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Operator: Good day, and thank you for standing by. Welcome to the Acadian Timber Fourth Quarter 2025 Analyst Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Wood, Chief Financial Officer. Ma'am, please go ahead. Susan Wood: Thank you, operator. Good afternoon, everyone, and welcome to Acadian Timber's Fourth Quarter Conference Call. With me on the call today is Adam Sheparski, Acadian's President and Chief Executive Officer. Before discussing Acadian's results, I will first remind everyone that in discussing our fourth quarter and full year financial and operating performance, the outlook for 2026 and in responding to your questions, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on our known risk factors, I encourage you to review our news release and MD&A, which are available on SEDAR and on our website at acadiantimber.com. I'll begin by outlining the financial and operational highlights for our fourth quarter ended December 31, 2025. Adam will then comment on our operational activities and financial results for the full year as well as our outlook for the remainder of 2026. Acadian delivered solid fourth quarter results with overall freehold timber sales volumes, excluding biomass, 21% higher than the fourth quarter of 2024. Increased freehold sales volumes were partially offset by a decrease in our weighted average selling price in large part due to changes in product mix, hauling distances and fuel adjustment surcharges and lower timber services activity. Sales for the fourth quarter were $22 million, an increase from $20.2 million in the prior year period. Favorable weather conditions contributed to increased volumes across both of our operating regions. In New Brunswick, a favorable shift in customer mix resulted in more harvesting on our freehold timberlands and less on Crown-licensed timberlands, which increased freehold sales and reduced timber services revenue. Contractor availability improved in New Brunswick. However, limited trucking capacity continued to be a significant challenge in Maine. Softwood sawlog pricing decreased 2% year-over-year, with a higher value product mix offset by shorter hauling distances. Hardwood sawlog pricing declined 10%, reflecting a lower value product mix and ongoing weakness in lumber markets. Softwood pulpwood pricing was consistent with the prior year period, while hardwood pulpwood pricing decreased 12% due to shorter hauling distances and lower fuel adjustment surcharges. Biomass sales volumes were 12% higher than Q4 2024, while pricing decreased 12% as a greater proportion of sales were made roadside rather than delivered. Overall, our weighted average selling price, excluding biomass, decreased 6% year-over-year. Operating costs and expenses were $17.7 million during the fourth quarter compared to $17 million during the fourth quarter of 2024. The increase was primarily due to higher sales volumes and higher land management costs, partially offset by lower timber services activity. In New Brunswick, weighted average variable cost decreased due to a higher proportion of softwood versus hardwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances and reduced fuel adjustment costs. In Maine, cost of sales per cubic meter increased as compared to the prior year period due to lower production levels. Adjusted EBITDA for the fourth quarter was $5.2 million, up from $3.7 million in the prior year period, and adjusted EBITDA margin improved to 23% compared to 18% in Q4 2024. Our net income for the fourth quarter was $39.7 million or $2.18 per share compared to $5.6 million or $0.32 per share in the same period of 2024. The increase in net income was largely due to the impact of higher gains on noncash fair value adjustments in 2025 compared to 2024, partially offset by lower operating income and higher income tax expense. Acadian generated $1.9 million of free cash flow and declared dividends of $5.3 million to our shareholders during the fourth quarter or $0.29 per share. I'll now move into the fourth quarter results for our New Brunswick operations. Sales for New Brunswick Timberlands were $19 million, up from $17.2 million in the prior year period. Sales volume, excluding biomass, increased 23%, driven by increased contractor availability and a favorable shift in customer mix, which shifted harvesting volumes from Crown-licensed timberlands to our freehold timberlands. Favorable weather conditions further supported higher sales volumes. With regard to softwood sawlogs, demand was strong and volumes increased 54% compared to Q4 2024, largely due to the favorable shift in customer mix noted earlier. Pricing was consistent with the prior year period, supported by modest improvement in softwood lumber markets and a higher value product mix, partially offset by shorter hauling distances. Hardwood sawlog demand and pricing were negatively affected by weakness in end-use markets. Sales volumes declined 23% and pricing decreased 12% year-over-year, reflecting both market conditions and a lower value product mix. Softwood pulpwood demand was also steady, volumes increased 21% in New Brunswick and pricing was consistent year-over-year. Hardwood pulpwood volumes decreased 18% as compared to Q4 2024 with demand impacted by tariff uncertainty. Pricing decreased 13% due to shorter hauling distances and lower fuel adjustment surcharges. Overall, New Brunswick's weighted average selling price, excluding biomass, decreased 6% as compared to Q4 2024. Operating costs and expenses were $13.6 million during the fourth quarter compared to $13.4 million in the prior year period. Higher costs associated with increased freehold sales volumes were offset by lower timber services activity and reduced weighted average variable costs. Weighted average variable costs, excluding biomass, decreased 15% compared to the fourth quarter of 2024 due to a higher proportion of softwood products, lower harvesting costs associated with the harvesting method used, shorter hauling distances and lower fuel adjustment cost. New Brunswick generated $5.5 million of adjusted EBITDA for the fourth quarter, up from $4.2 million in the prior year period. Adjusted EBITDA margin improved to 29% compared to 24% last year. Switching over to Maine. Sales during the fourth quarter totaled $3 million, consistent with Q4 of last year. Sales volume, excluding biomass, increased 5% compared to the same volume -- same period of 2024, supported by more favorable weather conditions. However, deliveries were hindered by limited trucking capacity. Softwood sawlog volumes increased 12%, although pricing decreased 12% in U.S. and Canadian dollar terms. Pricing was impacted by the incurrence of stumpage sales, which did not occur in the fourth quarter of 2024 and increased roadside sales, partially offset by a higher value product mix. Excluding stumpage sales, softwood sawlog pricing increased 6%. Hardwood sawlog volumes were negligible during the fourth quarter of the year. Softwood pulpwood volumes were also negligible in Maine due to the extended shutdown of a major softwood pulpwood customer. Hardwood pulpwood volumes were consistent with the prior year period, though pricing decreased 6% due to lower demand. Overall, the weighted average selling price in Maine, excluding biomass, decreased 8% compared to the fourth quarter of 2024, primarily due to stumpage sales. Excluding stumpage sales, the weighted average selling price, excluding biomass, increased 3%. Operating costs and expenses for the fourth quarter were $3.8 million compared to $3.3 million during the same period in 2024 as a result of higher average operating costs and expenses per cubic meter produced. Adjusted EBITDA for the quarter was negative $53,000 compared to negative $223,000 and adjusted EBITDA margin was negative 2% compared to negative 7% in the prior year period. Lower operating income was offset by higher gains on sale of timberlands and other fixed assets. With respect to Acadian's financial position at the end of the quarter, they remain strong, ending with a net liquidity position of $17.4 million, including a cash balance of $4.8 million and our revolving credit facilities, which remain undrawn. With that, I will turn the call over to Adam. Adam Sheparski: Thank you, Susan, and good afternoon, everyone. As always, health and safety remain Acadian's top priority. I'm pleased to report that we had no recordable safety incidents during the fourth quarter. As we have said many times, we believe that emphasizing and achieving an excellent safety record is a leading indicator of success in the broader business and incident reduction continues to be a primary focus. 2025 was another busy year for Acadian. As part of our year-end review, I want to again highlight the meaningful steps we took to address the ongoing challenge of limited contractor availability in Maine by establishing our own internal logging operations. In January, we purchased several pieces of harvesting equipment and hired equipment operators. Then in February, we acquired additional logging and related assets, including harvesting, trucking and road working equipment and related real estate. These assets, combined with an established workforce, constituted an operational logging business, which has operated on the Acadian land base for many years. As part of the transition, some operations are and will continue to be performed by external contractors in Maine, including a significant portion of our trucking. During 2025, we experienced a shortfall in external trucking capacity, which impacted our ability to meet delivery demands. To address this, we are actively expanding our contractor network, working with our customers to align on solutions and exploring options within our internal operations to ensure greater reliability moving forward. Our strategic transition in Maine from contractor-based logging to internal logging operations has temporarily reduced production volumes. During 2025, production volumes were below anticipated long-term levels and operating cost per cubic meter of timberland produced remained elevated relative to long-term targets by approximately 30% as of the fourth quarter. The shift to a more fixed cost structure has also changed our historical cost patterns, making costs less directly tied to revenue, which is more noticeable during periods of lower sales volumes. To support long-term improvement, we are investing in operator training and optimizing equipment utilization to enhance efficiency, build long-term capabilities and ensure sustained cost improvements. We expanded the operational workforce in the third quarter and production levels notably improved in the fourth quarter and have continued to improve since. Turning to our operating and financial results for the year. Acadian's 2025 revenues for timber sales and services were $87 million compared to $91.6 million in 2024. In 2024, carbon credit sales contributed an additional $24.6 million to total sales, while no carbon credit sales occurred in 2025. Adjusted EBITDA totaled $15.8 million compared to $38.9 million during 2024. And adjusted EBITDA margin was 18% compared to 33% in the prior year. Overall, we achieved solid results from our timber operations in 2025 despite a multitude of challenges and amid a high level of economic uncertainty. We are very pleased with the performance of our New Brunswick operations, which delivered increased sales and sales volumes, lower variable costs and higher adjusted EBITDA as compared to 2024. New Brunswick's steady operations helped to offset the operational challenges in Maine. Overall, demand for our timber products was mixed but generally stable. Despite the heightened economic uncertainty, underscoring the resilience of Northeast regional log markets, timber pricing softened modestly but remained relatively stable over the year. Timber sales volume, excluding biomass, was consistent year-over-year, but was offset by a decrease in our weighted average selling price and lower timber services activity. New Brunswick benefited from increased contractor capacity and delivered a 10% increase in sales volumes, excluding biomass. In contrast, Maine sales volumes declined 40%, reflecting unfavorable weather in the first half of the year, limited trucking capacity and the short-term productivity impacts of our operational transition. Our weighted average selling price for 2025 was 4% lower than 2024. Softwood sawlog pricing was consistent year-over-year, supported by modest improvements in end-use markets. Softwood pulpwood demand started a low early in the year, which contributed to a 5% decrease in pricing year-over-year, but improved in the second half of the year. Weakness in hardwood lumber markets put downward pressure on hardwood sawlog prices and combined with the lower value product mix, resulted in a 7% decrease in pricing from 2024. However, demand for Acadian's hardwood sawlogs remained stable. Hardwood pulpwood demand softened due to tariff-related uncertainty and shorter hauling distances contributed to a pricing decrease of 3%. Operating costs and expenses related to timber sales and services were relatively consistent with lower average cost in New Brunswick, offset by higher average costs in Maine. Now turning to our outlook for the remainder of 2026. Near-term pressures on end-use markets have continued with trade policy developments adding further complexity for forest products companies on both sides of the border. The escalation of U.S. duties on Canadian softwood lumber along with tariffs on select wood-based products poses a potential risk to Canadian exporters and may dampen cross-border demand. That said, macroeconomic indicators remain supportive. North American interest rates are easing and the outlook for U.S. housing starts is steady at approximately 1.38 million starts in 2026 compared to 1.35 million in 2025. We remain confident that the stability of the northeastern forestry sector, combined with long-term demand for new homes and repair and remodel activity will support the long-term demand for our products. On the operations side, we maintained sufficient contractor availability in New Brunswick through 2025, and we expect this to continue into 2026. As I mentioned earlier, production from our internal harvesting operations in Maine improved during the fourth quarter of 2025, and we expect this momentum to continue through the winter, supporting further progress towards our targeted cost structure. We do expect production levels to ease somewhat in the second and third quarters of 2026, reflecting the usual spring slowdown and lower productivity of the harvest stands planned for the warmer months. Demand for Acadian sawlogs continues to be driven by regional supply and demand and is expected to remain stable in the near term, while pricing may remain challenged until end-use markets improve. Demand and pricing for softwood pulpwood and hardwood pulpwood is expected to remain at reduced levels in the near term. With respect to voluntary carbon credits, demand and pricing are expected to remain stable. Registration of the next batch of credits for our ongoing project in Maine was delayed in 2025 as a result of transitioning our project to version 2.1 of the ACR's Improved Forest Management protocol. However, we are expecting registration in the near term, which is expected to be approximately 400,000 credits. While the updated protocol may result in slightly fewer total credits than originally expected, all credits generated will be carbon removal credits, which are generally more attractive to customers and expected to command higher pricing. Beyond our current project, we are also evaluating future opportunities to develop additional projects for the remaining 900,000 acres under either the Canadian compliance protocol that was finalized in 2024 or voluntary programs similar to our current project. We also expect to remain active in our real estate business in 2026 as we begin selling residential lots and continue pursuing investments and partnerships in renewable energy in both Maine and New Brunswick. In closing, our priorities for 2026 remain clear. We will lead with the highest standards of safety and environmental stewardship. We will stay focused on achieving the best possible margins across our product lines, and we will keep pushing targeted improvements throughout the business to strengthen cash flow and support long-term value. A key focus for 2026 will be improving productivity in our internal harvesting operations in Maine, while keeping a close eye on costs. We will also continue working closely with our contractors in both New Brunswick and Maine to meet our harvesting goals and ensure we are meeting the delivery and demands of our customers. As always, our work is grounded in sustainable forestry practices. That commitment will continue to guide us as we strengthen the business and deliver long-term value for our shareholders. With that, we are now available to take your questions. Operator? Operator: First question will come from the line of Matthew McKellar with RBC Capital Markets. Matthew McKellar: First, I'd just like to ask about the transition to internal harvesting operations. Certainly positive to hear you say that production has continued to improve in Q1. Two questions there. First, how are you thinking about a target for harvest volumes in Maine this year? And then second, you noted that operating costs per cubic meter about 30% above the long-term target. Aside from higher harvest volumes, and I think you talked a bit about optimizing equipment utilization as well, but are there other important levers we should be thinking about for reducing your operating costs? Adam Sheparski: Thanks, Matthew. Starting with your first question regarding volumes, how we see it. I think the easiest way to address that is to look at our allowable volumes on an annual basis as we disclosed in our AIF, call that 240,000 cubic meters. Probably about 10% less than that just as we have some marketability issues with softwood pulpwood is really what it comes down to. So I would take approximately 10% off of that to give you a volume for the rest of the year. For 2026, that's our target. We believe we can achieve that. Regarding the second question on the 30% cost levers. Most of our levers are internally generated through the internal logging operations. It's a very fixed cost structure that we are operating in right now. Even some of the things that you would think would be quite variable like fuel where over the last 12 months, we've realized it's actually quite fixed in a lot of the equipment, believe it or not. And productivity is just going to be so crucial to achieving that 30%. But most of, if not all of that 30% is under our control as far as productivity is concerned. Matthew McKellar: Okay. That's helpful. Next for me, could you maybe just talk a little bit about how U.S. tariffs on cabinets and vanities have affected your business, if at all, maybe especially on the hardwood side? And with that, how are you thinking about risk to maybe volumes and pricing if those tariffs end up stepping higher into '27? Adam Sheparski: Yes. Great question. It is a tariff duties have really been causing a lot of noise in the news in particular. Hardwood is an interesting one for Acadian. Hardwood timber, in particular, is probably more important of a conversation than hardwood lumber, especially in our region. Hardwood timber volumes across the region or the supply of hardwood timber logs, in particular, is expected to continue to decrease. So more or less supporting our volumes moving forward. I think where we find ourselves right now is these end-use markets, which are probably being driven by cabinets, as you say, a number of things crossing the border, home starts, for instance, less hardwood floors, less cabinets. That's keeping the price of end-use markets for hardwood lumber, the pricing down. So it's hard for us to push through pricing. Volume isn't the problem for Acadian for hardwood sawlogs. It's being able to push that pricing through to our customers and keep them running, to be frank. And so that's what we're remaining focused on is those hardwood lumber markets and pushing through as many price increases as we possibly can as those hopefully will improve over the next near to midterm. Matthew McKellar: Great. That's helpful. If I could just sneak one last one in. You've got trucking constraints and certainly, this wouldn't be a near-term solution by any means, but it's been interesting to see a couple of large forest products companies trial autonomous trucking in Quebec this last December. Is that something you see kind of on the horizon as an opportunity for Acadian over the next few years? How are you potentially thinking about that one? Adam Sheparski: Yes, it's a great question. We've been talking about it internally. And literally, that's all we've been doing is talking about it. We've been talking a lot about AI and data, especially as it relates to inventory, which is really, really neat. And some of the information that's coming out and some of the data that we're receiving has been really interesting to consume. Nothing obviously to report. On the trucking side, there probably is some availability for us in the future when those systems get refined because we do have a significant amount of off-road hauling that happens on our roads that are restricted. So there is potentially something there. We are keeping an eye on it, but certainly haven't done anything in that regard as of yet. But I would say the off-road availability to Acadian, which you locally, you probably don't realize, but locally is a very big benefit to us to allow us to do hauling a lot longer than a lot of our friends here in New Brunswick and would lend itself to an autonomous driving vehicle as well. Operator: And I would like to hand the conference back over to Adam Sheparski for closing remarks. Adam Sheparski: Thanks, operator. On behalf of the Board and management of Acadian, I would like to thank all of our shareholders for their ongoing support. Thank you. Stay safe, and we look forward to you joining us for our virtual AGM and first quarter of 2026 conference call, both of which are on May 7. Goodbye. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Greetings. Welcome to the NewMarket Corporation Conference Call Webcast to Review Fourth Quarter and Full Year 2025 Financial Results. At this time, all participants are in a listen-only mode. Please note this conference is being recorded. I will now turn the conference over to your host, Timothy K. Fitzgerald, CFO at NewMarket Corporation. You may begin. Thank you, and thanks to everyone for joining me this afternoon. Timothy K. Fitzgerald: As a reminder, some of the statements made during this conference call may be forward-looking. Relevant factors that could cause actual results to differ materially from those forward-looking statements are contained in our earnings release and in our SEC filings, including our most recent Form 10-Ks. During this call, we will also discuss the non-GAAP financial included in our earnings release. Earnings release, which can be found on our website, includes a reconciliation of the non-GAAP financial measures to the closest comparable GAAP financial measures. Today, I will be referring to the data that was included in last night's press release. However, our 2025 10-K contains significantly more details on the operations and performance of our company. Pretax income for the 2025 was $113,000,000 compared to $134,000,000 for the 2024. For the full year, pretax income was $561,000,000 in 2025 compared to $584,000,000 for 2024, a decline of only 4%. We do not normally call out pretax income; it is notable now due to the significantly higher income taxes booked throughout the year, impacting our net income and EPS. Net income for the 2025 was $81,000,000 or $8.65 per share compared to net income of $111,000,000 or $11.56 per share for the 2024. Net income for the full year of 2025 was $419,000,000 or $44.44 per share compared to our net income of $462,000,000 or $48.22 per share for 2024. One of the primary drivers of the decline in net income was a higher effective tax rate in 2025 compared to 2024. The factors driving the increase in our effective tax rate are outlined in the 10-K. Petroleum additive sales for the 2025 were $585,000,000 compared to $626,000,000 for the same period in 2024. Petroleum additives operating profit for the 2025 was $107,000,000 compared to $136,000,000 for the 2024, which was a record fourth quarter for the segment. The decrease in operating profit compared to prior year was driven by a decline in shipments 6%, mainly due to market softness as well as a decline in selling prices. In addition, to manage inventory levels, operating profit in the fourth quarter was impacted by higher unit costs resulting from lower production volumes at our plants. For the full year of 2025, sales for the Petroleum Additives segment were $2,500,000,000 compared to $2,600,000,000 for 2024. Petroleum additives operating profit for 2025 was $520,000,000 compared to $592,000,000 in 2024. The drivers for the decrease in operating profit were consistent with those affecting the fourth quarter comparison. Shipments were down by 4.9% compared to last year, as we saw market softness throughout 2025 combined with our strategic decision to manage the profitability of our portfolio by reducing low margin business. We are very pleased with the performance of our petroleum additives business in 2025 compared to a record performance in 2024. However, we remain challenged by the ongoing inflationary environment and the impact of tariffs, as well as softness in the market impacting shipments. Continue to focus on investing in technology to meet customer needs, becoming more efficient in our operating costs, optimizing our inventory levels, and improving our portfolio profitability. We report the financial results of our AMPAC business and our newly acquired Calca Solutions business in our Specialty Materials segment. Specialty Materials sales for the 2025 were $49,000,000 compared to $27,000,000 for the same period in 2024. The increase in sales was mainly due to higher volume at Ampac and the inclusion of the Kalka business, which was acquired on 10/01/2025. Specialty Materials operating profit for the 2025 was $7,000,000 compared to about $2,000,000 for the 2024. As previously stated, we will see substantial variation in quarterly results for the Specialty Materials segment on an ongoing basis, due to the nature of the business. For the full year of 2025, sales for the Specialty Materials segment were $182,000,000, compared to $141,000,000 for 2024. Specialty materials operating profit for 2025 was $47,000,000 compared to $17,000,000 for 2024. The increase in operating profit was mainly driven by an increase in volume demand at Impact. As previously announced, through our acquisitions of Ampak, and Kalka and our investments to expand capacity at both operations, we have committed approximately $1,000,000,000 to this resilient high technology specialty materials segment. Our company generated solid cash flows throughout the year in 2025, which allowed us to return $183,000,000 to our shareholders through share repurchases of $77,000,000 and dividends of $106,000,000. We also reduced our total debt by $88,000,000 compared to 2024, which includes the borrowing for the Calca acquisition. As of 12/31/2025, our net debt to EBITDA ratio was 1.1 times, slightly down from 1.2 at the 2024. This strong cash flow performance enables us to continue to provide value to our shareholders through reinvestment of capital into our businesses for growth and efficiency, acquisitions, share repurchases, and dividends. We anticipate continued strength in our petroleum additives and specialty materials segment. We are committed to making decisions that promote long-term value for our shareholders while staying focused on our long-term objectives. We believe that the core principles guiding our business, a long-term perspective, a safety-first culture, customer-focused solutions, technology-driven products, and a world-class supply chain will continue to benefit all of our stakeholders. That concludes our planned comments. We are available for questions via email or by phone, so please feel free to contact me directly. Thank you all again, and we will talk to you next quarter. Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Erik Engstrom: Good morning, everybody. Thank you for taking the time to join us today. As you may have seen from our press release this morning, we delivered strong financial results in 2025. We made further operational and strategic progress, and we continue to see positive momentum across the group. Underlying revenue growth was 7%. Underlying adjusted operating profit growth was 9%, and adjusted earnings per share growth was 10% at constant currency. All four business areas continue to perform well. On this chart, you can see the relative sizes of the business areas and their growth rates with underlying adjusted operating profit growth exceeding underlying revenue growth in each business area. In Risk, underlying revenue growth was 8% and underlying adjusted operating profit growth was 10%. Strong growth continues to be driven across segments by the development and rollout of our deeply embedded AI-enabled analytics and decision tools with over 90% of divisional revenue coming from machine-to-machine interactions. In Business Services, which represents over 40% of divisional revenue, strong growth continues to be driven by financial crime compliance and digital fraud and identity solutions and strong new sales. We continue to expand our differentiated data set, build out our global fraud infrastructure and more deeply integrate advanced authentication and behavioral intelligence. In Insurance, which represents around 40% of divisional revenue, strong growth continues to be driven by innovation and adoption of contributory databases and market-specific solutions, supported by positive market factors and strong new sales. We continue to expand our products across the insurance continuum and across the insurance lines, while adding data sources and analytics to enhance value for our customers. Going forward, we expect continued strong underlying revenue growth with underlying adjusted operating profit growth exceeding underlying revenue growth. In STM, underlying revenue growth was 5%, and underlying adjusted operating profit growth was 7%. Improving momentum is being driven by the evolution of the business mix towards higher growth, higher value analytics and tools supported by the increasing pace of new product introductions and strong new sales. Databases, Tools & Electronic Reference, which represents around 40% of divisional revenue, delivered strong growth, driven by higher value-add analytics and decision tools and we continue to expand our solution set built on our industry-leading trusted content with an ongoing series of new releases. In Primary Research, which represents a little over half of divisional revenue, good growth continues to be driven by volume growth. The number of articles submitted continued to grow very strongly across the portfolio by over 20% in 2025, and the number of articles published grew 10%. Going forward, we expect good to strong underlying revenue growth, with underlying adjusted operating profit growth exceeding underlying revenue growth. In Legal, underlying revenue growth improved to 9%, with underlying adjusted operating profit growth of 12%. Strong growth continues to be driven by the ongoing shift in business mix towards higher growth, higher value legal analytics and tools. In Law Firms & Corporate Legal, which represents around 70% of divisional revenue, double-digit growth is being driven by continued adoption of our core AI-enabled legal platform and integrated Agentic assistant, Lexis+ AI and Protege. Ongoing releases of new functionality and deeper integration with our comprehensive, verified legal content is enabling us to increase our value add and serve an increasing number of use cases. Going forward, we expect continued strong underlying revenue growth, with underlying adjusted operating profit growth exceeding underlying revenue growth. Exhibitions delivered strong underlying revenue growth of 8%, reflecting the improved growth profile of our event portfolio and good progress on our growing range of value-enhancing digital initiatives. Underlying adjusted operating profit growth of 9% was ahead of revenue growth with margins now significantly above historical levels. Going forward, we expect continued strong underlying revenue growth with an improvement in adjusted operating margin over the prior full year. Our strategic direction is unchanged. Our improving long-term growth trajectory continues to be driven by the ongoing shift in business mix towards higher growth analytics and decision tools. This is being supported by the continued evolution of artificial intelligence, which is enabling us to add more value to our customers as we embed additional functionality in our product and to develop and launch products at a faster pace. Our revenue growth objectives for the business areas remain: For Risk, to sustain strong long-term growth; for both STM and Legal, to continue on their improving growth trajectories; and for Exhibitions, to sustain strong long-term growth. When combined with continuous process innovation to manage cost growth below revenue growth, the result is a higher growth profile with strong earnings growth and improving returns. I will now hand over to Nick Luff, our CFO, who will talk you through our results in more detail. I'll be back afterwards for a quick wrap-up and Q&A. Nicholas Luff: Thank you, Erik. Good morning, everyone. Let me start by providing more detail on the group financials. As Erik said, underlying revenue growth was 7%, with underlying adjusted operating profit growth ahead of that at 9%. As a result, the adjusted operating margin improved by just under 1 percentage point to 34.8%. The strong operating result flowed through to adjusted earnings per share, which at constant currency increased by 10%. Cash conversion was again strong at 99%. After acquisition spend of GBP 270 million and the completion of the GBP 1.5 billion buyback, leverage ended the year at 2.0x at the lower end of our typical range. Given the strong overall performance, we are proposing an increase in the full year dividend of 7% to 67.5p per share. Looking at revenue, you can see how all 4 business areas contributed to the overall 7% underlying growth. As we discussed at the half year results, we have separated out the reporting of print and print-related revenues and profits, reflecting changes to how we manage the distribution of print versions of our content. The proactive steps to reduce our involvement in print-related activities continued in 2025, resulting in a reduction in associated revenue of over 20%. For the group as a whole, total revenue growth at constant currency was 4% after the portfolio effects in Risk, Legal and Exhibitions and after the step-down in print activities. In addition, there were cycling effects in Exhibitions with 2025 being a cycling out year. In sterling, total revenue growth was 2% impacted by the relative strength of the pound against the dollar compared to the prior year. Here, you can see the 9% underlying growth in group adjusted operating profit. As Erik mentioned, we continue to manage cost growth to be below revenue growth in each business area. As a result, Risk, STM and Legal each delivered underlying profit growth 2 or 3 percentage points ahead of underlying revenue growth, while Exhibitions was 1 point ahead, reflecting a better cycling in the year. The profit contribution from print and print-related activities declined but at a lower rate than revenue. As I said at the half year results, going forward, we expect profit from print and print-related activities to continue to decline in the high single digits each year in line with historical trends. Portfolio effects and the decline in print were a slight drag, leaving total adjusted operating profit growth in constant currency at 7%. There was a similar currency effect on profit as there was on revenue, giving adjusted operating profit growth in sterling of 4%. With profit growth ahead of revenue growth, margins improved across all 4 business areas, driving the overall improvement of 90 basis points to 34.8%. Margins were up by 40 basis points in Risk, 70 in STM and 80 in Legal. Exhibitions margin increased by 250 basis points, aided by prior year disposals and the effects of cycling. Turning to the group adjusted income statement. You can see here the underlying growth was 7% in revenue and 9% in operating profit. The interest expense was slightly lower, with the decrease reflecting lower average interest rates partly offset by higher average debt balances. The effective tax rate was 22.5%, in line with the prior year. Net profit was up 8% at constant currency and up 5% in sterling to over GBP 2.3 billion. With the lower share count as a result of the buyback program, adjusted earnings per share were up 10% at constant currency and up 7% in sterling to 128.5p. Turning to cash flow. Cash conversion was strong at 99%. EBITDA was over GBP 3.8 billion and CapEx was GBP 525 million, equating to 5% of revenue. After interest and tax, total free cash flow was over GBP 2.3 billion. And here's how we deployed that free cash flow. We completed 5 small acquisitions with total consideration of GBP 270 million and made 2 small disposals. The most significant acquisition was IDVerse, an ID document verification platform for business services in Risk, which completed in the first quarter of the year. Dividend payments were GBP 1.2 billion, and as I mentioned earlier, we completed GBP 1.5 billion of share buybacks. Overall, year-end net debt was GBP 7.2 billion. Including pensions, the ratio of net debt to EBITDA calculated in U.S. dollars was 2.0x at the lower end of our typical range of 2 to 2.5x. Our priorities for the use of cash remain unchanged. Organic development is our #1 priority with CapEx consistently around 5% of revenues. We augment that organic development with selective acquisitions with this level of spend typically being the most significant variable in our uses of cash, depending on the opportunities that arise. Average acquisition spend over the last 10 years has been around GBP 400 million per annum with 2025 a little below that average. We pay out around half of our adjusted earnings in dividends and have increased the dividend every year for well over a decade. Leverage has typically been in the 2 to 2.5x range. Strong cash generation, improving EBITDA and modest acquisition spend in the year mean that leverage at the end of 2025 was at the lower end of that range. We continue to return our surplus capital through the share buyback with GBP 2.25 billion of spend announced today for 2026, of which GBP 250 million has already been deployed. With that, I will hand you back to Erik. Erik Engstrom: Thank you, Nick. Just to summarize what we have covered this morning. In 2025, we delivered strong financial results, and we made further operational and strategic progress. Going forward, we continue to see positive momentum across the group, and we expect another year of strong underlying growth in revenue and adjusted operating profit as well as strong growth in adjusted earnings per share on a constant currency basis. And with that, I think we're ready to go to questions. Operator: [Operator Instructions] We take the first question from the line of George Webb from Morgan Stanley. George Webb: I have got a couple of questions, please. Firstly, big picture one, it's hard to miss the kind of broad concern or fear that's happening across a lot of stocks today. If we pick up on your Legal segment, I guess the latest one of those worries is a concern that you might face incremental competition around AI-enabled workflow tools from other large software companies. Maybe if we take one step back, for the last couple of years in Legal, we've seen you talk about product launches which use Gen AI, more product adoption by customers and therefore, underlying acceleration in the Legal business. I guess the question is, do you or have you seen anything in your business in terms of lead indicators or numbers on product adoption, conversations you're having that calls into question your ability to continue to participate in that tech adoption cycle, and that means we should be thinking about potential deceleration in legal before any potential further acceleration? That's the first question. Secondly, just on STM, given the slight bump in the outlook there. On one hand, you talked to kind of the strong submissions growth and maybe the early ramp of new products such as LeapSpace, but then I guess the full open access growth might moderate in the mix this year, the U.S. funding environment is still a little bit tough. Could you maybe just outline some of those growth considerations in the mix for 2026? Erik Engstrom: Okay. Well, maybe I'll have -- thank you. Maybe I'll ask Nick to comment on the specifics on growth, adoption, penetration, rollout usage on Legal. And then I'll comment on that a little bit and move on to the second. Nicholas Luff: George, I mean I think the opposite. I mean, we see these tools as adding value, enabling us to build the functionality into our products. And you're seeing that come through in the adoption, the usage. And if you look specifically at the Legal business and Lexis+ AI, the enterprise-wide subscription customer base has more than doubled in the past year. And the usage is going up faster than that. We have users in the multiple hundreds of thousands now across the globe on Lexis+ AI. We're seeing strong demand for what we do with the product built on that trusted curated content set, it remains very important to the customers, and these tools are enabling us to add value and grow faster. Erik Engstrom: I think just if you back up a little bit to your broader question about workflow software, I think it's important to remember that the core of our strategy always starts with our uniquely differentiated, comprehensive content, our collection of trusted, verified, continually updated content and data sets. And we then leverage our deep understanding to combine these content assets with sort of advanced evolving technologies and these evolving AI tools to deliver increased value to our customers. And I think it's important to understand that we have worked with this strategy inside Risk with the evolution of AI tools, extracting machine learning tools for over 15 years, and that's been the core driver of the whole evolution of the Risk business to now being 40% of our profits, growing 8% a year on revenue, and this year, 10% on profit. And we have had the same technology-agnostic philosophy and tool-agnostic, multi-model architecture from the beginning of the Gen AI trends for over 3 years. We've been partnering closely with all the large language models providers, including Anthropic and OpenAI for that time period. And as they continue to build out their models and tools, we continually evaluate all the new releases, including often through previews as a partner, and we often test them through ongoing interaction with our customers to determine if they can help us add more value to our customers if we embed them in our tools. So any new tool that you read about, hear about, we're probably already testing it, involving it in our platform and seeing if we can add more value on our platform to our customer value equation. And often, as you say, there are several companies out there that are developing workflow tools that effectively are today serving -- they're trying to serve or starting to serve some of the use cases that other software companies are serving today. In Legal, large law firms typically use over 100 of these software companies for different workflow tools, different admin procedures. And if those tools embedded in our core content platform help our customers add more value, we will embed the best of those new tools into our platform and act as an integrator of those and make them work with our customers. And if they're not relevant to the content-related use case, the content-related workflow and if it's just workflow that's today being served by software companies, then we don't integrate them directly. We often look at alternative ways to be interoperable and compatible with them so that our content sets, our deeply differentiated content set on our content platform can actually be accessed in the different workflows and we believe that, that way then we enhance the utility of, and therefore, the value of our platform if it can be accessed in workflows where people are more efficient and more productive and in the area where we don't want to be or operate ourselves. I mean today and historically, we have virtually no revenue in any of our divisions from what I would describe as workflow software-related services. Nicholas Luff: And sorry, to the STM question. I mean you asked about submissions and publication volumes, George. The fact is that science remains a totally global industry. The number of scientific researchers in the world continues to go up. The information intensity of science continues to increase. The desire and the speed at which people want to be published continues to increase. And so we -- as you saw in the -- we had strong growth in submissions last year, over 20%, the number of articles we published over 10%. And that has not slowed down. We're seeing that continue into this year. There's continued strong momentum in primary research. And there's always in any one country, there can always be things happening. But if you look at it in an overall sense, we continue to see strong demand for primary research publishing. Operator: We take the next question from the line of Nick Dempsey from Barclays. Nick Dempsey: I've got 3. So first of all, for the Protege AI workflows, which you are now starting to roll out, can you please talk through what differentiates those offerings from the competition in that broad AI workflow market in a bit more detail, please? Second question, there have been some concerns knocking around about autonomous driving and the auto insurance market. Can you talk about your exposure, the impact as the auto market shifts gradually towards autonomous driving and give us a sense of whether you see any long-term risks around that? And number three, when you refer to strong new sales in 2025 for the group and then in Legal, you'd say renewals and new sales are strong across all 3 segments, am I right in thinking that those new sales will have only a very modest effect on '26 growth, but you're signaling that they should be supporting growth through '27, '28 and beyond? Erik Engstrom: Yes. So I'll let Nick to start with the first one. Nicholas Luff: Yes. So I mean, the big difference between what Erik was touching on earlier, all the things we're offering to do is the content that's behind them. We would describe what the workflow tools that we're introducing as being content-enabled, and that's a key differentiator. It's not that other tools can't be useful to people. And as Erik touched on, many tools are used by lawyers and other professionals. But the ones we have, if you're actually doing anything that relies on trusted curated content, then that's where the differentiation comes in. We also, of course, have the advantage of the customer understanding and the sheer scale at which we already operate. As I touched on earlier, we have hundreds of thousands of users of Lexis+ AI. And so we can see how it's used, and we can see what's useful and constantly be updating the quality of the answers that we're able to provide, and that's a key differentiator as well. Erik Engstrom: Yes. Yes, I mean I just want to add to that, but I think it's important to look at this is that the workflows we're developing, I think when we first released Protege, we were talking about order of magnitude sort of 50 workflows or so in earlier, and these have been released out in phases, continue to be released out in phases and upgraded as we go along. At the moment, we're probably nearing 300 different workflows -- specific workflow tools. And we can develop these on our content, on our platform and launch them to our customers at the rate of probably another 2 or 3 a day in this machinery that we have. But again, these are content-related workflows that are embedded in our platforms that help add value to our customers the way they operate with us and it's unrelated to the kind of industry that is the broader legal tech software industry where people are spending money on software or workflow solutions for operating an admin. And that's where we separate the two and try to be embedded with the first category and be interoperable with the second category. As you know, we're fully embedded in Microsoft since many years ago for our customers, they can fully operate and work between our tools and the Microsoft tools. That does not mean we're trying to compete with them or operate Microsoft general admin workflows in any way. But it enhances the value of our content and our utility of our platform when our content-specific workflows fit right on our content, but it also enhances the value when you can use our LexisNexis AI-related platform and workflow interoperably with Microsoft, for example. And we have about 25 of these different existing partnerships in Legal today, and I'm sure there'll be many more in the future, yes. Nicholas Luff: So Nick, on the autonomous driving question, obviously, there are lots of trends affecting the auto insurance industry all the time. Enhanced safety features is part of that, automatic braking, telematics, some autonomous driving. And I think we see that as the whole industry evolving to make driving safer, generate more data and everything becoming more complex as you do that. And in that environment, what we do where you get sophisticated risk analysis, combining the data from -- about the driver, about the vehicle, about how it's been driven, the interaction between cars being driven in different ways, that just creates opportunity for us. The value at stake actually goes up, and it's been a trend for many years that you get fewer accidents, but the severity of them and the cost of them goes up. So the value at stake actually is getting higher. And in that environment, I think we're extremely well placed to add more value because of the additional data and analytics that we can provide. And your last question, Nick, was on strong new sales. You're absolutely right. I mean obviously strong new sales. New sales are -- in a subscription -- heavily subscription based business as we are, they are only a small component of what's relevant to the current year revenues, but they are a good indication of the momentum there is in the business and ultimately, what drives the long-term growth trajectory, and that's why we're flagging this morning. Operator: The next question comes from the line of Christophe Cherblanc from Bernstein. Christophe Cherblanc: I have 2 questions. The first one is on STM. I guess, we have a sense of the lawyer population, but it's harder to understand the addressable population for tools like LeapSpace. So I was curious whether you had any number in mind or any number of institutions and how long it would take to ramp up penetration? And the second question was about pricing. I think you've been insisting that especially in Legal, you are no longer pricing per seat, but I was curious as to what was the extent to which you've been changing pricing contract over the last 12, 24 months and whether you intend to further adjust pricing going forward? Erik Engstrom: Yes. So on the STM side, we are launching several different tools into that market, as we've told you. Several tools have been going for now up to -- well, 1 year or up to 2 years in some instances, and we continue to see what the value uplift is to the customer, what the usage growth is and what the user growth is and usage growth, and we can see the value they're getting. From the new forward-looking LeapSpace launch, which has just recently launched commercially, we can see that is a significant value uplift to the users, several of them report very significant time savings or productivity gains or improved results from specific use cases that are very material. And we look, therefore, at the potential addressable market as being basically all the institutions that today have any of our platforms in use, right, or any of the subscribers. And that order of magnitude is in the thousands. I mean, it's over 10,000, depending on when you want to define it, somewhere between 10,000 and 15,000 institutions, right, as potential institutional customers. When it comes to individual users, which also in the end could be a customer for this, I would look at it as is typical that people refer to the total number of researchers in the world at somewhere a little bit above 10 million. That's the scale of this. And if you look at the question of how do we price them, our approach here is to price this platform based on scale of institution and research intensity of the institution. So therefore, there's a set of pricing metrics regarding what type of institution it is. We are also likely to, over time, come up with an individual researcher subscription option for those researchers who operate in a different way that they should -- that might want to access the capability of this in their daily research life. But we're very early stages on the commercial side of this, and it's sold and priced separately from our other content tools. But the indication we're getting from our customers, the feedback we're getting in terms of the value adds and the excitement is very strong. But as you said, everything in the STM industry goes a little more slowly than it does in other industries, partly because of how they think of funding and spending and budget and also because the purchase cycles, the decision cycles at academic institutions are typically slightly more involved and take longer. But we are very positive on the ability for this platform to continue to add value to our customers and meaningfully impact our long-term value-add and growth trajectory in this division, but it's going to come through very gradually. Operator: We take the next question from the line of Thymen Rundberg with ING. Thymen Rundberg: Two from my side. I have one on operating leverage and margins. So you've done a great job in managing cost growth below revenue growth in the last few years, also 2025, profit margins are expanding nicely. As we are now moving in more compute-intensive AI or agentic workflows that just basically require deeper reasoning, how are you leveraging your scale and your -- what you've just talked about as well, your model agnostic approach to ensure that you can still drive that margin expansion while delivering these more sophisticated capabilities? And then the second question is with the pace of this AI and agentic AI innovation across all your divisions, I was wondering if you could walk us through a bit how you're currently assessing the balance between returning capital via buybacks, what you've now increased, and more or perhaps larger strategic acquisitions. And so given that your leverage remains at the low end of your 2 to 2.5 range and organic investments are still your priority, I was wondering if you could highlight just when does it make sense to use the balance sheet a bit more actively, particularly in light of competitive dynamics? Erik Engstrom: Thank you for that. I'm actually going to ask Nick to tell us about both of those. Nicholas Luff: Yes. I mean obviously, the new technologies that are evolving are giving us great opportunity to build additional functionality in our products, but they're also giving us the opportunity to improve our own processes, make our own processes more efficient. So we're using those to -- internally, which enables us to get to market faster, but also ensure we can keep cost growth below revenue growth. And I don't think -- obviously, we're spending more on some things than what we're spending with large language model providers, et cetera, as our customers use our products more and as we use those technologies more. But equally, with other things that we can do more efficiently than we couldn't before. And there's nothing we see in the overall dynamic that means we can't keep cost growth below revenue growth. And if anything, as we touched on in the outlook statements, the gap between profit growth and revenue growth can be -- potentially be a little bit wider. And that's just through cost control and the opportunity that it's -- that these new tools are giving us. I think -- your second question, I think, was about acquisitions and balance sheet and how we might use it. The primary focus remains on organic development. We have the skills and the opportunity. We have all the assets we need to innovate and bring new products to market and value to customers using that. We will look at acquisitions where we see the opportunity -- where we see something that can enhance and accelerate what we're doing. But they have to fit, they have to fit with what we're doing. And obviously, with those specific criteria, there's only a few things that are available at any time that makes sense. We could -- and we've had a couple of -- a few years now of relatively low M&A spend. That's not deliberate. It's just the way things have -- what's come up and it's perfectly possible that in the next period, we may see slightly 2 or 3 larger acquisitions come up, and we would absolutely invest in those if we saw the opportunity, but it's not the core of the strategy. The core strategy is organic. And in terms of where the leverage is, as you rightly point out, because we've had relatively low M&A spend in the last couple of years, we're at the bottom end of our leverage range. Clearly, we reflect that when we think about the buyback, and we have announced a buyback of GBP 2.25 billion this morning, which is up 50% from the buyback in the previous year. That -- if you take the sort of average M&A spend we have for the last few years, it's been around the sort of GBP 250 million mark, then all things being equal, that would put us roughly in the middle of our leverage range of 2 to 2.5x. So that's why it's been pitched at that level. Operator: We take the next question from the line of Ciaran Donnelly from Citi. Ciaran Donnelly: Firstly, just in terms of Legal, can you help us understand the mix between publicly available data and proprietary created curative data that underpins those products? And perhaps just comment on how difficult it will be to replicate those data sets, just looking to get a sense of how deep that competitive moat is? In addition, can you just clarify with regards to your comments on interoperability, would you be open to licensing use of your proprietary data to be integrated into, I don't know, API plug-in such as Claude Cowork? And then lastly, just in risk, it looks like the base market growth contribution was a smaller contribution in 2025 versus '24. So can you just help us understand the dynamics there? And looking forward to 2026, what the mix of growth from base and product innovation is likely to be? Erik Engstrom: Yes. So let me start with the question of our content sets. As you know, we describe RELX as a global provider of information-based analytics and decision tools. And everything we do is built on that information base, which is a foundation of unique and comprehensive content and data sets. And that applies to all our divisions. And our assets are both historically comprehensive and continuously updated on an industrial scale across our divisions. And in each one of our divisions, it includes some form of public records accumulated over decades, some of which are no longer publicly available, some of which are theoretically public, but extremely difficult and complicated to collect because of the format or in print or in different locations. Then they also include licensed data sets. Across the company we have licensed data for over 10,000 different sources. Some of those sources, the usage is regulated and controlled, and we can only use them in certain ways in our tools. We then have unique contributory data sets, and we have some of those involved in Legal as well. And we have dozens of those contributory databases across the company. We then have proprietary data and content that we have created ourselves, written ourselves, either within our pool of internal employees or external contractors have created them for us over many years, right? But we combine these content and data sets then with our deep customer understanding to build proprietary algorithms, judgment, inferences and interpretations, which accumulated over decades, delivered unique insights and significant value to our customers themselves, and this would be extremely hard, if not impossible, to replicate to the same level of value. And this is what we mean when we talk about the fact that we have a content advantage that we believe is very sustainable and very strong and are very high value to our customers across our divisions, including Legal. So if you then look at the question, will we consider just licensing out our content sets and on? No, this is a centerpiece of our strategy. This is what we are. We are an information-based company. We're a content-based company. And everything we do is built around that unique, comprehensive information base. And that's the foundation for our product today. It will be the foundation of our products and their value-add in the future. And is it possible some [ small sliver ] in some noncore areas could be licensed in some places? Yes. We've always done copyright sales here and there for decades, but that's not material. It's not the core of our strategy. Our core -- the core of our strategy is to leverage those deeply embedded content and data sets and embed these new tools on top to enhance the value of those content platforms to our customers. And that's what we're seeing a confirmation of when we do that to our customers, we see that they see a value uplift. We see the spend uplift they are willing to go on those because they see the higher value. We see that customers do that when it rolls out. We see that the users, we have more active users on the new higher value-add platforms and that they use them more. Nicholas Luff: And I think your last question was about the split of the risk growth, the 8%. As you rightly pointed out, the contribution from new products has gone up. This year, the split was 6% from new products, 2% from older products compared to 5%, 3% the previous couple of years. I wouldn't read too much into that. It's only a small shift. If anything, it just demonstrates that the pace of innovation has increased. The older products perhaps are being replaced slightly quicker with new products, new functionality. And therefore, the split has shifted a little bit, but I wouldn't read too much into it. Operator: We take the next question from the line of Steve Liechti from Deutsche Numis. Steven Craig Liechti: I'll take 3 well, please. First of all, just relatively simplistically, just if I'm a lawyer, and I've now embedded Harvey or Legora into my workflow, just why am I going to buy Protege as well as a workflow tool, maybe put that in the context of a large lawyer and a small lawyer? So that's the first question. Second question is on STM. You've given your -- you've moved your guidance from good to good to strong like-for-like growth. Is that code for saying that you think like-for-like is going to go from 5% this year to more like 6% next year? And then the third question is on the Risk. Just we're having a lot of conversations with people on the kind of disruptive stuff going on in the market. Just remind us or rehearse the arguments on why an LLM or disruptor would find it very, very difficult to break into the risk market in terms of either the business services bit or insurance? Erik Engstrom: Nick, would you like to take the first one? Nicholas Luff: Yes. Look, there are obviously various tools out. And as we said before, the whole ecosystem in which lawyers operate, they've traditionally used all sorts of different tools for different functionalities. It does depend on what sort of work you're doing. But if you're doing work that -- legal research work, in particular, but anything that it relies on content and what the latest information is, the latest law is, then as we've been outlining, we have a significant competitive advantage because of the data set that we've put and the content that we've articulated a couple of times already on this call. That doesn't mean to say that lawyers won't use other things as well. And if they're good tools, then as we said, we'll look to see whether we can use that functionality, replicate it in our products or make it interoperable with our products. And we'll continue to do that. But I think we're clear that we have a big customer base already using our Lexis+ AI with Protege tool that runs into the hundreds of thousands of users, tens of thousands of customers, so the scale of what we're doing is already way bigger than a lot of things -- lot of other things that are out there. So I think the starting point with that content advantage is very good for us. Erik Engstrom: And I think it's important to distinguish here between content players and competing in content, which is what we do with these layers on top, which is content-enabled processing that adds value to the content, and the people who are building workflow tools that are not in the content business at the scale that we have or the comprehensiveness of the historical trust and verified content that we have. But there, there are several hundred software and workflow companies ranging all the way from Microsoft at the top to very specialized tools that are used by lawyers in many ways. And as we said, many of the large law firms have 100 of these different tools. And the two that you mentioned that are coming up that for workflow tools that enable processing and workflows, they are more the way they describe it, going after that much larger software and services market in the legal tech space. And in a way, they have explained that they see that their biggest threat to their in their quote publicly is the LLM tools and LLM-related workflow tools themselves. We see them as additional partners. We're partnering with already 25 of these workflow and software-related companies in that space, and there's nothing that says that, that couldn't be -- do more over time. So we see them more as complement than competitors. Nicholas Luff: Steve, your second question was about the guidance around STM. I think as we said in the statement this morning, we have got improving momentum in STM. We are seeing an increased pace of the introduction and rollout of new products. We can see it in the strong new sales. So the business is in very good shape. Clearly, it's a very heavy subscription business. So things tend to change relatively slowly. But without getting into the numbers, clearly, the outlook statement is a more positive statement than we've had previously. That is an upgrade in our outlook. And your last question was about the Risk business and LLMs and things. I think the most important thing to remember about the Risk business is 90% of its revenue comes from machine-to-machine interactions. And this is a massive scale of the data sets we have and the data we collect from all the -- as we've outlined a couple of times already on this -- in this discussion, the thousands of sources, the public records, the contributory data coming back from customers with that network effect that they can all benefit from, what we do with the data, the algorithms that we apply to it and it's incredibly difficult to replicate. It's a heavily regulated area, what data you can collect, how you can -- how you're allowed to use that data is heavily regulated. And I think given it's almost all machine to machine, I think we see lots of opportunity to continue to use new data sources and using technology. But I think we will be the beneficiaries of that. Erik Engstrom: But I think it's important also to point out that Risk has been at the forefront of using AI technology now for close to 20 years. The core driver behind the entire growth rate and the growth improvement over the last 15 years in Risk has been the fact that we have all these unique comprehensive data sets that most people don't have access to any of those particularly the contributory data sets and some of the internal data sets that we generate in those markets. But the real enabler has been the fact that we have had a technology-agnostic philosophy for that entire time period and continuously look at new AI and machine learning tools and new algorithms for a very, very long time. And whenever anything comes out that can help us increase the value to our customers, we have tested them and embedded them. And that's why at this point, we are a 90% embedded machine-to-machine AI-enabled algorithm business. The new or evolving generative AI tools actually do not add significant value to those kind of mathematical calculations. I mean, just to give you an illustration, in one of our contributory database offerings, we process around 400 million transactions per day in a mathematical continuously improving model, right? So this is a completely different type of business that went through the AI enablement transformation starting about 20 years ago, it started and that's continuing to evolve, and it's already very, very far down this path. I mean I could remind you that it's exactly 20 years ago this year that because of how we approach big data, data science and algorithms, we picked up knowledge of what was going on over at -- no, over at Palantir, yes, exactly over at Palantir. And I went out to visit them personally about 20 years ago and talked about how our different technologies compare and how well we could do together and some of their tech people were at our conferences and so on. And we've evolved into a high-volume, algorithm-driven very low price per unit, but very high volume sort of transaction-based pricing installed inside industries, and they've evolved in a complete opposite direction, but we still leverage the same technology heritage and the same thinking and approach to big data, data clients and AI. So this is not a new thing, and it's not something that's likely to impact the trajectory of the Risk business in any way other than continue on the path we've been on to evaluate and look at and embed any new possible AI tools from any source that can increase the value to our customers of those algorithms we operate today. Operator: [Operator Instructions] We take the next question from the line of Henry Hayden from Rothschild & Company Redburn. Henry Hayden: I have 3 from my end. The first one on STM, how do you think about the corporate opportunity? So it's one you discussed in the past as a large addressable market with attractive structural growth profile. We were hoping for any incremental color you could give around end client preferences. And if there's a different approach that needs to be taken in going after that opportunity in terms of product functionality? And is there an appetite to grow corporate within the mix? And if so, what unlocks better exposure to that underlying growth? Secondly, within Legal, we're seeing this structural uplift in tech investment from law firms, which adds support to your growth, but also can drive some degree of experimentation for new solutions around legal research and workflows. At what point would you expect firms to kind of consolidate how many products they're taking? And how do you think about your positioning against that consolidation? And then finally, on Risk, you called out strong new sales and insurance again now. Is there a specific product or line item driving this? And are those competitive displacements? Or is there something else at play here? Erik Engstrom: Well, I can address first the STM market. The corporate market is, we believe, an important future growth opportunity for us. It is a relatively small segment of our revenue today. And we believe that it is more commercially oriented, and as these tools that we build become higher value, more usable with new tools on top of our content that we see an opportunity to continue to sell and package those in a way that is more appropriate for the corporate market. We believe that we're going to continue to see that growth rate there pick up as well over time as those tools are developed, integrated to add more value. But it's a relatively small segment today. It's likely to be gradual, even though on some of the tools we've rolled out today, we've actually slightly faster uptake on the sales cycle than we do in the academic markets as early signs. So we're positive, but it's small and it's still going to be gradual. On the Legal tech? Nicholas Luff: So Henry, on the legal tech. And look, I think law firms will continue to evaluate and look at new technology and look at new tools. The legal research market clearly is very consolidated already with, obviously, the two big players, of which we're one. But if you look at the wider technology provided to law firms, which is a big market, and all commentators think that's going to grow quite significantly. Individual law firms may choose different strategies, but I'm sure they'll continue to experiment. And we think we have a strong offering to move into some of that market and to continue to add value in that more consolidated legal research market where we play. And your third question was on insurance and new sales. That business is going well. It is -- we continue to innovate. We continue to have new sources of data, and we touched on it earlier when we're talking about data coming off vehicles, from vehicles, about vehicles. For example, new identity data being brought to bear. We are using new data sources in different lines of insurance. So for example, using electronic health records for -- in the life insurance market, using aerial imagery or video taken inside the home, analyzed by AI to inform property. And these are additive. These are additive to what's already there. This is not typically displacing anything. It's -- these are not either/or type products. It's something that functionality and analytics that wasn't available before. And as we innovate and make it available, then it comes into the marketplace and helps the insurance companies become more efficient, helps them price risk more accurately and they see value in them, and that's what's driving the take-up. Operator: As there are no further questions from the participants, I would like to turn the conference back over to Erik Engstrom, CEO, for any closing remarks. Erik Engstrom: Well, thank you so much for taking the time to join us this morning. I appreciate you listening to us and asking us questions. And I look forward to talking to you again soon.
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.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to Precision Drilling's Fourth Quarter and Year-End Conference Call. I will now pass the call over to Lavonne Zdunich, Vice President, Investor Relations. Please go ahead. Lavonne Zdunich: Good day, and thank you all for joining Precision Drilling's Fourth Quarter and Year-end Conference Call and Webcast. Today, I'm joined by Carey Ford, our President and CEO; and Dustin Honing, the CFO. Please note that some comments today will refer to non-IFRS financial measures and include forward-looking statements, which are subject to a number of risks and uncertainties. For more information on financial measures, forward-looking statements and risk factors, please refer to our news release and other regulatory filings available on SEDAR and EDGAR. Before I pass the call over to Carey and Dustin, I would like to recap how we delivered on our 2025 strategic priorities. First, we enhanced our shareholder returns by reducing debt $101 million, ending the year with a net debt to adjusted EBITDA ratio of 1.2x. And we also repurchased $76 million of our shares, meeting the midpoint of our guidance of allocating between 35% and 45% of our free cash flow to share buybacks. During the year, we maximized our free cash flow by delivering resilient drilling margins in both Canada and the U.S., even though average industry activity declined. And finally, we grew revenue organically by increasing our Canadian market share and increasing our U.S. rig utilization from a low of 27 in February to a high of 40 in the fall and exited the year with 38 active rigs. Today, Precision is the second most active driller in North America. With that, I will turn it over to Dustin Honing. Dustin Honing: Great. Thank you, Lavonne. Good morning, good afternoon. Precision's 2025 financial results demonstrate our long-standing commitment towards delivering on our strategic priorities and further strengthening the competitive positioning of the business. Last year, we continued to generate strong free cash flow, allowing Precision to meet our shareholder return commitments while significantly reinvesting into our rig assets and Alpha digital technologies. As we enter the final stages of our long-term deleveraging journey, the business is positioned with immense financial flexibility and a platform to maximize value for our shareholders. Moving on to fourth quarter results. We recorded adjusted EBITDA of $126 million, which equates to $132 million before share-based compensation expense. This compares to prior year EBITDA of $121 million, $136 million before share-based compensation expense. During the quarter, we reported a net loss of $42 million, which includes a noncash charge of $67 million related to decommissioning of drilling rigs and another noncash charge of $17 million related to drill pipe. Without these onetime expenses, net income would have been positive $42 million compared to $15 million in the fourth quarter of 2024. In Canada, drilling activity averaged 66 active rigs, an increase of one rig from Q4 '24. Our reported Q4 daily operating margins were $14,132 a day compared to $14,559 a day in the fourth quarter of '24, falling within our prior guidance range. During the fourth quarter, Precision incurred reactivation costs associated with the 2 Super Triples that were mobilized to Canada from the U.S. back in September. Both rigs began operations in Q4 and will be fully operational throughout 2026 and beyond, backed by long-term contracts. In the U.S., we averaged 37 active rigs, a slight increase sequentially from Q3 and an increase of 3 rigs from prior year Q4. Our daily operating margins for the quarter were USD 8,754 compared to USD 8,700 per day sequentially in the third quarter, also falling within our prior guidance range. During 2025, despite declining industry activity levels, we increased our U.S. rig count throughout the year. This momentum is a result of leveraging our upgrades and digital offering to deliver strong field performance for our customers, coupled with our favorable positioning in U.S. natural gas markets. Internationally, Precision averaged 7 active rigs, down from 8 rigs prior year Q4. International day rates averaged USD 53,505 a day, an increase of 8% from prior year Q4. This was due to prior year nonbillable days from rig recertifications. In our C&P segment, adjusted EBITDA was $17 million, which compares to $16 million for prior year Q4. Increased well servicing demand in Canada more than offset the impacts of winding down our U.S. operations back in the second quarter of 2025. During the year, our strong presence in Canada's unconventional natural gas and heavy oil markets, combined with our unique natural gas exposure in the U.S. provided us the ability to capitalize on rig upgrade opportunities, underpinned by firm customer contract commitments. For the full year 2025, capital expenditures were $263 million, comprised of $156 million for sustaining and infrastructure and $107 million for upgrades. These investments were made alongside our shareholder return commitments, reducing debt by $101 million, allocating $76 million towards share buybacks and increasing our year-end cash balance to $86 million, which is up $12 million from prior year. Moving on to forward guidance, which I will begin with our expectations for the first quarter of 2026. In Canada, all of our 32 Super Triples and 47 Super Singles have been active in the winter drilling season. We also have several Tele Doubles operating, allowing us to reach a peak rig count of 87 rigs operating in Q1. For the full quarter, we expect average active rig counts to exceed the 74 average rigs from prior year Q1. Our operating margins in Canada are expected to range between $14,000 and $15,000 a day. In the U.S., we've sustained the momentum we've built over the last 3 quarters. For Q1, we expect our average active rig count to be in line with the 37 active rigs from prior quarter with encouraging customer conversations for additional deployments. For the first quarter, we expect our operating margins to remain firm, ranging between USD 8,000 and USD 9,000 a day. Internationally, we expect to run 7 rigs. However, operating margins will be lower than prior year due to one Kuwait rig coming down, offset by one reactivated rig in Saudi Arabia. In Q1, we expect to incur USD 2 million of onetime charges with this reactivation. Our C&P business continues to generate strong free cash flow, driven by our Well Servicing and Surface Rental business lines. For Q1, we expect EBITDA to slightly exceed prior year levels. Moving to forward guidance for the full year of 2026. Capital expenditures are budgeted to be $245 million, comprised of $182 million for sustaining and infrastructure and $63 million for upgrades. Note that our sustaining and infrastructure budget includes long lead components, a portion of which, which will be allocated to upgrade projects as they materialize, plus a bulk purchase for drill pipe, which will be utilized in late 2026 and into 2027. Depreciation is expected to be $305 million and cash interest expense from debt is expected to be approximately $45 million. Our effective tax rate is expected to be approximately 25% to 30% with cash taxes remaining low in 2026. For 2026, we expect SG&A to stay flat at approximately $95 million before share-based compensation expense. Share-based compensation guidance for the year is expected to range between $25 million and $45 million, assuming a share price range of $100 to $140. Please note that this is a preliminary estimate, and we will provide updated guidance on our Q1 call following the settlement of past grants and issuance of new grants later this quarter. Our long-term target to achieve net debt to adjusted EBITDA of less than 1x remains firmly in place as is our plan to increase our free cash flow allocated directly to shareholders, up to 50%. We entered 2026 with a net debt-to-EBITDA ratio of 1.2x with an average cost of debt of 6.6%, and we have over $445 million in total liquidity. With that, I'll pass it over to Carey. Carey Ford: Thank you, Dustin, and good morning and good afternoon. As Dustin and Lavonne mentioned, Precision Drilling had a successful 2025, reflecting industry trends with differentiated activity levels and financial outperformance in a flat to declining North American market. Certainly, there is plenty for the Precision team to be proud of about 2025. As our recent performance has been well covered in previous disclosures and on this conference call, I would like to spend time talking about our 2026 priorities and why Precision Drilling is positioned for continued differentiated performance in the year ahead. Our 2026 priorities may sound familiar to listeners because they are consistent with those of prior years with a focus on generating free cash flow, delivering financial returns to our investors and providing high-performance services to our customers. Financial discipline has been important for strengthening Precision's balance sheet, reducing share count and building trust with our investors through our decade-long track record of delivering on commitments. This part is ingrained into Precision's strategy and will continue this year. Our first strategic priority is to drive revenue growth and deepen our customer relationships, and it is listed first because this focus area will be how Precision differentiates itself this year. Our platform provides multiple avenues to achieve this priority. First, I'll discuss our options to grow revenue in the current market. Precision is uniquely positioned to capture demand across North America's diverse basins, each with distinct demand drivers and equipment requirements. What remains constant across every basin is the increasing complexity of well designs and our customers' relentless demand for footage per day performance. Starting in Canada, our heavy oil regions require long horizontals and complex wellbore geometries, including wine rack, feather and fish bone designs. And we're meeting that demand with 17, soon to be 19, pad capable Super Singles. In the Montney, we continue to invest in the hardware and digital capabilities of our 32 Super Triple rigs to drive consistent industry-leading performance. Turning to the U.S. In the Permian, we're executing extended reach U-turn wells in the Haynesville drilling deep high-pressure wells requiring a 1 million pound hook load and in the Marcellus, delivering smaller footprint rigs with extended reach horizontal drilling capabilities. The takeaway is clear, no matter the basin or the challenge, Precision has the fleet, the technology and the expertise to deliver well after well. Second, I'll follow the discussion on revenue growth with the objective of deepening customer relationships through performance conversations and presenting new ways to create longer-term value. We do this through field service delivery and our standardized and fully scaled Alpha and Clarity digital platforms to optimize drilling planning and execution, provide real-time insights, enhance customer communication and implement performance improvement plans. We also delivered upgraded rig solutions executed internally and delivered quickly to meet our customers' specific needs. Additionally, we have been introducing creative commercial arrangements to incorporate equipment upgrades, digital technology additions and performance contracts. Many of these initiatives are underway, and we plan for more in the future. Absolute market share gains are one positive outcome of our strategy. But perhaps more importantly, among Precision's 130 drilling rigs active globally, 25 customers are running multiple Precision rigs, and we want this number to grow. My final point on our first strategic priority is that many of these revenue growth and customer relationship initiatives are capital-light, enabled by Precision's vertically integrated operations, cross-border capabilities and a consistent modular Super Series rig design, dynamics that allow for a faster, more economic upgrade plan. We view our upgrade capabilities as a competitive advantage and expect contracted upgrades to continue in 2026 for customers across several North American regions. All 3 of our priorities in 2026 are important for the Precision team. with financial discipline and returns focus underpinning operational and growth decisions. I would now like to make a few comments about Precision's core geographies, starting with Canada, where our Q1 peak activity of 87 rigs surpassed last year's peak by 4 rigs. The medium- to long-term outlook for the Canadian market is solid with supportive commodity prices, increased LNG and crude takeaway capacity and resilient demand for Super Series rigs. As a reminder, short-term activity throughout the year can be affected by weather and commodity price volatility. The U.S. industry outlook for rig activity is generally flat, but we are finding pockets of opportunity for performance differentiation and expect to continue to capture modest growth in a flat market. Our customers are focused on executing the development plans in the most efficient way possible and are not reacting to weekly changes in oil and gas prices. The gas basins have been the main drivers of growth over the past year, but we are having several encouraging performance conversations with Permian customers as we look to expand our presence in that key oil region. In the Middle East, our 7 active drilling rigs are delivering excellent results for our customers, and we are actively pursuing opportunities to reactivate idle rigs with financial returns driving all potential capital deployment decisions. Also, we are exploring options for more capital-efficient means to develop scale, including technology differentiation. To that point, we are installing our first Alpha system on an active Precision rig in the region. And we are laying the foundation for longer-term capital-light international growth in the Western Hemisphere. During the fourth quarter, we entered an MOU with an established drilling contractor in Argentina, under which Precision has the option to provide idle Super Series rigs, digital technology and operational support, while our partner will operate the rig, and the customer will have a direct leasing arrangement with Precision. We are excited about the potential to expand our presence in a growing region, focusing on Precision's performance offering. We are in the process of deploying our first Alpha automation system on one of our partners' drilling rigs in the country to demonstrate Alpha's performance advantages to potential customers. We currently have no near-term rig deployment plans, and we'll update the market as opportunities develop. I'll wrap up the business discussion with an update on Precision's Completion and Production Services division, where we delivered a 6% increase in service hours in 2025. Rising operating costs in the division continued to be a concern, but the team has addressed these costs with operating efficiencies and focused execution. Precision Well Services remains the premier service provider in Western Canada with industry-leading crews and safety performance and has proven its ability to meet evolving customer needs, resulting in resilient customer relationships. Once again, I would like to thank the Precision crews, field leadership and all Precision employees for their commitment to safety, customer service and dedication to Precision. With that, I will hand the call back to the operator for questions. Operator: [Operator Instructions] Our first question comes from Derek Podhaizer with Piper Sandler. Derek Podhaizer: Maybe just starting off with Kuwait and the rig that was demobilized over there. I was hoping to get a little more color and context around what happened there. It's great that you're able to backfill as far as reactivating the Saudi rig. And then separately, you also talked about potential reactivations of idle rigs in the region. Can you maybe help refresh us on how many rigs you have idle there and would be candidates to return to work? And where could your active rig count, which is at 7 now go to? So just a little more color on Kuwait and then just potentially the upside to your 7 active rig count today? Carey Ford: Sure, Derek. So we have 6 rigs in the Kuwait market, 4 are active and are on long-term contracts for the next couple of years. We do have 2 idle rigs. One of them just finished its last 6-year contract. And we didn't demobilize it. We just racked it in-country, and we'll be looking for opportunities to deploy that in the region, either in Kuwait or another country. And there will be opportunities to tender that rig, we think, later this year. So we are looking to reactivate that rig. We do have another idle rig in Kuwait that we're -- it's in the same situation. It's a modern rig. We deployed it in, I think, 2017, and we would expect to have opportunities to deploy that rig as well. In Saudi Arabia, we have 2 active rigs. One of them just went back to work. It was a suspended rig that have been well publicized in the market. And that one just went back to work last week, and will be running on a multiple year contract. So we have 2 rigs there and then one rig idle in the region. So first priority for Precision is to reactivate idle rigs in the region, and we think that's a near term -- near- to medium-term opportunity. And I think more medium and long term, we'll be looking for new avenues for growth in the region. Dustin Honing: Yes. And Derek, just to clarify, like the 2 will be up to 3 in Saudi after this reactivation is complete. Derek Podhaizer: Right, right. Super helpful. Switching over to the U.S. Obviously, an encouraging guide as far as steady rig count with some potential for the upside. Could you maybe help us understand that potential upside comment that you guys made? Is this, again, more gas-associated rigs like in the Haynesville or Permian, you talked about getting in with maybe some of these performance-based contracts. Just maybe a little more help as far as what the upside there and also publics versus privates? Carey Ford: Yes. I think the answer is all of the above. We're having active rig addition conversations with customers in the Marcellus, in the Haynesville and the Permian. And I think that we're looking at modest growth opportunities, but all of the discussions are driven by performance and efficiency where we think we can outperform several of the rigs that are operating today. I probably should add, we are having conversations with customers in the Rockies as well. Operator: Our next question comes from Keith MacKey with RBC Capital Markets. Keith MacKey: Can we just maybe start on the U.S. margin guide for Q1, USD 8,000 to USD 9,000 per day, pretty consistent guide with what you did in Q4, although there was a significant amount of reactivation costs that came through in Q4. So can you just break down some of the pieces for us in terms of the Q1 guide and what we should be expecting for reactivation or changes in day rates or changes in your core OpEx? Dustin Honing: Keith, it's Dustin here. I'll start. I'll let Carey jump in. But I would say it's kind of a mixed bag because we're seeing different pricing trends in each one of our operating segments in the Lower 48. We've seen some encouraging pricing play with a lot of the upgraders we've staged into the natural gas markets, that would be the Marcellus and Haynesville, a little bit more competitive in the oil-based markets. But we've been able to leverage our Alpha technologies as an a la carte charge to help support our margins. And then the benefit of fixed cost absorption certainly helps as we've been increasing our activity in the U.S. market. So from what we see, it's very short-term visibility. Contracts are quite short term in nature in the U.S. market, a little bit longer in gas, but overall, shorter than Canada. But from what we see, we feel comfortable with that guidance range for -- to hold firm. Carey Ford: I don't have anything to add there, Dustin. It's a good answer. Keith MacKey: Got it. Just anything on reactivation costs we should be expecting for Q1 in the U.S.? Dustin Honing: I would expect to see a fairly similar trend, Keith. It's not perfectly linear, but this is just the reality of the constant churn that we see in the U.S. market. But we've been able to absorb those quite well. And I would say you probably want to expect something similar going forward. Keith MacKey: Got it. Okay. And just turning to the MOU in Argentina. Just maybe give us a little bit more comments on that. How did this opportunity come about? And what ultimately do you hope to achieve from executing this MOU in terms of financial performance or further international expansion, et cetera? Carey Ford: Sure. So I would say that this was announced in the industry press in the fourth quarter. So it's been out there. I would say that we've looked at Argentina as a really interesting market from both the resource that's there and the growth opportunities. And we've been trying to figure out the way that we can get to the market, have a differentiated offering and reduce some of the challenges and risks associated with that market. We understand that a lot of parts of the market are improving for the better for Western countries or North American countries to go into that region. But we still want to find a solution where we can offer performance and technology, but derisk some of the complexities of doing business in the market. So we think that this is a really good opportunity for us to explore, and that's all that we have right now is an MOU to go to the market in a way that we have an established partner. It's San Antonio Drilling. They have a long-standing relationship and very good customer relationships in the -- long-established reputation and very good customer relationships in the region. And we want to partner with them with our rig technology and digital technology to go and work. And it's hard to say at this point how big of an opportunity this is going to be. But I'll stress that we don't have anything to announce right now. I think that the first rig deployment, if it moved at light speed would be late this year, maybe early next year. And I think we're probably talking about 1 to 3 rigs over the next couple of years. It's not going to be a fast-moving program for us. Operator: Our next question comes from Aaron MacNeil with TD Securities. Aaron MacNeil: Carey, you mentioned the strength of the longer-term Canadian outlook. And I'm sure you don't want to get into anything too specific on a customer-by-customer basis. But with their Q4 results, ARC recently removed Attachie Phase 2 from its 5-year plan and withdrew its broader Attachie guidance. So just curious to see if you've had -- if you've seen any direct impact of this yet, if you're expecting it in the future, how you're thinking about this in the context of overall basin demand for Super Triples or any other color that you could provide? Carey Ford: Yes. So I certainly won't speak to any particular customers' plans and Precision, I think we work for 8 of the top 10 most active customers in the Canadian market. So we do see quite a bit. You did hear my comments that we had 87 rigs running in the winter drilling season. We peaked in January at 87 rigs, which is up from last year. We've had all of our Super Triples and all of our Super Singles active during this winter drilling season. So certainly, we haven't seen any change in demand in the short term. We've been as active as we've ever been, at least in the last decade. And then longer term, I think our point is that takeaway capacity for both oil and gas is strong. We also have deep resources -- deep inventory resources for almost all of our customer base. So I think despite an individual customer with a specific change in plans, we have not seen a broad change in demand from our customers. Aaron MacNeil: Okay. Fair enough. And then maybe to build on Keith's question on the direct leasing opportunity in Argentina. What would a contract look like in terms of daily margin? Who is responsible for the mob and demob? Like how does that -- like all sort of the nuts and bolts of all of that work? Carey Ford: Yes. So I won't get into all the specific details. But yes, the mob and demob would be contemplated in the contract and an economic consideration will be given for that. But think about it as 2 revenue streams for Precision, one from our partner for what we provide on operational support and one from the customer on a direct leasing payment for the rig itself. And I think that's the crux of the contract and why the opportunity is attractive for us if we're able to secure a rig contract or 2 with a customer down there over the next few years. Operator: Our next question comes from Tim Monachello with ATB Cormark Capital Markets. Tim Monachello: It was good to see the capital allocation guidance pushing higher on the share repurchases. So I wanted to start there. You're getting to the tail end of your deleveraging target. And I'm curious what you think your allocations are going to look like once you hit that target? Carey Ford: I think we're stretching to give annual allocations for share repurchases. And we like the model. We get feedback from investors all the time that they like the way that we're allocating capital to both debt and equity, and we've been consistent that as we reduce our absolute debt levels, we will increase our direct allocations to shareholders. And that's a broad bucket. It could be share buybacks, it could be dividends at some point, but we'd like to continue that. And based on the current market, based on where valuations have been, we're comfortable continuing that. Now a year from now, we might be in a different market. And so I can't really comment on what form that would take. And I think the key thing for investors to remember about Precision is we are generating significant cash flow in just about any market, and we will continue to use that cash flow to deliver returns for investors. Tim Monachello: Okay. And then on the rig upgrade capital, $63 million earmarked for 2026, how much of that is a home currently? And can you speak to which markets you're seeing opportunities for rig upgrades? And I guess a follow-on to that would be, how do you think that will impact your contracted status, particularly in the U.S.? Carey Ford: Yes. So I'll comment about the capital plan. So remember, our capital plan is always activity driven, and that is definitely the case for maintenance, and it is the case for upgrades as well. Upgrades are demand driven. It's where we have customer request and customers willing to enter into contracts. I would say that only a portion of that has been fully committed, and I don't know if it's 15% or 20% or 30% has been fully committed. The rest is what we expect based on conversations with customers. So that could go up and down. The other part of the capital plan that Dustin covered a bit in his opening comments is that the maintenance and infrastructure portion of our capital spend contains long lead items that may either be used in maintenance, may be pushed into 2027 or if we get upgrade contracts, you can think about the absolute total dollar amount of capital expenditures not necessarily going up, but the shift from maintenance to upgrade may change with more capital going to upgrades as we go throughout the year. So that's one comment. Did you have anything? Dustin Honing: I would just add, Tim, if you're asking just regionally where we're seeing the upgrade opportunities? It's really a similar allocation that we commented in Q3. So in Canada, it's the deeper extended reach drilling programs in natural gas, specifically the Montney. And then we're seeing continued demand for pad Super Single upgrades with our heavy oil customers, significantly improving the agility of those rigs and converting those rigs from 250 days a year to an asset that might work 325 days. So we really like those upgrades. In the U.S., continued momentum with upgrade opportunities in the Marcellus and Haynesville. And to Carey's comments earlier, we're seeing increased opportunities playing out in the Permian. Tim Monachello: Okay. That's helpful. I guess in Q1, which is anticipated to be, I guess, the peak of the oil glut, and you guys are talking about sort of stable rig activity and opportunities in the Permian and gas basins in the U.S. Do you think that when you look through the back half of '26, you continue to think that the rig count in the U.S. is stable? Or do you think you're going to start to see that move higher? Carey Ford: Yes. I think when we comment about flat activity, it's kind of a combination of what we hear and what we read from the experts. And then in the shorter term, what we're hearing from customers. And I think our view from customers is shorter than back half of this year. I think it's -- we've got some customers that are looking a year or 2 out, but the broad market is still largely 6 months out. Tim Monachello: Okay. And then last one for me. Just on the Argentina opportunity, would that be served with rigs in your fleet that would assume be upgraded from the U.S.? Or would that be -- assume it probably not a new build. Is that the right way to think of it? Carey Ford: No. And that's one of the reasons why it's attractive to us. It wouldn't be new builds. We still have some idle Super Triple rigs in the U.S. market. And some of them would have minor upgrades before they were deployed and some would require a bit more capital. But all of those capital investments and mobilization would be contemplated in the economics of any contract that we pursue. Operator: Our next question comes from John Daniel with Daniel Energy Partners. John Daniel: A quick question. You mentioned potentially modest growth expectation in the U.S. market and you cited 4 basins. I'm curious, is that growth -- is that Precision adding rigs that are being displaced -- you're displacing others? Or do you actually see your customers in those 4 basins looking to add incremental activity? Carey Ford: I would say at least half are displacements, and I'd probably add on more of those being displacements than customer rig adds. John Daniel: Got it. And then as we continue to see more and more consolidation within your customer base, how is that influencing your appetite to potentially participate or prosecute more consolidation within your businesses? Carey Ford: Yes. I would say we've been pretty consistent. We don't look at any of the targets as strategic. So there's not one that we think we have to have to make Precision Drilling a better and more competitive company. There are some decent targets out there, and it's just a matter of whether it works on a strictly financial basis where we pay something below our multiple and get synergies and we can integrate well within our fleet. So possible, but not strategic priority #1. John Daniel: Fair enough. And the final one is just housekeeping. How many -- in the budget for '26 -- if you said this, I apologize, I missed it, but how many rig upgrades does that contemplate? Carey Ford: I would say it's -- right now, I mean, it can move around a lot. It's -- think about it as a big bucket of capital and sometimes it might be a high-torque top drive on a rig and that's an upgrade and that's not a huge dollar amount or it might be creating a 2,000-horsepower Super Triple rig, which could be $6 million, $7 million, $8 million. So I would say, as we sit here today, think about it as 10 upgrades, plus or minus a few. Operator: [Operator Instructions] Our next question comes from Josef Schachter with SER. Josef Schachter: Two questions. Going through the decommissioning of the drilling rigs and the $67 million charge, can you talk -- is there a certain class of rigs that you were -- and age of rigs that you decommissioned? And then in the balance sheet under assets held for sale, you don't even have anything there either for scrap value. Can you give me some background on all of that? Dustin Honing: Yes. So we did a deep dive on really analyzing the forward trends in the industry and what's really evolved in these more complex drilling programs. It's really starting to surface and take hold, I'd say, over the last 1 or 2 years where rigs -- drilling programs are becoming more complex, higher strain on equipment. There's just a specific capacity that you need. So when we look deep into our fleet and scrutinize the capabilities, it just was clear that we had a few that were falling not competitive, and we had that review late in the year and booked the appropriate charge. Carey Ford: Yes, in terms of the assets held for sale, there's going to be 2 things that we do with those rigs. One will be strip the rigs with any parts that we might be able to use in our fleet. So there will be some of that. And the rest, we would scrap, but we wouldn't necessarily have a held-for-sale item on our financials because we don't have a time line on that. Josef Schachter: Okay. Next one, going to the drill pipe, $17 million. What's going on in pricing? Because you mentioned you're going to be buying quite a bit in Q4. How big of a swing are you seeing in these numbers in terms of the timing of when it's appropriate and attractive for you to add more drill pipe? Carey Ford: Yes. I would say that when we pursue bulk drill pipe purchases, and we've done this throughout the history of our company, usually, there are times in the market where a supplier will have extra drill pipe. They'll need to have a home for production schedule, and we're able to capitalize with some liquidity and planning to where we can take advantage of a discount. And don't think about this as being a 40% or 50% discount. But on large dollar amounts, it can be meaningful, and it makes us act a little bit quicker than we would have otherwise. Josef Schachter: And the $17 million happened for any specific reason? Dustin Honing: Similar to our rigs, we made an adjustment on useful life for drill pipe and similar comment. As wells have become more complex, harder on equipment, we've noticed that our drill pipe life spans have been shortened up. And then we did have some that were disposed as well at a loss. Carey Ford: Yes. And I would just say that this is not a Precision dynamic. This is an industry dynamic in both the Canadian market and the U.S. market. Drill pipe is just wearing out a whole lot faster than it used to, and we need to adjust our accounting treatment to account for that. Operator: I'm not showing any further questions at this time. I'd like to turn the call back over to Lavonne. Lavonne Zdunich: Thank you, everyone, for joining today. If you have any further questions, you can call me or contact me through e-mail. Thank you. Operator: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.
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.
Operator: Good day, and welcome to the SCI's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to SCI management. Please go ahead. Trey Bocage: Good morning. This is Trey Bocage. AVP of Treasury and Investor Relations. I'd like to welcome everyone to our fourth quarter earnings call. We will have some prepared remarks about the quarter from Tom and Eric in just a minute. But before that, let me go over our safe harbor language. Any comments made by our management team that state our plans, beliefs, expectations or projections for the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements. These risks and uncertainties include, but are not limited to, those factors identified in our earnings release and in our filings with the SEC that are available on our website. Today, we might also discuss certain non-GAAP financial measures. A reconciliation of these measures can be found in the tables at the end of our earnings release and on our website. I will now turn the call over to Tom Ryan, Chairman and CEO. Thomas Ryan: Thank you, Trey. Hello, everyone, and thank you for joining us today on the call. This morning, I'm going to begin my remarks with some high-level color on our business performance for the quarter, then provide some greater detail around our funeral and cemetery results. I will then close with some thoughts about our 2026 business and financial outlook. For the fourth quarter, we generated adjusted earnings per share of $1.14, which was an 8% increase compared to $1.06 in the prior year. We saw moderate increases in revenues and gross profit in both the funeral and cemetery segments driven by strength in comparable and noncomparable operations as well as slightly lower adjusted corporate, general and administrative expense which, when combined, resulted in $0.04 of earnings per share growth from operating income. Below the line, the favorable impact of a lower share count contributed an additional $0.04 of earnings per share growth. For the year, we generated adjusted earnings per share of $3.85, which was a 9% increase compared to $3.53 in the prior year. We saw solid increases in revenue, gross profit and comparable margin percentages in both the funeral and cemetery segments contributing $0.26 to adjusted earnings per share growth from operating income. Below the line, the favorable impact of a lower share count and slightly lower interest expense was somewhat negated by a higher effective tax rate, resulting in a net $0.06 favorable impact on earnings per share growth for the year. If the effective tax rate had remained constant, we would have had an additional $0.07 in earnings per share for the year resulting in $3.92 or 11% earnings per share growth over the prior year. Now let's take a deeper look into the funeral results for the quarter. Total comparable funeral revenues increased $3 million or just less than 1% over the prior year quarter as growth in core and non-funeral home revenue was somewhat negated by lower core general agency revenue. Comparable core funeral revenue increased by $6 million or just more than 1%, primarily due to a healthy 3.2% growth in the core average revenue per service. This core average growth was achieved despite a modest increase of 30 basis points in the core commission rate. The favorable impact from the average revenue per service growth was muted by a 1.9% decrease in core funeral services performed for the quarter. For the full year 2025, comparable funeral volume declined less than 1% as we believe the impact of the COVID pull-forward effect continues to diminish. Non-funeral home revenue increased by $3 million primarily due to a more than 11% increase in the average revenue per service. We expect this impressive growth in the average revenue per service to continue as older preneed contracts, that are maturing out of our backlog, have higher cumulative trust earnings and more recent preneed contracts written will mature with higher value in the backlog due to our operational decision to no longer deliver preneed merchandise at the time of sale. Non-funeral home preneed sales revenue increased over $2 million or more than 11%, as increased sales production with a higher percentage underwritten on insurance-funded preneed contracts generated more than an $8 million increase in general agency revenue. This was partially offset by a $6 million reduction in revenue recognized from merchandise deliveries in the prior year quarter. Core general agency and other revenue declined by $8 million or almost 13%, primarily due to a lower general agency commission rate versus the prior year quarter that was impacted by changes in product mix and higher cancellations resulting from the impact of our insurance partner transition. We believe the general agency commission rate to be stabilized now in the mid-30s percentage range moving forward. Funeral gross profit declined by almost $4 million, while the gross profit percentage declined by 70 basis points to just about 21%. A modest increase in revenue was more than offset by a $5 million increase in recognized selling compensation costs. While the cash rate expended for selling costs was flat versus the prior year, recognized selling costs increased for both the core and non-funeral home segments. For core, we have shifted our sales counselor compensation to more fixed versus variable, resulting in less being deferred for preneed trust sales production. On the SCI Direct front, our conversion from trust-funded products to insurance-funded products compels the immediate recognition of the general agency commission and the related selling costs. This has the effect of replacing high-margin merchandise revenues in the prior year with lower margin general agency commissions, therefore, putting downward pressure on SCI Direct's margins as we compare to the prior periods. The team managed fixed cost growth to less than 1% for the quarter, which had the effect of moderating the impact of the recognized selling cost increase. Preneed sales production increased by $29 million or about 11% over the fourth quarter of 2024. Core preneed funeral sales production increased by $25 million or 12%. Non-funeral home preneed sales production increased by over $4 million or 8% over the prior year quarter. We feel great about our momentum in both channels, now having had the time to work out the kinks of the insurance partner transition in the core segment. And as of the end of 2025, we have now rolled the insurance product into 100% of our SCI Direct locations. Now shifting to cemetery. Comparable cemetery revenue increased by $5 million or about 1%, primarily due to an $8 million increase in other revenue, slightly offset by a $3 million decline in core revenue. The core revenue decline was primarily due to a $3 million decline in atneed revenue. Total recognized preneed revenue was essentially flat as a $6 million increase in preneed merchandise and service revenue was offset by a $6 million decline in recognized preneed property revenue. Preneed merchandise and service sales production was up $15 million over the prior year number, growing the preneed sales backlog by over $9 million. Other revenue was higher by $8 million compared to the prior year quarter primarily from an increase in endowment care trust fund income. Comparable preneed cemetery sales production increased by $8 million or about 2%. Core sales accounted for a $13 million sales production increase powered by impressive velocity growth, which was slightly offset by a $5 million decline in large property sales, which was comparing against a very strong prior year large property sale quarter. For the full year 2025, preneed cemetery sales production grew by about 4%. We feel very good about the momentum our team carries into 2026. Cemetery gross profit in the quarter grew by $5 million or about 3% and the gross profit percentage increased by 70 basis points, generating an operating margin percentage over 36%. While recognized revenue growth was 1%, high-margin trust income was slightly offset by lesser margin core revenue declines. And when combined with our team managing fixed cost growth slightly higher than 1%, this resulted in gross profit growth and margin percentage expansion. Now let's shift to a discussion about our outlook for 2026. As you saw in our earnings release, we provided a normalized earnings per share range of $4.05 to $4.35 for 2026 or a midpoint of $4.20. The 2026 range is 5% to 13% growth with a 9% growth at the midpoint. Within our funeral segment, we expect flat to slightly down funeral volume compared to 2025 with the average revenue per case growing at inflationary rates, slight negated by the effect of a modest cremation mix increase. We do expect to see higher general agency revenue from increased preneed sales production as well as slightly higher selling costs recognized, not cash, from the effect of the shift to a higher percentage of fixed compensation that does not get deferred. Finally, we believe we can continue managing fixed costs slightly below inflationary levels with higher productivity, which all in should drive profit growth for the funeral segment, increasing the gross market percentage by 20 to 60 basis points. We expect preneed funeral production for both the core and SCI Direct businesses to grow in the low to mid-single-digit percentage range. For the cemetery segment, we anticipate that we can grow preneed cemetery sales production in the low to mid-single-digit percentage range, resulting in cemetery revenue growth of about 2% to 5%. This, combined with our continued focus on managing inflationary costs, should result in impressive segment profit dollar growth, expanding our gross margin percentages by 30 to 60 basis points as compared to 2025. Below the line, we expect a net favorable impact on earnings per share as the positive effect of a lower share count is slightly offset by higher interest expense and a slightly higher tax rate as compared to 2025. For our shareholders, know that we are laser-focused on growing your great company as best we can for the long term, growing revenues, leveraging our scale and deploying capital to its highest and best use. In conclusion, I want to acknowledge and thank the entire SCI team for their daily commitment to our customers, our communities and to one another. Your dedication is the foundation of our success. Thank you for making a difference every day. With that, operator, I will now turn it over to Eric. Eric Tanzberger: Thank you, Tom. Good morning, everybody. Thanks for joining us today. Before I begin, I'm going to continue Tom's last thought and I want to take a moment to really sincerely thank our more than 25,000 associates at SCI across our entire network. Your dedication, your compassion, your commitment to excellence truly make a difference each and every day. We are deeply grateful for the care you provide the families we are honored to serve and the positive impact you continue to have in the communities that we are lucky enough to serve. So today, I'm going to start by reviewing our cash flow results and capital investments for the fourth quarter followed by a recap of our full year performance in '25. After that, I'll provide an outlook for our 2026 cash flow and capital investments, and I'll conclude with an update on our overall very positive financial position. So in the fourth quarter, we generated strong adjusted operating cash flow of $213 million. This exceeded the high end of our most recent guidance range for the quarter. Compared to the prior year, neutralizing for an expected $21 million increase in cash taxes, our adjusted operating cash flow decreased $34 million. So breaking this down a little further, adjusted operating cash flow was positively impacted by higher adjusted operating income of $8 million, highlighting the strength in our underlying funeral and cemetery operations during the quarter. However, cash interest was higher by $24 million, primarily due to the timing of a lower interest in the prior year quarter due to the bond financing and reduction of our drawn bank credit facility that we completed in September of 2024. Additionally, during the quarter, with a net $18 million use of other working capital, primarily due to the timing of payroll funded in the current year quarter. For the year -- for the full year, we finished 2025 with impressive adjusted operating cash flow of $966 million. Compared to 2024, when you exclude cash taxes and special items in both years, 2025 cash provided by operating activities increased an impressive $108 million or 11%. So going back to the fourth quarter, we invested $174 million of capital into our funeral homes and cemeteries, new growth opportunities, business acquisitions and real estate, all of which resulted in our full year capital investment in these categories of $508 million. So in the quarter, we invested $107 million of maintenance capital back into our current businesses with $47 million allocated to high return in cemetery development projects, $51 million into our funeral and cemetery locations and $8 million into our digital strategy and other corporate investments. For the full year, we invested a total of $328 million in maintenance CapEx, slightly below prior year and ahead of the high end of our guidance range. We dedicated a portion of the strong cash flow from operations during the fourth quarter towards reinvestment into the maintenance of our funeral homes to improve the customer event experience and into cemetery development, creating new tiered options for our customers. We also invested $31 million of growth capital in the quarter towards the construction of new funeral homes, the expansion of existing funeral homes as well as the purchase of real estate for future new build and expansion opportunities. This brought total 2025 growth capital to $79 million, which is down about $25 million from 2024, which was anticipated. So turning to acquisitions. We invested $36 million into business acquisitions in the fourth quarter and in locations in North Carolina, Arizona, Florida and Canada. In total, we finished the year with $101 million of acquisition spend, which was in the middle of our annual guidance target of $75 million to $125 million. We are really thrilled about these high-quality funeral homes and cemeteries joining our company, and we're happy to welcome all of these new associates to our SCI family. So moving on to capital distributions. We returned $107 million of capital to shareholders in the quarter through $59 million of share repurchases and $48 million of dividends. We repurchased just under 1 million shares during the quarter at an average price of about $79 per share. For the year, we returned $645 million to shareholders through $461 million of share repurchases and $184 million of dividends, bringing the number of shares outstanding today to just under 140 million shares. Subsequent to year-end, we repurchased another 500,000 shares for about a $40 million investment at an average price of about $80 per share. So before we get into our 2026 outlook, I want to make a brief comment about our corporate G&A expense during the quarter. Corporate G&A expense increased $19 million over the prior year quarter to $34 million. This was primarily a result of the prior year quarter having benefited from the reduction of a legal reserve of about $20 million. So when you exclude this prior year impact, G&A expenses actually declined about $1 million quarter-over-quarter. And as we look forward to next year, 2026, I should say, we expect that corporate G&A expense will average around $40 million to $42 million per quarter with, again, a reminder that this rate could be impacted one way or the other by the timing of our accruals related to our short-term and long-term compensation plans. So shifting now to outlook for cash flow. As you saw disclosed in the press release, our 2026 adjusted operating cash flow guidance range consists of a $60 million range from about $1.0 billion to $1.06 billion. The midpoint of this range assumes the following: we expect our cash earnings at the midpoint of our EPS guidance range to grow about $70 million, reflecting growth in our underlying funeral and cemetery operations. Cash taxes are actually expected to decline by about $20 million, which will result in $120 million of cash taxes as the impact of higher expected earnings on cash taxes are being more than offset by an anticipated tax benefit from an investment in renewal energy projects. As we look beyond 2026, though, we anticipate returning to a normalized cash tax rate of about 24% to 25%, absent additional tax planning strategies or regulatory additional changes. From an effective tax rate perspective on our income statement, we expect 2026 to really trend in line with 2025, which is about a 25% to 26% effective tax rate. And then lastly, we expect a modest decrease in cash paid for interest this year due to higher average balances being more than offset by lower rates. So now let's talk about capital investment in 2026. We expect maintenance CapEx in 2026 to be about $325 million, which is generally in line and flat with the levels we incurred in 2025. Of this target spend, we expect to invest $135 million into improving our funeral homes and cemeteries, $165 million into cemetery development projects with high rates of return and $25 million into our digital strategy investments and other corporate investments. We expect to invest again an additional $75 million to $125 million towards acquisitions, which is in line with kind of the annual acquisition spend target we've had in the last couple of years. In addition to the maintenance CapEx and acquisition spend targets, we also plan to spend roughly $70 million to $80 million of growth capital on a new funeral home construction and real estate opportunities, which together drive low to mid-teen after-tax internal rates of return. Finally, as been our strategy for many years, we continue -- we plan to continue returning capital to our shareholders through dividends and our share repurchase program in a very consistent and disciplined manner, absent other higher return investment opportunities. So in closing, I'd like to provide some commentary about our current liquidity and our financial position. I'd first like to note that in November, we entered into a new $2.5 billion bank credit facility, which consists of a funded $750 million term loan and a $1.7 billion revolving credit facility, both now maturing in November of 2030. This transaction increased our liquidity by over $350 million and our current liquidity today is about $1.7 billion. Our leverage ended 2025 generally in line with prior year-end just above 3.65x, which is at the lower end of our long-term net debt-to-EBITDA leverage target range of 3.5x to 4x. So our strong balance sheet, this enhanced liquidity position that I just mentioned, and consistent and predictable cash flows continue to support our capital deployment program, which gives us remarkable flexibility as we enter 2026 to invest opportunistically for the long-term benefit of SCI, our associates and our shareholders. So with that, operator, this concludes our prepared remarks. And so I'm now going to turn it back to you to open the call for questions. Operator: [Operator Instructions] Our first question comes from Joanna Gajuk from Bank of America. Joanna Gajuk: So first, on the cemetery preneed sales production, it sounds like you expect low to mid-single-digit growth for '26. So can you kind of break down your assumptions in there for the large sales versus the core? I mean, it sounds like in Q4 large sales declined year-over-year because of the comp, but it sounds like the number must have been good. So if you can give us a sense of the magnitude of the amount for the year for '25 and then what you assume for '26, I guess? Thomas Ryan: Sure, Joanna. Thank you. So on that, you're right. In the fourth quarter, we're slightly down comparing against a tougher number. I think for the year, we're slightly up around 2% or so on the large sales, maybe 3% for year-over-year. And as we think about next year, I'd tell you, I feel very confident about the momentum we carry into 2026. We feel really good about our start and both on the large sale and on the core sales. So I think, again, as you think about large sales, it's always really hard to predict, as you can imagine. But think of that as being slightly lower, so maybe a 2% to 3% increase there and then maybe a more robust increase as you think about the core customer. But as you well know, large sales are tough to predict. It could be -- that's the piece that can be a little bit volatile to the upside. And in times of stress, maybe something that isn't there. Joanna Gajuk: If I may, in the, I guess, current period, any indications, how things are tracking so far this year, specifically in your [ Brookfield ] location and maybe elsewhere? If you can comment any disruption to the sales process and such because of the -- some winter storms in some of the markets? Thomas Ryan: Yes. We continue to see very positive trends on both preneed cemetery sales and on funeral sales. We've had a real focus. Our sales team is really focused around 3 things this year, and this plays a little bit into something we've talked about. We've shifted more compensation to fix from variable that we talked a little bit about in my comments. And that was a strategic decision to focus on people power, focus on retention of our key employees by giving them the stability of that higher guaranteed pay. So the 4 things we're working on are people power or call it, people retention. We believe if we can increase the number of preneed seminars that are out there, it's going to increase the number of good leads. And then once we have those leads, a real focus on the lead to sale rate, which is really the conversion of the leads. And then finally, really focused big time on large sales, making sure we have the inventory, making sure they have the presentations right, that we're finding people that could be customers in this category. So those 4 things really drive our sales, and we're laser-focused. Jay has got everybody laser-focused on those things, and we're seeing great results. We're seeing both at the high end and at the core level on funeral and cemetery. Joanna Gajuk: Any color on [ Brookfield ] activity so far? Thomas Ryan: Well, again, I don't want to give percentages, but as you think about January, two things to keep in mind. One is funeral volume last year was pretty strong. So we're comparing against a pretty tough number. We've not seen -- it's been a bit sluggish when you think about volume. But on the sales side, we're seeing tremendous out-of-the-gate results, both on funeral and cemetery, particularly cemetery. But again, one month is not a year make. So we're excited about it. We love -- I think the team is focused on the right things, and we feel very good about our opportunities for 2026. Joanna Gajuk: Great. [indiscernible], last one, I guess, staying on the cemetery side. Can you talk a little bit more about the opportunities to grow cementery for cremation customers? So you noted the shift to cremation is slowing down, but 65% of services are cremations. And I guess you kind of talk last time about opportunities to grow cemetery, I guess, sales for the cremation customers. So can you give us an update of where things stand and kind of what are your goals for this year? Thomas Ryan: Sure, Joanna. We actually have piloted in a few markets now in the process of rolling out to more a specific focus on that cremation consumer. And some of that is putting videos into our locations that can show the opportunities to the cremation customer and just making it more visible to our visitors and to the clients that we're serving. So, yes, we're doing a lot of things as it relates to media and the like to create that awareness and hopefully drive some opportunities in that market. I'd say early days, we feel very good about it. And it's going to take a while to roll it out to the entire network, but we're in the beginnings of doing that now and are excited about the results to come. Operator: Up next, we have A.J. Rice with UBS. Albert Rice: First of all, just on the comments that Eric made on G&A. You explained the 4Q's impact, but I think your 4Q of '24 the comp, but 4Q of '25, you're only at about $34 million. I think we had been thinking you'd be more like $38 million to $40 million based on the third quarter call. What drove the better performance on G&A? Eric Tanzberger: Two things, really, A.J. The first one is that we have short-term and long-term ICP accruals, and this is primarily a long-term situation, an LTIP situation. And just to remind you, we have some performance units that get compared to the S&P MidCap 400. And that's going to move quarter-to-quarter, which is what I was trying to say during my conference call remarks. Sometimes you have a $2 million, $3 million, $4 million headwind and sometimes you have a $2 million, $3 million, $4 million tailwind. And that's what occurred during the fourth quarter. Absent that kind of volatility on LTIP, you should see a $40-ish million, $42 million-ish per quarter G&A expense as we move forward. That's kind of the middle-of-the-road expectations as we move forward. The other thing that can move it that you kind of have seen us talk about in the last few quarters, sometimes you have some positives and negatives related to some of the insurance being self-insured. This primarily could be Workers' Comp, sometimes general liabilities, sometimes auto liability, sometimes even the health care accruals. Generally, those aren't moving as much as we've seen kind of the LTIP accruals move in. But any of those at any point in time can do that, and we'll explain that to you. But in terms of modeling, I think I'm pretty comfortable with that $40 million to $42 million a quarter right now. Albert Rice: Okay. When you think about the changeover toward more insurance, you've got -- you've called out commission normalization and then you also talk about the impact of SCI Direct. Are we pretty much going to have more straightforward going forward? And what are the implications on the commission run rate? It sounds like it's a little lower in the back half of '25. Do we have to annualize that in the first half of '26 or something else? And then SCI Direct go forward from here. It sounds like the restructuring of that is done, and we should have more normalized trends, but I just want to make sure of that. Thomas Ryan: Yes, that's correct, A.J. Answering the SCI Direct piece, we are 100% implemented in having the insurance product in those markets. There will still be some trust sales because some people aren't insurable. But I would say over 90% of the sales are going to be insurance and therefore, generate a commission and generate the associated selling costs. So as we think about SCI Direct, it's going to trend in a positive direction year-over-year and it's been a while since that's happened. So we're excited about it. On the other commission front, as you think about selling costs and you look at the -- what we talked about, when you looked at funeral, remember, we had 11% preneed sales production growth. So part of our selling cost increase is the fact that we're selling a lot more that's driving that cost up. We also saw a slight bit of transition to a fixed cost plan that I mentioned before as opposed to variable. And so as you think about the trust product that we sell, not the insurance, less is getting deferred and more is getting recognized. No cash increase, just the type of compensation that occurs. And yes, I think as you think about SCI Direct, like I said, positive from here as you think about trend-wise. Albert Rice: Okay. And you also called out, I think this may be the second straight quarter of the improvement in velocity you're seeing in the cemetery production area. Can you just maybe drill down a little bit more about what you're seeing there and what's driving that and what might implications of that be? Thomas Ryan: Yes. I think, A.J., a lot of that's back to those 4 metrics or particularly the first 3. Having one, the aim to try to have higher retention of our good people and getting them quality leads and then really focusing on the training to take that lead and convert it to a sale. And so as I think about our success in being able to do that and focusing on those types of things, we're seeing, again, trends that we really like. And so we are seeing velocity drive our success as we think about the core cemetery sales. So I just attribute that to focus. You mentioned the cremation consumer before. We are seeing a higher lift of people, cremation consumers choosing to buy into our cemeteries. So all those cumulatively bode very well as we think about cemetery production going forward. Operator: Our next question comes from Tobey Sommer with Truist. Tobey Sommer: I was wondering if you could talk about the drivers of lower than inflation expense growth. That's pretty impressive, particularly if you think that your ability to achieve that has legs. Thomas Ryan: Sure. Some of the things that are happening within the current year 2025 is our focus on the products that we sell. And the things that we're selling, the types of products we sell, who we're buying from. And so our supply chain team, led by Michael Johnson, have done a lot of great things as we think about the products that we retail to consumers and how we price those and how, again, we're -- what types of products we're buying and selling. So we've seen on that really on the merchandising cost side, some enhancements as we think about it. The other thing that I think is probably the most powerful and it gets back to kind of labor efficiency. So we utilize -- we empower our operators really to proactively managing staffing levels and giving them the tools to do it as you think about overtime, part-time roles, they're using metrics. They've got daily dashboards. And so what it allows us to do with those labor efficiency metrics is manage that and then, as a team, we're taking best practices and sharing those across the entire portfolio. So think of it that way, and then at the very top, we've got a cross-functional margin improvement committee that's been in place for a number of years now that really focus on dissemination of these best practices. So we think we've got a pretty good grip as we think about volumes aren't as high as we thought they were. We're going to manage the variable cost, particularly around staffing. So really a testament to our great operations management team and how they're utilizing those tools to manage costs effectively. Tobey Sommer: So would you say that you think that this sort of spread could be achieved beyond 2026 or take it one year at a time at this stage? Thomas Ryan: I think it's kind of a one year at a time. And I do believe that's true, but it kind of gets back to volume, right? If we begin to see volumes ticking up, it becomes a little more complicated as you think about staffing costs, you're going to see some rises in that because, again, these are variable costs. But at the same time, I think it really allows us in the challenging volume periods to manage costs as low as you see us do it. But I'd expect those to trend back up as volumes begin to increase as we anticipate over the coming years. Tobey Sommer: If I could sneak one more in from an acquisition perspective, you closed out the year and right down the fairway for your total capital deployed. When you look at the pipeline, is there any change in the composition such that something might be a little bit bigger this year? Eric Tanzberger: I think we're seeing a similar type pipeline, Tobey. I think we're very excited about it. As I've said before, it's generally going to be more of larger independent type transactions that are both funeral and cemetery. And the best that we could do in those situations were places that we already exist and already have local scale. And that's the best of both opportunities for our company as well as those independent funeral homes that are decided to join our company, and we can continue the great service and the way they're treating their consumer in those markets that we are already in and guarantee that really, but the pipeline is good. The pipeline is healthy. We're very busy. I think I've been saying that for a couple of quarters now. And I think I'm going to still say the same thing. I think it's pretty good and pretty busy, and we're excited about it. Operator: Our next question comes from Tomohiko Sano with JPMorgan Chase. Tomohiko Sano: This is Tomo from JPMorgan. Could you talk about the plans for developing selling premium cemetery inventory and your outlook for recognition rates? And could you talk about how do you view price elasticity as well, please? Eric Tanzberger: We're going to deploy capital, which is the first part of your question, similar to last year, which our metric right now is about $165 million of very high returning opportunities. As you're describing as you saw Memorial Oaks during your tour, we're going to invest in tiered type inventory at each of our cemeteries that are going to give offerings all the way to the higher end in terms of families that want like private estates and such, then you go all the way down to the semiprivate areas, and then you get to some of the initial more lower-tier type offerings. I think that it continues, coupled with our sales force, to be the best value opportunity that we can get and the highest return opportunities we can get for that type of capital. In terms of the cemeteries themselves, there's relatively high barriers to entry. We're very lucky to have this 35,000 acres that we had that were built over many, many decades by really the founder of this company over a long period of time where metropolitan areas have grown around these cemeteries, but yet we still have a tremendous amount of capacity and years left within these cemeteries. What you saw in Memorial Oaks, which Houston has now grown out and surrounded, still has many years left, many decades left in terms of inventory. For those of you all on the call have been to Rose Hills, that's a similar situation where L.A. has grown around it and many years left in that. So we're very lucky to have it. We have good barriers to entry. We're going to price it based on the tiering effect and type the value proposition that exists that we've always had. We feel that there's a lot of opportunity with a strong cemetery consumer, especially as the demographics over the long term turn our way over a period of time. Tomohiko Sano: Very helpful. Just one follow-up on the M&A pipeline in 2026. Could you talk about prioritization for expansion, especially what drove the recent acquisition in locations of North Carolina, Arizona, Florida and Canada? And are you continuing to target these locations or more broader-based M&A? Eric Tanzberger: No. It's going to continue to be, as I said, we want to be in markets that we already exist in as the first stack ranking because we already have -- we carry the national scale anywhere that we're buying. But when we already have that local scale, it can really make 2 plus 2 equal 5, so to speak, when we have these larger really nice independents joining our company. So we'll continue -- you know, we have a broad base across the United States. We also have a wonderful business in Canada really from anchored in the West all the way over to the East, especially in Toronto. And you'll continue to -- for us to develop very long-term relationships with a valuable pipeline that we have with those relationships and as those individual businesses and their owners and their families kind of raise their hand and are interested in discussing the next step and discussing liquidity event, we have the advantage of having tremendous liquidity and speed and really making it a win-win situation with our independent partners. Operator: Our next question comes from Parker Snure with Raymond James. Parker Snure: Just wanted to drill down on the GA revenue in the funeral segment a little bit more. With your core preneed funeral production up 12%, but the GA commissions were down just a bit. Maybe just talk us through some of the drivers there. I know there were some comments on the commission rate. I know you previously made some comments on a flex product that comes in with lower commission, maybe just drill down on some of the dynamics driving that. Thomas Ryan: Sure, Parker. I'll take that. So as you think about the timing of all this, the fourth quarter of 2024, we're relatively new into the new contract with our new insurance partner. And so at the time, we're really hesitant to talk about what we think the rate is going to be because there are so many factors that play into that. Any kind of new plan is going to have new pricing, new learning, new forms, new processes, new rules. So there's just a lot of change management engaging in there. So the two things I mentioned on the call, Parker, were product. And so as you think about that, you rightly pointed out that we opened up the flex product in the mid part of 2025 that we didn't offer at the end of '24. So some of this is we're offering a flex product with a dramatically lower commission rate than the traditional insurance. That's a little piece. Another one is kind of what we call early payoffs. You try to predict who's going to sign up for these things and then pay off within a year with the early payoff rates slightly higher, and that again would drive it down. The other factor is, if someone pays a single pay upfront versus a multi-pay over time, there's different commission rates there. So we're trying to predict how many people are going to buy a single pay, how many people are going to buy a multi-pay. So those are the 3 things that kind of impacted the product piece. And then the other thing we mentioned was cancellation rate. And again, two things there. One is you've got cancellation rate from the old insurance provider in that business. And we saw an increase of older contracts from the previous supplier that, again, kind of happens from time to time it isn't as predictable. And I don't think that's going to continue at those rates. And then finally, we're seeing a slightly higher cancellation rate than we used to experience with the previous insurance provider. I would attribute that to, again, the new plan learning. We're learning how -- what are the points where customers are frustrated with processes, rules, forms. And so I think we'll get better at that as time goes on. So we came out and said, let's look for kind of a mid-30s type of percentage rate going forward. We think that's probably a fair way to think about it as you model '26, '27. Hopefully, we'll get a little better over time at some of these things like cancellation. But we're very comfortable that now we're in a place that we understand it and we should try to improve from here. Parker Snure: Okay. Great. That's super helpful. And yes, just a follow-up on that. On the -- it sounds like there was almost like a bad debt accrual for the cancellation rate. Maybe if you could just help us like give us a number for the magnitude of that? And is that expected to be a onetime item? Or is that going to be kind of an ongoing accrual that's constantly flowing through the numbers? Thomas Ryan: Well, I think it's -- like you said, the cancellation rate experience we're having is a little higher than we thought, which requires us under -- when you're making estimations to catch up. So maybe think about 200 bps as being the impact of catching up this quarter, which again, we've factored into going forward, what we think about 2026. So as you model, I'd just go back to that kind of mid-30s and that would encompass any catch-up that we think we need to have. And like I said, I hope operationally over time, and I believe this is true, we're going to get better at this because there's typically a reason. And again, this gets back to new products, forms, processes, people, us getting used to them. So I expect this over a period of time to get better. It's just the part of change management that's tough. But look, at the end of the day, we've got a better product for our customers. We're generating higher commission rates. So we're very, very pleased with our partnership and expect it to continue to trend to the positive. Parker Snure: Yes, absolutely. Understood. And then just if I can squeeze in one more. On the perpetual care trust, that was up $8 million year-over-year. I think for the full year, it's up about $16 million. Maybe just help us with what is expected in your guidance for 2026 for perpetual care trust revenue? And maybe just remind us on the accounting treatment of how that portfolio is accounted for. Eric Tanzberger: Yes. We had a great year across all the trust funds, as you saw Parker, at a 15% return. We normally expect and model kind of about half that, kind of about a 7%-ish type market return in the trust funds. That's true for the internal care funds just like it's true for the MST funds. The internal care fund is really split into two components. One is a prudent person approach, which is the same 60% equity, 30% fixed income, 10% alternatives type mix that you would expect from that type of portfolio. There's still though a few states in the internal care fund, which don't follow that method and primarily are invested in fixed income securities. When that occurs, when there are gains or losses from those portfolios, that flow through that particular line. The issue was not during the fourth quarter of '25, but in the fourth quarter of '24, we had a liquidation related to a portfolio manager and that created a $4 million, $5 million, $6 million loss that came through. So it's not that the portfolio looks so much better than last year is that last year was pressured by that particular event in the internal care funds. Operator: Our next question comes from Scott Schneeberger with Oppenheimer. Scott Schneeberger: I have probably a total of three questions. I'm going to ask the first two upfront. We heard a lot about the flu in the fourth quarter, certainly carryover into the first quarter. But funeral volumes were pretty light in the fourth quarter. Just kind of curious what you're seeing on the flu front. And then the second part of the question is, the guide for 2026 on funeral volumes flat to slightly down. When are we going to see that? I mean that's kind of in the trend, but is there a conservatism in there? Or is that the trend? I was thinking we might be seeing that start to improve a bit. So just thoughts on those. Thomas Ryan: You bet, Scott. So as it relates to flu, you're correct, we did hear about the cases. I think as it relates to creating funeral volume that we're not seeing any of that. We're not hearing any of that. And as we think about trends in volume, it's probably good to take a step back for a second. So we know that the COVID impact occurred. We knew that we're going to have the COVID pull-forward effect, and we've modeled that. And we think we've got a little bit of diminishment there, but less year-over-year. The other thing just to point out that we don't talk about as much, but you'll recall us talking about it during COVID, was the term excess deaths. And what did that mean? And we said that was kind of the ripple effect of COVID. We saw increases in drug overdose, suicide, traffic fatalities, murders, lack of cancer screenings. And so we couldn't explain this excess volume that has occurred even beyond COVID. And I think as you look at the statistics now, and this is a positive for us as a society, I think goodness, right, drug overdose down, suicide down, traffic fatalities down, murders down, cancer screenings back to levels, and you're seeing deaths from cancers trend down. So as you look at the national data and again, it's not perfect, as a country, volumes were down in 2024. Preliminary '25, they're down. So I think what we're going through is a little bit of a trying to normalize out of this strange period. The other thing that we do is we go back and look at the CAGR of the 2019 numbers. So if you go back and look at pre-COVID and you said, let's expect volumes to increase 1% over the next few years. If you do that and look at our current volumes, you'd be very pleased about where we stand. As you think about market share, as you think about demographics. So it's very confusing, and I understand why it is. It's frustrating for us sometimes too. And look, we're paranoid. We're going to fight for volume for market share. Are there markets we could do better as we think of cremation pricing, maybe, and we're doing that every day and trying to fix it. But I think if you really take a step back and do the compounded impact of '19, you feel very good about the volumes that we're experiencing today. We still believe the demographics of this business, just the pure aging of society is going to have an impact, and it's just challenging to understand exactly when you're going to be able to see that. It isn't being clouded by some of these other trends. But again, we're going to manage our costs. We're ready to take care of that. On the good news front, so as I think about '26, yes, we think it's probably going to be flat to slightly down. January is a little soft, as we mentioned earlier, but we'd expect it to trend back towards flat. I think as you get out to '27, '28, '29, we expect to see funeral volumes increase is the way our models are working. So we think we're close. We're poised and ready to do it. I'd say on the positive front, on the cemetery side, we're seeing a lot of great things in our sales activity, both in large sales and in core. So still feeling good about '26. Volumes could be slightly down to flat, like we said. Scott Schneeberger: Great. Appreciate that color, Tom. And then the last question, it kind of dovetails off all that. The guide for 2026 EPS is growth of 5% to 13%. That certainly encompasses your 8% to 12% midpoint kind of in the bottom half of that. It feels about right, but just curious what has you concerned that could put you at the lower end? What are the drivers that could put you up at the higher end or above? Thomas Ryan: Yes. So I think at the lower end right now, I think we think that would be continued soft funeral volumes. If we saw volumes that came in at down and down, let's say, 200 basis points or something, that's tough to overcome. If we get flat, I think we feel very good about the higher end because, again, what we're seeing in our -- through the windshield is a lot of sales activity and feeling really, really good about it. I think we feel good about SCI Direct trending the other direction. I think we feel good about our arms around the expense category. So to me, the part that would put you challenging to the lower end would be a continued year-over-year decline in volumes. And again, we're going to do everything we can to push you towards the higher end of that EPS guidance. But that's probably the most difficult one for us to overcome if it's not there. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to SCI management for any closing remarks. Thomas Ryan: We want to thank everybody for being on the call today. We look forward to speaking to you again soon. I guess next call will be at the end of April. So everybody be safe out there. Thanks again. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Carolina Stromlid: A warm welcome to RaySearch 2025 Year-end Results Presentation. My name is Carolina Stromlid, and I'm Head of Investor Relations. With me today are our CEO and Founder, Johan Lof; and our CFO, Nina Gronberg, who will take you through the key highlights and financial results. After the presentation, we will open up for questions. Feel free to submit them in the Q&A chat or ask them live. With that said, Johan, over to you. Johan Löf: Thank you, Carolina, and welcome again, everyone. So this is the agenda for this webcast. I will start with an introduction about RaySearch, then I will summarize Q4 and the full year. After that, Nina Gronberg will talk about the financial development. Then I'll take over again and mention the dividend proposal that we have. Since there is a strong focus on AI these days, I will make a deep dive into what that means for RaySearch. And then I will just summarize the presentation and make an outlook. After that, we take Q&A. So a few words about RaySearch. RaySearch is a pure software company, and we are dedicated to cancer treatment software. And we have 4 platforms, RayStation, RayCare, RayIntelligence and RayCommand. What we see in this image is a comprehensive cancer center. And our long-term goal is to support such a center with all the software that they need. So not only radiotherapy, but also support for chemotherapy, surgery, tumor board meetings and other things. So that's a long-term vision for RaySearch. So far, we have focused mainly on radiation therapy of cancer. What we see in this image is the user interface of RayStation, our treatment planning system. And it summarizes quite well what's going on in treatment planning, radiotherapy. In the upper left upper -- let's see, upper right image here, you see a machine. This particular machine happens to be an X-ray by Hitachi. And we can see in this image how the machine moves around the patient. So it rotates and it also swivels this ring around the patient. So one thing that we have to do in our treatment planning system is to model this machine, so we understand how we can move and also the physics of the beam, so we can calculate dose in the patient, et cetera. The next thing we need is a model of the patient. So we see the patient in the middle upper image here and also in the other images, you see different cross-section of the patient. And we also see the dose distribution, which is the color wash overlaid on the CT images. And the idea here is that we get a high dose to the tumor, which is the red color in this image and low dose to the organs at risk outside of the tumor. For example, you see the spinal cord in this surgical view that it has a very low dose. The lower right image shows the patient from the source. If you look at the patient from the source, this is how the patient would move. It looks like the patient rotates, but it's actually the source that rotates around the patient. So this is, in summary, what we are doing in treatment planning for radiotherapy. We also want our systems to absorb data as we treat the patients so that all of our products will automatically capture the data that is being generated before the treatment starts, during the treatment and during follow-up what happens to the patient after the treatment. And by absorbing all of this data in the system RayIntelligence, we can achieve clinical insights and feed information back to our systems to improve the systems. And some of those icons are -- represent machine learning models, but it can also be other aspects and other types of clinical insights. And we use this feedback data to improve our algorithms. We have some examples of that already out in the field. We can improve the efficiency of the operation. Ultimately, we want to provide decision support so that the members of the Tumor Board, for example, can make the best possible choice of strategy for the patient and ultimately improve outcomes. I show this diagram just to illustrate the long-term journey in terms of revenues. The reason is I want to highlight that we shouldn't look at RaySearch revenues on a quarterly basis. If you zoom out a little bit, this one goes all the way back to 2008. We can see that there has been a steady growth of revenues year after year. The 2 pandemic years are an exception, and we understand why those were -- those 2 years were weaker. But besides those, there has been a steady growth of the company, even though you may see fluctuations between quarters. Okay. And now I will make a few comments about the last quarter and also the full year. So Q4 was a strong finish of the year. Net sales grew by 16% to SEK 375 million, which is all-time high. Adjusted for the strong currency headwinds, the growth would have been 28%. Recurring support revenue was SEK 139 million, which corresponds to 37% of the total revenues. The strong sales translated directly into improved profitability. Operating profit increased by 25% to SEK 92 million, resulting in a 24% EBIT margin. Adjusted for currency losses, the margin would have been 27%. So for the full year 2025, net sales increased by 13% to SEK 1.34 billion, marking the highest annual revenue in the company's history. Organically, net sales grew by 19%. Recurring support revenue was SEK 524 million, which corresponds to 39% of the total revenues. Operating profit was SEK 292 million for the full year and the margin 22%. If we adjust for currency effects and extraordinary items, the operating profit would have been SEK 353 million and the margin of 26%. Let me briefly highlight a few of the new orders and expanded installations we secured during the quarter. We continue to see solid momentum with strong license sales to both new and existing customers across all regions. Greater Poland Cancer Center expanded its RayStation installation to include Proton Therapy, bringing photon and proton planning together on a single platform. The University of Pennsylvania, one of the premier proton therapy institutions in the U.S., selected RayStation as a unified treatment planning system for proton therapy across its 3 clinics. And Universitätsklinikum Gießen und Marburg in Germany chose to replace Philips Pinnacle, which reaches end of life in 2027 with RayStation. We have also seen strong clinical progress during the quarter. The Royal Marsden NHS Foundation Trust achieved a major milestone by performing its first online adaptive treatment on the standard Elekta linac using RayStation's adaptive planning module. Until now, most online adaptive treatments have been limited to specialized machines that a few centers have. This achievement makes online adaptive radiotherapy accessible to far more clinics and patients. At the Southwest Florida Proton Center, the first patient treatments were delivered using RayStation and RayCare together with IBA's Proton Therapy System, enabling highly precise treatments, including proton arc therapy. Together with the trend to Proton Therapy Center, we performed the world's first clinical proton arc treatments in 2025, a technique that improves dose distribution by using many beam angles and optimized energy levels. This achievement was actually named one of the top 10 scientific breakthroughs of the year across the entire field of physics by Physics World, and that's something that we are very proud of. And now I will hand over to Nina, who will go through in more detail the financial development. Nina Gronberg: Thank you, Johan. Taking off from your presentation and the numbers in brief, we can conclude that it has been high interest in RaySearch solutions throughout the year, and that goes both from new and existing customers and in all of our regions. And that is also something that is very much reflected in the numbers for the last quarter. Order intake increased by 8% in the fourth quarter and 17% for the full year. And I want to highlight that these numbers include the effects from the stronger Swedish krona, which, as you know, has affected us a lot during the year. And that goes both in terms of growth and on the bottom line. Order backlog end of December amounted to SEK 1.528 billion, and the book-to-bill ratio was 0.9, both in the quarter and for the full year. Moving on to net sales. We finished the year beating the last sales record by far. Net sales of SEK 375 million means a growth of 16%. The organic growth was 28%, showing that the underlying business really performs well. License sales growth was 15% in quarter 4 and support sales grew with 6% year-on-year. When we take out the currency effects from the support sales numbers, the growth was 16%. The high net sales drove EBIT to SEK 92 million in the quarter and strengthened the margin to 24% compared to 23% for the same period last year. Currency losses from the revaluation of working capital affected EBIT with just above SEK 10 million. And adjusted for that, the EBIT margin would have been 27%. Next slide is the rolling 12 development of net sales and EBIT and the perspective that we believe gives a better description of RaySearch's business performance. For the full year 2025, net sales increased 13% to SEK 1.344 billion. The organic growth was 19%. And with an EBIT of SEK 292 million, we ended the full year 2025 with a margin of 22%. That is equal to last year, but also burdened by SEK 37 million in currency losses. Adjusted for those and an additional SEK 23 million that we treat as nonrecurring costs, the margin would have been 26%. Moving to the next slide, showing the revenue split and where I focus on the revenue from support, we saw a growth of 11% in our support revenue for the full year 2025. With the steady growth we have in our support revenue over time, we increased the robustness in the business from recurring revenue. And for the total year 2025, the portion of recurring revenue in relation to total net sales was 39%. Cash flow in quarter 4, as you can see here on the next slide, improved significantly and amounted to SEK 91 million, and that includes positive effects from a lower working capital. We will continue to put focus on having a good cash flow in 2026. However, I want to point out that I also -- or what I also said in quarter 3 that the cash flow can fluctuate also going forward. We always seek to work with standard payments or standard payment terms in our customer agreements, but we also have situations where the gap between sales and payment is longer. It can be tenders or framework agreements or related to certain markets, sales that comes with a good profit, but where we have to accept later invoicing. We want to have a position where we sometimes for strategic reasons and in relation to important customers can choose to accept profitable sales over short payment terms. And with the cash balance end of 2025 amounting to SEK 407 million and no loans, we have a solid financial position. The next slide shows the contract assets, that is our customer receivables and also our contract liabilities, and that is the balance sheet items that shows how much payments we have received from our customers in advance. We have, during 2025, moved away from a position where our contract assets were lower than the contract liabilities. And that is, to a large extent, dependent on that we have delivered on prepaid sales in our backlog. But I want to point out that a net position of SEK 118 million is still a good position. But of course, this doesn't take away our intention to lower this number and to improve the working capital where we can during 2026. And with this, I hand over back to you, Johan. Johan Löf: Thank you very much, Nina. So I will just briefly mention the dividend proposal. So we are pleased to announce that the Board proposes a dividend of SEK 4 per share for 2025, which is up from SEK 3 per share. The dividend will be decided at the Annual General Meeting on May 7. The Board has also revised RaySearch dividend policy effective from 2026. The goal is to distribute 50% of profit after tax annually, taking into account the company's capital needs, investment opportunities and overall financial position. And now I would like to devote some time to AI and how it affects RaySearch. It's very important to note that AI is something very positive for RaySearch, and it's definitely not a threat against our products. There has been some belief in the community in general for software companies that AI can create and replace ordinary system development. That's probably true for simpler applications and with thin functionality and not so much data. With our large and complex systems, it's not doable for AI today. AI can only produce smaller snippets of code with high quality. Also, in our field, we need very deep domain knowledge. We also need to consider patient safety as well as cybersecurity and we are liable for that, and we have to take responsibility for the code. AI could never make sure or promise that there is no ML treatment of patients, for example. So we -- as a company, we need to understand the code and make sure that it doesn't harm any patients as we treat millions of cancer patients, and we cannot make a mistake one single time. There are also huge data requirements in our field. We need clinical data, images, plans, contours, et cetera. We need to perform measurements for machine modeling and quality assurance. Then we have the medical device regulations such as FDA where we, as a company, have to promise and document that our system performs according to the requirements and that it is a safe application. And AI doesn't take any responsibility in that regard. And it's also -- we are existing in an ecosystem with many, many partnerships with machine vendors and our installed base of about 1,200 clinics. And in order to develop these platforms that we develop, we need to do that in partnership with all of these stakeholders. So AI for RaySearch is a very useful thing. We have a large machine learning department at RaySearch, where we leverage AI for our products. For example, we have a functionality in RayStation called deep learning segmentation, where we based on images such as CT images and MR images can automatically segment the organs in the patient, as you see in that image to the right. So those are about 200 structures in the patient that has been automatically segmented with deep learning segmentation, and it takes about 1 minute to do that, which would take many hours to do in a manual setting or in a manual manner. And this is used clinically throughout the world and only 2025, 270,000 patients were segmented using this particular module. This leads to significant time savings, and it also increased the segmentation quality, and you can achieve better consistency over different users and over different institutions. The second product that we have in RayStation is deep learning planning. So here, we automate the very time-consuming task of treatment plan generation. 7,000 clinical treatment plans have been generated by our customers so far, but this is increasing rapidly now as more and more customers get their hands on this technology. This increased plan quality and again, consistency and saves a lot of time. It also opens up for multiple treatment plan generation for patients so that we can explore a larger solution space. One good example is a customer in Belgium, Iridium that have now automated almost all of their prostate patient planning using the AI capability in RayStation. So what they have seen is that the deep learning planning models outperform manual planning by a human being, achieving superior quality and consistency. And you can see some of the time savings that they achieve. So on the patient modeling side, they save 44% time and on the plan generation side, they save 47%. We also use AI to help develop our developers write code faster. So AI can then, for example, Microsoft Copilot can help our developers to find bugs, can explain complex code and patterns write tests and also help with documentation. But it's important that developers stay in control. They always review and modify the AI output. The code that's generated by AI is not always -- is not very tidy or beautiful. So we have to -- the developers have to stay on top of that. Okay. And now the final section of the presentation is a quick summary and outlook. So we saw that we had record high net sales despite macro uncertainty and a very heavy currency headwind. In spite of that, we could show solid profitability and also improved cash flow, which is that we are very happy about. There is still a strong demand for RaySearch Solution and increasing demand, I would say, for RaySearch Solutions across all the regions. And we are confident about our EBIT margin target of at least 25% in 2026. So with that, I will open up the Q&A session. And I believe Carolina will manage the questions. Carolina Stromlid: Thank you, Johan. Yes, we will start the Q&A session with live questions. But before we do that, I would like to remind you that you can post written questions in the Q&A chat. So let's start with the first question that comes from Kristofer Liljeberg at DNB Carnegie. Kristofer Liljeberg-Svensson: Yes, sorry. I have quite a number of questions. Maybe I'll start with 3 and then come back. So first... Johan Löf: Kristofer, can I ask you to ask one question at a time? Kristofer Liljeberg-Svensson: Okay. Maybe then I would like to ask about the support revenues, if there are any one-offs here helping that in Q4 or if that's a good starting point for 2026? Nina Gronberg: Yes, that's a question for me then. Yes, we have some one-offs. It is not very much. But I mean, it is a little bit tricky, I think, to talk about one-offs in our support revenue because we always have a little portion of that. We have situations where our customer contracts are -- I mean, there is a delay in timing when they are renewed. And it might be that we -- because of that, have revenue for, I mean, more than 3 months in 1 quarter. So it's a little bit too hard to say, Kristofer, give a straight answer to that. But I would say that you can use this as the base going forward. Johan Löf: Please go ahead, Kristofer. No, no, take one question at a time. That's all. Kristofer Liljeberg-Svensson: Okay. That's helpful. Yes. My second question, the news that you set out a couple of weeks ago about Royal Marsden doing online adaptive on Elekta machine. was this without RayCare? And if so, how are they able to do that? I don't know if that's -- if it's possible to just give a quick answer on that. Johan Löf: Yes. There was on the Versa HD Elekta machine. So far, only RayStation without RayCare, but that means the workflow is somewhat clunky, it takes more time. And -- but it is doable to do it, and that's the important message here. They will implement RayCare going forward and then the workflow will be smoother and quicker. Of course, it's more -- they have also a Radixact machine, so we'll be quicker on that machine given that we have interoperability between RayCare and the Radixact. And it will be also smoother on a TrueBeam, Varian TrueBeam since RayCare is fully integrated. But the point here is that even without this strong integration, you can do it, but it's not as quick. Kristofer Liljeberg-Svensson: Okay. That's helpful. And my third question, if you could comment on the Pinnacle conversion in Q4 and the outlook for that here in 2026. Johan Löf: Yes, we will of course, focus -- this is the last year that Pinnacle is around. So there will be a strong focus during 2026. In -- Q4 was actually surprisingly low. It has been a quite high percentage of license sales in previous quarters. In Q4, it was actually the license revenues from Pinnacle conversion was only 11%. So that shows that we can -- because I think that has been discussed and there's been a lot of questions about whether we are able to convert other clinics than Pinnacle clinics, but that shows you that, that's very possible. Carolina Stromlid: The next question comes from Mattias Vadsten at SEB. Mattias Vadsten: Can you hear me? Johan Löf: Yes, we hear you loud and clear. Mattias Vadsten: Good. I will always take them one by one. So you shared the license share of Pinnacle here in Q4, which was a low number. Could you share that for the full year? And also, that leads me to believe then that the conversion -- the Varian conversion and Elekta conversion must have been very strong to end the year. So just yes, if the momentum has switched gears there and what's driving that? That's the first one. Johan Löf: Yes. Okay. So first, you asked for the full year number, I think it was 23% license revenues from Pinnacle conversion. Yes. It's just that we have been able to convert other types of clinics. For example, this large University of Pennsylvania order in Q4, which was, I believe, SEK 57 million, around that number. Nina Gronberg: Revenues in order. Johan Löf: What was it in SEK 53 million in revenue. Nina Gronberg: A bit above SEK 40 million. Johan Löf: And that was an Eclipse conversion. So that, of course, affected that mix for the Q4. So -- but this will vary from quarter-to-quarter. It's very hard to predict. We will have -- since we have a time-limited opportunity now for Pinnacle conversion, there will be a strong focus for that in 2026. Mattias Vadsten: Good. And then I have a follow-up on Kristofer's question on the online adaptive radiotherapy that you can perform on Elekta, Linacs and TrueBeam with RayStation. But do I still read you correctly that in order for a clinic to seamlessly sort of perform online adaptive, you would still need RayCare in the future? Or how should I interpret that? Johan Löf: That's correct. And to have like a broad clinical use for this RayCare is needed. So you have understood that correctly. Mattias Vadsten: Okay. Good. And do you expect it to be frequently used among those clinics that have RayCare for maybe 2026 and the years to come? Johan Löf: The main drivers for RayCare going forward now that we have a very good combination of equipment with RayStation, RayCare and Varian TrueBeam where you can make extremely effective online adaptive treatments. So we see a lot of -- well, all over the world for this combination. Mattias Vadsten: I will limit myself to one more question. So in terms of the new orders, the University of Pennsylvania, if that was recorded as sales in Q4? And then maybe the same question for Greater Poland Cancer Center as well. That's my last one. Nina Gronberg: Yes, it was a big portion of the order was recorded as sale as Johan also just said. Carolina Stromlid: We have a question from Oscar Bergman at Redeye. Oscar Bergman: Yes. Just wondering if you can give an update on roughly how many Pinnacle centers are left to convert? And also then were there fewer conversions in absolute terms from the clinics in Q4? Or have you sort of lost any market share on conversion? Johan Löf: Okay. We don't know the number of Pinnacle clinics. It's in flux right now. So it's very hard to know the number of remaining Pinnacle clinics. In some countries, there are almost none like in the U.K. and Japan, they have been basically all converted. In Germany, there are quite a few remaining in the United States and China. But it's a couple of hundred. I can't give you more detail, but there's still a big opportunity out there. And no, we have not lost market share in terms of Pinnacle conversion. It's rather that other conversions have been -- because we look at percentages here. So in absolute numbers, we haven't -- we are still very successful in converting Pinnacle clinics to RayStation. Oscar Bergman: Okay. I always asked about RayCare, and I have to ask about it also this time. I just wondering how many new RayCare centers were signed in Q4? And perhaps also if you can elaborate on what remains the largest obstacle for increasing RayCare clinics. Johan Löf: No. There are no real obstacles. We had, I believe, 4 RayCare orders in 2025 in total. Of course, that's not where we want to be. But we see -- we believe that this will ramp up during 2026. And okay, one obstacle is the online adaptive capability, which needs 2 new versions of RayStation and RayCare requires FDA approval, and that takes the time it takes. It's not something we can -- it will be affected to some extent, but it will also in the hands of FDA. But -- so that's needed. But in Europe, the online adaptive treatments on this platform will start during spring. So we see the first. And that's also a good message for the U.S. market because then it's just a matter of time before they can get their hands on this functionality as well. So regarding ramp-up of RayCare, it only takes time, but there is a lot of interest for RayCare now. There are no particular obstacles in place. So we are quite confident that we will see, let's say, over the next 2, 3 years, a good ramp-up of RayCare sales. Oscar Bergman: And I think in the Q3 report, you mentioned that you opened up some modalities for a customer base for a 6-month trial period. Just wondering if we can get an update on how that has progressed so far. Johan Löf: It's still limited to a couple of countries, and it's progressing well. So they are very happy that they can try out new functionality. I think the limiting factor there is the time they have at their disposal. They're running very busy clinics, and it's hard to spend time on just exploring new functionality. But otherwise, it has been very well received in the countries where we have opened up so far. Oscar Bergman: Okay. And just a final question. I know you're not supposed to give your view on the share price, of course. But at these share price levels, why are you focusing on dividends rather than stock repurchases? Johan Löf: Yes, that's a good question. I think buying back shares is an interesting option that we will look into deeper. So we are looking into that for sure. Carolina Stromlid: We will now take a question from [ Ariane Nothermeer ]. Unknown Analyst: Can you hear me? Johan Löf: Yes. Unknown Analyst: I have a question about the order backlog. So we have seen it steadily decrease over the past few years and right now is on the 1.1x for the sales for this year. Why is it decreasing so much? And is this like a problem for revenue growth going forward? Or is there something else going on here? Johan Löf: The main reason why it has shrunk lately is the dollar effect or the currency effect. So no, we don't really see it as a problem. Unknown Analyst: Okay. So you don't think that is limiting growth like over the past few years? Johan Löf: No. Carolina Stromlid: We will now move back to Kristofer Liljeberg at DNB Carnegie. I guess you have a follow-up question. Kristofer Liljeberg-Svensson: Yes, a few more. First, just a clarification. The 11% and 23% you mentioned for Pinnacle conversion part of total license sales or is that for total license sales or license sales to new customers? Nina Gronberg: Out of total license sales. Kristofer Liljeberg-Svensson: Yes. Great. Then a question on the cost and particularly administration costs seem to have remained high here in Q4. Sequentially given that, I guess, third quarter, you should have had the extraordinary cost, much of that in that line or... Nina Gronberg: Sorry, Kristofer, can you please... Kristofer Liljeberg-Svensson: If I look at the administration costs, they remain at a quite high level. They're actually higher in Q4 than in third quarter and second quarter when I guess you had cost for the employee conference? Or was that another cost line? Nina Gronberg: No, it's included in the administration costs. Kristofer Liljeberg-Svensson: Okay. But did you have such costs this quarter as well? Or why does administration costs remain so high? Nina Gronberg: No, we didn't have those costs in this quarter. And yes, it's a good question. I must come back to that one. I haven't looked at it from that perspective. Kristofer Liljeberg-Svensson: Okay. And then maybe, Johan, I don't know if you want to say, you sound pretty positive in the CEO word in the report. So when it comes to the sales outlook for 2026, do you expect this a similar positive trend here or anything that could change that? Johan Löf: No, to achieve the 25% EBIT margin and -- with at least 25% EBIT margin that relies heavily on sales growth. So we are positive in that regard. Carolina Stromlid: Now we have a question from [ Mats Andersson ]. Unknown Analyst: I have a question about Ortega order. In Q3, you said that the first will have income in Q4. So my first question is how much is the income in Q4? And when will the next delivery to next center, don't know? Johan Löf: I didn't hear which -- was it Ortega you were talking about... Unknown Analyst: Yes, Ortega. Johan Löf: No, that will come -- there hasn't been any revenue from that during 2025. But our estimate is that there will be revenues from at least 2 centers during 2026 from the Ortega order that will be delivered and booked as revenue. Carolina Stromlid: Moving on to the next question that comes from Carlos Moreno. Carlos Moreno: In the -- you're obviously very near your kind of previously set medium-term margin targets. And you mentioned in Q3 that you might revise those targets, give new long-term guidance. Do you still expect to do that at some point during 2026? Johan Löf: Yes. During 2026, we will communicate a new, let's say, 3-year margin target and possibly some other financial target. But you can expect that will be communicated. Carlos Moreno: And is that with like the half year or the first quarter or sometime during the year? Johan Löf: I don't know for sure. It involves the Board has to make a decision. So I can say by myself. But that's not a problem. We want to communicate a new, let's say, medium-term target. Carlos Moreno: Sorry, I interrupted you. I apologize. Sorry. Johan Löf: No problem. Go ahead. Carlos Moreno: No, no, that was it. That's good. So we're going to get some new targets sometime during the year. And by the sound of it, we're going to get margin and maybe sales. There's going to be some sort of more than margin medium-term target. Okay. And I just want to add what the -- another person said. I mean, if your shares are just being pushed down because they're in some basket, I appreciate the dividend is fantastic, but it just seems to me you have to be on the other side of AI selling, and it just seems to me a buyback is -- there'll come a point where spending your cash on buying your shares is a very sensible investment, right? And to me, it just seems like an extremely good idea. But anyway, I just wanted to look at that. Johan Löf: I note your comment, and I think you're probably right. Carolina Stromlid: And we have a follow-up question from Ariane Nothermeer. Unknown Analyst: It was answered, sorry. Carolina Stromlid: We have a follow-up question from Mattias Vadsten. Mattias Vadsten: I just thought if you could help disclose some outlook on timing of approvals, release of modes to expand the use of the software products you have to further cancer therapy areas. Johan Löf: Time line for that is -- so if you take liver ablation, for example, that can be used in Europe as of now. There, we are waiting for 510(k) clearance in the U.S. Chemotherapy will be clear sometime during 2027. And surgery will be -- yes, that's even further into the future. So I can't say that. But liver ablation will be first, chemotherapy after that and then surgery is coming after that. Carolina Stromlid: Thank you all for your questions. With that, we will conclude today's presentation. A recording will be available shortly on our investor website. And if you have any additional questions, you are very welcome to reach out to us. We appreciate your participation today, and we look forward to connecting with you again on April 29 when we present our Q1 results. We wish you a pleasant rest of your day. Thank you. Johan Löf: Thank you. Nina Gronberg: Thank you.
Operator: Good day, and welcome to The GEO Group Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Pablo Paez, Executive Vice President, Corporate Relations. Please go ahead. Pablo Paez: Thank you, operator. Good afternoon, everyone, and thank you for joining us for today's discussion of The GEO Group's Fourth Quarter 2025 earnings results. With us today are George Zoley, Executive Chairman of the Board; and Mark Suchinski, Chief Financial Officer. This morning, we will discuss our fourth quarter and full year results as well as our outlook. We will conclude the call with a question-and-answer session. This conference call is also being webcast live on our investor website at investors.geogroup.com. Today, we will discuss non-GAAP basis information. A reconciliation from non-GAAP basis information to GAAP basis results is included in the press release and the supplemental disclosure we issued this morning. Additionally, much of the information we will discuss today, including the answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall within the safe harbor provisions of the securities laws. Our actual results may differ materially from those in the forward-looking statements as a result of various factors contained in our Securities and Exchange Commission filings, including the Form 10-K, 10-Q and 8-K reports. With that, please allow me to turn this call over to our Executive Chairman, George Zoley. George? George Zoley: Thank you, Pablo, and good afternoon to everyone. During the past year, we believe we've made significant progress towards meeting our financial and strategic objectives. Since the beginning of 2025, we've been awarded new or expanded contracts that represent up to approximately $520 million in new incremental annualized revenues that have staggered activation dates and are expected to primarily normalize by the end of this year. This represents the largest amount of new business we have won in a single year in our company's history. We've entered into new contracts to house ISD Panes at 4 facilities totaling approximately 6,000 beds, which include 3 company-owned facilities we announced in the first half of '25, the 1,000-bed Delaney Hall, New Jersey facility, the 1,800-bed North Lake facility in Michigan and the 1,868-bed D. Ray James facility in Georgia. And more recently, the 1,310-bed North Florida detention facility, which is a state-owned facility, where we are providing management services under a joint venture agreement that we announced in early October. The Florida contract arrangement demonstrates GEO's ability to provide management services through alternative solutions like the state of Florida's partnership with the federal government. During the third quarter, we also reactivated our 1,940-bed Adelanto ICE Processing Center in California, which was already under contract, but had been underutilized due to a long-standing COVID-related court case. The activation of these 5 facilities represent the largest start-up activity in our company's history with a combined annualized revenue value of approximately $400 million, and involve the hiring and training of approximately 2,000 new employees. The census across our active ICE facilities has continued to steadily increase from the third quarter at approximately 22,000 to presently approximately 24,000, which is the highest level of ICE populations we've ever had. This past year, we also significantly expanded the delivery of our secured transportation services on behalf of both ICE and the U.S. Marshals Service, valued at approximately $60 million in incremental annualized revenue. The increase in ICE enforcement and removal operations has resulted in an increased need for secured ground and air transportation services. In 2025, we entered into a new or amended contracts to expand secure ground transportation services at 4 existing ICE facilities and at our 3 newly activated ICE facilities. And the support services that we provide under our ICE air transportation subcontract continue to steadily increase throughout this past year. In addition to the secured ground transportation services we have historically provided for the U.S. Marshals, last year, we signed a new 5-year contract with the agency covering 26 federal judicial districts in spanning 14 states. At the state level, we were awarded 2 new management-only contracts in 2025 from the Florida Department of Corrections. The 1,884-bed Graceville facility and the 985-bed Bay facility are scheduled to transition to GEO-management on July 1 of this year and a combined annualized revenues of approximately $100 million. Of particular importance 2025, we also secured a new 2-year contract for the ISAP 5-program following a competitive procurement process. ISAP is the only ICE program currently in place to provide electronic monitoring and case management services for individuals on the 9 detain docket. It's mainly for people, ICE considers a higher flight risk or who have a pending asylum or removal cases but are still allowed to live in the community. The program relies on several forms of monitoring, including GPS ankle bracelets or risk worn devices that provide real-time tracking as well as a phone app which relies on facial recognition, voice ID and GPS to confirm a person's location during predetermined check-ins. The ISAP counts have declined slightly over the last year due to approximately 180,000 presently due to a decline in the use of a phone app called SmartLink, provided by GEO at a very nominal cost. Instead, we've had a steady increase in more intensive and higher-priced monitoring devices such as ankle monitors. The number of ISAP participants on GPS ankle monitors has increased from approximately 17,000 in early 2025 to more than 42,000 ankle monitors today. Correspondingly, the number of ISAP participants on the SmartLink mobile app has declined to less than 135,000 participants today. Currently, with this trend, we've also seen an increase in the number of ISAP participants additionally assigned to case management services, which involves staff interaction and monitoring for approximately 106,000 individuals at this time. If this trend continues, the technology and case management mix shift would increase the revenues and earnings generated under the ISAP contract even if overall volume remains constant. Thus, we continue to be optimistic about the importance and growth potential of the ICE contract. The new 2-year contract includes pricing for 361,000 participants year 1 and 465 participants in year 2. With the capital investment we made in 2025, we believe we have the capability in scaling monitoring devices and case management services to achieve those significantly increased participation levels and far beyond if desired by ICE. But of course, we cannot provide definitive assurance of future ISAP participation levels, which are determined by ICE management. In December of 2025, we were awarded a new 2-year contract by ICE for the provision of skip tracing services valued at up to $60 million in revenues per year. Skip tracing entails enhanced location research primarily with identifiable information and commercial data verification to verify current address information and investigate alternative address information for individuals on the non-data docket. This 2-year contract award follows initial skip tracing pilot contract that we successfully implemented, which generated approximately $10 million in revenues during the fourth quarter of 2025. Looking at our initial guidance for 2026, we believe there are several sources of potential upside, including additional growth in our Secure Services segment, additional volume increases or accelerated mix shift in our ISAP contract, additional growth in our secured transportation segment and the normalization of higher labor expenses at newly activated facilities. It is our understanding that the present ICE detention census is presently approximately 70,000 distributed over 225 separate locations, which are primarily short-term GEO facilities. We believe the federal government is continuing its focus to increase immigration detention capacity and looking for solutions as to how to upscale to 100,000 beds or more and consolidate to fewer larger facilities. As a 40-year partner to ICE, we expect to be part of this solution. We continue to be in active discussions with ICE regarding our remaining available capacity and are currently in discussions for the potential activation of additional facilities. We have approximately 6,000 idle beds at 6 company-owned facilities, which are primarily former U.S. Bureau Prisons facilities and are currently therefore, high security facilities making them ideally suited for the current needs of the federal government. At full capacity, these 6,000 beds would generate more than $300 million in combined incremental annualized revenues. We are obviously aware that ICE is exploring the purchase of several commercial warehouses that would be retrofitted to further increase retention capacity. This procurement process would result in the federal government owning these assets while contracting with private sector companies to retrofit and operate these potential sites. We are cautiously participating in this process and are evaluating select potential sites with the possibility of responding to this procurement opportunity. With respect to the federal government's annual appropriations process, the Department of Homeland Security is currently funded under a short-term continuing resolution that expires tomorrow night. If no additional appropriation bill is passed by Congress before the expiration of the current continuing resolution, there will be a partial government shutdown involving the Department of Homeland Security. It's important to note that this process only affects the annual appropriations ICE receives from Congress, which is approximately $10 billion. It does not impact the funding under the one big beautiful bill, which is available through September 30, 2029. Under that budget reconciliation bill, ICE was allocated approximately $75 billion, including $45 billion for detention. Historically, during government shutdowns, the services rendered under our contracts with ICE have continued uninterrupted as they are considered essential public safety services. However, the timing of payments and collections could be delayed, requiring us to carefully manage our liquidity and working capital needs. With the recent expansion of our revolving credit facility by $100 million, we believe we have substantial liquidity. While the exact timing of government actions, including congressional funding decisions and new contract awards, it's difficult to estimate, we expect the balance of 2026 to be very active. In addition to the opportunities at the federal level, we are pursuing additional opportunities at the state level, specifically in the field of mental health services. In Florida, we are currently participating in a procurement by the Department of Children families for the management contract at the South Florida valuation and Treatment Center, which is a state for psychiatric hospital, which -- at one time, we were the operator. In addition to our efforts to capture new growth, we believe we also have made significant progress towards strengthening our capital structure and enhancing shareholder value. Our efforts to strengthen our balance sheet were enhanced by the successful sale of the Lawton, Oklahoma fiscally for $312 million and the Hector Garza facility in Texas for $10 million. We used approximately $60 million of the Lawton facility sale gain to purchase the 770-bed downtown San Diego, California facility that we have operated for the U.S. Marshals Service for 25 years. In 2025, we also began returning capital to shareholders through a share repurchase program that was initiated in August and expanded to $500 million in November. As of year-end '25, we had repurchased approximately 5 million shares for approximately $91 million, bringing our total share outstanding to approximately $136 million. Given the intrinsic value of our assets, including 50,000 owned beds at 70 facilities, and our expected growth, we continue to believe our stock is significantly undervalued and offers a very attractive investment opportunity. Our stock is trading at a historically low multiple despite the significant growth opportunities we expect going forward. We recognize that this imbalance creates a unique opportunity to enhance value for our shareholders through share repurchases. At this time, I will turn the call over to our CFO, Mark Suchinski, to review our financial highlights and guidance. Mark Suchinski: Thank you, George, and good afternoon, everyone. For the fourth quarter of 2025, we reported net income attributable to GEO operations of approximately $32 million or $0.23 per diluted share on quarterly revenues of approximately $708 million. This compares to net income attributable to GEO operations of approximately $15.5 million or $0.11 per diluted share in the fourth quarter of 2024 on revenues of approximately $608 million. Excluding extraordinary items, we reported adjusted net income of approximately $35 million or $0.25 per diluted share for the fourth quarter of 2025 compared to approximately $18 million or $0.13 per diluted share for the prior year's fourth quarter. Adjusted EBITDA for the fourth quarter of 2025 was approximately $126 million, up from approximately $108 million reported for the prior year's fourth quarter. Looking at revenue trends. Our owned and leased secure service revenues increased by approximately $70 million or 23% in the fourth quarter of 2025 compared to the prior year's fourth quarter. This increase was primarily driven by the activation of our 3 company-owned facilities under new contracts with ICE, which was offset by revenue loss from the sale of the Lawton, Oklahoma facility and the population of the Lea County, New Mexico facility. Quarterly revenues for our managed-only contracts increased by approximately $26 million or 17% from the prior year's fourth quarter. This increase was primarily driven by the joint venture agreement for the management of the North Florida detention facility as well as certain transportation revenue increases that are reported in this segment. Quarterly revenues for our reentry services increased by approximately 3%, while quarterly revenues for our nonresidential services was largely unchanged compared to the prior year's fourth quarter. Finally, quarterly revenues for our electronic monitoring and supervision services increased by approximately 3% from the prior year's fourth quarter. Fourth quarter 2025 results for our electronic monitoring and supervision services reflect the reduced pricing for our ISAP 5 contract which was offset by favorable technology and case management mix shift and the skip tracing pilot contract that was implemented during the quarter. Additionally, our fourth quarter 2025 results for our electronic monitoring and supervision services was impacted by $1.6 million in employee severance costs as part of our efficiency initiative, which will lead to labor cost improvements in '26 of approximately $2 million to $3 million per quarter. Turning to our expenses. During the fourth quarter of 2025, our operating expenses increased by approximately 18.5% as a result of activation of our new ICE facility contracts and increased occupancy compared to the prior year's fourth quarter. Our general and administrative expenses for the fourth quarter of 2025 declined to 8.4% of revenue as compared to 10% of revenue in the prior year's fourth quarter. Our fourth quarter 2025 results reflect a year-over-year decrease in net interest expense of approximately $6 million as a result of our reduction in our net debt. Our effective tax rate for the fourth quarter of 2025 was approximately 35%. For the full year 2025, we reported net income attributable to GEO operations of approximately $254 million or $1.82 per diluted share on annual revenues of approximately $2.63 billion. This compares to net income attributable to GEO operations of approximately $32 million or $0.22 per diluted share on annual revenues of $2.42 billion for the full year 2024. In 2025, we completed the sale of our Lawton, Oklahoma facility for $312 million and the Hector Garza Texas facility for $10 million. These 2 transactions result in a $232 million pretax gain on asset sales during the third quarter. Additionally, during '25, we incurred a noncash contingent litigation reserve of approximately $38 million, which we disclosed last quarter. Excluding the noncash contingent litigation reserve, the gain on asset sales and extraordinary items, adjusted net income for the full year of 2025 was approximately $120 million or $0.86 per diluted share compared to approximately $101 million or $0.75 per diluted share for the full year 2024. Full year 2025 adjusted EBITDA was approximately $464 million, largely in line with the approximate $463 million reported for the full year 2024. Moving to our outlook. We have issued our initial financial guidance for the full year and first quarter of 2026. We expect full year 2026 GAAP net income to be in the range of $0.99 to $1.07 per diluted share on annual revenues of $2.9 billion to $3.1 billion and based on an effective tax rate of approximately 28%, inclusive of no discrete items. We expect full year 2026 adjusted EBITDA to be in the range of $490 million to $510 million. We expect capital -- total capital expenditures for the full year of 2026 to be between $120 million and $155 million. Our 2026 guidance includes an assumption for some modest organic growth in the second half of the year as well as the corresponding impact of start-up expenses. While the assumptions we have included in our 2026 guidance result in a temporary compression in our margins due to the impact of start-up expenses and the gradual nature of contract activations, we would expect our margins to normalize as growth begins to layer in, resulting in higher adjusted EBITDA run rate as we exit the year. For the first quarter of 2026, we expect GAAP net income to be in the range of $0.17 to $0.19 per diluted share on quarterly revenues of $680 million to $690 million. We expect first quarter 2026 adjusted EBITDA to be between $107 million and $112 million. Compared to the fourth quarter of 2025 results, our first quarter 2026 guidance reflects higher payroll tax expenses, which are front-loaded in the beginning of every year, 2 fewer days during the period and no revenue or earnings assumptions for the skip tracing contract as we transition from the pilot contract that was implemented in the fourth quarter to the new 2-year contract. As a result of these factors, along with the assumptions we have made in our guidance related to start-up expenses, our first quarter 2026 guidance reflects a decline from our fourth quarter '25 results. However, we would expect subsequent quarters in 2026 to reflect more normalized results. Moving to our balance sheet. We closed 2025 with approximately $70 million in cash on hand and approximately $1.65 billion in total debt. During the fourth quarter of 2025, we experienced a temporary increase in accounts receivable in part as a result of the federal government shutdown in October and November, which resulted in a temporary increase in our outstanding debt borrowings. In recent weeks, we have been able to significantly improve our accounts receivable position, further improving our liquidity, resulting in improvement in our current net debt balance to approximately $1.5 billion. With the recent expansion of our revolving credit facility by $100 million, which we announced last month, we believe we have adequate liquidity to support our diverse capital needs. Additionally, with the prospect of a potential partial government shutdown in the future, we believe we have strong support from our lenders and creditors to address our liquidity should it be necessary. The significant achievements in 2025 have allowed us to make good progress towards strengthening our balance sheet as we enter 2026. As a result of these efforts, we achieved an annual reduction in interest expense of approximately $30 million in 2025 compared to the prior year. We also believe we've made great progress towards enhancing long-term value for our shareholders through our share repurchase program, which we only initiated in August and was later increased to $500 million in November. As of year-end 2025, we had repurchased approximately 5 million shares for approximately $91 million leaving approximately $409 million available under our current stock buyback authorization. We recognize the unique opportunity to enhance value for our shareholders through our share repurchases given the current valuations of our stock, which reflects a historical low multiple despite the growth we have already captured and the significant growth opportunities we expect going forward. We believe that our strong cash flows will allow us to support all of our capital allocation priorities. At this time, I will turn the call back to George for some closing comments. George Zoley: Thank you, Mark. In closing, we are pleased with our strong fourth quarter results and the significant progress we've made in '25 towards meeting our financial and strategic objectives. Over the past year, we've captured new growth opportunities that we could generate up to $520 million in annualized revenues, making it the most successful period for new business wins in our company's history. We expect '26 to be as active as '25, and we believe we have upside potential across our diversified business segments. We have approximately 6,000 idle high-security beds that remain available and could generate in excess of $300 million in annualized revenues at full capacity. The continued shift in technology and case management mix and potential increases in accounts under our ISAP 5 contract could also provide upside throughout 2026. . We're also well positioned to continue to expand our delivery of secured ground and air transportation services for ICE and the U.S. Marshals Service. While the exact timing of government actions that including new contract awards is difficult to estimate, we remain focused on pursuing new growth opportunities and allocating capital to enhance long-term value for our shareholders. Finally, as we announced this morning, our CEO, Dave Donahue, has informed GEO of his decision to retire at the end of February. I'd like to thank Dave for his more than 11 years of service to GEO and wish him well in his retirement. I will be returning to my previous position of Chairman and CEO under an amended employment agreement effective through April 2, 2029. I look forward to working with our management team and our Board of Directors and leading our company through what we expect to be a very active period with significant growth opportunities that lie ahead. That completes our remarks, and we would be glad to take some questions. Operator: [Operator Instructions] The first question today comes from Joe Gomes with NOBLE Capital. Joseph Gomes: George, I know in the past, you've said that if ICE wanted to get to that 100,000-bed level it all couldn't come from the existing private that there would have to be alternatives out there. And with these warehouses I guess kind of the question is, I know you've talked about something that you are exploring, participating in. But do you see ICE's focus on this? Is that somewhat potentially behind the, I'll say, delay in awarding new contracts for currently idle facilities as they kind of taken their the focus off of that and moved it over there to the warehouses? George Zoley: Well, I think they're on a dual track to do both. But the warehouse initiative is large scale and its coast-to-coast and it's very complicated to find locations in areas that are suitable to their needs and would meet with the less political resistance. You got red states versus blue states issues go to solve through. But you're right. The private sector available bed capacity at this time, will not get them to the 100,000. I estimate they need to do at least 20,000 if they want to get to 100,000, and they may very well want to go beyond 100,000 and do 20,000, 30,000, 40,000 new beds. So we're looking at it. And we've been a long-term 4-decade partner with ICE. We want to be supportive in playing a role in this new initiative and hopefully see our idle facilities be utilized because, as I've said, most of our idle beds are prior BOP facilities, which are high-security facilities, which I think are very well suitable to their needs. Joseph Gomes: And on ISAP, yes, the populations have been slightly declining here over the past year about 180,000 as you mentioned. And then the new contract they talk about up to funding for, I think, up to like 360,000 in year 1 and 460-some-thousand in year 2. In the past, you did hit that 370,000 type of level. If ICE came to you and said, "Hey, in 2026, we want to start really increasing the number of people under ISAP to that -- get up to that 360,000 level." Are you set up that you could move quickly and get up to those levels? George Zoley: Absolutely. We've made the investments on all of our devices from ankle monitors to wrist-worn devices to the phone apps that we can reach. The levels you described that were included in the procurement as well as go beyond those levels. Joseph Gomes: Okay. Perfect. And then one last one for me. Looking at the stock price, and it's something that there's a lot of discussion about, but you hit a new 52-week low today, and you guys have done a great job on the buyback. But given where the stock is, is it possible or something that consider or maybe even be getting more aggressive on the buyback at these levels? George Zoley: Joe, as you said, I think we've done a great job. We launched our stock purchase program in August -- late August, and we were able to buy back over 5 million shares in a short period of time. And so our focus is to lean in hard when there are opportunities, as you just mentioned. And I think we've been very diligent about making sure that we manage our liquidity and take advantage of the stock buyback program when we can. And so we're going to lean into it hard. We're looking at it, and we'll continue to do that. But we're -- as I said, we've done a good job, and we'll continue to look at buying back stock and creating some value for our shareholders. But I think that's what we can say at this point. Operator: The next question comes from Matthew Erdner with JonesTrading. Matthew Erdner: I'd like to kind of touch on the monitoring as well. You mentioned the investments that you guys have made there kind of on the forefront. But I see the margin kind of coming down to around 42.5 from a little under 50, quarter-over-quarter. And I apologize if I missed it earlier, but is there a reason as to why the margin is compressing? Or is that just the mix shift change? George Zoley: It's primarily the mix shift change that is related to the reduction in the phone apps, which we have had in the past, and those have reduced what is increasing significantly are the ankle monitors. There's a desire to have a higher level of security for these individuals and as well as increased case management services. So the top-level numbers kind of obscure what's happening below those numbers. There's a mix change that's occurring that goes beyond the top-level numbers because the 100-and-some thousand people that get the case management services is really on top of the 180,000 participants. It's just another billing mechanism within the 180,000. So it's -- I don't know that the 180,000 is an accurate metric to be using any more when we have different -- they call them clans, and these are billing mechanisms of which there are 40 within that program, and they're kind of all emanated into that 180,000, but it's -- that's the top level number. But below that number, there's 40 different pricings that support the services that are rendered to the 180,000 participants. Matthew Erdner: Got it. And then I guess on a go-forward basis, I guess, assuming that say there's the 360,000 in year 1. I guess, what would the margin be if say that 360,000 was all on ankle monitors versus it's kind of a half split between SmartLink and ankle monitor? George Zoley: Well, the ankle monitors, I believe, is our most expensive monitor devices, so the margins would substantially increase because of that. And we are -- I think we are the largest providers of ankle monitors in the world. We make all of our devices in Boulder, Colorado, and we are -- we have properly resourced that company, which is called BI to scale up to whatever level services ICE wants, whether it's a few more hundred thousand or beyond that. We're ready to go. Matthew Erdner: Got it. Yes, that makes sense. And then last one for me and then I'll step out. In the guidance, it has about 134 million to 136 million for end of your share count. If you guys repurchased the same amount that you did in the fourth quarter, you'd already be at the low range of that target. Should we expect you guys to be a little more aggressive there? Or how are you thinking about capital allocation throughout the year? George Zoley: Again, we're going to -- we've talked about it in the past, we're going to look at the capital allocation process. We're very diligent about allocating capital to our growth needs. -- addressing paydown of debt and returning capital back to shareholders. And as you indicated, when the stock price goes low, there's opportunity for us to jump in the market and be more aggressive. And I think if you look at the last 5 months, we've done a pretty good job with that. Operator: The next question comes from Greg Gibas with Northland Securities. Gregory Gibas: First, with the midpoint of guidance set below your Q4 EBITDA run rate. It seems conservative when considering uplift in '26 from a number of items like ISAP cost savings that I think you previously said are $8 million to $12 million Adelanto cost normalization, ongoing mix shift in ISAP tech. And then those incremental Florida contracts. Is that fair? Or is there some offset to take into account there? Mark Suchinski: Greg, I wouldn't say there's nothing that we're aware of in the business that would create a big offset to that. I think we're starting out here. I think we're prudent as it relates to the guidance that we've provided here. The skip tracing contract that we talked that we won that's coming off a protest. So we don't think it will contribute much here in the first quarter. But we're starting the year. We're executing well. We've factored in some modest growth, particularly as it relates to ISAP, as George talked about, the mix shift, the GPS and higher case management services. We're looking at continued expansion and growth around our Marshalls transportation contract in ICE Air. We're going to factor -- we factor in some skip tracing later in the year. So it's earlier in the year. I think we've done a good job of balancing the risks and opportunities that we've looked at our forecast. And as you indicated, we know what our run rate was in the fourth quarter. But we think at this point in time, it's a well-balanced approach to guidance. And as the quarters unfold, and we continue to pursue these growth opportunities, we'll have opportunities to update that our guidance. Gregory Gibas: Great. And I wanted to touch on your commentary around participating in the process. I think you said on the potential warehouse managed-only opportunities. Wondering if you could maybe add any color there and kind of what phase those negotiations or bidding that process is in? George Zoley: Well, we have a relationship with the prime contractor that's listed as eligible to participate in that procurement. And we're looking at the some sites, predominantly in the Sun Belt states, predominantly in red states to be very frank about it. So we want to be careful as to where we extend our financial and operational commitments. Operator: The next question comes from Raj Sharma with Texas Capital Bank. Raj Sharma: Good quarter. Congratulations. I had a question on the guidance. Again, just trying to understand that fiscal '26 does seem that the guidance seems to have been sort of taken down from just about a quarter ago, even if the facilities get activated at pace and even outside of new activations, plus the ISAP dynamics in the ankle monitors. It seems like the numbers are conservative. And are you incorporating? And what sort of start-up expenses are you incorporating? Can you give more color on that? And I know you've talked about this earlier. We just wanted to understand if you're being more conservative than not. Mark Suchinski: Well, again, I think I tried to talk a little bit about the guidance with Greg's question a few moments ago. But the truth is, we're -- we still are incurring some level of start-up expenses on the activation of our idle facilities, particularly on the West Coast. So that's creating a little bit of headwind as we move into the year here. But as I said earlier, we expect the back half of the year to really normalize, and we expect to see some expansion of our margins as we get into the back half of the year. So I would say this, there's nothing inherently going on from a business standpoint. Fourth quarter was helped a little bit by the skip tracing contract, and we talked about the fact that we haven't built that into our first quarter forecast. So as I said earlier, I think it's a balance and prudent approach, and we'll look to update things as the business progresses over the coming quarters. Raj Sharma: Got it. Got it. And just the second, my next question is also you would kind of talked about this. So there were no new activations in Q4, was that sort of government shutdown or year-end related? And also, there's been a lot of talk of warehouses and given -- can you help us understand a little bit, given your favorable history with ICE and the low to reasonable sort of cost for detention bed shouldn't all your idle facilities be reactivated soon for ICE to meet their retention goals? George Zoley: Well, you're correct that there have been no new awards, but we are in active discussions with ICE about all of our facilities. They are aware of where the facilities are. They're assessing their facilities to their needs. So fourth quarter did have the shutdown and did have the conceptualization, let's say, of this new warehouse initiative. And all that takes time and the government, I guess, slowed down is a fair way of saying that in the fourth quarter, and may be a bit delayed if there's another shutdown. You can't say what exactly it's going to happen. But we do expect more activations in '26 and more activity that will drive our financial results. Raj Sharma: Right. I just wanted to kind of understand that, given the stock price reaction and trying to make sense of what the concerns are. And -- so I wanted to understand that even outside of this talk of warehouses, it's fairly certain that the pace of reactivations should continue given where ICE goals stand -- right, and so you're saying, yes. George Zoley: Yes. We're in discussions. We're hopeful of awards. So -- and these are high-security facilities, of which I believe, are more desirable by ICE compared to lower security facilities. And -- so as that plays out, we think there will be more awards sometime this year. Operator: The next question comes from Brendan McCarthy with Sidoti & Co. Brendan Michael McCarthy: I wanted to ask a follow-up on the facility reactivation side. I know in recent quarters, we had discussed certain headwinds around the fall government shutdown, maybe ICE staffing challenges and then the DHS policy around contract approvals. Do you still sense that those headwinds are in force today? Or what's your kind of sense around how that's impacting the contract or facility reactivations? George Zoley: Well, I think it's similar to what I just discussed. I think there was a slowdown because of the government shutdown, the time spent on conceptualizing this warehouse program. But we -- as I said, we are active discussions with ICE about our available facilities and they're high security, they're high quality, and they're -- I think, comparatively speaking, there very high quality compared to any other facilities in the country actually because they were formerly Bureau of Prisons facilities, Several of them are mostly cellular type facilities, not dormitories and I think they're well suited for ICE needs. And we just continue to have discussions with ICE about those things. And not only just the facilities, but what physical plant changes they want to those facilities, all of which takes time and it has to be evaluated by different sections of the department. You have the security section of the department. You have the health services section of the department. You have transportation. Putting -- standing up a new facility is a very complicated process. And particularly now as the objectives advice has expanded. They've hired another 10,000 staff. Those staff have to go somewhere. And in part, they will be going at to these facilities around the country. There's been a request to add more space at, I think, at most of our facilities actually. So that is part of the discussion, providing office space, courtroom space, transportation space, expanded health care space, all those things take time to be worked out and that we hope will eventually lead to more awards. Brendan Michael McCarthy: Understood there. I appreciate the detail. And I wanted to ask a question on the skip tracing contract. I think you mentioned that contract is included in guidance likely to have an impact in the back half of 2026. Just curious as to what kind of case volume assumptions you make with that contract? And maybe if you could provide detail on the margin profile there. Mark Suchinski: Brendan, we're not going to get into margins. We don't go to that level of specificity on these types of calls here. So we won't talk about that. And as George indicated, it's -- the award was a 2-year award for $121 million, approximately $60 million per year. We talked about the fact that the protest just was removed. We don't anticipate any activity on that here in the first quarter. We expect there to start to ramp up in the second quarter, but we expect it mainly to occur in the back half of the year. And so as that -- it's a new program for us. It's one that we don't have a lot of history with from a projection standpoint. So we're working closely with our with our client on that to understand their needs and help support them. So again, we've factored in some modest assumptions as it relates to this -- and then as we start to execute with our client, I think we'll be able to provide more specifics on that in the coming quarters. Brendan Michael McCarthy: Got it. And lastly, on capital allocation. I know that you mentioned net debt has stepped down to about $1.5 billion in recent weeks. What's your sense for how much debt you may look to pay down in 2026 just regarding your priorities. George Zoley: Yes. Again, we're going to focus on continuing to pay down debt. The goal here in 2026 is to get our net debt below 3x levered, right? And so we believe as we move through the course of the year, we'll be able to achieve that goal. Operator: The next question comes from Kirk Ludtke with Imperial Capital. Kirk Ludtke: you mentioned that ICE was looking to consolidate those 225 facilities, mostly short-term jail facilities. There's a lot of people in those -- as you know, a lot of people in those facilities. I'm just curious, what's the motivation there? Is it cost? Is it that those facilities don't do a good job? Or what -- is there any background you can share? Mark Suchinski: Well, the complexity of overseeing 225 facilities is enormous. I think just a human preference would be to have fewer facilities but they need some level of access because interior ICE enforcements occur throughout the country, and they need to have a relationship with county jails throughout the country. And that's what most of those things are. So they have a few beds here and a few beds there. But those people are in a short-term detention confinement. And most of them will eventually go to an ICE processing center for evaluation of their cases and most of them will be then deported outside the country, but they have to go through a process, which typically does not occur at the county jail level. They need to go to a formal ICE processing facilities. And of course, in the federal government prefer to enjoy economies of scale of having larger facilities rather than smaller facilities, which would be a force multiplier in the ability to process and detain and deport approximately 100,000 people per month. Kirk Ludtke: Yes. No, that all makes sense. I'm sure you would prefer to utilize your own beds first before you facilitated additional government-owned capacity. But the contracts to just operate the facilities, those are pretty attractive contracts, aren't they? I mean in terms of ROI, that's operating those facilities could be a pretty good business, right? George Zoley: Are you speaking of our facilities or the warehouses? Kirk Ludtke: The warehouses, just managing facilities? George Zoley: I think it's a reasonable opportunity that we're assessing. We've only had one experience in renovating a warehouse. And that occurred maybe 30 years ago. So it's more complicated than you may think. As far as the physical plant, renovations of a warehouse to get it operational, it's complicated. And then the operational implications of how you manage such a facility, particularly a large-scale facility is going to be concerning because our prior experience was only on -- I think it was a like 200-bed facility. What is being discussed are 500-bed facilities, 1,500-bed facilities and facilities of several thousands of beds, 7,000, 8,000 or 9,000 beds per facility, which is an enormous capacity and it has to be carefully evaluated as to how you would do that. Because those are larger numbers than any in existence. Now I think the largest facility is probably 2,500 beds, not more than 3,000 beds in the country. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to George Zoley for any closing remarks. George Zoley: Well, thank you for participating in today's call, and we look forward to addressing you on the next one. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Unknown Executive: Good afternoon, and welcome to Outokumpu's Fourth Quarter Results Webcast. I'm Johan, responsible for Investor Relations. We will begin with the presentation from our CEO, Kati ter Horst; and our CFO, Marc-Simon Schaar. After the presentation, you are welcome to ask questions over the line. With that, I'm pleased to hand over to you, Kati. Kati Horst: Thank you very much, Johan, and also very, very welcome from my side. We are here today in the studio in a very snowy beautiful Helsinki. So let's go then directly to the business and talk about the fourth quarter and also some comments, key comments on the full year. So if we look at the whole year as such, I think the comment there is that the stainless steel market did remain weak and was very much pressured by the uncertainty we saw in the markets and also the especially low-priced Asian imports coming to Europe. So our full year adjusted EBITDA then decreased to EUR 167 million, and the profitability improved very clearly in BA Americas and in Ferrochrome, but then they declined in business area Europe, if you compare year-on-year from 2024. Then the Q4 '25 profitability was impacted both by market weakness, but also the temporary challenges we've been having with the supply chain planning solution in the ERP rollout in business area Europe. We do expect more favorable market dynamics going forward, and I'll come back to that in a little while. Also I would like to remind you that we are advancing our EVOLVE growth strategy by investing in the pilot plant in the U.S., to develop this proprietary technology we've been talking about, which is aimed at producing low CO2 metals and first focus being on ferrochrome and high chromium content metal. CBAM and tariffs are now the 2 elements that we see changing the import picture both in North America and Europe. So on the left side, you see Europe. The Q4 figures include October and November. And you can see that the imports have come down. Same has happened in North America because of the tariffs. And this is something, especially now in Europe, that we do expect to continue this quarter. I wanted to give also a bit of a sense from the Q4 of the sentiment in different customer segments. So you basically see here our key customer segments and the colors are giving a bit of the sentiment. And you can see that the sentiment has been quite subdued. So either no change or even a little bit slightly negative on the automotive and heavy industry side. But now that we come to the beginning of '26, I think it is changing a little bit. So first, I would like to comment on Europe that we clearly see that CBAM and the expectation of the coming safeguards are supporting demand for European suppliers. It's not necessarily helping to increase the end customer use demand. And there, we don't see really clear signs of recovery yet. But demand for European producers, we do see supported by the policy instruments. Then on the Americas side, I would say that we now see some first signs on a market recovery or economic recovery, however you want to call it. And that was also reflected a bit in the clearly better PMI index that was published in January. It basically jumping to 52.6 points. And I think that is also what we see in our order books and the sentiment that we see being somewhat more positive than before in the Americas. There's one customer case here I wanted to share with you because it is basically an example of one of the product developments in Outokumpu that highlights how our innovative material development. In this case, the Lean Duplex Forta provides a solution for very challenging customer needs in the real life, and it also helps to support the energy transformation and sustainable products and minerals and metals. So the customer here is Metso, very much in the space of mining and minerals and metals. Then moving forward, commenting then a bit on the Q4 result more. So we have clearly here a situation where Europe was weak also for the whole year and where BA Americas and Ferrochrome had a very solid performance. The European weak financial performance very much based on the market weakness and the sustained pressure from the imports. And then as I said earlier, also in the Q4, some temporary challenges that we've been having with our supply chain solution in this ERP implementation. We have had significant improvement profitability in BA Americas. That has been driven very much by the higher volumes and lower cost. And then really in BA Ferrochrome, we've actually seen a third consecutive year of improvement. And we also do see the robust demand continuing for our low emission European Ferrochrome. And then maybe on the own measures, I could comment that we had the target to have EUR 60 million savings in short-term cost-saving measures. So we have reached EUR 63 million by the end of the year. We have also reached the targeted level of EUR 350 million on this 3-year run rate program that we've been running by the end of '25. And therefore, also that program is now closed. Then moving to sustainability and commenting on some of the key items there. So our solid sustainability performance continued in Q4. We were also present in the COP30 and had some really good interactions with some of our customers, but also different politicians, talking about energy, talking about carbon capture, and other important topics. On safety, we are on a world-class level in the process industry. We had a challenging Q3. And I was very happy to see that now in Q4, we are really back on track in our safety performance with a total recordable incident frequency rate of 1.4. If we then look at the recycled material content, actually, all the quarters in 2025 we were at the record high level of 97% of recycled material content. And of course, together with the actions we've taken in energy efficiency and optimizing our processes, this has really delivered continued emission reductions for Outokumpu. And this becomes a more important topic going forward. So the low EU ETS emission intensity that we have, coupled with the free allowances that we have going forward, is really supporting our competitiveness, and I come a bit back to that a little bit later. Our sustainability leadership was also recognized externally. Earlier in the year, in '25, we got again the EcoVadis Platinum. And then towards the end of the year, the CDP's A rating for the climate was received. Then a couple of words about how CBAM and the phaseout of the free allowances under the EU ETS are expected to impact our business. So when you look at the left side, CBAM basically impacts the top line, while then the discussion of the free allowances is a cost question to the industry and for the players. So both in stainless steel and in CBAM or both in stainless steel and ferrochrome, so the key importers to Europe have carbon intensity default values that are clearly higher than the European benchmark. And this is clearly expected then to shift demand more towards the European suppliers. So you can see here in the left and in the middle the black bar presenting the imports and then the green bar representing the European reference values. Further then, I would like to point out that Outokumpu has been one of the early movers in smart decarbonization, and that has now resulted in a very competitive position under the EU ETS. So we basically have available free allowances covering our needs until 2030. I have here then another example on how we can reduce carbon emissions through partnerships that actually create win-win business concepts in the ecosystem. So this is a partnership that we have announced as an MAU with Norsk e-Fuel where basically the concept is that the side stream of our ferrochrome production, the CO gas, we can deliver that to Norsk e-Fuel for the production of sustainable aviation fuel. The beef here for us is that we are really -- by selling the CO gas, we are really reducing quite substantially our emissions. And for them, it's a very cost-effective and good raw material for producing sustainable aviation fuel. So here, let's see how this continues going forward, but these are continuously the type of opportunities we are looking in partnerships. And then now I think I would like to hand over to Marc-Simon to talk more details about our financial position and the results. Marc-Simon Schaar: Thank you, Kati. Good morning, good afternoon, everyone, and thank you for joining us today. Despite the challenging market environment, our solid financial foundation positions us well for future growth. Let's take a closer look at our financials at the end of the year. During the fourth quarter, our strong liquidity increased to EUR 1.2 billion. With positive free cash flow and the dividend payment in October, our net debt increased slightly -- only slightly during the quarter. At the same time, we secured a new unsecured EUR 800 million sustainably linked RCF with a 4-year maturity and an option to extend until 2032. The new facility replaced 2 previous RCFs of the same amount, but with improved and more flexible terms. This once again demonstrates the strong and continued support from our lending partners. Now let's take a look at our fourth quarter profitability. Our fourth quarter group profitability of EUR 10 million was mainly impacted by lower deliveries and a lower pricing level in Europe. The decrease in stainless steel deliveries to 365,000 tonnes was driven by continued market weakness and challenges related to the new supply chain planning solution, as mentioned earlier. These negative impacts were partly offset by improved cost performance and higher electrification aid. Let's now take a closer look at the performance of our business areas in the fourth quarter, starting with business area Europe. Overall, the market conditions in Europe remained weak during the quarter. This was evident in manufacturing activity as the euro area PMI remained below 50 much for the second half of the year, indicating continued contraction in the sector. Against this backdrop, volumes were lower during the quarter. This reflected both the ongoing market weakness and a temporary impact from the implementation of the ERP rollout, which we expect to normalize going forward. The weaker pricing environment also weighed on spreads, namely our price net of raw material costs. And this impact was partly offset by improved cost performance, supported by higher fixed cost absorption as production activity increased. In response to the prolonged market weakness, we continued to take decisive restructuring actions to safeguard our cost competitiveness. These actions form part of the EUR 100 million restructuring program announced in connection of our Q2 2025 results, which runs through the end of 2027. As part of this program, we expect to realize cost savings of EUR 50 million this year with a primary focus on business area Europe and group functions. Looking ahead, we also expect demand for domestic producers in Europe to be supported by the introduction of CBAM from the beginning of this year. With that, let me now turn to business area Americas. Despite seasonally lower deliveries, business area Americas delivered another strong performance in the fourth quarter. Improved product mix and lower variable costs more than offset higher fixed costs related to the annual maintenance shutdown in the U.S. as well as lower gains from timing and hedging effects and the usual seasonal decline in deliveries in the Americas market. During the quarter, demand in the U.S. continued to shift from imports towards domestic producers following the tariffs imposed by the U.S. administration in July last year. However, underlying end-user demand remained weak. Similar to Europe, manufacturing activity was contracting with PMI levels below 50 throughout the quarter. On a more positive note, we have recently seen early signs of improving market activity in the U.S. In addition, the Mexican government implemented tariffs on Asian imports, supporting domestic producers such as ourselves in Mexico. Looking ahead, our focus in business area Americas remains on strengthening operational excellence to fully unlock the potential of our asset base while advancing our commercial strategy through an expanded product portfolio and a more differentiated go-to-market approach. With that, let's have a look to business area ferrochrome. We are very pleased that the strong financial and operational performance in business area ferrochrome continued during the quarter. Against the backdrop of ongoing supply constraints in Southern Africa and continued geopolitical tensions, demand for our low-emission European ferrochrome offering remained strong throughout the quarter. While total deliveries declined due to lower internal demand, external deliveries increased, underlying our strong market position. With the introduction of CBAM from the beginning of this year, we expect this positive trend in external demand to continue. Profitability in the fourth quarter benefited from higher prices, lower variable costs supported by the electrification aid and improved fixed cost absorption driven by higher production levels. Looking ahead, despite the termination of electrification aid and the increase in mining tax in Finland from the beginning of this year, we see our ferrochrome business as very well positioned for the future. Our strong strategic setup, the continued expansion of our product portfolio into higher-margin ferrochrome as part of our EVOLVE strategy, and improving mining efficiency through the expansion of the sub-level caving concept will support further value creation in the business. Examples of our product portfolio expansion include our move into medium and high-carbon ferrochrome as well as low titanium products during 2025 already. In addition, recent underground drilling confirms that our mineral reserves and resources provide sufficient ore availability well into the 2050s, offering long-term visibility without the need for any major additional investments. With that, let me turn to some final remarks on the group's overall financial position. Despite the low profitability in the fourth quarter, our free cash flow improved significantly compared to the third quarter, driven by a strong release in working capital. Our ability to release additional working capital was limited by temporary challenges related to the implementation of the ERP system. As a result of the dividend payment of EUR 61 million during the fourth quarter, net debt increased slightly to EUR 265 million. Given the current market environment, our primary financial focus remains on maintaining strong capital discipline with a particular emphasis on working capital efficiency. Now with that, I will hand it back over to you, Kati. Kati Horst: Thank you, Marc-Simon. So going forward, based on our EVOLVE growth strategy, our focus is clearly on cost competitiveness in our foundational sustainable stainless steel business, while we are then targeting transformative growth in Advanced Materials and low-carbon metals through the technology development. And on the next slide, just as a reminder, as communicated last summer during our Capital Markets Day, here you see the pillars of our EVOLVE growth strategy. So it's maximizing the value from sustainable stainless steel, both in Europe, Americas, growing profitably in Advanced Materials and alloys, then working on technology to create innovative materials and low carbon, of low CO2 metals. And this is exactly the USD 45 million investments we've done on the pilot line in the U.S., which is proceeding well. And then, of course, we continue to focus on total shareholder returns as well and keeping our balance sheet healthy at the same time that we want to keep the possibilities open to invest in growth. Then we would be moving here now to the dividend proposal from the Board of Directors. And the proposal is EUR 0.13 per share for the year 2025 and to be paid in 2 installments. And I think it's important to mention this is very much according to our dividend policy where we also say that we need to look at the company's financial performance in the cyclical market conditions while we maintain the financial flexibility to invest in transformative growth. You see here our dividend per share and earnings per share. And then if you look at over the 5 years and you include this proposal of EUR 0.13, we have actually paid over the 5 last years, about EUR 0.5 billion of dividends to our shareholders. Then we move to the outlook for the first quarter of 2026. And in the first quarter of 2026, the adjusted EBITDA improvement is expected to benefit mainly from the recovering stainless steel deliveries, the volumes, which are forecast to be 20% to 30% higher compared to the fourth quarter in 2025. And the change in deliveries mainly reflects the normal seasonality that we have in the market, but also the exceptionally low level of business in business area Europe in the comparative period, so fourth quarter, which was then impacted also by the challenges related to the supply chain planning tool in the ERP rollout during the fourth quarter. And then with the current raw material prices, some raw material related inventory and metal derivative gains are forecast to be realized in the first quarter. And then our outlook for Q4 2026. So our adjusted EBITDA is -- in the first quarter of '26 is expected to be higher compared to the fourth quarter of 2025. Then I would like to summarize a bit with this slide, some of the key messages from today. And I would start by saying that we do expect more favorable market dynamics going forward in 2026. So in Europe, this culminates very much currently to CBAM and the proposed safeguards as they are supporting demand for low emission stainless steel and ferrochrome, supporting European suppliers. In the Americas, we see a positive outcome of the -- potential positive outcome of USMCA negotiation would really support our business in Mexico and also create more capacity for us eventually to sell in the U.S. And like I said earlier, we see also first signs of economic and end-user demand recovery in the Americas. So being clearly more positive than in Q4. And then we expect this robust demand for our ferrochrome to continue also supported by the continued uncertainty on supply on the market. And if I look at all the business areas, we are very much working on the commercial strategies and the product portfolios, and I see that we have a lot of opportunities in that side. Ferrochrome is already now bringing 3 new products to the market. So this is the way to continue. And on the EVOLVE strategy, I mentioned the technology development. It is very important for us, and we will tell you more about that as we go forward. So I'm very optimistic about our future, our possibility to grow and improve our financial performance and resilience. And then I think this takes us to the Q&A that we are now ready for. So please, happy to hear your questions. Operator: [Operator Instructions] The next question comes from Tristan Gresser from BNP Paribas Exane. Tristan Gresser: The first one, I just wanted to ask about Americas. There was a strong performance in Q4. Any one-off tailwind that was in there that will not repeat into Q1? Or is the type of margins on EBITDA per ton that you've seen and done in Q4? Is that kind of a normalized level that you see for the coming quarters? Is there more of the price increase to flow through in Q1? Or that's all in the results we've seen in Q4? And now with the visibility you have and you flagged a bit of improvement as well on the demand side, do you think you can reach your EBITDA target for the division of EUR 150 million, EUR 200 million in 2026? And if not, if you can tell us why? Marc-Simon Schaar: Maybe I can start with taking your first part of your question, Tristan, on the performance and if there are any extraordinary items within the result. The answer is clear, no, and we can expect then this result to be an underlying result then also going forward plus then the market dynamics which we see now. We expect a seasonal uptick in demand over here. And while we're not giving any price outlook, I think given the current situation and then referring also maybe to the early signs of a market recovery explains, I think, a bit about how we think about the overall market and the dynamics coming with that one. Tristan Gresser: And regarding the EBITDA target of EUR 150 million to EUR 200 million, is that achievable for 2026? Kati Horst: Well, I would say, if the market recovery continues, then I think there are possibilities to go towards that, yes. Tristan Gresser: All right. That's clear. And then kind of a similar question around Europe. I mean, it's always a market that is a bit difficult to calibrate. How do you think about the margin improvement for 2026? I mean you went from negative EBITDA adjusted EBITDA in Q4. The market was tough. There was a bit of one-offs. But consensus has EBITDA per tonne for the Europe division going above EUR 150 per tonne by Q4 this year. Do you think that's feasible? And if you can talk a little bit about the market environment as well. We've seen prices going up. I guess, margins are going up at the moment as well. If you can discuss a bit your order books and the impact of CBAM, that will also be helpful. Marc-Simon Schaar: Yes. So maybe if I start and then Kati can chip in and add. I think in the fourth quarter, we have seen the lowest volumes driven by the weak market. Yes, we also had here the implementation of the supply chain solution, which I mentioned before. But what we do see and from preliminary data also in January is that CBAM is somehow supportive, as I mentioned before, expecting also a shift towards domestic producers in the European market over here. And as such, also seeing then a margin -- relative margin improvement here in Europe as well. Kati Horst: And let's just say, command, that needs to also happen. If you look at the overall volumes, demand in Europe and the price level. So yes, volumes need to increase and deliveries need to increase and prices need to increase. Tristan Gresser: Okay. That's clear. But you're confirming that margin improving at the moment. And just the CBAM and the safeguards, is that enough for you to go back to historical margin levels? Or do you think absent a more pronounced demand recovery that on the end user side that you're not necessarily seeing at the moment, it will be difficult to reach, let's say, historical margin level already this year without the demand? Marc-Simon Schaar: I think that certainly CBAM and then safeguards are supporting us here and what you just described. At the same time, yes, we see increased activities, but this is not coming really from an underlying demand in the end user segments. And to be clear, in order to get back to historical levels, we also need further demand from the market side as well, given also the capacity utilization we are currently running still being on the low side. Operator: The next question comes from Tom Zhang from Barclays. Tom Zhang: Two as well for me, please. So yes, maybe just on ferrochrome. I know a lot of the quarter-on-quarter improvement was from these electrification aid. But I think underlying, you also talked quite positively about the ferrochrome market, which I was a little bit surprised by because stainless volumes have not been very strong. There was still a lot of stainless imports and CBAM, I guess, will help, but it's only just coming in from January. Is there much of a step-up again into Q1 for the underlying ferrochrome business? And so as I kind of look at Q1, even without the power subsidies, do you think it's possible that ferrochrome earnings can remain fairly stable? Marc-Simon Schaar: I think maybe if I can take that. When it comes to Q4, yes, there was a positive element of then the electrification aid, as we mentioned before. What we have seen as an increase from the third quarter to the fourth quarter, I would say, approximately half or a bit more half of that improvement is coming from that electrification aid. And the rest is real underlying improvement, stronger performance. Coming to the market side, yes, stainless steel demand is lower, is weak. However, we're constantly also reporting that the demand for, again, our European low-emission ferrochrome is very solid. And as such, we saw an increase, not in internal demand, but in external demand. We're also expanding our product portfolio, as I mentioned before, so these are areas and topics together then also with improving our cost performance in ferrochrome with this new or continued expansion of our mining method, sublevel caving, that's all contributing positively. Now if we think about then Q1, certainly, the impact, which I mentioned to you before the electrification aid, but then also the impact from the mining tax in Finland then will have a negative impact in the fourth quarter compared to -- in the first quarter compared to the fourth quarter. However, we continue to improve on the mix side and also on the cost performance. So I would only bake half of the impact of electrification and mining tax into the forecast. Kati Horst: And maybe to add to that a bit that just as a reminder, so we're delivering now internally, externally about 400,000 tonnes of ferrochrome. We have a capacity of 500,000 tonnes. So we have capacity to increase also external deliveries. And maybe another aspect just to add that this portfolio development in ferrochrome, low titanium ferrochrome, medium carbon ferrochrome and now our latest test based on concentrate, more than 60% chrome content ferrochrome, they bring us also to other customer segments. So it's not only then stainless steel anymore being the customer, but there are other segments. So we see the outlook for ferrochrome quite positive. Tom Zhang: Okay. Okay. That make sense. I think in -- sorry, just following on from me quickly. I think in Q2, you guys had talked about a mining tax could be a sort of EUR 50 million hit. Is that still the right number to think about? Kati Horst: No, it's -- so I can be a bit more specific on that. So the mining tax increase now for this year. So last year, we paid about EUR 8 million. This year, we are paying EUR 21 million based on the current premises and volume estimates. So it's a EUR 13 million increase in mining tax. And what does continue in Finland, the parliament has asked the government to look at also at the hybrid model, which would be partly based on royalty and partly then based on the actual result. So that discussion should continue this year. And then the other item there was the electrification aid. So Outokumpu has been getting in total about EUR 20 million in the electrification aid. So if you put those together, then the impact, I think, right now is about EUR 30 million, EUR 35 million. Tom Zhang: Very clear. And then the second question was basically around, there's been a lot of headlines around ETS reform or potential extension of free allowances. As I understand, that would potentially mean CBAM also needs to be drawn out to adhere to WTO. Given your emissions are already well below international levels, you're covered for allowances out to 2030. Do you see the extension of free allowances as a bit of a risk for stainless? Or do you think it's kind of not too material? Kati Horst: No, I don't -- at least from our perspective, I don't see that as a big risk. Of course, there's a lot of discussions going on. If my understanding is correct, there will be some kind of a review now in the summer of the EU ETS system. But I think that's also about should it be extended to some other sectors where it's not now yet. So we will definitely hear more about the review and what is being reviewed in the summer. But I think it is -- I think European Commission is still quite determined to their emission reduction targets. And of course, EU ETS system also goes a bit hand-in-hand with CBAM. So we need to see also the effect in the CBAM going forward. But I think it's definitely a competitive advantage to have been an early mover in this area in the case of Outokumpu. Marc-Simon Schaar: And maybe to add also with smart decarbonization here as well. And I think Kati has mentioned one example, how we think about ecosystems and partnering and making the reduction in emissions as economically feasible. Operator: The next question comes from Anssi Raussi from SEB. Anssi Raussi: I have a couple of questions left. First about CBAM and safeguards in Europe, like how do you see the situation if you think about scrap value chain, like if the end user demand is declining due to these new regulations, even though it would be positive for your stainless side. But do you think that scrap suppliers would face some problems, for example? Marc-Simon Schaar: Well, Anssi, if I can take that question, then I think that -- well, overall, there is then a stronger demand for stainless steel scrap. And this is what we do see then in the market as well. But overall from -- I can only speak from an Outokumpu point of view that through our partnerships with our suppliers being very well covered and also going forward. Anssi Raussi: Okay. That's clear. And then about BA Europe, like what kind of delivery times you have right now? Because I think your contracts are so-called all-in price-based contracts. So how long it takes before we see this positive changes in market environment in your P&L? Marc-Simon Schaar: Maybe to start with, not all of our business is on effective pricing. So I would say around 30% of our business in Europe is based -- still based on base plus alloy surcharge and our U.S. business is completely on base plus alloy surcharge. Certainly, we have around 1/3 of our annual expected volumes under contract. These contracts being concluded by mid to end of last year. And as such, there is naturally a certain delay in here. But we should see a gradual improvement here from the first quarter in business area Europe. Operator: The next question comes from Dominic O'Kane from JPMorgan. Dominic O'Kane: I have 2 questions. So first, could you maybe provide us with an update on your current thinking for Tornio? And then second question is a related question. If we think about cash flow, you've had 2 successive years of negative calendar year free cash flow. You've done a good job on working capital management, but it may be that is going to be difficult to continue and replicate going forward. And so if I think about what you said at the Capital Markets Day, you didn't provide us with any forward-looking guidance for 2026 CapEx. So I just wonder if you could maybe just help us with those building blocks. Are you able to maybe give us an update on 2026 CapEx? And how should we think about the free cash flow potential in 2026? Kati Horst: So if I leave the cash flow question to Marc-Simon, I could maybe comment on Tornio. So you're referring to this potential investment in the annealing and pickling line in Tornio. We said in the fall when we were discussing the mining tax topic that is currently on hold. So now we know what the impact on the whole Kemi Tornio setup is cost-wise without this electrification aid and the mining tax. So what we are doing currently, we're updating the investment case and also, of course, looking at is there is there other ways? Are there other items we can take in so that this investment case basically reaches our hurdle of 15% of ARR for foundational investments. So the investment case is still valid and it's being reviewed now with new assumptions as some of the cost assumptions have changed, and we also have some other ideas what more we could do. So it's under review currently. Marc-Simon Schaar: Yes. And if I then continue on the cash flow question, first of all, during fourth quarter, as mentioned earlier, our ability to reduce working capital was. if I think about the first quarter, yes, business activities do increase, as we mentioned before, our volumes. Then we have also seen the nickel price increase, but expectation at the moment is that working capital will only increase moderately into the first quarter of this year. We do think then for the entire year, I mean, that pretty much depends also on how business activities and prices further develop that we, as a management team, are very committed in focusing on improving our working capital and particularly inventory efficiency now during this year and have dedicated programs in place. Coming back to your particular question around CapEx guidance for this year is around EUR 200 million. And then if we think about financial expenses, pretty much in line with what we have seen this year around, I would say, EUR 50 million. In terms of taxes, I would add or take similar levels as we had a cash out in this year according to our plan. And then we do have restructuring provisions here as well, which we should take into account and which we have been reporting earlier as well. Dominic O'Kane: Could I just ask on the EUR 200 million CapEx, does that include anything for Tornio? Kati Horst: No. So if we look at like a bigger investment on the AP line or we would look at more transformative investment in Avesta, no, it does not include that. And maybe as a reminder, we capped our CapEx this year also because of the financial performance cash flow to EUR 160 million -- and I think we arrived at EUR 145 million. So that was also how we were managing the cash. So I think EUR 200 million is more going on the ongoing initiatives, what we have, normal maintenance that we have. And then potentially other investments, they would probably not start in '26 yet impacting our CapEx, but later. Dominic O'Kane: But the announcement on the CapEx in the U.S. with new proprietary technology, the USD 45 million, that's being part of the EUR 200 million as well. Kati Horst: Correct. Operator: The next question comes from Maxime Kogge from ODDO BHF. Maxime Kogge: So my first question is on dividend because there have been some expectations on our side, on the sell side, that you would at least roll over the existing payout and you have cut it by half. So it's fair considering the other constraints you mentioned. But going forward, how should we think about your dividend payment ability? Is it fair to assume that as long as you have not been back to this ratio of net debt to EBITDA of 1, which is your long-term target, dividends are going to stay quite limited? Kati Horst: Well, I think our kind of target in the dividend area is, of course, to continue to deliver stable and growing dividend over time. We just have to maybe remember in what kind of cycle we have been and what kind of financial performance we have had -- so that consideration is there. And then the other consideration is, of course, the financial health. So our balance sheet and then also keeping this room for potential investments in transformative growth. So those are the aspects that we are considering in the dividend policy, and that's why the proposal now of the EUR 0.13 dividend per share. Maxime Kogge: All right. Second question is on the nickel price. So price of nickel has surged by 20% over the last 2 months. So when we ask a question to your main competitor, they were relatively dismissive of any impact since they procure most of the nickel needs from scrap. That's the same for you. But still, would you believe that there could be a positive price volume impact associated with higher nickel price in the sense that distributors in such phases of higher nickel prices tend to rush to buy material. And yes, would it apply in particular in the U.S. where the market is more geared towards distributors, plus you have this pass-through mechanism of the base plus alloy surcharge, which is working quite well unlike in Europe? Marc-Simon Schaar: Yes. To answer your question directly, with the higher nickel price, also we expect an improvement here on the price level and also within our margins. Maxime Kogge: Okay. But you don't see any volume impact associated with that, do you? Marc-Simon Schaar: We do need to see here really a recovery in the underlying demand, certainly with CBAM, as mentioned earlier, and then let's see safeguards coming in that there is a shift in -- from imports to domestic producers, but we definitely need to see how the economic activities are recovering. Maxime Kogge: Okay. Fair enough. And just last one is on your long-term EBITDA target. That's also in light of comments made by your main competitor around its own long-term target of EBITDA that it dropped from EUR 800 million to EUR 700 million to EUR 800 million, and that was despite a big acquisition made in between. As far as you're concerned, you have a very ambitious and very high long-term EBITDA target at EUR 750 million to EUR 850 million. That's an improvement over the existing EUR 500 million, EUR 600 million. I understand this target is based on the quite high base prices, plus you have the benefit of this new investment. So how comfortable are you with this target given the fact that prices remain quite depressed at this stage, plus consensus has expectations at a much lower level, including for '26 and '27? Marc-Simon Schaar: I think you mentioned yourself here the pricing environment right now, and this is -- and also the long-term target here as well. And this is how we should look at this as well. We also said this is then the target looking through the cycle here as well and having the improvements as we communicated during the Capital Markets Day through investments in the foundational business here, which is then building up here the improvements. And yes, we're still comfortable around this level. Operator: The next question comes from Bastian Synagowitz from Deutsche Bank. Bastian Synagowitz: I have 2 quick ones left as well, please. Maybe firstly, on Americas where you've been doing quite well. You mentioned the U.S. MCA agreement. I guess we don't know what the outcome will be, but could you briefly remind us on the sensitivity to your numbers in the current price and margin environment should the U.S. tariffs be dropped completely? That is my first question. Kati Horst: Yes. Maybe I'll start with that. I'm not so much talking about the whole USMCA for instance, with Canada, but more referring to the negotiations and the sentiment we have from the negotiations between Mexico and the U.S. So I think they've been constructive, quite positive. Of course, we don't know the outcome. But what was done in Mexico now as well, Mexico imposed 50% tariff for Asian imports as of beginning of the year. That is, I think, something what you have been also asking for. So that has happened. That gave us some opportunities for price increases. And it could also support then demand to a domestic supplier in Mexico, which we are the only one. But of course, there is a tariff now between U.S. -- from Mexico to U.S. of 50% for steel. And it doesn't take into account whether the steel has been melted in America or not. So that is, of course, an upside for us if we can also use the Mexican capacity for the needs of the U.S. market because the Mexican market currently is very weak. It can recover with some of the measures somewhat, but we would very much in this situation, want to use the capacity more for the U.S. demand as well. So therefore, if this tariff would become lower or disappear, of course, that would support our business clearly. Bastian Synagowitz: And could you maybe just give us like a quick understanding on what the sensitivity is if that 50% tariff would be dropped, just looking at the cross shipments from the U.S. into Mexico and vice versa? Kati Horst: Well, I think in the past, the shipments have not been so very high because the Mexican market was also doing well. So probably 10,000, 15,000 tonnes. But we have, of course, more capacity in Mexico. So should the Mexican market stay weak, which I, of course, don't hope and the tariff would not be there, it would give us opportunities to bring even bigger volumes to U.S. Bastian Synagowitz: Okay. Understood. Okay. Great. And could you just clarify the Mexican tariff, does that also cover at least part of your client sectors as well on the downstream side? Kati Horst: So yes, so there's a derivative list, and there are certain products then on the derivative list where there is no tariff that are made out of steel. I think refrigerators happens to be one of them. But it's a bit of -- it depends what is on the derivative list and what's not on the derivative list. But everything that's in the form of raw material as steel is tariff by 50%. Bastian Synagowitz: Okay. Got you. Thanks, Kati. Then lastly, are there any big items for us to keep in mind for 2026 on the maintenance side? I guess there's probably the usual, but I don't know, is there anything extraordinary here? And then also anything similar, any one-offs like the ERP, which you had last year, which we should just factor in? Kati Horst: No. No, nothing major. Operator: The next question comes from Igor Tubic from DNB Carnegie. Igor Tubic: I just have 2 follow-ups. You mentioned that the mix in Americas improved. I just wonder what we should expect in terms of Q1 for 2026, both for Americas and for Europe? And then also if you can comment anything about in what segments you saw an improvement, so to say, in the mix in Americas? Kati Horst: Well, I guess, we have to start by saying we don't guide on the PA level for the Q1, but you saw our guidance of improving volumes in stainless steel between 20% to 30%, so that goes both -- it's combined Europe and Americas. I think that is an answer on there. And then if we look at the -- I could maybe generally answer that if you look at the end user segments that are booming in Americas, data centers is one, electrification goes forward. But I think this is also very much about our own work. So we are digging deeper to different customer segments where we see opportunities for our product portfolio. So we are becoming more of a market maker in the segments where we want to grow. So this work, I'm also expecting to bring some results in the coming quarters. Marc-Simon Schaar: And maybe to come back a bit more on the first quarter, I think the best way really to look at our first quarter and the guidance is, as we said and stated in the guidance, it's the volume recovery. There are, of course, a couple of offsetting effects left and right that the major driver is really the volume recovery in the first quarter. Operator: The next question comes from Joni Sandvall from Nordea. Joni Sandvall: One quick left from me. Could you give -- I think this is a bit of -- you answered partly, but could you give any indication how your lead times have developed now under the CBAM game effective 1st of January. So have you seen increasing order books for yourself? And any indication of how lead times have developed after this? Marc-Simon Schaar: Yes. Lead times have developed. Lead times have improved. And right now, we're middle of February, and we have already started booking into the second quarter, April into May. Joni Sandvall: Okay. And maybe a quick one also just to confirm, was the ERP rollout completed already during the Q4? Marc-Simon Schaar: Well, it is a huge project in itself. We talked about the difficulty and the implications from the supply chain solution as part of the ERP program. And the aftercare will still continue into the first quarter of this year. But yes, we expect then by the end of the first quarter to have then a stable situation going forward. So being temporary. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Kati Horst: Thank you very much for your active participation today. And I think this, in principle, concludes our session today. Like I said a while ago, I think we are really confident about our future going forward. So we will look at growing this company. We will gain the resilience, and we will work hard to improve our financial performance. So thank you very much for being with us today and talk to you then again in our -- when we talk about the Q1 results in the spring. Thank you very much. Marc-Simon Schaar: Thank you.
Operator: Hello, everyone, and welcome to Yatra's Fiscal Third Quarter 2026 Financial Results Call period ended December 31, 2025. Today's call is hosted by Yatra's Co-Founder and Executive Chairman, Dhruv Shringi; and CEO, Siddhartha Gupta. The following discussion, including responses to your questions, reflects management's views as of today, February 12, 2026. The company does not take any obligation to update or revise the information. Before they begin their formal remarks, please be reminded that certain statements made on this call may constitute forward-looking statements, which are based on Yatra management's current expectations and beliefs and are subject to several risks and uncertainties that could cause actual results -- for a description of these risks, please refer to Yatra's filings with the SEC and the press release filed earlier this morning on the IR section of Yatra website. With that, let me turn the call over to Yatra's Co-Founder and Executive Chairman, Dhruv Shringi. Dhruv, please go ahead. Dhruv Shringi: Thank you, operator. Good morning, everyone. Thank you for joining us on [Technical Difficulty] third quarter and 9 months ended fiscal year 2026 earnings. Let me start by briefing you first on the events that happened during the quarter, and how it has impacted the industry, and then our CEO, Siddhartha Gupta, will brief you on the operational performance and the financial performance in greater detail. The third quarter, which is typically a strong period for leisure travel in India, witnessed healthy demand across [Technical Difficulty] limitations which led to operational challenges for the airlines and a spike in cancellations across the entire country. Market data indicates that domestic [Technical Difficulty] and recovered in the second half of the month, and we've seen those factors continue to rise in the month of January and thereon. But the key positive during the period was the divergence between domestic and international travel trends. While domestic travel experienced short-term headwinds in December, international travel remained strong with healthy year-on-year and sequential growth. This reinforces that outbound and long-haul travel is in a structural up cycle, benefiting organized travel platforms like Yatra with strong corporate and international travel franchises. Also, the recent union budget sends a clear message and positive signal about the government's long-term commitment to the travel and tourism sector. By positioning tourism as a strategic growth engine linked to the employment generation, foreign exchange earnings, and regional development, the policy framework shifts from episodic support to building a more structural and sustainable ecosystem for travel and hospitality in the country. Key measures such as rationalization of tax collection at source on overseas tour packages to a uniform 2% rate, lower upfront cost improved outbound segment. In addition, increased emphasis on domestic connectivity through infrastructure investments, including high-speed rail corridors, waterways and regional access, among the initiatives to enhance hospitality capabilities through a National Institute of Hospitality and large-scale skilling programs, expand the talent pipeline for the tourism sector. There is a growing demand for Indian organizations to help digitize travel procurement while using AI-driven platforms that offer end-to-end automation, self-booking tools and integrated expense management, prioritizing compliance and cost savings. AI and predictive analytics platforms make travel procurement by forecasting demand, optimizing costs, enforcing policies and ensuring risks are attended in real time. AI-enabled self-booking tools can perform real-time policy compliance checks, flag risks like disruption or itinerary analysis and personalize itineraries with safety insights. The generative AI shifts from reactive auditing to predictive spend, cutting administrative friction and enabling productivity boosts in procurement. Yatra through its corporate self-booking platform, supported by AI bot and its richer expense management solution is taking the lead in driving this shift in industry dynamics. Moving on more specifically to our business for the quarter. Our B2C business, as was predicted earlier by us, [Technical Difficulty] is now still growing profitably. Additionally, our corporate and MICE business [Technical Difficulty] was well on track to deliver our strongest third quarter yet. With the exception of the recent inflation [Technical Difficulty] about our operational performance in the quarter. We remain richly supported by our continued focus on scaling the Corporate Travel business. The steady growth in corporate bookings, along with the increasing contribution from higher-margin hotels and MICE segments, positions us well for sustained margin expansion and improved profitability over the long term. With this, let me now introduce you to Mr. Siddhartha Gupta, who recently joined us as our new CEO. Siddhartha brings with him a wealth of experience across the B2B SaaS industry, and in his last role, was the President of Mercer Consulting in India and was also heading their SaaS-based talent acquisition business globally. Prior to this, Siddhartha has also held leadership roles in large tech and SaaS companies like SAP and HP. With that, let me hand you over to Siddhartha. Sid, over to you. Siddhartha Gupta: Thank you so much, Dhruv. Operator, I hope I am loud and clear on the line. Thank you so much, Dhruv, for giving a preamble on our quarter performance and the industry trends. A very good morning to everyone on the call. Adding to Dhruv's comments, despite an industry-wide disruption in the airline sector during the quarter, Yatra continued to deliver in its Air Ticketing business, supported by seasonally strong B2C travel demand. Gross bookings in the Air Ticketing increased 22% year-on-year, supported by 14% growth in air passenger, which far exceeds the industry growth of about 1%. Take rates also improved from 6.2% to 7.1% on account of the quarter being more B2C focused. In the Hotels and Packages segment, overall performance during the quarter remained healthy. However, we did see some temporary impact in the MICE and the Corporate Events subsegment, with a few bookings getting deferred due to flight disruptions. Just to remind listeners, it was the disruption in the IndiGo Airlines schedule in India. This resulted in a modest onetime impact on the quarter, part of which we expect to roll over in quarter 4, supported by the continued strength in underlying Corporate Travel demand. Gross bookings in the segment grew 20% year-on-year, excluding the impact of deferment of the MICE business. Hotels would have grown over 30% on a stand-alone basis, supported by strong growth in our corporate business and in our affiliate business. While gross take rates moderately -- moderated slightly from 12.2% to 11.7% year-on-year on account of change in business mix, gross margins improved further from 9.7% to 10.2% year-on-year, reflecting prudent discounting in B2C and better margin realization from suppliers for corporate hotels. Our B2B to B2C mix was approximately 60-40 for the quarter versus the 9-month average of 65-35 in favor of B2B. Our Corporate Travel business continues its strong momentum. We onboarded 40 new corporate clients in this quarter, collectively adding an annual billing potential of INR 2.2 billion. As mentioned earlier, the disruption happened during the highly productive first 2 weeks of December, when Corporate Travel usually peaks before holidays. We saw deferment of MICE travel into Q4 and subsequently, few of the groups moved to Q1 of the next financial year as a direct result of uncertainty in the travel during that period. This disruption not only adversely impacted our operating performance, but also led to incremental working capital deployment where advances had already been paid to vendors for MICE Groups. These impacts were largely limited to the month of December, and the business is back on track. In the Corporate business, there's more to cheer. The early response to our expense management solution has been very, very encouraging, and we have onboarded 8 customers now on our expense management platform. Early traction proves that Yatra understands the pulse of what our corporate customers need. This solution has not only become a door opener to get new accounts, but also gives us a huge upsell potential in our existing accounts. A few thoughts on what you can expect from Yatra in quarters ahead. Our consumer-focused line of business has returned to growth path while improving margins. This was a result of sharp execution, coupled with successfully tapping into partnerships and affiliates for demand generation. In the near future, you should hear more on organic demand generation projects making impact, helping us further improve margins in this line of business. Our corporate value proposition still has a huge headroom for growth. Online penetration is around 23%, and we have laid a strong foundation for chasing this potential. We have sharpened our go-to-market by establishing separate teams to chase large and small and medium enterprises. Demand generation is amplified by a new inside sales team now, which has started augmenting the efforts of the team on ground. Early signals are very promising. Beyond new customer acquisition, our farming team have won multiyear renewals from some of our largest customers this quarter, proving that corporates want trusted partners who can deliver value to them. Needless to say that our success is closely tied to the speed at which we can deliver tech innovation. Our early investments in adding talent to our product and tech team have started showing results. You can expect us to further add gap between us and what's available in the market. Hope that gives you a flavor of where we're headed. At this moment, I would have paused and handed over to Anuj Sethi, who is our CFO, to brief you on the financial performance for the quarter under review. He has got caught up in a medical emergency. Hence, I'll take you through the financial performance as well, and then me and Dhruv will take the questions together. On the financial performance, for the third quarter of financial year '26, on a consolidated basis, our revenue from operations grew 10% year-on-year to INR 2,577 million or approximately $29 million, driven by steady demand across our key segments with robust growth from air ticketing business. In terms of segmental performance, our Air Ticketing passenger volume grew 13% year-on-year to 1,491,000. However, gross bookings grew 22% year-on-year to INR 16,931 million or $188 million. And Air adjusted margins rose 40% year-on-year to INR 1,195 million, or $13 million with adjusted margin percentage improving from 6.2% to 7.1%. Under Hotels and Packages segment, hotel room nights grew by 22% year-on-year to 508,000. Gross bookings increased 20% year-on-year to INR 4,306 million or close to $47 million, with adjusted margins expanded 15% year-on-year to INR 502 million or $6 million. On the liquidity front, cash and cash equivalent and term deposits stood at INR 2,042 million or $23 million as of 31st December 2025. Gross debt has marginally increased from INR 546 million as of 31st March 2025 to INR 583 million or $6 million as of 31st December 2025. With this, I would like to hand back to the moderator and open up for question-and-answer session. Operator: [Operator Instructions] First question comes from Scott Buck with H.C. Wainwright. Scott Buck: First, I'm curious, the revenue growth deceleration in the quarter, is any of that structural? Or you're viewing that all as just kind of the ebbs and flow of managing some of the macro challenges that are out there? Dhruv Shringi: Scott, this is largely seasonal in nature. Quarter 3, if you would recall, is one of the lowest quarters for business travel, given the holidays that we have for Christmas, New Year and for Diwali, Dussehra, which both happen in this quarter. So effectively, you lose 1 month out of the 3 in holidays. And then it got compounded this year with the flight disruptions that happened during the first 2 weeks of December. So it's not a structural shift. It's just a one-off, given the disruption that happened in the industry. Scott Buck: Okay. That's fair. Second, I just want to ask about the MICE business. Are you seeing some of the macro challenges out there, whether it's tariffs or anything else, having an impact on that business? I know there were some headwinds in the quarter. Dhruv Shringi: No, we haven't really seen any impact of that, especially things like tariff and all. We do, in fact, expect that given that there is a new trade deal which is in place between India and the EU and India and the U.S., we will see business travel scale up even further when it comes to travel between both Europe and the U.S. But we're not really seeing any headwinds per se on account of these. Sid, if you want to add something extra on that? Siddhartha Gupta: Yes. So this MICE as a segment has grown and has tremendous potential for us to grow into. This was a very fragmented market about 3 to 4 years back. And now over the last 2 years, Yatra has become one of the top 3 players operating in this space in India. And Indian economy is one of the fastest-growing economies. So there are multiple industries where corporates are traveling, not only outside India, but within India as well. And hence, there is a huge headroom for growth. What we've seen is that this entire segment is getting more formalized. So instead of very small players operating these events for corporates, now the corporates prefer doing business with large vendors like ourselves. So I think there's a huge potential, and we don't see any disruption in this space at all. Scott Buck: Great. That's helpful color. And then last one for me, guys. You continue to do a really nice job adding new corporate partners on the travel side. I'm curious how many of those kind of obvious or low-hanging fruit opportunities are still out there? And at some point, do you need to change or pivot the way you're pitching some of these customers to continue to bring on that Corporate Travel business? Dhruv Shringi: I think at this time, we have got a lot of headroom in this. Our initial mapping had suggested close to about 13,000 organizations that we could target as part of this. We are still just in excess of about 1,000. So I think there is a lot of headroom for growth for us in this sector. I think Siddhartha coming on board will also sharpen our focus on how we go to market. And maybe Siddhartha can elaborate a bit more around how he's gone ahead in the short period of time in augmenting the sales team and putting in some new things in place, which will help us drive further growth. Siddhartha? Siddhartha Gupta: Yes. So to add, I concur with Dhruv completely. We have barely scratched the surface. There is a huge headroom for growth because the offline Corporate Travel still is the majority market and the value proposition of Yatra from providing an online Corporate Travel platform, which caters for all uniqueness of every corporate customer has a huge headroom for growth. To give you a parallel, in my days at SAP or Hewlett-Packard, corporate India itself has more than 30,000 companies, which are potential customers to Yatra. We have just about crossed 1,300 right now. So there's a huge headroom for growth for us. From a go-to-market standpoint, we have commenced a very ambitious and aggressive go-to-market sharpening exercise at Yatra. We have divided our go-to-market into 3 pillars. One is -- so we've separated these teams out. One is the elite sales team, which looks at only large enterprises and tries to get us more inroads into large corporates where travel spends are very high. Then we've got a separate team, which is looking at small and medium enterprises, which operates through digitally creating demand and then through an inside sales, landing it into our kitty. And the third bit is we are already one of the larger players in India from a large enterprise automation. So we have a very large existing account base. So we have a team called key account managers, and it's headed by a very senior leader here in India. And the mandate there is to upsell and grow our existing relationships where we are introducing newer solutions like expense management and other solutions and especially international hotels and travel so that we are able to upsell into our existing customer set as well. So overall, we are sharpening the go-to-market, running a very strong cadence on a weekly basis to ensure that spikes remain healthy and conversions remain healthy as well. So you should see momentum pick up from here, and we expect our strategy of leaning more towards B2E to grow Yatra being very successfully executed over the next 3 to 4 quarters. Operator: [Operator Instructions] We have no further questions, so I'll hand back to the management team for any final remarks. Dhruv Shringi: Thank you, operator. Siddhartha Gupta: Dhruv, would you like to.... Dhruv Shringi: And thank you, everyone, who joined the call today. And as always, we remain committed to driving shareholder value and being able to address any questions that you might have. Siddhartha and I are always available. Please feel free to reach out to us through our IR firm, ICR, and they can direct you to us. We look forward to engaging with you and continuing to deliver on the strong results that we have done for the last few quarters. Thank you for your time today. Siddhartha Gupta: Thank you so much, everyone. Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.
Operator: Good morning. My name is JL, and I will be your conference operator today. At this time, I would like to welcome everyone to the Entergy's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]. I will now turn the conference over to Liz Hunter, Vice President of Investor Relations for Entergy Corporation. Liz Hunter: Good morning. Thank you, JL, and thanks to everyone for joining this morning. We will begin today with comments from Entergy's Chair and CEO, Drew Marsh; and then Kimberly Fontan, our CFO, will review results. In today's call, management will make certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to a number of factors, which are set forth in our earnings release, our slide presentation and our SEC filings. Entergy does not assume any obligation to update these forward-looking statements. Management will also discuss non-GAAP financial information. Reconciliations to the applicable GAAP measures are included in today's press release and slide presentation, both of which can be found on the Investor Relations section of our website. And now I will turn the call over to Drew. Andrew Marsh: Thank you, Liz, and good morning, everyone. The last couple of years have been transformational for Entergy. While 2024 reshaped our long-term expectations through historical new demand for power, 2025 was affirmational as our success has continued. Today, I'll highlight our 2025 achievements and discuss our ongoing efforts to successfully execute on our customer-first strategy that creates value for all stakeholders. Starting with the financial results. We are reporting 2025 adjusted earnings per share of $3.91, which is in the top half of our guidance range. We continue to expect greater than 8% adjusted EPS annual growth through 2029, and our transparent outlook provide specific expectations by year. Turning to the customer. Our initiatives to improve customer experience have yielded positive results. Based on J.D. Power data, Entergy's utility remains in first quartile for Net Promoter Score for both residential and business customers. Three jurisdictions were in the top quartile for residential NPS and Entergy Texas was ranked #1 in customer satisfaction for business electric service in the South among midsized utilities. Our work to meet our customers' needs while maintaining low rates is being recognized, and this will remain a key focus for us going forward. We had 4% sales growth in 2025, driven by a 7% increase in industrial sales, continuing a long history of strong growth rooted in the advantages of our service area. We anticipate the sales growth trend to accelerate an expected 8% compound annual growth rate through 2029 from 2025 and driven by 15% industrial growth. Last year, we signed electric service agreements totaling approximately 3.5 gigawatts. There were several noteworthy customer announcements, which give us confidence in our outlook for growth from data centers and traditional industrial segments. Customers achieved important development milestones, including those in the steel, petrochem and LNG sectors. In fact, with Hyundai Steel's $5.8 billion planned investment in Ascension Parish, Louisiana earned Business Facilities Platinum Deal of the Year, the first state to accomplish the feat 2 years in a row after the Meta AI data center project in 2024. We also had new data center announcements in Arkansas, Louisiana and Mississippi, including both colocation developers and hyperscalers. Entergy's service area remains attractive, starting with our low electricity rates and vertical integration, business-friendly environment, welcoming communities and proven workforce. Our geographic location provides access to diverse energy sources and robust infrastructure that are attractive to industrial customers. Our integrated stakeholder engagement is also an advantage as we bring parties together to discuss potential development solutions and a common understanding of benefits. We continue to have meaningful conversations with potential new customers to secure additional growth to benefit all of our stakeholders. And our pipeline is unchanged at 7 to 12 gigawatts for data centers and 3 to 5 gigawatts for other industries. We have clear line of sight on equipment to serve 8 gigawatts of incremental load above our current plan. We've also confirmed EPC engagement for projects in our outlooks and beyond. Entergy has distinguished itself with a long history of greater than 5% compound annual large industrial growth over the past 16 years. We know how to attract new business and serve new large low customers while delivering positive outcomes to all our stakeholders from operational execution to affordability. The economic development activity has paid off as all of our states achieved record employment milestones in 2025. From the beginning, our hyperscale electric service agreements were developed with guiding principles that account for both the new customers' goals and impacts for our existing customers and communities. For our residential customers, we estimate the data center contracts in place today will generate approximately $5 billion in rate offsets from their fair share of contributions to fixed costs during the life of the contracts. That equates to more than $5 per residential customer per month on average, and that has the potential to grow with additional data center contracts. Customers will also see improved reliability and resilience from new generation and transmission infrastructure built to the latest standards. In addition, new, more efficient power plants will lower fuel costs for all customers. Our operating companies have implemented programs such as Superpower Mississippi and Next Generation Arkansas made possible by data center revenues that will improve reliability and reduce outages for all customers in those jurisdictions. Our long-term data center contracts include early termination penalties and minimum bills to ensure that other customers aren't left to pay for investments needed as a result of adding large loads to the system. Plus, on their own, these customers will create real value for our communities, including benefits from jobs and increased tax base and economic development. These are just a few examples of how data center growth is enhancing Entergy's efforts to support customers and communities every day. Beyond data centers, our operating companies have implemented many other ways to help manage customer rates and benefit our communities. That starts with cost discipline, including an ongoing focus on O&M efficiency and scrubbing our capital projects to ensure the best outcomes for customers. Our teams work closely with regulators to manage bill levels and volatility, which includes use of tools like deferred fuel collections, state and federal grants, tax incentives, philanthropic support and securitization. Our operating companies also proactively engage customers to ensure they are aware of programs to help manage bills, including energy efficiency programs, LIHEAP funds for qualifying customers and our Power to Care program for low-income seniors. Currently, we are exploring new rate offerings such as demand response and time of use rates to complement our average bill and deferred payment options. This year, our employees delivered more than $100 million in economic benefits to the communities we serve through philanthropy, volunteerism and advocacy. That includes our employees volunteering for approximately 170,000 hours in our communities last year, the equivalent of roughly 81 full-time employees. Our employees are also focused on delivering benefits to customers from our 4-year capital plan. Because of our track record, we know what it takes to successfully execute large projects. With a $43 billion capital plan through 2029 to support customer needs, we have a sizable build cycle ahead. In 2025, we invested $8 billion to benefit customers with about half of that in generation. That includes significant work on Orange County Advanced Power Station, which is entering the final stages ahead of a summer in-service date and Delta Blues in Mississippi. Looking ahead, new generation is a big part of our customer-centric plan. We have several projects in early stages that will come online in the next few years, including Franklin Farms Units 1 and 2 and Waterford 5 in Louisiana, Legend and Lone Star in Texas, Ironwood in Arkansas and the Vicksburg Advanced Power Station and Trace View in Mississippi. We also have 5 owned and contracted solar resources approved or in progress totaling 740 megawatts. Including gas, solar and battery storage, we have nearly 9 gigawatts approved and under construction towards our planned 13 gigawatts of new capacity to serve and support customers over the next 4 years. In 2025, our nuclear fleet operated safely and reliably, achieving a 90% unit capability factor. All refueling outages, including major turbine and generator projects were completed on schedule. The team also delivered more than 35 megawatts, sorry, of additional clean capacity from plant upgrades and replacement of older equipment. Looking ahead, at Waterford 3, previous investments in low-pressure turbines have paved the way for a 45-megawatt upgrade later this year. Turning to energy delivery. We invested about $3.5 billion in 2025, which includes accelerated resilience projects to support customer growth and to improve reliability. Thus far, we have invested $800 million in approved accelerated resilience work, including 17 substation upgrades and 59 line hardening projects, upgrading more than 15,800 structures. In total, our 4-year $17 billion customer-led energy delivery capital plan includes new construction on more than 570 miles of 500 kV lines and 175 miles of other transmission lines as well as investment in new substations. This also includes $1.4 billion of approved projects to harden more than 45,000 assets. System resilience is a key area of focus, and we are planning to continue progress on delivering that value to customers. To that end, Entergy New Orleans filed an application for the second phase of its resilience program, requesting approval for up to $400 million in projects. While we have and will put forward recommendations for projects that have both resilience and cost benefit value for customers, we recognize it's important that we balance near-term affordability with the need to continue to strengthen our system. The topic of reliability is never more in focus for us and our customers than when faced with the storm. A couple of weeks ago, Winter Storm Fern affected our service area, particularly in North Louisiana and Mississippi. Throughout the event, we worked closely with state and local leaders to stay aligned on our restoration efforts. Our generation fleet operated well, providing critical energy to serve customers who could take power. At the same time, our distribution and transmission lines were impacted by significant ice accumulation well over an inch in some places. Fern disrupted 170,000 of our customers. But ultimately, we restored power for more than 360,000 cumulative outages because many customers were impacted multiple times due to ongoing tree damage from the heavy ice. Damage resembled a strong hurricane, but with more dangerous icy restoration conditions afterward. In fact, we replaced more poles, more miles of wire and repaired more substations than we did for Hurricanes Barrel or Francine in 2024. Our employees, contractors and mutual assistance workers performed very well in these dangerous and difficult conditions. I sincerely appreciate their hard work and dedication to safely and quickly bring power back to our affected customers. Legislative and regulatory processes support our ability to successfully execute initiatives to provide long-term benefits to our customers. In 2025, Arkansas passed the Generating Arkansas Jobs Act, which materially improves utilities' ability to make critical generation and transmission investments needed for economic development in the state. The act paved the way for assets like Jefferson Power Station and the Cypress Solar and Battery project. Meanwhile, Texas passed legislation enabling rider recovery of MISO capacity costs, which historically were recovered in base rates. A year ago, I said that our 2025 regulatory calendar would be busy, and it was. Our regulators made tremendous headway to benefit our communities and to advance customer growth. They approved routine updates to base rates and riders as well as major transmission projects and new generation, both modern gas and renewables. All of these projects will modernize our infrastructure, provide customer reliability benefits and support growth that's critical for our communities. Our regulators are considered -- also considered policy issues aimed to promote economic development. For example, the Louisiana Public Service Commission in December voted to adopt a policy proposal referred to as the Louisiana Lightning Initiative, which provides a path for utilities to efficiently meet the needs of large new loads. The rule allows for RFP exemptions and an expedited review in specified situations with all actions subject to prudence review. This policy will align with Louisiana's broader Lightning Speed initiative to better coordinate among critical state permitting offices, allow us to bring new customers online faster, which will attract new business to Louisiana. You may recall that Arkansas and Mississippi also adopted rules and processes to foster economic development and attract projects that have speed to market as a top priority. There are a few other regulatory updates since our last earnings call that I'd like to highlight. The Arkansas Public Service Commission approved the special rate contract for Google. They also approved construction of the Jefferson Power Station and established a benchmark against which to measure the cost. In December, Entergy Louisiana filed a request to acquire the Cottonwood facility with an upfront purchase price of $1.5 billion as well as $300 million of investment for maintenance and improvements. This is an attractive opportunity to acquire additional energy and capacity sooner and at a lower cost than a new build alternative as Louisiana continues to experience significant customer growth. We requested a decision from the LPSC by the end of this year to allow for an acquisition early next year. In November, Entergy Louisiana also filed a request for approval to construct the Segno and Votaw solar units. These projects were safe harbored earlier this year -- earlier last year and will be attractive resources to support customer clean energy demand. For our 2026 regulatory calendar, we're planning for another productive year. In addition to the projects I just mentioned, we have 4 major generation and transmission projects that are awaiting commission decisions in the year. Arkansas Cypress Solar with battery storage, the Babel to Webre 500 kV project and the Waterford 6 and Westlake combined cycles in Louisiana, which were filed yesterday. Later this month, Entergy Arkansas will file its first base rate case since 2015, following 10 years of formula rate plans. Our current expectation is to request a rate change of well below 3%, and it could be lower for residential customers, which will support our continued efforts to invest for the benefit of our customers while being mindful of affordability. Our goal is to receive a commission determination by the end of this year for rates effective at the beginning of 2027 and a renewed formula rate plan starting with the 2028 forward test year. The formula rate plan benefits our customers and other stakeholders through predictability and ease of implementation while supporting continuous regulatory oversight. In addition, we expect to implement the Generating Arkansas Jobs Act rider for the next few weeks, supporting economic development. And the combined total rate change for residential customers between the rider and the rate case is expected to be at or below recent FRP rate changes and also maintain Entergy Arkansas' competitive position with rates well below the national average. Mississippi, New Orleans and Louisiana will file their formula rate plans between now and May, and Entergy Texas expects to request updates to its transmission and distribution riders as needed. Entergy Texas also plans to utilize the generation rider after Orange County Power Station is placed in service, which will trigger a base rate case in 2027. 2025 was an affirmational year, building on our continuing transformation. I appreciate everything our employees have done to create value for our customers and as a result, all of our stakeholders. As we move into 2026, we will continue to put the customer first in everything that we do. Before I turn it over to Kimberly, I'm excited to announce that we will host an Investor Day on June 9 in New York City. We will continue the conversation on the significant opportunities that we see ahead, including 5-year outlooks as we've done in the past. And now Kimberly will review our 2025 financial results as well as our outlook. Kimberly Fontan: Thank you, Drew. Good morning, everyone. As Drew said, 2025 was another important year in our growth journey. I'll review our 2025 results and then provide an overview of 2026 and our longer-term outlook. Starting with earnings, our adjusted EPS for the year was $3.91, as shown on Slide 4. Our results reflected strong sales growth and the effects of investments made for our customers. The increases were partially offset by higher other O&M and an increase in our share count from settling equity forwards. Earnings contribution from sales growth for the year was positive, including the effects of weather. Excluding weather, retail sales increased approximately 4%. Industrial sales were the largest contributor at around 7%, including sales for new and expansion projects that continue to ramp up their operations. The highlights of our 4-year plan are shown on Slide 5. Our retail sales outlook remains very strong. Off of 2025 weather-adjusted results, we expect 8% retail sales compound annual growth, driven by 15% industrial growth through 2029. Data centers are the primary driver, along with growth from a variety of traditional Gulf South industries, including transportation or LNG, primary metals, industrial gases, petrochemicals and agricultural chemicals. As a reminder, we take a conservative approach with hyperscale data centers. We only include them in our plan once we have an ESA in place, and we include them at the minimum build levels. Our customer-centric capital plan is now $43 billion, $2 billion higher than our preliminary plan presented at EEI. The increase includes the investment for the Cottonwood Generating Station that Drew mentioned. For 2026, our capital plan is $11.6 billion, approximately $3.6 billion higher than 2025, reflecting the step-up in investment to support our customer growth. The equity associated with our 4-year plan is unchanged at $4.4 billion at the lower end of our target range of 10% to 15% of the total capital plan. Our forecast also includes $1 billion of hybrids in the back half of the forecast. We have been proactive in addressing our equity needs, selling forward contracts through our ATM program as well as the block transaction we executed last March. We've taken significant price risk off the table, and we have ample time to raise capital. For our 2026 through 2029 equity need, about 45% is already contracted, meaning we wouldn't need to transact again until well into 2027. In February, after year-end, we settled an additional $345 million or about 4.6 million shares. We are using those funds to continue to invest for the benefit of our customers. Slide 6 summarizes our credit ratings and affirms that our credit metric outlooks remain better than rating agency thresholds. For 2025, we estimate that Moody's cash flow from operations free working capital to debt is greater than 17% and S&P's FFO to debt is approximately 16%, both well above the agency's thresholds. Moody's metric includes approximately $550 million for nuclear PTCs that were monetized in 2025. Without the PTCs, 2025's estimated Moody's metric is still well above our 15% target. Based on final MISO prices and strong nuclear production, we also recorded nuclear production tax credits in our 2025 results. We plan to monetize these credits in 2026 and estimate that the net proceeds will be approximately $215 million. Tax credits will ultimately provide benefits to customers. Beyond 2025, our credit metric outlooks are strong with FFO to debt above our thresholds throughout the outlook period, achieving our 15% target for Moody's metric during the period, giving us capacity to manage events in the business as they occur. As a reminder, because the value of nuclear PTCs is highly dependent on average revenue per megawatt hour, we do not include cash benefits in our cash flow or credit metric outlooks beyond 2026. Our financial health is bolstered by all the work we've done to strengthen our balance sheet and create benefits for customers, including structuring large customer ESAs to protect existing customers and our credits, improving our pension funded status and receiving constructive regulatory mechanisms. As Drew discussed, in late January, Winter Storm Fern impacted our service area. Our preliminary estimate for restoration cost is up to $300 million for Louisiana, up to $200 million for Mississippi and approximately $60 million for Arkansas, the majority of the cost being capital. Our current expectation is that these costs will be recovered through normal mechanisms. Our adjusted EPS guidance and outlook are shown on Slide 7. Throughout the outlook period, we continue to see very strong growth, driven by our customer-centric capital plan and our long-term compound annual growth remains strong at greater than 8%. Slide 8 provides additional detail behind our guidance assumptions. For 2026, we expect continued benefits from strong sales growth, especially as data centers increase their usage. Our guidance also includes the effects of investments made for customers, including regulatory actions and increases in depreciation, property taxes and financing costs. Share effect will also be a driver as our fully diluted average share count increases. Additional information on specific drivers for the year as well as detailed quarterly considerations are included in the appendix of our earnings call presentation. We have a very strong growth story that supports our plans to invest in reliability and resilience to better serve our customers. We have a solid base plan consistent with our strategic objectives and a strong customer pipeline, including 7 to 12 gigawatts of data center opportunities. And we have secured critical equipment to bring additional customers online. We're very proud of what we have accomplished, and we are working hard to make 2026 another successful year, continuing to prioritize the needs of our customers to create value for all of our key stakeholders. We have a very unique growth opportunity before us, and we're excited about what the future holds. And now the Entergy team is available to answer questions. Operator: [Operator Instructions] Our first question comes from the line of Shar Pourreza of Wells Fargo. Shahriar Pourreza: Just on the large load ramp, Hut 8 was the most recent announcement. Was Phase 1 of that project already partially in plan and with the formal FID, does that kind of put some upward pressure on rate base growth? Or is Phase 2 the upside? I guess maybe just help us frame if there are other probably weighted projects in '26 and '27 as well. It's two-part question. Kimberly Fontan: Yes, sure. I would think about Hut 8 and similarly sized data centers like we think about our probability weighted industrial growth overall. So that would have been included in the probability weighting there. Certainly, we're seeing positive progress in that space. And so that increases that probability weighting, but it would not be a separate discrete item like a hyperscaler. Andrew Marsh: And also, first part of what they have announced doesn't add to the capital plan, but -- and I'm not sure what you mean by Phase 1 and Phase 2, but additional incremental growth in that customer would likely require incremental capital for capacity. Shahriar Pourreza: Got it. Yes, I guess there's going to be a second phase they've talked about that could be fairly material. Okay. And then Drew, I want to ask on the large load protections you have as you kind of put the CapEx into plan. I mean we've seen at least one data center walk away from a project despite having a signed ESA. Obviously, different state than yours, of course. Just remind us on the level of comfort, the collateral requirements, et cetera. You have some lumpy projects there, which can be sizable so that could move the needle should one of these customers walk. Just maybe overall, just on the ESA environment and the protections there. Kimberly Fontan: Sure, Shar. On the overall large load customers, including not just the hyperscalers, but also colocators like a Hut 8, we have significant credit requirements that require things like termination fees, that sort of thing as well as minimum bills. And what we've included in our forecast is only the minimum bill. So certainly, there's -- to the extent that they run up to their full capacity, there's opportunity there. But to the extent that they choose to not run or not continue, there's the termination payments that protect us there as well. And those are backstopped all the way up at their parents. Shahriar Pourreza: Okay. Got it. And then just maybe one quick one I'll squeeze in is, I know the prior update noted 4.5 gigs of power equipment associated with potential upside. Is any part of that spoken for at this point? Have you started to expand those expectations given continued large load expansions if Cottonwood potentially added to that number? Kimberly Fontan: Yes, Shar. We have about 8 gigawatts of turbines and other plant island equipment available for growth. We haven't turned those into specific projects tied to ESAs at that point. But if you recall that turbine schedule that we showed you, those are all the great projects there. We continue to have really positive conversations with our customers and would expect to be able to continue to grow our portfolio. But certainly, we haven't -- we don't have anything specific here. That is lumpy, as you well know, but we have the opportunity to add incremental. I will note that Cottonwood that was added into the capital plan does not replace one of those turbines. That's existing capacity that provides additional space in Louisiana to continue to meet customer needs, but it doesn't replace any of those turbines. Operator: Your next question comes from the line of Julien Dumoulin-Smith of Jefferies. Paul Zimbardo: It's Paul Zimbardo on for Julien. The first, just a quick clarification. I think you said the CapEx change increase is Cottonwood. Are there other major changes going on? Or is it really just the Cottonwood being rolled in? Kimberly Fontan: Paul, it's largely Cottonwood. There is a little bit of capital from '25 that rolled into '26. So the overall increase there is not fully incremental versus what we had in '25, but most of what's there is Cottonwood. Paul Zimbardo: Okay. Okay. Great. That's my thought. And then you had that comment around the $5 per month of customer bill savings from the data centers that you've kind of secured to date. Are there good ways to think about it? I know it's difficult rules of thumbs or just ways to think about potential future savings from that data center pipeline for customers. Kimberly Fontan: Yes. I would think about that as the data centers' contribution to embedded fixed cost. So there's not a good rule of thumb. It's going to depend on the size of the data center. But in general, what you're doing there is you're essentially -- you've got your embedded fixed cost that you're spreading over more kWh. So the size of their kWh is going to drive what that opportunity is. But there's not -- I don't have a good rule of thumb for you. Andrew Marsh: Yes. And I would add to that, Paul, that we think that, that's conservative because there are other things that the customers are benefiting from. And I listed some of those in my remarks, like fuel efficiency and things like that, that are important contributions, more reliability, more resilience from the new infrastructure, not to mention all the community benefits like taxes and so forth. So there is a lot of value for customers, but we thought it would be important to label that fixed cost contribution part because it is significant. Paul Zimbardo: Okay. That makes sense. And if I could squeeze in one more quick. Just on the -- after the Jefferson approval and the Texas generation approval, noting that Louisiana has that Lightning amendment, have you seen kind of customer preferences shifted between different states? Any color would be helpful there. Andrew Marsh: No real change among states. The customers that we have in our states are continuing to invest where they are, and they are very comfortable with the rules where they are. But I think it will help attract incremental customers potentially. And so we've seen some support for that as well. But I don't think it's causing hull from one of our jurisdictions to another jurisdiction at this point. Operator: Your next question comes from the line of Jeremy Tonet of JPMorgan. Diana Niles: This is Diana Niles on the call for Jeremy. Going back to the customer benefits from data centers and the $5 billion in rate base offsets. Could you provide some color on what buckets this covers, whether that's transition required for new load or previously complicated resilience investments? Any color there would be appreciated. Kimberly Fontan: As I said, I would think about that as contribution to incremental cost. So that is things like in Louisiana, they had storm costs that were already securitized the customers were paying for, they're paying a contribution to that. In Mississippi, we had announced Superpower Mississippi, where we added incremental capital with no increase in rates because the revenues coming in from the hyperscalers there were providing room to continue to invest in resilience and reliability. And then as you think about going forward, that incremental revenue is helping to offset future rate changes as you make investments over time. So it's those categories that I would think about. Diana Niles: Great. And one more, if I may. The Cottonwood addition to the plan. Is it already contemplated in your outlook going forward? Or to what extent do we need to look at future approvals to think about the inclusion in the plan? Kimberly Fontan: Yes. So Cottonwood is included. It's in our -- if we added it into our capital plan, it is pending regulatory approval. But from an EPS outlook perspective, it just moves us in the range, but it doesn't change our ranges. Operator: Your next question comes from the line of David Arcaro of Morgan Stanley. David Arcaro: I was wondering what updates should we expect at the Investor Day coming up in June? Is that a natural time when you might expect more data center contracting clarity to come in or capital projects to be approved and added to the plan? Any specific update that might be incremental in June? Andrew Marsh: Yes. So I appreciate that question, David. So we never know exactly when a data center contract might land. But certainly, we're going to give you more color around the data centers and how we're positioning ourselves and things like that. We'll give you a little bit of a longer outlook and you typically have been going out 5 years from that period. And we'll try to get a couple more of our leaders in front of you so that you have a chance to talk to a little more depth in our team. So you have a chance to really understand perhaps the various jurisdictions and what those mean and what they're trying to do. So those are the kind of things that we would try to update you on to give you more comfort around the plan that we've laid out. And if we're fortunate, maybe we'll have something to announce. But the timing, you never know about the timing for a large customer contract. David Arcaro: Yes. Got it. That makes sense. That's helpful. And then I'm just curious, what's -- more broadly, what's the latest feedback that you're getting from the political and regulatory standpoint related to data center activity? Are you seeing -- is it continued support here as you continue to accelerate? Or are you seeing increased pushback challenges locally to the activity that's popping up? Andrew Marsh: Yes. Thank you there. That's another good question. So the -- we still continue to have strong support for the data centers in our jurisdictions. The Lightning Initiative that I mentioned in Louisiana is a good example of that. That was just the end of last year. And we continue to see strong support in other jurisdictions, not to mention a lot of customer interest and a lot of customer activity. So we see a lot of positive movement, and it continues to bode well for the expectations that we've laid out for you all. In fact, I think they probably strengthened since we talked to you last quite a bit. There still is some concern about things like affordability and rates. And I outlined a lot of the things that we are doing. In fact, the comments about customer -- existing customer benefits from the contribution of fixed costs and other things are, we think, really important to continue to maintain the positive momentum in our jurisdictions. But right now, we continue to see very positive momentum from both customers and communities about data centers. Operator: [Operator Instructions] Your next question comes from the line of Andrew Weisel of Scotiabank. Andrew Weisel: I hope you guys are getting ready for Mardi Gras. First question, I wanted to clarify a little bit the forecast for retail sales growth on Page 5. I see you increased the CAGRs, but the numbers in the bar chart went down. Am I right, that's just because you roll forward the starting point from '24 to '25. And I know you're not showing the forecast in absolute terms, but if my math is correct, I think your forecast for '28 to '29 went up by about 2 terawatt hours or 4% to 5%. And if so, is that driven by a small number of specific projects? Or would you call that broad-based growth? Kimberly Fontan: Relative to the roll forward of the year and what you're seeing on the dimensions there on the chart. We can get you the specifics on '28 and '29 to confirm your terawatt number. But we have seen the step-up from '27, '28, '29 as these large customers continue to ramp, the ones that we've made significant announcements on. And then any adjustments to the probability weightings would also show up there. Andrew Weisel: Okay. But does that sound about right? Are they going up by about 5%? Kimberly Fontan: I think overall, I would look at the -- we looked at the 15% off of the '25 base. I don't have those other numbers right off the top of my head, but we can certainly double check them and circle back with you, Andrew. Andrew Weisel: Okay. Fair enough. Directionally, it seems like it's certainly going up, though. Next question, regarding the Meta contracts, help me understand the pushback or confusion around contract terms. It seems like Meta structured these leases as a series of 4-year subcontracts under an entity owned by Blue Owl with the ability to exit or renew every 4 years. Yet you and the regulators are describing it all as a 15-year structure. And of course, the new gas plants will have a much longer useful life of a few decades. I certainly don't want to put words in anyone's mouth, but help us understand the 2 different perspectives and how to reconcile these 4-year terms versus the 15 years and how that may or may not create risk for investors or rate payers and why there seems to be... Kimberly Fontan: Yes, I would think of as 2 separate transactions. So on the electric service agreement side, we have a 15-year term with a subsidiary of Meta backstopped all the way at the parent. That is the service agreement, and that has all the provisions that I mentioned earlier around termination fees and minimum bills and those sorts of things. On the -- separately, what Meta has pursued is a transaction with Blue Owl, where they are structuring the capital that they're spending on their side, that is where all of those terms that you're referencing are. And I don't have the details on all those terms, but they're separate and apart from the ESA that they have with us that backstop by their parent. Andrew Weisel: Okay. So who's the ultimate guarantor on your ESA? Kimberly Fontan: It is the parent. It is Meta all the way up. Andrew Marsh: And I don't know if you heard earlier, but there's -- we were worried that there might be sirens in the background because of all the Mardi Gras floats that are getting escorted around town right now. Operator: Your next question comes from the line of David Paz of Wolfe. David Paz: Just with the 8 gigawatts of gas turbine availability, what level of flexibility do you have in the equipment delivery period? So just thinking about the chart from EEI, I think there were some, let's call them, open slots in the '28 to '30 period. Are those -- to the extent you don't have a new announcement, say, this year, for instance, how would you kind of fill those in? Would you just push those out a little? And just can you maybe better explain how to think about the cadence? Andrew Marsh: David, this is Drew. So thanks for that question. First of all, we fully expect to utilize the turbines that we have ordered on the time line that we have them ordered. We have customers that would move them forward if they could. And we fully expect to utilize the turbines that we have. If for some reason, we don't have contractual arrangements, we don't have ESAs in place for customers when we need to make -- start making payments on these turbines, we're likely to get reimbursement agreements from customers. So that shouldn't be a problem for us financially. But we fully expect to meet the time line that those turbines are on. So that's -- I think that's where we are right now. Operator: There are no further questions at this time. Liz, I will now turn the call back over to you. Liz? Liz Hunter: Thank you, JL, and thanks to everyone for participating this morning. Our annual report on Form 10-K is due to the SEC on March 2 and provides more details and disclosures about our financial statements. Events that occur prior to the date of our 10-K filing that provide additional evidence of conditions that existed at the date of the balance sheet would be reflected in our financial statements in accordance with generally accepted accounting principles. Also, as a reminder, we maintain a web page as part of Entergy's Investor Relations website called Regulatory and Other Information, which provides key updates of regulatory proceedings and important milestones on our strategic execution. While some of this information may be considered material information, you should not rely exclusively on this page for all relevant company information. And this concludes our call. Thank you very much. Operator: This concludes today's conference call. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the West Fraser Q4 2025 Results Conference Call. [Operator Instructions]. This call is being recorded on February 12, 2026. During this conference call, West Fraser's representatives will be making certain statements about West Fraser's future financial and operational performance, business outlook and capital plans. These statements may constitute forward-looking information or forward-looking statements within the meaning of Canadian and United States securities laws. Such statements involve certain risks, uncertainties and assumptions, which may cause West Fraser's actual or future results and performance to be materially different from those expressed or implied in these statements. Additional information about these risk factors and assumptions is included both in the accompanying webcast presentation and in our 2025 annual MD&A and annual information form as updated in our quarterly MD&A which can be accessed on West Fraser's website or SEDAR+ for Canadian investors and EDGAR for United States investors. I would now like to turn the conference over to Mr. Sean McLaren, President and CEO. Thank you. Please go ahead. Sean McLaren: Thank you, Mina. Good morning, everyone, and thank you for joining our fourth quarter 2025 earnings call. I am Sean McLaren, President and CEO of West Fraser. And joining me on the call today are Chris Virostek, Executive Vice President and CFO, and Matt Tobin, Senior Vice President of Sales and Marketing; and other members of our leadership team. On the earnings call this morning, I will begin with a brief overview of West Fraser's Q4 and fiscal 2025 financial results and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks. West Fraser generated negative $79 million of adjusted EBITDA in the fourth quarter of 2025, an improvement from the negative $144 million reported in the prior quarter, which had included a $67 million out-of-period duty expense relating to the calendar 2023 duty year. Results remained soft across our business in Q4 as broader housing and repair and remodeling markets continued to face affordability pressures. For full year 2025, we generated $56 million of adjusted EBITDA -- down from the $673 million reported in 2024. The lumber segment had a challenging 2025 with the protracted down cycle in lumber among the toughest we've experienced in many years. During the year, we made meaningful progress high-grading our mill portfolio, which included a number of closures or curtailments of higher cost assets, but more importantly, the completion of the ramp-up of our Allendale OSB mill in South Carolina and the completion and commissioning of our new Henderson lumber mill in Texas. In terms of our balance sheet, we had more than $1.2 billion of available liquidity at year-end, which offers us the financial flexibility and strength to support a consistent capital allocation strategy through the cycle. With that high-level overview, I'll now turn the call to Chris for additional detail and comments. Christopher Virostek: Thank you, Sean. And a reminder that we report in U.S. dollars and all my references are to U.S. dollar amounts, unless otherwise indicated. The lumber segment posted adjusted EBITDA of negative $57 million in the fourth quarter compared to negative $123 million in the third quarter. The Q4 result is actually quite comparable with the prior quarter. If one excludes the $67 million export duty expense reported in the third quarter, which had related to the 2023 calendar year. While not included in our adjusted EBITDA, we reported $473 million of noncash restructuring and impairment charges in the lumber segment in the fourth quarter. This was related to a goodwill impairment of our U.S. lumber business as well as the closure of 2 of our sawmills. The North America EWP segment reported negative $24 million of adjusted EBITDA in the fourth quarter compared to negative $15 million in the third quarter. Not included in this EBITDA, you will also have seen that we reported a $239 million noncash restructuring and impairment charge in this segment in the fourth quarter, which was related to the indefinite curtailment of our OSB mill in High Level, Alberta. The Pulp & Paper segment reported negative $1 million of adjusted EBITDA in the fourth quarter compared to negative $6 million in the third quarter. Sequential improvement in this segment was largely owing to the major maintenance shutdown at the mill in the third quarter. In our Europe segment, adjusted EBITDA was $4 million in the fourth quarter versus $1 million in the third quarter as that business experienced a moderately improved business environment. In terms of our overall Q4 results, the sequential EBITDA improvement was supported by reduced SPF log costs, lower Southern Yellow Pine manufacturing costs and lower OSB labor costs as well as the absence of the $67 million out-of-period duty expense that we reported last quarter, partially offset by lower lumber and North American OSB prices. Our lumber business continued to benefit from the portfolio optimization actions we have taken in recent years. In some instances, we have been able to replace output from now closed mills with production from our more modern, larger scale and lower-cost mills, helping to enhance the overall cost structure of the operation. For instance, in the U.S. South, our Q4 2025 Southern Yellow Pine shipments were 6% lower quarter-over-quarter, while SYP unit manufacturing costs were also lower. Cash flow from operations was negative $172 million in the fourth quarter, with net debt at $131 million compared to a net cash position of $212 million reported last quarter. This change in our net debt is attributed to a normal seasonal build in working capital, $139 million of capital expenditures and $32 million of cash deployed towards share buybacks and dividends. With respect to our operational outlook for 2026, we have reiterated previously released guidance for the year, as shown on Slide 8 and as detailed further in our earnings release. Note that if and as the U.S. administration's tariffs and other policies evolve, we will evaluate the impact of the tariffs on our operations and determine revisions to our 2026 forecast as appropriate. With that financial overview, I will pass the call back to Sean. Sean McLaren: Thank you, Chris. Before I shift to concluding remarks, I'd like to make a few comments on our liquidity. As you can see on Slide 9, we had a healthy balance sheet and total liquidity exceeding $1.2 billion as we exited 2025. While our liquidity has trended lower over the last few years during this extended down cycle, our financial position remains strong, providing us with sufficient flexibility to navigate further economic challenges should they unfold. I think it's also important to reflect upon the history of attractive returns West Fraser has generated for our shareholders. As you can see in the figure at bottom of Slide 10, our shareholders have been rewarded for their patience as we have continued to execute on our plans to grow the business, optimize our portfolio through dispositions and/or closures of highly variable or uneconomic assets and return surplus capital through dividends and buybacks. With the total annualized return approaching 9% since the beginning of 2006, a which includes share price appreciation and reinvested dividends, we remain proud of what the West Fraser team has been able to accomplish. I'll now shift to our general outlook and add some concluding remarks. There's no avoiding the fact that we face difficult end markets in 2025, but we manage our business for the long run. We have not been resting waiting for a market recovery. We've been actively investing in and improving the business. And because of that, we remain optimistic about West Fraser's future. For our lumber assets in the U.S. South, we continue to refine and optimize our operations by removing costs and looking for additional margin opportunities. We are also ramping up our modernized Henderson mill, which we believe is positioned to be one of the best mills in our fleet once it achieves full operating rates. In Canada, the supply and demand for SPF products continues to show relative advantages compared to SYP as the U.S. South absorbs the new capacity introduced in the region in recent years. We continue to execute on our portfolio optimization strategy, which includes the reduction of higher cost capacity across our lumber platform. Since 2022, we have removed over 1.1 billion board feet of capacity through mill closures and permanent shift reductions, representing a 16% decrease in the company's lumber operating capacity. We've also reduced the number of shifts or hours of operations at various lumber mills across our platform as a means to manage cost. At the same time, we have invested nearly $1 billion of capital into our lumber business over the last 4 years, modernizing assets, adding flexibility to our production platform, removing costs, implementing margin expansion projects and making our mill safer for our employees. Specifically with the startup of Henderson, we are nearing completion of the major U.S. lumber investment we have made over the past number of years with our focus increasingly turned towards operationalizing the capital we have invested in the region. Taking such a proactive approach to portfolio management has further strengthened our cost position and competitiveness. In our North American EWP business, we have largely completed the ramp-up of our Allendale OSB mill, while more recently, we announced the planned indefinite curtailment of our high-level OSB mill this spring, which will remove 860 million square feet of currently uneconomic capacity in an effort to balance our production with customer demand. In conclusion, while we rise to meet the needs of our customers every day, we are also dealing with limited macro visibility. In response, we have been actively managing our portfolio to be low cost and diverse by both geography and product to mitigate uncertainties. We remain optimistic about our longer-term prospects and we'll continue to focus on operational excellence, creating a leading wood building products company that is resilient and sustainable through the cycle. And we will do all this while maintaining the type of financial strength that gives us the flexibility to be able to take advantage of growth opportunities as they arise. Thank you. And with that, we'll turn the call back to the operator for questions. Operator: [Operator Instructions]. And your first question comes from the line of Ben Isaacson from Scotiabank. Ben Isaacson: Just 2 questions for me. The first question, can you give a little bit of qualitative color as to how balanced or imbalanced margins were between SPF and SYP in Q4? And how does that look right now? Sean McLaren: Ben, we don't specifically call out our different segments, saying that as we saw through the quarter, you've seen -- you've watched the spreads start to close between the pricing between the products. So I think that's reflective of things kind of moving as customers adjust their needs and demand patterns depending on the end users of the products. Saying that, I think we're -- as we look to this year on both sides of the border, both products we're actively looking to make cost -- reducing costs, as you saw with both 100 Mile and Augusta in Q4. And we believe both those businesses are positioned to operate through the bottom of the cycle here. Robert Winslow: Great. And then I think you mentioned lower log costs for SPF, lower manufacturing for SYP and lower labor for OSB. Among those 3, how much of that is sustainable going forward versus a one-off for Q4? Sean McLaren: Ben, I'd say we've been very active in -- across all 3 segments on not only adjusting capacity on uneconomic assets, but modernizing assets through investment as well as reducing costs through flexible operating schedules. And I think the trends you are seeing in our cost structure are really the result of the work we've done over the last several years to lower cost. Operator: And your next question comes from the line of Ketan Mamtora from BMO Capital Markets. Ketan Mamtora: Maybe to start with, Sean, can you talk about sort of the M&A opportunities that you are seeing right now, given how depressed lumber prices have been for the last couple of years? Would that be an area of interest at this point, which certainly looks like bottom of the cycle? And related to that, any interest in growing outside of North America in lumber? Sean McLaren: Yes, I'll make a couple of comments here, and Chris, please add anything I miss. And I think we maybe talked about this a few times over the quarters. For us, it's really about how do we make the company stronger at the bottom of the cycle in the current conditions we're in. So asset quality is very important. And over the last number of years, we've actioned a few things, but not very many. And every one of those things has been designed to make us stronger at the bottom. We have a balance sheet to be able to react to anything of quality that presents itself saying that we typically, the stronger assets are going to wait for a better time to be available. So those would be the only comments that I would say on M&A. Chris, anything to add there? Christopher Virostek: No, that's a great point. Thanks, Sean. Sean McLaren: Yes. And then in terms of any outside of North America, of course, even though the macro environment in Europe continues to be slow, we are pleased with our team, pleased with our assets over in Europe, and they're performing well at the bottom of the market. We continue to work with them to look at how we make our European business stronger. And I think I would just leave it there. There would be nothing in front of us today that we would talk about. It would be the same conditions we would look at in North America, makes us stronger at the bottom of the cycle, and it's a good return and our team is ready to take it on. We've got the flexibility to be able to consider it. Ketan Mamtora: Understood. That's helpful. And then just one more from me. How should we think about ramp-up of the Henderson mill in the context of demand environment, which is quite muted? Sean McLaren: Yes. And I think -- so it's very early days in Henderson. The mill began commissioning at the end of Q4. So we're in the early stages of startup. And as a reminder, it replaces an existing mill. So that volume had been in the market, and we expect through this year to be ramping up to replace that volume. And I think we will continue to look at our customer needs as we move beyond that. And this just gives us another low-cost asset to be able to adjust our full platform with. Operator: And your next question comes from the line of Sean Steuart from TD Cowen. Sean Steuart: A question for Sean or for Matt. We've seen a good lift in North American lumber and OSB prices the past couple of months. Interested in your perspective on how much of that you would attribute to seasonal activity picking up in advance of the spring building season versus maybe the initial stages of the cyclical recovery as supply is rationalized in the market. Sean McLaren: Maybe, Matt, I'll hand that one over to you. Matt Tobin: Sure. I think what we've seen is just from what we hear from our customers is just a little bit more difficult to get what they're looking for at the time they're looking for it. And so just as I think supply shrinks and demand stays relatively steady over the last couple of quarters, just a little bit harder for our customer to get the product they're looking for when they're looking for it, and it's had an impact on pricing. And as far as spring, I would say, probably a little early to say today. I said, you usually see a bump in buying in the spring. But as you know, spring is usually defined by that warmer weather. And so just coming out of a couple of weeks of freeze in the U.S., I'd say, we're still a little early to see there. And once the weather turns, we'll have a better idea of what spring looks like. Sean Steuart: And Matt, any perspective on the relative strength we've seen for U.S. South pricing of late versus Canada? Matt Tobin: Like I said, I think from what we hear from our customers, it's a little harder for them to find the product they need when they need it. I think a lot of curtailment that Sean has talked about that we and the industry has taken that make it a little harder to find the product. And so just reflecting in the pricing based on that available supply. Sean Steuart: Okay. Chris, I wanted to follow up on the prior question around M&A. And I appreciate you guys aren't -- you don't want to tip your hand too much in terms of thing of what you'd be looking at or specific areas or products. But I know the priority here is sort of sustaining a balance sheet that's flexible. Can you give us any perspective on how thoughts are evolving around minimum liquidity thresholds or maximum leverage targets that the company might be comfortable with as acquisition opportunities are considered in the initial stages of an upturn? Christopher Virostek: Thanks, Sean. I think there's a lot of latent financial flexibility in the business on the leverage side. I think anything that we would consider on leverage would -- we'd have to see a very clear path to getting leverage metrics and interest burden to a level that's very manageable through the cycle. So I wouldn't say that we would rule out putting leverage on to do something. But there'd have to be a pretty clear path through that to a deleveraging quickly afterwards, through value creation, and that really translates to quality assets, right, is, as Sean said, things that make us better, generate cash flow, there's a synergy opportunity. And if we incur some leverage to do something, a path to quickly pay that down to metrics that are very durable through the cycle for us and maintain that flexibility for us. So it's not off the table, but have to be a very clear path. Sean Steuart: Okay. Understood. And then I guess just following on that, when you talk about anticipation of more opportunities on acquisitions coming to the table in the initial stages of an upturn. Is that you need to see that initial upturn to get comfortable that there will be a deleveraging path? Or is it in anticipation of more potential sellers looking to take advantage of a better valuation environment in the initial stages of an upturn. I'm just trying to sort of scale that up and how you think about the timing? Sean McLaren: Sean, maybe I'll jump in on that one. Again, you never know what might be available when. I think our comments around quality and every one of our assets gets pressure tested at the bottom of the market. So we have an opportunity to see what the level of quality is of an asset. And it's hard to say when those assets become available, whether it's in the early stages of recovery or whatever is happening. I think that is the criteria for us. So it's not -- I think we have a balance sheet that regardless of timing, we'll be able to consider and look at it. And it's just hard for us to predict when those opportunities may present themselves. I would say, for us, we are focused on operationalizing what we've invested inside West Fraser and ready if something presents itself that makes us stronger. Operator: And your next question comes from the line of Hamir Patel from CIBC Capital Markets. Hamir Patel: Sean, there's been a lot of discussion around potential housing measures, the Trump administration may implement to boost affordability. What do you think would be the most meaningful initiatives that they could bring about? And how soon could that translate into real-world incremental lumber demand? Sean McLaren: Well, first off, Hamir, we would like all of them. So it's hard to pick and choose which ones would be the best, but we are pleased to see the attention the administration is paying to housing affordability and the different ideas that are being talked about and the different measures that are being taken. Anything that allows homebuyers to be able to get into a single-family or multifamily home and improves demand, and that is good for our industry and obviously good for West Fraser. So hard to predict how quickly what will happen, when it will happen, how long it will take effect. I would say from our perspective, we're just pleased. It's being talked about quite a bit with the administration on both sides of the border, frankly. Hamir Patel: Fair enough. And Sean, it sounded like from your outlook, a bit more cautious on the demand outlook for the year ahead for OSB versus lumber. Can you speak to maybe what drives the difference there and maybe what you're hearing from your customers for growth on the R&R side? Sean McLaren: Yes. Maybe before I answer that, I might just ask Matt to maybe a few comments on the R&R side. Matt Tobin: Sure. I'd say kind of mixed from our customers. I mean, some projecting low growth, others flat. So I'd say we're seeing a mix of sentiment on the year, but I don't know, consensus on a shift from what we've seen recently in the R&R markets. Sean McLaren: And in terms of our outlook, Hamir, again, I think we would always take a cautious view because we really don't know, and we are going to manage our business to be competitive at the bottom of the market. And if it lasts, we're going to continue to look to take out -- remove cost and make ourselves more competitive. And I really think that's been our focus the last 3 years and will continue to be our focus. Hamir Patel: Fair enough. Thanks a lot. Operator: Thank you. That ends our question-and-answer session. I will now hand the call back to Sean McLaren for any closing remarks. Sean McLaren: Thank you, Mina. As always, Chris and I are available to respond to further questions as is Robert Winslow, our Director of Investor Relations and Corporate Development. Thank you for your participation today. Stay well, and we look forward to reporting on our progress next quarter. Operator: This concludes today's call. Thank you for participating. You may all disconnect.
Operator: Thank you for standing by. This is the conference operator. Welcome to WildBrain's Fiscal 2026 Second Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Kathleen Persaud, VP of Investor Relations. Please go ahead. Kathleen Persaud: Thank you, operator, and thank you, everyone, for joining us today for WildBrain's Second Quarter 2026 Earnings Call. Joining me today are Josh Scherba, our President and CEO; and Nick Gawne, our CFO. Before we begin, please note the matters discussed on this call include forward-looking statements under applicable securities laws, which reflect WildBrain's current expectations of future events. Such statements are based on a number of factors and assumptions that management believes are reasonable at the time they are made and information currently available. However, many of these factors and assumptions are subject to risks and uncertainties beyond WildBrain's control, which could cause actual results and events to differ materially from those that are disclosed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, changes in general economic, business and political conditions. WildBrain undertakes no obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. Please note that all currency numbers are in Canadian dollars, unless otherwise stated. After our remarks, we will open the call for questions. I will now turn the call over to our President and CEO, Josh Scherba. Josh Scherba: Thank you for joining us today. The second quarter of fiscal 2026 reflects a period of continued execution of WildBrain's flywheel strategy while unlocking a transformational opportunity for the company. During the quarter, we continued to see strong performance for our owned IP and WildBrain CPLG, our global licensing agency, as well as strong engagement on our digital platforms and positive reception for new premium content launches. During the quarter, we also announced the sale of our interest in Peanuts for $630 million, which will eliminate our debt and leaves us with material cash proceeds to invest in our business. This represents a significant inflection point and opportunity for WildBrain. As we move through this transition, our focus is on ensuring the business is positioned effectively for the go-forward operating structure with clear priorities around capital allocation, cost discipline and long-term value creation. Before delving into greater detail on the path ahead for WildBrain, I'd like to take a few minutes to look back at another successful quarter. Our global licensing business continued to perform well in the second quarter, reflecting the enduring strength of our core brands and the depth of our global licensing platform. We saw continued momentum across Strawberry Shortcake and Teletubbies, supported by active partner engagement and expanding retail programs. MGA Entertainment recently launched its LOL Surprise Strawberry Shortcake Dolls, a collaboration that brings Strawberry Shortcake to a new generation of consumers. The collection sold out in just 12 days, underscoring the strength of the brand and its appeal to leading global toy partners and consumers. Strawberry Shortcake continues to benefit from rising engagement across digital and social platforms, which remains an important driver of licensing demand. Just last week, we announced a refreshed CG Version of the Classic Strawberry Shortcake with a vibrant slate of new original content launching across WildBrain's digital network this year. This includes a hybrid live action and animated baking show and other short-form animated episodes. Early fan response to the refreshed Strawberry Shortcake look has been encouraging, with fans on our socials expressing excitement for the new design and commenting they're eager to see more. This creative evolution underpins a broad content rollout, reaching today's fans where they're watching and strengthens the foundation for continued licensing and franchise growth. Strawberry Shortcake's growth is being led primarily by the U.S. market, which is creating a halo effect that is already seeing incremental opportunities across additional regions and categories. The playbook is clear. We are broadening and deepening the content road map, building on recent wins to reach new fans while continuing to engage and activate audiences we've already reached. This consistent and expanding content strategy keeps Strawberry Shortcake top of mind with consumers and reinforces confidence among existing licensing partners. It is also creating opportunities with new partners globally with momentum building toward multiple territory launches coming over the -- launches over the coming 12 months. Teletubbies also delivered steady performance during the quarter, with particular strength in collectibles and lifestyle categories. We've previously highlighted our collaboration with Pop Mart, which continues to drive meaningful fan engagement and retail momentum, demonstrating the brand's ability to resonate with young adult consumers and expand into new high-value categories. Teletubbies and CASETiFY recently took home the award for Most Vibrant Energy IP at the China Licensing Expo, highlighting the cultural resonance and enduring affinity for Teletubbies that we will build on and grow over time. Engagement across YouTube and social platforms remained healthy, supporting our longer-term plans as we build toward the brand's 30th anniversary in 2027. YouTube watch time for the brand was up 11% year-over-year in the quarter, and we're developing new content in partnership with a major Chinese platform to further support growth in one of the largest licensing markets in the world. Across the portfolio, we continue to see broad-based interest from partners. Our focus remains on disciplined dealmaking, category diversification and nurturing long-term growth of our franchises. By building high-quality franchises that generate repeatable and growing profits over time, strong U.S. engagement provides a foundation for scaling these brands and unlocking additional growth opportunities internationally. WildBrain CPLG delivered a strong quarter with growth in both owned and third-party brands and across all territories. CPLG remains a highly differentiated licensing platform, continuing to attract new partners while expanding existing relationships. During the quarter, we announced an expanded licensing partnership with Dr. Seuss Enterprises, broadening global programs for The Cat in the Hat and How the Grinch Stole Christmas, reflecting sustained retailer demand for evergreen multigenerational franchises. CPLG's global footprint and deep retail expertise continue to create tangible commercial opportunities for both our own and partner brands, underscoring a unique WildBrain advantage, the ability to translate creative momentum into scalable global retail programs. This momentum was further supported by the LOL Surprise collaboration for Strawberry Shortcake mentioned earlier, highlighting the strength of CPLG's ability to activate brands across high-impact categories and partners. Overall, the quarter highlights the strength of CPLG's infrastructure and its ability to convert brand momentum into meaningful commercial outcomes across regions and categories. Turning to content creation and audience engagement. Our premium and digital offerings continue to resonate with audiences globally. Our content recently received 6 Children's and Family Emmy nominations, 3 Annie Award nominations and 5 Kidscreen Award nominations. This reflects a deliberate evolution in our creative ambition from preproduction with House of Cool to premium feature filmmaking with Peanuts as we continue to raise the bar on delivering what audiences want. In January, our live-action young adult figure skating series, Finding Her Edge launched on Netflix to massive success, rising quickly to the top 10 in 81 countries, including the U.S. and Canada. The series performed strongly enough to be renewed for a second season within a week of its premier. The [ renewal ] reflects positive audience engagement and reinforces our ability to develop premium internationally relevant family content for global platforms. Another live action series, Season 2 of Yo Gabba GabbaLand premiered on Apple TV+ in late January, featuring an expanded lineup of special guest stars and the signature music that defines the franchise. The new season builds on the brand's strong creative momentum and continued appeal with kids and families globally. The brand is also gaining momentum in the consumer products licensing space as we finalize a number of deals that we'll be announcing shortly. Our capabilities in premium content highlighted by the upcoming Peanuts feature positioned us well for where we see the industry headed, be it for premium feature films or high-quality episodic storytelling. Across audience engagement, our digital network on YouTube, FAST and social media continue to play an important role in maintaining brand visibility and supporting franchise momentum. This quarter was marked by strong engagement across platforms. The Teletubbies YouTube channel drew its highest ever quarterly watch time. Our overall FAST viewership grew an impressive 46% in calendar year 2025 to 24 billion minutes. We also launched several new YouTube channels, including a Peanuts relaunch. These platforms remain central to how kids and families discover content today. While monetization across parts of the digital ecosystem continues to evolve, we are well positioned to capture long-term value supported by a strengthened commercial engine, upgraded technology and tools and expanded capabilities across YouTube, FAST and Media Solutions. On the advertising side, we continue to see opportunity as [ dollar ] shift from linear kids networks to digital. WildBrain is one of the few scaled brand-safe options for advertisers who need to reach kids and families. Our direct sales team is packaging inventory across YouTube and FAST in a COPPA compliant way that programmatic can't replicate. We believe we're well positioned to capture demand that has limited places to go. With our premium content, scaled distribution footprint and deep compliance expertise, we see meaningful runway to grow this business over time for years to come. Looking at the path ahead now, the sale of our 41% interest in Peanuts fundamentally reshapes WildBrain's financial profile, eliminating all of our debt and significantly improving our balance sheet flexibility. At the same time, it changes the scale and composition of our earnings base as we move toward a more focused and streamlined operating structure. Importantly, we retain a long-term relationship with Peanuts and Sony through exclusive service agreements across content production, global content sales and licensing in EMEA and APAC. With a strong balance sheet and a clear strategic focus, WildBrain is repositioned to make the investments and strategic actions needed to unlock the significant profit potential across its portfolio as we transition toward a business increasingly weighted to wholly owned franchises and digital platforms. Let me talk about why we're so confident in the path ahead. WildBrain has a unique set of assets, globally recognized brands, a scaled digital platform, deep licensing expertise and a proven content engine. And just as importantly, a brand-building playbook that we know works. We demonstrated that playbook with Peanuts, increasing the brand's value through disciplined stewardship, global monetization and thoughtful capital allocation. Now, we are continuing to apply those same capabilities to a portfolio that is increasingly weighted toward wholly owned WildBrain IP. Historically, our capital allocation priorities were shaped by debt service costs. Going forward, that changes. With a debt-free balance sheet, our focus shifts toward reinvesting in growth, activating wholly owned franchises, expanding licensing and digital monetization and modernizing our infrastructure and systems. These investments will allow us to operate more efficiently, make better data-driven decisions and ultimately drive higher performance across the organization at a lower cost. At the same time, we remain disciplined, reducing costs where appropriate, improving operating leverage and returning capital to shareholders when appropriate, including through stock buybacks. Taken together, this positions WildBrain as a more focused, more flexible and more scalable business, one that is well equipped to create long-term value for shareholders. With that, I'll turn it over to Nick to walk through the financial results for the quarter and provide an update on our outlook for fiscal 2026. Nick Gawne: Thanks, Josh. Before we get into the results, just a quick note on presentation. Under IFRS, following the closure of our Canadian television broadcasting business and the announced sale of our interest in Peanuts, both businesses are now reported as discontinued operations, included in the results related to our 41% ownership in Peanuts are certain consolidation benefits that arise from fully consolidating the brand, which no longer continue following the sale. For example, where we were content producer, distributor and owner of Peanuts, we capitalized certain production cost of sales to be amortized against future revenue streams. This reduced our content creation cost of sales. This treatment will be discontinued. So for comparison purposes, the benefit we took from this accounting has been recorded in discontinued operations. By contrast, the business we transact with Peanuts, which was previously eliminated from consolidated revenue and cost of sales, is now shown as continuing operations. By way of example, when we generate revenues from Peanuts as a service provider for content production or as a licensing agent, these revenues are now shown as continuing, having previously been eliminated. Please refer to our MD&A for further information. As we go through the discussion today, I'll be clear about whether we're referring to continuing versus discontinued operations. Revenue from continuing operations in the second quarter was $72 million, up 11% year-over-year. Drilling down to the segment revenue for continuing operations, global licensing revenue in the quarter was $27 million, up 24%, driven by growth in both our franchises and our global licensing agency. Revenue for content creation and audience engagement in the quarter was $45 million, up 4%. Revenue was driven by higher production revenues, offset by softer audience engagement revenues across distribution, YouTube and FAST. Despite lower revenues, engagement levels remained strong, supporting ongoing brand awareness and long-term franchise growth. Staying with continuing operations, gross margin percentage in the second quarter was 50% compared to 48% in the prior year, driven by a mix shift towards higher-margin licensing revenue. SG&A was $21 million, an increase of 8%, driven by higher variable compensation and the impact of foreign exchange. Absent these movements, SG&A was flat as we continue to offset increases in our licensing cost base with savings in corporate costs. Adjusted EBITDA was $15 million, up 30%. Net loss in the quarter was $20 million compared to net loss of $86 million in the prior period. Turning to discontinued operations. Revenue was $132 million, up 83% year-over-year. The increase was driven by the timing of recognition of the Peanuts library renewal with Apple TV. Adjusted EBITDA from discontinued operations was $23 million, up 54% for the same reason. Free cash flow on a consolidated basis was positive $15 million. Our leverage at the end of the quarter was 4.88x, well within our covenant requirements. Proceeds from the sale of WildBrain's stake in Peanuts will be used to repay the company's outstanding debt in full. As a reminder, we paused guidance in December following the announcement of the Peanuts transaction as we accelerate a transformational agenda that is reshaping our growth profile and positioning us for durable high-quality returns. Over the past 12 months, we have undertaken a series of strategic moves, including the exit from our television business, the simplification of our share structure, the anticipated sale of our interest in Peanuts and its associated full repayment of debt. Those moves materially strengthen the balance sheet and enable management to sharpen our focus on high-growth opportunities. With debt eliminated and strong free cash flow from continuing operations, we are prime to invest meaningfully in structural and technology initiatives intended to reduce SG&A and improve scalability from calendar '27 and beyond. These foundational technology investments will modernize how the business operates with a focus on automation, data and scalability and will improve efficiency and performance across the enterprise. This supports sustainable margin expansion over the medium term. In parallel, we intend to resegment our financial reporting disclosures to better reflect how our business operates and how we engage with partners and customers and to provide investors with greater transparency into the underlying economics of the business. Given the timing in early stage of the infrastructure and technology investments, we are maintaining a pause on fiscal '26 guidance. We expect to learn more about the scale of our transformation opportunities in the coming months and anticipate resuming financial guidance for fiscal 2027. We've done the heavy lifting to reset the business, strengthen the balance sheet and sharpen our focus. Once the Peanuts transaction is complete, WildBrain enters its next phase, positioned to deploy capital more effectively, improve performance across the organization and drive durable value creation. That phase will be characterized by high growth and strong free cash flow generation. I'll turn it back to Josh to close this out. Josh Scherba: To wrap things up, the second quarter reflects a company in transition, but one that is executing well against its priorities. We're seeing strong momentum in global licensing, continued engagement across our digital platforms and positive validation of our premium content strategy. The announced Peanuts transaction and expected execution in calendar Q1 is a pivotal step that meaningfully strengthens our balance sheet and gives us greater flexibility to invest in our highest return growth opportunities. While fiscal 2026 is a transition year, we believe the actions we're taking now, simplifying the business, sharpening focus and reallocating capital, position WildBrain well for improved profitability and sustainable EBITDA growth beyond this year. With that, we appreciate your continued support and interest in WildBrain, and we're happy to take your questions. Operator: [Operator Instructions] And the first question will come from Drew McReynolds from RBC. Drew McReynolds: I guess maybe for you, Nick, just with respect to the timing of closing, I think that was expected for calendar Q1. Obviously, we're midway through. Any kind of more specific timing you can provide? Or yes, any update there would be great. Nick Gawne: Yes. We're still aiming to close in calendar Q1 this year. I can't really give any more update than that, but we're obviously working diligently towards that close date. Drew McReynolds: Okay. And so obviously, with all the moving parts, fully understand just pausing guidance until the end of fiscal 2027. I'm just wondering, at the 30,000-foot view, just some of the puts and takes about Q2 here for the continuing business like what -- is this kind of the profile we generally can model kind of going through the end of fiscal 2026 and into 2027? Or are there kind of obvious costs or revenues that kind of come in and out relative to what you just reported for Q2? Nick Gawne: Yes. I think the profile we see in the first half, definitely where within the continued operations where licensing growth is being seen in the licensing side of the business, which is higher margin. We'll continue to see that for the year and that kind of profile and mix through the year. Josh Scherba: And I would just add, I mean, this is a moment where we're really -- we're taking a beat to really look forward to '27 and '28. We've got some really strong underlying growth, as we've talked about in our core brands and what we're doing in global licensing as well as our content slate. So there's lots of excitement around. And we look forward as the dust settles to be able to update you more thoroughly. Drew McReynolds: Sure. No, understood. I think I asked this each quarter to you, Josh, just any kind of notable evolution in the global content environment just overall? Josh Scherba: Well, I think for us, we're excited about how our slate is shaping up. We had a really nice win here with Finding Her Edge, live-action, young-adult drama that launched in January and already has its second season pickup. Overall, I think there were some trends last year on an industry level. I think it was 6 of the top 10 box office performers were animated. Netflix, of course, had a huge win with KPop Demon Hunters. So it certainly continues to show the appetite for animated family entertainment. We think we're really well positioned on the feature side, given we're in production on a Peanuts feature that we think looks great. And we think there's going to be more opportunity in that space as we move forward. So as there's kind of been this evolution out of a high volume of episodic content and into more premium spectacle content for the streamers, that was really the rationale for us making the House of Cool acquisition a few years ago. And now as we're seeing that trend become a reality, we think we're really well positioned. And I would say, too, that we're -- in terms of our slate for '27, rough math, we're around 75% green-lit at this point, which is above where we typically are at this time of year. Drew McReynolds: Okay. Fabulous. And maybe just a last one for me for now. When you announced the sale of Peanuts transaction, you obviously provided some kind of updates on Strawberry Shortcake and Teletubbies kind of revenue performance and what some of that kind of growth looked like dating back, I can't remember the time frames. Obviously, in your prepared remarks, you have a lot of qualitative comments that point to kind of continued momentum. Are you kind of just comfortable in saying that you can sustain generally the growth of these 2 pieces of IP? Or can you kind of put it in some quantitative sense at a 30,000-foot view? Or should we just kind of wait until you can put that and roll it into formal guidance for fiscal 2027? Josh Scherba: Yes. So what I would say in terms of the rollout of Strawberry and Teletubbies, Strawberry specifically right now is -- it's essentially a U.S. property. The vast majority of our revenue is coming from there, and it's on a really good trajectory in the U.S., and we expect some growth to continue. But ultimately, there's a lot of untapped potential in the rest of the world. And we're excited about that as we move into '27 and '28. I think we've talked about -- I think we talked about retail numbers last quarter and somewhere around USD 200 million in the trailing 12 months. We think the opportunity is -- we could size it at 4x that. And we have a path and an opportunity, we think, to grow it to that level. And Teletubbies is earlier stage, geographically, very different profile. The leading territory currently is China, and we see other opportunities throughout Southeast Asia and Korea. And also an overall plan to bring it back to make it be a really relevant brand for toddlers once again. I mean, [indiscernible], it was a $1 billion retail brand, and we're approximately going to be at around $100 million in the trailing 12 months. So significant room for upside in both IP. And I would also mention that there's -- now that we have some capital to invest elsewhere, we will be looking at some of our other IP as well. DeGrassi and Inspector Gadget would be 2 examples of properties we spend a lot of time talking about, and we think Warren Reboots at some time here in the future. Operator: And the next question will come from David McFadgen from ATB Cormark. David McFadgen: So I just want to get an update, like when you closed the Peanut acquisition, has it changed in terms of your outlook for the cash? Like it's about $40 million? Nick Gawne: No, we're still seeing kind of plus $40 million of proceeds from the transaction and after full repayment of debt and transaction fees. So we're still very positive about the number. David McFadgen: Okay. And so when I read through your MD&A, you talked about the potential for reducing SG&A. Can you give us any idea how much you think you might be able to bring it down to? Nick Gawne: Yes. We're just at a stage where I think it's important to note that underlying SG&A over the past couple of years is broadly flat. We've had some FX differences. Now within continuing operations, our SG&A is split between U.K. and Canada. And the GBP has strengthened in the quarter, which is driving up some of our SG&A, and we've got a bit more variable comp in that. But our underlying cost base is pretty flat. We're not ready to quant the size and return of the investments quite yet. We've done some of the work, but we need to close that transaction. We need to kind of dig into what these technology projects can yield for us. And so I think when we're ready to resume guidance, we'll be able to kind of unpeel the onion on some of those opportunities a bit better. David McFadgen: Okay. So post the Peanut transaction, you have about $40 million in cash, no debt. So when we look at the company, we always say, okay, what's the capacity -- financial capacity for acquisitions. And that would obviously take into consideration a leverage target that you might feel comfortable going up to if there was a certain acquisition that was really attractive to you. So I was just wondering, I would imagine with that kind of a balance sheet, you'd probably be in the mode to look at acquisitions. So I was just kind of wondering what kind of acquisition capacity do you think you would have if something really interesting [indiscernible]? Josh Scherba: Well, yes, we will certainly have some capacity, and we are going to be on the lookout for things that make sense for our core business model. So things that represent opportunity to leverage our licensing business would be a natural fit. But we also have use of this capital internally, as we've talked about, investing in our own IP as well as infrastructure. And we've also discussed the opportunity for share buybacks depending on the trading level of the company. So yes, there is going to be flexibility moving forward. I don't want to put a target on it specifically, but you can do the math on generally the flexibility we're going to have should the right opportunity present itself. David McFadgen: Okay. I mean, clearly, you've left for several years with very high leverage. And I think you guys are making the right moves to have some flexibility now. Maybe I'll ask in another way, like would you be comfortable going up to, say, 1.5x leverage or 2x? Or any comment there? Josh Scherba: Yes, 2x would certainly be comfortable. We're also going to be in a position, as Nick mentioned in his comments, that we're going to be a cash-generative business. So we feel some leverage would be appropriate and a 2x level, it certainly would feel comfortable, should the right opportunity present itself. Operator: [Operator Instructions] The next question will come from Tim Casey from BMO. Tim Casey: I mean I realize you're not giving guidance, but can you talk a little bit about the cadence of quarters within the new construct of the company, given that you -- this quarter, you generated $15 million of free cash flow and $15 million of EBITDA. What -- like -- how does Q2 fit into the seasonality of the business? And the second question is, you've mentioned one of the things you want to do is invest internally. You talked about modernizing facilities. Can you rank that for us in terms of your capital allocation priorities? And give us some sort of quantum of how much you're going to spend? And is it a kind of a onetime sort of upgrade? Or is it -- are you moving more to a sustained internal investment that is going to be recurring as you pursue growth opportunities that you weren't able to given your previous financial constraints? Nick Gawne: So maybe if I could take the second question first. I think we're seeing the kind of infrastructure and technology investments of more of a onetime opportunity -- rather than a kind of a continual loading on the cost base. I think where we have clear opportunities for our brands, which are very high margin, you can see the margin in the MD&A of the licensing business at 90%. Clearly, there are opportunities there, but those opportunities are effectively paid for by the revenue they're going to create. So from a cost base perspective, it's more of a kind of onetime opportunity to renovate the house, so to speak. When we think about kind of quarterly cadence of earnings, traditionally in this business, it's been kind of Q1, Q2, so July to December weighted as those are the big kind of licensing periods with some mix -- with some kind of noise caused by revenue recognition arising from content distribution. So as that content distribution business gets smaller as a percentage of our revenues and licensing gets bigger, we do become more first half weighted from an EBITDA perspective -- revenue and EBITDA perspective. Now production always -- production isn't seasonal. Production is kind of -- it depends when you kick off production and when you finish production. But generally, that we do have some kind of -- we will have more seasonality than we've seen before because of our weighting towards licensing. From a cash perspective -- from a free cash perspective, we always have to look at it over a year because of the working capital challenges. Production is really kind of -- is a business where the disconnect between EBITDA and cash coming in the door is more extreme than many. So in any given year, we think we can generate a really strong percentage -- a really strong free cash flow conversion, EBITDA free cash flow conversion. Some years, that will be better. In other years, it will be worse. Some years, it will be over 100% due to the timing of production in previous years. So the net-net is a bit more seasonal than we used to be, a bit more first half than we used to be. But again, working capital kind of makes us look at cash over like a trailing 12-month or a 12-month period. Operator: And ladies and gentlemen, this concludes the question-and-answer session and today's conference call. You may disconnect your lines at this time. Thank you for participating, and have a pleasant day.
Andreas Trösch: Hello, everyone. This is Andreas Trosch from Investor Relations thyssenkrupp. Also on behalf of my entire team, I wish you a very warm welcome to our conference call on the first quarter results '25-'26. With me on the call are our CEO, Miguel Lopez; and our CFO, Axel Hamann. Before I hand over to the CEO and CFO for their presentations, I have some housekeeping. All the documents for this call are available in the IR section on the website. The call will be recorded, and a replay will be available shortly after the call. After the presentations, there will be the usual Q&A session for our analysts. we use Microsoft Teams for the call [Operator Instructions]. With that, I would like to hand over to our CEO, Miguel Lopez. Miguel Angel Lopez Borrego: Thank you, Andreas, and hello, everyone. Welcome to our first conference call in the current fiscal year. Let me start with an overview of our management priorities. First of all, portfolio. In terms of our strategic transformation, we continue to execute ACES 2030 with full focus also in order to establish thyssenkrupp as a lean financial holding company. With the successful spin-off of TKMS in October, a major milestone on our path towards this target picture, we created significant value for our shareholders. That is our clear ambition also for any portfolio actions ahead. For Materials Services, we push ahead for capital market readiness and their respective stand-alone setup. At Automotive Technology, we defined and implemented a new structure with clear focus on the core businesses. Moreover, we also initiated the sale of the noncore business unit, Automation Engineering, in November. At Steel Europe, negotiations with Jindal about the majority holding are ongoing and the respective due diligence is on its way. And let me remind you that we have reached a collective restructuring agreement with IG Metall Union in December, an historic milestone for thyssenkrupp. And in addition, actually another very important historical milestone just from last week, we have agreed on a term sheet on the new shareholder structure of HKM. Salzgitter plans to continue to operate HKM as the sole shareholder from June 1, 2026 onwards. That also means that the slab supply to thyssenkrupp Steel will already end in 2028. Regarding performance, Q1 marks a confirming start to the new financial year, even though our markets remain challenging across many of our customers' industries. Therefore, we confirm our group guidance for fiscal year '25, '26. On a relevant note, the likely positive implications from current political initiatives in Europe, such as CBAM or steel tariffs have not yet translated into measurable tangible effects, but they do present upside potential for our businesses going forward. On the green transformation side, we continue to build momentum. Let's start with the recent announcement. Uniper and Uhde have signed a framework agreement on ammonia cracking technology. The agreement covers up to 6 large-scale plants with a total capacity of 7,200 metric tonnes of ammonia per day. In addition, construction of the DRI plant at Steel Europe is moving ahead with full commitment. More from an ESG perspective, CDP -- so Carbon Disclosure Project, again honored thyssenkrupp for transparency and climate protection for the 10th consecutive year. With this result, thyssenkrupp has once again secured a place on the annual Climate A List, make it one of only 877 companies internationally with this distinction, including 34 companies from Germany. To summarize, a difficult market environment persists, but we are executing our strategy with discipline, reshaping our portfolio and improving our operational performance. Plus, we are confirming our full year guidance. Axel, the stage is yours for the financial section. Axel Hamann: Thanks, Miguel. Hello, everyone. This is Axel. Yes, let me turn now to the financial overview for the first quarter. Despite the macro environment you just have heard about, we achieved a promising and confirming start into the new fiscal year. We've increased our EBIT adjusted despite the top line headwinds, which continues to serve as a proof point that our internal efforts and the respective performance management are paying off. While sales decreased to EUR 7.2 billion, that means an 8% decline year-over-year. Our EBIT adjusted increased to EUR 211 million, which is EUR 20 million above last year's level. Net income came in at minus EUR 334 million, mainly [Audio Gap] We have experienced some technical issues here. Apologies for that. I believe that I was talking about the net income, which came in at minus EUR 334 million. And I explained that this was on the back of the expected restructuring expenses at Steel Europe. Now let me now turn to free cash flow. And as already flagged in our last conference call, you see a typical seasonal pattern here at the beginning of the fiscal year. And that's what you see at the minus EUR 1.5 billion free cash flow before M&A. And this is important to get it right, and I want to highlight it right here. Our free cash flow before M&A guidance for the entire year remains unchanged as we expect a reversal of this Q1 pattern in the course of the fiscal year, particularly in the second half. So that cash flow development led to a decrease in our net cash position. It's now at EUR 3.2 billion. That is still a very solid level that will also recover throughout the fiscal year as free cash flow before M&A is improving. Also some operational comments. We see tangible results from our restructuring and performance initiatives. Workforce reduction is progressing as planned, with FTE down by around 1,100 year-to-date, first quarter, 1 quarter. And a bit more from a broader perspective, the future economic development remains challenging overall from our point of view. And we do continue to face weak customer demand, particularly in Europe, but also uncertain upside potential that is related to the political framework in Europe. Now first quarter sales and EBIT adjusted development, which you see here in that chart. Most segments managed to improve or at least stabilize their performance despite weak demand conditions. I've already mentioned that the sales decline of more than EUR 600 million is more than offset in our EBIT adjusted. This is again a pretty clear proof point for our increased underlying resilience. With regard to sales, we saw declines of stagnation across all segments, with the decline mainly driven by three segments. First, Decarbon Technologies, still facing hesitant markets and some project postponements on the customer side. Then Material Services and Steel Europe, they both showed lower demand that, for example, you can see also at the trading business at our Materials Services segment. In terms of EBIT adjusted, we saw a number of improvements across the group with Steel Europe posting the biggest increase, which was also due to lower raw materials prices and some efficiency gains. Looking at DT, Decarbon Technologies, the negative first quarter resulted from lower sales and project-related additional costs at the cement business. Let's now talk a little bit about Automotive Technology. Overall, challenging market environment, soft demand levels also in Q1. Total, we had a sales decline of around about 3% year-over-year. However, if you adjust for the negative currency effects, sales were around about on prior year's level. Here, we experienced a growth in the serial business that was overshadowed by the declines in the project business as well as from our business unit, Springs & Stabilizers. Let's take a look at earnings. We saw per performance increase. EBIT adjusted came in at EUR 20 million. That's up by EUR 8 million year-over-year. So what we can see is here that our internal countermeasures such as volume compensations from customers, savings from restructuring, and efficiency initiatives are in place and are working. Ultimately, these efforts could more than offset the top line and currency headwinds. Let's look at -- business cash flow came in again in negative territory at around about minus EUR 70 million. That's mainly driven by restructuring cash outs and net working capital changes as expected. Let's turn to Decarbon Technologies. Overall, we continue to see an ongoing hesitant market environment with a number of project deferrals on the customer side. That translated into weak order intake and therefore, declining sales of minus 19% in our first quarter, especially in the water electrolyzers business at thyssenkrupp nucera and in the new build businesses at Chemicals. These lower sales led to the decrease of EBIT adjusted by minus EUR 33 million to minus EUR 16 million. In addition, some project-related additional costs at Polysius impacted that result. Performance measures and efficiency gains supported earnings, however, could not compensate the decrease. Also, the cash flow was hit by missing sales. The drop in business cash flow to minus EUR 162 million was driven by the lower top line as well as negative cash profiles in our project business at DT. Let's turn to Materials Services. Material Services delivered higher earnings despite a challenging market environment, particularly in Europe. Sales declined here by minus 6% year-over-year, mainly due to weaker performance in the direct-to-customer business, which also led to significantly lower shipments. At the same time, distribution and processing businesses in North America showed some solid growth. EBIT adjusted came in at EUR 50 million, with a strong performance of our processing business, especially in North America, more than offsetting the decline in European distribution and also supported by APEX cost reduction and efficiency measures. Business cash flow. Business cash flow was down year-over-year, reflecting the before mentioned typical seasonality with the net working capital buildup at the start of the fiscal year, also influenced by higher price levels that we particularly see at some commodities. Steel Europe. So for Steel, the market conditions in Europe remain challenging, with, for example, demand being still quite reluctant. Consequently, sales decreased by minus 10% and shipments fell by 4%. However, we also saw some higher volumes from our automotive customers and from steel service centers. Let's take a look at EBIT adjusted. Despite the lower top line, EBIT adjusted at Steel increased to EUR 216 million. That is due to more favorable raw material prices and also efficiency measures that was supporting the positive earnings development. Business cash flow at Steel decreased year-over-year, also, as mentioned, driven by a seasonal buildup of net working capital and here, mainly receivables and payables. Last but not least, Marine Systems, TKMS. Overall, we see ongoing strong demand for defense products across the product range. Order backlog continues to be impressive, stands now at a record level of EUR 18.7 billion. And so here only a couple of brief comments on Marine as a segment of thyssenkrupp because all operational details are available in the reporting of TKMS as of yesterday as they already conducted their earnings call. Important to mention is here for Marine Systems, all relevant will develop in line with our outlook, including the updated sales guidance. Now let's take a look at our EBIT adjusted to net income bridge. You can see here that we are also in a transition period. Let's take a special look at the special items. The first and largest portion of restructuring expenses of EUR 400 million, more specifically EUR 401 million at Steel Europe is now included in our first quarter, and the remainder will be booked in the course of the financial year '25-'26. In addition, we faced some impairment losses at Automotive Technology in connection with the signing of the sale of our business unit Automation Engineering. The remaining positions are rather straightforward. Overall, we saw a negative net income of EUR 334 million. Now what do we get from net income to our free cash flow before M&A. In essence, the delta between net income and free cash flow before M&A is the aforementioned seasonal net working capital swing, particularly within our materials businesses that will, as mentioned, reverse over the course of the fiscal year, particularly in the second half. Remaining positions, meaning cash flow from invest and M&A and these adjustments are also straightforward. So it's really -- it's the seasonal net working capital pattern. Again, also very important for me to highlight, we do confirm our free cash flow before M&A guidance for the entire year, which is a good segue to the next chart. So guidance. Miguel and also myself have already stressed that we confirm our group guidance. And that means in particularly, we expect sales in the range of minus 2% to plus 1% compared to prior year, so unchanged. EBIT adjusted, as previously guided, will end in the range between EUR 500 million and EUR 900 million. Free cash flow before M&A is expected to come in between minus EUR 600 million and minus EUR 300 million despite our Q1, as explained, including expected cash outflows from restructuring of up to EUR 350 million. So the EUR 350 million cash outflows from restructuring are already included in our guidance of minus EUR 600 million to minus EUR 300 million. Looking at investments, obviously, also a driver of free cash flow before M&A. Overall, we are pretty cautious with investments. And that means that we're orientating ourselves rather to the lower end of our guidance of EUR 1.4 billion to EUR 1.6 billion. Here, similar to the last financial year, there might be a possible revisit over the remainder of the year as we see clearer towards the end of the year. Last but not least, net income. Here, our unchanged guidance, minus EUR 800 million to minus EUR 400 million, including restructuring expenses, mainly at Steel Europe. So if you look at the segments, there are a couple of smaller changes, but those do balance out on a group perspective. For example, on sales, automotive -- the guidance now takes into account the initiated sale of Automation Engineering, the business unit, and we have now better or higher sales expectations for Marine Systems. But overall, group guidance is confirmed for all KPIs. With that, Miguel, I'd say it's up to you again. Miguel Angel Lopez Borrego: Thank you very much, Axel. Before we come to our Q&A, I would like to highlight some reflections and outline the way forward. That slide looks familiar to you. That's why I will keep it short. The overall key message is big decisions are behind us. Now it's about disciplined execution and implementation. As you all know, we are developing thyssenkrupp into a lean financial holding company. By doing so, we will strengthen the independence of our segments and increase their accountability as well as entrepreneurial freedom. I'm convinced that this will also encourage innovation and unlock additional growth prospects. I'm also convinced that this approach will ultimately translate into additional value for our shareholders. And by working with full steam towards the capital market readiness of Materials Services, we make sure that this may become an option to further develop thyssenkrupp towards our strategic goal of a financial holding. With that, we are at the end of today's presentation. Thank you all for your continued interest and trust. We are now ready to take your questions. Andreas, back to you. Andreas Trösch: Thank you very much, Miguel and Axel. As mentioned, we are now ready to take your questions, and we are opening the Q&A session for our analysts. The first one in line is Boris. Boris Bourdet: I have three. So the first one is on the general discussions. There were recent rumors that [ Salz ] might be interested also in the steel business. So I would be interested to get an update on the process. Where are you? And what's according to your knowledge, the most likely time line for a decision? Maybe the second one that would be on the political support you mentioned during the presentation, CBAM and TRQ and others. You pointed out the fact that there could be some upside going forward. So does your current guidance include those supports? And if not, what could be the potential uplift? The last one is on Steel Europe, pretty decent margin over the period in Q1. So I would be interested to know how much is the contribution from the energy compensation in Germany this quarter? Miguel Angel Lopez Borrego: Boris, for your questions -- I'll start with the first one. So we are in the due diligence process with Jindal Group, intense conversations. Of course, you always understand that we cannot do any kind of statements around timing. And of course, it's also important to understand that the highlight of last week has been HKM. So the agreement that Salzgitter will continue the company on its own. And of course, all this influences, of course, also the due diligence process because that's a new factor coming now in and certainly positive. So discussions ongoing, and we will let you know as soon as something is more concrete to be reported. Yes, it is expected -- your second question, it is expected that we will see improved, pricing after the tariffs will be introduced in Europe. And also the CBAM -- concrete CBAM actions will, I believe, also help. We will not see anything this fiscal year around it because we expect the European Union to decide on the tariffs around May, June. And until then everything is really getting into the orders, we will see an impact for sure next fiscal year. But the likelihood that we see this fiscal year some positive effects already in our view is, for the time being, very limited. For the third question, I hand over to Axel. Axel Hamann: Thanks, Miguel. Yes, Boris, you've asked for the electric compensation and what the share is for the, let's say, increase also in EBIT. It's basically 3 components that help us increasing the EBIT. It's raw material prices, it's efficiency gains. And as you said, it's the electrical price compensation, and that is a bit higher than last year. I hope that gives you an indication. Boris Bourdet: Can you just remind us how much that was last year? Axel Hamann: That was a low 3-digit million euro number. Andreas Trösch: Now the next question comes from Jason Fairclough. If not, then we try the next in line and come back to Jason in a second. Next in line is Alain Gabriel. Alain Gabriel: A couple of questions. On HKM, how do you see the cash outflows relating to the sale potentially being phased over the course of this year and beyond? That's the first question. The second one is still on HKM. Can you give us some indication of the pro forma Steel Europe EBITDA without HKM, potentially for '25 or even Q1 '26, just to help us quantify the impact of HKM or even if it's easier, if you can give us what would your guidance have been ex-HKM for '25, '26? Miguel Angel Lopez Borrego: All right. Thanks. First of all, cash outflow or I should say, potential cash outflow for HKM, a term sheet has been signed. And as we stated, it's going to be a low to mid-3-digit million euro number. The cash outflow pattern, what I can already provide you with as of now, it's going to be a minor part of this year, and we're going to stretch that out over at least 3 years. So you would see a sequential cash out, and we're going to start with a smaller part in this year in case we're going to close the deal, and that is expected for June of this year. Axel Hamann: With regard to guidance for HKM, we do not disclose, let's say, individual guidance for that business as part of our Steel segment. Alain Gabriel: But can you give us some indication if it's a positive EBITDA or negative EBITDA if we were to strip it out? Or even that you cannot give any color? Axel Hamann: Well, there's still a couple of variables also to be negotiated in terms of supply from HKM. So it's really -- it's too early to tell. Andreas Trösch: Now let's try Jason again, Jason Fairclough. Unmute yourself. All right. Well then, let's try again later. Now we're switching over to Bastian. Bastian Synagowitz. Can you unmute yourself Bastian? Bastian Synagowitz: Maybe firstly, starting off on the strategic plans you have for the Steel business. I guess maybe looking at the broader market, obviously, the -- I guess, the equity market has significantly rerated the valuation of any European steel asset given the very supportive policy backdrop. And if we overlay this with the talks you're currently having on the possible sale of the unit, this must be obviously a very different conversation today versus the talks which you probably had at the very early stage of that process. So can you confirm that you're basically seeing a positive momentum here in these talks? And -- or is there also a scenario where at least you may potentially crystallize the value of the steel unit in a different way? And has this become more likely? That's my first question. Miguel Angel Lopez Borrego: Obviously, a very relevant strategic question you raised. I mean, it is quite clear that the sentiment, and we have seen that -- you have seen that also in all the steel companies that are publicly listed. So the sentiment has turned into a positive one for the last 4 months. We have seen increases in the share prices of around 50% and more. So there is a clear positive sentiment. It is also clear that this is due to the tariff situation, as mentioned before, and the limitation also of the import quota for Europe. And of course, the idea of resilience -- and I've been reporting, you remember about the Steel summit with Chancellor Merz and also talks that we had directly with Ursula von der Leyen and her team. So yes, there is a clear positive sentiment here. And of course, that will have, for sure, to get into an input for the conversations with our colleagues from Jindal, no doubt about that. Bastian Synagowitz: Maybe just looking also at the recent news around the possible plans to delay the phaseout under the European ETS scheme. I would think that, that must be quite positive news for you as well in terms of like the CapEx perspective of the business. And in that sense, probably in the overall context, probably is another derisking factor for the unit. Would you agree with this? Miguel Angel Lopez Borrego: Yes, there are really good things happening, and this will have quite a different shape in terms of Steel for the future. Bastian Synagowitz: Then maybe lastly, one more technical question just on the restructuring costs you're expecting. I think you're now guiding for EUR 700 million to EUR 800 million of restructuring costs in total. Is this only related to Steel? Or does this already include something for the other units as well or maybe even for HKM? Or is this just Steel? Axel Hamann: Yes. Let me take that question, Bastian. The vast majority is Steel related. And we've also, let's say, provisioned -- not technically, but planned for some at HKM. And what is also included is a minor part for automotive. So vast majority is Steel. Bastian Synagowitz: The HKM portion, however, that does not include the low to mid-3-digit number you were referring to earlier, I suppose? Or does it include that one as well? Axel Hamann: It's not too far away, let me put it that way. Andreas Trösch: All right. Thank you, Bastian and now again, trying Jason. Jason Fairclough: Look, a couple of quick ones for me. First, I was wondering if you could just give us an update on Elevators. How are you thinking about the value of that stake? And what's the path to releasing that value? On Material Services, we've talked about this one before, huge working capital in this business. Do you think it's performing the way it needs to? And again, how do you think about releasing value? And Steel, is the vision to sell completely now? Or would you just be looking to sell a 51% stake? Axel Hamann: Let me maybe start with Elevator, Jason. You've probably seen currently booked at around about EUR 2 billion. I think there's a certain expectation in the market around, let's say, further developing TKE. So as of now, we're super happy with our share, and we're looking forward what the developments around TKE will be. Obviously, there are some, let's say, talk in the market around IPO. Let's see. We're happy with our share, and we're looking forward how this is going to develop. With regard to working capital, I think that's something we've touched upon also in the past for Materials Services. Are we happy with the performance? I think we're working towards capital market readiness, let me put it that way. And working capital efficiency is a part of it. And yes, so let's see when that business is going to be capital market ready, and so we will let you know once we're there. With regard to Steel, it's maybe a question for you, Miguel. If I recall you correctly, it was around whether we're going to sell or whether we intend to sell 100%, or whether we can think of any 50% structure. Miguel Angel Lopez Borrego: Okay. I was having technical problems for 30 seconds. Well, Jason, on your question around what portion of the business is -- of the Steel business is in discussion for selling. We continue to go the direction of to sell the majority of it. That's what is in the discussions with Jindal right now. Jason Fairclough: Can I just follow up on the Material Services. So it's an interesting phrase you used there, working towards capital market readiness. So should we read from that, that you're considering a potential IPO or sale of that business? Axel Hamann: No. I mean it's part of our overall strategy that we want to enable our businesses and then ultimately become a financial holding company. And that would encompass that the segments would eventually be also listed. That's something we've communicated and materials may be one of them. But as I said, no -- final decision not yet taken, but we're working hard on, let's say, getting all ducks in a row. Jason Fairclough: Okay. Glad we could make it for a third time. Thank you. Andreas Trösch: [Operator Instructions] Next follow-up question is coming from Alain Gabriel. Alain Gabriel: A couple of follow-ups. On Steel Europe, you are not too far from the bottom end of your guidance range just with the Q1 numbers. Should we see your full year number as conservative? Or are there any items that you expect to develop over the course of the year that would drag down the margins? That's one. The second question is on Steel Europe. Can you remind us what are the pension provisions allocated to Steel Europe? And on top of that, what are the other restructuring provisions that are booked as liabilities on your balance sheet for Steel Europe? Miguel Angel Lopez Borrego: Sure. Thank you. First of all, we've touched upon the guidance for steel after that promising start. As said, the reasons are threefold. It's efficiency gains -- it's lower raw material prices, and it's also the electrical price compensation. So I would not rule out at this point in time that we continue to see efficiency gains. And with regard to prices, let's see. But you see me rather, let's say, on the comfortable side, if I look at our guidance range for steel, let me put it that way. Then pension provisions for Steel should be around EUR 2.4 billion. And with regard to -- I think you also asked around for restructuring provisions, that is something we have guided around a mid- to high 3-digit million euro numbers for this year. Andreas Trösch: Thank you, Alan, for your questions. There seems to be no more questions currently in the call. If you have more questions, please contact the Investor Relations team, including myself. So thank you very much for participating in that call, and have a great day. Thanks. Miguel Angel Lopez Borrego: Thanks, everyone. Bye-bye. Bye.
Operator: Good afternoon, ladies and gentlemen, and welcome to the Deutsche Borse AG Analyst and Investor Conference Call regarding the preliminary Q4 and full year results of 2025. [Operator Instructions] Let me open the floor to Mr. Jan Strecker. Jan Strecker: Welcome, ladies and gentlemen, and thank you for joining us today to review our financial results for the fourth quarter and the full year of 2025. Present on today's call are Stephan Leithner, our Chief Executive Officer; and Jens Schulte, our Chief Financial Officer. Stephan and Jens will take you through the presentation. And following their remarks, we will open the line for your questions. The presentation materials have been distributed via e-mail and are also available for download on our Investor Relations website. This call is being recorded, and a replay will be made available shortly after the conclusion of today's session. With that, let me now hand over to you, Stephan. Stephan Leithner: Thank you, Jan, and welcome, everyone. In 2025, we achieved record-breaking top and bottom line financial results, successfully executing our strategy and delivering on our guidance. This demonstrates the strength and resilience of our diversified business model. Net revenues without treasury results increased by a strong 9%, reaching the targeted level of EUR 5.2 billion. Importantly, we showed significant and operating leverage with EBITDA without treasury result growing even faster at 14%. This performance was underpinned by our very disciplined cost management with operating cost growth held at just 3%, right in line with our expectations. These record results confirm that we are on the right path, successfully executing our strategy despite headwinds in some areas. Our strong performance and confidence in our strategy directly translate into significant shareholder returns. We are proposing a 5% dividend increase to EUR 4.20 per share and will shortly launch a EUR 500 million share buyback program on an accelerated basis. In total, this delivers a record distribution of EUR 1.3 billion to our shareholders in 2026, a total payout of around 63%. The positive momentum of the full year was also visible in the fourth quarter performance. Q4 net revenues grew 7%, driving a 10% increase in EBITDA without treasury results. This was primarily fueled by outstanding double-digit net revenue growth in 2 areas: first, in the SimCorp Software Solutions, which was up 18% on a constant currency basis, driven by client wins and the continued expansion of our SaaS offering. Our performance in the Americas in this context was a standout with 47% annual recurring revenue growth. This was driven by major client wins, including a Tier 1 U.S. asset manager, which will bring all asset classes onto our platform with a full front-to-back coverage. This is a powerful validation of our SimCorp One platform and our strategy in this key market. The acceleration of our SaaS transformation at SimCorp is also a core driver of this success. SaaS net revenue grew 50% in the fourth quarter, what a number. This is the secular growth we are focused on, and it confirms we will have over half our clients on our SaaS platform by 2026. This performance puts us clearly ahead of our key competitors as I can proudly report. Altogether, 2025 was a year of strong execution for SimCorp, and we have delivered excellent results. Our strategic path is clear, and we are delivering on it. The second area that performed exceptionally well in the fourth quarter was our Security Services business, which grew net revenue without treasury results by an outstanding 17%, again, what a number. we achieved new all-time highs across custody, settlement and collateral management, which drove this exceptional result. The record-breaking activity was fueled by a confluence of powerful market trends, including continued strong fixed income issuance, which increased the overall amount of debt outstanding, equally as a second driver, persistently high equity market valuations. And thirdly, a significant uptick in retail investor activity and flows into Europe. Finally, and furthermore, a heightened demand for safe and efficient collateralization propelled our collateral management outstandings up by 28% to a new record of EUR 932 billion, demonstrating the essential role our infrastructure plays in a dynamic market environment. The future growth of our Security Services division is driven by 3 core strategic drivers as we also outlined at our Capital Markets Day. First, we are focused on business scaling by expanding our client footprint with direct plug-and-play infrastructure access and innovation with our Collateral Management as a Service platform. Second, we are leading the European capital market transformation by leveraging our unique position as a top CSD and ICSD to consolidate the fragmented post-trade landscape and capture new capital flows into Europe. And finally, a third trend and the most transformative, we are pioneering asset class expansion by driving the digitization of finance, building on our D7 digital issuance platform to create the trusted market infrastructure for tokenized securities, digital cash and institutional crypto assets. Our strong performance, as you can see on the second chart, gives us the power to execute our strategy and make decisive moves to solidify our leadership position for the long term. The slide highlights 2 examples of this in action that we are tackling this year. First, an update on our acquisition of Allfunds, a truly transformational step for our Fund Services business in our Leading the Transformation strategy. The strategic, commercial and financial rationale for this move is exceptionally compelling. With Allfunds, we are not just acquiring a business, we are building a European investment fund champion. This isn't just about getting bigger, it's about getting better and creating a fully integrated end-to-end service offering for the entire fund industry across different markets. This combination is powerful because our businesses are highly complementary. We are bringing together Clearstream's strengths in Central Europe with Allfunds' leadership in Southern Europe. This positions us at the heart of pan-European ecosystems, significantly reducing market fragmentation and establishing a harmonized global reaching business that plays a pivotal role in facilitating the investment of retail savings into productive capital. This is a significant step forward for European capital markets and also addresses the goals of the savings and investment unions that are so often talked about. From a financial perspective, this transaction is designed to create substantial long-term value. We have identified significant synergy potential, expecting to deliver annual cost savings of EUR 60 million in operating costs and EUR 30 million in capital expenditure. Approximately half of the run rate synergies will be realized in the current strategy cycle by year-end 2028. The acquisition is valued at EUR 5.3 billion, structured at EUR 8.80 per share. Initially, we proposed a balanced mix of cash and shares. However, we have since refined this financing structure to increase the cash component. This strategic adjustment allows us to fully utilize our debt capacity. Due to our strong financial performance, our credit rating metrics at year-end 2025 were all very well within the established thresholds, leaving room to increase the cash component. Speaking to you today on the analyst call here, the result is a transaction that delivers high single-digit cash EPS accretion from year 1 based on the run rate synergies while preserving our strong credit rating and maximizing immediate value for you as our shareholders. I would like to emphasize, however, beyond the financials, the partnership nature of this transaction, which, from my perspective, will make it so transformative and a unique opportunity. The compelling concept was developed through close dialogue with the Allfunds management team. The transaction has the unanimous support of the Allfunds Board of Directors. We have also already received irrevocable undertakings from Allfunds' largest shareholders. We are now proceeding with the U.K. scheme of arrangement process and obtaining the necessary regulatory approvals. We are highly confident in securing antitrust clearance because our businesses really are complementary. Clearstream mainly drives post-trade fund processing infrastructure, while Allfunds is a fund distribution platform. We also have a distinct geographical and client focus across the funds value chain, as I already outlined earlier. We anticipate completing the transaction in the first half of 2027. In closing, this is a landmark transaction. It strengthens our capability, accelerates our strategy and reinforces our commitment to building the future of capital markets infrastructure. We are creating a world-class player that will better serve clients and drive the evolution of the global funds industry. You hear my passion. I think this is a very strong story. Now let me expand on the second situation, for which I know many of you have been persistently looking for clarification. I recall many of our meetings around this. We are now taking full ownership of our data analytics and index champion ISS STOXX. As we announced overnight, we have reached an agreement with GA to acquire the remaining 20% minority stake held by our partner. The move creates clarity around this topic and is the natural and planned culmination of our successful partnership, which began with our joint investment in Axioma back in 2019 and continued through the strategic merger that formed the integrated ISS STOXX business in 2023. This buyout is a reaffirmation of our strategic vision and gives GA the necessary liquidity. It solidifies our ambition for ISS STOXX to be a leading go-to provider of mission-critical data analytics and indices for the buy side. While we acknowledge the headwinds resulting from a changed attitude towards certain products, particularly in the U.S., we feel strongly confirmed by clients about the underlying business logic. We remain confident in a return to stronger growth in the medium term as outlined during our Capital Markets Day last December. We also view the transformation through AI as a key opportunity, not a threat. ISS STOXX is uniquely positioned for this transformation to its unique historic databases. Our clients have a strong need for highly reliable regulation-proof quality data with an algorithm alone cannot provide. Our strategy is to use AI as a powerful augmentation tool, combining our trusted data and human experience to enhance our offerings and maintain our market leadership. Taking full ownership reduces complexity, allowing us to accelerate the execution of our strategy for this highly attractive business. For example, we'll benefit from lower governance costs and closer integration with our global system and processes. It will also be easier for us to promote closer cooperation between our index and data businesses in areas such as financial derivatives and software solutions. Similarly, we can leverage ISS STOXX's data handling and processing capability globally as well as analytics competence over time in other parts of the group. The agreement with General Atlantic included a contractual path for their exit, and the valuation is based on the peer group multiple as we had agreed at the outset of the partnership in 2019 and 2023. We will finance this using available cash and debt. The transaction is expected to have a low single-digit accretive effect on our cash EPS, obviously, already this year. Finally, let me be very clear on a critical point. Integrity and independence of ISS research are paramount. We are fully committed to maintaining the established noninterference policies, ensuring that the research provided by ISS continues to be objective and trusted by the market. Both the Allfunds acquisition and the minority buyout of ISS STOXX are clear, logical steps in the further development of our group. Let me turn to the strategy for a second again. Our strategy, Leading the Transformation, provides a clear road map for the future. So let me come to the outlook for 2026 within the growth trajectory of our strategy on Page 3. This is best summarized in 4 key messages. First and foremost, we start from a position of strength. We are on track and fully committed to our 2026 financial targets. And you heard me say that a year ago when it came to 2025, and we deliver. Specifically for 2026, this is EUR 5.7 billion in net revenue and EUR 3.1 billion in EBITDA without our treasury results. But let me be clear, we see these ambitious goals, not as a final destination, but as an important interim milestone in our journey as we have outlined already in London in December. Delivering on this plan demonstrates our credibility and provides the foundation for our next phase of growth. The second point is our ambition extends well beyond 2026. We are committed to delivering sustained growth, targeting a high 8% organic net revenue growth through 2028. This isn't just a number. It's a plan powered by durable sector growth drivers and our leadership in technology. Our unique position allows us to lead key market transformations, unlocking new growth vectors that will propel us forward. As a third element of the strategy, we are evolving our operating model to efficiently deliver this growth. Through our OneGroup model, we are building a more scalable and efficient organization. This is not just about cost control, it's about cultivating a culture of excellence. And obviously, we are not compromising our organic investment volume, which runs at around EUR 600 million per year. By holding our operating cost growth to a disciplined 3% growth rate, we will ensure that the revenue growth translates directly into enhanced profitability and operating leverage. And therefore, finally, our financial ambition. The payout from this strategy is very attractive. We will deliver strong structural top line growth and significant scale benefits. This bottom line performance gives us a powerful combination of strong investment capacity for organic growth and strategic M&A while delivering attractive and growing shareholder returns. In light of the recent market developments regarding artificial intelligence, let me also again reaffirm our clear position on the topic. We view AI not as a threat, but as a powerful engine for our growth. A thorough assessment confirmed our portfolio robustness, showing that less than 5% of our revenues are only potentially affected as AI cannot replace the regulated system-critical infrastructure and processes we operate. At the same time, our plans for scaling and limiting cost growth benefit greatly from AI. With over 75% of our infrastructure now cloud-based, we are strategically positioned to capitalize on this opportunity by developing AI at scale on a rapid, cost-effective and secure manner. We're already leveraging AI to enhance internal efficiency and are rolling out product embedded AI to boost client productivity. As a component of our Leading the Transformation strategy, AI is generating tangible value. In short, we are delivering on our current plan, and we have a clear path to sustained and profitable growth throughout 2028. We are evolving our operating model to support it, and this will all translate into strong returns for you, our shareholders. With that, I'll hand it over to Jens for a closer look at the financial and the segment details. Jens Schulte: Yes. Thank you very much, Stephan, and warm welcome, everyone, also from my side. So it's a pleasure to walk you through our financial results for 2025. As you've heard, the year was a record year for Deutsche Borse Group, and Slide #4 crystallizes the strong basis we have built. We delivered total net revenue of over EUR 6 billion and an EBITDA of more than EUR 3.5 billion. Without the treasury results, we achieved 9% top line growth and more importantly, 14% bottom line growth. The fact that our revenue growth is outpacing the growth of our operating costs demonstrates the increasing profitability we are generating across the group. It's a testament to the strength of our diversified portfolio, which allowed us to, a, deliver this performance despite cyclical headwinds in certain areas; and b, our disciplined approach to cost management with only 3% growth, fully in line with our guidance. This all translates into a strong cash EPS of EUR 11.65. Now let's zoom into the fourth quarter on Page #5, which was a strong finish to the year. We posted net revenue of EUR 1.6 billion and an EBITDA of almost EUR 900 million. This translates to a 7% top line growth without the treasury results, which corresponds to 9% on a constant currency basis and 10% bottom line growth, again showcasing that our profitability is growing faster than our revenue. The key takeaway for this quarter is the quality of our earnings. Our performance was driven by sustained double-digit secular growth in our Software Solutions and Security Service businesses. The structural momentum more than compensated for the weakness in areas such as equity derivatives, which were affected by modest market volatility. Our ability to balance performance across the portfolio is a core strength of our business model. On the cost side, total operating costs remained broadly stable as disciplined cost management and FX tailwinds offset inflation and targeted investments. Additionally, operating costs included exceptional effects from preparing for the potential IPO of ISS STOXX last year. Now that we have agreed to buy out the minorities, a lower double-digit million euro amount has become income state effective. Now let's take a closer look at our segments. First, let's start with Investment Management Solutions on Page #6. As we discussed at our Capital Markets Day, this segment is central to our buy-side strategy. In the fourth quarter, Software Solutions was clearly the growth engine, delivering 13% net revenue growth. As Stephan mentioned, we even achieved an impressive 18% net revenue growth on a constant currency basis. This reflects the increasing U.S. footprint. The growth resulted from our focused execution, including significant customer wins in North America and the continued success of our Software-as-a-Service transformation. It's encouraging to see that Axioma, our analytics offering, which is now part of the SimCorp One platform, has achieved the highest ARR growth since the acquisition in 2019. This achievement is a testament to the benefits of combining the 2 businesses as well as the revenue synergies we anticipated as part of the SimCorp acquisition. The strong performance offset the known challenges in the ESG and Index business, which continues to experience prolonged cycles due to the political uncertainty. Net revenue growth in ESG and Index was 4% at constant currency, which is not fully satisfactory, but within the expected growth range for this business, as discussed during the CMD. Our Index business benefited from robust licensing and achieved net revenue growth of 10%. The segment EBITDA is affected by the exceptional costs I just mentioned. After adjusting for these costs, EBITDA increased broadly in line with net revenue. The results in Trading & Clearing on Page #7 demonstrate our strength in secular growth areas and our leadership in European markets. The division achieved 3% growth without the treasury results, but the details are what tell the real story. We saw good performance where structural drivers are strongest. Commodities benefited from robust EU gas activity. Cash equities were fueled by ongoing inflows into Europe, and foreign exchange continued to expand its client base and geographic reach. Financial derivatives remained flat as expected, given the subdued volatility environment in equities. However, this was offset by our fixed income business. We made good progress on our fixed income road map, achieving a 7% year-over-year increase in net revenue without the treasury results. Our OTC Clearing and Repo businesses significantly propelled this growth with net revenue climbing by 14% and 44%, respectively. A key element of our strategy has been preparing for the EMEA 3.0 active account requirement, a major catalyst for growth in our OTC Clearing segment. Our strategic focus on converting our extensive client base into active participants yielded further results. We experienced a 31% increase in our outstanding notional, reaching EUR 44 trillion and capturing a 22% market share. This was accompanied by a surge in trading activity with our average daily IRS volumes growing by 97%. While we have successfully onboarded nearly 2,500 clients, our EU buy-side activation rate remains at 16%. This underscores a significant opportunity for future growth, and we anticipate gradually phasing in more active clients over the next 6 to 12 months. Our commodities business had another successful quarter with an 8% increase in net revenue. This growth was fueled by Europe's increased reliance on our global LNG supplies, which created price volatility and a heightened need for market participants to hedge against uncertainties in supply and demand. We also saw further momentum in the Clearing Services that our U.S. commodities business, Nodal, provides to Coinbase. Nodal Clear serves as the central counterparty for the Coinbase Derivatives Exchange, mitigating credit risk for market participants. Thanks to this partnership. The first ever 24/7 clearing for margin crypto futures are now available in the U.S. and plans are in place to integrate the stablecoin USDC as eligible collateral for futures trading. In cash equities, we benefited from strong demand for European equities and significant inflows into European ETFs. This reflects the broader investor rotation into European markets and growing interest in passive strategies. And finally, our foreign exchange business achieved net revenue growth across most product lines, supported by net new client wins and geographic expansion. Now turning to our post-trade businesses. We have Fund Services on Page 8. Net revenue without the treasury result increased by 3%. However, the underlying businesses of fund processing and fund distribution grew by a solid 7%. This growth is mainly fueled by structural trends, but was also influenced by some retrospective adjustments of volume-related costs. Generally, we are seeing new record levels of custody and settlement volumes as well as the continued increase in assets under distribution to more than EUR 760 billion. The performance is a direct result of our investments in our platform and our successful partnerships with global participants. These investments position us perfectly to capture the ongoing industry trend of outsourcing. We are seeing positive momentum across the board, supported by new client wins, portfolio growth and ongoing inflows into European assets. The other line item declined mainly due to exceptional effects in the fourth quarter of last year. And operating costs this quarter were influenced primarily by slightly higher investments and growth. However, the 2% growth in operating costs in Fund Services for the full year is in line with our expectations. It demonstrates our scaling momentum, which will be further fueled once the Allfunds acquisition is completed. Securities Services on Page #9 had an outstanding quarter, with net revenue without the treasury result growing by 17%. This performance highlights Clearstream's essential role in the European financial market infrastructure and its robust competitive position. Growth was broad-based and driven by record levels of assets under custody, strong settlement transactions and continued fixed income issuance. High equity market levels and increased retail participation also contributed to this growth. Our collateral management business reached an all-time high with outstanding balances increasing 28% to an average of EUR 932 billion. This robust growth nearly offset the impact of lower cash balances at year-end and U.S. dollar rate cuts on net interest income. As you can see on Page #10, our strong and consistent cash generation enables us to make investments such as Allfunds and the buyout of the ISS STOXX minorities while providing attractive and growing returns to our shareholders. Based on our performance in '25, we are proposing a dividend of EUR 4.20 per share. This represents a 5% year-over-year increase and a 38% payout ratio, which is at the upper end of our stated policy range. Furthermore, as we announced at our Capital Markets Day, we have refined our capital allocation policy to include regular annual buybacks. And I'm pleased to confirm that the previously announced EUR 500 million share buyback program will begin soon and is expected to last around 3 to 5 months. Our balanced approach of investing in organic and inorganic growth while increasing direct shareholder returns reflects our confidence in our future cash flow generation. On a side note, the 2 million shares we repurchased last year have been canceled and the shares outstanding now amount to 182.1 million. Finally, let me conclude with our outlook for fiscal year '26, which is outlined on Page 11 and reflects our confidence in the year ahead. We fully confirm the guidance we laid out as part of our Horizon '26 strategy, which has become an important interim step in our Leading the Transformation trajectory until '28. Our Leading the Transformation strategy presented at our Capital Markets Day in December sets a clear path for sustained growth through 2028 and beyond. The strategy is built on 4 key pillars: executing secular growth, driving market transformation, evolving our OneGroup operating model and refining our capital allocation. We are targeting an 8% compound annual growth rate in net revenue without the treasury result to reach EUR 6.5 billion by 2028. This will be driven by our leadership in secular trends, such as the growth of the buy side and our focus on key transformation themes like the evolution of European capital markets and the expansion of digital and alternative assets. A core component of the strategy is the evolution of our OneGroup operating model, which focuses on scalability and efficiency improvements, allowing for an increase in operating efficiency with the projected operating cost CAGR of only 3%. The resulting bottom line outperformance will support strong investment capacity and attractive shareholder returns. For '26, we expect to generate net revenue of EUR 5.7 billion and an EBITDA of EUR 3.1 billion in '26 without the treasury result. We are confident in our ability to achieve these targets due to our sustained business momentum, including recent client wins and continued momentum from secular growth trends. Furthermore, our strategic initiatives, particularly the deployment of AI will improve operational efficiency, supporting our EBITDA target while generating new revenue streams over time. Our targets also assume a normalization of market volatility and modest growth in equity derivatives. Additionally, we expect a treasury result of approximately EUR 0.7 billion, comprised of about EUR 0.5 billion in net interest income and EUR 0.2 billion in margin fees. The underlying assumptions for the NII are stable cash balances and euro interest rates as well as modestly declining U.S. interest rates. Regarding costs, we anticipate a moderate increase in overall operating expenses, consistent with our medium-term guidance of approximately 3%. This increase is not just passive cost inflation, it's disciplined investment in our key strategic initiatives that will fuel our future growth and drive operating leverage. We are fully on track to meet our medium-term goals and continue to lead the transformation of our industry. And that concludes our presentation. We look forward to your questions. Operator: [Operator Instructions] And the first question comes from Benjamin Goy from Deutsche Bank. Benjamin Goy: One question on Software Solutions, please. You mentioned another major client win in North America. Maybe you can give a bit more color on this client and more broadly, whether the business has reached a tipping point now in this market with major logos you can put on your RFPs and the integration of Axioma. How the dialogue has changed with U.S. clients over the last year or so? Stephan Leithner: Benjamin, thanks for your question. We are indeed very excited. I don't know how to frame that well because I gave you this West Coast largest pension fund last year type guidance. I think give us a bit more time for the press release, and we will be able to give you absolute clarity. But to the second part of your question, I think we have reached a positive tipping point in the spirit of the type of RFP participation and invitations we receive. We see a continued very strong pipeline in the U.S. market. But let me emphasize that this is a much broader pipeline than we historically have seen because of the Axioma integration. And as a second leg that it is equally fueled, and we talk a bit less about it by European momentum. I mean the quality of the names in Europe, Axioma was one of them as we had announced it, that really have such a strong and broad front-to-back character is something that, in fairness, we had not expected in that quality of dialogues that we are seeing now. Operator: And the next question comes from Arnaud Giblat from BNP Paribas. Arnaud Giblat: It's Arnaud Giblat from BNP. My question is on ISS. So I was wondering how the price of the acquisition was determined for the minorities. You mentioned peer multiples earlier on the call, but it seems to me that it's a small premium. And I'm just wondering how the headwinds you acknowledge for this business affected that price because the peers seem to be growing a bit faster. And also, was the timing of the minority of this buyout predetermined as part of the terms of the acquisitions made in 2019 and 2023? Stephan Leithner: No for the questions. As we have highlighted, there is a historic context in the basic agreements that we struck in 2019 and 2023. It is obviously, and that's why we put in the reference back to the peer group context. It's not arbitrary or negotiated in a narrow sense. There is an analytic basis on which we obviously will not provide more further details around, given that it's confidential between GA and us. But in summary, it's something that we feel very much is supported by the strength that we see in the business medium term, very confident and very excited. I think some of the valuation dynamics we see in the market is clearly a change from historic levels, but it doesn't change our belief in the fundamental quality of the business. Arnaud Giblat: And on the decision to do that today rather than in the future, was that predetermined as well? Stephan Leithner: No, there was a context. We have always said that around the dual track. And after 7 years, I alluded to that on a number of occasions. Certainly, there was already a long time horizon. So in that sense, yes, there were windows during which it became the possibility for GA to also have liquidity through the buyback. But again, that was not predetermined. That's why we did indeed look very seriously at the possibility of the dual track throughout the last year. Operator: And we have the next question from Enrico Bolzoni from JPMorgan. Okay, so he doesn't want to ask a question. Then we have the next question from Hubert Lam from Bank of America. Hubert Lam: Just one question on Allfunds. What gives you the confidence that you can pass the regulatory hurdles to get the Allfunds deal done, just given the possible antitrust situation around that? Stephan Leithner: Thanks, Hubert, for the question. The complementarity is really the sense of confidence that we have. The second element I would really want to emphasize is that this is a highly competitive market environment. I mean the platform and the size and quality makes the combined business very much a leader in many dimensions, but we are very much aware that and why the universe of intermediaries that are active there, including a number of platforms that are run by different asset managers as well as distribution groups. So it's a very competitive market in addition to the complementarity. If you put the 2 things together, we have done a lot of analysis, as we have also highlighted together with Allfunds in the run-up to the announcements, and that gives us a high degree of confidence. Operator: And the next question comes from Ian White from Autonomous Research. Ian White: Very simple one from my side, please. Very specifically, with respect to ISS' historical databases, why is AI unable to replicate those data sets? What are the moats there, please? Stephan Leithner: Good question, Ian. I think the substance of that moat is really driven around the enormous amounts of quality assurance that needs to happen, and that has been happening in the work that ISS has been doing over the many years. That is the anchor that really drives that distinctive sort of positioning of the data sets they have. I would add as a second element, the integration with a number of the qualitative data in recent years when it comes to sort of information that is supporting certain decisions and voting decisions, take again many of the ESG data and other, which is a pretty unique combination that ISS has there. Ian White: So just to clarify, is it fair to characterize those data sets then as essentially enriched or augmented by things that you couldn't scrape for free from company disclosures or the Internet? Is that a fair summary? Stephan Leithner: Yes, absolutely. But let me add to that. Quality assured means often error corrected. And I think that is what, in particular, for nothing worse than for models that learn of wrong and mistaken data, erroneous data. I think it's an area of shareholder voting where the topic of having a factually correct database is a critical part. Operator: And we have the next question from Tom Mills from Jefferies. Thomas Mills: I have one on Allfunds, please. Obviously, you've laid out what you expect to achieve from a cost synergy perspective. I'd certainly anticipate there should be some material revenue synergies that you should be able to exploit here as well. Can you maybe talk about what you see there and perhaps why you haven't set those out in detail? Stephan Leithner: Thanks a lot, Tom. It's much appreciated. I think the cost synergies, as you say, is something, which even though Allfunds is a public listed company, we have had a lot of joint efforts. I think we thought very conservatively about the synergy topic, as you can take from the revenue side. I think we'll see that much better once we have full access in the combination. Operator: And we have the next question from Michael Werner from UBS. Michael Werner: One question from me, please. I believe at the Capital Markets Day, you indicated that you expected Trading & Clearing revenues to grow by about 11% year-on-year in 2026, which is a bit above, I think, myself and the sell-side consensus number out there. And I think maybe some of this is coming from the opportunity from active accounts. A, can you confirm that? And then B, I believe when you talked about active accounts, and I might very well be wrong here at the Capital Markets Day, you talked about a phase-in period kind of midyear around May of this year. And then earlier, you talked about this opportunity still coming through in the next 6 to 12 months. So, A, was there any change in any of the timings? And B, when do you expect all of these active accounts to be activated? Stephan Leithner: Yes. Thanks very much, Mike, for the 2 questions. So on the Trading & Clearing revenue outlook for this year, I guess, comparing us to the consensus, there's been 2 major differences. One is maybe we estimate the EEX performance a little bit more strongly because we believe that the basic trajectory in that business is really, really super rock solid. And the second one is probably, as you indicate, slightly different assumptions on the uptick on the fixed income road map where we are confident to achieve it on a fee-based revenue basis and where there may be a little bit more caution on the market side. With respect to your active accounts question, basically, that has not changed. So active accounts, as you know, needs to be basically fulfilled until the middle of this year, so until June. So we do anticipate more significant activation rates by the mid of this year. But what we wanted to indicate on our tax today is also to say that, of course, this will not stop in the middle of the year, right? So this will be a phased ramp up and there may be some clients which start on a low basis just to test technicalities and figure out their flow routing and things like that. And then this should hopefully also expand further. That's essentially what we meant with our statement. Operator: The next question comes from Grace Dargan from Barclays. Grace Dargan: I just wanted to probe a little bit more around the synergies for ISS STOXX. Whether you have any target numbers, how you're thinking about that and whether there'd be any one-off costs to achieve that? And whether that's all captured in your existing revenue and cost guidance? Jens Schulte: Yes. Thanks very much, Grace, for the question. So we have not -- there are not top-down figures on potential ISS STOXX synergies. And as Stephan alluded to, we see several ways in how to benefit from that, by the way, also in the other direction. So I mean, we mentioned that we can see lower governance costs and also the business being more closely integrated on the back office. Also the other way around. This business has, for example, a strong footprint in the Philippines. So it's a very good far-shoring location. And we anticipate as part of our OneGroup topic that we explained that also other parts of the group will basically make use of that. And that's now much easier in a 100% consolidation scenario. But to your question, we haven't quantified that yet, so that's work that we're going to do over the next weeks and months. And then these figures are not yet included in our guidance or anything, yes. So it's basically the guidance has been set based on the structure so far, and there should be additional benefits in there. Operator: And we have one question from Ian White from Autonomous Research. Ian White: If I can maybe just ask a couple of follow-ups, if that's okay. I think following slightly on from Mike's question, can you provide us maybe a little bit more detail about how you're thinking of monetization of the short-term interest rate contracts and also the renegotiation potentially of the revenue share within the OTC clearing business? I'm assuming nothing has happened or nothing has changed on either of those fronts so far, but maybe a bit more detail around that would be interesting. And secondly, if I can maybe ask on the Kraken partnership and specifically the xStocks initiative. Have you kind of effectively entered into competition for trading in, in U.S. stocks there with the recent developments? And what do you anticipate in terms of additional securities that will be offered under that partnership and the prospects for building some liquidity in those markets, please? Jens Schulte: On the first part, Ian, happy to take that one. So on the various incentive programs that we have running within the fixed income road map, as you know, so that alludes to the -- I mean, to the STIR component of the FI ETD business, but also to the other components of our fixed income road map. We are actually reviewing those, as we said, within the first half of the year and then taking individual decisions. So far, I mean, with good market shares already achieved in most of the components, but we want to go further and we will figure out whether we further make use of these incentives or not. We haven't decided that yet. So it's going to come in through by the middle of the year. And on the second one, will you? Stephan Leithner: Happy to take it on. So I think, again, this is in an early phase. The xStocks dynamics will, for us is more relevant when it comes to the European parts. And what we can really do around the partnership with Kraken of tokenizations that bring not only xStocks on the 360X platforms, but then more importantly, the reverse direction, some of the different asset categories we have as we move to tokenization and leverage the Kraken sort of infrastructure there. Jens Schulte: I think we have one further question. Enrico redialed in and I think is ready to ask the question. Enrico? Enrico Bolzoni: Can you hear me? Jens Schulte: Yes, loud and clear. Enrico Bolzoni: Sorry, I was kicked out and thus rejoined. So perhaps I might have missed the question from my colleague. I'm going to ask it again, just in case. So going back to your stat, can you provide a bit of color perhaps on the competitive landscape? I would be very curious to know if, for example, you can break down the growth that you printed between its components of perhaps a bit of pricing, how much was due to new clients win? And in general, do you expect that competitors in the U.S. will react to your success and perhaps we should see a bit of pricing pressure coming forward? Jens Schulte: Enrico, this was the Software Solutions business, right, to make sure? Enrico Bolzoni: Yes, that's right. Stephan Leithner: I think again, we wouldn't have a detailed breakdown. But inherently, this is not a pricing type. I mean market works with a decent inflation protection type pricing structure. So it really is around market share wins. And secondly, to go back, it is very much about activation of clients, meaning in the SaaS period, you clearly reap the full benefits once the early transition is coming on stream. So therefore, it's a blend of the sign-up, the client upfront parts and then obviously even more important, the ARR components, which go live, the more sort of activation of components has happened. So that's the real driver from a market share context. Jens Schulte: I mean maybe only to build on what Stephan said. In terms of competitive dynamics, always keep in mind that the majority of this market is still outside third-party providers such as us, right? I mean the majority of the market is still captive solutions within clients. And so it's less that we try to snap away clients from our competitors. It's actually basically turning captive solutions into our solution. So there's plenty of growth in the market still. Enrico Bolzoni: That's very helpful. If I may add on this last point you made in light of the current debate on AI latest products that have been launched. Do you see any change so far in the client to perhaps... Stephan Leithner: I think let me be pretty... Enrico Bolzoni: Out of the change... Stephan Leithner: Well, Enrico, thanks for the question very much because I truly want to make that point in a very strong and passionate way. I think the power of SimCorp One is really the character of the front-to-back data handling, the ultimate truth type quality of a platform. I think we really see this as something where given the size and magnitude that we talk about in numbers in investment volumes, I mean, this is not something you play around as a retailer or even as a wealth investor. This is something where the biggest institutions of the world are handling their data where the certainty of quality and processing is really critical. And that's the confidence. That's the one true power. That's the unique asset for SimCorp different from a number of other providers who come at this from the front end rather than the middle and back office. So that power is one where AI capabilities come on top. So that's why we also look at it as an opportunity. We have in place with the biggest and most demanding clients, the base platform. That's why we look at this as an upside opportunity as we obviously work with AI-based modules going forward. Jan Strecker: Great. So there are no further questions in the pipeline. And therefore, we would like to conclude today's call. Thank you very much for your participation. If there's anything else, then please do feel free to reach out to us directly. Thank you. Operator: The recording has been stopped.
Operator: Welcome to AB InBev's Full Year 2025 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer. [Operator Instructions] Today's webcast will be available for on-demand playback later today. [Operator Instructions] Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, see risk factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2025. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michel Doukeris. Sir, you may begin. Michel Doukeris: Thank you, and welcome, everyone, to our full year 2025 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with the key highlights for the year. In 2025, we executed our strategy with discipline, delivering another year of dollar-based EPS growth, continued margin expansion and solid free cash flow generation, even as we navigated a dynamic consumer environment. As we reflect on the year, we are encouraged with the consistency of our financial performance, the durability of our strategy and the resilience of our business. While near-term demand across many CPG categories was impacted by a constrained consumer environment and unseasonal weather, we continue to invest in our strategic priorities. We remain disciplined in our revenue management choices and delivered EBITDA growth within our outlook. We continue to make progress this year. We strengthened our operating model and increased our portfolio brand power. We also formed new long-term partnerships to extend the reach of our brands and deepen the connection to our consumers. The momentum of our growth priorities continued. Our mega brands and premium portfolio grew ahead of our overall business. The growth of our Beyond Beer and non-alcohol beer portfolios accelerated, increasing revenue by 23% and 34%, respectively. And BEES Marketplace GMV increased by 61% to now reach $3.5 billion. Solid free cash flow generation enabled us to increase the size of our share buyback program, pay an interim dividend and propose a final dividend that combined represents a 15% increase versus last year and further strengthened our balance sheet. We exit 2025 with improving momentum across many of our key markets, and we entered 2026 well positioned to engage consumers and accelerate growth. Turning to our operating performance. While our overall volumes for the year were below potential, momentum across many of our key markets accelerated through the fourth quarter with improved volume performance in December. The combination of our disciplined revenue management and portfolio of mega brands that command a premium price drove a revenue per hectoliter increase of 4.4% this year, resulting in top line growth of 2%. Our productivity initiatives more than offset transactional FX headwinds to drive an EBITDA increase of 4.9% with margin expansion of 101 basis points. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver consistent profitable growth. Revenue increased in 65% of our markets this year, and we delivered EBITDA growth in 4 of our 5 operating regions. Our footprint also positions us well to capture a disproportionate share of future industry growth with a diversified mix of currencies. Around 70% of our EBITDA is generated in emerging and developing markets that are projected to account for more than 80% of the beer category volume growth through 2029. Now I will take a few minutes to walk you through the operational highlights for the year from our key regions, starting with North America. In the U.S., our business continues to build momentum, and we gained share in both beer and spirits in 2025. Our beer performance was led by Michelob Ultra and Busch Light, which were the top 2 volume share gainers in the industry. In Beyond Beer, our portfolio growth accelerated. Revenue increased in the high 30s, led by Cutwater, which grew revenue in the triple digits. While industry volumes were below trend in 2025, we are encouraged by the start to 2026. Beer industry volumes and revenues grew in January. And later this year, we look forward to celebrating the 150 years anniversary of Budweiser and activating the category at the FIFA World Cup. This past weekend also provided us a good opportunity to engage with our consumers in one of the most watched live sporting events in the U.S., the Super Bowl. We continue to invest behind our brands to fuel momentum, and the creativity and effectiveness of our marketing was once again recognized by consumers. Budweiser, Michelob Ultra and Bud Light were named as 3 of the top 10 ads according to the USA Today Ad Meter with Budweiser taking the top spot for the second year in a row. Now let's turn to Middle Americas. In Mexico, our business momentum continued, delivering a mid-single-digit top and bottom-line increase with our above core beer portfolio leading our growth. In Colombia, record high volumes and margin expansion drove double-digit EBITDA growth with revenue increasing across all price segments of our portfolio. In Brazil, our momentum improved in the fourth quarter as we gained market share and our volumes returned to growth in December as weather normalized. Our premium and super premium beer brands delivered high teens volume growth in 2025 and gained share to now lead the premium segment. In Europe, market share gains and premiumization partially offset the softer industry with performance driven by our mega brands and non-alcohol beer. In South Africa, our momentum continued with market share gains in beer and Beyond Beer and disciplined revenue and cost management driving mid-single-digit top and bottom-line growth. Now moving to APAC. In China, revenue declined by low teens with our volumes underperforming a more stable industry as we adjusted inventory levels and focus areas to better reflect the channel and geographic shift. In Q4, our market share trend improved to be flat versus last year, driven by improvements in Budweiser brand power and our in-home channel performance. As we move forward, we continue to focus on rebuilding momentum and reigniting growth. Now I would like to take a few minutes to reflect on the beer category and progress we have made in executing our strategy. Let's start with the category. Beer plays an important role in bringing people together and creating moments of celebration, and we believe beer has a long runway for future volume growth across our footprint, supported by favorable demographics, economic growth and opportunities to increase category penetration. According to IWSR, the beer and Beyond Beer category is forecast to continue to gain share of alcohol beverages in 2025 and has now gained more than 200 basis points since 2021. And looking ahead, beer is expected to grow volumes globally and continue to gain share of alcohol beverage. In 2025, we invested $7.4 billion in sales and marketing and have averaged more than $7 billion per year since 2021. Our marketing effectiveness continues to strengthen, and our mega brands and mega platform approach were key contributors to the brand power of our portfolio, reaching a record high in 2025. Our mega brands led our growth and have increased revenue at a CAGR of 10% since 2021 and now represent 57% of our total revenues. We are the leader in the premium beer segment globally and see significant headroom for category to continue to premiumize. Premium beer is forecast to grow volumes across all geographic clusters and at more than double the rate of the category overall. And the best example of premium execution in our portfolio is Corona. In 2025, Corona celebrated 100 years since its original launch and 2026 is off to a fast start with the brand sharing the golden moments at the Milan Cortina Winter Olympics. Since 2018, the volumes of Corona have doubled. And in 2025, volume increased by double digits in 30 markets. The quality, brand power and consumer preference for Corona has earned the right for a premium price point. Corona sells on average at a 20% premium to the nearest competitor. And in 2025, was again ranked as the most valuable beer brand in the world. We continue to lead the development of the category and expand occasions to meet consumer trends. Our balanced choice portfolio includes options for consumers seeking low carb, low calories, sugar-free, gluten-free and non-alcohol alternatives. This portfolio is growing ahead of the overall beer category and momentum continued in 2025. Led by Corona Cero globally and Michelob ULTRA Zero in the U.S., our non-alcohol beer portfolio delivered a 34% revenue increase, and we estimate to gaining share in 70% of our top 14 non-alcohol beer markets. While non-alcohol beer is currently a relatively small portion of our global beer volume, it is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth. In Beyond Beer, the growth of our portfolio accelerated, increasing revenue by 23% in 2025. Our performance was led by Cutwater in the U.S., which grew revenue in the triple digits and was the #1 share gaining brand in the total spirits industry in the fourth quarter. After the successful rollout in Africa, our flavored beer Flying Fish is now expanding to Europe and the Americas. Beyond Beer now accounts for 3% of the total revenue of our business, and the category is projected to grow volumes at double the rate of the overall beer category. The strength of our brands, route-to-market capabilities and innovation pipeline gives us a strong right to win in this segment. Discipline and incremental innovation is a key enabler of our growth. In 2025, our innovations across packaging, brands and liquids contributed 11% of our total revenue. In the U.S., we led the industry innovation with 3 of the top 5 innovations of the year, with Michelob ULTRA Zero and Busch Light Apple, the top 2. In China, we launched a 1-liter can for Budweiser and a Corona full-open lid can to bring the iconic lime ritual into the in-home channel. In South Korea, we launched the country's first 4 Zero beer with great taste, zero alcohol, zero sugar, zero calories and zero gluten. And in Beyond Beer, we are expanding our winning propositions globally and innovating with flavor varieties to provide consumers with choice. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In 2025, BEES captured $53 billion in gross merchandising value, a 12% increase versus last year. The growth of BEES Marketplace accelerated and delivered $3.5 billion of GMV this year, a 61% increase versus last year. The Marketplace on BEES has grown rapidly since we initially started developing the platform in 2021. We recognized early that many of our customers could benefit from a one-stop shop for their business and similarly, that many consumer goods partners could benefit from leveraging the breadth and efficiency of the digital connection we have with our customers. The marketplace has grown to $3.5 billion in GMV business from a standing start 5 years ago, and we continue to explore the opportunities to scale and enhance profitability. We are still early in the marketplace journey, but we are encouraged by the progress we have made and see a clear opportunity to continue the growth momentum while solving a pain point for our customers and partners. In DTC, our digital platforms continue to enable a one-to-one connection with our consumers and developing new consumption occasions. In 2025, we continue to grow our consumer base, now serving 12.3 million consumers, an 11% increase versus 2024. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business. Fernando Tennenbaum: Thank you, Michel. Good morning, good afternoon, everyone. I will take a few minutes to discuss the progress we have made on 4 key areas of focus in optimizing our business, improving margins, compounding dollar EPS and free cash flow growth, making disciplined capital allocation choices and advancing our sustainability priorities. Our EBITDA margin improved by 101 basis points this year with margin expansion across 4 of our 5 operating regions. While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization and efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. This year, we delivered underlying profit growth of $350 million. Underlying EPS was $3.73 per share, a 6% increase versus last year's in dollars and a 9.4% increase in constant currency. Dollar-based EPS has now grown at a CAGR of 6.7% since 2021. EBITDA growth accounted for a $0.46 per share increase this year. Lower net interest expense from active debt management and continued deleveraging contributed $0.09 per share but was partially offset by a higher cost of hedging and FX movements. We maintained this level through a combination of EBITDA growth and margin expansion, reducing our net interest expense through deleveraging, and maintaining our disciplined resource allocation. Looking ahead, we are encouraged about the opportunities to grow from this base. With this solid cash generation, we continue to strengthen our balance sheet. We repurchased $2.7 billion of debt. And despite a $2.8 billion FX headwind on our net debt from a stronger euro, we reached a leverage ratio of 2.87x. In 2025, we improved our debt maturity profile while maintaining our weighted average coupon. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 13 years and no financial covenants. As we continue to deleverage, we have increased flexibility in our capital allocation choices. We have raised our dividend every year since 2021, including the payment of an interim dividend in 2025. We have completed $3.2 billion of share buybacks and are currently executing a further $6 billion program. For 2025, the Board has proposed a final dividend of EUR 1 per share. Combined with the interim dividend announced in October, this represents a total dividend increase of 15% year-over-year with the ambition to continue a progressive dividend over time. Now turning to sustainability. Our 2025 goals were set in 2018 to drive impact and efficiency across our value chain. As our business is closely tied to the natural environment and the local communities, we focus on areas that are relevant to us, water, agriculture, climate and packaging. We achieved our water and agriculture goals and made strong progress against our climate and packaging objectives over the past 8 years. We are proud of the progress made, and we'll continue building on our strong foundation in these areas. As we look ahead to 2026, we expect EBITDA to grow between 4% and 8% on an organic basis, in line with our medium-term outlook. As we continue to invest to execute our strategy while optimizing our resource allocation, we expect net CapEx to be between $3.5 billion and $4 billion, and we expect our normalized effective tax rate to be between 26% and 28%. With that, I would like to hand it back to Michel for some final comments. Michel Doukeris: Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap on our performance for the year. It's fair to say the operating environment in 2025 was dynamic. Despite this backdrop, the disciplined execution of our strategy delivered consistent financial results. EBITDA grew within our outlook. Underlying EPS increased by 6% in U.S. dollars, and we delivered another year of solid free cash flow generation. We strengthened our balance sheet and increased our capital allocation flexibility, enabling a progressive increase in our dividend and announcement of a larger share buyback program. While our volume performance was below our potential in 2025, we are encouraged with the momentum we saw as we exited the fourth quarter. Our volume trend improved in December, and we gained or maintained share in 80% of our markets in the quarter. The combination of our mega brands with an unparalleled lineup of mega platforms is a powerful opportunity to lead and grow the category. This past weekend, we kicked off an exciting calendar of events with both the Super Bowl and the opening of the Winter Olympics. And then the summer will bring FIFA World Cup in North America. With 104 games across 3 countries, each game is an opportunity to bring beer and sports together to create unforgettable moments for fans around the world. We entered 2026 with improving momentum, and we are well positioned to activate the category and engage consumers. With that, I'll hand it back to the operator for the Q&A. Operator: [Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies. Edward Mundy: Two questions, please. So last year, you wrote that beer is a passion point for consumers and a vibrant category globally. And this year, you're starting off with beer plays an important role in bringing people together and creating moments of celebration. I'd love to get a bit more context into this nuance. And to what extent can you, as industry leader, help to bring across a more balanced message around the positive attributes of moderate consumption and getting people together is my first question. And my follow-up, again, for Michel. You're sounding a little bit more optimistic about the prospects for 2026. How much of this owes to sort of consistent application and progress with your strategy? And how much of this owes to some very early green shoots that you might be seeing from a cyclical standpoint? Michel Doukeris: Thanks for the question. I think that on the first point, they are actually both right. Beer is a passion point for consumers, but beer always brings people together around moments of celebration and enjoyment. And I often say that we listen to a lot of things that are happening and everything gets better when people get together and drink a beer. So the world really needs a beer. And this is important as we get people to exchange ideas, to socialize, to enjoy moments as we saw this weekend with Super Bowl or during the Olympic Winter Games in Milan Cortina, everybody was enjoying the sessions and having the opportunity to be together with friends and drink a beer. So I'm extremely optimistic about the role that our product plays and how we can always enable memorable moments for our consumers. That's why we invest in the platforms that we invest on our brands, and we keep pushing the category forward with innovation. In terms of the tone for 2026, let's say, I think that 2025 was definitely a very complicated year with many dynamics impacting different markets, industry and consumer goods in general, right? And beer was not insulated from what happened last year. As we saw most of the impact for beer came on the second half of the year. But as we phased the year towards the end of the year, we saw momentum reaccelerating, especially in December. And this momentum is carrying on now early in January in majority of the markets. We have a very good year in terms of opportunities to activate and land our innovations. And I think that if you look forward during the summer, the World Cup always presents a unique opportunity for us and the fact that's going to happen in the Americas, 104 games plus across the world is going to be great. And in connection with our strategy, of course, despite of everything that happened last year, you've seen the numbers, we continue to invest on our strategy, always focusing on the long term. Our growth accelerators and growth drivers like balanced choices, premiumization, non-alcohol beer, Beyond Beer and BEES marketplace are all working as per plan. And therefore, the more the mix contribution of these initiatives and the more solid the execution behind our 3 pillars of this strategy becomes, the more optimism, of course, we build and continue to deliver our midterm outlook. That's why it's unchanged for 2026. Thank you for the question. Operator: Our next questions come from the line of Rob Ottenstein with Evercore... Robert Ottenstein: Michel, you've done a terrific job turning around the U.S. market, and it really looks like it's in the best position to grow in many, many years. Can you first maybe kind of give us a sense of the key elements of that turnaround and what you've learned from that? And then perhaps even more importantly, can you talk about other major markets around the world where you can apply those learnings, those strategies, tactics to put the markets on a better trajectory and maybe specify particular actions along that front that perhaps you started in '25 or plan to start in '26, so we can get a sense of how you can take what you've learned and the momentum in the U.S. and move it around the world. Michel Doukeris: Thanks for the question. So to start with, I think that the team is doing a great job in the U.S. So they are working really hard on things that we agreed and those things are turning the results around. I think that we have been in a long journey in the U.S. since 2008. We got a business that had structural disadvantage because the portfolio was concentrated in segments that were not growing. You remember that since 2017, when I arrived in the U.S., there was this idea of rebalancing our portfolio for growth and the idea that, of course, this rebalance will not happen overnight. So we continue to be very focused on this strategy, investing in the right segmentation and in the right brands, innovating in the segments where we had low or no participation. And the biggest learning, I think, for everybody in the U.S., including myself, is the power of consistency. So the U.S. is a market that moves on the long horizon. It doesn't move overnight. Investments, that's why we continue to heavy up our investments in the U.S. and hard work. And I'm very glad to see the team working very hard to execute this strategy and start harvesting some of the efforts that they are making over the last 3, 5 years in this market. So we are very focused. We are very consistent. We are investing, and we are working hard in getting this strategy to benefit our business and our wholesalers and our customers in the U.S. When you think about other markets, you know that we have a very large footprint. So every day is a different day. It's never boring. But if I would choose only one market at this moment where we are very focused in turning around is China. So China went from a big accommodation of the industry first re-accommodating. This industry plays different by region, as you know. So the east part of China suffered much more than the inland. The on-trade channels declined much more than the off-trade. And because our business had a very large footprint in the East and in the on-trade, we had to reorganize ourselves. So we took last year a huge effort to keep the business healthy, especially in inventories, cash flow for our wholesalers, while we start to reorganize towards off-trade and more inland distribution as well. I think the recipe for the China business is the same. It starts with right focus and moving at the speed that we need, which was not the case before. Execute with consistency. We have a great portfolio in China. invest on the right channels, which we are doing now and making sure that the team is working as hard and with the sense of urgency that we need. And I'm glad to see that quarter 4 share was stable, Budweiser was in a better place. And now in 2026, we need to continue to work on this direction so we can reignite growth there. Thanks for the question. Operator: Our next questions come from the line of Sanjeet Aujla with UBS. Sanjeet Aujla: Two from me, please. I'd like to follow up on China there, please. And maybe just a little bit more of an update on your commercial execution. How far or how much progress do you think you've made in terms of penetrating the off-trade channel? Are you now gaining share within that channel? And just tied to that, what are you seeing in the on-trade channel? Any signs of some of the anti-extravaganza measures in your key provinces starting to ease at all? That's my first question on China. And secondly, just on Brazil, it's been a tough year in Brazil from a category standpoint. You spoke about December returning to growth. Has that also continued into January? And just your -- the competitive dynamics in the market. I think you alluded to some share gains in Q4. It would be great to dig deeper into that. Michel Doukeris: Thanks for the questions. So I think that in China, the 2 questions. First, the off-trade in China is changing very quickly. So the biggest acceleration of all is this O2O channel, but it's a very sophisticated O2O channel because it's very dynamic. It serves different channels from the O2O. And this was a channel that we used to lead in China. We were lagging behind now, and we are accelerating big time gaining share of this channel. And then there is the large off-premise, which we had to adjust distribution, pack assortment, price and promotion. And this is evolving, but there is a lot of room there for us to improve. The on-trade is not improving, but I think that the good news is that it's not getting worse either. So I saw relative stabilization on the industry last year in China, which is a good signal. The industry was let's call it, minus 1%. I think that this opens an opportunity for this year to have a more positive outlook for the industry. Chinese New Year moved, right? So it's a little bit later, should help as well, another 2, 3 weeks of Chinese New Year loading in sales to consumers within 2026. So let's see. It's early to say. I was there in January. I liked what I saw in terms of industry consumption and our execution, but it's too early to call. And in terms of Brazil, I think that we discussed during the calls last year, there were actually 3 things playing into the dynamics of Brazil. One was part of the consumers under stress in disposable income because of the high inflation. There was a very abnormal weather. So we call them seasonal weather but was really cold and rainy through a big portion of the middle of the year in Brazil. And then as we kept running our revenue management agenda, there were like relative price gaps in Brazil hanging there for over a year. I think that during the year and especially at the end of the year, the weather improved a big time, and that was the biggest change in the dynamics in the market. But also, I think that the gaps in terms of relative start to close. And then the power of our brands and the level of our execution start to speak louder, and we ended the year with very good momentum. As we look at the beginning of the year, weather remains normal. Normal is good for us. And our brands continue to have very strong demand. So the beginning of the year has been so far positive. Thank you for the questions. Operator: Our next questions come from the line of Trevor Stirling with Bernstein. Trevor Stirling: One question for me, but probably a longer one. Fernando, I appreciate you're not going to give guidance on margins. But if I look at 2025, despite the problems in volumes in many regions, you still delivered 100 bps of margin expansion. As I look forward to 2026, as Michel has commented, the outlook for volumes is looking better than it has for probably quite a few years in terms of both momentum as you exit 2025 and the FIFA World Cup coming. So that's looking positive. COGS outlook to me looks similar to 2026, there's moving parts in different countries in Midwest premium, but probably similar, but albeit probably a little bit more pressure in the first half than the second half because of currency hedges. A&P, you're probably going to spend more because of all the activation but knowing you guys will be disciplined spend. Price/mix looks solid. That looks like a pretty good outlook for margins for 2026 as well. Am I reading things the wrong way? Fernando Tennenbaum: Trevor, so very comprehensive analysis. I think what you are saying and what we saw happening in 2025 is not anyhow different than what we've been discussing for a while. When we look at our business, when we look structurally our business, we continue to see opportunities to drive further margin expansion. And as you said very well, kind of every quarter, every year has its unique dynamics. But on a year where you see your cost dynamics more of a normal year, like 2025 was more of a normal year and 2026 as well and hopefully, going forward, we have to see more normal years by driving efficiency, by making sure that we continue to invest behind our brands, which command a premium with all these components, we continue to see further opportunities to expand margin, okay? So -- and then when you talk about the cost of goods sold, you are right because you have the FX curves kind of given what happened last year, we always hedge 1 year later. You know that there is going to be a little bit more pressure on the first half than on the second half. In terms of investment, this year is somehow different because we have the World Cup. So we have some more concentration of investments of sales and marketing in the second and third quarter. But overall, kind of business is healthy. We are excited with the opportunities, and we'll continue to invest behind it. But maybe even giving more high-level view, the fundamental drivers of our margin at the end of the day are the iconic mega brands, the unique global footprint, the meaningful leadership positions that we have, this very efficient operating model that we keep looking for further opportunities and the financial discipline and ownership culture. So I still believe we have room to further improve on that. Operator: Our next questions come from the line of Andrea Pistacchi. Andrea Pistacchi: I also have 2, please. And sorry about my voice, which is a bit low. First one is on Beyond Beer in the U.S., please. Now you referenced your capabilities and route-to-market advantage that clearly gives you a right to win in Beyond Beer. So focusing on the U.S., where your prepared cocktails are growing very strongly, and you've also launched Phorm Energy this year, again, leveraging your competitive advantages. So the question is, if you could share some thoughts maybe on what you think your Beyond Beer business could look like in the U.S. 3, 5 years from now, what the long-term or medium-term innovation pipeline looks like? Are you planning to bring new brands to market? Are you open to more M&A like the BeatBox deal? And ultimately, how large do you think -- what's the ambition? How large could Beyond Beer be in, say, 5 years' time in the U.S.? The second question actually is also on the U.S., a bit more specific on margins going to Trevor's point, I guess. So COGS inflation in the U.S. increased a bit in Q4. I think it will increase a bit further this year. So in light of that, can you share something on your revenue management strategy in the U.S. this year? And what are the levers do you have to protect to help margins in the U.S. this year? Michel Doukeris: Andrea, no issues with the voice. I think we are both on the same page here. So mine is a little bit under the weather as well. Thank you for the questions. U.S. Beyond Beer. So this is something that we've been discussing as well since 2017 as we start to rebalance our portfolio and invest in segments that we under-index. And definitely, these ready-to-drink beverages that source from other alcohol beverages and other occasions, they are a great opportunity for our business in the U.S., and we've been investing and building capabilities and brands in this segment. So today, this represents a little bit less than 3% of our business in the U.S., but it is growing very fast. And if you look at the brands that we are building, these brands today are ranking top 10, top 20 in the spirits industry in general in the U.S. and Cutwater specifically is ranking at the top of the fastest-growing brands in the industry for last year and the fastest one for the quarter 4. So I think that the headroom for growth is huge because they source from outside of the beer arena, and they are very incremental to our business. They are brands that we build from scratch. Therefore, they have still a lot of headroom for growth. As you said, we continue to complement this portfolio with BeatBox, for example, which is a different proposition for different occasions for different consumer cohorts, and our portfolio is getting stronger, but we still have a lot of headroom to grow in this area. Connecting this with the second point, they are also margin incremental. So as this mix continues to grow, as the mix of Michelob ULTRA continues to grow, this is all incremental to our margins. So we are managing our margins, not only from the cost productivity standpoint, but also from mix and revenue, as you said. And in terms of revenue, you all know we price in line with inflation. I think that COGS and the cost of goods sold will continue to fluctuate. That's why we hedge so we can have a more long-term perspective. And we'll continue to invest to accelerate the momentum of our business in the U.S. So we are moving in the right direction, still a lot that we need to continue to do. But so far, we are happy with the evolution, and we'll continue to execute in the way that we are executing so far. Operator: Our next questions come from the line of Mitch Collett with Deutsche Bank. Mitch, could you please check if you're self-muted. Mitchell Collett: Sorry, can you hear me now? Operator: We can hear you. Mitchell Collett: Okay. Apologies. So Michel, Fernando, I was just going to ask about your thoughts on phasing in 2026. Fernando, I think you've just given some of the components, but transactional FX, I guess, is more helpful in the second half. You've obviously got some phasing around your marketing and sales spend and some pretty uneven comps. So can you maybe just sort of tie that together and give us some thoughts on how we should think about phasing across 2026? And then my follow-up is on CapEx, which is still well below depreciation. And I think your guidance suggests that it will remain well below in '26. I know you've talked before about how you're using technology and AI and other tools to keep CapEx at a low level. Can you just comment on how you're doing that and how sustainable that level of CapEx is going forward? Fernando Tennenbaum: Mitch, so on the first question on phasing. So phasing, I think on the last question, we went over very well on that, but it's -- given what happened to the FX last year and kind of knowing that we hedge 1 year out, you know that last year, you had kind of -- you are going to have a bigger challenge in the first half of the year, especially in markets like Brazil and Mexico, where currency was really depreciated at the beginning of last year. And then you have kind of easier comps towards the second half of the year on cost of goods sold and transaction. So that is something definitely fair to say. And then of course, if you look at our financial filings like the 20-F, you look some of our exposures, you can get a good guess on how these things will behave kind of in the year of 2026. On sales and marketing, this is going to be somehow of a different year because since you have this World Cup, with a massive event in a lot of our markets, more towards Q2 and Q3. So one would expect some sales and marketing concentration. What is important to bear in mind is that even though kind of there are different dynamics in the year, we are going to manage the business to make sure we invest in the long term and create long-term value, not necessarily trying to cater to one quarter or another. But one would expect more concentration of sales and marketing investments in the second and the third quarter this year specifically. In terms of CapEx, it's not different than what we've been talking about. By looking at further efficiency opportunities, by looking on the role on technology, by kind of looking at every single different investment in our business, we are confident that we can kind of deliver the CapEx within the outlook for this year and still do everything that we need to do. We still have CapEx -- growth CapEx within this kind of envelope, anything that we need to support the business. So very comfortable with this level of CapEx. Operator: Our next questions come from the line of Gen Cross with BNP Paribas. Gen Cross: Just one question from me actually. It's actually on BEES marketplace. It looks like you've added over $1 billion in marketplace GMV in 2022. And interestingly, it looks like it's pretty much all driven by the 3P part of the business. I think, Michel, you mentioned looking at opportunities to scale and further increase profitability in marketplace. So I just wonder if you could give us some thoughts on the potential to scale marketplace further, particularly as the higher margin 3P part of the business becomes a bigger part of the mix. Michel Doukeris: Thanks for the question. So marketplace is a growth opportunity for us, as I've been highlighting over the last couple of years. and it's incremental to the beer business that we have. So it's a new revenue stream. And it's adjacent because actually, we built the technology product to serve better our customers. At the same time, we could increase this addressable market for our business by solving 2 pain points. One pain point is our customers. They were underserved by most of the CPGs because they are small, fragmented in distant areas. And on the other side, the CPGs need growth. They need to reach more customers. And the fact that we built this digital channel enables them to seamlessly reach a much broader and much more important base of customers. We always knew that the model would work. So we start testing and building the 1P. The 1P was using the capabilities that we have, the route to market, the trucks, the sales reps. But as we built the product and enhanced the technology, we always knew that the biggest opportunity is actually what we call 3P, which is touchless, right? So the app is downloaded by the bar owner. The bar owner sees an assortment that's much bigger than only the beer assortment or the products that we sell. They place the orders. The orders are then redirected to the different suppliers, and the suppliers take care of the delivery of these orders. And we, of course, in the middle, we are the product delivery and the marketplace for them to sell, to promote, to follow through with their sales team because the suite of products that this has is beyond only the app; we can also digitize our partners. And this is the part that is scaling fast and the most and is also the one that's the most profitable. The simple way to understand the opportunity is that on average on these retailers, beer accounts for 34% to 40% of what they sell. Therefore, there is a 1.5 to 2x addressable revenues that today we do not participate without the marketplace, and we can participate. And as you know, I think you were with us in Mexico, we are, in some cases, even increasing this addressable market because we are taking, for example, technology products like minutes for people to buy and operate their phones or paying their bills. So there is many incremental opportunities that can be built on top of that credit. We have partners today selling credit to these points of sales. So all of that builds on top of what the marketplace will directly build. So we are in early stage. It is scaling up at the pace that we want to scale up and it's becoming the business that we thought that could become. So very happy with the development, but a long way to go still. Thank you for the question. Operator: Our next questions come from the line of Sarah Simon with Morgan Stanley. Sarah Simon: I have 2 questions. First one was on Zero again. Your growth is extraordinarily high compared to peers. What do you think you're doing that they're not? And then the second one would be on RTDs. Your RTD business is obviously largely concentrated in the U.S. How are you thinking about that in the context of other markets and exporting it? Michel Doukeris: Thanks for the questions. I think I got both of them. If I didn't, please help me here at the end. So the non-alcohol beer, I think that we've been talking about that. We invested a lot in the technology. So making sure that we have superior products. And this investment was done in 2020, 2021, 2022. Many breakthroughs there. The liquids are fantastic. It's really great taste beer without alcohol, products that range from what we shared with you today in South Korea that is zero calorie and zero gluten and zero sugar, great taste to the fantastic Michelob ULTRA Zero in the U.S. that has only 29 calories, but it tastes delicious. So we invested first on the product and technology. Then we start to roll out this on our winning brands. So we have great brands across the globe. And every time that we put together a non-alcohol version of these brands, of course, consumers try and they choose the strong brands that we have. And then I think that the last point, we decided to invest and walk the talk. So just think about Olympic Games, a mega platform that we have globally that we sponsor with both Corona Cero and Michelob ULTRA Zero. So we got to get great product. We lined up the brands and innovation, and then we are investing behind that. And when we do all of together with our execution, which is superior execution, we can gain share quickly as we are gaining. We can expand categories, reach more consumers and get the growth that we are getting with this. So consumers are there. We are there for them, and we are gaining share in an accelerated way in this segment. In terms of RTD, actually, if you look at the numbers, RTD for us is bigger outside the U.S. than it is in the U.S. It's 3% of our global business, it's around 2 -- between 2% and 3% in the U.S. The most meaningful expansion that we are doing in this Beyond Beer space started last year, and we are rolling out this year is with Flying Fish, which is this beer liquid, but it's very different than beer. It's flavored. It has very different demographics that we reach with the product. It competes a lot outside of the beer space because of the taste profile, brings a lot of new consumers to the category because they are flavor seekers. They like sweetener liquids. They don't like too much the bitter. And then this is now going to 10 different countries. And in every country, we have a nice story to tell so far because this is fulfilling what the plans were and what we want to achieve. And then we also have Cutwater, which we are building in a very diligent way in the U.S., but we already started to expand to Canada, and there are some other markets coming in the lineup. And we have today a global portfolio, let's say, for Beyond beer that caters each of the segments within the Beyond Beer. So NUTRL, Brutal Fruit and Beats are also getting expanded globally to different countries. So there's more to come there. The opportunity is very big outside the U.S. and outside Africa, and we are just scratching the surface so far. So more to do. Thanks for the question. Operator: This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Mr. Michel Doukeris for closing remarks. Michel Doukeris: Thank you. Thank you, everyone, for the time today, for the ongoing partnership and support to the business. I hope you are all well, get some time to drink a beer. Cheers. Operator: Thank you. This does conclude today's earnings conference call and webcast. Please disconnect your lines at this time and have a wonderful day.
Anna Tuominen: Good afternoon, ladies and gentlemen. My name is Anna Tuominen. I'm the IRO of Marimekko. Thank you for joining us today. We have the opportunity to hear our President and CEO, Tiina Alahuhta-Kasko, in a few minutes to go through Marimekko's Q4 and full year results from 2025. And after that, we have reserved some time for Q&A with Tiina and our CFO, Elina Anckar, answering your questions. You can type in your questions using the chat function already during the presentation and then we'll start going through them after we first heard Tiina's wise words. Tiina, please go ahead. Tiina Alahuhta-Kasko: Thank you so much, Anna, and good afternoon, everyone. It's my pleasure to share with you a few words about Marimekko's results in 2025. So let's get started with the fourth quarter of the year. As it pertains to our business development in the last quarter of the year, of course, the market situation continued to be challenging. But despite of that, our net sales grew from the comparison period's record level, fueled by our international sales and our operating profit margin was at a good level. Altogether, our net sales in the fourth quarter grew by 1% and totaled EUR 54.7 million. Our net sales were driven especially by increased retail and wholesale sales in the Asia Pacific region in spite of the globally uncertain market situation and the weak consumer confidence. In total, our international sales increased by 5%. Net sales in our home market in Finland were down by just 1% as retail sales declined in the environment that in Finland remained highly price sensitive and tactical. Then as it pertains to our profitability, our comparable operating profit totaled EUR 8.8 million, equaling to 16.1% of net sales. It was decreased by higher fixed costs, while then improved relative sales margin and increased net sales had a positive impact on profitability. Overall, our cash flow from operations strengthened and our financial position continued to be strong. Overall, as we now have entered to the 75th year of Marimekko's operations, our brand is as vibrant as ever. Then, of course, our strong financial position, paired with the sustained profitable growth and positive development of our business, they put us in a great position to continue scaling up the global brand -- Marimekko brand phenomenon growth also in the now started year. But let's have a closer look now behind the drivers in net sales and operating profit. So starting with the Q4 net sales, which increased by plus 1% to EUR 54.7 million and being boosted in particular by the increased retail and wholesale sales in the Asia Pacific region. Overall, the net sales in Finland were close to par to the comparison period as our retail sales declined in the highly price-sensitive and tactical operating environment. However, wholesale sales grew by 2% when the domestic nonrecurring promotional deliveries increased. In our second biggest market area, the Asia Pacific region, our net sales grew by 10% as retail sales in the region increased by a very strong 24% and wholesale sales by 9%. Internationally, overall, our retail sales also grew in all other market areas. And in total, our international retail sales grew very strongly, so plus 20%. And in total, our international net sales grew by 5%. Then when looking at the full year '25 performance, in total, our net sales increased by 4% to EUR 189.6 million, boosted especially by the growth of wholesale sales in the Asia Pacific region and in Europe as well as the increased retail sales in Scandinavia. The operating environment in Finland continued as challenging. And as estimated earlier, also the nonrecurring promotional deliveries in the domestic wholesale sales were considerably below the comparable year. But in spite of this, our net sales in Finland increased. Our retail sales in Finland were on par with the previous year's record level, while then wholesale sales increased by 1% and licensing income grew significantly. Then when we look at our second largest market area, the Asia Pacific region, that increased by 2% when both wholesale and retail sales grew. So while we had a good development in this core business of retail and wholesale in the Asia Pacific region, the net sales in that region was negatively impacted by the considerable decline in the licensing income in the region. Overall, when we look at the group net sales performance in the full year level, as estimated since the beginning of 2025, the licensing income was considerably lower than in the previous year. And that, of course, had a negative impact on the total net sales development as well. In total, sales grew by 7% with retail sales increasing in all and wholesale sales in almost all international market areas. So international sales, plus 7%. I think that's a good testament on us progressing well in our scaling journey despite the volatilities and uncertainties in the world economy and consumer confidence. Then when we look at our net sales breakdown per market area and by product line, no major differences or changes in the split by market area. So Finland continuing to be the strong home market and then Asia Pacific being the second largest market, but also solid kind of shares across Scandinavia, Europe and North America. When we look at the net sales split by product line, fashion is there the biggest product line. And actually on a full year level, we saw the strongest growth from the fashion product line, namely 12%. Our omnichannel store network also expanded in 2025. And today, 174 Marimekko stores around the world serve our customers. And our online store serves customers already also in 39 countries. Our brand sales in the full year amounted to EUR 385 million and 62% of our net sales came from the international markets. Then when we look into our profitability in the fourth quarter, our comparable operating profit margin -- profit was at a good level, amounting to 16.1% of net sales. Our operating profit was decreased by a higher fixed cost, while then the improved relative sales margin and increased net sales had a positive impact on our profitability. When we look at the drivers behind the fixed cost increase, they were due to, in particular, the higher marketing costs, but also due to increased personnel expenses. Then when we look at what is behind the increased personnel expenses, it is the general pay increases in different markets as well as the increased personnel costs in stores to support retail. The relative sales margin was improved by margins per product being at a good level as well as lower logistic costs than in the comparison period, while then the relative sales margin was weakened by higher discount. When we look at the situation cumulatively, our cumulative operating profit increased by 1%, and our comparable operating profit margin was at a good level, actually 17.1% of net sales, which I would say is a good outcome, especially in the volatility of the world situation. Our operating profit was, of course, boosted by the net sales growth, while then on the other hand, the higher fixed costs and weakened relative sales margin had a negative impact on the operating profit development. The fixed cost growth was attributable to, in particular, the increased personnel expenses, but also they were due to the investments in digital development. The reasons behind the personnel expenses increase were actually the same as in the fourth quarter. The relative sales margin was negatively affected then by especially higher discounts and as estimated by significantly lower licensing income. In addition, also unrealized exchange rate differences had a weakening impact on sales margin. while the relative sales margin was then supported by margins per product being at a good level. There were several key events that took place in the fourth and last quarter of the year that really show how we're progressing in scaling up the global Marimekko brand phenomenon and our growth. Let's have a look. First of all, at the end of October, we opened our historically first Paris flagship store. Paris is, of course, no doubt the most important fashion capital in the world whose impacts in brand awareness and positioning expand beyond Europe to also North America and Asia. This way, our presence in Paris supports the scaling of our brand phenomenon and long-term growth across channels and international markets. In the fourth quarter, also Marimekko store, originally opened in 2012, reopened as a flagship store in the same street in Hong Kong, which again allowed us to reinforce our brand awareness and positioning across the broader Asia region. Also, new Marimekko stores were opened in Tokyo and Bangkok along with 8 pop-up stores that delighted customers, mainly in Asia as well as a pop-up cafe, which all complement our omnichannel store network. We also progress and continue to invest in our digital business. We launched at the end of the fourth quarter, a new Marimekko app that really offers an inspiring shopping experience and a digital home for our renewed loyalty program. The app also allows people to peek behind the scenes into our printing factory, into our print archive. And this app really allows us to deepen the engagement of our loyal customers. So really much at the core of our D2C business. In the fourth quarter, we also hosted local collaborations, namely the JW Marriott Hotel in 9 places hosted Marimekko rooms as well as events as well as in Taichung in the Sundate Cafe, the experience was addressed in the Marimekko Prints. And these kind of creative brand experiences that really connect with the local culture and community, they really allow us to differentiate from the competitors and introduce our brand yet again to new audiences, in this case, in Asia. To close the year, the Field of Flowers touring exhibition that actually has been, during the course of the year, touring and visiting a total of 11 cities, especially in Asia, made stops in Shanghai and Sydney. The Field of Flowers exhibition showcases the newest Marimekko floral print design, production, and these touring exhibitions have also featured pop-up stores, where people have been able to buy a bit of the new designs to their homes. Sustainability is one of the key strategic success factors in our scale strategy, and we believe that determined efforts to develop sustainability support our long-term success. In 2025, we continued our progress in our sustainability work and actually achieved 3/4 of our very ambitious targets in our previous strategy, sustainability strategy term on the greenhouse gas emissions and water use reduction. Then moving on to the outlook of 2026. Just a few words in general to get started. Of course, there are significant uncertainties related to the development of the global economy, such as the tensions related to geopolitics and trade relations, and the rapid changes in the trade policies, as well as other uncertainties, are reflected in consumer confidence, purchasing power and behavior, and thus can have a weakening impact on Marimekko. In addition, also, possible disruptions in production and logistics chains, and changes in these chains caused by the uncertainties may also have a negative impact. But of course, as usual, we're always monitoring these situations and developments and will adjust our operations and plans accordingly if needed. A few words about seasonality. So due to the seasonal nature of our business, a major portion of our company's euro-denominated net sales and operating results are traditionally generated during the second half of the year. It's also good to remember that the timing between quarters of the non-recurring promotional deliveries in Finnish wholesale sales and their size typically vary on an annual basis. Licensing income in 2026, we forecast to be approximately at the level of the previous year. Then, continuing to the net sales development outlook for 2026, starting from Finland, our important home market. Despite the weak market situation, our net sales, in the domestic market, Finland, are expected to increase in 2026. Sales in our domestic market are impacted by the continued weak general economy and low consumer confidence, as well as the development of purchasing power and behavior. The operating environment continues to be tactical and price sensitive, which continues to have an impact on the business. What is good to note is that in 2026, the non-recurring promotional deliveries in wholesale sales are expected to grow from the comparable year, and they will be weighted in the second half of the year, as in 2025. What is also good to note is that the development of the domestic sales is estimated to be more muted in the first quarter of 2026. Then moving on to the international. Overall, international sales, we estimate to grow in 2026. When it comes to the Asia-Pacific region, our second largest market area, we expect our net sales to increase in 2026. However, it's good to note that due to timing reasons, the development of sales in the Asia-Pacific region is estimated to be more muted in the first quarter of the year. In 2026, the aim is to open approximately 10-15 new Marimekko stores and shop-in-shops, and most of the planned openings will be in Asia. When it comes to growth, investments, and costs, of course, we develop, as always, our business with a long-term view and aim to continue scaling our profitable growth in the upcoming years. Thus, our fixed costs are expected to be up on the previous year, so also the marketing expenses are expected to increase. When it comes to the tariffs in the U.S., maybe a few words about that. So the increased tariffs in the U.S. have a direct impact only on a small part of our business, as the entire North American market accounted for 6% of our net sales in 2025, and we as a company are taking diverse measures to minimize the negative impacts of the tariffs. Then the early commitments to product orders from partner suppliers, which is typical of our industry and partly further emphasized due to the different factors, weakens our company's ability to optimize our product orders and respond to rapid changes in demand and supply environment, and thus increases business risks. There are also uncertainties related to global production and logistics chains, but of course, we always work actively in various ways to ensure competitive and functioning production and logistics chains, to mitigate the increased costs and other negative impacts, and to avoid delays, and to enhance inventory management. When it comes to our financial guidance for 2026, we expect our net sales for 2026 to grow from the previous year, and our comparable operating profit margin is estimated to be approximately 16% to 19%. The development of consumer confidence and purchasing power in our main markets, in particular, cause significant volatility to the outlook for 2026, and this development is strongly impacted by rapid changes and uncertainties in geopolitics and global trade policy, among others. In addition, possible disruptions in global supply chains can cause volatility to the outlook. Then finally, a few words still about the proposal for dividend for 2025. Our board of directors is proposing to the AGM that a regular dividend of EUR 0.42 per share to be paid for 2025, and this is, of course, in line with our dividend policy, or actually higher than that. With these words, I would like to open up the Q&A. Thank you for listening. Anna Tuominen: Thank you, Tiina. And I would like to invite also our CFO, Elina Anckar, here for the Q&A. And just to remind you, you can still type in your questions using the chat function, and we'll go through them. But let's start with a couple of questions related to the events that you went through. There was a lot happening in Q4. So the Paris flagship store, has it met your expectations? Are you happy with the launch? Tiina Alahuhta-Kasko: So, of course, it's very early days still in Paris, as the opening took place at the end of October. I think that overall, as I mentioned in my presentation, taking the step to open a flagship store in Paris is a significant milestone in our scale journey, namely because of Paris being the fashion capital of the world, The store caters not only for the local consumer, and this way supports us, in our Europe strategy. Many of you, you might remember that, we are working on modernizing both our brand and our distribution network in Europe, but equally, Paris is a destination for tourists. So we see that, good, inspiring presence in Paris can also support our awareness and positioning efforts, more widely, including also in Asia and in North America. Anna Tuominen: What about the new Marimekko app? That was even more recent launched. But are you able to share some details on how that's developing? Can you see some impact on customer engagement or... Tiina Alahuhta-Kasko: So of course, the Marimekko app was launched even later at the end of the year. And we're very excited about the Marimekko app. We have a very strong technology team at Marimekko, and we work in various diverse ways how to advance further digitalization of Marimekko's business to even better serve our customers and to support our efficiencies. The app plays a really important role in our direct-to-consumer business as it allows us to have a deeper engagement with our loyal customers and also provide to them an even more personalized experience. So they're excited to continue on that journey. Anna Tuominen: Yes. A question related to sales, especially the Finnish sales. At least in Finland, one can see that there's been quite a lot of campaigns lately. Is this something that you consider necessary in this market environment? And the question -- and the person asking the question is asking also that assuming that fewer campaigns would result in higher profitability. Tiina Alahuhta-Kasko: So overall, if we look at the domestic market, like Finnish market sentiment over the course of the last couple of years. So of course, we know that the general economic situation in Finland has been quite gloomy and the consumer confidence has been very low. And all of these uncertainties have also reflected in general in the marketplace to highly tactical and price-sensitive behavior in the marketplace. So in order for us to be competitive, there are 2 things. We need to have commercial excellence so that we are relevant for the customers in the climate where we operate. And even more important is that we continuously invest into the desirability of our brands and the hype around it. So both are important to succeed in this kind of a more challenging market situation. Anna Tuominen: There needs to be a balance. Tiina Alahuhta-Kasko: Yes. Anna Tuominen: Another question related to sales, maybe for Elina, about the licensing income, especially licensing income in 2026, so this year. Is this level of licensing income that we saw in '25 and that you're guiding now for '26, is it sort of a new normal, or should this be viewed as particularly low level, or how should investors look at the licensing income going forward? Elina Anckar: Yes. Regarding licensing income, that is something that we actually give a market outlook every year. And for the year '26, we have said that the licensing income will be more or less in line with the '25 levels. But it's good to remember that when we look at backwards, years '23 and '24 were, like record high in terms of the licensing, but we will announce the outlook for the licensee fee every year. Anna Tuominen: There's also a couple of questions related to specifically marketing costs. So maybe I'll continue with the CFO. So you're guiding marketing costs to increase in '26. Is that in absolute terms or as a percentage of sales? And is there any way of giving a sort of guidance on how much they will increase? And what drives this kind of increase in '26? Elina Anckar: As Tiina has already talked about like the importance of us continuing like increasing the brand awareness and the brand loves and the hype and in overall like making sure that we do invest into the growth even if the market situations are a little bit tougher. So for that perspective and based on a very strong financial situation, we are increasing our financial spend. And we're talking about like euro values here in terms of like the spend. And if we look at backwards, year '26, we spent some 6% of the turnover to marketing and the year before, the same 6%. Tiina Alahuhta-Kasko: And maybe one addition to this is that when the market -- general market situation around the world is more challenging, it is also very much an opportunity for companies with a strong balance sheet and continued positive performance of our profitable growth and positive performance of our business to then invest into fueling our long-term growth. So we see that this also very much as an opportunity. Anna Tuominen: There actually was another question also related to this that why not adjust these fixed costs, especially marketing to be closer to the long-term target, but then you would lose the opportunity to invest in growth. Tiina Alahuhta-Kasko: Yes. We have a scale strategy. So we are all about building our long-term growth. Anna Tuominen: That was actually all the questions this time. So we would like to thank you for joining us, and we hope to see you next time as well. Tiina Alahuhta-Kasko: Thank you. Elina Anckar: Thank you.
Operator: Hello, everyone, and welcome to Yatra's Fiscal Third Quarter 2026 Financial Results Call period ended December 31, 2025. Today's call is hosted by Yatra's Co-Founder and Executive Chairman, Dhruv Shringi; and CEO, Siddhartha Gupta. The following discussion, including responses to your questions, reflects management's views as of today, February 12, 2026. The company does not take any obligation to update or revise the information. Before they begin their formal remarks, please be reminded that certain statements made on this call may constitute forward-looking statements, which are based on Yatra management's current expectations and beliefs and are subject to several risks and uncertainties that could cause actual results -- for a description of these risks, please refer to Yatra's filings with the SEC and the press release filed earlier this morning on the IR section of Yatra website. With that, let me turn the call over to Yatra's Co-Founder and Executive Chairman, Dhruv Shringi. Dhruv, please go ahead. Dhruv Shringi: Thank you, operator. Good morning, everyone. Thank you for joining us on [Technical Difficulty] third quarter and 9 months ended fiscal year 2026 earnings. Let me start by briefing you first on the events that happened during the quarter, and how it has impacted the industry, and then our CEO, Siddhartha Gupta, will brief you on the operational performance and the financial performance in greater detail. The third quarter, which is typically a strong period for leisure travel in India, witnessed healthy demand across [Technical Difficulty] limitations which led to operational challenges for the airlines and a spike in cancellations across the entire country. Market data indicates that domestic [Technical Difficulty] and recovered in the second half of the month, and we've seen those factors continue to rise in the month of January and thereon. But the key positive during the period was the divergence between domestic and international travel trends. While domestic travel experienced short-term headwinds in December, international travel remained strong with healthy year-on-year and sequential growth. This reinforces that outbound and long-haul travel is in a structural up cycle, benefiting organized travel platforms like Yatra with strong corporate and international travel franchises. Also, the recent union budget sends a clear message and positive signal about the government's long-term commitment to the travel and tourism sector. By positioning tourism as a strategic growth engine linked to the employment generation, foreign exchange earnings, and regional development, the policy framework shifts from episodic support to building a more structural and sustainable ecosystem for travel and hospitality in the country. Key measures such as rationalization of tax collection at source on overseas tour packages to a uniform 2% rate, lower upfront cost improved outbound segment. In addition, increased emphasis on domestic connectivity through infrastructure investments, including high-speed rail corridors, waterways and regional access, among the initiatives to enhance hospitality capabilities through a National Institute of Hospitality and large-scale skilling programs, expand the talent pipeline for the tourism sector. There is a growing demand for Indian organizations to help digitize travel procurement while using AI-driven platforms that offer end-to-end automation, self-booking tools and integrated expense management, prioritizing compliance and cost savings. AI and predictive analytics platforms make travel procurement by forecasting demand, optimizing costs, enforcing policies and ensuring risks are attended in real time. AI-enabled self-booking tools can perform real-time policy compliance checks, flag risks like disruption or itinerary analysis and personalize itineraries with safety insights. The generative AI shifts from reactive auditing to predictive spend, cutting administrative friction and enabling productivity boosts in procurement. Yatra through its corporate self-booking platform, supported by AI bot and its richer expense management solution is taking the lead in driving this shift in industry dynamics. Moving on more specifically to our business for the quarter. Our B2C business, as was predicted earlier by us, [Technical Difficulty] is now still growing profitably. Additionally, our corporate and MICE business [Technical Difficulty] was well on track to deliver our strongest third quarter yet. With the exception of the recent inflation [Technical Difficulty] about our operational performance in the quarter. We remain richly supported by our continued focus on scaling the Corporate Travel business. The steady growth in corporate bookings, along with the increasing contribution from higher-margin hotels and MICE segments, positions us well for sustained margin expansion and improved profitability over the long term. With this, let me now introduce you to Mr. Siddhartha Gupta, who recently joined us as our new CEO. Siddhartha brings with him a wealth of experience across the B2B SaaS industry, and in his last role, was the President of Mercer Consulting in India and was also heading their SaaS-based talent acquisition business globally. Prior to this, Siddhartha has also held leadership roles in large tech and SaaS companies like SAP and HP. With that, let me hand you over to Siddhartha. Sid, over to you. Siddhartha Gupta: Thank you so much, Dhruv. Operator, I hope I am loud and clear on the line. Thank you so much, Dhruv, for giving a preamble on our quarter performance and the industry trends. A very good morning to everyone on the call. Adding to Dhruv's comments, despite an industry-wide disruption in the airline sector during the quarter, Yatra continued to deliver in its Air Ticketing business, supported by seasonally strong B2C travel demand. Gross bookings in the Air Ticketing increased 22% year-on-year, supported by 14% growth in air passenger, which far exceeds the industry growth of about 1%. Take rates also improved from 6.2% to 7.1% on account of the quarter being more B2C focused. In the Hotels and Packages segment, overall performance during the quarter remained healthy. However, we did see some temporary impact in the MICE and the Corporate Events subsegment, with a few bookings getting deferred due to flight disruptions. Just to remind listeners, it was the disruption in the IndiGo Airlines schedule in India. This resulted in a modest onetime impact on the quarter, part of which we expect to roll over in quarter 4, supported by the continued strength in underlying Corporate Travel demand. Gross bookings in the segment grew 20% year-on-year, excluding the impact of deferment of the MICE business. Hotels would have grown over 30% on a stand-alone basis, supported by strong growth in our corporate business and in our affiliate business. While gross take rates moderately -- moderated slightly from 12.2% to 11.7% year-on-year on account of change in business mix, gross margins improved further from 9.7% to 10.2% year-on-year, reflecting prudent discounting in B2C and better margin realization from suppliers for corporate hotels. Our B2B to B2C mix was approximately 60-40 for the quarter versus the 9-month average of 65-35 in favor of B2B. Our Corporate Travel business continues its strong momentum. We onboarded 40 new corporate clients in this quarter, collectively adding an annual billing potential of INR 2.2 billion. As mentioned earlier, the disruption happened during the highly productive first 2 weeks of December, when Corporate Travel usually peaks before holidays. We saw deferment of MICE travel into Q4 and subsequently, few of the groups moved to Q1 of the next financial year as a direct result of uncertainty in the travel during that period. This disruption not only adversely impacted our operating performance, but also led to incremental working capital deployment where advances had already been paid to vendors for MICE Groups. These impacts were largely limited to the month of December, and the business is back on track. In the Corporate business, there's more to cheer. The early response to our expense management solution has been very, very encouraging, and we have onboarded 8 customers now on our expense management platform. Early traction proves that Yatra understands the pulse of what our corporate customers need. This solution has not only become a door opener to get new accounts, but also gives us a huge upsell potential in our existing accounts. A few thoughts on what you can expect from Yatra in quarters ahead. Our consumer-focused line of business has returned to growth path while improving margins. This was a result of sharp execution, coupled with successfully tapping into partnerships and affiliates for demand generation. In the near future, you should hear more on organic demand generation projects making impact, helping us further improve margins in this line of business. Our corporate value proposition still has a huge headroom for growth. Online penetration is around 23%, and we have laid a strong foundation for chasing this potential. We have sharpened our go-to-market by establishing separate teams to chase large and small and medium enterprises. Demand generation is amplified by a new inside sales team now, which has started augmenting the efforts of the team on ground. Early signals are very promising. Beyond new customer acquisition, our farming team have won multiyear renewals from some of our largest customers this quarter, proving that corporates want trusted partners who can deliver value to them. Needless to say that our success is closely tied to the speed at which we can deliver tech innovation. Our early investments in adding talent to our product and tech team have started showing results. You can expect us to further add gap between us and what's available in the market. Hope that gives you a flavor of where we're headed. At this moment, I would have paused and handed over to Anuj Sethi, who is our CFO, to brief you on the financial performance for the quarter under review. He has got caught up in a medical emergency. Hence, I'll take you through the financial performance as well, and then me and Dhruv will take the questions together. On the financial performance, for the third quarter of financial year '26, on a consolidated basis, our revenue from operations grew 10% year-on-year to INR 2,577 million or approximately $29 million, driven by steady demand across our key segments with robust growth from air ticketing business. In terms of segmental performance, our Air Ticketing passenger volume grew 13% year-on-year to 1,491,000. However, gross bookings grew 22% year-on-year to INR 16,931 million or $188 million. And Air adjusted margins rose 40% year-on-year to INR 1,195 million, or $13 million with adjusted margin percentage improving from 6.2% to 7.1%. Under Hotels and Packages segment, hotel room nights grew by 22% year-on-year to 508,000. Gross bookings increased 20% year-on-year to INR 4,306 million or close to $47 million, with adjusted margins expanded 15% year-on-year to INR 502 million or $6 million. On the liquidity front, cash and cash equivalent and term deposits stood at INR 2,042 million or $23 million as of 31st December 2025. Gross debt has marginally increased from INR 546 million as of 31st March 2025 to INR 583 million or $6 million as of 31st December 2025. With this, I would like to hand back to the moderator and open up for question-and-answer session. Operator: [Operator Instructions] First question comes from Scott Buck with H.C. Wainwright. Scott Buck: First, I'm curious, the revenue growth deceleration in the quarter, is any of that structural? Or you're viewing that all as just kind of the ebbs and flow of managing some of the macro challenges that are out there? Dhruv Shringi: Scott, this is largely seasonal in nature. Quarter 3, if you would recall, is one of the lowest quarters for business travel, given the holidays that we have for Christmas, New Year and for Diwali, Dussehra, which both happen in this quarter. So effectively, you lose 1 month out of the 3 in holidays. And then it got compounded this year with the flight disruptions that happened during the first 2 weeks of December. So it's not a structural shift. It's just a one-off, given the disruption that happened in the industry. Scott Buck: Okay. That's fair. Second, I just want to ask about the MICE business. Are you seeing some of the macro challenges out there, whether it's tariffs or anything else, having an impact on that business? I know there were some headwinds in the quarter. Dhruv Shringi: No, we haven't really seen any impact of that, especially things like tariff and all. We do, in fact, expect that given that there is a new trade deal which is in place between India and the EU and India and the U.S., we will see business travel scale up even further when it comes to travel between both Europe and the U.S. But we're not really seeing any headwinds per se on account of these. Sid, if you want to add something extra on that? Siddhartha Gupta: Yes. So this MICE as a segment has grown and has tremendous potential for us to grow into. This was a very fragmented market about 3 to 4 years back. And now over the last 2 years, Yatra has become one of the top 3 players operating in this space in India. And Indian economy is one of the fastest-growing economies. So there are multiple industries where corporates are traveling, not only outside India, but within India as well. And hence, there is a huge headroom for growth. What we've seen is that this entire segment is getting more formalized. So instead of very small players operating these events for corporates, now the corporates prefer doing business with large vendors like ourselves. So I think there's a huge potential, and we don't see any disruption in this space at all. Scott Buck: Great. That's helpful color. And then last one for me, guys. You continue to do a really nice job adding new corporate partners on the travel side. I'm curious how many of those kind of obvious or low-hanging fruit opportunities are still out there? And at some point, do you need to change or pivot the way you're pitching some of these customers to continue to bring on that Corporate Travel business? Dhruv Shringi: I think at this time, we have got a lot of headroom in this. Our initial mapping had suggested close to about 13,000 organizations that we could target as part of this. We are still just in excess of about 1,000. So I think there is a lot of headroom for growth for us in this sector. I think Siddhartha coming on board will also sharpen our focus on how we go to market. And maybe Siddhartha can elaborate a bit more around how he's gone ahead in the short period of time in augmenting the sales team and putting in some new things in place, which will help us drive further growth. Siddhartha? Siddhartha Gupta: Yes. So to add, I concur with Dhruv completely. We have barely scratched the surface. There is a huge headroom for growth because the offline Corporate Travel still is the majority market and the value proposition of Yatra from providing an online Corporate Travel platform, which caters for all uniqueness of every corporate customer has a huge headroom for growth. To give you a parallel, in my days at SAP or Hewlett-Packard, corporate India itself has more than 30,000 companies, which are potential customers to Yatra. We have just about crossed 1,300 right now. So there's a huge headroom for growth for us. From a go-to-market standpoint, we have commenced a very ambitious and aggressive go-to-market sharpening exercise at Yatra. We have divided our go-to-market into 3 pillars. One is -- so we've separated these teams out. One is the elite sales team, which looks at only large enterprises and tries to get us more inroads into large corporates where travel spends are very high. Then we've got a separate team, which is looking at small and medium enterprises, which operates through digitally creating demand and then through an inside sales, landing it into our kitty. And the third bit is we are already one of the larger players in India from a large enterprise automation. So we have a very large existing account base. So we have a team called key account managers, and it's headed by a very senior leader here in India. And the mandate there is to upsell and grow our existing relationships where we are introducing newer solutions like expense management and other solutions and especially international hotels and travel so that we are able to upsell into our existing customer set as well. So overall, we are sharpening the go-to-market, running a very strong cadence on a weekly basis to ensure that spikes remain healthy and conversions remain healthy as well. So you should see momentum pick up from here, and we expect our strategy of leaning more towards B2E to grow Yatra being very successfully executed over the next 3 to 4 quarters. Operator: [Operator Instructions] We have no further questions, so I'll hand back to the management team for any final remarks. Dhruv Shringi: Thank you, operator. Siddhartha Gupta: Dhruv, would you like to.... Dhruv Shringi: And thank you, everyone, who joined the call today. And as always, we remain committed to driving shareholder value and being able to address any questions that you might have. Siddhartha and I are always available. Please feel free to reach out to us through our IR firm, ICR, and they can direct you to us. We look forward to engaging with you and continuing to deliver on the strong results that we have done for the last few quarters. Thank you for your time today. Siddhartha Gupta: Thank you so much, everyone. Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.
Carolina Stromlid: A warm welcome to RaySearch 2025 Year-end Results Presentation. My name is Carolina Stromlid, and I'm Head of Investor Relations. With me today are our CEO and Founder, Johan Lof; and our CFO, Nina Gronberg, who will take you through the key highlights and financial results. After the presentation, we will open up for questions. Feel free to submit them in the Q&A chat or ask them live. With that said, Johan, over to you. Johan Löf: Thank you, Carolina, and welcome again, everyone. So this is the agenda for this webcast. I will start with an introduction about RaySearch, then I will summarize Q4 and the full year. After that, Nina Gronberg will talk about the financial development. Then I'll take over again and mention the dividend proposal that we have. Since there is a strong focus on AI these days, I will make a deep dive into what that means for RaySearch. And then I will just summarize the presentation and make an outlook. After that, we take Q&A. So a few words about RaySearch. RaySearch is a pure software company, and we are dedicated to cancer treatment software. And we have 4 platforms, RayStation, RayCare, RayIntelligence and RayCommand. What we see in this image is a comprehensive cancer center. And our long-term goal is to support such a center with all the software that they need. So not only radiotherapy, but also support for chemotherapy, surgery, tumor board meetings and other things. So that's a long-term vision for RaySearch. So far, we have focused mainly on radiation therapy of cancer. What we see in this image is the user interface of RayStation, our treatment planning system. And it summarizes quite well what's going on in treatment planning, radiotherapy. In the upper left upper -- let's see, upper right image here, you see a machine. This particular machine happens to be an X-ray by Hitachi. And we can see in this image how the machine moves around the patient. So it rotates and it also swivels this ring around the patient. So one thing that we have to do in our treatment planning system is to model this machine, so we understand how we can move and also the physics of the beam, so we can calculate dose in the patient, et cetera. The next thing we need is a model of the patient. So we see the patient in the middle upper image here and also in the other images, you see different cross-section of the patient. And we also see the dose distribution, which is the color wash overlaid on the CT images. And the idea here is that we get a high dose to the tumor, which is the red color in this image and low dose to the organs at risk outside of the tumor. For example, you see the spinal cord in this surgical view that it has a very low dose. The lower right image shows the patient from the source. If you look at the patient from the source, this is how the patient would move. It looks like the patient rotates, but it's actually the source that rotates around the patient. So this is, in summary, what we are doing in treatment planning for radiotherapy. We also want our systems to absorb data as we treat the patients so that all of our products will automatically capture the data that is being generated before the treatment starts, during the treatment and during follow-up what happens to the patient after the treatment. And by absorbing all of this data in the system RayIntelligence, we can achieve clinical insights and feed information back to our systems to improve the systems. And some of those icons are -- represent machine learning models, but it can also be other aspects and other types of clinical insights. And we use this feedback data to improve our algorithms. We have some examples of that already out in the field. We can improve the efficiency of the operation. Ultimately, we want to provide decision support so that the members of the Tumor Board, for example, can make the best possible choice of strategy for the patient and ultimately improve outcomes. I show this diagram just to illustrate the long-term journey in terms of revenues. The reason is I want to highlight that we shouldn't look at RaySearch revenues on a quarterly basis. If you zoom out a little bit, this one goes all the way back to 2008. We can see that there has been a steady growth of revenues year after year. The 2 pandemic years are an exception, and we understand why those were -- those 2 years were weaker. But besides those, there has been a steady growth of the company, even though you may see fluctuations between quarters. Okay. And now I will make a few comments about the last quarter and also the full year. So Q4 was a strong finish of the year. Net sales grew by 16% to SEK 375 million, which is all-time high. Adjusted for the strong currency headwinds, the growth would have been 28%. Recurring support revenue was SEK 139 million, which corresponds to 37% of the total revenues. The strong sales translated directly into improved profitability. Operating profit increased by 25% to SEK 92 million, resulting in a 24% EBIT margin. Adjusted for currency losses, the margin would have been 27%. So for the full year 2025, net sales increased by 13% to SEK 1.34 billion, marking the highest annual revenue in the company's history. Organically, net sales grew by 19%. Recurring support revenue was SEK 524 million, which corresponds to 39% of the total revenues. Operating profit was SEK 292 million for the full year and the margin 22%. If we adjust for currency effects and extraordinary items, the operating profit would have been SEK 353 million and the margin of 26%. Let me briefly highlight a few of the new orders and expanded installations we secured during the quarter. We continue to see solid momentum with strong license sales to both new and existing customers across all regions. Greater Poland Cancer Center expanded its RayStation installation to include Proton Therapy, bringing photon and proton planning together on a single platform. The University of Pennsylvania, one of the premier proton therapy institutions in the U.S., selected RayStation as a unified treatment planning system for proton therapy across its 3 clinics. And Universitätsklinikum Gießen und Marburg in Germany chose to replace Philips Pinnacle, which reaches end of life in 2027 with RayStation. We have also seen strong clinical progress during the quarter. The Royal Marsden NHS Foundation Trust achieved a major milestone by performing its first online adaptive treatment on the standard Elekta linac using RayStation's adaptive planning module. Until now, most online adaptive treatments have been limited to specialized machines that a few centers have. This achievement makes online adaptive radiotherapy accessible to far more clinics and patients. At the Southwest Florida Proton Center, the first patient treatments were delivered using RayStation and RayCare together with IBA's Proton Therapy System, enabling highly precise treatments, including proton arc therapy. Together with the trend to Proton Therapy Center, we performed the world's first clinical proton arc treatments in 2025, a technique that improves dose distribution by using many beam angles and optimized energy levels. This achievement was actually named one of the top 10 scientific breakthroughs of the year across the entire field of physics by Physics World, and that's something that we are very proud of. And now I will hand over to Nina, who will go through in more detail the financial development. Nina Gronberg: Thank you, Johan. Taking off from your presentation and the numbers in brief, we can conclude that it has been high interest in RaySearch solutions throughout the year, and that goes both from new and existing customers and in all of our regions. And that is also something that is very much reflected in the numbers for the last quarter. Order intake increased by 8% in the fourth quarter and 17% for the full year. And I want to highlight that these numbers include the effects from the stronger Swedish krona, which, as you know, has affected us a lot during the year. And that goes both in terms of growth and on the bottom line. Order backlog end of December amounted to SEK 1.528 billion, and the book-to-bill ratio was 0.9, both in the quarter and for the full year. Moving on to net sales. We finished the year beating the last sales record by far. Net sales of SEK 375 million means a growth of 16%. The organic growth was 28%, showing that the underlying business really performs well. License sales growth was 15% in quarter 4 and support sales grew with 6% year-on-year. When we take out the currency effects from the support sales numbers, the growth was 16%. The high net sales drove EBIT to SEK 92 million in the quarter and strengthened the margin to 24% compared to 23% for the same period last year. Currency losses from the revaluation of working capital affected EBIT with just above SEK 10 million. And adjusted for that, the EBIT margin would have been 27%. Next slide is the rolling 12 development of net sales and EBIT and the perspective that we believe gives a better description of RaySearch's business performance. For the full year 2025, net sales increased 13% to SEK 1.344 billion. The organic growth was 19%. And with an EBIT of SEK 292 million, we ended the full year 2025 with a margin of 22%. That is equal to last year, but also burdened by SEK 37 million in currency losses. Adjusted for those and an additional SEK 23 million that we treat as nonrecurring costs, the margin would have been 26%. Moving to the next slide, showing the revenue split and where I focus on the revenue from support, we saw a growth of 11% in our support revenue for the full year 2025. With the steady growth we have in our support revenue over time, we increased the robustness in the business from recurring revenue. And for the total year 2025, the portion of recurring revenue in relation to total net sales was 39%. Cash flow in quarter 4, as you can see here on the next slide, improved significantly and amounted to SEK 91 million, and that includes positive effects from a lower working capital. We will continue to put focus on having a good cash flow in 2026. However, I want to point out that I also -- or what I also said in quarter 3 that the cash flow can fluctuate also going forward. We always seek to work with standard payments or standard payment terms in our customer agreements, but we also have situations where the gap between sales and payment is longer. It can be tenders or framework agreements or related to certain markets, sales that comes with a good profit, but where we have to accept later invoicing. We want to have a position where we sometimes for strategic reasons and in relation to important customers can choose to accept profitable sales over short payment terms. And with the cash balance end of 2025 amounting to SEK 407 million and no loans, we have a solid financial position. The next slide shows the contract assets, that is our customer receivables and also our contract liabilities, and that is the balance sheet items that shows how much payments we have received from our customers in advance. We have, during 2025, moved away from a position where our contract assets were lower than the contract liabilities. And that is, to a large extent, dependent on that we have delivered on prepaid sales in our backlog. But I want to point out that a net position of SEK 118 million is still a good position. But of course, this doesn't take away our intention to lower this number and to improve the working capital where we can during 2026. And with this, I hand over back to you, Johan. Johan Löf: Thank you very much, Nina. So I will just briefly mention the dividend proposal. So we are pleased to announce that the Board proposes a dividend of SEK 4 per share for 2025, which is up from SEK 3 per share. The dividend will be decided at the Annual General Meeting on May 7. The Board has also revised RaySearch dividend policy effective from 2026. The goal is to distribute 50% of profit after tax annually, taking into account the company's capital needs, investment opportunities and overall financial position. And now I would like to devote some time to AI and how it affects RaySearch. It's very important to note that AI is something very positive for RaySearch, and it's definitely not a threat against our products. There has been some belief in the community in general for software companies that AI can create and replace ordinary system development. That's probably true for simpler applications and with thin functionality and not so much data. With our large and complex systems, it's not doable for AI today. AI can only produce smaller snippets of code with high quality. Also, in our field, we need very deep domain knowledge. We also need to consider patient safety as well as cybersecurity and we are liable for that, and we have to take responsibility for the code. AI could never make sure or promise that there is no ML treatment of patients, for example. So we -- as a company, we need to understand the code and make sure that it doesn't harm any patients as we treat millions of cancer patients, and we cannot make a mistake one single time. There are also huge data requirements in our field. We need clinical data, images, plans, contours, et cetera. We need to perform measurements for machine modeling and quality assurance. Then we have the medical device regulations such as FDA where we, as a company, have to promise and document that our system performs according to the requirements and that it is a safe application. And AI doesn't take any responsibility in that regard. And it's also -- we are existing in an ecosystem with many, many partnerships with machine vendors and our installed base of about 1,200 clinics. And in order to develop these platforms that we develop, we need to do that in partnership with all of these stakeholders. So AI for RaySearch is a very useful thing. We have a large machine learning department at RaySearch, where we leverage AI for our products. For example, we have a functionality in RayStation called deep learning segmentation, where we based on images such as CT images and MR images can automatically segment the organs in the patient, as you see in that image to the right. So those are about 200 structures in the patient that has been automatically segmented with deep learning segmentation, and it takes about 1 minute to do that, which would take many hours to do in a manual setting or in a manual manner. And this is used clinically throughout the world and only 2025, 270,000 patients were segmented using this particular module. This leads to significant time savings, and it also increased the segmentation quality, and you can achieve better consistency over different users and over different institutions. The second product that we have in RayStation is deep learning planning. So here, we automate the very time-consuming task of treatment plan generation. 7,000 clinical treatment plans have been generated by our customers so far, but this is increasing rapidly now as more and more customers get their hands on this technology. This increased plan quality and again, consistency and saves a lot of time. It also opens up for multiple treatment plan generation for patients so that we can explore a larger solution space. One good example is a customer in Belgium, Iridium that have now automated almost all of their prostate patient planning using the AI capability in RayStation. So what they have seen is that the deep learning planning models outperform manual planning by a human being, achieving superior quality and consistency. And you can see some of the time savings that they achieve. So on the patient modeling side, they save 44% time and on the plan generation side, they save 47%. We also use AI to help develop our developers write code faster. So AI can then, for example, Microsoft Copilot can help our developers to find bugs, can explain complex code and patterns write tests and also help with documentation. But it's important that developers stay in control. They always review and modify the AI output. The code that's generated by AI is not always -- is not very tidy or beautiful. So we have to -- the developers have to stay on top of that. Okay. And now the final section of the presentation is a quick summary and outlook. So we saw that we had record high net sales despite macro uncertainty and a very heavy currency headwind. In spite of that, we could show solid profitability and also improved cash flow, which is that we are very happy about. There is still a strong demand for RaySearch Solution and increasing demand, I would say, for RaySearch Solutions across all the regions. And we are confident about our EBIT margin target of at least 25% in 2026. So with that, I will open up the Q&A session. And I believe Carolina will manage the questions. Carolina Stromlid: Thank you, Johan. Yes, we will start the Q&A session with live questions. But before we do that, I would like to remind you that you can post written questions in the Q&A chat. So let's start with the first question that comes from Kristofer Liljeberg at DNB Carnegie. Kristofer Liljeberg-Svensson: Yes, sorry. I have quite a number of questions. Maybe I'll start with 3 and then come back. So first... Johan Löf: Kristofer, can I ask you to ask one question at a time? Kristofer Liljeberg-Svensson: Okay. Maybe then I would like to ask about the support revenues, if there are any one-offs here helping that in Q4 or if that's a good starting point for 2026? Nina Gronberg: Yes, that's a question for me then. Yes, we have some one-offs. It is not very much. But I mean, it is a little bit tricky, I think, to talk about one-offs in our support revenue because we always have a little portion of that. We have situations where our customer contracts are -- I mean, there is a delay in timing when they are renewed. And it might be that we -- because of that, have revenue for, I mean, more than 3 months in 1 quarter. So it's a little bit too hard to say, Kristofer, give a straight answer to that. But I would say that you can use this as the base going forward. Johan Löf: Please go ahead, Kristofer. No, no, take one question at a time. That's all. Kristofer Liljeberg-Svensson: Okay. That's helpful. Yes. My second question, the news that you set out a couple of weeks ago about Royal Marsden doing online adaptive on Elekta machine. was this without RayCare? And if so, how are they able to do that? I don't know if that's -- if it's possible to just give a quick answer on that. Johan Löf: Yes. There was on the Versa HD Elekta machine. So far, only RayStation without RayCare, but that means the workflow is somewhat clunky, it takes more time. And -- but it is doable to do it, and that's the important message here. They will implement RayCare going forward and then the workflow will be smoother and quicker. Of course, it's more -- they have also a Radixact machine, so we'll be quicker on that machine given that we have interoperability between RayCare and the Radixact. And it will be also smoother on a TrueBeam, Varian TrueBeam since RayCare is fully integrated. But the point here is that even without this strong integration, you can do it, but it's not as quick. Kristofer Liljeberg-Svensson: Okay. That's helpful. And my third question, if you could comment on the Pinnacle conversion in Q4 and the outlook for that here in 2026. Johan Löf: Yes, we will of course, focus -- this is the last year that Pinnacle is around. So there will be a strong focus during 2026. In -- Q4 was actually surprisingly low. It has been a quite high percentage of license sales in previous quarters. In Q4, it was actually the license revenues from Pinnacle conversion was only 11%. So that shows that we can -- because I think that has been discussed and there's been a lot of questions about whether we are able to convert other clinics than Pinnacle clinics, but that shows you that, that's very possible. Carolina Stromlid: The next question comes from Mattias Vadsten at SEB. Mattias Vadsten: Can you hear me? Johan Löf: Yes, we hear you loud and clear. Mattias Vadsten: Good. I will always take them one by one. So you shared the license share of Pinnacle here in Q4, which was a low number. Could you share that for the full year? And also, that leads me to believe then that the conversion -- the Varian conversion and Elekta conversion must have been very strong to end the year. So just yes, if the momentum has switched gears there and what's driving that? That's the first one. Johan Löf: Yes. Okay. So first, you asked for the full year number, I think it was 23% license revenues from Pinnacle conversion. Yes. It's just that we have been able to convert other types of clinics. For example, this large University of Pennsylvania order in Q4, which was, I believe, SEK 57 million, around that number. Nina Gronberg: Revenues in order. Johan Löf: What was it in SEK 53 million in revenue. Nina Gronberg: A bit above SEK 40 million. Johan Löf: And that was an Eclipse conversion. So that, of course, affected that mix for the Q4. So -- but this will vary from quarter-to-quarter. It's very hard to predict. We will have -- since we have a time-limited opportunity now for Pinnacle conversion, there will be a strong focus for that in 2026. Mattias Vadsten: Good. And then I have a follow-up on Kristofer's question on the online adaptive radiotherapy that you can perform on Elekta, Linacs and TrueBeam with RayStation. But do I still read you correctly that in order for a clinic to seamlessly sort of perform online adaptive, you would still need RayCare in the future? Or how should I interpret that? Johan Löf: That's correct. And to have like a broad clinical use for this RayCare is needed. So you have understood that correctly. Mattias Vadsten: Okay. Good. And do you expect it to be frequently used among those clinics that have RayCare for maybe 2026 and the years to come? Johan Löf: The main drivers for RayCare going forward now that we have a very good combination of equipment with RayStation, RayCare and Varian TrueBeam where you can make extremely effective online adaptive treatments. So we see a lot of -- well, all over the world for this combination. Mattias Vadsten: I will limit myself to one more question. So in terms of the new orders, the University of Pennsylvania, if that was recorded as sales in Q4? And then maybe the same question for Greater Poland Cancer Center as well. That's my last one. Nina Gronberg: Yes, it was a big portion of the order was recorded as sale as Johan also just said. Carolina Stromlid: We have a question from Oscar Bergman at Redeye. Oscar Bergman: Yes. Just wondering if you can give an update on roughly how many Pinnacle centers are left to convert? And also then were there fewer conversions in absolute terms from the clinics in Q4? Or have you sort of lost any market share on conversion? Johan Löf: Okay. We don't know the number of Pinnacle clinics. It's in flux right now. So it's very hard to know the number of remaining Pinnacle clinics. In some countries, there are almost none like in the U.K. and Japan, they have been basically all converted. In Germany, there are quite a few remaining in the United States and China. But it's a couple of hundred. I can't give you more detail, but there's still a big opportunity out there. And no, we have not lost market share in terms of Pinnacle conversion. It's rather that other conversions have been -- because we look at percentages here. So in absolute numbers, we haven't -- we are still very successful in converting Pinnacle clinics to RayStation. Oscar Bergman: Okay. I always asked about RayCare, and I have to ask about it also this time. I just wondering how many new RayCare centers were signed in Q4? And perhaps also if you can elaborate on what remains the largest obstacle for increasing RayCare clinics. Johan Löf: No. There are no real obstacles. We had, I believe, 4 RayCare orders in 2025 in total. Of course, that's not where we want to be. But we see -- we believe that this will ramp up during 2026. And okay, one obstacle is the online adaptive capability, which needs 2 new versions of RayStation and RayCare requires FDA approval, and that takes the time it takes. It's not something we can -- it will be affected to some extent, but it will also in the hands of FDA. But -- so that's needed. But in Europe, the online adaptive treatments on this platform will start during spring. So we see the first. And that's also a good message for the U.S. market because then it's just a matter of time before they can get their hands on this functionality as well. So regarding ramp-up of RayCare, it only takes time, but there is a lot of interest for RayCare now. There are no particular obstacles in place. So we are quite confident that we will see, let's say, over the next 2, 3 years, a good ramp-up of RayCare sales. Oscar Bergman: And I think in the Q3 report, you mentioned that you opened up some modalities for a customer base for a 6-month trial period. Just wondering if we can get an update on how that has progressed so far. Johan Löf: It's still limited to a couple of countries, and it's progressing well. So they are very happy that they can try out new functionality. I think the limiting factor there is the time they have at their disposal. They're running very busy clinics, and it's hard to spend time on just exploring new functionality. But otherwise, it has been very well received in the countries where we have opened up so far. Oscar Bergman: Okay. And just a final question. I know you're not supposed to give your view on the share price, of course. But at these share price levels, why are you focusing on dividends rather than stock repurchases? Johan Löf: Yes, that's a good question. I think buying back shares is an interesting option that we will look into deeper. So we are looking into that for sure. Carolina Stromlid: We will now take a question from [ Ariane Nothermeer ]. Unknown Analyst: Can you hear me? Johan Löf: Yes. Unknown Analyst: I have a question about the order backlog. So we have seen it steadily decrease over the past few years and right now is on the 1.1x for the sales for this year. Why is it decreasing so much? And is this like a problem for revenue growth going forward? Or is there something else going on here? Johan Löf: The main reason why it has shrunk lately is the dollar effect or the currency effect. So no, we don't really see it as a problem. Unknown Analyst: Okay. So you don't think that is limiting growth like over the past few years? Johan Löf: No. Carolina Stromlid: We will now move back to Kristofer Liljeberg at DNB Carnegie. I guess you have a follow-up question. Kristofer Liljeberg-Svensson: Yes, a few more. First, just a clarification. The 11% and 23% you mentioned for Pinnacle conversion part of total license sales or is that for total license sales or license sales to new customers? Nina Gronberg: Out of total license sales. Kristofer Liljeberg-Svensson: Yes. Great. Then a question on the cost and particularly administration costs seem to have remained high here in Q4. Sequentially given that, I guess, third quarter, you should have had the extraordinary cost, much of that in that line or... Nina Gronberg: Sorry, Kristofer, can you please... Kristofer Liljeberg-Svensson: If I look at the administration costs, they remain at a quite high level. They're actually higher in Q4 than in third quarter and second quarter when I guess you had cost for the employee conference? Or was that another cost line? Nina Gronberg: No, it's included in the administration costs. Kristofer Liljeberg-Svensson: Okay. But did you have such costs this quarter as well? Or why does administration costs remain so high? Nina Gronberg: No, we didn't have those costs in this quarter. And yes, it's a good question. I must come back to that one. I haven't looked at it from that perspective. Kristofer Liljeberg-Svensson: Okay. And then maybe, Johan, I don't know if you want to say, you sound pretty positive in the CEO word in the report. So when it comes to the sales outlook for 2026, do you expect this a similar positive trend here or anything that could change that? Johan Löf: No, to achieve the 25% EBIT margin and -- with at least 25% EBIT margin that relies heavily on sales growth. So we are positive in that regard. Carolina Stromlid: Now we have a question from [ Mats Andersson ]. Unknown Analyst: I have a question about Ortega order. In Q3, you said that the first will have income in Q4. So my first question is how much is the income in Q4? And when will the next delivery to next center, don't know? Johan Löf: I didn't hear which -- was it Ortega you were talking about... Unknown Analyst: Yes, Ortega. Johan Löf: No, that will come -- there hasn't been any revenue from that during 2025. But our estimate is that there will be revenues from at least 2 centers during 2026 from the Ortega order that will be delivered and booked as revenue. Carolina Stromlid: Moving on to the next question that comes from Carlos Moreno. Carlos Moreno: In the -- you're obviously very near your kind of previously set medium-term margin targets. And you mentioned in Q3 that you might revise those targets, give new long-term guidance. Do you still expect to do that at some point during 2026? Johan Löf: Yes. During 2026, we will communicate a new, let's say, 3-year margin target and possibly some other financial target. But you can expect that will be communicated. Carlos Moreno: And is that with like the half year or the first quarter or sometime during the year? Johan Löf: I don't know for sure. It involves the Board has to make a decision. So I can say by myself. But that's not a problem. We want to communicate a new, let's say, medium-term target. Carlos Moreno: Sorry, I interrupted you. I apologize. Sorry. Johan Löf: No problem. Go ahead. Carlos Moreno: No, no, that was it. That's good. So we're going to get some new targets sometime during the year. And by the sound of it, we're going to get margin and maybe sales. There's going to be some sort of more than margin medium-term target. Okay. And I just want to add what the -- another person said. I mean, if your shares are just being pushed down because they're in some basket, I appreciate the dividend is fantastic, but it just seems to me you have to be on the other side of AI selling, and it just seems to me a buyback is -- there'll come a point where spending your cash on buying your shares is a very sensible investment, right? And to me, it just seems like an extremely good idea. But anyway, I just wanted to look at that. Johan Löf: I note your comment, and I think you're probably right. Carolina Stromlid: And we have a follow-up question from Ariane Nothermeer. Unknown Analyst: It was answered, sorry. Carolina Stromlid: We have a follow-up question from Mattias Vadsten. Mattias Vadsten: I just thought if you could help disclose some outlook on timing of approvals, release of modes to expand the use of the software products you have to further cancer therapy areas. Johan Löf: Time line for that is -- so if you take liver ablation, for example, that can be used in Europe as of now. There, we are waiting for 510(k) clearance in the U.S. Chemotherapy will be clear sometime during 2027. And surgery will be -- yes, that's even further into the future. So I can't say that. But liver ablation will be first, chemotherapy after that and then surgery is coming after that. Carolina Stromlid: Thank you all for your questions. With that, we will conclude today's presentation. A recording will be available shortly on our investor website. And if you have any additional questions, you are very welcome to reach out to us. We appreciate your participation today, and we look forward to connecting with you again on April 29 when we present our Q1 results. We wish you a pleasant rest of your day. Thank you. Johan Löf: Thank you. Nina Gronberg: Thank you.