's no question about that. So that's very simple applied to that one. Fredrik Tiberg: We have 36 months shelf life on the product. So typically, that's not a problem for us. Operator: The next question from Mattias Haggblom from Handelsbanken. Mattias Häggblom: I have 2. So I'm coming back to this 100,000 patient target. So with the net additions of 30,000 required to get there, should we think of net patient wins as linear from here? Or should we think of them rather as back-end loaded as more and more reimbursement hurdles are removed? And then secondly, for the vision of revenues of SEK 4.5 billion for 2027 shared back at the CMD in 2022, at the time, the composition was SEK 3 billion from Buvidal and SEK 1.5 billion from pipeline. When I look at it from consensus, it's largely at the SEK 4.5 billion level, but the composition is different, SEK 2.6 billion from Buvidal and SEK 1.9 billion from pipeline. So I'm curious to hear if you have any feedback or thoughts on that composition, at least in light of some of the pipeline contribution being delayed due to CDMO inspections as well as slower accrual events in the SORENTO trial. Fredrik Tiberg: You can start. Anders Vadsholt: So I'll take the first one on the pickup of patients. I mean I don't think there's a clear answer on this one because it depends on when we achieve the funding. So yes, obviously, it's more likely to come later as we get there, but we're in quite advanced discussions with some areas that we could move more quickly. So that would depend on some changes that we need to make in discussions with the stakeholders involved in this. So I don't think there'll be a clear answer on that. Fredrik Tiberg: I mean we do see also that we have a contribution for the expansion into new markets. Some of them have responded relatively slowly, like Portugal, but we do see significant growth opportunities. So there is -- I mean, it's a mix there, and it's not easy to give you -- so far, we have been quite linear as was shown in the figure here earlier. So we need to pick up some more patients to reach the 100,000 in -- by the end of 2027, for sure. And the SEK 4.5 billion, yes, I mean, the mix, obviously, in 5 years, things happen in terms of the different programs advancing. We have maintaining our ambition. You see basically how Buvidal is evolving and the contribution can be closer to where we were expecting it. We have uncertainty to how quickly the Brixadi sales will continue growing. We are hopeful there, of course. So those would be 2 major contributions. The delay in SORENTO in the trial -- or not trial execution, but in the event rate may have an impact. And in that case, we will need to reach the goal, we will need to add additional revenues. On top of this, of course, we also have a number of milestones that can come in, in 2027. But I would say, overall, we are not that far from the distribution that we mentioned in the 2022 CMD. But obviously, we weren't exact and will not be exact. Operator: Next question is from Erik Hultgard from DNB Carnegie. Erik Hultgård: The first is what drove your decision to change distribution model in the U.K.? And what impacted the timing of the decision, i.e., why now? My second question relates to Oczyesa and the 20 patients that you have on therapy in Germany. Is this mainly switch patients? Or are you also getting naive patients? And where do the switches come from? Is it both Sandostatin and Somatuline or mainly Sandostatin switches? Fredrik Tiberg: Okay. I'll leave the first question to Anders. Anders Vadsholt: Yes. So it came out from the volatility in the U.K. market. So that caused us to more or less aligned with the U.K. model with the rest of our distribution strategy. That's why we went to a different model and also because we have the upcoming launch of Oczyesa. But then also when I look to the future accounting principles, how you report, especially IFRS 15 and 18, then this model is much more suited for us. So that was why we did it. And it made sense to do it by the end of the year. So it was very clear. Fredrik Tiberg: And on the Oczyesa patients, I would say that all of them were switches from both treatments. We should, of course, be aware that there was only basically a little, 1.5 months or so recruitment time since the launch and availability of product in the market. And I think we saw a good pickup in that time period. And I think we'll see continued -- I mean, the positive note is that most patients in Germany are on treatment. So I mean, there are many fewer coming in new patients per month or per time period. So this is a very good signal for us. And it seems to be progressing nicely also into the early part of this year. So we are happy with that. But I think you would -- you should assume that most of our patients will come from switches of current treatment. Erik Hultgård: All right. Great. Then just a follow-up on Brixadi. Do you expect a similar pattern in Q1 of this year as last year when the buprenorphine market declined by double digits in Q1 versus Q4? Fredrik Tiberg: I think there is a change now because, obviously, we had the whole situation with the change from the COVID times that was -- that we saw impacting the 2025 first part because there were still patients that didn't have to do or hadn't had to be exposed to getting new allowances for prescriptions. And I don't think that that dynamic is left there. So we expect to see less of a dip in Q1, if any. It's -- I don't have that information, but I think that's the situation. Operator: Gonzalo has a follow-up from Danske Bank. Gonzalo Artiach Castanon: Yes. It's one on PLD. Could we assume that you guys will start a Phase III this year if you have the end of Phase II meeting now in March, if I heard correctly? And if so, is this baked into guidance? Fredrik Tiberg: Yes. So the important thing here is we will, of course, we are seeking the agency's advice on the study design of the PLD study. And should we get perfect alignment with them in the first meeting, then there is definitely a probability. But even so, I wouldn't say that it would impact our R&D costs significantly, and they are baked into the current expectations or financial results expectations. Operator: Christopher SEB also has a follow-up. Christopher Uhde: Two, if I may. So the first, just one clarification on the U.K. funding. Is there any kind of claw back or rollover on the funding that was allocated for '25? Or -- and if there would be a rollover, how would that impact 2026's funding allocation? Richard Jameson: So I think there's unlikely to be a rollover, but there is new funding for '26 announced a couple of months ago now. So of which some of it -- the public health grant that goes to all sorts of -- is distributed amongst public health requirements and some of it has been ring-fenced specifically for treatment of drug and alcohol. Christopher Uhde: Okay. Great. That's helpful. And then the second question is on the runway remaining in the AMEA region. And I guess within that also, particularly Australia, how much more penetrated can long-acting injectables get in those markets? Richard Jameson: Yes. I think there's still a reasonable opportunity. There's still reasonable numbers of patients on sublingual that would -- many of whom will benefit from moving to a long-acting. And there's also the methadone segment. And we're seeing increasing demand from patients to move to a long-acting treatment from methadone. It's a harder transfer, but the experience that people are gaining and how to do that is growing all the time. And we're seeing, firstly, demand growing and also the numbers of patients moving away. In Australia, for example, we're seeing methadone gradually decline, but there's still -- we have 35% -- some in the region of 35% share for long-acting. So that means that 65% of people still available. Some of those will want long-acting. Fredrik Tiberg: Yes. I think we have said earlier that we believe that we could ideally or even potentially exceed that, that long-acting injectables could reach up to 50% share. And so there is significant growth opportunity left, in our view. We'll see how it -- it's continued developing very well in 2025, and we haven't seen any signs yet that that will be stopping. Operator: The next question is from Shan Hama from Jefferies. Shan Hama: I've got 3, if that's okay. Could I actually just press you on what the guide actually bakes in for Brixadi growth in 2026? I know it was asked before, but could you perhaps compare that to how Brixadi performed last year and what that would look like for the momentum in 2026? Fredrik Tiberg: I think what we said is we are believing that Buvidal will continue to grow in a steady fashion. And the remainder of the, what is baked in, should be essentially Brixadi growth according to our projections. Shan Hama: Okay. Understood. And then my next question, please, is with the end of Phase II conversation that you have with FDA in March for the PLD indication, where does that place potential Phase III start and therefore the timing of the costs for that study? Fredrik Tiberg: Well, yes, importantly, it depends, of course, on which response we get from the agency. And I mean, starting up a Phase III study and having the first patient treated, it typically takes at least 9 months and probably a little longer than that. Shan Hama: Understood. Make sense. And then just my final question, please. Could you just clarify the England funding situation? So there's funding that was meant to -- well, from last year that was meant to arise that never hit the clinics. When is that expected? And then you said, is there another round of funding that could come or be communicated by April that was then hit in 2H? Could you just clarify the timing of the funding? Richard Jameson: Yes. So there's 3 sources. Firstly, the NHS England funding for prison, so which is reasonably significant, is already in place in clinic and is driving growth in the U.K. The broader community-based funding, that's the bit that struggled to come through. We don't know really what's going to happen in Q1. But what we do know is from Q2 onwards, from April when the NHS year starts, there is this new committed funding by the government, of which, for public health, of which a large proportion is allocated specifically to drug and alcohol addiction. So we anticipate that coming in. We anticipate last year as well and it didn't reach it. So we have to wait and see. But I think the pool for access to long-acting buprenorphine is very clear from various sectors. And I think that we -- I think we're confident that it's going to come through in '26 at some time. Operator: The last one is from Romy a follow-up from Van Lanschot Kempen. Romy O'Connor: Just one follow-up from me. Can you please provide some more color on your M&A and BD priorities for 2026? And is there any specific criteria or areas that you are looking at? Fredrik Tiberg: Yes. Nothing has really changed from previous year. We are looking, as I said, for -- mainly our target is pre-commercial, commercial assets that are synergistic to our current business in Europe, U.S., or the more global setting. So that's the main target for us. So that would be in endocrinology, rare oncology, and potentially other rare disease indications, and CNS. And then we are working more exploratively, of course, also with early potential developments, including licensing transactions and early licensing just to fill the early pipeline. But I would say, I mean, our core focus is on late-stage opportunities, as mentioned earlier. Operator: No more questions. So I hand the word back to you, Fredrik. Fredrik Tiberg: So thank you, everybody. I think and hope you see that we have a solid foundation for the year to come. And I look forward to updating you all together with the team on our Q1 presentation and meet you in between. So thank you very much for listening in and asking very insightful questions. Thank you.
Operator: Good day, ladies and gentlemen. Welcome to the SmartCentres REIT Q4 2025 Conference Call. I would like to introduce Mr. Peter Slan. Please go ahead. Peter Slan: Good afternoon, and welcome to SmartCentres' Fourth Quarter and Full Year 2025 Results Call. I'm Peter Slan, Chief Financial Officer, and I'm joined on today's call by Mitch Goldhar, Executive Chair and CEO, and by Rudy Gobin, our Executive Vice President, Portfolio Management and Investments. We will begin today's call with comments from Mitch. Rudy will then provide some operational highlights, and I will review our financial results. We will then be pleased to take your questions. Just before I turn the call over to Mitch, I want -- I would also like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A. This also applies to comments that any of the speakers make today. Mitch, over to you. Mitchell Goldhar: Thank you, Peter. Good afternoon, and welcome, everyone. Our comments this afternoon will be succinct to allow more time for your questions. SmartCentres continued its strong performance in Q4, closing out 2025 strong, same property NOI growth, high occupancy levels, competitive rental lifts, higher FFO, developments on schedule while maintaining a conservative balance sheet. At the property level, performance across all sectors throughout the country, retail, industrial, residential, storage and office are all experiencing healthy short- and long-term growth with high tenant retention. And in the area of retail specifically, very healthy growth. Among other things, this is translating into upgrading and expansion of our existing retail sites with stronger covenants as well as the development and build-out of newly acquired retail sites across the country. And while the business continues to grow organically and through new income-producing developments, we will continue to carefully manage our debt and debt-related metrics. In that regard, we have improved our financial flexibility with over $1 billion in liquidity, 90% of debt being fixed rate and for the first time, attaining an unencumbered asset pool of $10 billion, which Peter will speak to in a moment. But before that, let me turn it over to Rudy for some more operational highlights. Rudy? Rudy Gobin: Thanks, Mitch, and good afternoon, everyone. The fourth quarter was once again a standout and delivered on the momentum of the prior quarters. Tenant demand for space remained strong, delivering high-quality income across the portfolio, maintaining a leading 98.6% occupancy at year-end, unchanged from the prior quarter. Same-property NOI continued its strong momentum with 3.7% growth for the year and 5.6%, excluding anchors, and well within the range we outlined at the beginning of the year. We extended 88% of the 5.3 million square feet of space maturing during the year with rental spreads of 8.4% excluding anchors and 6.3% all-in. Cash collections remained strong at near 99% in the quarter. Strong retail demand for our high-traffic centers have allowed us to expand into complementary uses with medical, daycare, entertainment, racket and sports facilities. Our premium outlets continue to excel in driving traffic with improving tenant sales and a resulting percentage rents, which we convert to base rent at maturities. At Toronto Premium Outlets, the increasing demand for space has developed into an expansion opportunity of 85,000 to 90,000 square feet, with top end tenants already signing leases. This expansion will be accompanied by a new parking deck, and all of this is already underway with the construction start expected this summer. As you know, after the year-end, Toys filed for credit protection, but prior to that, the REIT had already terminated its 6 leases and taking control of the space based on the advanced lease negotiations to backfill with grocers and TJX banners. We expect to re-lease at least half of these locations very soon and at higher rents. On ESG, we continue advancing several initiatives across the organization as part of our multiyear plan, including materiality assessments, decarbonization planning, physical preparedness and response to the climate change, cyber security improvements and enhancing our disclosures. Overall, the business remains strong. Rents continue to grow on the foundation of an improving retail environment, greater cash flow stability, improving covenants and an expanding footprint. We expect the portfolio to continue this momentum throughout 2026. Thank you, and I will now turn it over to Peter. Peter Slan: Thank you, Rudy. As you have seen in our release, same-property NOI growth remained solid, increasing 2.9% for the quarter or 5.1% excluding anchor tenants, mainly due to lease up and renewal activities, partially offset by the impact of an expected credit loss provision, primarily associated with one retail tenant. Excluding the credit provision, same-property NOI grew at 4.5% in the fourth quarter. The change in FFO this quarter was primarily due to NOI growth and the fair value adjustments on our total return swap. During Q4, we also closed on 7 townhomes in our Vaughan Northwest project. This has resulted in a cumulative margin of approximately 23% for the project to date, bringing Phase 1 of the project to virtual completion with 118 of the 120 homes now closed. We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO continues to show improvements at 89.2% for the full year ended December 31, 2025. Adjusted debt to adjusted EBITDA was 9.7x in Q4, up slightly from last quarter. The weighted average term to maturity of our debt, including debt on equity accounted investments, is 3.4 years, a significant improvement from 2.9 years at Q3, largely as a result of debentures we issued during the quarter and the maturities that were refinanced. As in previous quarters, we have updated our MD&A disclosure, focusing on those development projects that are currently under construction. As you can see on Page 18, there were 8 projects under construction at the end of Q4 unchanged from the prior quarter. And with that, we would be pleased to take your questions. So operator, can we have the first question on the line, please? Operator: Mario Saric from Scotiabank. Mario Saric: Just maybe to start on the capital recycling/allocation side. Mitch last quarter you talked about some potential dispositions of some vacant buildings. Could you just give us an update in terms of what your dispositions targets are like in 2026 and the timing thereof? Mitchell Goldhar: Mario, we have something going on one of the -- I think maybe exactly how it was framed last time, but there were a couple of sales that were still not done that we were anticipating. One of them is -- seems very much alive. The other one -- I think the other one it's actually a vacancy that we thought we had sold, but it fell through that we're now negotiating a lease on. So that's in terms of sort of the 2 that were outstanding from last call. And then in general, the market conditions seem to be improving for capital recycling, for dispositions. So we are hoping to see some dispositions of -- first and foremost, potentially some non-IPP, some land which we are currently starting to focus on. Mario Saric: And Mitch, what would you attribute the improved kind of sentiment in terms of the buyer pool? Mitchell Goldhar: Probably, I think it's partly to do with there's -- I mean not that the world is so great, but it does feel like there's a little more visibility or a sense of visibility whereas, a year ago, there was a lot more uncertainty. People were actually sort of nervous a year ago. I don't -- I think that there's a little bit more confidence. So I think it's a big one. I guess, construction prices are softening, little bit more motivation in the sub-trade marketplace so for certain types of construction. I think that's helping. And I'm not saying it's red hot or anything. But I think in terms of people making some moves and opening their wallets a bit, it does feel like they're -- it's better than it was. Mario Saric: Got it. Okay. And speaking of construction costs, I may have missed it, but in terms of the expected expansion, the Toronto Premium Outlets. Can you share with us any kind of range in terms of the cost and types of returns that you think you can achieve? Mitchell Goldhar: I'll not going to really jump in there, too, but the returns are quite solid in excess of -- we anticipate in excess of 8%. And probably we're still -- you know what, we're still negotiating on the construction. So I'd rather not speak to the cost, our contractors could be listening in. We are in negotiations right now. But it looks like a pretty healthy 8-plus percent return. Mario Saric: My last question on the operational side. You have industry-leading occupancy every time we think it can't go up any higher, it does. When you look at '26, what is your projection in terms of at least maintaining the occupancy like we've seen a couple of tenants face a bit of pressure, a colleague of yours highlighted, a couple of beer stores, for example, that were given back. So I'm not sure what your exposure there would be, but how do you see the occupancy both kind of in place and committed evolving as '26. Mitchell Goldhar: Well, of course, you had to say couldn't get any higher. And then, of course, we have the rest. So -- but this is something that's actually, frankly, the least what's the right way to say it. We were not surprised by the Toys"R"Us situation. As you know, we already dealt with a couple of them before they declared. So if you ex them out, I think you're looking at very, very very strong occupancy levels. And we have a lot of interest in the Toys spaces at better rents and better covenants and better draw and long-term leases et cetera, et cetera. But I'll let Rudy further illuminate on that. Rudy Gobin: Mitch said it well. The only thing I'd add is we terminated those leases before the filing, so we have control of the space because we had parties we were talking to grocers, TJX banners requesting those spaces, they're perfect sizes for food for the likes of TJX banner. So we have control of all the spaces, and we are exchanging paper on 4 of the 6 of them already, which is fantastic. So we -- excluding that, we are expecting another strong occupancy year. Operator: The next question is from Giuliano Thornhill from National Bank Financial. Giuliano Thornhill: Just kind of one question on deleveraging. I missed the tail end of the question actually that was asked earlier. Just with your kind of payout ratio at the mid-90s, like net debt at the high 9. Has the REIT given thought to more aggressively selling some of the noncore IPP and if not, why? Mitchell Goldhar: Well, first of all, I don't think we really have any noncore IPP. So -- and it takes an enormous effort to create the shopping centers, most of these shopping centers or some of the other forms to create in the first place. And we put a lot of thought -- upfront thought into developing them. Most of them, as you probably know, we developed probably 85% to 90% of the portfolio. We developed it. So at the end of the day, we do all the upfront strategic thinking. And so we don't really have -- we didn't buy varieties of forms of retail and/or whatever we can get our hands on to arbitrage IPP for debt and so on and so forth. So we don't have sort of fringe assets that are undesirable. So we don't -- and it's tough to move the needle, even if we did want to part with IPP. I mean, it would be tough to move the needle in terms of cap rates and giving up that income. It's very, very good income and we collect 99% or over 99% of our IPP. So we forge on, with our IPP. We do have a lot of potential PUD for disposition. So we can afford "to sell PUD" and that would be our first -- that's our overwhelming preference in terms of capital raise and capital recycling. It really does move the needle. The market just hasn't been there. It seems like there is a bit of a market there now. I don't want to overstate it. We're going to test it, but that's where we're going to focus on. Giuliano Thornhill: Yes. And I guess I was going to my follow-up here more so where are you kind of starting to see the land values bottom or possibly increase, at all, in your portfolios? Mitchell Goldhar: Yes. I mean, wherever we have retail land, if we haven't developed it, we could sell that. But we're obviously not going to sell that. But the mid-rise, the lower rise, mid-rise residential, there's a feeling that there's some potential. There are seniors housing seems to have life in terms of potential dispositions. We're getting approached. We have excellent sites for both mid-rise, high rise for that matter, and seniors homes. So yes, there is a market for storage, but we're in the storage business. So we're not really sort of inclined to dispose that. So those are the main categories that we think there's a little bit of life. Giuliano Thornhill: And so how large is that opportunity the seniors and kind of low to mid-rise within your portfolio? Is it 20%, 30% or less than that? Mitchell Goldhar: I mean I'll come back to the -- I'm not sure if you meant what percentage or what we have, I mean -- but no, we're -- I'm talking about we could sell -- I mean, we have somewhere in the 60 -- plus or minus 60 million, 70 million square feet of permitted density across the portfolio on our owned properties. So what I was referring to was selling some of that some of that density carving those out. Giuliano Thornhill: I'm just trying to get to like a number that is reasonably realizable in the next couple of years for those 2 uses is kind of where I was going with the question. Mitchell Goldhar: Yes, in the next couple of years, and that's a lot easier than saying the next year, but the next couple of years, I mean, we could see -- I mean, we'd like to sell $200 million to $300 million worth of that over the next couple of years. And more if there's a market for it. Operator: The next question is from Lorne Kalmar from Desjardins. Lorne Kalmar: Just 2 quick ones for me, and I'm really sorry if I missed it. I was just wondering, did you guys mention a same-property NOI outlook for 2026? Peter Slan: As you know, we had a 7%. And if you excluded Toys from this mess we would be in a similar range for 2026. Toys is going to put a little damper on things at the beginning of the year. So we might be a little bit lighter than we were last year because of that. But we're expecting something in that range, ex the Toys. So -- and we -- and because we have good backfill for the Toys, which won't take occupancy right away because we'll execute some of these leases very soon. But by the time they take possession, it's probably into Q2. So you won't see it until you get closer to the end of the year where it catches up. Lorne Kalmar: And then I was just wondering, any updates in relation to building out new stores for Walmart. I know you guys just opened the one in, I think it was in Oakville or just west of the GTA here. I was just wondering if there are any updates on that front. Mitchell Goldhar: First of all, I guess, the new retail program here is really picking up, in general. So I would say that is something worth noting. We are anticipating quite a bit of growth over the next, let's just say, 5 years in the areas of -- I mean, grocery, Loblaws, Sobeys, potentially Metro, Costco, TJX. Those are large space users. And of course, we do have a long-standing relationship with Walmart. And so we anticipate that we will be also seeing some growth in the new Walmart category as well. Lorne Kalmar: As of now, I guess, so nothing really to report on this as it relates to Walmart. Mitchell Goldhar: Well, I think at this moment, we will leave it at that. We hope we'll be able to expound on that. But I guess, there's a lot going on in general across the board, in all of the areas that I just mentioned, not just garden variety kind of growth in the new retail, new sites category of growth. So we will start to shed more light on the details of that. But I guess, in the meantime, I would think of it as it's quite robust. Lorne Kalmar: Okay. Just maybe going back to you mentioned the new sites for growth. Obviously, Premium Outlets. Any other retail developments in the immediate future for you? Mitchell Goldhar: Yes. Yes, quite a few. I would -- sort of what I mean -- what I'm saying is we're anticipating quite a few new acquisitions of new sites across the country. Operator: The next question is from Dean Wilkinson from CIBC World Markets. Dean Wilkinson: Mitch, you get a lot of questions about what you're going to sell. I'd like to talk a little bit about more what you're going to keep. When you look out, call it, 5-plus years. Do you think that there is going to be a shift in the mix between retail, self-storage and multifamily and some of the other verticals? And secondarily to that, do you think any one of those verticals could hit a size where they're potentially able to just stand on their own. Mitchell Goldhar: Well, listen, based -- just on the retail and what's going on because what we're doing now is going to come out of the ground in the next 2, 3, 4, 5, 6, 7, 8, 9, 10 years, okay? And it's been -- it's nothing driven per se by us. It's actually being driven by the consumer. And the ones who have the closest relationship with the consumer are the retailers like I was naming like Loblaws and like Costco, Walmart, et cetera. And they're saying through their interest in new locations is that there's going to be -- there's a huge investment, a huge commitment, a huge belief in physical retail shopping. And you put a lot of those different retailers and ones that I haven't named that aren't as large space users together and you've got a shopping center in a country that's seen very little physical retail construction in the last 12, 13 years, but a lot of population growth. So I mean, in the eyes of these retailers, there's a lot of catch-up. So we're one of the go-tos. We're one of the go-tos for that. So we're super busy buying new sites and processing approvals for the development of new shopping centers across the country. And that's going to kick in, really kick in like start to kick in action and really kick in the year after and the year after and the year after, really kick in. Those are quick. Those take us anywhere from -- take a year basically to go from commencement of construction, to lease commencement, to rent commencement. So those are really going to affect things over the next 5 years plus, plus and drive growth here. As far as storage seems like storage is -- I think the honeymoon is over, but I think everyone's sober about it, which is good. I don't think anybody is doing anything irrational. So I see that continuing and holding value. We were doing very well with storage. They do go on their own. We don't always put them in shopping centers, but we do stick them into our shopping centers where it makes sense. And the res is still very desirable as a use, but very skinny in terms of returns. I mean multi-res and condos basically don't exist. So we'll be standing by and waiting for the planners to line up again to start to recommence that program. Dean Wilkinson: So just think of that as ancillary and opportunistic, but it wouldn't be something that becomes a little more core. Mitchell Goldhar: Yes, I would say we wanted it to become more core. It will be more core ultimately because we do have a lot of permissions, but that's in a sense 5 to 10 years from now, it will start to become more and more core. But yes, correct. Our next 5 years, as it looks now, is going to be retail, be a nice little augmentation with the storage and some opportunistic, to use your word, I think it's right word for some mid-rise, low-rise residential where we can kick it, where we can knock it out at surface parking, wood construction and very low, no offsites, very little on sites accretive. We will do some of that, but it won't be core. Operator: The next question is from Gaurav Mathur from Green Street. Gaurav Mathur: Just one quick question on the renewal statistics. When you're looking at the renewal summary, we are noticing a few metrics moving down a bit year-on-year when you look at renewal rate both including the anchors or excluding the anchors as well as tenant renewal rate. Could you provide some color on why that's happening, just given the underlying strength in the retail strip center sector. Peter Slan: Gaurav, it's Peter. I wouldn't read too much into that. The biggest single driver is just the timing of when we have lease expirations during any given quarter. So that can move around a little bit. But as Mitch and Rudy both noted earlier, we continue to see very robust demand for space in our centers and -- but it does ebb and flow from quarter-to-quarter depending on the term of each lease. Rudy Gobin: If you look at the near 90% extension, that is consistent with the last few years as well. Operator: [Operator Instructions] The next question is from Sam Damiani from TD Securities. Sam Damiani: Just on the Toys"R"Us, how much of the 6 sites were paying rent for the full quarter in Q4? And how much rent do you expect to receive in Q1. Rudy Gobin: Sam, it's Rudy. I don't have that in front of me, but some of them are co-management partners. So we have some of them paying rent and some of them weren't paying rent in that quarter or part rent in nature. So I think we disclosed a higher provision in the quarter to reflect that nonpayment of rent. So that's what that was. And then early in the year, we had so much good interest from these other retailers I mentioned that we took advantage of terminating those leases in advance of the filing that Toys did. So it's to minimize the impact on the REIT. Sam Damiani: Okay. And then just on the 6 sites now vacant, that alone and nothing else happening, what would that do to your occupancy rate in Q1 versus Q4? Rudy Gobin: Yes. Well, again, there's the in-place occupancy and there's the occupancy, including executed deals. So half of those, like I mentioned, is going to be -- expected to be released before the end of the quarter. So it leaves another $0.3 billion. So the 98.6% may be 98.3% on an apples-to-apples basis. Sam Damiani: And just -- I noticed there was an acquisition of some land in Bolton. Is that for retail? Is that adjacent to the existing SmartCentres shopping center there? Mitchell Goldhar: Yes. It is for retail. We will announce the details of that at some point soon. But it is, I would say, part of everything that I was describing earlier about the retail growth program. So we do have interest from strong retailers. And we anticipate starting construction there sometime, hopefully, this year. Sam Damiani: And then in total, with all the push on retail development, you've obviously leased a lot of space last year for new build retail. Like how much -- I guess, you got TPO, potentially the site in Bolton, how much square footage do you think commences construction in 2026 on the retail site. Mitchell Goldhar: Maybe this year starting 200,000 to 300,000 but it's going to climb a lot after that. That just -- it takes a little bit of time to get all the permits and whatnot to go. But in terms of technically, in this calendar year, yes, maybe 200,000 to 300,000. Sam Damiani: And I did miss the part of the call at the start regarding TPO, I think I heard an 8-plus percent guesstimate on the yield that's looking at the cost, including the parkade. Mitchell Goldhar: Yes. Yes. The whole expansion, including the additional parking. Yes. 8-plus percent, yes. Sam Damiani: And rents would commence -- I didn't hear that if it was said 2028 is a reasonable visible timeline or? Mitchell Goldhar: Yes. We're hoping we can maybe pull it off in late '27. But yes, by 2028. Operator: We have one more question, Pammi Bir from RBC Capital Markets. Pammi Bir: Just coming back to leverage. Most of your peers have really worked to drive debt-to-EBITDA levels down lower. And investors certainly seem supportive of that. I'm just curious, what do you see as the right level for the business? And where does reducing leverage fit in terms of the priorities? Mitchell Goldhar: Yes, everything is a priority. So it's a question of balancing. I mean, the market likes growth, too. Market likes long average lease terms. Market likes strong covenants. Market likes refreshing of existing shopping centers. So we, of course, balance that because we also very much value our credit rating. So we look at all of these things. We have a lot of demand for new space. The good news is that the demand for new space is mostly single-story retail with that great parking, which means that within a year or so of commencement of construction, we're usually collecting rent. So to the extent, like always, that we -- everybody's debt-to-EBITDA rise and fall with various activities we're in an enviable position to be able to basically balance both. But this is not a one-trick pony. We are minded to grow and strengthen our network and strengthen our portfolio and our earnings. And of course, we're not going to commit any fall as it relates to important important metrics. Pammi Bir: Okay. Maybe one follow-up, and I don't know if you can answer this one, but in terms of the agreements with Penguin, the release indicated that the voting top right has expired. But I just wanted to clarify, is that part of the discussions in the new 5-year agreements. And then the second part of that is, do you expect to have the new agreements in place or at least announced by the end of the month? Mitchell Goldhar: Well, actually, everything expired at the end of last year. And we extended the parts of it that we were able to extend and one of them that we are not able to extend is the voting top-up, that needs unitholder approval. So that has expired and has not -- can't have been extended. So -- but the negotiations for a new contract are going on, going very well. And in terms of what form and whatnot that takes, that will be released, I guess, when it's absolutely finalized. But we're getting near the end and it's looking positive. Operator: Thank you. There are no further questions in the queue. Mitchell Goldhar: Thank you. Thank you for participating in our Q4 call. Of course, as always, please feel free to reach out to any of us if you have any further questions. Have a great rest of your day. Operator: Ladies and gentlemen, this concludes the SmartCentres REIT's Q4 2025 Conference Call. Thank you for your participation. And have a nice day.
Baard Haugen: Good morning, and welcome to Hydro's Fourth Quarter 2025 Presentation and Q&A. We will shortly begin with a presentation by President and CEO, Eivind Kallevik, followed by a financial update from CFO, Trond Olaf Christophersen. At the end, we will finish with a Q&A session. Please note that if you have questions you would like to ask in the Q&A, you can do so at any time by typing them in the box on your screen. When we get to the Q&A, I will then ask your questions on your behalf to Ivan and Trond. And with that, I turn the word over to you, Ivan. Eivind Kallevik: Thank you, Erik, and good morning, and welcome from me as well. As always, I will start with safety. Our top priority is to ensure the health and well-being of our employees. Now the positive development that we've seen over time continued into the fourth quarter. In fact, total recordable injuries and high-risk incidents are lower compared to last quarter, which was also a record low for Hydro. It is also worth mentioning that when looking at 2025 as a whole, we also had no fatalities or no life-changing injuries. On the other hand, we do know that this situation can change quickly. So to sustain these low numbers, that requires continuous attention and strong commitment from all employees across all our locations. And by ensuring a safe work environment, we can maintain a stable operation, which in turn enable us to deliver on our strategic ambitions. Now let's continue with the highlights of the quarter. EBITDA came in at roughly NOK 5.6 billion, with free cash flow of NOK 4.6 billion, yielding an adjusted RoaCE for the year at 10.2%. And that is above our target of 10% over the cycle. In short, the fourth quarter saw strong metal prices, high upstream production volumes and very healthy cash generation. Looking closer at the highlights listed here. First of all, alumina production are above nameplate capacity for the fourth quarter and the smelter production was also up 2.5%. On the Energy side, we can report an increased power production of some 13.6% year-over-year. We are continuously working to secure more long-term power contracts, and we are pleased to report 2 new long-term power contracts as well as the power plant investment in Norway during the quarter. Due to increased volatility driven by the global uncertainty, we have also made several difficult but also necessary restructuring decisions in the recent months during Q4. We've completed the strategic workforce reduction as planned, and we also proposed the closure of 5 European extrusion plants. And finally, the Board of Directors decided to propose a dividend of NOK 3 per share, and this is 60% of adjusted net income above the minimum threshold of 50% as decided by our distribution policy. Now we've made good progress on the strategy this quarter with several key milestones achieved. On the upstream side, both Bauxite & Alumina and Aluminum Metal have delivered good production numbers. In B&A, the Alunorte refinery experienced improved flow through the plant and high equipment availability, resulting in production above nameplate capacity. In addition, we also saw one of the highest commercial sales volumes ever in Bauxite & Alumina in the fourth quarter. As a result, in the 2025, B&A delivered its second best EBITDA ever. In Aluminum Metal, our smelter system also delivered stable performance and primary aluminum production increased some 2.5% year-over-year in the fourth quarter. As previously communicated, the Norwegian capacity that was curtailed back in 2022 is now being ramped up, and we expect to increase production by some 50,000 to 60,000 tonnes during 2026 and then comparing to '25. We expect to reach the production speed during the summer of '26. Now moving to power sourcing. For our Norwegian smelters, one of our key priorities is to secure long-term and competitive renewable power to support competitiveness as well as our low carbon position. In Q4, we have made good progress in this regard, signing 2 power purchase agreements with Hafslund, one in November and one in December. Putting these agreements together cover the period between 2031 and 2040 with a total volume of 5.25 terawatt hours. The contracts are in the price area NO3, covering the Sundal and Hojangar assets that we have. In addition to working actively on third-party sourcing, we are continuing to invest in our own hydropower system. And in Q4, we took the final investment decision on the Illvatn pumped storage power plant. And this is Hydro's biggest investment in the Norwegian hydropower system since 2004, with a gross investment of NOK 2.5 billion and net investment after tax of some NOK 1.2 billion. The Illvatn pumped storage plant will also contribute with increased power production, reservoir capacity as well as installed power capacity from our facilities in Fortun. And then lastly, cost control. One of the things we talked a lot about in 2025 was uncertainty and the need to take proactive measures. So in Q3, we announced the strategic workforce reduction for white-collar employees on a global scale. This program concluded in fourth quarter with around 850 white-collar employees having either left or will leave the company within the first half of 2026. The FTE reduction, together with reduced spending on consultants and travel, will yield savings of roughly NOK 1 billion per year starting now in 2026. Likewise, just before our Investor Day late in November, we did announce the proposed closure of 5 European extrusion plants. We have now confirmed the closure of 2 of the plants, Bedwas and Cheltenham in the U.K., and the process around the remaining 3 plants is still ongoing. As we all know, Extrusions has faced market headwinds also during 2025, which has negatively impacted their results. On the other side, the Extrusion organization has worked hard on cost control and mitigating actions, which enabled them to deliver a good and positive cash flow from the business area in 2025. Now turning to Bauxite & Alumina. In the fourth quarter, oversupply in the alumina market put a continued downward pressure on PAX. And according to CRU, 2025 ended with a small surplus of around 700,000 tonnes. This is expected to narrow somewhat to about 500,000 tonnes in 2026 in the roughly 145 million global market for alumina. As a result, the market remains sensitive to any production disruptions or delays in ramp-up of new facilities. During the quarter, new refineries in Indonesia continued to ramp up production, while alumina prices in China declined. This pushed the PAX index down to $306 per tonne at the quarter end from $321 in the third quarter. In China, bauxite import prices remained stable at around $70 per tonne on a CIF basis. Import volumes, on the other hand, increased by some 10% year-on-year, to 43.5 million tonnes imports from Guinea, increasing with 20%, while shipments from Australia declined by some 9%. Then moving on to LME. Now looking at the global primary aluminum balance in 2025, external sources estimated a global deficit of primary aluminum at around 0.3 million tonnes. The 3-month aluminum price increased throughout the fourth quarter of 2025, starting the quarter at $2,688 per tonne and ending at $2,995 per metric ton. This rally was likely supported by a weaker dollar, news of a potential shutdown of the Mozal smelter in Mozambique and a broadly bullish sentiment across base and precious metals. The U.S. Midwest premium continued to surge in the fourth quarter, moving from around $1,675 per tonne at the start of the quarter to just above $2,000 by quarter end. And this increase reflects the market fully pricing in the 50% import duty under the Section 232 tariffs, highlighting both the underlying structural aluminum deficit in the U.S. as well as the continued need to attract metal into the domestic market. In Europe, duty paid standard ingot premiums ended the fourth quarter at $335 per tonne, up from $223 per tonne at the end of the third quarter. This is due to the tightening supply situation that we have and certainly some CBAM front-loading also going into 2026. As in previous quarters, Hydro's primary concern remains the risk of a broader global economic slowdown driven by tariffs and trade tensions, which could weaken demand and put pressure on the current price levels that we see today. Now moving downstream. We see Extrusion demand ended in 2025 with a modest increase in Europe and a modest decrease in North America compared to the last year. In Europe, Extrusion demand is estimated to have been flat in the fourth quarter of 2025 compared to the same quarter last year but increasing 3% compared to the third quarter. Demand from building and construction and industrial segments have stabilized at historically low levels with some improvements in order bookings. Automotive demand has been negatively impacted by lower European light vehicle production but has been partly offset by increased production of electric vehicles. And CRU estimates that the European demand for extruded products will increase 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have increased by 1% in 2025 compared to '24, with current estimates for '26 as compared to 2025 coming in at 3%. In North America, Extrusion demand is estimated to have been flat in the fourth quarter of '25 compared to the same quarter last year, but it did decrease 8% compared to the third quarter, which is partly driven by seasonality. Extrusion demand has continued to be very weak in the commercial transport segment, driven by lower trailer builds. Automotive demand in the U.S. has also been weak. Demand within building and construction has been positive as well as within certain industrial segments. At the same time, Extrusion demand across segments is being subdued due to higher product prices resulting from tariffs and duties on aluminum in the U.S. CRU estimates that North American demand for extruded products will decrease some 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have decreased by 2% in 2025 compared to 2024, but there is an expectation of a growth of 1% in 2026 compared to '25. And let me then give the word to Trond Olaf for the financial update. Trond Christophersen: Thank you, Ivan, and good morning, and welcome from me as well. We'll start my part with the financial highlights for the quarter. Comparing year-over-year, revenues fell by around 14% to NOK 47 billion for Q4, driven by lower alumina prices. For Q4, we have an adjusted EBITDA of NOK 5.6 billion and a reported EBITDA of almost NOK 2 billion, meaning that we have adjusting items of around NOK 3.6 billion. The main adjusting item is unrealized derivative loss, mainly on LME-related contracts of NOK 2.3 billion. We also have rationalization charges and closure costs of NOK 1.3 billion, mainly related to the restructuring of Extrusion Europe. There were also smaller positive adjusting items from FX and divestments. The adjusted EBIT for Q4 was NOK 2.9 billion, with a reported EBIT of negative NOK 1.5 billion. In addition to the EBITDA adjusting items, there were NOK 700 million in adjusting items impacting EBIT related to impairments. The difference between the adjusted and the reported EBIT was therefore negative NOK 4.3 billion. Net financial expense for Q4 was around negative NOK 600 million. Interest and other financial income was NOK 430 million, offset by interest and finance expense of NOK 470 million and foreign exchange losses of NOK 575 million, mainly reflecting a weaker BRL versus U.S. dollar. The income tax expense was NOK 57 million in Q4, impacted by negative earnings before tax, offset by higher power surtax. Overall, this results in an adjusted net income of NOK 1.7 billion with reported net income of negative NOK 2.2 billion. The total adjusting items to net income was NOK 3.8 billion, which is the sum of the EBIT adjusting items plus a net foreign exchange loss of NOK 575 million and an income tax effect of negative NOK 1 billion. Adjusted net income is down from NOK 2.6 billion in the same quarter last year and down from NOK 1.9 billion in Q3. Consequently, adjusted EPS was NOK 0.7 per share. When looking at results Q4 versus Q3, adjusted EBITDA decreased by NOK 400 million from NOK 6 billion to NOK 5.6 billion. The main driver was lower Extrusion results -- realized results. Realized all-in aluminum prices contributed positively by NOK 800 million, and alumina price contributed negatively by NOK 300 million, for a net effect of around positive NOK 500 million. Upstream volumes contributed positively by NOK 300 million, driven by alumina production above nameplate capacity and high commercial alumina trading volumes. Lower raw material costs in Bauxite & Alumina and lower alumina costs in Aluminum Metal contributed positively by NOK 400 million. Extrusions and recycling margins and volumes had a negative impact of around NOK 1 billion, driven by seasonally lower volumes and lower margins in extrusion. In Energy, higher production and prices were partly offset by lower gains on price area differences, with a net positive impact of around NOK 300 million for the quarter. Fixed costs were around NOK 400 million, higher compared to the Q3, mainly in Aluminum Metal and Extrusions and mainly driven by seasonal effects. Currency effects positively impacted results by around NOK 100 million. The final negative effect of NOK 500 million is mainly related to other and eliminations. The eliminations this quarter amounted to approximately NOK 300 million on the profits on the increased volume in B&A. And this concludes the adjusted EBITDA development from NOK 6 billion in Q3 to NOK 5.6 billion in Q4. When looking at the full year EBITDA development from 2024 to 2025, adjusted EBITDA increased by NOK 2.6 billion, from NOK 26.3 billion to NOK 28.9 billion. The main drivers were higher aluminum price and normalizing eliminations, offset by stronger NOK versus U.S. dollar. Realized all-in aluminum and alumina price contributed positively with around NOK 2.3 billion, where higher aluminum price was partly offset by lower alumina price. Upstream volume development had a net positive impact of NOK 500 million, with higher sales volumes in both B&A and Aluminum Metal. Raw material costs improved with NOK 500 million. B&A saw an improvement of NOK 1.1 billion, where the fuel switch savings were partly offset by higher costs for other raw materials. Raw material costs in aluminum metal increased by NOK 600 million on higher alumina costs. The downstream segments contributed to -- continued to face headwinds in 2025, leading to a total negative effect of around NOK 400 million. Extrusions experienced headwinds of around NOK 700 million from reduced volumes and margins, while the recycling results in Metal Markets improved by NOK 300 million. Furthermore, we saw a net positive impact of NOK 800 million due to higher energy prices, production and gain on price area differences compared to 2024. Fixed costs increased in 2025 with an impact of NOK 800 million, where increased fixed cost upstream, mainly related to inflation and salary adjustments, were partly offset by reduced fixed cost in Extrusions. We also saw a negative NOK 2.7 billion in currency effects, mainly driven by the stronger NOK versus U.S. dollar. The final contribution of NOK 2.4 billion was driven by NOK 2.6 billion in realization of previously eliminated internal margins. And this was partly offset by NOK 200 million in net other effects. Then moving on to debt. And when looking at the debt development through the quarter, net debt decreased by NOK 3.9 billion since Q3. Based on the starting point of NOK 13.6 billion in net debt in Q3, we had a positive contribution in adjusted EBITDA of NOK 5.6 billion. During Q4, we saw a net operating capital release of NOK 1.4 billion, mainly driven by a release in net accounts receivable and accounts payable, partly offset by increased inventories and receivables related to CO2 compensation. Under other operating cash flow, we had a positive NOK 1.6 billion impact, mainly driven by dividend contributions from equity accounted investments and adjustment for noncash effective bonus accruals, partly offset by interest payments. On the investment side, we had a net cash effective investments of NOK 4 billion, reflecting the typical high maintenance investment activity level at the end of the year. As a result, we had positive free cash flow of NOK 4.6 billion in Q4. We also had negative other effects of NOK 700 million, and this was mainly driven by negative FX effects on debt and new leases. As we move on to the adjustment related to adjusted net debt, hedging collateral has increased by NOK 600 million since the end of Q3. Furthermore, during Q4, the net positive pension position increased by NOK 300 million. And finally, we had an increase of NOK 700 million in other liabilities during Q4, mainly explained by increased provisions related to restructuring in Extrusion Europe. And with those effects taken into account, we end up with an adjusted net debt position at the end of Q4 of NOK 18.2 billion. Moving then to the business areas and starting with Bauxite & Alumina. Adjusted EBITDA for Bauxite & Alumina decreased from NOK 5 billion in Q4 '24 to NOK 1.4 billion in Q4 '25. This was mainly driven by lower alumina prices and negative currency effects caused by a weaker U.S. dollar against the Norwegian kroner. This was partly offset by higher sales volumes and strong trading results in B&A. Compared to Q3 '25, the adjusted EBITDA increased from NOK 1.3 billion to NOK 1.4 billion in Q4 '25, mainly driven by higher sales volumes and strong commercial results. Production volumes ended the quarter above nameplate capacity following high equipment availability and improved refinery flow. Alumina realized prices declined during the quarter but remained above market prices indications, supported by intra-group pricing mechanisms. Raw material costs were lower compared with the Q3, driven by lower caustic soda and coal prices, and fixed costs remained roughly stable. Moving then to the Q1 outlook. For Q1, we expect fixed and raw material costs to remain stable. Production volumes are expected to decline seasonally, reflecting fewer operating days in Q1 and scheduled maintenance activities. Realized alumina prices are anticipated to continue correcting in line with market trends, while trading results are expected to return to more normalized lower levels. Moving then to Aluminum Metal. Adjusted EBITDA increased from NOK 1.9 billion in Q4 '24 to NOK 3.7 billion this quarter. The main drivers year-on-year were higher all-in metal prices and reduced alumina costs, partly offset by negative currency effects. Compared to Q3 '25, adjusted EBITDA for aluminum metal, increased from NOK 2.7 billion, and this was driven by higher all-in metal prices and lower alumina costs, partly offset by seasonally higher fixed costs. The alumina cost reduction of approximately NOK 200 million drove raw material cost savings above our Q3 guidance of a flat impact. The guided seasonal increase in fixed costs ended slightly above our guidance of around NOK 220 million. And this brings me over to the Q1 outlook. For Q1, AM has booked 70% of the primary production at USD 2,803 per tonne. This includes the effect of our strategic hedging program. We have also booked 40% of the premiums affecting Q1 at USD 478 per tonne. We expect the realized premium to end up in the range of USD 380 to USD 430 per tonne. On the cost side, raw material expenses are expected to increase by NOK 100 million to NOK 200 million, primarily driven by LME-linked energy costs in our joint venture portfolio. Fixed costs are expected to increase by NOK 50 million to NOK 150 million, driven by seasonality, and sales volumes are also expected to increase. For Metal Markets, the adjusted EBITDA decreased in Q4 from NOK 319 million in Q4 '24 to negative NOK 56 million due to lower results from sourcing and trading activities and negative currency and inventory valuation effects. Those were partly offset by increased results from recyclers. Excluding the currency and inventory valuation effects, the result for Q4 was NOK 39 million, down from NOK 115 million in Q4 '24. Compared to Q3, adjusted EBITDA for Metal Markets decreased from NOK 154 million due to lower results from recyclers and from sourcing and trading activities. Recycling results ended lower at NOK 48 million, down from NOK 93 million last quarter. Decrease was primarily driven by challenging market conditions for the European recycling operations. For Q1, we expect stable recycling results. In our commercial segment, we also anticipate higher contribution from sourcing and trading activities in Q1. As always, we emphasize the inherent volatility of trading and currency fluctuations. And for 2026, we expect the commercial adjusted EBITDA, excluding currency and inventory valuation effects, to be in the range of NOK 200 million to NOK 400 million. Moving then to Extrusions. For Extrusions, the adjusted EBITDA decreased year-over-year from NOK 371 million to a negative NOK 62 million, driven by lower margins and sales volumes. Still strong focus on cost control and portfolio optimizations have contributed to a full year 2025 positive cash flow. We saw 1% decline in sales volumes as well as strong pressure on sales margins across the portfolio. Similar to the previous quarter, transport volume developments were negative, but headwinds are moderating compared to previous quarters. Shipments to the transport market were down 4%, negatively impacted by North America. Automotive sales in Q4 were still negative in both Europe and North America, driven by continued moderate production at some car manufacturers. Sales volumes growth in the industrial segment ended 8% higher in Q4, while sales in the distribution segment increased by 6% in Q4, mainly driven by increased shipments in the U.S. After a significant increase in volumes in the HVAC&R segment previously in 2025, the trend turned negative in Q4 '25, mainly caused by tighter consumer spending and inventory offloading at customers. The metal effect for the quarter ended at NOK 160 million. Compared to Q3 '25, adjusted EBITDA for Extrusions decreased from NOK 1.1 billion in Q3 to negative NOK 62 million in Q4 due to seasonally lower sales volumes, partly offset by lower costs. When looking at Q1, we always compare it to the same quarter last year, and this helps to capture the typical seasonal patterns we see in Extrusions. Looking at external market data, volumes in Europe are expected to increase moderately by 1%, while North America shows a slight decline of about 1%. We expect our European sales to be largely stable, while our North American sales are expected to decrease slightly more than the external market estimate due to our high exposure to commercial transport and distribution. Margins are expected to remain more or less stable with some improvements expected in North America due to favorable scrap prices. On the metal side, we expect flat metal effect development compared with the same quarter last year. It is, however, important to note that the metal effect are highly dependent on movements in the Midwest premium. Moving then to the final business area, Energy. The adjusted EBITDA for Q4 decreased to NOK 1.1 billion compared to NOK 1.2 billion in Q4 '24. The decrease was mainly due to lower gain on price area differences, offset by higher production and higher prices compared to Q3. Compared to Q3, adjusted EBITDA increased from NOK 828 million, mainly due to high seasonal production. Some of this increase is also due to planned maintenance that will be done during Q1. The price area gain was NOK 37 million in Q4, at significantly lower level than in Q3, following a seasonal convergence between the area prices. Looking into Q1, as always, we should be aware of the inherent price and volume uncertainty in Energy. For the next quarter, production is expected to decrease due to power plant maintenance and to be below the normal seasonal levels. While price area while prices are expected to increase with the seasonality, price area gains are expected to decline further. And then moving to the dividends. This year, the Board of Directors has proposed a distribution to shareholders of NOK 5.9 billion. This will be distributed as an ordinary cash dividend of NOK 3 per share. The dividend proposal represents a cash distribution of 60% of adjusted net income, a year-end yield of around 3.8% and a 5-year average payout ratio of 65%. Hydro's capital structure policy to maintain an adjusted net debt target over the cycle of around NOK 25 billion at the year-end, including proposed shareholder distribution to be paid year after remains unchanged. As always, the final distribution for 2025 is subject to approval by the Annual General Meeting in May 2026. And with this, I end the financial update and give the word back to Ivan. Eivind Kallevik: So let me conclude today's session by outlining our priorities going forward. First and foremost, it's health and safety. This remains a nonnegotiable for Hydro. We see that building a strong safety culture has a positive impact on our performance metrics. And we need to continue learning and improving to keep these numbers low also going forward. Secondly, through uncertain times, we are taking measures to improve our robustness. Cost control measures such as the strategic workforce reduction and restructuring in extrusions are helping us to grow with the right structure going forward. Our strategic growth areas remain recycling, extrusions and renewable energy. While we do recognize the current market challenges, we also see meaningful progress, including the new long-term power contracts secured in Q4 in addition to the upgrade of our own power plants. Lastly, we continue to deliver on our decarbonization and technology road map while seizing opportunities in greener aluminum. One concrete example from Q4 is our new partnership with the University of Michigan, which is aimed at translating innovation rapidly from lab to production. This positions Hydro to support customers in reducing emissions and to future-proof their own supply chains. So to sum up, we remain fully committed to our 2030 strategy, and the fourth quarter of 2025 demonstrated important steps in the right direction. With that, I want to thank you all for your attention, and then over to you, Erik. Baard Haugen: Thank you, Ivan, and thank you, Trond Olaf. We will then commence the Q&A. And just a remind, If you do have questions, please type them in the box on the screen, and I will then read your questions to Ivan and Trond Olaf. And I think we have a few questions already. So let's get started. First one is from Marina from RBC. Based on the order book, how confident are you in a volume recovery in Extrusions in the second half of 2026? Eivind Kallevik: So when we look at the extrusion order book, that is typically pretty close in time. Very seldom do you have extrusion companies booking into the second half. So we'll still need to see the economic growth coming in into the second half from orders as we get later on in the year. What's important, I think, for us, at least when we look at the automotive sales, for instance, several of the new contracts that we have talked about that we have booked in the last couple of years, they are now coming into production. But seen from an internal viewpoint in the company, it's too early to sort of conclude where we see the second half on the extrusion side. Baard Haugen: Okay. Next one is from Liam from Deutsche, also on Extrusions. Can you clarify the guidance for Q1 '26 versus Q1 '25? Are you expecting broadly flat EBITDA year-on-year? What have been the cumulative one-off gains in Extrusions in 2025 from the high Midwest premiums? Trond Christophersen: Liam, so to comment on your question. So first, the last question. So in total, we had around NOK 700 million in positive metal effects in Extrusions in 2025. If you then look at the different parts of the extrusion guiding, you see that we guide on roughly flat metal effect, some pressure on volumes, but flattish development on the margin side. Baard Haugen: Then we have another question from Marina. You are guiding for higher fixed and raw material costs in your Aluminum Metal division. Can you elaborate on the key drivers? Eivind Kallevik: So let me comment on 2 things. So when you look at fixed cost, typically in Q4, you have the reversal of vacation accruals, which is done and then you don't have that into Q1. So that will drive fixed costs up somewhat. And then we have some of the power contracts within our joint venture portfolio that also has an LME link into it. So that will lift the Energy costs somewhat coming into first quarter and into 2026. Baard Haugen: Okay. And then we have another one from Liam. Does the cost guidance for Q1 factor in a stronger NOK? Trond Christophersen: Yes. So the cost guidance is based on the currency assumption some weeks back. So then you need to factor in any development after that. Baard Haugen: And then we have a question from Alain, Morgan Stanley. Q4 B&A beat expectations. Can you quantify the trading contribution in the quarter and indicate how much of this is sustainable into Q1 '26? Trond Christophersen: Yes. So we have around NOK 300 million in very strong commercial results in B&A in Q4. Baard Haugen: And then another question from Alain on B&A. Alunorte ran above nameplate in Q4. Is this operationally sustainable? Or should we expect normalization in 2026 due to maintenance or any bottlenecks? Eivind Kallevik: So I think when you look overall for the year, we still have a target to produce at nameplate capacity, which we showed also in the fourth quarter. Now when we look at first quarter of '26, you should expect volumes to come down somewhat, driven by 2 things. One is that there are fewer production days in Q1. And secondly, also that we will have some planned maintenance in the first quarter. So a little bit lower production speed in Q1. But over the year, we should be still targeting nameplate capacity. Baard Haugen: And then there doesn't seem to be any other further questions. So if nothing else comes in, I think we will say thank you all for joining us here today. And if you do have any further questions, please don't hesitate to reach out to Investor Relations. Thank you.
Baard Haugen: Good morning, and welcome to Hydro's Fourth Quarter 2025 Presentation and Q&A. We will shortly begin with a presentation by President and CEO, Eivind Kallevik, followed by a financial update from CFO, Trond Olaf Christophersen. At the end, we will finish with a Q&A session. Please note that if you have questions you would like to ask in the Q&A, you can do so at any time by typing them in the box on your screen. When we get to the Q&A, I will then ask your questions on your behalf to Ivan and Trond. And with that, I turn the word over to you, Ivan. Eivind Kallevik: Thank you, Erik, and good morning, and welcome from me as well. As always, I will start with safety. Our top priority is to ensure the health and well-being of our employees. Now the positive development that we've seen over time continued into the fourth quarter. In fact, total recordable injuries and high-risk incidents are lower compared to last quarter, which was also a record low for Hydro. It is also worth mentioning that when looking at 2025 as a whole, we also had no fatalities or no life-changing injuries. On the other hand, we do know that this situation can change quickly. So to sustain these low numbers, that requires continuous attention and strong commitment from all employees across all our locations. And by ensuring a safe work environment, we can maintain a stable operation, which in turn enable us to deliver on our strategic ambitions. Now let's continue with the highlights of the quarter. EBITDA came in at roughly NOK 5.6 billion, with free cash flow of NOK 4.6 billion, yielding an adjusted RoaCE for the year at 10.2%. And that is above our target of 10% over the cycle. In short, the fourth quarter saw strong metal prices, high upstream production volumes and very healthy cash generation. Looking closer at the highlights listed here. First of all, alumina production are above nameplate capacity for the fourth quarter and the smelter production was also up 2.5%. On the Energy side, we can report an increased power production of some 13.6% year-over-year. We are continuously working to secure more long-term power contracts, and we are pleased to report 2 new long-term power contracts as well as the power plant investment in Norway during the quarter. Due to increased volatility driven by the global uncertainty, we have also made several difficult but also necessary restructuring decisions in the recent months during Q4. We've completed the strategic workforce reduction as planned, and we also proposed the closure of 5 European extrusion plants. And finally, the Board of Directors decided to propose a dividend of NOK 3 per share, and this is 60% of adjusted net income above the minimum threshold of 50% as decided by our distribution policy. Now we've made good progress on the strategy this quarter with several key milestones achieved. On the upstream side, both Bauxite & Alumina and Aluminum Metal have delivered good production numbers. In B&A, the Alunorte refinery experienced improved flow through the plant and high equipment availability, resulting in production above nameplate capacity. In addition, we also saw one of the highest commercial sales volumes ever in Bauxite & Alumina in the fourth quarter. As a result, in the 2025, B&A delivered its second best EBITDA ever. In Aluminum Metal, our smelter system also delivered stable performance and primary aluminum production increased some 2.5% year-over-year in the fourth quarter. As previously communicated, the Norwegian capacity that was curtailed back in 2022 is now being ramped up, and we expect to increase production by some 50,000 to 60,000 tonnes during 2026 and then comparing to '25. We expect to reach the production speed during the summer of '26. Now moving to power sourcing. For our Norwegian smelters, one of our key priorities is to secure long-term and competitive renewable power to support competitiveness as well as our low carbon position. In Q4, we have made good progress in this regard, signing 2 power purchase agreements with Hafslund, one in November and one in December. Putting these agreements together cover the period between 2031 and 2040 with a total volume of 5.25 terawatt hours. The contracts are in the price area NO3, covering the Sundal and Hojangar assets that we have. In addition to working actively on third-party sourcing, we are continuing to invest in our own hydropower system. And in Q4, we took the final investment decision on the Illvatn pumped storage power plant. And this is Hydro's biggest investment in the Norwegian hydropower system since 2004, with a gross investment of NOK 2.5 billion and net investment after tax of some NOK 1.2 billion. The Illvatn pumped storage plant will also contribute with increased power production, reservoir capacity as well as installed power capacity from our facilities in Fortun. And then lastly, cost control. One of the things we talked a lot about in 2025 was uncertainty and the need to take proactive measures. So in Q3, we announced the strategic workforce reduction for white-collar employees on a global scale. This program concluded in fourth quarter with around 850 white-collar employees having either left or will leave the company within the first half of 2026. The FTE reduction, together with reduced spending on consultants and travel, will yield savings of roughly NOK 1 billion per year starting now in 2026. Likewise, just before our Investor Day late in November, we did announce the proposed closure of 5 European extrusion plants. We have now confirmed the closure of 2 of the plants, Bedwas and Cheltenham in the U.K., and the process around the remaining 3 plants is still ongoing. As we all know, Extrusions has faced market headwinds also during 2025, which has negatively impacted their results. On the other side, the Extrusion organization has worked hard on cost control and mitigating actions, which enabled them to deliver a good and positive cash flow from the business area in 2025. Now turning to Bauxite & Alumina. In the fourth quarter, oversupply in the alumina market put a continued downward pressure on PAX. And according to CRU, 2025 ended with a small surplus of around 700,000 tonnes. This is expected to narrow somewhat to about 500,000 tonnes in 2026 in the roughly 145 million global market for alumina. As a result, the market remains sensitive to any production disruptions or delays in ramp-up of new facilities. During the quarter, new refineries in Indonesia continued to ramp up production, while alumina prices in China declined. This pushed the PAX index down to $306 per tonne at the quarter end from $321 in the third quarter. In China, bauxite import prices remained stable at around $70 per tonne on a CIF basis. Import volumes, on the other hand, increased by some 10% year-on-year, to 43.5 million tonnes imports from Guinea, increasing with 20%, while shipments from Australia declined by some 9%. Then moving on to LME. Now looking at the global primary aluminum balance in 2025, external sources estimated a global deficit of primary aluminum at around 0.3 million tonnes. The 3-month aluminum price increased throughout the fourth quarter of 2025, starting the quarter at $2,688 per tonne and ending at $2,995 per metric ton. This rally was likely supported by a weaker dollar, news of a potential shutdown of the Mozal smelter in Mozambique and a broadly bullish sentiment across base and precious metals. The U.S. Midwest premium continued to surge in the fourth quarter, moving from around $1,675 per tonne at the start of the quarter to just above $2,000 by quarter end. And this increase reflects the market fully pricing in the 50% import duty under the Section 232 tariffs, highlighting both the underlying structural aluminum deficit in the U.S. as well as the continued need to attract metal into the domestic market. In Europe, duty paid standard ingot premiums ended the fourth quarter at $335 per tonne, up from $223 per tonne at the end of the third quarter. This is due to the tightening supply situation that we have and certainly some CBAM front-loading also going into 2026. As in previous quarters, Hydro's primary concern remains the risk of a broader global economic slowdown driven by tariffs and trade tensions, which could weaken demand and put pressure on the current price levels that we see today. Now moving downstream. We see Extrusion demand ended in 2025 with a modest increase in Europe and a modest decrease in North America compared to the last year. In Europe, Extrusion demand is estimated to have been flat in the fourth quarter of 2025 compared to the same quarter last year but increasing 3% compared to the third quarter. Demand from building and construction and industrial segments have stabilized at historically low levels with some improvements in order bookings. Automotive demand has been negatively impacted by lower European light vehicle production but has been partly offset by increased production of electric vehicles. And CRU estimates that the European demand for extruded products will increase 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have increased by 1% in 2025 compared to '24, with current estimates for '26 as compared to 2025 coming in at 3%. In North America, Extrusion demand is estimated to have been flat in the fourth quarter of '25 compared to the same quarter last year, but it did decrease 8% compared to the third quarter, which is partly driven by seasonality. Extrusion demand has continued to be very weak in the commercial transport segment, driven by lower trailer builds. Automotive demand in the U.S. has also been weak. Demand within building and construction has been positive as well as within certain industrial segments. At the same time, Extrusion demand across segments is being subdued due to higher product prices resulting from tariffs and duties on aluminum in the U.S. CRU estimates that North American demand for extruded products will decrease some 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have decreased by 2% in 2025 compared to 2024, but there is an expectation of a growth of 1% in 2026 compared to '25. And let me then give the word to Trond Olaf for the financial update. Trond Christophersen: Thank you, Ivan, and good morning, and welcome from me as well. We'll start my part with the financial highlights for the quarter. Comparing year-over-year, revenues fell by around 14% to NOK 47 billion for Q4, driven by lower alumina prices. For Q4, we have an adjusted EBITDA of NOK 5.6 billion and a reported EBITDA of almost NOK 2 billion, meaning that we have adjusting items of around NOK 3.6 billion. The main adjusting item is unrealized derivative loss, mainly on LME-related contracts of NOK 2.3 billion. We also have rationalization charges and closure costs of NOK 1.3 billion, mainly related to the restructuring of Extrusion Europe. There were also smaller positive adjusting items from FX and divestments. The adjusted EBIT for Q4 was NOK 2.9 billion, with a reported EBIT of negative NOK 1.5 billion. In addition to the EBITDA adjusting items, there were NOK 700 million in adjusting items impacting EBIT related to impairments. The difference between the adjusted and the reported EBIT was therefore negative NOK 4.3 billion. Net financial expense for Q4 was around negative NOK 600 million. Interest and other financial income was NOK 430 million, offset by interest and finance expense of NOK 470 million and foreign exchange losses of NOK 575 million, mainly reflecting a weaker BRL versus U.S. dollar. The income tax expense was NOK 57 million in Q4, impacted by negative earnings before tax, offset by higher power surtax. Overall, this results in an adjusted net income of NOK 1.7 billion with reported net income of negative NOK 2.2 billion. The total adjusting items to net income was NOK 3.8 billion, which is the sum of the EBIT adjusting items plus a net foreign exchange loss of NOK 575 million and an income tax effect of negative NOK 1 billion. Adjusted net income is down from NOK 2.6 billion in the same quarter last year and down from NOK 1.9 billion in Q3. Consequently, adjusted EPS was NOK 0.7 per share. When looking at results Q4 versus Q3, adjusted EBITDA decreased by NOK 400 million from NOK 6 billion to NOK 5.6 billion. The main driver was lower Extrusion results -- realized results. Realized all-in aluminum prices contributed positively by NOK 800 million, and alumina price contributed negatively by NOK 300 million, for a net effect of around positive NOK 500 million. Upstream volumes contributed positively by NOK 300 million, driven by alumina production above nameplate capacity and high commercial alumina trading volumes. Lower raw material costs in Bauxite & Alumina and lower alumina costs in Aluminum Metal contributed positively by NOK 400 million. Extrusions and recycling margins and volumes had a negative impact of around NOK 1 billion, driven by seasonally lower volumes and lower margins in extrusion. In Energy, higher production and prices were partly offset by lower gains on price area differences, with a net positive impact of around NOK 300 million for the quarter. Fixed costs were around NOK 400 million, higher compared to the Q3, mainly in Aluminum Metal and Extrusions and mainly driven by seasonal effects. Currency effects positively impacted results by around NOK 100 million. The final negative effect of NOK 500 million is mainly related to other and eliminations. The eliminations this quarter amounted to approximately NOK 300 million on the profits on the increased volume in B&A. And this concludes the adjusted EBITDA development from NOK 6 billion in Q3 to NOK 5.6 billion in Q4. When looking at the full year EBITDA development from 2024 to 2025, adjusted EBITDA increased by NOK 2.6 billion, from NOK 26.3 billion to NOK 28.9 billion. The main drivers were higher aluminum price and normalizing eliminations, offset by stronger NOK versus U.S. dollar. Realized all-in aluminum and alumina price contributed positively with around NOK 2.3 billion, where higher aluminum price was partly offset by lower alumina price. Upstream volume development had a net positive impact of NOK 500 million, with higher sales volumes in both B&A and Aluminum Metal. Raw material costs improved with NOK 500 million. B&A saw an improvement of NOK 1.1 billion, where the fuel switch savings were partly offset by higher costs for other raw materials. Raw material costs in aluminum metal increased by NOK 600 million on higher alumina costs. The downstream segments contributed to -- continued to face headwinds in 2025, leading to a total negative effect of around NOK 400 million. Extrusions experienced headwinds of around NOK 700 million from reduced volumes and margins, while the recycling results in Metal Markets improved by NOK 300 million. Furthermore, we saw a net positive impact of NOK 800 million due to higher energy prices, production and gain on price area differences compared to 2024. Fixed costs increased in 2025 with an impact of NOK 800 million, where increased fixed cost upstream, mainly related to inflation and salary adjustments, were partly offset by reduced fixed cost in Extrusions. We also saw a negative NOK 2.7 billion in currency effects, mainly driven by the stronger NOK versus U.S. dollar. The final contribution of NOK 2.4 billion was driven by NOK 2.6 billion in realization of previously eliminated internal margins. And this was partly offset by NOK 200 million in net other effects. Then moving on to debt. And when looking at the debt development through the quarter, net debt decreased by NOK 3.9 billion since Q3. Based on the starting point of NOK 13.6 billion in net debt in Q3, we had a positive contribution in adjusted EBITDA of NOK 5.6 billion. During Q4, we saw a net operating capital release of NOK 1.4 billion, mainly driven by a release in net accounts receivable and accounts payable, partly offset by increased inventories and receivables related to CO2 compensation. Under other operating cash flow, we had a positive NOK 1.6 billion impact, mainly driven by dividend contributions from equity accounted investments and adjustment for noncash effective bonus accruals, partly offset by interest payments. On the investment side, we had a net cash effective investments of NOK 4 billion, reflecting the typical high maintenance investment activity level at the end of the year. As a result, we had positive free cash flow of NOK 4.6 billion in Q4. We also had negative other effects of NOK 700 million, and this was mainly driven by negative FX effects on debt and new leases. As we move on to the adjustment related to adjusted net debt, hedging collateral has increased by NOK 600 million since the end of Q3. Furthermore, during Q4, the net positive pension position increased by NOK 300 million. And finally, we had an increase of NOK 700 million in other liabilities during Q4, mainly explained by increased provisions related to restructuring in Extrusion Europe. And with those effects taken into account, we end up with an adjusted net debt position at the end of Q4 of NOK 18.2 billion. Moving then to the business areas and starting with Bauxite & Alumina. Adjusted EBITDA for Bauxite & Alumina decreased from NOK 5 billion in Q4 '24 to NOK 1.4 billion in Q4 '25. This was mainly driven by lower alumina prices and negative currency effects caused by a weaker U.S. dollar against the Norwegian kroner. This was partly offset by higher sales volumes and strong trading results in B&A. Compared to Q3 '25, the adjusted EBITDA increased from NOK 1.3 billion to NOK 1.4 billion in Q4 '25, mainly driven by higher sales volumes and strong commercial results. Production volumes ended the quarter above nameplate capacity following high equipment availability and improved refinery flow. Alumina realized prices declined during the quarter but remained above market prices indications, supported by intra-group pricing mechanisms. Raw material costs were lower compared with the Q3, driven by lower caustic soda and coal prices, and fixed costs remained roughly stable. Moving then to the Q1 outlook. For Q1, we expect fixed and raw material costs to remain stable. Production volumes are expected to decline seasonally, reflecting fewer operating days in Q1 and scheduled maintenance activities. Realized alumina prices are anticipated to continue correcting in line with market trends, while trading results are expected to return to more normalized lower levels. Moving then to Aluminum Metal. Adjusted EBITDA increased from NOK 1.9 billion in Q4 '24 to NOK 3.7 billion this quarter. The main drivers year-on-year were higher all-in metal prices and reduced alumina costs, partly offset by negative currency effects. Compared to Q3 '25, adjusted EBITDA for aluminum metal, increased from NOK 2.7 billion, and this was driven by higher all-in metal prices and lower alumina costs, partly offset by seasonally higher fixed costs. The alumina cost reduction of approximately NOK 200 million drove raw material cost savings above our Q3 guidance of a flat impact. The guided seasonal increase in fixed costs ended slightly above our guidance of around NOK 220 million. And this brings me over to the Q1 outlook. For Q1, AM has booked 70% of the primary production at USD 2,803 per tonne. This includes the effect of our strategic hedging program. We have also booked 40% of the premiums affecting Q1 at USD 478 per tonne. We expect the realized premium to end up in the range of USD 380 to USD 430 per tonne. On the cost side, raw material expenses are expected to increase by NOK 100 million to NOK 200 million, primarily driven by LME-linked energy costs in our joint venture portfolio. Fixed costs are expected to increase by NOK 50 million to NOK 150 million, driven by seasonality, and sales volumes are also expected to increase. For Metal Markets, the adjusted EBITDA decreased in Q4 from NOK 319 million in Q4 '24 to negative NOK 56 million due to lower results from sourcing and trading activities and negative currency and inventory valuation effects. Those were partly offset by increased results from recyclers. Excluding the currency and inventory valuation effects, the result for Q4 was NOK 39 million, down from NOK 115 million in Q4 '24. Compared to Q3, adjusted EBITDA for Metal Markets decreased from NOK 154 million due to lower results from recyclers and from sourcing and trading activities. Recycling results ended lower at NOK 48 million, down from NOK 93 million last quarter. Decrease was primarily driven by challenging market conditions for the European recycling operations. For Q1, we expect stable recycling results. In our commercial segment, we also anticipate higher contribution from sourcing and trading activities in Q1. As always, we emphasize the inherent volatility of trading and currency fluctuations. And for 2026, we expect the commercial adjusted EBITDA, excluding currency and inventory valuation effects, to be in the range of NOK 200 million to NOK 400 million. Moving then to Extrusions. For Extrusions, the adjusted EBITDA decreased year-over-year from NOK 371 million to a negative NOK 62 million, driven by lower margins and sales volumes. Still strong focus on cost control and portfolio optimizations have contributed to a full year 2025 positive cash flow. We saw 1% decline in sales volumes as well as strong pressure on sales margins across the portfolio. Similar to the previous quarter, transport volume developments were negative, but headwinds are moderating compared to previous quarters. Shipments to the transport market were down 4%, negatively impacted by North America. Automotive sales in Q4 were still negative in both Europe and North America, driven by continued moderate production at some car manufacturers. Sales volumes growth in the industrial segment ended 8% higher in Q4, while sales in the distribution segment increased by 6% in Q4, mainly driven by increased shipments in the U.S. After a significant increase in volumes in the HVAC&R segment previously in 2025, the trend turned negative in Q4 '25, mainly caused by tighter consumer spending and inventory offloading at customers. The metal effect for the quarter ended at NOK 160 million. Compared to Q3 '25, adjusted EBITDA for Extrusions decreased from NOK 1.1 billion in Q3 to negative NOK 62 million in Q4 due to seasonally lower sales volumes, partly offset by lower costs. When looking at Q1, we always compare it to the same quarter last year, and this helps to capture the typical seasonal patterns we see in Extrusions. Looking at external market data, volumes in Europe are expected to increase moderately by 1%, while North America shows a slight decline of about 1%. We expect our European sales to be largely stable, while our North American sales are expected to decrease slightly more than the external market estimate due to our high exposure to commercial transport and distribution. Margins are expected to remain more or less stable with some improvements expected in North America due to favorable scrap prices. On the metal side, we expect flat metal effect development compared with the same quarter last year. It is, however, important to note that the metal effect are highly dependent on movements in the Midwest premium. Moving then to the final business area, Energy. The adjusted EBITDA for Q4 decreased to NOK 1.1 billion compared to NOK 1.2 billion in Q4 '24. The decrease was mainly due to lower gain on price area differences, offset by higher production and higher prices compared to Q3. Compared to Q3, adjusted EBITDA increased from NOK 828 million, mainly due to high seasonal production. Some of this increase is also due to planned maintenance that will be done during Q1. The price area gain was NOK 37 million in Q4, at significantly lower level than in Q3, following a seasonal convergence between the area prices. Looking into Q1, as always, we should be aware of the inherent price and volume uncertainty in Energy. For the next quarter, production is expected to decrease due to power plant maintenance and to be below the normal seasonal levels. While price area while prices are expected to increase with the seasonality, price area gains are expected to decline further. And then moving to the dividends. This year, the Board of Directors has proposed a distribution to shareholders of NOK 5.9 billion. This will be distributed as an ordinary cash dividend of NOK 3 per share. The dividend proposal represents a cash distribution of 60% of adjusted net income, a year-end yield of around 3.8% and a 5-year average payout ratio of 65%. Hydro's capital structure policy to maintain an adjusted net debt target over the cycle of around NOK 25 billion at the year-end, including proposed shareholder distribution to be paid year after remains unchanged. As always, the final distribution for 2025 is subject to approval by the Annual General Meeting in May 2026. And with this, I end the financial update and give the word back to Ivan. Eivind Kallevik: So let me conclude today's session by outlining our priorities going forward. First and foremost, it's health and safety. This remains a nonnegotiable for Hydro. We see that building a strong safety culture has a positive impact on our performance metrics. And we need to continue learning and improving to keep these numbers low also going forward. Secondly, through uncertain times, we are taking measures to improve our robustness. Cost control measures such as the strategic workforce reduction and restructuring in extrusions are helping us to grow with the right structure going forward. Our strategic growth areas remain recycling, extrusions and renewable energy. While we do recognize the current market challenges, we also see meaningful progress, including the new long-term power contracts secured in Q4 in addition to the upgrade of our own power plants. Lastly, we continue to deliver on our decarbonization and technology road map while seizing opportunities in greener aluminum. One concrete example from Q4 is our new partnership with the University of Michigan, which is aimed at translating innovation rapidly from lab to production. This positions Hydro to support customers in reducing emissions and to future-proof their own supply chains. So to sum up, we remain fully committed to our 2030 strategy, and the fourth quarter of 2025 demonstrated important steps in the right direction. With that, I want to thank you all for your attention, and then over to you, Erik. Baard Haugen: Thank you, Ivan, and thank you, Trond Olaf. We will then commence the Q&A. And just a remind, If you do have questions, please type them in the box on the screen, and I will then read your questions to Ivan and Trond Olaf. And I think we have a few questions already. So let's get started. First one is from Marina from RBC. Based on the order book, how confident are you in a volume recovery in Extrusions in the second half of 2026? Eivind Kallevik: So when we look at the extrusion order book, that is typically pretty close in time. Very seldom do you have extrusion companies booking into the second half. So we'll still need to see the economic growth coming in into the second half from orders as we get later on in the year. What's important, I think, for us, at least when we look at the automotive sales, for instance, several of the new contracts that we have talked about that we have booked in the last couple of years, they are now coming into production. But seen from an internal viewpoint in the company, it's too early to sort of conclude where we see the second half on the extrusion side. Baard Haugen: Okay. Next one is from Liam from Deutsche, also on Extrusions. Can you clarify the guidance for Q1 '26 versus Q1 '25? Are you expecting broadly flat EBITDA year-on-year? What have been the cumulative one-off gains in Extrusions in 2025 from the high Midwest premiums? Trond Christophersen: Liam, so to comment on your question. So first, the last question. So in total, we had around NOK 700 million in positive metal effects in Extrusions in 2025. If you then look at the different parts of the extrusion guiding, you see that we guide on roughly flat metal effect, some pressure on volumes, but flattish development on the margin side. Baard Haugen: Then we have another question from Marina. You are guiding for higher fixed and raw material costs in your Aluminum Metal division. Can you elaborate on the key drivers? Eivind Kallevik: So let me comment on 2 things. So when you look at fixed cost, typically in Q4, you have the reversal of vacation accruals, which is done and then you don't have that into Q1. So that will drive fixed costs up somewhat. And then we have some of the power contracts within our joint venture portfolio that also has an LME link into it. So that will lift the Energy costs somewhat coming into first quarter and into 2026. Baard Haugen: Okay. And then we have another one from Liam. Does the cost guidance for Q1 factor in a stronger NOK? Trond Christophersen: Yes. So the cost guidance is based on the currency assumption some weeks back. So then you need to factor in any development after that. Baard Haugen: And then we have a question from Alain, Morgan Stanley. Q4 B&A beat expectations. Can you quantify the trading contribution in the quarter and indicate how much of this is sustainable into Q1 '26? Trond Christophersen: Yes. So we have around NOK 300 million in very strong commercial results in B&A in Q4. Baard Haugen: And then another question from Alain on B&A. Alunorte ran above nameplate in Q4. Is this operationally sustainable? Or should we expect normalization in 2026 due to maintenance or any bottlenecks? Eivind Kallevik: So I think when you look overall for the year, we still have a target to produce at nameplate capacity, which we showed also in the fourth quarter. Now when we look at first quarter of '26, you should expect volumes to come down somewhat, driven by 2 things. One is that there are fewer production days in Q1. And secondly, also that we will have some planned maintenance in the first quarter. So a little bit lower production speed in Q1. But over the year, we should be still targeting nameplate capacity. Baard Haugen: And then there doesn't seem to be any other further questions. So if nothing else comes in, I think we will say thank you all for joining us here today. And if you do have any further questions, please don't hesitate to reach out to Investor Relations. Thank you.
Operator: Welcome to Camurus' Q4 Report 2025. [Operator Instructions] Now I'll hand the conference over to CEO, Fred Tiberg. Please go ahead. Fredrik Tiberg: Thank you, Einar, and hello, everyone. Welcome to our fourth quarter earnings call and full year. As customary, please note our forward-looking statements, which I will assume that you have read. So moving over to the agenda, we will begin today's call with an introduction and business highlights, followed by financial, commercial, and R&D pipeline reviews before finishing off with the key takeaways and Q&A. With me in the call today is Anders Vadsholt, Chief Financial Officer; and Richard Jameson, Chief Commercial Officer. So a quick overview of Camurus. We are a rapidly growing commercial stage biopharmaceutical company focused on developing and delivering innovative long-acting treatments for people living with serious and chronic illnesses. We have become a global leader in opioid dependence therapy with our products, Buvidal and Brixadi. Our commercial reach covers Europe and Australia, and we are now expanding into the U.S. as we gear up for upcoming product launches. At the core of our offerings is the FluidCrystal technology, which supports advanced long-acting injectable treatments and has proven successful through both our commercial and clinical results and collaborations. Alongside our meaningful investments in the R&D pipeline, we have maintained sustainable profitability since 2022, placing us in a good position for ongoing growth. Now turning to full year highlights. In 2025, we achieved several significant milestones that further strengthened our leadership in opioid dependence treatment and our ongoing expansion. We continue to build momentum with Buvidal and Brixadi, expanding their reach and impact across key regions. Importantly, the first of our new wave products, Oczyesa, received regulatory approval for acromegaly in both EU and the U.K. Supporting our strategic expansion into the U.S., the commercial infrastructure is now firmly established, positioning the company for upcoming launches and long-term success in this critical market. During the year, we also entered a strategic license agreement with Lilly, opening new opportunities in the long-acting incretin therapy space. The year also marked substantial improvements in sustainability performance, evidenced by high external ratings and reinforcing our commitment to responsible and sustainable business practices. As a testament to the performance of our teams, full year revenues for 2025 continued their positive trajectory, reaching SEK 2.3 billion. At the same time, profit before tax increased to just above SEK 0.9 billion, accomplished while maintaining significant investments in R&D and expanding the U.S. operations. In the fourth quarter, results demonstrated a balanced performance with an overall positive conclusion for the year. Brixadi royalties in the U.S. showed strong year-on-year growth of 47% and increased 82% at constant exchange rate. Buvidal sales declined temporarily due to FX headwinds and the change in our U.K. distribution model. The launch of Oczyesa in Germany represented a notable milestone as it is the first European country to introduce this product to patients with acromegaly. Turning to R&D. We resubmitted the NDA for Oclaiz, which the FDA now has accepted with a PDUFA date in June. Additionally, we reported compelling Phase Ib results for CAM2056. [Technical Difficulty] Operator: [Foreign language] Yes, and now we seem to be back again. Yes, and we're back. You can continue now, Anders. Anders Vadsholt: Okay. Thank you. Camurus reported quarterly revenue of SEK 464 million, down from SEK 553 million, a 16% decline compared to the same period last year, while quarterly product sales reached SEK 342 million, reflecting a 27% decrease. This reduction is primarily due to a change in the U.K. distribution model. Consequently, we repurchased SEK 93 million worth of inventory from our U.K. wholesaler. Quarterly royalty income from Brixadi sales in the U.S. increased by 47% year-on-year, reaching SEK 122 million. A potential milestone payment from Braeburn relating to Brixadi sales is now expected in 2026. Full year revenue reached SEK 2.27 billion, up from SEK 1.87 billion, representing a 21% growth or 30% at constant exchange rates. Product sales increased by 6%, while the Brixadi royalty income increased by 87%. When reviewing operating costs, marketing and distribution expenses decreased by 12% during the quarter, but increased 7% over the year. The annual increase was mainly driven by the commercial rollout of Buvidal in Europe and Australia as well as company's expansion in the U.S. In R&D, we observed a 20% -- 25% reduction in cost during the quarter and a 24% reduction for the full year. This reduction results from the completion of clinical trials of CAM2029 and CAM2056 with new trials scheduled for 2026. Some costs related to the SORENTO study have been deferred to 2026. The increase in general and administrative expenses is primarily due to a change in Camurus' internal cost allocation model. And additionally, we have boosted our investment in digitalization throughout the organization. The operating result for the quarter decreased 32% to SEK 113 million, while the full year results increased with 86% to SEK 874 million. Buvidal sales and Brixadi royalty income mainly drove the increase. Looking at the quarter's cash flow. The cash position increased by SEK 211 million, mainly driven by the operating activities, which contributed SEK 111 million and a change in working capital, adding SEK 144 million. Investment reduced cash by SEK 46 million, resulting in a net cash position of SEK 3.7 billion, a 30% increase from previous year. Moving to 2026 financial guidance. The key considerations for the guidance are anticipated market dynamics and competitive developments, pricing conditions, and the reimbursement landscape, clinical progress and regulatory outcome, and not least the current macroeconomic uncertainties. We expect an increase in OpEx to be primarily caused by organizational expansion and increased R&D activities. An additional SEK 200 million will be allocated to expanding U.S. operations in preparation of the planned Oclaiz launch mid-2026. And R&D expenses are expected to increase by roughly SEK 150 million. We provide guidance on revenue and profit. We have shifted from reporting profit before tax to operating results. Revenues consist of product sales, including royalties and milestones. Potential license income from new and existing development partners are not included. Our full year 2026 outlook is as follows: Revenue guidance is SEK 2.6 billion to SEK 2.9 billion, an increase of approximately 21%, operating result in the range of SEK 0.9 billion to SEK 1.2 billion, an increase of approximately 20%. The numbers are reported or measured at constant exchange rate. With that, I would like to hand over to Richard. Richard Jameson: Thank you, Anders. So I'll start with Camurus markets. As already stated, invoice sales were impacted due to a onetime accounting adjustment associated with the change to the U.K. distribution model at the end of the period. Importantly, though, across markets, the underlying in-market growth remained solid, growing at 5% quarter-on-quarter with notable performances from Australia, which continues to grow from a high base and Buvidal is maintaining its leadership position in the long-acting buprenorphine segment. And in the Nordics, where Buvidal continues to gain market share, which has increased by the competitor withdrawal from the market. And the U.K. showed improved growth, mainly from the criminal justice system as NHS England funding is reaching those treatment centers. On a full year basis, overall growth was 17% at constant exchange rate versus 2024 with a growth spread across geographies. Those markets with high Buvidal penetration, such as Australia, the Nordics, grew at 15% from their high basis. A positive contribution was achieved from the larger European markets that have lower penetration due to access issues. These markets grew in the region of 21%. And at the end of '25, there are an estimated 7,000 patients currently in treatment with Buvidal, a net gain of 3,000 patients in the quarter. There remains a significant growth opportunity to Buvidal and notably in those larger European markets. As I already mentioned, in countries where funding and access hurdles have been addressed, penetration is high. In Australia, Nordics, Scotland and Wales, Buvidal share ranges from 26% to 70% with an average of 35% of all patients, and we expect continued growth in 2026. In the larger markets where access is currently limited to Buvidal, Buvidal has gained single-digit share of patients in treatment. So it represents a significant opportunity when the funding and infrastructure issues are addressed. In England and France, the main challenge remains the prioritization for funding in this area. In Spain and France, there are restrictions on Buvidal access, either which patients are approved for treatment or limitations on the treatment setting where Buvidal can be prescribed. We achieved a notable success in Q4 where we reached agreement in Spain with the Spanish Ministry of Health to remove restrictions on the patient populations for Buvidal, allowing access to the large methadone segment. And in Germany, physician remuneration remains the hurdle. Additionally, we continue to expand geographically in other markets where our focus is penetration to deliver double-digit growth in 2026. Now to address the challenge -- access challenges in these high potential markets, the teams are focused and delivering on critical policy affairs programs that call for and drive improved patient access. On the next slide, there are some examples of the outcomes already achieved from these programs and the growing support from across stakeholder groups for broader access to long-acting injectable buprenorphine, which we expect to drive growth in 2026. So take these in turn, in the U.K., the Home Office Select Committee, the Justice Committee, the Independent Review on Drugs and a recent report from the Experience in Wales have all called for improved access to long-acting injectable buprenorphine. We are already seeing good access in prisons, though challenges remain in the community setting, and we have ongoing discussions with the Department of Health to address this. In France, reports from both the senate and the assembly have similarly made calls for improved access and some progress has been made in funding for Buvidal at both the national and the regional level. In Germany, again, there's wide stakeholder support from physician societies, patient organizations, and policymakers such as the drug policy group in the Bavarian Parliament for change in the remuneration system to allow access to innovative treatments. The progress on this is slow. However, it is understood that there are ongoing discussions on this topic with the regional and federal associations of physicians and the health insurers. In Spain, as mentioned already, restrictions on patient access have now been removed. With this growing policy support for better access, we continue to work with payers to find ways to deliver on changes that will allow more patients to benefit from the advantages Buvidal brings. Now moving across to the U.S. Brixadi continued its strong performance in the year with Q4 royalties of SEK 122 million, up 10% from previous quarter and 40% -- 47% year-on-year. For the full year, Brixadi royalty grew 113% at constant exchange rate versus '24. According to our estimates, Brixadi has captured at least 30% of the long-acting buprenorphine segment. In the U.S., this segment, the long-acting buprenorphine segment is now above SEK 1 billion in annual sales. Looking ahead to '26, continued market penetration is expected. The key areas of focus remain conversion of patients from daily sublingual buprenorphine. Note there are an estimated 2 million patients that access treatment on sublingual buprenorphine in a year. Also improving access for patients outside of treatment or in the criminal justice setting. And we -- and Braeburn, our partner, continues to communicate the evidence base and the clear value proposition of Brixadi. So overall, we remain optimistic about the prospects of Brixadi in the U.S. and the potential for significant growth in the coming years. And in parallel to this, we are preparing for the launches of Oczyesa in Europe, the first monthly subcutaneous octreotide medication that enables convenient self-administration for patients and enhanced octreotide plasma exposure. The European launch has now been initiated in the Wave 1 countries that have an estimated 4,000 to 5,000 acromegaly patients currently treated with first-generation SRLs. The response to Oczyesa from physicians and patients has so far been encouraging with a positive view on the product profile and the clinical data and market research shows a high willingness to switch to Oczyesa from current SRLs. In our first launch market, Germany, we've seen a strong start with the uptake in the first month of launch an estimated 20 patients, which is about 1% share and high patient engagement with the advantages of the simple self-administration. In addition, initial feedback from other payers has been favorable and pricing is now approved in the U.K. and Norway, where we're now ready to launch. And with the resubmission of the NDA for Oclaiz, we're also gearing up, as Fredrik said, for the U.S. launch mid-2026. The team is launched ready with a clear understanding of the market, a developed go-to-market strategy that includes market access, advocacy, and distribution plans. During the review time of the NDA, we will take the opportunity to build the sales leadership, followed by the sales team's onboarding and look forward to the execution of the launch plan if approval is granted. And on this, I will hand back to Fredrik. Fredrik Tiberg: Thank you so much, Richard. I will continue with a brief summary of the R&D advancements in the fourth quarter. So starting out with the progress in the octreotide depot program for acromegaly, gastroenteropancreatic neuroendocrine tumors and polycystic liver disease. The overall clinical program for CAM2029 is nearing completion across indications. We have successfully wrapped up the ACROINNOVA program, which delivered strong results from 2 pivotal Phase III studies and an open-label extension. In gastroenteropancreatic neuroendocrine tumors, SORENTO study is making solid progress and remains on track for reaching the critical readout of primary efficacy results in the second half of the year. Additionally, the open-label extension of the POSITANO study continues to advance following the achievement of positive results for the primary endpoint during the core phase of the study. Now moving over to development update by indication. In acromegaly, we received significant milestones. Oczyesa, as we mentioned before, was approved both in the European Union and the U.K. in 2025, marking a major regulatory success in the year. Following this, we launched Oczyesa in Germany in the fourth quarter and broadening out our commercial presence in Europe. Turning to the U.S. We resubmitted the new drug application for Oclaiz to the FDA on the 10th of December after receiving green light from our contract manufacturer partner. And the FDA accepted this after the year as a Class 2 review, setting a PDUFA date target of 10th of June 2026 and positioning Oclaiz for potential U.S. approval and market entry shortly thereafter. Moving over to GEP-NET and the ongoing Phase III study. As you know, SORENTO is the largest clinical study to date for GEP-NET using a somatostatin analog, directly comparing CAM2029 with current standard of care. The study is progressing according to plan with a target of 194 progression-free events required to reach the primary endpoint readout in the second half of the present year. Importantly, compared with earlier trials with SSAs in this indication, SORENTO has enrolled patients with more advanced disease, including a majority of Grade 2 and Grade 3 neuroendocrine tumor patients. As we await the results, our teams remain focused on robust study conduct, rigorous data cleaning, and maintaining the highest study quality to enable rapid and reliable top line result announcement. The upcoming results will represent a major milestone for Camurus, marking the culmination of nearly 5 years of patient treatment and study efforts. Commercially, this represents a significant opportunity for the company with global peak sales estimated around USD 2 billion currently. Finishing off with the CAM2029 in polycystic liver disease, where we have in the process of completing the 30-month POSITANO extension phase, as mentioned before, our regulatory and clinical teams have prepared an end of Phase II meeting with the FDA scheduled for March to discuss the design of the pivotal Phase III study. In summary, we achieved significant progress with 2029 across the 3 indications, and we anticipate an eventful period ahead. Moving over to the early pipeline. A clear highlight of the fourth quarter was the positive top line results from our Phase Ib study of the monthly formulation of semaglutide CAM2056 in patients with overweight or obesity. This study featured a randomized comparison to the current weekly semaglutide formulation as well as dose escalations. The results exceeded our expectations and showed that CAM2056 achieved faster and greater reductions in body weight and blood glucose compared to Wegovy with a similar safety and tolerability profile up to the highest dose. This slide summarizes the Phase Ib study design for CAM2056 with the 5 dosing regimens across 80 patients using both randomized and dose escalation parts. The study allowed us to compare directly against weekly semaglutide and to define the optimal initiation and titration strategy for a monthly formulation. On the next slide here, as you can see, CAM2056 delivered substantially greater reductions of body weight and A1c compared to the weekly semaglutide over the treatment period. By day 85, that is after 3 months of treatment, Group 4 achieved a 9.3% weight reduction with CAM2056 versus 5.2% with weekly semaglutide dosed according to label. And A1c declined by 0.44% versus 0.12%, which is in the significant clinical domain. The data clearly demonstrates the potential of FluidCrystal based formulation of semaglutide. And going forward, our next steps will be to build on the promising Phase Ib results, we are actively preparing for a Phase IIb study planned to begin in the second half of the year. In parallel, our R&D teams are preparing the final product presentation, which will feature a new auto-injector pen device to enhance dosing convenience for patients. The positive outcomes from the study not only support continued development of CAM2056, but also provide strong validation for the FluidCrystal technology platform. As such, these results reinforce the potential of using FluidCrystal technology for additional long-acting incretins as well as other peptide-based therapeutics, including in our ongoing collaborations with Lilly and the partnership -- the new partnership with Gubra. So with this, it's time to wrap up with some final comments. And I think we can say that 2025 was a year where Camurus made significant progress with major R&D milestones, solid growth, and high profitability. This year we aim to -- this year with that, I mean, 2026, we aim to expand our market leadership in opioid dependence treatment, launch Oczyesa and Oclaiz for acromegaly in Europe and the U.S., pending, of course, FDA approval, and move SORENTO to positive data readouts. New clinical trials will also begin for promising candidates like CAM2056. For further growth and diversification of our business, we will invest in our partnerships, intensify business development to secure new collaborations and potential strategic acquisitions. Our solid financial, operational, and scientific base gives us a clear path to sustainable value creation, and we are well positioned to make 2026 a transformative year. And with that said, I will thank you all for listening, and let's move over to Q&A. Operator: The first question comes from the line of Romy O'Connor from Lanschot Kempen. Romy O'Connor: Two questions, if I can. The first, in the annual report, it says that the core component phase of the SORENTO trial is now set to be completed in H2 '26. Can you clarify what this core component is? And is the top line data still then estimated for mid to late 2026? And the comments on the new auto-injector pen device. Can you provide any more color on this? Is this just for the CAM2056 asset? Fredrik Tiberg: Thank you, Romy. Well, with the core phase, we mean the randomized part of the study. So to the point where we can start reading out the data. And as to the injector -- auto-injector for CAM2056 that we are working to develop, we have been working with this for quite some time, and it will be a new device adopted specifically for CAM2056. Does that answer your questions? Romy O'Connor: Clear. Thank you so much. Yes, it does. Operator: The next question is from Gonzalo Artiach from Danske Bank. Gonzalo Artiach Castanon: Gonzalo Artiach from Danske Bank. Thank you for taking my questions. I have a couple of them. The first one, I'm trying to understand the FX impact, especially in the U.S. Could you give us some color on this on FX impact that you see there in the U.S., to trough is 17% headwind, if I understand correctly, on USD to Swedish krona, so how did you end up with 35% headwind? And the second question is on your 2027 goals. Have they changed based on how 2025 closed? I see that you guys still target 100,000 patients with Buvidal, but do you have any words on margin development? Are you still targeting around 50% for 2027? And anything on top line goal for that year would be appreciated. Fredrik Tiberg: So I think I'll leave the first question over to Anders when it comes to the dollar rate and its impact on our FX rates. Anders Vadsholt: Yes. So we've had a lot of fluctuation in the currencies during the year, primarily in the Australian dollar and the U.S. dollar, as you state. So it all depends on when we book, it is more a technical thing, when you book the invoices and so on, that's where you see the effect. But we have seen a decrease over the year from January all the way to December. So yes. Fredrik Tiberg: Gonzalo, can you give me just -- is that -- can you repeat the second question? Gonzalo Artiach Castanon: Yes, it's on your 2027 goals or targets that you have disclosed in the past. And what do you have to say in terms of your margin approach? Are you still targeting around 50%, your EBIT margin? And on the top line, any words on that also? Fredrik Tiberg: Yes. So we established the vision for 2027 in 2022, and we are working concisely and with a high dedication to achieve that. Obviously, there is still ways to go, but we are -- we maintain our goals currently, including the margin goals of approximately 50%. I want to highlight that this is and remains a vision for the company. Operator: The next question comes from Pauline Hendrickson, from Van Lanschot Kempen. Pauline Hendrickson: My question has already been answered. Operator: The next question is from Christopher Uhde from SEB. Christopher Uhde: So my first question is just whether -- to what extent your guidance range might reflect any concern about ongoing FX headwinds because, obviously, it was a headwind for your '25 delivery and you cut the guidance partly as a result. And obviously, it's only going to get worse. So you're fighting with one hand tied behind your back. That's my first question. Fredrik Tiberg: Anders, do you want to comment on? Anders Vadsholt: Yes. So -- yes. So we have definitely taken the currency exchange risk into consideration when providing the guidance. So -- and then we've made a thorough analysis on several expectations for the development. And also, I would say, when we look into the U.S., this year, we predominantly have income. Next year, we're also beginning to have some expenses because of the buildup. So it's -- now it's a more natural hedge. But of course, we are very much exposed to the U.S. dollar. Christopher Uhde: Okay. That was the first one. Secondly, I noted that you had mentioned the milestone from Braeburn in 2026. So is it fair to assume that that's in guidance? And can you give us an indication of the size? Is it similar to the last one you got from them? Fredrik Tiberg: So yes, good question. Obviously, we did not realize the milestone in 2025. So that -- but there are good reasons to expect the first milestone. We haven't received any sales milestones yet from the collaboration, but it's good -- there are good reasons to expect it in 2026. The size, you could say, I don't think we have given any exact size. It's the smaller of the 3. So -- and the total amount is $75 million. Christopher Uhde: Okay. Great. Thanks. That's helpful. Then my next question is on -- so SORENTO, is it in the -- likely to be in the early or late second half at this point, do you think? Fredrik Tiberg: I think there is still some uncertainty about that. I mean it depends on the accrual rates month-by-month and quarter-by-quarter. And of course, it's very difficult because it's an event-driven trial, it's very difficult to give exact predictions and it may vary between how patients were enrolled. We have, of course, our models, but they do give quite a big wide interval still. So we will get some more updates here, of course, in the early part of the year. And the more data we get, the better we are able to give an idea about when exactly we can start to read out and -- close and start to read out data. Christopher Uhde: Okay. Those are my sort of housekeeping questions. Then I have a question on revenue per patient because last 9 months, you can see a dip for Buvidal of about 25%, it looks like. How much of that is actual price pressure versus FX? And I have other questions if it's okay. Fredrik Tiberg: I'll leave it over to Richard to explain. Richard Jameson: Yes. So I mean, there's -- the first answer is the price is pretty stable across our markets. We're maintaining that without a problem. So there is obviously a country mix depending on the volume there because there are different prices in different markets and then the rest will be down to FX. Christopher Uhde: Okay. And -- all right. So then, I guess, just if you could -- is there a little bit more you can give us in terms of what's going on in the U.K. and Germany in terms of the status, and France, I should say, you did comment a little bit, but do you have any hints on whether momentum is gathering, let's say, for Germany, for example, with remuneration reform? Richard Jameson: Yes, sure. And good questions. I'll start with Germany then, is the one you mentioned there. So yes, I mean, as I said, there's quite a lot of support for change in this remuneration system. It's something that we cannot be involved with as an organization, but we understand there is ongoing and advancing discussions between the both national and federal physicians associations and the health insurances to change that, so they can open up access. And we've seen the growth -- there was a report came out of the Bavarian -- the drug strategy group of the Bavarian Parliament calling for the same thing. So I think there's growing momentum there. It's a bit unsure how we can say when the outcome will come, but we know there's ongoing discussions. And for the U.K., to answer your question there, it's -- we know Wales and Scotland are going very well. They have high penetration. They have funding available. England is our challenge. But again, there, there's clear demand from across many groups, as I said, from criminal justice, from health care, from health care professionals, and patients to have funding. We've seen the NHS England who are responsible for treatment in prisons making a significant commitment to funding over -- that started mid this year, mid-'25 and is continuing. And hence, we're seeing the growth we're seeing in the U.K. coming mostly from prisons. We know the U.K. government have now announced a 3-year funding settlement for public health, including a ring-fenced proportion for opioid dependence treatment. So we're in dialogue with the Department of Health, NHSE and other stakeholders to identify ways that the funding can be allocated to long-acting buprenorphine to meet the demand that's there. Christopher Uhde: Okay. That's very helpful. Can you -- is it possible to kind of give us gating events that remain for these things to happen in both Germany and U.K. and France, like specific events that -- so we... Richard Jameson: I think that's very difficult. This is policy change. And with the remuneration, we're not involved in that. So it's very hard to be able to judge when the timing on those things are. Operator: The next question is from Viktor Sundberg, Nordea. Viktor Sundberg: Yes, continuing maybe on the U.K. I guess this is perhaps the main uncertainty going into 2026. Can you give a bit more insights into if there's any stocking left at distributors that could impact sales here in 2026? And just remind us maybe if -- yes, when funding is expected to trickle down to clinics to improve the sentiment in the U.K.? Richard Jameson: Yes, sure, sure. So there's no more stock in the channel to answer that one quickly. Then the answer -- I mean, the NHS year runs from April to March. So the latest announcement from the government will come from April. How long that would take for the funding to reach the clinics is a moot point. We know that this year, there was an announcement, and it's been very slow in reaching the clinics, which is one of the reasons that it's been a bit slower than we anticipated after the announcement. So we're obviously doing everything we can to encourage responsible people to make that available to patients as soon as possible because there is a clear unmet need and patients are waiting to go on to treatment with Buvidal. Viktor Sundberg: Okay. So maybe it's more towards the end of 2026 or second half. Is that fair? Richard Jameson: I don't think we can say that now. I think there is potentially it could come. We know there's been a delay in '25 and people are putting pressure on that, so it could come earlier. Viktor Sundberg: Okay. And just on guidance also, could you specify a bit more what you mean with pricing conditions and reimbursement as something that could impact guidance, both on the upside and downside? And what the most important points here is also on -- in the U.S. here to keep in mind when you talk about competitive development that you mentioned in your guidance? Markus Johnsson: Yes. When it comes to pricing, of course, it is our current understanding of the pricing landscape, both for, of course, most importantly, for Buvidal and Brixadi. And we don't see that there is a big differences from year-to-year, at least not from 2025. It's relatively stable landscape there. When it comes to Oczyesa, I mean, we don't have that many uncertainties either because we got the approval, of course, in Germany of the price, and we have proceeded now with Norway and other markets. So I think that's what we mean. We are relative -- we are building it on our current understanding of the pricing situation and the reimbursement willingness in our different markets. Viktor Sundberg: Okay. And I just had a final one also on FluidCrystal maybe in general. You have had a lot of data pointing to that FluidCrystal also enhances existing drugs bioavailability in your trials. And I guess we saw evidence of this again in your trial with semaglutide. But have you done any more analysis on that on your semaglutide data supporting that bioavailability is higher with FluidCrystal enhanced semaglutide versus Wegovy? And do you expect this efficacy advantage to be sustained in your next trial? Do you get both long-acting, but also increased efficacy here for this product? And also maybe related there, what would be the difference here in the Phase IIb trial? Is it just more patients or any other key changes that we could expect? Fredrik Tiberg: That's a really good question. I mean when it comes -- I don't think we have talked about bioavailability specifically. What we referred to was that we had the same Cmax concentration with -- at a much higher dose with -- well, at a 4x higher dose with CAM2056 as the now approved product. So that's -- we have obviously done a lot of analysis on the relationship between our different variables in the study and time and so forth. Going to the Phase IIb study, the main question will be to see how the weight reduction is developing over longer period of time. So it will be a significantly longer study. And we will also look at some details around the dosing mechanism, although we have now identified what we believe is the optimal dosing regimen. So we will definitely produce new data that will be presented in various different settings, on the PK/PD and relationships. But for the specific question about the study, it will be a longer study, and it will be a controlled study in the first case. And then in parallel with that, we will do the Phase III preparation development. Operator: Next question from Oscar Haffen Lamm from Stifel. Oscar Haffen Lamm: A couple of questions on my side. The first one, maybe on the guidance for 2026. Could you give us a bit more granularity on your expected contributions from Buvidal, Brixadi, and Oczyesa in this guidance? Fredrik Tiberg: Yes. I mean we are -- as we said in the report, we are expecting Buvidal to continue to grow in the region of what we saw in 2025. So I think that's clear. We also have a view that we're expecting good performance from the U.S. and Braeburn with Brixadi development. So that's, of course, a very important component of the development or the expected development for 2026. I think we have to say that Oczyesa, of course, is going to be launched in a few markets, but it's going to be early in the launch cycle compared to the developments that we have, of course, for -- in the opioid dependence area. So the contribution there will be low. And I think we should focus on the big components. And then, of course, we have excluded any potential revenues from ongoing development programs. And they are as always digital. So we thought it was better to leave them out. But there is, of course, the potential of some upside in that range. Oscar Haffen Lamm: Okay. Then another question. You maintain your objective of 100,000 patients on Buvidal by the end of '27. This will obviously mean a strong acceleration in the next 2 years, maybe higher than what you've shown in the past. So my question is, I mean, where will this growth come from? Are you already seeing some signs of acceleration in Europe, for example? Fredrik Tiberg: I'll leave that to Richard. Richard Jameson: Yes. I mean, as I said, we saw growth of 20% plus in the big European markets, so Germany, U.K., France, and Spain, and that's the big opportunity here. We're working very closely with a whole group of stakeholders to try and improve access here. Some of those could be quite material if successful, that will give access to many more patients. So that's why we believe the 100,000 is still possible in that time. But it is predicated on some -- solving some of those funding challenges that we're facing, which we're making good progress in doing. Oscar Haffen Lamm: Okay. Thank you. And just one last question. What is currently the proportion of Buvidal sales are coming from the U.K.? I don't know if you've already disclosed this or not. Fredrik Tiberg: I don't think we have disclosed it, and we're typically not giving the relationship between different markets. Operator: Next question is from Georg Tigalonov-Bjerke from ABG Sundal Collier. Georg Tigalonov-Bjerke: This is Georg from ABG. I have a couple of questions as well. So first, I'm wondering if you can give any insight to where the German patients adding roughly 20% year-over-year growth are coming from? And then secondly, regarding Oczyesa, when do you expect to launch in France, Spain, and Italy? Fredrik Tiberg: So when -- the first question you had, was that regarding Buvidal? Georg Tigalonov-Bjerke: Yes, regarding, I mean, what kind of German patients, I mean, are you getting or adding at the moment that were... Fredrik Tiberg: Okay. Yes. I'll leave it to Richard. Georg Tigalonov-Bjerke: The year-over-year growth, 20%. Yes. Fredrik Tiberg: I'll leave it to Richard. Richard Jameson: Yes. So it's a mix. There's patients in the criminal justice setting that are outside the remuneration challenge, which we see growing. There are other physicians who are more open to prescribing a long-acting and in the community setting, and that's coming from there. So it's a mix. I can't say there's one specific segment or other. Prisons is key, but also so is the community setting. Fredrik Tiberg: And when it comes to the other question, I mean, we are starting in the Wave 1 countries. In parallel, we are doing our market access work for the rest of Europe. And we will kind of announce -- as you have seen for Buvidal, we have added countries now for -- we are in our 7th year, and we are still adding new countries in the markets. But I wouldn't say that we are expecting to see France on board, for instance, until at the earliest next year. Operator: Next question from Dan Akschuti from Pareto Securities. Dan Akschuti: Just 2 more questions from my end. And one would be if you could share any comments with regards to your communication with Eli Lilly. Is that frequent on a monthly basis, for instance? And are they happy with the data? And the second question would be just on the inventory there that you got back for the U.K. How long is the shelf life for that? Or can you reallocate that to other geographies if the U.K. would take more time? Fredrik Tiberg: Yes. So on the first question, I have to say that we -- through our contractual relationship with Lilly, we have -- are not able to communicate too much about the progress on important things that are material to the company, we will progress and communicate. So I think the information that is available now is what we can say about the current state of that collaboration. So on the second question, Anders? Anders Vadsholt: Yes. So yes, we can definitely sell the product continuously. So it's -- yes, so there's no question about that. So that's very simple applied to that one. Fredrik Tiberg: We have 36 months shelf life on the product. So typically, that's not a problem for us. Operator: The next question from Mattias Haggblom from Handelsbanken. Mattias Häggblom: I have 2. So I'm coming back to this 100,000 patient target. So with the net additions of 30,000 required to get there, should we think of net patient wins as linear from here? Or should we think of them rather as back-end loaded as more and more reimbursement hurdles are removed? And then secondly, for the vision of revenues of SEK 4.5 billion for 2027 shared back at the CMD in 2022, at the time, the composition was SEK 3 billion from Buvidal and SEK 1.5 billion from pipeline. When I look at it from consensus, it's largely at the SEK 4.5 billion level, but the composition is different, SEK 2.6 billion from Buvidal and SEK 1.9 billion from pipeline. So I'm curious to hear if you have any feedback or thoughts on that composition, at least in light of some of the pipeline contribution being delayed due to CDMO inspections as well as slower accrual events in the SORENTO trial. Fredrik Tiberg: You can start. Anders Vadsholt: So I'll take the first one on the pickup of patients. I mean I don't think there's a clear answer on this one because it depends on when we achieve the funding. So yes, obviously, it's more likely to come later as we get there, but we're in quite advanced discussions with some areas that we could move more quickly. So that would depend on some changes that we need to make in discussions with the stakeholders involved in this. So I don't think there'll be a clear answer on that. Fredrik Tiberg: I mean we do see also that we have a contribution for the expansion into new markets. Some of them have responded relatively slowly, like Portugal, but we do see significant growth opportunities. So there is -- I mean, it's a mix there, and it's not easy to give you -- so far, we have been quite linear as was shown in the figure here earlier. So we need to pick up some more patients to reach the 100,000 in -- by the end of 2027, for sure. And the SEK 4.5 billion, yes, I mean, the mix, obviously, in 5 years, things happen in terms of the different programs advancing. We have maintaining our ambition. You see basically how Buvidal is evolving and the contribution can be closer to where we were expecting it. We have uncertainty to how quickly the Brixadi sales will continue growing. We are hopeful there, of course. So those would be 2 major contributions. The delay in SORENTO in the trial -- or not trial execution, but in the event rate may have an impact. And in that case, we will need to reach the goal, we will need to add additional revenues. On top of this, of course, we also have a number of milestones that can come in, in 2027. But I would say, overall, we are not that far from the distribution that we mentioned in the 2022 CMD. But obviously, we weren't exact and will not be exact. Operator: Next question is from Erik Hultgard from DNB Carnegie. Erik Hultgård: The first is what drove your decision to change distribution model in the U.K.? And what impacted the timing of the decision, i.e., why now? My second question relates to Oczyesa and the 20 patients that you have on therapy in Germany. Is this mainly switch patients? Or are you also getting naive patients? And where do the switches come from? Is it both Sandostatin and Somatuline or mainly Sandostatin switches? Fredrik Tiberg: Okay. I'll leave the first question to Anders. Anders Vadsholt: Yes. So it came out from the volatility in the U.K. market. So that caused us to more or less aligned with the U.K. model with the rest of our distribution strategy. That's why we went to a different model and also because we have the upcoming launch of Oczyesa. But then also when I look to the future accounting principles, how you report, especially IFRS 15 and 18, then this model is much more suited for us. So that was why we did it. And it made sense to do it by the end of the year. So it was very clear. Fredrik Tiberg: And on the Oczyesa patients, I would say that all of them were switches from both treatments. We should, of course, be aware that there was only basically a little, 1.5 months or so recruitment time since the launch and availability of product in the market. And I think we saw a good pickup in that time period. And I think we'll see continued -- I mean, the positive note is that most patients in Germany are on treatment. So I mean, there are many fewer coming in new patients per month or per time period. So this is a very good signal for us. And it seems to be progressing nicely also into the early part of this year. So we are happy with that. But I think you would -- you should assume that most of our patients will come from switches of current treatment. Erik Hultgård: All right. Great. Then just a follow-up on Brixadi. Do you expect a similar pattern in Q1 of this year as last year when the buprenorphine market declined by double digits in Q1 versus Q4? Fredrik Tiberg: I think there is a change now because, obviously, we had the whole situation with the change from the COVID times that was -- that we saw impacting the 2025 first part because there were still patients that didn't have to do or hadn't had to be exposed to getting new allowances for prescriptions. And I don't think that that dynamic is left there. So we expect to see less of a dip in Q1, if any. It's -- I don't have that information, but I think that's the situation. Operator: Gonzalo has a follow-up from Danske Bank. Gonzalo Artiach Castanon: Yes. It's one on PLD. Could we assume that you guys will start a Phase III this year if you have the end of Phase II meeting now in March, if I heard correctly? And if so, is this baked into guidance? Fredrik Tiberg: Yes. So the important thing here is we will, of course, we are seeking the agency's advice on the study design of the PLD study. And should we get perfect alignment with them in the first meeting, then there is definitely a probability. But even so, I wouldn't say that it would impact our R&D costs significantly, and they are baked into the current expectations or financial results expectations. Operator: Christopher SEB also has a follow-up. Christopher Uhde: Two, if I may. So the first, just one clarification on the U.K. funding. Is there any kind of claw back or rollover on the funding that was allocated for '25? Or -- and if there would be a rollover, how would that impact 2026's funding allocation? Richard Jameson: So I think there's unlikely to be a rollover, but there is new funding for '26 announced a couple of months ago now. So of which some of it -- the public health grant that goes to all sorts of -- is distributed amongst public health requirements and some of it has been ring-fenced specifically for treatment of drug and alcohol. Christopher Uhde: Okay. Great. That's helpful. And then the second question is on the runway remaining in the AMEA region. And I guess within that also, particularly Australia, how much more penetrated can long-acting injectables get in those markets? Richard Jameson: Yes. I think there's still a reasonable opportunity. There's still reasonable numbers of patients on sublingual that would -- many of whom will benefit from moving to a long-acting. And there's also the methadone segment. And we're seeing increasing demand from patients to move to a long-acting treatment from methadone. It's a harder transfer, but the experience that people are gaining and how to do that is growing all the time. And we're seeing, firstly, demand growing and also the numbers of patients moving away. In Australia, for example, we're seeing methadone gradually decline, but there's still -- we have 35% -- some in the region of 35% share for long-acting. So that means that 65% of people still available. Some of those will want long-acting. Fredrik Tiberg: Yes. I think we have said earlier that we believe that we could ideally or even potentially exceed that, that long-acting injectables could reach up to 50% share. And so there is significant growth opportunity left, in our view. We'll see how it -- it's continued developing very well in 2025, and we haven't seen any signs yet that that will be stopping. Operator: The next question is from Shan Hama from Jefferies. Shan Hama: I've got 3, if that's okay. Could I actually just press you on what the guide actually bakes in for Brixadi growth in 2026? I know it was asked before, but could you perhaps compare that to how Brixadi performed last year and what that would look like for the momentum in 2026? Fredrik Tiberg: I think what we said is we are believing that Buvidal will continue to grow in a steady fashion. And the remainder of the, what is baked in, should be essentially Brixadi growth according to our projections. Shan Hama: Okay. Understood. And then my next question, please, is with the end of Phase II conversation that you have with FDA in March for the PLD indication, where does that place potential Phase III start and therefore the timing of the costs for that study? Fredrik Tiberg: Well, yes, importantly, it depends, of course, on which response we get from the agency. And I mean, starting up a Phase III study and having the first patient treated, it typically takes at least 9 months and probably a little longer than that. Shan Hama: Understood. Make sense. And then just my final question, please. Could you just clarify the England funding situation? So there's funding that was meant to -- well, from last year that was meant to arise that never hit the clinics. When is that expected? And then you said, is there another round of funding that could come or be communicated by April that was then hit in 2H? Could you just clarify the timing of the funding? Richard Jameson: Yes. So there's 3 sources. Firstly, the NHS England funding for prison, so which is reasonably significant, is already in place in clinic and is driving growth in the U.K. The broader community-based funding, that's the bit that struggled to come through. We don't know really what's going to happen in Q1. But what we do know is from Q2 onwards, from April when the NHS year starts, there is this new committed funding by the government, of which, for public health, of which a large proportion is allocated specifically to drug and alcohol addiction. So we anticipate that coming in. We anticipate last year as well and it didn't reach it. So we have to wait and see. But I think the pool for access to long-acting buprenorphine is very clear from various sectors. And I think that we -- I think we're confident that it's going to come through in '26 at some time. Operator: The last one is from Romy a follow-up from Van Lanschot Kempen. Romy O'Connor: Just one follow-up from me. Can you please provide some more color on your M&A and BD priorities for 2026? And is there any specific criteria or areas that you are looking at? Fredrik Tiberg: Yes. Nothing has really changed from previous year. We are looking, as I said, for -- mainly our target is pre-commercial, commercial assets that are synergistic to our current business in Europe, U.S., or the more global setting. So that's the main target for us. So that would be in endocrinology, rare oncology, and potentially other rare disease indications, and CNS. And then we are working more exploratively, of course, also with early potential developments, including licensing transactions and early licensing just to fill the early pipeline. But I would say, I mean, our core focus is on late-stage opportunities, as mentioned earlier. Operator: No more questions. So I hand the word back to you, Fredrik. Fredrik Tiberg: So thank you, everybody. I think and hope you see that we have a solid foundation for the year to come. And I look forward to updating you all together with the team on our Q1 presentation and meet you in between. So thank you very much for listening in and asking very insightful questions. Thank you.
Christina Glenn: Good morning, and welcome to the presentation of Aker's fourth quarter results for 2025. My name is Christina Schartum, and I am the Head of Communications at Aker. I am joined in the studio today by our President and CEO, Oyvind Eriksen, who will walk you through the key highlights and recent developments across the portfolio. We are also fortunate to have Josh Payne, Founder and CEO of Nscale, with us, to give an update on this exciting company. Our Chief Financial Officer, Svein Oskar Stoknes, will then take you through the financial results in more detail. After the presentation, we'll host a Q&A. And with that, I'll hand it over to Oyvind. Øyvind Eriksen: Thank you, Christina, and good morning, everyone. 2025 was a pivotal year. Aker became a more focused industrial owner with greater scale in fewer platforms and a portfolio positioned to deliver through cycles. That comes through clearly in our full year results. Net asset value closed at NOK 67.3 billion, up 22.4% for the year, if you add the NOK 3.9 billion Aker paid in dividends. Total shareholder return was nearly 50%, a strong reflection of both underlying delivery and the choices we made during the year. Dividend income of NOK 6 billion continue to form the financial backbone of Aker, supporting predictable returns while giving us the freedom to invest where long-term ownership makes a difference. We also saw clear progress across the portfolio. Our listed holdings grew 28%, reflecting strong delivery from companies that remain central to Aker's long-term industrial foundation. And our unlisted holdings, including technology platforms like Cognite and Nscale, grew 33% and is moving forward in ways that increase scale and strategic relevance. Taken together, 2025 strengthened Aker both financially and operationally, while also making it more clear how the mix of our companies positions Aker to navigate a more competitive and capacity-constrained decade. The fourth quarter closed broadly unchanged from the net asset value of the third quarter despite a substantial dividend distribution of NOK 2 billion or NOK 26.5 per share. For 2026, the Board proposes a dividend of NOK 29 per share in the second quarter, with authorization for an additional dividend later in the year. The intention remains the same, a competitive, reliable payout supported by a portfolio that has become structurally stronger. Aker BP and Aker Solutions have remained the core of Aker's Industrial Foundation, and 2025 reinforced why they sit at the center of the portfolio. Aker BP delivered another year of strong performance. Projects stayed on track, production remained high, and the company continued to operate as a low-cost, low-emission producer on the Norwegian continental shelf, a competitive position it has built systematically over time. The year also strengthened its long-term resource base through exploration successes, while maintaining the reliability and efficiency that underpin its cash generation. Johan Sverdrup is the jewel in the Aker BP crown, accounting for more than half of the company's production at record low production cost and CO2 emissions per barrel. The laws of nature will trigger decline in production for any oil and gas field over time, including Johan Sverdrup, which is why that is embedded in Aker BP's plans and guidance. What's not included is the potential of enhanced oil recovery due to technology and drilling. History shows how big oil fields have outperformed forecasts repeatedly. For Aker, Aker BP continues to generate solid value creation, attractive dividends and continued confidence in a business that performs through cycles. Aker Solutions also had a solid year with high activity levels and good progress across major projects, particularly those tied to Aker BP. Its strength lies in deep engineering competence, long-term customer relationships and asset-light model that continues to generate cash while expanding into new verticals. It also benefits from the scale and positions built through OneSubsea, which is increasingly well placed in a growing subsea market. Together, Aker BP and Aker Solutions anchor the kind of stability that lets us take a long-term view across the rest of the portfolio. Real estate has become a significant and growing part of Aker's portfolio, now representing a gross NOK 145 billion platform. Beyond structure, the returns delivered over the past year deserve attention. Since the transaction announced in May 2025, all of Aker's real estate investments have significantly outperformed the broader market. Over this period, PPI delivered a 23% return; Sveafastigheter, 20%; and SBB, 16%; while the OMX Stockholm Real Estate Index declined by 4%. This reinforces our view of real estate as a disciplined, return-driven allocation, one that strengthens cash flow, reduces volatility and improves the portfolio resilience over time. A key driver of this progress was the transaction between Public Property Invest, PPI, and SBB. It tripled PPI's portfolio and established a leading listed platform in the European social infrastructure, characterized by long duration leases, high occupancy and dependable public sector tenants. For Aker, the transaction increased our economic ownership in PPI to 34% and expanded our exposure to a platform with stable, predictable cash flows and countercyclical characteristics. The structure of the transaction was equally important. It reduced risk, strengthened balance sheets and simplified ownership, while allowing SBB to remain the majority owner in a higher-quality platform. The result was a material improvement in the quality and robustness of the ownership structure. Moving on to Cognite, our exposure to industrial software and industrial AI. 2025 marked a clear shift. Focus is now on how AI will move from excitement to enabler of improvement and change and how these technologies are being used in day-to-day operations. Cognite sits at the core of this work, in environments where complexity is high, uptime matters, and the tolerance for error is near 0. Cognite provides the foundation that makes AI useful in production. Cognite Data Fusion delivers the contextualized data layer, while Atlas AI and [ June ] drive how AI is actually deployed in practice. Atlas AI is Cognite's industrial agent platform built on contextualized operational data, enabling AI agents to act on real operating conditions. [ June ] is Cognite's low-code environment for building and adapting industrial applications, reducing the time from ID to deployment significantly. Together, they shorten the distance between data, domain expertise and action, which is what industrial operators need for AI at scale. The shift in adoption this year has been unmistakable. Cognite delivered USD 164 million in annual revenue, with ARR up 32% to USD 124 million. The number of Atlas AI customers grew nearly eightfold, firmly moving the product into mainstream use. And in 2025, more than 70% of new bookings included Atlas AI, showing how central it has become in new customer engagements. The fourth quarter reinforced this. Cognite signed 13 new customer contracts, underlining its ability to scale across asset-heavy industries globally. At the same time, the quality of the business strengthened, gross margin increased and reached 68%. And the software part of that gross margin exceeded 80%, reflecting a high-value Software-as-a-Service mix and operational leverage. And importantly, these are not generic AI pilots. Customers are deploying product-grade AI agents and workflows for our maintenance planning, root cause analysis, energy optimization and decision support, use cases tied directly to uptime, efficiency, safety and profitability where AI has real economic impact. Commercially, Cognite continues to broaden. Around 80% of revenue now comes from customers outside the Aker Group and roughly 40% from outside oil and gas, reflecting significant sector and customer diversification. A new vertical, pharma and life science is showing especially strong traction with 4 of the top 10 global companies now Cognite customers. Cognite is also investing for growth. The company is expanding its sales force, deepening its market coverage and continuing to invest heavily in product development to maintain its pole position in industrial AI. A key differentiator remains the company's industrial proximity. Early deployments inside demanding operating environments, including Aker BP's Yggdrasil development, provide a feedback loop few software companies can match. There, Cognite's technology enables automated operations, remote control rooms and digitally-enabled work processes such as robotic inspection. Taken together, Cognite is moving from early adoption to embedded use. AI is becoming part of day-to-day industrial operations. That is what supports continued growth and why Cognite plays a critical role in Aker's long-term value creation. Aize is providing advanced visualization and collaboration tools that help asset-heavy industries plan, operate and maintain large facilities more efficiently. The company continues to strengthen its position, delivering advanced visualization and collaboration tools for heavy asset industries. Its technology is now deployed across 66 facilities worldwide, supporting customers like BP, Exxon and SBM Offshore. While Aize is well established in EPC and offshore operations, its addressable market is broader. The next area of expansion is onshore processing, and in the fourth quarter, Aize secured a first major contract for a large onshore LNG facility in the U.S., an important step in that direction. 2025 marked a shift in the company's revenue profile. Aize generated more than USD 14 million in recurring revenue, with subscription revenues increasing as the product matures. Revenue from customers outside [indiscernible] Aker Group also made a meaningful step forward, reflecting broader international traction. Looking ahead, the company is targeting a USD 50 million in the recurring revenue by 2029, with around 90% of the business on a recurring basis, reflecting a more scalable and predictable model as adoption grows. We are very pleased to have Josh Payne, Founder and CEO of Nscale,, with us today. Josh has built one of the fast-scaling AI infrastructure platforms globally, and he'll take you through the company's trajectory and plans in more detail shortly. Aker's shareholding in Nscale is our exposure to AI infrastructure at true international scale, where access to compute, power and grid capacity has become the defining constraint. The company combines data center capacity, GPU clusters and orchestrations in one integrated model built around long-duration customer commitments. We're also executing locally through the 50-50 Aker Nscale joint venture in Northern Norway, where Aker's industrial capabilities and Norway's strength in renewable power and grid access come together. Construction is underway in Narvik with 230 megawatts of secured grid capacity and around 1.5 gigawatts in the official queue across multiple sites, locations suited for large-scale energy-efficient AI infrastructure workloads. Over time, our joint venture stake can be rolled into Nscale parent company, ensuring that what we build locally connects directly with a larger long-term ownership in the broader global platform. And with that, I'll hand it over to you, Josh, for a deeper introduction and presentation of your great company, Nscale. Joshua Payne: Good morning, and thank you to Oyvind and the team for your leadership, and to the Aker shareholders for your continued support. Nscale is a European-headquartered, vertically-integrated AI infrastructure company. The true challenge in the market is the enormous demand for AI infrastructure and the lack of supply, driven by the complexities of deploying large-scale infrastructure at speed and the disconnection between each segment of the value chain. Nscale solves this by both building and operating the data centers, building and operating the compute clusters and also the software, delivering large-scale training and inference as an end-to-end service for customers worldwide. Today, we have deployments across 5 countries, and we're working together with Aker as part of the Aker Nscale joint venture to deliver large-scale AI infrastructure in Norway by utilizing the surplus renewable energy that exists in NO4. Norway, I believe, is one of the most compelling places in Europe to deliver on the global demand for AI compute capacity. Here in Norway, there are abundant renewable power resources, a mature industrial base, optimal climate and a high density of human capital. Norway has a long history of turning low-cost renewable energy into economic value. And for this reason, we firmly believe that Norway can leverage its energy resources to emerge as a global leader in artificial intelligence. That's why the partnership between Aker and Nscale matters. Aker is a Norwegian national champion with world-class industrial project delivery. Nscale brings the full AI infrastructure to stack, which involves the data center design and operations, the clusters, the platform software that makes the compute valuable for customers. Together, we are building a new market for the country, turning Norway's economic and industrial strengths into high-performance AI capacity that is both sovereign, sustainable and built to the highest standards. Under the Aker Nscale joint venture, we are progressing a portfolio of AI infrastructure projects in Norway, anchored first by our flagship site in Kvandal near Narvik. In Narvik, we have 230 megawatts of secured grid capacity with a further 290 megawatts in capacity queue, and customer negotiations are ongoing for adjacent plots at Narvik to support continued expansion. Overall, at Nscale, our future expansion is in line with the incredible demand we're seeing today, and we expect this will continue to grow in the future. The market is moving into a phase where the overall limiting factors are power, speed and efficiency of operations. In other words, this is becoming an execution story, and that is where our focus is in 2026 and beyond. In Q4, Nscale also strengthened the foundation for that execution. We successfully completed a Series B funding round, which was the largest Series B in European history at USD 1.1 billion, attracting both strategic investors and also global institutional top-tier investors. In parallel with this round, we also closed a $433 million Series C safe, driven by investor demand and the oversubscribed nature of that Series B round. This capital both underscores the demand for the product that we have and also supports what matters most now, which is delivery. We have a large global power pipeline, multibillion dollar contracts signed, Tier 1 strategic partnerships in place, including NVIDIA, Dell and Nokia, and hundreds of thousands of GPUs awarded to win scale to date. We're also expanding our leadership team, bringing in deep industrial experience and recently acquired global DC engineering firm, Future-tech, bringing in a team of designers, engineers, consultants, project managers and more, which empowers us to accelerate our delivery and execution. What we're building in Norway and beyond is differentiated and durable. It's both engineered for scale, for performance, built to serve demanding training and inferencing workloads reliably and to expand in phases in line with the breakneck speed of the market. And lastly, it's sovereign, both by design, giving customers clarity and control of where their data and workloads run and most importantly, aligned to European standards. We're proud to be building this with Aker. So thank you to Oyvind for your partnership, and thank you to the Aker shareholders for your continued support as we work together to build a long-term European AI infrastructure asset here in Norway and globally. Thank you. Øyvind Eriksen: Thank you, Josh. It's so exciting to see what we have achieved in 21 months only and how Aker and Nscale are working together, a great partnership. And even better, we are just getting started. Now to sum up Aker's fourth quarter and the year, our portfolio today reflects a deliberate shift toward a more balanced and more resilient Aker. We have strengthened the mix between our long-standing industrial businesses and the growth platforms we are building in compute, software and real assets. This was a year where macro conditions mattered, tighter energy systems, heightened security concerns and a more complex backdrop for long-term industrial investments and developments. These dynamics influence how our companies operated, from financing and infrastructure access to customer decision making, and they reinforce the value of diversification across sectors and geographies. A clear theme throughout the year has been collaboration. Across industries and borders, partnerships have accelerated adoption, reduced risk and created scale that individual companies cannot achieve alone. Several of the steps we took in the compute, software and industrial operations were made possible by strong partners, and this will remain a competitive advantage for the different Aker companies. Looking ahead, the portfolio we are building [indiscernible] in areas with long-term structural demand, while maintaining the industrial backbone that supports predictable cash flows. As we look ahead, our focus remains the same: disciplined ownership, operational delivery and building companies that can compete and cooperate in a more complex operating environment. That concludes my part of the presentation this morning. I'll now hand it over to our CFO, Svein Oskar. Svein Stoknes: Thank you, Oyvind, and good morning. To begin, I will provide a brief overview of the key numbers for our listed and unlisted equity investments along with cash and other assets, followed by a more detailed discussion of our financial results. As of the end of the fourth quarter, Aker's listed equity investments were valued at NOK 57 billion, accounting for 72% of the company's total assets and corresponding to NOK 768 per share. This represented an increase from the previous quarter, primarily due to a net asset value increase of NOK 2.7 billion in Aker Property Group's listed real estate holdings, following the investments in PPI and Sveafastigheter. Additionally, the combined market value of Aker BP, Aker BioMarine and Aker Solutions increased by NOK 1.1 billion during the quarter. And these positive developments were partially offset by reductions of NOK 1.1 billion in Solstad Maritime and NOK 0.3 billion in Solstad Offshore. In the fourth quarter, total dividends from listed investments reached NOK 1 billion. Of this amount, Aker BP contributed NOK 842 million; Solstad Maritime provided NOK 78 million; Akastor accounted for NOK 40 million; AMSC delivered NOK 33 million; and Solstad Offshore contributed NOK 14 million. Then over to Aker's unlisted equity investments, which represented 25% of Aker's total assets at the end of the quarter. These assets were valued at NOK 20 billion or NOK 263 per share. This represents an increase of NOK 6.2 billion compared to the previous quarter, driven primarily by Aker's investments in AI infrastructure. Aker acquired a 9.3% ownership stake in Nscale by contributing 50% of the Aker Nscale JV in kind, plus USD 100 million in cash. This stake is valued at NOK 3.8 billion, including an earn-out provision that will take the ownership to 12.2%. Additionally, Aker holds the remaining 50% stake in Aker Nscale valued at NOK 2.9 billion, also based on the Nscale Series B valuation. The reduced value of Aker Holdco and the conversion of interest-bearing receivables and associated accumulated interest, which I will come back to on the next slide, offset most of the Nscale and Aker Nscale value uplifts, giving a total net uplift to our reported NAV of NOK 1.6 billion from these transactions. In addition, the net asset value of Aker Property Group's unlisted real estate increased by NOK 0.6 billion in the quarter as debt and accumulated interest to Aker were converted to equity. At the end of the quarter, cash and other assets represented 4% of Aker's total assets equivalent to NOK 38 per share. Cash inflows reached NOK 5.3 billion, consisting primarily of NOK 3.5 billion from drawdowns on revolving credit facilities and NOK 1 billion in dividends received from Aker BP, Solstad Maritime, Akastor and Solstad Offshore. Additionally, proceeds of NOK 600 million were realized from the sale of shares in SalMar during the period. Cash outflows totaled NOK 5.6 billion, including a dividend payment of NOK 2 billion; investments in Aker Property Group and Nscale of NOK 1.3 billion and NOK 1 billion, respectively; settlement of the AMSC TRS agreements amounting to NOK 565 million; as well as share buybacks totaling NOK 317 million, and these shares were used to settle a share loan from TRG. Meanwhile, cash outlays related to operating expenses and net interest for the quarter amounted to NOK 287 million. As a result, the cash balance at quarter end stood at NOK 0.8 billion. The decrease of NOK 4.4 billion in interest-bearing receivables and NOK 0.7 billion in interest-free assets were primarily due to the conversion to equity of outstanding receivables and accumulated interest from Aker Holdco, Aker Horizons and Aker Property Group. Then let's move to the fourth quarter financials for Aker ASA and holding companies, starting with the balance sheet. In accordance with our accounting principles, investments are recognized at the lower of historical cost and market value. At the end of the quarter, the book value of Aker's investments was NOK 35.5 billion, which represents an increase of NOK 6.9 billion compared to the previous quarter. This change primarily reflects Aker's cash and in-kind investments in Nscale of NOK 3.8 billion, including the estimated value of an earn-out. In addition, investments in real estate of NOK 3.3 billion consisted of a cash investment of NOK 1.3 billion and conversion of receivables and accrued interest of NOK 2 billion. The book value of equity at quarter end was NOK 24 billion, down NOK 3.6 billion from the previous quarter, mainly due to the ordinary dividend allocation for 2025 of NOK 2.2 billion and dividends paid in the quarter of NOK 2 billion, partly offset by a profit before tax for the quarter of NOK 0.7 billion. On a fair value adjusted basis, Aker's gross asset value was NOK 79.4 billion. After subtracting for liabilities, the net asset value amounted to NOK 65.1 billion or NOK 876 per share after allocation for dividend. And the value-adjusted equity ratio was 82%. Of the total liabilities, NOK 11.7 billion is related to bond debt and bank loans and NOK 2.2 billion is related to the dividend allocation for 2025, representing NOK 29 per share. And as Oyvind mentioned, the Board of Directors is proposing that the Annual General Meeting authorizes the Board to pay a potential additional cash dividend during 2026 based on the 2025 annual accounts, in line with the practice from last year. Aker maintains a strong financial position, holding a total liquidity buffer of NOK 5.9 billion, that includes both undrawn credit facilities and liquid funds. Following the end of the quarter, the size of the company's revolving credit facilities increased by NOK 3 billion, resulting in a total RCF capacity of NOK 15 billion. At the close of the quarter, net interest-bearing debt rose to NOK 9.7 billion, up from NOK 1.7 billion in the previous quarter. This increase is primarily due to the conversion of interest-bearing receivables from Aker Holdco, Aker Horizons and Aker Property Group during the period, alongside the capital allocations that were made. The loan-to-value ratio was 14%, with Aker's weighted average debt maturity at 2.9 years. Factoring in available options for credit and loan extensions, the total effective loan maturity extends to more than 5 years. Then finally, moving to the income statement. Operating expenses in the fourth quarter were NOK 170 million, reflecting a high activity level. Dividend income was NOK 1 billion, mainly from Aker BP as well as Solstad Maritime and Akastor. The net value change was negative NOK 46 million. Net other financial items totaled negative NOK 125 million. And finally, our profit before tax was NOK 659 million for the quarter. Thank you. That concludes today's presentation, and we will now proceed to Q&A. Christina Glenn: Thank you, Svein Oskar. We'll now continue with the Q&A. The first question to Oyvind is, what is the long-term industrial logic behind your real estate platform? And how might it evolve? Øyvind Eriksen: Well, the answer to that question is twofold. The real estate investments as stand-alone and real estate as a part of the broader Aker portfolio. So we believe that the investments we made last year in SBB, PPI and Svea, in particular, were attractive due to the quality of the assets and due to timing, and the shareholder returns we reported today are speaking for themselves. So value drivers are stand-alone investments. But equally important is the diversification of the Aker portfolio. We have great assets in volatile industries, oil and gas, in particular. And with real estate, we are establishing a different asset class which has not the same volatility and cyclicality as the oil and gas and energy part of the Aker portfolio. So attractive investment stand-alone and diversification of the Aker portfolio. Christina Glenn: Great. Thank you. The next question is on Nscale. What is the next step for Nscale in its development? And how should we think about the long-term road map for the platform? Josh touched on it. Do you want to? Øyvind Eriksen: Yes. Josh mentioned, by far the most important priority for the time being, it's execution. It's just amazing to see how swiftly Nscale and Aker Nscale help grow the last 21 months and even the last 6 or 7 months since we announced the transaction. And the amount of contracts signed with great customers like OpenAI and Microsoft are nothing more, nothing less than point of departure for execution. First, project execution and so far, so good. And thereafter, a high-quality operation. And that, in parallel, I take for granted that Josh will continue to grow the company. But high-quality execution is a prerequisite for long-term success. Christina Glenn: Great. The next question is, how do you balance investments in high-growth areas like AI infrastructure and real assets with your dividend framework, the 4% to 6% of our net asset value? Øyvind Eriksen: So that's exactly the point, that we would like to diversify Aker portfolio investments and more in order to also establish and obtain cash flow from different sources, different companies. So real estate is once again an example. Over time, we expect a more predictable and attractive dividend also from that part of the portfolio, which will come in addition to the dividends paid by companies like Aker BP and Aker Solutions. So increased nominal dividend year-on-year has been a strategy for a while and continue to be core to our strategy and financial plan. Christina Glenn: Great. You touched on being less tied to commodity cycles with these new investments. Can investors consider this shift largely complete? Or should we expect additional rebalancing of the portfolio? Øyvind Eriksen: Well, Aker has been around for 185 years. And the company has never completed its growth and development. So you can take for granted that we will continue to work 24/7 to create shareholder value through a combination of development of existing portfolio companies and new transactions. Christina Glenn: Great. Last question is on Cognite. Has anything changed in your thinking around a potential IPO or the future ownership structure for that company? Øyvind Eriksen: Not really. And what it's all about is to continue on the good trajectory, continue to grow and to prove that Cognite is an AI for industry leader. 2025 was a great year for Cognite. They took full advantage of what's happening in the AI space also for industry and a huge market, which is, quite frankly, more immature than some other AI markets, but also attractive due to the size of the contracts signed with some of the global leaders in different industries. Christina Glenn: Great. That concludes the Q&A and our presentation today. Thank you for watching.
Sven Kristensson: Good morning, and welcome to this conference call regarding Nederman Group Q4 2025. It's been an interesting year. And what we can conclude in Q4 is that we had higher orders received and a stronger business. We have, during this challenging period, continued to strengthen our leading position and we are working with market leadership, technical leadership, commercial leadership and operational leadership. That's our focus during this period. If you look at Q4, we had good organic growth if you consider it on a currency-neutral basis. We also had a currency-neutral growth in sales and we believe that is very positive given the market conditions. We have delivered good cash flow and we have continued invest in operations and also in R&D. And these investments have provided a very solid basis for the future. We will have higher margins and better efficiency when we regain some momentum in the market. Matthew Cusick: If I look at some of the key financials now, orders received grew currency-neutral in both Q4 and the full year. It's very hard -- some of you who've listened to a number of these hearings already in this year-end season might be tired of hearing about currency-neutral and currency effects, but it's really very important to take this into account when analyzing the numbers. Sales as orders received for Q4, SEK 1.38 billion versus SEK 1.4 -- slightly over SEK 1.4 billion last year. So on the face of it, that looks like a decrease. However, organic growth was 4.7% in the quarter, currency-neutral, including some of the couple of acquisitions from Euro-Equip that we acquired back in March of 2025 and some from Duroair last year. That leaves us at 7.3%. Unfortunately, currency effect on orders received and actually on sales in the quarter was over 9%. For the full year, SEK 5.55 billion was the full order intake. That's growth, currency-neutral of 1.5%, slightly negative organically, minus 1.3% and still, obviously, for the full year, a clear currency impact. On the sales side, again, currency-neutral growth for both Q4 and the full year, just over SEK 1.4 billion in sales in the fourth quarter versus a very strong Q4 of 2024. It must be pointed out, SEK 1.62 billion was very high for the Nederman Group. Currency-neutral, that's 1.3% up in the year -- in the quarter -- sorry. For the full year, SEK 5.78 billion versus SEK 5.9 billion last year -- 2024. 3.5% up currency-neutral. So we see in these -- with these market conditions and the current investment appetite that 3.5% currency-neutral growth is rather strong. Profit-wise, like Sven mentioned, these investments that we've done in our operations have improved underlying profitability. The releases of new products has boosted sales in, for example, Process Technology's aftermarket. Adjusted EBITA for the quarter SEK 459 million versus SEK 185 million for quarter 4 2024. That's a drop of SEK 26 million, SEK 22 million currency effect in the quarter. Please take that into account when analyzing this. The SEK 159 million leaves a margin of 10.6%. Earnings per share is SEK 1.86, therefore, versus SEK 2.49 in Q4 last year. Full year adjusted EBITA SEK 627 million versus SEK 708 million. EBITA margin, 10.8% versus 12% and earnings per share SEK 7.8 versus SEK 9.83. When looking at the full year results, we had a currency impact on EBITA of approximately slightly under SEK 70 million. U.S. tariffs were approaching SEK 15 million for the group as a whole. And then we did have a couple of one-offs, you remember in 2024 related to a property sale and the company sale in China. The sum of those is just under SEK 100 million. So when comparing SEK 708 million to SEK 627 million for the full year, please take that into account. Cash flow, good cash flow in the fourth quarter, very good cash flow actually in Q4 of 2025, not quite as good as the cash flow in the -- I think that was an all-time high for 1 quarter cash flow in the Nederman Group in Q4 2024. For the full year, SEK 382 million, again, rather strong. This is important that we maintain a good cash flow. This has funded a lot of the investments that we've been making in our operations. We can see that on the second -- on the right-hand side of this slide, the net debt has decreased over the past 2 quarters, although it is higher than it was 12 months ago. We've made significant investments in our operations. We've also acquired a new company and paid out a dividend during the year, of course. If we go right through and break things down on how the business is going division by division, then Sven, and start with Extraction & Filtration Technology. Sven Kristensson: Yes. Extraction & Filtration Technology Q4, we had more large orders, both Americas and EMEA and that gave an increased order intake versus last year. We grew sales in Q4, currency-neutral. We definitely improved operational efficiency and that was driving profitability. And the full year EBITA was up SEK 10 million. And if you would consider it currency-neutral close to SEK 50 million, which is a strong performance in a very challenging market. For the regions, EMEA, we had increased order received. We had major solutions orders and we are growing our aftermarket business, which has been on the strategic agenda for several years. We had 2 very big orders in Belgium for welding and one in Sweden operating nuclear industry. In Americas, we had actually double digit growth in order and sales. There were several larger orders. Several of them came from defense and aerospace industry, where we have good solutions and our concept of clean air optimized with energy savings, logarithm, et cetera, has given us some success here. Then we have the orphan APAC. One major order was secured to aerospace, a strategic and prestige order. But overall, we are not doing a very strong performance in Asia. Both orders and sales dropped. Key activities during period has been preparation to modernize the facility in Charlotte. It will further strengthen U.S. supply chain and operational capacity. It will shorten lead times, which is one of the biggest advantage, but it will also take away over time, some tariffs and other challenges. Continued investment in the new innovation center in Helsingborg is ongoing and we have a fully booked innovation center for the full year 2026. And we will also see order -- new products and solutions coming out of that. Testing and validation of current and next-generation products in the innovation center is ahead of new launches in that. Matthew Cusick: When we look at the financials for E&FT division, orders received for the quarter, slightly irritating, SEK 0.5 million below the same quarter last year, even at prevailing rates, currency-neutral growth, 7.9% which is purely organic in the case of this division. Sales, SEK 686 million, left an adjusted EBITA of SEK 96.4 million, which is 14.1%. It's ahead of Q4 2024 in both -- in both SEK and in percentages. For the full year, EBITA up to SEK 362 million from SEK 352 million, as Sven mentioned, currency-neutral, that's SEK 48 million up. The margin increasing up to 13.7%. So more efficiency in the operations investments, for example, in the site in Helsingborg and in [ Markaryd ] have contributed to that. If we move on to Process Technology then, Sven. Sven Kristensson: Yes. Process Technology, more dependent on larger projects and have had a challenging period, but the activity picked up towards the end of last quarter. We had a currency-neutral order growth of 15%. We also had some sales increase versus Q4 '24. We have had some positive contribution from Euro-Equip that we acquired end of first quarter last year and they are integrated and doing a very good job working with the rest of the Nederman team. The service business continued to perform strong. Customers are focused on maintaining compliance and ensuring the efficiency of existing installations. And this is, of course, a result of the lower willingness to take decision on larger investments. If we look at textile and fiber, there's still a very low investment appetite and that goes for the global market as such. There is still overcapacity globally in spinning mills and also in weaving mills and that has a negative impact on our sales here. However, we are growing the service content. The order intake did, however, increase slightly in Q4, meaning that we are taking market share, especially in India, where we have a very strong organization and some neighboring countries that we supply from there. When going to foundry and smelters, Euro-Equip supported an increased order intake. It's a very good addition to Spanish-speaking area. We had one large aluminum order in Australia and some local production in India have enabled deliveries to several smaller foundry projects there. That is something we have tried out to get inside the tariff barriers and also shorten lead times by using our strong capacity and capability in India and increase their scope by doing -- under the supervision of our German expert team, doing FS filter, which, of course, is technical mumbo-jumbo for you, but it's configurated large for hot air application like foundries and smelters. This is something we will continue to further develop for the region to take a position in APAC. Customized solutions, orders received increased. It was boosted by large orders in U.S. from pharmaceutical industry. And again, our service and aftermarket is developing well. Key activities has been the investments in upgrading test centers, upgrading buildings in Germany, including solar panels and efficient heating. We have continued positive trend for service and aftermarket business and that includes our digital offerings, our continued strong demand for energy-efficient fan for textile. This, again, the very large energy saving that you get from our newly developed high-tech fans for spinning, weaving industry. And we are soon selling our thousandth new replacement fan for that. Matthew Cusick: Financials then for Process Technology. Orders received SEK 384 million is an increase from an albeit modest SEK 368 million in Q4 last year, but nevertheless, currency-neutral growth, 15%. Sales, a stronger sales quarter for the division than the earlier quarters of the year, SEK 456 million, resulted in an EBITA of SEK 44 million, 9.6%, which is quite good for this division. It's below a very strong Q4 last year, 11.1%. That included some -- concluding some varied -- for this division, high-margin projects then. But 9.6% is pleasing. The mix with higher service -- higher levels of service business helps that. For the full year, adjusted EBITA of SEK 144.7 million is 8.8%. It's down from 182% -- SEK 182 million, which was 11%. We move on to Duct & Filter Technology. Sven Kristensson: Yes. Duct & Filter, the development during the quarter, we had a declining order intake. There were significantly fewer major projects, particularly in the U.S. and that has been very much linked to EV batteries, large investments that has flattened out. We have also seen that there has been the same problem as PT for large investments -- larger investments in smelters, foundries, et cetera. And we are dependent on getting those wood industries, et cetera. Order activity, however, increased in EMEA. Sales was impacted negatively by lower order intake early in Q3. But despite the low volumes, profit margins remained solid. If you look at Nordfab isolated, both orders received and sales decreased in the U.S., and that is a market that stands for almost 80% of division sales. Work continued on 2 large projects in EV battery manufacturing, which generate further follow-up orders. But as mentioned earlier, it's drying up a little bit with the EV battery market in U.S. Nordfab now is contributing to a higher efficiency and profitability with delivery reliability of 99.9% during the quarter. So we are the leading and first choice when they want to have secure deliveries, quick deliveries. And we have also now, which I will mention later, started with our hub in Texas in order to further strengthen our reach in the U.S. market. If we go to Menardi, orders received in the U.S. increased in Q4 and that was boosted by new major orders to U.S. steel manufacturers that are facing a revival due to the tariff protection. In EMEA, the trend remains stable. So again, the key activities have been new production warehouse facility in Thomasville is completed and it's taken into operation. Thailand and Australia have launched new stainless steel product for the food industry and Nordfab EMEA launched improved high vacuum bends and branch for easier installation. Warehouse center established in Dallas, Texas, to strengthen Nordfab Now and Nordfab Now is our concept of being able to have next-day deliveries. Amazon has spoiled people with very quick deliveries and we are now following that trend and we see good success in this new way of handling it. As mentioned, almost 100% delivery certainty. Nordfab EU obtained EPD certification for galvanized and stainless steel product families. Matthew Cusick: Briefly on the financials for Duct & Filter Technology. Orders received did drop 11% currency-neutral as did sales. Sales at SEK 179 million versus SEK 229 million last year. EBITA 17.4%, up from 16.5% last year. Okay, it's down in absolute terms, but this is -- we see the efficiency from these investments we've made in the operations units around this division. So able to maintain good levels of profitability. For the full year, 19.3% is the EBITA. That's slightly down from 19.6% on obviously lower sales volumes. Monitoring & Control Technology then, Sven. Sven Kristensson: Yes. Monitor & Control, the development during the quarter was that we had an increase in orders received and that was fueled by very strong performance by NEO Monitors in Asia. It's a division that has most success in the Asian market. However, the weak orders received in Q3 led to slightly lower sales in Q4. We are focusing on the service business and we continue to perform well in growing that part of the business. We are also here linking our Olicem, the reporting system to our -- especially Gasmet projects and seen success when we can package these things. Some segments, hydrogen and defense are developing well. Geographically-wise, we look at EMEA. It was boringly straight. It was same basically as Q4. First portal analysis to defense customer in Germany and Switzerland has been delivered. And we have also the certification process of Auburn's product line ongoing for European market, which when that will be finalized, will give us access using also our Boston manufactured products for especially particle emission measurement available for the European market. In Asia, NEO Monitors saw strong order intake. We have also come in the situation, we have more direct sales to customers. We are in more direct discussions with customers that strengthen our position. We have also increased the presence in APAC with small offices, both in Korea and in Singapore. In the Americas was the development rather weak. Fuel orders to public sectors that is customs duty and it's emergency service, educational institution where Gasmet has had a very strong market with affordable units. However, with the financial restrictions in the public sector, we've seen a decline here. The exception is that the steel industry as also has been seen in Menardi is continuing to upgrade the old facilities, which has led to some new opportunities and orders. The key activities has been the launch of LG III ICL. That's a very prosaic name, only an engineer or a Ph.D. in engineering can come up with that very market-friendly name, but it's there and it's an advanced laser gas analyzer for industrial application. The extension of Auburn's facility in Boston is completed. It was inaugurated January 21, but it was taken into use slightly earlier than that. What it means is that we have strengthened the product and logistic flow. So we have now a test base and a more efficient operationally working in that factory as well. We have also preparations underway to improve efficiency and increase production capacity at Gasmet Finland. And we have attended some of the important shows in Asia to prove our willingness to be there and grow our market. Matthew Cusick: Financials for Monitoring & Control. SEK 189 million in order intake was an increase of 10% currency-neutral. Sales, SEK 205 million is below what was a very, very strong Q4 of 2024, SEK 241 million. Currency-neutral, that's actually down 8%. Adjusted EBITA is SEK 37 million, which is 18%. That's an improvement in margin versus the full year average. So we see -- we think -- or we are seeing some efficiency in the operations, these investments in NEO Monitors in Auburn starting to have an effect right away. For the full year, currency-neutral growth was 1% positive, sales, 1% negative currency-neutral. And then adjusted EBITA, SEK 129 million versus SEK 144 million in 2024. That leaves a full year margin of 16.7%. So Sven, our outlook? Sven Kristensson: Yes. And as for the last few years and especially this year, the outlook is interesting, but the demand remains dampened in many industries. There are some areas that are better than others. We have a growing service business and a very strong digital range enable us to assert ourselves well in the current turbulent market. Following higher activity in September, orders received continued to pick up in Q4, which if it continues, would be very positive for development in the first half of 2026. At the same time, the market is dominated by considerable uncertainty, making it difficult to forecast the broader recovery in demand. But if it gains momentum, we are in a very good position to increase our margins. With a strong balance sheet, we are continuing to invest in operational efficiency, ongoing improvements to our offering, allowing us to continue to advance our position irrespective of the market condition. In the world with growing insight into the damage that poor air does to people, Nederman with its leading industrial air filtration offering has a key role to play and good possibility for continued growth. Matthew Cusick: Financial calendar annual report will be released on the 17th of March this year. The interim report exactly a month later on the 17th of April for the Q1. Annual General Meeting on the 21st of April, where we expect the AGM to approve the proposed dividend of SEK 4 per share. That's unchanged versus 2024 level. Q2 report will be released on the 16th of July and the Q3 report on the 21st of October this year. And with that, we can open up, I think, for any questions that people listening may have for us. Operator: [Operator Instructions] The next question comes from Anna Widstrom from DNB Carnegie. Anna Widstrom: So firstly, I just want to dive into price and volume in the order book. Given that there are some tariff effects, how should we think about volume versus price in the organic growth that we see in the orders? Matthew Cusick: Let me think. That's a very good question. The currency -- the tariff -- if you think in relation to tariffs, the tariffs are not making a huge effect. The tariffs affect our costs by around SEK 5 million per quarter on approximately current -- give or take on current volume. So on sales prices, they don't affect things massively. Then when it comes to price, we're not seeing massive price movement in the market. There's not -- it's not -- we're very careful not to get dragged into a race to the bottom. However, we're not increasing prices significantly. So I think when you're looking at this -- or when you look at this organic or currency-neutral growth, it is growth that you're looking at there is the simple answer. Anna Widstrom: Okay. Perfect. And just to continue there on the tariffs. Have you experienced any shift in customers' willingness to pay these new set of prices? Have they sort of been more keen on evaluating local opportunities? Or have they just sort of caused investment decisions? What's your sense in your view? Sven Kristensson: This is, of course, not something that you can empirically prove. But the biggest effect during this year is that the uncertainty that has been generated is that a lot of American large project has been postponed. We are talking about several hundred million PT project that has been postponed both in U.S. and some also in Asia due to the uncertainty of what are the rules here. When it comes to other effects... Matthew Cusick: I could answer that maybe, Sven. Sven Kristensson: Yes. Matthew Cusick: When it comes to tariffs, we don't import an awful lot into the U.S. And what we do -- of course, what we do has been impacted by certain parts of what we do is being impacted by this. But in the U.S., you have seen inflation, for example, in steel prices internally anyway. So it's not that our costs are significantly different to any competitor. And I mean, in fact, we source approaching 90% of everything we sell in the U.S. is sourced U.S. anyway. But we don't think that we're at a competitive disadvantage related to these tariffs. And like you say, the investment appetite is... Sven Kristensson: Yes. And then you have some awkward sort of more emotional feeling that some Canadian customers refuse to take the product from our U.S. factory. So we are now shipping directly from Europe and manufacturing in Europe is that it has more to do with an emotional side of it than -- and that is things that going on. So it's more that you have an uncertain world and animosity towards some. But we also have to -- EFT has more than 80%, 85% local made in U.S. Where we have some import is on MCT when it comes from our Norwegian and Helsinki. But that's where we see that. Otherwise, we have basically in all regions manufacturing for the local market. Anna Widstrom: Okay. That's very clear. So then I just want to go into the margin development in EFT. So first, I'm a bit curious on the improvement that we can see here. How much of this is an effect from the improvements made in, for example, the Helsingborg site? Matthew Cusick: There are clear improvements made. If we talk operational improvements, then, we were talking around SEK 20 million, I think we were talking. We believe we've made operations improvements of around SEK 20 million in total in the EFT division through -- and then it's very -- it's not exactly the same volumes that are going through, but we've definitely made clear operations improvements. We've also seen a part of the profitability boost is that we are -- we have seen good growth in product sales or a higher portion of product sales, which means we're filling our factory up even more with less. So there's more Nederman content in everything we sell. But operations clearly helping and 20 million is the -- what we believe is the full year effect for 2025. Sven Kristensson: And we will continue to see effects of that. And we are now also investing further in order to show, as mentioned, in the Charlotte factory, in-sourcing more. We will take less from our Polish factory. But the biggest advantage here will be that we are more competitive because we have -- we are shortening the lead time. This is actions we are going to use in other areas as well. And we are also looking at how can we utilize our capabilities in, for instance, Thailand because there are free trade agreements between Thailand, India and some other areas. So we -- you have to play this game as well. But generally speaking -- and when you mention EFT, we'll also say that the NEO Monitors efficiency program where we have rebuilt and reorganized from a more prototype version of manufacturing to a more -- when we now have got some volumes, we have also there significant improvements, then we need some further volume. We had also for NEO and Gasmet set up in Suzhou in China where we now can service locally the equipment rather than shipping them across the globe to Norway and so on. So that is also not saving so much of the cost saving. It's more attractiveness for the customers that we locally can handle their issues. It was a long answer. It was slightly outside of the -- I hope that it was okay. Anna Widstrom: And just a follow-up on sort of the short-term expectations because I think you wrote something about the orders having quite a lot of solutions and service in the order book for the division. Is that then perhaps a bit more of a negative effect for margins in Q1 if we just think short term? Sven Kristensson: I -- probably not. I think that -- our assessment is the service increase will continue to -- or the service proportion will continue to be high and that will counter any shift between the products and solutions there. That's -- but also remember, we are doing very well in our solutions with our -- now I'm almost bragging, but our superior, we get better paid for our solution because this clean air optimize would include the energy save system, it includes digital surveillance. It includes the good filters locally made. We have an attractive offer. And the reason why we get larger orders and the special orders to defense and so on is that we have proven concept. We do not have to guess that it will work. We have done it. We've been there. We've done it. We got the winners T-shirts before. So we -- and that we see especially in sensitive areas like aerospace, defense, where we have good strong performance. Anna Widstrom: Great. That's a perfect segue into my next question because for several quarters, we've noted that you mentioned large orders from defense. Do you have any sort of guesstimate on how much of the order book or sales that currently is towards the defense industry? Sven Kristensson: Matthew? Matthew Cusick: We don't have a completely accurate figure on that. So I would rather not say -- I could do some -- I will do some research on that. We will try to -- I think we will note this because it's not the first -- you're not the first person we've heard this question from. I think in the Q1 report, we will try to have some level of estimation there. So we don't -- it's -- what we -- we should say about this defense is not in one particular region that we see. This is both Europe and the U.S., is less so in APAC. Europe and U.S. is where we're seeing it and it's different countries. Some of the same suppliers -- customers, sorry, BAE, we followed -- we've seen them in Europe, U.S. -- and the U.S. Sven Kristensson: Northrop Grumman here, the big -- and it's very much -- you can say that it's the same. It's aerospace, which we've been a long-term supplier to Airbus, et cetera, that now also goes into military aircraft. You have vehicles where, for instance, our RoboVent company in Detroit has been utterly dependent on the local regional automotive market, which has declined significantly, but we have exchanged that by using their American-favored technology in defense for welding applications, but also in food and other areas. So we have exchanged somewhat the customer base. And you understand that what did they say for the company, they had SEK 130 billion in losses last year because they write off. Their investment appetite is not enormous. So we have the customer base. Anna Widstrom: Great. I have a follow-up question on this. If you've -- you're sort of answering it. But if you noted that you have sort of gained market share within this segment or having a sort of preferred supplier position? Or is the growth that you're noting is mainly from the growing of the defense industry in general? Sven Kristensson: I think the preferred supplier one, you can say something. When you -- with these customers, once you're in, you are kind of -- you are in -- it's not to say there's no competition whatsoever, but the likelihood of getting repeat orders is there. And we have seen that where like I mentioned with BAE, for example, so it is happening in more than one country or more than one project. So this signals that -- hopefully that there is some stickiness on this business going forwards. Anna Widstrom: Great. And then on the [ GST ] division, it stands out a bit on the organic order intake. Is this mainly from it having larger U.S. exposure? Or what's your view of this? Matthew Cusick: They do have a large U.S. exposure. It's around 80%, I think, U.S. And then they have -- on top of that, they have a couple of -- they were very strong in EV battery investments, which were happening late last year and actually Q1 -- sorry, late 2024 and actually in Q1 of 2025, we were receiving orders there. The other part of the market, they do have quite a large chunk of exposure to the wood industry still, which -- a lot of which is construction-related, which isn't super hot right now, but it's obviously a very, very important industry and will continue to be so. So what we've seen in Duct & Filter like we mentioned is the efficiency in the factory is clearly, clearly better, but they are lacking volume. It cannot be denied. Anna Widstrom: As you said, the margin is positive and you mentioned that improved production and warehousing process in U.S. and Europe is a positive. Is this also a benefit from having a lower ratio of very large orders? Or should this scale from current levels very well and also that activity of significant large order comes back? Matthew Cusick: We have invested also in some more -- in the production of the -- for the larger ducting as well so that you ought not to see a decline. If we were to get more large orders, you ought not to see a decline. And in fact, with more volume, we'll have more absorption of overheads as well. So we don't -- we think this improvement is here to stay. Sven Kristensson: Yes. The improvement is definitely there to stay. The thing is, of course, we need to utilize the equipment and so on. But what you see is that we have been heavily impacted with EV batteries when we had magnificent success over a year's period when that market grew. Now we have to do the same as we did with [indiscernible]. We need to find new attractive areas where we can supply. And we have to remember, what we are doing is that we have in -- we are efficient and we are mostly used in combustible dust environment because that is -- this is a specialty. It is very clean interior in the duct work and that is the importance here. So that's where we have. So it's typically combustible dust in food. It is in EV batteries. It is in aluminum, wood, et cetera. Anna Widstrom: Great. Just 2 more questions from my side. The first one is on the Monitoring & Control Technology division that you mentioned and you mentioned that, I think, in the last quarter as well, that the conversion to new technologies amongst customers is taking a bit longer than expected and connecting this also to the political uncertainty. Could you maybe expand a bit on this? And is it a type of customers that has found this trend more clearly or regions like the U.S. or something else? Sven Kristensson: Yes, it's difficult. What we see -- the main thing here and what has been talked is the decline in the public sectors. That has had a strong impact. What we then have to do is, of course, focus a little bit more on other customers, again, like EFT has been doing and so on. If our current customer base are reluctant to do the investments, we need to work harder with some other areas. And I think we've seen -- we are launching new products in U.S. in Auburn, where we are cooperating between NEO and Auburn and the combination here, we can do better. We are working now with the Gasmet Olicem on service and quick reporting response been quite successful in this incineration business where reporting is a very important portion of it. So we are building out sort of packaging it to be even more attractive going slightly outside our current customer base in a controlled way. Anna Widstrom: Perfect. And then my final question is on capital expenditures, which is down year-over-year. While you mentioned some initiatives in the report and so what level of CapEx are you planning for during 2026? And is there differences in tangibles and intangibles? Matthew Cusick: For 2026, I think the rate of product development, which is the vast chunk of our intangibles, that will continue. We're not going to ease off on product development, digital or actually filters -- new filters, et cetera. When it comes to fixed assets, what we can say on that, 2024 and 2025 were quite high years for fixed asset expenditure with a lot sort of longer-term investments in buildings in Helsingborg, the one in RoboVent, the Nordfab ducting one in the USA as well. 2026, what are we doing on that front? We're going to invest in the Charlotte plant to some extent. But I think you can expect a drop in tangible fixed asset investments, although it will still be on a -- historically, if you go back 5 years on a rather high level. As things are now, we would expect this to drop in 2027 a little more because we don't -- we believe we've got -- we will have a footprint that is there to and can incorporate a manufacturing footprint that can handle significant growth without major further CapEx. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Sven Kristensson: We thank you for taking your time listening on this Thursday morning and we'll be back for the Q1 report later in the year. So thank you very much, everyone.
Juha Rouhiainen: Good afternoon, good morning, everyone. This is Juha from Metso's Investor Relations, and I want to welcome you all to this conference call where we discuss our fourth quarter '25 and full year results, which were published earlier this morning. Results will be presented by our President and CEO, Sami Takaluoma; and CFO, Pasi Kyckling. And after the presentation, we'll have normally Q&A. And please note that we have reserved 1 hour for this call. And also a reminder of the forward-looking statements that will be used in this presentation. With these words, we are ready to start, and I'll hand over to Sami. Please go ahead. Sami Takaluoma: Thank you, Juha, and good afternoon also from my behalf. Happy to talk through the highlights of the last quarter of the 2025. We saw the market activity to be very much in line with our expectations that also resulted then for our orders to grow on a healthy way. including also then at the end of the year, being able to finalize the 2 larger orders from the Minerals capital side. Sales growth was good, and that also drove then the increase in our adjusted EBITA euros. And worthwhile mentioning here in this page definitely is the strong cash generation that the businesses did in the Q4. Looking from the figures point of view, orders received EUR 1.5 billion for the quarter, growth by 2% compared to the comparison and worthwhile also here mentioning that the currencies did have an impact, so organic growth higher. And sales was EUR 1.4 billion growth from the period, 11% and exactly same growth percent for our adjusted EBITA euros. And from the relative EBITA perspective, same delivery as year before, so EUR 16.1 million. Earnings per share was EUR 0.14 improvement from the year before. And then as mentioned, the cash was strong compared to the comparison period. Looking at our segments. Aggregates have been performing throughout the year. And in the last quarter, strong orders and performance was recorded. Orders received growth was to EUR 307 million from the EUR 294 million. This is double-digit growth in the constant currencies. Growth was driven mainly by the European market, which has been showing the pickup throughout the whole year already. Equipment orders growth was 7% and the aftermarket was 1%. Sales side, also growth, so EUR 330 million for the period. Year before, it was EUR 290 million. Equipment growth in the sales was significant, and the aftermarket was reflecting the previous period, so that declined by 3%. Aftermarket share now from the sales perspective is 30% compared to the 35% a year before. And then the adjusted EBITA for the Aggregates segment, EUR 53 million growth from the EUR 46 million year before, and the margin also improved from 16.0% to 16.2%. Strong sales growth was supported both adjusted EBITA and the profitability development. On the Minerals side, orders, EUR 1.194 billion growth from the year before, and that's reflecting 5% growth in the constant currencies. Aftermarket orders grew by 5%. And if taken the currency into account, that was a strong single-digit growth in the aftermarket for the quarter. And as mentioned and as published, there was 2 major equipment orders, copper smelter and also then the gold processing plant. ales for the period, EUR 1.13 billion million, and that was also growth from the previous period. Aftermarket in this was flat and the equipment had a very good period, finishing the projects and creating also from our perspective, the capacity for the new orders and deliveries. Aftermarket share of the sales, 57% for the period. Adjusted EBITA EUR 190 million growth from the EUR 173 million year before and margin point of view, same 17.1% as year before. Adjusted EBITA was driven by the higher sales and equipment heavy mix kept margin still flat for the comparison period year before. And looking then the dividend part as the year is in that point. So the Board proposes an increase in the dividend paid by Metso. Proposed dividend is now 69% of the EPS from the continuing operations calculation standard way as we have been doing that in the past year. So 2 payments, one in May and one in October. Total payout will be with this proposal, EUR 331 million. Then I'll let Pasi to walk through the numbers a little bit more into detail. Pasi Kyckling: Thank you, Sami, and good day, everyone, also on my behalf. Let's start with our profit and loss statement, where the Q4 sales increased 11% to EUR 1.443 billion, and this was driven by successful progression of several mineral equipment projects as well as good equipment delivery in our Aggregates segment during Q4. Equipment share was exceptionally high in the revenue mix and represented 49% of turnover, while aftermarket was 51%. On a full year basis, we increased the sales by 4% to EUR 5.24 billion. And then there aftermarket represented 54% and equipment 46% of sales. Adjusted EBITDA was up EUR 22 million in the quarter to EUR 232 million, and the margin was flat at 16.1%. On a full year basis, our EBITDA margin was 15.8%. In Q4, the equipment business profitability was at good level, both in Aggregates and Minerals supported by high volumes, whereas aftermarket profitability was at normal level. In Q4, we also recorded EUR 27 million of adjustment items and the makeup is basically 3 main components. First, we accounted provisions related to our Minerals restructuring that was announced earlier in 2025. Then we incurred Haggblom divestment-related losses during the quarter. And additionally, we had costs regarding one legacy project that we have still in our pipeline and which we are looking to complete during the year 2026. Additionally, in the discontinued operations, where we presented our Ferrous business, we accounted the final losses from that divestiture. And it's worth noting that early 2026, both the Ferrous divestment as well as the Haggblom divestment have been completed. Income tax rate for the quarter -- for the year was 24%, quite normal for our profit mix. In Q4, the tax rate was low at 21% due to the country result mix that we had during this quarter. EPS from continued operations was EUR 0.14, which is EUR 0.01 up from comparison period. Let's then look at our financial position and balance sheet where the overall position remains very healthy. Net debt end of the period was 1.1 billion and net debt-to-EBITDA KPI at 1.2x, well below our 1.5x target. And the evidence of the healthy situation is that Moody's in December changed our outlook from stable to positive while maintaining the Baa2 long-term credit rating that we have. Let me then close my part by a brief look at our cash flow and cash flow, like Sami already said, was certainly one of the highlights of our quarter. During Q4, we delivered strong cash flow from operations of EUR 365 million, and this was supported by working capital release of EUR 130 million during the quarter. Looking at the full year 2025, we delivered EUR 974 million cash flow from operations. And if I think this from the free cash flow basis, deducting CapEx and acquisitions from the operating cash flow and comparing that to revenue, we delivered 13% free cash flow margin, which is something we are happy with. With that, I would like to hand over back to Sami to talk about our strategy execution and outlook. Sami Takaluoma: Thank you, Pasi. From the strategy point of view, we go Beyond strategy was launched in the Q4 and happy to report that the execution has started well. And one good indication is also that we measure our own employee satisfaction. And one question there is about the strategy, and we did see very high engagement level overall and also very high improvement in the strategy question, meaning that we have a full energized organization to deliver. And certain things are already moving according to the strategy. From the acquisition point of view, it happened after the Q4 closing of MRA Automation, it's Multiskilled Resources Australia company. This was a very good addition to the strategy road map that we have built. Company is a leading provider of automation and software solution for the ports and terminals worldwide. And now proudly the employees are Metsonites, and we are working for the synergies and growth through this acquisition. And then as mentioned, the divestment side, making the portfolio ready for the future. So we have completed the Ferrous business divestment and also the Loading and Hauling business, meaning Haggblom. Investment side, one thing to report here is that we are building a new rubber products plant in China to be a relevant player for this very fastly growing business inside China. And then also good to report the new sustainability targets that we got in the very early days of the year approved by the SBTi. And they are good ambitious targets and the most ambitious ones in the industry. So we continue in that sense as well as promised in our strategy. Then looking at the market outlook, we are expecting that the market activity in both Minerals and Aggregates will remain at the current level for the next 2 quarters. Reminder that tariff-related turbulences could potentially affect the global economic growth and especially the certainty level of that one and can have an impact on the market activity. And in our previously published outlook, the expectation was that it also remains at the same level. So we are expecting to see similar kind of activity from the market as we did see for the Q4. Juha Rouhiainen: Thank you, Sami. Thank you, Pasi, for the presentation. And operator, we can now open lines for questions and answers. Operator: [Operator Instructions] The next question comes from Chitrita Sinha from JPMorgan. The next question comes from Christian Hinderaker from Goldman Sachs. Christian Hinderaker: I want to start with the Minerals OE development. I appreciate those the 2 big orders in the books for the quarter, which is nice to see. But if we strip those out, I get to EUR 220 million of OE in terms of order intake. That's down 22% Q-on-Q and 30% year-on-year. And I got to go back quite some quarters to get to at that low level. I'm just curious what's behind that? Is there a specific commodity weakness? Is it a timing effect as maybe you've alluded to on Page 7 of the release. It seems a little bit at odds with the strong commodity price unlock in permitting process and broader confidence in the turn you've had in recent months. I'll start there. Sami Takaluoma: Thank you. Relevant question, and there is no real link for the commodity prices as such throughout the 2025 when it comes to the Minerals capital side. So we have been receiving a good amount of small replacement orders and smaller projects as well. And this is -- no change in that. They do fluctuate based on the month and also the quarter in question had the lower amount of these ones coming in. But there is no real change in the actual demand of that and looking at the pipeline and also looking at the start of the year, they are having the normal volume, but there were less of these in the Q4, as you also pointed out. Pasi Kyckling: And Christian, just complementing when we look more in detail where the delta comes from, it comes from the sort of medium-sized orders in our order intake, the sort of base business, smaller orders that is at a very normal level. But in the sort of medium size of orders, we see this decline that you pointed out. Christian Hinderaker: Maybe turning to the working capital dynamic. I think customer advances have been about 10% of revenue, at least in the first 3 quarters. How do we think that working capital item evolves? You've seen a step-up in large orders. Do you require a larger level of advanced payments on those large orders versus the midsized ones? Pasi Kyckling: Thanks for that one. And indeed, on those 2 large orders that we have announced, we have also, during the quarter, received the prepayments and the prepayment size is sort of similar to other orders. So it's not larger than in other orders. And yes, it has a positive impact of some tens of millions in our fourth quarter cash flow, but not more than that. Christian Hinderaker: And then maybe just finally, in the service business again within Minerals, were there any revenue gaps in the year as a whole, either as a result of customers moving to carry maintenance, say, in the nickel market or perhaps due to site-specific issues? We know there's been a lot of productivity challenges. So I just wonder if there's any gaps during the year. Sami Takaluoma: Nothing significant that would have affected Metso service numbers as such. Of course, these are never good ones when there has been a lot of challenges in certain customers, but we have not had that kind of stake of service business that would have been creating any real impact for our situation. Pasi Kyckling: The 2 main incidents at customer side, [indiscernible], those are there, but they are nothing new. They have been there already for some time. Operator: The next question comes from Edward Hussey from UBS. Edward Hussey: So just the first one, the drop-through of 17% in the Minerals business, which given only equipment revenues grew, it imply that this is the drop-through on equipment revenues. Is this the sort of normalized drop-through we should think about going forward? Or maybe put it another way, is 17% roughly what the equipment gross margins are? Pasi Kyckling: Yes. Maybe I can take that, Edward. Thanks. And when we look at the numbers, we see the higher revenue impacting positively the capital margins. And if you think about our margins in Minerals capital overall at drop-through level, they are higher than 17%. So sales margins are greater than that. Edward Hussey: Okay. That's helpful. And then just maybe just one further question. Just on the -- within the release, you talk about mining FIDs being slow. I mean, is the implication that the pipeline remains very strong? And is there any sense that these FIDs might accelerate into 2026? Sami Takaluoma: Yes. We have seen already the change like coming to the end of the '25 that there is more activity remains high, but there's more closer to the final kind of situation in the negotiation and also from the customer side readiness to start to move and place the orders. And we see no change in this when looking now Q1 and then the rest of the '26 at this moment. Operator: The next question comes from Chitrita Sinha from JPMorgan. Chitrita Sinha: Sir, can you hear me? Sami Takaluoma: Yes, we can. Chitrita Sinha: I have 2, please. Maybe if I could just follow up on the Minerals margin. I mean here, clearly, the equipment mix was negative in the quarter. But I mean, going forward, how should we think about the path towards your 20% margin target should mix continue to be a negative? Pasi Kyckling: Yes. I mean thanks for the question, and great that you got also through the line. We have, obviously, in our strategy to target to grow this share of aftermarket. And I think you can appreciate based on the numbers and looking at the history that we were extremely successful in Q4 in terms of recognizing revenue from those OE projects, which resulted to unusual profit mix. What I take as encouragement is that despite that mix, we were able to deliver okay numbers in Minerals, and that's a proof point that the system works. But of course, going forward, we are not looking to have, over time, this kind of mix, but rather higher share of aftermarket in line with strategy and then with that also, turning towards the 20% Minerals margin by 2028. Chitrita Sinha: Very clear. And then maybe if I could just ask on the Aggregates margin. I mean here, the margin improved quite nicely in the quarter, and you were saying that you were bringing back temporary workers, I think, back into Q2. Do you think you'll need more people capacity if demand continues to be strong in H1? How should we think about this? Sami Takaluoma: I think that is a very positive problem if that comes because that means that the main markets are active and the orders are coming in. And definitely, we have capability for that, and that's not going to be a challenge for us in that sense. Right now, we are in a good situation. We have a good capacity in the factories, and the work is happening, and people are working for the current level of business. But as I said, we, of course, have all the readiness for also increasing the product production. Pasi Kyckling: If you look at what happened in Aggregates during 2025, a lot of equipment was delivered from inventory. So the finished goods inventory during the year went quite a bit down in Aggregates, which was, of course, a positive news. But then the consequence is that to deliver, for example, the same amount of equipment in 2026, we need to manufacture significantly more, which is positive. We need our people to do that. And the teams are now back in work since the spring time. Operator: The next question comes from Klas Bergelind from Citi. Klas Bergelind: Sami and Pasi, Klas from Citi. So first, I want to come back to large orders versus underlying. I think you said before, Sami, that we can't have both larger orders and underlying orders improving at the same time. One of the reasons why underlying orders were solid from mid-'24 was because of a relatively slow decision making on the larger side. Now we see the large orders coming through in a big way, but small- and medium-sized are down year-over-year. So should we then assume that the current level of underlying of some EUR 200 million, around EUR 800 million annualized is the right level right now and then add new larger orders on top? I was just interested in your thoughts on the dynamic there. Sami Takaluoma: Klas, I don't fully recall that what quote you are referring to because these two are not really fully aligned in that sense that, let's say, underlying small-, medium-sized projects, they live their own life and they have their own drivers. And then these larger ones, they have different dynamics and approval process and so on. So they are not connected in that sense. And what I was now in this call saying is that there is a fluctuation. It's not constant month-by-month when it comes to these smaller ones, which are very important for us. And in Q4, we had 2 months with a lower amount. That's not so much to do with the large orders coming in it. It was more about those 2 months had less orders coming in and already reflected at the beginning of the year seems to have a normal level, if I call something normal. Klas Bergelind: Got it. We had the discussion in November when we met. But yes, all good. Then my second question, coming back to the mix in Minerals. If I add back the warranty cost of EUR 5 million from last year, the margin in Minerals is down from 16.5% to 16.1%. And during the CMD, I think the message was that mix shouldn't be an issue for you to get to at least 20% margin. So obviously, as you said, Pasi, it's a pretty extreme quarter. But when you look at other peers, particularly upstream, think about Sandvik here; they have very strong equipment deliveries, no mix issue. So two questions on this topic. Do you expect the equipment margin to improve already in next couple of quarters? And when do you look to see your modernization orders with higher margin sort of going through the backlog and then boosting the mix? Just to understand the dynamic, when this mix can sort of start to improve? Pasi Kyckling: Maybe, Klas -- and thanks for that. Starting from the upgrades and modernizations, which are aftermarket business for us, so there, the dynamic changed during 2025 when we started to receive those orders and have a good amount of those in the pipeline to be delivered now during 2026. And the expectation is that we continue to see some of those orders coming in during '26, and that is based on -- simply based on the customer fleet that is out there and from a timing point of view, requires those activities. Then when it comes to the drop-through, my take on Q4 is that it's encouragement that the capital business is healthy and can deliver. And like I already said, and you also reported or said as part of your question, it's not the normal mix. And we should not expect that we have this kind of a mix on a rolling basis going forward. We will continue to see the steady growth in our aftermarket business, and then that will be complemented by healthy capital business. Klas Bergelind: Okay. My final question is on free cash flow. You're now at an all-in free cash margin, not operating, but all-in free cash margin around 12% for the year. So I just want to assume the underlying working capital ex the prepayments, receivables are up 2 percentage points to sales. Inventories are down by around the same amount. But payables and other liabilities are going up and creating -- it looks like they're creating a boost. I'm trying to understand if this is sustainable, i.e. better payment terms with your suppliers and what's going on, they're looking at other liabilities? I appreciate that, that was a very low level last year. But just to understand the dynamic on working capital, Pasi, would be very, very good. Pasi Kyckling: Yes. Thank you. And if I quickly talk through all the three or four main components, starting from the prepayments, which we already discussed here. So yes, the prepayments from those 2 larger orders had an impact on our fourth quarter cash flow, and the impact was some tens of millions. So of course, significant, but I mean that's not sort of on its own behind the strong cash flow that we created. And on those projects, we continue to operate so that we run them on a cash positive basis throughout the project execution. Then if you look at inventories, that has been a focus area for us for some time. Now when you look at Q4 inventory numbers, I just want to highlight that the MCP business back to continuing operations has impact on inventories as well. We talk about some EUR 50 million worth of inventory. And if you do the comparison, for example, to the balance sheet, end of 2024, so that is just something to be noted. When it comes to payables, you are indeed right that we have gained some traction there. I wouldn't think that this is one-off activity. It's rather thanks to the work that our procurement people are doing to work with our suppliers and bring the payment times up in the discussions, agreements that we have with our supplier partners. And then finally, receivables, I mean nothing extraordinary, ordinary there. Continues to be a focus area to sort of make sure that our customers pay on time and in line with the terms that we have agreed with them. No material issues there to report, which is, of course, a good position to be. Operator: The next question comes from Antti Kansanen from SEB. Antti Kansanen: It's Antti from SEB. A couple of questions from me as well. And coming back to the Minerals sales mix discussion, I mean if we look at kind of the equipment orders in Minerals in the past couple of years, have been EUR 1.5 billion, EUR 1.6 billion, and that's the level of sales that you also delivered in '21. And the service book-to-bill is obviously better. So I just wanted to maybe understand better, how do you expect that equipment backlog to convert into sales during this year '26? Is the backlog longer, shorter than what it has been? And is there still kind of a contribution from early orders that could drive that top line into growth in latter parts of this year on equipment specifically in Minerals? Pasi Kyckling: Thanks, Antti, for that. And from -- if we start from the backlog number point of view, the backlog in equipment is in substance the same as it was when we started year 2025 where the backlog improvement is coming from -- is from our aftermarket business, which is good because now we have significantly more, so it's starting point '26 compared to the starting point we had for 2025. Then if we think about the projects that in Minerals capital side that we will recognize during 2026, it's, of course, first to sort of bread and butter business, the small ones, which turn as they come. And then I mean, none of the bigger projects that we announced in late 2024 are fully complete. Yes, we have started to recognize the revenue, but they will contribute to '26 still. In some cases, it will go up to 2027. And if we think then about the new ones, I mean the smelter project and then the modern [indiscernible] gold plant, so there, the revenue recognition will start potentially something H1 this year, but then towards end of the year when we get the underlying works with our teams, with suppliers, with customer moving. So that's a little bit the dynamics. And I think it's quite typical with these larger ones that it takes 6, 8, 10 quarters to deliver those. They are big projects. And when we do POC accounting on them, this is the outcome from a revenue point of view. Antti Kansanen: And I guess you're seeing fairly stable outlook for, let's say, the smaller ones. So the ones that you would book this year and would still contribute in a meaningful manner on revenues, so one would assume that the sales mix improves actually year-over-year, driven by kind of service growth and flattish equipment. Or is that a bit of a stretch? Sami Takaluoma: That's good thinking, Antti. As stated, so we see good amount in our pipeline of those small and medium-sized ones. And 2025 showed that we are winning also a lot of those opportunities. Antti Kansanen: Okay. And then the second one was on the Aggregate side. And I mean, it's a good order growth end of '25, I guess, positive indication now that we are heading into the summer season. Do you want to talk anything about how you're seeing kind of the European demand trending early this year? I mean you talked about that kind of there's a sentiment improvement throughout '25, but maybe not much happening on the utilization rates or the work situation for your end customers. So are you seeing kind of an improvement on that front? And are you seeing kind of volume pickup that would, let's say, compensate or more than compensate on the increased cost base that you have on the European production setup? Sami Takaluoma: Yes, from the European market first, so yes, 2025 was already the year of the pickup. And it came from, let's say, Eastern European countries, if I put it this way. At the same time, we also had low hours coming to the machines located in other countries. So kind of like not creating the aftermarket potential. But from the new equipment point of view, there was a clear pickup and we see that the pickup is to stay. So there is a continuous request for quotes and also then winning the orders from the European countries. Pasi Kyckling: If you look at the distributor inventories, that continues to be an encouraging data for us. The decline started spring 2025 and continues to be at sort of a level where we expect it to be supportive for our business in the short-term outlook. Antti Kansanen: Is it too early to comment anything on the potential summer season or the bigger Central European regions that have been historically big markets for you, the Germany and the France, countries like that? Sami Takaluoma: Yes. I think that Germany, which was somehow may be impacting also the pickup of the Europe last year, the Germany stimulus package, which maybe have not creating so much of business coming from the actual Germany yet, so that is a little bit positive upside potential that when that governmental money actually is flowing down for the provinces and for the actual infrastructure projects. So that could be creating that normal seasonality in that sense, but no real signs of that yet. Operator: The next question comes from Vlad Sergievskii from Barclays. Vladimir Sergievskiy: I'll start with commodity mix, please. Could you talk about the difference in demand levels between gold customers and industrial metal customers? Is there a notable difference in urgency to take investment decisions for those group of customers? Also, could you provide an update of what your exposure to gold customers was in 2025 and whether it could grow in 2026? Sami Takaluoma: Vlad, good to hear you. Yes, the gold customers have had much faster decision-making process than the so-called traditional commodity metal customers. And of course, it has been driven by the very high record high prices of the gold and not waiting to get orders in and also the execution of the delivery projects moving forward. So that has been one area that we did see already '25 and seems to continue at the moment. Vladimir Sergievskiy: Excellent. Sami, if I can ask you about one specific project as well. It's the Reko Diq project, which obviously, you won some nice orders previously. What's the security situation over there right now? Because as you probably have seen, Barrick has put this project under review, given the security concerns, I think, it was last week. Would you give us some idea of what your backlog exposed to this project? And what's your view actually from a Metso perspective on what's going on? Sami Takaluoma: So let's start for the very important one, which is the security of the people, and that has been on a very high security level from the beginning, and that was also something that we worked on together with Barrick to ensure that their people and our people have the maximum security all the time. So there has been no real issues that -- or incidents or anything like that. And then from the perspective of Barrick making the moves, we have, of course, taken a lot of these things into account between the contract between Barrick and Metso. And in that sense, there is no real issues for Metso at this point. Backlog situation, I don't remember the numbers myself. Pasi Kyckling: So if we start from the orders that we have reported, so second half of 2024, we recorded roughly EUR 150 million worth of recorded orders. And certainly, back to earlier discussion that we have here, some of those have been delivered or are in delivery as we speak. But I guess we will not go to sort of exactly there, how much has been delivered and how much is still in the backlog. But as a starting point, from H2 '24, we have that EUR 150 million-ish order intake from Reko Diq. Vladimir Sergievskiy: Excellent. And just to clarify, you continue to work on this project as normal? There is no like schedule adjustments or anything like that? Sami Takaluoma: As per today, we act normally together with Barrick. Operator: The next question comes from [ Alex Jones ] from BofA. Unknown Analyst: Just one following up on the question earlier about Aggregates demand in Europe. Could you expand a little bit what you're seeing in other regions of the world and whether you've seen any changes in any of those into 2026? Sami Takaluoma: Let's start by three baskets we normally talk about, so U.S., Europe and then the rest of the world. And maybe this time, I can start from the rest of the world. And there we have seen quite a good activity level last few months. Obviously, this third basket is the smallest of these three. But nevertheless, we are happy that our truly global exposure also for the Aggregate business is yielding results. So we have a good growth numbers coming from many countries in that basket. And Europe, we discussed. And then U.S., which normalized quite well during 2025 to the normal levels, so there, we have also this positive signal to our direction, what Pasi was saying that we do see that the distributor inventories have been developing positively from our perspective, that distributors have been able to move the machines to the customers, and that gives a good normal situation for us for the beginning of 2026 situation. Operator: The next question comes from Andreas Koski from BNP Paribas. Andreas Koski: First, if I can come back to the order intake in Minerals, it's been a lot of discussions about large orders versus small and midsized orders. And in Q4, as you pointed out, you have had 2 large orders. And on top of that, you had the Almalyk order as well. I understand that the pipeline remains strong, but to repeat this kind of order level, EUR 1.1 billion, EUR 1.2 billion in the Minerals segment, do you think that we need to see large orders coming through also in the coming quarters? Or is it possible that we could expect a bounce in the small- and mid-sized orders? Sami Takaluoma: Yes. Thanks, Andreas. As said, we do see that the activity for the small- and mid-sized stays in a good level. And then it's about the timing, timing question that when they actually come as a PO. But for your question, so obviously, it helps when we get the larger ones. And as our market outlook statement also says, we expect to remain on the same level as in the Q4 when we did see that these larger ones started to come, and we do know that we are having discussions with the customers with the so-called final stage. So the expectation is about the same that we had during the Q4 that expecting the larger ones to come Q1, H1. So there is nothing at the moment saying that, that wouldn't happen. And to get those quarterly order intake numbers together, it is the mix of the larger ones, the mid ones, and then good strongly single-digit development in the aftermarket. Andreas Koski: Understood. Very clear. And then secondly, on Aggregates, maybe a bit short term. But in Q4, you had very strong deliveries. Usually, we see somewhat stronger deliveries in Q1 than in Q4. Is that what we sort of should expect also going into 2026? Sami Takaluoma: Yes, I think you spot it nicely, that one. So we did have a good amount of deliveries in the Q4, and that is making us to think that then the normal situation, as you were referring that stronger in Q1 than Q4, maybe it's not the case in this quarter now. So it's going to be good delivery, but not maybe stronger than Q4. Andreas Koski: Yes. Understood. And then lastly, if I look at the P&L, the admin cost line increased a lot. Is that more or less only related to the one-offs or capacity adjustment charges that you took in the quarter? Or is it something else? Pasi Kyckling: Yes. Thank you, Andreas. It's primarily those items impacting there. We have also some other variations, typical year-end stuff, but nothing material there. The bigger change is those one-off type items. Operator: The next question comes from William Mackie from Kepler Cheuvreux. William Mackie: A couple, please. First of all, with regard to the Americas or North America, could you comment a little on any impact potentially from your customers on Section 232 and how the situation sits between your Canadian operations and sell-in into the U.S.A.? And then on a regional basis, the question is more around Minerals. When I look at the regional sales, I know there's a lot of FX effects in there. But South America seems to have come down a little and North America flat. I wonder if you'd comment on how the order versus revenue development has been in the Americas, South and North, and what your outlook is, particularly in South America? Pasi Kyckling: Yes. Maybe, William, I'll start from the Section 232. So when it comes to Minerals, this has been in place since it was introduced. I don't remember the exact month, but during the autumn -- August 2025 or if I was wrong, apologies for that, but that time frame anyway. And our approach, like with other tariffs, has been that we price this into our customer deliveries. And then, that has been successful. It looks that this is the approach the industry has also taken. Then when it comes to Aggregate, the situation is a bit different. So you may, William, remember that this steel and aluminum derivatives discussion has been ongoing for some time. And when it comes to crushers and screens, the primary aggregate equipment, they are still excluded from Section 232. And there was speculation that this would change already late last year. We haven't seen that. And let's see if they continue to be excluded for good or if there is a change in this regard. Sami Takaluoma: And then for your second question, of course, we can maybe comment about the FX. But that's, of course, living its own life. But when it comes to the Americas, both North and South, so for obvious reasons, they are the 2 largest regions that we do business in. And looking at the pipeline, so that is strong in both. So we are truly a global company, and so it's especially the Minerals business. But obviously, we have quite a lot of current opportunities in both of these continents. And that then has the impact for the FX later on or not, it depends on how the world is at that moment. Pasi Kyckling: And then William, when it comes to currencies. So I think we have seen throughout 2025 sort of appreciation of euro against most currencies that are relevant for us, and that impact is then similar in the orders and revenue. So that shouldn't -- the FX, of course, impacts the sort of total levels, pushing euro level slightly down, but the impact is similar to orders and revenue. William Mackie: A short follow-up, if I might. With regard to your strategy execution, great cash inflow, strengthened balance sheet recognized by the agencies. You clearly have more flexibility on capital allocation. You've made a couple of disposals. Are there more? But more importantly, what is the environment like for M&A additions? And what should we expect with regard to your acquisition-based strategy this year? Sami Takaluoma: Yes. Thank you for that question. As we stated in the Capital Market Day, this is a growth strategy. And we know that by focusing, we are able to grow organically. But in the growth part of the success of the strategy is also the inorganic part. And we are having quite a good amount of interesting targets, if we put it this way. How is the environment? Environment is quite normal in many sentences. Obviously, we are looking for those kind of targets that are clearly supporting our strategy and filling in either the technology gaps that we have or creating us synergies to really accelerate our growth initiatives. So we are active in that front as well, as you saw that we just closed one in Australia. Pasi Kyckling: And then when it comes to the other side of the portfolio, divestitures. So the Ferrous, Heat Transfer business and [ Loading, Hauling ] just completed. We don't have anything else ongoing in that side. So looking for growth for now. Operator: The next question comes from Edward Hussey from UBS. Edward Hussey: One more question for me. I just wanted to ask about -- so I mean, clearly, a strong Minerals equipment sales growth in the quarter. I'm just trying to sort of work out how this is going to translate to aftermarket in the coming quarters. I mean do you mind just to give me a sense of what the usual lag is between equipment installation and when it comes to an aftermarket? And also sort of what kind of level of aftermarket sort of take up can we expect? I mean what's the sort of aftermarket intensity on these sort of large projects that you're installing? Sami Takaluoma: Thank you very much. That is always good when we get the new installed base out there in operation. The business that starts immediately is the consumables business and then also the expert services in the field. When it comes to the spare part business, that typically takes a few years before there starts to be significant amount of that type of business coming out of the newly installed base. But all in all, it starts immediately with the consumables side. And then the big kind of like upgrade potentials typically then come some equipment at the year 5 and most of them at the year 10. So this is like a long-term game in that sense to create a large installed base for the future aftermarket growth. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Juha Rouhiainen: All right. Thanks very much for your participation and for questions and discussions. We conclude this conference call here. We will be back on April 22 for first quarter results. And before that, we are looking ahead for quite an active conference and road showing season. So looking forward to see many of you in the next coming weeks face to face. But this concludes this call. Thanks again, and goodbye. Sami Takaluoma: Thank you. Pasi Kyckling: Thank you.