加载中...
共找到 17,615 条相关资讯
Operator: Good day, and welcome to the Vertex Pharmaceuticals Incorporated Fourth Quarter 2025 Earnings Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ms. Susie Lisa. Please go ahead. Susie Lisa: Good evening, everyone. My name is Susie Lisa, and as Senior Vice President of, I would like to welcome you to our fourth quarter and full year 2025 financial results conference call. On tonight's call, making prepared remarks, we have Dr. Reshma Kewalramani, Vertex's CEO and President, Charlie Wagner, Chief Operating Officer and Chief Financial Officer, and Duncan McKechnie, Chief Commercial Officer. We recommend that you access the webcast slides as you listen to this call. The call is being recorded, and a replay will be available on our website. We will make forward-looking statements on this call that are subject to the risks and uncertainties discussed in detail in today's press release and in our filings with the Securities and Exchange Commission. These statements, including, without limitation, regarding Vertex's marketed medicines for cystic fibrosis, sickle cell disease, beta thalassemia, and moderate to severe acute pain, our pipeline, and Vertex's future financial performance are based on management's current assumptions; actual outcomes and events could differ materially. I would also note that select financial results and guidance that we will review on the call this evening are presented on a non-GAAP basis. I will now turn the call over to Reshma. Reshma Kewalramani: Thank you, Susie. Good evening all, and thank you for joining us on the call today. 2025 was marked by excellent progress across the business: disciplined commercial execution in CF and the new product launches, meaningful pipeline progress, and robust financial performance. Fourth quarter results wrapped up another strong year with 10% total revenue growth, and for the full year 2025, total revenue growth was 9%. As we executed on our plans for commercial diversification, full year '25 results included KASJEVY revenue of $116,000,000 and Gernamix revenue of $60,000,000 in the eight months since launch. Building on the momentum of our Q4 and full year 2025 results, in 2026 we are focused on increasing the number of patients we serve and further diversifying our revenue base. 2026 priorities include expanding leadership in CF, accelerating adoption of Kashyabi, growing Jurnavics both in prescriptions and revenue, and advancing the emerging renal franchise starting with POBI in IgAN. We are entering an exciting period, and Vertex is well positioned to deliver on the significant opportunities in front of us and drive sustained growth over the long term by combining commercial execution with serial innovation and rapidly advancing the pipeline across multiple serious disease areas. With that overview, I will focus my R&D comments tonight on cystic fibrosis and the renal franchise. Reshma Kewalramani: Beginning with cystic fibrosis, Elliptrex is a next-generation 2.0 CFTR modulator and is the fifth approved CF therapy in our portfolio. Aliftrex brings many important benefits for patients: once-daily dosing, regulatory approval in additional mutations, and the best CFTR protein function restoration in our CF portfolio. As continued evidence of this, I am pleased to share the top-line results from the recently completed Elephtrak Phase 3 trial, this one in two- to five-year-olds. All patients in this study were on TRIKAFTA and switched to ElefTrex on entry into the study. A Liftrec was safe and well tolerated, and the sweat chloride data showed a mean reduction of 9.6 millimoles from a TRIKAFTA baseline. Importantly, 65% of these AlifTrac patients achieved levels of sweat chloride below the normal or carrier level of 30 millimoles when treated through 24 weeks. This compares to 37.5% of patients at normal levels of sweat chloride at baseline on TRIKAFTA. This magnitude of sweat chloride reduction is unprecedented for this age group in cystic fibrosis. We are on track to initiate global regulatory submissions for AlifTrex in the two- to five-year-old age group in the first half of this year. And as we continue the march down to younger age groups, I am also pleased to share that the AlifTrek one- to two-year-old study has already initiated and enrollment and dosing are underway. Reshma Kewalramani: Turning now to our next wave of CFTR modulators, or NextGen 3.0 medicines. In this class, VX 828 is the most efficacious corrector we have ever studied in vitro and advanced studies in patients. The VX 828 proof-of-concept study is on track to complete enrollment and dosing in 2026. VX 581, another corrector from this 3.0 class, is currently in a Phase 1 healthy volunteer study. And beyond these two assets, we are advancing additional CF regimens. Shifting to the VX 522 program for the approximately 5,000 patients who do not make any CFTR protein and, therefore, cannot benefit from our CFTR modulators, our Phase 1/2 study of VX-1522 is on track for readout in the second half of this year. And we are not stopping there. We are poised to continue to expand our CF leadership position driven by more than 20 years of serial innovation, an enduring goal that if it is possible to do better for CF patients, we are committed to doing so. An unmatched 200,000-plus patient years of real-world data and a proven ability to extend the benefits of our medicines to the youngest patients. Reshma Kewalramani: Moving next to our renal pipeline, which is emerging as our fourth vertical alongside CF, heme, and pain, as a key engine for Vertex's next decade of growth. Povatacept, a dual BAFF/APRIL inhibitor, is the most advanced asset in our renal pipeline, with the first expected indication in IgA nephropathy, or IgAN. IgAN is a progressive kidney disease with high unmet need that affects 330,000 people in the U.S. and Europe, and more than a million people in Asia. We see Povi's dual BAFF/APRIL inhibition as key to interdicting the underlying cause of IgA nephropathy, because this is a disease driven by B cells, and BAFF and APRIL are the key cytokines that play distinct roles in B cell proliferation, differentiation, and survival. In addition to mechanism of action, Povi's biophysical characteristics enable a differentiated profile. Povy was specifically engineered to achieve improvements in binding affinity, potency, pharmacokinetics, and tissue distribution. This protein engineering translates to two key areas of downstream advantage. First, in terms of efficacy, through Phase 2, Povi has delivered substantial reductions in proteinuria and stabilization in GFR, supported by significant reductions in Gd-IgA1 and hematuria. As importantly, Povi's meaningful advantages in dosing. Povi is administered as a once-monthly small-volume subcutaneous dose delivered via an auto-injector, a noteworthy consideration in the chronic biologics market where ease of use has repeatedly been shown to influence product choice. Povi is progressing through the BLA regulatory pathway where FDA has granted Breakthrough Therapy designation as well as rolling review. We used the Priority Review Voucher to ensure an expedited timeline for regulatory review and initiated our rolling BLA submission by submitting the first module in December '25. We remain on track to complete the BLA submission in the first half of this year, if the Phase 3 interim analysis results are supportive. Reshma Kewalramani: Switching to Povi in membranous nephropathy, a disease that affects approximately 150,000 patients in the U.S. and Europe, and over 400,000 patients in Asia, where we partnered with Zai and Ono for these markets as we did in IgAN. Membranous nephropathy, like IgAN, carries significant morbidity and lacks disease-modifying therapies. Accordingly, Povi has FDA Fast Track and EMA PRIME designations and was recently granted Orphan Drug designation in the U.S. The OLYMPUS Phase 2/3 adaptive study of Povi in membranous is enrolling and dosing patients. I am pleased to share we remain on track to complete the Phase 2 portion of this study and advance to Phase 3 this summer. Reshma Kewalramani: Before updating you on the two other renal programs in mid- and late-stage clinical development, let me shift focus briefly to neurology and Povi's potential as a pipeline-in-a-product with our plans in generalized myasthenia gravis. The rationale to study Povi in myasthenia is compelling. First, it is a serious disease with high morbidity. Second, there are approximately 175,000 patients with myasthenia in the U.S. and Europe, and an estimated 300,000 patients globally. Third, current therapies have limitations in terms of mechanism of action, specificity, or the need for cyclical administration. This need for cyclical administration is particularly challenging, as it can lead to disease relapse and progressive damage to neuromuscular junctions. In contrast, Povi is dosed chronically and does not require cycling on and off. Lastly, recent human clinical pharmacology results provide strong evidence for dual BAFF/APRIL inhibition as a transformative approach. Putting this all together, we believe Povi's mechanism of action and specifically engineered protein format provide best-in-class potential in myasthenia. I am pleased to share that we are on track to initiate a proof-of-concept Phase 2 dose-ranging study of Povi in myasthenia in 2026. Reshma Kewalramani: Now returning back to renal and enaxaplin for APOL1-mediated kidney disease, or AMKD, where we completed enrollment in the interim analysis cohort of the AMPLITUDE pivotal study last fall. We anticipate several key upcoming enaxaplan milestones. Operator: First, Reshma Kewalramani: completing enrollment in the AMPLITUDE full clinical trial cohort in the second half of this year. Second, results from the AMPLITUDE interim analysis cohort either late this year or early next. And if the results are positive, to file for U.S. Accelerated Approval thereafter. Finally, in the AMPLIFIED study of enaxaplin in patients with AMKD and moderate proteinuria, or patients with AMKD and type 2 diabetes, patient groups we did not study in AMPLITUDE, we expect results in mid-2026. Reshma Kewalramani: The last program in renal to cover tonight is VX 407, which is being studied in a Phase 2 proof-of-concept trial for autosomal dominant polycystic kidney disease, or ADPKD. This disease affects 300,000 patients in the U.S. and Europe with no available disease-modifying treatments. VX407 is a small-molecule protein-folding corrector that targets the underlying cause of disease in up to 10% of people with ADPKD. The VX 407 Phase 2 proof-of-concept study is up and running, and we expect to complete enrollment this year. This study will evaluate the effect of VX407 on height-adjusted total kidney volume, an important efficacy measure given that it is an FDA-accepted surrogate endpoint in ADPKD. Reshma Kewalramani: I will close with two quick updates on a couple of other R&D programs. For KASJEVY, we remain on track to file for U.S. approval in patients ages five to eleven in the first half of this year. Recall, this has been granted a Commissioner's national priority voucher and thus, we expect an expedited review. For Gernavix in acute pain, a pair of single-arm Gernavix Phase 4 studies have been recently completed and will be presented at medical conferences this spring, one in aesthetics and reconstructive procedures and another in arthroscopic procedures. In both studies, Gervix was used as part of multimodal pain therapy. The first study in plastic surgery procedures showed approximately 90% of patients remained opioid-free versus less than 10% opioid-free rates in the literature with standard of care for similar procedures. In the second study, which included arthroscopic knee and shoulder procedures, as well as laparoscopic procedures, 76% of Gernavix patients remained opioid-free versus less than 50% opioid-free rates in the literature with standard of care for similar procedures. And in chronic neuropathic pain, our two sicetralgene Phase 3 studies in patients with diabetic peripheral neuropathy remain on track to complete enrollment by the end of this year. With that, I will turn the call over to Duncan to review the commercial highlights. Operator: Thanks, Reshma. The focus of the commercial Duncan McKechnie: organization in 2025 was to drive multiple successful launches fueled by clear strategic intent, disciplined execution, and targeted investments. We launched a lift truck in the U.S. and Europe, built momentum behind the launch of Kasjevi in the U.S., Europe, and the Middle East, and successfully executed on the first year of launch for Genavix here in the U.S. We are pleased with the progress we are making to diversify our revenue growth and treat patients in four diseases around the world. Duncan McKechnie: In cystic fibrosis, our goal has been to help patients get to carrier or normal levels of CFTR function as measured by sweat chloride. We have made incredible progress against this goal for patients with all mutations, all age ranges, and all geographies. We now have five approved CFTR modulators, a decade plus of real-world evidence, over 77,000 patients on one of our CF therapies, and access agreements in over 60 countries across six continents. We continue to drive growth from new patients, new launches, new geographies, and new reimbursement agreements, all supported by an underlying 3% annual increase in the CF population over the last five years. Duncan McKechnie: Focusing now on Elephtrak. The rollout in the U.S. and Europe continues to progress well. The vast majority of treatment-naïve patients in countries where we have reimbursement are already on AlifTrex. We also see continued ongoing transitions from TRIKAFTA to AlifTrex and the majority of AlifTrek scripts continue to come from switches. ElefTrex’s improved sweat chloride profile and once-daily dosing versus TRIKAFTA are resonating with the clinical community, even as we observe strong patient loyalty to TRIKAFTA. In Europe, we have already secured reimbursed access for ElefTrek in key countries, for example, England, Ireland, Germany, Denmark, and Norway. We also recently announced reimbursement for Eleftrac in Australia, New Zealand, and Italy, the latter enabling access for 1,500 patients to a CFTR modulator for the first time. Additionally, we continue to make excellent progress expanding geographic reach with meaningful contributions in 2025 from Brazil and Turkey. Overall, 2025 was another year of strong execution and growth in CF, and we will continue these efforts into 2026. Key drivers of growth for CF in 2026 include continuing the launch of AlifTrek globally, treating younger patients, expanding to additional geographies, securing access for patients, and maintaining our comprehensive patient support programs. Duncan McKechnie: Turning now to Kashyvi. Where we successfully moved from a foundational year in 2024 to a year of building significant momentum in 2025. You can see the evidence of this acceleration in our excellent Q4 2025 results, where Casjevi had 111 new patient initiations, 37 patients with first cell collections, and 30 patients receiving infusions, driving $54,000,000 in quarterly revenue. We also reached some notable reimbursement agreements for KASJEVY in Q4 2025. In the U.S., more than 30 states have joined the CMS Cell and Gene Therapy Access Model. There is now approximately 90% access for both Medicaid and commercial KASJEVY patients with the remainder having case-by-case access. In Europe, all countries in the UK are now providing reimbursed access, and a recent landmark coverage decision by the Italian reimbursed body represents about 5,000 eligible TDT patients, half of Europe's beta thalassemia population. We anticipate seeing continued quarter-to-quarter variability in JEVY infusions in 2026 based on the duration of the patient journey and given the fact that patients themselves dictate when they wish to receive their infusion. We anticipate this will smooth out in 2027 and beyond as the number of patients at all stages of the treatment journey continues to build. Overall, we are very encouraged by the robust flow of patients in the U.S., in Europe, and the Middle East moving from referral to cell collection and infusion as we drive towards realizing KASJEVY's multibillion-dollar potential. Duncan McKechnie: Moving to pain. I am pleased to report that Genavix achieved our 2025 launch objectives of first securing broad payer access, secondly, ensuring extensive hospital adoption, and thirdly, creating a broad prescriber base across both the hospital and retail segments. This launch strategy was designed to create a strong long-term foundation for years of growth with Genavix. More than 550,000 Genavix prescriptions were filled in 2025, with a roughly 50/50 split between hospital and retail channels. There were as many prescriptions written in 2025 as there were in the prior three quarters cumulatively. Although I would note that Q4 revenue growth does not yet fully reflect this strong prescription growth given the continued utilization of our patient support programs. Importantly, more than 35,000 physicians wrote prescriptions for Genavix in 2025, including orthopedic surgeons, general surgeons, anesthesiologists, pain specialists, dentists, and general practitioners. Over 200,000,000 lives now have access across all three national PBMs. In addition, 21 states now provide unrestricted access for Medicaid recipients without prior authorization or step-edit requirements. Genavix has also been incorporated into formularies, order sets, and/or discharge protocols across more than 950 hospitals and over 100 integrated delivery networks, a significant accomplishment in a short period of time and an indicator of the unmet need in this space. Perhaps most importantly, we estimate that about 420,000 Americans benefited from the inclusion of in their treatment journey as an effective, well-tolerated non-opioid option for moderate to severe acute pain. Duncan McKechnie: Looking ahead, given the strong adoption of Genavix by hospitals and physicians, and the progress we have made in securing payer coverage, we plan to double the size of our field force in Q2. We will also continue with a range of consumer engagement activities to drive meaningful prescription and revenue growth in 2026. This includes the recent launch of our first Vertex connected TV campaign in January, which we are piloting in select markets. In 2026, we expect to more than triple the number of Genavix prescriptions compared to the approximately 550,000 written in 2025. As we work to finalize access and gain coverage with additional payers, including Medicare Part D plans, we have made the strategic decision to maintain the patient support program for those patients not covered by their insurance. As this PSP program sunsets and gross-to-net in late 2026, early 2027, we expect prescription growth to increasingly drive meaningful revenue growth, especially in the latter half of the year. Our expectation is that Genavix gross-to-net will ultimately settle at levels comparable to other branded medicines. We are excited to continue to drive a transformation in the management of the 80 million Americans with moderate to severe acute pain each year by offering a safe and effective non-opioid treatment option and to build another multibillion-dollar franchise for Vertex. Duncan McKechnie: Turning now to our emerging renal business. We are partnering with and investing in the nephrology community for the long term, and povitacept is the first in a series of potentially transformative medicines that tackle the underlying cause of several renal diseases: IgAN, PMN, AMKD, and ADPKD. We anticipate that the renal franchise will ultimately rival the of our CF business, and we are seeking to bring the best elements of our success in CF to these kidney disease areas. These best practices include intense focus on the patient, an unrelenting commitment to serial innovation in R&D, a clear high-science sell to specialist physicians, and disciplined execution in securing reimbursed access here in the U.S. and around the world. We will also offer comprehensive patient support programs for eligible patients to remove access challenges and enable them to more seamlessly obtain the medicine that HCPs prescribe. We believe our experience, focus, and capabilities equip us to win in renal and deliver substantial value to both patients and healthcare providers. Duncan McKechnie: Povatacept's potential best-in-class profile enables us to clearly distinguish it within the IgA nephropathy landscape, setting it apart from other therapies. As Reshma detailed, Povi is an engineered fusion protein designed specifically to address B cell–mediated autoimmune diseases with a strong clinical profile that is further supported by an easy-to-use small-volume auto-injector administered at home every four weeks. The importance of this insight has been borne out in our recent research with nephrology who highlight the importance of payer access and for an auto-injector versus prefilled syringe in their treatment decisions. This market research with nephrologists reinforces what we have seen in the biologics space many times over. Commercial excellence combined with patient convenience and ease of use of the medicine are critical drivers of market share. We began preparing for povitacept's launch last year by building a commercial team for renal and engaging payers to ensure broad access. We are completing the staffing of our teams, and the first contingent of our field team is already trained and actively engaging customers and providing disease education. As noted above, we are also developing a renal patient support program based on our decade plus of experience supporting cystic fibrosis patients. In summary, each of our commercialization areas reflects a clear strategic intent and an ambitious approach to both established and future launches. Our 2025 performance positions the portfolio for continued revenue growth, deeper market penetration, and most importantly, broader patient impact across cystic fibrosis, hematological disorders, moderate to severe acute pain, and potentially, in the future, renal diseases. I will now turn the call over to Charlie for our financial results and outlook. Operator: Thanks, Duncan. Charlie Wagner: I am pleased to share the details of Vertex's strong financial performance in the fourth quarter and for the full year 2025, which stands as a testament to our market leadership, the strength of our product portfolio, and our disciplined approach to investment and operational. In the fourth quarter, total revenue reached $3,200,000,000, a 10% increase compared to Q4 2024. For the full year, total revenue was $12,000,000,000, an increase of 9% versus 2024. These results reflect our consistent commercial execution, durable CF franchise strength, and expansion into new, high-value disease areas. Our cystic fibrosis therapies remain the foundation of our revenue and cash flow with full year 2025 growth of 7% globally. CF revenue in the U.S. grew 11% year over year, largely due to pediatric uptake, ongoing strength in TRIKAFTA and ELEFTREC, higher realized net prices, and a modest benefit from channel inventory in the fourth quarter. Internationally, CF revenue grew 2% year over year, reflecting the ongoing penetration of Calf Trio in established markets and contributions from AlifTrek in countries where reimbursed, partly offset by the previously communicated $200,000,000 decline in Russia sales for the year. Charlie Wagner: Kaschevy achieved $54,000,000 in revenue in Q4 and $116,000,000 for the full year 2025, and during Q4 demonstrated continued momentum in patient and first cell collections. Dronavix delivered $27,000,000 in sales in the fourth quarter and $60,000,000 for the full year, with substantial growth in quarterly prescriptions since its launch in 2025. Note that Gernavix gross-to-net was significantly impacted by our patient support program in 2025, and that impact will diminish over the course of 2026. Our increasingly diversified commercial portfolio, now spanning four disease areas, is driving new revenue streams and adding to our near- and long-term growth profile. Our fourth quarter gross margin of 85.7% reflects this product mix as well as investment in manufacturing optimization for our diversifying portfolio. I would add that Q4 gross margin is a reasonable proxy for what to expect in 2026. Charlie Wagner: Turning to operating expenses, Q4 2025 combined non-GAAP R&D, acquired IPR&D, and SG&A expenses totaled $1,400,000,000, up 5% year over year, and reflect our strategic investments in product launches, principally in pain, and late-stage pipeline programs. Fourth quarter non-GAAP operating expenses included $56,500,000 of AIPR&D expense, or approximately $0.22 per share. This fourth quarter BD activity included an exclusive global license agreement with WuXi Biologics to develop and commercialize a tri-specific T cell engager for B cell–mediated autoimmune diseases. This asset is currently in preclinical development. For the full year, combined non-GAAP R&D, acquired IPR&D, and SG&A expenses totaled $5,100,000,000, consistent with our previous guidance. Excluding acquired IPR&D, the increase versus prior year was primarily driven by the acceleration of late-stage clinical programs in renal medicine and ongoing expansion of commercial and marketing activities to support the launch of Gernavix and upcoming launches in renal. The fourth quarter 2025 non-GAAP effective tax rate was 13.5%, reflecting increased utilization of one-time tax credits, and our full year 2025 non-GAAP effective tax rate was 17.3%. Q4 2025 non-GAAP net income was $1,300,000,000, up 24% year over year, delivering $5.30 of earnings per share, up 26% versus the prior year. Full year 2025 non-GAAP net income of $4,700,000,000 resulted in $18.40 of EPS. Vertex ended 2025 with $12,300,000,000 in cash, cash equivalents, and marketable securities. Our strong balance sheet positions us to continue investments in both internal and external innovation. During 2025, we increased our repurchase activity, buying approximately 4,800,000 shares for roughly $2,000,000,000. This reflects our ongoing commitment to returning value to shareholders while maintaining the flexibility to act on growth opportunities. Charlie Wagner: Let me now turn to guidance for 2026. We expect full year 2026 total company revenue to be in the range of $12,950,000,000 to $13,100,000,000, representing 8% to 9% growth versus the prior year. This outlook anticipates continued solid performance from our CF franchise and a $500,000,000 or greater revenue contribution from non-CF products, including greater volumes of patient infusions for CasGevi and a ramp of Gernavix. In Q1 2026, we anticipate year-over-year total revenue growth of approximately 7% with growth accelerating thereafter and building towards our full year guidance. Additionally, we expect combined non-GAAP operating expenses to be in the range of $5,650,000,000 to $5,750,000,000 as we continue to invest in our late-stage clinical pipeline and commercial buildouts in support of new launches and revenue diversification, particularly for generics in acute pain, and for renal. We anticipate our non-GAAP effective tax rate to be in the range of 19.5% to 20.5% for 2026, as we do not expect a repeat of the one-time tax benefits we experienced in 2025. In addition, based on our understanding of current rules, we do not expect a material impact from tariffs given our diversified supply chain and large U.S. manufacturing presence, but this outlook is subject to change. In summary, 2025 was a year of very strong performance, continued execution on our commercial priorities and clinical programs, and further strengthening of our robust financial foundation. As we turn to 2026 and beyond, Vertex remains well positioned to continue expanding our impact for patients, investors, and all stakeholders. We look forward to updating you on our progress on future calls, and I will now ask Susie to begin the Q&A period. Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, press star then 2. And our first question will come from Cory Kasnov with Evercore ISI. Please go ahead. Great. Good afternoon. Thanks for taking my question. Probably not surprising that it is on Povi. Cory Kasnov: Curious how you view the risk of potential hypogamma adverse events and how this could ultimately impact the label, if at all? Thank you. Operator: Cory, this is Reshma. Let me take that one. Reshma Kewalramani: On hypogammaglobulinemia, that is to say low IgG levels, the way BAFF/APRIL inhibitors work, you are going to see dips in IgG. It is part and parcel of the mechanism of action. But the important question you are asking is, what does that mean, if anything, on safety? So the data that we have shown is RUBY-3, the 80 mg RUBI-3 cohort that we showed at ASN in November. What you see there is there were actually no SAEs, none of infection. It does not matter what IgG level you look at. There were simply none. That is good news. There was a single patient with IgG levels of less than 300 milligrams. That was a threshold we used. It was not associated with any serious infection, and there was no severe infection either. And on average, when you look at the IgG levels from the RUBY-3 IgAN study, the average value was within the normal range. So let us say around 700 mgs. So when I look at that, I do not really see anything there. And I think that when you look at the overall benefit-risk including IgG levels, but look at everything as a whole, it looks really very good. Operator: I hope that helps. Very helpful. Cory Kasnov: Yeah. Very helpful. Thank you, Reshma. Operator: You bet. The next question will come from Salveen Richter with Goldman Sachs. Please go ahead. Salveen Richter: Good afternoon. Thanks for taking my question. With regard Salveen Jaswal Richter: to the guidance here, is there any way you could help us understand what is baked into the guide for the CF component relative to Alevtrex and and on Alevtrek in particular, you had a strong quarter. So walk us through the contributing factors here as we think of the trajectory for 2026? Thank you. I will be happy to split that question and ask Reshma Kewalramani: Charlie to go first on the guide, and then I will ask Duncan to comment on the market dynamics that led to the Ali numbers we shared. Operator: Yes. So I mean, additional color on the guidance. Charles F. Wagner: Obviously, total revenue guidance of $12.095 to $13.01. So 8% to 9% for the year. Within that, a contribution, a non-CF contribution of $500,000,000 or more. Within CF, we are not going to break it down further in terms of Ali versus other products. Maybe Duncan could comment on the dynamics in Ali that we are seeing right now. Sure. Thanks for the question, Salveen. So I would say the fourth quarter was buoyed by the international launch Duncan McKechnie: so we, as you know, secured reimbursement in Europe, in countries like the UK, Germany, Denmark, Ireland, Norway, in 2025. So that really helped drive some of the numbers that we saw in the latter part of 2025, and we expect that to continue obviously into 2026. Reshma Kewalramani: Next question, Operator: Thank you. The next question will come from Geoff Meacham with Citibank. Please go ahead. Geoffrey Christopher Meacham: Hey, guys. Thanks for the question. Just have a couple. First one, you guys seem really excited about Povi's potential as well as the renal space. Guess the question is, is there work to do on the payer side when you think about access and reimbursement and maybe cost-benefit? When you look historically, Reshma, renal has not been a category where you get higher realized value, but obviously, Geoffrey Christopher Meacham: a new MOA can help that. Then just a follow-up on Ali. Is there more interest in the U.S. in using sweat chloride as a disease biomarker? And you mentioned the European launch. I mean, would you characterize Geoffrey Christopher Meacham: maybe the awareness and willingness to switch Geoffrey Christopher Meacham: to Ali compared to the U.S.? Thanks. Reshma Kewalramani: Alright. Jeff, I am going to ask Duncan to comment on both, but we will take it in two parts. Let us do Ali first. Duncan, how do folks, how do the community think about sweat chloride U.S. versus ex-U.S.? How do you see the uptake? And then let us get to Povi. Jeff, you are absolutely right to detect a a of enthusiasm in our voice on Povi. It is not just about Povi in IgAN, but it is Povi in membranous and in myasthenia. And it is getting close to the time where we think we are going to have the results to share and close to the time where think we are going to be able to file. So enthusiasm is certainly building internally. Ducking on the Povi question, it was about reimbursement and how you are seeing that. Duncan McKechnie: Yep. So Ali first. Yeah. Thanks for the question, Jeff. So as far as the interest in sweat chloride is concerned, in general terms from a physician level, the level of sort of understanding and interest in the connection between sweat chloride and CFTR function is by and large similar in the U.S. to Europe. There are no major differences in that regard. In terms of your question about willingness to switch, there are some different dynamics with regard to the labeling between the U.S. and Europe, meaning that there are fewer liver function and liver monitoring requirements in Europe. So that has an impact on the dynamic. The other comment I would make as well is we always see more rapid uptake in naïve patients, and as per the prepared remarks, there are, for example, 1,000–1,500 naïve patients in Italy that have just been reimbursed for CFTR modulator for the first time ever, so we would anticipate rapid uptake in that particular patient population. On the first part actually of your question, povitacet and our engagements with payers and the payer community, I would make just a couple of comments. Firstly, we started engaging with the payers in July. We have, at this point, had 74 engagements with multiple payers that cover over 210 million lives. And I would say those conversations are going extremely well. They are very well educated on IgAN, and they are very interested in the products that are coming to the market. So we feel really good about where we are at with our engagements with payers so far and where those will go in the future. Operator: The next question will come from Tazeen Ahmad with Bank of America. Please go ahead. Tazeen Ahmad: Hi, guys. Good afternoon. Thanks for taking my question. Reshma Kewalramani: With relation to Povi, can we talk about what you are expecting to show on proteinuria? Like what results do you think would provide your mind Tazeen Ahmad: medically, clinically differentiated data versus competitors? Thanks. Reshma Kewalramani: Sure. Magnitude of proteinuria response, I think we have talked about this before, but in every study that we have done, the depth of proteinuria response, the greater the depth, the better it is in terms of long-term outcomes, long-term outcomes being defined as death, dialysis, or time to transplantation. In this particular interim analysis, I would point you to the RUBY-3 80 mg IgAN results. I think it is the best analog to look at to sort of get a sense for what we could see from the RAINIER trial. I say that because it is very similarly designed in the inclusion and criteria. The proteinuria threshold, the GFR thresholds for entry, it is the same exact dose, 80 milligrams, and the endpoint is exactly same. And in RUBY-3, the 36-week proteinuria data was 56% reduction in proteinuria. I think it is important to also note that the proteinuria reduction is something that I believe will have, think you could think of it as compounding effect over time. Even a little bit more improvement in proteinuria, better proteinuria reduction, is going to be important because these patients are going to be on the for their whole life. It takes something like 20 years for a person to develop end-stage renal disease from when they start having their GFR drop or proteinuria starts to become heavy. So over that course of time, improvements in proteinuria could really be very important. So if we see something like we saw in RUBY-3 Phase 2, that would be incredibly important. Very meaningful from a clinical perspective. Thanks, Krishna. Yeah. See you next. Operator: Question will come from Evan Seigerman with BMO Capital Markets. Please go ahead. Evan David Seigerman: Hi, guys. Thank you so much for taking my question. I would love for you to expand on the rationale to study Povi in gMG. Just seems to be a more crowded rare disease. I would love for you to just touch on differentiates this asset, what you saw potentially kind of in earlier studies, and how you think it would compare to both assets that have been approved and are under investigation for the indication? Yep. Sure thing, Evan. Reshma Kewalramani: I will repeat a couple of things I said in my prepared remarks. It is a sizable population, right, nearing 200,000 patients in the U.S. and Europe. It is clearly, like, one of the best examples of a B cell–mediated disease. That is how this disease happens. It is autoantibodies largely against the acetylcholine receptor. And the available treatments have some real limitations. One of the big limitations is for some of the treatments, you have to cycle on and cycle off. During the time where you cycle off the treatment, where you are not taking the treatment, obviously, if you are not on the medicine, what happens is the autoantibodies come back and that can lead to the disease returning. Now what I am about to tell you next is cross-study comparisons, so you have to take it with a grain of salt. But there has been a study in China, China-based study, using a wild-type tacky. And using a wild-type tacky, if you do a side-by-side comparison of what is called the myasthenia gravis ADL score, that is the endpoint, it is remarkable what the wild-type PELI test is that this is the wild-type tacky, was able to accomplish. Again, these are cross-study comparisons, so take it with a grain of salt. But what that wild-type tacky tells me is that by mechanism of action, it is something to really hold close. So then you translate that to Povi. Povi is not a wild-type tacky. Povi is this engineered fusion protein. Better potency, better binding affinity, better pharmacokinetics, better tissue distribution. So I look at the wild-type tacky, and then I think about what Povi could bring to the table. And that is the reason I am so excited about this. I think this is going to be a really important indication for Povi. First things first, we have to get through Phase 2. That study should be up and running shortly. That is a dose-ranging study, so we are going to study 80 and 240. Then we can take it from there and go to pivotal development. But it is one of the ones that I am excited about. Operator: The next question will come from Michael Yee with UBS. Please go ahead. Hello. Thank you. Two questions. First on Ovi, can you remind us how to think about what rates of ADA are possible, either absolute rates or neutralizing rates? And do you expect that to be of any material number given it is a chronic drug that could be something to think about? And then I do not think anyone has asked on AMKD, but obviously you have a very potent drug there and that data could be in about a year or so. And just wanted to think about how you expect those results to play out and, given you have a more population rather than just FSGS, expect essentially the same results from the Phase 2? Thank you. Yeah. Mike, let me Reshma Kewalramani: take the AMKD results first, and I will come back to Povi and ADA. So in AMKD, when I was listening to Duncan talk about AMKD, ADPKD, Povi in IgAN, Povi remembrance, it really is a renal franchise that is emerging. The bottom line, I do expect that our results from the AMKD Phase 3 AMPLITUDE study will be very similar to what we saw in the Phase 2 AMKD study. Recall, though, Mike, that the readout, the primary endpoint for the Phase 3 study is GFR slope. Of course, we are going to measure proteinuria, but you will recall that the FDA pathway to Accelerated Approval for ANKD is based on 48-week GFR. So there is that difference. And if you ask me, well, why do you think that? Even though the group that we studied in Phase 2 was something we called FSGS, which is a histologic diagnosis. It is what you see on biopsy. The and the group that we studied in Phase 3 is AMKD, two APOL1 allele. They are the same disease. It is just whether or not the patient with two APOL1 alleles, depressed renal function, and proteinuria was sent to get a biopsy or not sent to get a biopsy. If you do not go to get a biopsy, you will never be able to see FSG because that is simply a histological diagnosis. So net-net, I expect the results to be in line with Phase 2. And I will reaffirm the timelines for data sharing, tail end of this year, beginning of next. Reshma Kewalramani: On Povi and ADA and NAb, just to set this stage, and I know you know this, in biologics, ADAs—anti-drug antibodies—are to be expected. If it does not have a consequence on efficacy—so you would know that by neutralizing antibodies, you would see it on the endpoint of interest, in this case proteinuria—it is not something to be concerned about. And, of course, on the other side, it could be an antibody that causes safety, but based on how this particular drug works, I do not have concerns in that domain. So it is really about a specific subset of anti-drug antibodies, neutralizing antibodies, that have an impact on outcomes. Based on everything that we saw in RUBY-3 that we shared with you in November, I do not expect that to be something of consequence. Tazeen Ahmad: 80 is that is. Operator: The next question will come from Io Muir with Barclays. Please go ahead. Eliana Merle: Hey, it is Elly. Thanks for taking my Reshma Kewalramani: just on TERNAVEX, how do you see the mix between retail and Eliana Rachel Merle: hospital setting evolving over the course of the year? And how should we think about how that mix could impact gross-to-net as well as treatment duration? Thanks. Reshma Kewalramani: Duncan, do you want to take that one? Operator: Yeah. Sure. Duncan McKechnie: So as far as the mix is concerned, I would say that we did see it evolve over the course of 2025. We concluded the year at around about 50/50 between retail prescriptions and hospital prescriptions. And I would say that in the future, we anticipate that that will move more towards the retail space proportionally compared to where it is right now. In terms of the impact on gross-to-net, there are a number of dynamics to that. Obviously, the length of the prescription in hospital is usually shorter than the duration of the prescription in retail. But it also depends on the type of patient, for example, whether they are a commercial patient, whether they are a patient or a Medicaid patient, and indeed whether they are going through our patient support program, or whether they are a self-pay patient. There are a number of dynamics in terms of how this sort of prescription balance affects gross-to-net. Operator: Your next question will come from William Pickering with Bernstein. Please go ahead. William Pickering: Hi, thank you for taking my question. I was wondering—this is a Povi one—if you could discuss how you expect the baseline GFR to impact the observed effect size. I think your Phase 2 patients had an average GFR about 10 mL higher than the competitor Phase 2 or Phase 3 trials. And so if we were to see a Phase 3 baseline for Povi that is more similar to those competitor trials, Operator: just wondering directionally which way, if at all, that would influence effect size? William Pickering: Thank you. Reshma Kewalramani: Yeah. Well, I think you are asking about what the impact of baseline GFR could be on proteinuria. Did I understand that correctly? Charles F. Wagner: Yeah. That is right. Reshma Kewalramani: Okay. In general, when you are in the range of proteinuria where we are studying—so you have to be somewhere between 30, and I think the entry criteria is, like, 30 to 90 or something like that—when you are not at the very tail end close to dial—so what we would call a burnt-out kidney—in the range that we are studying, it should not have any great impact on proteinuria. When you have a burnt-out kidney, proteinuria could seemingly decrease because you do not have any renal function left. But in the range that we are talking about, it should be fine. It does no real big impact there. Operator: Thank you. I hope that helps. Yeah. Your next question will come from Brian Abrahams with RBC Capital Markets. Please go ahead. Hey, good afternoon, and thanks so much for taking my question. Another one on Povi. Just recognizing there are similar inclusion/exclusion criteria between RUBY-3 and RAINIER. I was just wondering if there were any differences such as proportion of patients from China or their degree of patients on SGLT2 inhibitors that might impact proteinuria response to povitacicept. And then also, is there any reason as we sort of think about a proxy for the potential magnitude of what we might see not to include the blend of UCPR reductions from both the 80 and 240 mg doses from RUBY-3, just to, I guess, get to a higher end? I am just wondering if there is any reason 240 might have conferred lesser activity mechanistically. Thanks. Eliana Merle: Okay. Reshma Kewalramani: On the differences between Phase 2 RUBY-3 and the Phase 3 RAINIER, I think the most important one is that the Phase 2 study was not placebo-controlled. The Phase 3 study, obviously, is placebo-controlled. In all the other dimensions— inclusion criteria, the dose of the study, the endpoint—there are either exactly the same or very, very similar. The difference is the placebo arm. So you do have to think about that. And at the ASN event, there was a question to one of the thought leaders who has worked in this space for a long time about, well, what do you think the placebo protein response could be over this period? And they said between 0–5%. I think that is about right. So I think that is the big one. I do not have baseline characteristics, Brian, to share with you from the RAINIER study. Obviously, we will have that for you when we share the results. I think there was another question about 80 and 240. We did not study 240 any further. After RUBY-2 and all of the 240 data that we had, we shared with you at the ASN, and it did look on average about the same as 80 milligrams. Brian Abrahams: Thanks so much. Reshma Kewalramani: Yep. You bet. Operator: The next question will come from Terence C. Flynn with Morgan Stanley. Please go ahead. Terence C. Flynn: Hi, thanks for taking the question. Maybe two for me. First one, unsurprisingly on Povi. I was wondering, Reshma, if you can comment at all about the blinded serious data you are seeing from the RAINIER study at this point. And then the second one was on the WuXi deal. I know you mentioned you are developing this TCE for B cell–mediated autoimmune conditions. Wondering how you think about differentiation there on the portfolio in terms of where you might carve out those indications relative to Povi? Thank you. Reshma Kewalramani: Yeah. Yeah. On the data for RAINIER, as you may know, there is an independent data safety monitoring committee that monitors that study. And maybe the most helpful thing I can share is that they review the data in an ongoing fashion, and of course, they review blinded and unblinded data. They review everything because they are the DSM. They have not asked us to change anything in the study. And they have given the study a clean bill of health as it goes through. Maybe that is the most helpful thing I can say to you with regard to what the ongoing data is. With regard to WuXi and indication, we specifically did not share, so I am going to keep that information under wraps for a little bit longer. I will say that the idea of having a medicine like Povi, a pipeline-in-a-product for multiple B cell–mediated diseases, is exciting. And our interest in serial innovation stands. And you put those two together, it is probably unsurprising to you that we are interested in these kind of tri-specific engagers, because they would work for a variety of diseases, not just the ones that we talked about—IgAN, membranous, myasthenia—but other B cell–mediated diseases that we are interested in. But I will keep the specifics under wraps for a little longer. Operator: Your next question will come from Debjit D. Pattijay with Guggenheim. Please go ahead. Hi. This is Morris on for Debjit. For taking our questions. I have two about Povi. First, looking at the RUBY-3 UPTR data, Povi had a much larger Morris: standard error than the test receptors in their comparable studies. Any comment on what may have caused this variability? And, second, as I said, in cipaprevimab's Phase 3 studies showed very different placebo rates in their UPCR interim analysis. What is your assumption for the placebo rate in the RAINIER interim? Reshma Kewalramani: Yeah. I do not have much more to add about the placebo rate other than what I said. When this question was asked at ASN, the physician who had been involved in a number of trials and is a real IgAN expert offered that his idea was 0% to 5% for placebo. I think that is probably about right, and that sounds right to me. So I would keep that. On the idea of standard error, I have not looked at, I have not looked at their data. I do not know that I have anything particularly helpful to say. As you know, the standard error is impacted by sample size, so I do not know exactly which datasets you are looking at, but that is one thing I would look at. And it also matters what lab tests you use, whether you are using 24-hour urine or you are using spot urine. So I could offer multiple explanations, but, unfortunately, I have not looked at the data looking at. But if you send it to Susie, I am happy to look after the call. Morris: Thanks. And, just to be specific, the 0–5%, is that increase or decrease given that in the competitor Phase 3 study one of them showed a placebo increase and the other showed a decrease in UPCR? Reshma Kewalramani: I was thinking about the placebo group potentially having proteinuria improvement of somewhere between 0% to 5%. Obviously, if the proteinuria in the placebo group—if there was more proteinuria—it would be incrementally beneficial to Povi because it is a comparison versus placebo. Of course, the placebo is equal opportunity, could go up or down. We will take one more question, thank you so much. You bet. Operator: And the next question will come from Phil Nadeau with T.D. Cowen. Please go ahead. Good afternoon. Thanks for taking our question. Philip Nadeau: Want to ask about the $500,000,000 guidance for products outside of CF. First, could you give us some sense of the breakdown between KESJEVRI and Genomics in that number? And then second, that is a big increase, a threefold increase over 2025 and an approximate doubling versus the Q4 run-rate. What gives you confidence in that level of growth? Is it KASJEVY infusions, KASJEVY self-harvest that are happening? Visibility from payers on Genrex? Can you give us some sense of what you are seeing to put that number out there? Thanks. Reshma Kewalramani: I will ask you to take that one. Sure. Yes. Charles F. Wagner: So the guidance includes a contribution from non-CF products of $500,000,000 or more. We do feel very confident about that number and have great line of sight to the year for some of the reasons that you touched on. I will not break it down further in terms of Kasjevi or Gernabix. But you will see the Kasjevi and Gernavix results in our quarterly reporting as it has occurred. So you will have a sense of where the contribution is coming from. With KASJEVY, we had a strong year with over—with 300 or so patients initiating, 150 or so having first cell collections. Given the length of the patient journey, that gives us great visibility into the year. So we are very confident that KASJEVY will ramp up nicely compared to 2025. And then similarly, you have seen our previous commentary about Jornavik's prescriptions tripling in 2026 compared to 2025. And with greater access in 2026 versus 2025, the revenue conversion on those prescriptions will be greater as well. So feeling confident about both. We have a nice trajectory heading into 2026 versus 2025, and look forward to reporting out on the results each quarter as we go forward. Philip Nadeau: That is helpful. Thank you. Eliana Merle: Thanks, Jeff. If you could wrap it up first, please. Operator: Yes, ma’am. This concludes our question and answer session, as well as the conference call. Thank you for attending today's presentation. A replay of today's event will be available shortly after the call concludes by dialing 704-0529 or 8 using replay access code +1 000026104. Again, that replay access code is 10206104. Thank you for participating today. You may now disconnect.
Operator: Welcome to the Wynn Resorts, Limited fourth quarter 2025 earnings call. All participants are in a listen-only mode until the question-and-answer session of today's conference. Record your name, and I will introduce you. Please limit yourself to one question and one follow-up question. This call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the line over to Julie Cameron-Doe, Chief Financial Officer. Please go ahead. Thank you, Operator, and good afternoon, everyone. On the call with me today are Craig Billings and Brian Gullbrants in Las Vegas. Also on the line are Jenny Holiday, Linda Chen, and Frederic Louvizuto. Please note that we have published a presentation to provide more color on the company and recent performance ahead of this call. You can find the presentation on our Investor Relations website. I want to remind you that we may make forward-looking statements under Safe Harbor federal securities laws, and those statements may or may not come true. I will now turn the call over to Craig Billings. Craig Scott Billings: Good afternoon, and as always, thank you for joining us. I would like to start today's call by taking a step back and taking a broader multiyear view of our business and talk about how the company is positioned relative to some of the broader forces shaping the world and our target customer base. We are now a little more than a year out from a meaningful milestone, the opening of Buenos Aires Islands. This development is significant for many reasons, but over the long term, its importance as a step forward in our geographic diversification stands out, especially in the context of an increasingly multipolar world. Recent actions in geopolitics, currencies, metals reinforce our view that multipolarity is not a transient trend. With it comes meaningful shifts in historical patterns of travel, trade, technology diffusion, and capital flows. Increasingly, those patterns are coalescing around a small number of global hubs, notably, the U.S., China, and portions of the Middle East. We see this in financial markets, and we see it in the travel patterns of our international customers. At the same time, we are approaching a period of significant change driven by technology and artificial intelligence. Anticipation of those changes is already fueling substantial business formation and wealth creation centered again in the U.S., China, and portions of the Middle East. That expanding wealth creation will continue to drive demand for what Wynn Resorts, Limited has always delivered: exceptional product and service for the world's most discerning customers. This brings me to two related capabilities that position us well for the long term: our relentless focus on our core customer segment, and our proven ability to develop and operate world-class assets in diverse geographies, thereby allowing us to meet the affluent customer wherever they choose to be. With the opening of Wynn Al Marjan, we are introducing a significant into a new and dynamic market. More broadly, we are moving toward a portfolio where we expect over 55% of our revenues will be generated in non-U.S. dollar denominated markets from assets we developed and operate, each meticulously designed around the most valuable consumers in these key markets. So as we begin 2026, Wynn Resorts, Limited is on track to become one of the most globally diversified companies in our industry. That diversification, combined with our brand, customer focus, and proven operating capabilities, leaves us exceptionally well positioned for the longer term. Now turning to the fourth quarter, Wynn Las Vegas delivered another robust quarter with EBITDA of $241,000,000. It is important to note that the comparable quarter of 2024 benefited from nearly 31% hold, and thus, when normalizing both periods, EBITDA in Q4 2025 was just above the prior-year comp. Demand for our product in Las Vegas remained healthy across the board with drop, handle, and ADR all up year-on-year. While RevPAR was slightly below last year, the overall results reflect our ability to balance stronger ADRs with modestly lower occupancy in order to optimize the performance of the building. We remain well positioned to do this given our strong competitive positioning and our customer base. More recently, performance in the first quarter has been encouraging with casino volumes and RevPAR both holding up well. Looking further out, we feel good about the business in 2026. The visibility that we have into forward demand is largely due to our group and convention business which continues to look strong, on pace to grow both room nights and rate relative to 2025. As I mentioned last quarter, we will begin the Encore Tower remodel in the second quarter and expect to lose about 80,000 room nights in 2026. We expect to recapture some of that impact in rate, but the remodel will nonetheless present a slight headwind for the year. Turning to Boston, Encore generated $57,000,000 of EBITDAR during the quarter with lower-than-normal table hold masking what was otherwise strong fundamental performance with RevPAR, table drop, and slot handle all up year-on-year, along with tightly controlled OpEx. More recently, demand in Boston has remained healthy into February, aside from specific days impacted by poor weather. Shifting to Macau, this quarter was all about significant volume growth but unusually low hold in both VIP and mass. The team delivered $271,000,000 in EBITDA with low VIP hold costing us a little over $16,000,000 in EBITDA. Volumes in the quarter were strong, with VIP turnover up 48% and mass drop up 18%, both year-on-year. While we do not quantify the impact of unusual mass hold, mass hold in the quarter was below our expectations. And like Las Vegas, Macau also held higher in the prior-year quarter, skewing year-over-year comparability. Momentum in Macau has persisted into the first quarter with volumes in January just above those we saw in Q4. We are also very excited about the upcoming opening of the new Chairman's Club floor at Wynn Palace, a 63,000 square foot addition dedicated to our highest value customers, featuring gaming alongside a suite of bespoke amenities. We expect to be welcoming guests into the space for Chinese New Year. Looking ahead to the rest of 2026, following sustained double-digit market-wide GGR growth in 2025, we remain optimistic about the future of Macau. The premium segment continues to lead the market, and that is a segment where we are always well positioned. The expansion of the Chairman's Club at Wynn Palace along with the refresh of the Wynn Tower rooms at Wynn Macau further strengthen our ability to capture this demand in 2026 and beyond. Turning to Wynn on Marjan Island. I would like to thank those of you who made the trip to join us for our Investor Day in the UAE in December. We hope the visit provided you with a clearer sense of both the scale of the opportunity and the broader dynamics of the region. During the fourth quarter, we reached a significant construction milestone when we topped out the tower at the 70th floor. Construction continues to progress rapidly with interior fit out underway in all guest rooms and our iconic exterior glass about 80% complete. The opening of Wynn Al Marjan and the free cash flow inflection that it will bring reinforces our confidence that our best days lie ahead. Before turning the call over to Julie, I would like to address one final item. As we announced a few weeks ago, Julie will be retiring before the next earnings call. On behalf of the company, I would like to acknowledge her accomplishments as CFO and thank her for her leadership and significant contributions over the past four years. Over to you, Julie. Julie Mireille Cameron-Doe: Thank you, Craig. It has been such an honor to serve as CFO here at Wynn. We are known for our beautiful buildings and five-star service, but what sets this company apart from all the others are its people, at all levels and across the globe. It is extremely rare to work somewhere where everyone is bringing their A-game every day. That is exactly how it is at Wynn. It is incredibly special. So before I get into the quarter, I would like to thank each and every one of our employees in Vegas, Boston, Macau, Marjan, and London for all you do to make Wynn the best in the business. Turning to the numbers. At Wynn Las Vegas, we generated $240,800,000 in adjusted property EBITDA on $688,100,000 of operating revenue during the quarter, delivering an EBITDA margin of 35%. Hold positively impacted EBITDA in the quarter by just over $8,000,000. OpEx, excluding gaming tax per day, was $4,600,000 in the quarter, up 4.1% compared to the prior year, largely due to incremental costs related to payroll, higher repair costs, and bad debt expense. Turning to Boston. We generated adjusted property EBITDA of $57,000,000 on revenue of $210,200,000 with an EBITDA margin of 27.1%. As Craig mentioned, low hold negatively impacted the quarter's results, while casino volumes and RevPAR were strong. Slot revenues were strong, up over 2%, setting a new record for Boston. We maintained our discipline on the cost side with OpEx per day of $1,180,000, up less than 1% compared to Q4 2024 despite continued labor cost pressures in the market. The Boston team has continued to do a great job of mitigating union-related payroll with cost efficiencies in areas of the business that do not impact the guest experience. Our Macau operations delivered adjusted property EBITDA of $270,900,000 in the quarter, on $967,700,000 of operating revenue, resulting in an EBITDA margin of 28%. Lower-than-normal VIP hold impacted EBITDA by just over $16,000,000 in the quarter. And though we do not report EBITDA normalized for mass hold, our mass hold in Q4 was about 250 basis points lower than the prior-year quarter, impacting our overall EBITDA margin. OpEx excluding gaming tax was approximately $2,850,000 per day in Q4, with the increase from Q4 2024 driven primarily by a full quarter of Gourmet Pavilion related costs, normal cost of living expenses, and variable costs driven by healthy business volumes. In terms of CapEx in Macau, back in Q2, we initiated two projects as Craig mentioned: an expansion of the Chairman's Club gaming area at Wynn Palace and the refresh of our Wynn Tower rooms at Wynn Macau. The impact of those projects on CapEx continues into 2026. For the full year 2026, we expect to spend a total of $400 to $450,000,000, with several concession-related projects awaiting government approval. Moving on to the balance sheet. Our liquidity position remains very strong, with global cash and revolver availability of $4,700,000,000 as of December 31. This was comprised of $2,900,000,000 of total cash and available liquidity in Macau and $1,800,000,000 in the U.S. The combination of strong performance in each of our markets globally, with our properties generating over $2,200,000,000 of adjusted property EBITDA together with our robust cash position, creates a very healthy consolidated net leverage ratio just over 4.4 times. Our strong free cash flow and liquidity profile also allow us to continue returning capital to shareholders. To that end, the Wynn Resorts, Limited Board has approved a quarterly cash dividend of $0.25 per share payable on 03/04/2026 to stockholders of record as of February 23. Our recurring dividend highlights our focus on and continued commitment to prudently returning capital to shareholders. In terms of CapEx, we spent approximately $171,200,000 in the quarter, primarily related to the Fairway Villa renovations, Zero Bond and Sartiano’s in Las Vegas, the new Chairman's floor at Wynn Palace, the hotel tower refurbishment at Wynn Macau, and normal course maintenance across the business. In addition to that figure, we contributed $79,200,000 of equity to the Buenos Aires Island project during the quarter, bringing our total equity contribution to date to $914,200,000. We also continue to draw on the Marjan construction loan with a drawn amount to date of $769,600,000. We estimate our remaining share of the required equity, including the new-to-new project, is approximately $450,000,000 to $550,000,000. With that, we will now open up the call to Q&A. Craig Scott Billings: Thank you. Operator: To ask a question, unmute your phone, record your name clearly after the prompt, and I will introduce you. Please limit yourself to one question and one follow-up question. To withdraw your question, press 2. Question comes from Daniel Brian Politzer with JPMorgan. Your line is open, sir. Craig Scott Billings: Hey, good afternoon, everyone. And Julie, congratulations on the retirement, and thanks for all the help these past few years. First question on Vegas. Some of your peers have been fairly upbeat on the path for higher-end luxury properties to grow in 2026. And I recognize, Craig, you mentioned the limited booking window and visibility outside of group and convention, as well as the Encore Tower disruption. But I guess, as we think about those puts and takes and your level of confidence in this high-end customer, the strength retaining or maintaining here, how do you think about the path to growing in Vegas in 2026? Sure. It is kind of funny because I feel like we have spent the past few years trying to convince people that we were not going to decelerate. And, you know, we have continued to hold up very, very well. If you look at the drivers in 2026, I noted the headwind of the rooms that will be out of service. Certainly, I expect that will impact us. Again, we will try to pick up some of that in rate, but the group business is doing really, really well, which, of course, in turn allows us to yield in the other segments. And so as long as the group pace plays out as we expect it will, strongly expect it will, we feel good about our ability to continue to price rooms. Gaming volumes, you can see gaming volumes in the quarter, and that gives you a sense for how tables and slots are holding up. So we feel good about our ability to perform really, really well in 2026. I mean, by any kind of historical standards, Wynn Las Vegas is absolutely crushing it. So, you know, we do not see anything at the moment that would change our view on our ability to continue to do so. Brian, would you add anything to that? No. I would say so far, our key business indicators are all positive. But as mentioned, the out-of-order rooms will certainly be a challenge in the latter half of the year. It. That makes sense. And then just in terms of the OpEx, Julie, I think touched on Macau ticking a little bit higher. In Vegas, I think there has been a little bit of increase there too. Is there any kind of parameters to which to think about the OpEx growth in Vegas as well as Macau for 2026? Operator: Yeah. I mean, I will start with I will start with Vegas and move on to Macau. Julie Mireille Cameron-Doe: So, I mean, the team in Vegas remains incredibly disciplined on OpEx. And we did raise our outlook last quarter to $4,300,000 to $4,500,000 outside of major event periods. We ended up slightly above that range at $4,600,000 in Q4. It is a very heavy event period with Formula One, Concours, New Year’s, and a busy convention calendar. You know, we also continue to see normal wage inflation in union and nonunion areas of the business. But otherwise, we are managing OpEx very tightly. And in terms of the outlook, we are not changing our expectation for OpEx to be in that $4,300,000 to $4,500,000 range outside of major event periods. If I move on to Macau, Macau, obviously, as we said on the call, we got a full quarter in of the Gourmet Pavilion. And we have had some, you know, obviously, some cost of living increases going on in there as well. We once again saw the variable impact of higher business volumes in the quarter because we had very strong volumes in the quarter. We raised our OpEx per day expectations last quarter to be in the range of $2,700,000 to $2,900,000, and, you know, we are aligned with that number. Craig Scott Billings: Got it. Thanks so much. Operator: Thank you. Our next caller is Elizabeth Dove with Goldman Sachs. Your line is open. Elizabeth Dove: Hey, thanks for taking my question. I will echo congratulations and thanks to you, Julie. Really appreciate all the help and, you know, wish you the best going forward. Sticking with Vegas, first of all, I guess, similarly kind of on that OpEx side of things. Just thinking about the margins, I think margins in Vegas are obviously up a lot versus 2019 that you have just seen such incredible strength there. And, you know, there has been a bit of a giveback over the couple of years, maybe a bit of a return to normal, whatever you want to call it. But just thinking about really a bit longer term, not just 2026, but how you think about just margin expansion, whether that is possible at some point in Vegas or if there is still a bit of a kind of normalization to go there. Craig Scott Billings: Sure. We have always been pretty explicit about the fact that we do not really manage to margin per se. Right? What we do is try to absolutely top-tick revenue, which is about taking market share in gaming and driving ADRs, pushing the right customers into the building for retail tenants, and then being absolutely judicious about managing OpEx. And we are doing both of those things. So we do not really give margin guidance, and we do not look forward in terms of margin. But philosophically, that is really how we approach it. And I think you saw that this quarter. Elizabeth Dove: Got it. And then just on the Encore renovation, you know, it is helpful to call that out. And, you know, on my math at least, the 80,000 room nights could be maybe $50,000,000 of EBITDA impact, you know, assuming that you do not get any recapturing on the rate, which you did mention. Anything that you could share there and just how you are thinking about it, particularly in the second half when you kind of fully start the renovations and also typical kind of IRR on the longer-term basis of projects like this. Craig Scott Billings: Yeah. That sounds a little bit high to me. But the way to think about it is we stage and stagger the renovations as taking out floors such that they occur in the lowest demand periods. So that is one of the ways that we mitigate the impact of those renovations, thereby allowing us to pick up the highest-rate periods. And then I think as you pointed out, we expect that we will pick up some of that in rate. Beyond that, it kind of is what it is. You know, we need to do the renovation, and it is important to the building and the brand. Brian, what would you add? Brian Gullbrants: We are starting in mid-May. So as far as impact, it starts in mid-May, and it will consume about six floors as we go through the building. But it is a twelve-month process, so this is going to linger into 2027 as well. Yeah. That is a good point as well. Craig Scott Billings: It is really split between two years. Elizabeth Dove: Got it. Thank you. Craig Scott Billings: Yep. Operator: Thank you. Our next caller is Shaun Kelley with Bank of America. Your line is open. Shaun Kelley: Good afternoon, everyone. Thank you for taking my question. Shaun Kelley: First of all, Julie, for all of your time and attention and, of course, the hospitality on the UAE trip. It was spectacular, so you will be missed. And, you know, if I could, I wanted two questions on Macau. Maybe first, Craig, if we could lead off with a little bit of color on there is concerns both about promotions in the market and competition. And then specifically, we have got some questions, just mix shift between VIP and premium mass. I know you kind of specialize in both these segments. So just kind of wanted your thought on the overall environment and then again, are you seeing any sort of notable shifts between business lines that may be impacting or changing margins in that segment? Brian Gullbrants: Sure. Thanks, Shaun. Craig Scott Billings: Yeah. Both of your questions kind of lead to margin. I guess, first of all, with respect to margins overall, margins in the quarter were really affected by three things: the significant jump in VIP volumes, but low hold; unusually low hold in mass, which we mentioned a couple times in the prepared remarks; and remember, we generally accrue reinvestment on theoretical, not actual, so that obviously suppresses margins; and then the incremental OpEx that was previously discussed from cost adjustments and a full quarter of the Gourmet Pavilion. There was not really, beyond everything that I mentioned, there was not really a fundamental shift in the business. As you know, VIP can be incredibly lumpy. It is just the nature of the business. I would not be proclaiming a market-wide shift, or at least a Wynn shift, in the sources of business. With respect to reinvestment, and again, as we have discussed on prior calls, look, it is a very short booking window in Macau. And so it is daily hand-to-hand combat, as I have said before, for customers. And we will adjust reinvestment up or down in any given period to make sure that we achieve our business goals. I cannot say that our quarter was unusually impacted by a significant jump in reinvestment. Shaun Kelley: Very clear. And then as my follow-up, you mentioned in the prepared remarks as well the excitement around the new Chairman's Club space. So just wondering if you could give us a little bit more color and detail there? I think timing sounded like open by Chinese New Year, but if you could talk about the kind of scope and scale there, what you have been investing, and potential impacts for both 1Q and maybe the full year? Brian Gullbrants: Yeah. Sure. Craig Scott Billings: Thank you for asking about it. We are waiting on, I think, one final government approval. Maybe we got it yesterday, actually. So we do expect we will be open by Chinese New Year. This is significant. We did it in record time. Amazing that the development team was able to do it. But this is a significant expansion of the Chairman's Club. So the Chairman's Club, for those of you that are not aware, is an area within Wynn Palace that is the space that is dedicated to our highest value customers. This expansion actually triples the size of the Chairman's Club to nearly 100,000 square feet. The space includes gaming areas along with a whole bunch of amenities, including several boutique food and beverage outlets, entertainment areas, cigar lounge, a bar. We honestly believe it will set a new standard for premium gaming space in Macau, in an area that already feels very, very comfortable to our best customers. So we feel great about it opening up. The impact on Q1, we will see. We are hoping to get into Chinese New Year. And, obviously, the rest of the year, we do not provide any forward guidance. Julie Mireille Cameron-Doe: Just confirming that we have the approval for opening today. Thank you. Craig Scott Billings: Yeah. So we are good to go. You can strike the word “expect” from the prepared remarks. Shaun Kelley: Thanks, everyone. Operator: Thanks, Shaun. Thank you. Our next caller is Robin Margaret Farley with UBS. Your line is open. Sorry. One moment, please. Robin? We will go to the next caller. John G. DeCree with CBRE. Your line is open. John G. DeCree: Hi, Craig, Julie. I will pile on to the congratulations and gratitude. It has been a pleasure working with you. Good luck on what is next for you. Maybe to stick with Las Vegas, kind of ask the consumer question a couple of different ways. With lower occupancy, obviously, rate was up, but I think it is impressive gaming volumes are up. We saw higher food and beverage revenue. And so, Craig, if you could talk about are you getting more foot traffic in the door from other properties not staying at Wynn, or is it really just a higher price? Anything you could say about gaming volumes and F&B revenues being up, you know, despite a little bit of lower occupancy in the hotel? Craig Scott Billings: Yeah. Thank you. First, driving rate over occupancy is an incredibly intentional strategy. It is not a strategy that we are doing because it is being hoisted upon us. Right? When we drive rate over occupancy, we can change our restaurant opening hours. We can staff the building differently, and we can really push EBITDA. On the gaming volume point, it is definitely not the mass customer that is wandering in the door and driving our incremental gaming volume. We set out, geez, three years ago now, and changed a tremendous number of things in the business, from our hosting strategies to our underlying technology to aspects of our rewards program and our reinvestment, and that has resulted in a pretty significant shift in market share in our favor. And this was another quarter where you saw the benefit of that. Brian, anything you would add? Brian Gullbrants: I would say the ops team continues to crush it on optimizing RevPAR, focused on keeping the restaurants full, and still tightly controlling OpEx. So all of those are key in our future. Craig Scott Billings: Very helpful. I think I have piled two questions in there, so I will step out of the queue. Thanks all. Julie Mireille Cameron-Doe: Thanks. Operator: Thank you. Our next caller is Brandt Montour with Barclays. Your line is open, sir. Brandt Montour: Good afternoon, everyone. Thanks for taking my question. Operator: Can you guys— Brandt Montour: I do not think you guys have talked about this yet, but the sort of the convention calendar for you guys for the year by quarter, you know, any sort of what should we think about in terms of year-over-year comparisons and what stands out to you when you look out over the year in terms of group? Craig Scott Billings: Brian, you want to take that? Sure. I think if you look at— Brian Gullbrants: Some of the citywides, and it does not impact us as much, but there is some significant change this year over last year. Q1 seems to be higher than last year. Q2, a little bit more challenged because April, you have got Passover, Easter, and then we layer in pretty nicely. There is a couple holes in the summer. We have plenty of prospects. Team is doing a great job in filling those holes and pacing nicely right now. So we will see how it goes. Operator: Okay. Great. Thanks for that. And this is a follow-up on Macau. Brandt Montour: You know, you guys already talked about margins and sort of the effect of VIP mix. But when we look at just the VIP volumes, they look incredibly strong, and you are not the only ones that have seen this. Can you just help us understand what is driving that? Are you guys doing more direct lending as part of that roll and ship business? What are sort of the supply and demand things to keep in mind when we are trying to understand those trends? Craig Scott Billings: We definitely have not changed any component of how we think about credit. Brian Gullbrants: So— Craig Scott Billings: We are not driving volumes on the back of incremental credit. As you know, in VIP, a very small number of players can drive a very large amount of turnover. So we have been making very specific investments in our VIP hosting teams and in our VIP player development, and we saw the benefit of that this quarter. Brian Gullbrants: Great. Thanks, everybody. Elizabeth Dove: Sure. Operator: Thank you. Our next caller is David Brian Katz with Jefferies. Your line is open, sir. David Brian Katz: Hi. Good afternoon, everybody. Brandt Montour: Julie, congrats and all the best. I wanted— Craig Scott Billings: To just get an updated comment on Las Vegas broadly. Brandt Montour: And— Craig Scott Billings: You know, how do we think about the opportunity for your assets to continue to grow— Brian Gullbrants: Either top line— David Brian Katz: Or bottom line. Is it—what I understand that the refurbs are necessary and helpful, you know. But how do we sort of think about your presence there growing longer term? Craig Scott Billings: Yeah. Look, the way I think about it is Vegas, if you look at Vegas over the course of the past—really since the emergence from COVID—Vegas has become a more multifaceted destination than it has ever been. And, you know, and we have talked about this before, Vegas has a long history of tacking on incremental sources of demand. The Raiders are an example of that. The Sphere is an example of that. And, really, the business is more diversified—the total business here in Vegas is more diversified than it has ever been. David Brian Katz: That— Craig Scott Billings: Next maturation of the market tends to appeal to customers that are in our customer segment. And during that same period, I would humbly say that we have continued to distance ourselves in the market and provide the best option for those high-value customers. You have seen those high-value customers hold up, even as, you know, perhaps folks who are in a different income strata have not. And I think that we have been a real beneficiary of that. So from an organic same-store-sales basis, I feel very good about our business and our position in Vegas. I mean, look at the EBITDA numbers and the return on invested capital that we are delivering out of this building. It is tremendous. David Brian Katz: Then— Craig Scott Billings: Beyond that, of course, we have a pretty significant land bank here. You have to choose the right time to flex that land bank. If you look at the last two openings in the market, they have had to be share takers because the market visitation did not change with those two openings. But over the very longer term, you know, particularly as, again, as I was saying in my prepared remarks, you have incremental wealth creation, everything that is going on in technology and AI. We think that demand for our products will allow us to take advantage of that expansion. It is just a question of when. So, again, I do not really think—candidly, I do not really think “will 2026 be greater than 2025?” I think “where will we be in 2030 and 2032?” And what will our business look like? And I feel very good about it. Okey doke. David Brian Katz: Thank you. Sure. Operator: Thank you. Our next caller is Chad Beynon with—your line is open, sir. Benjamin Nicolas Chaiken: Hi, good afternoon. Thanks for taking my question. And— David Brian Katz: Julie, congrats on all your accomplishments as well. Wanted to ask unfortunately, maybe more of a near-term question, just around 2026. I know a lot of the lodging companies and event centers are talking about the World Cup impact. I know it is making its way through Boston for a couple weeks and then obviously in Los Angeles and other cities, where international customers could be here and maybe frequent your properties. I guess my question is, do you think there could be an impact or maybe a spark that we have not seen from maybe some international customers coming back into the market and then frequenting your properties? Thanks. Craig Scott Billings: Sure. It is a good question. In Boston, for sure, the direct impact there I would expect would be on ADR. In Vegas, we have an entire strategy that we have developed to take advantage of the proximity of the World Cup. That is a very targeted strategy because, you know, we do not need kind of the mass volume to make their way here. And so, certainly, we will take advantage of that and make sure that we are able to ghost on the event, if you will. Does it impact how we think about 2026? Maybe on the margin. But I do not think I would be calling it out as a specific driver of the year. David Brian Katz: Okay. Thanks, Craig. And then as it relates to AI, you talked about just the wealth effect that could improve your customers’ wealth over the next couple of years and then drive business to your properties. But what about internally in terms of tech that you guys are using, either in-house or with certain vendors to help whether it is, you know, search or content, kind of product on the floor? Do you think we will see an improvement in 2026 versus 2025 that could either help on the revenue or margin side? Craig Scott Billings: Great question. How much time do we have left on the call? Okay. So first of all, we are already seeing the effect of that wealth creation. We already have customers that are spending time with us that have had wealth created through everything that is going on with artificial intelligence. So this is not something that I am just kind of forecasting out of my head. I mean, we can see it. And in the long run, I do not anticipate that it will just be here. I anticipate that it will be in Wynn on Marjan Island, where you have the UAE being extremely aggressive in terms of AI infrastructure and AI model development. And so I think that that will benefit us there as well, and I think it will benefit us in Macau as a new generation of wealth is created in China. On the internal side, our approach to date—we worked under the presumption initially that anything that was focused on OpEx efficiency would be packaged up and sold to us because that is where everybody was going to head first. And I was kind of proven to be the case. I think with respect to that, look, anybody who watches CNBC, particularly today, is going to tell you that there is a general feeling that we are finally at a tipping point with respect to the models. And I believe that to be true. And so I think from an OpEx efficiency perspective you will start to see gains over the course of the next several years. What I think is underappreciated in the enterprise is the amount of plumbing that goes into how all the systems that we utilize, the data, the databases that we utilize are connected. So that plumbing does not change overnight, and so that takes time. But I am certain that that will happen. So if we were not focused on the OpEx side, what were we focused on? We were focused really on customer delight. And so that really comes down to personalization, where we have rolled out several things. I will not get into the details on this call for competitive reasons, but we have rolled out several things that have had a meaningful impact, we believe, on retention. We focused on improving the underlying machine learning and modeling for our reinvestment. That is true here and in Macau. And that has certainly had an impact. I believe you can see that showing up in gaming volumes. So, you know, it is a little bit of everything. Oh, and then the last piece I would say, I think if you are watching the markets, you may have seen TripAdvisor trading off heavily today, citing the impact of what is called GEO, generative engine optimization, on a business that is very SEO, search engine optimization, dependent. So we have been on that for probably about a year now, making sure that our discoverability—that is from a hotel sales perspective, primarily food and beverage as well, but mostly hotel sales—that our discoverability would be absolutely top notch as GEO starts to take over SEO. So there is really—there is a hundred things that will ultimately come out of all of this. I am not going to put us in a position where we are talking about impact on—well, never put us in a position where we are talking about impact on margins. But it certainly will show up. Brian Gullbrants: Thanks, Craig. Appreciate it. You got it. Operator: Thank you. Our next caller is Steven Moyer Wieczynski with Stifel. Your line is open, sir. Steven Moyer Wieczynski: Hey, guys. Excuse me. Good afternoon. And congrats, Julie. Hope you have a great retirement. Not sure if I missed this or not, Craig or Julie, but, you know, if we think about Macau margins in the fourth quarter on a more normalized basis, meaning hold normal in VIP and mass, OpEx is— Operator: Based on our quick math, is it safe to say those margins would have been pretty close to the 31.5% margin that was posted in 2024? Am I kind of thinking about that the right way? You are a little above where we would put them. We would probably put them somewhere around 30. Okay. 30.5. Yep. Okay. Thanks, Craig. And then I am not sure how much you will say, Craig, or not, given we are kind of in the first quarter, but Chinese New Year obviously starting up in the next couple days. Would you give any kind of high-level view on where you guys are booked at this point or what you think demand is going to look like? Yeah. Booking pace is good. Julie Mireille Cameron-Doe: We feel very, very good about where we are. And with the opening of Chairman's Club at Palace, we feel like we have something new and shiny that will delight our best customers. So we are feeling good about Chinese New Year. We do—and we call this out, I think, kind of ad nauseam now—but we do run into capacity constraints around these peak periods based on table count. That does not affect our best customers, obviously. But on the more base mass side, we do. But we feel great. Operator: Okay. Gotcha. Thanks, Craig. Appreciate it. Sure. Craig Scott Billings: Thank you. Our next caller is Trey Bowers with Wells Fargo. Your line is open. Julie Mireille Cameron-Doe: Hey, guys. Thanks for the question. Great to see you on the trip a couple months ago. I guess I will be the first to ask an Al Marjan question, but as we progress through the year, could you guys just give us any kind of signposts to think about? Be it even when the rooms will go on sale as we look towards just strength of the opening. And then a second part of that question would be one question I get is just it feels like the only hindrance in that market is supply constraint. And can you just give us a sense for when you look around the property, how long it is going to take for that area to kind of be fully built out and how necessary that is to hit some of the targets that you guys are looking for? Thanks so much. Julie Mireille Cameron-Doe: Sure. Elizabeth Dove: The signposts along the way, we will release them in press releases. I mean, we put out construction updates every now and again, and then we update folks on this call. With respect to when rooms will go on sale, that is the subject of discussion right now. But if I had to spitball it at this point, it would be late Q3, early Q4. Elizabeth Dove: You are correct that it would be great to have a bunch of incremental room capacity. We are not dependent on that incremental room capacity to meet our base case. I want to be very, very clear about that. What we said when we were in the UAE was that meeting the outperformance numbers or beyond would certainly require incremental hotel capacity. Those of you that were there saw that construction happening. So the construction is absolutely happening. I do not expect a material uptick in the room count prior to our opening. I mean, we are but a year and a few months out at this point. But shortly thereafter, I would expect incremental rooms to come online. Our strategy to deal with that in the short run and ultimately the long run is to have a very, very strong transportation program and effectively utilize adjacent cities as a source of day-to-day visitation. And so we are being very, very thoughtful on the transportation side. So just to reiterate, base case unaffected, but we certainly would like incremental hotel rooms to come up, and they are coming up. Elizabeth Dove: Great. Thanks. And I guess just a quick follow-up just to ask about my town. We saw in some of the trade rags that maybe a hotel expansion here in Boston was back on track. I did not see anything in the slide deck in reference to anything planned for Boston, but could you guys just walk through any expectations around anything you want to do in this market? Julie Mireille Cameron-Doe: Thanks. Sure. Thank you for that. Yeah. There was a bit of misreporting in a number of those articles, so let me clarify. We are not developing hotels on our balance sheet. Rather, we own some 16 acres of land adjacent to Encore, and we are contemplating providing a portion of that land under what is effectively a land lease. So to that end, we entered into an MOU with the City of Everett outlining certain things that we would each do to facilitate that development. And, really, this is part of a broader vision for the neighborhood, including a potential rail stop and, of course, a possible Major League Soccer stadium very, very close to Encore Boston Harbor. So to be clear, we are not developing those hotels. We would be a land-lease lessor. The hotels themselves would drive benefit to Encore Boston Harbor, and we would be excited about that. But that is what we are up to. Thanks, guys. Craig Scott Billings: Thank you. Our next caller is Ben Chaiken with Mizuho. Your line is open, sir. Benjamin Chaiken: Hey, thanks for taking my questions. And just wanted to echo the previous comments. Benjamin Chaiken: Maybe just follow-up on UAE. Recognizing you have provided us with a high-level financial framework, can you give us your latest thoughts on the mix of F&B, entertainment versus gaming? And then some of the swing factors as you see it today? Thanks. Operator: Sure. Julie Mireille Cameron-Doe: I mean, we have outlined our expectations for the market in a base, low, and upside case. Beyond that, obviously, on the gaming side, the market is extremely supply constrained. We are kind of it for quite some time. I think we have said in the past we expect that market to have many attributes that are consistent with Las Vegas, which is very, very strong nongaming demand. So the balance there really is how we utilize our room base. You know, Vegas, where the vast majority of our revenue is nongaming; Macau, where the vast majority of our revenue is gaming; I would not expect it to be at either of those poles, but it will really come down to the tension of how we utilize those rooms. Elizabeth Dove: So— Julie Mireille Cameron-Doe: You will see in the numbers that we provided very healthy gaming revenues, representing the productivity of the casino and also supply-constrained nature of the market, but you will also see a healthy balance of nongaming revenues reflecting substantial ADRs and a substantial willingness to spend in that market for food and beverage. Helpful. Thank you. Craig Scott Billings: Thank you. Our next caller is Steven Donald Pizzella with Deutsche Bank. Your line is open, sir. Steven Donald Pizzella: Hey, good evening, and thank you for taking our question. And also wanted to say congrats to Julie. Brian Gullbrants: Maybe just following up on Al Marjan as we get closer to the opening. Can you share how your database continues to shape up and the efforts to build the pipeline to get the right people to the property when it opens? Elizabeth Dove: Sure. On the hosting side— Julie Mireille Cameron-Doe: We started building our hosting infrastructure a year and change ago when we started bringing on very senior folks with regional experience. So the kind of one-to-one relationship marketing has been well underway. And I would say that general awareness among high-value players regionally is extremely high. I mean, we have been getting approached by people in pretty far-flung places asking when the property will be open. Elizabeth Dove: On the mass market side, we have begun, primarily through digital, building a database and creating awareness. We are communicating with those folks regularly in anticipation of the opening. And I think that will be additive. Honestly, so we are doing a lot, long story short, to build the database. But the awareness among people who are both gaming customers and nongaming customers in the market—the unaided awareness—is actually quite high. So I do not want to be flippant about it and say, you know, we do not need to build a database because we absolutely, positively do. But we are feeling pretty good about people showing up the day we open doors. Brian Gullbrants: Okay. Great. Thank you. Craig Scott Billings: Operator, the next question will be the last. Thank you. Robin Margaret Farley with UBS. Your line is open. Robin Margaret Farley: Great. Hopefully, you guys can hear me. I wanted to circle back to your comment about Macau and reinvestment. I know you said there was not a significant jump, I think that was in your reinvestment spend. Can you talk a little bit more broadly about what you are seeing in the environment? Others are talking about, you know, how much more competitive it has gotten. Are you seeing that stabilize in terms of what others are doing even if your own reinvestment rate has not had a jump? Thanks. Elizabeth Dove: Sure. Julie Mireille Cameron-Doe: I mean, I will not specifically comment on others’ perception of others’ reinvestment rates. I would say that there has been at least one operator in the market who has publicly stated that they are driving incremental reinvestment. I think you naturally get responses to that. I think you are really talking about a band market-wide. You are talking about a band of 200 basis points in reinvestment, you know, when you talk about reinvestment moving up and down. So as we have said before, I do not view the market as being in some all-out promotional war by any means. But like I said in my prepared—or in a response actually to another question—it is a short booking window, and it is a competitive market. And that is the way it is. So all I can really do is speak to what we do, and that is move reinvestment up, down, do what we need to do in order to drive EBITDA-positive incremental visits. And lastly, as I mentioned on prior calls, we have a to-the-basis-point, day-by-day view of what our reinvestment is, and so we are able to modulate it on the fly far better than we ever have, which really relates to some human capital and technology improvements that we made several years ago so that we can really bring it up, bring it down, and do whatever we need to do at any given moment. Craig Scott Billings: Okay. Thank you. Robin Margaret Farley: And then just a quick follow-up on Vegas. Craig, in your comments when you were sort of talking longer term about demand and growth in 2030 and all of that, you kind of wrapped it up by saying you were making the point that you think about growth longer term. But you made a comment about, you know, 2026 maybe not being greater than 2025, and I did not know if that was just like a theoretical making the point that you were not as focused near term. And I know you do not guide, but is the expectation, given the room remodel disruption, it would be reasonable to think that EBITDA would be down year-over-year? Is that sort of a takeaway that we should have from that comment? Julie Mireille Cameron-Doe: My comment was purely theoretical. I am simply pointing out that, look, we do not—this is true in Macau, this is true in Vegas—right? We do not control the market. We control our share of it. And so everything we do every day is designed to be a share taker, hold share and be a share taker. That manifests itself in two ways: gaming volumes and ADR. And by all measures, I think we have shown that we are very successful in that strategy. And so opining on 2026 for us is actually opining on the market. And I am not going to opine on the market. In fact, you all spend a lot more time analyzing market-level trends, quite frankly, than we do per se, because we are thinking about how to deliver the absolute best product so that we can top tick our own EBITDA. But my comment was purely designed to illustrate the fact that we are thinking about an arc that is, you know, five to seven years out. Robin Margaret Farley: Okay. Great. Understood. Thanks. Operator: Sure. Well, thank you for joining the Wynn Resorts, Limited Q4 earnings call, and thank you for all the kind words. We appreciate your interest in the company, and the team looks forward to talking to you again next quarter. Thank you, everybody. Craig Scott Billings: And thank you for participating on today's conference call. You may disconnect. Have a nice—
Dominik Ruggli: Good morning everyone, and welcome to the press conference call of Leonteq's Full Year 2025 Results. Today at 6:30 a.m. we published the results press release, the results presentation, the annual report and the sustainability report for 2025. All these documents can be found in the Investor Relations section of our website. In today's discussion of our financials, we will use information that references alternative performance measures. For that, I refer you to the APM section at the end of the press release where you will also find the usual cautionary statement. That cautionary statement also applies to the information provided verbally in this presentation and the Q&A session. Here with me today are Chief Executive Officer, Christian Spieler; and our Chief Financial Officer, Hans Widler. We will start the presentation with our key messages. Afterwards, Hans will provide you a detailed discussion of our financial performance in 2025. And Christian will then take you through our strategic progress update. The presentation will last about 45 minutes, after which we are happy to take questions. We intend to close the conference call latest by 11:00 a.m. With that, I hand over to you, Christian. Christian Spieler: Thank you, Dominik. Also from my side, a warm welcome to all investors, analysts, and media representatives on this call. 2025 presented a mixed set of developments. We closed the year with an unsatisfactory result, as challenging market conditions and lower activity from our historic partners weighed on our earnings. We also continued to feel the effects of legacy matters in our business. At the same time, we began to see improved client momentum in the second half of the year. The transition to the new regulatory regime in a very short time frame was a major achievement, reflecting significant commitment across the entire organization. At the end of December 2025, we reported a strong CET1 ratio of 16.9%. We have also executed against our strategic priorities in a disciplined manner along our ROE plan: Resize, Optimize and Expand, with the focus on resizing and optimizing in 2025. We can now fully focus our resources on expansion while continuing to transform the company. For 2026, our full focus is on growing and expanding promising businesses, and we expect to return to a positive pretax result for H1 and full year 2026. I also want to draw your attention to our further announcement today: the nomination of Felix Oegerli as new Independent Chairman proposed for election at the AGM 2026. Felix is an accomplished leader in the financial services industry and brings experience across the major business areas in which we operate. He retired last year after more than 11 years at ZKB as Head of Trading, Sales and Capital Markets. Before that, he ran the Kantonalbank's liquidity management, short-term interest rates and prime finance activities for more than 5 years. Earlier in his career, he spent 21 years at UBS, where he held positions including Global Head of Prime Brokerage and Deputy Global Head of Securities Lending and Repo. I am convinced that this background and skills will be of great value in the continued transformation of our company, and I very much look forward to working with him. Now I'll hand over to Hans for the financial update. Hans Widler: Thank you, Christian. Also a very warm welcome from my side and thank you for joining us here today. I would like to start by putting our performance into the context of the market environment we faced as shown on Page 6. 2025 was indeed a challenging market environment for Leonteq with 2 distinctly different half years. Looking at the left-hand side chart, we provide you with the development of 1-month implied versus realized volatility of the Standard & Poor's 500. In the first half year of 2025, we saw a significant increase in market volatility following the so-called Liberation Day. In the second half, the realized volatility decreased significantly and was constantly below the implied volatility. Why is this relevant? We keep a structurally long volatility position on the trading book as a macro hedge against market dislocations. In periods of heightened market volatility, we benefit from significant positive contributions on the trading side. Due to the fact that the realized volatility was constantly below the implied volatility, we recognized negative contributions from our hedging activities in the second half of 2025. Such a pattern is very rare and unusual over an extended period of time. Looking at the right-hand chart, the Swiss franc, which was the best performing currency in the G10 last year, continued to strengthen against major currencies. This impacted parts of our revenues given a large component of our client flow is denominated in U.S. dollars and in euro. Let's move now to Page 7 to look at how these parameters concretely influenced our numbers. Our net income declined by 17% to CHF 178.5 million in 2025. This was on the back of 4 key factors. First, we had a temporary halt in new business activities with Leonteq's largest insurance partner due to a merger-related shift in priorities. Second, on the structured product side, we saw a decrease in margins from 70 basis points to 59 basis points on the back of a change in our partner and product mix. Third, contributions from large tickets decreased from approximately CHF 14 million to CHF 7 million year-on-year. And fourth, the before-mentioned strengthening of the Swiss franc impacted fee income by another CHF 5 million. Let's look now at the net trading result, which is influenced by our hedging and our treasury activities. In 2025, the net trading result decreased to minus CHF 3.1 million compared to CHF 21.5 million in 2024. On the hedging side, we recorded positive hedging contributions in the first half of 2025. These were reversed in the second half on the back of the realized volatility which was consistently below the implied volatility as mentioned before. Contributions from Leonteq's treasury activities were also negative, primarily due to a change in our investment portfolio in preparation of the newly defined business-specific liquidity regime. This resulted in reduced credit risk exposure, but also yielded in lower returns. For the same reason, we extended and used available credit facilities leading to a net interest result of minus CHF 6.4 million. On the cost side, underlying operating expenses decreased by CHF 36 million or 16% in 2025. I will give you a detailed breakdown of the drivers and also the view between reported and underlying costs on the next page. Overall, on the back of lower net fee income and a reduced trading result, we reported an underlying pretax loss of CHF 21.5 million for 2025 despite significant cost reductions and renewed momentum in client business activities in the second half of the year. On an IFRS reported basis, which includes one-off charges that are non-recurring in the amount of approximately CHF 11 million, the Group net loss amounted to CHF 33 million. Moving now to Page 8. I would like to give you more color on the drivers behind our cost base. On a reported IFRS basis, costs are down CHF 25 million or 11%. We reduced personnel expenses by CHF 20 million. This was driven by a more than 50% reduction in lower variable compensation committed for 2025 compared with the previous year. We also reduced our head count by 7% and reduced our contractors by 24%. Leonteq also recognized lower net provisions of approximately CHF 5 million due to the conclusion of legacy matters. On an underlying basis, our costs went down by 16% to CHF 194 million. This excludes CHF 2.2 million one-off costs in relation to the transition to our new regulatory framework. It also excludes CHF 9 million for one-off restructuring costs which we incurred in 2025. For 2026, Leonteq expects total operating expenses of approximately CHF 200 million. This slight increase compared to the underlying cost base 2025 reflects 3 factors. First, the planned launch of the retail flow business in Germany, which will require marketing-related expenditures. Second, we expect to see a certain normalization of the variable compensation following 2 years of significant reductions in bonuses for our staff. Third, we further expect certain index-related price increases, in particular on market data services and software licenses. These increases are partly offset by the full-year effects of cost reductions achieved in 2025 and result in net increased costs of approximately CHF 6 million. Let us now move to Page 9 of the slide deck. Since 1st January 2025, Leonteq is subject to enhanced capital and large exposure requirements as defined by the Swiss Capital Adequacy Ordinance. This governs capital requirements for banks and account-holding securities firms in Switzerland. Simultaneously and effective January 2025, the revised capital adequacy requirements known as Basel III final entered into force. Under this framework, most relevant are capital calculations under the standardized approach for market risks for Leonteq. These were introduced under the so-called Fundamental Review of the Trading Book. I will refer to FRTB from here onwards during the presentation. Leonteq's business model is largely driven by the issuance of structured investment products with embedded derivatives. Therefore, Leonteq is required to perform capital calculations according to FRTB. Taking into account, the complexity of risk-weighted asset calculations under FRTB, Leonteq was allowed to temporarily apply the so-called simplified standard approach over a phasing period until end 2026. Leonteq invested significant resources in implementing FRTB, which required substantial changes in systems, data infrastructure and calculation engines. We completed the transition to FRTB in November 2025 and thus significantly ahead of schedule. The implementation of the risk-weighted asset calculations according to FRTB had a material positive impact on Leonteq's capital position. The market risk risk-weighted assets decreased by 16% resulting in an increase in the CET1 ratio of approximately 270 basis points to 16.9% at the end of December 2025. This is a strong capital ratio and well above the guidance provided with first half year 2025 results. Looking now ahead, we will continue to optimize our capital framework to reduce the sensitivity to risk-weighted asset fluctuations. We also want to maintain an appropriate buffer under different stress test scenarios, and for that, an appropriate observation time period is required. In light of the reported financial loss and in line with its capital return policy, the Board decided that Leonteq will not pay a dividend for 2025. The Board considers it prudent not to return capital at this point in time. This will allow the effectiveness of measures taken to further optimize the company's capital framework to be monitored. The Board is determined to return excess capital through a share buyback in early 2027, provided that the CET1 ratio is maintained at a level meaningfully in excess of 15% on a sustainable basis. This is also very much in line with the capital return policy defined last summer, and we are confident that we will be able to deliver also on this ambition. Continuing on Page 10, let's look at our balance sheet. In terms of numbers, we reported an increase in total assets of CHF 0.5 billion to CHF 11.2 billion at the end of 2025. This is predominantly driven by an increase in trading financial assets on the back of higher equity hedging positions which in turn increased our securities lending activities. Cash and receivables decreased mainly due to a decrease in transaction volumes towards the end of the year. Our investment portfolio remained broadly stable at CHF 2.7 billion, but the composition is today even more conservative. In preparation for the business-specific liquidity regime, Leonteq shifted its investment approach to higher quality liquid assets resulting in reduced credit stress exposure. On the liability side, Leonteq issued products increased by 2% to CHF 5.3 billion, underscoring the continued confidence by our clients in Leonteq. We shifted further certain of our funding activities in relation to the before mentioned increase in equity hedging positions and saw an increase in short-term credit and liabilities by 20% to CHF 2.3 billion. Lastly, our shareholders' equity reduced by 14% to CHF 0.7 billion. This was predominantly driven by 2 factors. First, Leonteq made a CHF 52.9 million distribution to shareholders in April 2025. Second, the depreciation of the U.S. dollar against the Swiss franc had an OCI impact on our structural U.S. dollar position of CHF 46.6 million. This capital impact, however, strongly correlated with the currency impacts of risk-weighted assets. Overall, Leonteq has a highly liquid hedge book and runs a very conservative investment portfolio. This puts us in a sound position to manage our assets and liabilities in different operating environments. I will now turn over to Christian for his remarks on our strategic progress update. Christian Spieler: Thank you, Hans. I have now been CEO of Leonteq for roughly a year. I would like to briefly outline what I found when I took on the role, how we addressed key challenges, and where I believe we stand today, where we're going next. My first and foremost observation is that with both the existing talent and some new leaders I added when I joined, Leonteq has indeed a very strong team. This team is highly business and customer driven and extremely committed and gives me confidence we'll succeed. Let us now look at our business model and put this into context of our strategy. Our business model is in fact very simple. Leonteq generates fees by selling structured products through distributors. These financial intermediaries generally distribute these products to end investors. The fees usually are generated by charging margin on transacted volumes. So this is a straightforward business model. However, as you can see on the left side in the grey box area, we operate a highly specialized product factory for structured investment solutions. This requires highly skilled teams, advanced trading systems and sophisticated risk control. The business model depends on high volume transaction processing, which means operational complexity and execution intensity. We work closely with financial intermediaries and partner institutions to distribute our products. But in some of these relationships our pricing power is limited, which contributes to margin pressure. To attract more volume to the platform, Leonteq has built over the years a number of additional core services to support the needed growth in fees. In particular, these are: First, different white labeling setups to onboard new issuance partners. Second, the company started to offer auxiliary services such as accounting, risk metrics, lifecycle management support and regulatory reporting services for its partners. Third, a SHIP infrastructure was built to allow partners to back-to-back hedge the exposure on a trade-by-trade basis to external hedging counterparties. And fourth, a powerful digital investing platform called LYNQS was developed. However, all these services are provided free of charge. So to a certain extent, you can think of all these services in the grey box on the left as Leonteq's fixed cost base. Over the years, also the operating environment has fundamentally changed. The economic dynamics of the structured products market have steadily deteriorated over the last 15 years, with fee and margin compression, excess capacity, and aggressive pricing becoming the norm. Competitors are increasingly pursuing scale, commoditized offerings, and volume-driven models, all of which have put pressure on industry margins. In response to these market dynamics, a number of countermeasures were taken in the past. These you can see on the right side in the green box. First, the number of partners were increased to leverage the existing fixed cost base and to reduce the historic dependence on 2 large partners. Whilst this dependency was in part reduced, it also affected one stable revenue sources as well as margins. Second, the client base was widened through regional expansion and a significant increase in target markets from 30 to 70, together with a widened client risk spectrum within a few years. Third, the product offering was diversified which triggered significant investments. Altogether, these countermeasures led to an increasingly diversified revenue mix with a nevertheless high and increased cost base, but also with a continued dependency on volatile trading results. As a further challenge, which you can see on the top in the red box areas, increased regulatory scrutiny since 2022 and a lingering reputational overhang have impacted Leonteq's client business and reduced strategic flexibility. Combined with a generally reduced risk appetite, certain counterparties and partners have been limiting their exposure to us. Or the company has itself limited certain activities since the beginning of 2025. On top, our new much stricter regulatory framework has required major investments in systems, processes, risk infrastructure, and liquidity management, weighing on our profitability and absorbing significant management time last year. This is why we introduced our ROE strategy, our execution framework to build sustainable performance. Resize parts of the business that are not profitable. Optimize established areas. And expand initiatives with strong future potential. So the goal is clear: a structurally stronger Leonteq with less dependence on volatile trading income, improved profitability, and more resilient returns. Let me walk you through how we are executing on this strategy and the progress made so far since last summer. Let's start with the Resize pillar where we're reshaping the footprint and cost base with discipline. We have materially reduced our cost base. Underlying operating expenses are down 16% to CHF 194 million in 2025. We're actively improving the structural efficiency of our organization with 26% of non-sales trading staff now based in Lisbon, and targeting about 30% by end 2026. We're decreasing our footprint where it is strategically and economically sensible. For example, we signed an agreement to sell our Japan entity which is expected to close in Q1 2026. And we're making very good progress in exiting our pension savings initiative, bench. In the past months, we managed to transfer saving balances of all bench customers to other providers and target the controlled wind-down by end 2026. In our Optimize pillar, we are strengthening efficiency and capital discipline in the core. We're improving profitability by focusing on the levers that matter most: stronger operational execution, lower capital consumption and tighter control of complexity and risks. We're taking a pragmatic approach here: improve what works, fix what doesn't and remove avoidable friction in our model. Now most importantly, our Expand pillar. We are building up initiatives with more recurring revenues and a more efficient capital profile and are increasing our total addressable market. This includes businesses like: quantitative investment strategies, QIS; actively managed certificates, AMC; the retail flow business; and LYNQS. To be clear, this is not growth at any price. It's targeted expansion into areas where Leonteq has a clear right to win and to achieve superior margins. Let's now move to the next page to back up my statements with concrete data points that demonstrate why we're confident about our strategic trajectory. As you can see on Page 14, we saw an improved client momentum in the second half of 2025 despite all the headwinds we faced. Our client transactions increased by 14% to more than 140,000 and we issued a record of 33,000 products on our platform in the second half of 2025. Also in our home market Switzerland, we increased our market share in structured investment products to 29% in H2 2025. On Page 15, I want to take a closer look at the regional performance. Net fee income in Switzerland declined by 16% to CHF 39 million in H2, mainly driven by a decline in fee income from the pension savings business. This decrease is related to a temporary halt in new business activities with our largest insurance partner on the back of a merger-related shift in priorities there. Operations in Europe generated net fee income of CHF 38 million in H2, mainly due to a change in partner mix. As you can see, we had a significant drop already in H1 2025 and are now starting to see a slow improvement from here. In the Asia and Middle East region, net fee income grew by 38% to CHF 13 million in H2, reflecting the first positive results of the leadership change in Asia. Whilst obviously our starting point is low, we are seeing positive trends in the second half which continued now in the start of the new year, and we clearly expect revenue growth across all our regions for 2026. On Page 16, you can see continued progress in key growth areas. In 2025, we consistently rolled out our new generation of AMCs to a broader client base. This offering has attracted considerable interest, especially in Asia, and the outstanding volume had already risen to approximately CHF 0.3 billion at the end of December 2025. That's an increase of 46% year-on-year. Overall, across all AMC products, the total outstanding volume in AMCs amounted to CHF 2.3 billion. That's minus 5% year-on-year. This provided the Group with recurring revenues totaling CHF 28.3 million in the second half of 2025, which is broadly flat versus H2 2024. This clearly demonstrates the recurring revenue nature of this business, even in a half year when total revenues are down notably. We also advanced our retail flow business initiative, which represents our single biggest investment in recent years. Leonteq entered the market of listed leverage products in Switzerland in April 2025. As of end 2025, we offered more than 10,000 listed leverage products on SIX and BX Swiss, positioning Leonteq among the leading issuers in this market. With eight months of entering the Swiss market, we had achieved 7% market share in the offered product categories at SIX Swiss Exchange. At the beginning of 2026, we also received BaFin approval for a license extension in Germany. This marks an important step in the expansion of the Retail Flow business in the German market. We plan to go live in the second quarter of 2026 and are looking forward to a well-executed start that will be just as successful as the one in Switzerland. And finally, we continue to make progress with our digital investment platform, LYNQS. Major developments included the addition of further third-party issuers on the platform as well as the enablement of QIS for pricing. In the second half of 2025, the number of products initiated via LYNQS increased by 90% to 11,087 products. As a result, our click 'n' trade ratio improved to 33% in H2 2025 compared to 26% in the prior year period. This demonstrates the company's success in shifting trade execution to the platform, particularly for smaller ticket sizes. Let's now look at our performance from an issuer perspective on Page 17. We saw a strong pick up in demand for our own issued products, which demonstrate continued confidence in our Leonteq product. Turnover in Leonteq products increased by 23% to CHF 7.5 billion in the second half of 2025. Turnover from Tier 1 issuers increased by 7% to CHF 4.5 billion in H2. In this segment, we saw a change in partner mix. This also had an impact on our margins. Turnover from Tier 2 and Tier 3 issuers saw a strong growth by 42% in H2 to CHF 1.7 billion. As reported before, we have revised our acquisition framework and have launched a process to identify an additional high-rated issuer. So let me wrap up today's presentation on Page 18. We are at an inflection point. Legacy matters are largely behind us, and with the transition to the new regulatory regime now completed, we have full clarity on our capital ratios, and our capital position is strong. This significantly reduces uncertainty and frees up management capacity and resources to focus on our core priorities: strengthening client relationships; onboarding new clients; and growing revenues. We have already seen a recovery in client activity in the second half of 2025, reflected in higher issuance volumes and increased transaction activity. Client sentiment has improved and flows into Leonteq-issued products have picked up, underscoring the continued confidence in Leonteq by our clients. Following a year focused on resizing and optimizing the company, we are now in a position to focus our resources toward growth and the expansion of the initiatives defined under our new strategy. In terms of financial outlook, we expect to return to a positive pretax result for both the first half and the full year 2026 and now expect to achieve our mid-term financial targets in 2028. The key now is disciplined execution of our strategic priorities. While the transformation will take time, my first year at Leonteq has reinforced my conviction that we have distinctive capabilities and a highly committed team that can deliver progress and shareholder value. In closing, what I ask of our shareholders and stakeholders is this: judge us by execution and trajectory. Look beyond the unsatisfactory result for 2025. Look at what we have achieved already in a short time. Going forward, look for disciplined delivery of our ROE initiatives and steady progress in our performance step-by-step. The direction is right. The measures are in motion and our foundations are solid. We need the time and support to complete this turnaround and fully deliver on Leonteq's value creation potential. We have a capital and infrastructure-intensive business. It requires a sophisticated and costly machine. But when run well, it will deliver attractive returns and meet shareholders' expectations over time. I'm confident we're on the right track. With this, I would like to thank you for your attention and hand back over to Dominik. Dominik Ruggli: Thank you, Christian and Hans for the presentation. We are now happy to start with the Q&A session. We will take the first question. Operator: [Operator Instructions] The first question comes from the line of Daniel Regli from Zurcher Kantonalbank. Daniel Regli: I have a couple of questions. First about capital policy. Obviously, you have achieved quite a nice capital ratio of 16.9% by year-end. And you announced a share buyback in early 2027. Should the CET1 ratio remain meaningfully above 15%? So here, I first wanted to ask, can you specify a little bit more what you exactly mean by meaningfully above 15%? And then secondly, obviously regarding 2026, since you expect a profit, can we also assume that investors will again get a dividend in 2026? And what do you have in mind in terms of payout ratio for 2026? Is it still the kind of 50% you once mentioned, or has anything changed in this regard? Then my second question on the turnover developments. And I mean, I appreciate you trying to provide more clarity on the turnover, however, can you maybe talk a little bit more specifically about, the old world traditional or historic partners versus new partners? Obviously, I lack a bit the comparability of the new tiring of the partners since partners can move between the different tiers. So yes, can you maybe talk a little bit more about this? And then also regarding turnover, historically you have always talked about a balance sheet-light turnover. Can you maybe specify how this has developed and in how far this SHIP project from years ago has kind of recovered in importance due to the regulatory transition? And then maybe lastly, can you maybe talk a little bit about the regulatory legacy points which I think with BaFin you are now kind of settled, FINMA is also settled. So there remains something in France. Can you maybe talk a little bit about the timeline until when you expect clarity on this one? Hans Widler: Thanks a lot, Daniel, for your questions. Allow me to start first with the capital policy and your question with regards to the dividend. As you know, we switched to FRTB for market risks in November. That is just about 2 months ago. Leonteq feels it's prudent and adequate first to focus on the sensitivity of the respective capital ratios over a certain period of time before committing to the capital return policy that we have announced accordingly. With regards to dividend, we adhere to our guidance provided earlier, that is no dividend with a loss-making result. And we reiterate the current payout ratio of 30% that was guided earlier. With regards to the share buyback early 2027, as mentioned, it's important that we observe the sensitivity of the respective ratios over a certain period of time, and we feel it's adequate and prudent then to launch it on the basis accordingly beginning of 2027. With regards to historic versus new partners, the split that you asked on the turnover side, the major drivers that you see on Tier 1 issuance partner are obviously the historic partners. That didn't change within the last 6 to 12 months. So majority of the respective Tier 1 partner impacts can be really compared with the historic partners. And as you can see, it is clearly our ambition to further diversify as reflected in the increase of Tier 2 and Tier 3 partner activities. With regards to your question on balance sheet-light. Balance sheet-light turnover amounted to approximately 13%. This is comparable with last year. We will have a continued focus on expanding balance sheet-light activities as part of our efforts to optimize our regulatory capital requirements. With regards to the regulatory update, I will pass on to Christian. Christian Spieler: Yes. On the regulatory side, I mean, first, you've seen, and we've talked about this already before in December, the announcement by BaFin, we closed matters with them related to legacy stuff that was at a low fine. But we then immediately after got an expansion of our license. So on the side of BaFin, everything is resolved and fine. On the side with FINMA, we have taken everything they had and wanted us to fix on board. We -- everything has been remediated. And it's all done. And so now on this front, we are -- there's a last audit going through, but nothing is expected here. So that is considered that one done. There is one large -- one other EU regulator where there was a finding in 2023 that was largely -- that was largely with respect to lack of certain processes and certain governance structures. All of those findings that we were told about in 2023 were remediated fully very quickly and are fully remediated. We were also told in that interaction that things -- that nothing new had occurred and been found since, and we are expecting that to close in the future. Operator: Next question comes from the line of Anne Risold from Octavian. Anne-Chantal Risold: Maybe on the German retail flow business, I mean, over the years -- I mean, it's good you have finally received the license. Over the years, we had -- that was your main investment, and we had previously some figures how much you could contribute. But if you could maybe give us again how much do you expect now that you have the license and kicking in, how much it will contribute to your profitability in the midterm? And what kind of margin do you expect from this business? One on the -- you mentioned a lower fee from the insurance contribution because of your partner is having some restructuration or merging. Do you expect -- what do you expect on this front? Is it going to restart? Or do you think the merged entity of your counter partner may change their view? On the -- and then on the governance side, did I understand right that also you mentioned that you described previously the regulatory update. So clearly, on the French regulatory update, do you still -- did you close this? Or do you -- when do you expect to close this with the French regulator? And maybe one thing on the -- at the beginning of January, the shareholder agreement with Raiffeisen and 2 stakeholder has terminated, was not renewed. Do you expect that it could have any effect on your operation? Christian Spieler: Yes. Thank you for the questions. So first on the RFB business. The RFB business so far, and that's just based on what we've done in Switzerland has generated this year around about CHF 3 million of revenues. That's a significant increase versus the prior year and like in the order of magnitude increase of CHF 2 million. And as we said, like we went into the market with only 8 months, we went to a significant number of listed products, achieved sort of like #3 player in the market. That is a very significant achievement here. And looking at Germany, which is a much larger market, we think this is going to be a very, very good success for us. We're looking forward to it. But what are the drivers? Why do we believe this? We have probably the best team, most experienced team in this space on our platform. They joined us a few years ago. They built a tech platform, which is absolutely market-leading. And this business is largely -- there is a lot of technology drive in this business. So having a leading top-notch tech platform that has all the experience of 30 years of these people built into this platform and the experienced people on board with our execution strategy there, we expect this to be a very successful start. And altogether, the RFB business this year is budgeted to deliver around CHF 8 million of revenues. That's a significant increase. You asked about margin. It's a high-volume business with low margin. But again, tech platform comes into play and becomes the real strength here because the ability to handle large volumes, low-margin product still, in the end, generates significant revenues, and we have a very positive outlook for the medium to longer-term for this business, which obviously goes into the double-digit revenue region. Hans Widler: Then with regards to our major insurance partner, [ indiscernible ], we are in very close collaboration for a potential new product launch in this regard. On operating level, we are in contact, obviously, on a daily basis in this regard. But we also have full sympathy for the respective partner given the legal merge that the priorities are short-term different. With regards to expectations for 2026, we expect a comparable revenue contribution in 2026 as for 2025, excluding effects of a potential relaunch accordingly. Why do we expect the comparable revenue contribution? Whilst certain policy cancellations every year are standard and hence, the number of policies are expected to slightly decline without a relaunch of new products, the AUCs given the premium inflows will increase and herewith lead to a stable revenue contribution. We are highly committed to that large insurance partner and looking forward to relaunch additional products, but have full sympathy and full support for the interim period for the merger requirement adjustments. With regards to French regulator, I will pass on to Christian. Christian Spieler: Yes. I mean, this was effectively part of my answer to Daniel Regli's question earlier. When I referred to a large EU regulator, again, as I said, as answer to that question, we have remediated everything that has been asked for. We've been told there have been no new findings since the original raising of the issue in 2023. And as I also mentioned, we expect this to close in the future. I cannot comment on timing because the regulators work this their way, but we look forward to this being closed. Lastly, your question on the shareholder agreement, we do not expect that to have any impact to say. Raiffeisen is our main shareholder and remains our main shareholder. We welcome them as our main shareholder. And to the extent they want to stay committed in their investment, we love that, and we'll work with them. Operator: We now have a question comes from the line of Sylvain Perret from AlphaValue. Sylvain Perret: So I wanted to know whether you could share more details on how you perceive the market environment in the beginning of 2026? Has it become less difficult than in 2025? And if so, what positive market catalysts do you see as having the potential to accelerate the turnover growth and the fee margin recovery this year? And my second question is on the retail flow business. So considering the good success you already observed in Switzerland and the expertise you are building there, do you expect to launch the business into additional countries besides just Germany? That's all for me. Christian Spieler: Yes, thank you for the question. Market environment 2026, I would characterize in short as very different from the second half of 2025. What 2025 second half made it a really rare stretch of a market environment was the consistently higher volatility, implied price volatility versus the actual realized volatility. Specifically in the maturity segment of the products that we offer. That obviously for us being largely buyers of optionality led to us buying at the high price implied volatility and hedging at the lower realized volatility, which caused some of the issues in our trading result in the second half. That again is a very rare environment and over the years to observe. And if we now look at 2026, we are in a completely different environment. It's been very different. Like, high level, realized vol has been above implied vol. And we're seeing a very active market. So it's a market environment that suits us. That being said, our outlook is it's too early to comment on an outlook for the performance for H1 in trading per se because obviously we only had about 5 or 6 weeks into the new year under our belt. But -- and it also depends, like results depend very much on how flows materialize from the client side et cetera. But we're seeing an overall what I would call healthy market environment 2026. A question of the RFB business. So I give two answers. So one is, we're expecting to go live in Germany in Q2 2026. And yes, we do have a list of further countries where we intend to roll this out. One major country that's on our list is Italy. Operator: [Operator Instructions] The next question comes from the line of [ Thomas Paul ] from [ AVP ]. Unknown Analyst: I just have one question on your pension savings business. Did I understand this right? This was slowed down by the merger -- this is probably Helvetia Baloise? And will this pick up now in 2026 or 2027 meaningfully? Hans Widler: Thanks a lot, Mr. Paul, for your question. I mean we are not commenting on single insurance partners or on single partner names itself from that perspective. But with regards to the contributions, the reduction compared with 2024 is two-fold. On one side, we had some extraordinary effects in revenues in 2024. On the other side, we benefited still from the launch of new so-called contingencies, from new insurance policy sets. We do expect that to continue. With regards to the timing, we are to some extent also dependent on the respective partner activities. But it's clearly a business activity that is close to Leonteq's DNA and that we will continue to invest, also with potential new insurance partners that we target. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Dominik Ruggli for any closing remarks. Dominik Ruggli: So thank you everyone for attending the conference and the interesting debate. We look forward to speaking and meeting with many of you in the coming days and weeks. And we wish you all a very good day. Thank you.
Operator: Good day, and thank you for standing by. Welcome to the Q4 2025 CoreCivic Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to Jed Bachmann. Please go ahead. Jeb Bachmann: Thank you, operator. Good morning, everyone, and welcome to CoreCivic's Fourth Quarter 2025 Earnings Call. Participating on today's call are Patrick Swindle, CoreCivic's President and Chief Executive Officer; and David Garfinkle, our Chief Financial Officer. We are also joined here in the room by our Vice President of Finance, Brian Hammonds. On this call, we will discuss financial results for the fourth quarter of 2025 as well as financial guidance for the 2026 year. We will also discuss developments with our government partners and provide you with other general business updates. During today's call, our remarks, including our answers to your questions, will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors including those identified in our fourth quarter 2025 earnings release issued after market yesterday as well as in our Securities and Exchange Commission filings, including Forms 10-K, 10-Q and also 8-K reports. You are cautioned that any forward-looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. Management will discuss certain non-GAAP metrics. A reconciliation of the most comparable GAAP measurement is provided in the corresponding earnings release and included in the company's quarterly supplemental financial data report posted on the Investors page of the company's website at corecivic.com. With that, it is my pleasure to turn the call over to our CEO, Patrick Swindle. Patrick Swindle: Thank you, Jeb. Good morning, and thanks, everyone, for joining us for CoreCivic's Fourth Quarter 2025 Earnings Call. On this morning's call, we will discuss our latest operational results and update you on the latest developments and opportunities with our government partners. Following my opening remarks, I will hand the call over to our CFO, Dave Garfinkle, who will provide greater detail on our fourth quarter and full year 2025 financial results as well as introduce our 2026 financial guidance. Dave will also provide an update on our capital structure, including activity on our share repurchase program and other balance sheet initiatives. First, I'd like to provide an update on our activation activities, where we continue to move towards stabilized occupancy in mid-2026. As a reminder, we announced new awards in the second half of 2025 at the 600-bed West Tennessee Detention Facility, the 2,560-bed California City Immigration Processing Center, the 1,033-bed Midwest Regional Reception Center and the 2,160-bed Diamondback Correctional Facility. While 3 of the 4 previously idle facilities continue to receive additional populations, the fourth, Midwest Regional, continues to experience a delay in the intake process as we await the result of a special use permit application that we filed in December 2025. We've been engaged with the city on the application and the conversations have been productive. In aggregate, and excluding Midwest Regional, these 3 new contract awards are expected to generate annual revenue of approximately $260 million once our operations normalize. Once we reach stabilized occupancy on these previously idle facilities, which we expect to occur during the first half of 2026, we expect our annual revenue run rate to be approximately $2.5 billion and our annual EBITDA run rate to increase by almost $100 million year-over-year to approximately $450 million. This is not counting Midwest Regional or any additional contract awards. Let me emphasize that point. Our 2026 guidance is consistent with the commentary on our last earnings call, despite excluding Midwest Regional due to uncertainty around initial detainee intake. Once operational, that facility will provide upside to our initial 2026 guidance. Moving to a discussion of the business climate. In early January 2026, nationwide ICE detention populations were at historical highs of around 69,900 individuals, an increase of almost 10,000 individuals from the end of the third quarter. ICE was our first customer 43 years ago and has been our largest customer for over a decade. From the end of 2024 through the end of 2025, ICE populations in our care increased 5,903 individuals to just over 16,000 or 58%. Nationwide populations from the U.S. Marshals Service, our second largest customer, have declined from the prior year, partially offsetting the increase from ICE as facilities that share contracts between the 2 agencies have extended the capacity to ICE due to the higher demand. Marshals populations are also down nationwide due to fewer apprehensions at the southern border. Our average daily Marshals population has declined by 1,235 individuals from the fourth quarter of 2024. As we continue to look for additional ways to meet our government partners' needs, we believe we can make available substantial capacity to meet future demand. Even after the aforementioned activations, we own 5 idle corrections and detention facilities containing approximately 7,000 beds. Along with search capacity, we've made available at certain facilities and partial capacity we have in facilities that are currently in operation, we've informed ICE that we can provide it with nearly 13,000 additional beds. And this does not include additional capacity we may be able to provide through other means. We are confident that the detention beds that we provide are the most humane, most efficient logistically, most compliant, most secure, are readily available and provide the best value to the government. Our Dilley Immigration Processing Facility is a great example. This is a purpose-built facility for family residential housing that we first operated in 2014 under the Obama administration. Last year, we entered into a new agreement that extends into 2030. As part of that contract, we must meet performance requirements based on a combination of rigorous accreditation and government established performance standards. There are full-time federal monitors on site to ensure accountability in compliance with the contract. This includes specific quality measures and standards for cleanliness, high-quality food and basic necessities, legal access, medical care and translation services. For those of you interested in learning more about this facility, I would encourage you to visit our website at www.corecivic.com, where you can take a virtual-guided tour. Beyond these federal opportunities, we are seeing an increase in opportunities at a state level as well. In addition to increases in populations under existing contracts, we're in discussions with several states in need of additional bed capacity. One or more of these opportunities could include the use of our idle correctional facilities. These opportunities could transpire in the coming quarters. I'll now move on to a high-level overview of our top line revenue and fourth quarter operational performance. Federal partners, primarily Immigration and Customs Enforcement and the U.S. Marshals Service comprised 57% of CoreCivic's total revenue in the fourth quarter. Revenue from our federal partners increased 49% during the fourth quarter of 2025 compared with the prior year quarter. Further breaking down our federal revenue. Revenue from ICE increased $124.4 million or 103.4%, while revenue from the U.S. Marshals Service decreased by $11.3 million versus the prior year quarter. As mentioned, some of this decline is simply a shift in mix where ICE and Marshals share contract. Revenue from our state partners increased 5% from the prior year quarter. This increase includes additional revenue from the State of Montana, resulting from 2 new contracts we signed with the state since the second quarter of 2024 and population increases in Georgia and Colorado. Total occupancy for our Safety and Community segments for the quarter was 78.1%, up 2.6 points since the year ago quarter. The average daily population across all of the facilities we manage was 56,380 individuals during the fourth quarter of 2025 compared with 50,202 in the year ago quarter. This increase was driven by more demand for our services, new contracting activity and the Farmville acquisition that was completed July 1, 2025. Our teams continue to be successful in working with our government partners in managing the additional people in our care for which we are focused on delivering the highest quality services and environment every day. Our fourth quarter results exceeded our internal projections for adjusted EPS and normalized FFO per share by $0.08 each and adjusted EBITDA by $8.6 million. Despite full year 2026 EBITDA guidance near record levels, our stock is currently trading at a discount to our historical trading multiples, which we believe does not reflect the cash flows of our business particularly considering the ongoing ramp of previously idled facilities, giving us good visibility of our growth potential in 2026 and beyond. Therefore, we plan to continue to prioritize our cash flow on share repurchases taking into consideration stock price and alternative opportunities to deploy capital, among other factors. That being said, we have the balance sheet flexibility to take advantage of other growth opportunities that we may identify. The substantial progress made during the year in reactivating previously idled facilities couldn't have been accomplished without the hard work of our employees and strong relationships with our government partners. I'm confident we have the right plan and the right teams in place to be successful, both in these and future activations. In the meantime, we continue to remain focused on effectively managing our core portfolio and ensuring we meet our high operational standards as well as those of our government partners. Without this focus and strong performance, these additional opportunities would not exist. And so as I turn it over to Dave to discuss our fourth quarter financial results in more detail, our capital allocation activities and assumptions included in our 2026 financial guidance, I'd like to again express my appreciation to our 13,000 employees. I want to recognize their focus and commitment to ensuring that everyone in our care has provided a safe, secure and humane environment, delivering industry-leading quality to every individual for which we are responsible. Dave? David Garfinkle: Thank you, Patrick, and good morning, everyone. In the fourth quarter of 2025, we generated GAAP EPS of $0.26 per share and FFO per share of $0.51. Special items in the fourth quarter of 2025 included a $1.5 million net loss on the sale of assets and $0.7 million of M&A charges reported in G&A expense. Excluding special items, adjusted EPS was $0.27 compared with $0.16 in the fourth quarter of 2024, an increase of 69% and normalized FFO per share was $0.52 per share compared with $0.39 per share in the prior year quarter, an increase of 33%. Adjusted EBITDA was $92.5 million compared with $74.2 million in the fourth quarter of 2024, an increase of 25%. Adjusted EPS exceeded average analyst estimates by $0.09 per share and adjusted EBITDA exceeded average analyst estimates by $9 million. The increase in adjusted EBITDA from the prior year quarter of $18.3 million resulted from higher demand and utilization of our solutions by our federal and state partners, including revenue from ICE that more than doubled. The number of ICE detainees in our care followed national trends, which reached record highs during the fourth quarter of 2025. We manage approximately 23% of total ICE populations as of both December 31 and September 30, 2025, compared with approximately 25% at year-end 2024. Revenue from our state partners grew 5% and included notable increases from Georgia, Colorado and Montana. Results for the fourth quarter of 2025 reflect the full activation of the 2,400-bed Dilley Immigration Processing Center, which was completed in the third quarter of 2025. Funding for this facility was previously terminated effective August 9, 2024, and the facility remained idle until its reactivation in the first quarter of 2025. Fourth quarter results also included start-up activities for new contracts at our 2,560-bed California City Immigration Processing Center and our 2,160-bed Diamondback Correctional Facility where we signed new management contracts during the year. Both of these facilities were idle at the beginning of the year and are expected to reach stabilized occupancy in the first and second quarters of 2026, respectively. These 2 facilities incurred facility net operating losses totaling $3.6 million in the fourth quarter of 2025. Other factors affecting EBITDA and per share results included higher G&A expense, more than offset by the favorable impact of our share repurchase program and the acquisition of the Farmville Detention Center on July 1, 2025. Collectively, these 3 items accounted for an increase in adjusted EPS and normalized FFO per share of $0.03. Operating margin in our Safety and Community facilities combined was 22.2% in the fourth quarter of 2025 compared with 23.6% in the prior year quarter. Excluding the 4 facilities in various stages of activation, operating margin was 24.1% for Q4 2025. As these facilities reach stabilized occupancy, we anticipate further margin growth. Turning next to the balance sheet. On December 1, we amended our bank credit facility to increase the size of the accordion feature that provides for uncommitted incremental extensions of credit and expanded the capacity under our revolving credit facility from $275 million to $575 million. Including the original $125 million term loan, commitments under our bank credit facility totaled $700 million which reflects the strength of our accessibility to bank capital and our deep banking relationships. Expanding the size of our revolving credit facility provides us with enhanced balance sheet flexibility while remaining positioned for strategic investments and long-term value creation such as through our share repurchase program. During the fourth quarter, we repurchased 5.3 million shares of our common stock at an aggregate cost of $97.3 million, increasing our year-to-date repurchases to 11.2 million shares at an aggregate cost of $218.4 million. These repurchases represent 10.2% of our outstanding shares at the beginning of the year and reduced the number of shares outstanding to 100 million as of December 31, 2025. Since the share repurchase program was authorized in 2022 through December 31, we have repurchased a total of 25.7 million shares at an aggregate price of $399.5 million or $15.52 per share. As of December 31, we had $300.5 million available under our Board authorization which includes an increase of $200 million authorized by our board in the fourth quarter of 2025, increasing the cumulative repurchase authorization to up to $700 million. After taking into consideration the share repurchases, our leverage measured by net debt-to-adjusted EBITDA was 2.8x using the trailing 12 months ended December 31, 2025. As of December 31, a we had $97.9 million of cash on hand and an additional $311.4 million of borrowing capacity on our expanded revolving credit facility, which had a balance of $245 million outstanding providing us with total liquidity of $409.3 million. Moving lastly to a discussion of our 2026 financial guidance, we expect to generate diluted EPS of $1.49 to $1.59. FFO per share of $2.54 to $2.64. And EBITDA of $437 million to $445 million. Consistent with our past practice, guidance does not include the impact of new contract awards not previously announced because the timing of government actions on new contracts is always difficult to predict. Even though we entered into a new management contract with ICE at our Midwest Regional Reception Center last year, our guidance does not contemplate the ramp-up of detainee populations at this facility as the intake process continues to be delayed by a claim that a special use permit is required to operate the facility. Although we dispute this claim and consequently filed a lawsuit in state court, which remains under appeal, we have nonetheless filed an application for the SUP. Although we can provide no assurance, discussions have been collaborative, and we are optimistic in a favorable outcome, which would be upside to our guidance. We still have 5 remaining idle facilities containing 7,066 beds, and we believe incremental demand for more idle facilities will likely be needed once ICE absorbs the recently contracted beds. With historic funding levels for border security and immigration detention obtained under the One Big Beautiful Bill Act secured through September 2029 and an expectation of a continued increase in detention bed demand nationwide as well as growing demand from existing and potentially new state government partners, we believe there are numerous opportunities to activate additional idle facilities we own. We also believe there could be opportunities to manage additional bed capacity not currently in our portfolio. These opportunities would also be incremental to our guidance after considering any start-up expenses. We plan to spend $60 million to $70 million on maintenance capital expenditures during 2026 and $15 million for other capital expenditures. Our 2026 forecast also includes $35 million to $40 million for capital expenditures associated with previously idled facilities we are activating and for additional potential facility activations in order to prepare these facilities to quickly accept residential populations if opportunities arise. Approximately $23.5 million of the CapEx associated with activations represents capital expenditures included in our 2025 forecast that was not spent by year-end and therefore, has been carried over to be spent in 2026. We expect adjusted funds from operations, or AFFO, which we consider a proxy for our cash flow available for capital allocation decisions such as share repurchases and growth CapEx such as facility activations to range from $245 million to $259.3 million for 2026. We do not believe the share price of our common stock reflects the value of the cash flows of our business as we are trading below historical multiples despite visibility of cash flow growth in 2026 driven by recent contract awards. Therefore, we expect to prioritize our cash flows to continue executing on our share repurchase program, which has been incorporated into the range of our guidance. The amount of our share repurchases will take into consideration our stock price, liquidity and earnings trajectory and alternative opportunities to deploy capital. We expect our annual effective tax rate to be 25% to 30%. The full year EBITDA guidance in our press release provides you with our estimate of total depreciation and interest expense. We are forecasting G&A expenses in 2026 to range from $160 million to $165 million. [ We're ] modeling our quarterly results. As a reminder, compared to the fourth quarter, Q1 is seasonally weaker because of 2 fewer days in the quarter, higher utilities and because we incur approximately 75% of our unemployment taxes during the first quarter, resulting in a collective $0.04 per share decline from Q4 to Q1 and negatively impacting our operating margins. However, in Q1 2026, these negative effects are expected to be offset by facility net operating income generated at our California City and Diamondback facilities, which are projected to reach profitability in the first quarter due to the continued intake of detainee populations. I will now turn the call back to the operator to open up the lines for questions. Operator: [Operator Instructions] And our first question for today will be coming from Raj Sharma of Texas Capital Bank. Rajiv Sharma: I was -- so there were no new reactivations in 4Q. Was that because of the government shutdown or the year-end? Also, there's been a lot of talk of warehouses. Patrick Swindle: So to answer your question -- this is Patrick. So there were no new contracts that we entered into in the fourth quarter. We have been in active dialogue with our customer, and we're always exploring different ways to support their desired enforcement approach. And so I would really look at the pacing of additional capacity is driven by bed demand. We've obviously have available demand within facilities already activating as we believe our peers do as well. And so you would expect that additional capacity would be added as needed to reflect that. And so I certainly wouldn't take the fourth quarter not having a new award is indicative of lack of potential additional demand. It's more reflective of, I think, the ebb and flow of demand that's presenting, and certainly, we're well positioned with 7,000 beds that are presently available in idle facilities, additional 5,000 beds within existing facilities that are immediately available for use. So again, we think we're very well positioned, both with existing contracts and potentially idle facilities as that demand manifests in a way that requires additional contract actions. Operator: Next question is coming from the line from the line of Matthew Erdner of JonesTrading. Matthew Erdner: You talked a little bit about the safety margins and kind of the expectation for those to improve. Is the decline in margin there just kind of as you guys activate these facilities, bring them online, like you're talking about with California City and Diamondback. David Garfinkle: Yes, this is Dave. So absolutely, that's correct. I think if you backed out the 3 facilities that were being activated during the quarter, our margin was around 24%. And so as those facilities do reach a stabilized occupancy in the first half of 2026, we would expect that margin to continue to grow. Matthew Erdner: Got it. That's helpful. And then as a follow-up, you talked a little bit about the increased opportunities specifically to manage other facilities. What's your confidence on, I guess, gaining the capacity for you guys to bring in employees, get it staffed up. Are there any concerns there with staffing that? Just, I guess, what's the dynamic right there at the moment? Patrick Swindle: So we reactivated our South Texas, our Dilley facility, very quickly, we're able to staff that rapidly being able to deliver our activation sooner than we had expected or modeled initially. In our other locations, we've been very successful in being able to staff up. And so we do not believe that our ability to staff would be a limiter in terms of our ability to offer or use our bed capacity. The team is very well structured. They developed operating plans coming into 2025 that would allow them to be able to respond quickly when a new facility activated we've made preemptive investments across our portfolio to prepare those facilities for use. So really, we don't see an inhibitor in our ability to activate either through capital needs or through staffing challenges, our ability to quickly respond to demand if it presents. David Garfinkle: And I'd add, Diamondback, we actually didn't expect that to start taking detainees in until January but we actually activated that one earlier or began accepting detainees earlier in late December. It didn't have a big impact on the quarter, it was very late December, but it was indicative of our ability to hire and meet the demands of our partner in that case. Operator: Our next question is coming from the line of Greg Gibas of Northland Securities. Gregory Gibas: Patrick, Dave, congrats on the results. Wondering if you can maybe speak to the current contracting environment and how your dialogue with ICE and the DHS has trended of late, and also maybe wondering along those lines, if you could or would be willing to opine on the recent headlines related to the Minnesota pullback that Homan announced and possibly investors misinterpreting that as a national mandate change. Patrick Swindle: Sure. So for -- with your first question, the way I would answer that is we are a constant dialogue with our customer as we assess what their needs are and try to evaluate how we can participate in that. And so that dialogue is very consistent today as it's been all along with both current and prior administrations. So we would expect to be actively engaged at all times and discussing what is the need, how can we best support that need? Is that a need that we can deliver high-quality outcomes in a way that we believe we can be successful in supporting their mission. So that's something that we're obviously always focused on always ensuring that we're well positioned to be able to step into those places where we believe we can be helpful to our government partner. If opportunities present in a specific way that would give you more detail, we're certainly going to do that. At this moment, there isn't a specific update I'd give you in terms of pipeline opportunity, but I can assure you that we remain an ongoing dialogue around how we can best support our partners' mission. Second part of that question is, I think you really have to pan back to national enforcement activity and approach. At any given time, ICE is taking different enforcement approaches across the country. And so I think if you were to look at Minnesota, specifically as a discrete example, that was a larger scale discrete enforcement action that obviously is a bit different than what we've seen around the country. And so I think to extrapolate the activity or the action that was discussed this morning nationally, I think it's difficult because I think that was a unique enforcement action. And so if I look the country, I, at this point, don't see meaningful changes in enforcement style or approach as that approach has not been consistent with what we saw in Minneapolis because it was a large-scale discrete initiative. Gregory Gibas: Great. That makes sense. And if I could just maybe ask if you're willing to share any more color on buybacks and intentions there. in terms of shares bought back for the year and like 5% in Q4, pretty impressive. And I just wanted to see if you could provide any additional color on maybe your -- how aggressive you'll be with buybacks going forward? David Garfinkle: Yes. Sure, Greg. This is Dave. I'll take that one. Yes, it was a pretty active quarter. We had indicated we were going to double the pace of the first 3 quarters of 2025 in the fourth quarter. In fact, we bought back more than double the pace in the fourth quarter. We bought back an average, I think it was $18.25 in the fourth quarter, obviously trading lower than that this morning. So we're expect to continue to buy back shares at this price. Even at the $18.25, we felt like it was a good buy trading at a significant discount to our historical EBITDA multiples. So yes, I mean, that's -- we have full support of the Board. So I expect we would continue to buy back shares subject to any legal limitations that there are. Operator: Our next question is coming from the line of Ben Briggs of StoneX Financial. Ben Briggs: Congratulations on the quarter and the guidance. I've got a couple of quick ones here. So fiscal year guidance is for about $441 million. And I know you said during the scripted portion of thecall that $450 million-ish is kind of the new EBITDA run rate. Can you just clarify, does that $450 million EBITDA run rate include the 2 new contracts that you discussed at the beginning of the call, but not the Midwest Regional Facility? David Garfinkle: Yes, you got it exactly right. Ben Briggs: Okay. All right. Great. And then over and above that, if you were to activate the Midwest Regional Facility, what do you think the potential EBITDA upside from that would be? David Garfinkle: Well, we wouldn't disclose the EBITDA associated with that facility. I think we did disclose the revenue associated with that facility. So that's probably the best data I could give you. As you look at our full year guidance for 2026, we do expect still to be at the $450 million run rate in the second half of the year. So if you just back off half of that minus the -- or $441 million as the midpoint of our guidance minus $225 million for the second half of the year, you get to a little over $100 million per quarter in Q1 and Q2. So that's pretty detailed. There is that dip, as I mentioned in my prepared remarks, from Q4 to Q1. The $0.04 decline from Q4 to Q1 for unemployment taxes and utilities. Yes, and Midwest was a $60 million annual revenue. Patrick Swindle: And just to add a bit, I would say, when you look at the guidance that we have provided, it assumes no new incremental contract wins. So whether that's Midwest Regional and ability to activate that facility under the final approval of the SUP, which we're optimistic regarding -- but also any other new business opportunities that present would also provide incremental upside. So in terms of visibility into the guidance, this is probably the greatest visibility that we've had in providing guidance in a number of years, given the pace of growth that we're anticipating in 2026. Ben Briggs: Understood. Understood. I appreciate that. So I guess my follow-up was going to be, so you have these -- you've got 5 idle facilities that you said have 7,000 beds over and above these new contract wins? And then did I hear you correctly when you said with surge capacity very -- the total room for additional population you could have is up to 13,000 beds. Patrick Swindle: That's correct. Ben Briggs: Understood. Okay. I just wanted to clarify that. And then finally, I just want to touch on the revolver that you guys upsized in the share purchases. Does drawing the revolver remain an option for share repurchases? Or are you more likely to fund those repurchases with cash from operations? David Garfinkle: Well, if you take our annual guidance, we always like to use AFFO as kind of the proxy for cash flow available for growth opportunities and buybacks and if you back out the growth CapEx that we have for the activations of the idle facilities, you're somewhere in the neighborhood of $200 million of annual cash flow. So that would be available throughout the year without increasing leverage. But certainly, the revolving credit facility can be used for whatever we wish it to be used for. So yes, it is available. Ben Briggs: Okay. Understood. I appreciate it. Thank you guys for the call and congratulations again. David Garfinkle: Thank you. Operator: And the next question will be coming from the line of M. Marin of Zacks. Marla Marin: So I have a couple of housekeeping questions because you've answered a lot of a lot of things on the call and in the Q&A. You did say during the prepared remarks that between the idled facilities that could be reactivated and other means you have significant capacity for if and when new contracts come online. So in 2025, you made that one acquisition of Farmville, are there any other potential small tuck-ins that you've seen come up that might be on the horizon? Or there's -- it's very remote that, that would be an opportunity. Patrick Swindle: We have a business development team that's always actively out looking at opportunities that may be available. And so certainly, there's nothing that I would say that's imminent today. But we are going to evaluate opportunities that present. And from time to time, there may be opportunities to look at circumstances or situations that would be similar to Farmville. Obviously, we recognize where our stock is trading, and it's incredibly valuable at the current trading multiple. So a multiple would have to be pretty compelling to be better than our current stock price. But we do, on occasion, see those opportunities. And if they do, and we think it's a good strategic fit, we would avail ourselves. Marla Marin: Okay. And then one other question, which is -- and I think other callers, other participants have tried to get at this as well. You have substantial liquidity, and I think that there's potentially a sense on the Street that your liquidity cannot support everything you're trying to accomplish between satisfying new demand for capacity, potentially increasing capacity through reactivating idle facilities, the share buybacks and other potential growth initiatives. Could you just touch upon that, particularly in light of the potential for delayed payments from some of your government partners. David Garfinkle: I think I know where you're going with that. So yes, I mean, we had at December 31, over $300 million available on our revolving credit facility. So really feel like we've got plenty of liquidity to execute our strategy even despite a slowdown in some collections of receivables. So that -- we had -- gosh, it was close to $100 million in cash on top of that. So we are not liquidity-constrained in executing our strategy. So yes. And also during the fourth quarter, expanded our revolving credit facility by $300 million through a supportive bank group. So that bank credit facility is now up to $700 million. So we don't feel like we're constrained at all by liquidity. Patrick Swindle: And maybe to build off that, we've maintained a conservative leverage approach as well. And our EBITDA is certainly growing faster than our lever debt at this point. And so when you think about leverage policy, we're certainly going to continue to maintain a conservative approach. We're going to maintain appropriate levels of liquidity. We did make meaningful investments in the facilities, our idle facilities in anticipation of activation. So we did a bit of preloading in terms of the capital that would be necessary to support activation. So we're going to continue to make measured investments as appropriate, take advantage of opportunities to buy back stock based on its attractiveness. But at this moment, there's nothing that we see on the horizon that would cause us to believe we're capacity limited from a capital perspective. Operator: And our next question will come from the line of Bill Sutherland of Benchmark. William Sutherland: I thought I'd zoom out a little bit here, just thinking about what the growth trajectory might be over a multiyear period for you guys given the given the visibility you have with ICE to '29 and some of the emerging state demand. I look back at EBITDA, even back to '09, and it's kind of been in a very steady range, but no discernible CAGR. So I just wondered how should we think about a potential CAGR here for the next 3 or 4 years? Patrick Swindle: That's a great question. I think as you've said, you've gone back and done a historical review of the growth rate of the company over multiple years. And I think that's important in that what you typically see is that growth will come in periods of demand with very specific customers. So if you look back over the history of our organization, we've gone through periods where we would see significant demand from the State of California, for example, or a significant demand with the Bureau of Prisons or, at present, we're seeing meaningful demand from immigration and customs enforcement. What we know is that you've got large aging infrastructure for many of our state and federal partners you have demand needs that are presenting as both populations grow and service offerings are changing, and we believe we're in a position to provide that. And so I would say we're always going to be in a position where we've got the greatest visibility a year out. but our team is obviously focused well beyond this year and future periods. So I'd love to give you a more precise answer in terms of what would be sustainable growth after the current period. But obviously, that's something that we continue to be focused on, and we'll give updates as our pipeline develops both with other federal and state partners as well as we consider potentially other ways to deliver services to our customers, as we mentioned earlier. William Sutherland: Okay. And you can't get through a conference call now without a question about AI. So are you all -- I guess, what are some of the ways you can apply it to your business model? Obviously, I think this kind of business is going to be a net beneficiary or just pure beneficiary in terms of efficiency. So how do you think it can be used in the organization? Patrick Swindle: Well, there are a number of ways that we have contemplated use of AI in our organization. I think the most obvious in straightforward is in back office efficiency. So as we think about our ERP systems and we think about the ways that we support our facility operations from administrative perspective, we're certainly seeing opportunities to enhance the way that we currently deliver those services. Out in our facilities, there are always opportunities to enhance what we're providing. So whether that be educational opportunities for the individuals in our care. Whether that be security tools that we can use both to actively monitor and make our facilities more safe. Whether that be making our cameras smarter as we're trying to evaluate activities that are occurring in the facility. There are a number of pilots that we have underway across the organization to explore how we may be able to use AI to enhance our services. But I would say we're also very sensitive to the fact that we are in an environment where we're managing care for individuals and want to be sensitive to what we use and how we use it so we can ensure that it's being used effectively. So we do hope to give updates in future quarters. We did make a meaningful investment this year in our team. We hired an executive leader, Laura Groschen, to step in as our Chief Information and Digital Officer. So I would view that as indicative of the investment that we're making to bolster our technology team and grow and build out our capabilities. We do believe that's part of our future. And again, we'll have more to update on future quarters as we were able to talk more specifically around some of those opportunities, some of which may be ultimately commercializable. Operator: And our next question comes from the line of Joe Gomes of Noble Capital. Joseph Gomes: So let's go a little blue sky here. You talked about potential upside for Midwest. But let's assume ICE has got the 10,000 new enforcement employees up and running, increasing the pace of detainees out there. I think you've talked about 12,000 or 13,000 beds between existing contracts and idle facilities. If we got to the point where ICE was to contract for those beds or fill all of those beds. What could that mean for upside in terms of revenue and EBITDA? David Garfinkle: Well, it's a tough question to answer. I guess if you took 13,000 beds, an average per diem, I don't know, just say, $125 a day. That's $593 million of incremental revenue. And if you assume we're on a 23% margin in the fourth quarter, that's $136 million of incremental EBITDA just to kind of use publicly available numbers in our reports. Joseph Gomes: Okay. So it's a potential nice upside, again, blue sky, but just -- would be nice to see that. And then one of the big questions, I think, a concern for investors out there has been the pace of detention by ICE that it's been below what people -- investors had thought was going to be, I think people thought we'd be at that 100,000 level. We're at 70 -- a little over 70,000 here. And what is your kind of viewpoint here? What's your -- what are you seeing in terms of the pace of detention? Have you seen it starting to crawl back up here and we're still waiting to kind of see more of a measured pace here in terms of retention? Patrick Swindle: So I would answer that through a couple of lenses. I guess one of them is if you go back to the end of the prior administration coming into the current administration, you were looking at roughly 45,000 funded beds that were operational. And so you now have increased just over 70,000 beds in a fairly short period of time. I think one of the things that at least has been apparent to me throughout this process is the expectation that one can see a significant change in the infrastructure and ecosystem occur immediately. And when you're looking at the way that ICE approaches enforcement action, nothing occurs immediately. And I think as maybe you or someone else noted, the organization had not fully ramped its team until really the end of the year last year. So as we think about timing, it does take time because it is a very complex ecosystem. And as that ecosystem grows, it's going to result in additional bed demand, it has been slower than I think some thought might occur. But certainly, when you look at -- take a step back at the 30,000-foot level and look at the magnitude of scale that's already increased as well as the timing of when the additional enforcement infrastructure was put in place, one can reasonably expect you would see continued growth. Joseph Gomes: Okay. Great. Congrats on the quarter. David Garfinkle: Thanks, Joe. Patrick Swindle: Thank you. Operator: And the next question is coming from the line of Kirk Ludtke of Imperial Capital. Kirk Ludtke: Patrick, David, can you hear me? In your prepared remarks, I think you said at year-end, ICE detained what, 69,000 and of which you detained 16,000. Occasionally, you see press reports that ICE is exploring other ways of housing detainees, repurposing industrial spaces, warehouses, things like that. I'm just curious where that stands? Do you know offhand how many people are detained in facilities other than the facilities, your facilities or GEOs facility? David Garfinkle: Yes, I'll take that one, Kirk. Yes, correct. The administration has pursued a number of alternatives since the beginning of the administration. You had facilities like Guantanamo Bay, Alligator Alcatraz, some international options, some state capacity blocks of state capacity. And I would say, I think the last time I looked at the total the total number of people in detention in those alternatives, so somewhere in the 5,000 range. Kirk Ludtke: Okay. Is that pretty stable or maybe I hate to ask you to provide guidance on something like that. But I mean, do you see that increasing? Do you think that's a viable alternative for ICE? Patrick Swindle: ICE is going to continue to look at different ways to meet their capacity requirements. And as you look at, obviously, the bed need and availability, we have beds available in specific parts of the country. Our competitors have beds available in specific parts of the country. Sometimes the demand can be national. Sometimes it needs to be more localized. And so depending on locationally where that demand is manifesting, you could see traditional capacity used or you could see other alternatives use. I think there's certainly a lot of exploration in terms of different ways that the goal and mission can be accomplished. And we believe we could be part of some of those. And some of those are probably not best suited for our business model. But certainly, I think that will be an ongoing conversation as the administration thinks about how they can best innovate service delivery and make sure that they have the right bets in the right location they need to support their mission. Kirk Ludtke: Interesting. So it's not that the populations are different. It's more of a geography -- geographical consideration? Patrick Swindle: We don't see meaningful differences in populations across the facilities that we operate. So obviously, there are classification differences within each facility, but -- and facility type is really -- it's less about having a dedicated specific type of facility for a particular population than it is about being appropriately located geographically based on where demand is presenting. Again, some demand is national. So it doesn't matter the location as long as you have a transportation infrastructure that's in place to be able to support that mission. In other cases, there's a preference that it would be in specific areas where incremental need may be higher which may make a distant facility not as viable. Kirk Ludtke: Got it. Okay. That's very helpful. I appreciate it. And I don't know of anywhere that ICE actually discloses the level of actual deportations or detentions. But did you -- if that's available, I'd be -- I'd love to know, or any way to back into that. But do you see anything on the horizon that would allow detentions to step up other than just building out the network incrementally? Do you see any big events that facilitate a ramp in detentions? Patrick Swindle: I believe it's really the build-out of the enforcement infrastructure and the completion of training of those individuals who are being hired and then those folks being deployed to go out and enforce the mission. So I don't view it as much sort of a singular event as I do a progressive build of infrastructure that results in higher levels of enforcement, assuming that the policy remains static. Operator: Thank you. And this does conclude today's Q&A session. I would like to turn the call back over to Patrick Swindle for closing remarks. Please go ahead. Patrick Swindle: Thank you, operator. Since there are no further questions, I'd like to thank you all for joining our call today. We take very seriously the responsibility that we have in managing care of more than 55,000 individuals each day. We're grateful for the confidence our partners place in us as our 13,000 employees strive to deliver the highest quality services and programming for those in our care. Just this last weekend, we were able to celebrate the exemplary service of 3 of our correctional facilities and 3 of our residential reentry facilities at the triennial ACA reaccreditation hearings with near perfect scores. This is just a small example of the work our team does but is indicative of the excellence that we aspire to every day. Our team has also done an exceptional job delivering positive results in our core portfolio and successfully ramping our activating facilities. Our guidance with assumed EBITDA and EPS growth of 21% and 40%, respectively, both at the midpoint is the most significant annual growth of our organization as forecast in many years. As a reminder, this growth assumes only already awarded contracts, excluding Midwest Regional, which is successfully activated would be additive to this initial guidance as would any additional opportunities that present to provide additional services to our federal state or local partners. Lastly, we believe that our shares remain significantly undervalued. Using the midpoint of EBITDA guidance, our shares are currently trading at roughly 6x forward EBITDA, well below our historical trading ranges. We're obviously evidencing our view of value with an active share repurchase program that increased in intensity during the fourth quarter while maintaining our consistent balanced leverage position. We're optimistic that as we successfully deliver on our outlook for this year, we'll see this value recognized in our shares. With that, operator, we'll close out our call for today. Have a great day, everyone. Operator: Thank you. This concludes today's conference call. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Orbit Garant Drilling's Financial Fiscal 2026 Second Quarter Results Conference Call and Webcast. [Operator Instructions] Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties and assumptions relating to forward-looking information, please refer to the company's latest MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures. Although Orbit Garant believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the company's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on Thursday, February 12, 2026. I would now like to turn the floor over to Mr. Daniel Maheu, President and CEO of Orbit Garant Drilling. Welcome, sir. Daniel Maheu: Thank you, Jim, and good morning, ladies and gentlemen. With me on the call is Pier-Luc Laplante, Chief Financial Officer. Following my opening remarks, Pier-Luc will review our financial results in greater detail, and I will conclude with comments on our outlook. We will then welcome questions. As expected, our results for our fiscal second quarter reflect the full resumption of certain projects in Canada and South America that were temporarily delayed in Q1 and the continued ramp-up of new drilling projects in Canada. Aside from a customer initiated delay on one drilling project in South America and unexpected modification to another during Q2, we have increased overall drilling activity in the quarter in both Canada and South America, including a higher proportion of specialized drilling in Canada. Our revenue and margin for the quarter were somewhat constrained by the temporary delay on these 2 projects in South America. Competitive pricing on new projects and contract renewals remained during the quarter. Overall, revenue for our fiscal second quarter was up by 10.5% compared to Q2 a year ago, and our adjusted gross margin was 18.5% compared to 21.5% in Q2 last year. Our drill utilization rate in the quarter reached the highest level in more than 2 years and supported by new drilling contracts and contract renewals. We expect further increase in our drilling utilization rate in our fiscal third quarter, which we can accommodate with minimal mobilization costs. Some of these increased utilization gains may not be fully realized until our fiscal fourth quarter due to the various challenges caused by the severe winter weather conditions we have experienced in Canada in January and into February. We also expect to continue to benefit from the continued advancement of our ramp-up activity on new projects in Canada as projects typically yield lower gross margin during the ramp-up period. While we have experienced some unexpected project delays in the first half of the year, these projects are all back online now, and we are well positioned to continue increasing our drilling utilization rate to drive revenue growth. Demand for our drilling services in both Canada and South America remained strong, supported by record gold prices and elevated copper prices and bidding activities on new projects remains at a high level. I will now turn the call over to Pier-Luc to review our financial results for the second quarter in greater detail. Pier-Luc? Pier-Luc Laplante: Thank you, Daniel, and good morning, everyone. Revenue for the quarter totaled $47.9 million, up from $43.5 million in Q2 last year. Canada revenue was $33.8 million in the quarter, an increase of 9.8% compared to Q2 last year, reflecting increased drilling activity and a higher proportion of specialized drilling. International revenue totaled $14.1 million, an increase of 12.1% compared to Q2 a year ago, reflecting increased drilling activity in both Chile and Guyana. So our revenue was constrained in the quarter by a customer decision to temporarily delay one project and unexpected modifications to another drill program. The project that was temporarily delayed by a customer decision was fully resumed in January 2026. Gross profit was $6.5 million or 13.5% of revenue compared to $7.2 million or 16.5% of revenue in Q2 2025. Adjusted gross margin, excluding depreciation expenses, was 18.5% in the quarter compared to 21.5% in Q2 last year. The decreases in gross profit and adjusted gross margins are primarily attributable to lower drilling productivity on certain projects in Canada, a competitive pricing environment on new contracts and contract renewals and the customer initiated delay and modifications to certain drilling programs in South America. Adjusted EBITDA totaled $5.1 million, up from $4.5 million in Q2 last year. Net earnings for the quarter were $1.3 million or $0.03 per share diluted compared to $0.5 million or $0.01 per share and diluted in Q2 last year. The increases in adjusted EBITDA and net earnings were primarily attributable to lower income tax expenses and a favorable foreign exchange variation, partially offset by lower operating earnings. Turning to our balance sheet. We repaid a net amount of $3.3 million on our credit facility in the quarter compared to a repayment of $2.4 million in Q2 a year ago. Our long-term debt under the credit facility, including the current portion, was $16.0 million at quarter end, down from $19.3 million at the end of Q1, but up from $14.0 million at our fiscal 2025 year-end. Our increased debt in the first half of fiscal 2026 is the result of our yearly shipments of equipment inventory for our operations in Nunavut and Nunavik. We expect to continue to pay down debt on a net basis throughout the remainder of fiscal 2026. On December 22, 2025, the company entered into a sixth amended and restated credit agreement with National Bank and the lenders in respect of the credit facility. The credit facility consists of a $30.0 million revolving credit facility, along with the credit facility in the unused amount of USD 5.0 million utilized for the purposes of standby letters of credit. The credit facility expires on December 22, 2029. On October 28, we announced that the Toronto Stock Exchange approved our renewed normal course issuer bid, which allows us to repurchase up to 500,000 shares over a 12-month period that began on October 31, 2025. During the quarter, we repurchased and canceled 141,450 shares at a weighted average price of $1.29 per share pursuant to the NCIB program. We continue to view the NCIB as a useful tool to enhance shareholder value when the underlying value of Orbit Garant is not reflected in our share price. Our working capital was $51.9 million at quarter end compared to $50.4 million at the end of fiscal 2025. I will now turn the call back to Daniel for closing comments. Daniel? Daniel Maheu: Thank you, Pier-Luc. With record gold prices and historically high copper prices supporting strong customer demand for our drilling services, we are confident in our business outlook for the second half of fiscal 2026 and entering into fiscal 2027. The level of demand for our drilling services from senior and intermediate mining customers in both Canada and South America is increasing, and we are seeing a definite acceleration of requests for proposal from junior exploration company in Canada. Due to the sustained high level of demand in our industry, we expect to experience cost inflation with respect to supply, material and wages. So we are going to have to work with our customers to accommodate these expected increases to our input costs with future contract and renewal. Increased demand from junior exploration company may have a positive impact on the current pricing environment. Our overall priorities remain the same going forward, a strategic focus on senior and well-financed intermediate customers in Canada and South America, our disciplined business strategy and continuous operational improvement program. By focusing on this priority, we intend to capitalize on opportunities in this period of elevated customer demand to deliver enhanced profitability and value for our shareholders. That concludes our formal remarks this morning. We will now welcome any questions. James, please begin the question period. Operator: [Operator Instructions] We will hear first from Kerem Aksoy at Glacier Pass. Kerem Aksoy: It seems like it's an exciting time for the industry. I had a couple of questions. Just maybe one more routine to start. I was wondering if you can provide a little more color on the outlook for the International segment. You mentioned during the prepared remarks that the segment was impacted by a customer decision in South America, and we kind of saw the margins decrease year-over-year. What should we expect for the second half of the year in that segment and maybe going on? Daniel Maheu: Thank you for this question. Essentially, in Chile, we have 3 customers, big copper mines, and they have some concerns with budget. They have sometime -- some requests to move the drill. So that could take several weeks to do so. So essentially, we have long-term contracts with these customers in Chile, and that's the point. The other thing is in Guyana, actually, the market is very strong and customer asked us to move also equipment from a site to another site. So that creates some delays. But that's very positive for the next quarter because the market is increasing there. And these requests from customers, it's a good thing for us. Kerem Aksoy: That's helpful. And then maybe just kind of moving to Canada. I mean you kind of provided some commentary in your prepared remarks, but I was wondering if you could just kind of dig into that a little bit more. Maybe just kind of big picture when you speak to your clients, maybe on the senior side, have they provided any commentary to you about what their budgets will look like in 2026? And I'm just curious how that might have changed year-over-year or kind of what their expectations that they've outlined to you are? Daniel Maheu: Yes, that's correct. The point is here is our customer, as you know, probably more -- in Canada, more than 80% of our drilling business is related to a customer in the gold industry. So with the gold price, actually, customer wants to increase their drilling exploration project, and they ask us to add several drills there and there. For example, we have a customer asking for 2 new drills in Q2. So we added. And we -- in the quarter, we had more than -- I think it's 10 drills. So we -- that's why our utilization rates went from 56% in Q1 to 62% in Q3 and Q2. So -- and we expect this level of utilization rate for new contracts from actual customer will increase in Q3, probably at 65% utilization rate. So that's the market in Canada. So that's very encouraging for us. It's great. Kerem Aksoy: That's helpful. Maybe just one last one for me. You mentioned you started to see some increased demand from juniors. I'm curious, we saw a lot of financing for juniors kind of last year, maybe started this year. Has all of that money started to flow into tenders? Or do you think there's still a bit of delay and you might see a step-up in demand from juniors? Or I mean, have we seen all the demand from juniors yet? Or is it still to come? Daniel Maheu: What we see actually in the market, the money is coming. Right now, we have requests from juniors for more than, let's say, a small program. Let's say, in the last few quarters, we have small requests for less than 5,000 meters for 2, 3 months' work. Now we see since end of December 2025, we see a request for a longer drilling program, more 6 months, and it's over 5,000 meters, 15,000, 20,000. So that's interesting. This is not our main market. We focus more on major and intermediate customer. But that means the small drilling companies will go with these small request from juniors. So that gives us more space to work with our target customer for long term and let's say, more specialized drilling. So at the end of the day, that's exactly where we want to go. And that's, let's say, junior demand is positive for us on the short and long term. Operator: [Operator Instructions] Mr. Maheu, I do not see any signals from our audience. I would like to turn it back to you, sir, for any additional or closing remarks that you have. Daniel Maheu: Thank you, Jim, and thank you, everyone, for participating today. We look forward to speaking with you again soon. Operator: Ladies and gentlemen, this does conclude today's Orbit Garant Drilling 2026 Q2 Conference Call and Webcast. We do thank you all for your participation, and you may now disconnect your lines.
Operator: Good morning, and welcome to the lastminute.com Q4 and Preliminary Unaudited Full Year 2025 Financial Results Conference Call. Today's call will be hosted by Julia Weinhart, Head of Investor Relations, and joined by Alessandro Petazzi, Chief Executive Officer; and Diego Fiorentini, Chief Financial Officer. [Operator Instructions] Please note that this call is being recorded. At this time, I'd like to turn the call over to Julia, Head of Investor Relations. Please go ahead. Julia Weinhart: Thank you, Valentina. Good morning, everyone, and thank you for joining us for our Investor Relations call this morning. We value your continued support and are pleased to present our latest developments. After the presentation, we will be happy to address your questions. With that, I hand over to Alessandro now. Alessandro Petazzi: Thank you. Thank you, Julia. Thank you, everyone. Good morning. Thanks for joining us. We have a lot of positive ground to cover today. We're commenting today the final quarter, but also the preliminary unaudited full year results. And I think you've come to know me throughout this year as we complete my first year as CEO of the company. And you probably know that I normally do not like to be blowing my own trumpet, but it is a real pleasure indeed to be presenting such a strong set of results, I would say, quite exceptional, to be honest. If you follow our industry closely, you know that the period from October to December is the lowest from a seasonality point of view. But in terms of year-over-year comparison, actually, Q4 was the strongest period of the year for us. But in general, if we take a look at the whole 2025, we really -- we outperformed the market. We grew our market share in core markets, in the expansion markets in which we started investing this year, we hit and then exceeded the expectations we had and the guidance we already raised in Q3, by the way. So achieving double-digit growth in both revenues and adjusted EBITDA. So as I said, at the very beginning of this journey, I think we're the kind of company that can grow top line, bottom line and cash generation, and that's exactly what happened in 2025 with the holiday packages continuing to be our primary engine and the strategic focus of the company. I would say that we really had a step change also in capital discipline. There's been criticism by some investors in the past about the fact that this company was generating a lot of volumes, but maybe not so much in terms of cash generation. And I think that we can say confidently that this has also changed this year with cash flow doubling compared to 2024. And it's not a one-off thing. It's there to stay. So this is definitely something on which we think the next year will allow us to grow even more. Again, it's not just because the market has favored us. It's something that came from decisions we took over the year, sometimes not easy decisions, but really aim to put the company in a stronger position to be focused on what really matters, what moved the needles. We reorganized the internal structure to allow us to work more efficiently. We made clear calls on where to focus and where not to. We set clear priorities, define what we wanted to do and laid out a 3-year outlook to guide us there starting with already strong execution in 2025, which is the foundation of the next phase of the growth of this company. So 2025 has a clear direction and the focus now is carrying on that energy into 2026. I think it's a very good momentum to enter '26 on such a strong tailwind, and we plan to continue that. So if we look at the numbers a bit more closely, you can see this slide, the financial performance for both the quarter and the full year. And you will notice that the quarter has been growing even more than the full year. So 23% growth on revenues. Adjusted EBITDA, very positive at almost EUR 9 million and adjusted EBITDA minus CapEx, which actually was positive, again, as a proxy of the cash generation even in the fourth quarter, which normally because of the working capital dynamic of our industry has been a quarter in which traditionally we've been having negative free cash flow and negative EBITDA minus CapEx, but not this year. And for the whole year, I think the picture then is pretty similar, 15% growth in revenues, more than proportional growth in adjusted EBITDA. We'll see exactly why and how over the next few pages with our CFO, Diego. And again, let me insist on adjusted EBITDA minus CapEx as kind of a proxy of cash flow, even if we will then take a look at the cash flow in detail later on, but we can say that this number already doubled compared to last year. So again, it shows the strong operating leverage that we currently have in the business. And I would say that the business as a whole is now operating at a new level of financial strength and cash conversion. 2025 was the first year like that. 2026 will be the second one, and we can say that we will confidently move forward in that direction in the future. And with that, I hand it over to our CFO, Diego Fiorentini, to take a closer look at the numbers. Diego Fiorentini: Thank you, Alessandro, and good morning, everyone. As you know, Q4 is seasonally the least relevant quarter for our sector. Despite that, we delivered a very strong close of the year. When we last spoke, we highlighted a clear acceleration in Q3, and I'm now pleased to say that this momentum further improved in Q4. Overall, Q4 revenues reached EUR 77 million, up 23% year-on-year. This brought full year revenues to EUR 361 million, up 15% and clearly above our guidance. Importantly, all 3 core segments delivered a Q4 year-on-year growth above their respective full year growth rate, confirming the strength on the underlying trend. Looking at each segment, Packages, our core product, grew 16% in Q4 and 11% for the full year, demonstrating resilience and solid execution. Flights delivered an outstanding performance, up 48% in Q4 and 31% for the full year with strong acceleration in growth and continued market share gains. Hotels remain solid and consistent, growing 22% in Q4 and 21% for the full year. Finally, as a reminder, the other segment includes the cruise business, which was discontinued in early October. As a result, Q4 reflects the absence of that revenue stream. The strong top line performance translated into solid profit growth. In Q4, gross profit increased 17% year-on-year, while it grew 10% for the year. As already anticipated, gross profit growth was below revenue growth, both in the quarter four and for the full year. This reflects higher investment mainly in performance marketing aimed at supporting acceleration and expanding market share. Let me be clear on this. We increased investment where we saw measurable and accretive returns. Our performance marketing model remains highly data-driven with strict return on investment thresholds and continuous optimization. Looking at the segment breakdown, Packages remained our largest contributor, delivering EUR 20 million in gross profit in Q4, up 14% versus the same quarter last year. Flights continue to let the term -- in terms of growth rate with gross profit up 31% year-on-year, confirming strong operating leverage and scalability in the segment. Hotels remained broadly stable year-on-year with higher marketing investment made in the quarter. Finally, while the other segment showed a year-over-year decline at the revenues level, the dynamic reverses completely at the gross profit level. With the discontinuation of the Cruise business in early October, the segment now reflects a leaner perimeter and delivered a positive gross profit growth in the quarter. On Slide 8, you can see in more detail the composition of our cost structure between variable and fixed costs. Variable costs included a [ 36% fixed ] increase in marketing spend, supporting gross travel value growth momentum and made possible by our stronger financial position. On the other hand, fixed costs were up just 6% in the quarter, mainly reflecting higher variable compensation as we achieved and exceeded our targets. Excluding this performance related component, fixed costs would have been down 13% year-on-year, reflecting the full impact of the cost measures we previously implemented. Looking at the full year, the picture is consistent with fixed costs were broadly unchanged in absolute terms compared to 2024 despite double-digit revenue growth. Taken together, higher revenues and disciplined cost control drove a 4% point reduction in the fixed cost ratio, highlighting clear operating leverage and improved structural efficiency. This slide takes a closer look at the profit and loss, giving you a bit more detail on what we just covered. In Q4, adjusted EBITDA reached EUR 8.8 million, up 62% year-on-year. This strong increase reflects our operating leverage, which amplified profitability even if we continue to invest in marketing and sales. Net result benefit from lower financial costs compared to last year as well as a positive contribution from taxes following the remeasurement of the deferred tax asset. Closing at EUR 1.9 million, earnings per share came at EUR 0.18 compared to a small loss in the same period of last year. Looking at the full year, as we already discussed, revenue grew 15%, while adjusted EBITDA increased 33%, with both metrics comfortably exceeding our guidance. Net result came at EUR 11.6 million, slightly below last year, reflecting the one-off costs related to the cost reduction measures we implemented. That said, the story on operating cash generation is very positive. Adjusted EBITDA minus CapEx, a useful proxy for cash flow, doubled over the year, increasing from EUR 16.2 million to EUR 32.4 million. During our third quarter call, we got some questions on cash generation. So we decided to give a bit more detail to really explain what's driving the numbers. Free cash flow for the year came at EUR 27 million compared to a negative EUR 4.7 million in 2024. And even if you strip out the effect of working capital, which, of course, moves with the gross driven value, free cash flow was still prepared versus 2024 even after accounting for the one-off costs related to the cost reduction initiatives. Our free cash flow to EBITDA conversion has improved significantly, moving from a fixed effectively 0% to 58%. And we are looking to push this further in 2026, building on the strong progress we have already made from 2024 to 2025. Finally, the net financial position stood at almost EUR 32 million, up from EUR 19 million at the end of 2024. As we speak, we have already repaid all the short-term debt that was outstanding at the end of 2025. With this, I'll pass the word to Alessandro, and I'll be happy to take any follow-up questions during Q&A. Alessandro Petazzi: Thank you. Thank you, Diego. So basically, to wrap it up, I mean, you probably don't even need me to highlight how strong this set of results is from 3 points of view, right? I mean the first one is that we did better than we planned, I would say, across the board. We exceeded the guidance that we already raised in Q3, and this is visible at the revenue level, where we grew 15%, where we had a target of low double digits and even more so at the adjusted EBITDA level, where the growth was 33% compared to a 20% guidance, which had been reviewed also pretty recently. And again, these results are, I would say, a combination of a positive trend, right? So it's not just Q4, it's more the entire year across product segments, across geographies. We grew in the core markets. We grew in the expansion markets. And we'll see a bit more details about also our product initiatives in a second. So very robust starting point for 2026. And finally, as Diego mentioned, we really closed the year with a significantly stronger balance sheet, right, driven by both EBITDA growth and a very disciplined approach to CapEx and working capital. So yes, we're delivering on our commits on the one hand, but I would say, even more importantly, we have this trajectory now of our midterm plan on which we are executing against. And the growth is just, I would say, at the beginning. So for me, it is really important also as we move into -- so we talked about the financial results. But I think it is also important to realize that these results do not happen in a vacuum. They happen because there are industrial choices that we make underneath and things that we are working on and that we already delivered and then they translate into these results. So we've decided starting from this quarter and going forward to give you a bit more of a chance to take a look under the hood of what we've done and what we're doing to make these results possible. So the next section, when we say strategic direction, this is it. Well, first of all, the overall strategic direction, I will not spend too much time on this because we insist on this every single time. You've seen this page a few times on Page 13, the pillars of our strategy are strengthening the market presence, evolving our Dynamic Packages product, making sure that we are a travel companion that is relevant for our customers, not only in the moment in which they do the holiday, but really throughout the entire journey and making sure that we have clear idea of what each brand in our portfolio stands for and what is the type of product and audience that are relevant to that with AI, I would say, being the glue that takes it all together as an enabler for the next phase of scaling up. But let's be a bit more concrete, right? Because this could sound like just a framework, but what about the execution on this framework and the things that prove that we're getting there progressively. Well, first of all, the first thing that I'm really happy to announce is that we have indeed launched our free multi-tier loyalty program, which, as you can see, we decided to call PRO, which I think is a nice acronym for perks, rewards and offers and also hints to the idea that with that, you are indeed traveling like a pro. So the concept is simple, and the idea is that the more our customers travel with us, the more benefits they unlock over a 12-month period. Some of these benefits are special discounts because indeed, this is something that people still expect from a loyalty program, but also, I would say, perks and dedicated offers. So it's going to be a mix of financial rewards, I would say, and more qualitative elements, which people have proven to enjoy and also games that they can play that did not have an immediate monetary value, but are designed in order to improve the psychological effect of happiness on our customers if they come back. So the idea is that, again, we want to convert people who maybe got in touch for us for the first time with a price-led approach and make them become loyal customers. We started that in Q4 2025 in the U.K. and progressively, we are rolling that out in all of our markets. But now it's not just about what we did, I would say, is also what we achieved. So if we take a look at loyalty of our customers, you can see on this page that the bookings from repeat customers in 2025 already grew 27% compared to 2024. So clearly, there is -- and this was before the launch of the loyalty program, obviously. So throughout the entire year. So this is very important. This tells us that our brands already resonate with consumers and our value proposition convinces them to come back. So that is something that happens across the board on all touch points, web, mobile and app. But obviously, I would say that the app is at the center of this travel companion bit of the strategy as the go-to device and the go-to product for people who are familiar with the brand and loyal to us. And I would say the numbers have been really interesting on that side as well. I think we never talked about these numbers, and I think it's actually important to give you a sense of how relevant the app already is in our ecosystem and how even more relevant will become in the next few years. We had a 12% growth year-on-year of app downloads to 1.6 million. People who download the app then also use it. We have over 600,000 monthly users for the app. And it represents an important engine of bookings with 20%, 21% of booking shares. And don't get me wrong, we don't think that the app's value is just in terms of allowing people to book a holiday. Yes, that's also there. But let's be honest, they can do it on a variety of touch points. We think that the app value is really as a travel companion. But of course, as you get more used to it and you use it more often, then it becomes natural once the app has all the information about you, it becomes easier also to book there your second or third trip with us. And as we talk about touch points and as we talk about how consumer behavior is evolving in terms of looking for holidays and booking holidays, I think it is really important to take a closer look at AI and how AI is changing the way we all search and get inspired online. This is a topic on which I got a lot of questions and all the one-to-ones I had with you guys over the past few months. And so I thought it was appropriate to take a closer look. And a question that I get all the time, even if it's not always articulated this clearly, but the concept behind this is, okay, what happens to your business if Google search becomes irrelevant? What happens if users search via chatbots, they never click on that, they never land on your website. What happens if agents do all the work on behalf of the customers, and therefore, they're not necessarily influenced by your brand. What happens? And sometimes I get that question in a much more simpler form, which is, well, but now progressively, everyone is looking for inspiration about their travels on ChatGPT. So what happens to people like you, what happens to online travel agencies, right? There's a complete disruption of the business model. And I think it's fair because I think that potentially, you could say, well, if you lose the entry point, then ultimately, you lose the customer. But actually, the evolution we're seeing is much more nuanced than this. And I think it's important to understand certain characteristics and dynamics of our market to really understand what we're talking about here. So on the next page, so first of all, a bit of fact checking, right, how the search and discovery scenario is actually evolving. So historically, I would say, for over 20 years, it kind of stays the same, right? People go to Google, they type holiday for 4 in Mallorca, and thanks to SEM ads or SEO, free positioning, companies like us, they show us at the top, right? So for sure, we're seeing a shift from -- even if typing keywords into a bar, it's still the vast majority of searches. Of course, people are having more conversations with chatbots such as ChatGPT and Gemini by Google. So is this the end of paid ad? Is it the end of Google search? Will AI players become the new OTAs when they eat your cake and your company will become irrelevant? Well, it's a bit different than that. Well, first of all, Google still holds a dominant position. If we're talking about Gemini and AI overviews, basically, the vast majority of customer interactions with some type of AI chatbot is indeed managed by Google. And Google has been adamant that their business model is an ad-based one. They have no intention to become an OTA. For those of you who've been following the sector for a few years, this sounds like Google Flights all over again when Google many years ago now launched Google Flights. A lot of questions like, oh, then the OTAs are done. Google is going to allow you to look flights. And actually, Google's business model has always been to be able to surface the right type of information to the right type of audience and connect that audience and that information with the right advertisers paying them their bills, right? And their adamant, their business model will continue to be absent and also in an AI-first world, their job will be to connect demand and supply. And when they say supply, it means companies like us. Now obviously, other players are emerging. So there's new traffic sources emerging. OpenAI and ChatGPT are the obvious ones. I think it's really interesting actually that because up to now, obviously, these companies have been burning through a huge amount of cash, and that will continue for some time. But at some point, they will also want to understand how they can better monetize what they're doing. And so far, they try to have a premium -- a freemium kind of model with a lot of stuff for free and then the possibility to pay, let's say, $20 a month if you want something more or even more if you want more premium features. But it's pretty clear that it's a pretty niche market, the market in which people are willing to pay for that and potentially they're realizing that ad money is bigger. So I think it's interesting that they started offering ads in the U.S. Now, will this be the end of the game? Because at the end of the day, maybe the end game will be a situation in which all the players managing chatbots will have an ad-supported model. And then for us, it will be an evolution from basically having Google as the main -- as the only actually player for search to having a number of players that we interact with that are really strong on the inspiration phase of the journey and where we can place our ads to make sure we're relevant there. This is one possible scenario. But obviously, we don't have a crystal ball. So it's so early days. It's very difficult to say how the things will evolve. New players might emerge, new models might emerge. So let's say that even if the business model remains or the business model changes in a way that actually it will be customers to pay for the service and there will be no ads, which again, something that right now, we really don't see happening. But even assuming that, that might happen, we believe that lastminute.com is very well positioned to be a winner in this new phase of AI growth and to thrive, not just survive, I would say, in this evolving landscape. And why that? For a number of reasons, which you can see at Page 18. So on one hand, from a technical point of view, we're building an AI-friendly infrastructure, embedding our services where the conversation happens. So you might have seen the PR that we already launched our Flight MCP server in Q4. Now, I get it that it might be a bit technical. The easy way to say that is that it's kind of a universal plug. It's kind of the evolution of APIs, if you want. And that allows LLMs such as Gemini or ChatGPT or Claude to plug directly into our real-time inventory and pricing. And this is very important because it has the power to ensure that when an AI agent moves from the inspiration to actually booking a holiday, we are one of the brands that are surfaced and the agent has directly access to our tariffs, right? So it's very important. The first use case that we -- that this technology enables is the fact that we have an app in the Claude ecosystem. And it will be also very soon available on OpenAI and ChatGPT as well. So I saw that in the insurance sector, a Spanish start-up made a huge wave in the industry to say, "Oh, we have an app on ChatGPT. And so people were like, wow, this company is the one who's going to benefit from all people starting to book their insurance directly on ChatGPT." Well, we're going to be there in a few weeks as well from a travel point of view. But again, this is an infrastructure play. So the MCP, this thing of having the app on ChatGPT, the app on Claude is, I would say, just one of the use cases. There are even more interesting ones that this infrastructure enables. And this is the type of investments that we can do. And of course, other very large companies such as Booking.com or Expedia can do. But if you are a small hotel chain, probably you're not able to do that, right? So that already, I think, creates a most in terms of the winners, the large companies versus the really small ones. The second one is that from a product point of view, we used to be a distribution platform, which was distributing mostly, we can call them commodity products such as flights and hotels. But in reality, over the past few years and even more from now onwards, we have our unique proprietary packages at the core. And so we have these end-to-end holiday packages, which are not just available on any hotel website or airline or even their MCPs. This is a lastminute package. You can only find it on lastminute. And when you find it on lastminute, I don't necessarily mean the website. I also mean the MCP server. I mean everything that is lastminute. So we are the producer of that, not just -- it's produced by Netflix, if you want, not just distributed by Netflix, if you allow me the analogy. And by owning the product itself, we are the provider of this value proposition. Now, people might say, well, but basically, a package is just putting a flight and a hotel together and AI agents can do that themselves or they will be able to do that. And I'm definitely -- I'm not in the camp where people in the industry say, "Oh, but that's more complex. AI is not able to do it." I don't think that's the case. I think any kind of technical complexity, AI will be able to get it. So that's not the point, maybe not now, but in the not-too-distant future, for sure, for sure. That's not the point. So I'm not saying that what we do is so complex, AI cannot do it. What I'm talking about is business models and regulation, right? Because the key thing here is that in order to create a package, we have commercial agreements with all the hotel chains from the big ones, Hilton, Marriott, to the really small ones with independent boutique hotels. We have commercial agreements with all the airlines. We have commercial agreements with transfer providers, with activity providers, with the tons of players in the ecosystem. And for each of those, we have access to those called opaque or opaque or nonpublic rates, which can be used only if you create a package. Now, again, it's really not the business model of Google or OpenAI to start replicating these deals with all these players. And then it's not their business model to be in-charge of customer service when something goes wrong. You get to a lot of times, you book a flight and then the flight is disrupted, it's rescheduled. We are in-charge of that. If there's a partial refund, as the provider of the package, it's our responsibility. All these companies want nothing to do with them. It's the opposite of their business model. They want again to surface someone like us to serve the customer. And it's not just because they don't want to do it, but it's also because from a regulatory point of view, once you are the provider of a package, at least in Europe and in the U.K., you clearly have responsibilities of that. And again, to have a license, you have -- so this is definitely not something that is interesting for this company. So again, AI and chatbots excelling inspiration, but we remain the partner that delivers the actual holiday. So for sure, AI can help you plan, know the context and give you great suggestions, but then to sell a protected package to have the ATOL license in the U.K. to manage the customer operations and service, you need to be a player like us. So I hope that this clarified a few things. But now talking about AI as an opportunity, right? Because let's focus on why this is actually good for us. And I think it's good for us from 3 points of view, and these are the 3 pillars on which we are working on. So internal productivity, of course, everyone gets it. We are embedding AI company-wide to boost, I would say, productivity of our employees. We have already automated a number of processes, and we are working to increase that. We have a new AI automation department under our Chief Data Officer, precisely in charge of that to collect all the initiatives that are happening already around the company and to give a very clear strategic direction using a mix of internal and external tools. Of course, we started with a big project on our customer service side, which really is aimed also to improve the customer experience. So again, I don't see historically, right, you were seeing productivity and customer experience almost as a trade-off. You need to invest more if you want to make customers happy. In this case, I would say, yes, we are investing, obviously, on technology, but then the efficiency will come also with a bigger effectiveness, I would say. So we're also using AI to rethink the travelers' journey in terms of personalization. So the kind of things, the kind of experience that you have right now on ChatGPT, there's no reason why you cannot have it on our website potentially, and in terms of providing that type of, I would say, consultancy, if you want. And then again, as I was saying, Gen AI-powered customer service allows to provide high-quality support 24/7 in all languages initially in the chat and potentially then also with voice. Last but not least, we need to be present where the conversations happen. And therefore, that's why we are integrating seamlessly in the various chatbots. As I was saying, Claude is the first example, but the MCP servers that we now released for flights and we will expand for it to include Dynamic Packages will then be on all the relevant chatbots in the market. And I would say that because this is so interesting and because there's so much happening in the company right now, probably over the next few quarters, we will give you some more insight on the things that we are progressively deploying as they go into production because I think there are so many interesting things that I'm really excited to share them with you. And as we complete this very passionate talk about product and industry, let's go back on Page 21 to what it means from a financial point of view. So our 2026 outlook, you might have, by the way, noticed that this year, we're giving you an indication on what we expect at the very beginning of February. Last year, considering it was my first year in the job, I needed a bit more time to take a look at our budget. And so we gave you guidance much later towards the end of March. So while we're doing that, we think that we're going to keep growing more than the market. So that's going to be constant. We still expect to be growing market share at the expense of more traditional players in both core and expansion markets around Europe. And we expect the growth to be at 10%. Now, you might be -- I can anticipate some questions you might have as soon as we open the floor in a few minutes, which is, well, this year, you grew much more than proportionally at the adjusted EBITDA level than on revenues, why? For 2026, we're forecasting the same type of growth. And I would say there are various considerations here. The first one is that from a strategic point of view, I think that this company underinvested in its own its own brand actually for many years. And this is something that potentially in the short term maximizes or helps maximize EBITDA, especially if revenues are a bit stagnating, but it's not something that makes sense in the long term. And I would say that by excessive short-termism, companies die, right? And this is not us. We have the possibility because we're growing the top line, we have the possibility to also grow the bottom line while still making strategic bets and strategic investments. And one of these is that we will significantly expand our investments in our brands in 2026, again, to -- and these are investments that maybe do not necessarily have an immediate return on revenues. It's different from performance marketing clearly, but they do have a return on a foundation for the future on customer loyalty. So we're really building the steps for our continued long-term success. The other element is that, here, we're talking about it more -- a bit more of a technical one, if you want. We're talking about the adjusted EBITDA, which was EUR 55 million. This year, you might have noticed that actually below the adjusted EBITDA, we had over EUR 8 million of one-off charges. And obviously, we do not expect one-off charges to -- by definition, they're one-offs. So we don't expect such a value in 2026. So actually, the growth of the reported EBITDA will be more than that because of this element, right? And if I take a look at the cash flow, I would say even more so because on one hand, our CapEx reached kind of a plateau in 2025. So we do not expect a growth in CapEx for 2026. And because we're growing the top line and the GTV, clearly, because of the nature of our working capital dynamics, we will also have a very positive effect from working capital on our cash flow. So if you combine all of these effects, the growth of adjusted EBITDA, the more than proportional growth in reported EBITDA, stable CapEx, so that growth will go straight to the, let's say, bottom line of cash generation, right? And then you mount on top of it the positive net working capital effect, then you have a company that we generate in 2026. So very confident to generate even way more cash flow than in 2025 while still growing the top line. So I think it's a very, how can I say, reassuring and positive forward-looking message, both from an industrial and from a strategic and financial point of view. And with that, I leave the floor again to Julia to wrap it up with our financial calendar and then to open the floor for questions. Julia Weinhart: Thank you very much, Alessandro. On Slide 23, we have just wrapped up our latest financial publications you can see and the conferences where we participate in 2026. We will now begin with today's Q&A session, starting with the live questions followed by submitted the ones in webcast. Please note that like always, we might group questions together and they might be slightly rephrased. In line with our privacy and data protection policy, we remind participants that stating your name is optional when asking a live question. With this, I hand it over to Valentina now to start with the first live questions. Operator: The first question comes from Volker Bosse from Baader Bank. Volker Bosse: Volker Bosse, Baader Bank. Yes, congratulations on the great set of results and the convincing outlook. I would like to start with 3 questions, if I may, starting with Page 6, where you give the breakdown of sales growth by product lines. And I mean, in the past, we were used that the strongest growth comes always from the Dynamic Packaging system. Now we see flights up 31%, hotels 21%, which are, of course, great results, but they are exceeding Dynamic Packaging growth. So therefore, my question, is that a structural change? And what has been the driver for that outperformance of hotels and flights? I mean in the past, you spoke about flights as a commodity, and we do not push that and therefore, growth will be lower. So my question would be, how should we look at the growth by the product lines if we model our year 2026 and the following years, just the growth guidance you can give here in that regard? Second question, if I may, would be on your guidance '26. Yes, you always took my question, why EBITDA -- adjusted EBITDA just in line to sales. But you -- thanks for the explanation, more marketing investment, understood. But a bit more details. How do you plan to spend more marketing? Which channels you will use? Will you also use offline channels or online only? Or mean a bit more on how your marketing budget will be spent going forward? And last but not least, a bit more general one. You speak about a robust demand for travel products, which helped you to generate great results on top to your, of course, company-specific initiatives. But my question would be on your expectations regarding market trends in 2026. What is the growth you expect for 2026 from the market side? Do you expect less tailwind for '26? I mean we see that unemployment rates are going up means job uncertainties are rising on the back of weak macros all over Europe basically. But just curious to get your view on these things and how this would affect the travel industry potentially. Alessandro Petazzi: Volker, this is Alessandro. Thanks for the questions. Actually, we had said last time that it would be better to have one question at a time out of respect of the many people who write questions. So we have a lot of that. Because of that, I'll answer 2 of your questions, the first 2, which are really company specific, and then I'll leave the floor for other questions which are company specific. If we then have time at the end, happy to also answer the one on market dynamics, but I would prioritize the others if you allow. So I would say, revenue growth, well, maybe there was, I would say, a conceptual misunderstanding here. What we say is that if we have to bet 5, 10 years down the line, the more we want to be a product-led organization. We want to have a differentiated product that is just specific of us of lastminute, and that's the package. And the evolution of the package, flight plus hotel, it becomes potentially even something more. Now -- and we want to have a more curated approach on the experience. Now, does that mean we're abandoning flights or hotels? Absolutely not. We're very happy about the performance. I would say that for flights, it was about catching up with the fact that, that product had been neglected a bit over the past few years. But maybe in another time, we can go into the details of how we managed to grow so much. We improved the unit economics. That was again done. That's why I want to try and give more details about the things we do internally because then they explain by having a lot of testing on and changing our pricing algorithm. We improved that. We were able to sell more ancillaries and therefore, we were able to have better discounts on Meta channels. That increases the volume. So we will continue to do that as long as possible, right? So in terms of the market evolution, maybe this is something that will change in the next few years. But as long as it doesn't change, as long as there is an audience interested in our flight product, we will continue believing in that, investing on it, improving it and therefore, growing it. So going forward, I would say I expect the growth to be kind of, I would say, similar across our various segments for 2026. I don't necessarily expect one specific segment to really outperform. Clearly, the one difference will be the so-called other because other in 2024 and before included the cruise business, which, as you know, we closed in Q3. So obviously, that number will be smaller going forward. So that's the first one. The second one was about marketing, I guess. Sorry, there's another consideration. What we report as packages is a mix of our own product, the Dynamic Packaging and the fact that especially in Germany with the brand Weg.de, we distribute packages by third-party tour operators to either tour and stuff like that. This is a minor component of the business, so don't think much about that. But of course, strategically, again, that's something on which we are distributing a third-party product. And so the core is our own product. Now marketing, as I use the word brand rather than marketing, not on purpose, right? Because basically here, performance marketing is when you spend money, especially on Google or Meta to drive immediately traffic that is already, let's say, warm, ready to potentially book a holiday, searching for something specific, maybe tomorrow already, searching something in ChatGPT and then it's being ready to book their holiday. Performance marketing, of course, we will increase that in the core markets, in the expansion markets. But the increase there is very data-driven. Every extra euro we spend brings more than EUR 1 in terms of profit. So it's always accretive from an absolute number point of view. What I was talking about here is differently so-called brand, meaning the investments that are not necessarily meant to drive an immediate conversion, but something that builds brand awareness and loyalty over time. Does this mean offline, does this mean out-of-home or TV? Not necessarily. You can do a lot of that on digital channels. But for example, we're talking about YouTube videos on YouTube, on TikTok, on Instagram, but stuff that talks about why lastminute is your provider of choice, not necessarily book now for this deal, right? So it's a different thing. And historically, we haven't really done it a lot over the past few years. I think now that we can afford it, so to say, with the cash flow that we generate, it's now the time to do that investment. And with that, I would pass on to the next question. Julia Weinhart: Thank you, Volker. Valentina, do we have any other live questions in line? Operator: We don't have any more questions from the phone. Back over to you for questions from the webcast. Julia Weinhart: Okay. Then we will now move to the webcast. I will start with the first question we have received today. Will the growing adoption of pay by installment options for Dynamic Packages have an impact on your working capital? Have you structured partnerships with external providers, for example, Klarna, Scalapay, that advance the full transaction amount to you upfront, leaving the credit risk with them? Diego Fiorentini: Thank you, Julia. I'll take this one. Yes, we do have agreements with players like Klarna, Scalapay and PayPal. And those partners are offering the current payment solution to our customers even after departure. In these cases, we are getting the full value of the transaction upfront, and we are not taking any credit risk on our balance sheet. This solution still amounts to a few percentage points of our gross travel value. On the other hand, we still -- we are offering to our customer, our internal solution, both deposit and balance, so deposit upfront, balance before departure or deposit and payment by installments. These options are still with no credit risk for us because our clients are required to pay everything before departure. Julia Weinhart: Thank you, Diego. The next question we have received this morning. Unfortunately, you only communicate the planned change in EBITDA for 2026, but not for the net result. Net result will also be positively affected by missing one-offs that should be communicated. Diego Fiorentini: Thank you, Georgia. Yes, yes, this is a fair point, and thank you for highlighting it. Our primary guidance focuses on revenues and EBITDA because those are the clearest indicator of the underlying operational performance of the company. But it is correct. The next year, we are not expecting significantly one-off item like we had in 2025. For this reason, the net profit will -- we expect it to be higher than in 2025. We'll be in the position to provide greater clarity during the year as the year progresses. Julia Weinhart: Thank you, Diego. Moving to the next question. Dynamic Packages delivered strong growth to EUR 250 million in revenues. Can you decompose this between B2C and B2B white label channels? What's the percentage of Dynamic Package revenue now comes from B2B2C partnerships? Alessandro Petazzi: Thank you, Julia. Yes, basically, you've seen that our packages grew from -- mostly from the new pricing and approach to marketing. The one thing that we're not disclosing now the precise distribution mix, but there's one thing that I can say, and I think also hopefully correcting what was maybe a misunderstanding in the past. We love our B2B2C partnerships. We love our white label partnerships with players like Booking.com and a lot of companies for which we deliver their welfare solutions, holiday [ cards ], other players. We love them, but we think that strategically, it's important to invest in our own B2C brands where we're really building an asset. So the one thing that I can tell -- this is to say that when we say, well, we should increase the percentage of our revenues that come from our B2C proposition, I would say, yes, but we achieved that by making sure that our B2C proposition grows more than proportionately than the other, not by making sure that the others remain either flat or even decreases, right? So in that sense, I can reassure you that indeed, the majority of growth in revenues for our Dynamic Package product in 2025 came from our own B2C brands. So indeed, the proportion of B2B2C decreased as a part of the mix compared to the latest numbers we had disclosed in 2023 and 2024. Julia Weinhart: Thank you, Alessandro. Moving to the next question. Flight revenues accelerated to 31% growth in the full year 2025 after more muted performance previously. What were the primary drivers for this trajectory change? Is this growth sustainable in the future as well? Alessandro Petazzi: Well, I think actually that I already answered this question with answering Volker's live question. And so yes, we will continue to invest in flights. Again, the exceptional growth of 2025, I think, was a function of many things, the improved pricing system, the improved ancillary products which, again, in turn, improved also the way that we showed up in meta channels, also the fact that we have a resilient traffic on the non-meta channels for flights, the fact that we started having more kickbacks from debit card providers because we started progressively having more cash. We could have a bigger portion of the payments going to airlines done with debit cards, which right now provide higher kickbacks than credit cards, and that also improved the unit economics. So it was all about basically the improvement of unit economics. Clearly, you cannot improve unit economics indefinitely, I guess, but you can still grow. Again, I would say 2025, for sure, we had also the fact that the investments was neglected and this type of activity neglected in the prior years. But yes, we expect the growth to continue at a more balanced level with the other products. Julia Weinhart: Thank you, Alessandro. Moving to the next question. Can you please talk about your dividend plans? Diego Fiorentini: Yes. Thank you, Georgia. I just want to remind everybody that these are unaudited results, which means that once the audit is completed in the coming weeks, the Board will propose the 2025 dividend in line with our dividend policy for shareholder approval at the end of June. Julia Weinhart: Thank you, Diego. Moving to the next question. Cash allocation. Given the strong operating cash generation, what are your capital allocation priorities for 2026? Do you plan to accelerate debt reduction considering targeted acquisitions, M&A or invest further in technology and marketing? Could you please explain how do you think about cash generated priorities going forward? Alessandro Petazzi: Yes. Yes. Well, basically, the first thing is that we intend to reinvest in all our strategic drivers. Brand for sure is one of them, strategic initiatives and let's say, improving our product and getting ready for this really fast-changing landscape is also part of that. We also have the idea of keeping disciplined shareholder returns through our dividend policy. So that's going to continue. But I would say more in general, I think we still feel that it's the right time now to have a bit of a war chest in a way to be prepared for whatever market scenario comes up. Basically, I really like the idea of having optionality, especially when there's so much change, right? I think when there's so much change, you want to be in a position to act swiftly if something interesting comes up. For example, we are working a lot now with AI start-ups, I would say, mostly in the AI space, but not just in the AI space, also another interesting project, which maybe we'll tell you a bit more about in the next few quarters, and if opportunities come there. So I'm not thinking about that type of transformational type of acquisition, but if opportunities arise to maybe have direct capital investments in some of these very interesting companies that are developing something that is AI first or that are developing something that is really complementary to our business model, then I want to have that flexibility. So that's what we're prioritizing now. Julia Weinhart: Thank you, Alessandro. Moving to the next question. Your revenue outlook for 2028, EUR 450 million looks very defensive now. Have you plan to do EUR 400 million in '26 already? Can you give us an update, please? Alessandro Petazzi: Well, guys, I would say this is a happy problem to have in the sense that if you look at this company a couple of years ago, the story was completely different, right? Revenues were stagnating, maybe decreasing. Now we have the problem of, say, oops, we're growing too fast, you're not credible in what you're saying if you're not more aggressive. So I would say it's February. There is a bit of a tendency sometimes of the market to say, well, actually, once you give a guidance in the beginning of the year. It's not -- we're not a SaaS business in which you have subscriptions, obviously, there's seasonality, there's stuff. So it's early days, I would say. We're confident that we can deliver on the growth that we talked about for 2026. The moment that this confidence translates into actual numbers, we can think about taking a closer look at our longer-term guidance. Obviously, we will have like a rolling approach to our 3-year plan. So last year, we were talking about 2025, 2026, '27, '28 plan. And later in the year, we will extend it to 2029 and give you a refresh on that based on the actual numbers. I would say, when we are past the peak of the season. Julia Weinhart: Thank you, Alessandro. Moving to the next question. How would tax rate be negative in Q4? Diego Fiorentini: Thank you, Julia. I think I mentioned during the call already, but happy to explain it better. In Q4, we had what is called the measurement of the deferred tax assets. Basically, tax assets are losses that we incurred in the past, but we were not able to record because the expectation for the profitability of the companies was not there yet. With the measures we have taken in 2025, we are now more confident about the possibility to use those losses brought forward. And for this reason, we have recognized these tax losses. Julia Weinhart: Thank you, Diego. Do you consider your fixed cost base as optional at the moment? Any path to further optimize without damaging top line growth potential? Diego Fiorentini: Yes, this is a very good question. The current cost base is something we are happy with at the moment. But of course, this cannot be taken for granted as we move forward. So we will continue to revise our cost base, especially in light of the new technology and the possibility to automate the back office and the accounting operations. Julia Weinhart: Thank you, Diego. Moving to the next question. Thank you so much for the presentation you mentioned. No growth of CapEx for 2026. Does it mean that there was no change in your approach? Do IT app development expenses? Or have you finished the app and there is not much to capitalize? Alessandro Petazzi: Okay. I'll take this. No, I think this would be a bit of a simplistic view. We're not slowing down development. We maintain a significant level of CapEx relative to our EBITDA. It's more that we have reached a plateau in which we think that this is the amount of money that allows us to basically keep on improving our products because there's always something to improve. Keep in mind that also thanks not just but also thanks to the usage, the more widespread usage within the company of AI tools also for coding, we expect a big productivity gain. So with the same type of cost should be able to be faster, deliver more products. So that's more the approach. We started using internally [ Claude co-brand ] with the development team, and we have a target of improving productivity of 15% on that. So that alone means that you can be actually delivering all the initiatives we're talking about without increasing the CapEx amount. Julia Weinhart: Thank you, Alessandro. Moving to the next question. What was the one-off charge in P&L 2025 for? Maybe it was covered and I have missed it. Could you please explain? Diego Fiorentini: Yes. Thank you, Julia. Yes, this was covered during Q2 and Q3 calls. We had 2 reorganization efforts in 2025. The first one during Q2 and the second one in Q3 when we closed the cruise business. There were no other exercises in Q4. Julia Weinhart: Thank you, Diego. With this, we will close our call today. If there are any questions which we couldn't address today, we are, of course, available after the call. You can write us an e-mail or give us a call. With this, I hand over to Alessandro for the final words. Alessandro Petazzi: Thank you, Julia, and thank you, everyone, for joining us. Yes, I think we talked a lot about what we've done in an exceptional -- in what ended up being an exceptional year, to be honest, even beyond our targets and expectations. And we keep on building for 2026 to make sure that we keep this momentum, and we will give you more information, not just on our financial growth, but how we get there and all the interesting things that we are working on. So stay tuned, not just for our investor calls, but also for the press releases we will have over the next few months about some industrial developments. Thank you so much, and see you next time. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Good morning, ladies and gentlemen, and welcome to our 2025 year-end and fourth quarter results for Russel Metals. Today's call will be hosted by Mr. Martin Juravsky, Executive Vice President and Chief Financial Officer; and Mr. John Reid, President and Chief Executive Officer of Russel Metals Inc. [Operator Instructions] I will now turn the meeting over to Mr. Martin Juravsky. Please go ahead, Mr. Juravsky. Thank you. Martin Juravsky: Great. Thank you, operator. Good morning, everyone. I plan on providing an overview of the full year and Q4 2025 results. And if you want to follow along, I'll be using the PowerPoint slides that are on our website and just go to the Investor Relations section, and it's located in the conference call submenu. If you go to Page 3, you can read our cautionary statement on forward-looking information. So before I go into detail on the fourth quarter, I want to provide a little context. I view Q4 and even full year 2025 as continuations of a broader game plan that has been unfolding over several years. And if you go to Page 5, you'll get a bit of a snapshot of the significant changes over the last several years, including 2025. On the left graph, you see that we generated about $2.2 billion of cash flow since 2020. This has been asset sales such as the OCTG line pipe monetizations back in '21 and '23 and then the cash flow from operations. The right graph shows how we've deployed that $2.2 billion of capital. In the orange section, it shows about $1 billion of reinvestments through both internal investment initiatives as well as acquisitions. And this capital has really materially reshaped the portfolio. For example, we closed 3 acquisitions over the past 16 months being Samuel, Tampa Bay and most recently, the Kloeckner operations. For the Samuel and Tampa Bay acquisitions in 2024, we've started to see the contributions from those acquisitions. When we acquired the Samuel branches in October -- and excuse me, in August of 2024, we had a plan to reduce the footprint, gain efficiencies and also repatriate redundant capital. When the sale of the Delta property in BC is completed in the coming couple of months, we'll have reduced the initial capital by almost 50% and the implied purchase price multiple will be close to 4x average EBITDA. Going forward, we are now positioning the Western Canadian business for new investments, and we see some interesting new opportunities that are expected to unfold in 2026 and 2027. When we acquired Tampa Bay Steel in December of 2024, it was a very, very good stand-alone business with strong value-added and nonferrous components in its product mix. Equally important, it provided us with a literal and figurative beachhead to further grow into the Florida market. And if we jump forward from that acquisition to 2025, Tampa Bay was a really nice and steady contributor to our results. And it also allowed us to look at Kloeckner Metals, where we picked up 7 new branches in the U.S. in total, including 2 in Florida that complement the Tampa Bay presence in that market. And I'll talk more about Kloeckner acquisition in a minute, but the geography is exceptionally good fit for us. In the blue bar, it shows we returned about $900 million to shareholders by both dividends and NCIB. In the past, the approach was skewed to dividends only. But since 2022, we have taken a more balanced and flexible approach by also using the NCIB. And lastly, in the green, we reduced our leverage by over $300 million since 2020 at the same time that we grew and derisked our business. The result is that our credit profile has changed significantly, and we are now rated investment grade by both S&P and DBRS. On Page 6, the summary shows how the previously mentioned portfolio changes and initiatives have enhanced our EBITDA generation profile. We've talked a lot in the past about changing our profile to raise the cycle floor, raise the cycle ceiling and a result, raise the cycle average. In addition, we focused on reducing the volatility through the cycle where possible. This chart shows each of those elements. One, just by way of background of the way the chart is set up, the continuity takes out the quarter-to-quarter noise as it's sometimes hard to see trends when looking at individual quarters due to seasonal factors. All the data on this chart shows trailing 12-month periods at the various points in time. And I want to show 2 periods of time being both pre-COVID and post-COVID. The pre-COVID period is the 3 years between 2017 and 2019, then excluded the COVID period of 2020 to '22. Those years were so unusual and not really all that meaningful in looking for medium-term trends. and the right chart reflects the most recent 3-year period being 2023 to 2025. Takeaways are really threefold: One, the pre-COVID period shows an average EBITDA of $270 million versus the post-COVID chart. The average EBITDA is $354 million for a 30% increase. Also, the chart on the right doesn't fully reflect the impact of the acquisitions that were completed in 2024 and 2025. The point being that our average cycle EBITDA is now substantially higher than the past. If we look at the circled areas, it shows the peak to trough range in the last cycle had a variance of $167 million in the 2017 to 2019 period versus a much lower variance of $127 million on the right chart for the most recent 3-year period. The point being that we have raised the cycle average EBITDA and also reduced the cycle volatility. Lastly, if we look at the chart on the right, it shows the arrow being the sequential improvement in trend over -- of the trailing 12-month period over the last 4 quarters, including the most recent quarter. If we go to Page 7, there's a snapshot of our 2025 results. For 2025, revenues are up 9%, gross margins are up 90 basis points. EBITDA dollars are up 13%. This improvement is a function of the 2024 acquisitions making contributions as well as the impact from some of the recent CapEx initiatives and generally improved market conditions on average in 2025 versus 2024. On the middle row of the diagram, our 2025 CapEx was $74 million. This number is below our expected multiyear run rate as some projects were completed, and we are still scoping out some potential new opportunities that should be initiated this year, particularly related to some interesting initiatives in Western Canada as well as opportunities that will emerge from the Kloeckner locations. Capital deployed is now about $1.8 billion, and it grew from $1.3 billion at the end of 2023 and $1.6 billion at the end of 2024. At the same time that we are deploying incremental capital in targeted areas, we are also repatriating capital where the returns are not adequate. As I mentioned earlier, in September, we announced the closure of a branch in Delta BC and the sale of the related real estate. This will release over $40 million of capital that was not generating an appropriate return and was part of the broader initiatives in Western Canada that emerged as part of the Samuel's acquisition. When that real estate sale closes in the coming couple of months, we'll have reduced over $100 million of capital in Western Canada and thereby reduce the cost of the Samuel acquisition substantially from the original $225 million purchase price. We generated strong return on invested capital. Our return was 15% in 2025 and averaged 18% per year on average over the past 3 years. These levels compare well against our industry peers and against our stated target of 15% or more over the cycle. We grew in strategic ways. Our U.S. platform represented 44% of 2025 revenues compared to 30% in 2019. Once we take into account the Kloeckner acquisition, our U.S. platform will be over 50% of total revenues. Also, we'll have about 11% -- at about 11% of our revenues as specialty metals such as stainless and aluminum in 2025 versus much lower thresholds in previous years. On the last row of the diagram, returning capital to shareholders. We have balanced approach. In 2025, we returned $86 million via share buybacks, $96 million via dividends for a total of about $182 million of capital returned to shareholders. And in spite of all the reinvestments that we've done, the acquisitions, returning capital to shareholders, we still have maintained a very strong capital structure as it's critical in a cyclical industry. As a result, we've got really strong liquidity, flexible bank covenants, no financial covenants in our term debt and our maturities are extended to 2029 for bank debt and 2030 for our term debt. We go to market conditions on Page 8. On top chart, we saw sheet and plate prices exhibit increases in many categories over the past couple of months. Current hot-rolled coil and plate prices are up around $70 or $80 per ton since late November as demand is solid early in the new year and supply chain inventories are reasonable. On the bottom chart, we've shown aluminum and stainless prices as those are now bigger percentages of our product mix. As shown on the chart, those products don't exhibit as much volatility as carbon as they have different supply and demand dynamics and aluminum, in particular, has been an upward trend over the past 6 months. On the right charts, supply chain inventories in both Canada and the U.S. as measured by months on hand in the yellow lines remains reasonable and within the normal range. On Page 9, a snapshot of our historical results, starting on the top left on the various charts. Revenues were consistent at around $1.1 billion for each of the past several quarters. And if we look on an annual basis, which are the green bars, we had a nice uplift of revenues in 2025 versus 2024 with the contributions from the recent acquisitions. EBITDA of $69 million was down from Q3 2025 due to the typical seasonal decline in volumes, but was higher than Q4 of 2024. EBITDA margins of 6.3% for the quarter and 7.3% for the full year 2025 were up over the comparable periods of 2024. Earnings per share was $0.55 in Q4 just a little over $3 for full year 2025, which were both up versus the comparable periods of 2024. I mentioned earlier, our return on invested capital, 15% for the year, and our 3-year average was 18%. Both of these are industry-leading figures. And as mentioned earlier, on our capital structure, we're in really, really good shape. Going to more detailed financial results on Page 10, income statement perspective. I covered some of these items already, so I'm not going to go into too much detail. Revenues were up 6% from Q3 -- excuse me, down 6% from Q3, but up 5% from Q4 of last year. And I'll talk more about volumes later, but it was a reasonably good shipping quarter in spite of the typical seasonal dynamic. Our margins were flat in Q4 versus Q3, and that was frankly better than I expected. the pickup in margins late in fourth quarter helped the Q4 average and it sets the stage for a small pickup on a same-store basis in margins in Q1 2026 versus Q4 of 2025. There was a little bit of clutter in noise in the quarter, which are included in the results. Some were positive and some were negative. The mark-to-market on our stock-based comp was a $3 million expense in Q4 versus a $2 million recovery in Q3. There was $2 million of operating losses at a couple of our locations in Western Canada that are in transition with some major pieces of equipment moving around, and those can be and were disruptive to the operations. The good news is those are now largely complete. There's about $1 million of costs related to the Kloeckner transaction. And a couple of items that were positive one-off items. There was a $2 million recovery of the tariff that was charged by the Canadian government for our inventory in transit that was expensed in Q3, and we recovered that back in Q4. And we actually had a small about $1 million gain on the sale of various pieces of equipment. From a cash flow perspective, in Q4, we generated $53 million in cash and working capital, which typically does happen in Q4 due to the seasonal nature. This is likely to go the other way in Q1 as we'll have a seasonal pickup in activity, we'll experience some higher prices that impact working capital, and we'll make our annual payments of variable compensation in Q1. The Kloeckner acquisition closed and the estimated purchase price is now USD 95 million or CAD 130 million, and this is down from the previous announced level due to refinement of the closing working capital amount. That being said, I suspect that the level of capital required to operate the former Kloeckner branches under our watch will go up somewhat from the capital deployed at the December 31 closing date. That being said, to put the $95 million purchase price into context, you'll see from our financial statement disclosure that the Kloeckner branches generated around USD 550 million of revenues in 2025 and around USD 30 million of adjusted EBITDA in 2025. So I suspect this transaction will turn into a very economically attractive situation. Share buybacks were $25 million in Q4 and the cumulative share buybacks since August of 2022 or 14% of our shares outstanding for $326 million or a little under $38 per share. Our quarterly dividend of $0.43 per share was paid in December, and we have just declared a $0.43 per share dividend that will be payable in March. Our CapEx, I'll talk more about this later, $14 million was down a bit, but we still have a meaningful pipeline of projects, and we should average closer to $100 million per year for a few years. Balance sheet perspective, I mentioned this a few times already. We remain in a strong position, only $184 million of net debt. Lastly, our book value per share remains around $29 per share. Some of the recent decline in book value was due to the strength in the Canadian dollar, both in the Q4 as well as full year 2025, which had a negative impact on the FX translation in our OCI account. On Page 11, there's an EBITDA variance analysis between Q3 and Q4. Starting on the left and looking at service centers. The service centers as a whole was flat quarter-over-quarter. There are some positives and some negatives. Volumes had a negative impact, but that was again the seasonal factor. The margin impact was a slight positive with most of the pickup in margin occurring at the end of Q4, so it didn't really have much of an impact in Q4. We also did have a favorable variance in service center costs, operating costs as Q3 had more nonrecurring items in them, including the $4 million cost that we recorded to wind down the Delta branch. And as I mentioned earlier, this branch wind down is mostly complete and the sale of the real estate should occur in the coming months, and we expect to recognize a meaningful gain on the sale at that time. Energy field stores down $4 million versus Q3 due to seasonality. Steel distributors had a really solid quarter and it was up $1 million from Q3. But that being said, it did benefit from the $2 million tariff recovery that I mentioned earlier. In the other bucket, there was a reduction in corporate expenses that was a positive variance, but it was more than offset by the negative variances from the mark-to-market on stock-based comp and the seasonal dynamic where our Thunder Bay terminal operation turns down somewhat in Q4 and then also into Q1. On Page 12, segmented P&L information. Service centers, I'll go through this in more detail on the next page, but it was a flat quarter versus Q3, which is pretty good for what is typically a down quarter in Q4 versus Q3. Energy field stores revenues and margins were both down from Q3, but they were within our typical range. Distributors revenues were down, but gross margin was up and EBIT was up. Page 13, deeper dive on the metrics for the Service Center business. Top right graph is tons shipped. Q4 was down a bit from Q3 due to seasonality, but up over Q4 of last year and expect Q1 to exhibit a typical seasonal pickup, notwithstanding some weather-related factors that have impacted pretty much all of our operating regions, both Canada and the U.S. over the past number of weeks. On the bottom left and right graphs, we have revenue, cost of goods sold and margins per ton. Our price realizations, cost of goods sold, gross margin per ton were pretty much flat in Q4 versus Q3, but there was a slight pickup at the end of fourth quarter that resulted in the end of year gross margins being higher than the Q4 average, which should lead to higher Q4, Q1 versus Q4 margins as measured on a same-store basis. Page 14, inventory turns. Overall, our inventory turns declined from 3.8 in Q3 to 3.5 in Q4. That is pretty consistent, though, with the normal seasonal factors that occur in Q4. On Page 15, the impact of inventory turns on inventory dollars. Total inventory was up $111 million, but most of the increase, around $96 million related to the Kloeckner inventory that came with the acquisition that closed on December 31. If you go to Page 16, capital structure. I may sound a little bit like a broker record, but our liquidity is strong, and it gives us a lot of flexibility. As I said earlier, we recently obtained a credit rating upgrade from S&P, and so we are now investment grade by both S&P and DBRS. Since last quarter, our net debt was reduced by $41 million prior to the Kloeckner closing on December 31, and our liquidity increased from $600 million to $653 million. The far right column on the table shows the impact of the Kloeckner acquisition that did close on the last day of the year as we ended the year with net debt to invested capital of 10% after that transaction closed and over $500 million of liquidity. Page 17, a bit of an update on our capital allocation priorities, which really haven't changed all that much over the last little while. They remain pretty consistent. Starting point for investment opportunities, we do see average returns over the cycle greater than 15%. We continue to focus on all the various initiatives. And when we look at facility modernizations and value-added equipment in particular, our multiyear CapEx pipeline is approximately $200 million at this point. In terms of acquisitions, we are always looking at M&A opportunities and the types of acquisitions that are being considered are similar in nature and scope to what we've done over the last few years. But that being said, our very near-term focus is on integrating the Kloeckner acquisition that only closed a few weeks ago. For returning capital to shareholders, as I said before, our approach is to be flexible. Over the last 2 years, we've returned an average of a little over $100 million to shareholders via the NCIB, while our average annual run rate for our dividend is currently a little under $100 million per year. Page 18, a little bit of a context to our reinvestment program, and I've mentioned this a couple of times already. If we look at 2025, it was a little bit of a down year from what our expectation was as we invested $74 million in CapEx, which was down from $90 million in 2024. I expect the 2026 CapEx to be closer to that $100 million mark as our multiyear pipeline, as I said earlier, is about $200 million, and that includes a number of opportunities that we'll pursue at the former Kloeckner branches. Page 19 is a deeper dive on returning capital to shareholders. Top left graph is dividends, and we show our longer-term dividend profile with the most recent dividend declaration of $0.43 per share that will be payable in March. We'll continue to regularly revisit the appropriate dividend level, taking into account capital structure, earnings profile and the like as was done when we listed the dividend in May of 2023, May of 2024 and most recently in May of 2025. Bottom left graph, we show our NCIB activity since we put it in place in August of 2022. It is not a fixed approach to the program. It is opportunistic way buy back shares, and we have been more aggressive at certain price points than others. In Q4, we acquired around 600,000 shares at an average price of around $40. On the bottom right graph, the impact of the NCIB has been a gradual reduction in our share count and result in a 14% reduction in our shares outstanding since we initiated it. On the top right graph, the aggregation of dividends and NCIB over the past few years shows a fairly balanced approach, but it isn't fixed and it isn't the same in any particular quarter. That being said, and in closing, folks, on behalf of John and other members of the management team, I really want to express our appreciation and thanks to everyone on the Russel team for their contributions. A lot was accomplished in 2025 with much more opportunity ahead. And as an example, I've talked about before, we are in the early days of operating the former Kloeckner branches, but we see significant opportunities that will be pursued over time, and we really appreciate everybody's efforts and contribution to realizing on those opportunities. So operator, that concludes my introductory remarks. Can you please open the line for any questions? Operator: [Operator Instructions] The first question comes from James McGarragle at RBC Capital Markets. James McGarragle: I just wanted to ask a question on the return on invested capital. So returns have been really solid in the context of a very weak backdrop, but kind of trended down the past couple of years. So any confidence here that 2025 was a trough and that 2026 should start to show improvement in that metric? Martin Juravsky: Yes. Well, I guess as a starting point, James, if we kind of compare to the return on invested capital that we realized in '21 and '22 and '23, frankly, that was buoyed not just for us, but for everybody in the industry by some really unusual market activities. So when we look at 2024 and 2025, where we generate around a 15% return in both of those years, both of those years were extremely volatile and involved a lot of challenges, a lot of navigation. So we're actually quite proud of those levels of returns in what were frankly difficult markets. And that's just not looking at it relative to our internal expectations is also relevant in comparison to what we look at when we compare ourselves to other public companies. So it's hard to say what's a peak, what's a trough because we actually look -- our frame of reference is trying to look through the cycle on average because sometimes we get impacted by market conditions that we have no influence over and the test is how we navigate through them. And we navigated through 2024 and 2025 exceptionally well and to have generated 15% returns in each of those years. That's a pretty high level compared to some of our public competitors. James McGarragle: Yes. I appreciate the color there. And can you just give us an update on how you're thinking about volumes? I mean PMIs came in really strong in January. There was some indication that might have been potentially front running of some tariffs. But can you just kind of give us an update on what your customers are saying? And if that PMI reading is kind of consistent with some of the conversations that you're having with your customers early in the year so far? John Reid: Yes. Thanks, James. The PMI rating is very consistent with what we're hearing in both Canada and the U.S. from our customers. So we're seeing an uptick. I think another reference point you can use is mill capacity utilization rates are now creeping towards 80%, which anything above 80% really gives pricing control. And so you can see the mill pricing is moving up, mill lead times are moving out, which would indicate demand is also moving strong, which would correlate with the index that you're referring to for the purchasing managers. So we're pretty bullish on what we're seeing in Q1 that's out there right now with a lot of optimism around basically all of our end markets with the exception primarily of ag is still languishing. But everything else is running extremely well. Equipment manufacturing is good. Obviously, you've seen robust things for data centers that are out there, solar, wind. We're participating in all of those. You're seeing some [indiscernible] from the government that are coming in where projects are -- there's a lot been announced. You're seeing some projects move forward. So that's adding to the robustness that's out there. Energy has a lot of positive things going on with it. So overall, we're pretty optimistic going into Q1. Operator: The next question comes from Michael Tupholme at TD Cowen. Michael Tupholme: Maybe just to pick up on the last line of questioning there. Is it possible to elaborate a little further in terms of any differences from a demand perspective in Canada versus the U.S.? It certainly sounds strong in general, but just geographically, wondering if you're seeing any differences. John Reid: It's definitely a little stronger in the U.S. right now. And so we've seen the U.S. kind of lead that and is moving forward quicker. As we see the tariff dynamics continue to unfold, it's obviously impacted some of the end use in Canada. But overall, we're seeing upticks on both sides. On a percentage basis, the U.S. is probably up a little bit more. But again, we're growing in both markets. So again, we feel good in both areas right now. Michael Tupholme: That's helpful. And then just in terms of some of the comments you made, Marty, earlier in the call about expectations for sequential improvement in service centers margins as we move into the first quarter on the back of the higher pricing you've seen. Can you provide any further detail around sort of order of magnitude, like, I guess, margins -- gross margins in service centers were relatively consistent Q3, Q4. You talked about some of the sort of the dynamics as you move through the various quarters there. But I guess, just any help in terms of sort of to what extent we should expect to see an improvement in Q1? Martin Juravsky: So it's a good question, Mike, and let me break it down into 2 pieces, one on same-store and one overall. So if you look on a same-store basis, where we saw a little bit of an uptick was in December versus the Q4 average. And it really was a continuation of margins were basically flatlined through probably the previous -- before December, probably the previous 3, 4, 5 months. And so December was a little bit of a pickup. So that's why December was a little bit higher than the Q4 average. It wasn't a step function change. I'd measure it by probably 25 or 50 basis points higher in December than it would have been in the previous couple of months. And so that kind of looks on a same-store basis. The qualifier in all that, though, is when we look at our overall results, though because on December 31 is where we picked up the Kloeckner branches. And so the Kloeckner branches will be included in our Q1 results, whereas they weren't included in our Q4 and the Kloeckner branches, as we've talked about before, different product mix, different earnings profile. The economics of that transaction look pretty good, but the margin profile is below the margin profile of the rest of our business. So what we'll probably do in Q1, Mike, is have some sort of disclosure that distinguishes between same-store data and overall data because there will be some margin dilution because of the meaningful contribution from those Kloeckner operations. And that is separate apart from my earlier comments about on an apples-to-apples basis, there was a margin pickup at the end of Q4. Michael Tupholme: Okay. That's helpful. We'll look forward to that disclosure. So overall, when you layer in Kloeckner, we should actually expect down in Q1 on an overall blended basis. Martin Juravsky: If you look at service centers, on a margin basis, percentages, it will be flattish. Same-store will be up overall, should be flattish on a percentage basis or dollar per ton basis. But when you look at bottom line contribution in dollars, it is accretive right away. Michael Tupholme: Perfect. No, for sure. And I mean, obviously, the visibility is not quite sort of as good. But if we look out to Q2, is that a similar sort of dynamic? Or can things change -- begin to change kind of quickly with Kloeckner? Or is it going to take some time such that sort of what you've described in -- as being the dynamic in Q1, is that sort of the right way to also think about sort of the next few quarters as we look out a little further? Martin Juravsky: Sorry, are you talking specifically about Kloeckner or the broader market, Mike? Michael Tupholme: No. Well, service center margins overall for the company, inclusive of Kloeckner as we kind of move past Q1. Like I understand it depends what happens with steel prices. But so far, everything looks pretty solid on the steel pricing front, and there is the lag effect. So beginning to maybe get some visibility into Q2. Just wondering if this sort of Kloeckner dynamic, does that act as a bit of a drag for a little while such that as we look to Q2, we should be kind of thinking sort of flattish as well? Martin Juravsky: Yes. So talking about the Kloeckner piece of it first, that's not a 30-day turnaround situation. There are going to be initiatives that will unfold over years, not months. And when I talked about CapEx, for example, there are some opportunities that are coming to the table related to CapEx, some of which is catch-up, some of which is incremental new opportunities, but those don't happen quickly. Those are being scoped out. Those will take some time. They will come to the table over the course of 2026 and probably even in 2027. So some of the improvement in margin profile that we're expecting to come out of the former Kloeckner branches, that will unfold over a couple of year period. So it wouldn't -- I wouldn't suspect that you're going to see any meaningful noticeable difference for the initiatives that we're putting in place in Q2 versus Q1. That's going to take a little bit longer time to unfold. In terms of broader market conditions, though, Mike, almost by definition, our visibility is somewhat limited just because that is how we structure our operations being highly flexible, highly adaptable. We don't have the contract business. So we can adapt to whatever the market conditions are. So John's comments, we're quite optimistic, but we don't have a backlog or a formalized pipeline that lets us see what Q2 and Q3 and Q4 are going to be because so much of what we do is just adapting to market conditions, whether they're good, bad or otherwise. Right now, we're quite optimistic of what the rest of the year is going to look like, but we'll play it out as it plays out. And if it's good, that we will be very well positioned to do that. If there's some twists and turns like we saw in the last couple of years, we'll adapt to that as well. Michael Tupholme: That's helpful. And then maybe just one final one, picking up on some of the comments that you made about CapEx. Can you help us understand this $100 million or so that you'd expect to deploy in the next -- each of the next couple of years. Presumably, maintenance CapEx has gone up a little bit as a result of some of the acquisitions. So is it possible to kind of talk about how much of that $100 million is maintenance and then of the balance, I mean, I think I have a pretty good idea, but can you talk a little bit about where you plan on devoting or directing that capital in terms of specific opportunities? Martin Juravsky: Yes. If I look at what the maintenance piece is, your premise is right on, which is the maintenance piece of it does go up, in particular, where using the Kloeckner transaction example, there is some catch-up associated with those operations for sure. And so the bar keeps going up. But the most meaningful part of the $100 million is discretionary that will have some degree of a return attached to it. Michael Tupholme: Okay. And it's facility modernization, value add is continue to be the focus and I guess, any further detail there? Martin Juravsky: Some of the individual projects are still being scoped out. So it will be more of the same of the types of things you've seen in the past, different kinds of modernizations across different facilities, where we'll be debottlenecking, expanding the footprint, enhancing the product flow that will exist in some of those operations. In a couple of cases, we're looking at rationalizing 2 locations into one, enhancing the flow a little bit better, putting everything under one roof. So it fits into the same category, the type of modernizations that we've done in the past. And then the type of equipment projects, more of the same, Mike. Operator: The next question comes from Ian Gillies of Stifel. Ian Gillies: Russel has obviously been quite busy doing bolt-on M&A over the last 5 years, if not longer. Some of your peers have been executing what I would call larger transactions in the last 6 months. And as you look across the competitive landscape, I'm curious if you feel a desire or need to start moving your acquisitions into a larger snack bracket just in an effort to keep up from a size perspective or whether the market is still so fragmented that you're not very worried at this point in time? Martin Juravsky: My apologies for gravitating on a couple of your words, but it sort of does set the frame of reference for us. We don't find a need to do anything. It's purely where the opportunities are. And when we have looked at some transactions that other competitors have done, whether big, small or otherwise, it's not like we didn't know about them or see them or have opportunities on them. We've come to our own conclusions. And our own conclusions were not to pursue things that we don't think makes sense. So other people will have their own strategies and their own initiatives, and that's all fine and good. our strategy, I think, has been successful. And it's not a case of we look at stuff that is of a certain size or scope. That's just what has made sense over the course of the past period of time. And we think some of the chunkier things that have been out there have inherent challenges associated with them. And we're quite comfortable with the approach that we've taken. And in some ways, when you talk about the chunkier or the scalable things, Ian, if we look at the aggregation of what we've done over time, there's a bunch of singles and doubles. And when you put them all together, we've deployed about $1 billion of capital through acquisitions and through internal investments. And that's a meaningful amount. It just happened to come through a series of transactions over the course of time. And that's what the next number of years looks like. that will be more of the same. If there's something chunkier that comes available that meets our criteria, that's fine, too. If it doesn't meet our criteria, we don't need to do it. John Reid: And Ian, just to add on to that, I think our balance sheet flexibility puts us in a position to take advantage of any opportunity that we see that fits within our metrics and it's disciplined. It also puts us in a position not to have to do anything. And sometimes our nose are just as good as our guesses. And so we'll remain very disciplined. Again, we think there will be a lot of opportunities out there. We'll see what fits. But again, it puts us in a very nice position to have a lot of flexibility going forward to continue to push the company, as Marty said, the singles and doubles approach for a lot of loans. Ian Gillies: No, that's very helpful context. John, there was a lot of last week, if I could call it that, around Fast Markets rolling out a Canadian HRC price. I know it's not necessarily really core to what you do, but it is an input into the value-added products that you sell in some instances. And so are you willing to comment at all on the price point they laid out? Because it feels a little high relative to what's been talked about in market for where the Canadian steel price is. John Reid: Yes. I think they came out. They pulled the market. Obviously, they're taking more of a median or an average. So I think it's within the realm of reasonableness and maybe a little bit on the high side. I think the challenge for them has been the historical pricing, and we've talked about this before on calls, historically, U.S.-based currency adjusted within a few percentage points. When that disconnected, it became a little bit of a free fall. That gap has now narrowed and continues to narrow. So I think there's just a little bit of ambiguity, and I actually feel for them as they try to put that together because things are starting to tighten back up between that spread of Canada and the U.S. So I think it is moving directionally correct. I think they may just came out just a little bit over market day 1, but I think the market is moving in that direction. Ian Gillies: Yes. No, that's very helpful. Marty, I've tried this before, and I'll try again, but there's obviously -- you've been opportunistic in and around the buyback. In the event you choose not to be opportunistic on the buyback given the move in the share price, are there other ways you may want to use those funds, i.e., like perhaps higher dividend increases, maybe you put a bit more towards M&A than you have historically? I'm just trying to kind of risk and think about how you allocate capital here this year. Martin Juravsky: Well, you've tried again so. I'll try my answer again. How is that? Ian Gillies: I like that. Martin Juravsky: I'll go back to what John said in terms of our capital structure, which is it's set up in a way for a reason. to give us a lot of flexibility. And that flexibility is about making decisions that are not based upon February 12, 2026, and what it might do on February 13, 2026. We're trying to make as many long-term impact decisions as possible. And so we don't really feel that there's a need -- there's not a best before date on our balance sheet. It really gives us a lot of flexibility and optionality to do what we want, when we want. And we don't feel that we need to be forced into a time-constrained box. And I think, again, if we look over a multiyear period, I have a much higher degree of conviction of what we will do on aggregate over a period of time, just like we have done for the last couple of years. But on a very short-term narrow basis, it's really ebbing and flowing a fair amount, and we're not making decisions purely on a short-term basis. Higher degree of conviction of what our long term will be. And if you look at the last 5 years, it's probably a good reflection of what the next 5 years is going to be, whether it's NCIB, whether it's dividends, whether it's acquisitions or CapEx. Did I not answer your question again? Ian Gillies: I'll just go to the [ drawing board. ] Operator: The next question comes from Sean Jack at Raymond James. Sean Jack: So I know that you mentioned before that M&A has kind of followed an opportunistic trend. But if you had to highlight top strategic priorities with acquisitions, is it adding spokes to hubs? Is it filling white space? Is it new customers? Any color would be appreciated. Martin Juravsky: So the answer is yes. And it may sound repetitive, but it really is a multipronged approach. And it is all of the above. It's not one or the other. It's a series of things that in aggregate, we think is meaningful and additive. And as I was just mentioning to Ian, the last couple of years, there's been an accumulation of a series of initiatives, both internal and external, how we return capital to shareholders. And it's going to be more of that. Some of it just doesn't even get on the radar screen, quite frankly. The stuff that some of our folks are doing in the field on a day-to-day basis and going after customers, going after market share, generating returns, generating margin, that doesn't necessarily get a lot of profile, but that's just blocking and tackling that they're dealing with every day, and then there's a few things that pop up here and there that are more meaningful that actually just do become more noticeable in the public context. But it really is an all-of-the-above approach. Operator: The next question comes from Jonathan Goldman of Scotiabank. Jonathan Goldman: I just want to know, is it possible to quantify or even directionally talk about how much your volumes are benefiting from data center work? I mean, John, you talked about kind of pretty decent end markets for a few quarters now. It looks like it's staying that way. The only drag would be ag. Volumes have kind of been flattish on a same-store basis. Is data center work kind of offsetting some of the weakness you're seeing in ag or some other verticals? John Reid: It's a good question. It's because we touch so many layers from structural steel fabricators and people making racking for data centers. It's a little hard to put an exact pin on that, but it is impacting us across multiple customer base. The thing that's interesting is you've seen, if you look at the Architectural Billing Index, it's hovering just below that 50%, which would mean expansion. It is a big portion of that, and it's with wind towers as well. It's driving the energy side of it, whether it's solar, whether it's wind, whether it's nuclear small nuclear, medium or large. So it's driving that power demand as well. So it's hard to quantify exactly. But no, we think it's making a meaningful impact, and we think it will continue to for the next several years. Jonathan Goldman: That's interesting color. I appreciate that. And then I guess another one on the industry kind of the consolidation we've seen lately, another 2 of your big peers have consolidated and it follows on another one that happened, I think, last October. When you guys think about what's happening there, how do you think about that from a competitive dynamic standpoint? And how does it potentially change your approach to M&A? John Reid: I got your question there backwards. I guess, it doesn't really change our approach. We look at every opportunity that's out there, what does it do? How does it stand on its own 2 feet? How does it compare to a myriad of things that are out there buying our own stock back? What does it do for our shareholders? What risk does it put our balance sheet at? Understanding we are in a cyclical industry, and we've taken out some of that volatility by changes we've made in the past by exiting OCTG and line pipe, we don't want to recreate that again. We don't want to get out over our skis on the balance sheet. But we're not -- as Marty mentioned earlier, we spent over $1 billion now in the last 5 years. So we're growing. We're just doing it very systematically. And so we like our approach. But I will say when looking at some of the other deals, I guess, the growth for the sake of growth is not something we're interested in. And so what is it doing for our shareholders and what is it doing for our company long term? And how does it impact our balance sheet, we are very cognizant of that. Jonathan Goldman: Understood. And I'm sure investors will appreciate the discipline as well. I guess one more maybe for you, Marty. I mean, I guess this has been asked a bunch of different ways. But if we sit here today and you think about the M&A pipeline that you have and the visibility there, how do you think about the relative attractiveness of M&A versus buybacks today? Martin Juravsky: We'll constantly calibrate them and the opportunities on both of those buckets change every day because our share price changes every day and the M&A opportunities change every day. So it's a constant recalibration. But it is a fair observation, though, which is -- we're not doing M&A for the sake of M&A. And there are some businesses that might be interesting, but not at certain values. And we have seen M&A opportunities over the last couple of years that come to market, leave the market, come back to market, leave the market. And sometimes they are good businesses that just have wrong valuation expectations. So not to be repetitive with John's comment about not growth for the sake of growth for us. And there are always opportunities that are out there, some of which are just not attractive either from an economic perspective or business perspective or the like. And if we see opportunities that make sense both in terms of internal deployment external deployment, share buybacks, it's a constant recalibration, which is why if we look back over the last 5 years, in aggregate, we've done a bunch of all of the above. But on a quarterly basis, sometimes we do more of one versus the other. It's a constant shift of where the opportunities are. Operator: We have no further questions. I will turn the call back over to Martin Juravsky for closing comments. John Reid: Great. Thank you, operator. I really appreciate everybody for joining our call today. Very good questions, and we're really excited about what unfolded in 2025 and the opportunities that are in front of us. So thank you for indulging with us through the discussion. If you have any questions, please feel free to reach out. Otherwise, we look forward to staying in touch during the balance of the quarter. Take care, everyone. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.
Operator: Good morning, and welcome to Klabin's conference call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] Any statements made during this conference call about Klabin's business outlook, projections, operating and financial targets and potential growth should be understood as merely forecasts based on the company's management in relation to the -- and their expectations in relation to the future of Klabin. These expectations are highly dependent on market conditions, on Brazil's overall economic performance and on industry and international market behaviors and therefore, are subject to change. We have with us today Mr. Cristiano Teixeira, CEO; Gabriela Woge, CFO and IRO; and the other officers from the company. Mr. Cristiano and Ms. Gabriela will comment on the company's performance during the fourth quarter of 2025. And after that, other executives will be available to answer any questions that you may wish to ask. Now I will pass the call over to Mr. Cristiano. Please go ahead, sir. Cristiano Teixeira: Thank you, and welcome, everyone, to our earnings call for the fourth quarter of 2025. I would like to officially make it known, not that it is not known, but I'd like to mention Gabriela's presence here as a Financial Director, as a CFO. She has been a partner for some years. And now that she has taken on this position, she will definitely have a wonderful journey for the -- along with the entire company. We'd also like to wish Marcos all the best. He's somewhere in Central America with [ Sares ] visiting our clients, and that is why he is not here today. But here we are for the main -- to discuss the main points about the paper market. So starting on the fourth quarter of 2025. I'd just like to mention briefly the most important points from the end of last year so that we can talk about the performance for the full year. And I will come back when we talk about the trends and our alert signs, our dashboard. So starting on Slide 3, it's important to mention the consolidation of that recovery we started in our production. The second half of 2025 was a benchmark for the recovery of our teams. As you know, the fact that we are working on basically full capacity, as I'll mention on the next slide, except for recycled products. In virgin fibers, we are producing at full capacity and all of it is sold. So obviously, our margins are lower. We don't have any production announcements to make. We are at our full capacity after all. So we don't have any, let's say, fat from not producing. So I always have to prove that we are at full efficiency. If we did have any reduced production, these operational errors would not appear because it would be hidden by the production that was announced to the market. So since we are at our full capacity, we did have an issue early in the first half of the year, which was recovered in the second half. We're full steam now with all machines, and we're having a very positive moment right now. Let's continue with Slide 4. So I'd like to draw your attention to something on this slide. As a reminder of the split that we had for some time, this number related to pulp sales in 2025 is the basis for our expectations in 2026. So fluff is always a priority, as you know, and we are at full production in January. This recovery that we saw in the second half of 2025 has been sustained. We had a downtime in Ortigueira and Monte Alegre, and now all plants are in full production. Looking at papers now, what is the piece of good news we see here? We've been saying for some time that Klabin has been increasing its production. That's what happened in '25 versus 2024, and we have the same expectation for 2026. So this expected production increase will take papers to similar numbers as we have in pulp. So we're going to have a similar split there, about 1.5 million tonnes. And this increase in production in 2026 is still to come, but it will be in the same order of magnitude as we had in 2025 versus 2024, and this will continue to dilute our fixed costs. And especially, we have some expectations about this. We expect the market to be better. We'll go further into details about this later on. But all the signs that we had in January have led to very positive expectation so far. Of course, we have to be cautious. It's the first month of the year. But when we compare to the first month of 2025 or even the pace we had at the end of 2025, we are having a very good January. When it comes to packages -- we will return to this afterwards. But when it comes to packages, once again, it has been a brilliant year. The corrugated boxes area has been performing very well as it had been in previous years. We've been performing well in volume, but especially in recovering price stability. Initially, 7 or 8 years ago, we repositioned ourselves, and we've been able to maintain that position since then. But we are now seeing signs that we are at a new level in corrugated box prices in Brazil. Volumes and market share have improved due to improvement in services, better client relationships. 70% of what we have is under long-term contracts, 3- to 5-year contracts. We have many exporters, and we have many clients in the domestic market, and this will continue. Similarly, although January is only the first month of the year, it's been very positive. I will now hand it over to Gabi, and we'll return and discuss some trends later on. Maria Woge Liguori: Thank you, Cristiano. Good morning, everyone, and thank you for following our conference call. On Page 5, given the production stabilization and the ramp-up of paper machines, our quarterly sales volume reached 1.25 million -- excuse me, 1,025,000 tonnes in the period, in line with the same period last year. Net revenue in the quarter reached BRL 5.2 billion, down 2% year-on-year due to the appreciation of the real versus the dollar and the pressure on hardwood pulp prices. Adjusted EBITDA was BRL 1.8 billion with a margin of 35% in the fourth quarter of 2025, the same level as the fourth quarter of 2024. This reflects an increase in volumes, especially in pulp and paper, and an increase in packaging prices, as well as the effect of land sales, which are in line with our strategy of monetizing forestry assets. These effects were enough to offset the appreciation of the real against the dollar, pressure on pulp prices and the impact of maintenance downtimes during the period. Moving on to the next page. Net revenue for 2025 was BRL 20.7 billion, an increase of 5% compared to the previous year. This increase is mainly explained by the higher volume in sales across all business segments, the depreciation of the real versus the dollar and price increases in packaging. Adjusted EBITDA in 2025 was BRL 7.8 billion, 7% higher than EBITDA in 2024. Margins were 38%, an increase of 1 percentage point on the same comparison basis. Throughout the year, the solid performance of these segments, the ramp-up of Puma II and the effects from the exchange rate all contributed to a growth in our adjusted EBITDA. During this time, the company used its ability to adapt resilience and execution discipline to deliver consistent results and make important progresses tangible. Moving on to Page 7. The total cash cost per tonne in 2025, including the effects of the general downtime, was BRL 3,225, stable for the fourth consecutive year and confirming the cost projection we gave to the market. The accumulated cash cost for the year materializes this various actions implemented by Klabin, especially the reduction of fixed costs, mainly personnel and services such as travel and consultancies in addition to the dilution provided by a higher sales volume. This performance reinforces our predictability, the financial performance and discipline of our business model. Continuing with Slide 8, we ended the fourth quarter of 2025 with a net debt of BRL 25.9 billion, in line with the third quarter of 2025. Leverage measured by the net debt to adjusted EBITDA ratio in U.S. dollars ended the quarter at 3.3x, down 0.3x comparing -- excuse me, down 0.6x comparing to the fourth quarter of 2024. The company continues its downward trend in leverage in a disciplined manner, confirming its consistent execution of our strategy and the strengthening of its capital structure. Moving on to the next page. Our liquidity remains robust, ending September at BRL 13.6 billion. This liquidity comprises BRL 10.9 billion in cash and the rest in undrawn revolving credit lines. The average debt maturity at the end of the quarter was 85 months, and the average cost in U.S. dollars was 5.2% a year, a reduction of 0.5 percentage points compared to December 2024, which reflects the liability management initiatives carried out throughout the year. Turning to Page 10, we present the company's free cash flow. In 2025, Klabin had a positive free cash flow generation of BRL 715 million. In the last 12 months, our adjusted free cash flow was BRL 2.1 billion, representing a free cash flow yield of 9.2%. Continuing with Slide 11, the dividends distributed to shareholders over the last 12 months totaled BRL 1.215 billion. This amount represents a dividend yield of 5.3%. I would also like to highlight the early declaration of dividends approved at the end of last year in view of the transitional rules laid out by the current legislation, a total of BRL 1.112 billion, the first instalment of which was paid -- will be paid on February 2027 amounting to BRL 278 million. I'll now hand it back to Cristiano. Cristiano Teixeira: Thank you, Gabi. Starting on Slide 12, talking about pulp. Our sales volume versus the previous quarter is listed here along with our market demand and expected prices. So starting with short fiber, we are recovering. We had been in this moment already at the end of last year, but I want to draw your attention to the next 20 to 30 days. Recently, in Indonesia, there was an operation that was blocked, over 1 million hectares, and this affected the planted area or the planted volume there. That had a deep effect on pulp producers with production costs for February and March. And on the long term, it will also postpone several projects. I have to mention that because this is making us reflect on something. And this is something I've mentioned to you previously. Our current projection -- well, China is importing 40 million tonnes. And by projecting what has been announced in capacity, we have over 5 million tonnes. So when we draw this parallel with the supply of wood in Indonesia -- and why am I talking about Indonesia and China at the same time? Well, as I've mentioned in other opportunities, we have some integrated industrial units. And in this concept, you have to ensure that there are forests near to where you need to guarantee your supply, that is your production units. This is not what we see in China. We are currently seeing that they are importing pulp, wood scrap. So when we look at current and future production, there would need to be an accelerated planting process in China to face their current and projected volumes. So we are very confident in these numbers here in Latin America. We don't see any threats to this. There would need to be a major planting effect not only in China, but we would also need to see a reconciliation between China and Australia and other wood producers from the region. So I'm mixing the short and long term here, but I just want to say that our recovery since last year shows us an impact on trying to recover stocks in Indonesia and postponing investments in Indonesia itself. On the medium to long term, I am confident in our belief that there will be positive mutual dependence from Brazil exporting to China. With fluff, we also see price recoveries. This recovery is short of what we would like, but it is happening. And as a sign of the last few days, something that we should see over the next days is that we expect price readjustments to be announced, which will affect us still on the first quarter. So we have positive expectations when it comes to price. Among our fibers business, as we recently saw in our volumes, we have a significant part of the domestic market in fluff and short fibers, but we also have a significant share of China. And obviously, we are going to reposition our sales mix according to how the other markets behave starting in the first quarter, but also continuing during the second one. But in January, we have already seen a significant recovery for pulp prices. Continuing with paper, I'm mentioning 2 products here, as I usually do, milk and beer. We are well positioned in milk. We have some of the best machines to produce milk cartons in the world from LTV. We have already had technical approval from all of the manufacturers. We're having very positive volumes, and not only with our main clients, but all the other system suppliers. So we will see a significant increase in servicing these clients around the world that produce liquids. So we are already seeing good volumes in January. When it comes to kraftliner, you've been seeing how much we've expanded our exports recently. And I skipped from milk to kraftliner, but -- and I forgot to talk about beer, but that's another important point. So I'm just going to go back here to coated board. We are seeing a recovery in the beer market in January. We're being very cautious about this information. I understand that beer brewers are cautious as well. We had a call from Heineken yesterday. But for us, since we are selling coated board for beers here in Latin America, specifically in Brazil, we did see a significant recovery in January. Our information is always specific about what we're operating, and everything is short term for us because our clients have small inventories. But when we look at January 2026 versus January 2024, we can already see a recovery. And at the end of the year, even with the seasonal pattern, we are starting to see a recovery in the beer market in January, specifically in Brazil, which is positive. But we do understand that beer producers are being cautious here in Brazil. That's what we've been seeing. And similarly, we're seeing a significant improvement in Manaus. Now continuing with corrugated boxes. We're seeing significant numbers from Manaus. Their market expenses are representing some of the items being sold for the World Cup, just as we have good expectations with beer. So we're seeing a very important year ahead of us, which is normally the case when we have a World Cup. That goes -- those years are usually very good for television sets and beer. For the other items under corrugated boxes, as I mentioned initially, the last few years have been brilliant in price and volumes, but also market share gains. And what we're seeing in January for corrugated boxes is that we will continue to outpace the market. Obviously, it's still January. We can't set our expectations for the year yet. But when we look at all of that and when we analyze our budgets, our expected prices and sales volumes, our expectations for 2026 are very positive. We expect paper production to be higher. We expect our market share to be sustained. And in the worst-case scenario, we will follow inflation. It's going to be a good year for industrial bags. Coated board, we expect to have good volumes. Kraftliner is well established. And you saw the reduction of U.S. exports to China. And so Klabin has gone strongly into the Chinese market. And finally, in pulp, in general, we expected a price recovery, which is continuing at a very positive pace. That is in addition to everything else I mentioned when it comes to wood supply in China. So that concludes our analysis of the trends. We have very positive expectations for 2026, and January is starting very well. We expect prices to recover and stabilize in practically all markets. Thank you. We can now continue with the Q&A. Operator: [Operator Instructions] The first question will be asked by Caio Greiner from UBS. Caio Greiner: First of all, I'd like to ask about a hot topic, which is M&As in the paper and packaging industry. It's interesting. We talk about this very frequently. We've talked about regional integration. But now we're seeing the opposite movement. We're seeing a major American producer splitting its operations between South and North America. We were expecting last year an M&A with Klabin and a major American player. So I just like to get your take on the strategic changes to the industry. And how much has that impacted your volume and the industry? Do you think Klabin is fitting into these global -- how do you think Klabin is fitting into these global dynamics? And should we continue keeping track of this with an outlook to Klabin? So continuing, you mentioned this frequently, Cristiano, but I'd like to hear more about the replacement of single-use plastics and how it impacts the demand for paper. That might have been one of the biggest points that made the demand disappoint us a bit considering your expectations in the beginning of last year. You mentioned a beer brand in the U.S. that switched back from paper to plastic. And now we are seeing the targets of these major companies in U.S. and many of them are removing the ESG targets, their reduction in single-use plastic targets. So what have you been hearing from your clients? And how do you think that will impact the demand for the industry on the short and medium terms. Cristiano Teixeira: Starting with your second question on strategy. You are correct in what happened, but I would just add this. Over time, we had a COVID pandemic -- I know that it has been over for a while, but during that time, we expected alcohol products -- well, there were several residential consumption items that grew. Obviously, this was the case for beer. There is an example that you mentioned yourself. So our expectations had to be realigned. Maybe volumes for beer will not be what they were like during the COVID pandemic, but I think now the numbers are normalized. 2025 still hasn't been a positive year. We still haven't seen the recovery we expected. But I do think it's been happening. In January 2026 -- this is very short term, but we'll get to the strategic part of your question. In January 2026, we are seeing very positive historical numbers, as if we were reaching historical levels for beer production again. I see that all my clients are cautious. Some of them had been changing their guidance. But considering that we sell paperboard to other areas that also produce beer, we're seeing that January at least in Brazil is posting a historical level recovery in the volume of beer produced. Obviously, this includes beers packaged as a 6-pack. But then we would need to see how much of that is replacing plastic. So companies may be losing their focus and so on, on sustainability I think is a circumstantial thing. I think reality will make everything bounce back. The recycling level for single-use plastics and the CO2 emissions, I mean this is not discussed enough. And I won't go too deep into it, but we did see an increase in CO2 emissions. The recycling for single-use plastics in the world is very low, it's very poor, and that continues to be true. But I do think that this is just a current circumstance. Again, reality will prevail. And on the medium term, this will come back to the commitments that many governments have made on the reduction of single-use plastics. I just want to add one point here when it comes to beer, but this goes to any supermarket item. You know this better than I do since you are keeping track of macroeconomic factors. We see that the world has been trying to find a rebalance in tax conditions after the COVID pandemic. I'm referring to the COVID pandemic again, even though it's been some time, but we still haven't rebalanced after that. So we saw that taxes have increased around the world. There are interest rate policies to try to control inflation. And I'm not even talking about the tariff wars, but we are seeing that countries are trying to find stability or at least an optimal point for their tax policies. Exchange rates have changed significantly recently. So we have a complex situation. So putting it in simple terms, looking at consumers, whether they are in the U.S. or in Brazil or anywhere in the world -- and I can refer to a book by one of our shareholders. He said, look, I can make a list of how much I pay item by item, toothpaste and so on, without looking at inflation data, just looking at how much a supermarket basket costs. This means that -- this shows that people lost their purchasing power. We don't need to discuss what this means for society and for politics, but what I'm saying is that consumers can feel it. And you can see how much average tickets have been lower in supermarkets. Sales volumes have gone down in retail in some countries, but especially, we see that average tickets are lower in supermarkets. So major brands took a hard hit in 2025 from that, from the lower average ticket. And now we're starting to see a recovery. I mentioned beer brands, but each brand has its own strategy to restructure itself. And they understood, and some of the main brands, they've said that they need to reposition their prices to regain market share. And when I see major brands repositioning themselves, I see that, that is good for Klabin, bringing it back home. Whenever we see major brands repositioning itself -- their selves, this is good for Klabin because we supply to all major brands in the world. So I'm making a long answer out of it, but I want to say that this is circumstantial. I think recycling levels need to go up. We talked about CO2 emissions. And I think, again, truth will prevail at the end. For Klabin, what we've been seeing is that major brands are trying to structure themselves to regain share. When it comes to M&A, I'll try to keep it brief. Obviously, I'm not going to talk about the recent M&As positions that changed and so on. But what I can tell you about Klabin is that we've never been this focused on something I've been saying for a while. We are seeing great years ahead of us in free cash generation, all of the investments that we're making. And of course, you are the ones who are going to judge. But all of our investments have been precise when it comes to capital allocation. Figueira, the paperboard machine, the kraftliner machine, this is all happening at the right time. So all of our precise investments, our capital allocation strategy, the Monte Alegre boiler, all of the interconnections that we made in January, everything is going well. The company has allocated its capital well. As I mentioned earlier, we're going to see good paper production volumes this year. This will also be sold across all the markets we work in. And in 2026 and the next 4 or 5 years, we will see a lot of free cash generation, which will make the company's leverage lower. So we don't expect to talk about M&As in Klabin. There haven't been any studies. This is not in our strategic vision for the next years. Of course, if it does happen -- if it is proposed, it will be assessed. But right now, this is not in our long-term vision. Quite contrary, we're focusing on cash costs here in Brazil. We're focusing on the markets that we work in. We're focusing on long fibers. And there's a difference of about USD 400 between short and long fibers. I've been saying this for many years. Klabin has been focused on this, and that's why we purchased some areas from [ Arau ]. But M&As are not on our radar. We're focusing on free cash generation and using our capacity, which is increasing for 2026. Operator: The next question was asked by -- will be asked by Marcio Farid from Goldman Sachs. Marcio Farid Filho: The first question is about pulp. Obviously, fluff performed well this year, above the main benchmarks in the industry. And this is probably due to your strategy of focusing in Brazil and regions outside China. But what we see is that China is gaining relevance in producing and exporting fluff. So I'd just like to ask about your perspective for the next years. So what do you think will happen in China? I think that's the next step in growth. And what can you tell us about that? Also if you can tell us -- I think Cristiano mentioned this, the headlines that we've been hearing from Indonesia. But in any case, if you could see -- if you could tell us what you believe will happen to the supply and demand in the main hardwood and softwood markets around the world? Cristiano Teixeira: I'll talk about this strategic part that you mentioned about fluff. Let me put it this way. We see the -- we can see the acreage in China, how many millions of acres have been planted in China, where is that wood being taken. So if you have 3 million hectares of Pinus planted in China, where is that being taken? Wood has multiple uses, and markets compete among themselves. So that's the first angle: where is wood being used? The second angle is: what's the productivity of that wood? So how much do they expect to increase their volumes every year. That will give us an understanding of this future projection. And how much is being replanted and how much of it is new areas. So if we look at this, I don't see -- this is not material. We're not seeing any new areas in new planting in China. Specifically, about softwood, there's no long -- excuse me, there's no planting there. Actually, they're reducing their Pinus areas due to the regional issues with pests. They've been reducing their acreage. They're using this wood circumstantially for fluff. But our industry can't only be short term. I know that things get mixed up. We're talking about the financial and economic vision and the company's strategy. So they are not planting new areas in China for Pinus. We don't see this area being prepared to be planted. The most important thing is I don't -- we have to look at the use of soil in China, the use of land. They know that they cannot expand into flat areas. And for agriculture -- they're not going to expand these areas for forests. Forest will always be in more difficult areas in other regions. But again, they're not expanding into new planting areas, especially for softwood, but this also goes for hardwood. What's happening now is just the circumstance of planting these Pinus areas due to their issues with pests. When it comes to the short term, speaking about the American market that is not exporting to China, this is the circumstance that led to the current situation. Linking this to Santa Catarina, which is our expected future project, nothing will change, quite contrary. What I'm saying is that we have a short -- excuse me, a softwood plant in the most competitive area in the world, with the lowest cash cost in the world, with the best logistics to deliver to any part of the world. And they are planting and renewing areas in Santa Catarina and Parana. This is a growing market, such as adult diapers are growing by double-digit figures around the world, versus China that is not planting a new area, that has very low productivity, and that basically is not developing its genetics, that it's no R&D. So I don't see any long-term threats to Klabin's softwood fluff. Unknown Executive: And just adding to what Cristiano has said, these tariff issues in China have affected the supply of American fluff to China. So that gave us some strength for the local production in China. But it doesn't compete with our fluff simply because these products in China will not be used for premium products, and Klabin gained market share in China. It's important to underscore that. It's also important to mention that when it comes to price, this is something that you need to calculate. We talked about the price gap of $400 per tonne. But if you look at the benchmark prices for softwood and the prices that we delivered last year, we were $200 above the market between softwood and fluff. So this shows our -- the strength of our contracts. This is a business of contracts. It's not a spot market. And we have a good balance between Brazil and the international market, which gives us a leverage on the general prices. Looking at the short term, as Cristiano mentioned just now, we started the year with some maintenance downtimes in our pipeline. We had some weather effects from the U.S., which led to some complications, especially for North American producers. We started seeing a slight reaction in prices in February in spot markets, where prices went up USD 10 to USD 20 per tonne. And this year had a significant announcement of price increases of about $155 in mature markets, Europe and the U.S. And this influences -- this will influence Brazil in March. And we saw a $70 change in net prices for Asian, Middle East and African markets. So we expect this to recover. Obviously, this is a first announcement. And Klabin reinforces that the demand for fluff remains robust. Volumes have been consistent. So this recovery should take place during the end of this quarter, with a more positive impact during the second quarter. Marcio Farid Filho: Great. And if you can tell us a bit more about hardwood and softwood and fibers in China, that would be great. Cristiano Teixeira: So hardwood, as you mentioned -- as we mentioned in other calls, we were surprised by high demand from China that started in the fourth quarter of 2025. This movement continues, and we are seeing robust volumes from these markets, not only China, but Asian countries in general. Europe and the U.S. market are not having the same demand levels as Asian countries. But all of the volumes contracted for mature markets are being placed with no issue. We expect prices to be implemented in China. Those $10 from February have already passed. In Europe, the listed prices have been implemented completely. And we also expect another price increase in March. So in general, markets are behaving with resilience during the first quarter. And in the case of mature countries, there's always a delay in implementing these prices, especially Europe and the U.S. And this will probably lead to better prices starting in the second quarter. Operator: The next question will be asked by Tathiane Candini from JPMorgan. Tathiane Candini: Actually, my first question is about costs. We expected a cost increase in pulp quarter-on-quarter due to the downtimes that you mentioned. But something that drew my attention was that increase in -- of BRL 90 per tonne due to weather issues that were a bit out of control. So what do you expect this to be when it normalizes? What level do you expect for the first quarter? Do you see a reduction in costs? And the total cash cost is not too far from your guidance for the year. So should we expect reductions or just a normalization? My next question is about paper. In 2025, as you mentioned, we had a very significant mix of kraft versus paperboard. January seems to be stronger, as you mentioned. But I'd just like to understand what your expectations are of the mix between kraftliner and paperboard. Should we expect it to be stronger in the direction of paperboard? What do you expect? Cristiano Teixeira: So let's start on costs, and Gabi will answer that, and then I'll answer your question about paperboard. Maria Woge Liguori: As you mentioned, throughout 2025, we faced some weather issues, which impacted the cost of fibers in our forests. After several initiatives made by the company, we expect these costs to normalize. So after these past issues, we expect fiber prices to normalize. But something to point out is that in our cash cost that we listed in our guidance for 2026, the cost of fiber there already reflects some of our expectations for the year. You can see that our cash cost is close to what it was in 2025. We will have the fourth year in a row in which we are seeking stability without passing on inflation through our costs. So this is reflected there. There was also an offset in 2025 from these costs of fibers through other initiatives to preserve our total cash. This was our guidance, and this was reached in 2025. For 2026, we will continue doing the same. The company obviously will need to do everything it needs to do throughout the year. But besides this expected normalization, we also have a number of other initiatives to try to offset these things so that we can deliver on our guidance for the fourth year in a row. Cristiano Teixeira: Continuing talking about the paper market and the mix that you are asking about. Paperboard machine ramp-ups usually happens with kraftliner, as you know. I mentioned at some point that machine 28 has been fully approved for high-end products in our industry. There's no concerns about this right now. The milk market is doing very well around the world, not only here. When we look at 3 to 5 manufacturers, and this is very regional, we are supplying to the entire world. And we are aligned with the sales behaviour that is happening throughout the world, not only milk, but new proteins, the fitness market and so on. And we're going to keep track of their expected volumes for the next year. So there's no issue there. There are very few paper manufacturers in the world, as you know. And we always have the option of making paperboard for milk, for beer or kraftliner, which at a good moment that we've been reporting. And I've mentioned here before, this reduction in U.S. exports to the Chinese market has created an important volume for Klabin. These are products that we are experienced in, kraftliner for the tobacco industry, which we already service in Brazil. And we've been taking this to China efficiently. We've been replacing some U.S. suppliers. So we should continue doing that. Production volumes will increase, and we are expecting that, but the mix will probably remain similar, which will make our paperboard volumes higher than 2025. But craft volumes will be more significant. I think I mentioned in the last call that virgin fiber kraftliners in the category that we call containerboard will be a premium product, just as we saw with softwood recently. I mentioned this before, and I can assure you that this premium will come. And why do I believe that? There are softwood production players leaving the market, and that is faster than the entrance of hardwood producers. So we're basically not seeing an increase in softwood. This balance in the medium term will make this premium appear. But fiber to fiber can be an issue, and this will happen for some of that replacement. But it will never replace it completely, just as it never had -- has. Klabin has done this in the last 40 years. In fluff, we've done 30% hardwood in the blend, and that facilitates operations for our clients. We still believe that. And this will be the blend used in our machines in the future. So the premium will continue to exist. Each market has its own specificities. I've mentioned tobacco, which is a product that requires more weight. So this production mix -- I don't mean to bore you, but these are -- there are several opportunities and several alternatives there. And we're making a very strong effort to study this opportunity cost, and we will continue to maximize our mix in the best way possible. At the end of 2026 and early 2025 (sic) [ 2027 ], we expect Klabin to be full in its production volume. Looking back and comparing to the next 12 months, we believe Klabin will be at a different production level, which will also help with the point that Gabriela has just raised on stability and confidence in our cash mix for the next years. Operator: The next question will be asked by Stefan Weskott from Citibank. Stefan Weskott: My first question is, in 2025, we saw a conclusion of the STE processes, which helped with your leverage. You mentioned that there will be some changes for 2026, but do you think there will be other STE operations in forestry that can help you deleverage for the year? My next question is, looking at paperboard again, we saw how it is offsetting a more challenging year of 2025. So should we expect a better domestic mix? You mentioned that you had positive figures for January. So what do you believe will be the share between domestic and exports in paperboard? Cristiano Teixeira: I'm going to let Gabi answer first, and then I'll answer your other question. Maria Woge Liguori: Our strategy on STEs is not new for Klabin. We've been using this as a way of optimizing our capital structure in our forestry expansion for many years. Last year, this operation was a highlight for the company as we used it for the purchase of forestry assets. So this was a special operation in volume as it was connected to this major forest acquisition that we made. But what I can tell you about the future is that if the forestry operation strategy happens through partnerships with teams and other entities -- well, that's a core part of our strategy of optimizing our capital structure. We need to have partnerships. As you mentioned, they help us with deleveraging. And we expect this to happen -- for this to continue happening, not at the same volume. This was a huge operation for the market. But our forestry expansion in the future will definitely count on this structure as well. Cristiano Teixeira: And continuing on paperboard and the mix, speaking a bit about the domestic market. Well, the domestic market, obviously, is relatively smaller. But what we saw in the last, at least 2 years -- and you mentioned this before. We've answered this question, and I'll underscore it. Yes, there has been a pressure on Chinese paperboard, this deflation when they stepped out of the U.S. They sent a lot of this to Latin America, Europe and a bit to Africa. During that time, Klabin gained market share in Brazil. So not only did we not suffer from this, but we gained market share from this during this time in which China was exporting. And where did that come from? Well, we're focused on major brands. We have several smaller brands in our portfolio, of course, but we're focusing on consolidated clients. There are many Brazilian manufacturers of several products like frozen foods, hygiene products, personal hygiene and cleaning products and other products that use paperboard in Brazil. We can also manufacture white paperboard, and so we've been able to access clients from the pharma industry as well. So we believe the Brazilian market has been oscillating in the last few years. Some major brands have been losing space in some products, but secondary brands, let's call them that, have gained space. And Klabin is selling paperboards to both for frozen foods and liquids -- I've mentioned them before -- but also personal hygiene and cleaning, all of the paper markets that we're working with. And now the pharma industry, high-technology products, or higher than at least traditional folding paper. So we gained market share despite this Chinese threat. We have good long-term contracts with major brands. And what we're seeing right now, and I mentioned this as well, is that major brands are repositioning themselves to regain market share in the secondary brands that I mentioned. So I'm very confident about the Brazilian market. We expect this to continue, and we're going to keep track of the volume. Whatever we are gaining in market share will depend on the market dynamics. And we will continue to export to these clients I mentioned, our suppliers in the milk industry, whatever opportunities we find in beer. And of course, we have a great opportunity -- excuse me, cost of opportunity, which is to implement kraft and -- kraftliner in the markets where we're replacing American suppliers. Operator: Ladies and gentlemen, this concludes the question-and-answer session. We will now hand it over to Mr. Cristiano Teixeira for his closing remarks. Cristiano Teixeira: Thank you, everyone. See you on the next call. Operator: This concludes Klabin S.A.'s conference call. Thank you for your participation, and have a great day.
Operator: Greetings, and welcome to the Leggett & Platt Fourth Quarter 2025 Webcast and Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Ryan Kleiboeker. Please go ahead. Ryan Kleiboeker: Good morning. Welcome to Leggett & Platt's fourth quarter and full year 2025 earnings call. With me on the call today are Karl Glassman, CEO; Ben Burns, CFO; Tyson Hagale, President of the Bedding Products segment; and Sam Smith, President of the Specialized Products and Furniture, Flooring and Textile Products segments. We posted to the IR section of our website yesterday's press release and a set of slides that contain summary financial information along with segment details. Those documents supplement the information we will discuss on this call, including non-GAAP reconciliations. Remarks today concerning future expectations, events, objectives, strategies, trends or results constitute forward-looking statements. Actual results or events may differ materially due to a number of risks and uncertainties, and the company undertakes no obligation to update or revise these statements. Please refer to yesterday's press release and the sections in our most recent 10-K and subsequent 10-Q entitled Risk Factors and Forward-Looking Statements. I'll now turn the call over to Karl. Karl Glassman: Thank you, Ryan, and good morning, everyone. Early last year, we shared our 2025 priorities, which included strengthening the balance sheet, improving operational efficiency and margins and positioning Leggett & Platt for profitable long-term growth. Thanks to the tremendous efforts by our teams, we delivered on those priorities and made significant progress to position the business to accelerate when residential end markets turn. We have substantially completed the restructuring plan we launched in early 2024, reflecting strong execution and disciplined follow-through. The actions taken over the past 2 years delivered greater EBIT benefit at lower cost than originally expected. These improvements are sustainable, and we expect they will contribute to improved profitability and cash flow generation, which will allow us to reinvest in growth and return capital to our shareholders. Although the 2024 restructuring plan is essentially complete, we continue to identify opportunities to improve our cost structure and enhance profitability across our businesses. We also took meaningful steps in 2025 to simplify our portfolio and ensure focus on our core operations. Notably, we divested our Aerospace business in the third quarter. After-tax proceeds from that transaction were used to retire our outstanding commercial paper and accelerate our deleveraging efforts, moving us meaningfully closer to our long-term leverage target of 2x. Our teams also did outstanding work in 2025 to further strengthen our foundation for long-term profitable growth. A few highlights include the continued growth of our semi-finished products, particularly Eco-Base and pre-foam-encased ComfortCore and bedding products. We also made significant progress on filling key roles to expand our competencies, especially in Specialty Foam, where we are working to diversify and expand the customer base. Automotive made progress in building our innovation pipeline and establishing greater intimacy with our OEM and Tier 1 customers to strengthen our position in seating comfort and in-car motion systems. Our Home Furniture team opened a facility in Vietnam to better serve our customers who have relocated to this growing region of furniture production, and in Textiles, we have continued to penetrate new specialty markets such as medical nonwovens, where we are poised to introduce additional new products in 2026. Our Geo Components team saw growth in our retail business, where we continue to gain share at major home improvement retailers. As we turn to demand trends and expectations for 2026, our residential markets, which account for roughly half of the company's revenue, remain in a multiyear depression with demand well below average cycle levels. While we cannot predict the timing of demand recovery, we are confident that we are well positioned to capitalize on the incremental volume when it materializes. In Bedding, trade rod and wire sales benefited from metal margin expansion and strong domestic demand last year, while our mattress-related businesses faced another year of soft demand in addition to specific customer challenges. We believe the U.S. mattress market was down low single digits in 2025. Domestic production was down high single digits, but second half performance improved after a tough start to the year. Demand in our Bedding Products segment is expected to be down low single digits in 2026 due to volume declines in Adjustable Bed and Specialty Foam as we lap customer program changes that began in 2025. However, U.S. Spring is anticipated to perform in line with the U.S. mattress market and domestic production, which we expect to both be flat to up low single digits in 2026. In the Specialized segment, we expect automotive volume in 2026 to reflect the impacts of a challenging industry backdrop. In North America, demand faces inflationary pressures as automakers seek to recoup a portion of tariff-related costs. Exports from China are expected to continue pressure multinational OEMs in Europe, especially as the Chinese EV manufacturers face near-term demand headwinds in their domestic market. Overall, these dynamics support our expectation to perform in line with broader market trends from down 1% to 2% as we balance regional pressures with disciplined execution across the business. Excluding Aerospace, our 2026 Specialized Products segment comparable sales are expected to be flat to slightly above 2025. Anticipated currency benefits are expected to offset the effects of lower volume and pricing year-over-year in both automotive and hydraulic cylinders. In our Furniture, Flooring and Textile Products segment, we saw continued soft demand in our residential-focused businesses, Home Furniture and Flooring, while Work Furniture and Textile saw modest growth year-over-year. We anticipate further demand uncertainty in our residential markets, but expect to see growth in textiles, both in our Geo Components business and nonresidential markets in Fabric Converting. As we move through 2026, we will continue to prioritize balance sheet strength, operational efficiency and margin improvement and build on the progress we've made over the last couple of years to position the company for profitable long-term growth. In Bedding, we will focus on diversifying our customer base in Specialty Foam, further integrating our foam and innerspring capabilities while growing component content and improving our ability to support the omnichannel needs of our bedding customers. In Automotive, with new leadership in 2026, we will focus on making strategic investments in our commercial organization and operations to return to growth and strengthen our relationships with OEM and Tier 1 customers. In Textiles, we are focused on expanding our business through organic growth and small strategic acquisitions. And throughout the company, we are committed to driving operational excellence through continuous process improvement, cost reduction and footprint optimization, while also investing in our talent and developing a strong pipeline of future leaders. Although near-term demand in several of our markets remains challenged, the foundation we have in place will enable us to pursue growth opportunities in 2026 and return capital to shareholders. I'll now turn the call over to Ben. Benjamin Burns: Thank you, Karl, and good morning, everyone. Fourth quarter sales were $939 million, down 11% versus the fourth quarter of 2024, resulting from sales weakness at a certain customer and retailer merchandising changes in Adjustable Bed and Specialty Foam as well as continued soft demand in residential end markets, customer supply chain disruptions in Automotive and lower demand in Hydraulic Cylinders. Growth in Textiles and Work Furniture, along with higher trade wire and rod sales partially offset demand declines. Looking at sales by segment, Bedding products decreased 11% compared to the fourth quarter of 2024. Additionally, Specialized Products declined 21%, mostly due to the Aerospace divestiture and sales in Furniture, Flooring and Textile products were down 3%. Fourth quarter EBIT was $32 million and adjusted EBIT was $48 million, down $8 million versus fourth quarter 2024, primarily due to lower volume and earnings associated with our divested aerospace business, partially offset by metal margin expansion and restructuring benefit. Fourth quarter earnings per share was $0.18. On an adjusted basis, fourth quarter EPS was $0.22, a 5% increase from fourth quarter 2024 adjusted EPS of $0.21. For the full year, 2025 sales decreased 7% to $4.05 billion, primarily from continued weak demand in residential end markets, sales weakness at a certain customer and retail merchandising changes in Adjustable Bed and Specialty Foam, divestitures, lower demand in Automotive and Hydraulic Cylinders and restructuring-related sales attrition. These declines were partially offset by growth in Textiles and Work Furniture, higher trade wire and rod sales, raw material-related selling price increases and currency benefit. EBIT increased $786 million, primarily due to the non-recurrence of $676 million in goodwill impairment charges during 2024. Adjusted EBIT decreased $4 million to $263 million, primarily from lower volume, partially offset by restructuring benefit and metal margin expansion. Full year EPS was $1.69 and adjusted EPS was $1.05, flat versus 2024. In 2025, operating cash flow was $338 million, an increase of $33 million versus 2024. This increase was primarily driven by working capital benefits. We ended the year with adjusted working capital as a percentage of annualized sales of 11.6%, a decrease of 140 basis points versus 2024. Our teams executed exceptionally well, resulting in significant balance sheet improvement in 2025. Aerospace divestiture proceeds, along with cash from operations and real estate sales allowed us to reduce debt by $376 million. Our net debt to adjusted EBITDA decreased from 3.8x to 2.4x by the end of the year, bringing us significantly closer to our long-term leverage target of 2x. As we move into 2026, we expect to use most of our excess cash flow to reduce net debt, while also pursuing opportunities for share repurchases and small strategic acquisitions as conditions allow. Our long-term priorities for uses of cash remain consistent: Funding organic growth, funding strategic acquisitions and returning cash to shareholders through share repurchases and dividends. As Karl mentioned earlier, we have substantially completed the restructuring plan in 2025 and significantly exceeded our original expectations. We expect a full run rate of approximately $70 million of EBIT benefit and total cost of $80 million, half of which were noncash costs. We also expect cash proceeds from real estate sales of $70 million to $80 million, $48 million of which have already been realized with the remaining balance expected in 2026. Moving to guidance. 2026 sales are expected to be $3.8 billion to $4.0 billion or down 1% to 6% versus 2025. 2025 divestitures are expected to reduce sales 3%. Volume is expected to be flat to down low single digits with volume at the midpoint, down low single digits in Bedding Products, down low single digits in Specialized Products and flat in Furniture, Flooring and Textile Products. Inflation and currency benefit combined are expected to increase sales low single digits. 2026 earnings per share are expected to be $0.92 to $1.38, including approximately $0.02 to $0.11 per share impact from restructuring costs, primarily related to cost improvement and footprint optimization opportunities identified across the company that are currently being evaluated. $0.05 to $0.08 per share impact from costs associated with the unsolicited offer from Somnigroup and $0.11 to $0.25 per share gain from sales of real estate. Full year adjusted earnings per share are expected to be $1 to $1.20. The midpoint reflects operational efficiency improvements, disciplined cost management, favorable product mix and full year benefit of metal margin expansion that started in Q2 2025, partially offset by lower volume. We expect normal seasonality in our 2026 results with lower sales and earnings in the first and fourth quarters. Based upon this guidance framework, our 2026 full year adjusted EBIT margin range is expected to be 6.3% to 7.0%. Cash from operations is expected to be $225 million to $275 million in 2026. While we do not anticipate a benefit from working capital this year, we will continue to have a sharp focus on cash flow generation. Our CapEx is expected to be $100 million to $115 million in 2026. The increase versus last year is due to the timing of some initiatives being pushed from 2025 into 2026, and the replacement of equipment lost in the storage facility fire within our Bedding segment. With that, I'll turn the call back over to Karl for final remarks. Karl Glassman: Thank you, Ben. In closing, I want to thank our employees around the globe for your efforts in transforming the company in 2025. Together, we executed our restructuring plan, strengthened our balance sheet and positioned Leggett & Platt for long-term success. While near-term demand uncertainty remains, we are confident in our ability to execute our strategic priorities and create long-term shareholder value. Before we begin Q&A, I want to acknowledge the current discussions between Leggett & Platt and Somnigroup. As we announced in January, we have entered into a customary nondisclosure agreement and 6-month standstill. We do not intend to make any further public comments and will not be answering any questions related to these discussions on this call. With that, operator, we're ready for Q&A. Operator: [Operator Instructions] And our first question comes from Susan Maklari with Goldman Sachs. Susan Maklari: My first question is on the restructuring. It's nice to see how those efforts are coming together even with all the headwinds that you're still facing. Can you talk about how they are coming through to the various segment margins in last year, what we should expect for this year? And then you also mentioned, Karl, that you're looking at additional ways to further improve the cost structure and enhance the margins, can you talk about where you're seeing perhaps some of those additional opportunities, and what they could mean over time? Karl Glassman: Yes, Susan, thank you for the questions. I'll start with the latter and ask Ben and the rest of the team to fill in the first question. But we continue to look at the portfolio. I will say at this point, there are no divestitures of BUs being contemplated, but we continue to look for operational improvement opportunities in every one of the BUs. Nothing has been announced other than a consolidation of one of our Flooring Products segment facilities that's closing one small facility, moving that productive capacity into a larger facility into North Carolina. The teams continue to look at each one of the BUs, and there are some things that we're analyzing, but it would be premature to announce. But Ben, as regards to segment margins, why don't you... Benjamin Burns: Yes. So Susan, as we said in the prepared remarks, really good benefits from the restructuring efforts. We had really in 2025, $63 million of benefits that are flowing through, and we expect roughly another $5 million in 2026. So puts us at a $70 million run rate as we look to the future. So obviously, that had a very big impact with our Bedding segment. Also we saw some benefits in our Specialized segment with Hydraulic Cylinders, and then that benefited us as well in the FF&T segment, primarily with Home Furniture and Flooring. As we look forward, I think you'll see, like I said, a more modest impact from the restructuring plan for 2026, the $5 million that will flow through. And then as Karl said, we do have some other opportunities that we're looking at, but not ready to quantify those just yet. From a cost impact, we do have about $2 million or a pretty small amount that is left that we know of in the formal restructuring plan. Susan Maklari: Okay. All right. That's helpful color. And then turning to Bedding and the outlook there. You mentioned that you expect springs to be flat to up low single digits, it sounds like, for this year. Just generally speaking, as you think about the Bedding market and the demand there, how much of a recovery do you think we can see if we don't have housing that really starts to come back? How important is that? And what does it mean in terms of the near-term potential path for the industry versus where we could be longer term? Karl Glassman: Yes, Susan, great questions. I'll ask Tyson to answer all of that. I do want to remind you and the rest of the investors that there is no expectation of macro market recovery in our 2026 forecast. We'd like to see it. We've been guilty as have some others of forecasting a strong back half. We're not doing that. So to the degree that, that impact takes place, it would be upside to the midpoint of our guidance. But Tyson, why don't you unravel that? J. Hagale: Sure. Good morning, Susan. I agree with Karl. We've definitely been tired of just hoping that a recovery is coming. And you mentioned one of the big macro factors being housing and the continued headwind that we face there. But that's a big one, obviously. It's not the only one. Generally, consumer confidence and how people are feeling about discretionary purchases is a big deal. And then just general affordability, which goes into housing for sure, but also across the board, whether people are spending the money on insurance, gas, food, all of those things are a big deal. And just seeing where things stand today, that's why we don't feel good about building any type of recovery into guidance. Essentially, what we thought about in the bedding market for 2026 is a continuation of what we really saw in the back half of the year. The first half of 2025 was pretty tough. And so really just a more seasonal pattern in 2026 is really carrying off the back half of 2025. And that's where we get to a flat to up low single digits is really just lapping the early struggles that the market had in 2025. Relative to our business, and you mentioned U.S. Springs, that's where we have the tightest correlation to the market. And we've had some ups and downs through 2025 and in prior years relative to our performance against the market. And I think we talked about this in the third quarter, but it's true for us and our customer base, performance is mixed across the industry, and we still see a lot of choppiness. We were impacted in the fourth quarter. And we've had some other periods where this has happened as well, where we've had some consolidations happen, and we had one at the beginning of the fourth quarter that was related to some financial distress with one of our partners. And that was the biggest impact that we had in the U.S. Spring versus the market. But generally, and we saw this in the second and third quarter, we've closed the gap and have been performing pretty close to market. And we feel good about in 2026, where we've had some content gains and have some more coming as we've had more products introduced in some of our comfort products and comfort layers, and we think that helps us manage our business along with the rest of the market. Susan Maklari: Okay. That's great color. And then I'm going to squeeze one more in, which is for Ben, can you just run through the guide for the segments for this year in terms of the revenue and the margins for each one of them? Benjamin Burns: Yes. Sure. Thanks, Susan. So from a Bedding perspective, we would expect net trade sales and volume to both be down low single digits with margins up 150 basis points. From the Specialized Products segment, this is adjusting for the Aerospace divestiture, we would expect organic sales and volume down low single digits with margins down 150 basis points. And then on the Furniture, Flooring and Textile side, we'd expect net trade sales and volumes to be flat and margins to be flat as well. Operator: And our next question comes from Bobby Griffin with Raymond James. Alessandra Jimenez: This is Alessandra Jimenez on for Bobby Griffin. First, I wanted to follow up on the Bedding segment. U.S. Spring volumes notably decreased in 4Q versus 3Q. Is that mainly driven by the consolidation you mentioned in 4Q, or was there something else that impacted the volume trends? Sorry, what was your view on industry for 4Q versus 3Q for the Bedding segment? J. Hagale: Good morning, thanks for the question. Yes, our primary delta between our performance in the market was the customer consolidation that I mentioned just a moment ago. Otherwise, generally performed, we feel like, in line with the market. We expected fourth quarter to be down versus third quarter, just the general seasonality that we always see in the business. And also just a reminder that we had a tough comparison against last year fourth quarter. There was a pretty strong run-up post election in the market. So it was a little bit of a tougher comparison against the fourth quarter of last year. But overall, we saw the normal sequential decline in the fourth quarter versus the third quarter. Alessandra Jimenez: Okay. That's helpful. And then maybe switching gears a bit to Auto. You had mentioned customer supply chain disruptions during the quarter. Can you walk us through the impact there? And are you seeing any lingering issues in 1Q? R. Smith: Thanks, Alessandra. This is Sam. I'll jump in with that one. So I think last quarter, we mentioned that we were seeing some supply chain issues of various types when we talked. And those are the ones we were referring to. And just for memory's sake, there was a Dutch semiconductor company who had some disputes with the Chinese Government and got shut down for a while. That caused the largest and most widespread customer impacts. And when our customers were impacted, they just rolled back to us. On top of that, in North America, there was an aluminum manufacturer that had a fire and had to shut its production. That hurt a few customers here. And then over in Europe, there were a couple of very specific customer issues. One of the OEMs got hit by a cyber attack, and it was shut down -- all of its factories were shut down for several weeks. And then another OEM found themselves long on inventory and had to shut a few plants for a little while. And our team did just a really good job working together with our customers to manage through all those issues and all those issues that we faced last quarter are really behind us now. Alessandra Jimenez: Okay. That's very helpful. And then finally, I wanted to talk on capital allocation. We are pleased to see debt tick down again this quarter. With the rest of the debt kind of well termed out, can you refresh us on your capital allocation priorities? Is the goal to get to that 2x leverage to get there on EBITDA growth or continue to build the cash balance? Karl Glassman: Alessandra, I'll take that, and Ben jump in at any time. But you'll remember our long-term priorities, as Ben said in the prepared remarks, are the same. Fund organic growth, which I'm proud to say that we're starting to see some green shoots there, moving a little bit from defense to offense, and we can walk through all those areas of opportunity, small strategic complementary acquisitions and then return the excess to the shareholders via either repurchases or dividends. But in the near term, the goal is to move closer to the 2x leverage target. So we'll -- we think probably conservatively, we'll be there by the end of this calendar year. We'll continue to move toward it. We'll update you as we make that progress. You'll remember that the first quarter typically is a use of cash just as we rebuild working capital for the normal seasonality of the businesses. So we'll continue to update you. But near term, the goal is to move closer to the 2x leverage metric. Operator: [Operator Instructions] We'll go next to Keith Hughes with Truist Securities. Keith Hughes: I also have a question on Bedding. It seems implied in your guidance that some of these customer disruptions are going to be ending. Are you anniversary-ing those as we head into 2026? J. Hagale: Keith, this is Tyson. Yes, the bulk of that, we would lap early in the year. And there's always -- it's hard to forecast those things. There's always the chance that we have some other things like that pop up, just hard to estimate that. And on the flip side, we see some balance on things that could be opportunities for additional volume gains on the other side of it. But balancing it out for the midpoint of our guidance, we left the Spring business flat. Keith Hughes: It appears that would be some disruptions at some retailers as well as some wholesale manufacturers. Is that correct? Karl Glassman: That's correct. Yes, that's correct. Keith Hughes: Okay. And then I guess a question for Karl as a little historical perspective on mattress sales. The last 3 or 4 years have been just so difficult for the industry. Have you ever seen anything like this in your career or anything approached like this in your career? And I think you've talked about affordability, but what do you think is the issue for the entire industry in terms of getting these sales going? Karl Glassman: Keith, you know you've been around a long time when you get asked the question from a historical perspective. Keith Hughes: I am old, but I didn't want to say that. Karl Glassman: As a matter of fact, once again, you're accurate. No, I've never seen anything like this. There's -- interestingly enough, when we track data back to the early '70s, and I was not in the industry -- well, I guess I was -- anyway, no, that typically, in any kind of macroeconomic step down, Bedding goes into the cycle first and comes out of it earliest. So if there's -- even in the Great Recession, so you had their 2.5 years of softness, you saw real strength coming back out of it, and it was a leading indicator of recovery. So we've never seen anything of this duration, this magnitude, probably overused phrase of pent-up demand, but it feels like it's building. We think that normal consumption -- normalized consumption in the U.S. should be in the 34 million to 35 million mattress range. We're probably just sub 30 million on an annualized basis and have been there for a while. So it feels good once the consumer becomes confident and Housing is unleashed, but we just have no ability to predict when that happens. So in the interim, Tyson and the team are doing an outstanding job. First, the restructuring effort was really important, getting that successfully completed and behind us. And then now working with customers on innovation, product development and the opportunities are significant. We feel pretty good about the year. But Keith, to your point, I have been around a long time. We're manufacturing, a manufacturer that is unit sensitive. When additional volume goes through these assets, that are now rightsized via restructuring, it will get really good, really quick through a value chain that starts at a steel mill, walks through a wire mill and then into a spring plant. So the volume will be fantastic. It will be on the high side of our contribution margins. We just can't make a call as to when it happens. Operator: And moving on to Peter Keith with Piper Sandler. Alexia Morgan: This is Alexia Morgan on for Peter Keith. Maybe to start, regarding the 2026 EPS growth drivers in your guidance, can you elaborate on what the favorable sales mix driver is? And then as for metal margin expansion, how should we assume metal margin -- or should we assume that metal margin will be a benefit for all of 2026 or just concentrated to Q1? Or how should we think about those two pieces specifically? J. Hagale: Sure. Good morning, this is Tyson. I'll handle the Bedding pieces first, and hand it back to Ben for any others. But on your question about metal margin, yes, we've assumed continuation of the steel economics that we saw in the third and fourth quarter really carrying out through the full year at this point, just based off the data that we've looked at, that's our best estimate. So we would have the full year metal margin impact through 2026. In terms of mix in Bedding, both from trade rod and wire, which we also saw the tailwinds of that in the back half of 2025, but then also improving mix within our U.S. Spring business. Benjamin Burns: Yes. And then I'd just add on, we've got some operational efficiency improvements that will help us mostly from a bedding perspective, from a margin and EPS perspective. And then we -- like I said earlier, we'll have a little bit of additional restructuring benefit that will flow through that will also contribute to the higher EPS at the midpoint. Alexia Morgan: And then next, how should we think about organic growth assumptions by segment, by quarter? Does guidance assume any business segment sees improvement in sales trend as the year progresses, or is it pretty steady throughout the year? Benjamin Burns: Yes. I would say we would typically see our normal seasonality that really flows through first quarter and fourth quarter are generally lower and then second and third quarter are stronger. But I think as we think about organic growth over the course of the year, generally pretty ratable. Alexia Morgan: Okay. And then lastly, can you discuss your view on mattress industry trends for Q1, like any early reads you have quarter-to-date? And then looking longer term, can you elaborate on growth drivers for the Bedding segment specifically, and when you expect those to start to contribute? J. Hagale: Sure. I'll jump in on the first part. The big weather events that we've had over the last several weeks have certainly been impactful. We've heard that from our customers and just seeing between retail activity and what we've heard with foot traffic, but also facility closures and impacts there. So we expect there will be a catch-up, and we'll all be looking to President's Day and see what the activity is like there. But the weather impacts certainly have had some impact on the business early in the quarter. And we talked about it, I think the big drivers being housing, consumer confidence and general affordability are the big factors that we're watching to point to a recovery. Benjamin Burns: And I'd just circle back on your previous question about the quarters and growth. I think Tyson's point there on, weather is probably a good one to be aware of. The first quarter could be a little bit more impacted from that perspective. So that's probably a good thing to call out. Operator: And we'll take a follow-up question from Susan Maklari with Goldman Sachs. Susan Maklari: I have two things that I just want to touch on a little further. The first is in FF&T, we saw that meaningful drop-off in their margin in the fourth quarter. Can you just talk a little bit more about how we should think about the path of getting from where you ended this year back to something that is flat in line with the guide that you're giving us for the full year? And anything specific that came through that kind of caused that bigger-than-expected decline in the fourth quarter? R. Smith: Susan, this is Sam. Thanks for the question. So yes, there were several factors that hit us. A couple of them, I think, are maybe just Q4 issues. And let me just talk through them. At the top of the list, like we've said over the last several quarters, we've seen some pricing adjustments in Flooring and Textiles, and that was still an issue in Q4. In Flooring, it's simply very weak consumer demand. And until that consumer demand turns around, we kind of see that as an ongoing issue for us. And that's baked into our forecast and our guide. In Textiles, it's been mainly a raw material-related issue. And it feels like we're really close to the bottom of that cycle now. In fact, some of the materials that we use in textiles, we saw a little bit of Q4 inflation, and that's actually a really good thing. And hopefully, we continue to see that going forward into Q1 for the rest of the year. Currency was a plus on the top line, but it was a pretty decent negative on the bottom line. Not sure exactly what to think about that going forward, but I feel like currency could continue to be a drag a bit. The third factor would just be lower consumer demand that we mentioned, driving those year-over-year volume declines in Home Furniture and Flooring. It feels like we can continue to see soft demand in those two businesses. And finally, we're launching our greenfield home furniture site in Vietnam, and there are always costs associated with the greenfield. We started at the last week of Q3, and we spent Q4 ramping up. So that was an impact for sure. Our team is working hard, and we've met our first goal, which was to ship product to our U.S. customers. We're there now. That's happening. Now we're focused on driving productivity and shipping more and more product to our Southeast Asian customers. And I think as we go through the year, go through Q1, Q2, we're going to see a productivity improvement there that should help alleviate some of these issues we saw in Q4. Those were the major factors. I think in all these businesses, our teams are just doing a great job continuing to focus on controlling what they can control in some difficult environments. Susan Maklari: Yes. Okay, that's great color, Sam. And it actually brings up another question that I'm going to ask, which is when you think about Leggett's global footprint and what's going on from a trade perspective, are there other areas or other needs to shift your production on a relative basis to better align with some of the customers, and where they're looking to operate, or where they're looking to source from? Karl Glassman: Go ahead, Sam, and I was actually going to go where you might be headed in Auto, there's that those tensions. But go ahead. R. Smith: Yes, sure. That's exactly what I was going to talk about. There is a push in Automotive to do more regional sourcing, specifically from the North American OEMs to do more sourcing from here in North America. And we have traditionally been kind of a region-for-region business, meaning what we make in North America stays in North America, what we make in Asia tends to stay in Asia. But we are seeing some of those questions and some of those concerns, and we're addressing those and trying to relocate some product as needed. The push has been stronger from some OEMs than others because I think everybody is still, to some degree, concerned about what is the next change that might happen, right? Karl, do you have anything to add? Karl Glassman: No, I was just going to say, absent Auto, I think we're really well positioned. And to your point, really well positioned in Auto today as the global industry is constructed, but it certainly is in a state of flux. And we'll be there to support our customers at every turn. But the rest of the businesses, I think we're really pretty well positioned geographically. R. Smith: I agree. Susan Maklari: Okay. All right. That's good. And then my next question is on the working capital. You've done an excellent job on the working capital side, even with all the moving parts and the pressures that the business has been under. Can you talk about how we should think of that going forward? Is there further opportunity there? Do you actually need to build a little working capital? And especially maybe if demand does start to come back, would there be a need to add some inventory or just thoughts on the path there? Benjamin Burns: Yes, I can jump in here. Susan, it's Ben. You're right. Our teams have done an excellent job of -- over the last couple of years, driving out a lot of working capital. Just last year, we had an $83 million benefit from working capital changes. So I think we're in a really good spot. We ended the year at 11.6% percent of sales. As we move forward, we don't -- we're not anticipating any working capital benefit in 2026, maybe a slight use of cash as we kind of work through the year. But if you think about it, our sales have been coming down the last couple of years, but our guide for 2026 is really more flat, especially as you adjust out Aerospace. So I think there's probably less opportunity, but we'll be really focused on it, of course. And then as sales growth comes, we would look to hold that percentage of sales mark and manage it tightly there, but I think we would have some investment as sales grow. Operator: There are no further questions at this time. I would like to turn the floor back over to Ryan Kleiboeker for closing comments. Ryan Kleiboeker: Thank you, [ Carrie, ] and thank you, everyone, for joining us. We appreciate your time today and your interest in Leggett & Platt. Take care. Operator: And this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning. Welcome to Corby Spirit and Wine's Fiscal Year 2026 Q2 Financial Results Conference Call for the period ended December 31, 2026. Joining me on the call this morning are Florence Tresarrieu, President and Chief Executive Officer, and Juan Alonso, Vice President and Chief Financial Officer. Hopefully, you have had the opportunity to review the press release, which was issued yesterday. Before we begin, I would like to inform listeners that information provided on today's call may contain forward-looking statements, which can be subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Risks and uncertainties about the company's business are more fully discussed in Corby's materials, including annual and interim MD&A filed with the securities regulatory authorities in Canada as required. [Operator Instructions] I would now like to turn the conference over to Ms Tresarrieu. Please go ahead. Florence Tresarrieu: Thank you very much, and good morning, everyone. Thank you for joining us to review Corby's Spirits and Wine Q2 and first half results. I am very pleased to be here for my first earnings call as the CEO. For those of you who doesn't know me, I'm Florence Tresarrieu, and it's a privilege to lead Corby at this moment of its journey. I bring over 20 years of experience across markets, investor relations and operational strategy, and I was most recently Global Senior Vice President of Investor Relations, Treasury and Cash Performance at Pernod Ricard. Over the past months, I have spent time with our people being on the road, meeting our brands, our partners across the country. And what I've witnessed is an organization with very strong fundamentals, a clear strategy, very passionate people and a proven track record to execute and deliver with discipline and agility. And actually, today's H1 results are the perfect illustrations of what I've seen. This is indeed a very strong first half for Corby, a record-breaking start to the year. We delivered the highest first half revenue in Corby's history with reported revenue of up 12% and organic growth of 13%. Continued market share gains in spirits and the accelerating expansion of our RTD business have been at the forefront of our performance with RTD now representing roughly 1/3 of Corby's top line revenue and being as such, a core pillar of our strategy. These results reflect strong and consistent sales execution with significant share gains across our total portfolio in a volatile and highly competitive market. Performance was further supported by the removal of U.S-origin products on shelves and favorable LCBO order phasing extending into Q2. The breadth and depth of our portfolio continues to differentiate Corby. Despite the impact of the British Columbia strike, we delivered strong shipments and earnings growth in Q2 and across first half. And at a retail, we outperformed the spirits market in value for the 13th consecutive quarter. Earnings growth is slightly inside revenue growth, which is reflecting an RTD-skewed portfolio mix together with some less favorable spirits and channel mix effects. We are reporting a very strong cash generation, which is indeed the backbone of our long-term value creation and attractive capital returns. Our balance sheet is strong, and this is one of our key financial strengths. Our net debt to adjusted EBITDA ratio at 1.1x allows flexibility to invest behind our brands for future growth, reflecting the confidence of the continued dynamism of our business. The Board declared a quarterly dividend of $0.24 per share, an increase of $0.01 or a growth of 4% from the previous quarterly dividend. As of December 31, 2025, Corby delivered a 1-year total shareholder return, TSR of 25%, which is very much a testament to our strong performance and commitment to long-term sustainable value creation for our shareholders. As a nutshell, Corby has the right momentum and it's leveraging its key strategic levers to continue outperforming the market. So let me then briefly frame the market context and explain why Corby model continues to perform so well in an evolving and indeed volatile market. Corby achieved a clear acceleration in market share across all categories in Q2, building on strong and disciplined execution, being, for instance, illustrated by our ability to capture share following the removal of U.S.-origin products from shelves. In the rolling 3 month period ending December 31, while the Canadian spirits market declined 4.4%, Corby outperformed by 6.9 percentage points, delivering 2.5% value growth. Our Wine portfolio performed even more strongly, growing 11.9% against a declining -- slightly declining market of minus 0.7%. As mentioned before, RTD continued to be a standout. The category delivered 27.7% growth representing a 6.5 points out-performance versus the market, which is indeed reinforcing RTD as a strategic growth engine within our portfolio. I've mentioned that before, but it's quite important, RTD represents approximately 1/3 of our net sales and contributed this fiscal half for almost 3/4 of our net sales growth. Corby has consistently outperformed the Canadian market in value for 13 quarters in a row. In Spirits, while the category declined, we delivered a very resilient performance with R12 at 1.9%, representing a 6.2 points out-performance versus the market. Our Wine business also delivered strong growth, up 13.7% for the R12, which was 15.8 points ahead of the market. And again, we see the biggest gain in RTD, delivering 28.1% growth which is 16.5 points above the continuously growing category. Looking closer at spirits performance by category, you can see that we continue to outpace the market across several categories over the 12 months ending December 31, which is showcasing our competitive advantage and the effectiveness of our sales execution. Some highlights include our portfolio growth in the otherwise declining rum and vodka categories, benefiting from the shelf prominence amid restrictions on U.S-origin products in some provinces. We remain the category leader in Irish whiskey and have expanded our footprint in the tequila category with double-digit growth. Although our performance in the blended scotch category was impacted by production challenges, we remain optimistic in the opportunity to gain our fair share back in this category, along with the growing Canadian whiskey category, supported by our J.P. Wiser's NHL partnership. We have a uniquely diverse portfolio across price points for various customer occasions in Spirits, RTD and Wine, and we're leveraging all that with impact. Now let's dive up to discuss the growth strategy. RTD is one of Corby's most important growth engines. Over the last 12 months, our RTD business has accelerated meaningfully with sustained share gains driven by strong innovation and market expansion. Our unique RTD route-to-market strategy continues to deliver with increased penetration and share in both Ontario and Western Canada through focused RTD-dedicated sales execution. At the end of H1, Corby's RTD portfolio delivered 28% value growth over the last 12 months, significantly outpacing the category. Over the last 3 months, we gained share in every single region, reinforcing the natural strength of our RTD brands and the consistency of our execution. Our portfolio is well positioned for continued growth, supported by a robust innovation pipeline with exceptional new listing results in all major provinces set to launch in H2 FY '26. New brands are playing an increasingly important role, allowing us to move quickly into white spaces and capture emerging consumer occasion. In Ontario, for instance, we continue to capitalize on route-to-market modernization, leveraging the breadth and depth of our RTD portfolio to strengthen our presence in grocery and emerging channels where our brands are gaining visibility and relevance. We also continue to actively shape the portfolio to elevate growth through the fastest-growing categories. And as such, we've increased our ownership of ABG to 95%, while exiting non-core brands, SL Beer, SL RTD and Liberty Village Dry Cider, therefore, streamlining the business and sharpening ABG growth profile. I'm not going to walk through the page in detail, but you're already familiar with the Corby strategy. Our priorities remain very much unchanged, and they are gaining share in spirits, accelerating penetration in the fastest-growing category, continuing to grow value ahead of volume while investing efficiently behind the brands, including innovation and finally, actively managing our portfolio of brands. Pace of execution and breadth of opportunity we're seeing across RTD, spirits and channels are accelerating further our momentum. So with that, let me pass you over -- let me pass over to you, Juan. Juan Alonso: Thank you, Florence, and good morning, everyone. I'm Juan Alonso, Corby's Chief Financial Officer. I'm pleased to walk you through our financial results. Very quickly, before we talk about our financial performance, you're going to notice some mentions of adjusted metrics and organic revenue growth. We believe that these non-IFRS financial measures support a better understanding of our underlying business performance and trends. We provided the detailed explanations for each of those elements in our Q2 FY '26 MD&A, and I invite you to refer to this document for any questions related to it. So let me start with our Q2 results. Corby delivered $66.9 million in revenue, representing plus 9% reported growth and 10% organic growth year-over-year. As Florence said, this performance was supported by the strong momentum in our RTD business expansion and continued market share gains in Spirit. Adjusted earnings from operations reached $13.8 million, up plus 6% versus last year, reflecting strong revenue and diligent cost discipline, but partially offset by the RTD-skewed portfolio mix and channel mix effects on margin. Adjusted earnings per share came in at $0.32 and reported earnings per share at $0.31, reflecting solid growth of plus 8% and 12%, respectively. We also delivered $31.4 million in cash from operating activities in Q2, underscoring the strength of our earnings and working capital discipline. Lastly, in line with our Q2 declaration, the Board approved a quarterly dividend of $0.24 per share, an increase of $0.01 from our previous declaration in Q1. This reflects our confidence in Corby's outlook and our ongoing commitment to shareholder returns. Now let's go to the next slide and delve deeper into our Q2 revenue growth. To reiterate, Corby delivered a strong quarterly revenue of $66.9 million in Q2, representing a 9% increase over Q2 of FY '25. And this growth can be attributed to: first, domestic Case Goods, which accounted for 80% of Corby's Q2 net sales performance, reached $53.4 million, reflecting 11% reported growth and a 12% organic growth. This is highlighted by improved shelf prominence of Corby's Spirits, capitalizing on the removal of U.S-origin products in key provinces. ABG brands grew plus 19% with continued strong momentum on new channel expansion in Ontario and Western Canada. Total Commissions made up 12% of Q2 net sales and reached $7.8 million, a decline of 8%, lapping a strong Q2 last year, where our represented wines portfolio quickly gained traction early on, during the route-to-market modernization in Ontario and provided a strong fuel of shipment pipeline to grocery and convenience store channels. Lastly, export revenue, which contributed 7% to total net sales surged to $4.8 million, an increase of 25%, largely driven by strong shipment performance of J.P. Wiser's Whiskey and Pike Creek to Turkey. Now let's turn our attention to the H1 performance. Coming off a strong Q2 after a record quarterly performance in Q1 in earnings and profitability, H1 FY '26 marked another company record in top line generation. In H1, Corby generated $142.3 million in revenue, a plus 12% reported increase over H1 last year with plus 13% organic growth. This performance, that was achieved in a challenging retail environment set the highest H1 revenue in Corby's history, highlighting the strength of our diversified portfolio and our agility in responding to market shifts. I will further delve into the details in the next slide. Our top line growth was driven by the rapid expansion of our RTD business, now the fastest-growing category in the Canadian alcohol market. While this RTD mix and channel shifts put some pressure on margins, strong cost discipline helped offset those impacts. As a result, adjusted earnings from operations grew 6% year-over-year, though at a moderate pace than revenue. For the bottom line, our adjusted earnings per share was $0.71, with reported earnings per share at $0.67, representing a robust 11% growth in reported earnings and 8% in adjusted earnings. Our cash from operating activities totaled $37 million, a $1.5 million increase year-over-year. This was supported by earnings growth, disciplined management of costs and capital spend. We also strengthened our balance sheet, reducing our net debt to adjusted EBITDA ratio to 1.1x, down from 1.4x at the end of Q1 FY '26. This reflects our strong solvency and financial discipline. Total dividends declared for H1 FY '26 were $0.47 per share, up 4% from H1 last year, reinforcing our commitment to consistent and growing returns for our shareholders. Now let's delve deeper into our year-to-date revenue growth. To recap this record H1 top line performance, Corby delivered a strong growth of 12% year-over-year, totaling $142.3 million, and this growth can be attributed to, first, domestic Case Goods, which accounted for 81% of Corby's H1 net sales performance and reached $114.8 million, reflecting a plus 13% reported growth and 14% organic growth. This is highlighted by improved shelf prominence of Corby Spirits, capitalizing on the removal of U.S-origin products in key provinces. ABG brands grew plus 28% with continued strong momentum on new channel expansion in Ontario and Western Canada. Total Commission made up 11% of H1 net sales and reached $16 million, a slight decline of 1%, lapping a strong H1 last year when our represented wines portfolio quickly gained traction during route-to-market modernization in Ontario and provided a strong fuel of shipment pipeline to grocery and convenience store channels. In addition, H1 earnings growth in Canada benefited from cycling off the LCBO labor strike last year and emphasized by favorable LCBO ordering phasing this year, which is expected to normalize in H2. Lastly, export revenue, which contributed 7% to total net sales surged to $9.7 million, an increase of 38% largely driven by strong shipment performance of Wiser's Whiskey and Pike Creek to Turkey as well as recovery of shipments to the U.K. and U.S. markets. So to summarize our P&L results for H1, Corby recorded the highest H1 revenue in company history with a strong 12% revenue growth, bolstered by the strength of our portfolio, specifically the accelerated RTD portfolio, capturing new channel expansion in Ontario and the Spirits portfolio capturing market share gains in key provinces. Our total operating expenses also increased by 13% at a higher pace to support the continued growth and expansion of our RTD business in addition to strategic investments behind the key strategic brands such as the Wiser's NHL partnership. As a result, Corby delivered a solid H1 adjusted earnings from operations, marking 6% increase versus last year. On a per share basis, our adjusted net earnings was $0.71 and reported net earnings was $0.67, reflecting growth of 8% and 11%, respectively, versus last year. In H1, Corby generated $37 million of cash from operating activities, an increase of $1.5 million from last year, supported by higher net earnings as well as favorable working capital changes, primarily driven by the timing of spend. This strong cash flow allowed Corby to pay robust dividends, increase our stake in ABG to 95% and still reduce debt to $72 million, a $13 million improvement compared to FY '25 after loan repayments. As a result, our net debt to adjusted EBITDA ratio reduced to 1.1x, demonstrating a robust solvency position and reinforces our financial health. Corby has an attractive dividend payout ratio at 57% on a rolling 12-month basis, highlighting the sustainability of company's quarterly dividend. Notably, quarterly dividend payment increased by 4% in Q2 FY '26 compared to both Q1 FY '26 and Q2 FY '25. These actions have contributed to a high dividend yield over recent years at 6.5% at the end of H1, marking a consistent level of return for our shareholders. We are proud of our performance in H1 FY '26, and we remain focused on delivering long-term value for our stakeholders and shareholders. With a strong diversified portfolio, disciplined execution and a clear strategy, Corby is well positioned to continue driving growth and shareholder returns. Before I hand back to Florence, I want to give you a glimpse at what's ahead for Corby. After all you have heard today, you can see that Corby is well positioned to continue outperforming the market in FY '26, even as the environment remains dynamic. Our RTD portfolio remains a major growth engine, and we see significant potential to expand across Canada, led by strong traction from ABG. Our ambition is to continue gaining market share in spirits despite the challenge of a potentially slight market decline. We will remain agile and respond whenever U.S. products are permitted back on shelves. In Ontario, we will continue to capitalize on route-to-market modernization, meeting evolving consumer preferences with agility and breadth. From a financial perspective, we remain focused on protecting margins, driving profitable growth and generating long-term shareholder value. And finally, looking ahead to H2, while we are expecting some normalization in growth after a strong H1, Corby is still expected to deliver a strong full year revenue growth, supported by the continued strength in our Canadian portfolio and continued expansion of our RTD business. Now back to Florence for some closing remarks. Florence Tresarrieu: Thank you very much, Juan. So as we close our earnings call, I just want to reiterate the key strengths of Corby equity story, which makes it indeed a very strong investment. Starting with the fact that Corby is Canada's largest publicly listed multi-beverage alcohol company with the most diverse portfolio in the market. On top of that, our close partnership with Pernod Ricard gives us strategic advantages and access to global best practices. We have indeed a clear strategy, a very strong execution and a proven track record of outpacing this market in value growth. Our innovation pipeline, marketing strength and dynamic portfolio is driving performance and operational excellence. And finally, as you've seen, we have consistent financials with dynamic revenue, strong cash flow and a strong balance sheet that supports attractive shareholder returns. The results we've shared this morning demonstrate a business that is executing with discipline and agility, gaining share in the categories that matter most and building a strong foundation for sustainable long-term value creation for all stakeholders. Thank you once again for joining us today and for your continued interest in Corby. I very much look forward to continuing our engagement as I take on this role. For now, Juan and I are happy to take any questions. Operator: [Operator Instructions] And there are no questions at this time. I will turn the call back over to Florence for closing remarks. Florence Tresarrieu: So I think there is actually a question in that we've seen on the console. So maybe I'm going to read out and then we're going to share the answer with Juan, right? So the question is, can you provide more details on the performance of our RTD portfolio, sorry, for instance, with regards to a change in the route-to-market model in Ontario. Have you adjusted your marketing sales and organization to address the different sales channel? And second, are you deriving benefits from the customer boycott of U.S. products in this category? Or is there any other reason for your out-performance in RTD? And finally, can you detail the relative contribution percentage of RTDs to our net sales? I guess -- so if you don't mind, we're going to share. So maybe I'm going to take some questions and then Juan will answer the other ones. I think maybe the reason why we are gaining so much shares in RTD and then the reason behind our out-performance, maybe I will summarize them in three. I think the first one is the mindset. So we have a very strong team with the right mindset for the RTD products. Innovation is very central to everything that they're doing. So innovation is very strong for spirits. I think it's even stronger for RTD with a different pace. And I think the ability that they have to adjust innovations to consumer trends and market trends is second to none. So this is definitely something which is an explanation behind the out-performance. And then the last one, which is key as well is the route-to-market. So they have a dedicated route-to-market to service the RTD across the country. And again, this is definitely one of the key strengths behind our performance. Juan Alonso: Yes. Thank you, Florence. I would add as well that we did strengthen this team as well for -- to grab the opportunity to different channels, grocery and convenience. We reinforced the team in the beginning of the fiscal year. And finally, regarding the question of the relative contribution of RTD to our net sales. RTD represented around 72% of our total net sales growth. So almost 3/4 of our net sales growth came from RTD. And today, RTD has a total weight of around 1/3 of Corby's revenue as we initially announced at the moment of the acquisition of ABG. And mainly on the boycott of U.S. product in this category, is there any other reason for your out-performance? So the boycott of U.S. product is definitely supporting a lot of the market share gains in spirit. There is no relation to RTD. RTD is really the opportunity to perform better than our competition, accelerate, taking advantage of the modernization of routes-to-market, expand to other provinces in Canada beyond Ontario, and that explains our great performance on RTD. Florence Tresarrieu: Maybe I take this opportunity maybe to reiterate something that we've tried to develop in the presentation is the fact that Corby is quite unique in being a multi-beverage company and have a multi-beverage portfolio. So I think the performance across spirits, wines and RTD is outstanding. So RTD is definitely standing out as well. But I guess having the balance is key to our organization, and it's very much at the forefront and at the core of our results today, right. So again, if I want to leave you with one message is, I guess, the fact that we have a very strong portfolio, and we are a multi-beverage company in an evolving and in a volatile market. So that's very key to what we are and very key to our equity story. Operator: [Operator Instructions] And there are no questions over the phone at this time. I will turn the call back over to Florence. Florence Tresarrieu: Thank you very much. Thank you all for connecting. Again, I was saying I'm very much looking forward to connecting and meeting many of you, as we continue to get to know each other and then discuss with you the great sense of the company's equity history. So I wish you a very good day. I wish you as well to enjoy our products in a responsible way, of course. And I'm hoping to see you all very soon. Thank you. Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.
Operator: Good day, everyone, and welcome to the Arca Continental Fourth Quarter 2025 Conference Call. [Operator Instructions] Please note, this call is being recorded. I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Melanie Carpenter of IDEAL Advisors. Please go ahead. Melanie Carpenter: Thank you, operator. Good morning, everyone. Thanks for joining the senior management team of Arca Continental to review the results for the fourth quarter and full year of 2025. The earnings release went out this morning. It's available on the company website at arcacontal.com in the Investor Relations section. It's now my pleasure to introduce our speakers. Joining us from Monterrey is the CEO, Mr. Arturo Gutierrez; the CFO, Mr. Emilio Marcos; the Chief Planning and Strategic Capabilities Officer, Mr. Jes�s Garc�a; and the Chief Operating Officer, Mr. Jean Claude Tissot. They're going to be making some forward-looking statements, and we just ask that you refer to the disclaimer and the conditions surrounding those statements in the earnings release or guidance. And with that, I'm going to go ahead and turn the call over to the CEO, Mr. Arturo Gutierrez, who is going to begin the presentation. So please go ahead, Arturo. Arturo Hernandez: Thanks, Melanie. Good morning, and thank you for joining us today to review our fourth quarter and full year 2025 results. 2025 was a complex and challenging year for our business. We faced extreme weather events, operational disruptions and a volatile macroeconomic backdrop. These factors influenced consumption patterns and weighed on traffic in several of our markets. Our teams responded with agility and discipline, delivering strong execution, sustaining profitability while continuing to invest in the long-term foundations of our business. In many respects, 2025 marked a transition year. We navigated heightened volatility while staying firmly focused on what we can control. We made meaningful progress scaling digital platforms and analytics to enhance commercial capabilities, strengthening our end-to-end supply chain and driving productivity across the organization. As a result, we closed the year with stronger fundamentals, greater operational flexibility and improved readiness to capture opportunities as conditions normalize. We are confident in the strength of our operating model and our readiness for the period ahead. Moving on to our consolidated results. For the fourth quarter, total consolidated volume declined 0.8% and for the full year, 2.1%. Consolidated revenues in the quarter were down 0.6%. For 2025, revenues increased 4.6%, supported by revenue management, effective portfolio mix and strong execution across channels. Consolidated EBITDA in the fourth quarter declined 4.5%, posting a margin of 21%. Full year consolidated EBITDA increased 3% to a record level, surpassing MXN 50 billion for the first time in the company's history, underscoring the resilience of our operating model and continued focus on profitability. Now let's review the performance of our operations. Our beverage business in Mexico ended the year on an encouraging note, delivering a gradual and sequential volume recovery in the second half, supported by our sophisticated revenue growth management capabilities, portfolio optimization and continued progress in returnable packaging initiatives. In the fourth quarter, unit case volume, excluding jug water, declined 3%, cycling exceptionally strong growth of 7.8% and 3.5% versus the same quarter in the prior 2 years. For the full year, total volume declined 3.4%, reflecting strong 2024 comps. Sparkling beverages declined 2.5% in the quarter, partially offset by outstanding sequential double-digit growth in Coca-Cola Zero. This momentum was supported by expanded coverage and affordable packages, including the 450-milliliter nonreturnable format. Remarkably, Coca-Cola Zero achieved a CAGR of 15.8% in the last 5 years. Stills increased 2.8%, led by teas, dairy, juices and nectars, driven by sustained momentum in the modern trade channel, mainly in supermarkets, which were up 6.3%. Net sales grew 1.2% in the quarter, with average price per case, excluding jug water, up 5%. For the full year, revenues rose 1%. EBITDA in the quarter increased 5.1%, reaching a margin of 23.9%. For the full year, EBITDA declined 1.7% with a 23.4% margin, supported by disciplined expense control, operational efficiencies, proactive hedging initiatives and favorable negotiations on key inputs. Looking ahead, we will continue to accelerate the deployment of digital capabilities to drive operational efficiency and improve visit frequency and effectiveness. Key initiatives include broader use of TUALI and the Suggested Order tools, along with new AI-driven inventory planning and predictive analytics to further strengthen execution. Turning to South America. Total volume during the quarter and the full year were broadly flat, reflecting softer results in Ecuador and Argentina, largely offset by growth in Peru. Total revenue declined 5.6% for the quarter, while increasing 3.1% for the full year. Fourth quarter EBITDA declined 14.9% with margins at 22.2%. On a full year basis, EBITDA increased 6.5%, reaching a margin of 19.6%. Overall, our results reflect the gradual and uneven recovery across the region with distinct dynamics by country. Taken together, the region remains on a constructive path characterized by modest growth, improving fundamentals and increasing confidence in the trajectory ahead. In Peru, our operations delivered a strong finish to the year, supported by resilient demand and solid execution across channels. Total volume in the fourth quarter was up 3%, cycling strong growth over the same quarter in each of the past 4 years. Notably, this was the highest quarterly volume since we assumed operations in 2015. Growth was broad-based across categories, led by sparkling up 1.9%, stills 1% and water at 10%. Core brands, Coca-Cola and Inca Kola delivered solid performance, with volumes up 2.7% and 3.1%, respectively. In stills, the water segment stood out, supported by double-digit expansion in brand San Luis. Sports and energy drinks also contributed, increasing 2.6% and 8.6%, respectively. Importantly, Powerade continued to build momentum following the rollout of its new formula, further enhancing its relevance within the category. For the full year, total volume increased by 0.5%, confirming a clear sequential recovery through the second half of the year. Volume growth was also supported by targeted market-focused investments. In 2025, our team in Peru installed nearly 44,000 cold drink units, reaching our highest coverage level to date. This momentum, combined with disciplined execution, drove value share gains in alcoholic ready-to-drink beverages across both sparkling and still categories. Moving on to Ecuador. Volume in our beverage business declined 5.4% in the quarter and 4.4% for the full year, reflecting a consumer environment that remains moderate, though constructive. Despite this backdrop, we sustained a solid competitive position, delivering value share gains in both sparkling and still beverages. These results were supported by affordability initiatives, particularly the expansion of returnable packages. Notably, the mix of returnables increased by 0.3 percentage points during the year. We also continued to strengthen our portfolio through innovation with the introduction of the Flashlyte brand to compete in the fast-growing rapid hydration segment. Looking ahead, we remain focused on sustaining profitability through disciplined cost management and efficiency optimization across the supply chain. Now lastly to Argentina. Fourth quarter volume declined 1%, while increasing 5.2% for the full year, supported by selective pricing and affordability initiatives with recovery led by the traditional trade. Our operation navigated this environment through strong end market execution and a continued focus on returnable packages. We also delivered value share gains in NARTD beverages, with single-serve packages gaining traction and driving a 1.1% improvement in mix during the quarter. These gains were led by a remarkable performance in the energy category, highlighted by the strong momentum of Monster. In addition, our digital agenda continues to advance with digital sales reaching 75%, supported by the rollout of our proprietary B2B platform, TUALI. Our beverage business in the United States delivered another year of strong financial and operating performance. In the fourth quarter, volumes grew 2.2% and transactions increased 3.5%, reflecting our focus on sustaining consumer engagement and driving interaction at the point of sale. For the full year, volume declined 1.2%. This quarter showed broad-based momentum across categories. Our low-calorie portfolio grew by 9% with Coca-Cola Zero up 11%, Diet Coke up 2% and Diet Zero Dr Pepper up 10%. Still beverages increased 3.7%, driven by strong performance by Monster, Fairlife and our water brands, supported by excellent holiday point-of-sale execution. Quarterly net sales rose 4.9% with average price per case up 2.8%. Full year net sales increased 3.3%. EBITDA in the quarter declined 4.3% with a margin of 17.5%. For the year, EBITDA increased 4.2% with a margin of 17.2%. This is the highest full year EBITDA margin since we acquired this operation in 2017, underscoring the strength of our operational model. Finally, we are pleased with the seamless integration of our recently acquired adjacent franchise territory in Oklahoma, which commenced operations on November 1, further strengthening our footprint and growth opportunities in the region. To conclude our review of operations, the Food & Snacks business delivered low single-digit sales growth for the full year, demonstrating strong execution despite a high single-digit decline in the fourth quarter. Disciplined pricing, portfolio optimization and operational efficiencies continue to support profitability and strengthen the position of our Food & Snacks business going forward. I will now hand it over to Emilio to discuss our financial results. Please, Emilio? Emilio Marcos Charur: Thank you, Arturo. Good morning, everyone, and thank you for joining us today to review our results. We're closing a year impacted by significant challenges not only for our business, but also for the global economy, which has faced multiple external pressures. Consistent with our historical approach, we remain focused on the factors within our control, our execution, operating discipline and effective management of costs and expenses. This sustained approach is reflected in our performance throughout the year. We delivered sequential volume improvement every quarter and achieved full year growth in both revenues and EBITDA, highlighting the solid fundamentals of our operations even in a highly complex environment. At the same time, disciplined cost and expense management enabled us to maintain our EBITDA margin within the 20% range despite the headwinds we faced. These results demonstrate our ability to manage volatility while reinforcing our business fundamentals. And they confirm that even in challenging times, disciplined execution and a clear approach enable us to deliver a solid performance. Now let me provide you with further details on our financial results. Consolidated revenues decreased 0.6% in the quarter to MXN 64.5 billion, mainly explained by the exchange rate effect given an exposure to U.S. dollar. For the full year, revenues grew 4.6% to MXN 247.9 billion, reflecting the consistent results derived from our successful RGM strategy. On a currency-neutral basis, revenues rose by 5.4% in the quarter and 3.6% for the full year period. During the quarter, SG&A expenses decreased 0.3% to MXN 20.4 billion, while the SG&A to sales ratio was fairly in line with fourth quarter '24 at 31.4%, reflecting our continued commitment to operational discipline. In the fourth quarter, consolidated EBITDA was MXN 13.5 billion, a decrease of 4.5% compared to the same period of 2024. For the full year, consolidated EBITDA rose 3% to reach MXN 50.2 billion. On a currency-neutral basis, EBITDA grew 1.3% for the quarter and 1.9% for the full year. EBITDA margin for the fourth quarter contracted by 80 basis points to 21.8%. The contraction is explained by the high comps in the U.S. and South America region in the fourth quarter of 2024 given the factors that we have disclosed in previous calls. At the same time, profitability in our Mexico business continued to improve sequentially, with the region delivering a 90-basis points margin expansion during the quarter. For the full year, EBITDA margin was 20.2%, reflecting a 30-basis points contraction. Despite the challenging environment and volume pressure, we successfully sustained margins within the 20% range, supported by our effective hedging strategy and disciplined expense control and ongoing operational initiatives to support margin stability. Now moving on to the balance sheet. As of December, cash and equivalents totaled MXN 28.6 billion, while total debt stood at MXN 62.3 billion, resulting in a net debt-to-EBITDA ratio of 0.7x, reinforcing the strength and flexibility of our balance sheet. In 2025, we distributed a total dividend of MXN 8.62 per share. This reflects a payout ratio of 75% of retained earnings and a dividend yield of 4.3%, consistent with our disciplined capital allocation approach. On February 4, we successfully completed the issuance of MXN 9,500 million in a local bond on the Mexican debt market in 2 tranches, one for MXN 6,240 million with a 7-year term at a fixed rate of 8.96%, and the other for MXN 3,260 million with a 3-year term at a variable rate equivalent to TIIE de Fondeo plus 40 basis points. With this issuance, we improved our debt structure profile. Looking ahead, we remain confident in our strategy. Our disciplined management of costs and expenses and a strong commercial and operational capabilities position us well to navigate uncertainty and continue delivering solid results. Thank you for your continued support as we remain committed on delivering sustainable long-term value. And with that, I will turn it back to Arturo. Please, Arturo. Arturo Hernandez: Thank you, Emilio. As we conclude today's call, I want to thank our exceptional team of associates. 2025 tested our execution and our teams rose to the challenge, delivering results in an environment that demanded agility, discipline and focus. This year reinforced what differentiates our model, the importance of adaptability in navigating unstable conditions across our markets and the operating leverage we continue to unlock to our digital capabilities. Even in a challenging year, we protected margins, stayed closely connected to customers and consumers and continued to strengthen the fundamentals of our business. For the full year, we anticipate consolidated revenue growth in the mid-single digits year-over-year, driven by balanced contributions from volume, pricing and mix. We will continue implementing pricing actions to at least offset inflation across our operations while remaining firmly committed to keeping our portfolio affordable and relevant for consumers. We plan to invest around 7% of total sales in capital expenditures with a disciplined focus on strengthening market execution, expanding and modernizing our production and distribution network and advancing our information technology and digital agenda. Looking ahead, we entered 2026 with better visibility and a more normalized operating environment. We also see incremental upside from major brand-building occasions, including the FIFA World Cup. With 24 matches hosted in 2 of our territories, we expect to drive incremental demand and deepen consumer engagement. 2026 also marks 2 historic moments for our company. We celebrate 100 years of Coca-Cola in Mexico, a brand that has become deeply embedded in the country's culture. This anniversary provides a powerful opportunity to reinforce local relevance, strengthen brand affinity, deepen our connection with consumers and communities, and recognize the enduring partnership that has shaped our shared success. At the same time, Arca Continental celebrates 100 years as a Coca-Cola bottler. This milestone honors a century of driving sustainable growth, continued investment, boosting the local economy and being a pillar for the communities where we operate. Most importantly, honoring the past is about preparing for the future. We entered 2026 with confidence and momentum. Profitability, efficiency and disciplined growth will continue to guide our decisions. With stronger capabilities, disciplined execution and solid fundamentals in place, we are confident in our ability to perform across business cycles and deliver sustainable value creation. Thank you for joining us today. Operator, please open the lines. We will be happy to take your questions. Operator: [Operator Instructions] We'll take our first question from Ben Theurer with Barclays. Benjamin Theurer: On Mexico, so fourth quarter profit finished clearly strong and probably a little bit stronger than what was initially expected. Could you elaborate what the drivers were towards the end of the year and how that positions you as we move into 2026, thinking broader picture around the backdrop of the adverse taxation that was put in place about a month ago. But then obviously, you've called about out the tailwinds from the World Cup, and then let's just hope for better weather. So just a little bit how we finished and how that sets us up for 2026? Arturo Hernandez: Yes. Thank you, Ben. Certainly, we're satisfied with our fourth quarter in Mexico, especially considering that we were cycling a 7% volume increase from last year. And so we had a good result, especially from the perspective of profitability. December was particularly very strong in the quarter, where we grew volume 2.1%. And we believe this validates the recovery potential of the business in Mexico, especially as we face new challenges in 2026. From the profitability standpoint, we continue balancing the pricing and affordability scenario and promoting growth across some of the priority categories in our portfolio. If you look at the categories in Mexico, Coke Zero grew more than 18%, stills grew volume, tea had spectacular growth at also 18%. Energy, juices, nectars, all those categories grew volume in the quarter. So the other thing is that we -- throughout the year, we adjusted our OpEx. We started '25 thinking that the consumer environment was going to be better than it turned out to be. So we were prepared for tailwinds throughout the year. So we had to adjust our OpEx. And at the end of the year, we were able to do that. So our margins continue to improve. And so as we face '26, we are tracking in line with expectations. We're managing the tax adjustment with our proven affordability and pricing tools. And we remain confident that we're going to be delivering a healthy performance throughout the year, especially protecting profitability. So I'm going to turn it over to Jean Claude to talk a little more about '26. Jean Claude Tissot: Yes. Thank you, Arturo. And to your point, we have prior experience with similar taxes with [ IEPS ] and the use of our tools. But something that I would like to emphasize is why we had a very good fourth quarter and that is going to be the base for 2026. But the local team and the leadership from the team in Mexico is that we are going back to basics. We are strengthening our foundation while embracing the future through our digital transformation. Going back to basics with a strong momentum with pricing and packaging as a lever to ensure competitiveness and transactions. We are expanding returnables. We are protecting entry-level packages and managing mix with a more differentiated zero sugar strategy. And we are embracing the future through our digital transformation that you saw through our digital capabilities and artificial intelligence tools with our B2B platform, TUALI. Our pricing copilot and TPO initiatives, both with an end-to-end approach with supply, with our forecasting, distribution network and warehouse automation. We worked together with the Coca-Cola Company to see the fast start in Mexico and the feedback that we received was really good. And yes, we are ready, as you are saying, for a great opportunity that we have in 2026, that is the World Cup. Operator: Our next question comes from Froylan Mendez with JPMorgan. Fernando Froylan Mendez Solther: Can you hear me well? Jean Claude Tissot: Yes. Fernando Froylan Mendez Solther: I would really appreciate if you could dig in into the guidance of next year on a country-by-country basis, obviously focusing a little bit more on Mexico. If anything has changed from your original expectations on the impact on volumes from the increased taxation and whatever extra pricing you would do for next year. So a little bit more detail on country, region-by-region basis volume, pricing outlook for next year, that would be highly appreciated. Arturo Hernandez: Sure, Froylan. Let me start by Mexico, as you requested. And the current environment, as you know, is that we're facing the price increase in line with what we anticipated. So we -- as Jean Claude explained, we're going back to basics in our operation. We're focusing on our traditional playbook, but at the same time, deploying our digital initiatives. So that will help us mitigate the impact of elasticity as we increase prices. So we've seen a constructive response from the consumer. Engagement remains very healthy across our core categories and channels. Modern trade particularly responds well to targeted promotions and competitive pricing. And the traditional trade remains resilient, especially as it is supported by digital execution in this market. So we are reinforcing affordability through returnables, entry-level packs, strengthening our execution or metrics for execution, cooler placement and as I said, leveraging digital tools, particularly our revenue management tools, pricing and promotions to fine-tune our decisions in the marketplace. These -- all these actions are helping us manage the transition very effectively and at the same time, maintain competitiveness. So we're confident that we're going to deliver on our guidance for Mexico. In the other markets, well, the U.S. has its particular challenges, but we also have the opportunity to capitalize on the World Cup, which is an extraordinary event in the year. And we're focusing on improving our execution, especially focusing on transactions and growth categories and also efficiency projects that we've been deploying in the last few months, and we're going to capitalize on those as well. In Peru, it's probably our most promising market in terms of growth -- of the growth potential. We have the opportunity to continue to win in the stills categories, which is a huge opportunity in Peru as well as the dual cola strategy within Inca Kola, which is a unique advantage that we have in that market. And if you look at the -- just the growth in coolers, we had a historic cooler placement in Peru last year, 43,000 units. We're going to continue to do that. The coverage is still quite low as compared to Mexico. And same thing in Ecuador. Ecuador faces different challenges. It's not as favorable the consumer environment, but we also have seen recovery in the last few months. In the case of Argentina, well, Argentina is recovering. As you know, we expect lower volatility, improving consumer confidence. And I would say, more predictable backdrop performance in 2026. We have reversed the negative trend we saw in the third quarter. The key in Argentina is we have competitive price points across key categories, focused on immediate consumption, single-serve and very importantly, an efficiency program to protect margins. We expect margins to recover in Argentina throughout the year. So every market has its particular challenges. There are some, I would say, basics in all of our markets, which we're going to be working on, digital deployment and the -- going back to our fundamentals or stick to our fundamentals and things we can control. So we're confident about our guidance in each of the markets. Fernando Froylan Mendez Solther: If I can follow up just quickly in Mexico. So should we still expect a low single-digit decline in volumes and still some additional pricing efforts throughout the year to reach at least inflation? And what about margins? Is this shifting to more profitable mix or higher-priced SKUs? Is that helping margins and changes anything on your margin outlook for Mexico? Arturo Hernandez: Yes. Well, we haven't seen anything in Mexico that would change our outlook and what we've mentioned before. And in terms of margins, we do anticipate -- and this was expected, we anticipate margin pressure from tax-related volume impacts and elasticity. But this will be also mitigated by volume tailwinds from major events as Jean Claude explained and digital rollouts and also the favorable comps with some unusual activity throughout 2025. So with efficiency initiatives and disciplined cost management, we're confident that we're going to be able to protect our margins throughout the year. Operator: We will move next with Felipe Ucros with Scotiabank. Felipe Ucros Nunez: So first, a quick one on IEPS. Just wondering if you can comment on whether an offset has been implemented in the market? And what type of volume evolution? If so, what type of volume evolution you've seen after the offset in the beginning months of the year? And then in second place, congrats on the M&A in the U.S. Just wondering if you can talk to us a little bit about the target and how it may impact the current operation in the U.S.? Anything you can give us in terms of size, margins and how things will change after this? Arturo Hernandez: I'll talk about Mexico, and then I'll turn it over to Chuy to talk about the M&A activity in the U.S. As I said, we haven't seen anything in Mexico that would change our view on what to expect for the year. We did have some favorable weather in the first part of the year. So it's hard to figure out how much of that will have an effect on what we're seeing in the market. Again, we are approaching the situation with the same discipline and the same playbook that has proven effective in previous cycles. So we have the experience of dealing with situations like this one. So we -- I think we have -- we're able to predict better and also to execute better. What are we doing is maintaining competitiveness through the best price pack architecture for the current situation. We are protecting our consumer affordability with returnable packages and very strategic price points. When this happens, you have the opportunity to kind of realign your price pack curves and architecture to promote the price points and the SKUs that are more favorable. And also, we're leveraging our tools, basically, pricing and promotional tools that also have proven very effective, and that is certainly an improvement as compared to 12 years ago when we faced similar a situation. So we do expect the volume decline derived from the tax in '26. But there are, as we've said, strong tailwinds that will be also mitigating that impact. So we haven't seen anything that would change our view in that regard. So we are going to be consistent with the playbook. And with that, I'll turn it over to Chuy. Jesús García Chapa: Thank you, Arturo, and thank you, Felipe, for your question. Our most recent transaction, the acquisition of Idabel Coca-Cola Bottling in Oklahoma in December of last year, reflects how we approach consolidation, adjacent territories, clear strategic fit and real opportunities to generate synergies. Idabel is a long-established small Coca-Cola bottler operating since 1911 with strong ties to its local community and previously owned by the Fulmer family. It is located next to our existing footprint, and it does not have a production facility as it was supplied by Coca-Cola Southwest Beverages as well as other nearby bottlers. This obviously makes integration simpler, and it lowers execution risk. Idabel also distributes Dr Pepper and Monster brands, which strengthens the overall commercial opportunity with our partners. I will summarize this as deals like this are representative of the type of consolidation we favor. They're focused, value-accretive and operationally aligned. So we're really excited to be serving a new set of clients and customers for Coca-Cola Southwest Beverages. Arturo Hernandez: So this is the natural thing that we think will be happening in the next few years in the U.S. marketplace. Operator: We will move next with Rodrigo Alcantara with UBS. Rodrigo Alcantara: Congratulations on the results. Also to Jean Claude for the appointment as COO. My question is precisely in the U.S., Jean Claude. Maybe to understand better, I mean precisely this playbook that is allowing you to deliver that volume growth in not necessarily such a friendly consumer environment in Southeastern region -- the South region in the U.S., right? I mean we have all these of this context right of the Spanish population. In addition to that we have the upcoming cups -- World Cup to the [ SNAP ]. So you already spoke very clearly about the tailwinds, right, that could lift your bonds like the World Cup, right? But it would be nice to understand precisely the playbook that is allowing you to navigate this challenging factor in the U.S. That will be my question. Jean Claude Tissot: Thank you, Rodrigo for the questions. And yes, obviously, I am biased and excited to talk about U.S. performance. Yes, we had a very good year. As you know, we won the Candler Cup in 2025. And the question is, why the good results. We are -- we have confidence in North America outlook. As you're saying, we finished with positive momentum. And even though we had the challenge of some fake news during the year, but recovering volume, share and transactions. Why? Something that we have been sharing with you that has been a priority in the U.S., the culture. The culture that we have with our frontline heroes on how we are working together with the Coca-Cola system, the Coca-Cola Company and the other bottlers. But also, we have been implementing what we have been sharing that we are doing in the rest of our countries. A simple formula that is going back to the basics, strengthening our foundation while embracing the future through digital transformation. Going back to the basics in the U.S. has been a focus on all 3 channels with a focus on solid fill rate and growing transactions. And in terms of the digital transformation has been our myCoke.com implementation that is like TUALI in Latin America. Also the tools that we are providing to our commercial teams that they have the information by store to see our execution and performance, working together with our customers, but with that end-to-end approach between supply and commercial, connecting the dots between those 2 areas. Then three pillars: culture, going back to the basics and the fundamentals of our business, and the digital transformation that we have been implementing together with our Digital Nest. Arturo Hernandez: So I think that Rodrigo, this is -- the U.S. for us is a story, not about what we're going to do in '26, but throughout the years, it's consistent, high-quality customer-focused execution. And that is based, as Jean Claude said, on a strong culture that has been transformed. Just -- and we don't talk about these metrics usually in some of these meetings, but when we came to the U.S., engagement score was in the 60s, and last year, it's in the high 80s with all of our associates. So this is the culture that we're talking about. So we think this delivers consistent results throughout the years, aside from particular things that we're going to have as headwinds or tailwinds throughout '26. Rodrigo Alcantara: Thank you, Arturo. Indeed very consistent results. Congrats. Arturo Hernandez: Thank you, Rodrigo. Jean Claude Tissot: Thank you, Rodrigo. Operator: We will move next with Alejandro Fuchs with Itau. Alejandro Fuchs: Congratulations on the results and also on the 100 years of Arca this year, pretty impressive milestone. I have just one very quick question for Emilio. I think the rest of the questions have been answered already. But for Emilio, there was a big net financial expense this quarter of almost MXN 2 billion. I was to see -- was there anything unusual this quarter there that explain a little bit of a higher financial expense? Or is this the level that we should expect going forward, especially for 2026. I think if you could provide some color there, that would be very helpful. Emilio Marcos Charur: Thank you, Alejandro. Yes, we're celebrating 100 years of being a franchise in Mexico. Thank you for your comment. Yes. Well, the main variation on the net interest expense is basically 2 reasons. One is the increase in the financial expenses, explained by a higher interest payment that we have since we have new debt in Mexico of around MXN 15,000 million associated with CapEx and the M&A activity that we had last year. And the second one is the decrease in financial income since interest rates were lower than last year and also, we had a lower cash position basically in Mexico and U.S. So what you're seeing on the financials is the net of expenses and income. So at the end, I think the short answer is higher debt in Mexico and U.S. Operator: We will move next with Fernando Olvera with Bank of America. Fernando Olvera Espinosa de los Monteros: It's a follow-up regarding the acquisition in the U.S. and I would like to hear your thoughts of what changed versus previous years that motivated this franchise to sell its business? And how can this cause other franchises to again, to be motivated to sell their business in the future? Arturo Hernandez: Well, we don't really know exactly what motivated them. We have been having conversations with the owners of the franchise for some months or maybe a couple of years. But I think at the end of the day, what we have to realize is that this is kind of the logical thing to happen as the business of Coke franchises becomes more a business of scale. If you think about this business throughout time, probably 30, 40 years ago, owning a Coke franchise, scale was not really the name of the game because you had a very local operation. You had kind of a obviously, most favored nation treatment by Coca-Cola. And you didn't require the sophisticated capabilities that you require now or you didn't have the large accounts. Now it's different. And one of the things that's changing is, particularly as we move into digital conversations with customers that we need to have, as I said, more modern tools for a lot of the commercial core processes, it makes sense to have more scale in the operation. It's not -- that's not specifically the reason in this case, but what it creates is the opportunity to share the value that will be created through consolidation. So that's why I've been arguing that consolidation is a positive thing for everybody in the system and Coca-Cola Company also believes that. And I think that is a trend that will continue. Exactly when that is going to happen, it's hard to predict because it depends on very personal decisions by franchise owners. But again, it's -- I think it's the logical thing to happen in the future. Operator: We will move next with Alvaro Garcia with BTG. Alvaro Garcia: Two on my side. One on the cost outlook for '26. We still saw some gross margin pressure, which I think probably had to do with the U.S. in this fourth quarter, but into '26. I was wondering if -- I mean if you can give some color on sort of key raw materials and what you're seeing in the context of obviously a pretty important affordability strategy in Mexico. And then my second question is on snacks. You mentioned this high single-digit decline in the fourth quarter. So any sort of update on sort of how you're thinking about allocating capital to this business strategically would be helpful. Arturo Hernandez: Sure, Alvaro. Let me turn it over to Emilio. Just mentioning first that as we look at margins going forward, I mentioned the challenges and opportunities we have in our operations, particularly in the case of volume in '26. We are confident about our pricing strategy. We're going to be consistent with what we've said and especially as we improve our tools for pricing and promotions. The raw material environment, Emilio can expand on that and a very strong focus on OpEx efficiency throughout '26. So Emilio, please. Emilio Marcos Charur: Thank you, Arturo, and thank you, Alvaro, for your question. Well, I would like to mention that despite the macroeconomic volatility, most of our key raw materials continued to show stable trends during the fourth quarter, and we expect that stability to continue this year. I would say that with the exception of -- for aluminum. Aluminum prices continue to rise, especially MWP component. So for that reason, we have fully hedged our LME, which is the other component of aluminum. So we have hedged 100% of our needs in Mexico and 97% of our needs in U.S. for LME, and both at a higher price than last year but lower than the current spot prices. So we are in a better position compared with the market as of today. In addition, we hedged 50% of our MWP requirements in the U.S. also above last year prices but below the current market prices. We have also covered 90% of our sugar needs in Peru at levels below 2025. So we are better than last year here. And 71% of our high fructose needs in Mexico in line with inflation and 43% in U.S. at the same levels of 2025. So as you can see, we are basically very well on the hedges with the exception of aluminum basically in U.S. Arturo Hernandez: With respect to snacks, well, the fourth quarter, we had a mixed performance in our snacks operations, some net sales declining in some markets like Mexico, U.S. and growing in Ecuador. And this reflects a varied market dynamics by country. So in some countries, we have more synergies. Your question was about snacks business, just confirming? Alvaro Garcia: Yes, it was about sort of how you're thinking about the business longer term, sort of how you think about... Arturo Hernandez: So yes, this -- we don't allocate a disproportionate amount of capital in this business, and we constantly evaluate strategic opportunities to strengthen the business and maximize volume. Let me tell you that we do regularly assess this business in our portfolio, including the U.S. Snacks division. And this is part of our commitment to long-term growth. As I said, in some cases, we have stronger synergies as in Ecuador. In other cases, it's not the same. And also the business is not connected to our beverage operation. It's quite independent. So we are very flexible to make decisions about this business in the future. Operator: Our next question comes from Ricardo Alves with Morgan Stanley. Ricardo Alves: I want to go back to the U.S. Besides frontline pricing, I wanted to go into more details on revenue management, your strategy longer term on revenue management. It would be super helpful for us maybe to illustrate your strategy on ground, if you can share some specific examples. Where is really the focus of the management in stuff that it's really going to move the needle on your unit revenues? Is it opportunity on a higher value mix, higher value brands? Is it more get more exposure or work better on your packaging and mix of packaging, use smarter promotion activity now with the digital. You mentioned digital in several fronts. So I wonder if maybe this is where the -- there are several ways in which we are able to think about how you are tackling new opportunities to improve even more the U.S. business, but it's difficult for us to really have a grasp on what really could move the needle, what are the practical examples that you are implementing right now. So I just wanted to understand a little bit better your longer-term strategy, what could be the upside in the U.S. Maybe it's efficiencies, right? You talked about efficiencies as well. I know that in the U.S., we talked in the past about route optimization, integration of distribution centers. There's many things in my mind right now. I just wanted to get from you what is really on top of your mind to improve even further the U.S. business? Arturo Hernandez: Thank you, Ricardo. I will turn it over to Jean Claude, just by saying that, yes, you pretty much described the many opportunities that we have in the market. Revenue management pricing has been a fundamental capability, and that's been a driver for value in that operation. And in every operation, as I've said, if there would be one commercial capability that we really want to get right, it's pricing and promotion. I think we've -- we're off to a very good start in the last few years. Efficiency is becoming more of a priority in the U.S. as well. We're investing for making our supply chain more efficient. And -- but I will turn it over to Jean Claude to provide details. Jean Claude Tissot: Thank you for the question, Ricardo. And indeed, RGM has been and will continue to be critical in our strategy in the U.S. What we have done? We have been focused on increasing transactions. 2025, despite all the challenges that we had at the beginning of the year due to the fake news, we were able to finish the year once again growing transactions. Why do we grow transaction is because we have been developing a new portfolio. We have strengthened our portfolio in terms of packages, but also in terms of categories, in terms of innovation. We have been -- you have seen the improvement that we have done with brands such as Core Power. But RGM is also how we are bringing our digital transformation and use the implementation of tools such as the price promotions and the copilot pricing. And pricing as well has been the alignment that we have with the Coca-Cola system with the Coca-Cola Company, the other bottlers and the customers. Then it's a combination of initiatives that are together with our execution, allowing us to grow the margins as you saw. Operator: We will move next with Renata Cabral with Citi. Renata Fonseca Cabral Sturani: My question is about the strategy on Coca-Cola Zero, we saw -- any standout growth in the quarter? And also, if you see the -- over the last 5 years, the CAGR has been around 16%. So my question is how much we can continue to see this trend over the Coca-Cola Zero. And if you can say for country, where do you see still the biggest opportunity to increase the portfolio? Arturo Hernandez: Yes. Thank you, Renata. I think Coca-Cola Zero is probably the biggest innovation we've had in the portfolio and in the Coca-Cola system in recent years. And it's been a very, very successful product as it captures new consumers, younger consumers and also consumers from Coke Original Taste that would prefer a zero-calorie version. So this has been relevant in every market. It's been growing . As I mentioned before, it grew 18% in Mexico. It's growing in the U.S. It's actually sustaining the sparkling segment in the U.S. and Coca-Cola brand. So we will continue to promote Coke Zero in every market. And one example of that is that in the case of Mexico, it will take center stage in all advertising and promotions tied to the '26 FIFA World Cup. This is a very powerful global platform that we will use to celebrate our iconic brand and showcase our commitment to offering this no-calorie versions of our products. So you're going to see a much more relevant presence of Coke Zero in all of our marketing activity. And also, it's obviously a very profitable product. So it helps to sustain our profitability as we grow into the zero-calorie segment. Operator: Our next question comes from Antonio Hernandez with Actinver. Antonio Hernandez: Just a quick follow-up on the Snacks business in Mexico, and particularly in the U.S. Obviously, the competitive environment and its performance being affected by consumer trends or any other highlights that you could provide? Arturo Hernandez: I'm sorry, just to clarify, your question is about consumer trends, competitive environment in Mexico and the U.S.? Antonio Hernandez: In the Snacks business. Arturo Hernandez: In the Snacks business. Okay. Yes, I will turn it over to Chuy to make some comments about Snacks. This operation now reports to Jean Claude, but it was supervised by Chuy last year. I can tell you that Snacks had a mixed performance in the fourth quarter. That reflects different dynamics in different countries. Much more challenging, I would say, in the U.S. than in Latin America. So we've been focusing on, again, being very profitable in this business, focusing on growth categories and also continue to invest in the brands that are more relevant for our consumers in each of the markets. And innovation is very important in this business. So I will let Chuy expand on that. Jesús García Chapa: Thank you, Arturo, and thank you, Antonio, for your question. I think the fourth quarter reflects what happened during the year. The Bokados performance as well as the Inalecsa performance was very good. Most of our challenges are in the U.S. market. I'll give you an example, in Mexico, our focus is basically on 3 categories, extruded snacks, tortillas and mixes. And the products in these categories for the most part, grow double digit. Ecuador has been facing some political and economic challenges. But at the same time, we have a very good position across channels, and we have been investing primarily on product displays and that has been very successful. As far as the U.S., we definitely see more aggressive pricing from competitors and ongoing category contraction in all segments. And we're basically continuing to strengthen our portfolio profitability through an optimized price package strategy. And we'll continue strengthening our innovation agenda, sponsorship strategies and expanded distribution network, particularly for Deep River in some of our key strategic accounts. Operator: We will move next with Carlos Laboy. Carlos Alberto Laboy: My question maybe is more directly for Jean Claude. Look, the passion and intensity for client service that your people in the U.S. have, I mean, I haven't seen anything like that anywhere in the world. But the revenue growth management tools that they operate with, right, for volume, price mix, trade discount, how do you see them in terms of their stage of development for where they need to be or where they can get to? And what's the upside that you have in terms of -- in 2026, 2027 for the efficiency, the capacity of these tools given how you see your IT projects in the pipeline moving along? Jean Claude Tissot: Thank you for the question, and thank you also for the nice words about our culture, something that make us super proud. Regarding our question about RGM is part of going back to the basics as well. As you know, we have that vision how to evolve to be a shelf replenisher, to be a market developer in U.S. market and RGM is essential. We have been developing tools to grow our transactions to expand our portfolio with single-serve packages in all the categories, not just in sparkling. The development of zero sugar and the tools -- and the digital tools, as you are saying, that we have to make sure that we connect our digital tools such as the TPO, pricing copilot with our supply tools as well to ensure that going back to the basics, we have the best fill rate. A lot of improvement working together with the Digital Nest with [ CONA ], but we are excited as well for what is coming. We cannot say that we are done with all our digital initiatives. We are excited about what is coming. To continue with that vision that is about culture, is about being a market developer, is about back to the basics, embracing the future through our digital transformation and all our RGM tools. Arturo Hernandez: And Carlos, I would say that the tools continue to evolve as the portfolio continues to evolve, and there's also an element of change management as we have to somehow involve our brand partners into the effort. I would say that in terms of promotional activity, there's still a lot of opportunity as we continue to refine the tools. Operator: Thank you. This concludes today's Q&A portion. I would now like to turn the conference back to Arturo Gutierrez for any additional or closing remarks. Arturo Hernandez: Thank you, and thank you again for your time and your continued interest in Arca Continental. If you have any additional questions, our Investor Relations team is always available. We look forward to connecting with you again in the next quarter. Have a great day. Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
Vincent Rouget: Good morning, and a warm welcome to URW's Full Year 2025 results, my first as CEO. I'm going to take you through some key highlights and share some insights on our key priorities. Fabrice will cover our financials, and then we will both be available for questions. 2025 was another big year for URW with many achievements and a good start to our Platform for Growth business plan, including a 2025 AREPS guidance at EUR 9.58 per share. We are reporting a strong performance across our business plan priorities, attractive growth -- organic growth, disciplined capital allocation and substantial deleveraging. First, the key foundation is our strong retail operational performance. Footfall and tenant sales are up, leasing activity is strong and vacancy is down to a record low. We also made very important strategic inroads in preparing for a bright future through 2 capital-light initiatives, a new franchising business, an industry first in flagship retail globally and the acquisition of a 25% stake in St. James Quarter in Edinburgh. This demonstrates the significant growth potential of the Westfield ecosystem of performance with top mall owners. We also had successful deliveries with Westfield Hamburg-Uberseequartier and Westfield Cerny Most in Czech Republic. Second, on the capital allocation side, valuations are up and our LTV has significantly improved, helped by EUR 2.2 billion of disposals completed or secured since the start of 2025. We have delivered on our earnings and distribution commitments for 2025, thanks to all these great achievements and to the successful financing and hedging activity delivered by Fabrice and his teams. One more point. We will present in a few slides how we are preparing the future as a top innovator, thanks to the exciting possibilities data and AI offer us and our retail partners. I'm sincerely grateful to all our teams for their outstanding performance across our 4 regions in 2025, and I'm very excited to lead this great company. Our Platform for Growth business plan focuses on delivering growth from a dominant network of retail-anchored urban infrastructure assets. And you can see that clearly in our 2025 results. For me, they clearly reinforce our strong underlying fundamentals and showcase the strength and attractiveness of our unique business. Our EBITDA margin stands at 63%, a level very few businesses enjoy. And post disposals, we now have an attractive cash flow conversion rate in excess of 70%. With the completion of our noncore disposals program, our business now comprises a portfolio of irreplaceable destinations. The strengthening of our balance sheet with an LTV at its lowest level since 2017 means we are well on track to achieve our 40% 2028 LTV target. All this is great news as it gives us the strategic flexibility to unlock URW's embedded growth potential in line with our business plan. As I shared at the start, our business has once again demonstrated its attractivity and consistent compounding growth. We saw continued improvement in key operating metrics across all regions within our retail portfolio. Tenant sales continue to outperform sales indices and core inflation and vacancy is down a further 20 basis points to record low, driven by dynamic leasing activity. Zooming in on our key leasing metrics, we signed over EUR 400 million of MGR with an 11% uplift on long-term deals, consistent with 2024 activity. We made good progress in 2025, and we want to go even further with leasing being our #1 priority for me and our teams. In the Platform for Growth, we have a simple plan, which will drive growth through our established ecosystem of performance that combines unique assets, best-in-class retail operations expertise and the powerful Westfield brand. As a result, we see a clear opportunity to increase traffic, to keep driving tenant sales up with our partners, further enhance rental tension and retail tension and reduce vacancy and solidify our competitive advantage and capture market share. This is the key work that will drive like-for-like growth and unlock capital-light opportunities for our group. Now I want to spend a couple of minutes on why we outperformed our sector. It's pretty simple, and this is at the core of our competitive advantage. Flagship stores are an essential part of a retailer's brand expression and customer acquisition strategy. Traditionally, these stores were located in premium city center or high streets with high footfall. And today, they are increasingly a key component of the Westfield value proposition. We offer brands premium locations, incredible footfall and most importantly, a profitable growth platform. Our value proposition combines brand awareness with earned media value equal to 20% to 25% of annual occupancy costs at our centers and a cost-efficient customer acquisition channel, 80% lower than digital. For these reasons, our stores are big business for many tenants. Our top 20 fastest-growing brands achieved a plus 40% sales increase across our portfolio over only the 2 past years and generate an average of EUR 16 million of annual sales from each store. Here is another data point. Our 10 largest brands are grossing between EUR 100 million and EUR 900 million in annual sales volume across our portfolio. This is huge, and we're super excited to see which one will first reach the EUR 1 billion sales with us. Finally, I would add that this success also reflects the benefits of our highly curated destinations for customers. These are safe, secure, comfortable locations that offer a superior experience in real-life human connection. This being said, here is a thought-provoking comparison. We have taken key leasing data from Forum des Halles in Paris and compared it to our city's leading high streets, Avenue des Champs-Elysees. We are talking about roughly the same annual footfall levels around EUR 65 million, yet Forum des Halles has materially lower rents. Given our similar to higher sales densities, this means higher profits for retailers at our Westfield destination. You'll also notice that average store sizes are 4x larger on Champs-Elysees. Usually, in retail, the larger the store, the lower the rent per square meter. Interestingly here, the opposite is true with Champs-Elysees. And this is clearly the beauty and power of operating in the flagship locations business, where retailers are ready to pay a premium for brand awareness and visibility. OCR is much less part of the conversation. Obviously, you could argue that Champs-Elysees represents a different proposition for major brands. And I'm not saying that we will soon match these rental levels. However, we clearly offer a compelling value proposition that provides comparable traffic levels and attractive demographics while also delivering profitability for retailers. And it certainly gives us confidence about the true value of our offer and the upside potential we see on the very best flagship assets. And beyond this sales performance, as a single landlord compared to Forum des Halles multiple ownership, this means that we are in full control of tenant mix, customer journeys and visit store data. And this is where we can be a top innovator in the flagship retail segment. In 2025, we continue to see a strong lineup of new flagship openings. Bringing in new flagship concepts that are in demand by our customers is key to increasing the level of commercial tension at our locations. The U.S. offers, in particular, a deep reservoir of great brands like Skims, Vuori and others that are very open to the flagship opportunity we offer and look to Westfield as a natural partner to expand into Europe. A great example is premium activewear brand, Alo, which has 7 stores in our U.S. portfolio and just opened its first shopping center location at Westfield London. Early data is extremely positive, outperforming the brand's gross revenue targets by 80%. We also hear it is frequently outperforming their other flagship stores. In Europe, our newest flagship asset, Westfield Hamburg-Uberseequartier is also proving to be a major draw for big brand flagships such as Aesop, LEGO, [ Polo Ralph Lauren ] or Dyson. We have a huge opportunity in front of us, and I'm confident we can do more to attract exciting new concepts by better demonstrating our value proposition and its potential to brands, hence, our leasing, leasing, leasing priority for 2026. In the end, it's fairly simple. The higher the attractivity, the higher the demand, which results in more leasing tension and occupancy, which delivers a higher rental growth profile. We are also leading the way in data intelligence, thanks to years of investment in technology as well as our scale and the quality and size of our assets. We see it as another way to unlock the full potential of Westfield through AI. We partnered with digeiz to develop mapping algorithms to convert video footage into GDPR-compliant segmented data, harnessing the power of AI to analyze real customer visits and traffic patterns. We have now rolled out this technology across 21 Westfield shopping centers in Europe. And what is truly exciting is its massive potential as a performance tool in areas like asset management and leasing. We are unlocking new KPIs and data sets like capture rates, conversion rates or bounce rates today received or estimated in almost real time, i.e., not a month later, like tenant sales. These KPIs are making a real difference in decision-making and providing insights that were not possible with traditional metrics like rent per square meter and sales intensity. And this powerful data can allow a deeper evidence-based conversation with tenants to drive their performance at a shopping center and a portfolio level with URW. This understanding provides valuable insights and data intelligence that can unlock higher long-term growth, but also allows us to provide additional value-add services like Westfield Rise packages. On this slide, we have shared some anonymized data showing these new KPIs for a medium-sized fashion tenant with stores at multiple locations. By comparing store performance at such a granular level, you start seeing how much richer conversations with retail partners can be. How can we help you improve capture rates at a given store? Do you know why this store has significant higher bounce rate than your others? Why is the conversion rate so low at store X versus usual standards? This is obviously a ton of new data to digest for our teams. And this is where AI technology will be of great support to start unlocking this full potential. To further illustrate this, we selected 3 other concrete examples of how data is already enabling active asset management and driving operating performance at URW. First, leasing. Thanks to new passing by and demographic data, we were able to demonstrate the true potential of an area that had been perceived as soft and a specific unit that had been vacant or only short-term let for several years at Westfield Forum des Halles. Traffic data helped us convince an existing tenant to upsize and relocate into the space and unlock the second opportunity within the same asset, i.e., allowing another tenant to expand as well into the free space to create a flagship store, which it had been looking for, for quite some time. Second, the retailer performance. We can now measure the real impact of introducing new concepts, not just on traffic in the immediate area, but also on visits to adjacent stores or brands in the same category. This gives us tangible evidence for rental discussions and powerful insights, leasing strategy in opportunity zones across the mall. And third, retail media. Data enables more precise audience targeting and far more effective brand campaigns. Across 11 recent Westfield Rise campaigns in our portfolio, we were able to measure a 16% increase in store visits for advertising retailers with an estimated 17% sales growth over the campaign months. Looking ahead, AI will allow us to go even further, generating smarter, automated campaign recommendations based on our custom data sets. Using this data, we will also be able to create digital simulations of our assets to further optimize our tenant mix and customer journey. And I can tell you, you simply don't get this on the best high streets. We are excited by the potential and one of our key priorities for 2026 is to scale use cases and turn them into a driver of shared performance with retailers. With this, data and AI-led physical retail truly becomes the future of commerce. Moving now to disposals, which have been key to streamlining and simplifying our business and the continued strengthening of our balance sheet. Despite tough market conditions, we were very active in 2025 and have now completed or secured EUR 2.2 billion of disposals. I remember vividly the many questions received at our Investor Day last year about the feasibility of a disposal plan, well within and at pricing levels in line with book values. This now means a strategic shift to a capital recycling mode to fund any additional investment and development activities going forward that can contribute to our organic growth profile in a disciplined way. Speaking of capital-light growth, it will be an important tool for creating long-term value for our group. We established very important foundations in 2025. First, our acquisition of a 25% stake in St. James Quarter, an 81,000 square meter flagship shopping center in Edinburgh and 1 of only 4 A++ assets in the U.K. As you could guess, Westfield London and Westfield Stratford City are 2 of the other 3. This transaction demonstrates our ability to strengthen our presence in an existing market and expand the Westfield platform in a way that is consistent with our capital-light strategy. Our ecosystem of performance, including the Westfield brand was key to majority owner APG, actively seeking us out, creating an opportunity to improve the future performance of the asset and generate management fees for the group. Second, a new franchising business is generating fees as well, while allowing us to reach new markets and customers with no capital deployment. This is a first in the world in flagship retail, and we are very proud of this achievement. In December, a 58,000 square meter mall in Saudi Arabia's third largest city became Westfield Dammam and the first asset to be rebranded. Based on early feedback, the rebranding has already driven stronger-than-expected footfall and increased commercial tension. In the coming year, 2 new flagship centers in Riyadh and Jeddah will open under the Westfield brand. A key focus for URW this year will be to demonstrate the substantial added value we can bring to owners of flagship assets in new markets. Let's now spend a few minutes on our developments. We delivered projects that totaled EUR 1.8 billion of total investment cost, including 3 key retail projects, all at high leasing levels. In November, Westfield Cerny Most became the 41st Westfield branded asset in our portfolio, and we opened its extension, bringing in 32 new shops and dining concepts. Westfield Hamburg-Uberseequartier has now crossed 10 million visits and as mentioned earlier, has proven to be the new destination for flagship retail for major brands and retailers in Hamburg. With completion of the IBIS hotel and remaining office works, our committed development pipeline drops to EUR 0.7 billion over H1 2026, down from EUR 3 billion a year ago. This significant progress means our development focus can now shift to disciplined capital allocation and capital-light growth outlined in our Platform for Growth business plan. Moving to sustainability next and a Better Places road map, which is a core strategic driver for the group and a key to our long-term competitive advantage. In 2025, URW achieved significant progress and was recognized again among the top 100 most sustainable companies worldwide by Corporate Knights and Time Magazine. Other highlights include our Le Louvre au Centre partnership, bringing iconic Louvre artwork reproductions into 6 mold -- 6 French molds to expand cultural access and reconnect communities with a shared heritage. URW is fully on track to achieve its Better Places targets, and we will publish more information on our 2025 performance in our URD in March. At the end of the day, with a portfolio of EUR 49 billion and an annual footfall in excess of EUR 900 million, we have a substantial impact in our communities and an increasingly meaningful role to play in today's society. We are in a position to deliver at scale and on our purpose to reinvent being together. In addition to leasing and innovation, our third core priority for 2026 is the continued simplification of our business. We've already made significant progress in 2025, including our organizational shift to 4 regions, the disposals of noncore businesses and 21 noncore assets and administrative changes like delisting Australian CDIs. In addition, we are preparing to destaple URW shares. This would be tax neutral and have no change to economic exposure, and we plan to propose this to shareholders at this year's AGM. We will continue to reduce the number of group subsidiaries, and Fabrice will cover the further decrease in our net admin expenses in 2025. In 2026, we will remain very focused on driving down costs while developing a culture of simplicity and agility for all teams at all levels in all regions and for everything we do. This is key to freeing up internal resources so that we can allocate a valuable time to generate growth, push our advantage in data and AI and drive impact. Before I hand over to Fabrice, I am happy to welcome Kathleen Verelst, who joined our Management Board as Chief Investment Officer at the start of the year. She brings a deep real estate experience and relationships and will lead a disciplined capital allocation approach. Kathleen joins Anne-Sophie, Fabrice, Sylvain and I, and we are altogether tremendously excited to lead the group in this next chapter. In May, we presented our Platform for Growth business plan, which was well received by the market. The whole Management Board is focused on delivering the plan and achieving those targets. We've already made significant progress with LTV down 355 basis points on a pro forma basis and generated underlying average growth of more than 5%. And we have very clear priorities for 2026, leasing, leasing and once again leasing. Innovation, including leveraging the Westfield brand and our data and AI capabilities and continued simplification and development of an agile and entrepreneurial culture. I want to thank once again our teams across our business and regions for their significant commitment and focus. We have achieved attractive growth with lower cost, less CapEx and more innovation, and we are well positioned to continue this strong momentum in 2026. I will now hand over to Fabrice to share more detail on our results, and I will then return to cover 2026 guidance and answer questions. Fabrice Mouchel: Thank you, Vincent, and good morning, everyone. In 2025, we once again saw a strong operating dynamic. Tenant sales increased plus 3.9% compared to 2024, supported by a footfall increase of plus 1.9%. Leasing activity was robust and vacancy fell further to 4.6%, the lowest level since 2017. We completed or secured EUR 2.2 billion of disposals in 2025 and in the year-to-date. And as a result, IFRS net debt, including hybrid is down to EUR 19.7 billion pro forma for secured disposals. This net debt reduction, together with the increase in valuations and in like-for-like EBITDA led to a further improvement of the group rate metrics. Let's look at our 2025 figures. AREPS stands at EUR 9.58 per share, down minus 2.7% on 2024, mainly as a result of the disposals completed in 2024 and 2025. Our AREPS figure also reflects the 3.25 million URW shares issued to CPPIB in December 2024 in exchange for an additional 39% stake in URW Germany. 2025 AREPS is consistent with guidance, taking into account the timing of disposals, strong underlying growth and lower financial costs. EBITDA growth was plus 3.6% on a like-for-like basis, mainly from higher shopping center NRI. Office NRI was down minus 34.7% due to disposals, partly offset by the full letting of Lightwell and the full delivery of the Coppermaker Square residential project. 2025 earnings growth also benefited from the reduction in both financial expenses and the hybrid coupon, which I will comment on later. Here, we provide a detailed bridge showing the AREPS evolution year-on-year. Disposals net of acquisitions had a minus EUR 0.57 impact on 2025 AREPS. 2025 AREPS was also down minus EUR 0.19 year-on-year due to the contribution of the Paris Olympics to C&E activity in 2024. Rebates for disposals, net of savings in financial expenses, the Olympics and the impact of the CPPIB deal. We have delivered underlying AREPS growth of 5.4%. And this is in line with the underlying growth rate of at least 5% in our guidance for 2025. Retail NRI growth contributed plus EUR 0.51, thanks to our positive operating performance and recent deliveries. This performance was partly offset by minus EUR 0.07 from offices as well as the usual C&E seasonality effect between even and odd years. Financial expenses had a positive contribution of EUR 0.04, thanks to proactive refinancing and FX hedging. And we also saw a positive impact of plus EUR 0.13 from the hybrid liability management exercises completed in April and September. The other category reflects the negative FX impact on EBITDA before hedging as well as minority interest. So let's look more closely at URW's retail performance on a like-for-like basis. NRI was up 3.8% like-for-like, made up of plus 3.5% for Europe and plus 5% for U.S. flagship assets. Indexation made a plus 1.4% contribution at group level, reflecting a plus 1.7% increase in Europe. Leasing activity and sales base rents in Europe made a total contribution of plus 1.2% on top of indexation. Our U.S. flagship NRI growth was supported by leasing activity and higher sales days rents, representing growth of plus 5.4%. And the other category contributed plus 0.4%, thanks to variable income, including Westfield Rise and parking as well as lower service charges in Central Europe. It was slightly down in the U.S. due to a few bankruptcies. Moving to vacancy now, which stands at 4.6% at group level. This corresponds to a minus 20 basis points decrease from last year, thanks to strong leasing activity. In particular, vacancy decreased in Q4 with EUR 125 million in MGR signed, corresponding to around 30% of total leasing activity for the year. Vacancy in Europe was 3.3% compared to 3.6% in December 2024, thanks to a noticeable reduction in Northern Europe, which dropped from 5.5% to 4.8% with a further decrease in U.K. vacancy. Vacancy remained low in Southern Europe and Central Europe at 3.1% and 2.2%, respectively. U.S. Flagships vacancy was 6.3%, in line with December 2024, up slightly, reflecting the impact of bankruptcies in Q3. And despite this, U.S. flagship delivered like-for-like growth of 5% in 2025. Leasing activity remains strong in 2025 with EUR 423 million of MGR signed. Total MGR is slightly down on last year due to lower vacancy and lower bankruptcies to address as well as the FX impact. Rental uplift continued to be healthy, standing at plus 6.7% on top of indexation, combining a 5.4% uplift in Europe and a plus 9.4% uplift in the U.S., and this is in line with the 6.5% uplift that we achieved in 2024. 2025 performance was supported by an 11.3% uplift on long-term deals, including plus 6.6% in Europe and plus 23.8% in the U.S. It also benefited from a higher proportion of long-term deals at 82%. And the uplift in the U.S. was driven by the introduction of new food, luxury, automotive and fashion brands replacing nonperforming tenants. Rents per square meter signed in 2025 stood at EUR 659 per square meter in Europe and $80 per square foot in the U.S. This was an increase of 17.8% and 17.4%, respectively, compared to rents signed in 2024. Moving now to occupancy cost ratio, which stands at 15.7% in Europe, slightly above its 2024 level of 15.6%. In the U.S., OCR for flagship assets decreased from 12.6% in 2024 to 12.2% as at December 2025. And as we have demonstrated previously, the volume of activity generated by omnichannel retailers through in-store initiatives as well as brand and marketing value as highlighted by Vincent, goes well beyond the sales figure used to compute the OCR. NOI for our C&A activities stood at EUR 160 million, a 27% decrease compared to last year, reflecting the positive effect of the Paris Olympics on 2024 and the usual seasonality between even and odd years. On a like-for-like basis, i.e., excluding triennial shows, the Olympics and scope changes, NOI was minus 0.9% compared to 2024 and plus 31% above 2023, the last comparable year. This was thanks to lower energy costs and the full recovery of this activity. Bookings and prebookings stand at 93% of the expected rental revenues planned for 2026, demonstrating the appeal of URW's convention and exhibition venues. Our 2025 performance was also supported by a minus 4.6% decrease in our general expenses as part of wider cost-saving initiatives. And this is on top of the minus 10% decrease achieved in full year 2024. General expenses as a percentage of NRI have now decreased from 10.1% in 2022 to 8% in 2025, reflecting both the improvement in our operating performance and the efficiency gains that we've achieved on top of the effect of disposals. These gains include the positive effect of the simplification of the organization into 4 regions as well as stringent procurement and ongoing process automation. Moving now to the evolution of our gross market value. The group GMV at December 2025 amounted to EUR 48.9 billion, a minus 1.6% decrease compared to last year. This is mainly due to the EUR 1.5 billion in disposals achieved in 2025, partly compensated by CapEx of EUR 1.1 billion spent over the period. GMV was also impacted by a minus EUR 1.2 billion FX impact from the weakening of the U.S. dollar and sterling versus euro. Net of investment, disposals and FX, portfolio valuations were up EUR 836 million, corresponding to a plus 1.7% increase. This is the first positive revaluation of the portfolio, excluding FX, investment and disposals since 2018, and it is above the 1% annual growth we referred to at our Investor Day. Net reinstatement value stood at EUR 143.8 per share at the end of 2025, in line with year-end 2024. This includes an AREPS contribution of EUR 9.58 per share and the EUR 3.50 distribution paid in May. NAV saw a positive asset revaluation contribution of plus EUR 3.85 per share at group share. This was partly offset by a negative FX impact of minus EUR 5.18 from U.S. and U.K. assets, net of liabilities and minus EUR 1.49 on the mark-to-market of debt, hybrid and financial instruments. It also takes into account an increase in the fully diluted number of shares. Moving to shopping center portfolio valuations next. Like-for-like retail valuation was up 1.9% in 2025, driven by a positive rent impact of plus 1.6% and plus 0.4% from yield impact. This positive rent impact reflects the strong operating performance achieved in both Europe and in the U.S. in 2025. Overall, a yield impact, which had been negative in previous years was slightly positive in 2025, thanks to Europe. And this comes from an overall minus 10 basis points reduction on the discount rate, while exit cap rates remain unchanged. Like-for-like valuations were up plus 2.3% in Europe, slightly above the 2024 revaluation at plus 1.6%. Valuations were up in the U.S. for the first time since the Westfield acquisition at plus 0.7% and the GMV increase for U.S. Flagship assets was plus 1.6%, fully coming from a rent impact. The net initial yield for European assets as at December 2025 stands at 5.3%, i.e., 10 basis points below 2024 level, while potential yield was stable at 5.7%. The NRI growth assumed by appraisers for the European portfolio stands at 3.5%, including a plus 1.8% assumption on indexation. The net initial yield for U.S. flagship assets stands at 5.2%, plus 10 basis points above its 2024 level and 40 basis points above its 2023 level. The stabilized yield for U.S. Flagship assets based on assumed rental increase in year 3 stands unchanged at 5.7%. And these yields are consistent with recent transaction on A++ assets in the U.S. like NorthPark Center in Dallas sold at 5.3%. These yields also reflect the potential growth embedded in our U.S. assets. And the NRI growth assumed by appraisers for the U.S. Flagship assets stands at 3.8%, and this is based on cash flow growth, including the contractual rents and CAM escalation of 3% on average. This means that more than 3/4 of the growth assumed by appraisers comes from current leases in place, assuming the extension with no capture of rental uplift nor vacancy reduction. Moving now to development. The key event in 2025 was the successful delivery of the retail component of Westfield Hamburg as well as the handover of the first office to Shell. Following these deliveries, the total investment cost of our committed pipeline decreased from EUR 3 billion to EUR 1.2 billion between 2024 and 2025. Works on the IBIS Hotel and the remaining offices in Hamburg are due to be completed in H1 2026. And when handed over to tenants, this will reduce the total investment cost of our pipeline by a further EUR 0.5 billion, leaving just EUR 0.7 billion in committed projects. The controlled pipeline amounts to EUR 1 billion at 100%, in line with last year. And any decision to launch controlled pipeline projects will be fully consistent with the capital allocation policy presented at our Investor Day. Net debt has further reduced in 2025 from EUR 21.9 billion to EUR 20.3 billion on an IFRS basis, including hybrid. This results from the EUR 1.6 billion disposals completed in 2025, which has a positive impact of over 200 basis points on the LTV. The retained profit, net of distribution and others also contributed to the LTV reduction for a net impact of circa 120 basis points, and this was partly offset by the EUR 1 billion of investment spend in 2025. Net debt decreased by EUR 0.4 billion as a result of the weakening of the sterling and the U.S. dollar, which also impacted the GMV as we saw earlier, leading to an overall negative impact of circa minus 20 basis points from FX on the LTV. And last, portfolio valuation had a positive impact of circa 90 basis points on our LTV. In total, IFRS LTV, including hybrid, stood at 42.8%, down from 44 -- from 45.5% at year-end 2024, a 270 basis points decrease. The group has also secured an additional EUR 0.5 billion of disposals. And taking into account these disposals, the IFRS net debt, including hybrid would stand at EUR 19.7 billion on a pro forma basis. And as a consequence, the LTV would decrease further to 42%. The IFRS net debt over EBITDA ratio, including hybrid, further improved to 9.1x in 2025, down from 9.5x in 2024. This is consistent with the trajectory presented at our Investor Day and the 9x level anticipated in 2026. This results from the net debt reduction of EUR 1.6 billion achieved in 2025. It also reflects an EBITDA decrease of minus 2.9% due to disposals and the 2024 Olympics impact and a plus 3.6% EBITDA increase on a like-for-like basis. This ratio does not take into account the further EUR 0.5 billion of disposals secured or the full year NRI impact from projects delivered in 2025 and to be delivered in 2026. The cost of debt for 2025 amounted to 2.1%, slightly above the 2% in full year 2024. This includes the benefit of refinancings completed in particular in the U.S. and the hedges put in place in 2025 to cover rates and FX. This was partly mitigated by the maturity of low coupon debt in 2025, a lower cash amount and decreasing cash remuneration. Going forward, the cost of debt is expected to be aligned with the trajectory presented during the Investor Day of a 20 to 30 basis points increase per year. So let's look at those refinancings in more detail. The group has successfully executed major financing transactions in 2025, illustrating its access to funding at attractive conditions and its ability to seize market opportunities. We fully refinanced our hybrid stack in April and September 2025. The new hybrids issued have an average coupon of 4.8%, while the group reimbursed its 2028 hybrid with a coupon of 7.25%. Through these transactions, the group has generated savings of around 55 basis points on its hybrid coupon, representing a positive contribution of plus EUR 18.6 million to its 2025 AREPS. The group's hybrid portfolio stands at EUR 1.8 billion at the end of 2025 and will decrease to EUR 1.5 billion by April 2026 with the repayment of the remaining EUR 226 million hybrid. We also refinanced $1.2 billion of commercial mortgage-backed securities, managing to both extend the maturity and secure improved conditions with an average coupon of 5.3%. This corresponds to a saving of around 190 basis points compared to conditions previously in place. And this included the refinancing of $925 million for Century City, which was the tightest spread for a AAA tranche over the 2020, 2025 period and the tightest CMBS coupon for a single asset in the past 5 years. And last, the group renewed and extended its credit facilities. And thanks to this activity, our average debt maturity was unchanged at 7 years. Finally, the group's IFRS cash position decreased from EUR 5.3 billion to EUR 2.7 billion during 2025. This results from the use of available cash to repay EUR 3 billion of maturing debt. This also included proactive repayment of EUR 600 million of bonds at a 2.5% coupon maturing in June 2026 and EUR 150 million loans at 4.2% maturing in 2027. We also proceeded with the discounted repayment of Wheaton and the debt on Wheaton, generating a $30 million net debt reduction. And this is consistent with the group's approach to reducing its cash position as remuneration conditions deteriorated with a decrease in central bank's rates and as we made a significant progress in our deleveraging program. And as the group's cash position decreased, we reaccessed the commercial paper markets in Europe and in the U.S. to benefit from decreasing short rates. And these programs are backed by undrawn credit facilities standing at EUR 8.7 billion at the end of the year. And the group's strong liquidity position gives us the full flexibility to access debt markets as and when we see fit. In total, we have secured the EUR 2.2 billion of disposals announced during the Investor Day. We have shown a strong operating performance in 2025. Our credit metrics improved on the back of the group's net debt reduction, like-for-like EBITDA growth and a 1.7% increase in asset values. We have also demonstrated our strong access to funding through the CMBS and hybrid issuances completed in 2025. In view of these achievements and as already disclosed, we intend to propose a distribution of EUR 4.50 per share for fiscal year 2025. This corresponds to an increase of circa 30% compared to 2024 and a payout ratio of 47%, which we intend to increase to 60% for fiscal year 2026. And as in 2024, this distribution will be paid out of premium. With that, let me hand back to Vincent for some closing remarks. Vincent Rouget: Thank you, Fabrice. Solid performance. Let's now look at our guidance for 2026. At our Investor Day, we provided AREPS guidance of at least EUR 9.15, reflecting the mechanical effect of disposals. We are now increasing the range of full year 2026 AREPS guidance to between EUR 9.15 and EUR 9.30. This represents another year of underlying growth of at least 5%, supported by our solid retail operating performance. No major deterioration of the macroeconomic and geopolitical environment is built into this guidance. Finally, in line with our commitment to increase shareholder distributions, we intend to propose a payout of EUR 5.50 per share for fiscal year 2026 to be paid '27, consistent with our confidence in the group's outlook. This represents a payout ratio of circa 60% and a 22% increase versus 2025. Before we move to Q&A, I would like to share why I'm excited to lead this amazing business and confident we will deliver sustainable long-term growth. We have an unmatched and irreplaceable flagship portfolio located in the best cities and catchment areas in the U.S. and Europe, powered by our retail operations expertise and the iconic Westfield brand. Our assets, our expertise and our brand are an ecosystem of performance and a powerful competitive advantage. Looking more broadly beyond the real estate industry, we also have a sound, highly profitable and cash-generative business and are fully focused on unlocking our full potential through a platform for growth business plan and being the leading innovator in our industry. This will generate compelling shareholder returns and create value for all our stakeholders. With the depth of talent in this group and the plan we have in place, I have absolute confidence in our ability to deliver something truly incredible. And with that, let's start the Q&A. Operator: [Operator Instructions] The first question is from Valerie Jacob of Bernstein. Valerie Jacob Guezi: Congratulations on your results. So my first question is on capital allocation. You've now completed your disposal program. You've also sold some lands, which perhaps reflect less upside on development. So I just wanted to ask you what are now your key priorities in terms of capital allocation? And how shall we think about it? Vincent Rouget: Thank you, Valerie. We're very happy to be at a point where we can now move towards capital recycling. That's another avenue of organic growth to some extent at a similar debt level that keeps on going down, that will fuel potential additional growth. This is a tool through the further disposal on the land bank part as we had shared during the Investor Day that we'll keep on working over the next few years. And that will be the main driver of our capital allocation strategy in a disciplined way. And as we expressed it and shared it during the Investor Day, we have a net CapEx investments, annual investments on average over '26, '27 and '28 that is set at EUR 600 million, and that will be the key yardstick for us for any future capital allocation decisions and new investments, which will be funded by disposals on the resource side. So -- and maybe the last point I will add is that we share the criteria upon which we will appreciate and analyze any new investments in the future as part of our Investor Day as well, and they remain fully in place in any new situations we may be looking at. Valerie Jacob Guezi: And just in terms of geographies, are you completely agnostic or do you have some priorities? Vincent Rouget: I think our teams are monitoring every opportunity that fits our overall highly qualitative positioning across the portfolio in our existing markets. So I think we remain alert to every opportunity in the market across different locations and geographies. And I would say -- beyond countries, I would say, urban areas to some extent because, as you know, we are more a city player than a country player, generally speaking, across our 24 markets. So this is where we like to build scale and to generate further competitive advantage in our positioning as well. Valerie Jacob Guezi: And my second question is on your vacancy rate. I mean you've made some good progress over the past few years. Do you think you can improve the occupancy further? Or have we reached a floor and you're happy with what the portfolio is? Vincent Rouget: I think before I hand over to Fabrice, maybe to comment on the vacancy, it's really at the core of our leasing, leasing, leasing #1 priority. So we intend to keep driving up occupancy across the portfolio and continue to increase the retail tension across the board. So that's definitely part of the plan. And it's really through this virtuous cycle of efforts of bringing in and attracting the very best concepts, which are sometimes not in shopping centers yet that will increase gradually the expansion that will reinforce our desirability vis-a-vis tenant partners and will drive upward as well the tenant sales, which is the long-term yardstick we are pursuing to ensure that we have durable and consistent long-term organic growth. Fabrice Mouchel: Thank you, Valerie. So to come back to your question. First, we've been able to reduce significantly the vacancy in Q4. And as you would recall, the vacancy stood at 5.3% at the end of Q3. And we've been able to decrease it to 4.6%. And this was in particular on the back of strong leasing activity with EUR 125 million of MGR signed. So 30% of the total full-year leasing activity and with a higher focus on the letting of vacant units. Hence, as Vincent said the importance on the leasing, leasing side. Now to your question, there are still some areas where we see some improvement potential. One is the U.K. And even though there was an improvement in the vacancy rate in the U.K. from 5.8% to 5% at the end of 2025, we still see some possibility to reduce further the vacancy rate in the U.K. And the other one is obviously the U.S. at 6.3%. So historically, the structural vacancy in the U.S. was somewhat higher than in Europe but we feel that there's some room for improvement to reduce further the vacancy on our U.S. Flagship assets. Operator: Next question is from Jonathan Kownator, Goldman Sachs. Jonathan Kownator: The first question is going to be on brand media. I think you described a slightly shrinking market. You described weakness in luxury demand. Obviously, you have a lot more statistics also to offer to retailers at this stage. How are they seeing the market? Are you able to convince them that it's not just out-of-home market and that there is more potential, i.e., do you see any, I would say, a question on the growth path for that business, please? Vincent Rouget: Yes, correct. We see a lot of potential in this activity. As you know, Jonathan, we expressed it during the Investor Day, and we see this business line as higher growing trend inside the overall portfolio. We see some -- there are several levers across this activity. Beyond the market situation and the market environment generally, we believe that we can increase the occupancy rates across our screens, generally speaking. And we believe that we have some substantial leeway as well on the rate card and the way we -- what we pay and charge -- what we charge for those screens. So we are still at the beginning of this activity, we believe and where we see some interesting potential as well is making the link with our core business further in the next few years. And that's really our second priority around data and AI because of the investments we've made to expand and to develop retail media franchise with Westfield Rise. Now we can use those substantial investments to improve on our core business. And it's really the link and the full connection of those various approaches and value-add services towards retailers to some extent that will crystallize the upside. The advertising market is softer right now that -- what we foresaw maybe a year ago. We still see some growth in our business and we fully believe in the upside we shared with investors during last year's Investor Day and the substantial growth trajectory we see on this line of business. Jonathan Kownator: Just to continue on the -- so these luxury tenants, are they unhappy with the results of their campaigns? Or is it just broadly they reduce advertising? Or are they shifting it online? I mean, online is obviously 60% of the market, right? And so what are you seeing there? Vincent Rouget: Look, I think luxury tenants are very happy with us because they've been generating a positive performance in sales, in footfall, generally speaking, across year 2025. It's one of the best-performing branches when we look at our overall portfolio with tenant sales, which are above what we reported at the group level of 3.9%. So from that standpoint, I think the business for luxury retailers with us is doing well. On the advertising market, again, we are seeing an increase in occupancy across our screens between '25 and '24 when we correct for the positive effect of the Olympic games in Paris. And so we don't have anything to report specifically around the luxury market and the lack of appetite for this new media. Jonathan Kownator: Okay. Just one quick question, sorry, on your FX assumption for 2026. You said that you have a negative FX impact. Are you able to elaborate what assumptions you've taken for FX and at the same time, have you put hedges in place similar to what you had in 2025? Fabrice Mouchel: So that's a very important topic and which effectively has a strong impact on the 2026 results compared to 2025. And just to give you some perspective, so basically, a, of course, we are hedged in 2026 to the same extent as we are hedged in 2025, but we are hedged at levels that are much higher in 2026 than they were in 2025 as a result of the evolution of the currency, in particular, the ongoing weakening of the dollar that we saw over the period. So all in all, we are fully hedged but the level at which we are hedged is closer to the current market levels that you see with an FX of around 1.8 between euro and dollar, whereas in 2025, we've been able to hedge ourselves at a level closer to 1.03. That was the level of FX that was prevailing at the beginning of 2025. So basically, in 2025, we had a positive impact from FX compared to 2024 when the FX rate was on average at 1.06. But in 2026, we'll see a negative impact on the FX coming from this evolution and the weakening of the U.S. dollar that we've seen over the period. Vincent Rouget: Let me commend very strong performance of Fabrice and his treasury teams this year. Again, I think it's a well-known fact in the market, generally speaking, but obviously, the track record is very impressive and better than the trajectory we shared last year in terms of anticipation. So hats off. Operator: Next question is from Pierre-Emmanuel Clouard, Jefferies. Pierre-Emmanuel Clouard: Yes. Coming back on your capital allocation, what do you mean when you say that the objective in 2026 to capture market share in 2026. Is it -- are you willing to be a net buyer or net seller in 2026? And would you say that the convention and exhibition activities core business for you from a medium-term perspective? Vincent Rouget: Yes. Pierre-Emmanuel, very simply by mentioning capturing market share. This is what we've been doing over the last few years and somewhat when you look at the evolution of a tenant sales versus national indices, we've been operating at a healthy spread over the years. And it's true that, I would say, leasing, leasing, leasing priority that will predominantly capture this. Obviously, when we co-invest in a capital-light way on the 25% stake in St. James Quarter in Edinburgh. It allows us to expand our portfolio as well in a very disciplined way on the balance sheet side and the net debt levels that we want to keep on reducing over time. So this is what we mean about capturing market share, generally speaking. It's not about acquisitions, substantial M&A or things like that. And I think we're very happy to have achieved a EUR 2.2 billion disposal program in advance to what we foresaw and announced to the market during our Investor Days or slightly in advance, I would say, because we had targeted early 2026. And it allows us to look with full flexibility at capital recycling opportunities if the attractive ones materialize for us, and it will need to be to the service of the growth profile of AREPS and obviously, it doesn't -- without affecting LTV reducing trend. So I think these are the core parameters for us in terms of capital allocation. I don't have an answer for you on the net buyer or net seller from that standpoint because we have completed a disposal program. So it will be managing the timings in case we were pursuing capital recycling because the opportunities are there. Lastly, on the convention and exhibition. This is a core activity. This is historic activity for the URW Group, we see some growth potential with the delivery of major infrastructure in the northern side of Paris for [indiscernible] site. And so -- and the activity is performing very well. You could see obviously, the great performance with the Olympic games last year. And we are on the right trend on this business. So there's no disposal plan whatsoever on this activity. Pierre-Emmanuel Clouard: Okay. Understood. And a quick follow-up on your capital allocation strategy. The [ Balkany family ] Is selling a big Spanish portfolio, including La Vaguada, in Spain, and it has been reported by the press, you could have a look at this portfolio? So are you evaluating this process? And if so, would you angle be selective [indiscernible] stakes or full ownership? Vincent Rouget: We as -- I mean, first, we never comment on specific situation, as you well know. So thank you for your question. And more generally, we are monitoring all situations across the market and across our different markets, as I mentioned previously. So we track them. We want to know where assets trade, whether the portfolio quality fits our ambition and our overall quality in the portfolio, and we do that with this opportunity as with others. I think in the end, the bottom line is we have a very clear trajectory. We intend to deliver on that. And it sets some parameters, which are pretty stringent in terms of capital allocation. So even though we look at everything to know the market and know our markets, I think the odds of something happening are pretty disciplined, I would say. Pierre-Emmanuel Clouard: Okay. Understood. And a final question on your pipeline. So it would be interesting to have an update on your pipeline, specifically about the residential scheme next to Westfield White City in London and also Westfield Milan, is there any news here? And maybe a quick follow-up about the pre-letting ratio on offices in Hamburg that will be delivered this year. Vincent Rouget: Yes. On the pre-leasing ratio, we stand at 82% on the overall office product across the Hamburg state in the Westfield, Hamburg-Uberseequartier, a state which is a very high rate and reflects the high quality and great location, this office product offers prospective tenants, and we keep on having positive discussions with prospects. With regards to your questions on the various developments, I think on all the examples you shared or you cited. We are investing in pre-devCapEx and expenses across our portfolio to bring our land investments to maturity. And this is what we apply across the board on our controlled pipeline and noncontrolled pipeline. And again, it will -- any decision to commit further capital to new developments and new densifications will have to fit within a baseline, the baseline we shared during the Investor Day of EUR 600 million net CapEx, so net of capital recycling. So that's the approach we're pursuing. We are working on a slightly marginal rezoning of the Westfield London residential quarter to improve the product and improve overall the project. Operator: Next question is from Paul May, Barclays. Paul May: Just a couple of quick questions for me. I wonder if you could give some color on the average yield on the EUR 2.2 billion of disposals, not obviously specific assets, but just so we can get a sense for modeling, particularly the remaining outstanding yield would be great. And then given all the activity, if you could provide a proportionately consolidated closing annualized rental income as at the year-end, that would be really helpful moving forward and say proportionately consolidated would be great. I think you gave the nonconsolidated version. And then do you want the second question now or should I ask that afterwards? Fabrice Mouchel: So to your first question, Paul, on average, the yield at which we sold or secured the EUR 2.2 billion was between 6% and 7%. and I will be even more helpful than your question. So basically, just to give you an insight of the impact of disposals -- of the 2025 disposals on the 2026 AREPS. So basically, it's higher than the EUR 82 million of negative impact that we saw in 2025 for the 2024 and 2025 disposals. And out of the EUR 82 million, you had less than EUR 40 million that was coming from the 2025 disposals. So basically, based on that, you see what could be the total impact on the NRI side of the disposals secured or completed, the EUR 2.2 billion. What was the impact on 2025 and therefore, what would be the impact on the 2026 AREPs. Hope it helps. And if not, you can still call me. Paul May: Perfect. Just following up with the second question is following on a previous question around the ramp-up of development, which I think you talked about in the medium-term outlook. I think various development schemes, especially your experience at Hamburg and recent retail experience would imply that retail development isn't really going to work in the current rate environment or the current return environment. And then if you look at offices, you've got obviously the structural issues and possible AI impact seemingly impacting offices at the moment. So that doesn't seem like a viable sort of decision to ramp up development there. So I was just wondering what is the thought process with that? Does it not make more sense to reduce your land exposure, try to sell what you can and rotate that into income-producing assets? Just thinking on that sort of capital allocation, what the thought process is? Vincent Rouget: Yes, sure. I would say both on the offices side as well as on retail, but I'm sure it applies to other asset classes. It all starts with the product. And I think on offices, there's a lot of talk about the impact of AI. And at the same time, I read headlines everywhere that New York office market -- prime office market has been booming for 3 years now and has never been as good as it is right now. So it's really the quality of products. What we've shown very substantially and meaningfully on La Defense market, which has not been an easy market for a number of years and where we managed to deliver Trinity and fully leased Trinity after delivery, starting from 0% pre-letting at record rents and a massive premium versus every other restructured product delivered over the same period in La Defense. So it really starts with the product. It's the same for us in our view and strong conviction with [indiscernible] project, which is -- where construction is ongoing. And so it's really a question of location, market, but as well ability to create the right product. It also applies to retail. I leave aside the capital allocation side of Hamburg, but we see that Hamburg product is a tremendous success from a retail perspective. The retail partners are very happy about the performance. We already passed in less than a year, 10 million footfall. And so you see that when you create a great product, it creates its own attractivity. That being said, I think a lot of -- obviously, we're working on the land portfolio, as you suggest. And as we expressed it during the Investor Day, we shared, I believe, a figure of roughly EUR 1 billion on our balance sheet of land values back then. And we shared that we intended to sell or dispose around EUR 400 million over the duration of the plan. So between last year and the end of 2028 this objective remains true. And so that's what will enable us to keep investing in development or selling assets and more through a mixed-use angle and adding and densifying around our existing footprints, I would say, as a general trend. And then for the rest, it will be a matter of bringing in partners alongside us as well on the right product and projects in which we have strong conviction to enable the launch and the development of those. So I would say, in a disciplined capital allocation way in the end as we committed to early 2025. Paul May: Yes, I do. I get that. It's just, as you said, putting aside the capital return point, which, obviously, for shareholders, we can't put aside the capital return point. So Hamburg is a great success in terms of it looks pretty and it's got lots of footfall, but I think yield on cost was in the 3s, and also you've lost a lot of money on that. So that would be, I suppose, a concern of shareholders is that real estate companies focus on the shiny final asset and not on the capital return point. I think we just want to get comfort that you're not going to just go off and develop a lot of trophy assets and not generate returns for shareholders. I think that's the concern people have. . Vincent Rouget: Paul, you can have every comfort you wish to have on this, and that's the exact reason why we ascribe ourselves to a very stringent net CapEx spend of EUR 600 million per annum. I use this opportunity -- as we shared during the Investor Day, roughly EUR 300 million, give or take, is going to leasing -- ongoing leasing, maintenance and better places CapEx overall, which leaves EUR 300 million net of extra spending to go for developments or densification around our existing assets. So this is a very stringent trajectory from that standpoint. And I didn't mean the capital allocation side in that form for Hamburg. It's a real trauma, and this is an experience we learned from. And it was also at the source of the decision we made with GMV to drive a platform for growth business plan last year with such a disciplined capital allocation approach. We shared during this some pretty specific criteria in terms of the targets we will aim at in terms of underwriting of new projects as part of the Investor Day, and we absolutely stick to them. And that's exactly the approach we are pursuing. And lastly, when I look at our business overall across real estate asset classes, the EUR 600 million net CapEx accounts for roughly 25% to 30% of the EBITDA we generate on an annual basis of our NRI. This is one of the most compelling metric across asset class in the industry -- in the real estate industry. And that shows that it doesn't leave a ton of space to launch, as you call, new crown jewel developments in terms of development forward. Operator: The next question is from Florent Laroche-Joubert, ODDO BHF. Florent Laroche-Joubert: So 2 questions for me, if I may. So my first questions would be on the guidance for 2026. So we have been able to see in your presentations that you are working on improving your G&A expenses. In which way have you been able to -- have you taken into account some improvement today in your guidance for 2026? Fabrice Mouchel: So thank you, Florent. So basically, this is incorporated, but this is not the main driver for the evolution and the AREPS in 2026. So basically, our guidance. First, we've discussed the 2 mechanical effects with Jonathan and Paul, which are, a, the disposal, which, as you see, as I've mentioned, will be significant and even above in terms of NRI loss compared to 2025. The second is the FX impact. But all in all, this is also driven by a positive evolution and particularly on the rents on a like-for-like basis even though the indexation would be lower in 2026 than it was in 2025. So -- but despite that, we expect to deliver strong like-for-like growth in line with what we've done last year, in line with the guidance that we gave during the Investor Day. And on top of that, we'll benefit from the ramp-up of the projects. And ultimately, there will be also the positive impact of the seasonality of the C&E activity with the even year that would also benefit from the 2026 year. So this is part of the growth that we expect or the evolution of the NRI of the AREPS that we expect in 2026 but that's not the main driver. The main driver continues to be the strong like-for-like growth, which is the priority that we have laid out during the Investor Day and the platform for growth. Florent Laroche-Joubert: Yes. That's very interesting. And maybe my second question would be on your cash on hand that you have now at EUR 2.7 billion, so it's much more or less than 1 year ago. And also we have been able to see that you have been able to re-access to short-term debt. So what would be -- what can we expect now for you for 2026? And after maybe -- do you think that you would be able to have maybe a lower cost of debt than the ones you presented at the Capital Market Day? What -- how do you want to manage that now? Fabrice Mouchel: So. So basically, first, in 2025, we've been able to achieve a cost debt of 2.1% which was only a 10 basis points increase compared to 2024. So below the 20 to 30 basis points increase in the cost of debt that we have mentioned during the Investor Day. And the main reason for that, again, is the FX hedging that we have put in place and that have been -- that we have -- that has allowed us to reduce our cost of debt for 2025. So basically, going forward, as we said, we stick to the guidance that we gave of an increase between 20 and 30 basis points in the cost of debt. And this already incorporates, by the way, the use of the commercial paper market. And it also incorporates some lower remuneration on the cash and the cash has reduced, and this was done on purpose. We've reduced it from 5.3% to 2.7%. So part of the cash was used to repay debt, maturing debt, but also proactively repaying debt maturing in '26 and '27, which had coupons above the cost -- the remuneration conditions of the cash. But all in all, the marginal conditions are higher than the average cost of debt. And therefore, there should be a 20% to 30% basis points increase year-on-year, even though as usual, we try to optimize it and the use of the CP market is one of the ways to achieve that. But it only makes sense to the extent that your cash position reduces enough. Otherwise, you would raise cash on the CP market, but you would have to replace it at conditions that would be slightly worse than the ones at which you would have raised this cash. Operator: The next question is from Veronique Meertens, Kempen. Veronique Meertens: For me, 2 questions around Asian disposals. So I was wondering, so you've now completed your disposal program, pro forma LTV of 42% and you reiterated your guidance of 40%. I was just wondering versus the plan that you presented in May last year, are you ahead or on track after the completion of the disposal program to reset 42% -- 40%? And then in line with that, how actively are you still pursuing disposals at the moment? Are there ongoing discussions at the moment? And how do you see that investment market at the moment? Vincent Rouget: I would say on the fact that we reached EUR 2.2 billion disposals, we had planned to reach it slightly later. So from that standpoint, we are slightly ahead of the objective and what we foresaw last year, and we received a lot of questions during the Investor Day last year on -- to what extent we were confident we would be able to execute such a volume and quantum in a difficult market. So we're slightly ahead there. On the rest of the criteria, and I will leave -- I will let Fabrice elaborate on those. We are well into the plan. We are on track with the plan we disclosed and we shared with the market in May 2025, and we see a solid momentum in our business. And so I would say that's the general assessment and perception we have around our strong operations. Fabrice Mouchel: So to come back to your question, I think the one point on which we are ahead compared to the assumption that we have given during the Investor Day is the evolution in valuation. So as you would recall, we said that the trajectory towards 40%, a, assumed that we would complete the EUR 2.2 billion of disposals, and this has been done. But it also assumed a 1% increase in values per year between '25 and '28, and we have achieved 1.7% in 2025, which is above the 1% level that we had referred to during the Investor Day. So this is where we are ahead of the plan compared to the LTV evolution, and this is already incorporated into the 42% of LTV level, which, as you would recall, compares to 41.7%, which was the level without any increase in values at the end of -- at the end of 2028. Vincent Rouget: It' a good sign, and I will finish on also insisting on the fact that, that's the key reason why organic growth is our primary focus and the leasing, leasing, leasing priority there because with the ability to drive our business plan and to generate the kind of organic growth we shared during the Investor Day market, we see that rates have kind of landed now or reached a high on the cap rates. And to some extent, we start seeing the benefit with such an attractive organic growth on the valuation levels. So that gives us a lot of confidence. And this is really at the center of everything we do, driving this like-for-like performance for our own assets, but it's also the key that unlocks and makes extremely attractive to partner with us either through rebranding and management or co-investment in our existing markets, but also on the franchising business to expand into new markets where we are not present today. So this is really the core of the ecosystem of performance we set up in order to deliver a very attractive platform for growth. Veronique Meertens: Okay. That's clear. And one follow-up on that because during the Investor Day, you had several ideas on future capital allocation and obviously, on a disciplined manner. But one of the things that you did mention was also share buybacks as one of the potential ways. When you're looking at -- if you say that now you're ahead on that sort of like 40% target, what is necessary to potentially trigger a share buyback? Or is it really just focusing now on interesting opportunities in the market? Fabrice Mouchel: So share buyback is definitely part of our toolbox. Now there are a number of conditions that needs to be met before we use this tool. The first one is, as we said, that we need to sell more than the EUR 2.2 billion of assets. So basically, any use of capital would be only done to the extent that we sell more than the EUR 2.2 billion. So now we've reached EUR 2.2 billion. So we'll have to see what are the additional proceeds that we can generate from disposals. And the second topic is that out of the use of these proceeds coming from additional disposals on top of the EUR 2.2 billion, we have a variety of options to reallocate this capital, one being acquisitions. And as we have done, for instance, in Edinburgh with the acquisition of this 25% stake, which is on a prime asset, as Vincent has mentioned, with very attractive conditions with capacity also to develop the brand, capacity to generate some fees. And so basically, out of the various options that will be available to us, we will look into what can be done in terms of acquisition, what can be done in terms of share buyback. And again, looking at both the returns of each option and as well its impact on the financial ratios and the LTV and the net debt over EBITDA, the share buyback being, of course, more negative than acquisitions when it comes to the financial ratios. Operator: The next question is from Neil Green, JPMorgan. Neil Green: Just one, please. It's a bit of a follow-up from Jonathan's earlier on FX. If you go back to the Capital Markets Day, I think you used a euro-dollar FX assumption of 1.14 in the medium-term guidance. So just wondering if there's any change to that assumption, please, and whether the reiteration of the medium-term targets today could potentially be seen as an upgrade given what we've seen in the movement in the FX rate over the last 12 months or so, please? Fabrice Mouchel: Coming back to effectively the FX, the FX evolution as of now had a negative impact on 2028 AREPS in as far as -- as mentioned, today, the spot rate is more in the [ 118, 119 ] whereas what we had assumed during the Investor Day was more closer to [ 114 ]. So basically, what we've been doing is securing a level of FX above which we won't go, and therefore, we have limited our risk on the downside. We can still benefit from the upside. But all in all, the level at which we have hedged ourselves is above the 1.14 in terms of FX, meaning that there will be a negative impact on the FX compared to the 2028 guidance that was given. By the way, there would be another mechanical effect, a negative effect, which is the one that I've already mentioned for 2026, which is the lower level of indexation. And just to give you an insight, so we were at 1.4% indexation contribution for 2025, and we expect to be closer to 1% in 2026. So these are the 2 elements that might impact 2028. But all in all, we expect the trajectory that we have presented in terms of recurring results to be still aligned with the Platform for Growth targets. And in particular, this is consistent with the priorities that Vincent has reminded in terms of leasing, leasing, leasing because in the end, this growth will be coming from the leasing activity, the like-for-like growth that we will be able to generate out of our assets. Operator: And the last question is from Rahul Kaushal, Green Street. Rahul Kaushal: My first question is on the investment market. How much appetite do you see across various investment markets? And more specifically, what -- I guess, were the differences you see across various markets? And maybe if you can specifically touch on Germany there. And what is the spread in terms of cap rates between your ask and what you're seeing from interest from investors? Vincent Rouget: Thanks, Rahul. To answer your question on the spread, I mean, we are transacting. So we are transacting at values we are comfortable transacting to in line with our valuation. So in the end, we don't see so much of a spread. As we often mentioned in the past, some noncore assets we are disposing are core assets for other acquirers given the very high quality of our portfolio. And this is one of the reasons why despite, I would say, an overall difficult investment market, we managed to progress on disposals at pace and at scale because we've been one of the most active player in the market on the disposal market over the last year-end change. So I would say in terms of investor velocity, obviously, the Spanish market is showing quite substantial liquidity and the diversity of investors and buyers. So this is one of the strong markets, investment markets in Europe. We see some transactions in the U.K. market as well where you see some liquidity. We've transacted in Germany. So it's quite widespread overall. And interestingly, Fabrice mentioned it as well as part of his presentation, we are seeing some real mark of interest on the premium end of the mall sector in the U.S. The financing markets are wide open over there for senior credit, which is pricing at tight spreads. There's a lot of appetite and demand from debt investors from that perspective. It feeds into the retail market and the quality mall market as well or for some large-scale mixed-use type of properties with a very substantial quality retail component, which have been trading, let's say, in the 5% to 6% cap rate area over 2025. So we see encouraging signs of a strong return of investment market in the U.S. as well. Okay. I believe we do not have any more questions. Thank you. Thank you, everyone, for joining us for this presentation and the Q&A session, and we're looking forward to speaking with you very soon. Fabrice Mouchel: Thank you. Bye-bye. Vincent Rouget: Bye-bye.
Dave Huizing: Good morning, and thank you for joining today's call. I'm sitting here with Dimitri de Vreeze, our CEO; and Ralf Schmeitz, our CFO. This morning, we published our full year 2025 results on a restated basis, together with a presentation to investors, which you can find on our website. Here you can also find our disclaimers about forward-looking statements. Following Dimitri's and Ralf's opening comments, we will open the line for questions. [Operator Instructions]. Dimitri, the floor is yours. Dimitri de Vreeze: Thank you, Dave, and welcome to everybody here in this call. Nice to see you yet again, a busy week for us, busy week for you. The ANH call last Monday, now the full year results, and you've seen that there are a lot of numbers there. So Ralf will lead you through in a minute. And then next week, our integrated annual report. And as you've seen in the press release, we're also looking forward to host our investor event on March 12 about the next phase of DSM-Firmenich as a consumer company. Now let me go through a few of the highlights of the divestment of ANH to CVC. We explained that on Monday, but it was an important piece of our journey. And I think it's clear to say that it's really focusing on DSM-Firmenich to become a key player in Nutrition, Health and Beauty. And that's also where the value creation is. So an important point was the signing of the divestment of ANH to CVC. And we constructed a deal where we have mitigated the downside risks in the ANH business as well as the volatility, one of the strategic reasons that we announced that we wanted to divest, and we have implemented on that. Now we have created a deal structure that is not only mitigating those risks on downsides, but also creates an opportunity on upside. And that is also what we have announced last Monday, together with a favorable long-term supply agreement on vitamins. The EUR 2.2 billion, we found a fair value for the ANH business. I think it's a great business, but it has its volatility. We'll get proceeds at closing of EUR 1.2 billion and remained a 20% retained stake because we wanted to cater for a possible upside. The solutions core business, the specialty business is a really good resilient business going forward. So that whole multiplier on value we would like to capture, as well as the Essential co, which is predominantly the vitamins business, where I think CVC Capital Partners are a partner we work on different businesses with, and they are very much catered to make that business grow and add value and want to capture that 20% as well. Well, in the grand scheme of thing, 20% of EUR 2.2 billion is around EUR 0.5 billion. So it is also in terms of risk mitigation, not the biggest number. So please don't see the 20% is something where there's a direct link to our business, not anymore. It's deconsolidated. It has been out of our numbers. The EUR 9 billion is the DSM-Firmenich consumer scope that we're talking about. Now the earnout, the earnout is linked to business on solutions scope, very good business. So in that sense, I think the earnout is pretty much secure. And the part of the earnout is linked to Essential core. And then if that's half of the earnout, I think it's all been mitigated with CVC working diligently to bring that business up to [ thrive ]. And I think there are lots of opportunities with normalization over the business as we speak. Now what are we going to do with the money? Although let's make it very clear, the money only comes in towards the end of the year. As a sign of confidence, we will start our share buyback already in quarter 1 in addition to the EUR 1 billion that we have started and executed and completed for the Feed Enzyme business. And at the same time, not resetting the dividend, it remains stable also after the carve-out of ANH at 250. Now if we then go to the next slide that shows with ANH out of the way, we are on our journey where we merged the company, we delivered on the synergies. We have tuned our portfolio, and we have signed the deal to divest ANH. We're now into the next phase of DSM-Firmenich, the consumer company, and we're going to grow what we have. We're going to anchor what we do and going to deliver on our promises. On March 12, we'll give you that accelerate route with our BU President to get a bit of a feel on what we're growing and how fast we were growing. Under that journey, we have grown organic sales growth of 6% in '24 in the scope of DSM-Firmenich consumer related. And this year, we have announced the 3 years full year result, 3% growth on 2025 for that business in the environment we are in. So we're showing the resilience of that portfolio going forward. Now we then go to the next slide, a little bit the financials of that DSM-Firmenich consumer scope. If you move to the next slide, I'm going to show you a few numbers. Yes, here we go. So here are the numbers. Here, you can see we're a $9 billion company. We have grown that company 3% in '25, as we said, 6% in '24, if you go through the restate apples-with-apples comparison. An adjusted EBITDA of EUR 1.7 billion, EUR 1.8 billion, which was a 5% step up like-for-like. By the way, that's the same from '23 to '24. So it shows the resilience of that portfolio that we've built. With the trajectory of EBITDA margin, I think many of you asked the question, how do you come to the '22, '23 midterm targets? Well, we started with 18%. We moved it up to 19%, 19.6% for 2025. If you take the last 2 quarters, we're more closer to 20%. So also that trajectory will continue with a good generation of cash flow, the 10.5% conversion over sales in 2025. I already alluded on the dividend and on the share buyback and on the investor event on March 12th, where we're going to give you some insight on what the next phase of DSM-Firmenich is all about. Now last phase, last slide before I hand over to Ralf. In that whole trajectory, we stay true to our sustainability program. If you can go to the next slide, please. Then it's clearly that we also have made quite some progress on sustainability. It's important for our customers. So some people will say, well, why do you still work on sustainability? Well, apart from the fact that it's part of who we are, it is in the market we play in with customers important, 100% renewable ahead of plan and also some recent ratings of CDP, AA for climate and water, but also platinum metal for EcoVadis. It does matter. It is the company we're building. And we are proud that we also continued that during that merger. So we're well positioned to go into the next phase, which we call internally the accelerate phase, with growing what we have, anchor what we do and deliver. But before we go there, maybe let's look back for one more time in what we've done in 2025 before we move forward. And with that, I hand over to Ralf. Ralf Schmeitz: Well, thanks, Dimitri. And good morning, everybody. Before diving into all of the numbers, every number presented is, as Dimitri said, in accounting terms, a continuing operation. It represents the company we've been building over the past 2 years. And it's all about Perfumery & Beauty, Taste, Texture & Health; and our Health, Nutrition & Care business. As you'll see, ANH is not very much coming forward in the slides. It's now part of discontinued and the Dimitri and myself will be managing that business for cash until the closing has finalized, which we anticipate towards the end of the year. It will be positive in cash flow generation as well, and that's what we'll steer up on, and we'll continue to report on the cash performance going forward. Now a few things. Happy with the announcement on Monday, where obviously triggered the whole event of all of the restatements and we've been releasing the new numbers on Monday afternoon. So it is a lot to take in. We appreciate that. I think also if you look at our press release, we have been as elaborate as possible, giving you the full P&L, the balance sheet and the cash flow ahead of our annual report. In the Annex we've tried to bridge also between the total group and the continuing operations and show you all of the moving pieces. But we also appreciate that in a busy reporting season, maybe not everybody has restated it. In the Annex, on Page 21 and 22, we've basically also included a reporting as per the old world, including the divisions before restatement to accommodate you as much as possible. Now Dave and the team are happy to take your questions. The annual report next week, that Dimitri alluded to, will also be based on continuing operations that will allow you also to all adjust to the new world and then we move from there. Now let's dive in a bit how that new world has performed. But before we move there, I think this slide is an important one for me, where overall, you've seen the work and the outcome of all the activities around tuning of the portfolio, where on a group perspective, we've developed the group towards a 22% margin. It's very much in line with the trajectory that we envisage. But also you see the 3 BUs with P&B, TTH coming towards the lower end of our guidance, also very nice progress on those fronts. And HNC really showing a strong recovery towards that trajectory as well. And I'm happy, although that the restatement is a lot to take in, it does show that also going into '26, we've got the right reference on how we're doing as a company. Now let's dive in on the next page, please. Overall, the group, Dimitri already highlighted it, for full year overall 3% organic sales growth in not the easiest environment with a stronger H1 than H2, but encouraging growth throughout the year with the leverage in EBITDA, so a 5% step-up in EBITDA and has set the margin of 19.6%, very nice. But for me, it's more relevant as we're on a trajectory that the second half is at 20%. And that's something that we'll continue to improve on. If we look at Q4 specific for the group, overall, a 2% organic growth and a 3% step-up in EBITDA and a margin very much in line with prior. But I think it's more relevant to zoom in into the business units. But before we go there, also a highlight on cash. We delivered overall, remember that when we guided for a 10% target that, that was for the group. We've delivered upon that for the total group. So the total group was just over 10%, but also in the continuing operations, we've delivered upon that, and I'll comment that towards the end of my voice over. Another metric that I want to call out is that we talk about our capital returns. Overall, the core ROCE for continuing operations stood just over 11%, showing also the quality improvement on that front over the period. Now let's zoom in on the next slide, please, into the businesses, starting with Perfumery & Beauty. Overall, a 3% organic sales growth. Keep in mind that throughout '25, we obviously had the headwind in sun filters, where we've seen some softer conditions. Overall, adjusting for that, the sales growth is 1% to 2% higher throughout the year. And going into Q4, we've seen an improvement in sequential conditions with an overall 4% organic sales growth with a strong contribution of Fine Fragrance with a high single-digit growth and a more mid-single-digit growth and a more mid-single-digit growth in our Consumer Fragrance & Ingredients business, whilst the recovery in B&C did not come through yet, overall delivering a solid performance in our Perfumery & Beauty business. Margin overall, slightly impacted by FX and the mix effect as a result of that on a full year basis, very much in line at 22% on average despite a difficult exchange rate environment. Moving then on to the next page, please, to Taste, Texture & Health. Overall here, a very strong year. Again, 4% organic growth. Keep in mind, the comps of last year on the back of a very strong 2024, that translated again in a very nice step up in EBITDA of 7% year-over-year when adjusting for the FX. And also here, the margin is something we continue to improve margin positively, as said, towards the 21%, the lower end of the range, and we continue to progress from there. If we look at Q4, a bit impacted by softer conditions in the U.S. mainly. Overall, a 2% organic sales growth, still reflecting the contribution of synergies and very well positioned in the market, but we see, especially with our key accounts in the U.S., a bit of weaker. Overall, if you look at it from a segment basis, beverage, a bit softer, but dairy, baking at very strong and that continues. EBITDA quality very profound. Q4, a very nice step-up. Overall, a 10% step-up in EBITDA. And when adjusting for currencies and also the margin showed a very strong step-up versus prior, in line with the ambition that we have for this business overall. Then moving to Health, Nutrition & Care on the next page, please. Overall there, we often talk about the journey of Health, Nutrition & Care and also that journey continued. So on a full-year basis, continued growth of around 3% organic. A continued strong performance at the EBITDA side, a 4% step-up when adjusting for currency and also the margin continues to improve. You also see that in Q4, we again delivered a 20% margin for the business. The growth was somewhat impacted by timing of a bit more lumpy order in our pharma business. There is a bit of a shift there that overall, adjusting for that, the organic sales growth stood at 1% for the quarter, where we see a continued strong environment for Early Life Nutrition and our HMO business, but we also see the uncertain consumer behavior impacting a bit of higher dairy supplements and Eye health business in the fourth quarter. Overall, margin more or less flat as said in Q4. But overall, a continued trajectory of growth also in Health Nutrition & Care. Maybe then last, but not least, looking at cash, overall, important on the next page, please. Our cash performance -- sorry, before we go there, there was one more slide. I think here a lot of detail. I did want to come back on the overall performance of the group as well because I think that's important. It's a bit of a busy slide, but it's coming out of the press release. I think the key highlight here are two things. On the one hand, our adjusted EBITDA for the group, overall will land just below EUR 2.3 billion, in line with the guidance that we gave, set aside for a bit of weakness in Animal Nutrition in the fourth quarter and a deteriorating FX environment. Overall, we came in at EUR 22.80 billion for the total group, so very much in line from an overall perspective as well. And also on the tax side, you see that our rate is normalizing at 21% for the continuing operations where we aim to improve a bit further, I think, as relevant going forward. Then to the next page to our cash conversion. So overall, I think looking at a few drivers. Overall, working capital was below 29%, a little up versus prior when we talked about cash and the unwind of inventory in the second half. I'm pleased to report that our second half performance was very strong. Remember that we came out with the half year numbers with a softer performance in the first half, so happy to see that rebound. However, in the current environment, we were not able to fully absorb the uplift of inventory on the back of the tariffs and the carve-out activities that we've done. So that is to further unwind in '26 and causing us a bit of a percent in working capital. Overall, our sales to cash conversion for the continuing operations was also well above 10%. And there, we alluded to that in the first half, a bit of a shift, where in '24, you had a bit of a benefit from some timing of payments, including incentives, which is obviously then impacting '25. So -- but across the two years, a 12% performance, and we'll come back on that in the March 12th event where we will be stretching ourselves a bit further in terms of target setting on that front. But overall, an encouraging performance. And a good momentum going into '26. And maybe with that, Dave, we pause with the voice over and move to Q&A. Dave Huizing: Yes. Thanks, Ralf. Indeed, it is a good moment to start with the Q&A. [Operator Instructions]. And with that, operator, we can start. Operator: [Operator Instructions] Our first question comes from Nicola Tang with Exane BNP Paribas. Ming Tang: I want to start a bit with the outlook. I know you didn't give an outlook and we have to wait until 12th of March to get a bit more color. But I was wondering if you could talk a little bit about how the year has started across each of your continuing divisions. And you've given us a restatement for the past year, but is there anything to be aware of in terms of any changes in seasonality versus what we're used to for old DSM-Firmenich. I'll leave it there. Those will be my questions. Dimitri de Vreeze: Okay. Let me respond on that. Indeed, on March 12th, we'll give the formal outlook, but I can give you a little bit of color, and then you can prepare your outlook yourself before we go on March 12th. What you can expect from us on March 12 is that we'll go a little bit to industry standards. So we'll give you a bit of a range on where we see organic sales growth, the EBITDA quality as a percentage, and obviously, the cash percentage of which you were clearly indicating, all of you, that we felt that the 10% was right, conservative. So we're going to review that and come back to you in March on that. Well, a bit of color. What we have seen overall, before I dive in a little bit to the 3 business units and the 3 businesses. We've seen a bit of a cautious consumer behavior around the globe, but predominantly in North America, which is an impact on the Taste part of TTH and certainly dietary supplements and the eye health part in HNC. We'll come back to that in a minute when I'll give you a bit of color for BU. I think a 3% growth of the consumer in scope business for DSM-Firmenich is a good growth in the current market context, considering also the 6% growth we've done in the same scope in 2024. Now organic sales growth, 3% if that is in this current setup, we didn't see any change in trends from Q4 into Q1. So I think you can see that Q1, certainly for now half of February, we will not see a huge change from Q4 to Q1. We will know a little bit more in March. We'll give you the input, I think at the end of the day. A 3% in a year 2025 is a little bit the range where we've seen in a difficult market context, is what our business can bring, with a nice pipeline and growth going forward, still to the midterm target of 5% to 7%. And the BU presidents will also be there at March 12th to give you a bit of a feel of what is in the pipeline, what are the drivers? The fundamentals of the businesses are absolutely the same. We've all seen human mankind when uncertainty is there, they will start to be a bit more cautious. And there are two things of it. They either pile the stock or they destock. Pile stock, we saw during COVID. Now we see that destocking happening and then it normalizes over time. When it exactly will normalize, we don't know, but that normalization will take place, I think that is clear. Now, some color per business, Perfumery & Beauty. I think a good result in Fine Fragrance, high single digit. We see that continue. Mid single-digit growth in Consumer Fragrance, also there, with that trending doing well. Ingredients, for us, very good. Remember, mid single-digit growth after we've tuned the portfolio. We had a EUR 1.2 billion portfolio. We've tuned it, made deliberate choices where we want to grow. That ingredients we have are a big part, are specialty ingredients with mid single-digit growth in Q4. And Beauty & Care, the destocking effect fading out in Q4 and moving that into 2026, where we will see normalization going on. Now Taste, Texture & Health. Here, overall, a 2% growth in Q4, 4% for full year, with a 10% growth in the year before. So let's look a little bit about the 1 to 2 years trending with the comparison. Very good growth in pet food, in bakery and dairy. Also, dairy as a segment linked to healthy food. GLP, we really see a pickup there, a bit slow in beverages, but above all, in the North American region, that uncertainty has caused cautious behavior of consumers and therefore, also our customers, so we have seen North America being soft with destocking. Now then Health, Nutrition & Care. Health Nutrition & Care grew 3% for the full year, minus 1% for Q4, but you have to correct for that specific pharma order, which is sometimes in 1 quarter to another, it would have grown with 1%. Also here, predominantly the North America bit Dietary Supplement and Eye Health, Early Life Nutrition, Pharma, really, really doing well with good growth also on biomedical. So the fundamentals are still there. We've shown, build on what Ralf said, a 3% growth in a difficult market is creating a bit of confidence. So we're not giving an outlook, but we are giving you a lot of color to understand where we are heading for. Dave Huizing: Second question, Ralf? Ralf Schmeitz: Okay, yes. No, supplementing, I think Dimitri gave a better call. I think overall, Nicola, I think also, if you look at the Annex, then the impact of the restatement is very limited. So the regular seasonality will remain in place. Not that, that is very big, but on the back of the restatements, there's no fundamental change on that. Other than that, is that you now see the quality of the tuned portfolio. And if you look at the overall margin, fairly stable throughout the year and also from a growth perspective, not much of a deviation. Other than that, some of the a more volatile and weaker segments have now been restated. So that generally lifted the performance a little up. Operator: Our next question comes from Charles Eden with UBS. Charles Eden: My first question is more of a follow-up around sort of comments on Monday around the stranded cost of EUR 75 million that you mentioned. Would you expect this to mean that you start '27, I guess if we assume the deal closed at the end of '26, with a EUR 75 million headwind to continuing op EBITDA? Or do you expect to announce sort of another sort of top-up cost savings program to offset this amount, either fully or partially? And then second one, I'm just kind of follow up on the '26 guidance. And can I pressure a bit on the decision not to provide the guidance today. I guess, given the initial plan was to announce last summer, you've known the scope for a while when Ralf, as you mentioned, the restatement are pretty small for the continuing ops. So I'm slightly surprised you're waiting until March to give us that outlook. It just feels like it adds another period of uncertainty for your shareholders who've been patient and waiting for the disposal. So can you just help us understand that? Dimitri de Vreeze: Okay. Let me do the first one and then Ralf could explain the outlook. By the way, 12th of March is three weeks away. But apart from that, that's Ralf to respond. On the stranded costs, thanks for giving me the opportunity to elaborate on that. The stranded cost will have zero effect on our EBITDA. So we will compensate it for that. We have programs ready. We know when the TSA will run out. We'll take actions before. We've done it several times with many of the divestments we've done. So the EUR 75 million will be fully compensated for that. Maybe you see some small effects from one month to another, but we have road map, a road book where we exactly know what to do and how to phase that out. So that will not have any effect on our bottom line throughout the period. Ralf Schmeitz: All right. And let me then comment a bit further on the guidance. The short answer was of the Dimitri, it's only three weeks away. Now but on a serious tone, Charles, it's something that we looked at as well. But as you'll appreciate, we just closed the transaction literally over the weekend and then the restatement and the announcement of the deal. Obviously, when we want to guide, we want to guide for continuing operations. But I think also through the color that Dimitri gave is that we will be giving that guidance in full, including the BUs, but also about what is comprising of the businesseses, I think also a guidance today would kind of land in a territory where there's a lot of -- where people are still digesting all of the changes and going through. I mean, if you look at it, there's not even a consensus out there in terms of that around that new company. But rest assured, we are managing the business for growth. You said that it adds a period of uncertainty. I don't think so. I think with the voice of Dimitri, I mean, the color that we gave is in a difficult environment in '25, how we managed to deliver at least 3% growth. We will be managing the business for growth going forward. We will be tilting -- what Dimitri clearly said is that our guidance will be very much around organic growth, EBITDA, quality and cash where the cash target we will be uplifting, I think that is clear. And at the same time, the margin is a continued improvement story as well. We are happy with that the actions of tuning, also, if you look at the bridges that we presented at Capital Markets Day, there was a step-up of 2% of that. We have delivered on that. We're now at a 20% margin, but it's clear that we want to continue that trajectory also going into '26. So I think overall, there is comfort around that, managing the business for growth. We continue our margin trajectory and we'll be uplifting our cash performance. But then zooming in onto the full details and everybody had time to digest also the new reality and then we'll be bringing also the BUs that can then elaborate a bit more on our growth ambitions or innovation-driven ambitions. And with that, I think then, there's more purpose of giving you the outlook then on March 12. Charles Eden: Appreciate the color. I guess my point would just be we're going to recalibrate consensus now. And then maybe in 3 weeks, it needs to be recalibrated again. So it just creates a netbook. Anyway. I appreciate the color. Ralf Schmeitz: Yes. All right. Operator: Our next question comes from Matthew Yates with Bank of America Merrill Lynch. Matthew Yates: A couple of questions, please. The first one on the Perfumery & Beauty business. If I take the sort of continuing operations, I think the margins were down 80 basis points year-on-year. Can you just help us disaggregate that a little bit? You know, what was the FX impact on that? You talked about negative mix, but Fine was actually growing quite well. So, I guess, the mix isn't obviously a headwind unless, you're suggesting that beauty is a very, very high margin. And then the second question for Ralf around the cash flow. And I apologize, I'm not really sure how to phrase it because I haven't been through the accounts in a lot of detail. Your cash conversion was down about 3 percentage points year-on-year. It looks like about half of that is probably explained by working capital and then there's another half that I think, in your introductory remarks, you talked about timing. I'm just trying to understand, you're saying you're aiming to raise the cash flow conversion target. You've just done 10.5%. Like how would you honestly assess the cash conversion last year? What -- are there things that you think was depressing that conversion that we wouldn't necessarily extrapolate going forward? Just trying to get an assessment really about how much cash the business is generating? Ralf Schmeitz: Yeah. You want to take P&B? I'll take the cash. Dimitri de Vreeze: Yes. I think on P&B, it's rather clear. You basically said it's FX and it's mix. So remember that Fine Fragrance is around EUR 600 million out of the total. So obviously, we had a growth there. But Beauty & Care was lagging behind, softening, waiting for normalization. So it's a mix effect. That's about half and the other half is FX. Ralf Schmeitz: All right. And then building on the cash, and I appreciate the question, Matthew. Let me -- I think your assessment -- your quick assessment is a good one. So there's a few moving pieces around working capital. I commented on that in the opening words, around inventory, that we're not able to manage everything through. So we're carrying a bit about an elevated level. Inventory is about 1% differential. Last year, we continued to make good progress. This year, whilst the efforts were there to reduce it, I think, overall, the tariff environment and our carve-out activities cost an elevated level. Obviously, with a somewhat softer demand environment in the second half. So that's about EUR 100 million and accounts for half of it. The other moving pieces in working capital, generally on the payable side, I'm happy if you look at our DPO, it's slightly above 100. We're very much in line with prior. Receivables have been elevated as well. I think everybody is carefully managing the cash flow and that costs us a bit of half a point as well. So I think that assessment is absolutely fair. Half is working capital, and then I'm confident that we will be able to rebound that. And that's how I am also looking more at the cash flow over the 2-year period. If you look at the continuing operations, we included that in the press release, was 13% last year, now with 10.5% now on average, that lands very much at a 12% rate over this period. Now, what do I mean in terms of timing of payments? There's always a bit of an overflow from year-to-year. And sometimes that allows you to slightly perform better in one year, and then you see the rebounds next year. That's what we've seen. But if you go back to a half year call, I also explained that the incentives had an impact on that as well. On the one hand, '24 was a strong year, but the actual cash out is actually the year thereafter. So whilst at the same time, you have a bit of an elevated level of cash generation in '24 because you got the strong business results, but then obviously, you see a bit of a higher outflow in the first half of the year thereafter. So I think that's why you need to balance the cash over the 2 years to really see the current earnings performance, but at the same time, we have a continued step-up that we want to do in terms of working capital, but also CapEx. If you look at it, when we gave the prior guidance was always for the full group. We guided for 6% of sales. We landed spot on, on that figure. If you look for the continuing operations, it's slightly elevated because we're finishing the Bovaer plant, so that has, still a cash outlet this year and next year. But there's a potential that, that will normalize back to the 5% for the continuing operations, so that in itself was also 1.5% improvement. So I think we've got the levers. We'll elaborate a bit more on that on March 12th as well on what the programs are in place and where Dimitri and myself are focusing on and steering on, but there is a potential uplift for that target, and we know where that needs to come from. Operator: Our next question comes from Alex Sloane with Barclays Bank PLC. Alexander Sloane: Two questions from my side. First one on HNC, could you remind us roughly how much of the division ARA oil sales make up? And if you were to see significantly increased demand there from market share gains, given everything that's been happening, you know, can you talk to your capacity to service that demand and what that could potentially mean for HNC in '26? And then just the second one, just going back to Perfumery & Beauty and Matthew's question on the margin. I mean, was there any of that margin pressure that may be related to the kind of increased price competition in perfumery ingredients that we have seen at some of your peers. I think so far, you haven't really called that out, but just wondering if you can maybe touch upon that? Are you seeing any pressure on that front? Would you expect to see any pressure on that front? Dimitri de Vreeze: Thank you for those two questions. Let me elaborate on that. Thanks for the ingredients China part. You didn't hear us calling that out because it's not an issue for us. Now then you could do a follow-up question. Yes, but why are the others talking about it? Because we have tuned our portfolio already 2 years ago. Remember, we had a EUR 1.2 billion ingredient portfolio, where we have made deliberate decision not to rebuild Pinova. We have sold the aroma business. We have tuned down our portfolio. We've upgraded our portfolio and we have an EUR 800 million portfolio left in the ingredients, apart from the CapEx. So that EUR 800 million is predominantly specialties, fragmented, small molecules. And the pressure on China is on the big molecules, the menthol, the citral we were not in those big molecules because these big molecules, scale is important, cost is important, commodity type of elements are there. We don't want to play there. It's not our profile. We are in the Fragrance ingredients, in the fragmented ingredients, and therefore, you don't hear us call us out. And if you see at the results, the ingredients grow mid-single digit, and we're very happy with that. So that's why you didn't hear us calling it out because it's not an issue for us. Now then on your HNC part, I will be less specific because obviously, this is also a customer as well as competitive -- sensitive. We are the best-placed player in Early Life Nutrition. I think nobody would debate that. We are in ARA, we are in DHA. We now are absolutely the first entrants in HMO in China, but also more than HMOs in the pipeline to follow. And obviously, what we have seen on ARA is helping the story we tell Early Life Nutrition. Innovation is super important. Quality is super important. Credibility and reliability is super important. And I think DSM-Firmenich is always have -- always been that type of partner for our customers. And obviously, what is happening on the Early Life Nutrition market is helping us a little bit, and we will see a little bit of tailwind for that because I think it hints to what we want to be for the Early Life Nutrition phase. Now HMO, I spelled out earlier, that's a category where we see more than EUR 100 million-plus segment moving towards. And Early Life Nutrition, as part of our HNC business is around 25-plus percent of the portfolio. So it's definitely an area where we want to play, where innovation is important, where premiumization is important. Just to give you a bit of reference, everybody is always asking, oh, Dimitri, Early Life Nutrition is bad because birth rates are going down. The issue is that the premiumization with new ingredients is going up, the ingredients play into the Early Life Nutrition has seen very, very healthy growth in the last two, three years if you're there with the right innovation. Let me pause here. Operator: Our next question comes from Fernand de Boer with Degroof Petercam. Fernand de Boer: Yes, I also had a question on Early Life Nutrition, but that was answered. But on the new company of the continuing operations, how much of your cost base is actually in Swiss franc? Ralf Schmeitz: Great question. Overall, our FX profile improved. Well, normally, you get a slide from me with the housekeeping indicating that a bit as well. I think overall, the dollar exposure came down to about [ $13 million ] , that was previously closer to [ $15 million, $16 million ]. So that has somewhat improved. And on the Swiss franc, our overall exposure was CHF 800 million, it's now CHF 600 million exposure. Overall, the impact of [indiscernible] is about CHF 6 million, I think that was previously CHF 8 million. So somewhat improved profile on the FX side. Obviously, the current environment is not very helpful. So we will see an impact of that. But overall, the sensitivity has improved with the separation of ANH. Fernand de Boer: And maybe to come back on the guidance question. The fact that you don't give a guidance today for '26, absolutely does not mean that you are going to change your midterm guidance of ambitions? Dimitri de Vreeze: The answer is for 2, yes, and for 3, no. OSG, no change midterm. EBITDA, no change, midterm. And you wanted us to change the midterm guidance on cash because we said above 10%. And we got so much comment that, that was absolutely conservative, et cetera, and Ralf and myself, said listen, we are also building a company, so we start with more than 10%. And I think during that event, I also asked for a little bit of patience. Now, we have delivered 2x above the 10%. And I think I've heard Ralf saying that we would upward adjust that cash target. But let's have that for March 12. So 2 out of 3, absolutely, yes. And the third one, a yes, but it will be changed upward. Fernand de Boer: Midterm still the starting point is '24? Dimitri de Vreeze: The midterm starting point in '24... Fernand de Boer: Because actually in 2022 you gave the guidance for midterm and then in '24, you did actually the same for a smaller company, but not that you now mean with midterm, okay, we're going to have midterm targets, and then the starting point is '26. Dimitri de Vreeze: No, because we're already in '26. By the way, we've always said a midterm target starting run rate into '28. So that is what we said and that's still consistent. It's not a moving target. Yes, it's not like my son saying, I will pass my exam, but not this year, but next year. Fernand de Boer: Okay. Dimitri de Vreeze: You don't sound very convinced. Fernand de Boer: Well, what I said, we had '22 and then it was midterm and then in '24, it was also still midterm, and that's why I'm asking that -- okay, the answer is very clear, thank you. Dimitri de Vreeze: Yes. '22, the company didn't exist as we are today. So we started in May '23, that is... Operator: Our next question comes from Chetan Udeshi with JPMorgan Securities. Chetan Udeshi: I have two. The first one is quick. Is there any implications on your tax rate, excluding animal? I mean, I suppose animal wasn't making much money anyway. So -- I would guess, but just to clarify, the second question is your cash target, and I appreciate you'll probably upgrade that conversion target, which is good to see. But it's based on your adjusted numbers. And I'm just curious, as we go past this phase of restructuring and separation. What is the level of APM that we should have in mind that sort of leaks out from your adjusted cash? Because when I look at what you give us in terms of adjusted free cash flow versus what we can derive just taking your cash flow statement, the numbers are pretty different, and I would hope, over time, that gap reduces. So I'm just curious what would be the normal level of APM that we should have in mind? Ralf Schmeitz: Yes. Thanks for questions, Chetan. So on the tax side, overall, I made a quick comment in the opening statements. So overall, our effective tax rate for the continuing operations is at 21%. I think previously we guided for 21% to 22% for the total group. Happy that we came in on 21%, and we continue to aspire to minimize the leakage on that front, but this is very much in line with the guidance that we gave before. So the impact of the separation of ANH despite having, of course, its base in Switzerland didn't adversely impact the company, which is good. And again, I think that's also going to be the guidance going forward, in that same range that the tax will be around that 21% level. Now then, with respect to your APM questions. I think in the Annexes of the press release, you can actually see the APM development as well. Now obviously, throughout these tuning activities, you're rightly so, we had a bit of leakage. And normally, when you transform, there is a bit of a cost associated to that. We took that into account in the company that we want to build. But over time, from a cash perspective, you see it coming down. It's a constant point of attention, also for Dimitri and myself, we don't want any leakage on that front. We have substantially reduced it over the years from '23 to '24 to '25 also with some of the merger costs flowing out. And the guidance for '26 is that it should come down to below EUR 100 million, but we continue to stay focused on it to reduce it as much as we can. So the adjusted number comes closer and closer to the nonadjusted figure. Dave Huizing: We're now at the end, I think we are at the end of the Q&A session. Maybe closing remark, Dimitri, you want to make? Dimitri de Vreeze: No. Thanks, Dave. Indeed. Thanks for your time. Thanks for your understanding. Let's dive into the numbers. Please reach out to IR to really understand. I understand there's a little bit of pushback why we don't give an outlook. Now, you need to establish a full understanding of the base before you give an outlook. Imagine we've given an outlook, you would have asked based on what? So let's do step 1 first, March 12 is around the corner. We gave color on the business. I think at 3% in a difficult year. That's what we inspire to. So even to the midterm target, when business is normalizing, is absolutely in play with an EBITDA trajectory starting from 18% to 19%, close to 20% and we will not stop after 20%, we move towards the 20% to 23%. And I think with the cash we clearly indicated that we'll listen to you and that we'll come with a new midterm target on the cash as well as in the outlook for 2026. Now with all that, over the last 2.5 years, I think we worked diligently to bring DSM-Firmenich into the next phase, a EUR 9 billion business with today already at 20 -- around 20% EBITDA with good cash flow generation. To the point on what's a normalized APM is also linked to what is the next phase? The next phase will be accelerated. We will not go for big M&A, we're going to grow what we have. So we're happy with that portfolio. We're going to show that potential with an improved step-up still from the EBITDA from 20% to the range of 22% to 23% with good cash flow generation and with a clear understanding for our investors. We have paid around EUR 2 billion of dividend over the last 2 years. It is important to us. If we have additional leverage on the balance sheet, we are doing share buybacks. We finished the EUR 1 billion. We'll add another EUR 0.5 billion already in anticipation of the close towards the end of the year. So we also take that very seriously, and I hope we all see you on March 12 to show that what we have built has huge acceleration potential. And with that, let's close the call. Dave Huizing: Okay. Thank you, Dimitri. Thank you all for attending today's call. And with that, we can close the webcast. Any questions, as the gentleman already said, make times, please reach out to Investor Relations. We will pull a consensus ahead of 12th March, so that also we will then give basically an outlook on basis of that you've referenced to your estimates. Back to the operator, please. Operator: This concludes today's call. Thank you, everyone, for joining. You may now disconnect.
Dominik Ruggli: Good morning everyone, and welcome to the press conference call of Leonteq's Full Year 2025 Results. Today at 6:30 a.m. we published the results press release, the results presentation, the annual report and the sustainability report for 2025. All these documents can be found in the Investor Relations section of our website. In today's discussion of our financials, we will use information that references alternative performance measures. For that, I refer you to the APM section at the end of the press release where you will also find the usual cautionary statement. That cautionary statement also applies to the information provided verbally in this presentation and the Q&A session. Here with me today are Chief Executive Officer, Christian Spieler; and our Chief Financial Officer, Hans Widler. We will start the presentation with our key messages. Afterwards, Hans will provide you a detailed discussion of our financial performance in 2025. And Christian will then take you through our strategic progress update. The presentation will last about 45 minutes, after which we are happy to take questions. We intend to close the conference call latest by 11:00 a.m. With that, I hand over to you, Christian. Christian Spieler: Thank you, Dominik. Also from my side, a warm welcome to all investors, analysts, and media representatives on this call. 2025 presented a mixed set of developments. We closed the year with an unsatisfactory result, as challenging market conditions and lower activity from our historic partners weighed on our earnings. We also continued to feel the effects of legacy matters in our business. At the same time, we began to see improved client momentum in the second half of the year. The transition to the new regulatory regime in a very short time frame was a major achievement, reflecting significant commitment across the entire organization. At the end of December 2025, we reported a strong CET1 ratio of 16.9%. We have also executed against our strategic priorities in a disciplined manner along our ROE plan: Resize, Optimize and Expand, with the focus on resizing and optimizing in 2025. We can now fully focus our resources on expansion while continuing to transform the company. For 2026, our full focus is on growing and expanding promising businesses, and we expect to return to a positive pretax result for H1 and full year 2026. I also want to draw your attention to our further announcement today: the nomination of Felix Oegerli as new Independent Chairman proposed for election at the AGM 2026. Felix is an accomplished leader in the financial services industry and brings experience across the major business areas in which we operate. He retired last year after more than 11 years at ZKB as Head of Trading, Sales and Capital Markets. Before that, he ran the Kantonalbank's liquidity management, short-term interest rates and prime finance activities for more than 5 years. Earlier in his career, he spent 21 years at UBS, where he held positions including Global Head of Prime Brokerage and Deputy Global Head of Securities Lending and Repo. I am convinced that this background and skills will be of great value in the continued transformation of our company, and I very much look forward to working with him. Now I'll hand over to Hans for the financial update. Hans Widler: Thank you, Christian. Also a very warm welcome from my side and thank you for joining us here today. I would like to start by putting our performance into the context of the market environment we faced as shown on Page 6. 2025 was indeed a challenging market environment for Leonteq with 2 distinctly different half years. Looking at the left-hand side chart, we provide you with the development of 1-month implied versus realized volatility of the Standard & Poor's 500. In the first half year of 2025, we saw a significant increase in market volatility following the so-called Liberation Day. In the second half, the realized volatility decreased significantly and was constantly below the implied volatility. Why is this relevant? We keep a structurally long volatility position on the trading book as a macro hedge against market dislocations. In periods of heightened market volatility, we benefit from significant positive contributions on the trading side. Due to the fact that the realized volatility was constantly below the implied volatility, we recognized negative contributions from our hedging activities in the second half of 2025. Such a pattern is very rare and unusual over an extended period of time. Looking at the right-hand chart, the Swiss franc, which was the best performing currency in the G10 last year, continued to strengthen against major currencies. This impacted parts of our revenues given a large component of our client flow is denominated in U.S. dollars and in euro. Let's move now to Page 7 to look at how these parameters concretely influenced our numbers. Our net income declined by 17% to CHF 178.5 million in 2025. This was on the back of 4 key factors. First, we had a temporary halt in new business activities with Leonteq's largest insurance partner due to a merger-related shift in priorities. Second, on the structured product side, we saw a decrease in margins from 70 basis points to 59 basis points on the back of a change in our partner and product mix. Third, contributions from large tickets decreased from approximately CHF 14 million to CHF 7 million year-on-year. And fourth, the before-mentioned strengthening of the Swiss franc impacted fee income by another CHF 5 million. Let's look now at the net trading result, which is influenced by our hedging and our treasury activities. In 2025, the net trading result decreased to minus CHF 3.1 million compared to CHF 21.5 million in 2024. On the hedging side, we recorded positive hedging contributions in the first half of 2025. These were reversed in the second half on the back of the realized volatility which was consistently below the implied volatility as mentioned before. Contributions from Leonteq's treasury activities were also negative, primarily due to a change in our investment portfolio in preparation of the newly defined business-specific liquidity regime. This resulted in reduced credit risk exposure, but also yielded in lower returns. For the same reason, we extended and used available credit facilities leading to a net interest result of minus CHF 6.4 million. On the cost side, underlying operating expenses decreased by CHF 36 million or 16% in 2025. I will give you a detailed breakdown of the drivers and also the view between reported and underlying costs on the next page. Overall, on the back of lower net fee income and a reduced trading result, we reported an underlying pretax loss of CHF 21.5 million for 2025 despite significant cost reductions and renewed momentum in client business activities in the second half of the year. On an IFRS reported basis, which includes one-off charges that are non-recurring in the amount of approximately CHF 11 million, the Group net loss amounted to CHF 33 million. Moving now to Page 8. I would like to give you more color on the drivers behind our cost base. On a reported IFRS basis, costs are down CHF 25 million or 11%. We reduced personnel expenses by CHF 20 million. This was driven by a more than 50% reduction in lower variable compensation committed for 2025 compared with the previous year. We also reduced our head count by 7% and reduced our contractors by 24%. Leonteq also recognized lower net provisions of approximately CHF 5 million due to the conclusion of legacy matters. On an underlying basis, our costs went down by 16% to CHF 194 million. This excludes CHF 2.2 million one-off costs in relation to the transition to our new regulatory framework. It also excludes CHF 9 million for one-off restructuring costs which we incurred in 2025. For 2026, Leonteq expects total operating expenses of approximately CHF 200 million. This slight increase compared to the underlying cost base 2025 reflects 3 factors. First, the planned launch of the retail flow business in Germany, which will require marketing-related expenditures. Second, we expect to see a certain normalization of the variable compensation following 2 years of significant reductions in bonuses for our staff. Third, we further expect certain index-related price increases, in particular on market data services and software licenses. These increases are partly offset by the full-year effects of cost reductions achieved in 2025 and result in net increased costs of approximately CHF 6 million. Let us now move to Page 9 of the slide deck. Since 1st January 2025, Leonteq is subject to enhanced capital and large exposure requirements as defined by the Swiss Capital Adequacy Ordinance. This governs capital requirements for banks and account-holding securities firms in Switzerland. Simultaneously and effective January 2025, the revised capital adequacy requirements known as Basel III final entered into force. Under this framework, most relevant are capital calculations under the standardized approach for market risks for Leonteq. These were introduced under the so-called Fundamental Review of the Trading Book. I will refer to FRTB from here onwards during the presentation. Leonteq's business model is largely driven by the issuance of structured investment products with embedded derivatives. Therefore, Leonteq is required to perform capital calculations according to FRTB. Taking into account, the complexity of risk-weighted asset calculations under FRTB, Leonteq was allowed to temporarily apply the so-called simplified standard approach over a phasing period until end 2026. Leonteq invested significant resources in implementing FRTB, which required substantial changes in systems, data infrastructure and calculation engines. We completed the transition to FRTB in November 2025 and thus significantly ahead of schedule. The implementation of the risk-weighted asset calculations according to FRTB had a material positive impact on Leonteq's capital position. The market risk risk-weighted assets decreased by 16% resulting in an increase in the CET1 ratio of approximately 270 basis points to 16.9% at the end of December 2025. This is a strong capital ratio and well above the guidance provided with first half year 2025 results. Looking now ahead, we will continue to optimize our capital framework to reduce the sensitivity to risk-weighted asset fluctuations. We also want to maintain an appropriate buffer under different stress test scenarios, and for that, an appropriate observation time period is required. In light of the reported financial loss and in line with its capital return policy, the Board decided that Leonteq will not pay a dividend for 2025. The Board considers it prudent not to return capital at this point in time. This will allow the effectiveness of measures taken to further optimize the company's capital framework to be monitored. The Board is determined to return excess capital through a share buyback in early 2027, provided that the CET1 ratio is maintained at a level meaningfully in excess of 15% on a sustainable basis. This is also very much in line with the capital return policy defined last summer, and we are confident that we will be able to deliver also on this ambition. Continuing on Page 10, let's look at our balance sheet. In terms of numbers, we reported an increase in total assets of CHF 0.5 billion to CHF 11.2 billion at the end of 2025. This is predominantly driven by an increase in trading financial assets on the back of higher equity hedging positions which in turn increased our securities lending activities. Cash and receivables decreased mainly due to a decrease in transaction volumes towards the end of the year. Our investment portfolio remained broadly stable at CHF 2.7 billion, but the composition is today even more conservative. In preparation for the business-specific liquidity regime, Leonteq shifted its investment approach to higher quality liquid assets resulting in reduced credit stress exposure. On the liability side, Leonteq issued products increased by 2% to CHF 5.3 billion, underscoring the continued confidence by our clients in Leonteq. We shifted further certain of our funding activities in relation to the before mentioned increase in equity hedging positions and saw an increase in short-term credit and liabilities by 20% to CHF 2.3 billion. Lastly, our shareholders' equity reduced by 14% to CHF 0.7 billion. This was predominantly driven by 2 factors. First, Leonteq made a CHF 52.9 million distribution to shareholders in April 2025. Second, the depreciation of the U.S. dollar against the Swiss franc had an OCI impact on our structural U.S. dollar position of CHF 46.6 million. This capital impact, however, strongly correlated with the currency impacts of risk-weighted assets. Overall, Leonteq has a highly liquid hedge book and runs a very conservative investment portfolio. This puts us in a sound position to manage our assets and liabilities in different operating environments. I will now turn over to Christian for his remarks on our strategic progress update. Christian Spieler: Thank you, Hans. I have now been CEO of Leonteq for roughly a year. I would like to briefly outline what I found when I took on the role, how we addressed key challenges, and where I believe we stand today, where we're going next. My first and foremost observation is that with both the existing talent and some new leaders I added when I joined, Leonteq has indeed a very strong team. This team is highly business and customer driven and extremely committed and gives me confidence we'll succeed. Let us now look at our business model and put this into context of our strategy. Our business model is in fact very simple. Leonteq generates fees by selling structured products through distributors. These financial intermediaries generally distribute these products to end investors. The fees usually are generated by charging margin on transacted volumes. So this is a straightforward business model. However, as you can see on the left side in the grey box area, we operate a highly specialized product factory for structured investment solutions. This requires highly skilled teams, advanced trading systems and sophisticated risk control. The business model depends on high volume transaction processing, which means operational complexity and execution intensity. We work closely with financial intermediaries and partner institutions to distribute our products. But in some of these relationships our pricing power is limited, which contributes to margin pressure. To attract more volume to the platform, Leonteq has built over the years a number of additional core services to support the needed growth in fees. In particular, these are: First, different white labeling setups to onboard new issuance partners. Second, the company started to offer auxiliary services such as accounting, risk metrics, lifecycle management support and regulatory reporting services for its partners. Third, a SHIP infrastructure was built to allow partners to back-to-back hedge the exposure on a trade-by-trade basis to external hedging counterparties. And fourth, a powerful digital investing platform called LYNQS was developed. However, all these services are provided free of charge. So to a certain extent, you can think of all these services in the grey box on the left as Leonteq's fixed cost base. Over the years, also the operating environment has fundamentally changed. The economic dynamics of the structured products market have steadily deteriorated over the last 15 years, with fee and margin compression, excess capacity, and aggressive pricing becoming the norm. Competitors are increasingly pursuing scale, commoditized offerings, and volume-driven models, all of which have put pressure on industry margins. In response to these market dynamics, a number of countermeasures were taken in the past. These you can see on the right side in the green box. First, the number of partners were increased to leverage the existing fixed cost base and to reduce the historic dependence on 2 large partners. Whilst this dependency was in part reduced, it also affected one stable revenue sources as well as margins. Second, the client base was widened through regional expansion and a significant increase in target markets from 30 to 70, together with a widened client risk spectrum within a few years. Third, the product offering was diversified which triggered significant investments. Altogether, these countermeasures led to an increasingly diversified revenue mix with a nevertheless high and increased cost base, but also with a continued dependency on volatile trading results. As a further challenge, which you can see on the top in the red box areas, increased regulatory scrutiny since 2022 and a lingering reputational overhang have impacted Leonteq's client business and reduced strategic flexibility. Combined with a generally reduced risk appetite, certain counterparties and partners have been limiting their exposure to us. Or the company has itself limited certain activities since the beginning of 2025. On top, our new much stricter regulatory framework has required major investments in systems, processes, risk infrastructure, and liquidity management, weighing on our profitability and absorbing significant management time last year. This is why we introduced our ROE strategy, our execution framework to build sustainable performance. Resize parts of the business that are not profitable. Optimize established areas. And expand initiatives with strong future potential. So the goal is clear: a structurally stronger Leonteq with less dependence on volatile trading income, improved profitability, and more resilient returns. Let me walk you through how we are executing on this strategy and the progress made so far since last summer. Let's start with the Resize pillar where we're reshaping the footprint and cost base with discipline. We have materially reduced our cost base. Underlying operating expenses are down 16% to CHF 194 million in 2025. We're actively improving the structural efficiency of our organization with 26% of non-sales trading staff now based in Lisbon, and targeting about 30% by end 2026. We're decreasing our footprint where it is strategically and economically sensible. For example, we signed an agreement to sell our Japan entity which is expected to close in Q1 2026. And we're making very good progress in exiting our pension savings initiative, bench. In the past months, we managed to transfer saving balances of all bench customers to other providers and target the controlled wind-down by end 2026. In our Optimize pillar, we are strengthening efficiency and capital discipline in the core. We're improving profitability by focusing on the levers that matter most: stronger operational execution, lower capital consumption and tighter control of complexity and risks. We're taking a pragmatic approach here: improve what works, fix what doesn't and remove avoidable friction in our model. Now most importantly, our Expand pillar. We are building up initiatives with more recurring revenues and a more efficient capital profile and are increasing our total addressable market. This includes businesses like: quantitative investment strategies, QIS; actively managed certificates, AMC; the retail flow business; and LYNQS. To be clear, this is not growth at any price. It's targeted expansion into areas where Leonteq has a clear right to win and to achieve superior margins. Let's now move to the next page to back up my statements with concrete data points that demonstrate why we're confident about our strategic trajectory. As you can see on Page 14, we saw an improved client momentum in the second half of 2025 despite all the headwinds we faced. Our client transactions increased by 14% to more than 140,000 and we issued a record of 33,000 products on our platform in the second half of 2025. Also in our home market Switzerland, we increased our market share in structured investment products to 29% in H2 2025. On Page 15, I want to take a closer look at the regional performance. Net fee income in Switzerland declined by 16% to CHF 39 million in H2, mainly driven by a decline in fee income from the pension savings business. This decrease is related to a temporary halt in new business activities with our largest insurance partner on the back of a merger-related shift in priorities there. Operations in Europe generated net fee income of CHF 38 million in H2, mainly due to a change in partner mix. As you can see, we had a significant drop already in H1 2025 and are now starting to see a slow improvement from here. In the Asia and Middle East region, net fee income grew by 38% to CHF 13 million in H2, reflecting the first positive results of the leadership change in Asia. Whilst obviously our starting point is low, we are seeing positive trends in the second half which continued now in the start of the new year, and we clearly expect revenue growth across all our regions for 2026. On Page 16, you can see continued progress in key growth areas. In 2025, we consistently rolled out our new generation of AMCs to a broader client base. This offering has attracted considerable interest, especially in Asia, and the outstanding volume had already risen to approximately CHF 0.3 billion at the end of December 2025. That's an increase of 46% year-on-year. Overall, across all AMC products, the total outstanding volume in AMCs amounted to CHF 2.3 billion. That's minus 5% year-on-year. This provided the Group with recurring revenues totaling CHF 28.3 million in the second half of 2025, which is broadly flat versus H2 2024. This clearly demonstrates the recurring revenue nature of this business, even in a half year when total revenues are down notably. We also advanced our retail flow business initiative, which represents our single biggest investment in recent years. Leonteq entered the market of listed leverage products in Switzerland in April 2025. As of end 2025, we offered more than 10,000 listed leverage products on SIX and BX Swiss, positioning Leonteq among the leading issuers in this market. With eight months of entering the Swiss market, we had achieved 7% market share in the offered product categories at SIX Swiss Exchange. At the beginning of 2026, we also received BaFin approval for a license extension in Germany. This marks an important step in the expansion of the Retail Flow business in the German market. We plan to go live in the second quarter of 2026 and are looking forward to a well-executed start that will be just as successful as the one in Switzerland. And finally, we continue to make progress with our digital investment platform, LYNQS. Major developments included the addition of further third-party issuers on the platform as well as the enablement of QIS for pricing. In the second half of 2025, the number of products initiated via LYNQS increased by 90% to 11,087 products. As a result, our click 'n' trade ratio improved to 33% in H2 2025 compared to 26% in the prior year period. This demonstrates the company's success in shifting trade execution to the platform, particularly for smaller ticket sizes. Let's now look at our performance from an issuer perspective on Page 17. We saw a strong pick up in demand for our own issued products, which demonstrate continued confidence in our Leonteq product. Turnover in Leonteq products increased by 23% to CHF 7.5 billion in the second half of 2025. Turnover from Tier 1 issuers increased by 7% to CHF 4.5 billion in H2. In this segment, we saw a change in partner mix. This also had an impact on our margins. Turnover from Tier 2 and Tier 3 issuers saw a strong growth by 42% in H2 to CHF 1.7 billion. As reported before, we have revised our acquisition framework and have launched a process to identify an additional high-rated issuer. So let me wrap up today's presentation on Page 18. We are at an inflection point. Legacy matters are largely behind us, and with the transition to the new regulatory regime now completed, we have full clarity on our capital ratios, and our capital position is strong. This significantly reduces uncertainty and frees up management capacity and resources to focus on our core priorities: strengthening client relationships; onboarding new clients; and growing revenues. We have already seen a recovery in client activity in the second half of 2025, reflected in higher issuance volumes and increased transaction activity. Client sentiment has improved and flows into Leonteq-issued products have picked up, underscoring the continued confidence in Leonteq by our clients. Following a year focused on resizing and optimizing the company, we are now in a position to focus our resources toward growth and the expansion of the initiatives defined under our new strategy. In terms of financial outlook, we expect to return to a positive pretax result for both the first half and the full year 2026 and now expect to achieve our mid-term financial targets in 2028. The key now is disciplined execution of our strategic priorities. While the transformation will take time, my first year at Leonteq has reinforced my conviction that we have distinctive capabilities and a highly committed team that can deliver progress and shareholder value. In closing, what I ask of our shareholders and stakeholders is this: judge us by execution and trajectory. Look beyond the unsatisfactory result for 2025. Look at what we have achieved already in a short time. Going forward, look for disciplined delivery of our ROE initiatives and steady progress in our performance step-by-step. The direction is right. The measures are in motion and our foundations are solid. We need the time and support to complete this turnaround and fully deliver on Leonteq's value creation potential. We have a capital and infrastructure-intensive business. It requires a sophisticated and costly machine. But when run well, it will deliver attractive returns and meet shareholders' expectations over time. I'm confident we're on the right track. With this, I would like to thank you for your attention and hand back over to Dominik. Dominik Ruggli: Thank you, Christian and Hans for the presentation. We are now happy to start with the Q&A session. We will take the first question. Operator: [Operator Instructions] The first question comes from the line of Daniel Regli from Zurcher Kantonalbank. Daniel Regli: I have a couple of questions. First about capital policy. Obviously, you have achieved quite a nice capital ratio of 16.9% by year-end. And you announced a share buyback in early 2027. Should the CET1 ratio remain meaningfully above 15%? So here, I first wanted to ask, can you specify a little bit more what you exactly mean by meaningfully above 15%? And then secondly, obviously regarding 2026, since you expect a profit, can we also assume that investors will again get a dividend in 2026? And what do you have in mind in terms of payout ratio for 2026? Is it still the kind of 50% you once mentioned, or has anything changed in this regard? Then my second question on the turnover developments. And I mean, I appreciate you trying to provide more clarity on the turnover, however, can you maybe talk a little bit more specifically about, the old world traditional or historic partners versus new partners? Obviously, I lack a bit the comparability of the new tiring of the partners since partners can move between the different tiers. So yes, can you maybe talk a little bit more about this? And then also regarding turnover, historically you have always talked about a balance sheet-light turnover. Can you maybe specify how this has developed and in how far this SHIP project from years ago has kind of recovered in importance due to the regulatory transition? And then maybe lastly, can you maybe talk a little bit about the regulatory legacy points which I think with BaFin you are now kind of settled, FINMA is also settled. So there remains something in France. Can you maybe talk a little bit about the timeline until when you expect clarity on this one? Hans Widler: Thanks a lot, Daniel, for your questions. Allow me to start first with the capital policy and your question with regards to the dividend. As you know, we switched to FRTB for market risks in November. That is just about 2 months ago. Leonteq feels it's prudent and adequate first to focus on the sensitivity of the respective capital ratios over a certain period of time before committing to the capital return policy that we have announced accordingly. With regards to dividend, we adhere to our guidance provided earlier, that is no dividend with a loss-making result. And we reiterate the current payout ratio of 30% that was guided earlier. With regards to the share buyback early 2027, as mentioned, it's important that we observe the sensitivity of the respective ratios over a certain period of time, and we feel it's adequate and prudent then to launch it on the basis accordingly beginning of 2027. With regards to historic versus new partners, the split that you asked on the turnover side, the major drivers that you see on Tier 1 issuance partner are obviously the historic partners. That didn't change within the last 6 to 12 months. So majority of the respective Tier 1 partner impacts can be really compared with the historic partners. And as you can see, it is clearly our ambition to further diversify as reflected in the increase of Tier 2 and Tier 3 partner activities. With regards to your question on balance sheet-light. Balance sheet-light turnover amounted to approximately 13%. This is comparable with last year. We will have a continued focus on expanding balance sheet-light activities as part of our efforts to optimize our regulatory capital requirements. With regards to the regulatory update, I will pass on to Christian. Christian Spieler: Yes. On the regulatory side, I mean, first, you've seen, and we've talked about this already before in December, the announcement by BaFin, we closed matters with them related to legacy stuff that was at a low fine. But we then immediately after got an expansion of our license. So on the side of BaFin, everything is resolved and fine. On the side with FINMA, we have taken everything they had and wanted us to fix on board. We -- everything has been remediated. And it's all done. And so now on this front, we are -- there's a last audit going through, but nothing is expected here. So that is considered that one done. There is one large -- one other EU regulator where there was a finding in 2023 that was largely -- that was largely with respect to lack of certain processes and certain governance structures. All of those findings that we were told about in 2023 were remediated fully very quickly and are fully remediated. We were also told in that interaction that things -- that nothing new had occurred and been found since, and we are expecting that to close in the future. Operator: Next question comes from the line of Anne Risold from Octavian. Anne-Chantal Risold: Maybe on the German retail flow business, I mean, over the years -- I mean, it's good you have finally received the license. Over the years, we had -- that was your main investment, and we had previously some figures how much you could contribute. But if you could maybe give us again how much do you expect now that you have the license and kicking in, how much it will contribute to your profitability in the midterm? And what kind of margin do you expect from this business? One on the -- you mentioned a lower fee from the insurance contribution because of your partner is having some restructuration or merging. Do you expect -- what do you expect on this front? Is it going to restart? Or do you think the merged entity of your counter partner may change their view? On the -- and then on the governance side, did I understand right that also you mentioned that you described previously the regulatory update. So clearly, on the French regulatory update, do you still -- did you close this? Or do you -- when do you expect to close this with the French regulator? And maybe one thing on the -- at the beginning of January, the shareholder agreement with Raiffeisen and 2 stakeholder has terminated, was not renewed. Do you expect that it could have any effect on your operation? Christian Spieler: Yes. Thank you for the questions. So first on the RFB business. The RFB business so far, and that's just based on what we've done in Switzerland has generated this year around about CHF 3 million of revenues. That's a significant increase versus the prior year and like in the order of magnitude increase of CHF 2 million. And as we said, like we went into the market with only 8 months, we went to a significant number of listed products, achieved sort of like #3 player in the market. That is a very significant achievement here. And looking at Germany, which is a much larger market, we think this is going to be a very, very good success for us. We're looking forward to it. But what are the drivers? Why do we believe this? We have probably the best team, most experienced team in this space on our platform. They joined us a few years ago. They built a tech platform, which is absolutely market-leading. And this business is largely -- there is a lot of technology drive in this business. So having a leading top-notch tech platform that has all the experience of 30 years of these people built into this platform and the experienced people on board with our execution strategy there, we expect this to be a very successful start. And altogether, the RFB business this year is budgeted to deliver around CHF 8 million of revenues. That's a significant increase. You asked about margin. It's a high-volume business with low margin. But again, tech platform comes into play and becomes the real strength here because the ability to handle large volumes, low-margin product still, in the end, generates significant revenues, and we have a very positive outlook for the medium to longer-term for this business, which obviously goes into the double-digit revenue region. Hans Widler: Then with regards to our major insurance partner, [ indiscernible ], we are in very close collaboration for a potential new product launch in this regard. On operating level, we are in contact, obviously, on a daily basis in this regard. But we also have full sympathy for the respective partner given the legal merge that the priorities are short-term different. With regards to expectations for 2026, we expect a comparable revenue contribution in 2026 as for 2025, excluding effects of a potential relaunch accordingly. Why do we expect the comparable revenue contribution? Whilst certain policy cancellations every year are standard and hence, the number of policies are expected to slightly decline without a relaunch of new products, the AUCs given the premium inflows will increase and herewith lead to a stable revenue contribution. We are highly committed to that large insurance partner and looking forward to relaunch additional products, but have full sympathy and full support for the interim period for the merger requirement adjustments. With regards to French regulator, I will pass on to Christian. Christian Spieler: Yes. I mean, this was effectively part of my answer to Daniel Regli's question earlier. When I referred to a large EU regulator, again, as I said, as answer to that question, we have remediated everything that has been asked for. We've been told there have been no new findings since the original raising of the issue in 2023. And as I also mentioned, we expect this to close in the future. I cannot comment on timing because the regulators work this their way, but we look forward to this being closed. Lastly, your question on the shareholder agreement, we do not expect that to have any impact to say. Raiffeisen is our main shareholder and remains our main shareholder. We welcome them as our main shareholder. And to the extent they want to stay committed in their investment, we love that, and we'll work with them. Operator: We now have a question comes from the line of Sylvain Perret from AlphaValue. Sylvain Perret: So I wanted to know whether you could share more details on how you perceive the market environment in the beginning of 2026? Has it become less difficult than in 2025? And if so, what positive market catalysts do you see as having the potential to accelerate the turnover growth and the fee margin recovery this year? And my second question is on the retail flow business. So considering the good success you already observed in Switzerland and the expertise you are building there, do you expect to launch the business into additional countries besides just Germany? That's all for me. Christian Spieler: Yes, thank you for the question. Market environment 2026, I would characterize in short as very different from the second half of 2025. What 2025 second half made it a really rare stretch of a market environment was the consistently higher volatility, implied price volatility versus the actual realized volatility. Specifically in the maturity segment of the products that we offer. That obviously for us being largely buyers of optionality led to us buying at the high price implied volatility and hedging at the lower realized volatility, which caused some of the issues in our trading result in the second half. That again is a very rare environment and over the years to observe. And if we now look at 2026, we are in a completely different environment. It's been very different. Like, high level, realized vol has been above implied vol. And we're seeing a very active market. So it's a market environment that suits us. That being said, our outlook is it's too early to comment on an outlook for the performance for H1 in trading per se because obviously we only had about 5 or 6 weeks into the new year under our belt. But -- and it also depends, like results depend very much on how flows materialize from the client side et cetera. But we're seeing an overall what I would call healthy market environment 2026. A question of the RFB business. So I give two answers. So one is, we're expecting to go live in Germany in Q2 2026. And yes, we do have a list of further countries where we intend to roll this out. One major country that's on our list is Italy. Operator: [Operator Instructions] The next question comes from the line of [ Thomas Paul ] from [ AVP ]. Unknown Analyst: I just have one question on your pension savings business. Did I understand this right? This was slowed down by the merger -- this is probably Helvetia Baloise? And will this pick up now in 2026 or 2027 meaningfully? Hans Widler: Thanks a lot, Mr. Paul, for your question. I mean we are not commenting on single insurance partners or on single partner names itself from that perspective. But with regards to the contributions, the reduction compared with 2024 is two-fold. On one side, we had some extraordinary effects in revenues in 2024. On the other side, we benefited still from the launch of new so-called contingencies, from new insurance policy sets. We do expect that to continue. With regards to the timing, we are to some extent also dependent on the respective partner activities. But it's clearly a business activity that is close to Leonteq's DNA and that we will continue to invest, also with potential new insurance partners that we target. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Dominik Ruggli for any closing remarks. Dominik Ruggli: So thank you everyone for attending the conference and the interesting debate. We look forward to speaking and meeting with many of you in the coming days and weeks. And we wish you all a very good day. Thank you.
Operator: Hello. This is the Chorus Call conference operator. Welcome to Vecima Networks Second Quarter Fiscal 2026 Results Conference Call and Webcast. [Operator Instructions] And the conference is being recorded. [Operator Instructions] Presenting today on behalf of Vecima Networks are Sumit Kumar, President and CEO; and Judd Schmid, Chief Financial Officer. Today's call will begin with executive commentary on Vecima's financial and operational performance for the second quarter fiscal 2026 results. Lastly, the call will finish with a question-and-answer period of analysts and institutional investors. The press release announcing the company's second quarter fiscal 2026 results as well as the detailed supplemental investor information are posted on Vecima's website at www.vecima.com under the Investor Relations heading. The highlights provided in this call should be understood in conjunction with the company's unaudited interim condensed consolidated financial statements and accompanying notes for the 3 and 6 months ended December 31, 2025 and 2024. Certain statements in this conference call and webcast may constitute forward-looking statements within the meaning of applicable securities laws from which Vecima's actual results could differ. Consequently, attendees should not place undue reliance on such forward-looking statements. All statements other than statements of historical fact are forward-looking statements. These statements include, but are not limited to, statements regarding management's intentions, belief or current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs and operating performance. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond our control. Vecima disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. Please review the cautionary language in the company's second quarter earnings report and press release of fiscal 2026 as well as its annual information form dated September 25, 2025, regarding the various factors, assumptions and risks that could cause actual results to differ. These documents are available on Vecima's website at www.vecima.com under the Investor Relations heading and on SEDAR at www.sedarplus.ca. At this time, I would like to turn the conference over to Mr. Kumar to proceed with his remarks. Please go ahead. Sumit Kumar: Good morning, and welcome, everyone. Thank you for joining us. In our earnings release today, we announced that Vecima is nearing the cusp of a major growth inflection. I'm going to start today's call with some comments on this outlook and our expectations for the next 12 months before moving on to an overview of our second quarter highlights. Judd will provide our financial review, and then I'll return to wrap up before we open the call for questions. As you know, the global cable and broadband industries have been preparing for a full-scale transition to next-generation DAA technology for several years now. It's something we've described as a once-in-a-generation technology transition, fundamental to how networks will be built and operated and requiring major multiyear capital investment by operators. From the start, Vecima made a deliberate decision to lead this transition through sustained investment in a comprehensive portfolio of next-generation solutions. It's a strategy that's positioned Vecima as a global leader in DAA technologies, and it's already been -- and it's already driven meaningful growth. But we've always recognized that the true scale of the opportunity would depend on customers moving to full-scale adoption and deployment. While it's taking time to reach this point, that critical new phase of adoption is approaching. On the broadband side, our lead Tier 1 customer is now preparing to expand wide-scale deployment and they've shared their anticipated product needs and expected timing with us. Based on that outlook, we anticipate a sharp rise in demand for our Entra Remote PHY products, including the EN9000 GAP platform and ERM3 and 4 RPDs beginning in the fourth quarter. This is a major multiyear upgrade program. Now with it underway and expanding, we expect it will provide sustained benefits to Vecima over an extended period. On the commercial video side of our portfolio, we also announced today that our lead North American Tier 1 customer has selected our next-generation TerraceIQ platform to underpin the wholesale upgrade of its commercial video network nationally. This includes upgrades to thousands of our customers' existing commercial account properties as well as ongoing rollouts to service new commercial video contracts, and it represents another multiyear opportunity for Vecima. These 2 developments, combined with continued strong demand for our high-margin fiber access products and the traction building for new products like our EN3400 are providing excellent forward visibility. Based on customer indications on a next 12-month basis, we're now estimating revenue growth of between 20% to 30% as compared to the last 12 months. The anticipated demand profile also positions adjusted EBITDA margin for the same period to break through 20% as our product mix expands with higher-margin offerings and as we make gains in operating efficiency. Paired with the top line growth expectation, this translates to an anticipated 70% to 85% increase in next 12-month adjusted EBITDA compared to calendar 2025. I want to note that we continue to see some third quarter timing lumpiness related to recent industry consolidation activity. We discussed this on our last call, but we now expect the impact to be modest and further mitigated by a favorable Q3 product mix. By the fourth quarter, we expect to see demand ramping up sharply. The developments announced today paved the way for renewed and sustained growth, and they follow on another rewarding quarter for Vecima in Q2. So turning to our second quarter results. I'm pleased to report that we achieved solid year-over-year revenue growth of 3.5%, paired with a significantly stronger gross margin percentage of 44.9%. The 850 basis point year-over-year improvement in our gross margin reflects an expected return to a more typical and higher-margin product mix as well as continued improvement in our operating efficiencies. We also generated adjusted EBITDA of $10.6 million in Q2 with an adjusted EBITDA margin of 14.4%. In our Video and Broadband Solutions segment, we turned in a productive quarter marked by steady sales performance, improved profitability and important product and customer advances. We continue to seed the market with our EN9000 platform, the industry's only GAP node, which is gaining deep adoption with customers. We expect the EN9000 platform will continue to pay many short- and long-term dividends as it widely seeds broadband networks with a modular, standardized and future-proof platform that's capable of being upgraded with multiple successive generations of DOCSIS or fiber-to-the-home technology for years to come. We also commenced deliveries of our new EN3400 GAP node, which is a more compact and condensed version of the EN9000, specifically targeted to multi-dwelling unit and enterprise applications. Our innovative new Power Holdover Modules, which provide Entra platforms with protection from power fluctuations in the field also gained traction in Q2. Both the EN3400 and Power Holdover Modules provided meaningful contributions to our Q2 results and VBS product mix. In our Entra Cloud portfolio, we continue to expand vCMTS trials with our lead customer while also expanding our engagement with additional customers. We view vCMTS as a major long-term growth driver for Vecima, supporting an addressable market estimated to be worth USD 350 million by 2029. I also want to highlight the contribution from vCMTS sales is not yet a significant factor in current revenues or within the strong projected growth for the next 12 months, meaning that vCMTS remains a major incremental growth opportunity for the business. On the fiber access side of the portfolio, Q2 was another successful quarter with ongoing strength in Entra optical sales. We also secured our first customer for XGS-PON in the U.S. and closed an order for our new Entra EXS1610 All-PON platform with a European customer. So all in all, an excellent quarter for VBS and our customer engagements for Entra increased to 147 from 123 a year ago. To date, 70 of those customers have purchased Entra products from Vecima. Looking at our other business segments. Our Content Delivery and Storage segment achieved another strong quarter with revenues of $12.3 million, growing sharply both year-over-year and quarter-over-quarter and gross margin climbing to a very robust 65.1%. These results were supported by increased demand for our media scale managed IPTV solutions as customers continue to migrate their networks from QAM to IPTV while also expanding their subscriber bases on IPTV. Second quarter also brought further contribution from our newer dynamic ad insertion products. DAI is providing a compelling use case for operators that are seeking to increase their video ARPUs without having to increase their rates to customers. So as such, it's a highly effective way for our customers to increase their monetization of video while retaining and building their subscriber base, and we view it as an important growth driver for CDS. Turning to Telematics. We achieved another highly profitable quarter with year-over-year revenue growth and an exceptionally strong gross margin of 71.4%. During the quarter, Telematics added 11 new customers and booked 345 new subscriptions for our NERO asset tracking platform. This brought the number of asset tags under management to over 106,000. So a very successful second quarter for Vecima across all 3 of our business segments, and we're moving forward with a very exciting outlook as some of our largest customers advance to wider scale adoption. I'll return to talk more about what we see ahead in just a few moments. But first, I'll pass the call to Judd to provide our Q2 financial review. Judd? Judson Schmid: Thanks, Sumit, and good morning to everyone with us on the call today. I'll be reviewing our second quarter financial performance in more detail. And for the purposes of this call, I'll assume that everyone has seen our Q2 fiscal 2026 news release, MD&A and financial statements posted on Vecima's website. We had another solid quarter of financial results. Starting with consolidated sales, revenue grew to $73.7 million in the second quarter, increasing 3.5% year-over-year and 3.7% quarter-over-quarter. Our Video and Broadband Solutions segment accounted for $59.6 million of our revenues with VBS sales increasing slightly year-over-year and up 2.8% sequentially compared to Q1. Next-generation Entra DAA products were the key driver of our VBS segment results. At $56.3 million, Entra sales were steady year-over-year and up 2.3% on a sequential quarterly basis. Commercial video sales added $3.2 million to the VBS results and were up 8.7% from Q2 fiscal '25 and 12% from Q1 fiscal '26. In our Content Delivery and Storage segment, second quarter revenues of $12.3 million climbed a sharp 20.7% year-over-year and were up 9.7% from the first quarter of fiscal '26. This growth reflects significant IPTV installation and expansion activity, including a 39% increase in product sales and slightly higher services revenue year-over-year. We continue to note that quarterly sales variations are typical for the CDS segment. In our Telematics segment, second quarter sales of $1.8 million grew 5% year-over-year, but were 3% lower than last quarter. The year-over-year gains reflect the increase in the number of tags and assets now being monitored. As we expected, gross margin rebounded in Q2 with gross margins climbing to 44.9%. That compares very favorably to 36.4% in the same period last year and 42.1% in Q1 of '26. After normalizing for inventory reserves and warrant expense, our adjusted gross margin also increased sharply to 46.4% from 35.6% last year and 43.9% in Q1 of fiscal '26. The improvements in gross margin and adjusted gross margin primarily reflect the return to a higher-margin product mix in our VBS segment and accretive contributions from our CDS segment as well. Turning now to our second quarter operating expenses. These increased slightly to $29.8 million from $29.3 million in Q2 last year. On a quarter-over-quarter basis, operating expenses were $1.8 million higher. Notable year-over-year changes are as follows: G&A expenses were lower at $6.7 million or 9% of sales as compared to $7.3 million or 10% of sales in the same period last year. This $600,000 improvement reflects decreased expenses for legal fees, other professional services, training and development costs, offset by higher expense for salary, wages and benefits. Sales and marketing expenses increased to $9.4 million or 13% of sales from $7.3 million or 10% of sales last year, reflecting lower finished goods inventory allowance recoveries of $100,000 in the current period compared to $1.7 million in Q2 of fiscal '25. R&D expenses for the second quarter increased to $13.2 million, or 18% of sales, from $11.3 million or 16% of sales last year. This is primarily a result of higher amortization of our deferred development costs, along with lower capitalized labor development costs. As we note each quarter, we defer some of our R&D expenditures to future periods until our products begin commercialization. And so reported R&D expense in a period is typically different than the actual cash expenditure. Adjusting for this, our actual cash R&D investment was $16.8 million or 23% of revenues in the second quarter, up from $15.9 million or 22% of revenues in Q2 of last year as we continue to emphasize our investment in future product developments and building our innovation pipeline. Also included in OpEx for Q2 of last year were $2.8 million in restructuring charges related to our workforce reduction at that time. We continue to monitor and control our operating expenses contributing to our bottom line results and do not foresee any significant OpEx increases in the near term. Now looking at bottom line results. Second quarter operating income increased significantly to $3.3 million from an operating loss of $3.4 million in the same period last year. The $6.7 million improvement primarily reflects VBS' higher-margin product mix as well as the increase in CDS sales, which typically carry accretive gross margins and the $2.8 million restructuring charge taken in last year's Q2. Lastly, net income for the second quarter increased to $100,000 or $0 per share from a net loss of $7.9 million or a $0.32 loss per share in the same period of fiscal '25. Additionally, adjusted earnings per share for the second quarter grew to $0.04 from an adjusted loss per share of $0.30 in the same period last year. Turning to the balance sheet. Working capital of $49.3 million decreased from $51.2 million at the end of June of '25. As we discussed, in our MD&A, the components of working capital can be subject to swings from quarter to quarter. Product shipments can be lumpy as they reflect the fluctuating requirements of our customers. Contract timing issues like those with greater than 30-day payment terms also affect working capital, particularly if shipments are back-end weighted for the quarter. Lastly, cash flow provided from operations for the second quarter decreased to $6.8 million from $15.2 million during the same period last year, primarily related to the changes in working capital. Our net debt position as a whole remains conservative however, and stood at $66.9 million at the end of the second quarter, down from a peak of $92 million in Q3 of fiscal '24. We had forecasted a slight increase in our net debt position for Q2 and continue to focus our efforts on paying down our debt. On a final note, the Board of Directors approved a quarterly dividend of $0.055 per common share payable on March 23, 2026, to shareholders of record as of February 22, 2026. It's important to note that this dividend will be designated as an eligible dividend for Canadian income tax purposes. Now back to Sumit. Sumit Kumar: Thank you, Judd. To recap our expectations for the next 12 months, we are anticipating a year-over-year revenue gain of 20% to 30% with 12-month adjusted EBITDA margin breaking through 20% based on customer indications. We expect to see this momentum growing beginning in Q4, driven by Vecima's portfolio strength, our design wins with major customers and the many other DAA-based gigabit network upgrades that are occurring globally. We anticipate our VBS segment will lead the growth with strong demand for a wide range of next-generation Entra DAA solutions. Our Remote PHY device solutions, our EN9000 and EN8400 platforms and our highly successful Entra Optical fiber-to-the-home portfolio are all expected to be strong contributors. Additionally, our newer EN3400 platforms and Power Holdover Modules are expected to gain momentum over the next 12 months. Our VBS results are also expected to be strongly supported by the program win with our lead Tier 1 customer and related uptake of our TerraceIQ Commercial Video platform. While we haven't yet factored vCMTS contribution into our outlook, this too could have a positive impact on our next 12-month results and will be incremental to the demand profile, nonetheless. In our Content Delivery and Storage segment, we continue to focus on driving revenue growth through managed IPTV expansions with new and existing customers and the rollout of DAI. As always, we note, however, that quarter-to-quarter performance in the CDS segment can be lumpy. And in our Telematics segment, we're anticipating steady and highly profitable performance from our high-margin recurring software and subscriptions-based monitoring business for vehicles and assets. Across Vecima's operations, we're moving forward with a sharp focus on capturing the significant opportunities ahead, both over the next 12 months for high growth and in the long term. Our strategy of building the industry's broadest and most innovative portfolio of interoperable cable and fiber access products and IPTV solutions has created multiple engines for growth. Combined with a wide customer base and deep relationships with some of the world's largest operators and BSPs, we've invested in and built a broad, uniquely innovative and world-leading platform that we enjoy today, and that sets us up for sustained expansion. As wide-scale deployment of DAA now gets underway and IPTV adoption continues to grow, Vecima is uniquely positioned for success, not just in the next 12 months but for years to come. That concludes our formal comments for today, and we'd now be happy to take questions. Operator? Operator: [Operator Instructions] Our first question comes from Ryan Koontz with Needham & Co. Ryan Koontz: Nice to hear about the improved outlook this year and gaining momentum there. I want to ask about the GAP node and what you hear are the criteria for customers to decide to go with a traditional node design versus a GAP node. I kind of understand -- I do understand the future-proof investment thesis, but how do you think customers are deciding to go with one versus the other? What do you think the criteria is? Sumit Kumar: Ryan, thanks for the question. Yes, with the GAP platform, as we've talked about, we've developed in conjunction with our lead Tier 1 operator customer, this future-proof platform that's modular and scalable and can evolve both over multiple generations of cable access, the DOCSIS 3.1, DOCSIS 4.0 and evolve to fiber-to-the-home modules inserted within that same platform and longevity in terms of any other use cases that emerge once those nodes are widely deployed. So operators are typically seeing that, that platform allows them a long runway of capability within the network from successive generations of access technology. You could even go so far as thinking about edge compute and some of the opportunities that arise there from. So -- and we can also mix services within the same platform, cable, DOCSIS, fiber-to-the-home, PON OLTS within the GAP platform. The thermal management is excellent. It gives them a lot of capacity there in terms of the cooling -- the passive cooling that it offers. And in the past, there's been a lot of fragmentation and unique nodes. So we contributed this standard in conjunction with our operator partner. We are the only manufacturer in the world of this platform today. So we have a significant time-to-market advantage. And as we said, it's being broadly adopted giving us a great amount of network incumbency at operators like our lead Tier 1. Ryan Koontz: Got it. It's helpful. And you mentioned the thermal management. Is it better than a node or what differentiates it from a traditional node in terms of the thermals? Sumit Kumar: It's just how we've designed the heat dissipation within the platform, how the modules slot into the available slots in the lid and all the network and the way the heat is passing through to the fins on this type of platform. It's taken 30 or 40 years of experience from vendors like us, from our operator partner to know that we -- the peak of engineering for thermal capacity is there in this platform. So we've been forward-looking with what we can do with the platform, again, with our operator partner is helping us to define that standard. Ryan Koontz: Sure. It sounds like the OLT business is picking up. Are you hearing any changes in terms of fiber deployment plans from customers? Is it still primarily greenfield deployments? Or are you picking up much about rehabbing coax with fiber in the cable industry? Sumit Kumar: I think the focus definitely has been on network edge, greenfield expansion, more and more opportunities our customers are seeing for that. Of course, the rural subsidy activity is going strong, too, and adding to our customers' footprints and their passings overall. I don't think that overbuild is a focus. We have a lot of capacity on the cable side with 3.1 and 4.0 and the cost advantages there. So the cable network has got a long runway to it for multi-gigabit symmetrical 4.0. There's standardization work being done on generations beyond 4.0 for DOCSIS as well. But the fiber activity, there's a lot of ground to plow on expansion of the network itself without overbuilding. Ryan Koontz: Got it. You talked about a new win for your new video platform. Do you have a rough idea of what your TAM is there, say, in North America for those sorts of products? I mean is it still primarily a legacy model? I don't think about linear being upgraded a whole lot. I assume you're going to kind of a switched IPTV-type model there. Can you maybe talk about where we are in adoption for those sorts of products? Sumit Kumar: Great. Yes. No, you're absolutely right that we are going to IP ABR input, switch to [ IP ], you can think of. So the feed to the commercial video platforms is evolving from a linear QAM feed to IPTV ABR. And that's the generational shift that we're seeing in this platform. We've led this market for the past 15 years, and it began when networks were converting to all digital from analog and commercial services and hospitality, in particular, needing a bulk demarcation solution into the property. So that's been a market we've enjoyed for well over a decade, and we have good visibility. Of course, it doesn't have the growth engine capacity, something like broadband access, but it's going to be very meaningful to our results and particularly with this lead Tier 1 with the amount of units of the prior generation that they have fielded with our Terrace QAMs and our TC600Es, we see a very meaningful contribution over the next 12 months and really the next 3 years or so as they upgrade that whole footprint. So I won't get too specific on the TAM side, but 5 years ago, the commercial video -- maybe 5 to 10 years ago, commercial video drove the entirety of Vecima business. So that will give you a sense of the magnitude. Operator: [Operator Instructions] The next question comes from Alexandre Ryzhikov with LionGuard. Alexandre Ryzhikov: I guess, Sumit, I just want to focus on your comments around renewed and sustained growth. I get that your largest customer will ramp up spending on network evolution in '26 and '27, and that will drive growth. But I guess what gives you confidence in growth beyond that upgrade cycle? Maybe if you can just break down the key drivers of growth beyond '26, calendar '26, that would be helpful. And then I have a follow-up. Sumit Kumar: All right. Thanks, Alex. Yes. Of course, that's a very meaningful program as we've talked about and with our lead customer and what will happen over the next several years there. I think that focusing there, that cycle is a significant wholesale upgrade that's happening to the cable network. I think what sometimes gets lost in the picture is that there is continuous segmentation activity and expansion activity that occurs for all operators. So it's not a start-stop type of program, it will tail off into a more regular run rate type of scenario. And another thing that I think we like people to understand is that only about 50% of our business today is in cable access. So we're already on the path of diversifying business. So we have a whole set of customers when I talk about the 147 engagements we have for cable and fiber access that are also in their own cycles of moving to the upgrade. We've had these lead Tier 1s in the whole industry that have led the timing in some very scaled programs, but very typical of DOCSIS upgrades across the industry is that we will have multiple other customers come into the fold after these large Tier 1s start to ramp back down to more of a run rate scenario. And then the fiber access and vCMTS are incremental to our portfolio. Fiber access in the sense of we've added XGS-PON, much larger TAM. We've been a leader in 10-gig EPON fiber-to-the-home to this point. And with this much larger TAM in XGS, we announced that we had the first customer win today. Our differentiation should come into play and give us a good market share in that much larger TAM. So we thought about this and the profile still sets itself up between the new customer additions, the fiber expansion, the addition of vCMTS to lead us to a sustained growth scenario after this next couple of years of very strong growth that are anchored by our lead customer. Alexandre Ryzhikov: That's very helpful. I guess maybe specifically on vCMTS, I think you still included in your press release the TAM for that business the estimate from Dell'Oro for $350 million. Are your expectations around market share, call it, in 2029, still the same as they've been previously? Do you think you can capture 1/4 of this market? I know currently, essentially, it's a single player has all of it. Maybe just help me understand your expectations today around the opportunity there for you. Sumit Kumar: Yes. No, great question. I think like we said and like you reiterated, the market is about $350 million, it will reach by 2029. There are only effectively 3 viable vendors in the space, us being one of them. We have our lead win with Cox. And typically, in every segment that we participated in, we have been successful and we have the track record of building this meaningful market share. The IP that we brought into bear originally started in our MAC PHY platforms that we've put into the Entra Cloud and virtualized in vCMTS. We've been a leader in MAC PHY for years now. That translates to a reasonable expectation between what we're doing with Cox, between these other engagements that we've already built a significant number of them for vCMTS and the natural timing of the rest of the market as it grows to $350 million. I think we've seen that it's very common to expect that a player like us when there's only 3 in the market and the customer engagements we have is going to have a respectable market share. Alexandre Ryzhikov: Great. And then my final question on capital allocation. I know you've talked about prioritizing debt repayment. But if I think about just the multiple on the numbers that you've shared today on '26 EBITDA, you're trading at a huge discount to all of your peers. So why not be more aggressive on debt repurchases? I know the volume is very low, but why not explore NCIB or some other type of share repurchase given where the market is valuing you today? Sumit Kumar: Yes. No, thanks for pointing that out. And of course, we agree that there's -- we have opportunities to the upside in the valuation. I think that fundamentally, that pathway from our growing performance is going to provide an avenue. I think, as Judd mentioned, we have been focused on bringing down our leverage and our debt position, and we see that happening relatively significantly in these next 12 months of the P&L performance and the EBITDA delivery. So that should open up the opportunity to explore other uses of capital. And one of the topics that does tend to gain the thought process is should we look at share repurchases. We haven't done any significant M&A in a while either. That would be the other avenue to turn to. But our first focus is on the cash generation, and that is expected to be there. Operator: [Operator Instructions] as there appears to be no further questions, this concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning, everyone, and welcome to BCV's 2025 Full Year Results Call. My name is Lydia, and I will be your operator today. [Operator Instructions] I'll now hand you over to Pascal Kiener, CEO, to begin. Please go ahead. Pascal Kiener: Thank you very much. Good afternoon, everybody. Let me jump directly on Page 4, where I would like to highlight the key messages or the key points of our 2025 result. As you might see, we have an ongoing growth in -- across all business lines. Our revenue are stable. Actually, this is, I think, minus 0.4%. I think the main point is to highlight the well-diversified business model of BCV. You will see when Thomas presents the financial result that we have a reduction in the interest rate revenues, more or less compensated by an increase in the commission business. I think this is the main point of our -- the strong point of our business model. A solid net profit of CHF 430 million, which is 2% less than last year. I remember that 2024, '23, were a very good year. 2024 was the second best result in BCV story. So basically minus 2% given the environment of interest rate, and I think this is a strong result. And finally, we're going to propose a dividend of CHF 4.40, unchanged from last year. Maybe I would direct lead to Page 6. So you see in the different business lines or volume categories being mortgage, other loans, deposit or AUM, you see an increase between 2% to 5%, 6% depending on the client segment. Basically here, everything is going quite well. In terms of ratings, the financial ratings being S&P or Moody's are totally unchanged and have been confirmed. In terms of ESG rating, we have some good news. CDP is not on the chart, because Carbon Disclosure Project, they have increased their the notation. And you see that we have quite high rating in terms of non-financial ratings. Very often, this is the second-highest rating in their categories or in their ranking. And if you compare with other cantonal banks, I think we are among the top. Now coming back to business. Retail banking, steady increase being deposit or mortgage loans, so quite a good performance. Here, it is clear there is one competition -- fewer competition since Credit Suisse is no longer in business. UBS remains a very tough competitor. But nevertheless, we could take advantage of this measure by getting some increase in this business, mortgage loan 5%, customer deposit 4%. And you see that in the revenues and operating profit. Here, there are a couple of points -- I mean the volume growth plays a role. Then quite a lot of transaction of those retail customer being ForEx transaction or in fact, transaction in Switzerland. And finally, as you know, I mean, in a universal bank like BCV, you have transfer pricing between the corporate center and the division, and it is clear that the transfer price have increased for the Retail Banking division. Therefore, they have better revenues and a better operating profit. If you have specific question on that, Thomas will answer those questions later. In the corporate banking business, basically here, I mean, it's almost nonsense to discuss the overall figure without going into the specific business lines. So SME basically up in terms of loan, and in terms of deposits slightly down, but this is the year-end figure. If we take the average over the year, this is more or less stable. One point I would like to make in those COVID-19 bridge loans, 90% have been paid off. Basically, 81% have been reimbursed by the customer and 9% have been reimbursed by the confederation. As you know, maybe for those of you who are not aware -- or are not aware of those bridge loans, there is no risk for the Swiss banks. I mean the risk is there by the confederation that was clear from the beginning. And when we set-up the program with the Swiss federal authorities and a couple of banks, we sold, we would have something like 20% default, 20% loss actually. And now, we are at 90% reimbursed, 81% by the customer, 9% by the confederation. So rest is 10%. Let's assume we have half-half, we have another 5% reimbursed and 5% by the confederation that would mean overall loss in this scheme of 15%, which is below what I would expect and showed also that the COVID-19 program was really a very good program for the Swiss economy. Anyway, for us, there is no risk. I just wanted to mention that if you're interested, which shows nevertheless that the Swiss economy is doing quite well. I was expecting more write-off out of those COVID-19 bridge loans. Real estate firms, mortgage are up. So nothing to mention here. Large corporate is always kind of volatility. It depends on the price that we are making. So here, we don't look at volumes, we indicate volume, but this is more a kind of profit business, so we try to optimize profit and profitability, and not the volumes here. This is very clear. Trade finance still operating at a very low level, I would say, given the geopolitical situation. And nevertheless, slightly up 8%, but this is really small. So we will carry on this way until, I mean, some geopolitical problems are solved, I don't know when. I hope soon, but it might take time. So trade finance will carry on more or less at this level, plus/minus 10% around the current situation. And the economy in Switzerland and Vaud is doing still well. Although we have a slight increase in provision for SMEs, Overall, this is still low and the cases of default we have nothing to do with U.S. tariffs or economy doing not well or the strength of the Swiss francs, those are isolated cases for different reasons. But nevertheless, the level remained very low if you compare with the expected loss, which is a bit higher. Okay. Wealth Management, again, here, you have different business here. You have the asset management part of the mother company of BCV. You have private banking part of BCV and you have also our small subsidiaries, Piguet Galland. So a typical small private banks in Lausanne and in Geneva, actually in the French part of Switzerland. Here, everything is up, which is quite normal given the current situation of the financial markets. And trading, very good year, up. This is the trading room basically. Two main drivers. First of all, the ForEx business, where we have limited risk as it's a transaction induced trading. And the second pillar is structured products, which are back-to-back. And here, given the very good rating of BCV, we had a strong expansion in the French part, but also in the German part of Switzerland. I think there are not a lot of companies that can have a AA of offering the kind of structured product we are offering to the markets. Okay, now for the, let's say, financial result, I hand over to my CFO, Thomas. Thomas Paulsen: Thank you, Pascal. Hello, everybody. I believe very brief, just to point out points, which you might be your questions. I'm on Page 13. Well, while the key numbers are here, as you know them by them on the extraordinary income, nothing special to signal. On Page 14. Well, let's -- you see again here the point of the composition of our bank revenue and the lower part of the chart, you see that our NII was basically before loan, impairments was basically down CHF 26 million. Here, you only have the volume and interest rate effects. And then we have slight variations in loan impairment charges, which remain very low, which means that NII is down by minus CHF 28 million. At the higher part of the chart, you can see that commissions almost have compensated this by CHF 25 million as mentioned already by Pascal Kiener. Let we come to this chart, which is especially prepared for you guys. On Page 15, we always give you more in-depth understanding with regard to interest income. What is really interest income from the activity, and what is rather balance sheet management. Here, you see that the pure NII before balance sheet management is going down from CHF 627 million to CHF 596 million, is down minus CHF 31 million, which is probably already answering one of your questions. So here you see the full impact from the business side perspective. Then you know that what we do is we do balance sheet management by taking typically in U.S. dollars, which create a charge on interest and doing FX swaps, which result into trading income. So the charges for this on the NII were by minus CHF 70 million, and the income generated by this was CHF 89 million on the trading side. So net CHF 19 million. So we can see 2 elements here, which are important to see that, first of all, in year-to-year comparison, the balance sheet management charge was lower, right? And explain the evolution to CHF 526 million. And on the other hand side, you see also that the income from this was lower, which actually points out another point. From an accounting perspective, trading income was CHF 195 million, stable. But from a business perspective, you can see that trading income is higher , CHF 106 million against CHF 99 million, okay? Of course, I will be there for your questions, if this was too complicated. On Page 16, total operational charges with the 3 components are almost stable. Basically, you see a shift from other operating costs into personnel costs, because this is basically the last movement, which appears here with regard to integrating the resources for IT hosting, because first quarter 2024, they were still paid outside. And over 2025, they were fully part of BCV employees. So that is why personnel cost -- main reason why personnel costs are slightly up. And other operating costs are slightly lower. I just focus on this key element, obviously, there are a lot of movements going on. Depreciation and amortization is stable. With regard to the headcount, nothing special to signal. It's more or less stable at the parent company, and its subsidiaries. With regard to total assets, obviously, the business developments of mortgage loans and advanced customers have already been explained by Pascal Kiener. I would like to focus on the elements that financial investments, which are purely there for liquidity reserve in the sense of HQLA, high quality liquid assets are up by CHF 1.3 billion, which is part of our financial strategy. On Page 19, you see that the customer deposits are up by 0.6% and bonds and mortgage bonds are up by 1.7 million, which is basically coming from our Pfandbriefe Centrale mortgage capital loans, which are first mutualized company of the cantonal banks and our own bond issues. With regard to current discussions in newspapers, I really want to point out one thing, which has also been made by Martin Schlegel of the Swiss National Bank. I mean we had no issue in funding at all over this period. And maybe it's also a little more further away from Switzerland, you must know that, for example, Pfandbriefe Centrale is this institute of Swiss Pfandbriefe, which issues mortgage covered bonds did record levels of issuing of CHF 14 billion gross issuing over 2025. So I just want to make clear there is no funding issue, and I recommend you the lecture of the short paper, which Martin Schlegel of the SNB published yesterday or days ago, which makes us even more -- provides even more in-depth understanding of that point. Well, our shareholders' equity continues to rise, and is now almost at CHF 4 billion and -- logically it cross CHF 4 billion the next time we closed. Now on Page 20, where it has all been mentioned, right, that the new -- net new money was CHF 3.8 billion, and this nice market performance, CHF 6 billion, we are up by 8%. So the net new money came has reflected our business mix of individuals, SMEs, institutions and large corporates. With regard to CET1 on Page 21. Obviously, here, we -- as mentioned already quite -- for quite a while, it happened, right? Basel final had its positive impact even larger than we shared with you before of 1.4% or 100 basis points. And then obviously, there are business volumes development. So we are at this nice CET1 of 18%, which gives a lot of place for further development because we consider this as an excessive CET1 rate. The LCR, as you see, is cruising at comfortable levels, with the mix, I already mentioned before between HQLA and liquidity and SNB. On Page 23, the net stable funding ratio is also pretty much on the same level, as you can see on Page 23. So given this nice business development, but also given that we are in a situation where still a lot of macroeconomic geopolitical uncertainty, but we are also at a solid earning capacity, we will propose a stable dividend of CHF 4.40 to the AGM soon. So basically, with this, we are at the historical average of payout. But I really want you to understand that, I only want to maybe make a point here also with regards to your first comments as a result. First of all, when we announced for 5 years dividend interval, this has nothing of a plan or an objective, nothing at all. This is an interval where we are convinced that, first of all, we will stay above the lower border. Secondly, it gives some perspective of what potential we see without being completely in the sky. And certainly, we do a step-by-step, and once we've done dividend level, except a major structure of regulatory crisis, we will not go to a lower level. But there's nothing of an objective if we say CHF 430 million to CHF 470 million to be at CHF 470 million by the end of the horizon. We have never communicated like this. It's not the logic. Our history has shown that we were able to do this for more than 15 years. We went through a lot of unexpected crisis, be it the financial crisis, be it euro crisis, be it negative interest rates, be it COVID, be it the Ukranian war. So we have shown that we are highly resilient. And obviously, if things become very positive, we will be rather at the higher end of the interval, but that's all. Okay. Maybe we will have more questions for this, but I think it's important to remind you of that. Thank you very much. Pascal Kiener: Good. Let me maybe just conclude very rapidly with 2 charts how we see the future going forward. I think that the fundamental of the Swiss economy are still strong. I know the Swiss franc is very strong. But on the other side, as can import goods cheaply or cheaper. And we have a production growth. So the internal demand is quite good, low employment rate. So I expect that to carry on the economy in Canton Vaud and Switzerland is quite resilient, quite strong. They have proven that during all past crisis that Thomas just mentioned, it's clear that the U.S. tariff and the strength of the Swiss franc is not something that we like. But nevertheless, I expect the Swiss and the Vaud economies doing correctly in the next 2 years, something like 1% growth. I don't expect more than 1.5%. I don't believe that, but I don't expect much below 1%. So probably maybe 0.8 that could not be excluded, but not below that. Those that means growth and not recession and not stagnation. One of the main business of BCV is the mortgage business and the real estate, you see the prices are going up every day, more or less, which is quite normal. I mean, low interest rates, but more than that is basically the ongoing growth of population being immigration of all basically more new kids than deaths of people. Anyway, so basically, with a 1.1% to 1.3% population growth every year, which is something like 9,000 people, which means a need for homes, 3,700, 4,000, let's say, flats or homes, and we don't build that much. So basically, I expect those prices to go up again. And I'm not saying this is very good because it's very, very high. But on the other hand, the economics, I mean, the fundamentals are just good. Those people need to sit somewhere. I don't expect immigration going backwards given the need for workforce in Switzerland and also some problems in terms of economics of our neighbors. So basically, we will carry on being very, very cautious in this business, where we target growth between 4% to 5%, but really focusing on quality. We could grow probably faster, but we don't want. We want to make sure that we have quality growth, and we will target those areas where there's a low vacancy rate, because this average of 0.9 basically, if you take the Canton Vaud, this is between 0.3 around Lausanne, maybe to 1.82% in some areas. Okay. I think that's it, and we are ready to take your questions. Thank you very much. Operator: [Operator Instructions] We have our first question from Cajrati. Ausano Cajrati Crivelli Mesmer Nobili: I have a question regarding the outlook. Why didn't you give any commentary on outlook or guidance or anything thereof? Pascal Kiener: Because, I mean, look, if you know BCV, you see this is a very stable business model, and basically, I don't see the point -- I mean how can I give a very bad outlook? Does that make sense? How can I give a very rosy outlook that doesn't make sense as well? So we are in a situation -- in an ongoing situation in the last 5, 6 years. So I don't expect something special, neither very negative, neither very positive. I mean, we don't want to do it because then if there is a slight, let's say, deviation from the normal course, then we have to make maybe a profit warning being positive or being negative. And this is always huge discussion. And since the stability of the business -- BCV business model, if we were a high-tech company or a company with suddenly a launch of new product or whatever, I can understand that analysts require more or less a guidance. But for a stability business like BCV, very diversified, I don't think this is necessary for analysts in order to make a, let's say, a good provision. I hope that answers your question. Ausano Cajrati Crivelli Mesmer Nobili: Yes. But in the past, you used to give some outlook? Pascal Kiener: Yes. that's a good point. And we had problems. Once we were much better than we thought because we had some extraordinary items. And we had tremendous discussion with our legal team, whether we have to make a profit warning, a positive one. And you see no discussions for me, useless. And at the end of the day, we say we don't do it. We will not make a positive profit warning, but that's the main reason, because I don't expect -- I mean, if we had a very special event, then we would do something, but I don't expect any special event, and I expect BCV to carry on showing similar results. Now it depends then on the interest rate you see. Of course, if interest rate go up, then we will have better result. If they go down, probably that will reduce slightly, but up to a certain point, because now I mean we are at zero. This is, in a way, the worst situation for BCV I would prefer probably the SNB. Just from a BCV point of view, I'm not sure this is good for the environment. But from a business point -- from a BCV point of view, if the SNB would reduce or go into negative territories, that will be better for us. So basically, I mean, either way, it's in a way better. Operator: We have our next question from Stefan Stalmann. Stefan-Michael Stalmann: I hope, you can hear me well. Pascal Kiener: Sure, very well. Stefan-Michael Stalmann: Yes, I wanted to come back to the dividend decision. I hear you, Thomas. It's not a commitment to follow this 4.3 to 4.7 trajectory, but you did seem to behave differently last year. So last year, profits were down by more versus '23, and you still increased the dividend by at least 10, which seem to follow this trajectory to 4.7. And this year, profits are almost stable, minus 2% or so. And the dividend is flat and so on. I guess, it's fair to wonder whether you're sending some signal here in any way or whether this is -- how should we think about next year really -- and is 4.7 still a plausible outcome for '27? Thomas Paulsen: Stefan, I like your question, because it gives me the opportunity to explain something further. 2023 was an extraordinary record result. And basically, when we -- we applied the same logic as we would do for an extraordinary bad result, right? We basically wanted to stay somewhere in the middle. That's why we did the CHF 430 million, whereas we were -- which was the CHF 370 million distribution, whereas the result was CHF 470 million being that we had CHF 100 million we kept, which is excessive from this regard what we did previously before that. So that's really the point. We had extraordinary net results. And basically, now we get back to something, which for the given environment is more typical. And we evolve it is CHF 4.40, right? That is a dynamic, which is really behind this move from -- going from CHF 380 million to CHF 430 million and not to -- we could have gotten to much higher to CHF 480 million, right, to CHF 470 million almost with that result. We didn't do it. And now we evolved with something which is this environment, which we look at it with some prudence, okay? I think that's really the point. Then there's a question forward looking for Pascal? Pascal Kiener: Maybe, if I may add. I mean, look, we've been doing that for 17 years. I introduced that 2008, this distribution policy. At that time, that's quite new. Now you see some banks or some other companies doing something similar. I think this is totally normal for the business model we are in and the kind of economy we are in, which is not really growing by 10%, but rather by 1% to 3%. So the point. So I think we -- I hope that you give us the credibility after 17 years. Now we will never go back. I will never blow up the dividend, that must be clear. Unless, I don't know if somebody, I don't know in 6 months, FINMA, Swiss regulator, asked for twice as much equity that is another story, but I don't expect that. So I will never lower the dividend. That's first point. And we will always be between the 2, the floor and the ceiling we have set. Now going forward, it depends a bit on the interest rate. I mean, who knows what's going to happen to the interest rate? So we had some -- we were cautious in putting the CHF 430 million. We said we don't know. We think probably that there is slight increase in the long-term rates, and maybe depending on the results next year, we will increase. I mean, going forward, if you take a kind of a midterm, long term, I think our result will increase because probably the interest rate will come back to normal level, I mean, to a certain level. We will never decrease, and we will over time, increase. But we have those 2 numbers, the floor and the ceiling to say what is reasonable for the next 5 years. Now it's for the next 2 to 3 years or the next 2 years. Given the current situation, probably we will not be at CHF 470 million in 2 years. Now depending, why not, but probably not, but there is a good chance that -- I mean, the strategy of increasing steadily regularly the dividend is still the strategy, and we will carry on doing that for the next couple of years. I hope that answered the question, because, let's say, in a nutshell, we are cautious. There is no signal. We are not signaling that we changed the BCV, the dividend policy or that we just know that we reduce, no, or that was stable. It was really to being cautious. Stefan-Michael Stalmann: And by the way, I wanted to apologize for only turning on my camera. Now I didn't have the full functionality of mic and camera during the first half of the call, but now I do. Could I maybe ask a related question? And I think it was you, Thomas, who said that 18% CET1 was excessive. Do you have any particular thoughts about how to bring it down to something less excessive? And where will that be? Thomas Paulsen: Well, Stefan, you know us for quite a while, and we -- I mean, from a business point of view, we always said that this bank would be really from as an efficient machine, perfectly capitalized with something like 14%, 15%. And anything above that is excess capital. Or from a valuation perspective, you will basically say 14% to 15% is what I need from my operating value, and what above can add to it as an excessive value, right? That's the story. And over time, the whole story of our dividend policy had also the idea, but it didn't happen. So that's why we don't insist on it, that we, okay, we keep some capital to take into account, part of the risk-weighted assets growth, but not fully enough so that the CET1 has it should go down over time. Now as I have been taking this for 17 years, it never went down. I don't talk about it so much anymore. But we must also objectively consider that Basal 1, 2 -- rather 2 and 3 has been very positive for us. And the different moments along this time scale, we had uplifts by this, because as we came in as the kind of unwanted participants, they had put on us a very tough regime. And the first we went, they realized that we were really doing it very honestly, and so we have seen these opportunities to even lower our risk rates for that reason. Pascal Kiener: So if you don't take into account those discontinuities. So those years where we had suddenly an increase in the ratio based on those, let's say, regulation changes. I mean you will see that the Tier 1 ratio goes down slightly because we -- as Thomas said, if we would keep it stable, then probably we would have a lower dividend. We would need to retain more equity, but that's not the point. I mean the point is to use this in a way excess capital to increase over time, the dividend and to decrease the Tier 1 ratio. And we don't expect yet new. I mean, new regulation from FINMA. I think Basel III final is implemented in Switzerland. And here, we had a tick-up, I'm fine, but we didn't expect exactly that. We expected some positive news, but not as positive -- or so positive as they are today, but I don't expect those kind of changes in the next 5 years. So roughly, probably given the growth in the credit business, so the risk-weighted assets, given the dividend policy of distribution, I expect this Tier 1 ratio to slightly reduced over time. I would like here to mention that I've been the CEO for now 17 years, CFO the previous 5 years. Since 2004-'05, we have, in a way, kind of excess capital. We will not use this capital to do bad things. So I don't expect any merger or acquisition just to use this capital. Capital will remain in the bank and will decrease slightly over time based on risk-weighted asset and distribution policy. Stefan-Michael Stalmann: I don't know, can I maybe ask another one? Or should I step out and step in, again? Pascal Kiener: Yes. Stefan-Michael Stalmann: AI. Obviously, a topic everyone is very high on the agenda. And I was wondering if you could just talk a little bit about how you're looking at it, whether you already have initiatives ongoing, how big they are, what the results could be, whether that changes the competitive dynamics, anything that you find important. Pascal Kiener: This is a huge question. We have time till 6:00. No, I mean, in a nutshell, Yes. No, I think this is something very important for the economy overall. I see AI as a game-changer, like in a way, Internet, but it's going to take time. I mean, this is one thing to play with ChatGPT at home and to ask for summary to have a couple of things. This is another thing to implement that in a bank with all risk assessment done with a 100% of reliability, et cetera, et cetera. And we have initiatives ongoing. Let me give you one example. I mean, I'll have a couple. For example, we have introduced an AI tool to generate leads for our customer relationship manager. So based on basically the situation of the customer, analyzing flows, analyzing the kind of product they have, the trajectory, et cetera. The system is able to suggest to the relationship manager, a couple of products that we could sell to that customer. I mean, a human can do exactly the same. The AI tool is not better, but it's much quicker, much quicker. So we get some productivity improved. But here, we're talking some percent of people. So you cannot really get rid of some people based on that. Another implementation, we have 5, 6 implementation tools. Another one is to prevent fraud. You know that in the -- in Switzerland, this is the same probably in other countries. You know that online payment. I mean this is incredible. Our people are naive, stupid and are being fraud. So here, we have implemented AI tool in order to, let's say, to better monitor the transaction of customers to try to get those wrong transactions or those fraud transactions, and to do that, let's say, at an acceptable cost because you could check every single transaction. But in payment, we have, I don't know, 30,000 to 40,000 payment by hour for each hour. So if you control all of them, that's impossible. So here, AI can help clearly. And I mean, that will carry on. Now what I see in the market, not only banks, I think, AI is a powerful tool. Now taking the benefit in terms of more revenues and, let's say, less cost is not easy, especially for established companies and established business model. Probably, it's easier to start a new company based on AI and then maybe you can get the benefit. That will come, but that will take some time, but we will be part of this game. In terms of competition, I don't think that we -- for the time being, play a significant role that will sometimes change a bit the relationship and on the customer and ourselves, think about investment. I think you are in the business of investment. So asking ChatGPT or I mean, asking a very good AI tool or asking a relationship manager for advice, who is best today, probably the man or the person, but in 5 years from now, I don't know. So probably expect, nevertheless, some productivity improvement due to AI in the mid- to long term, but not in the next 2 years. Stefan-Michael Stalmann: It sounds like you don't expect this to drive any particular investment needs that you wouldn't have out of your ordinary IT budget. Pascal Kiener: No. Stefan-Michael Stalmann: Could I ask one final from my side? I have been, I mean, I have been looking at the loan-to-deposit ratio, if you like to turn it the other way around in your reporting. And you have already commented a little bit on some of the funding topics that have been around more recently, let's say. But even if I look at longer periods of time, 5, 6 years, your loan-to-deposit ratio has quite consistently trended up. And I was just wondering whether that's any concern to you at all, whether you mind, whether this is maybe just a bit of a random result of what happens in your corporate -- large corporate business in particular, between loan and deposit decisions? Or are there constraints where you say, I don't want to go above whatever 110 or 115 for particular reasons. And why do you think, by the way, that we have seen this move from 93 to 100, whatever, 10 or 7 over those 5, 6 years? Pascal Kiener: Exactly I mean, it depends how you look at the ratio. We tend to look at the other way around, but I mean, it doesn't matter. No, no, no problem. But this is not a BCV trend. If you look at more or less all cantonal banks. So all, let's say, retail banks or universal banks, I mean, cantonal banks because UBS is something different anyway and private banks are also different. So if you look at cantonal banks or value or horizon, you see the same. And to be honest, I'm not sure I understand completely why. I mean, first of all, there is a strong demand for credit, being mortgage or be it commercial loan, this is clear. And the demand is even stronger after the UBS and Credit Suisse merger. So that's one point. But -- okay, that's one point. Second point, I think the retail customer, although let's say, mostly, let's say, the individual. I'm not talking about SME. I mean they are more, probably, this is an assumption, I'm not sure. There are more possibilities, opportunities to invest or to deposit their money. Okay, as I go, they would deposit in savings, and maybe they have some investment products. Today and in the crypto, there are so many opportunities in Switzerland, a broad -- so my guess is that part of the money is going to other, and investment channels, I'm not sure what I'm saying because we are trying to analyze that. But this is not a BCV trend. Now it's clear that following your question or the last part of your question, I mean, we have a kind of a limit. I don't want -- I mean, if I take my ratio, my way of looking at ratio, probably at 80%, I start being EBITDA and ticking and probably for you, it would be under 20 or under 15, I don't know if we should bid the math. It doesn't mean that we're not going to be above that or below that, depending on the way you look at the ratio, but we have to think about it, what it means. And that then we have to diversify, I don't want to be dependent on the financial market. This is a risk slightly, of course, but I would like to ask -- I don't know for example, 50% of my loans only covered by my deposit, that would be very dangerous. So we have to look at that. This is an ongoing trend for the last 5 years, you're right. But you see that is -- this is all retail bank, all cantonal banks have the same trend, more or less. And if you look at some of them, one or two are already at level, which I consider they should start thinking about what they do, whether they carry on like that, whether they try to get other opportunities for financing, whether they limit the growth in the credit business. We are not that. We have time, but this is something that we have to look at and to understand exactly what's going on. It's a very good question. Thomas Paulsen: I still want to remind, I just was looking for the chart, adjusted the chart recently. I mean, before 2015, we saw quite low loan-to-deposit levels, right? So we are still marked by this period of excessive liquidity, also linked to the negative interest rates, but the point which was Pascal was just making is completely the same. I just want to remind us of historic data. Operator: [Operator Instructions] We have no further questions at this time. So this concludes our call today. Thank you very much for joining us. You may now disconnect. Pascal Kiener: Thank you very much. Thomas Paulsen: Thank you. Bye-bye.
Dave Huizing: Good morning, and thank you for joining today's call. I'm sitting here with Dimitri de Vreeze, our CEO; and Ralf Schmeitz, our CFO. This morning, we published our full year 2025 results on a restated basis, together with a presentation to investors, which you can find on our website. Here you can also find our disclaimers about forward-looking statements. Following Dimitri's and Ralf's opening comments, we will open the line for questions. [Operator Instructions]. Dimitri, the floor is yours. Dimitri de Vreeze: Thank you, Dave, and welcome to everybody here in this call. Nice to see you yet again, a busy week for us, busy week for you. The ANH call last Monday, now the full year results, and you've seen that there are a lot of numbers there. So Ralf will lead you through in a minute. And then next week, our integrated annual report. And as you've seen in the press release, we're also looking forward to host our investor event on March 12 about the next phase of DSM-Firmenich as a consumer company. Now let me go through a few of the highlights of the divestment of ANH to CVC. We explained that on Monday, but it was an important piece of our journey. And I think it's clear to say that it's really focusing on DSM-Firmenich to become a key player in Nutrition, Health and Beauty. And that's also where the value creation is. So an important point was the signing of the divestment of ANH to CVC. And we constructed a deal where we have mitigated the downside risks in the ANH business as well as the volatility, one of the strategic reasons that we announced that we wanted to divest, and we have implemented on that. Now we have created a deal structure that is not only mitigating those risks on downsides, but also creates an opportunity on upside. And that is also what we have announced last Monday, together with a favorable long-term supply agreement on vitamins. The EUR 2.2 billion, we found a fair value for the ANH business. I think it's a great business, but it has its volatility. We'll get proceeds at closing of EUR 1.2 billion and remained a 20% retained stake because we wanted to cater for a possible upside. The solutions core business, the specialty business is a really good resilient business going forward. So that whole multiplier on value we would like to capture, as well as the Essential co, which is predominantly the vitamins business, where I think CVC Capital Partners are a partner we work on different businesses with, and they are very much catered to make that business grow and add value and want to capture that 20% as well. Well, in the grand scheme of thing, 20% of EUR 2.2 billion is around EUR 0.5 billion. So it is also in terms of risk mitigation, not the biggest number. So please don't see the 20% is something where there's a direct link to our business, not anymore. It's deconsolidated. It has been out of our numbers. The EUR 9 billion is the DSM-Firmenich consumer scope that we're talking about. Now the earnout, the earnout is linked to business on solutions scope, very good business. So in that sense, I think the earnout is pretty much secure. And the part of the earnout is linked to Essential core. And then if that's half of the earnout, I think it's all been mitigated with CVC working diligently to bring that business up to [ thrive ]. And I think there are lots of opportunities with normalization over the business as we speak. Now what are we going to do with the money? Although let's make it very clear, the money only comes in towards the end of the year. As a sign of confidence, we will start our share buyback already in quarter 1 in addition to the EUR 1 billion that we have started and executed and completed for the Feed Enzyme business. And at the same time, not resetting the dividend, it remains stable also after the carve-out of ANH at 250. Now if we then go to the next slide that shows with ANH out of the way, we are on our journey where we merged the company, we delivered on the synergies. We have tuned our portfolio, and we have signed the deal to divest ANH. We're now into the next phase of DSM-Firmenich, the consumer company, and we're going to grow what we have. We're going to anchor what we do and going to deliver on our promises. On March 12, we'll give you that accelerate route with our BU President to get a bit of a feel on what we're growing and how fast we were growing. Under that journey, we have grown organic sales growth of 6% in '24 in the scope of DSM-Firmenich consumer related. And this year, we have announced the 3 years full year result, 3% growth on 2025 for that business in the environment we are in. So we're showing the resilience of that portfolio going forward. Now we then go to the next slide, a little bit the financials of that DSM-Firmenich consumer scope. If you move to the next slide, I'm going to show you a few numbers. Yes, here we go. So here are the numbers. Here, you can see we're a $9 billion company. We have grown that company 3% in '25, as we said, 6% in '24, if you go through the restate apples-with-apples comparison. An adjusted EBITDA of EUR 1.7 billion, EUR 1.8 billion, which was a 5% step up like-for-like. By the way, that's the same from '23 to '24. So it shows the resilience of that portfolio that we've built. With the trajectory of EBITDA margin, I think many of you asked the question, how do you come to the '22, '23 midterm targets? Well, we started with 18%. We moved it up to 19%, 19.6% for 2025. If you take the last 2 quarters, we're more closer to 20%. So also that trajectory will continue with a good generation of cash flow, the 10.5% conversion over sales in 2025. I already alluded on the dividend and on the share buyback and on the investor event on March 12th, where we're going to give you some insight on what the next phase of DSM-Firmenich is all about. Now last phase, last slide before I hand over to Ralf. In that whole trajectory, we stay true to our sustainability program. If you can go to the next slide, please. Then it's clearly that we also have made quite some progress on sustainability. It's important for our customers. So some people will say, well, why do you still work on sustainability? Well, apart from the fact that it's part of who we are, it is in the market we play in with customers important, 100% renewable ahead of plan and also some recent ratings of CDP, AA for climate and water, but also platinum metal for EcoVadis. It does matter. It is the company we're building. And we are proud that we also continued that during that merger. So we're well positioned to go into the next phase, which we call internally the accelerate phase, with growing what we have, anchor what we do and deliver. But before we go there, maybe let's look back for one more time in what we've done in 2025 before we move forward. And with that, I hand over to Ralf. Ralf Schmeitz: Well, thanks, Dimitri. And good morning, everybody. Before diving into all of the numbers, every number presented is, as Dimitri said, in accounting terms, a continuing operation. It represents the company we've been building over the past 2 years. And it's all about Perfumery & Beauty, Taste, Texture & Health; and our Health, Nutrition & Care business. As you'll see, ANH is not very much coming forward in the slides. It's now part of discontinued and the Dimitri and myself will be managing that business for cash until the closing has finalized, which we anticipate towards the end of the year. It will be positive in cash flow generation as well, and that's what we'll steer up on, and we'll continue to report on the cash performance going forward. Now a few things. Happy with the announcement on Monday, where obviously triggered the whole event of all of the restatements and we've been releasing the new numbers on Monday afternoon. So it is a lot to take in. We appreciate that. I think also if you look at our press release, we have been as elaborate as possible, giving you the full P&L, the balance sheet and the cash flow ahead of our annual report. In the Annex we've tried to bridge also between the total group and the continuing operations and show you all of the moving pieces. But we also appreciate that in a busy reporting season, maybe not everybody has restated it. In the Annex, on Page 21 and 22, we've basically also included a reporting as per the old world, including the divisions before restatement to accommodate you as much as possible. Now Dave and the team are happy to take your questions. The annual report next week, that Dimitri alluded to, will also be based on continuing operations that will allow you also to all adjust to the new world and then we move from there. Now let's dive in a bit how that new world has performed. But before we move there, I think this slide is an important one for me, where overall, you've seen the work and the outcome of all the activities around tuning of the portfolio, where on a group perspective, we've developed the group towards a 22% margin. It's very much in line with the trajectory that we envisage. But also you see the 3 BUs with P&B, TTH coming towards the lower end of our guidance, also very nice progress on those fronts. And HNC really showing a strong recovery towards that trajectory as well. And I'm happy, although that the restatement is a lot to take in, it does show that also going into '26, we've got the right reference on how we're doing as a company. Now let's dive in on the next page, please. Overall, the group, Dimitri already highlighted it, for full year overall 3% organic sales growth in not the easiest environment with a stronger H1 than H2, but encouraging growth throughout the year with the leverage in EBITDA, so a 5% step-up in EBITDA and has set the margin of 19.6%, very nice. But for me, it's more relevant as we're on a trajectory that the second half is at 20%. And that's something that we'll continue to improve on. If we look at Q4 specific for the group, overall, a 2% organic growth and a 3% step-up in EBITDA and a margin very much in line with prior. But I think it's more relevant to zoom in into the business units. But before we go there, also a highlight on cash. We delivered overall, remember that when we guided for a 10% target that, that was for the group. We've delivered upon that for the total group. So the total group was just over 10%, but also in the continuing operations, we've delivered upon that, and I'll comment that towards the end of my voice over. Another metric that I want to call out is that we talk about our capital returns. Overall, the core ROCE for continuing operations stood just over 11%, showing also the quality improvement on that front over the period. Now let's zoom in on the next slide, please, into the businesses, starting with Perfumery & Beauty. Overall, a 3% organic sales growth. Keep in mind that throughout '25, we obviously had the headwind in sun filters, where we've seen some softer conditions. Overall, adjusting for that, the sales growth is 1% to 2% higher throughout the year. And going into Q4, we've seen an improvement in sequential conditions with an overall 4% organic sales growth with a strong contribution of Fine Fragrance with a high single-digit growth and a more mid-single-digit growth and a more mid-single-digit growth in our Consumer Fragrance & Ingredients business, whilst the recovery in B&C did not come through yet, overall delivering a solid performance in our Perfumery & Beauty business. Margin overall, slightly impacted by FX and the mix effect as a result of that on a full year basis, very much in line at 22% on average despite a difficult exchange rate environment. Moving then on to the next page, please, to Taste, Texture & Health. Overall here, a very strong year. Again, 4% organic growth. Keep in mind, the comps of last year on the back of a very strong 2024, that translated again in a very nice step up in EBITDA of 7% year-over-year when adjusting for the FX. And also here, the margin is something we continue to improve margin positively, as said, towards the 21%, the lower end of the range, and we continue to progress from there. If we look at Q4, a bit impacted by softer conditions in the U.S. mainly. Overall, a 2% organic sales growth, still reflecting the contribution of synergies and very well positioned in the market, but we see, especially with our key accounts in the U.S., a bit of weaker. Overall, if you look at it from a segment basis, beverage, a bit softer, but dairy, baking at very strong and that continues. EBITDA quality very profound. Q4, a very nice step-up. Overall, a 10% step-up in EBITDA. And when adjusting for currencies and also the margin showed a very strong step-up versus prior, in line with the ambition that we have for this business overall. Then moving to Health, Nutrition & Care on the next page, please. Overall there, we often talk about the journey of Health, Nutrition & Care and also that journey continued. So on a full-year basis, continued growth of around 3% organic. A continued strong performance at the EBITDA side, a 4% step-up when adjusting for currency and also the margin continues to improve. You also see that in Q4, we again delivered a 20% margin for the business. The growth was somewhat impacted by timing of a bit more lumpy order in our pharma business. There is a bit of a shift there that overall, adjusting for that, the organic sales growth stood at 1% for the quarter, where we see a continued strong environment for Early Life Nutrition and our HMO business, but we also see the uncertain consumer behavior impacting a bit of higher dairy supplements and Eye health business in the fourth quarter. Overall, margin more or less flat as said in Q4. But overall, a continued trajectory of growth also in Health Nutrition & Care. Maybe then last, but not least, looking at cash, overall, important on the next page, please. Our cash performance -- sorry, before we go there, there was one more slide. I think here a lot of detail. I did want to come back on the overall performance of the group as well because I think that's important. It's a bit of a busy slide, but it's coming out of the press release. I think the key highlight here are two things. On the one hand, our adjusted EBITDA for the group, overall will land just below EUR 2.3 billion, in line with the guidance that we gave, set aside for a bit of weakness in Animal Nutrition in the fourth quarter and a deteriorating FX environment. Overall, we came in at EUR 22.80 billion for the total group, so very much in line from an overall perspective as well. And also on the tax side, you see that our rate is normalizing at 21% for the continuing operations where we aim to improve a bit further, I think, as relevant going forward. Then to the next page to our cash conversion. So overall, I think looking at a few drivers. Overall, working capital was below 29%, a little up versus prior when we talked about cash and the unwind of inventory in the second half. I'm pleased to report that our second half performance was very strong. Remember that we came out with the half year numbers with a softer performance in the first half, so happy to see that rebound. However, in the current environment, we were not able to fully absorb the uplift of inventory on the back of the tariffs and the carve-out activities that we've done. So that is to further unwind in '26 and causing us a bit of a percent in working capital. Overall, our sales to cash conversion for the continuing operations was also well above 10%. And there, we alluded to that in the first half, a bit of a shift, where in '24, you had a bit of a benefit from some timing of payments, including incentives, which is obviously then impacting '25. So -- but across the two years, a 12% performance, and we'll come back on that in the March 12th event where we will be stretching ourselves a bit further in terms of target setting on that front. But overall, an encouraging performance. And a good momentum going into '26. And maybe with that, Dave, we pause with the voice over and move to Q&A. Dave Huizing: Yes. Thanks, Ralf. Indeed, it is a good moment to start with the Q&A. [Operator Instructions]. And with that, operator, we can start. Operator: [Operator Instructions] Our first question comes from Nicola Tang with Exane BNP Paribas. Ming Tang: I want to start a bit with the outlook. I know you didn't give an outlook and we have to wait until 12th of March to get a bit more color. But I was wondering if you could talk a little bit about how the year has started across each of your continuing divisions. And you've given us a restatement for the past year, but is there anything to be aware of in terms of any changes in seasonality versus what we're used to for old DSM-Firmenich. I'll leave it there. Those will be my questions. Dimitri de Vreeze: Okay. Let me respond on that. Indeed, on March 12th, we'll give the formal outlook, but I can give you a little bit of color, and then you can prepare your outlook yourself before we go on March 12th. What you can expect from us on March 12 is that we'll go a little bit to industry standards. So we'll give you a bit of a range on where we see organic sales growth, the EBITDA quality as a percentage, and obviously, the cash percentage of which you were clearly indicating, all of you, that we felt that the 10% was right, conservative. So we're going to review that and come back to you in March on that. Well, a bit of color. What we have seen overall, before I dive in a little bit to the 3 business units and the 3 businesses. We've seen a bit of a cautious consumer behavior around the globe, but predominantly in North America, which is an impact on the Taste part of TTH and certainly dietary supplements and the eye health part in HNC. We'll come back to that in a minute when I'll give you a bit of color for BU. I think a 3% growth of the consumer in scope business for DSM-Firmenich is a good growth in the current market context, considering also the 6% growth we've done in the same scope in 2024. Now organic sales growth, 3% if that is in this current setup, we didn't see any change in trends from Q4 into Q1. So I think you can see that Q1, certainly for now half of February, we will not see a huge change from Q4 to Q1. We will know a little bit more in March. We'll give you the input, I think at the end of the day. A 3% in a year 2025 is a little bit the range where we've seen in a difficult market context, is what our business can bring, with a nice pipeline and growth going forward, still to the midterm target of 5% to 7%. And the BU presidents will also be there at March 12th to give you a bit of a feel of what is in the pipeline, what are the drivers? The fundamentals of the businesses are absolutely the same. We've all seen human mankind when uncertainty is there, they will start to be a bit more cautious. And there are two things of it. They either pile the stock or they destock. Pile stock, we saw during COVID. Now we see that destocking happening and then it normalizes over time. When it exactly will normalize, we don't know, but that normalization will take place, I think that is clear. Now, some color per business, Perfumery & Beauty. I think a good result in Fine Fragrance, high single digit. We see that continue. Mid single-digit growth in Consumer Fragrance, also there, with that trending doing well. Ingredients, for us, very good. Remember, mid single-digit growth after we've tuned the portfolio. We had a EUR 1.2 billion portfolio. We've tuned it, made deliberate choices where we want to grow. That ingredients we have are a big part, are specialty ingredients with mid single-digit growth in Q4. And Beauty & Care, the destocking effect fading out in Q4 and moving that into 2026, where we will see normalization going on. Now Taste, Texture & Health. Here, overall, a 2% growth in Q4, 4% for full year, with a 10% growth in the year before. So let's look a little bit about the 1 to 2 years trending with the comparison. Very good growth in pet food, in bakery and dairy. Also, dairy as a segment linked to healthy food. GLP, we really see a pickup there, a bit slow in beverages, but above all, in the North American region, that uncertainty has caused cautious behavior of consumers and therefore, also our customers, so we have seen North America being soft with destocking. Now then Health, Nutrition & Care. Health Nutrition & Care grew 3% for the full year, minus 1% for Q4, but you have to correct for that specific pharma order, which is sometimes in 1 quarter to another, it would have grown with 1%. Also here, predominantly the North America bit Dietary Supplement and Eye Health, Early Life Nutrition, Pharma, really, really doing well with good growth also on biomedical. So the fundamentals are still there. We've shown, build on what Ralf said, a 3% growth in a difficult market is creating a bit of confidence. So we're not giving an outlook, but we are giving you a lot of color to understand where we are heading for. Dave Huizing: Second question, Ralf? Ralf Schmeitz: Okay, yes. No, supplementing, I think Dimitri gave a better call. I think overall, Nicola, I think also, if you look at the Annex, then the impact of the restatement is very limited. So the regular seasonality will remain in place. Not that, that is very big, but on the back of the restatements, there's no fundamental change on that. Other than that, is that you now see the quality of the tuned portfolio. And if you look at the overall margin, fairly stable throughout the year and also from a growth perspective, not much of a deviation. Other than that, some of the a more volatile and weaker segments have now been restated. So that generally lifted the performance a little up. Operator: Our next question comes from Charles Eden with UBS. Charles Eden: My first question is more of a follow-up around sort of comments on Monday around the stranded cost of EUR 75 million that you mentioned. Would you expect this to mean that you start '27, I guess if we assume the deal closed at the end of '26, with a EUR 75 million headwind to continuing op EBITDA? Or do you expect to announce sort of another sort of top-up cost savings program to offset this amount, either fully or partially? And then second one, I'm just kind of follow up on the '26 guidance. And can I pressure a bit on the decision not to provide the guidance today. I guess, given the initial plan was to announce last summer, you've known the scope for a while when Ralf, as you mentioned, the restatement are pretty small for the continuing ops. So I'm slightly surprised you're waiting until March to give us that outlook. It just feels like it adds another period of uncertainty for your shareholders who've been patient and waiting for the disposal. So can you just help us understand that? Dimitri de Vreeze: Okay. Let me do the first one and then Ralf could explain the outlook. By the way, 12th of March is three weeks away. But apart from that, that's Ralf to respond. On the stranded costs, thanks for giving me the opportunity to elaborate on that. The stranded cost will have zero effect on our EBITDA. So we will compensate it for that. We have programs ready. We know when the TSA will run out. We'll take actions before. We've done it several times with many of the divestments we've done. So the EUR 75 million will be fully compensated for that. Maybe you see some small effects from one month to another, but we have road map, a road book where we exactly know what to do and how to phase that out. So that will not have any effect on our bottom line throughout the period. Ralf Schmeitz: All right. And let me then comment a bit further on the guidance. The short answer was of the Dimitri, it's only three weeks away. Now but on a serious tone, Charles, it's something that we looked at as well. But as you'll appreciate, we just closed the transaction literally over the weekend and then the restatement and the announcement of the deal. Obviously, when we want to guide, we want to guide for continuing operations. But I think also through the color that Dimitri gave is that we will be giving that guidance in full, including the BUs, but also about what is comprising of the businesseses, I think also a guidance today would kind of land in a territory where there's a lot of -- where people are still digesting all of the changes and going through. I mean, if you look at it, there's not even a consensus out there in terms of that around that new company. But rest assured, we are managing the business for growth. You said that it adds a period of uncertainty. I don't think so. I think with the voice of Dimitri, I mean, the color that we gave is in a difficult environment in '25, how we managed to deliver at least 3% growth. We will be managing the business for growth going forward. We will be tilting -- what Dimitri clearly said is that our guidance will be very much around organic growth, EBITDA, quality and cash where the cash target we will be uplifting, I think that is clear. And at the same time, the margin is a continued improvement story as well. We are happy with that the actions of tuning, also, if you look at the bridges that we presented at Capital Markets Day, there was a step-up of 2% of that. We have delivered on that. We're now at a 20% margin, but it's clear that we want to continue that trajectory also going into '26. So I think overall, there is comfort around that, managing the business for growth. We continue our margin trajectory and we'll be uplifting our cash performance. But then zooming in onto the full details and everybody had time to digest also the new reality and then we'll be bringing also the BUs that can then elaborate a bit more on our growth ambitions or innovation-driven ambitions. And with that, I think then, there's more purpose of giving you the outlook then on March 12. Charles Eden: Appreciate the color. I guess my point would just be we're going to recalibrate consensus now. And then maybe in 3 weeks, it needs to be recalibrated again. So it just creates a netbook. Anyway. I appreciate the color. Ralf Schmeitz: Yes. All right. Operator: Our next question comes from Matthew Yates with Bank of America Merrill Lynch. Matthew Yates: A couple of questions, please. The first one on the Perfumery & Beauty business. If I take the sort of continuing operations, I think the margins were down 80 basis points year-on-year. Can you just help us disaggregate that a little bit? You know, what was the FX impact on that? You talked about negative mix, but Fine was actually growing quite well. So, I guess, the mix isn't obviously a headwind unless, you're suggesting that beauty is a very, very high margin. And then the second question for Ralf around the cash flow. And I apologize, I'm not really sure how to phrase it because I haven't been through the accounts in a lot of detail. Your cash conversion was down about 3 percentage points year-on-year. It looks like about half of that is probably explained by working capital and then there's another half that I think, in your introductory remarks, you talked about timing. I'm just trying to understand, you're saying you're aiming to raise the cash flow conversion target. You've just done 10.5%. Like how would you honestly assess the cash conversion last year? What -- are there things that you think was depressing that conversion that we wouldn't necessarily extrapolate going forward? Just trying to get an assessment really about how much cash the business is generating? Ralf Schmeitz: Yeah. You want to take P&B? I'll take the cash. Dimitri de Vreeze: Yes. I think on P&B, it's rather clear. You basically said it's FX and it's mix. So remember that Fine Fragrance is around EUR 600 million out of the total. So obviously, we had a growth there. But Beauty & Care was lagging behind, softening, waiting for normalization. So it's a mix effect. That's about half and the other half is FX. Ralf Schmeitz: All right. And then building on the cash, and I appreciate the question, Matthew. Let me -- I think your assessment -- your quick assessment is a good one. So there's a few moving pieces around working capital. I commented on that in the opening words, around inventory, that we're not able to manage everything through. So we're carrying a bit about an elevated level. Inventory is about 1% differential. Last year, we continued to make good progress. This year, whilst the efforts were there to reduce it, I think, overall, the tariff environment and our carve-out activities cost an elevated level. Obviously, with a somewhat softer demand environment in the second half. So that's about EUR 100 million and accounts for half of it. The other moving pieces in working capital, generally on the payable side, I'm happy if you look at our DPO, it's slightly above 100. We're very much in line with prior. Receivables have been elevated as well. I think everybody is carefully managing the cash flow and that costs us a bit of half a point as well. So I think that assessment is absolutely fair. Half is working capital, and then I'm confident that we will be able to rebound that. And that's how I am also looking more at the cash flow over the 2-year period. If you look at the continuing operations, we included that in the press release, was 13% last year, now with 10.5% now on average, that lands very much at a 12% rate over this period. Now, what do I mean in terms of timing of payments? There's always a bit of an overflow from year-to-year. And sometimes that allows you to slightly perform better in one year, and then you see the rebounds next year. That's what we've seen. But if you go back to a half year call, I also explained that the incentives had an impact on that as well. On the one hand, '24 was a strong year, but the actual cash out is actually the year thereafter. So whilst at the same time, you have a bit of an elevated level of cash generation in '24 because you got the strong business results, but then obviously, you see a bit of a higher outflow in the first half of the year thereafter. So I think that's why you need to balance the cash over the 2 years to really see the current earnings performance, but at the same time, we have a continued step-up that we want to do in terms of working capital, but also CapEx. If you look at it, when we gave the prior guidance was always for the full group. We guided for 6% of sales. We landed spot on, on that figure. If you look for the continuing operations, it's slightly elevated because we're finishing the Bovaer plant, so that has, still a cash outlet this year and next year. But there's a potential that, that will normalize back to the 5% for the continuing operations, so that in itself was also 1.5% improvement. So I think we've got the levers. We'll elaborate a bit more on that on March 12th as well on what the programs are in place and where Dimitri and myself are focusing on and steering on, but there is a potential uplift for that target, and we know where that needs to come from. Operator: Our next question comes from Alex Sloane with Barclays Bank PLC. Alexander Sloane: Two questions from my side. First one on HNC, could you remind us roughly how much of the division ARA oil sales make up? And if you were to see significantly increased demand there from market share gains, given everything that's been happening, you know, can you talk to your capacity to service that demand and what that could potentially mean for HNC in '26? And then just the second one, just going back to Perfumery & Beauty and Matthew's question on the margin. I mean, was there any of that margin pressure that may be related to the kind of increased price competition in perfumery ingredients that we have seen at some of your peers. I think so far, you haven't really called that out, but just wondering if you can maybe touch upon that? Are you seeing any pressure on that front? Would you expect to see any pressure on that front? Dimitri de Vreeze: Thank you for those two questions. Let me elaborate on that. Thanks for the ingredients China part. You didn't hear us calling that out because it's not an issue for us. Now then you could do a follow-up question. Yes, but why are the others talking about it? Because we have tuned our portfolio already 2 years ago. Remember, we had a EUR 1.2 billion ingredient portfolio, where we have made deliberate decision not to rebuild Pinova. We have sold the aroma business. We have tuned down our portfolio. We've upgraded our portfolio and we have an EUR 800 million portfolio left in the ingredients, apart from the CapEx. So that EUR 800 million is predominantly specialties, fragmented, small molecules. And the pressure on China is on the big molecules, the menthol, the citral we were not in those big molecules because these big molecules, scale is important, cost is important, commodity type of elements are there. We don't want to play there. It's not our profile. We are in the Fragrance ingredients, in the fragmented ingredients, and therefore, you don't hear us call us out. And if you see at the results, the ingredients grow mid-single digit, and we're very happy with that. So that's why you didn't hear us calling it out because it's not an issue for us. Now then on your HNC part, I will be less specific because obviously, this is also a customer as well as competitive -- sensitive. We are the best-placed player in Early Life Nutrition. I think nobody would debate that. We are in ARA, we are in DHA. We now are absolutely the first entrants in HMO in China, but also more than HMOs in the pipeline to follow. And obviously, what we have seen on ARA is helping the story we tell Early Life Nutrition. Innovation is super important. Quality is super important. Credibility and reliability is super important. And I think DSM-Firmenich is always have -- always been that type of partner for our customers. And obviously, what is happening on the Early Life Nutrition market is helping us a little bit, and we will see a little bit of tailwind for that because I think it hints to what we want to be for the Early Life Nutrition phase. Now HMO, I spelled out earlier, that's a category where we see more than EUR 100 million-plus segment moving towards. And Early Life Nutrition, as part of our HNC business is around 25-plus percent of the portfolio. So it's definitely an area where we want to play, where innovation is important, where premiumization is important. Just to give you a bit of reference, everybody is always asking, oh, Dimitri, Early Life Nutrition is bad because birth rates are going down. The issue is that the premiumization with new ingredients is going up, the ingredients play into the Early Life Nutrition has seen very, very healthy growth in the last two, three years if you're there with the right innovation. Let me pause here. Operator: Our next question comes from Fernand de Boer with Degroof Petercam. Fernand de Boer: Yes, I also had a question on Early Life Nutrition, but that was answered. But on the new company of the continuing operations, how much of your cost base is actually in Swiss franc? Ralf Schmeitz: Great question. Overall, our FX profile improved. Well, normally, you get a slide from me with the housekeeping indicating that a bit as well. I think overall, the dollar exposure came down to about [ $13 million ] , that was previously closer to [ $15 million, $16 million ]. So that has somewhat improved. And on the Swiss franc, our overall exposure was CHF 800 million, it's now CHF 600 million exposure. Overall, the impact of [indiscernible] is about CHF 6 million, I think that was previously CHF 8 million. So somewhat improved profile on the FX side. Obviously, the current environment is not very helpful. So we will see an impact of that. But overall, the sensitivity has improved with the separation of ANH. Fernand de Boer: And maybe to come back on the guidance question. The fact that you don't give a guidance today for '26, absolutely does not mean that you are going to change your midterm guidance of ambitions? Dimitri de Vreeze: The answer is for 2, yes, and for 3, no. OSG, no change midterm. EBITDA, no change, midterm. And you wanted us to change the midterm guidance on cash because we said above 10%. And we got so much comment that, that was absolutely conservative, et cetera, and Ralf and myself, said listen, we are also building a company, so we start with more than 10%. And I think during that event, I also asked for a little bit of patience. Now, we have delivered 2x above the 10%. And I think I've heard Ralf saying that we would upward adjust that cash target. But let's have that for March 12. So 2 out of 3, absolutely, yes. And the third one, a yes, but it will be changed upward. Fernand de Boer: Midterm still the starting point is '24? Dimitri de Vreeze: The midterm starting point in '24... Fernand de Boer: Because actually in 2022 you gave the guidance for midterm and then in '24, you did actually the same for a smaller company, but not that you now mean with midterm, okay, we're going to have midterm targets, and then the starting point is '26. Dimitri de Vreeze: No, because we're already in '26. By the way, we've always said a midterm target starting run rate into '28. So that is what we said and that's still consistent. It's not a moving target. Yes, it's not like my son saying, I will pass my exam, but not this year, but next year. Fernand de Boer: Okay. Dimitri de Vreeze: You don't sound very convinced. Fernand de Boer: Well, what I said, we had '22 and then it was midterm and then in '24, it was also still midterm, and that's why I'm asking that -- okay, the answer is very clear, thank you. Dimitri de Vreeze: Yes. '22, the company didn't exist as we are today. So we started in May '23, that is... Operator: Our next question comes from Chetan Udeshi with JPMorgan Securities. Chetan Udeshi: I have two. The first one is quick. Is there any implications on your tax rate, excluding animal? I mean, I suppose animal wasn't making much money anyway. So -- I would guess, but just to clarify, the second question is your cash target, and I appreciate you'll probably upgrade that conversion target, which is good to see. But it's based on your adjusted numbers. And I'm just curious, as we go past this phase of restructuring and separation. What is the level of APM that we should have in mind that sort of leaks out from your adjusted cash? Because when I look at what you give us in terms of adjusted free cash flow versus what we can derive just taking your cash flow statement, the numbers are pretty different, and I would hope, over time, that gap reduces. So I'm just curious what would be the normal level of APM that we should have in mind? Ralf Schmeitz: Yes. Thanks for questions, Chetan. So on the tax side, overall, I made a quick comment in the opening statements. So overall, our effective tax rate for the continuing operations is at 21%. I think previously we guided for 21% to 22% for the total group. Happy that we came in on 21%, and we continue to aspire to minimize the leakage on that front, but this is very much in line with the guidance that we gave before. So the impact of the separation of ANH despite having, of course, its base in Switzerland didn't adversely impact the company, which is good. And again, I think that's also going to be the guidance going forward, in that same range that the tax will be around that 21% level. Now then, with respect to your APM questions. I think in the Annexes of the press release, you can actually see the APM development as well. Now obviously, throughout these tuning activities, you're rightly so, we had a bit of leakage. And normally, when you transform, there is a bit of a cost associated to that. We took that into account in the company that we want to build. But over time, from a cash perspective, you see it coming down. It's a constant point of attention, also for Dimitri and myself, we don't want any leakage on that front. We have substantially reduced it over the years from '23 to '24 to '25 also with some of the merger costs flowing out. And the guidance for '26 is that it should come down to below EUR 100 million, but we continue to stay focused on it to reduce it as much as we can. So the adjusted number comes closer and closer to the nonadjusted figure. Dave Huizing: We're now at the end, I think we are at the end of the Q&A session. Maybe closing remark, Dimitri, you want to make? Dimitri de Vreeze: No. Thanks, Dave. Indeed. Thanks for your time. Thanks for your understanding. Let's dive into the numbers. Please reach out to IR to really understand. I understand there's a little bit of pushback why we don't give an outlook. Now, you need to establish a full understanding of the base before you give an outlook. Imagine we've given an outlook, you would have asked based on what? So let's do step 1 first, March 12 is around the corner. We gave color on the business. I think at 3% in a difficult year. That's what we inspire to. So even to the midterm target, when business is normalizing, is absolutely in play with an EBITDA trajectory starting from 18% to 19%, close to 20% and we will not stop after 20%, we move towards the 20% to 23%. And I think with the cash we clearly indicated that we'll listen to you and that we'll come with a new midterm target on the cash as well as in the outlook for 2026. Now with all that, over the last 2.5 years, I think we worked diligently to bring DSM-Firmenich into the next phase, a EUR 9 billion business with today already at 20 -- around 20% EBITDA with good cash flow generation. To the point on what's a normalized APM is also linked to what is the next phase? The next phase will be accelerated. We will not go for big M&A, we're going to grow what we have. So we're happy with that portfolio. We're going to show that potential with an improved step-up still from the EBITDA from 20% to the range of 22% to 23% with good cash flow generation and with a clear understanding for our investors. We have paid around EUR 2 billion of dividend over the last 2 years. It is important to us. If we have additional leverage on the balance sheet, we are doing share buybacks. We finished the EUR 1 billion. We'll add another EUR 0.5 billion already in anticipation of the close towards the end of the year. So we also take that very seriously, and I hope we all see you on March 12 to show that what we have built has huge acceleration potential. And with that, let's close the call. Dave Huizing: Okay. Thank you, Dimitri. Thank you all for attending today's call. And with that, we can close the webcast. Any questions, as the gentleman already said, make times, please reach out to Investor Relations. We will pull a consensus ahead of 12th March, so that also we will then give basically an outlook on basis of that you've referenced to your estimates. Back to the operator, please. Operator: This concludes today's call. Thank you, everyone, for joining. You may now disconnect.
Operator: Good morning. Welcome to the Sigma Foods Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. A replay will be available on Sigma Foods Investor Relations website following the conclusion of today's event. I will now turn the call over to Hernan Lozano, Sigma's IRO. Hernan Lozano: Thank you, operator, and good morning to everyone joining us today. Before we begin, please note that today's discussion will include forward-looking statements. These statements are based on currently available information, expectations and assumptions, which are subject to risks and uncertainties. Actual results may differ materially. Sigma Foods undertakes no obligation to update forward-looking statements. It is my pleasure to participate in today's call together with Rodrigo Fernández, Sigma's CEO; and Roberto Olivares, Sigma's CFO. Our agenda today is straightforward. Rodrigo will provide a strategic and operational overview. Roberto will then take you through the financial results and 2026 guidance. We will conclude with a Q&A session. With that, I will turn the call over to Rodrigo. Rodrigo Fernández Martínez: Thank you, Hernan, and good morning to everyone. I'm pleased to join you today for my first earnings call. I also look forward connecting with many of you in person through a range of forums as we step up the investor engagement agenda initiated last year. I want to begin by acknowledging the exceptional work of our more than 47,000 members worldwide. Their execution, resilience and commitment enabled a strong finish to 2025 across regions and categories. Let me highlight a few consolidated performance points. First, our revenue surpassed $9 billion for the first time, reaching $9.3 billion in 2025. Second, we delivered on our EBITDA guidance of $1 billion, making 2025 the second consecutive $1 billion year. And third, our balance sheet remains strong, supported by robust investment-grade credit ratings. A key advantage continues to be Sigma's diversified business model across regions, channels, brands and categories, which helped us navigate dynamic market conditions. Looking at performance by region. Mexico delivered outstanding results driven by commercial effectiveness and robust execution. Retail channels remained the primary growth engine, consistent with trends throughout the year. Dairy-led category performance and value brands gained momentum across income segments. In Europe, our team executed exceptionally well as we navigated temporary capacity constraints stemming from the Torrente flooding, particularly early in the year. We protected market presence and customer service levels by relocating production across our network and trusted partners. Importantly, underlying profitability in Europe continues a clear upward trajectory. Comparable EBITDA surpassed $100 million for the first time since 2021. We also advanced our strategic European agenda by restructuring the Fresh Meat business in Spain. We signed an agreement that further sharpens our focus on branded products and improves pork supply traceability. In the U.S., the year was marked by continued penetration of Hispanic brands in mainstream channels, driven primarily by raising performance in key national accounts. Market dynamics remained fluid as consumers adjusted shopping patterns across channels. In Latin America, profitability continues to recover gradually with sequential EBITDA improvements driven by operational normalization effects. While cost pressures persisted in some countries, we're encouraged by continued operational discipline. Shifting gears to our strategic priorities. Our purpose, delicious for better life sets the direction and our strategy turns into action, grounded in 4 core priorities. First, grow and defend the core. We will continue doing what Sigma does exceptionally well on a large scale, serving consumers with trusted brands, strong execution and a multichannel commerce presence. Second, developing new sources of revenue. This includes core adjacent innovations and disruptive opportunities to the growth business unit, which is already demonstrating strong scaling potential in initiatives such as high-protein snacking and direct-to-consumer concepts. Third, strengthening the organization. This pillar is about building the culture and capabilities that help each team member perform at their best. It also includes investing in systems, modernization, marketing and consumer-centric innovation platforms like the studio. And fourth, exploring the future. We're looking ahead to longer-term opportunities in food science, responsible protein and consumer well-being priorities that will shape Sigma's next era of growth. Looking ahead into 2026, we expect to grow co-branded volume supported by an improving raw material environment and solid execution. We also strive to expand margin driven primarily by stabilization in protein markets and continued profitability improvement in Europe and we will deploy CapEx high-return projects, capacity expansion in the Americas and capacity recovery in Spain. In sum, we anticipate another year of solid performance. In this context, I'm pleased to inform you that the Board of Directors approved our plan to propose at our Annual Shareholders Meeting, 2026 cash dividends totaling $150 million payable into installments. Dividends will continue to be a key component of our capital allocation strategy. With that, I will turn the call over to Roberto. Roberto Rolando Olivares Lopez: Thank you, Rodrigo, and good morning, everyone. I will walk through Sigma's financial performance and 2026 guidance. In the fourth quarter of 2025, Sigma Foods revenues were $2.5 billion, up 12% year-on-year and 2% sequentially. This was driven by favorable FX translation, selective price actions and a stable volume. In Mexico, revenues increased 21% in U.S. dollars and 10% in Mexican pesos, supported by selective pricing and a solid performance led by our dairy category. European revenues were up 11% in U.S. dollars and 2% in euros. A healthy top line figure reflected branded volume growth and successful allocation of production from the plant that was flooded in 4Q '24. Revenues in the United States and Latin America increased 1% and 2% year-on-year, respectively. For the full year, revenues reached $9.3 billion, up 4% year-on-year. Importantly, 2025 volume held steady at a record high level despite pricing actions taken to mitigate higher raw material costs. For the fourth quarter, EBITDA was $278 million and comparable EBITDA was $284 million, up 34% year-on-year, driven primarily by Mexico and Europe. For the full year, comparable EBITDA was $1 billion, in line with guidance and the second highest in Sigma's history. Moving on to key cash flow items for the year. Net working capital posted $64 million recovery in 4Q '25, driven by seasonality. For the full year, we invested $208 million, primarily due to higher raw material prices. CapEx was $159 million in 4Q '25 and $362 million for the full year, up 47% from 2024. This reflects capacity expansions in Mexico and the United States, replacement capacity in Europe and modernization of systems and infrastructure. Sigma Foods paid $35 million in dividends during 4Q '25 for a full year total of $119 million, aligned with Sigma's strong cash generating capacity. Sigma Foods ended the year with a solid financial position. Net debt was $2.7 billion, up 9% year-on-year, reflecting investments in net working capital and CapEx. Net debt-to-EBITDA was 2.5x, in line with our long-term target. We closed the quarter with $643 million in cash. Total liquidity, including committed credit lines was approximately $1.5 billion. We are currently exploring opportunities in the Mexican bond market to refinance 2027 maturities and further strengthen our debt profile. This financial strength allows us to continue investing with confidence. Let me now walk you through our 2026 guidance. FX conditions have been favorable in recent months. For planning purposes, we consider 2 FX scenarios: a currency-neutral base case using the 2025 average exchange rate of MXN 19.2 per U.S. dollar and an alternative currency-specific scenario using MXN 18 per dollar. These assumptions are intended to illustrate a reasonably range. We expect protein markets, particularly turkey to gradually trend downward from current elevated levels. As reference, year-to-date prices of turkey breast have decreased 12% and turkey thigh is flat. Volume is estimated to grow approximately 2% with improving trends across regions. Revenues are expected to rise by 4%, supported by mix improvements and balanced pricing actions designed to grow volume as raw material pressures ease. We expect EBITDA to increase 5% year-on-year, driven by all regions. In particular, Europe is expected to deliver double-digit growth in 2026. CapEx is estimated to increase approximately 27%, totaling $460 million. The year-on-year increase is mainly explained by the planned investment for Torrente capacity replacement in Spain, covered primarily by insurance reimbursements received in 2025. With that, I will now turn the call back to Hernan for Q&A. Hernan? Hernan Lozano: Thank you, Roberto. We will open the line for questions. Please limit yourself to one question and one follow-up, so we can address as many participants as possible. Operator, please? Roberto Rolando Olivares Lopez: [Operator Instructions] Our first question comes from Rodolfo Ramos of Bradesco. Rodolfo Ramos: Congratulations on the very strong results. My question is related to your 2026 guidance. And I'm hoping you can help me here square the circle on your guidance, which seems maybe a bit conservative. I understand the sensitivity to the FX, and it's great that you included these scenarios for different currency levels. But just given how well volumes at top line behaved, particularly in Mexico and how some raw materials seem to be improving, I'm trying to gauge how conservative you are. Is it something that -- is it something to do with how you see volumes performing or the raw materials in '26? I don't know if you're also expecting anything incremental from the -- associated with the World Cup. So just trying to get us a better sense of what we've seen maybe this year and trying to get a little granularity on your guidance. Roberto Rolando Olivares Lopez: Rodolfo. This is Roberto. Thank you for your question. Yes. So maybe I think it will be good to talk a little bit about the assumptions, the main assumptions in the different regions. In general, we see volume growing in all regions. In the case of Mexico, the retail is expected to grow low single digits. And we see better dynamics that we have -- as we saw in the last quarter of the year in the dairy segment, particularly in the yogurt and cheese. We see a recovery in the foodservice channel in Mexico coming from more clients, but also penetrating those actual clients and some additional growth coming from the World Cup, particularly in the cities where there were going to be some matches. Our main focus in the case of Mexico, particularly in foodservice coming from a year 2025, where we have a lot of inflation coming from raw materials is to focus on volume. So in the case and to your point that there's going to be less pressure coming from raw materials, maybe is to focus and to balance volume in the long run. In the case of Europe, we are seeing some volume growth coming mainly from branded core segments and better mix, particularly in Spain as we focus on initiatives to foster higher-margin portfolio. We also see better raw materials, particularly right now in Spain due to that at least in the short term, there's some export restrictions in Spain due to the ASF, the African swine fever that's where -- that is happening right now in Spain. In the case of the U.S., we expect a volume growth coming mainly from Hispanic brands as we continue penetrating the mainstream channels, and we look for more clients. We do expect a slight margin increase as well in the U.S. coming also from better mix, particularly getting into the underpenetrated categories. We -- as you know, we are the #1 hot dog in the U.S., but there's still some room to go in terms of ham and poultry and other categories. And lastly, Latin America in terms of volume is where we see more growth for next year. We're seeing mid-single-digit volume growth in Latin America, particularly coming from a soft year in 2025, where we have some supply chain disruptions, and we do expect to capitalize on those corrections during 2026. Rodrigo Fernández Martínez: And Rodolfo to complement, when you think about the raw materials, you might see, for example, turkey getting a little better in the short term. But at the same time, you see things like the winter storm that happened in the U.S. recently and the production of turkey for the last week was even smaller. So with raw materials, you always have to be thinking what could happen and be prepared for that. And I would say that even though -- even if the raw materials go down, we have to see or the way we see things, it's from 2 perspectives. One, it's in the short term and in the long term, and we need -- and we think and we need to deliver on both. So when there is a big cost increase, we definitely think about marginal contribution per unit, and we want to maintain that, and we usually increase prices to make sure that happens. But for example, last year, we increased prices to offset a cost of more than $400 million. And we also have to think of the consumer in the long term. And with that in mind, like Roberto said, we also want to think about volume to make sure that we deliver in the short and the medium and the long term. Operator: Our next question comes from Renata Cabral of Citi. Renata Fonseca Cabral Sturani: My question is regarding the U.S. We are receiving several questions related to potential impact on GLP-1 on the portfolio of the company. Actually, as the company is exposed to protein, my expectation is actually that could help in the U.S. So my question is if the company is already seeing that or it's a trend that should increase in the future in terms of innovation. The company is focusing on that because of the trends naturally much more broadly in the U.S., I imagine and then in the other countries. Rodrigo Fernández Martínez: Thank you, Renata, for the question. Let me answer it from 2 timelines in the short term and in the long term. In the short term, definitely, GLP users come from fat and muscle and then the protein intake is going to play an important part of muscle preservation efforts. So we're well positioned to benefit of such trends of a high protein portfolio that we have within the company. And -- but in the long term, I talked at the beginning about 4 pillars for our strategy. And the last pillar, it's about exploring the future. And one of the things that we're looking in the future, too, it's responsible protein. And there are 3 things that we're looking for, for the long term. We want to make sure that we have platforms that taste amazingly because that's very important, delicious for a better life, it has to be delicious. Two is we want them to be a high-quality protein. So at the end, there are 9 amino acids that only come through food, and we want to make sure that our proteins have those 9 amino acids that the body needs to come from food. And third, we want to make sure that those products can be better for the environment. And I'm talking about CO2 emissions. I'm talking about water consumption. So at the end, we do see a trend in the short term, but we're also preparing the company for the long term thinking that this is going to be important going forward. Renata Fonseca Cabral Sturani: The second question, it's about Europe. If you can help us elaborate a little bit about the trends this year, especially because we will have a different base because of the transaction that the company announced in the end of last year. So what are the expectations in terms of especially EBITDA improvement, but any additional color on that would be helpful. Roberto Rolando Olivares Lopez: Renata, this is Roberto. Thank you. So in general, in Europe, let me talk briefly about trends that we're seeing. We -- last year, we saw branded volume growing across the different segments. We also saw a better dynamics in the pork market during the year, but mainly at the end of the year, as I explained, due to excess supply of pork in Spain given the export restrictions that Spain is passing right now due to the ASF. We announced the divestment of our slaughterhouse business by the end of last year, and we're in the process of getting all the authorization from the authority. We are planned to get those during the 1st Q of 2026. If that happens or when that happened, we're going to have a better alignment in terms of the focus on the core segments on branded products, particularly and also having more traceability or securing the traceability of our pork in Europe. Rodrigo Fernández Martínez: And if I can just complement very briefly on that -- this year, we had growth, as Roberto mentioned, on branded products, and we have very nice also control of SG&A. So at the end, we're in a position that now we can think about growth. We can think about how can we do better, grow more. We have been thinking about some innovations in different geographies, very focused. And what we like a lot about Europe, about trends in Europe is that it's a way to see into the future in some of the other geographies, what happens in Europe later on and happening in the U.S. and later on in Mexico and Latin America. So we're very happy and eager to have -- to find those innovations and make sure that they start in Europe and then they can continue in the rest of the company. Operator: Our next question comes from [ Enrique Moreo ] of Morgan Stanley. Unknown Analyst: I would just like to do a quick follow-up in the U.S. If you could just explore a bit how the channel outside the big retailers is performing and how you're seeing the market share trends in the whole portfolio or in the whole channel mix that you have would be very helpful. I ask that because we see a little bit of a mismatch in the consumer scanner data that we have on bigger retailers. So just to see a broader picture of what you're seeing in the U.S. and how you see your strategy on that market going forward as well? Roberto Rolando Olivares Lopez: This is Roberto. Let me first put some context. 2025 for the U.S. was the second highest EBITDA in U.S. history. And also the fourth quarter was a record fourth quarter for the U.S. In the U.S., we have, as you mentioned, 2 different businesses. We have what we call the national brand business, which is mainly our brand Bar-S and the Hispanic brands business. In the case of the Hispanic brands, we have been -- we used to sell mostly to independent or specialty retailers focused on Hispanic population. And we used to grow a lot in that segment. Last year, as let me say, migration policy change in the U.S., those segments started to have softer numbers. But we increased a lot last year, our presence in the mainstream channel with the Hispanic brands portfolio. And we reached the big retailers with our Hispanic portfolio, and that helped us a lot offsetting the lower consumption numbers in the independent retailers. In the case of our national brand business, our Bar-S brand, -- we -- I mean, last year, we have tough competition coming mainly from private label, but we're focusing right now on revitalizing the category through innovation. Rodrigo Fernández Martínez: Let me, Enrique, just go a little further on the last comment from Roberto. We're the largest in hot dog in the U.S., and we plan to maintain that. And what we want to make sure is that we have the best product cost in the market -- best quality product versus cost in the market. We want to be the ones that consumers think about and not necessarily on product level. And we're doing things to get that. So for example, in sausages, we're just launching a new package. And usually, you have 6 links in 1 package. But when you eat them, you don't need 6 of them. You might need 1 or 2. So we have the IEP for this package where you can have 3 separate pieces tied together in the same package. So you can open a third and just eat those 2 links and then open another third and so on. So at the end with that, we want to make sure that the cost benefit we're the best one. And with that, we hope to be growing and taking some share from private label in the coming time. Operator: Our next question comes from Andrés Ortiz of BTG Pactual. Andrés Ortiz: I would like to ask you about the tax rate we saw this quarter. I believe it was close to 45% and we are already past the Alpek spin-off. So I just want to understand what happened here? And what will be the correct assumption for 2026 for tax rate? Roberto Rolando Olivares Lopez: Andrés, this is Roberto. So the main difference in the tax rate in the quarter has to do with the FX gains or losses due to the fluctuation of the MXN in regard to 2026, particularly in terms of cash flow tax, we do expect to have a similar amount of tax payment during 2026 that we have on 2025. Andrés Ortiz: So it's -- so if we continue to see like this level of appreciation, we will continue to see that or... Roberto Rolando Olivares Lopez: If we continue to see what, I'm sorry? Andrés Ortiz: This level of appreciation of the MXN, we will continue to see this like large. Roberto Rolando Olivares Lopez: So yes. So if the Mexican peso maintains in this level, there should not be many difference. If it continues to appreciate, there could potentially be an effect on that. Andrés Ortiz: And if I could do a second question. Could you remind us like the effect that an appreciation of the Mexican peso has on the margins in Mexico and how it benefits or affects consolidated EBITDA? Roberto Rolando Olivares Lopez: Sure. So in terms of -- so we have 2 effects. The first one is the conversion effect. In terms of conversion, MXN 1 change versus the U.S. dollar impacts around $30 million to $35 million in conversion. Operator: Our next question comes from Juan José Guzmán of Scotiabank. Juan José Guzmán Calderón: Congrats on the results. A quick one on Latin America. It was probably the only division that didn't perform as well as the others this quarter. So can you tell us a little more about what's going on there, both from the production standpoint and price pass-through angles? Roberto Rolando Olivares Lopez: This is Roberto. Yes, in terms of Latin America, last year, we have some impacts, particularly in some countries of Latin America regarding supply chain disruptions coming from problems in raw materials and demand planning. We -- as we move through the year, we solve those problems, and we actually saw a sequential improvement in EBITDA through -- coming from the second quarter. We do expect those problems to be to -- I mean, those problems ended last year. We expect a significant better result in 2026 coming from Latin America. If you see, as I explained in my initial remarks, in guidance, we do expect higher volume in Latin America, mid-single digits, coming from solving those problems. Juan José Guzmán Calderón: And if I can ask a follow-up question regarding your guidance. Can you tell us what kind of specific assumptions or expectations you're dealing with when it comes to input costs specifically in your guidance? At first glance, it seems to us that you are not incorporating much in input cost reductions. For example, turkey coming down or you're kind of expecting a lower contraction in the cost of turkey. What are you dealing with specifically for your guidance? Roberto Rolando Olivares Lopez: Thank you, Guzmán, yes. So we do are expecting or we consider in our guidance that prices of raw materials, particularly turkey, gradually trend down in 2026. However, we have seen that those prices started to decrease, particularly turkey a little bit sooner than we expected. But we are -- as Rodrigo mentioned, we right now are focused on volume this year. So we will take into consideration what is happening with the FX and what is happening in raw materials in that formula in order to grow volume this year. Rodrigo Fernández Martínez: And then we have people doing revenue management. And as I mentioned at the beginning, we want to do both. We want to make sure that we can deliver on the short term and we can deliver in the long term. And the cost increase that we were able to pass last year was significant. And we will look at every single product in detail per month just to make sure that we can both maintain or grow margins a little, but at the same time, we can get some volume increases that with that, we can do more sustainable growth for the company for the medium and long term. Operator: Our next question comes from Fernando Olvera of Bank of America. Fernando Olvera Espinosa de los Monteros: I have 2 questions. The first one is related to Europe. I believe, Roberto, you mentioned before that you are expecting volume growth in Europe. Does that -- I just want to be sure if that includes the agreement with Grupo Vall. Roberto Rolando Olivares Lopez: Fernando, so in case of volume growth, it's coming mainly from our core segments in our branded categories. The agreement with Grupo Vall will make that we will divest or not consolidate our Fresh Meat business. If that happens, we are going to divest a part of portfolio that will improve margin in terms of EBITDA margin. But that means that volume -- I mean, we're going to reduce that amount of volume, but we should produce that amount of the base as well. Rodrigo Fernández Martínez: Exactly. So Fernando, we're not -- the restructure is not included in our guidance. Fernando Olvera Espinosa de los Monteros: And my other question is regarding your gross margin. I mean, considering that you're still facing cost pressure, I mean what was the driver behind the gross margin expansion this quarter? Roberto Rolando Olivares Lopez: Sure. So I mean, it comes mainly from pricing actions that we have done through the year. As Rodrigo mentioned in one of the answers, we -- this year, we confront close to $400 million of additional cost in the operation. So we have to increase prices in some regions significantly to offset that effect. As we move through the quarters, we have the reflection of those price increases. So that's the main focus or our increase in gross margin. Operator: There being no further questions, I would like to return the call to management. Hernan Lozano: Thank you, operator. And it seems that we have a couple of questions from our chat. So this question is coming from Froylán Méndez at JPMorgan. Thank you for your question, Froy. And the question is, how should we think about capital return to shareholders under the simplified structure? Can we expect a higher payout in the short term? What needs to happen? Sure. Roberto Rolando Olivares Lopez: Thank you, Froylán. This is Roberto. In terms of dividends, Sigma Foods will continue to our long track record of cash distribution to shareholders, supported by our strong underlying cash flow generation. As you know, we announced yesterday in the report that we're proposing to the shareholders meeting to distribute a total of $150 million of dividends this year to be paid into installments. So as we mentioned, this is important for us. We -- our dividends are aligned to maintain our long-term target of 2.5x net debt-to-EBITDA ratio. Hernan Lozano: So that was the first question from Froylán. And the second question is cost at the holding level. How should we think about this cost component going forward? Rodrigo Fernández Martínez: So thanks for the question. So Sigma Foods, it's a company that -- it's about food. So what we have today, it's more than 99% of what we have today is food. We think about food, we talk about food, and that's all we do. The structure that we have today is to manage the food business. So you shouldn't see a difference between Sigma Foods and Sigma that you used to see. If you think about years in the past, that was different, that was a difference, and it was about transformation. But the structure that we have today, we're just converged totally there. And you can think today Sigma Foods as a food company overall. Hernan Lozano: Thank you. So that concludes our Q&A section. I would pass the microphone back to you, Rodrigo, for closing remarks. Rodrigo Fernández Martínez: Thank you. I want to close by reinforcing a few key points. First, Sigma business is strong and resilient, powered by a diversified platform and team that consistently delivers under dynamic conditions. Second, our long-term strategy is clear. We're focused on defending the core, developing new sources of revenue, strengthening our organization and exploring the future of food. And third, we remain committed to profitable growth, operational excellence and continuous innovation. Finally, I want to thank our investors and partners for their continued support. We look forward to updating you on our progress next quarter, and thank you for your interest in Sigma Foods. Operator: This concludes today's conference call. You may disconnect.
Operator: Good morning, and welcome to the Medexus Pharmaceuticals Fiscal Third Quarter 2026 Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Victoria Rutherford, Investor Relations. Victoria, over to you. Victoria Rutherford: Thank you, and good morning, everyone. Welcome to the Medexus Pharmaceuticals Third Fiscal Quarter 2026 Earnings Call. On the call this morning are Ken d'Entremont, Chief Executive Officer; and Brendon Buschman, Chief Financial Officer. If you have any questions after the conference call or would like further information about the company, please contact Adelaide Capital at (480) 625-5772. I would like to remind everyone that this discussion will include forward-looking information as defined in Canadian securities laws that is based on certain assumptions that Medexus believes to be reasonable in the circumstances, but is subject to risks and uncertainties. Actual results may differ materially from historical results or results anticipated by the forward-looking information. In addition, this discussion will also include non-GAAP measures such as adjusted EBITDA, adjusted EBITDA margin and adjusted gross margin and net debt, which do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For more information about forward-looking information and non-GAAP measures, including reconciliations, please refer to the company's MD&A, which along with the financial statement, is available on the company's website at www.medexus.com and on SEDAR+ at www.sedarplus.ca. As a reminder, Medexus reports on a March 31 fiscal year basis. Medexus reports financial results in U.S. dollars and all references are to U.S. dollars, unless otherwise specified. I would now like to turn the call over to Ken d'Entremont. Kenneth d'Entremont: Thank you, Victoria, and thank you, everyone, for joining this call today. We continue to execute on our commercial launch of GRAFAPEX and are extremely pleased with the progress achieved thus far. We've had a significant presence at Tandem meeting last week, and we're encouraged by the level of interest in conditioning regimens and GRAFAPEX in particular. Product level performance to date has exceeded our prelaunch expectations. And although we experienced a quiet period in the December holiday season, we have seen a strong rebound in January 2026 and which now represents one of the strongest months of patient demand we have seen since commercial launch. For the 9-month period ending December 31, '25, we recognized product level revenue of GRAFAPEX of $8.2 million compared to $8.5 million we invested in the GRAFAPEX launch over that period. We anticipate GRAFAPEX will be accretive to quarterly operating cash flow starting in fiscal Q4 '26, so the quarter we're in right now, and will generate product level net revenue of $11 million to $12 million for fiscal year '26. The initial adoption by major commercial payers and leading health care institutions has been highly encouraging and early indicators of patient-level demand continue to validate the value proposition GRAFAPEX delivers. To that end, product level net revenue from GRAFAPEX in fiscal Q3 '26 totaled $2 million relative to $2.5 million of GRAFAPEX personnel and infrastructure investments. The $8.5 million we have invested in the GRAFAPEX launch year-to-date through December 31, continues to have a significant impact. As of today, 32% of all 180 U.S. transplant centers have already ordered GRAFAPEX for procedures in their institutions and 77% of those 57 institutions have reordered. In fiscal Q4 '26, we expect that the underlying patient demand of GRAFAPEX will be approximately $3 million to $4 million. This compares to $2.2 million in fiscal Q1, $2.1 million in fiscal Q2 and $2.6 million in fiscal Q3 '26. Considering the estimated inventory on hand at our wholesaler at December 31, '25, we anticipate patient demand in fiscal Q4 '26 will result in product level net revenue of GRAFAPEX between $3 million and $4 million. Overall, our fiscal Q3 '26 results remain solid with positive operating income, adjusted EBITDA and operating cash flows. Our results reflect the continuation of our portfolio dynamics we have discussed in past quarters, coupled with continued growth momentum from GRAFAPEX, which we view as a continuing testament to our portfolio approach. Our fiscal Q3 '26 net revenue was $25.3 million, a decrease compared to $30 million for the same period last year. Our fiscal Q3 '26 adjusted EBITDA was $4.5 million, a decrease compared to $5.8 million for the same period last year, but our third consecutive fiscal quarter of adjusted EBITDA growth since the approval and launch of GRAFAPEX in fiscal Q4 '25. We produced modest net income of $0.1 million for the quarter, a slight decrease compared to $0.7 million for the same period last year. Operating income was $1.7 million in fiscal Q3 '26, a decrease compared to $2.1 million for the same period last year. But again, our third consecutive fiscal quarter of operating income growth since the approval and launch of GRAFAPEX. On the rest of our portfolio, I have a few updates to note. We continue to invest judiciously in our IXINITY manufacturing process improvement initiative, which has been ongoing for some years now. This initiative has resulted in a 30% decrease in product level cost of goods comparing fiscal Q3 '26 to fiscal Q1 '21 being the first full fiscal quarter following the acquisition of the product in February of 2020. This progress informed our choice to commit in fiscal Q3 to a modest further investment in this process, approximately $1.2 million, of which we expect to pay in fiscal '26. Regarding Rasuvo, during fiscal Q2 '26, we learned that another product in the branded methotrexate auto-injector market had been withdrawn by its distributor. Comparing fiscal Q3 '26 to fiscal Q3 '25, we attribute the 17% increase in patient unit demand to this change in the competitive landscape. Although we expect that this onetime increase is now largely reflected in product level performance. Rupall continues to face generic competition in Canada. However, we expect that the adverse impact of this generic competition is now largely reflected in product level performance of Rupall, meaning that declines in net sales and product level performance of Rupall for future fiscal quarters will be less severe. In summary, we remain focused on delivering strong overall performance across our portfolio of products in both the United States and Canada, advancing GRAFAPEX in the United States and strategically positioning the company to capitalize on future revenue opportunities. I will now turn the call over to Brendon, who will discuss our financial results in more detail. Brendon? Brendon Bushman: Perfect. Thank you, Ken. Our results for fiscal Q3 2026 continue to demonstrate consistent results quarter-over-quarter and continue to reflect the natural transitional changes of an evolving product portfolio year-over-year. We are very pleased with the early performance of GRAFAPEX, which, as Ken mentioned, saw strong quarter-over-quarter patient demand growth, generating $2 million of product level net revenue in our fiscal Q3 '26. As a reminder, net revenue is determined based on wholesaler buying in the period, not underlying patient demand, which in fiscal Q3 '26 was $2.6 million. GRAFAPEX is expected to begin contributing positively to operating cash flows in the first calendar quarter '26, which is our fiscal Q4 '26. Turning to the full quarterly results. Total net revenue for fiscal Q3 '26 was $25.3 million. This represents a decrease of $4.7 million compared to $30 million for the same period last year. The $4.7 million year-over-year net revenue decrease was attributable in part to reduced net sales of Rupall in Canada and the return of Gleolan in the United States to the licensor. Partially offset by product level net revenue increases from GRAFAPEX and Rasuvo. Gross profit was $13.6 million for fiscal Q3 '26 compared to $15.2 million for the same period last year. Gross margin was 53.6% for fiscal Q3 '26, which is an improvement on the 50.7% we achieved in the same period last year. We continue to expect increasing product level net revenue from GRAFAPEX, together with the absence of product level net revenue from Gleolan after fiscal year 2025 to have a positive effect on company-level gross margin. These resulting changes to gross margin have emerged over fiscal year '26 and are expected to continue to emerge over fiscal year '27. Selling, general and administrative expenses were $11.2 million for fiscal Q3 '26 consistent with $11 million for the same period last year. Adjusted EBITDA was $4.5 million for fiscal Q3 '26, a decrease of $1.3 million compared to $5.8 million for the same period last year. The decrease was primarily due to the effects of generic competition on product level net revenue from Rupall, the termination of Gleolan in the U.S. and a $2 million beneficial impact of customer buying patterns of IXINITY on net revenue in the prior year, so fiscal Q3 '25. Net income was $0.1 million for fiscal Q3 '26, a decrease of $0.6 million compared to net income of $0.7 million for fiscal Q3 '25. We continue to generate meaningful cash from our operating activities with quarterly operating cash flow of $7.8 million compared to $6.7 million for fiscal Q3 '25. Even while investing in the launch of GRAFAPEX, we have generated an average of $4.3 million of cash from operating activity per quarter in the 4 quarters since launch. Cash on hand of $15 million at December 31, 2025, compares to $24 million at March 31, 2025 -- sorry, one second. Sorry about that. As of December 31, 2025, our net debt was $10.4 million, a decrease of $2.8 million compared to $13.2 million as at March 31, 2025. In November 2025, we entered into a new senior secured credit agreement with National Bank of Canada. The delayed draw term loan feature of this facility provides us with flexibility to finance future licensing and/or acquisition transactions on a long-term nondilutive basis. Given our strong financial position on January 1, 2026, the remaining installment of a regulatory milestone payment owed to medac for GRAFAPEX was repaid -- fully repaid using cash on hand. We also initiated a normal course issuing bid -- issuer bid to repurchase Medexus common shares. As of today, we have repurchased 201,500 shares. As always, there can be variability in quarter-to-quarter results. and the operating environment also remains variable. But we are encouraged by the strength of our business and remain well positioned to continue building the company and expanding its portfolio in the coming quarters and beyond. Operator, we will now open the call to analyst questions. Operator: [Operator Instructions]. Our first question is coming from Andre Uddin of Research Capital. Andre Uddin: There was some very useful GRAFAPEX info provided in the release yesterday. I think all of us are trying to figure out right now what the great trajectory is to get GRAFAPEX to $100 million. So my questions are around that. Can you talk a little bit about the 180 transplant centers? And how are you working towards getting GRAFAPEX on their formularies? Kenneth d'Entremont: Yes. Thanks, Andre. Great question because obviously, getting the product listed on the formulary is the key leading indicator to future revenue. So we've had really good success in those efforts. I think we've directed that a significant portion of those hospitals have already put it on the formulary, and that is where a lot of our revenue is coming from. So it's roughly broken down 1/3 have got it on the formulary, 1/3 have it under review and another 1/3 we're still working on. So that's kind of how it breaks down. So we're really pleased with the revenue that we've been generating from the 1/3 that have it on the formulary. Andre Uddin: Okay. And so looking ahead, where do you think you would be in terms of getting GRAFAPEX on those formularies in those 180 centers in fiscal 2027? Is there some sort of goal that you have in mind there for that? Kenneth d'Entremont: Yes, absolutely. So obviously, we're working primarily on the adult hospitals. I mean that is 85% of the market and those are the ones that tend to take a longer period of time. So we would expect that it takes 12 to 18 months to get around to everybody. And so we would expect that kind of in that time frame, we should see significant continued uptake in formulary approvals. Andre Uddin: And just looking at your 75% reorder rate, I mean, that's pretty high. Do you think you can improve that? Kenneth d'Entremont: Yes, it's 77%, but absolutely. Yes, yes. Sure. I mean, obviously, we're getting new orders -- first orders from hospitals all the time every month. And so obviously, they don't necessarily reorder immediately. So as time goes by, that rate will continue. And then as new initiations of hospitals flatten, it should go closer to 100. As hospitals are starting to utilize our product, we will see regular orders. And that's kind of the pattern that we've been observing. Andre Uddin: That's useful. And just lastly, are there any additional transplant conferences this year that Medexus is looking to have either a sales booth or even a physician-focused symposium? Kenneth d'Entremont: Yes. So great question. So Tandem is the Super Bowl of conferences for this specialty. So that was last week, then there's many, many regional meetings, which we will go to all of them where they kind of discuss what happened at Tandem and other related topics. And then the EBMT, which is European Transplant Meeting is next month, and we will have people there as well. Operator: Our next question is coming from Michael Freeman of Raymond James. Michael Freeman: Brendon, congratulations on the quarter, in this GRAFAPEX ramp. I wonder if -- sort of following on to Andre's questions, I wonder if there are -- as you slice up those 180 transplant centers, you've surely taking a look at the highest volume centers and targeted those. I wonder if you could describe your penetration of those maybe like top decile volume centers? And just a progress update there would be great. Kenneth d'Entremont: Yes. Thanks, Michael. Good question. So 180 total transplant centers in the U.S., but recall that 76 of those 180 to 80% of the transplant. So they are highly concentrated in the top 76 and our penetration is better in the top 76 than the total. So obviously, we are focusing on those top decile hospitals. I think what I can say is that we've got some significant hospitals that are in the top quartile that are ordering product on a regular basis. So we're making good progress with the important hospitals and they simply take longer. The bigger the hospital, the more bureaucracy there is, the longer it takes to get products onto formulary. So that is the dynamic that exists, but we're making steady and excellent progress with everybody. And obviously, the top 76 is the focus. Michael Freeman: Got you. Helpful. Now prescribing for adult patients, you described in your releases that there was a significant increase in demand among adults. I wonder if you could describe the impact of that NTAP reimbursement program has had on that ordering dynamic. And if there are further improvements to be made to the process of reimbursement for adults and further penetrating that very important transplant population. Kenneth d'Entremont: Yes. Great question. So the reimbursement for everyone is excellent. So we haven't been running into problems where patients aren't able to get access to the drug. It seems to be quite universal. So we're really pleased with that. The NTAP or for those who aren't familiar with it, New Technology Add-on Payment, is a Medicare payment where they basically pay up to the difference between generic busulfan, our competitor product and our branded GRAFAPEX or treosulfan, and so that's $21,000. And so Medicare is -- we estimate about 30% of adult patients. And so it's a significant add-on payment for the institution. So there's basically no risk in using our product. And obviously, we're out there demonstrating to hospitals, institutions that even if they were to get that add-on payment, we still save the hospital money through shorter hospital stays, fewer readmissions. There's a bunch of factors that go into the fact that into the analysis that demonstrates that we actually save them money. When you add the add-on payment, obviously, there's no risk whatsoever. And so that just helps facilitate uptake in that patient population, and it is a significant patient population. So the add-on payment goes on top of what they receive in the case rate or the DRG. Michael Freeman: Got you. And maybe one more for Brendon. Looking -- thinking about the balance sheet, with this new credit facility, with the final medac payment made and looking at cash from operations funding much of your endeavors. I wonder if you could speak to maybe the difference in balance sheet health between now and the last year. Brendon Bushman: Yes. No, great question. Thanks. Yes. So as a reminder, a year ago, when we were with the BMO facility, our principal repayments were $3.3 million a quarter. Now with National, that's come down to $0.5 million a quarter. The company, as I mentioned, is still generating very meaningful cash from operations even while investing in GRAFAPEX. So we are in a much better position now from a cash flow perspective than we were previously in that currently and going forward, meaningful amounts of those cash from operations are ours to grow the business with or to buy back stock with. Operator: Our next question is coming from Scott Henry of AGP. Scott Henry: Ken, for starters, can you get a sense of when reported GRAFAPEX sales will more similarly match patient demand? At what point should we have consistency where those 2 would kind of go together? Kenneth d'Entremont: Yes, Scott. Good question. I think we're entering that now. I would expect that this quarter, they will start to be pretty level. Obviously, the wholesaler wants to keep about a month on hand. And so as our monthly and quarterly revenue grows, they'll keep more on hand, but it's going to be a lot more balanced as we go forward now. Scott Henry: Okay. Great. And as we try to -- the past questions have alluded to as we try to track GRAFAPEX, obviously, formulary participation will be a key metric to follow. Are there any other metrics that you would suggest that would be a good idea to follow? There may not be, I don't know, what you're going to make available. But anything else we can watch or is that the key thing to focus on? Kenneth d'Entremont: That is certainly the key thing. I think the other really important factor is the split of adult versus pediatric patients. And so that's why we've been calling that out. It's 15% for pediatric patients. And obviously, they use a much lower volume of product because they're smaller. So the adult market is the key market for future growth. And so that's why we've been calling that out. We will continue to do so. So keep an eye on our uptake in adult hospitals where that's 85% of transplants and obviously, they use a larger volume of products. So really key for us. And so we're very pleased that we are seeing strong uptake in that space. That's where our growth will come from going forward. Scott Henry: Okay. Great. And a couple of modeling questions for Brendon. I guess, first, selling and administrative was a little lower than I expected. I sort of expected there to be more increase from GRAFAPEX sales cost. How do you think of that December quarter number for selling and administration going forward? Should it be increasing? Or do you think that's a good reflection of the current run rate? Brendon Bushman: I think it will increase a little bit. One of the reasons we saw a bit of a drop in OpEx for GRAFAPEX in this last quarter was because of the holiday season. So there was just less traveling by our field team. That will ramp up again, including the trip to Tandem. So I think that it's -- we've hit a good stable operating expense for our base business, our business excluding GRAFAPEX and then I would expect sort of modest increases to GRAFAPEX to get us back into that $3 million to $4 million that we have been guiding to and then closer to $4 million throughout fiscal '27. Kenneth d'Entremont: Just to add to that, Scott, the variable expens is the piece that's changing. The infrastructure that we have in place is very, very flat and stable. So it's the travel and expenses for people to be in the field that can vary from quarter-to-quarter. Scott Henry: Okay. Great. And final question, when we think about fiscal Q4, last year, it was a sequential decline from Q3. I don't really recall what the specifics to that were. But when you're thinking about this March quarter, would you expect sales to be flat to up? Or would you expect some sort of seasonal weakness? Kenneth d'Entremont: Yes, I'll start and then maybe Brendon can jump in. So this quarter that we're working now, we'll be comparing kind of like businesses. Historically, the past 3 quarters, we haven't really been comparing like businesses. So it will be a much cleaner picture as we go forward. Brendon? Brendon Bushman: Yes. No, that's exactly right. I think one of the reasons for the drop sort of between Q3 and Q4 of last year was the Rasuvo -- sorry, Rupall generic hitting. So that as one of the benefits of the generic erosion with Rupall is that its seasonality, tracking allergy season won't move things up and down quite as much. So as Ken said, we've got a really, really nice, stable base business that really started to emerge in Q4 and then really has crystallized over the last 2 quarters as things like handing the Gleolan license back has sort of flushed itself out. So I would sort of say, if you take out Gleolan from -- or sorry, GRAFAPEX from the last 2 quarters, you'll see a very stable, repeatable, durable base business that GRAFAPEX as it grows will increase. Operator: [Operator Instructions]. Our next question is coming from David Martin of Bloom Burton. David Martin: First question, the NTAP incentives that you talked about for hospitals for patients insured with Medicare, I'm wondering about those that are covered by private insurance. Is there any flow-through for the extra cost of the drug versus busulfan generics for privately insured patients? Or do the hospitals have to swallow the increased cost of the GRAFAPEX? Kenneth d'Entremont: David, yes, thanks for asking that question because it is an important point. So there is a dynamic, and we've talked about this before, but we observed it even more strongly at Tandem last week. There is a dynamic by which more and more of these patients are treated as commercial patients, so they get conditioned as an outpatient, and then they will move to an inpatient. So what that dynamic does is it causes treosulfan or GRAFAPEX to be reimbursed as a commercial product, so it doesn't affect the DRG, the case payment. And we've observed that those get reimbursed. And so there is that dynamic that's happening for the inpatient, obviously, that is where the NTAP really comes into play and we will neutralize the cost increase in the drug budget between ourselves and busulfan for roughly 30% of those patients. The rest, they tend to get reimbursed by the institution or paid for by the institution and then the institution observed some cost savings within the case load. David Martin: Okay. Second question, are you getting feedback that the lower toxicity and the general benefits with GRAFAPEX are readily tangible to the physicians? Or is this something that they have to look at the results of the clinical trial and say, yes, I'm doing good for my patients. But I'm relying on that. Or are the patients telling them, are they seeing improvements when they use the drug? Kenneth d'Entremont: Yes. It's the latter. So there are visible indicators that the patient is doing better, so less toxicity. And that's visible during the hospital stay and at discharge. And so it's very, very clear that these patients do better. And so hospitals that have tried the product, later adopt the product because there are very tangible evidence that the patient does better. Then it's obviously -- the longer-term benefits are witnessed within the follow-up, just as we showed in the Phase III clinical trial that the survival benefit, obviously, is something that plays out over a longer period of time. But clearly, there is a very tangible and obvious improvement in the patient while in the hospital and at discharge. David Martin: So what is it that they see that's better, less fatigue or what is it? And is it equal across pediatric and adult patients? Kenneth d'Entremont: Yes, great question. I'm not sure I can answer it fully because I'm not a transplanter. The observation that we are receiving from physicians is that toxicity -- organ toxicity can demonstrate itself in many different ways. And so it can be GI toxicity, [ decreased mucositis ]. There's lots of various obvious reductions in organ toxicity that the physician can observe. And so that's typically it. In the pediatric patient, you -- those obvious Oregon toxicities are also observable but the fertility issue is a very big issue. And so that's why we get significant uptake in pediatrics. David Martin: Okay. That's it for me. Kenneth d'Entremont: It seems like we've lost Jenny. So I guess we'll wrap it up here. Operator: No, I'm right here, apologies. And I just cut for a second, and I didn't hear anything. So I do apologize for that. Thank you very much, everybody. This does conclude today's call. You may disconnect your phone lines at this time, and have a wonderful day, and we thank you for your participation.
Lars Solstad: Good morning, and welcome to the Presentation Fourth Quarter and Full Year 2025 from Solstad Offshore. This presentation will be held by CFO, Kjetil Ramstad; and myself, Lars Peder Solstad, CEO of the company. There will be a Q&A session after the presentation. [Operator Instructions] We take a quick look at the disclaimer before we move on to the business update for the quarter and for the full year. And the adjusted EBITDA for the year came in better than we guided in October 2025, mainly due to improved results from Solstad Maritime. Operationally, we had a lower utilization and EBITDA in fourth quarter than you have seen in previous quarters. And this is due to two vessels being between contracts. And that is the Normand Tonjer, which is -- came off a contract in early October, has been doing some upgrades and are preparing now for a contract that starts next week that we announced recently, and that will secure utilization for the vessel up till the end of 2026. And that contract is, as we have announced in Asia Pacific. So -- and a good improvement will be seen there on the utilization side from mid-February and onwards. The other vessel is the Normand Topazio. That came off a contract with -- in Brazil in early fourth quarter. We have done some upgrades and some class work on the vessel, and then the vessel will start on its new 4-year contract with Petrobras at the end of March. So utilization-wise, you will -- and EBITDA-wise starts to contribute from second quarter '26 and onwards. But as I said, those two vessels are the reason for the lower utilization in fourth quarter. We have -- also from Solstad Maritime side, we have -- there are four vessels fixed to Petrobras through the Solstad Offshore setup in Brazil. So those vessels will also start on their new 4-year contracts in -- some has already started and the fourth one will start very, very soon. We have, in general, experienced an increase in demand for our services in the last 4 to 5 months. And this seems to continue also into 2026. This goes for project-related work, but also for longer-term opportunities. And the main focus for Solstad Offshore is, of course, to secure a new contract for the large CSV Normand Maximus after the present contract which is expiring by the end of this year. And it's good to see that there is a firm interest already now, and we are quite confident to secure further work well ahead of present contract expires. Also, for your information and also to keep in mind that the vessel will have its main class renewed either at the end of this year or at the beginning of 2027. Looking at some of the numbers, utilization in fourth quarter, for reasons already explained, was lower than the previous quarters and also the year before. This also affected the adjusted EBITDA. This having said, we deliver within the original EBITDA guidance range of USD 120 million to USD 150 million for the year both operationally and financially. And that is also thanks to a solid contribution from -- in fourth quarter from the ownership in Solstad Maritime. The order intake has been solid in fourth quarter with two contracts signed in Brazil. And for the year and including the Solstad Maritime vessels with Petrobras, the contract value signed in 2025 was more than USD 700 million. Solstad Offshore will receive about $4 million in dividend from Solstad Maritime for fourth quarter and suggest paying the same amount as dividend to Solstad Offshore shareholders for the fourth quarter meaning that $8 million has been distributed to shareholders the last 2 quarters. If we move on to the market outlook and take a look at the fourth quarter and despite a volatile oil price, we did not experience any slowdown from our clients, more the opposite. And it seems like that the record high backlog held by the subsea contractors starts to give an increased positive effect now to the shipowners. We also see that there has been a much more or much better supply-demand balance on the anchor handling side by reducing the fleet in the North Sea by mobilizing to other regions, also in combination with quite high project activity, which is then benefiting the utilization and, of course, also then the rates in the spot market in the North Sea for those who has spot exposure there. We see that -- see Brazil as still very active. From the Solstad side, we have -- and the combined fleet, Solstad Offshore, Solstad Maritime, we have about half the fleet in Brazil at the moment. Some are on long-term contracts, some are there for project-related work. But about 20 vessels from the Solstad fleet is in Brazil at the moment. And in -- if we combine the present order book that we have and the bidding activity that we see, that is strong indications of a decent year ahead for the company. Looking at the backlog, we have nearly all the capacity sold out for 2026, especially if we include the newly announced contract for Normand Tonjer, that is not included in the graph you have -- you see on the screen right now. So the main focus when it comes to new contracts and to building backlog is for 2027 and onwards. And as I already mentioned, the Normand Maximus is presently uncommitted after year-end '26 and a new contract for that vessel will have a massive impact on the 2027 and beyond backlog. We are working on it, and we see some interesting opportunities for longer-term work for the vessel from '27 and onwards. For the three Brazilian-owned anchor handlers, they are all fixed on long-term contracts now, all on healthy rates, and they will contribute significantly to the company earnings in the coming years, as also shown on the graph to the left. And if we take a look at the backlog to the -- or the graph to the right, you see that we have the -- quarter-by-quarter, we have steadily increased the backlog of the company, which gives, let's say, a solid foundation for the company into '27 and also onwards. Then I leave it to you, Kjetil, to take us through the key numbers for the company. Kjetil Ramstad: Thank you, Lars. So if we start with the financial highlights for Solstad Offshore for the fourth quarter and full year, we had in the quarter, lower utilization of the fleet of 71% compared to 91% last year. And the main driver for the lower utilization is that both Normand Tonjer and Normand Topazio was idle for majority of the quarter. For the full year, we had an overall utilization of 90% compared to 95% last year. Revenue for the fourth quarter was $70 million, up from $65 million last year. The revenue for the full year was $290 million compared to $262 million in '24. The adjusted EBITDA for the fourth quarter was $35 million compared to $44 million last year. The year-to-date 2025 adjusted EBITDA came in at $126 million compared to $132 million last year. Net result for the fourth quarter was $53 million compared to $66 million in '24. 2025 net result was $141 million compared to $118 million last year. The firm backlog of $325 million at year-end compared to $227 million last year, an increase of almost $100 million. And the figures here excludes the backlog from the vessels on bareboat from Solstad Maritime on the Brazilian contracts. Book equity at the end of the year was $425 million, up from $288 million last year, representing an equity ratio of almost 50%. The cash position at year-end was $74 million compared to $34 million last year. The adjusted net interest-bearing debt is reduced to $51 million compared to $124 million last year. This is a result of prepayment of debt in combination with increased cash position. The company will distribute approximately $4 million to its shareholders, subject to the general meeting approval. And for 2025, the company has distributed approximately $8 million to its shareholders. Then if we go and look at the debt and lease structure in Solstad Offshore, Solstad Offshore has a regular bank facility of $80 million drawn in November '24 with a 5-year amortization profile maturity in November '27. Also has $44 million financing on -- for Brazilian built vessel with BNDES, matures between 2026 and 2031. The lease commitments in Solstad Offshore includes the present value of the Normand Maximus bareboat charter, approximately $49 million, until October 27. And the present value of the purchase option of $125 million and the present value there is $107 million. Other leases of $96 million mainly consists of commitments for the Solstad Maritime vessel operate through the Solstad Offshore Brazil setup. Yes. And then we also have a graph showing the net interest-bearing debt overview as of the year-end and also the amortization overview for the two mentioned loans at the bottom. If we go to the investment in associated companies and joint venture in Solstad Offshore, we start with Solstad Maritime, where Solstad Offshore owns 27.3%. And as we see, Solstad Maritime has declared a dividend of approximately $15 million, and that means that Solstad Offshore's share of this will be $4 million -- approximately $4 million in fourth quarter. So share of result in the quarter from Solstad Maritime is $25 million and $61 million for the full year. The book value of the shares is $233 million and the market value was, the fourth quarter, around $230 million. And then we have the Normand Installer, which is a 50-50 joint venture with SBM Offshore. The vessel Normand Installer is predominantly utilized on SBM's FPSO projects. First half of the year, the vessel had low commercial utilization. And for the second half, the vessel was in dry dock in the third quarter. However, it had good utilization in fourth quarter. The financial result in the fourth quarter was negative $0.4 million and negative $2.3 million for the full year of 2025. We believe that the vessel has a good backlog and good visibility for '26. So it looks to be a strong year ahead. The net -- the company has a net cash positive position, and the book value of the shares is around $20 million. Solstad Offshore also owns 35.8% of the shares in a company called Omega Subsea with Omega 365 as the majority shareholder. Omega Subsea owns and operates 12 ROVs as of end of '25 with 12 more ROVs to be delivered in '26 and early '27. Solstad share of results in the quarter was $0.1 million and total for the year, $4.3 million. The book value of the shares in Omega Subsea was $16 million. Then if we move to the financial outlook and guidance for '26. Solstad Offshore will from '26 and onwards only provide financial guiding on operational EBITDA. This means that guidance excludes the share of results from associated companies and joint ventures, which is included in the reported adjusted EBITDA. The 2026 operational adjusted EBITDA guiding is between $50 million and $70 million. One important factor to take into consideration is that the timing of the 10-year class renewal of Normand Maximus will be in a lower range if the docking takes place late 2026 and in the higher range if it takes place early '27. As mentioned, proposed dividend payment for the fourth quarter of $0.05 per share, totaling $4 million. It's also worth mentioning that Solstad is preserving cash for the Normand Maximus purchase option to be exercised fourth quarter 2027. So then we move to the dividend dates. And as mentioned, we proposed to -- the company proposed to distribute cash dividends for the fourth quarter of $0.05 per share, totaling $4 million. The dividend will be paid in NOK, and the NOK amount will be announced prior to the payment. The key dates for the fourth quarter dividend, we need to issue summons to the EGM, will be done 16th of February, and then the EGM will be held at the 9th of March '26. And the last day right to dividend is also 9th of March. The ex-date is the 10th of March, record date 11th and then the distribution date on or about 13th of March 2026. So with that, I leave the word to you, Lars, to summarize the presentation. Lars Solstad: Thank you, Kjetil. And as mentioned a few times already, we have had a fourth quarter that ended better than we guided back in October '25 and we ended up with an EBITDA for the year of $126 million, which is then also within the original guided range from -- that we gave early '25. And despite the weak utilization due to two out of seven vessels being between contracts, the full fourth quarter, we experienced market improvements. And this was also reflected in the order intake we had of USD 84 million in the fourth quarter. And those are on good EBITDA margins, and these are also giving increased visibility for '26 and beyond. The positive market trend we have seen has also continued into 2026 and where we already have signed an important contract for the Normand Tonjer with immediate commencement. And we see several opportunities in the market for the vessels we have with availability from 2027 and beyond. And as Kjetil said, we continue to distribute dividend to our shareholders on a quarterly basis, $4 million in total for fourth quarter. And that concludes our presentation, and we then move over to Q&As. Any questions so far, Kjetil? Kjetil Ramstad: Yes, we have one question on Normand Maximus. Do you expect to exercise the option on Normand Maximus? And how do you plan to finance the option if it's exercised? Lars Solstad: Yes. Well, it's -- the optional price is well in the money compared to the value of the vessel. It will be very natural that we use that option. But we -- and that has to be declared by fourth quarter this year and with effect from fourth quarter '27. And on finance, it will be a combination, if we do it, of most likely of bank debt, but also some equity. And that is also the reason why we are preserving cash in the company to contribute with the equity part of the financing of that purchase option. And of course, with the short -- at the moment, the contract we have on the vessel is expiring by the end of the year. If we manage to secure a longer-term contract on that vessel, we can also look a bit differently on how much cash we need to preserve for the equity part of the financing. So that is -- those are linked together. Kjetil Ramstad: And a little bit same question on Maximus and Tonjer. How do you consider the market opportunities for those two vessels from '27 and onwards? Lars Solstad: I think the -- I mean, the Maximus is a field installation vessel, a key enabler for deepwater subsea projects, one of very few in the market. And we are positive to a contract extension beyond what we see today. We have -- we have interest from clients already, and I'm not concerned about the commercial future for the vessel after its main class renewal coming up end of the year. I'm not concerned about that at all. When it comes to Tonjer, what we do now is that we are repositioning the vessel to Asia Pacific, taking on an okay contract there. The plan is to keep the vessel in that part of the world. And we see some interesting opportunities also there. So yes. Kjetil Ramstad: Thank you. That concludes the Q&A for today. Lars Solstad: Okay. So thanks for listening in, everyone, and have a nice day ahead. Thank you.