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CTTMF 2025 Q4 财报电话会议

Manuel Stan: Good morning, good evening, everyone. Welcome to Catena Media's Q4 Interim Report. I am Manuel Stan, and today, I'm joined by our Chief Financial Officer, Mike Gerrow. Today, we will be speaking to our Q4 interim report, related financials and our strategy and outlook going forward. We will start today's presentation with a high-level summary of the most important developments in the quarter. I am pleased to see a solid quarter with growth in both revenue and earnings. Q4 amounted to EUR 15.6 million. This represents an improvement of 53% versus Q4 2024 and 34% versus Q3 2025. The adjusted EBITDA improved to EUR 4.7 million, an increase of 60% from the previous quarter as well as over 200% versus Q4 2024. The adjusted EBITDA margin improved to 30%, a 5 percentage points increase from the previous quarter and 15 percentage points stronger than Q4 2024. During the quarter, we continue to focus on operational efficiency and diversification. From revenue diversification perspective, Q4 represented another step in the right direction as our performance marketing verticals, CRM, subaffiliation and paid media continue to increase their share of group revenue. Our disciplined cost management approach continued in Q4 with year-on-year decreases as well as quarter-on-quarter decreases, when normalizing for exceptions. Direct costs increased in line with the performance marketing channels growth. From a geographical perspective, the share of revenue coming from North America increased to an all-time high of 98%, reflecting our focus on this geography. While we continue to evaluate other geographies, North America remains our core focus for the immediate future. While the quarter was overall positive for us, we recognized that regulatory uncertainties surrounding social sweepstakes casinos and the continued rise of generative search can present headwinds for future quarters. Moving on to operational developments. We have seen good results from our diversification efforts as both CRM and subaffiliation verticals recorded once more new highs during the quarter. To further accelerate the success of both CRM and subaffiliation verticals, in early January, we have launched enhancements in both areas. On January 13, we launched PlayPerks on 1 of our leading products, PlayUSA.com. This is a first-of-its-kind loyalty program in the Catena universe. The objective is to build engagement products, which lead to returning loyal users. We see high potential in this space and intend to expand the concept to other products in the coming quarters. On January 16, we launched -- we announced the launch of MRKTPLAYS+, which creates scope for deeper commercial partnerships by giving partners access to our expertise, marketing support and potentially investment capital. From tech perspective, we continue to invest in our central platform and continue the consolidation of our top-tier products. A good example of the benefits of this consolidation is the future launch of our loyalty program on other products as a single platform allows for faster rollout. The results of the Missouri launch have been soft, mostly aligned with our expectations. This was driven both by the size of the market and its neighboring already regulated states as well as our current soft sports position. In early October, we initiated the return-to-office program in our multi headquarters, which seized the minority of our workforce back in the office for at least 3 days a week. A similar return to office strategy will be implemented in our Miami hub starting in April 2026. Moving on to the organic search score. In Q4 2024, we started showcasing our average ranking score for the most important keywords across Catena Media's owned and operated products. We are pleased to see that the uplift shown after Google's June algo update has continued throughout Q4, reflecting the strength of our products and validating the team's strategy and execution. At the end of the quarter, we have registered the best average score for the full year. Towards the end of the quarter, Google launched its end of year major algo update and we are pleased to see that most of our products emerge positively from the update. We continue to see the aftershocks of the end-of-year update in Q1 with high levels of volatility. I will now hand off to Mike to give an in-depth update on our financial performance. Michael Gerrow: Thank you, Manu, and good day. Looking into our Q4 financials. Q4 was a solid quarter that built on the progress made in Q3, 2025. Revenue was EUR 15.6 million, representing a 53% year-on-year increase and a 34% quarter-on-quarter increase. Adjusted for foreign exchange rate fluctuations, year-on-year revenue was up 68%. As Manu previously stated, North America contributed to 98% of group revenue in the quarter. Adjusted EBITDA was EUR 4.7 million, an increase of 211% from the same period in the previous year and a 15 percentage point increase in margin. Adjusted EBITDA increased 60% versus Q3 2025, representing a 5 percentage point increase in margin. Operating cash flows increased to EUR 1.4 million versus a decrease of EUR 200,000 in Q4, 2024. The quarter-on-quarter and year-on-year adjusted EBITDA growth was a further step towards recovery driven by a multichannel revenue growth and disciplined cost management. NDCs increased by 56% year-on-year, driven by stronger performance contributions from our core brands and from the growth of subaffiliate partners on our Marketplace platform. Moving on to our segment performance. In Q4 2025, our Casino segment contributed 89% of revenue with sports contributing 11%. I am pleased to see that our casino revenues grew by 81% versus Q4 2024 and 41% versus Q3 2025. This growth was spread across regulated and Sweepstakes casino operators. Another positive outcome was that this growth came from improvements in our top-tier products and positive developments in our diversification efforts to grow paid media, CRM and subaffiliate channels, as noted by the increase in direct costs. Casino NDCs increased by 117% versus Q4 2024 and by 87% versus Q3 2025. Adjusted EBITDA in our Casino segment increased by 52% versus Q4 2024 and increased by 63% versus Q3 2025, reflecting profitable growth of our core brands and subaffiliates engaged through the Marketplace platform. Our sports revenue decreased 33% versus last year to EUR 1.7 million. There was a 5% decrease versus Q3 2025. This reflects continued underperformance and the divestment of our esports products in late Q2 2025. The launch of sports betting in Missouri in December 2025 had a little effect on our sports revenue in the quarter. This reflects the market dynamics in the state, but also our [ subpar ] sports product offering, which requires further time and investments turn around. New depositing customers decreased 44% versus Q4 2024, but increased by a marginal 2% versus Q3, 2025. Adjusted EBITDA in sports grew significantly versus last year's losses to a healthy 38% margin. The growth in adjusted EBITDA is primarily related to the delivery of our cost optimization measures. Please note that the Sports segment loss in Q4 2024 was partially attributed to the remaining media partnerships that were operating at a loss for part of the quarter. Continuing on to our cost development. Our cost base increased to EUR 10.9 million in Q4 2025 versus EUR 8.7 million in Q4 2024. Our direct costs increased by 227% versus Q4 2024 and by 26% versus Q3 2025. This reflects our positive momentum in diversifying our revenue to include a larger mix of performance marketing channels, including paid media, CRM and subaffiliation. Excluding the increase in revenue driving direct costs, the cost base decreased by 14% versus Q4 2024. Personnel expenses decreased by 12% versus Q4 2024 and increased by 22% versus Q3 2025. But it's important to note that we recognized EUR 1.3 million of accruals in Q4 for the unexpected but welcome achievement of annual employee performance targets. In other words, we accrued the vast majority of the annual incentive programs in Q4 as it was not looking likely that these would achieve required thresholds earlier in the year. If we normalize personnel expenses to include these accruals, personnel expenses decreased by 38% versus Q4 2024 or 22% versus Q3 2025. We have added a gray section to the chart to separate the incentive program accruals versus the continued decrease of fixed cost personnel expenses over the quarters. Other operating expenses decreased by 18% versus Q4 2024 and increased by 33% versus Q3 2025. For items affecting comparability, we recognized a EUR 400,000 noncash gain in the quarter versus a EUR 700,000 cost in the corresponding period last year. The positive effects of items affecting comparability in the quarter resulted in a year-on-year EBITDA increase of 573% and a profit after tax of EUR 2.8 million versus a loss of EUR 1.4 million in the same period last year. Moving on to our financial position. Total operating cash flow from continuing operations was EUR 1.4 million in the quarter increasing from negative $200,000 in Q4 2024. Our resulting cash and cash equivalents balance at the end of December was EUR 9.3 million. We do not have any remaining debt instruments, but our hybrid capital security with a nominal value of EUR 44 million has interest cost of approximately EUR 1 million per quarter, sorry, EUR 1.4 million per quarter. As mentioned in the press release before the Q1 2025 report, we do not intend to redeem the hybrid capital security in the short term, and we have deferred making interest payments on this instrument. We have deferred the July and October 2025 as well as the January 2026 interest payments, and the accumulated deferred interest now totals EUR 4.0 million as of January 10, 2026. We expect to continue deferring additional interest payments and a direct available capital towards technology-driven initiatives that support revenue growth and strategic priorities. This position will be regularly reviewed and evaluated. I will now hand back over to Manu to give us an update on the strategy and outlook. Manuel Stan: Thank you, Mike. After 6 quarters without any new state or province launches in North America, Q4 saw the launch of online sports betting in Missouri. For Catena, the financial impact was relatively modest, driven by both the size of the market with its neighboring states already regulated as well as our relatively soft sports current position. The overall North American market penetration remains low at approximately 50% for online sports betting and only 16% for online casino, indicating the remaining sizable future opportunity. The next significant market launch in North America is Alberta, which is expected to go live in the second half of 2026 with no concrete launch date at this time. Alberta will follow a model similar to Ontario, including both online sports betting and online casino, which represents a much more bigger significant opportunity for Catena versus Missouri. Moving on to our strategic focus areas. In 2025, our strategy was focused on 3 key pillars: people, product and profit. This will carry on to 2026 as we further refine the strategy, but remain focused on these 3 pillars. From a people perspective, the key initiatives in the recent periods included -- the launch of our hybrid working model, the return to office program initiated in early October, bringing all employees back in the office for at least 3 days a week in our multi headquarters and the similar return to office strategy, which will be implemented in our Miami hub starting in April. The continuous development of our OKR program following its implementation earlier in the year, the first company-wide bonds in several years will be awarded following the achievement of our annual performance criteria and up to 50 points, since Q2 2025, our employee Net Promoter Score now marks the year's peak, reflecting the tangible impact of our people-focused programs. From product perspective, the key initiatives included good results from our diversification efforts as our performance marketing verticals continue to grow their share -- their share of revenues for the company with CRM and subaffiliates recording once more new highs during the quarter. As mentioned earlier, after the quarter end, we have launched initiatives to further accelerate the growth in both CRM and subaffiliate areas with PlayPerks and MRKTPLAYS+ launched in January. The positive momentum recorded in SEO in Q3 continued into Q4 as during the quarter, we have registered the best average score for the full year. The tech migration work continued in the quarter, and now we have a majority of our Tier 1 products on our consolidated platform. Our third and last strategic pillar is profit. After a stronger adjusted EBITDA margin in Q3, we are very pleased to report a further improvement in Q4 up to 30%. This represents an improvement of 15 points versus Q4 2024 and 5 points versus Q3 2025. The margin improvement came as a result of both revenue growth and cost control. From a cost perspective, direct cost increased as a result of our efforts on performance marketing channels. Excluding the increase in direct costs, the cost base decreased by 14% from the same period the previous year. Personnel and other operating expenses are unlikely to see any material movement from the current baseline. Lastly, let us recap the key takeaways from our report. Q4 was our strongest quarter of the year, showing positive momentum for revenue growth as well as good cost control driven by a disciplined approach. Q4 revenue amounted to EUR 15.6 million. This represents an improvement of 53% versus Q4 2024 and 34% versus Q3 2025. The adjusted EBITDA improved to EUR 4.7 million, an increase of 60% from previous quarter as well as over 200% versus Q4 2024. The adjusted EBITDA margin improved to 30%, an improvement of 15% versus Q4 2024 and 5 percentage points versus Q3 2025. Our core search channel has seen good development during the quarter, reaching the best average score for the full year. The focus on revenue diversification paid dividends during the quarter with all our performance marketing channels, continuing the positive trajectory. We have deferred the July and October 2025 as well as January 2026 hybrid interest payments and the accumulated deferred interest now totals EUR 4.0 million. We remain cautious for the future quarters due to the potential headwinds posed by Social Sweepstakes Casino regulatory pressures and the impact of generative search trends. After the quarter end, we have launched initiatives to further accelerate the growth in both CRM and subaffiliation areas with PlayPerks and MRKTPLAYS+ launches in January. We are pleased with the Q4 performance, which was a welcome step forward. And as such, I would like to thank all our teams for their hard work and dedication. Thank you very much for listening. I will now hand over to Mike to move on to the Q&A section of our call and open up for questions. Michael Gerrow: Thank you, Manu. I'll now open it up for any questions. [Operator Instructions] All right. It looks like there's no one, who wants to do a call-in question today. So I'll go to a few that we had submitted by writing. So Manu, the first question for you is how sustainable is this level of growth is Q4 an outlier? Manuel Stan: Thank you, Mike. I think that in Q4, we benefited from a number of factors that came well together. First of all, we said that from organic search visibility perspective, we have reached the peak of the year, the highest level of the year. And equally, we talked about the diversification efforts that both CRM and subaffiliate have both reached the all-time high during the year. However, equally, we have to recognize that not every quarter will look exactly the same and reaching all highs in all different areas of the business was quite an unique position to be. However, the improvements are structural rather than one-off. And with the cost base normalized and with the diversification in the revenue mix, our products performed relatively well. I think last I would say that Q3 and Q4 grew at an accelerated rate compared to the relatively low baseline in the beginning of the year. We have reaffirmed our double-digit financial target growth for 2026, and that reflects the confidence in our trajectory, but we would probably expect to see a more normalized growth on a quarter-on-quarter basis than we have seen in the last couple of quarters. Michael Gerrow: Thanks, Manu. Another question we got is, has the positive trend from Q4 continued into Q1? Kind of related to previous one. Manuel Stan: Yes. Thank you, Mike. We're not disclosing any financial performance after the quarter end. But we did touch on a couple of things in our report. One, we touched on the search performance and we have said that after the quarter end, we have seen some aftershocks of the end-of-year Google algo update. We have seen high volatility and we haven't seen quite the same strong momentum carrying into Q1. So that's one thing to keep in mind. We will continue to see volatility. I suppose during the quarter. So we'll see how that will perform. Secondly, we said that in mid-January, we have launched PlayPerks on PlayUSA as well as MRKTPLAYS+, which obviously, we are expecting to continue to drive the growth of those 2 particular channels. So I think you see a mix of sentiments across the business. We will see where we will be in Q1, but so far, a mix, I suppose. Michael Gerrow: All right. And we have another 2 here that came in. So the first 1 is, how will the Sweepstakes casino ban in California affect you in Q1? Manuel Stan: I think we touched very briefly on it. While obviously, California is the largest states in the U.S. and will definitely have a negative impact overall in the Sweep segment. We do continue to see growth in other states in the U.S. as well as new operators coming in the market. So I do think that we will continue to see growth in the Sweepstakes segment in the near future. Obviously, there's the potential of other states regulating or changing the rules, and we'll see how that will impact the business. But so far, the interest or the growth in other states, combined with the interest from new Sweeps operators is pretty much covering for the losses in California. Secondly, I would say that there are other similar products. If we're focused on California or New York or States, where Sweeps are no longer allowed. I think we have a number of other products that are somewhat similar in emerging products. And we continue to build our database of players and try to monetize that by referring to new products. And I think the best examples include prediction markets or similar. Michael Gerrow: Thanks, Manu. And 1 more question that came in was how can we perform better than peers in Q4? Manuel Stan: Thanks, Mike. I don't think I can comment on our peers. But as we said, we're pleased with our performance in Q4, and we're even more pleased that, that performance, that growth came from both our own and operated that were driven by the SEO part by the improved rankings as well as the diversification of our business model. So -- we're pleased to see our growth. Nothing else to comment on the rest of the industry. Michael Gerrow: All right. And there's 2 questions that came in about the hybrid. So I'll answer those ones. So the first 1 was regarding the hybrid capital security. Any plans soon to resume the interest payments. And so right now, no, we don't have any plans to continue to resume the interest payments, and we obviously deferred the interest payments in January. We're planning on directing the available capital towards technology-driven investments that support revenue growth and some of our strategic priorities. However, as the performance develops, we will continue to evaluate the right capital structure for the business, including the timing of any future interest payments and any other potential changes to that. And then the other related 1 that came in was what's your forecast for the deferral of interest payments and for the potential repayment or refinancing of the hybrid capital securities. And we don't have a defined forecast for deferring the interest payments as to when they may resume or may not resume. We are right now, after 2 decent quarters, happy to see cash generation increasing and being able to deploy that in areas that hopefully can continue that growth trajectory. However, we have not agreed upon a resumption of the interest payments at this point or any potential refinancing at this point? I believe that's all the questions that came through. I'm just going to check, if anyone's waiting on the line at this stage. Does not look like there are. So Manu, I'll hand it back over to you for any closing remarks. Manuel Stan: Thank you very much, Mike. As we said, Q4 was our strongest quarter of the year, showing positive momentum for both revenue growth as well as good cost control, driven by our disciplined approach. Our search channel has seen good development during the quarter, reaching the best average score for the full year and the focus on revenue diversification paid dividends during the quarter with all our performance marketing channels continuing the positive trajectory. We remain cautious for future quarters due to the potential headwinds posed by Social Sweepstakes Casino, regulatory pressures and the impact of generative search trends. However, we are overall pleased with our Q4 performance, which was a welcome step forward. And as such, again, I would like to thank all our teams for their hard work and dedication. Thank you very much for joining today's call and look forward to hosting you for our Q1 2026 report on May 12, 2026. Thank you very much.

92天前Insight Analytics约5分钟阅读

SVM 2026 Q3 财报电话会议

Operator: Thank you for standing by. Good afternoon. My name is Constantine and I will be your conference operator today. At this time, I would like to welcome everyone to Silvercorp.'s Third Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Lon Shaver, President of Silvercorp. Please go ahead, sir. Lon Shaver: Thank you, Constantine. On behalf of Silvercorp, I'd like to welcome everyone to this call to discuss our third quarter fiscal 2026. Financial results, which were released yesterday. A copy of our news release, the MD&A and the financial statements are available on our website and SEDAR. Before we start, please note that certain statements on today's call will contain forward-looking information within the meaning of securities laws. Additionally, please review the cautionary statements on our news release as well as the risk factors described in our most recent regulatory filings. So we'll kick off with our financial results. We delivered record-breaking performance in this Q3, highlighted by revenue of $126 million, which was up 51% from last year. Cash flow from operating activities and free cash flow reached $133 million and $90 million, respectively. And those were up 196% and 336% from last year. This performance was mainly driven by an 80% increase in the realized selling price of silver, which added just under $49 an ounce after smelter deductions. Silver accounted for 72% of our revenue in the third quarter. These results reinforce why Silvercorp remains a compelling investment in the silver sector. We are a profitable and growing producer that provides leverage to higher metals prices. We reported a net income of negative $15.8 million for the quarter or negative $0.07 per share, which reflected a significant $60 million noncash charge on the fair value of derivative liabilities. However, removing these noncash and onetime items, our adjusted net income for the quarter was $47.9 million or $0.22 per share compared to $22 million or $0.10 a share in the comparative quarter. As I mentioned, revenue was up 51%. So with adjusted net income up 118% that shows our ongoing efforts to control costs and drop these improvements to the bottom line. I also mentioned the record cash flow from operating activities earlier. This figure included an initial $44 million draw on our 175.5 million streaming facility from Wheaton Precious Metals for the El Domo construction as well as a positive $9.4 million change in the noncash working capital during the quarter. Even after adjusting for these items, our Q3 operating cash flow was still the highest quarter ever at $79.6 million, up 129% compared to last year. During the quarter, we invested nearly $26 million at our operations in China and $18 million at the El Domo project in Ecuador. And despite that, we added cash to the balance sheet, ending the quarter with a strong cash balance of $463 million, an increase of over $80 million from September 30. The cash position does not include our investments in associates and other companies, which had a total market value of $233 million on December 31 and was more recently pegged at just under $260 million. After quarter end, we announced a transaction to acquire gold projects in Kyrgyzstan for $162 million in cash, of which $92 million was paid at closing on January 27. Now to quickly recap our operating results. As we reported last month, in Q3, we produced approximately 1.9 million ounces of silver, just over 2,000 ounces of gold, 16 million pounds of lead and 7 million pounds of zinc. Production at Ying benefited from increased use of shrinkage mining relative to cut-and-fill re-suing which drove record productivity with tonnes mined and milled up 23% and 18%, respectively, compared with Q3 2025. Head grades were lower due to the XRT silver undergoing maintenance in October as well as higher dilution associated with the shift to more shrinkage mining. We stockpiled over 61,000 tonnes of ore to be processed during the Chinese New Year holiday later this month. Year-to-date, we have produced 5.3 million ounces of silver, 6,231 ounces of gold, 46 million pounds of lead and 18 million pounds of zinc representing increases relative to last year of 1%, 42% and 1%, respectively, in silver, gold and lead production and a 6% decrease in zinc production. On the cost side, Q3 production costs averaged $76 per tonne at Ying, down 11% from last year. The improvement reflects ongoing mine mechanization and greater use of cost-efficient shrinkage mining, boosting mine and mill productivity. Year-to-date production costs also averaged $80 per tonne below our annual guidance for Ying between $87 and $88 per tonne. Ying's cash cost per ounce of silver net of by-product credits was negative $1.22 in Q3 compared to a negative $0.30 in the prior year quarter. The decrease was driven by a $3.5 million increase in by-product credits. Q3 all-in sustaining cost per ounce net of byproducts was $11.32 at Ying, supporting robust margins amid higher silver prices. Consolidated mining income came at $77.1 million in Q3, with Ying contributing $71.6 million or 93% of the total. Turning to our growth projects at Ying, we invested $9 million in Q3, primarily ramp and tunnel development to enhance underground access and improve material handling. This work goes hand-in-hand with our efforts to expand mining capacity across the 4 licenses at Ying. Recall that we increased the permit at the SGX mine with a renewal for another 11 years and a capacity increase from 198,000 tonnes to 500,000 tonnes per year. The HPG permit was also renewed and expanded from 50,000 to 120,000 tonnes and the DCG permit increased from 30,000 to 100,000 tonnes. We're now in the process of applying to increase the TLP LM permit from 230,000 tonnes to 600,000 tonnes per year with approval expected later this quarter. Once all approvals are in place Ying's total permitted annual mining capacity will rise to 1.32 million tonnes. At Kuanping, our satellite project, north of Ying mine construction continued with over 3 kilometers of ramp development and 693 meters of exploration tunneling completed in Q3. Kuanping is expected to begin delivering some mining development ore starting in June of this year. Kuanping has a mining permit to produce up to 200,000 tonnes per year which at a full contribution would bring our total mining capacity to 1.52 million tonnes per year. As we previously mentioned, we will publish an updated technical report for the Ying District to include the Kuanping contribution by midyear of this year. Switching gears to Ecuador at El Domo mine construction continued in Q3 with around 1.1 million cubic meters of material moved. Cumulative earthmoving volumes have now reached 46% of the total design volume for Construction Package 1 with activities focused on haul road development process plant site preparation and the TSF starter dam. We also commissioned the 600-bed construction camp, allowing us to accommodate the new mining contractor, CRCC 19, with whom we are in the process of finalizing the contract to carry out mine construction. CRCC 19 has mobilized personnel and will bring equipment on site later this month. We spent approximately $45 million on construction through December 2025, which represents about 16% of our updated budget of $284 million. And at the Condor Gold project in Ecuador, we completed and announced a PEA in December for an underground gold operation centered around the Camp and Los Cuyes deposits. The study demonstrates a long-life, low-cost gold project with strong economics at a base case gold price that was used of $2,600 an ounce. This represents a first step as the company continues to derisk the project through further technical work. Our plan is to drive 2 exploration tunnels into these deposits in order to complete underground drilling to facilitate advanced exploration and resource definition. To proceed on this basis, we require an environmental license and water permits. The water permits have been approved by the relevant government authorities. Technical reports for the environmental license were also completed and submitted to the related government authorities for review. The environmental impact study for the Condor project has been approved by the Ministry of Environment, Water and Ecological Transition. We're now actively engaged in the formal consultation with the directly impacted communities surrounding the project. This represents the final stage in obtaining the environmental license for exploitation. Once this license is secured, we will commence in the development of underground tunnels into the Camp and Los Cuyes deposits, access that we believe could be used if and when we transition to the mining operation once we have received appropriate permits for this and the necessary surface infrastructure. Turning to Kyrgyzstan. We have recently acquired a 70% interest in the Tulkubash and Kyzyltash gold projects. This represents another important step in our strategy to build a globally diversified producer with added exposure to gold strong fundamentals. These projects give us the opportunity to apply our mine building expertise and financial strength to unlock value for all stakeholders through a phased development approach starting with a fully permitted Tulkubash project and followed by Kyzyltash. The Kyrgyz government retains a 30% free carried interest. So we feel interests are aligned as we advance the projects toward production in a modern and responsible manner that benefits our shareholders and the country as a whole. We look forward to updating the market on our development plans over the coming months. And with that, operator, I'd like to open the call for questions. Operator: [Operator Instructions]. Your first question comes from the line of Joseph Reagor from ROTH Capital Partners. Joseph Reagor: I guess, first thing on the guidance. You guys didn't make any changes to guidance, but it seems like you're probably tracking towards a higher than the high end on throughput at Ying, but obviously lower grades than expected. Is it fair for us to make assumptions like that? Lon Shaver: Yes. I mean I think it's pretty obvious given the challenges that we had in Q2, that it was going to be tough to catch that up. Certainly, going into Q4 with some extra tonnes to mill during Chinese New Year will certainly help smooth over and not make it as low of a Q4 as we typically would have because of Chinese New Year. But yes, I think right now, if we're going to be looking at guidance, it would be at the lower end and that might be still challenging at this point. Joseph Reagor: Okay. Fair enough. And then on the quarter, the $60-plus million derivative liability. Was that solely related to the convertible notes? Or is there something else in that? Lon Shaver: Yes. No, that's related to the convertible. Operator: [Operator Instructions]. There are no further questions at this time. This concludes our question-and-answer session. I would now like to turn the conference back over to the management team for any closing remarks. Lon Shaver: All right. Well, thank you. Thanks, operator, and thanks, everyone, for joining us today. If anyone does have any further questions, we're always happy to take calls or e-mails, and we look forward to catching up with all of you next time when we discuss our fiscal 2026 year-end results. Have a great day, everyone. Operator: This concludes today's conference call. You may disconnect your lines. Thank you for your participation, and have a wonderful day.

92天前Insight Analytics约5分钟阅读

GT 2025 Q4 财报电话会议

Operator: Good morning, everyone. My name is Bo and I will be your conference operator today. At this time, I would like to welcome everyone to Goodyear's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please note, this call will be recorded. It is now my pleasure to turn the conference over to Mr. Ryan Reed, Vice President, Investor Relations. Please go ahead, sir. Ryan Reed: Thank you, and good morning, everyone. Welcome to our fourth quarter 2025 earnings call. With me today are Mark Stewart, CEO and President; and Christina Zamarro, Executive Vice President and CFO. A couple of notes before we get started. During this call, we'll make forward-looking statements and refer to non-GAAP financial measures. For more information on the most significant factors that could affect our future results and for reconciliations of non-GAAP measures, please refer to today's presentation and our SEC filings. Our earnings materials, including a replay of this call, can be found at investor.goodyear.com. With that, I'll hand the call over to Mark. Mark Stewart: Thank you, Ryan, and good morning, everyone. We appreciate you joining our call. I'll begin today with a brief overview of the financial results, then walk you through what we're seeing across each of our business segments. I'll then hand it over to Christina, who will provide a view into our fourth quarter financial results as well as fourth quarter outlook. Let's start off with quarter 4. We delivered fourth quarter revenue of $4.9 billion, and segment operating income of $416 million, which represents year-on-year organic growth of 18% and continued sequential growth in earnings and margin across each of our geographies. As I mentioned in the press release, we issued yesterday, our fourth quarter results marked the highest SOI and SOI margin the company has achieved in over 7 years. And our free cash flow was one of the strongest on record. These results cap a year of meaningful progress on multiple fronts for Goodyear. We executed relentlessly on Goodyear forward, where our P&L commitments were consistently ahead of schedule. To date, we have delivered $1.5 billion of run rate benefits under the program. We drove renewed focus on high-value segments of the market and increase the vitality of our product portfolio by launching 30% more new products than most in our company history. We increased pricing in the U.S. and Canada in response to the tariffs. We won significant share in consumer OE in both the U.S. and Europe. We refreshed our brand advertising and customer programs in key markets. And finally, we completed 3 major asset sales in 2025, returning the balance sheet to a position of health and one that is more reflective of our iconic company's leadership in our industry. Controlling the controllables. it's a theme I emphasize frequently during the year as the industry environment proved to be and remains very challenging. And while I'm encouraged by our strong fourth quarter results, it's clear that progress isn't linear in today's environment. So I'll move on quickly to what we're seeing in the businesses and how that's reading through into the first quarter. Start with the Americas. In the Americas, the consumer replacement market remained volatile in the fourth quarter. U.S. consumer sellout declined despite the vehicle miles traveled remaining positive. On the other hand, we saw increased sell-in discounting and promotional activity as we ended the year, which only exacerbated the high levels of channel inventories. As we've shared, our focus has been on price mix and higher-margin tires, which means we won't sacrifice margin for the sake of fleeting volumes. The price mix in our fourth quarter results is a testament to that strategy and the execution. What we saw in January was an industry sellout that was materially weaker than Q4, down about 5% across the industry. Part of this can be explained by the shock of the January storms and the frigid temperatures around the country but it's also true that consumers are extending the tread on their tires. All of this means that on the back of high channel inventories, dealers and distributors are taking action to reduce inventory in the first quarter. Similarly, trends in Americas commercial truck remained very challenging during the quarter. Heavy truck builds in the U.S. declined 17% during the fourth quarter as the OEMs continue to destock. In commercial replacement, industry sell-in leveled out after being artificially inflated earlier in the year with pre-tariff front-loading of the imports. Within the turbulent environment, we remain focused on building the pipeline and the discipline for sustained growth. This includes making the right changes in our product lineup and programs with our customers to drive a more resilient portfolio of products than we've had before. We are bringing greater discipline through clear matching of products to white space opportunities and high-margin profit pools with governance of our cross-functional work streams, including a fully integrated pipeline across product planning, technology, manufacturing and marketing. This combination ensures we bring the right products to market at the right time, allowing us to grow where we can generate the highest returns. I am equally focused on our manufacturing costs. We are establishing the rigor within our teams to continue driving throughput, yields and efficiencies factory by factory, so we can optimize the way we flex costs to generate the best outcomes for the future. and we are building the team. Over the past several quarters, I've updated you on strategic hires we've made that are helping to innovate Goodyear and how we approach our business. As our largest region, the Americas is foundational to Goodyear's performance. As we look ahead to the opportunities in front of us, we are refining how we lead the business to drive clear ownership, faster decisions and more consistent execution. In January, Dave Cichocki joined our team and will lead the Americas and our Americas consumer organization with a strong focus on sales execution, profitable growth and alignment with our global strategy. Dave brings more than 3 decades of senior sales leadership across well-recognized industrial and consumer companies and has a proven track record of building high-performance teams, modernizing go-to-market models and driving sustainable margin-focused growth, capabilities that align very closely with the transformation underway at Goodyear. I'm confident that this leadership evolution further positions the Americas organization for long-term value creation. Turning to EMEA. Softening sell-in trends within consumer replacement reflected anticipation of EU duties on Chinese tires. While the European Commission recently announced an anti-subsidy investigation into Chinese passenger tires, the time line for a decision on antidumping tariffs has been pushed to midyear. Our consumer OE volumes in EMEA extended their run on market share gains, growing share by roughly 3 percentage points. Q4 was the eighth consecutive quarter of market share gains in the region. Profitability for EMEA continued to sequentially increase during the fourth quarter. If I look at the underlying operations, we are making steady progress with EMEA's fourth quarter SOI margin at the highest level in over 3 years. In addition, we settled an important insurance claim during the quarter, which helped to deliver strong free cash flow for year-end. If I look at EMEA from a macro perspective, with 2 major factory restructuring actions in the region completed in '25, another underway in '26, our cost base is seeing improvement. As the industry works through elevated channel inventory from prebuy activity, we expect high utilization of our consumer capacity in the region. In Asia Pacific, our performance strengthened with meaningful growth in SOI margin, and we're seeing the benefit from strategic actions to prioritize margin performance. Following a year of prudent SKU rationalizations, our consumer replacement volumes in the region returned to growth. Consumer OE volume was a headwind for Asia Pacific in '25 as government incentives in China have been geared towards opening price point vehicles. We are committed to managing our costs to maximize margin and to generate strong returns in the region. Let's turn to Goodyear Forward. Our fourth quarter results demonstrate the broader transformation underway across the company as we've sharpened our focus on execution, made deliberate portfolio choices and prioritized sustainable margin performance. Over the past 2 years, we've made substantial progress in strengthening our execution, and I'm proud of the discipline that underpinned the Goodyear Forward plan that made this possible. While market disruption around tariffs and trade has meant we're finishing '25 short of where we need to be, the successes we drove in the fourth quarter gives me confidence in our ability to ultimately deliver on those commitments. As I mentioned on our second quarter 2025 call, these targets are not off the table, and we're still executing with discipline and a sharp commitment to achieving them. There are 2 drivers that can help us achieve these goals, market improvement that allows us to recover profitable volume and continued self-help. -- we are not waiting for the market. We've been actively building the next phase of our plan to further drive cost efficiencies while increasing the company's exposure to the most structurally attractive parts of the tire market. As market disruption clears and the visibility improves, we look forward to providing additional details on our strategy, initiatives and the medium-term financial framework. All in all, while our Goodyear Forward plan has now reached its 2-year conclusion, we will continue to work to deliver a strengthened foundation. We are integrating Goodyear Forward's efficiencies, discipline and precision to drive a more durable earnings profile. With that, I'll turn the call over to Christina. Christina Zamarro: Thank you, Mark, and good morning, everyone. Our fourth quarter results reflect the execution of targeted actions to strengthen our business over the past 2 years. Goodyear Forward has provided significant benefits and debt reduction has situated us well compared to when we began the transformation just 2 short years ago. Turning to the fourth quarter results on Slide 8. Q4 sales were $4.9 billion, down 0.6% from last year, given lower volume and the sale of the OTR and chemicals businesses. Additionally, revenue per tire increased 4% in the quarter, driven by an 8% increase in consumer replacement. Unit volume declined 3%, driven by consumer replacement. In addition, Americas commercial volume declined 14%, reflecting ongoing market weakness. Consumer OE volume increased 2%, driven by share gains in EMEA. Gross margin increased 1 full point during the fourth quarter, driven by strong execution and price/mix and Goodyear Forward. Segment operating income was $416 million, which was up about 9% versus last year and up 18% adjusting for divestitures. SOI margin was 8.5% in the quarter and up 1 point, excluding asset sales. Our segment operating income in the quarter includes $56 million related to the settlement of a business interruption insurance claim, which we have excluded from adjusted earnings per share. After adjusting for this and other significant items, our non-GAAP earnings per share was $0.39. I'll note that we also received insurance proceeds of $52 million in the fourth quarter of 2024. Turning to the segment operating income walk on Slide 9. Our 2024 earnings base was lower by $30 million due to the sales of OTR and Chemicals. After this change in scope, our 2024 segment operating income was $352 million. Lower tire unit volume and factory utilization were a headwind of $92 million. Price/mix was a benefit of $206 million, with each of our regions contributing to the strong performance versus our prior outlook. Higher revenue per tire was driven by both price and mix up, where we grew greater than 18-inch tire volume in the U.S., EU and China. Raw material costs were a slight headwind of $9 million in Q4. Inflation, tariffs and other costs were a headwind of $227 million and other SOI was a headwind of $13 million. Goodyear Forward contributed $192 million of benefit during the quarter and ahead of the outlook we shared with you on our last call. On a full year basis, benefits from Goodyear Forward were $772 million. In total, we exceeded our initial P&L targets for 2024 and 2025 by over $150 million. Turning to Slide 10. With a strong focus on our balance sheet, we generated over $1.3 billion in free cash flow during the quarter. Combined with proceeds from divestitures, our net debt declined $1.6 billion versus a year ago, which reflects the benefits of net proceeds from asset sales, partly offset by cash restructuring and currency translation on debt. Moving to the SBU results on Slide 12. Americas unit volume decreased 4%, driven by lower U.S. consumer replacement volume. Commercial volume was significantly lower than last year and sequentially, particularly in replacement. U.S. consumer replacement industry sell-in was down about 0.5 point during the fourth quarter. As part of that, U.S. TMA member shipments were essentially flat year-over-year, while low-end nonmember imports declined 3% during the quarter. Industry sell-out at retail declined 2.5% in the fourth quarter. U.S. consumer OE volume declined 3% and was driven by supply chain challenges within our OE customers. We achieved significant market share gains for the full year in consumer OE. U.S. commercial OE industry volume declined 26% as OEM production remained very depressed amid continued weakness in freight and ongoing regulatory uncertainty. Similarly, U.S. commercial replacement industry volume was lower by 5% during the quarter. Americas segment operating income was $233 million or just over 8% of sales. Turning to Slide 13. EMEA's fourth quarter unit volume decreased 2%. Consumer industry sell-in declined as imports fell 7% in anticipation of potential tariffs in 2026. With the extension of the time line for a preliminary decision on antidumping tariffs in the EU, we're cautious on near-term conditions as the delay provides further opportunity for another round of low-end imports to make their way into the region. Consumer OE was a continued area of strength where EMEA registered its eighth consecutive quarter of market share gains. Segment operating income in EMEA was $114 million or 7.5% of sales. The increase of $76 million was driven by the insurance recovery we mentioned earlier. That said, excluding the insurance, SOI increased by $20 million and margin expanded 120 basis points versus last year. Turning to Asia Pacific on Slide 14. Fourth quarter unit volume decreased 2%, driven by lower OE volume. Consumer replacement volume returned to growth following SKU rationalization actions that meaningfully contributed to volume reductions throughout 2025. Segment operating income was $69 million or 13.1% of sales. Excluding the sale of the OTR business, Asia Pacific segment operating income increased $16 million and margin expanded 330 basis points. Turning to our first quarter outlook on Slide 16. Business trends moving into 2026 still reflect many of the same headwinds we faced in 2025. Even though the overall tariff environment has broadly stabilized in the U.S. Overall weak industry conditions continue to affect our global operations in terms of top line and cost. While our fourth quarter results demonstrate meaningful progress, we anticipate continued volatility as we move into 2026. First quarter results will be particularly impacted as heavy fourth quarter promotional activity across the U.S. consumer replacement industry further inflated channel inventory. At the same time, consumer industry sell-out during the month of January was down significantly, shaped by extreme winter temperatures and weak consumer sentiment more broadly. And in Europe, the delay of the ruling on a potential tariff on consumer imports has added to this uncertainty. As a result, our first quarter SOI will be significantly affected, driven by the convergence of lower consumer replacement volume, fixed cost carryover from 2025 and a continuation of unusually weak commercial truck trends. These are temporary factors, and we're confident that we'll regain earnings and margin momentum once this turbulence subsides. We expect first quarter volume to be down approximately 10%, driven by U.S. consumer replacement. Unabsorbed overhead will be a headwind of $60 million. As we shared on our last call, we lowered production by 4 million units in Q4 to manage inventory levels. With weak volume trends in the fourth quarter and in Q1, we will see a similar impact in the second and third quarters as we align production with demand. Price/mix is expected to be a benefit of approximately $25 million given Q1 volume and as we anniversary 2025 price actions and begin to see the impact of RMI indexed agreements. Raw materials should be a benefit of approximately $85 million in Q1. Full year raw material costs are a benefit of $300 million at current spot rates. Goodyear Forward will drive benefits of approximately $100 million in the first quarter and about $300 million for the full year. Inflation will be similar to what we saw in Q4. Tariffs and other costs will be a headwind of approximately $130 million, with tariffs at approximately $65 million and other costs reflecting increases in warehousing and freight, factory inefficiencies and transitory manufacturing costs associated with previously announced facility closures. For the full year, tariffs will be a headwind of $175 million and other costs will be $120 million, both weighted to the first half. Finally, the sales of Dunlop & Chemical lowers the base of earnings by $37 million in Q1 and $185 million on a full year basis. In addition, we will amortize $55 million of deferred revenue in 2026 related to supply agreements from the 3 asset sales. This is an increase of roughly $15 million versus 2025. Other financial assumptions are shown on Slide 17. For modeling, on a year-over-year basis, we've decreased both our CapEx and interest expense. With that, we'll open the line for your questions. Operator: [Operator Instructions] We'll go first this morning to James Picariello of BNP Paribas. James Picariello: I guess I first need to ask about volumes, how you're thinking about volumes for the remainder of the year. Obviously, we have the first quarter look and you just gave the overhead absorption headwind through the third quarter. I was just thinking if volumes start to stabilize in 2Q and improve from there, is it possible that the overhead under absorption might not be by the third quarter similar to the first quarter? And then, yes, my question is just your high-level thoughts on OE versus replacement the rest of the year. Mark Stewart: James. Yes. As we discussed at the opener, we really expect the conditions to improve after Q1, right? Weather obviously being a big headwind, but also some of the destocking and the inventories feeling a little bit stuff, if you will, in terms of distribution coming into the year. So those 2 things really are a drag on Q1. Coming into that as well, right, we slowed our production in the fourth quarter because we did not stuff channels. We wanted to make sure we were maintaining that richer mix, if you will. So we made sure to be careful with that. So we have that drag in Q1, which should correct as we go into Q2 with that. So the drawdown in Q1, we think it's going to be constructive as we look at the industry and for Goodyear specifically. If we look at the sell-out as well from quarter 4, right, down 2.5 points plus that inventory going into the system with heavy promo in terms of the stuff going into sell-in from others. So as that clears, we're really focused on making sure that we're continuing our U.S. portfolio, in particular, right, with the richer mix, the larger rim sizes. As mentioned, we had 30% more new products into the market than we've ever had of the white space products in that premium size in terms of a much richer mix in terms of margin. We're going to also increase that assortment of new products throughout '26. We are driving the business in a completely different way. The governance aspects and the control towers we put in place are very important. We've not fallen back on that. We've also created across the globe on our SLT, working directly with Christina and I, Alex Depau that was internal to part of the Goodyear Forward process and the clean sheeting running our global business process with the transformation office. so that we can make sure working with each SLT member around the globe and their teams, we are driving those -- the cost and cost efficiencies around the world, James. So on that 30% new product coming into the market as those really take hold and get their shelf space, we've got another 1,700 new products coming in '26, all fitting the bill of the richer margin on more premium size, premium mix. So we're really confident that we're positioning the business to drive those earnings past Q1. Christina? Christina Zamarro: Thanks, Mark. So James, I'll just jump in on the question on unabsorbed overhead. I think embedded in the comments around Q2 and Q3 is an assumption that Q2 sell-in begins to normalize in line with sell-out. Mark mentioned a recovery in demand in Q2, but still, I think, a conservative assumption. You could argue that there's some pent-up demand there. So -- and it could be -- the unabsorbed overhead impact could be lower. So we'll see how that plays through. When you asked about OE and replacement, and I think the best way for me to talk about that is by region. And Americas second quarter, I would still say, is still lower in consumer replacement year-over-year, but significantly better than the first quarter with the expectation for slight year-over-year growth in the second half. Consumer OE should grow beginning in Q2, and that's all based on our mix of fitments. When I look at EMEA, planning for a softer first half in consumer replacement just given the delay on the tariffs. And then consumer should continue to be strong just given the share gains we've seen over the past couple of years. Commercial OEM replacement volumes in EMEA will be up but low single digits is sort of what we're thinking stable. And in comparison, in the U.S., looking at commercial replacement down in Q1, maybe stable, slightly down in Q2 and then up a little in the second half. James Picariello: Okay. That's really helpful. And then one quick clarification is for the divested Dunlop units, is that still about 6.5 million units. And that's excluded from any volume assumptions that you're sharing, right? Christina Zamarro: Yes. So the Dunlop sales in 2025 were closer to 5 million units, James. And the supply agreements that we have with SRI are a minimum of 4.5 million units. Operator: We'll go next now to Itay Michaeli at TD Cowen. Justin Barell: This is Justin on for Itay. So a quick question on the Q1 volume setup and industry assumptions kind of baked into that. I know you briefly hit on it for a bunch of the regions, but just kind of how you're thinking about it against Q4 to Q1 and the industry sell-in and industry sell-out trends that you may be modeling for Q1. Where would you expect, I guess, total channel inventory to kind of look like at the end of Q1? Just trying to get a sense of that more cleanly. Christina Zamarro: So if I look at how year-end landed, we believe across the industry that U.S. channel inventories increased about 10% on a year-over-year basis, and that was a lot driven by prebuy of imports over the course of the year and then this increased promotional activity at year-end. I think built into our assumptions is that the majority of that is declined over -- or is declining in Q1, maybe a little bit of flow-through into Q2. And so earlier, when I was mentioning that our assumption for Q2 volume in Americas consumer replacement is still beginning to improve and -- but yet below sellout, I think there's still some inventory clearing that we've assumed here in Q2. Justin Barell: Perfect. Super helpful. And then I guess maybe on the information you provided before on the volume by regions and kind of understanding the nuance and cadence throughout the year. How should we think about maybe where the 2026 full year SOI and free cash flow land maybe based on those volume assumptions as well as maybe anything else that might not be explicitly guided for within the deck? Just trying to get like a rough bridge here. Christina Zamarro: Yes. No, no problem. So I'll walk through the assumptions, and I did try and lay out quite a bit in the presentation, but I'll just take you through add some context on some of the different drivers. If you start with our 2025 SOI ex insurance, that's about $1 billion. And then we take out the impact of the divestitures, which would leave us at about $815 million for base. as we begin the year. Lost revenue on the divestitures, we noted in the presentation, is about $915 million. So Goodyear Forward, $300 million. We've increased that steadily over the past couple of quarters. We'll continue to look to add to that over the course of the year. Mark was referencing that earlier. Tariffs are a headwind of $175 million, and that's really concentrated in the first half just given the timing of tariff implementation last year. Now other costs should be about $120 million, and that includes the ramp down of a couple of our factories last year. So we'll lap a lot of those costs in the first half. raw materials are a benefit of $300 million at current spots. And I'd say 2/3 of that is going to pull through in the first half of the year. And then price/mix, we haven't spent time talking about that yet, but price/mix should continue to be positive as we move through the year, lower in Q1, obviously, on volume and some of the seasonality, but a significant step-up in Q2 and Q3 until we get to a very high comp in Q4. And so then it all comes down to what we want to assume on volume when we lay out those drivers. I think you should be able to model year-on-year organic growth on that base SOI of $815 million in the range of 10% or so. And I mentioned this earlier when we were talking to James, but we're assuming that Q2 sell-in in the U.S. begins to normalize in line with a normal level of sell-out. We're also assuming U.S. imports are stable to down slightly in 2026. And we're assuming European imports are up slightly. And so that's all embedded within our assumptions. I think that free cash flow then, as you look at all the drivers and you create a bridge we should have a significant improvement in restructuring on a year-on-year basis. We're going to drive working capital inflows this year, reductions in interest expense. So all of that takes us to a base case where we're delivering slightly positive free cash flow. Of course, we're going to look to improve on that as we move through the rest of the year. Operator: We go next now to James Mulholland of Deutsche Bank. James Mulholland: So on the commercial vehicle side, there's been some significant improvement in expected orders for Class 8 in North America since your last update. So 2 questions there, given how important it is from a margin standpoint. First, does your guidance anticipate any further improvement in the overall CV market in the U.S.? And second, do you see this improvement spreading to other geographies as well in the near term? And then I have a quick follow-up. Christina Zamarro: So in the Americas, our commercial business for OE is expected to be up, I'd say, high teens, low 20% in the second half. Of course, that's off of a very, very low base. We should see the beginnings of some volume price/mix improvements in Americas commercial in the back half. But I wouldn't say that our assumptions there are robust. In EMEA, commercial OEM replacement, we do have growth, but I'd say it's low to mid-single digits. And it's not really a relevant business for us in Asia Pac. I think on average, we should be running between 12 million and 13 million units in commercial to generate a historical level of margins for that business. In 2025, our unit sales only totaled $11 million. So there's a lot of leverage as we see this business improve. James Mulholland: Got it. Okay. That's helpful. And then I guess with Goodyear Forward's completion now and in line of sight, it sounds like there could be maybe a little bit more upside on the cost savings there. I think last year, it feels like a while ago now, but the original exit SOI margin was around 10%. That was the target anyway prior to tariffs and other issues. Do you think that's a level that you can approach over the longer term? Or are there other significant steps that you can take to get to that point? Or I guess, where do you think you could end this year and then start to leap off into '27? Mark Stewart: No, we absolutely -- we've not backed off our Goodyear Forward targets. As we've shared in earlier calls, it's been more of a bit of a pushout to get to that overarching 10% SOI. As you can see in the year ending results, right, of 2 of the 3 units, particularly on the consumer base, already at that level, as Christina just described on commercial, right? Certainly, the commercial business and the downturn in commercial as an industry really was a drag towards hitting that overarching 10. But as I mentioned, as we continue the execution of our Goodyear Forward, that's really embedded into our DNA, right, of keeping the pipeline full of projects and executing those for cost efficiency as well as continuing to drive that richer mix of products around the world with the 1,700 -- or sorry, 1,500 and 1,700 new products coming into the market, both refreshed and brand new on the consumer side and making sure that we're best-in-class service on the commercial side. We feel good that we are going to get there as we go forward. Operator: We'll go next now to John Healy of Northcoast Research. John Healy: I just pounded in a minute late, so I apologize if you maybe mentioned this a little bit. Could you talk a little bit about the down 10% volume number for Q1 and kind of the puts and takes that goes into that number? My thought process had been that maybe there was a restocking opportunity on the horizon here. So is it a function of customer or moving away from any specific parts of the market, maybe how that down 10 might look directionally by region? And do you persist that kind of down volume kind of taking place throughout the year? And kind of what's your view of just the global market probably opportunity this year, whether it's for Goodyear or for just the industry as a whole? Christina Zamarro: John, I think you're right. I mean the U.S. market theoretically could be a lot better in February and March. Having said that, I think within our assumptions is the expectation that the first quarter sees a more significant onetime destocking just based on the activity we've seen so far to date. A large part of our story, so the downturn in U.S. consumer replacement really lies in what we're seeing as far as discounting and promotional activity, and that started in Q4 but it's continuing on into January. And so we are intentionally focusing on revenue per tire and mix, which was very strong in the fourth quarter because we have a point of view that we -- that this will -- disruption will moderate, and we want to protect the returns within the business through that period. There is a small part of the down 10% that is disruption, I would say, within our own customer base, you'll recall in the second quarter of last year, we exited the relationship with ATD. And that's a part of the headwind, but not a significant part. That begins to normalize in Q3, of course. And then in EMEA, we've talked about the delay on the EU tariff implementation or the prospective tariff implementation. That we've moved from January until the summer months. So we're expecting EMEA consumer replacement volumes to be soft in the first half as well. Mark Stewart: And maybe we can tack on, right? The strength in Q4 in EMEA, we were really pleased with our new winter premium products. They performed super well. They won the ADAC test. They were a very strong first winter pool on the OE fitments that we got in the market in '24 and '25. And that really helped drive that 2-point share gain in the premium 18-plus in EMEA. So super strong demand for that product. John Healy: Got it. And then just on the cash flow benefits that you talked about, I think you called out working capital as an inflow this year. Is that first half? Is that second half? And is there anything kind of unique that's happening there? And as you look at kind of the business, I know you guys have tackled a lot of things operationally. But from a financial standpoint, in terms of managing working capital, are there any sort of big projects you could do there to maybe kind of thaw some of the cash flow aspects of the business a bit? Christina Zamarro: So John, I would say Mark was referencing a little bit earlier, shifts in the way we operate and improvements in governance. I would say working capital performance this year should be smoother and less peaks, less valleys as we're managing the business for cash, that was embedded within my prepared remarks when I talked about unabsorbed overhead impacts. And so just trying to manage cash flow very closely quarter-to-quarter. Last year, it's very clear that the factory ramps down very quickly at the end of Q3 and Q4 just on all of the tariff import prebuy, which makes it harder to flex costs. And so it has 2 benefits, right? One is the better cost management within our factories allows our teams to flex better, but the second is in working capital. And so I think we'll see a smoother profile this year than normal, even though we do have a lot of embedded seasonality. As far as projects, I mean, we do continue to evaluate all alternatives in and around working capital because it is a big source of cash or use of cash and source of cash as we think about funding the business. In 2025, we increased, for example, supply chain financing, bringing on more and more suppliers into our top-tier banks credit facilities. And it's projects and programs like those that we'll continue to look to, to help fund some initiatives and potentially push the working capital inflows that we're expecting in 2026 even beyond what we've laid out here. Mark Stewart: I would add to it just a bit, John, as well. When you look at the CapEx on the base CapEx and you see a lower number there as well. It doesn't mean we're doing less. What it means is we're doing a heck of a lot more with what we've got. And that goes to big process changes that we've had within our global engineering and manufacturing groups that was really kind of an outcome of some of the activities we had on Goodyear Forward, but together with procurement, just on the buy, right, whether it was bundling, whether it was clean sheeting, but also looking to our equipment standards, the location of sourcing, the way we project manage, we've completely changed that process in the last 2 years, and we're seeing a big efficiency gain in our CapEx that's helping that working capital as well. Operator: [Operator Instructions] We'll go next now to Emmanuel Rosner of Wolfe Research. Emmanuel Rosner: Just a couple of follow-ups on the earlier questions. So I appreciate all the color on the SOI puts and takes for 2026. Just 2 quick clarifications. The other costs of $120 million, was that a tailwind or a headwind this year? And then as you said, it ultimately comes down to volume. In order to hit sort of like that potential base case scenario of double-digit SOI growth versus the organic piece of last year. What kind of all-in global volume essentially is assumed? Christina Zamarro: Sure, Emmanuel. I guess other costs are a headwind in the first half -- mostly in the first half. driven by -- I mean, it's factory inefficiencies, ramp downs of a couple of different factories in the first half. We talked about our first involved factory in Germany. Also, we had a closure in Danville, Virginia of our commercial truck production last year, and we're going to lap some of that in the first half as we move through that initiative. As far as volume, I mean, the way I look at it, Emmanuel, is we have a significant step-up in price/mix in Q2 and Q3 -- and then in Q4, we lap a really strong comp from Q4 2025. I think the way I look at that is we balance it against the volume assumptions that we make on the top line. And so we can balance that as we move through the year based on competitive conditions. But if I had to say right now, volume would be slightly down on a year-over-year basis and price/mix would be significantly positive just given what we've talked about in protecting our revenue per tire and our margins as we move through the year. Emmanuel Rosner: Great. Yes, I appreciate the color. And then my second follow-up is on the Goodyear Forward. So you've obviously spoken about the potential for additional actions. Just curious how we should think about it? Are these going to be sort of like more incremental in nature? Or are you looking at a potential reloading of significant actions that might potentially be like more expensive from a restructuring point of view, but that could yield some larger benefits? And where would be the areas that you would be looking at for that? Mark Stewart: Yes. Thanks, Emmanuel. We are continuing to use the philosophy, the cadence of governance and the drive for execution of Goodyear Forward to keep the pipeline filled with cost efficiency projects. And whether it's manufacturing efficiency, whether it's procurement efficiency, engineering development of, again, doing 30% more with the same number of engineers around the world. And so those are the activities we're doing. So we're not rolling out a big restructuring 2.0 at this point. It really is about execution right now. Operator: We go next now to Ross MacDonald at Citi. Ross MacDonald: It's Ross at Citi. I have 3 quick questions. The first one was on the inventory situation in the U.S. Could you maybe give a little bit more color if that inventory situation is full across all of the rim sizes? Or does it skew more to, let's say, sub 18-inch, more budget type content? And Mark, on your point around the SKU offensive you're rolling out, could you maybe help us model where you see the Goodyear North America 18-inch and above share finishing this year? I think you were at about 43% in Q3. Christina Zamarro: So yes. So a couple of comments. I think inventory situation is broad-based. And that was probably just as we headed into year-end driven by promotional activity that did not seem to favor Tier 1, Tier 2 or Tier 3. It was really something that occurred more across the board. When I look at the mix of greater than 18-inch in the fourth quarter, our U.S. business was about 50% greater than 18-inch in consumer replacement. Of course, OE is almost all greater than 18-inch already. And as you Julie noted, in comparison during the same quarter earlier or same fourth quarter 2024, we were only at 42%. And since the larger rim sizes are the area of the market that has good growth, we're naturally now at a place where the portfolio is leveraged or geared towards growth. So that's good. Ross MacDonald: That's helpful. My next question is on that promotional activity. Is there any merit from your perspective here in engaging in some of that promotional activity or discounting to try and encourage consumers to move up a tier or Mark called out that consumers were sort of delaying replacement decisions. Is there anything you can do here maybe to manage price down slightly, but with a view to actually getting higher volume market share on the back of that? It seems like the consumer is quite reluctant to move up tiers at this time in the cycle. Mark Stewart: Yes. There's, as mentioned, a lot of sell-in promotional activities that went into in the channel, right, into the distribution side of it as well as some of the sell-out promo activities as well. So I mentioned that quarter 1 has this headwind with the weather situation, particularly in the U.S. marketplace, right? But we're being super disciplined about our promo activities that we're doing. for that. We feel that we've got our pricing ladders in the right spot now, our pricing power deltas versus the competition. We -- the new products that we've rolled out between MaxLife 2, WeatherReady 2, the Eagle F1 coming out right now, all of those products are absolutely on the top of our game and top of the podium. And we want to make sure that they command the right place in the marketplace. So we're continuing to monitor those things, but we want to make sure that we're providing the value of the Goodyear brand and our Cooper brands and family of brands there. Ross MacDonald: And then final question, just a quick one on the truck business or commercial activities in the U.S. I'm not sure if you've disclosed in the past factory utilization rates in the U.S., but obviously, it has been a perfect storm, some prior callers asking rightly about the order inflection that we're seeing. But could you maybe frame where we are in terms of commercial activity utilization rates in the U.S.? Is this in your opinion, trough levels versus, let's say, the last 20 years? Mark Stewart: Yes, that's not something that we have historically shared. As we look to that commercial business, it's -- our mission is to be #1 in the tires and service, both consumer and commercial. We've got a very healthy fleet business that we're servicing the premium fleets. We've got a very healthy local book business as well. And that really helps us in terms of being able to weather a bit of a perfect storm in the commercial business, right, with the emission regulation changes, a very healthy number of mothballed tractors, if you will, and a lot of fleets deciding not to do a prebuy or an early buy of those new emission vehicles from the OEs. So we are continuing to focus on our service levels and through our -- which is a differentiator for us is around our CTSC, our truck service centers around the country. But no, we don't share the information in regards to the actual output of the factories on commercial. As Christina mentioned, we did have a restructuring last year with our Gangle operations so that it can really focus on its aviation business. Operator: We'll go next now to Ryan Brinkman of JPMorgan. Ryan Brinkman: I wanted to ask first on the $300 million of Goodyear Forward savings expected for the full year. On my math, I think you should have about $260 million of full year year-over-year tailwind simply on the anniversarying of savings that were already achieved by the end of 2025, which I realize you overachieved on, but it maybe implies only about $40 million or so incremental savings sequentially from the end of 4Q '25. Firstly, is that roughly correct? And then secondly, do you maybe have any internal ambitions for more cost cutting? Has the organization roughly achieved the level of leanness that you target? Or how should we think about the level of margin improvement that might remain from cost-cutting potential? Christina Zamarro: Sure, Ryan. I mean the assumption that you're making on the run rate flow-through is, yes, correct. It's about a little more than $250 million flow through. The rest is all new actions in 2026. I think we'll obviously look to build on that. And Mark was mentioning earlier, the pipeline fill, not just for 2026, but even beyond and that being a part of our rigor and our DNA inside the company. When we took another question a little bit earlier around restructuring cash costs, is there more to do? I think our mode of operation this year is to run the assets that we have. And we look at the playing field as if we have an unusually weak period in demand right now. So not necessarily looking to add any major restructurings to generate some cost out, but there's a lot we can do still yet in SAG in manufacturing efficiencies. And so we'll continue to build on that. And our intention is to come back and lay out not just what we're doing this year, but sort of that 3-year multiyear view for you a little later this year once some of this turbulence subsides and we just have the right backdrop to talk about the company story. Ryan Brinkman: Okay. And then with regard to potential European higher tariffs, what are the various implications there might be from the pushout from -- of implementation from the early part of the year to the middle part. I recall the push out of expected tariffs in the U.S. in '25 had quite a bit of impact on prebuy activity, U.S. PMA share and volume, et cetera. This is less of a concern, right, in Europe, given the retroactive or potential retroactive nature of tariffs. Curious what your thoughts are there. And then alternatively, when we do get these tariffs, I thought your price mix comment sounded pretty good, including the step-ups in 2Q and 3Q. I know your practice is not to model anything for tariffs that haven't been officially implemented. But -- and obviously, that makes sense. I don't know what the rates are, et cetera. But just curious if within the industry, you might have any kind of early read or sense of what the potential range of magnitude of tariffs might represent and what the potential impact could be on volume share price mix when they do come... Mark Stewart: Yes. Maybe I'll kick it off, Ryan, on the -- really 2 elements, right, to the tire tariffs in the EU. First were the antidumping investigation, and that specifically was on antidumping for consumer tires originated from China, right? We had expected it in January. It's now expected in July of '26. And in terms of your question there, the anticipated range for those duties is expected to be between 41% and 104%. And we will have to wait until that time to see what range that is, but it's definitely a large amount of duties there in terms of helping the competitiveness of the local footprint. Second is on the anti-subsidy investigation. In November, the EU also launched the anti-subsidy in terms of grants, loans, tax exemptions things around land or electricity usage below market into Chinese consumer tires as well. And so that is expected to conclude by the end of this year. And so from that standpoint, exactly to your point, right, it is -- things are preserved in terms of that possible retroactive duties. We'll just have to see how it pans out there. Operator: And it appears we have no further questions this morning. Mr. Stewart, I'd like to turn things back to you, sir, for any closing comments. Mark Stewart: Okay. Thank you. So thank you all for joining us today for the earnings call. Our fourth quarter performance really reinforces the progress we've made to strengthen Goodyear's balance sheet and the financial performance for the company. The near-term environment, as we shared, definitely remains dynamic, but we are absolutely focused on continuing to execute with the greater discipline, controlling the controllables and positioning the business to capture the attractive opportunities to continue to mix up as the market conditions normalize going forward. The work that we've done over the past 2 years has definitely created a more resilient, a stronger foundation. And as the visibility improves, we are very confident in our ability to translate that foundation into sustained margin expansion, stronger free cash flow generation and long-term value creation for our shareholders. So thank you all for joining us today. I appreciate the time. Operator: Thank you, Mr. Stewart, and thank you, Ms. Zamarro. Again, ladies and gentlemen, that will conclude today's Goodyear Fourth Quarter 2025 Earnings Conference Call. Again, thanks so much for joining us, everyone. We wish you all a great day. Goodbye.

92天前Insight Analytics约5分钟阅读

PSK.TO 2025 Q4 财报电话会议

Operator: Good day, and thank you for standing by. Welcome to PrairieSky Royalty Limited Fourth Quarter and Year-End 2025 Financial Results Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, sir Andrew Phillips, President and CEO. Please go ahead, sir. Andrew Phillips: Thank you, operator, and good morning, everyone, and thank you for dialing into the PrairieSky Year-End 2025 Conference Call. On the call from PSK are Pam Kazeil, CFO; Dan Bertram, CCO; and Mike Murphy, VP of Geosciences and Capital Markets; as well as myself, Andrew Phillips. Before we begin, there are certain forward-looking information and statements in our commentary today, so I would ask listeners and investors to review the forward-looking statements qualifier in our press release and MD&A, which can be found on our website. 2025 was a successful year for PSK on all fronts. We achieved 6% oil growth over the year, reaching a record 13,940 royalty oil barrels per day. We expect further records in 2026. Our PDP reserves grew alongside our oil production at over 7% year-over-year. Leasing activity remained robust. The company entered into 189 lease arrangements with 90 distinct counterparties. Leasing continues this year at a similar pace. On the capital allocation front, we executed on $100 million of acquisitions with excellent projected returns. In addition, we canceled 2.6% of the outstanding shares of PrairieSky while paying $243.4 million in dividends. Looking into 2026, the team will continue to focus on leasing our leading undeveloped land base to qualified counterparties across the basin. Over the year, numerous discoveries and pool extensions were found across our extensive portfolio with decades of remaining inventory on some of North America's most economic plays. With 98% operating margins and unmatched duration, we're in a position to provide strong returns to our owners in the coming years. We're pleased to announce a 2% increase to our annual dividend to $1.06 per share per year, and our first quarterly dividend will be $0.265 effective March 31, 2026. I will now turn the call over to Mike to further discuss activity on our lands. Michael Murphy: Thanks, Andrew. 2025 drilling activity was strong for PrairieSky with an estimate of $2 billion of gross third-party capital spent on our lands. This represents an estimated 8.3% of total industry conventional CapEx in the basin, and this is up from 6.9% in 2024. Activity was especially strong in our key oil growth place, including Clearwater spuds up 9% year-over-year, Mannville Stack up 11% and Duvernay up 67%. Multi-laterals continue to drive increased productivity per well with 80 multi-lad spud in Q4 and 285 spot in all 2025, representing 40% of all drilling activity on PSK lands up from 36% in 2024. We now estimate half of our Clearwater volumes are under waterflood support, providing for a highly sustainable low decline production base. Improved recovery contributed to a 42% increase in Clearwater 2P reserve volumes year-over-year. Clearwater royalty oil production has grown at a compound annual growth rate of 20% since 2022, and we expect double-digit growth from the play again in 2026. In the Duvernay, royalty production increased 90% year-over-year with growth primarily attributed to activity in the West Shale Basin with sizable third-party operator budgets in this part of the play this year, we expect the Duvernay to once again represent the fastest-growing play for PrairieSky in 2026. I'll pass it over to Pam to discuss the financials. Pamela Kazeil: Thank you, Mike. Good morning, everyone. PrairieSky's 2025 oil royalty production reached a record annual average of 13,940 barrels per day, a 6% increase over 2024 with Q4 volumes averaging 13,750 barrels per day. Growth in oil royalty production was focused in the Clearwater, Mannville Stack and Duvernay oil plays, which now represents 29% of our oil royalty production up from 25% in the prior year. We also achieved 17% growth in NGL royalty production in Q4, with production averaging 2,915 barrels per day. This growth was driven by Duvernay and Montney volumes and positively impacted our NGL realized pricing as pentanes and condensate made up approximately 35% or over 1,000 barrels per day of these volumes. With a strong fourth quarter, NGL royalty production grew 5% year-over-year. Total royalty production was 64% liquids for the year. Royalty revenue totaled $102.9 million in the quarter and $441.7 million for the year, which was 94% liquid. Other revenues added an incremental $8.8 million in the quarter and $36.5 million for the year, driven by bonus consideration of $22.6 million. During the quarter, PrairieSky settled the deferred share units for directors who retired last year of $7.2 million. Directors had until December 15, 2025, to exercise their DSUs. Funds from operations totaled $80.5 million or $0.35 per share in the quarter and $353 million or $1.50 per share for 2025. Looking forward, PrairieSky's 2026 annual pricing sensitivities, which are all net of G&A and taxes are as follows. A $5 per barrel change in U.S. dollar WTI would increase or decrease funds from operations approximately $24.5 million. A $1 U.S. change in the light or heavy oil differentials will increase or decrease funds from operations approximately $5.5 million. A $0.25 per McF change in AECO would increase or decrease funds from operations, approximately $4 million and a $0.01 change in the U.S. to Canadian FX rate would increase or decrease funds from operations of approximately $4 million. Entering 2026, we have tax pools of $1.18 billion to shelter future taxability at approximately 10% per year. This means that in 2026, the first $118 million of cash flow is tax-free with incremental cash flow tax at 23.5%. We prepared a 2025 U.S. tax information and our 2025 dividends will be a 44% return of capital for U.S. investors. This information can be found on our website. We will now turn it over to the moderator to proceed with the Q&A. Operator: [Operator Instructions] And our first question coming from the line of Michael Harvey with RBC Capital Markets. Michael Harvey: Yes, sure. Just a couple of quick ones. First on the West Hale Duvernay, volumes almost doubled this year. It looks like this year, you could be in a position where you kind of get broadly similar growth percentage-wise numbers. Just wondering if you would generally agree with that or take another view. And then second, on the return of capital program, maybe just remind us the philosophy on the buyback. How sensitive is it to your share price? Or is it just more of a sweep if there's looking to be excess cash at the end of a particular quarter? Andrew Phillips: Thanks for the questions. Yes, on the Duvernay, we don't obviously provide specific guidance for plays or guidance in general, but there will be strong growth associated with the Duvernay. I think one of the things you'll see is a little bit more volatility in terms of the actual production volumes given that like in Q3, we got substantial pad that came on and we had a big bump in our volumes. But I think overall, over the years, you'll get some significant growth out of that. I don't know that it will be just under 100% growth this year, but it will be very strong growth. And it really depends on when those volumes actually come on with whether -- how they're staggered throughout the year. And then on the return of capital, we obviously have the dividend, which we increased a couple of percent -- and then on the buyback, we will buy back stock this year. We have a buyback in place currently. And when we think about the business and we look at kind of terminal values, et cetera, we come to a share price that's a multiple of our current share price. So we believe there's good value anywhere in these ranges. So we will be occupying back shares when we come out of blackout. Operator: Our next question coming from the line of Jamie Kubik with CIBC. James Kubik: Can you just talk a little bit about the trend that we saw in the quarter with respect to oil volumes checking back a little bit and how we should think about the profile for PrairieSky in 2026. And then lastly, can you just talk a little bit about the average royalty rate being drilled in the profile right now and what that might mean for 2026 and onwards? Andrew Phillips: Yes. You bet, Jamie. On the first question on the trending again, you saw that big pad come on in Q3. So we had a substantial spike in our volumes. And so we're well ahead of our own internal estimates and analyst estimates. And then, of course, those wells come on with a very high decline. So you saw the declines in Q4. We have a number of new pads coming on throughout the year in 2026. So you will see those kind of a little more volatility, I guess, in the volumes. But I think on average, we'll see similar growth rates. So on the trending, I guess, that's just one thing to expect. In the past, if you go back 3 years, you've seen very ratable growth, mostly due to very kind of predictable pads coming on throughout the Clearwater and the Mannville Stack and very predictable volumes. And then with the Duvernay adding to that and being a big part of the growth, you get these very substantial volume spikes and then some substantial declines, of course, that come alongside with it. So I think you'll see volatility. But in the end, it's a good news story because it will smooth out over the year. And then the second question. Sorry, what was the second question? Oh, yes. Yes, on the average royalty rate is down like 0.2%, I think, on the well spud in Q4. We do expect some volatility in that as well. But as pretty usual, I think it will kind of average north of 6% throughout the year. We just don't know exactly how that will come on, and it depends on the seasonality of drilling and where those wells are drilled. But some of the longer laterals you're seeing in the Duvernay, they're slightly lower. But again, we have a high royalty rate there. So those should come on slightly higher royalties. And then the Viking, of course, in Q3 will add to that when they're mostly 17.5% royalties. But again, I think you expect a similar average royalty rates to 2025. James Kubik: Perfect. And could you also talk a little bit about the outlook perhaps that you might have for the Mannville Stack and the Basal Quartz for 2026? Obviously, good growth in Duvernay and Clearwater in 2025. Can you just talk a little bit about maybe what has you excited in the Mannville Stack and Basal Quartz? Andrew Phillips: Yes, you bet. So in the Mannville Stack, we were about 200 net royalty barrels in 2022. That's grown all the way to just under 1,000 net royalty barrels. We are seeing very robust programs throughout that area from a number of privates, including the lineup in Caltex Trilogy as well as Canadian Natural Resources has licensed a number of wells on our lands that haven't come on yet. So we are expecting pretty strong growth in the Mannville throughout the year. I don't know exactly what that number looks like, but it will be substantial And then the Basal Quartz for the first time we ended it as a segregated play in our corporate presentation. And you can see that volume has been roughly flat. We have done a number of acquisitions, just given the really high-quality operators that we're dealing with there, as well as the robust economics. And just given the gas processing plant that they've acquired throughout the area. They have a lot of access capacity now and has a very strong program coming out of breakup. So we're expecting some pretty strong growth from that play as well. It will certainly be in the double digits, but I don't know exactly what that will look like, and that's a light oil play with liquid search gas. So that's a play that we think will show growth over the next 5 years. Operator: I'm showing no further questions here at this time. I will now turn the call back over to Mr. Andrew Phillips for any closing remarks. Andrew Phillips: Thank you very much, everyone, for dialing into the PrairieSky Year-End and Conference Call. And please feel free to call Pam, Mike or myself with any questions you have, and have a great day. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

92天前Insight Analytics约5分钟阅读

DNLM.L 2026 Q2 财报电话会议

Clodagh Moriarty: Good. So welcome to Dunelm's interim results. I know I've met many of you before, but for those who haven't, I'm Clo Moriarty, and I joined us 4 months ago, having spent 15 years with Sainsbury's and almost a decade with Bain before that. Now over the last 4 months, it has been tremendous to validate for myself all the things that I believe to be true about this business. And I've been able to do that through a deep onboarding. Now having visited almost 60 of our shops and many of our logistics sites, engaged with our dedicated partners and of course, spent time with our teams in the center. And look, this really is a beautiful business, right? We are product-centric with something for everyone, carefully crafted with our long-standing suppliers across that end-to-end supply chain. This is a business that really understands the role of the physical store, but how it can be complemented with the role of digital. And it also has something that is really difficult to build from scratch. We have colleagues who really care. And all of that is in service of our customers. Now over the course of this morning, between Karen and I, we're going to walk through our H1 results, many of which have already been well trailed. Thank you for all of your questions and some provocations post our trading statement. What we've endeavored to do is actually weave the answers to those questions through our presentation and to keep us all in check, but we have plenty of time in Q&A if there's anything that we don't cover. And then uniquely on this occasion, given that it has been a number of months I'd love to share my initial reflections on where I and we see the opportunities for now and for all the years to come. A word of warning, this is not a Capital Markets Day under cover, right? This is a data share of those insights for us to be able to bring it to life. So let's start with the half that was. We demonstrated a very solid H1 start to this financial year with 3.6% growth year-on-year. It very much was a half of 2 quarters with strong growth of 6.2% in the first quarter and softer growth of 1.6% in the second quarter from which we're now rebounding. But our strong focus on our gross margin demonstrated further margin enhancement of 60 bps, now up to 53.4%. And we have consolidated our market share position, again, up a further 0.2 percentage points, now at 7.9% market share. Now we have endeavored through this transition to ensure that we've kept all of our measures and metrics really consistent to enable you to best follow our business. But today, we are introducing one additional measure for the purpose of this session, and that's all around the customer, CSAT customer satisfaction. And from a really strong base, and I wouldn't expect to see this level of increase year-on-year given the base, we have demonstrated a 2.6 percentage point increase, which really reflects the focus that this team and this business is putting on our customers and noting that our customers are noticing. As well trailed in our trading statement, Karen will go into a lot more detail, I promise, and on our GBP 114 million outturn and particularly around the phasing of our costs. But we've also had very strong cash flow. So free cash flow of GBP 171 million, which is relatively stable year-on-year. Now in this business, we have a very clear capital allocations policy and one that I really buy into. And it is as a result of that, that we're able to share our interim dividend and also announce our special dividend for this financial year. So let's get into a bit more detail on the growth from the half. So we demonstrated 3.6% year-on-year growth over the half in what was a relatively subdued market. But worthy of note is actually the shape of our business. So as I look across our total year-on-year sales from year-to-year, that's broadly consistent, but we do see variances between the quarters. And that's driven by seasonality. It's driven by discounting and it's driven by eventing. And we do typically see a lower Q2. Some of that is external. Some of that is a choice as to how we run our business. But we do want to spend a little bit more time on Q2 this time around because it still was softer than we anticipated. We know that consumer confidence has remained very subdued, and has done so now for a number of quarters. So every single penny or pound that a customer spends is hard earned. Equally, through this period of time, we saw much deeper levels of discounting and the discounting lasting for longer. This is an area that we chose to not further engage in, and that did impact our participation. And lastly, as again, trailed in our trading statement, whereas furniture has been providing tailwinds for us over the last number of quarters, it didn't fare well in this environment. And part of that was driven by a miss on our side from an availability standpoint. We introduced a new system and it didn't forecast for the demand that we saw later in the year. Now I'm going to go pains to labor that when we introduced F&R, so our forecasting and replan tool. And we rolled it out across the different categories, it is performing exceptionally well for us. It is driving up availability and it's driving down stock holding, exactly what we wanted to do. It didn't work as effectively in furniture. Lessons learned. We've embedded those learnings and moved on. And in the spirit of moving on, we are confident for the half to come. So we've started the year with a strong sale, and it was great to see our customers buy into that event, buy into Dunelm and buy into our products. And for the record, the highest selling item yet again was Dorma Full Forever pillows. So if you haven't got one, this is basically the U.K. market telling you that you should. We equally took a good bit of time focusing on newness, right, those full price sales. And we could see our customers engage in those products. So we are bang on expectations when we look at all of those new season lines. And lastly, there was a bit of a soft launch pre-Christmas. There were 130,000 customers who managed to find our app and download it organically and have continued to do so. But at the end of this month, we will have our official customer launch of the Dunelm app. And whilst it's -- we're relatively late, we'll acknowledge that to the digital space. We are seeing really high levels of engagement with these early adopters and in particular, around the basket building and the basket size. So more on that later, but before we go into that detail, I'm going to hand over to Karen to take us through the numbers for the half. Karen? A seamless change here. Karen Witts: A seamless change here, yes. So really nice to see everyone today, nice full room here. Thank you for taking the time to join us. As usual, I'm going to start with a summary of the half year financial results and then take you through our financial performance in more detail, as Clo said. We grew the business over the 6 months and continue to take market share despite some periods of softer sales in Q2. Our gross margin was strong at 53.4%, up 60 basis points year-on-year. Our net operating costs were higher this half as previously flagged, driven by the relative balance of investment, productivities and inflation with some phasing of costs into H1 rather than H2. We expect the year-on-year increase in costs to moderate significantly in H2. Profit before tax of GBP 114 million was GBP 9 million lower than last year, primarily due to operating cost dynamics, which I will explain in more detail. Our cash generation remains strong. We're reporting a headline free cash flow of GBP 171 million and a half year net cash position of GBP 13 million. Similar to this time last year, these figures included a temporary favorable timing variance on payables of GBP 93 million, which cleared very shortly after the end of the reporting period. With healthy cash generation and confidence in our business prospects, the Board has declared an interim ordinary dividend of 17p per share, up 3% year-on-year and we're also announcing another special dividend of 25p per share. We had a solid overall first half of trading with sales up by 3.6% to GBP 926 million. Year-on-year, our digital participation increased by 2 percentage points to 41%. Quarter 1 sales were strong and grew at more than 6%, but we were disappointed with the Q2 performance of 1.6% growth with external data pointing to the end of the quarter being particularly challenging for U.K. retail. Sales growth was driven by core categories, from heritage areas like soft textiles to newer areas of specialism such as lighting. However, as Clo explained, in furniture as well as macro pressures and while several subcategories performed well, we had availability issues of some key product lines. This was caused by challenges in how we managed forecasting and ordering, where we had a lot of newness. The issue has now been resolved and availability has significantly improved. Across the half, we saw growth in average item values driven by product and category mix while volumes were broadly flat. We expanded gross margin percentage by 60 basis points year-on-year to 53.4%, with the upside mainly driven by favorable foreign exchange rates. We kept retail prices broadly stable. We were disciplined on promotional activity, and we managed input costs closely. We expect a foreign exchange tailwind to continue over the remainder of the year. It is important for me to explain how the profile of our operating costs will work across the year. In H1, net operating cost of GBP 375 million were GBP 32 million higher year-on-year. In the first half of this year, our operating cost base increased through a combination of volume-driven cost growth, inflation and investment, partly offset with productivity gains. Volume-related growth of GBP 11 million related to the variable costs associated with digital sales, so that's logistics and performance marketing costs. The pressure on costs in the retail environment is well documented. Sales, marketing and distribution costs are the most impacted by the hourly wage rate inflation to national living wage and national insurance contribution increases. Aside from this, we're tightly managing inflation in our nonlabor cost base to limit the overall impact to GBP 11 million versus this time last year or just over 3% on the total operating cost base. We're reporting an incremental GBP 9 million of investment in the business in H1. This was driven by the full impact of costs associated with the new store opened in H2 of the prior year, and that's including the cost of our store openings in Ireland. As you can see, we offset some of the cost growth in the half with productivity benefits amounting to GBP 6 million. These came from further optimization of performance marketing and from work on store and other labor costs, and the latter included some of the early benefits from the rollout of self-serve checkouts. Our other items totaling GBP 7 million contributed to the H1 year-on-year increase in costs. So we'll always have some other year-on-year cost ups and downs in any time period. And in H1, the biggest of these were year-on-year cost increases relating to share-based payments, including the CEO buyout cost and a pull forward of brand marketing from H2 into H1. We continue to balance inflationary pressures alongside our investment plans, all the while ensuring that we continue to deliver productivity gains. And now here, you can see how we expect costs to moderate significantly in the second half of the year by looking at the relative year-on-year movements in the blocks of spend that I've described for the first half of the year. So we still expect to see volume growth in costs in line with sales channel mix and inflation will continue to be driven by labor costs, but we expect this to have peaked in H1, and we expect a lower national living wage increase in April 2026, which will impact our Q4 costs. Whilst we continue to invest investment spend growth will be lower in H2, largely because we have -- we started to incur new store-related costs in H2 last year, and therefore, they've annualized. Our productivity gains will accelerate in H2 primarily as we deliver more benefits from work on our operating models, including further gains from the rollout of self-serve checkouts and also as we continue to deliver our efficiency gains in performance marketing. And in H2, we expect a reduction in other items year-on-year. And that's including the relative benefit from the phasing of the brand advertising pulled forward into the first half and a small benefit in business rates. Reflecting the softer trading in Q2 and the timing of certain costs, PBT of GBP 114 million declined by GBP 9 million year-on-year. Higher gross profit was more than offset by the cost profile that I've just explained, and this results in a reduction in EPS from 45p to 41.7p. Our effective tax rate of 25.6% was stable and within our guidance of 50 to 100 basis points above the headline rate of tax. We're confident that our plans for the second half, including those on costs will result in a PBT for the full year in line with consensus expectations. Cash generation remained strong in the half, with a 65% conversion ratio. As I explained upfront, we're reporting a headline free cash flow of GBP 171.4 million. However, the same as last year, this includes a timing difference in working capital, which created a very temporary inflow of GBP 93 million due to supplier payments in transit at the end of the period, which cleared on the second day of H2. Again, there was nothing unusual about the payments. There were normal course of business payments to suppliers and for services and the impact is neutral over the full year. Inventory was well controlled, and we ended the half with inventory levels consistent with the prior year. Total CapEx in H1 of GBP 23.2 million was materially lower than the prior year, which included a freehold store purchase. This year's first half CapEx spend primarily relates to store estate spend, including a regular program of refits, small works and decarbonization activity. CapEx also includes spend associated with self-checkout rollout and capitalized tech spend, including the app. We were pleased to reopen our Yeovil store, which had been closed since the end of August '24 due to fire damage, and we also opened our second in the London store in Wandsworth and it's trading well. Store openings have been slow this year, and 2 stores will likely now open early in FY '27, but our pipeline for FY '27 is stronger, and we see plenty of opportunity for future store openings to drive growth, and Clo will give more color on this. We ended the period with a headline net cash position of GBP 13 million, equating to an underlying net debt position of about GBP 80 million after adjusting for the payments which cleared just after the period end. We have a capital allocation methodology that states that after prioritizing investments in the business for growth, we will return surplus cash to shareholders. And in this half, we're continuing our strong track record of shareholder returns. With confidence in the prospects of the business, the Board has declared an interim ordinary dividend of 17p per share, up 3% year-on-year. Although the underlying net debt-to-EBITDA position at the end of the period was within policy range at 0.3x, the ratio was outside of the range at the end of most months in the period, and the Board has therefore declared a special dividend of 25p per share. And this morning, we also announced one of our periodic intentions to buy back up to 1.6 million shares to satisfy the requirements of employee share option schemes. So I'll finish by summarizing the outlook and guidance for FY '26. We've been encouraged with trading in the early part of quarter 3. Customers responded well to our winter sale and sales growth to date has been similar to the overall growth for H1. We're working hard on mitigating inflationary pressures, especially wage inflation with value-creating initiatives. We're therefore confident in our plans to deliver full year PBT in line with market consensus. We expect our effective tax rate to be 50 to 100 basis points above the headline rate of corporation tax. And from a cash perspective, we expect a broadly neutral working capital position at the end of the year. And we're reducing our CapEx guidance to around GBP 40 million this year down from our previous view of about GBP 50 million, and that reflects the timing of new store openings. So thank you for your attention. And I will now pass back to Clo. Clodagh Moriarty: Thank you. Okay. So this really is a brilliant business, right? And over the last period of time, as I've been meeting with some of you and others, that's what also you've been telling me, right? There is lots to like about Dunelm. And I agree, okay? So what we're going to do over the next 10 minutes is talk through 6 of the data-driven insights that we as a team are now using to build the strategic evolution over the coming weeks, months and years. And as we should, let's start with customers. So we have universal appeal. And we're not going to shy away from that. So as I look at our customer base, our customer base broadly reflects the U.K. population. Here at Dunelm, we have something for everyone. And we have really high levels of awareness. So the U.K. customer knows who we are. But when I look at the consideration to buy, that drops off. Now there's nothing massive here, right? That's totally in line with benchmarks. It's absolutely in line with averages, but as the market leader, I and we do expect more. And then secondly, when I think about where we stand out for customers and we do, there are equally opportunities for us to grow. So what you're looking at on the right-hand side, across the top are a subset our categories and our subcats. And from top to bottom, we're looking at the key buying factors, so these are the factors that customers consider when they're picking where to buy and what to buy, and they're ranked in order of importance. And as you can see, Dunelm is #1 across many of them, but not across all. So we can see a real opportunity for us to match the perception with the true reality of what we offer. And this week, we announced externally that we're bringing in some new capability into Dunelm to be able to supercharge this. So I'm thrilled that Laura Harricks will be joining us as our Chief Customer Officer. And when she joins us in a couple of weeks at the beginning of March, Her two key priorities are going to be around our brand positioning and moving the dial on that perception. We also have deeply loyal customers, right? And those loyal customers are on a growing customer base. But critically, we understand those customers better and hence, we're able to respond to their needs. So now recognizing that 1/3 of our customers make up 2/3 of our sales. But even for those most loyal customers, we still only capture 15% of their homewares wallet. So there is so much more headroom for us. And as we think about how we do that, it is about the connection. It is about the contact, and it is about the personalization. So over the last quarter, we have been trialing these omnichannel communications and incentives. And we trialed them in-store and online. And we're seeing across the board, high levels of incrementality with an opportunity given we've got relatively low redemption rates. But whether it is in-store or online, we are seeing a mix of basket build or frequency. So over the coming trading periods, we're going to take those learnings and make them even more personalized. And we all know this that our products at Dunelm are just brilliant. And in any given year, we've got over 100,000 items live for our customers. One of the things that we're really proud of is our product brand as Dunelm. So we've now got about 70% of our products going out the door under the Dunelm brand. But there's more that we can do to help our customers understand our good, better and best. Because when I look at the packaging across some of those ranges, sometimes it's hard to distinguish. So we're going to create greater clarity so our customers can always opt in to whichever tier works for them. We'll also be thoughtful of our owned brands and national brands and where they have a role to play. But where they create cost for us as a business or where they create complexity or confusion for a customer, we're going to remove them. And we've already started doing that, and we've already retired now at the start of this financial year, Elements and Edited Life to name 2. And in this last chart, on the right-hand side really caused us reflection, right, because we are a specialist. And what you should expect for us and will expect for us going forward is that we will continue to have great ranges. We will continue to bring newness to the market. But we're equally going to ensure that each and every one of those SKUs works really hard for us and really hard for customers. And right now, that half our SKUs contribute most of our sales. So we've got some work to do. But again, we're going to use that insight across our good, better and best to help inform our ranges even more. And I guess, case in point, our starter for 10 is ensuring that all of our best selling lines are in each and every one of our stores. And we're moving fast. But in our lower our smaller stores, we only have 70% of our top-selling SKUs. So we're changing that now, and we'll have that embedded before the end of the financial year. This is a digital world. We all know that. But even in that digital world and particularly in homewares, the role of the physical really matters, to be able to touch, feel and see product really matters. So we are going to double down our focus on our existing estate because candidly, they're not growing fast enough. But at the same time, in spite of us having access to customers, 15% of the U.K. population can reach us within 15-minute drive. That's high, but it's not high enough. So we're going to go again at our store expansions. We've reappraised the market, so looked at where the demand is, our presence, our competitors presence and ultimately the different formats that we're able to bring to bear. And we can see an even bigger opportunity than we've showcased before. And lastly, again, as I alluded to earlier, we have come late to digital, but now at 41% participation, we are holding our own. But interestingly for us, we benchmark really highly on many digital journeys and in particular, search engine optimization. But there are still countless opportunities for us to go after, whether that is in the social commerce space or generative engine optimization or the app that we just referred to. When we launched the app at the end of this year -- at the end of this year, at the end of this month, we will be able to bring shop the look, shop the range. We'll be able to bring find your local store, find the products within the store, find the stock within the store. And critically, we'll be able to release products fresh to that market well ahead of any other customer. So again, my call to action is if you haven't downloaded the app, I strongly recommend you download it now. This is a business that has strong customer satisfaction. Of course, there is always room for improvement. But in addition to the strong customer satisfaction, when we notice something, when we see something, this is a business that can move at pace. So let's take an example of home delivery. We have nationwide reach in home delivery. It is a large and growing part of our estate, so one we need to pay attention to. But when I look at CSAT, so our customer satisfaction, customers who rate us 5 out of 5 on their experience, you can see a meaningful difference between our home delivery 2 person, large items. And our home delivery 1 person, smaller items. And when we interrogated that further, you could see that a big driver of that CSAT was damages. And of course, everyone here will know the costs associated with damages. Not only the lost sales and the fact that, that customer may not return, but equally, you've high costs associated with the contact center, return of the product, replacement of the product, refund of the product, redelivery of the product and potentially goodwill. So we addressed that. And before Christmas, we've changed our packaging. And now we've already reduced our complaints across the board in 1 person home delivery by 20%. So for a little bit of extra cost in our packaging, we have delivered significant value across the value chain, and we'll expand from there. So my key takeaway for you on this slide is we are going to be obsessed with our customers and what our customers tell us. But we are going to as system owners and as system thinkers follow the value across the value chain, and as such, return value. And last, but definitely not least, we have great colleagues, 12,500 amazing colleagues with great capabilities. And we've been investing as of others across the front end and back end for a number of years. But you'd expect me to say this. The job is not done. The job in this space will never be done. What we are looking to do is as we make those choices on tech, we're being really thoughtful about moving from best-in-breed to best in suite. So working with fewer, bigger partners, which will make our integrations more seamless and less costly. It will ensure we have access to the biggest and best thinking and us be present on their road maps. And it will also provide more context in our business. So for every penny we're spending, we're ensuring we're getting more impact for that investment. So building capabilities for the future is a big part of the route ahead across people, processes and systems. So if you ask me, do I think there are strengths and assets in this business? Absolutely. Do I think there are significant opportunities on the back of those existing strengths and opportunities? Absolutely. We've universal appeal, but we're going to maximize that appeal through a clearer brand proposition. We already have really loyal customers, but we're going to engage and delight those customers at each and every opportunity to drive share of their wallet. We know we've got outstanding product choice. We have a big opportunity to be able to use that master brand and ensure we make our amazing ranges more shoppable. We've got physical and digital reach, but we're going to double down on the existing and ensure that we maximize each and every ounce of that white space. We got great colleagues and platforms. And as a result, we're going to stand on the shoulders of giants and ensure that we are future fit across all. And we have strong customer satisfaction, but ensuring that we unleash the best of what Dunelm has from end-to-end experience, I believe that we're going to be able to drive repeat business, repeat purchases again and again and again. So we are the market leader. We only have 7.9% market share in a highly fragmented market. There is so much more to go for. As we've discussed, we have lots of assets across customer, across brands, across products, across channels. But each and every one of those assets presents a large and growing opportunity for us. And we have a proven track record of discipline and strong cash generation. And we're not going to move away from that. But we're going to build them up with additional efficiency and productivity opportunities. You might have gathered, I'm out and about a lot. And I'm talking to customers all the time. But one reflection really stuck with me from a customer. And when I said, Dunelm, what do you think? And they said, Dunelm, it's actually very good. And I agree. We are actually very good. And the job of work for us is to remove that actually sentiment because I do believe the U.K. core opportunity remains compelling, and we are best placed as the market leader to be the home of homes. Thanks, a million. What we'll do now is hand over to some Q&A. In case you have 1 or 2 questions that you'd like to ask and we'll ensure we cover the most. Clodagh Moriarty: Apologies, I missed the point to ceremony. Do you mind mentioning for the webcast, your name and where you come from. John Stevenson: Indeed. John Stevenson from [ Munster ] and from Peel Hunt and both in fact. Two questions to get us going. You sort of mentioned undertaking a review of store. Can you give us a bit more detail on that in terms of how big the opportunity do you think is from a space point of view, the types of store and how quickly you're going to be able to get after that space? And second question, just on customer and personalization sort of use of data and the kind of customer journey. It feels like it's still very, very early. Can you talk about how early we actually are on that? And looking back in -- I appreciate the Chief Customer Officer hasn't started yet, but looking back in, say, 18 months' time, what would you hope to have achieved from a sort of personalization customer viewpoint and what that sits against best practice? Clodagh Moriarty: Brilliant. Okay. Thanks, million. So let's start with the space opportunity, right? And it's twofold. The space opportunity is in our existing estate as well as the white space. And when we think about the existing estate, this is about us looking across our multi-category authority across each of our categories and understanding the right macro and micro space for that to be able to ensure our ranges are more shoppable and more findable, right? So that is one of the big opportunities that we do see. And you can see it reinforced with the SKU efficiency numbers that we shared today. Equally, as we roll out some of those efficiency levers on the walkway and welcome and our self-checkout. We'll be able to repurpose some of the space to ensure it works really hard for us. So that's one. And we can do that on a rolling basis. The second element of new store space, again, the opportunity for me is we should be 90% of the U.K. population within a 15-minute drive, not 60% of the U.K. population. And what we'll need to do is, of course, look at the demand, and we've got -- you saw the map, right? We've got a sense of the sites that we are going after, but us being really thoughtful about the different formats that we can use that will work better in different locations. And that's kind of the pivot that we'll use for that next stage. Okay? On your second question around the use of data, yes, you're right, it is early. But actually, our data journey hasn't been -- that's not early. We've been investing in that for a number of years and got a really strong data lake, and we use Snowflake and they are really best-in-class from that perspective. So the job of work is being able to surface all of that data in the most meaningful way to reach our customers. The omnichannel communications was the first sense of it. The next stage will be ensuring that, that drives hyper-personalization and the next best message. But even in the early stages of that data, we saw the incremental behavior. So what does great look like over the next kind of 18 months and beyond, we should see a growing loyalty base in our total customer base. David Hughes: David Hughes from Shore Capital. First of all, I think coming back to your final point on actually quite good. Obviously a clear difference between awareness and consideration, what do you view as the key factors in terms of bridging that gap? Is it the brand marketing to get people to try them once? Is it the product and the proposition? Where do you think the kind of opportunity is there? And then secondly, just on a technical point, in terms of the CapEx being GBP 10 million lower for this year, would you imagine that, that kind of flows through into next year with those 2 store openings coming at the start of next year? Clodagh Moriarty: Thanks, million, David. Well, why don't I take the first 2, and then I'll defer to my learned friend on the right on the third one. So in terms of the first question, this is about brand positioning. It is really important to know who you are and what you stand for. And us acknowledging that we have universal appeal and being really proud of that and ensuring that our journeys reflect it is going to be the next stage of the journey. And we're right. Laura doesn't start for a number of weeks, but we equally have a very strong team in place that is already starting on that work. In terms of moving the dial, we can see across our kind of customer base, where we have an element of spearfishing, right, very prevalent in the digital world. And our opportunity there is as we see that spearfishing and we delight a customer, using our communications to be able to ensure the repeat purchase. That's the job of work that we've got to work on with that part of our customer base. And when I look at our highly loyal customers who do shop very frequently across most of our ranges, it's continued to improve their repertoire by basket building. So they are the elements that we'll focus on first and foremost. On the CapEx? Karen Witts: On the CapEx. So some of it will flow through to next year, but we're not giving any guidance on what our CapEx in total is going to be for next year, and it's usually a combination of property-related CapEx and then tech-related CapEx, whether that's kind of the hardware or the capitalized labor. We're not changing our medium-term guidance for store rollouts. So even if the pipeline is stronger than we've seen this year, we're still sticking with 5 to 10 openings for next year. But clearly, our guidance for this year started off at 5 to 10, and we've opened 2. So there will be some CapEx that will roll over into next year, primarily related to the 2 that are just on the cusp of this year and next. Georgina Johanan: It's Georgina Johanan from JPMorgan. Just 3 quick ones from me, please. First of all, just following on from the CapEx question. Clo, given what you were saying about sort of reworking some of the ranges in store and maybe store layouts and so on, is that something where we should actually expect maybe a short-term sort of step-up in CapEx to be able to support that? Or is it actually -- is it quite minimal in terms of execution to do that? Second, just on the OpEx side. I think in terms of the kind of volume-related costs, you called out that, that was exacerbated by the channel shift. Given the launch in the app and the marketing that's going to go behind that within your guidance, have you accounted for like an incremental or step change in the second half, please? And then finally, you mentioned about considering changes to Q2 trading and how you're going to trade the business. Presumably, you kind of need to start thinking about that fairly soon. So just any color on what you're thinking about sort of discounting activity or catalyzing the customer in that quarter would be interesting to hear. Clodagh Moriarty: Perfect. Thanks a million, George. How about I top and tail and you can do those in the middle. Karen Witts: Yes. Clodagh Moriarty: Okay. So from a CapEx and ranges perspective, we already have an opportunity to look at the existing range and within the current master range, make some changes within the good, better and best. Those are things that we can roll in relatively easily. We've got -- I say high -- we have a strong level of churn because we do want to be bringing in newness. So we have very clear windows across our state to be able to make those changes. So I think that's probably the -- in terms of disruption and impact, that's probably the first one. Shall I cover off the Q2 question, and then we can talk about OpEx. So from -- as we look at Q2, you're right, it has historically been consistently a lower level of growth. Now we have 2 very strong sale windows at Dunelm. Our customers understand those windows and they trade into them. The question that we are asking ourselves is whether they are sufficient or whether we do want to go deeper into Black Friday. If and as we do, we will do it our way with the continued discipline that we manage over the full financial year. So we'll update in due course. But of course, we're considering the trading pattern for next year. Karen Witts: Yes. And just in terms of your OpEx questions, Georgi, in the schematic that we've drawn, the waterfall for the second half of the year, OpEx, we've clearly not put any numbers against the different blocks of costs, but we've tried to sort of shape them in the way that we think that they will come through. And therefore, any incremental spend that we might need on the app, for instance, will be included in the volume-related box there. And we are reiterating or confirming a commitment to a PBT in line with consensus. So that's all factored in. Clearly, at the end of the day, it actually is a function of channel mix and also the number of products that actually go through our logistics operation. Anne Critchlow: It's Anne Critchlow from Berenberg. I've got two questions, please. The first is on the location opportunities. So I noticed lots of green dots over Central London, for example. And just wondered what do you think of the small urban concept format in terms of the potential to roll it out? And how easy is it to find those sort of smaller stores, which I think are around sort of 5,000 to 7,000 square feet. And then the second one was just an update on the Designers Guild acquisition that you made last year. So just wondering how you might use the design assets in the business in the future? Clodagh Moriarty: Brilliant, thanks, a million, Anne. So on the smaller formats, and you'll know we have 2 of our kind of our micro both in Westfield and Wandsworth. They're trading well for us, right, with a very strong trading intensity. And you'll also have seen that we did move on from our Westfield store to our Wandsworth where we actually increased more seasonality and more newness, which did drive further enhancement in sales. So we quite like these and our customers quite like these. So we'll be going after more of them. So the green dots, that's exactly what it's about. And then on Designers Guild, as we look about the ranges, and we're looking at the range architecture, it has a clear role to play for us when we think about best, right? It is something that does stand out. And while we're embedding that into our thinking, it does, in the meantime, continue to contribute royalties to our business on an ongoing basis. Do you have any? Karen Witts: No, I think that's perfect. Timothy Ramskill: It's Tim Ramskill from Bank of America. I've got 3 questions, please. We've already spent a little bit of time talking about the space opportunity, but Karen was very keen to point out it's 5% to 10%, it's not changing. So but just help us out a little bit, kind of give us a sense for -- Clo, you talked about it's not being quick enough. So what would quick enough look like perhaps with the number to go alongside that. Second question around gross margin, where clearly the FX dynamics have been helpful. I think that's looking set to continue. But maybe just some early sense as to -- I also think that might well continue into 2027. So kind of maybe give you the chance to dissuade me from that perspective. And then the third question was, again, an extension of the conversation around Black Friday and discounting. Maybe just interested to hear your thoughts on which categories in particular that seems to be sort of sharpest in, in terms of what your competitors are doing. And then I guess just on the same topic, it's fair to observe that discounting has definitely moved away from being a twice a year type event to an almost ever present. So is this just about Black Friday? Or is it about -- are there other things to think about through the course of the calendar year? Clodagh Moriarty: Brilliant. Thanks a million, Tim. I'll take the first. Karen will take the second, and then we'll tag team on the third, okay? So in terms of the space, we're not moving away from the 5% to 10% guidance. However, we will explore as many opportunities that come our way in the disciplined way that we always have done. It's not -- on the quick enough point there are going to be stronger years and they're going to be slower years, right? So I think the way I would think about this is balancing it over time. What we are seeing though is the opportunity that we would have shared at kind of the IPO and beyond. It would be 50 plus. And I think our message today is and then some. That's probably the key message. On gross margin? Karen Witts: On gross margin, yes, we flagged in the half that we've reported on, the upside is largely driven by foreign exchange tailwind. And Tim, I'm not going to try to dissuade you that some of this will continue into 2027 because we hedge out over quite a long period, and we're already hedged for some, but not all of 2027. We'd just emphasize that FX is only one element of what goes into cost of sales, and we need to think about the cost of raw materials, the cost of freight, how much factory capacity there is. Things like the inflation rate in the U.K. where we're buying from U.K. suppliers. And then also, actually, we like to have the flexibility to do the right kind of eventing to appeal to our customers. So you kind of put all of that in a package, and I'm saying, yes, on the FX. And we'll see how the other things play out over time. Clodagh Moriarty: And then on Black Friday. So areas where we definitely saw a deep discounting. It was across all categories, right? We saw a deep discounting in furniture, right? You saw deep discounting in electricals, right? We could see that across the board. But when we think about how we respond to that, we do have those 2 sales windows that are actively participated in. All the time we are using our walkway to be able to showcase the best of deals while still having our zones to be able to give the best of the entire selection. And I think that is one of our advantages, having moved from market stall to market leader, never lose the market stall element, right? So our customers know that when they come into our shops, they will always be able to find some deals. Karen Witts: We want to make sure that we are not buying sales. Our sales have to be profitable and you saw the rather garish detail with some of the discounting that Clo showed that had been going on through that Black Friday period. And some of that, frankly, we just didn't want to indulge in. It's not right for the long-term profitability of the business. Clodagh Moriarty: Yes. We're not buying share. I think that's fair -- balance and everything. Unknown Analyst: I'm not sure if this microphone is working? Karen Witts: Yes, working Ben. Yes. Unknown Analyst: You've obviously held guidance today. And it seems to me that you've got some pretty significant reduction of that second half OpEx to hit that guidance, assuming your sales growth trends in line with, as you say, that H1. I suppose my question is you've had a lot of productivity over the last 2, 3 years anyway. Is there a worry here that we're beginning to cut into the muscle? You've also sort of mentioned there's some marketing spend brought forward. To what extent is this going to start to maybe impact the top line if we carry on having to take some of that cost down? Karen Witts: Okay. So just the first point is that the second half is about moderating the rate of increase in the cost base. We're not saying that we're going to reduce and it's really important to look at these buckets one by one because they all have different dynamics attached to them, including the fact that we expect to get more productivity in the second half of the year than we got in the first half of the year, and that's due to the timing of some of the productivity rollout plans, for instance, the self-serve checkouts, where by the end of this year, we'll have self-serve checkouts in more than 100 stores. Absolutely, we do not intend to cut into the muscle of the business. You'll have heard me speak before about the fact that when it comes to investment, I don't like putting my foot sharply on the accelerator and then slamming on the brake. We like a nice rhythm of investment and the same thing about productivity. So when we think about productivities, we almost have 2 streams of productivity going. We've got what we call continuous improvement, which every responsible manager in the business has a responsibility to deliver by really being focused on their cost base. And if they do need to invest a bit in continuous improvement, that has a fast return. And then more recently, we started to take a more programmatic approach. So investing things that might take a little bit longer to deliver a return on. I'd say we've got lots of opportunity still to go for, which is healthy opportunity and will be sustainable in terms of the productivity that it's delivering. Close example about changing the way that we're wrapping products so that you reduce damages is just one of the things that we can do. And on that particular example, it's important to take a holistic approach to what you're seeing. So if we just looked at the cost of packaging, we might not have taken this move. You've got to look at the cost of packaging relative to the other costs that you incur, if you create customer dissatisfaction. I think we've also spoken about the fact that our business isn't very automated. Now that comes from the customer touching parts of the business or engaging parts of the business, that's why we decided that we would roll out self-service checkouts. The business case for that became really clear when the cost of labor got so high. We don't have a lot of automation in our supply chain. We've got things like auto bagging but we've not gone much further than that. And I also think about automation when I'm thinking about processes, and we've still got a lot of processes that we can bring to system. So again, automation, more efficient -- more effective use of data. So I could go on for a while, probably best to stop there. Clodagh Moriarty: But what I think you can take away is we don't believe we're anywhere near cutting into muscle. We're honing the muscle. That's what we're at now and shifting away from this way of thinking to system-wide thinking. Richard Chamberlain: Richard Chamberlain, RBC. Just 3 quick ones from me, if that's okay. So you talked at the beginning of the presentation about your lessons learned from the furniture availability issues. And what are you referring to specifically there? Is that around [indiscernible]? And then the second one is, maybe you can just touch on how you created the efficiency performance marketing under the terms [indiscernible]? And then finally maybe give some update on Ireland on the stores there and your plans to upsize and just general on international -- thoughts on international growth? Clodagh Moriarty: All right. Thanks a million, Richard. So in terms of lessons learned, so with furniture, we rolled out a new system. We rolled it out systematically across each of our categories. When there was a high level of newness, the system that we have learns from previous data. When you don't have previous data, it pulls on some lookie-likies to be able to define what the demand should be. Those input signals weren't good enough. The second chance to catch it was to use all of our internal expertise to sense check, does that look and feel right? And we moved in the system of trust the system and the rest will follow rather than challenging what the outputs were. So our 2 big learnings were check the inputs to make sure we're really confident. Check the outputs to make sure we're really confident. And if you're confident on those two things, then absolutely let the system fly. And that's what we've embedded now going forward. And you can see with furniture, we've already seen a recovery. We're now north of kind of 95% availability. So we've got that in place, okay? On performance marketing... Karen Witts: Efficiency in performance marketing. We've been improving efficiency of performance marketing for a few years now, that kind of started off by developing capability in the organization. So investing in people. And then as these people become more confident and competent working within some quite strict guidelines around returns on performance marketing expenditure that's where you get the efficiency. So when we talk about efficiency, we don't say we're trying to reduce the overall quantum of the performance marketing spend because we will spend it where we think we're going to get the best return. Clodagh Moriarty: Okay. And do you want to start on Ireland? Karen Witts: On Ireland, Yes, I was just jotting down the things that we've done so far on Ireland, still in a relatively short space of time. So we've rebranded. We've refitted some of our stores. We are successively bringing more Dunelm branded product into those stores, and we're getting a nice response from customers. Still a lot to do because it is early days. And one of the nice things about Ireland is that it's going to inform the learning that we will take to some of these green dots on the map because the Irish stores are actually quite small compared with the rest of our portfolio. So getting them really humming is important so that then we can just take that and do it in other places. Clodagh Moriarty: There are many nice things about Ireland. Karen Witts: I don't know why you gave that question to me. Unknown Analyst: Just a few questions for me because quite a few of them were already taken. But just a little bit -- maybe a little bit of color around the competitive landscape and anything that you've noticed since taking on the role 4 months ago. Obviously, there's a [indiscernible] looking at some of the SKUs as well. If there are certain SKUs that maybe they're shopping over here, but you could take a few -- had a few more available over Dunelm, would that be more helpful. What have you noticed? Clodagh Moriarty: Yes. Look, I mean I think the big thing about the competitive landscape is because we have universal appeal and because we are a market leader, every other entity is a competitor, and that's how we're treating them. So with a double-down of focus on the physical and complementing it with the digital, we believe we're going to be able to address all parts of the market. Karen Witts: And I think Clo gave some examples that show that we can respond in what is quite a challenging competitive environment, not by -- not just by taking from others, but by helping ourselves. So the example of having our best sellers in all of our stores is an example where people will come to us if we got the best sellers in the store. Charles Allen: Charles Allen from Bloomberg Intelligence. The percentage of sales that are digital keeps on going up. Do you see a limit to that number? And obviously, also it means that the amount of cash gross profit you're generating just from in-store sales is either flat or going down unless you can improve the rate of sales growth there. So what does -- does that mean that you have to constantly improve gross margin to keep the store operating profit moving ahead? Clodagh Moriarty: Okay. So I am very happy for the digital percentage to keep growing, but I'm much happier if the total pie grows bigger, right? So we are an omnichannel business, and therefore, the role of walk-in, the role of Click & Collect and the role of home delivery play different roles for different customer bases. When we report and when we report in our sales, we typically talk about walk-in. But Click & Collect is a huge footfall driver for us into our stores. And as that continues to increase, it continues to bring more and more customers in. And we've got a very clear halo impact of every customer who's coming in, the impact it has on what else they pick up because you can't help with the inspired, right, when you walk around our shops. So you do see that halo impact as a result of the digital meeting the physical. So we'll continue with an overall omnichannel approach, because that's going to give us the best returns across the full channels. Karen Witts: And with omnichannel approach, we're not compromising profitability because both channels are profitable. We're quite agnostic as to where and how our shoppers want to shop. Charles Allen: Follow up is what's the relative cost base in each of the channels? Karen Witts: Well, we haven't actually disclosed what the relative cost base is. They've got different dynamics, which was one of the reasons why when we were talking about the cost profile for H2, I was pulling out some costs that sit below the gross margin, but which are costs that will vary more with digital sales than they will with store sales. So we've clearly got -- about 40% of our cost is labor cost, and that primarily comes from our stores -- the cost of our store colleagues and the cost of colleagues in distribution centers. There's much less labor that's attached to a digital sale, but it gets logistics costs and it gets performance marketing costs. Clodagh Moriarty: I'm getting a very clear signal from the back, which says there's time for one more question. Did I read that right, James. Richard Taylor: Richard Taylor from Barclays. Just interested to hear if you're seeing the way in which consumers are searching for Dunelm or the homewares market in general, whether it started to change. I hear your comments about SEO performing well, but social less so in generative engine sort of watch this space. But yes, keen to hear thoughts about how quickly you can prepare Dunelm for changes and how consumers may search and purchase and whether you feel you are currently losing out to many others who are more advanced in those areas? Clodagh Moriarty: Yes, super question. So firstly, on social, I don't think it's underperforming. I just think we haven't pushed it yet, but yet being the operative word because that's where we'll go, that's where we'll go next. It's really critical that we show up where customers are rather than expecting them to come to us. And that's a big shift. But specifically on SEO, the brilliant thing about SEO is we are benchmarking very highly on search engine optimization. To do that, your data integrity and how you surface that data has to be exceptional. And those are the ground routes for every form of GEO-type shopping. If you have your data right, then whoever or whatever is searching or browsing your site, we'll be able to find the best of what's there. So we actually believe, whilst we're not exploiting generative engine optimization yet, we've got all the foundations in place to be able to do that rapid fire. Well, thank you very much. I appreciate all the questions, all the energy and looking forward to seeing you all again very soon. Take care. Thank you. Karen Witts: Thank you.

92天前Insight Analytics约5分钟阅读

SDTHF 2025 Q4 财报电话会议

Operator: Welcome to Sdiptech Q4 2025 report presentation. [Operator Instructions] Now I will hand the conference over to CEO, Anders Mattson; and CFO, Bengt Lejdstrom. Please go ahead. Anders Mattson: Hello, everybody. Welcome to Sdiptech's presentation for the fourth quarter. I'm Anders Mattson, CEO of Sdiptech, and I will be presenting here today together with our CFO, Bengt Lejdstrom. A short intro to Sdiptech for any new listener on the call today. Sdiptech acquire, develop and create a long-term home in attractive infrastructure segments. Today, we consist of 31 companies in the group. And we operate in a decentralized structure and each company is responsible for the day-to-day operations. We divide the group into 4 business areas. And each business area has a clear structural underlying growth trend that we see for the future. For the full year 2025, Sdiptech as a group has SEK 4.5 billion in revenues and SEK 968 million in adjusted EBITA and an adjusted EBITA margin of 21.5%. And these are numbers for our core operation and excluding companies that are currently being divested. To start with, I would like to give you some highlights to the quarter. On a strategic level, we have made clear progress during the quarter with our divestments. Today, we have signed 8 out of the 11 companies for completion. The short- and long-term targets for return on capital employed is being implemented for each business unit. And we have done one acquisition in the quarter, which ties nicely into our growing cold-chain cluster. Financially, we are satisfied at a sales growth of 6% in the quarter, showing a good demand for our products and services in the market. I also would like to highlight the strong cash conversion of 134% in the quarter, primarily coming from reduction in working capital levels. Supply chain has [Technical Difficulty], but outlook for 2026 looks strong. Priorities going forward. Many of our companies have a strong return on capital employed, but we have a number of companies we can improve going forward. To be able to reach our growth target, we need to acquire in a high pace, which is for 2026. And we have several companies in the group with good momentum and we need to ensure that we are growing smart. And by smart, I mean being prudent with working capital and CapEx to facilitate that growth going forward. I also would like to follow up on the implementation of our 4 key strategic pillars that we presented on our Capital Markets Day during Q4 last year. The first one is around portfolio management. I already mentioned the progress of our divestment of the 11 companies have been signed for divestment with new owners. We have achieved an enterprise value of full year 2025 EBIT 6x for these companies, which then is in line with our expectations of the value. We have also been more prudent on which companies to allocate CapEx to due to discussions for 2026 and that's also according to our updated framework on how to look at CapEx investment going forward. Second pillar, as we call proactive ownership. We have defined a short- and a long-term target for each company according to the DuPont framework. We have some outliers in the group we need to focus on, but the majority of our companies have a great return on capital employed number as a base. Think we'll go through that a little bit later, but on average, 62% for the year. We have also aligned incentives towards capital efficiency in bonus plan for 2026. The third pillar is about disciplined and return-focused M&A. One example of an action here is that we have implemented a cash flow parameter in all earn-out discussions that we have in early stages for the LOIs with each and every potential acquisition. We have also [ intensifying ] throughout our existing companies. This is not a short-term fix. And this is something that's going to be very important for us going forward to be able to increase hit rate and also efficiency in our sourcing. The fourth pillar is our latest acquisition, STORR was linked to our cold-chain cluster, which is now 4 companies connected. And just for an example, the commercial due diligence was very efficient and straightforward as we already had a lot of information about the market and actually even the company in the group. So in summary, glad to report a strong momentum in implementing our key strategic initiatives. However, we all know that it's not just a short fix. And we look forward to a long-term mindset shift as well for us as a group. Then we are coming into the financial development in the quarter. We are satisfied with the net sales development in the quarter, plus 3% in total and 6% organic sales growth indicate a strong demand for our products and services in the market. The currency effect of negative 8% of course and is primarily due to our exposure to the sterling. In the quarter, we had a stable development, sorry, for 3 out of 4 business areas. We were expecting more sales from Supply Chain & Transportation as we have in the year, we have invested in some of the business units. For the full year, we achieved 6% sales growth and 3% organic growth. The year started weak, but improved during the second half of the year and reached a solid growth number for the year, a trend that we foresee continue in 2026 as well. No significant change in our geographic distribution of sales with U.K. is our largest market. Proprietary Products is at the same amount as previously with 65% -- sorry, 67% of total sales. If we then go to adjusted EBITA. In the quarter, adjusted EBITA came in at SEK 255 million. Organic growth was flat and a large negative effect from the currency of minus 7%. The flat organic growth is primarily a result of a weak quarter in the business area of Supply Chain & Transportation with 3 large companies that have invested for future growth. I will come back to that. I will give you some highlights per business area later as well. The margin of 22.4% in the quarter is strong, even lower compared to last year. For the full year, adjusted EBITA increased by 3% to SEK 968 million. This is an organic decline of 1% and mainly due to the weak first half of the year. The full year margin of 21.5% is in line going forward as a group. We expect our adjusted EBITA margin to be between 21% and 21.5%. We need to ensure sustainable growth and we need -- and also new acquisition with potentially lower margins coming in and being part of the mix. So with that said, I will now hand over to Bengt and he will continue with a more financial update. Bengt Lejdstrom: Thank you, Anders. And I will start then with some numbers for the full group. What you just described, Anders, was for our core operations. But looking then on the profit levels for the full group, as you can see on the left-hand side, for the full year this year and a couple of years back, we have had a strong average growth of 24%, even though it was then slowing off in '25, where it only increased 1% compared to last year. Of that 1% was an organic decline of 4% and another negative effect from the strong Swedish currency, especially against the British pound sterling with a minus 3% currency effect on the full year. And then for noncomparable growth, that is the companies here or the ones effect from the one we divested was plus 8%. So all in all, quite good. But of course, as Anders also said, the first half of the year was a bit sluggish. And for the quarter, for the full group, the quarter EBITA was an organic plus/minus 0. Looking then on the return on the capital employed. As you can see on the right-hand side, we have a chart showing on one hand, the actual capital employed, which has been reduced a little bit from last year. The improvement then from 12.6% to 13.5% is mainly because of an increased EBITA for the group. Looking at -- and of course, the 13.5% is much lower than the return on capital employed in our operations, where the average for our core operations, that is excluding the goodwill and material assets that we book in connection with the acquisitions continue to be strong around the 60%. We also showed the number from another popular KPI, the profit over working capital that some peers focus a lot on. We focus more on the return on capital employed. But anyhow, it has been quite steady around the 80% for a number of years, which is, of course, an important KPI as well and a sign of how we manage and get profit out of our working capital. Looking then at the cash and cash conversion. You can look on -- to the left-hand bottom, you see the cash flow generation Anders mentioned as well. It's very strong for the last quarter, exceptionally strong, I would say, perhaps at 134%, but that was mainly due to reduced inventories and also getting the money in from our customers. And we have had that focus for some time now. And of course, the activities continue to improve this even further going on, even though perhaps the cash flow generation will not be at that level consistently. And I see in the chart, a yellow marked area where we have our ambitions between 70% to 90% over the different quarters, stay there in the cash flow generation and conversion. Another important KPI is then the free cash flow. That is then not only the cash flow from our operations, but also reducing with the leasing part and any CapEx that we do in the quarter. And for the last 12 months, that free cash flow per share have been almost SEK 17 per share, up from almost SEK 13 a year ago. In that chart, you also see the earnings per share, which is somewhat lower. It's around SEK 12 per share if we exclude goodwill write-downs that we did during Q3 2025. And that is lower. And that is based on that we do some accounting when it comes to IFRS rules in connection with our acquisitions. So for example, we need to book noncash interest rates, discount rates for our provisions for contingent considerations and that hurts with about SEK 1.50 per share. So that explains to some part the gap between the free cash flow and the actual net earnings per share. But all in all, we are satisfied with the quarter from a cash flow perspective and we'll continue to work on that. Then looking at the balance sheet from a leverage perspective, one of our financial targets are now to have our total net debt leverage, the total net debt compared with the EBITDA to be below 3. And for the quarter, measured then, of course, on a 12-month basis, it was then below. It was 2.84. And you see the trend on the left-hand side of this slide. We also have another KPI for our debt and that's what we call the financial net debt, which is all debt but excluding the provisions for earnouts. And that one did also decrease to 2.12. And the main reason for this is that the net debt was reduced because of cash flow coming in both from the operations and from, for example, the divestment of one of the companies that we closed them last year. These earnout provisions is always tricky to understand fully the impact on the leverage and so on. But you see on the right-hand side that our provisions booked as a debt has decreased over the years as a share of the total net debt. So coming from almost half or even more than half of all the debt is now 25% of the net debt. And that's a number we expect to decrease as each and every acquisition become a smaller part of the total picture. And during this quarter, we did some write-downs of these provisions. And that means that the actual model works that if some companies under earnout are performing a little bit less than expected, then we don't expect to pay out the earnouts that we have booked. So we released some of that debt and that makes an income. But that's not including in our adjusted EBITA numbers. It's one-offs. And we have detailed those in the reports towards the end, if you want to dig into that in more detail. Right. So I hand over back to Anders for the business areas. Anders Mattson: Yes. Thank you, Bengt. So we have updated the presentation and a little bit more in detail each business area now. Starting with Supply Chain & Transportation, our largest business area. We had a poor performance, a relative poor performance in the quarter, an organic decline in adjusted EBITA of roughly 9%. And the result is mainly in units. Our company within transport refrigeration, GAH, they actually came out of a 4-year earnout. And we have increased investment to ensure a stable operation going forward. On top of this, 2 larger customers have throughout the year been being postponing the orders, unfortunately, postponed further into '26 as well. The other company, our company within winter road maintenance, Hilltip, have invested in an improved factory and organization in the U.S. to be able to serve the North American market locally. And the cost for this as is 2025. But we are convinced that this is the right thing to do as shipping in containers from Finland with finished goods is not a long-term solution for a market where we see great potential for our products for the future. And our company within port automation [indiscernible] large port projects to be postponed during the year and we were awaiting that to happen in Q4. And those global bigger projects, we feel it's the global uncertainty that is affecting these kind of major decisions for the larger ports in this. However, the challenges that we have in the business area are not long term as we see it. And we have a positive outlook for 2026 for the business area as a group. Within the business area, we are also happy to announce the acquisition of STORR late in the quarter. That is a company based in the Netherlands and fits well, as I already said, into our cold-chain cluster. STORR provides partition walls for refrigerated transportation. They have a product with a very high precision, which is needed to be able to separate frozen food from chilled food, for example. And the business model is interesting because the end customer, they usually don't know exactly how they would like to fit the lorry when they buy the bigger lorry. So STORR can actually come in and tailor flexible solutions depending on the needs, which also then can change over the lifetime for the lorry operator. So we look forward to continue to develop this company as part of the Sdiptech going forward. Then we're coming into Energy and Electrification, which had a very strong quarter. Net sales, SEK 281 million and adjusted EBITA of SEK 73 million. That's an organic sales growth of 14% and roughly the same adjusted EBITA growth -- organic growth as well. And also on top of that, a strong acquisition coming in, in Q1 and delivering a very strong result for the year. ForEx you can see of 49% is below the average in the group. And we have a few companies where we see improvement potential here, and that is primarily around inventory management. The demand is strong for several business units in this business area. I just would like to highlight one company that has a very strong new power, Swedish-based company from [ Alingsor ]. They offer equipment for measuring and monitoring power quality in the networks. And as we know, when renewable energy sources grow and also the network is growing itself, power quality becomes even more important to protect critical applications in a production environment or it could actually be in a hospital, for example. And even though we had a great 2025, we see the demand is still there and we see that's going to continue for the future. On other notice for this business area, we have the new leader, the new Head of the Business Area started in January. And it feels great to have recruited somebody that is actually based in the U.K. for such an important segment for us where the majority of our companies is in the U.K. If we then move to Water & Bioeconomy, they delivered a solid result in Q4, which is positive after a relative weak development in Q1 to Q3. Net sales at SEK 241 million and adjusted EBITA at SEK 56 million. Organic sales growth, 9% and adjusted EBITA growth of roughly 5%. In the business area, we see that we have [Audio Gap] and in 2025, we decided to make a number of leadership changes to the local businesses. We have the right products. The market is there. So we have said that we need to focus on more or bringing in more commercial-oriented leadership in some of the units. And we believe this will have a positive impact for the long-term development of the portfolio. Then, we go to the last business area, Safety & Security. They had a development in line with last year and kept up a high margin of 29%. Organic sales growth of 1% and organic adjusted EBITA growth of 2%. For the full year, Eagle Automation had a very strong year. I mentioned it the last quarter as well, but Eagle, they provide high security gates, bolards and rockers. And Eagle's products are certified to withstand vehicle attacks, which is then a specific certification needed. End customer segments are data center and airports, for example. And the strong development has led to further needs for expanding their assembly facility in the U.K. And just to tie back to our framework around where to allocate CapEx, this is a good example of where it makes sense to increase CapEx to expand the operations to get that market share that is out there for us to gain further. Then, we're moving into M&A. In the quarter, as we said, we finalized the latest acquisition of STORR. And total acquired growth landed at SEK 50 million in 2025. For the full year, we have been more selective, which has helped us to decrease the leverage as a group as well. And this is something we have been able to achieve to steadily increasing our ambition in 2026 for M&A. And as part of our updated strategic initiatives, we will be strict on our valuation principles and prioritize cash flow or IRR for each investment we're going into. Then I already mentioned is that we would like to intensify the local sourcing throughout our existing companies as well. So with that said, we are looking forward to more acquisitions in 2026. Yes. And just to give you a summary of the quarter, what we presented here today. We have had a solid financial result in fourth quarter with many KPIs in the right direction. Most of the business units developed a stable result in Q4, except from a few businesses in Supply Chain & Transportation, but improvement for 2026. We have had a selective M&A agenda in 2025 with -- but that's going to be a strong focus now 2026 going forward. The strategic initiatives, we are happy that we have made good progress with those. And I'm also [Audio Gap] a very strong management team in place now going into 2026 as well. And the outlook remains positive for us as a group. So that was all from the presentation here today. I think we can open up then for Q&A part. Operator: [Operator Instructions] The next question comes from Max Bacco from SEB. Max Bacco: Well done in the quarter. A couple of questions from my side, if that's all right. Perhaps starting then with the supply chain and -- Supply Chain segment. You mentioned, Anders, during the presentation that sales both in the quarter, but I guess, for 2025 as a whole has been impacted by some delays in project sales. But you mentioned on the slide as well on the outlook that you have seen some early signs of improvement here in 2026. So basically curious to hear more if you have already seen customers returning to those kind of orders already by now. Anders Mattson: Yes. It's -- we have had a lot of discussions with GAH. GAH is then, of course, one of our important companies in that segment. And exactly what you said there. They were pushing out orders and they wanted to place them in 2026 instead. So order intake for early signals is looking good for the first half of the year. They are securing those orders. It's a major decision for many of these customers as they're planning to renew a total fleet, a big, let's say, retail customer in the U.K. And yes, so from that perspective, we have received some good orders for GAH. Certus is still a little bit of a hesitation of the customers. We have not lost the projects, but major ports see issues or, let's say, hesitant to place those orders. And -- but I can also say that we are not just sitting there, of course, waiting for those bigger orders. We are having a lot of medium and smaller orders coming in all the time. So I think that's also a way of mitigating just sitting and waiting for big orders, try to be active and develop new potential customers as well then. Max Bacco: Okay, good. Sounds promising for 2026 or perhaps the latter parts. And then turning to the Energy and Electrification segment, very nice profitability here for the full year, some 26.4%, I think. And I guess, to some extent, supported by the acquisitions that have been done as of lately. Do you see this, say, 26%, is that a sustainable level for that specific segment? Anders Mattson: Maybe, Bengt, you can answer that one. Bengt Lejdstrom: And we can perhaps look at that slide since we're talking about the different business areas so we know what we're talking about. Energy and Electrification, as you see, it has had a developmental margins going up and down together with the acquisitions. We made a acquisition early '25 with Phase 3 coming in and doing these connectors for temporary connections with electricity, Phase 3 and IV working close together in many projects. But as you see, it has been quite steady around 25%, 26% EBIT margin, the different business units going a bit up and down. But I would say that it could be fair to expect around that level going forward, yes. Max Bacco: Okay. Perfect. And then a question on the opposite side for the Water & Bioeconomy segment, some 24% margin here 2025, which is, of course, a nice level, but a bit below historical levels. And I guess that has been the segment the most impacted by the salary inflation in the U.K. and so on and so forth. Do you -- with the price increases and actions that have been taken in the segment and I guess some effect is still to be seen, do you see a potential to get back to those 25%, 26% profitability perhaps in 1 or 2 years? Anders Mattson: I think from -- we have been trying to challenge a little bit in the past that we cannot change existing contracts there. We're trying to be a little bit more proactive with those kind of contracts. And there are some flexibility to step in and maybe make adjustments during the way we have seen some example of that. But still, it's hurting us, as you are saying. But I think it's going to be a challenge to come back up there. We're trying. It's depending on a little bit also with inflation in salaries going into now 2026 with so many, let's say, people business [Technical Difficulty]. But we are working hard with all the different business units here to steadily increase. We're going to work with pricing as far as possible to mitigate staying down at, let's say, lower levels then. Max Bacco: Okay. Understood. And then 2 final ones, quite short ones. With the additional 7 divestments signed here after Q4, so 8 in total then including KSS, how much of other operations are remaining in terms of sales and EBITA? If you look at the 2025 level, I guess, is the best. Bengt Lejdstrom: Yes. We reported for '25, I think, a little bit more than SEK 50 million for the company. Our run rate is rather around the SEK 65 million for all of these. And that's at least what we base our negotiations on. And so the ones we have divested are the major ones. We have 3 more, but they are a bit smaller. So I would say that perhaps they represent around 20% of that profit going further. So it's another SEK 10 million, SEK 15 million perhaps then that we looking at divesting. Max Bacco: Okay. Perfect. And then the final one. You mentioned it during the presentation, very nice cash flow here in the quarter, but also for the full year. Both supported by net working capital, but also CapEx levels coming down quite notably for the full year. Do you see more to do on, I guess, both net working capital, but also, I mean, the CapEx level relative to sales that we saw 2025, is that a good indication of where you intend to be going ahead as well? Anders Mattson: I think we have said that we will aim for not above 3% of sales in CapEx. And we will definitely if we can be below that in a specific year, that can be good. But I think we -- as a example I gave you here with Eagle, we need to support with CapEx to be able to drive that further growth in some of the business areas as well. So yes, some years can be lower. But I think we need to be up there towards the 3% to be able to have a sustainable growth going forward. On the working capital side, yes, I think we have more to do there. As I mentioned in the Energy and Electrification segment, the return on capital employed there around -- well, I think it was 49% is definitely more room to work on the inventory side there, just an example. So that's part of our incentive models as well for 2026 to try to bring that further down. Operator: The next question comes from Simon Jonsson from ABG Sundal Collier. Simon Jonsson: So I guess I just have maybe a few follow-ups on the cash flow. I think you made it clear that what you're looking for into this year in terms of CapEx and improving the working capital further. But maybe if you can just elaborate a bit more on what you have been doing more recently, specifically for the units to improve the working capital. I understand that it would be part of the incentive programs or bonus programs for units going forward here. But what more specifically have you done recently because we can see in the last 2 quarters or so that there has been a clear improvement in the trend? So yes, just wondering more specifically what you have been successful with here in recent quarters. Anders Mattson: I think from a CapEx perspective is definitely now coming into 2026 as well, we have been more prudent and selective where we would like to spend the money and for what reason. We mentioned on the Capital Markets Day, the framework with companies that are in a strengthened position. We need to make sure that you fix whatever you need to fix before we can accelerate growing the companies and also that we are being selective saying that for us, this is a harvest position. Let's try to harvest as much as possible and investing more prudent. So that framework, I think, has been quite good implemented with the company now coming into 2026. On the working capital perspective, we have started -- we have always talked about it. But we have intensified the discussion with the companies during the autumn that we need to improve working capital and showed an example of how other companies in the group have done or how they have performed. So I think that [Audio Gap] low-hanging fruit that we are seeing. Now we need to stepping into a more structured work to -- as we do it, we're looking at the DuPont framework. We see you have these kind of inventory levels. We believe you can move further down 5%. That will take you here and making sure that we are aligned on what kind of actions specifically you can do. So I would say, low-hanging fruit initially and now the real work starts to really go through each and every company to make sure we are optimizing it. Simon Jonsson: All right. Makes sense. Do you know already like how the bonus incentives will look like in terms of cash flow specifically? Will it be overall cash flow or focus on working capital? How much will that impact bonuses? Will it be different metrics or more sort of cohesive metric like return on capital for units or something like that? Anders Mattson: It's going to be, let's say, a mix. So we have some companies that we feel needs to grow more. So we have revenue targets for that. We have EBIT target as usually as our most important one or with, let's say [Audio Gap] we have, it could be then return on capital employed or it can be working capital as a percent of revenue. That's depending on how we see what the focus should be for the companies. But we tailor that depending on how we see the need for it. And we can also say that this company should then have 70% of the incentive based on the, let's say, the capital efficiency part and only 30% on EBIT part. So that's part of our, let's say, proactive model to see what we would like to incentivize from our perspective. Simon Jonsson: All right. Very good job here recently on the cash flow side, specifically. Operator: The next question comes from Carl Korsheden from DNB Carnegie. Carl Korsheden: Just -- yes, a couple of questions from my side. If just start off with a follow-up question on one of the first questions then regarding the postponed sort of deliveries in the Supply Chain & Transportation area. Is it possible to quantify that anyhow in terms of magnitude? How much do you feel you have been promised that has been postponed to the future? And how much of that could we expect will land in Q1 versus Q2? Anders Mattson: No, we have actually not quantified that. It's more that some specific orders we were talking about for a long time over the year. And yes, so it's been more about we as an organization preparing to deliver those. And we cannot actually say how much of that is actually now happening exactly in January and February. But as I said, I think 2026 looks positive. It's not only because we believe we're going to get those bigger orders. It's also in the general that we are in a good momentum with not only these 3 units in the Supply Chain & Transportation segment. Carl Korsheden: Yes. That's clear. And just -- I mean, on your Capital Markets Day, you talked a little bit about -- yes, you obviously had this new financial targets of growing 15%. And then you said that 2026 might be sort of call it slightly more of a transition year again that you will hopefully do some delevering and also complement with some additional M&A. Now it seems like your financial position has come down a little bit quicker than expected and you have seen very strong cash flows here in the quarter. Would you [ reinitiate ] sort of that view still? Or are you expecting you can do a little bit more M&A now in 2026 compared to your previous assessment? Anders Mattson: No, I would say it's important for us to work with, let's say, our plans that we have put in place. It's still quite -- as we said it as well, it's a lot that needs to be gained from the M&A perspective. So no, we are not adjusting that based on the good cash flow right now. But organic needs to show now coming into Q1, Q2 to be able to continue with that M&A growth. So it's still a lot of things to do actually to be able to accelerate the M&A to be within our financial target metrics. Operator: The next question comes from Linus Alentun from Nordea. Linus Alentun: Congratulations on the report. Just some quick questions here from me. If we continue here on the ROCE from the past question here, it improved to 13.5% from 12.6%. I mean with the divestments and your focus on disciplined M&A, what's the realistic time frame here to reach the 15% target here? Is this a '26 or '27 target? I guess when the divestments are not in the balance sheet, the ROCE will have some upside as well? Bengt Lejdstrom: Yes, that's correct. We simulated that during the fall and said perhaps 1%, 1.5% of ROCE will improve after the divestments. Still, it's a pretty complex to make a very solid forecast. But we have said that this will take perhaps a year or 2 to reach that 15%. It depends a bit also on how the M&As are lining up during the different quarters since we get the balance sheet first and the profits later. But I still would say that it's not early this year, perhaps around early next year or late this year, depending on how our expectation is really to go into next year for this. Linus Alentun: All right. All right. And just continued on the supply chain orders here. You said that they are in a good momentum. Is this something that has kicked in like now in January, like or at the end of last quarter? Can you see a significant improvement here? Or how should we see this? Anders Mattson: Yes. But I'm not talking about only about those 3 business units we mentioned had those problems. It's -- overall, it's a good momentum. Our e-l-m, our company producing attachment as well coming into -- from a very good second half of the year coming into this year and we see the same activity. JR producing different kind of doors as well to the transportation sector, having a great year and also continue to do that. And Hilltip, we talked about the U.S. facility in Europe. They are having a good development. They are expanding their product assortment and making bigger salt spreading equipment, not only to the pickup trucks, also to the tractor and to the bigger segment, the van segment. So -- and Certus is having -- they are growing their service level agreement base with every order they are taking. So I think from that perspective, those -- the mix of the companies and the good development there, that's what I -- when I see talking about the good momentum in this area. Linus Alentun: Okay. That's clear. And just a question here when we look at Q1. How has the weather conditions been here so far for the winter-dependent companies like Hilltip and HeatWork? Are you seeing the weather here is more favorable compared to last year? Anders Mattson: We've been talking a lot about that. And it's actually that what we see is that the season -- the winter season is getting shorter. So in the past, it could have been that they bought something and then they see early or December [Audio Gap] early January, they need an equipment to be able to go through the entire winter. The trend is that they do not have that kind of second wave in the winter because what they bought should be enough for the winter. But now Hilltip actually said with the condition that we have had in full Europe, it's better than last year in that kind of salt spreading equipment. And I think also HeatWork, another company dependent on the -- especially the temperature has also had a good start because of the cold climate, especially in the Nordic countries. So a little bit of positive effect because the winter is -- the feeling is it's going to be a longer period right now at least. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments. Bengt Lejdstrom: Yes. And we have one written question so far regarding share buybacks. And the question is if we have ever considered share buybacks instead of M&A as our stock is trading at the current low levels. And as always, through all the years, we have always been prioritizing to acquire companies and believe that in the long run, that gives the shareholders a better return. So there is no discussions going on, on that theme. That's the simple answer on that. Yes. And I think that was the only written question. So Anders -- Anders Mattson: Yes. Bengt Lejdstrom: -- any final remarks? Anders Mattson: Yes. No, I think it's good. The message we would like to send is that, yes, we are continue to do or work with our strategic priorities. We are not done, for sure not. We are working on it. We're implementing it. And it's also going to be a long-term mindset shift with this everything we talked about, the capital efficiency and everything around that. That's important to have for us for the long term. But again, we are happy with a solid quarter ending 2025 and now we are definitely looking forward to 2026. It's going to be exciting for the group to enter into this new year as well. So with that, I think, thank you, everybody, for listening and good questions as well. Bengt Lejdstrom: Thank you.

92天前Insight Analytics约5分钟阅读

IRMD 2025 Q4 财报电话会议

Operator: Welcome to the IRADIMED CORPORATION Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] This call is being recorded today, February 10, 2026, and contains time-sensitive, accurate information that is valid only for today. Earlier, IRadimed released its financial results for the fourth quarter of 2025. A copy of this press release announcing the company's earnings is available under the heading News on the website at iradimed.com. A copy of the press release was also furnished to the Securities and Exchange Commission on Form 8-K and can be found at sec.gov. This call is being broadcast live on the company's website at iradimed.com, and a replay will be available there for the next 90 days. Some of the information in today's session will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements focus on future performance, results, plans and events, and may include the company's expected future results. IRadimed reminds you that future results may differ materially from these forward-looking statements due to several risk factors. For a description of the relevant risks and uncertainties that may affect the company's business, please see the Risk Factors section of the company's most recent report filed with the Securities and Exchange Commission, which may be obtained free from the SEC's website at sec.gov. I want to turn the call over to Roger Susi, President and Chief Executive Officer of IRADIMED CORPORATION. Mr. Susi. Roger Susi: Thank you, and good morning. Thank you all for joining us on today's call. And once again, we have some exciting performance to announce. I'm very proud to report that IRadimed achieved its 18th consecutive quarter of record revenue, with the fourth quarter of 2025 reaching $22.7 million, a 17% increase over the fourth quarter of 2024 and exceeding our prior guidance. For the full year 2025, we delivered record revenues of $83.8 million, which was up 14% year-over-year. Our GAAP diluted earnings per share for the quarter was $0.50, up 25%; and non-GAAP diluted earnings per share was $0.54, up 23%. For the full year, GAAP diluted earnings per share reached $1.75, which was up 17%, and non-GAAP diluted earnings per share was $1.93, up 16%. Gross margins remained strong at approximately 77% for the year and 75% for the Q4. These results are reflective of solid execution across our product lines. MRI-compatible infusion pump systems, while still the legacy 3860 system, grew strongly. Sales of patient vital signs monitoring systems also grew very well. And disposable revenue increased with higher utilization. We also saw a meaningful contribution from the ferromagnetic detection system. Allow me now to recap the expectations for the new 3870 MR IV pump. Recall that in positioning this new product and its pricing, we anticipate 3870 pump deal ASP will increase 10% to 14%. And yes, the 3870 design is much -- is such that we fully expect to penetrate the greenfield opportunities more effectively and also increase utilization among existing customers who may currently only use their older pumps sporadically. But to be very clear, the most significant increase comes from the large replacement opportunity, which is the #1 driver we see and will deliver a significant step change in revenue, continuing to be our key growth driver for the next several years. Recall how the older 3860 model delivered approximately 20% growth in fiscal 2025, driven by simply limiting our extended maintenance offering to pumps under 7 years old. This minor change generated replacement orders for only a portion of pumps in that age group, but that portion resulted in significant revenue growth from pump sales in 2025, that being the old one. The promising news is that there remain a majority of these 7-plus-year-old pumps to be replaced, plus many more that are 5 years and older. In the U.S. market alone, there are approximately 6,400 5-plus-year-old 3860, 3861 pump channels that are up for replacement. We currently sell approximately 1,100 such channels annually into the domestic market. And we'll be targeting adding an additional 1,000 channels per year through replacement sales from those existing 6,400 units that are over 5 years old. This will be our target starting in Q2 and continuing through the rest of 2026. It's also important to understand that replacing only 1,000 channels per year leaves many thousands more to be replaced over the coming years. For our domestic business only, selling north of 2,000 3870 pump channels annually, with the higher anticipated ASP, we expect to approach a $50 million annual revenue run rate for pumps. With the addition of disposables and maintenance, international sales and the MRI monitoring business, one can understand our confidence in achieving a $100 million-plus revenue run rate during 2026. As planned, in December, we delivered an initial order of 23 3870 systems, for which we are providing an extraordinary level of clinical support and monitoring through February and into early March in an effort to make sure that the most stable and highest-quality exists in the device before the larger general sales release, which shall start in April. Bearing in mind the time required for our hospital customers to be sold, approve funding, issue orders and such, we expect bookings to build in this Q2 and ramp significantly in the second half of the year. We expect to maintain quarterly revenue in the first half of 2026 driven by growth in MRI monitoring and our 3860 pump backlog. But also anticipate booking strength of the 3870 systems, which will result in those initial shipments in April of approximately 100 to 130 3870 pump channels. I'd like to turn the call over to Jack Glenn, our CFO, to review the quarter's financial results. Thanks, Jack. John Glenn: Thank you, Roger, and good morning, everyone. As in the past, our results are reported on a GAAP basis and a non-GAAP basis. You can find a description of our non-GAAP measures in this morning's earnings release and a reconciliation to GAAP on the last page. For the 3 months ended December 31, 2025, revenue was $22.7 million, up 17% from $19.4 million in the fourth quarter of 2024. This growth was driven by strong performance across all of our product lines, with MRI-compatible IV infusion pump systems contributing $9.1 million, up 20% year-over-year, and patient vital signs monitoring systems contributing $7.1 million, up 7.5%. Disposable revenue grew 18% to $4.3 million, reflecting the continued increase in utilization of our devices, while ferromagnetic detection systems also saw solid gains. For the full year 2025, revenue reached $83.8 million, up 14% from $73.2 million in 2024. Domestic sales accounted for 81% of total revenue in the fourth quarter and 84% for the full year, reflecting consistent strong U.S. performance, especially in the domestic pump business. Gross profit for the quarter was $17 million with a margin of 75%. And for the full year, gross profit was $64.3 million with a margin of approximately 77%, consistent with 2024. Operating expenses for the quarter were $9.9 million, and for the full year, $38.2 million, reflecting higher general and administrative expenses to support growth, along with modest increases in sales and marketing and R&D. Income from operations for the quarter was $7.1 million, and for the full year, is $26.1 million. Tax expense for the quarter was $1.3 million, resulting in an effective tax rate of 17.3%. The decrease in the effective tax rate for the quarter was primarily due to a true-up based on our year-end tax provision, with our effective tax rate for the year at 20.7%, lower than our previously estimated 22%. Net income for the quarter was $6.4 million or $0.50 per diluted share, up 25%. Non-GAAP net income was $7 million or $0.54 per diluted share, up 23%. For the full year, net income was $22.5 million or $1.75 per diluted share, up 17%; and non-GAAP, $24.8 million or $1.93 per diluted share, up 16%. We ended the year with cash and cash equivalents of $51.2 million. Cash flow from operations was $5.9 million for the quarter and $24.9 million for the full year. Non-GAAP free cash flow was $5.5 million for the quarter and $16.5 million for the year after capital expenditures primarily related to the new facility. And with that, I will now turn the call over to questions. Operator? Operator: [Operator Instructions] One moment for our first question. And it comes from the line of Frank Takkinen with Lake Street Capital Markets. Frank Takkinen: Congrats on a solid finish to the year. Roger, I was hoping I could start with just some anecdotal thoughts around the initial market feedback from the pilot in the year. What can you tell us? What has the feedback been? And how has this influenced your decision to scale the 3870 launch in the second quarter here -- or first and second quarter here? Roger Susi: Good question. Frank, good to talk to you. So yes, well, it's been very positive. So maybe I should give a little more color. We've been showing the pump to more people than just that first taker of the 23 pumps. We actually have orders that we have on the books already, maybe, I don't know, another 15 or 20 pumps that are on order already. So we just launched this to our sales force a week before last, I believe it was. And so up until that time, we had some maybe 3 or 4 specialists in our sales team during November and December even showing the product to some select customers. So the feedback has been pretty tremendous. To go specifically to our, lack of a better word, let's call it beta site. It's not really a beta site, but this first user. They have approved FDA products, so it's not really beta. But we shipped it to them and then hold off, keeping these existing orders that we have already booked, and as I said, holding off launching it to the greater sales team until 2 weeks ago, to learn from that. So that's a user who's been using our 3860, the older pump, for a long while. And I guess, I mean, they're pretty excited with the changes in the new pump. The people we've showed it to, that are familiar with using the old pump, are pretty excited about the new pump, I guess, it's simple enough to say. I had one of our -- an anesthesiologist in here last week from one of our long time large users up in the Boston area, and she's very familiar with using the pump daily in the MRI environment. Very excited. Very excited about the changes. So the product's really sexy. It's very -- it just presses the button. It's quite modernized, right? The old pump was -- the genesis of that design is almost 20 years old. So this represents a big, bold new step, and lots of folks are excited. We're really thinking the demand will be great. And so we just wanted to do this couple-of-months test with this 1 first single large user and make sure we have everything polished up just right, because it's going to hit hard once it starts to ship. Frank Takkinen: Yes, that's very helpful. Maybe one for Jack on the gross margin profile. How should we think about gross margin scaling? I assume there's a subscale period. And then as that production is ramping and then that improves over time. But maybe any incremental color you could give us on how gross margin should trend throughout the year would be helpful. John Glenn: Sure. I think that initially in the early part of the year, the first half, it will probably be kind of in line with where we have been. But we anticipate that as we get into the second half of the year on those higher volumes, which we certainly are looking for, along with, as Roger pointed out, the -- what we're looking for is the higher ASP as well, that we would think that we could certainly trend a little bit higher in the second half of the year. Now having said that, I mean, we hit the quarters previously around 78%. That might be kind of in that range certainly, but maybe possibly, as time goes on, a little bit better. But that's certainly our plan. Frank Takkinen: Got it. That's helpful. And then last one, at the risk of getting over our skis, what's next for the R&D team now that the 3870 is launched and beginning to scale? Is there -- what's the R&D team up to next? And how should we think about that effort? Roger Susi: No rest for us, huh, Frank? Frank Takkinen: Exactly. Roger Susi: Well, actually, we've been -- we've already started a few months ago working on the facelift, let's call, or next-generation MRI monitor. So yes, the monitor we have now, we launched about, what, 7 years ago. So we plan to have a new, updated monitor on the market in 2028. So we've been working on that a good 6 months already. And that's the next thing on the road map. Operator: Our next question comes from Kyle Bauser with ROTH Capital Partners. Kyle Bauser: Roger and Jack, great results. Maybe on disposables and services, they were up very nicely in the quarter, can you talk a little bit about strength here and primary drivers that the growth rate looked outsized compared to in the recent past? John Glenn: Yes, sure. I can touch on that a little bit. I think on a disposable basis, we've kind of already said that we would think that the growth will be kind of commensurate with the capital side of things, hopefully, right? And so that kind of is reflected in that. The one thing I would point out going forward is we believe that we can hopefully increase that utilization with the 3870. And a lot of that is based on, as what we've talked about, the user interface and so forth. And so hopefully, we can continue to grow it like that, but maybe even a little bit higher as we -- as time goes on, with the 3870. Kyle Bauser: Okay. Makes sense. And for the 3860, how do inventory levels look? What's the backlog? Do you still kind of feel like it'll be good kind of through Q2? Just wanted to check in on how levels look there. John Glenn: Yes. I mean from an inventory standpoint, we're managing that 3860 as best we can, right? We don't want to have too much as we make the transition over, but we want to make sure that we can fulfill that backlog as we move forward. So we're monitoring that very closely. I think we're in pretty good shape there. But yes, going forward, certainly -- and we're bringing in that 3870 inventory, and that's reflected in the inventory numbers you see in Q4 as the increase in inventory, as we brought in quite a bit of that 3870 in anticipation of the shipments. But certainly, it's going to be -- the challenge will be as we manage that transition over from the 3860 to 3870, and a lot of that will be in Q2. Kyle Bauser: Okay. Got it. And then, Roger, following up on Frank's question just about early feedback, has there been any changes or audibles you've had to call, or tweaks? Or has it been pretty smooth and you feel like you kind of understand where the market is at and that the product is ready to go for the full launch? Roger Susi: So we've been -- we anticipate -- I mean that's why we did this like preview launch, is to get -- real users' in-the-trenches feedback and make final tweaks. So we are. We've been making some tweaks here and there and making it just optimal for these -- our target user. That's the point of that -- of this prelaunch. Kyle Bauser: Got it. And then lastly, can you provide any updates on the regulatory process for 3870 into Europe and Japan? Does this still feel like kind of late '26 events here? Roger Susi: Yes. Yes, that will be -- CE mark in the end of the year. We're working on Japan, but Japan also takes some time. Probably won't be cleared in Japan until next summertime. Kyle Bauser: Okay. Roger Susi: And not this summer. The following summer. Yes. Kyle Bauser: Following summer. Right. Got it. Okay. Well, really impressive results, and I appreciate you taking my questions. Operator: Thank you. And this will conclude our Q&A session, and I will pass it back to Roger Susi for closing comments. Roger Susi: Thank you, operator, and thank you all once again for joining today's call. And we look forward to displaying IRadimed's ability to execute launch of our exciting new 3870 MR IV pump systems and to capitalize upon the huge replacement opportunity throughout 2026 and beyond, utilizing the expanded capacity of our beautiful new facility here in Orlando, Florida. So thank you. Operator: This will conclude our call for today. Thank you. You may now disconnect.

92天前Insight Analytics约5分钟阅读

NKRKY 2025 Q4 财报电话会议

Annukka Angeria: Good afternoon, and welcome to Nokian Tyres Q4 and Full Year 2025 Results Webcast. I am Annukka Angeria from Nokian Tyres Investor Relations. Joining me today are Nokian Tyres President and CEO, Paolo Pompei; and Interim CFO, Jari Huuhtanen. As usual, we will begin with the results presentation. And after that, we will open the line for questions. You may have noticed that interconnection with the results, we published also Nokian Tyres' updated strategy and financial targets. These topics will be discussed in detail tomorrow at our Capital Markets Day. And in today's call, we will focus on Q4 and 2025 financial performance and the key drivers behind the results. And with that, Paolo, please go ahead. Paolo Pompei: Thank you, Annukka, and good afternoon also from my side. Thank you for participating in our quarter 4 release as well as year-end release. And what we will do now in the next few minutes, moving to the agenda. We are moving to the highlights, then we will discuss about our financial performance. Jari will present the business unit performance, and we will close the presentation together with the assumptions as well as the guidance highlights, moving directly to Page #4. It was quite a good year in terms of improvement. We have been improving a lot our performance, and this was possible due to strong price and mix improvement, in particular in the passenger car tires. We've been also very active in releasing new products, mainly related to Central Europe and North American market as new growing areas for our business area. And we've been strengthening a lot our premium positioning through pricing, but also through very effective communication and through dedicated marketing and communication activities. We've also completed a major investment in Oradea. We will discuss about that later on. And we had also a strong improvement of the cash flow, supported mainly by improved working capital, but also by the reduced CapEx that are now gradually getting back to normal level. EBITDA was performing -- remained pretty soft, actually, due to the market decline, in particular in the agricultural and forest tires industry. Moving to Slide #5. We completed the first important step of our expansion in Romania with reaching 1 million pieces produced in our facility in December 2025. So this was actually an important milestone for us because now we clearly move from the investment phase to stabilizing our manufacturing platform. At the moment, our team is extremely busy implementing new sizes and developing new products for the Central European market. We also obtained, at the end of December, the first installment of EUR 32.6 million from the Romanian government as a state aid. As you may remember, we are entitled up to EUR 100 million to be supported by the Romanian government at the end of the full process. Moving to Slide #6. This is also an important highlight when we think about the 2025 development. We've been investing heavily in our brand. We've been investing heavily on our product development. We signed a different partnership. I would like to highlight the one we signed with our brand ambassador, Kimi Räikkönen, that is well reflecting our brand values. And he will be with us also in 2026, supporting our development, being with us during the launch of new products, and supporting us in the development of the new products. We also signed an important agreement with the IIHF organization to -- since we will support the World Cup of ice hockey that will take place in May in Switzerland. As I mentioned before, we were very active in delivering new products. We have developed more than 150 new products in 2025 that will support our future growth in 2026, 2028. And of course, we've been focusing a lot in releasing new products in our growing markets like Central Europe as well as North America to support the demand coming from those markets. Moving to Slide #7. We did also important progresses when we talk about our sustainability journey. We are pretty proud about that because we have clearly set a direction that is getting closer to our long-term financial target -- sorry, the long-term target. We achieved 28% renewable and recyclable material within our products, moving up from 25% that we had in 2024. So a significant improvement that is supporting us towards our target of 50% by 2030. Then we reduced by 38% our CO2 emissions. I remind you the baseline is 2022. This was possible for Scope 1 and 2 also due to the start-up of our operation on that are -- as you remember very well, reflecting CO2 emissions in the current setup. We also reduced significantly our accident frequency from 4.6 last year to 3.7% this year. There is still a lot to do. Obviously, having new operation, we are improving day by day also on the new site. But I think also when we look at this kind of KPIs, we are improving significantly compared to previous year. And now let's move to the financial performance. So moving to Slide #9. Well, we have been navigating in a pretty stable market in 2025. The passenger car tire market was pretty stable both in Europe as well as in North America. We are less exposed to the truck tire market remain stable as well. We are more exposed to the agriculture and forestry tire market that was down 5% in the replacement channel and 10% in the original equipment segment. So the market was not really supporting our journey, but we have been obviously navigating well in these market conditions. I think we will see that the quarter 4 2025 was our best quarter of the last 3 years. While sales remained pretty flat, and this is also driven by the fact that in quarter 4 2024, we were heavily pushing for higher sales. This year, we fully dedicated our attention to improve in terms of profitability. And this is quite visible when we look at our EBITDA improvement in quarter 4. We were up by 30% up to EUR 87.1 million or 20.9% in the relation to sales. Our segment operating profit also increased significantly by 43%, up to EUR 51.5 million or 12.3% of net sales. This was mainly driven by strong price repositioning in the passenger car tire. And of course, in quarter 4, we had also some support from lower raw material costs. We had also, I would say, a strong improvement in terms of operating profit, up to EUR 35.1 million. This is 128% more than previous year or 8.4% of net sales. Looking at the same numbers for the full year, moving to Slide #11. We were able to increase sales by 7.2% with comparable currency, and we were able to grow actually in all the regions. Our segment EBITDA was EUR 222.2 million, or plus 20% compared to previous year. It was 16.2% of net sales. Segment operating profit increased by 28%, up to EUR 91.3 million or 6.6% of net sales. And again, same as in quarter 4, strong price increases or price repositioning, and of course, in the full year, positive effect, obviously, coming from the sales volume. The operating profit was EUR 35.8 million at the end, a significant improvement compared to previous year or 2.6% of net sales. The Board of Directors has just proposed a dividend of EUR 25 per share -- EUR 0.25 per share to be paid in April 2026. Moving to Slide #12. As I mentioned before, we were able to grow actually in all the geographical areas where we operate. We were able to grow in the Nordics, in Central and Southern Europe, as well as in North America. I would say the growth in North America of 16.6% was really a good performance in terms of growth, in particular, when we talk about price and repositioning in the North American market. Moving to Slide #13. I would like to highlight when we talk about this slide about 2 things, very, very important development. The first one is the net debt -- the interest-bearing net debt that was EUR 664 million at the end of 2025. This was actually much better than what we were also estimating at the end of -- previously at the end of quarter 4 ourselves, but that was turning really in the right direction. As well as the capital expenditure was EUR 126.9 million, almost EUR 127 million. We need to remind you, obviously, this include EUR 32.6 million state aid from the Romanian government. So we were approximately at EUR 160 million in total. So moving significantly down from previous year. Cash flow also was improving, both in the quarter as well as year-to-date. So let's look at the cash flow in more details in the following slide in Slide #14. As you can see, we were able to improve the change in cash flow by over EUR 200 million. This was obviously driven by an improvement of the EBITDA, but also an important improvement of the working capital despite the growing sales. And of course, we were investing significantly less than previous year. Financial cost has gone up clearly by EUR 16 million. And then, of course, we paid a dividend of EUR 0.25 during 2025. And our debt has gone up compared to previous year. So I would say also in terms of cash development, we are improving significantly our position, and we see actually a better outlook for 2026. Moving to Slide #15, you can clearly see that we have now completed a strong investment phase that was approximately EUR 800 million between 2023 to 2025, and CapEx now is returning to a normal level in line with the depreciation. We are estimating and anticipating approximately EUR 130 million to be invested in 2026. And now stop here, and I would like to ask Jari to comment the business unit performance. Jari Huuhtanen: Thank you, Paolo, and good afternoon also from my side. I'm starting from Page 17. Passenger Car Tyres in the fourth quarter, we continued sales and profit growth. Our net sales was EUR 244.1 million and net sales increased by 3.9%. Average sales price with comparable currencies improved, and the share of higher than 18 inches tires increased significantly. Segment operating profit was EUR 32.3 million or 13.2% of the net sales comparing to last year, EUR 13.6 million or 5.7%. Segment operating profit improved due to price increases, favorable product mix, and lower material costs. In the next page, we can see Passenger Car Tyres net sales and segment operating profit bridges. Net sales in the last quarter increased by EUR 6 million. And again, we can see very positive improvement coming from price/mix, plus EUR 20 million. On the other hand, sales volume was down by EUR 11 million, and then some headwind, mainly from the U.S. dollar, minus EUR 3 million. In the segment operating profit bridge, the same positive price/mix, plus EUR 20 million. And now first time in 2025, we had positive contribution coming from the material costs, plus EUR 6 million. Sales volume in the operating profit was slightly down, as well as SG&A, otherwise quite neutral changes comparing to the last year. In Page 19, we have Passenger Car Tyres net sales components and quarterly changes. In price/mix, we can see that this was now third quarter in a row that we reported quite significant positive change comparing to the last year numbers. In the fourth quarter, price/mix positive impact was 8.5%. Volume change was minus 4.6% and currency minus 1.4%. Moving to Page 20, Heavy Tyres. In the last quarter, lower volume affected net sales. Net sales was EUR 60 million and the change in comparable currencies, minus 2.8%. And net sales decreased caused by lower volume of forestry tires. Segment operating profit was EUR 6 million or 10% of the sales, and profitability declined mainly due to lower volume, weaker product mix, and inventory valuation, which had a positive impact on last year numbers. And Vianor in the last quarter, operating profit was stable. Net sales was EUR 132.4 million and net sales with comparable currencies decreased by 2.7%. And sales was impacted by the mild winter in the last quarter. Segment operating profit was EUR 11.2 million or 8.5% of the net sales and segment operating profit was exactly at last year level, EUR 11.2 million. Then handing over back to you, Paolo, with assumptions and the guidance. Paolo Pompei: And before we move to the guidance, I would like to say, first of all, thank you to the whole team. This was for us an important year of transformation, moving really from managing a strong transformation to create -- start to create value -- future value for our own shareholders. This has been well managed by the team who has been working hard in multiple dimensions, and we'll be happy also tomorrow to talk about our journey and how we will be able actually to improve further our performance for the years to come. But let's move to the assumption and guidance that is also very, very important. We are expecting for 2026 net sales to grow compared to previous year and our segment operating profit as a percentage of net sales to be between 8% to 10%. So we are becoming more specific about our guidance because we want to make sure that you will be able to follow our own journey with more information and more precise information now that our journey is becoming more and more reliable and more and more easy to manage when we look at our future development. The tire demand from the Nokian tire market is expected to remain pretty flat in 2026. So we are not expecting the market to grow significantly. Of course, the development of the global economy, as well as the geopolitical situation or trade tariff is creating some uncertainty and some volatility. But obviously, the improvement is supported by new high-performing product, price mix, and, of course, efficiency improvements that will be still having a strong effect in the years to come. Before to move to the question and answer, I would like to remind you that we have appointed a new CFO. He will start latest 15th of April 2026. So we will have the opportunity with Jari to keep working together on the quarter release. Timo Koponen is the appointed new CFO. He will be -- he has an extensive experience in the financial operation. He has been in important companies such as Normet, where he is currently the CFO, Lamor Corporation, but also he had an extensive career in Wärtsilä, Hackman as well as Konecranes at the beginning of his career. So we'll be happy to present Timo as soon he will be able to join us latest, as I said, by the 15th of April. And we remind you that tomorrow, we will held our Capital Market Day. This will be done in -- actually in here in Helsinki in the Sanding Up Hotel. So you are really welcome to join, and we hope to see you tomorrow at 2:00 p.m. to discuss together our new financial targets as well as our new journey up to 2029. We can now move to the question and answer, and we look forward to your questions. Operator: [Operator Instructions] The next question comes from Akshat Kacker from JPM. Akshat Kacker: I have 3 questions, please, and I will take them one by one, if possible. The first one on end markets, and what your peers have been saying recently. So Goodyear last evening talked about global tire shipments being down 10% in the first quarter. And I understand they do have exposure to the truck business, and there are some weather-related impacts in the U.S. But could you just give us a download on how you're seeing the inventory situation in both Europe and North America? And how do you expect the start of the year in terms of sell-in volumes, please? Paolo Pompei: Thank you very much for your question. Obviously, comparing Nokian Tyres with Goodyear and other companies, I need to remind you that, obviously, we are mainly focusing on specific segment, while Goodyear obviously is exposed to a larger scope. In general, we see, I would say, a healthy development of the inventory. So we believe that from the pure dealer wholesaler point of view, the inventory were pretty stable during 2025. And we see a pretty stable also consumer demand. So this is not really affecting our own business. Of course, when we look at the quarter 4 performance of Nokian Tyres, in particular, we should not forget winter came pretty late. So in some way, we were affected by a lower, let's say, a mild winter season in quarter 4. Fortunately, since, I would say, before Christmas, then winter started to come and started to come heavily in Europe, both in the Nordics as well as in North America. So this is also making us confident about the inventory development of 2026 because obviously, a stronger winter for a company like us that is strongly exposed to the winter tire business or all-season business. It's obviously something that is helping the inventory to be released to the end user. And consequently, we can anticipate that from the inventory point of view, we don't see major issues in 2026. Akshat Kacker: And the second question I have is on your top-line assumptions. When I think about 2026, you are talking about top-line growth. Could you just help us understand that better? What kind of growth assumptions are you working with, either in the passenger car business or for the group overall? And what does that mean in terms of volume growth for the business in 2026? That's the second question, please. Paolo Pompei: Thank you also. This is a very important question. When we say growth, we are expecting 1-digit growth. This is the best visibility we have at the moment, and it's also reflecting our strong focus on profitability improvement. So what I mean is that we are not going to look for market share growth. We are not going to fight for a higher volume as far, we don't see those volume will deliver value. This was the journey, as you know very well, that we started in 2025, and we will keep carrying this journey in 2026. So when we say growth, we are, at the moment, indicating single-digit growth. Akshat Kacker: And the last question is on the definition of the segment operating profit and operating profit. The question is on the IFRS exclusions. I thought the idea was to move away from any excluded costs in the medium term. Could you just tell me your recent view on how you want to tackle these exclusions going forward? And what do you want to book in those one-off costs, please? Paolo Pompei: Yes. We have anticipated several times that we will gradually go away from the exclusions concept. Obviously, we'll do it gradually because last year, we had EUR 70 million exclusions in 2024. In 2025, we had EUR 55 million exclusion. So we will go gradually down when we are -- we will discuss tomorrow our financial targets. Obviously, our financial targets will be very close to segment operating profit equal to operating profit. This is obviously a gradual process. So you can expect a gradual reduction, obviously, will carry a gradual reduction will carry on, obviously, up to 2027, 2027-2028. Operator: The next question comes from Thomas Besson from Kepler Cheuvreux. Thomas Besson: I have a few questions. I'd like to start with just a follow-up on the previous question. It's very difficult for analysts to make a forecast if we don't know what your exclusions are going to be. Can we assume, as you said, that in '29, it should be almost 0 that you're going to see 2026 exclusion go down by EUR 15 million or EUR 20 million, the same way the decline between '24 or '25? Or is it not going to be a linear decline? Paolo Pompei: I think your assumptions are correct. Obviously, you will -- I mean, at the moment, we are not planning any exclusion. There are no specific projects that will come up later on. But at the moment, we are not planning any specific exclusion, for obviously, we will go down EUR 15 million, EUR 20 million year-on-year to get obviously to 0. So your calculation and your assumptions are pretty correct. Thomas Besson: Second question, I'd like you to discuss about the [indiscernible] market and how you see that developing for -- no in 2026. Of course, you have a specific exposure to forestry and ag in specific markets. Do you see these end markets showing signs of a turning point or not yet? Are you assuming in your 2026 guidance that the end markets in the [indiscernible] segment grow or not? Paolo Pompei: This is a very good question. Obviously, you know very well that the agriculture and forestry market has been cyclical since I was born, meaning that it is up and down. It's been always quite difficult to see when the market was going up and down. Clearly, this cycle is longer than usual. So I'm expecting the market to recover within 6 to 12 months. Obviously, this is my estimation based on my experience in that industry. And as I said, the last cycle has been pretty long. 2025 was a difficult year for the -- particularly for the forestry machinery producers. And as you know very well, we are strongly exposed to those guys. at this moment, I don't say in the immediate, let's say, in quarter 1, any strong improvement, but we should expect that something will improve starting already from the second half of 2026. Again, this is the best estimate we can do based mainly on the analysis of the historical cycles. Thomas Besson: I think you have a very good experience of these end markets. So that's very helpful. Could you also please discuss the timing of the Romanian state aid? I think you had about 1/3 of what was expected in 2025. Should we assume that to be 1/3, 1/3, 1/3 over '26, '27 as well? Or are you going to get the remainder of the aid so EUR 67 million, EUR 68 million in 2026? Paolo Pompei: Well, obviously, please remind that these incentives are not fixed. What I mean is up to EUR 100 million, and this will be dependent on the final total investment level. This is very important, we remember. So it can be any value close to EUR 100 million, but obviously, or lower than EUR 100 million, depending on the final calculation of the investment level. Clearly, we will apply for -- we have a routine of applying for those incentives year-on-year. So we could expect a second payment within 2026. But I will be very careful in giving you a strong estimation about this because, as you know, we are talking about, obviously, I told you up to the end of last year, we didn't know exactly when those incentives were coming. Finally, they came in December. The Romanian government was extremely reliable in respecting the deadline of 2025. But again, there is a strong bureaucratic process that we need to run to get those incentive on time. But the best estimation we can do will be that, obviously, the second part will come based on our investment level in 2026, and eventually the last part in 2027. Thomas Besson: I have last question. Could you comment on the evolution of pricing in Q4 and year-to-date, given that raw materials have become finally, as you are saying after 2 or 3 years, a support toharmakers' earnings. Do you see any signs of price erosion? Because oil prices have picked up again and some of the materials are going up again, pricing have held up very well. Paolo Pompei: Yes. I mean, obviously, we've been focusing a lot on repositioning our own product in 2025. So we are expecting this effect to roll over in 2026. The raw material, I would say, at the moment, we see the raw material trend favorable, but also because we have been doing a lot, we have been working hard and really improving our raw material cost, both in terms of negotiating new agreements with our suppliers, but also in terms of better utilization of the material in our own products as well as in our own manufacturing facilities. So at the moment, of course, it's very difficult to anticipate in February what will happen for the full year. When we talk about raw material, they can go up and down. And at the moment, we see raw material pretty stable. And we see obviously a positive rollover in 2025 of the good job done by the team in 2026, rewarding the good job done by the team in 2025. Operator: The next question comes from Artem Beletski from SEB. Artem Beletski: Still 2 questions from my side. So the first one is relating to passenger car tires and seasonality on that front. How we should think about Q1? Because looking at past years, you have been unprofitable in this business, but I think that those years are not that representative what comes to 2026 and the Q1 development. So maybe some inputs you can provide on that front? And then the second question is relating to price/mix outlook for this year. So it has been really strong also in Q4, up almost 9% year-over-year. Some pricing effects are likely to be fading away gradually, but you're also introducing new products. So what is the picture when it comes to price/mix outlook for 2026? So those are my 2 questions. Paolo Pompei: Thank you very much for your question. I start with the seasonality. Historically, even when I was not working in Nokian Tyres, I was observing Nokian Tyres from outside. Nokian Tyres has been always having, I would call it, growing seasonality, meaning that quarter 1 is normally very slow, quarter 2 is improving. Quarter 3 and quarter 4 obviously are improving further. This is mainly reason by our strong exposure to the winter tire business because in quarter 1, mainly we produce, and in quarter 2, quarter 3, and quarter 4, we start to release all the stock that we have produced to face the new season. We have obviously -- if you look at the performance of the last 2 years, we were negative both in 2024 as well as in 2025. Clearly, we are here to improve day by day and quarter-by-quarter. So this is really reflecting our long-term plan to improve quarter-by-quarter compared to previous year. But of course, there will be always some seasonality related to the fact that we want and we are, and we will be strongly exposed to the winter tire seasons. About pricing, obviously, we did -- the team made a very good job in 2025. That was my first priority since the very beginning to make sure that we were getting back to the level where we should be in terms of price positioning, in particular, in the new markets like Central Europe and North America. And I would say that we will see this carryover in 2026 because obviously, we should maintain this value within the company. New products that we are going to release, actually, we are very excited about the new product that we are going to release very soon in -- starting from March, and particularly for the Nordic market, will, of course, present an upgrade -- that is my -- I would say, so we are expecting an improvement in terms of positioning and mix. Obviously, as you can appreciate, we cannot make any comment about price development from now to the remaining part of the year for competitors' rules. Artem Beletski: Yes. That's very clear. But I have still one follow-up question relating to the start of this year. So we indeed have seen really no winter weather conditions in Nordics, in Central Europe, and in North America. Should we anticipate any tailwind from this weather picture during the season or basically in Q1? Or should it be the impact for, let's say, Q2, Q3, ahead of the season when dealers are taking in new tires? Paolo Pompei: I think the development of the winter this year is having a positive effect on the new season when we will start because obviously, this will -- at the moment, what we see is probably the inventory of our own customers are going down because obviously, the winter has been pretty strong, I would say, everywhere in Nordics, in Europe, in North America as well. So their inventory are now going down, and this will be a very -- I think, is a very good news for us for the new season that will start. So we are talking about really quarter 3 and quarter 4 of 2026. This is the way I see it at the moment. So you should not expect any effect today because now today is the time for our customer really to reduce their inventory. Operator: The next question comes from Pasi Väisänen from. Pasi Väisänen: Well, I would like to start with the regulation. And so what is the latest information regarding these possible antidumping duties against the Chinese tires? And if those will be kind of set, could it even affect Nokian Tyres offtake agreements, those tires coming from China to Europe? And secondly, what could be the realistic sales volume forecast for your Romanian factory this year, and also on next year when looking at this ramp-up schedule? Paolo Pompei: Thank you. Two very important questions. About regulation, obviously, you read the news as we read the news at the moment, the antidumping investigation is moving on. There will not be apparently any preliminary duties that are coming from the preliminary investigation. So I think the investigation will need to be completed. And then obviously, the European authority will decide based on the findings they will see during the investigation. There is no effect really now, and we don't expect any effect for the future in Nokian Tyres because obviously, we are mainly now sourcing from different countries than China. So obviously, the impact on Nokian Tyres, considering the latest news, meaning that there are no duties in the immediate future, will not have an impact on us because in the wild time, we have been obviously moving our sourcing to other countries that are not today under investigation. I said very clearly as well that with the ramp-up of Oradea, of course, we have been in-sourcing a lot of products that before we had, by definition, had to produce in partnership with other suppliers. Moving to the question about Oradea. Clearly, Oradea is set to now to increase significantly the production. This will be strongly dependent on the development of the sales in Central Europe. We should expect anyway, for Oradea to, in some way, double the production volume compared to this year. And -- but will be very difficult. We should be more precise during the year to give you an exact estimation of where we are going to land. It's all dependent on sales development, and the success of the new products that we are expecting will deliver value to the customers. Pasi Väisänen: And maybe still one detail regarding the ramp-up costs. So if I remember right, they were close to EUR 10 million in the third quarter, now roughly EUR 16 million. So which figure of these should be used as an estimate for the first quarter or the run rate for the full year? Paolo Pompei: As we mentioned before, we are expecting -- I can guide you for the full year because obviously, the ramp-up cost is directly proportional to the ramp-up of the production as well in Croman in Romania. As you know, in quarter 4, we have been moving from 5 days to 7 days, 24-hour shift. So this is an important step for us in order to get to a normal production level and to increase our production output. So obviously, in quarter 4, they were a little bit heavier than in quarter 3. We said before that you should expect year-on-year a reduction of our exclusion of the region of EUR 15 million, maximum EUR 20 million year-on-year moving forward up to 2028 up to 0. So this is more or less our best estimate at the moment. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Annukka Angeria: It seems that there are no further questions. So it is time to conclude this call. Thank you, Paolo and Jari, and everyone who joined us online. And hopefully, we will meet many of you tomorrow at our Capital Markets Day. For now, goodbye, and enjoy the rest of your day. Paolo Pompei: Thank you very much. Looking forward to meet you tomorrow. Jari Huuhtanen: Thank you.

92天前Insight Analytics约5分钟阅读

DNLMY 2026 Q2 财报电话会议

Clodagh Moriarty: Good. So welcome to Dunelm's interim results. I know I've met many of you before, but for those who haven't, I'm Clo Moriarty, and I joined us 4 months ago, having spent 15 years with Sainsbury's and almost a decade with Bain before that. Now over the last 4 months, it has been tremendous to validate for myself all the things that I believe to be true about this business. And I've been able to do that through a deep onboarding. Now having visited almost 60 of our shops and many of our logistics sites, engaged with our dedicated partners and of course, spent time with our teams in the center. And look, this really is a beautiful business, right? We are product-centric with something for everyone, carefully crafted with our long-standing suppliers across that end-to-end supply chain. This is a business that really understands the role of the physical store, but how it can be complemented with the role of digital. And it also has something that is really difficult to build from scratch. We have colleagues who really care. And all of that is in service of our customers. Now over the course of this morning, between Karen and I, we're going to walk through our H1 results, many of which have already been well trailed. Thank you for all of your questions and some provocations post our trading statement. What we've endeavored to do is actually weave the answers to those questions through our presentation and to keep us all in check, but we have plenty of time in Q&A if there's anything that we don't cover. And then uniquely on this occasion, given that it has been a number of months I'd love to share my initial reflections on where I and we see the opportunities for now and for all the years to come. A word of warning, this is not a Capital Markets Day under cover, right? This is a data share of those insights for us to be able to bring it to life. So let's start with the half that was. We demonstrated a very solid H1 start to this financial year with 3.6% growth year-on-year. It very much was a half of 2 quarters with strong growth of 6.2% in the first quarter and softer growth of 1.6% in the second quarter from which we're now rebounding. But our strong focus on our gross margin demonstrated further margin enhancement of 60 bps, now up to 53.4%. And we have consolidated our market share position, again, up a further 0.2 percentage points, now at 7.9% market share. Now we have endeavored through this transition to ensure that we've kept all of our measures and metrics really consistent to enable you to best follow our business. But today, we are introducing one additional measure for the purpose of this session, and that's all around the customer, CSAT customer satisfaction. And from a really strong base, and I wouldn't expect to see this level of increase year-on-year given the base, we have demonstrated a 2.6 percentage point increase, which really reflects the focus that this team and this business is putting on our customers and noting that our customers are noticing. As well trailed in our trading statement, Karen will go into a lot more detail, I promise, and on our GBP 114 million outturn and particularly around the phasing of our costs. But we've also had very strong cash flow. So free cash flow of GBP 171 million, which is relatively stable year-on-year. Now in this business, we have a very clear capital allocations policy and one that I really buy into. And it is as a result of that, that we're able to share our interim dividend and also announce our special dividend for this financial year. So let's get into a bit more detail on the growth from the half. So we demonstrated 3.6% year-on-year growth over the half in what was a relatively subdued market. But worthy of note is actually the shape of our business. So as I look across our total year-on-year sales from year-to-year, that's broadly consistent, but we do see variances between the quarters. And that's driven by seasonality. It's driven by discounting and it's driven by eventing. And we do typically see a lower Q2. Some of that is external. Some of that is a choice as to how we run our business. But we do want to spend a little bit more time on Q2 this time around because it still was softer than we anticipated. We know that consumer confidence has remained very subdued, and has done so now for a number of quarters. So every single penny or pound that a customer spends is hard earned. Equally, through this period of time, we saw much deeper levels of discounting and the discounting lasting for longer. This is an area that we chose to not further engage in, and that did impact our participation. And lastly, as again, trailed in our trading statement, whereas furniture has been providing tailwinds for us over the last number of quarters, it didn't fare well in this environment. And part of that was driven by a miss on our side from an availability standpoint. We introduced a new system and it didn't forecast for the demand that we saw later in the year. Now I'm going to go pains to labor that when we introduced F&R, so our forecasting and replan tool. And we rolled it out across the different categories, it is performing exceptionally well for us. It is driving up availability and it's driving down stock holding, exactly what we wanted to do. It didn't work as effectively in furniture. Lessons learned. We've embedded those learnings and moved on. And in the spirit of moving on, we are confident for the half to come. So we've started the year with a strong sale, and it was great to see our customers buy into that event, buy into Dunelm and buy into our products. And for the record, the highest selling item yet again was Dorma Full Forever pillows. So if you haven't got one, this is basically the U.K. market telling you that you should. We equally took a good bit of time focusing on newness, right, those full price sales. And we could see our customers engage in those products. So we are bang on expectations when we look at all of those new season lines. And lastly, there was a bit of a soft launch pre-Christmas. There were 130,000 customers who managed to find our app and download it organically and have continued to do so. But at the end of this month, we will have our official customer launch of the Dunelm app. And whilst it's -- we're relatively late, we'll acknowledge that to the digital space. We are seeing really high levels of engagement with these early adopters and in particular, around the basket building and the basket size. So more on that later, but before we go into that detail, I'm going to hand over to Karen to take us through the numbers for the half. Karen? A seamless change here. Karen Witts: A seamless change here, yes. So really nice to see everyone today, nice full room here. Thank you for taking the time to join us. As usual, I'm going to start with a summary of the half year financial results and then take you through our financial performance in more detail, as Clo said. We grew the business over the 6 months and continue to take market share despite some periods of softer sales in Q2. Our gross margin was strong at 53.4%, up 60 basis points year-on-year. Our net operating costs were higher this half as previously flagged, driven by the relative balance of investment, productivities and inflation with some phasing of costs into H1 rather than H2. We expect the year-on-year increase in costs to moderate significantly in H2. Profit before tax of GBP 114 million was GBP 9 million lower than last year, primarily due to operating cost dynamics, which I will explain in more detail. Our cash generation remains strong. We're reporting a headline free cash flow of GBP 171 million and a half year net cash position of GBP 13 million. Similar to this time last year, these figures included a temporary favorable timing variance on payables of GBP 93 million, which cleared very shortly after the end of the reporting period. With healthy cash generation and confidence in our business prospects, the Board has declared an interim ordinary dividend of 17p per share, up 3% year-on-year and we're also announcing another special dividend of 25p per share. We had a solid overall first half of trading with sales up by 3.6% to GBP 926 million. Year-on-year, our digital participation increased by 2 percentage points to 41%. Quarter 1 sales were strong and grew at more than 6%, but we were disappointed with the Q2 performance of 1.6% growth with external data pointing to the end of the quarter being particularly challenging for U.K. retail. Sales growth was driven by core categories, from heritage areas like soft textiles to newer areas of specialism such as lighting. However, as Clo explained, in furniture as well as macro pressures and while several subcategories performed well, we had availability issues of some key product lines. This was caused by challenges in how we managed forecasting and ordering, where we had a lot of newness. The issue has now been resolved and availability has significantly improved. Across the half, we saw growth in average item values driven by product and category mix while volumes were broadly flat. We expanded gross margin percentage by 60 basis points year-on-year to 53.4%, with the upside mainly driven by favorable foreign exchange rates. We kept retail prices broadly stable. We were disciplined on promotional activity, and we managed input costs closely. We expect a foreign exchange tailwind to continue over the remainder of the year. It is important for me to explain how the profile of our operating costs will work across the year. In H1, net operating cost of GBP 375 million were GBP 32 million higher year-on-year. In the first half of this year, our operating cost base increased through a combination of volume-driven cost growth, inflation and investment, partly offset with productivity gains. Volume-related growth of GBP 11 million related to the variable costs associated with digital sales, so that's logistics and performance marketing costs. The pressure on costs in the retail environment is well documented. Sales, marketing and distribution costs are the most impacted by the hourly wage rate inflation to national living wage and national insurance contribution increases. Aside from this, we're tightly managing inflation in our nonlabor cost base to limit the overall impact to GBP 11 million versus this time last year or just over 3% on the total operating cost base. We're reporting an incremental GBP 9 million of investment in the business in H1. This was driven by the full impact of costs associated with the new store opened in H2 of the prior year, and that's including the cost of our store openings in Ireland. As you can see, we offset some of the cost growth in the half with productivity benefits amounting to GBP 6 million. These came from further optimization of performance marketing and from work on store and other labor costs, and the latter included some of the early benefits from the rollout of self-serve checkouts. Our other items totaling GBP 7 million contributed to the H1 year-on-year increase in costs. So we'll always have some other year-on-year cost ups and downs in any time period. And in H1, the biggest of these were year-on-year cost increases relating to share-based payments, including the CEO buyout cost and a pull forward of brand marketing from H2 into H1. We continue to balance inflationary pressures alongside our investment plans, all the while ensuring that we continue to deliver productivity gains. And now here, you can see how we expect costs to moderate significantly in the second half of the year by looking at the relative year-on-year movements in the blocks of spend that I've described for the first half of the year. So we still expect to see volume growth in costs in line with sales channel mix and inflation will continue to be driven by labor costs, but we expect this to have peaked in H1, and we expect a lower national living wage increase in April 2026, which will impact our Q4 costs. Whilst we continue to invest investment spend growth will be lower in H2, largely because we have -- we started to incur new store-related costs in H2 last year, and therefore, they've annualized. Our productivity gains will accelerate in H2 primarily as we deliver more benefits from work on our operating models, including further gains from the rollout of self-serve checkouts and also as we continue to deliver our efficiency gains in performance marketing. And in H2, we expect a reduction in other items year-on-year. And that's including the relative benefit from the phasing of the brand advertising pulled forward into the first half and a small benefit in business rates. Reflecting the softer trading in Q2 and the timing of certain costs, PBT of GBP 114 million declined by GBP 9 million year-on-year. Higher gross profit was more than offset by the cost profile that I've just explained, and this results in a reduction in EPS from 45p to 41.7p. Our effective tax rate of 25.6% was stable and within our guidance of 50 to 100 basis points above the headline rate of tax. We're confident that our plans for the second half, including those on costs will result in a PBT for the full year in line with consensus expectations. Cash generation remained strong in the half, with a 65% conversion ratio. As I explained upfront, we're reporting a headline free cash flow of GBP 171.4 million. However, the same as last year, this includes a timing difference in working capital, which created a very temporary inflow of GBP 93 million due to supplier payments in transit at the end of the period, which cleared on the second day of H2. Again, there was nothing unusual about the payments. There were normal course of business payments to suppliers and for services and the impact is neutral over the full year. Inventory was well controlled, and we ended the half with inventory levels consistent with the prior year. Total CapEx in H1 of GBP 23.2 million was materially lower than the prior year, which included a freehold store purchase. This year's first half CapEx spend primarily relates to store estate spend, including a regular program of refits, small works and decarbonization activity. CapEx also includes spend associated with self-checkout rollout and capitalized tech spend, including the app. We were pleased to reopen our Yeovil store, which had been closed since the end of August '24 due to fire damage, and we also opened our second in the London store in Wandsworth and it's trading well. Store openings have been slow this year, and 2 stores will likely now open early in FY '27, but our pipeline for FY '27 is stronger, and we see plenty of opportunity for future store openings to drive growth, and Clo will give more color on this. We ended the period with a headline net cash position of GBP 13 million, equating to an underlying net debt position of about GBP 80 million after adjusting for the payments which cleared just after the period end. We have a capital allocation methodology that states that after prioritizing investments in the business for growth, we will return surplus cash to shareholders. And in this half, we're continuing our strong track record of shareholder returns. With confidence in the prospects of the business, the Board has declared an interim ordinary dividend of 17p per share, up 3% year-on-year. Although the underlying net debt-to-EBITDA position at the end of the period was within policy range at 0.3x, the ratio was outside of the range at the end of most months in the period, and the Board has therefore declared a special dividend of 25p per share. And this morning, we also announced one of our periodic intentions to buy back up to 1.6 million shares to satisfy the requirements of employee share option schemes. So I'll finish by summarizing the outlook and guidance for FY '26. We've been encouraged with trading in the early part of quarter 3. Customers responded well to our winter sale and sales growth to date has been similar to the overall growth for H1. We're working hard on mitigating inflationary pressures, especially wage inflation with value-creating initiatives. We're therefore confident in our plans to deliver full year PBT in line with market consensus. We expect our effective tax rate to be 50 to 100 basis points above the headline rate of corporation tax. And from a cash perspective, we expect a broadly neutral working capital position at the end of the year. And we're reducing our CapEx guidance to around GBP 40 million this year down from our previous view of about GBP 50 million, and that reflects the timing of new store openings. So thank you for your attention. And I will now pass back to Clo. Clodagh Moriarty: Thank you. Okay. So this really is a brilliant business, right? And over the last period of time, as I've been meeting with some of you and others, that's what also you've been telling me, right? There is lots to like about Dunelm. And I agree, okay? So what we're going to do over the next 10 minutes is talk through 6 of the data-driven insights that we as a team are now using to build the strategic evolution over the coming weeks, months and years. And as we should, let's start with customers. So we have universal appeal. And we're not going to shy away from that. So as I look at our customer base, our customer base broadly reflects the U.K. population. Here at Dunelm, we have something for everyone. And we have really high levels of awareness. So the U.K. customer knows who we are. But when I look at the consideration to buy, that drops off. Now there's nothing massive here, right? That's totally in line with benchmarks. It's absolutely in line with averages, but as the market leader, I and we do expect more. And then secondly, when I think about where we stand out for customers and we do, there are equally opportunities for us to grow. So what you're looking at on the right-hand side, across the top are a subset our categories and our subcats. And from top to bottom, we're looking at the key buying factors, so these are the factors that customers consider when they're picking where to buy and what to buy, and they're ranked in order of importance. And as you can see, Dunelm is #1 across many of them, but not across all. So we can see a real opportunity for us to match the perception with the true reality of what we offer. And this week, we announced externally that we're bringing in some new capability into Dunelm to be able to supercharge this. So I'm thrilled that Laura Harricks will be joining us as our Chief Customer Officer. And when she joins us in a couple of weeks at the beginning of March, Her two key priorities are going to be around our brand positioning and moving the dial on that perception. We also have deeply loyal customers, right? And those loyal customers are on a growing customer base. But critically, we understand those customers better and hence, we're able to respond to their needs. So now recognizing that 1/3 of our customers make up 2/3 of our sales. But even for those most loyal customers, we still only capture 15% of their homewares wallet. So there is so much more headroom for us. And as we think about how we do that, it is about the connection. It is about the contact, and it is about the personalization. So over the last quarter, we have been trialing these omnichannel communications and incentives. And we trialed them in-store and online. And we're seeing across the board, high levels of incrementality with an opportunity given we've got relatively low redemption rates. But whether it is in-store or online, we are seeing a mix of basket build or frequency. So over the coming trading periods, we're going to take those learnings and make them even more personalized. And we all know this that our products at Dunelm are just brilliant. And in any given year, we've got over 100,000 items live for our customers. One of the things that we're really proud of is our product brand as Dunelm. So we've now got about 70% of our products going out the door under the Dunelm brand. But there's more that we can do to help our customers understand our good, better and best. Because when I look at the packaging across some of those ranges, sometimes it's hard to distinguish. So we're going to create greater clarity so our customers can always opt in to whichever tier works for them. We'll also be thoughtful of our owned brands and national brands and where they have a role to play. But where they create cost for us as a business or where they create complexity or confusion for a customer, we're going to remove them. And we've already started doing that, and we've already retired now at the start of this financial year, Elements and Edited Life to name 2. And in this last chart, on the right-hand side really caused us reflection, right, because we are a specialist. And what you should expect for us and will expect for us going forward is that we will continue to have great ranges. We will continue to bring newness to the market. But we're equally going to ensure that each and every one of those SKUs works really hard for us and really hard for customers. And right now, that half our SKUs contribute most of our sales. So we've got some work to do. But again, we're going to use that insight across our good, better and best to help inform our ranges even more. And I guess, case in point, our starter for 10 is ensuring that all of our best selling lines are in each and every one of our stores. And we're moving fast. But in our lower our smaller stores, we only have 70% of our top-selling SKUs. So we're changing that now, and we'll have that embedded before the end of the financial year. This is a digital world. We all know that. But even in that digital world and particularly in homewares, the role of the physical really matters, to be able to touch, feel and see product really matters. So we are going to double down our focus on our existing estate because candidly, they're not growing fast enough. But at the same time, in spite of us having access to customers, 15% of the U.K. population can reach us within 15-minute drive. That's high, but it's not high enough. So we're going to go again at our store expansions. We've reappraised the market, so looked at where the demand is, our presence, our competitors presence and ultimately the different formats that we're able to bring to bear. And we can see an even bigger opportunity than we've showcased before. And lastly, again, as I alluded to earlier, we have come late to digital, but now at 41% participation, we are holding our own. But interestingly for us, we benchmark really highly on many digital journeys and in particular, search engine optimization. But there are still countless opportunities for us to go after, whether that is in the social commerce space or generative engine optimization or the app that we just referred to. When we launched the app at the end of this year -- at the end of this year, at the end of this month, we will be able to bring shop the look, shop the range. We'll be able to bring find your local store, find the products within the store, find the stock within the store. And critically, we'll be able to release products fresh to that market well ahead of any other customer. So again, my call to action is if you haven't downloaded the app, I strongly recommend you download it now. This is a business that has strong customer satisfaction. Of course, there is always room for improvement. But in addition to the strong customer satisfaction, when we notice something, when we see something, this is a business that can move at pace. So let's take an example of home delivery. We have nationwide reach in home delivery. It is a large and growing part of our estate, so one we need to pay attention to. But when I look at CSAT, so our customer satisfaction, customers who rate us 5 out of 5 on their experience, you can see a meaningful difference between our home delivery 2 person, large items. And our home delivery 1 person, smaller items. And when we interrogated that further, you could see that a big driver of that CSAT was damages. And of course, everyone here will know the costs associated with damages. Not only the lost sales and the fact that, that customer may not return, but equally, you've high costs associated with the contact center, return of the product, replacement of the product, refund of the product, redelivery of the product and potentially goodwill. So we addressed that. And before Christmas, we've changed our packaging. And now we've already reduced our complaints across the board in 1 person home delivery by 20%. So for a little bit of extra cost in our packaging, we have delivered significant value across the value chain, and we'll expand from there. So my key takeaway for you on this slide is we are going to be obsessed with our customers and what our customers tell us. But we are going to as system owners and as system thinkers follow the value across the value chain, and as such, return value. And last, but definitely not least, we have great colleagues, 12,500 amazing colleagues with great capabilities. And we've been investing as of others across the front end and back end for a number of years. But you'd expect me to say this. The job is not done. The job in this space will never be done. What we are looking to do is as we make those choices on tech, we're being really thoughtful about moving from best-in-breed to best in suite. So working with fewer, bigger partners, which will make our integrations more seamless and less costly. It will ensure we have access to the biggest and best thinking and us be present on their road maps. And it will also provide more context in our business. So for every penny we're spending, we're ensuring we're getting more impact for that investment. So building capabilities for the future is a big part of the route ahead across people, processes and systems. So if you ask me, do I think there are strengths and assets in this business? Absolutely. Do I think there are significant opportunities on the back of those existing strengths and opportunities? Absolutely. We've universal appeal, but we're going to maximize that appeal through a clearer brand proposition. We already have really loyal customers, but we're going to engage and delight those customers at each and every opportunity to drive share of their wallet. We know we've got outstanding product choice. We have a big opportunity to be able to use that master brand and ensure we make our amazing ranges more shoppable. We've got physical and digital reach, but we're going to double down on the existing and ensure that we maximize each and every ounce of that white space. We got great colleagues and platforms. And as a result, we're going to stand on the shoulders of giants and ensure that we are future fit across all. And we have strong customer satisfaction, but ensuring that we unleash the best of what Dunelm has from end-to-end experience, I believe that we're going to be able to drive repeat business, repeat purchases again and again and again. So we are the market leader. We only have 7.9% market share in a highly fragmented market. There is so much more to go for. As we've discussed, we have lots of assets across customer, across brands, across products, across channels. But each and every one of those assets presents a large and growing opportunity for us. And we have a proven track record of discipline and strong cash generation. And we're not going to move away from that. But we're going to build them up with additional efficiency and productivity opportunities. You might have gathered, I'm out and about a lot. And I'm talking to customers all the time. But one reflection really stuck with me from a customer. And when I said, Dunelm, what do you think? And they said, Dunelm, it's actually very good. And I agree. We are actually very good. And the job of work for us is to remove that actually sentiment because I do believe the U.K. core opportunity remains compelling, and we are best placed as the market leader to be the home of homes. Thanks, a million. What we'll do now is hand over to some Q&A. In case you have 1 or 2 questions that you'd like to ask and we'll ensure we cover the most. Clodagh Moriarty: Apologies, I missed the point to ceremony. Do you mind mentioning for the webcast, your name and where you come from. John Stevenson: Indeed. John Stevenson from [ Munster ] and from Peel Hunt and both in fact. Two questions to get us going. You sort of mentioned undertaking a review of store. Can you give us a bit more detail on that in terms of how big the opportunity do you think is from a space point of view, the types of store and how quickly you're going to be able to get after that space? And second question, just on customer and personalization sort of use of data and the kind of customer journey. It feels like it's still very, very early. Can you talk about how early we actually are on that? And looking back in -- I appreciate the Chief Customer Officer hasn't started yet, but looking back in, say, 18 months' time, what would you hope to have achieved from a sort of personalization customer viewpoint and what that sits against best practice? Clodagh Moriarty: Brilliant. Okay. Thanks, million. So let's start with the space opportunity, right? And it's twofold. The space opportunity is in our existing estate as well as the white space. And when we think about the existing estate, this is about us looking across our multi-category authority across each of our categories and understanding the right macro and micro space for that to be able to ensure our ranges are more shoppable and more findable, right? So that is one of the big opportunities that we do see. And you can see it reinforced with the SKU efficiency numbers that we shared today. Equally, as we roll out some of those efficiency levers on the walkway and welcome and our self-checkout. We'll be able to repurpose some of the space to ensure it works really hard for us. So that's one. And we can do that on a rolling basis. The second element of new store space, again, the opportunity for me is we should be 90% of the U.K. population within a 15-minute drive, not 60% of the U.K. population. And what we'll need to do is, of course, look at the demand, and we've got -- you saw the map, right? We've got a sense of the sites that we are going after, but us being really thoughtful about the different formats that we can use that will work better in different locations. And that's kind of the pivot that we'll use for that next stage. Okay? On your second question around the use of data, yes, you're right, it is early. But actually, our data journey hasn't been -- that's not early. We've been investing in that for a number of years and got a really strong data lake, and we use Snowflake and they are really best-in-class from that perspective. So the job of work is being able to surface all of that data in the most meaningful way to reach our customers. The omnichannel communications was the first sense of it. The next stage will be ensuring that, that drives hyper-personalization and the next best message. But even in the early stages of that data, we saw the incremental behavior. So what does great look like over the next kind of 18 months and beyond, we should see a growing loyalty base in our total customer base. David Hughes: David Hughes from Shore Capital. First of all, I think coming back to your final point on actually quite good. Obviously a clear difference between awareness and consideration, what do you view as the key factors in terms of bridging that gap? Is it the brand marketing to get people to try them once? Is it the product and the proposition? Where do you think the kind of opportunity is there? And then secondly, just on a technical point, in terms of the CapEx being GBP 10 million lower for this year, would you imagine that, that kind of flows through into next year with those 2 store openings coming at the start of next year? Clodagh Moriarty: Thanks, million, David. Well, why don't I take the first 2, and then I'll defer to my learned friend on the right on the third one. So in terms of the first question, this is about brand positioning. It is really important to know who you are and what you stand for. And us acknowledging that we have universal appeal and being really proud of that and ensuring that our journeys reflect it is going to be the next stage of the journey. And we're right. Laura doesn't start for a number of weeks, but we equally have a very strong team in place that is already starting on that work. In terms of moving the dial, we can see across our kind of customer base, where we have an element of spearfishing, right, very prevalent in the digital world. And our opportunity there is as we see that spearfishing and we delight a customer, using our communications to be able to ensure the repeat purchase. That's the job of work that we've got to work on with that part of our customer base. And when I look at our highly loyal customers who do shop very frequently across most of our ranges, it's continued to improve their repertoire by basket building. So they are the elements that we'll focus on first and foremost. On the CapEx? Karen Witts: On the CapEx. So some of it will flow through to next year, but we're not giving any guidance on what our CapEx in total is going to be for next year, and it's usually a combination of property-related CapEx and then tech-related CapEx, whether that's kind of the hardware or the capitalized labor. We're not changing our medium-term guidance for store rollouts. So even if the pipeline is stronger than we've seen this year, we're still sticking with 5 to 10 openings for next year. But clearly, our guidance for this year started off at 5 to 10, and we've opened 2. So there will be some CapEx that will roll over into next year, primarily related to the 2 that are just on the cusp of this year and next. Georgina Johanan: It's Georgina Johanan from JPMorgan. Just 3 quick ones from me, please. First of all, just following on from the CapEx question. Clo, given what you were saying about sort of reworking some of the ranges in store and maybe store layouts and so on, is that something where we should actually expect maybe a short-term sort of step-up in CapEx to be able to support that? Or is it actually -- is it quite minimal in terms of execution to do that? Second, just on the OpEx side. I think in terms of the kind of volume-related costs, you called out that, that was exacerbated by the channel shift. Given the launch in the app and the marketing that's going to go behind that within your guidance, have you accounted for like an incremental or step change in the second half, please? And then finally, you mentioned about considering changes to Q2 trading and how you're going to trade the business. Presumably, you kind of need to start thinking about that fairly soon. So just any color on what you're thinking about sort of discounting activity or catalyzing the customer in that quarter would be interesting to hear. Clodagh Moriarty: Perfect. Thanks a million, George. How about I top and tail and you can do those in the middle. Karen Witts: Yes. Clodagh Moriarty: Okay. So from a CapEx and ranges perspective, we already have an opportunity to look at the existing range and within the current master range, make some changes within the good, better and best. Those are things that we can roll in relatively easily. We've got -- I say high -- we have a strong level of churn because we do want to be bringing in newness. So we have very clear windows across our state to be able to make those changes. So I think that's probably the -- in terms of disruption and impact, that's probably the first one. Shall I cover off the Q2 question, and then we can talk about OpEx. So from -- as we look at Q2, you're right, it has historically been consistently a lower level of growth. Now we have 2 very strong sale windows at Dunelm. Our customers understand those windows and they trade into them. The question that we are asking ourselves is whether they are sufficient or whether we do want to go deeper into Black Friday. If and as we do, we will do it our way with the continued discipline that we manage over the full financial year. So we'll update in due course. But of course, we're considering the trading pattern for next year. Karen Witts: Yes. And just in terms of your OpEx questions, Georgi, in the schematic that we've drawn, the waterfall for the second half of the year, OpEx, we've clearly not put any numbers against the different blocks of costs, but we've tried to sort of shape them in the way that we think that they will come through. And therefore, any incremental spend that we might need on the app, for instance, will be included in the volume-related box there. And we are reiterating or confirming a commitment to a PBT in line with consensus. So that's all factored in. Clearly, at the end of the day, it actually is a function of channel mix and also the number of products that actually go through our logistics operation. Anne Critchlow: It's Anne Critchlow from Berenberg. I've got two questions, please. The first is on the location opportunities. So I noticed lots of green dots over Central London, for example. And just wondered what do you think of the small urban concept format in terms of the potential to roll it out? And how easy is it to find those sort of smaller stores, which I think are around sort of 5,000 to 7,000 square feet. And then the second one was just an update on the Designers Guild acquisition that you made last year. So just wondering how you might use the design assets in the business in the future? Clodagh Moriarty: Brilliant, thanks, a million, Anne. So on the smaller formats, and you'll know we have 2 of our kind of our micro both in Westfield and Wandsworth. They're trading well for us, right, with a very strong trading intensity. And you'll also have seen that we did move on from our Westfield store to our Wandsworth where we actually increased more seasonality and more newness, which did drive further enhancement in sales. So we quite like these and our customers quite like these. So we'll be going after more of them. So the green dots, that's exactly what it's about. And then on Designers Guild, as we look about the ranges, and we're looking at the range architecture, it has a clear role to play for us when we think about best, right? It is something that does stand out. And while we're embedding that into our thinking, it does, in the meantime, continue to contribute royalties to our business on an ongoing basis. Do you have any? Karen Witts: No, I think that's perfect. Timothy Ramskill: It's Tim Ramskill from Bank of America. I've got 3 questions, please. We've already spent a little bit of time talking about the space opportunity, but Karen was very keen to point out it's 5% to 10%, it's not changing. So but just help us out a little bit, kind of give us a sense for -- Clo, you talked about it's not being quick enough. So what would quick enough look like perhaps with the number to go alongside that. Second question around gross margin, where clearly the FX dynamics have been helpful. I think that's looking set to continue. But maybe just some early sense as to -- I also think that might well continue into 2027. So kind of maybe give you the chance to dissuade me from that perspective. And then the third question was, again, an extension of the conversation around Black Friday and discounting. Maybe just interested to hear your thoughts on which categories in particular that seems to be sort of sharpest in, in terms of what your competitors are doing. And then I guess just on the same topic, it's fair to observe that discounting has definitely moved away from being a twice a year type event to an almost ever present. So is this just about Black Friday? Or is it about -- are there other things to think about through the course of the calendar year? Clodagh Moriarty: Brilliant. Thanks a million, Tim. I'll take the first. Karen will take the second, and then we'll tag team on the third, okay? So in terms of the space, we're not moving away from the 5% to 10% guidance. However, we will explore as many opportunities that come our way in the disciplined way that we always have done. It's not -- on the quick enough point there are going to be stronger years and they're going to be slower years, right? So I think the way I would think about this is balancing it over time. What we are seeing though is the opportunity that we would have shared at kind of the IPO and beyond. It would be 50 plus. And I think our message today is and then some. That's probably the key message. On gross margin? Karen Witts: On gross margin, yes, we flagged in the half that we've reported on, the upside is largely driven by foreign exchange tailwind. And Tim, I'm not going to try to dissuade you that some of this will continue into 2027 because we hedge out over quite a long period, and we're already hedged for some, but not all of 2027. We'd just emphasize that FX is only one element of what goes into cost of sales, and we need to think about the cost of raw materials, the cost of freight, how much factory capacity there is. Things like the inflation rate in the U.K. where we're buying from U.K. suppliers. And then also, actually, we like to have the flexibility to do the right kind of eventing to appeal to our customers. So you kind of put all of that in a package, and I'm saying, yes, on the FX. And we'll see how the other things play out over time. Clodagh Moriarty: And then on Black Friday. So areas where we definitely saw a deep discounting. It was across all categories, right? We saw a deep discounting in furniture, right? You saw deep discounting in electricals, right? We could see that across the board. But when we think about how we respond to that, we do have those 2 sales windows that are actively participated in. All the time we are using our walkway to be able to showcase the best of deals while still having our zones to be able to give the best of the entire selection. And I think that is one of our advantages, having moved from market stall to market leader, never lose the market stall element, right? So our customers know that when they come into our shops, they will always be able to find some deals. Karen Witts: We want to make sure that we are not buying sales. Our sales have to be profitable and you saw the rather garish detail with some of the discounting that Clo showed that had been going on through that Black Friday period. And some of that, frankly, we just didn't want to indulge in. It's not right for the long-term profitability of the business. Clodagh Moriarty: Yes. We're not buying share. I think that's fair -- balance and everything. Unknown Analyst: I'm not sure if this microphone is working? Karen Witts: Yes, working Ben. Yes. Unknown Analyst: You've obviously held guidance today. And it seems to me that you've got some pretty significant reduction of that second half OpEx to hit that guidance, assuming your sales growth trends in line with, as you say, that H1. I suppose my question is you've had a lot of productivity over the last 2, 3 years anyway. Is there a worry here that we're beginning to cut into the muscle? You've also sort of mentioned there's some marketing spend brought forward. To what extent is this going to start to maybe impact the top line if we carry on having to take some of that cost down? Karen Witts: Okay. So just the first point is that the second half is about moderating the rate of increase in the cost base. We're not saying that we're going to reduce and it's really important to look at these buckets one by one because they all have different dynamics attached to them, including the fact that we expect to get more productivity in the second half of the year than we got in the first half of the year, and that's due to the timing of some of the productivity rollout plans, for instance, the self-serve checkouts, where by the end of this year, we'll have self-serve checkouts in more than 100 stores. Absolutely, we do not intend to cut into the muscle of the business. You'll have heard me speak before about the fact that when it comes to investment, I don't like putting my foot sharply on the accelerator and then slamming on the brake. We like a nice rhythm of investment and the same thing about productivity. So when we think about productivities, we almost have 2 streams of productivity going. We've got what we call continuous improvement, which every responsible manager in the business has a responsibility to deliver by really being focused on their cost base. And if they do need to invest a bit in continuous improvement, that has a fast return. And then more recently, we started to take a more programmatic approach. So investing things that might take a little bit longer to deliver a return on. I'd say we've got lots of opportunity still to go for, which is healthy opportunity and will be sustainable in terms of the productivity that it's delivering. Close example about changing the way that we're wrapping products so that you reduce damages is just one of the things that we can do. And on that particular example, it's important to take a holistic approach to what you're seeing. So if we just looked at the cost of packaging, we might not have taken this move. You've got to look at the cost of packaging relative to the other costs that you incur, if you create customer dissatisfaction. I think we've also spoken about the fact that our business isn't very automated. Now that comes from the customer touching parts of the business or engaging parts of the business, that's why we decided that we would roll out self-service checkouts. The business case for that became really clear when the cost of labor got so high. We don't have a lot of automation in our supply chain. We've got things like auto bagging but we've not gone much further than that. And I also think about automation when I'm thinking about processes, and we've still got a lot of processes that we can bring to system. So again, automation, more efficient -- more effective use of data. So I could go on for a while, probably best to stop there. Clodagh Moriarty: But what I think you can take away is we don't believe we're anywhere near cutting into muscle. We're honing the muscle. That's what we're at now and shifting away from this way of thinking to system-wide thinking. Richard Chamberlain: Richard Chamberlain, RBC. Just 3 quick ones from me, if that's okay. So you talked at the beginning of the presentation about your lessons learned from the furniture availability issues. And what are you referring to specifically there? Is that around [indiscernible]? And then the second one is, maybe you can just touch on how you created the efficiency performance marketing under the terms [indiscernible]? And then finally maybe give some update on Ireland on the stores there and your plans to upsize and just general on international -- thoughts on international growth? Clodagh Moriarty: All right. Thanks a million, Richard. So in terms of lessons learned, so with furniture, we rolled out a new system. We rolled it out systematically across each of our categories. When there was a high level of newness, the system that we have learns from previous data. When you don't have previous data, it pulls on some lookie-likies to be able to define what the demand should be. Those input signals weren't good enough. The second chance to catch it was to use all of our internal expertise to sense check, does that look and feel right? And we moved in the system of trust the system and the rest will follow rather than challenging what the outputs were. So our 2 big learnings were check the inputs to make sure we're really confident. Check the outputs to make sure we're really confident. And if you're confident on those two things, then absolutely let the system fly. And that's what we've embedded now going forward. And you can see with furniture, we've already seen a recovery. We're now north of kind of 95% availability. So we've got that in place, okay? On performance marketing... Karen Witts: Efficiency in performance marketing. We've been improving efficiency of performance marketing for a few years now, that kind of started off by developing capability in the organization. So investing in people. And then as these people become more confident and competent working within some quite strict guidelines around returns on performance marketing expenditure that's where you get the efficiency. So when we talk about efficiency, we don't say we're trying to reduce the overall quantum of the performance marketing spend because we will spend it where we think we're going to get the best return. Clodagh Moriarty: Okay. And do you want to start on Ireland? Karen Witts: On Ireland, Yes, I was just jotting down the things that we've done so far on Ireland, still in a relatively short space of time. So we've rebranded. We've refitted some of our stores. We are successively bringing more Dunelm branded product into those stores, and we're getting a nice response from customers. Still a lot to do because it is early days. And one of the nice things about Ireland is that it's going to inform the learning that we will take to some of these green dots on the map because the Irish stores are actually quite small compared with the rest of our portfolio. So getting them really humming is important so that then we can just take that and do it in other places. Clodagh Moriarty: There are many nice things about Ireland. Karen Witts: I don't know why you gave that question to me. Unknown Analyst: Just a few questions for me because quite a few of them were already taken. But just a little bit -- maybe a little bit of color around the competitive landscape and anything that you've noticed since taking on the role 4 months ago. Obviously, there's a [indiscernible] looking at some of the SKUs as well. If there are certain SKUs that maybe they're shopping over here, but you could take a few -- had a few more available over Dunelm, would that be more helpful. What have you noticed? Clodagh Moriarty: Yes. Look, I mean I think the big thing about the competitive landscape is because we have universal appeal and because we are a market leader, every other entity is a competitor, and that's how we're treating them. So with a double-down of focus on the physical and complementing it with the digital, we believe we're going to be able to address all parts of the market. Karen Witts: And I think Clo gave some examples that show that we can respond in what is quite a challenging competitive environment, not by -- not just by taking from others, but by helping ourselves. So the example of having our best sellers in all of our stores is an example where people will come to us if we got the best sellers in the store. Charles Allen: Charles Allen from Bloomberg Intelligence. The percentage of sales that are digital keeps on going up. Do you see a limit to that number? And obviously, also it means that the amount of cash gross profit you're generating just from in-store sales is either flat or going down unless you can improve the rate of sales growth there. So what does -- does that mean that you have to constantly improve gross margin to keep the store operating profit moving ahead? Clodagh Moriarty: Okay. So I am very happy for the digital percentage to keep growing, but I'm much happier if the total pie grows bigger, right? So we are an omnichannel business, and therefore, the role of walk-in, the role of Click & Collect and the role of home delivery play different roles for different customer bases. When we report and when we report in our sales, we typically talk about walk-in. But Click & Collect is a huge footfall driver for us into our stores. And as that continues to increase, it continues to bring more and more customers in. And we've got a very clear halo impact of every customer who's coming in, the impact it has on what else they pick up because you can't help with the inspired, right, when you walk around our shops. So you do see that halo impact as a result of the digital meeting the physical. So we'll continue with an overall omnichannel approach, because that's going to give us the best returns across the full channels. Karen Witts: And with omnichannel approach, we're not compromising profitability because both channels are profitable. We're quite agnostic as to where and how our shoppers want to shop. Charles Allen: Follow up is what's the relative cost base in each of the channels? Karen Witts: Well, we haven't actually disclosed what the relative cost base is. They've got different dynamics, which was one of the reasons why when we were talking about the cost profile for H2, I was pulling out some costs that sit below the gross margin, but which are costs that will vary more with digital sales than they will with store sales. So we've clearly got -- about 40% of our cost is labor cost, and that primarily comes from our stores -- the cost of our store colleagues and the cost of colleagues in distribution centers. There's much less labor that's attached to a digital sale, but it gets logistics costs and it gets performance marketing costs. Clodagh Moriarty: I'm getting a very clear signal from the back, which says there's time for one more question. Did I read that right, James. Richard Taylor: Richard Taylor from Barclays. Just interested to hear if you're seeing the way in which consumers are searching for Dunelm or the homewares market in general, whether it started to change. I hear your comments about SEO performing well, but social less so in generative engine sort of watch this space. But yes, keen to hear thoughts about how quickly you can prepare Dunelm for changes and how consumers may search and purchase and whether you feel you are currently losing out to many others who are more advanced in those areas? Clodagh Moriarty: Yes, super question. So firstly, on social, I don't think it's underperforming. I just think we haven't pushed it yet, but yet being the operative word because that's where we'll go, that's where we'll go next. It's really critical that we show up where customers are rather than expecting them to come to us. And that's a big shift. But specifically on SEO, the brilliant thing about SEO is we are benchmarking very highly on search engine optimization. To do that, your data integrity and how you surface that data has to be exceptional. And those are the ground routes for every form of GEO-type shopping. If you have your data right, then whoever or whatever is searching or browsing your site, we'll be able to find the best of what's there. So we actually believe, whilst we're not exploiting generative engine optimization yet, we've got all the foundations in place to be able to do that rapid fire. Well, thank you very much. I appreciate all the questions, all the energy and looking forward to seeing you all again very soon. Take care. Thank you. Karen Witts: Thank you.

92天前Insight Analytics约5分钟阅读

TYRES.HE 2025 Q4 财报电话会议

Annukka Angeria: Good afternoon, and welcome to Nokian Tyres Q4 and Full Year 2025 Results Webcast. I am Annukka Angeria from Nokian Tyres Investor Relations. Joining me today are Nokian Tyres President and CEO, Paolo Pompei; and Interim CFO, Jari Huuhtanen. As usual, we will begin with the results presentation. And after that, we will open the line for questions. You may have noticed that interconnection with the results, we published also Nokian Tyres' updated strategy and financial targets. These topics will be discussed in detail tomorrow at our Capital Markets Day. And in today's call, we will focus on Q4 and 2025 financial performance and the key drivers behind the results. And with that, Paolo, please go ahead. Paolo Pompei: Thank you, Annukka, and good afternoon also from my side. Thank you for participating in our quarter 4 release as well as year-end release. And what we will do now in the next few minutes, moving to the agenda. We are moving to the highlights, then we will discuss about our financial performance. Jari will present the business unit performance, and we will close the presentation together with the assumptions as well as the guidance highlights, moving directly to Page #4. It was quite a good year in terms of improvement. We have been improving a lot our performance, and this was possible due to strong price and mix improvement, in particular in the passenger car tires. We've been also very active in releasing new products, mainly related to Central Europe and North American market as new growing areas for our business area. And we've been strengthening a lot our premium positioning through pricing, but also through very effective communication and through dedicated marketing and communication activities. We've also completed a major investment in Oradea. We will discuss about that later on. And we had also a strong improvement of the cash flow, supported mainly by improved working capital, but also by the reduced CapEx that are now gradually getting back to normal level. EBITDA was performing -- remained pretty soft, actually, due to the market decline, in particular in the agricultural and forest tires industry. Moving to Slide #5. We completed the first important step of our expansion in Romania with reaching 1 million pieces produced in our facility in December 2025. So this was actually an important milestone for us because now we clearly move from the investment phase to stabilizing our manufacturing platform. At the moment, our team is extremely busy implementing new sizes and developing new products for the Central European market. We also obtained, at the end of December, the first installment of EUR 32.6 million from the Romanian government as a state aid. As you may remember, we are entitled up to EUR 100 million to be supported by the Romanian government at the end of the full process. Moving to Slide #6. This is also an important highlight when we think about the 2025 development. We've been investing heavily in our brand. We've been investing heavily on our product development. We signed a different partnership. I would like to highlight the one we signed with our brand ambassador, Kimi Räikkönen, that is well reflecting our brand values. And he will be with us also in 2026, supporting our development, being with us during the launch of new products, and supporting us in the development of the new products. We also signed an important agreement with the IIHF organization to -- since we will support the World Cup of ice hockey that will take place in May in Switzerland. As I mentioned before, we were very active in delivering new products. We have developed more than 150 new products in 2025 that will support our future growth in 2026, 2028. And of course, we've been focusing a lot in releasing new products in our growing markets like Central Europe as well as North America to support the demand coming from those markets. Moving to Slide #7. We did also important progresses when we talk about our sustainability journey. We are pretty proud about that because we have clearly set a direction that is getting closer to our long-term financial target -- sorry, the long-term target. We achieved 28% renewable and recyclable material within our products, moving up from 25% that we had in 2024. So a significant improvement that is supporting us towards our target of 50% by 2030. Then we reduced by 38% our CO2 emissions. I remind you the baseline is 2022. This was possible for Scope 1 and 2 also due to the start-up of our operation on that are -- as you remember very well, reflecting CO2 emissions in the current setup. We also reduced significantly our accident frequency from 4.6 last year to 3.7% this year. There is still a lot to do. Obviously, having new operation, we are improving day by day also on the new site. But I think also when we look at this kind of KPIs, we are improving significantly compared to previous year. And now let's move to the financial performance. So moving to Slide #9. Well, we have been navigating in a pretty stable market in 2025. The passenger car tire market was pretty stable both in Europe as well as in North America. We are less exposed to the truck tire market remain stable as well. We are more exposed to the agriculture and forestry tire market that was down 5% in the replacement channel and 10% in the original equipment segment. So the market was not really supporting our journey, but we have been obviously navigating well in these market conditions. I think we will see that the quarter 4 2025 was our best quarter of the last 3 years. While sales remained pretty flat, and this is also driven by the fact that in quarter 4 2024, we were heavily pushing for higher sales. This year, we fully dedicated our attention to improve in terms of profitability. And this is quite visible when we look at our EBITDA improvement in quarter 4. We were up by 30% up to EUR 87.1 million or 20.9% in the relation to sales. Our segment operating profit also increased significantly by 43%, up to EUR 51.5 million or 12.3% of net sales. This was mainly driven by strong price repositioning in the passenger car tire. And of course, in quarter 4, we had also some support from lower raw material costs. We had also, I would say, a strong improvement in terms of operating profit, up to EUR 35.1 million. This is 128% more than previous year or 8.4% of net sales. Looking at the same numbers for the full year, moving to Slide #11. We were able to increase sales by 7.2% with comparable currency, and we were able to grow actually in all the regions. Our segment EBITDA was EUR 222.2 million, or plus 20% compared to previous year. It was 16.2% of net sales. Segment operating profit increased by 28%, up to EUR 91.3 million or 6.6% of net sales. And again, same as in quarter 4, strong price increases or price repositioning, and of course, in the full year, positive effect, obviously, coming from the sales volume. The operating profit was EUR 35.8 million at the end, a significant improvement compared to previous year or 2.6% of net sales. The Board of Directors has just proposed a dividend of EUR 25 per share -- EUR 0.25 per share to be paid in April 2026. Moving to Slide #12. As I mentioned before, we were able to grow actually in all the geographical areas where we operate. We were able to grow in the Nordics, in Central and Southern Europe, as well as in North America. I would say the growth in North America of 16.6% was really a good performance in terms of growth, in particular, when we talk about price and repositioning in the North American market. Moving to Slide #13. I would like to highlight when we talk about this slide about 2 things, very, very important development. The first one is the net debt -- the interest-bearing net debt that was EUR 664 million at the end of 2025. This was actually much better than what we were also estimating at the end of -- previously at the end of quarter 4 ourselves, but that was turning really in the right direction. As well as the capital expenditure was EUR 126.9 million, almost EUR 127 million. We need to remind you, obviously, this include EUR 32.6 million state aid from the Romanian government. So we were approximately at EUR 160 million in total. So moving significantly down from previous year. Cash flow also was improving, both in the quarter as well as year-to-date. So let's look at the cash flow in more details in the following slide in Slide #14. As you can see, we were able to improve the change in cash flow by over EUR 200 million. This was obviously driven by an improvement of the EBITDA, but also an important improvement of the working capital despite the growing sales. And of course, we were investing significantly less than previous year. Financial cost has gone up clearly by EUR 16 million. And then, of course, we paid a dividend of EUR 0.25 during 2025. And our debt has gone up compared to previous year. So I would say also in terms of cash development, we are improving significantly our position, and we see actually a better outlook for 2026. Moving to Slide #15, you can clearly see that we have now completed a strong investment phase that was approximately EUR 800 million between 2023 to 2025, and CapEx now is returning to a normal level in line with the depreciation. We are estimating and anticipating approximately EUR 130 million to be invested in 2026. And now stop here, and I would like to ask Jari to comment the business unit performance. Jari Huuhtanen: Thank you, Paolo, and good afternoon also from my side. I'm starting from Page 17. Passenger Car Tyres in the fourth quarter, we continued sales and profit growth. Our net sales was EUR 244.1 million and net sales increased by 3.9%. Average sales price with comparable currencies improved, and the share of higher than 18 inches tires increased significantly. Segment operating profit was EUR 32.3 million or 13.2% of the net sales comparing to last year, EUR 13.6 million or 5.7%. Segment operating profit improved due to price increases, favorable product mix, and lower material costs. In the next page, we can see Passenger Car Tyres net sales and segment operating profit bridges. Net sales in the last quarter increased by EUR 6 million. And again, we can see very positive improvement coming from price/mix, plus EUR 20 million. On the other hand, sales volume was down by EUR 11 million, and then some headwind, mainly from the U.S. dollar, minus EUR 3 million. In the segment operating profit bridge, the same positive price/mix, plus EUR 20 million. And now first time in 2025, we had positive contribution coming from the material costs, plus EUR 6 million. Sales volume in the operating profit was slightly down, as well as SG&A, otherwise quite neutral changes comparing to the last year. In Page 19, we have Passenger Car Tyres net sales components and quarterly changes. In price/mix, we can see that this was now third quarter in a row that we reported quite significant positive change comparing to the last year numbers. In the fourth quarter, price/mix positive impact was 8.5%. Volume change was minus 4.6% and currency minus 1.4%. Moving to Page 20, Heavy Tyres. In the last quarter, lower volume affected net sales. Net sales was EUR 60 million and the change in comparable currencies, minus 2.8%. And net sales decreased caused by lower volume of forestry tires. Segment operating profit was EUR 6 million or 10% of the sales, and profitability declined mainly due to lower volume, weaker product mix, and inventory valuation, which had a positive impact on last year numbers. And Vianor in the last quarter, operating profit was stable. Net sales was EUR 132.4 million and net sales with comparable currencies decreased by 2.7%. And sales was impacted by the mild winter in the last quarter. Segment operating profit was EUR 11.2 million or 8.5% of the net sales and segment operating profit was exactly at last year level, EUR 11.2 million. Then handing over back to you, Paolo, with assumptions and the guidance. Paolo Pompei: And before we move to the guidance, I would like to say, first of all, thank you to the whole team. This was for us an important year of transformation, moving really from managing a strong transformation to create -- start to create value -- future value for our own shareholders. This has been well managed by the team who has been working hard in multiple dimensions, and we'll be happy also tomorrow to talk about our journey and how we will be able actually to improve further our performance for the years to come. But let's move to the assumption and guidance that is also very, very important. We are expecting for 2026 net sales to grow compared to previous year and our segment operating profit as a percentage of net sales to be between 8% to 10%. So we are becoming more specific about our guidance because we want to make sure that you will be able to follow our own journey with more information and more precise information now that our journey is becoming more and more reliable and more and more easy to manage when we look at our future development. The tire demand from the Nokian tire market is expected to remain pretty flat in 2026. So we are not expecting the market to grow significantly. Of course, the development of the global economy, as well as the geopolitical situation or trade tariff is creating some uncertainty and some volatility. But obviously, the improvement is supported by new high-performing product, price mix, and, of course, efficiency improvements that will be still having a strong effect in the years to come. Before to move to the question and answer, I would like to remind you that we have appointed a new CFO. He will start latest 15th of April 2026. So we will have the opportunity with Jari to keep working together on the quarter release. Timo Koponen is the appointed new CFO. He will be -- he has an extensive experience in the financial operation. He has been in important companies such as Normet, where he is currently the CFO, Lamor Corporation, but also he had an extensive career in Wärtsilä, Hackman as well as Konecranes at the beginning of his career. So we'll be happy to present Timo as soon he will be able to join us latest, as I said, by the 15th of April. And we remind you that tomorrow, we will held our Capital Market Day. This will be done in -- actually in here in Helsinki in the Sanding Up Hotel. So you are really welcome to join, and we hope to see you tomorrow at 2:00 p.m. to discuss together our new financial targets as well as our new journey up to 2029. We can now move to the question and answer, and we look forward to your questions. Operator: [Operator Instructions] The next question comes from Akshat Kacker from JPM. Akshat Kacker: I have 3 questions, please, and I will take them one by one, if possible. The first one on end markets, and what your peers have been saying recently. So Goodyear last evening talked about global tire shipments being down 10% in the first quarter. And I understand they do have exposure to the truck business, and there are some weather-related impacts in the U.S. But could you just give us a download on how you're seeing the inventory situation in both Europe and North America? And how do you expect the start of the year in terms of sell-in volumes, please? Paolo Pompei: Thank you very much for your question. Obviously, comparing Nokian Tyres with Goodyear and other companies, I need to remind you that, obviously, we are mainly focusing on specific segment, while Goodyear obviously is exposed to a larger scope. In general, we see, I would say, a healthy development of the inventory. So we believe that from the pure dealer wholesaler point of view, the inventory were pretty stable during 2025. And we see a pretty stable also consumer demand. So this is not really affecting our own business. Of course, when we look at the quarter 4 performance of Nokian Tyres, in particular, we should not forget winter came pretty late. So in some way, we were affected by a lower, let's say, a mild winter season in quarter 4. Fortunately, since, I would say, before Christmas, then winter started to come and started to come heavily in Europe, both in the Nordics as well as in North America. So this is also making us confident about the inventory development of 2026 because obviously, a stronger winter for a company like us that is strongly exposed to the winter tire business or all-season business. It's obviously something that is helping the inventory to be released to the end user. And consequently, we can anticipate that from the inventory point of view, we don't see major issues in 2026. Akshat Kacker: And the second question I have is on your top-line assumptions. When I think about 2026, you are talking about top-line growth. Could you just help us understand that better? What kind of growth assumptions are you working with, either in the passenger car business or for the group overall? And what does that mean in terms of volume growth for the business in 2026? That's the second question, please. Paolo Pompei: Thank you also. This is a very important question. When we say growth, we are expecting 1-digit growth. This is the best visibility we have at the moment, and it's also reflecting our strong focus on profitability improvement. So what I mean is that we are not going to look for market share growth. We are not going to fight for a higher volume as far, we don't see those volume will deliver value. This was the journey, as you know very well, that we started in 2025, and we will keep carrying this journey in 2026. So when we say growth, we are, at the moment, indicating single-digit growth. Akshat Kacker: And the last question is on the definition of the segment operating profit and operating profit. The question is on the IFRS exclusions. I thought the idea was to move away from any excluded costs in the medium term. Could you just tell me your recent view on how you want to tackle these exclusions going forward? And what do you want to book in those one-off costs, please? Paolo Pompei: Yes. We have anticipated several times that we will gradually go away from the exclusions concept. Obviously, we'll do it gradually because last year, we had EUR 70 million exclusions in 2024. In 2025, we had EUR 55 million exclusion. So we will go gradually down when we are -- we will discuss tomorrow our financial targets. Obviously, our financial targets will be very close to segment operating profit equal to operating profit. This is obviously a gradual process. So you can expect a gradual reduction, obviously, will carry a gradual reduction will carry on, obviously, up to 2027, 2027-2028. Operator: The next question comes from Thomas Besson from Kepler Cheuvreux. Thomas Besson: I have a few questions. I'd like to start with just a follow-up on the previous question. It's very difficult for analysts to make a forecast if we don't know what your exclusions are going to be. Can we assume, as you said, that in '29, it should be almost 0 that you're going to see 2026 exclusion go down by EUR 15 million or EUR 20 million, the same way the decline between '24 or '25? Or is it not going to be a linear decline? Paolo Pompei: I think your assumptions are correct. Obviously, you will -- I mean, at the moment, we are not planning any exclusion. There are no specific projects that will come up later on. But at the moment, we are not planning any specific exclusion, for obviously, we will go down EUR 15 million, EUR 20 million year-on-year to get obviously to 0. So your calculation and your assumptions are pretty correct. Thomas Besson: Second question, I'd like you to discuss about the [indiscernible] market and how you see that developing for -- no in 2026. Of course, you have a specific exposure to forestry and ag in specific markets. Do you see these end markets showing signs of a turning point or not yet? Are you assuming in your 2026 guidance that the end markets in the [indiscernible] segment grow or not? Paolo Pompei: This is a very good question. Obviously, you know very well that the agriculture and forestry market has been cyclical since I was born, meaning that it is up and down. It's been always quite difficult to see when the market was going up and down. Clearly, this cycle is longer than usual. So I'm expecting the market to recover within 6 to 12 months. Obviously, this is my estimation based on my experience in that industry. And as I said, the last cycle has been pretty long. 2025 was a difficult year for the -- particularly for the forestry machinery producers. And as you know very well, we are strongly exposed to those guys. at this moment, I don't say in the immediate, let's say, in quarter 1, any strong improvement, but we should expect that something will improve starting already from the second half of 2026. Again, this is the best estimate we can do based mainly on the analysis of the historical cycles. Thomas Besson: I think you have a very good experience of these end markets. So that's very helpful. Could you also please discuss the timing of the Romanian state aid? I think you had about 1/3 of what was expected in 2025. Should we assume that to be 1/3, 1/3, 1/3 over '26, '27 as well? Or are you going to get the remainder of the aid so EUR 67 million, EUR 68 million in 2026? Paolo Pompei: Well, obviously, please remind that these incentives are not fixed. What I mean is up to EUR 100 million, and this will be dependent on the final total investment level. This is very important, we remember. So it can be any value close to EUR 100 million, but obviously, or lower than EUR 100 million, depending on the final calculation of the investment level. Clearly, we will apply for -- we have a routine of applying for those incentives year-on-year. So we could expect a second payment within 2026. But I will be very careful in giving you a strong estimation about this because, as you know, we are talking about, obviously, I told you up to the end of last year, we didn't know exactly when those incentives were coming. Finally, they came in December. The Romanian government was extremely reliable in respecting the deadline of 2025. But again, there is a strong bureaucratic process that we need to run to get those incentive on time. But the best estimation we can do will be that, obviously, the second part will come based on our investment level in 2026, and eventually the last part in 2027. Thomas Besson: I have last question. Could you comment on the evolution of pricing in Q4 and year-to-date, given that raw materials have become finally, as you are saying after 2 or 3 years, a support toharmakers' earnings. Do you see any signs of price erosion? Because oil prices have picked up again and some of the materials are going up again, pricing have held up very well. Paolo Pompei: Yes. I mean, obviously, we've been focusing a lot on repositioning our own product in 2025. So we are expecting this effect to roll over in 2026. The raw material, I would say, at the moment, we see the raw material trend favorable, but also because we have been doing a lot, we have been working hard and really improving our raw material cost, both in terms of negotiating new agreements with our suppliers, but also in terms of better utilization of the material in our own products as well as in our own manufacturing facilities. So at the moment, of course, it's very difficult to anticipate in February what will happen for the full year. When we talk about raw material, they can go up and down. And at the moment, we see raw material pretty stable. And we see obviously a positive rollover in 2025 of the good job done by the team in 2026, rewarding the good job done by the team in 2025. Operator: The next question comes from Artem Beletski from SEB. Artem Beletski: Still 2 questions from my side. So the first one is relating to passenger car tires and seasonality on that front. How we should think about Q1? Because looking at past years, you have been unprofitable in this business, but I think that those years are not that representative what comes to 2026 and the Q1 development. So maybe some inputs you can provide on that front? And then the second question is relating to price/mix outlook for this year. So it has been really strong also in Q4, up almost 9% year-over-year. Some pricing effects are likely to be fading away gradually, but you're also introducing new products. So what is the picture when it comes to price/mix outlook for 2026? So those are my 2 questions. Paolo Pompei: Thank you very much for your question. I start with the seasonality. Historically, even when I was not working in Nokian Tyres, I was observing Nokian Tyres from outside. Nokian Tyres has been always having, I would call it, growing seasonality, meaning that quarter 1 is normally very slow, quarter 2 is improving. Quarter 3 and quarter 4 obviously are improving further. This is mainly reason by our strong exposure to the winter tire business because in quarter 1, mainly we produce, and in quarter 2, quarter 3, and quarter 4, we start to release all the stock that we have produced to face the new season. We have obviously -- if you look at the performance of the last 2 years, we were negative both in 2024 as well as in 2025. Clearly, we are here to improve day by day and quarter-by-quarter. So this is really reflecting our long-term plan to improve quarter-by-quarter compared to previous year. But of course, there will be always some seasonality related to the fact that we want and we are, and we will be strongly exposed to the winter tire seasons. About pricing, obviously, we did -- the team made a very good job in 2025. That was my first priority since the very beginning to make sure that we were getting back to the level where we should be in terms of price positioning, in particular, in the new markets like Central Europe and North America. And I would say that we will see this carryover in 2026 because obviously, we should maintain this value within the company. New products that we are going to release, actually, we are very excited about the new product that we are going to release very soon in -- starting from March, and particularly for the Nordic market, will, of course, present an upgrade -- that is my -- I would say, so we are expecting an improvement in terms of positioning and mix. Obviously, as you can appreciate, we cannot make any comment about price development from now to the remaining part of the year for competitors' rules. Artem Beletski: Yes. That's very clear. But I have still one follow-up question relating to the start of this year. So we indeed have seen really no winter weather conditions in Nordics, in Central Europe, and in North America. Should we anticipate any tailwind from this weather picture during the season or basically in Q1? Or should it be the impact for, let's say, Q2, Q3, ahead of the season when dealers are taking in new tires? Paolo Pompei: I think the development of the winter this year is having a positive effect on the new season when we will start because obviously, this will -- at the moment, what we see is probably the inventory of our own customers are going down because obviously, the winter has been pretty strong, I would say, everywhere in Nordics, in Europe, in North America as well. So their inventory are now going down, and this will be a very -- I think, is a very good news for us for the new season that will start. So we are talking about really quarter 3 and quarter 4 of 2026. This is the way I see it at the moment. So you should not expect any effect today because now today is the time for our customer really to reduce their inventory. Operator: The next question comes from Pasi Väisänen from. Pasi Väisänen: Well, I would like to start with the regulation. And so what is the latest information regarding these possible antidumping duties against the Chinese tires? And if those will be kind of set, could it even affect Nokian Tyres offtake agreements, those tires coming from China to Europe? And secondly, what could be the realistic sales volume forecast for your Romanian factory this year, and also on next year when looking at this ramp-up schedule? Paolo Pompei: Thank you. Two very important questions. About regulation, obviously, you read the news as we read the news at the moment, the antidumping investigation is moving on. There will not be apparently any preliminary duties that are coming from the preliminary investigation. So I think the investigation will need to be completed. And then obviously, the European authority will decide based on the findings they will see during the investigation. There is no effect really now, and we don't expect any effect for the future in Nokian Tyres because obviously, we are mainly now sourcing from different countries than China. So obviously, the impact on Nokian Tyres, considering the latest news, meaning that there are no duties in the immediate future, will not have an impact on us because in the wild time, we have been obviously moving our sourcing to other countries that are not today under investigation. I said very clearly as well that with the ramp-up of Oradea, of course, we have been in-sourcing a lot of products that before we had, by definition, had to produce in partnership with other suppliers. Moving to the question about Oradea. Clearly, Oradea is set to now to increase significantly the production. This will be strongly dependent on the development of the sales in Central Europe. We should expect anyway, for Oradea to, in some way, double the production volume compared to this year. And -- but will be very difficult. We should be more precise during the year to give you an exact estimation of where we are going to land. It's all dependent on sales development, and the success of the new products that we are expecting will deliver value to the customers. Pasi Väisänen: And maybe still one detail regarding the ramp-up costs. So if I remember right, they were close to EUR 10 million in the third quarter, now roughly EUR 16 million. So which figure of these should be used as an estimate for the first quarter or the run rate for the full year? Paolo Pompei: As we mentioned before, we are expecting -- I can guide you for the full year because obviously, the ramp-up cost is directly proportional to the ramp-up of the production as well in Croman in Romania. As you know, in quarter 4, we have been moving from 5 days to 7 days, 24-hour shift. So this is an important step for us in order to get to a normal production level and to increase our production output. So obviously, in quarter 4, they were a little bit heavier than in quarter 3. We said before that you should expect year-on-year a reduction of our exclusion of the region of EUR 15 million, maximum EUR 20 million year-on-year moving forward up to 2028 up to 0. So this is more or less our best estimate at the moment. Operator: There are no more questions at this time. So I hand the conference back to the speakers. Annukka Angeria: It seems that there are no further questions. So it is time to conclude this call. Thank you, Paolo and Jari, and everyone who joined us online. And hopefully, we will meet many of you tomorrow at our Capital Markets Day. For now, goodbye, and enjoy the rest of your day. Paolo Pompei: Thank you very much. Looking forward to meet you tomorrow. Jari Huuhtanen: Thank you.

92天前Insight Analytics约5分钟阅读

AZN.L 2025 Q4 财报电话会议

Operator: Good morning to those joining from the U.K. and the U.S. Good afternoon to those in Central Europe, and good evening to those listening in Asia. Welcome, ladies and gentlemen, to AstraZeneca's Full Year and Q4 2025 Results Conference Call for investors and analysts. Before I hand over to AstraZeneca, I'd like to read the safe harbor statement. The company intends to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Participants on this call may make forward-looking statements with respect to the operations and financial performance of AstraZeneca. Although we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements made on this call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward-looking statements. Please also carefully review the forward-looking statements disclaimer in the slide deck that accompanies this meeting. For those joining remotely, there will be an opportunity to ask questions after today's presentations. [Operator Instructions] I must advise you that this presentation is being recorded today. And with that, I will now hand you over to the company. Andrew Barnett: All right. A warm welcome, everybody, to AstraZeneca's Full Year Fourth Quarter 2025 Presentation Conference Call and webcast for investors and analysts. I'm Andy Barnett, Head of Investor Relations. And before I hand over to Pascal and the rest of the executive team, I'd like to cover some housekeeping items. Firstly, all the materials presented today are already available on the AstraZeneca Investor Relations website. Next slide, please. This slide contains our forward-looking statements, including the safe harbor provisions, which I'd encourage you to take the time to read. We would be making comments on our performance using constant exchange rates, or CER, core financial numbers and other non-GAAP measures. A non-GAAP to GAAP reconciliation is contained within the results announcement and all numbers quoted today are in millions of U.S. dollars unless stated otherwise. Next slide, please. Here's the agenda for today's call. Following our prepared remarks, as usual, we'll open the line for questions. We will try and address as many questions as we can during the allocated time or to please limit the number of questions you ask set to allow others a fair chance to participate. We do have a hard stop today at quarter past the hour as many of us have to catch flights in order to participate in the full year roadshow. So we will need to cut it short. We'll try and get to as many people as we can. Hopefully, everybody gets a clear chance to ask a question. And with that, Pascal, great year. Over to you. Pascal Soriot: Thank you, Andy. Welcome, everyone. It's really a great pleasure to see you all again and to present our full year results. It's been a great year. A company -- if we can move to the next slide. The company delivered very strong performance, both on the financial and most importantly, the pipeline front. On the financial side, revenue grew 8% and product revenue importantly grew 10% driven by continued global demand for our innovative medicines. Our core EPS, as you can see here, grew by 11%. We had 16 blockbuster medicines in 2025, with 17 of those growing at double digits -- with 17 medicines, sorry, growing at double digit. And we have the potential to get to 25 blockbusters by 2030. Remember, when we announced our $80 billion target back in May 2024, we had 12 blockbusters at the time. We now have 16 and we hope to get 25. And many of those new ones actually are either approved or soon approved or in Phase III. So good hopes that we will indeed get to 25. At our full year results last year, we signaled that we are entering an unprecedented catalyst switch period for our company. Our R&D teams continue to deliver. We had 16 positive Phase III trial readouts in 2025. Together, they have a combined pick-year sales potential of $10 billion, as you see on this slide. In the last 12 months, we have secured 43 approvals for our medicines across major regions, helping us to sustain growth into 2026. And it's important also for me to recognize the work everybody has done in the company as far as the company to do this, in particular, our global operations colleagues, because each time we launch one product, for them it's probably 50, 60 launches, so many different SKUs around the world. So everybody has done a tremendous job across the organization. So if we move to the next slide. The strength of our portfolio is really -- was clear in 2025. And we are not taking significant steps to continue to strengthen our manufacturing and R&D footprint in both the U.S. and China. Together, our global reach and our diverse revenue streams really support our low concentration risk and ensure resilience to regional disruptions. But one to keep in mind, I know a couple of years ago, many questions we were getting where your pipeline is complicated, it's diversified. I struggled to get my head around it. I hope today, people realize better the value of this diversification. We're now talking about concentration risk. It's great to have 1 or 2 big, big products, makes you very, very profitable and make you look good. But one of those, if you lose one of those as we've seen happen to some actors in the industry lately, it really becomes very painful very quickly. So this diversification, both product-wise but also geographically, is certainly becoming more apparent as we drive growth through therapy areas, but also through regions. So if you look at this chart, we saw growth across oncology and R&I in particular, growing each 17% and 12%, respectively. CVRM, of course, was impacted by the patent expiry of Brilinta and Farxiga in the U.K. and there will be more of this, unfortunately, in 2026. Despite this, we still grew 2%. And overall, biopharmaceuticals still grow 6% and represents about 40% of our global sales. Rare disease grew 5% despite the impact of biosimilars on Soliris. I would say the transition from Soliris to Ultomiris is not totally finished, but close to being completed and Ultomiris is now growing very nicely. We continue to see increasing demand for our medicines across all our regions. Of course, growth -- strong growth in the U.S., 10%. We continue to grow in Europe. But importantly, I think I would like to highlight, attract your attention to the emerging markets outside of China. China still grew 4% despite losing Pulmicort to generics. We still grew 4%, which is quite nice, and we remain the largest pharma company in China. But outside of China, 22%. This part of the world is starting to really play an important role. As I said, Europe, we still grow 7%. Next slide, please. Importantly, our momentum through the pipeline continues. We now have more than 100 Phase III trials that are ongoing. Think about that, 100 Phase III trials. It's an enormous momentum going through the pipeline. And this year, we should have 20 Phase III readouts. And those readouts, fingers crossed, of course, if they are positive, they will collectively drive another more than $10 billion of peak revenue. And the pipeline '27 should also, again, deliver a similar number, actually slightly higher in 2027. Of course, not all, but at least the great majority of these Phase III readouts need to be positive. Importantly, you can see that there's the growing number of late-stage assets, but importantly, an increasing value per indication. As our pipeline grows, we continue to focus and prioritize. And of course, we prioritize the most valuable projects. And you can see in light pink, the average peak-year revenue per indication. That reflects the increasing individual value of projects and continuous effort we make to prioritize even though we have a lot of projects. Next slide, please. So the question is often asked of us beyond 2030. And we said back in May 2024 and we continue saying the same. We want to be a growth company until 2030, reached this $80 billion ambition, but also be a growth company post 2030. And that is why we need to continue investing in R&D. That is why we need to continue focusing on technologies, new medicines that will actually change the future of medicines and drive our growth post 2030. So you can see here the list of the 5 technologies that we prioritize and decided to invest in. And if you look at weight management, cardiovascular risk factors, we now have 2 products in Phase III, of course, are all PCSK9, for which we will get data in 2027. But we also announced that we have moved our oGLP-1 into Phase III, and we have a broad set of studies covering diabetes, weight loss in monotherapy, combination products, cardiovascular outcome studies. So we have a very ambitious plan for our oGLP-1. But beyond this, we're also investing in new products that will actually shape the future of this weight management sector, which is in the initial steps really. And the future will be made of better convenience, longer duration of action for injectables moving to weekly to monthly. And -- some of this will come from the partnership we announced with CSPC recently, but also new mechanisms. So we are waiting for data on our GLP-1/glucagon and amylin product. The GLP-1/glucagon in itself has independent value, but we also will combine it with amylin. So we should get data this year. So oral agents, long-acting injectables, new mechanisms, helping patients lose more fat and less muscle are the directions we are heading into. Now if you look at ADC and Radioconjugates, we now have 8 ADCs that are ADCs that came out of our own pipeline, our own efforts. 3 of those are in Phase III. We will get data in the first half of this year for one of those, as you can see here, sone-ve. And importantly, we have new ones, both as ADCs, but also radioconjugates that are moving through early development. We have novel linker combinations, payload combinations. We have dual payload ADC. We have radioligands. So we continue to build this, that will drive our growth post 2030. We, of course, invest in our next-generation IO bispecifics, in particular, rilvegostomig. And we combine those with our ADCs, as we've said in the past. Cell therapy, T-cell engagers, we're making good progress with AZD0120 that has good encouraging data in Phase I, but is entering Phase III this year. And we are moving as fast as we can to move it into hematology indications, but also immunology indications. And we also have very exciting data, early data for surovatamig, and it's also moving into Phase III. And on top of this, we have multiple approaches to CAR-T, not only CAR-T, but also allogeneic projects that some of them will be in the clinic this year. And we're working on the in vivo approach, as you know. And then we also have new platforms, TCE platforms. And finally, we're making progress also in our gene therapy programs. So if we move to the next one, I'll hand out to Aradhana, who will take you through the financials. Thank you. Aradhana Sarin: Thank you, Pascal, and good afternoon, everyone, and good morning to our colleagues in the U.S. who woke up very early to join us. So as usual, I'll start with our reported P&L. Next slide, please. Total revenue increased 8% in 2025. Product revenue, which consists of product sales and alliance revenue increased 10% with continued growth across all key regions. Alliance revenue increased by 38%, reflecting increased contribution from our share of profits with partnered products such as Enhertu, Tezspire and Beyfortus in regions where our partners book product sales. Next slide, please. This is our core P&L. The core gross margin landed at 82% in 2025, in line with expectations set out at the start of the year. Fourth quarter gross margin reflected the normal seasonal pattern as well as $235 million of royalty buyouts for Saphnelo and rilvegostomig, which were recorded in the cost of sales. Core R&D expenses increased by 12%, reflecting the growing number of investment opportunities in our broad and deep pipeline. At the end of 2025, we had more than 300 active trials, and as Pascal mentioned, more than 100 of these in Phase III. SG&A expenses increased by only 3% in 2025, reflecting continued cost discipline and focus on operating leverage. We continue to streamline our business, and as a proportion of total revenue, SG&A expenses decreased from 28% in 2024 to 26% in 2025. Operating profit increased by 9% with operating leverage continuing to be a key focus for the company. We manage our P&L in totality, enabling flexibility and investment decisions throughout the year. The lower tax rate seen in the fourth quarter reflected a release of certain tax provisions taken in prior years. Core EPS increased by 11%, in line with our full year guidance. Next slide, please. We continue to see strong cash flow from operating activities, which increased by 23% to $14.6 billion in 2025. We saw CapEx increasing by $1.1 billion to $3.3 billion, in line with the expectations set out at the beginning of the year. For 2026, we anticipate CapEx investment to increase by approximately 1/3 versus 2025 as we expand capacity to support future growth. This includes our recently announced U.S. and China investments and previously announced investments in our ADC facility in Singapore, all of which are multiyear projects. Total deal payments in 2025 amounted to $4.2 billion, of which around $3 billion were payments relating to past deals and the remaining were payments for deals announced in 2025 such as EsoBiotec. In 2026, we anticipate success-based milestones and sales payments relating to past deals to total around $2.5 billion. Our capital allocation priorities remain unchanged. We currently have interest-bearing debt of close to $30 billion, which is a level we're comfortable with as we continue making investments to drive future growth, expand our supply chain globally and further strengthen our R&D pipeline. Our net debt-to-EBITDA ratio currently sits at 1.2x. Today, we are pleased to confirm a second interim dividend of $2.17 per share, resulting in a full year 2025 declared dividend of $3.20 per share. In 2026, we intend to increase the annual declared dividend to $3.30 per share, in line with our progressive dividend policy. Today, we also issue our 2026 guidance. As usual, our full year guidance is at constant exchange rates. We anticipate total revenue to grow by a mid- to high single-digit percentage, driven by strong underlying momentum in the business. The growth will be delivered despite known headwinds in 2026, including VBP in China this quarter for Farxiga, Lynparza and roxadustat. Farxiga will also face loss of exclusivity in the U.S. in April. In 2025, U.S. Farxiga generated $1.7 billion or 21% of global revenues, while China represented just under half of emerging markets revenue. In Europe, which accounts for 35% of Farxiga total revenue, patent protections across EU markets extend to 2028. While the MFN deal presents a headwind in 2026, the effect is already factored in our guidance and can be absorbed given our large and growing revenue base. Despite these headwinds, we anticipate a broadly flat to slightly higher core gross margin in 2026 driven by backing out the royalty buyout and product sales mix. We expect a core tax rate between 18% and 22% in 2026 and core EPS growth of low double-digit percentage at constant exchange rates. Based on January average exchange rates, we anticipate a low single-digit positive FX impact on total revenue and neutral impact on core EPS. Next slide, please. As I mentioned earlier, we continue to make significant R&D investments in emerging areas such as ADCs, cell therapy, bispecific and late-state CVRM portfolio which have the potential to drive growth beyond 2030. As a result, we anticipate R&D expenses to be at the upper end of the low 20s percentage range of total revenue in 2026. SG&A as a percentage of total revenue has continued to decline over recent years, reflecting our disciplined approach to efficiency and operating leverage. At the same time, we're making targeted investment to support the next wave of growth with several important NME launches ahead of us, including baxdrostat, camizestrant and gefurulimab, all of which are medicines with blockbuster potential. While we continue to target a mid-30s operating margin in 2026, our priority remains to drive absolute profit growth and long-term value for our shareholders. As highlighted earlier, we remain comfortable with our current level of gross debt, we anticipate a step-up in core net finance expense for 2026 driven by higher lease expenses and lower interest income. In summary, we saw a very strong financial performance in 2025 which we anticipate to continue in 2026. Next slide, please. With that, I will hand over to Dave, who will take you through the commercial performance of our oncology business. David Fredrickson: Thank you, Aradhana. Next slide, please. In 2025, Oncology delivered total revenues of $25.6 billion, an increase of 14% on the prior year or 17% excluding the 2024 Lynparza sales milestone. Many of our key medicines have surpassed notable multi-blockbuster milestones with Tagrisso achieving over $7 billion in full year revenues, Imfinzi over $6 billion, Calquence over $3.5 billion and Enhertu over $2.5 billion in AZ revenues. This performance is a tangible demonstration of our commitment to bringing medicines with transformative potential to patients globally and is particularly notable given the headwinds from the introduction of the 20% manufacturers liability under Medicare Part D reform from last year. Turning now to our fourth quarter performance. Total revenues exceeded $7 billion for the first time, up 20% on the year, excluding the Lynparza milestone with all our key medicines in regions demonstrating double-digit growth. Tagrisso global revenues were up 10%, reflecting continued demand growth across all indications. In the first-line setting, we are now seeing a significant proportion of patients receiving a combination regimen. With FLAURA-2 being the clear preference across key markets. In earlier lines, increased adoption of ADAURA and LAURA has been another meaningful source of growth. Imfinzi and Imjudo delivered 37% and 26% growth, respectively, reflecting continued demand across tumor types. This growth is broad-based from both continued expansion of newer indications such as ADRIATIC in small cell lung cancer and NIAGARA in bladder cancer as well as increased uptake of more established indications such as HIMALAYA in liver cancer. Calquence total revenues increased 17% in the fourth quarter, driven by additional demand in frontline CLL as we maintain our class leadership position across major markets. Specifically, in the United States, we've seen our market share leadership grow over the course of the year, demonstrating our competitive positioning and differentiation. Enhertu delivered total revenue growth of 46% in the fourth quarter. Across all regions, Enhertu is seeing share gains both in HER2-positive and HER2 low metastatic breast cancer. And in China, demand continues to increase following NRDL enlistment in January of last year. Truqap revenues grew 41% in the fourth quarter with year-over-year comparisons benefiting from both inventory build in the U.S. and the reversal of pricing accruals in Europe. In the U.S., we now believe Truqap is at peak with further incremental growth to be driven by other markets. Finally, Datroway revenues of $40 million in the fourth quarter reflect our early launch momentum in late line EGFR mutated lung cancer, including an emerging leadership position in the third line. Next slide, please. The strong momentum in 2025 continues into 2026. For Imfinzi, we were pleased to see the U.S. approval for MATTERHORN in early gastric cancer at the end of November and are already seeing encouraging uptake. POTOMAC in bladder cancer will add another growth opportunity this year with the first approval expected in the first half. We expect data in 2026 for several Imfinzi combinations, including Imjudo in bladder cancer, and HCC and with Datroway in lung, with commercial launches planned in 2027, pending, of course, positive results and regulatory approvals. 2026 is set to be another landmark year for Enhertu as we further expand our position as the standard of care in HER2-positive breast cancer by bringing this transformational medicine to 3 new settings. This includes the first-line metastatic setting following the recent approval of DESTINY-Breast09, with approvals in early breast cancer for DESTINY-Breast11 and DB05 also expected this year. Looking to 2027 and beyond, we remain focused on bringing Enhertu to more patients globally, including in settings beyond breast cancer, such as lung cancer. For Calquence, we expect the imminent U.S. launch of the AMPLIFY finite therapy regimen to be an important driver of growth for the year. This complements the sustained demand in the treat to progression segment within first-line CLL, where Calquence remains the leading BTKi inhibitor. Looking ahead, we aim to leverage our broader hematology portfolio to improve outcomes through combination approaches in CLL as well as in other hematologic malignancies. Building on double-digit growth for Tagrisso in 2025, we anticipate strong performance in 2026 driven by further adoption and geographic expansion of LAURA and ADAURA in early disease and sustained leadership in first-line metastatic disease, particularly within the growing combination market. Longer term, we look forward to the results of multiple combination trials that have the potential to reinforce Tagrisso as the backbone TKI, both in later lines with SAFFRON and TROPION-Lung15 and in the front line with TROPION-Lung14. As we reflect on another strong year of growth, we continue to see sustained momentum in our oncology business heading into 2026. With a clear focus on expanding the reach of our medicines into new markets and with additional indications. With that, please advance to the next slide. I'll hand over to Susan, who will discuss our key readouts that we anticipate this year. Susan Galbraith: Thank you, Dave. So momentum continues to build across our oncology portfolio. And as we enter 2026 with a robust pipeline, we have an important opportunity to advance therapies for patients with high unmet needs. Today, I want to spotlight several key catalysts supporting our continued growth, starting with our TROP2 ADC Datroway. Last year, we saw Datroway demonstrate its profile as best-in-class TROP2 ADC with launches in HR-positive breast cancer and later line EGFR mutated lung cancer and with compelling data presented at ESMO in triple-negative breast cancer, demonstrating a 5-month improvement in overall survival versus standard of care chemotherapy. TROPION-Breast02 has now been accepted by the FDA for priority review. This year, we expect the readout for AVANZAR, a pivotal trial evaluating Datroway as the first-line lung cancer setting. AVANZAR investigates the combination of Datroway with Imfinzi and carboplatin, aiming to deepen and extend responses for this large high unmet need population. Crucially, AVANZAR will be the first trial to validate our QCS TROP2-NMR biomarker designed to identify patients most likely to respond to Datroway in this first-line lung cancer setting. Success here could enable broader application of this technology in other tumor types and across our ADC portfolio. Building on Datroway's current approval and later line EGFR mutated lung cancer, we also anticipate the readout from TROPION-Lung15, which evaluates Datroway alone or in combination with Tagrisso for patients who have progressed on a TKI. This trial aims to set new standards for second-line treatment, further reinforcing Tagrisso's role as the backbone of care in EGFR mutant lung cancer and paving the way for TROPION-Lung14 in first-line setting which can build on the success of FLAURA and FLAURA-2. Imfinzi continues to deliver transformative benefits across cancer types. And this year's key readouts in GI, lung and bladder cancer signal a third wave of Imfinzi growth highlighting the potential of combination regimens. I want to highlight 2 today. Firstly, the EMERALD-3 trial aims to bring the combination of Imfinzi and Imjudo into the local regional setting for hepatocellular carcinoma. Building on the transformative results we've already demonstrated in the later line HIMALAYA trial. Secondly, VOLGA looks to build on our existing presence in muscle invasive bladder cancer. The NIAGARA regimen established a role for Imfinzi as the first perioperative immunotherapy regimen in cisplatin eligible patients. VOLGA explores whether the combination of enfortumab vedotin and Imfinzi plus or minus Imjudo can improve outcomes for the 50% of patients that are not candidates for cisplatin. This regimen is differentiated in 2 important ways. First, enfortumab vedotin is limited to the neoadjuvant setting, aiming to optimize outcomes while balancing the overall benefit risk profile. And secondly, acknowledge in bladder cancer sensitivity to CTLA-4 blockade, VOLGA's includes an arm delivering 3 cycles of Imjudo, 2 preoperatively and 1 postoperatively with the goal of further deepening responses in this patient population. In 2026, we will also see the second pivotal readout for camizestrant, next-generation oral SERD. Last year, we shared the first Phase III data for camizestrant in patients with first-line hormone receptor positive disease with emerging ESR1 mutations. The transformational SERENA-6 results demonstrated that intervening at the earliest opportunity and switching to a more effective endocrine option ahead of progression with camizestrant ahead of progression and the switching with camizestrant offers the chance to retain control of a patient's disease for longer and thereby realizes the full potential of first-line treatment. In the second half of this year, SERENA-4 will read out, targeting a broader upfront first-line population eligible for the combination of a CDK4/6 inhibitor and an aromatase inhibitor and assessing whether camizestrant can replace the aromatase inhibitor to improve outcomes. Our confidence is driven not only by our data from the Phase II SERENA-2 and the Phase III SERENA-6 results, but also from recent readouts in the competitive space that demonstrate the value of this class in ESR1 wild type endocrine-sensitive disease. Finally, progress is accelerating across our ADC portfolio with sone-ve Claudin18.2 targeted ADC on track to deliver its first Phase III data in second-line gastric cancer in the first half of the year. These 6 trials represent only a fraction of the opportunities of our oncology portfolio, which is poised to drive continued growth. And throughout the year, we'll continue to share updates from our early pipeline, reinforcing confidence in our -- in progress on our transformative technologies and therefore, long-term growth prospects through 2030 and beyond. And with that, please advance to the next slide, and I'll pass over to Ruud to cover BioPharmaceuticals performance. Ruud Dobber: Thank you very much, Susan. Next slide, please. Our BioPharmaceuticals medicines delivered strong performance in 2025 with total revenue up 5% to $23 billion with our gross medicines substantially outpacing the impact of generic entry on a limited number of brands such as Brilinta in the United States and Europe and Farxiga in the United Kingdom. In the fourth quarter, R&I revenues were up by 10% with revenue from growth medicines having increased by 27%. CVRM revenues were 6% down on the prior year with generic competition slowing Farxiga's growth to 2% and Brilinta continuing to decline. V&I total revenue was down 33% year-on-year, largely due to the Beyfortus sales milestone booked in the fourth quarter of 2024. Next slide, please. Biologic medicines continue to gain share among severe asthma patients. Our medicines now make up more than half of the new-to-brand prescriptions for the severe asthma biologics segment in several markets. Fasenra is the leading IL-5 medicine for severe eosinophilic asthma and its product profile was recently strengthened with the launch of the EGPA indication. Overall, we expect Fasenra's positive momentum to continue in 2026, with growth in the emerging markets set to accelerate following inclusion in the national reimbursement drug list in China. Tezspire has made rapid market share gains in severe asthma since its launch and its growth potential has been enhanced by recent approvals for use in chronic rhinosinusitis with nasal polyps, where Tezspire has demonstrated that it can nearly eliminate the need for surgery. Nasal polyps are common comorbidity for asthma patients. So this approval further enhances its clinical profile. Breztri is the fastest growing medicine within the expanding COPD. We are the clear market leader in China and have been gaining share in most other major markets. Additionally, regulatory reviews are underway for asthma based on the KALOS and LOGOS trials, and we anticipate first approvals in the first half of 2026. Saphnelo, biological medicine for the treatment of SLE is continuing to grow strongly with the IV formulation having gained market leadership in several major markets. Saphnelo subcutaneous formulation was recently approved in Europe and will extend its reach to the large segment of patients who favor self-administration. We are expecting further approvals of subcutaneous Saphnelo in other regions this year including in the United States and Japan in the first half. 2026 marks a transition year for our CVRM franchise. We anticipate Lokelma's strong growth to continue into 2026 driven by market leadership within the growing potassium binder class. We have also increased additional manufacturing capacity to support our growth ambitions. In 2026, as mentioned, we anticipate Farxiga VBP implementation in China during the first quarter and the first generic competition in the United States in April. While Farxiga revenues in the United States, Japan and China are expected to decline this year. We anticipate strong demand growth to continue in Europe and the emerging markets. Looking beyond 2026, dapagliflozin fixed dose combinations have the potential to unlock new waves of medicines for patients, and we already have 3 fixed dose combinations of dapagliflozin in Phase III development with the first 2 Phase III trials due to readout in 2027. We are currently preparing for the launch of baxdrostat in uncontrolled and treatment-resistant hypertension. The U.S. approval is anticipated to broadly coincide with the entry of generic dapagliflozin in this market, allowing us to leverage our existing commercial infrastructure. While baxdrostat will not be a major contributor to revenues in 2026, the clinical data supporting its use is compelling, and the long-term potential of this medicine is substantial with peak revenues from the products -- from this product franchise expected to exceed $5 billion. I will now hand over to Sharon, who will provide further details on the upcoming developments in our pipeline, including ATTR cardiomyopathy which represents a major potential growth driver for the BioPharmaceuticals business. Sharon Barr: Thanks, Ruud. Next slide, please. We saw strong progress across our biopharma clinical pipeline in 2025 and are entering 2026 with a broad and deep pipeline across CVRM and R&I. Today, I want to highlight 2 high-value Phase III catalysts anticipated this year positioned to deliver meaningful impact for patients and AstraZeneca's growth ambition. Starting with Wainua. We expect the cardio transform readout in ATTR cardiomyopathy in the second half of this year. Wainua is an anti-sense oligonucleotide designed selectively to suppress hepatic production of transthyretin addressing the upstream driver of amyloid fibril formation. ATTR cardiomyopathy is often underdiagnosed as symptoms overlap with common cardiac issues. Leading to delayed diagnosis, poor prognosis and high morbidity. This highlights the need for better diagnostics and innovative new treatment options. CARDIO-TTRansform is the largest study ever conducted in this disease, enrolling more than 1,400 patients to receive Wainua or placebo on top of standard of care for 140 weeks. The trial's primary endpoint is a robust composite of cardiovascular mortality and recurrent cardiovascular clinical events designed to capture clinically meaningful outcomes. Importantly, Wainua can be administered once monthly as a single dose via a subcutaneous auto-injector, enabling convenient at-home dosing. That's an advantage for this largely aging population. Wainua represents just one component of our leading amyloidosis portfolio, we believe that multiple mechanisms of action will be needed to address the full spectrum of ATTR cardiomyopathy, and we look forward to initiating clinical development of Wainua in combination with our DepleTTR, cliramitug in the near future. Turning now to the Phase III program for our differentiated IL-33 biologic, tozorakimab in COPD, which we anticipate will read out in the first half of this year. We have 3 trials ongoing. OBERON, TITANIA and MIRANDA, which have the potential to redefine the management of this complex heterogeneous and progressive disease. The trials all have the same primary end point, the reduction in annualized rate of moderate-to-severe COPD exacerbations in former smokers. The program will also evaluate efficacy in a broader COPD population, irrespective of eosinophil count or smoking status and explores a range of dosing regimens to maximize the potential population that could benefit from tozorakimab. Should the results be positive, tozorakimab could be the first-in-class IL-33 biologic for COPD. I also wanted to take the opportunity to highlight advances in our weight management portfolio. We are delighted to announce today that our once-daily oral GLP-1 receptor agonist, elecoglipron formerly known as AZD5004 met its primary endpoints in both the VISTA and SOLSTICE Phase IIb trials conducted in people with obesity or type 2 diabetes, respectively. We look forward to sharing these data at the American Diabetes Association meeting in June. Based on the strength of these data, we are progressing elecoglipron into Phase III development this year. We look forward to sharing more details once these trials initiate. Our overarching goal is to create a weight management portfolio that addresses obesity and its interconnected conditions. Our diversified pipeline uniquely positions us to explore innovative novel combinations. And alongside elecoglipron, we continue to advance our broader portfolio of different mechanisms, including a selective amylin receptor agonist AZD6234 as a monotherapy and in combination with our dual GLP-1/glucagon receptor agonist, AZD9550, both of which are expected to deliver first Phase II data this year. We also continued to invest in our earlier programs, augmented by recent external innovation to further strengthen our pipeline in this space. And with that, please proceed to the next slide, and I'll pass over to Marc to cover rare disease. Marc Dunoyer: Thank you, Sharon. And can I get to the next slide, please? Rare disease delivered total revenue of $9.1 billion in 2025, up 4% over the next -- last year, driven by growth in neurology indications, increased patient demand and continued global expansion. In the quarter, Ultomiris grew 15%, driven by patient demand across indications, including the competitive gMG and PNH markets. Soliris revenues continued to decline due to the successful conversion to Ultomiris as well as biosimilar pressure. Strensiq grew 15% due to strong demand with a quarter benefiting from tender or the timing. We also saw strong underlying demand for Koselugo offset in the fourth quarter by all the timing in certain tender markets. We continue to see great momentum across the rare disease portfolio with further approvals for Koselugo and Ultomiris, expanding our geographic reach for these medicines. Five years after announcing the acquisition, I'm pleased to report that Alexion has delivered low double-digit compounded annual growth from 2020 to 2025 at constant exchange rates. We have also significantly expanded our global reach. At the time of the acquisition, Alexion medicines were available in 20 countries by leveraging AstraZeneca footprint and the outstanding efforts of our teams, our life-changing rare disease therapies are now available in more than 75 countries worldwide. Finally, we have made meaningful progress in deepening scientific collaborations between AstraZeneca and Alexion researchers, further accelerating innovation. Our work across similar disease areas, such as transthyretin cardiac amyloidosis of the development of our dual CD19/BCMA CAR-T across multiple therapeutic areas are 2 evidences of this. This integrated approach enables the seamless exchange of technologies and advancements across medicinal and process chemistry, molecular editing and library platform. We have now more than 120 collaborative initiative across AstraZeneca and Alexion which are advancing our ambition to pioneer new treatments and lead in our core therapeutic area. Please advance to the next slide. In 2026, we expect Ultomiris to grow -- to continue to grow, driven primarily by neurology indication including new-to-brand patients and those switching from Soliris as well as further market expansions. We indicated peak-year sales for Ultomiris to be above $5 billion with contribution from both existing and new indications, such as HSCT-TMA, IgAN and CSA-AKI. In the first half of the year, we anticipate high-level results in IgAN where we have guided for the first endpoint at 34 weeks assessing proteinuria. If positive, we will explore the potential for an accelerated approval in certain major markets. We also anticipate results from adult patients with HSCT-TMA. This data built on a positive finding from the single-arm pediatric study completed in 2025. For Strensiq, we expect continued adoption supported by hypophosphatasia guidelines, which have led to increased disease awareness, diagnosis rates and accelerated new patient starts. As global market expansion progresses, our priority remains advancing disease education to strengthen market readiness ahead of the readout for efzimfotase alfa which we anticipate in the first half of 2026. Patient demand and geographic expansion in pediatric patients, in addition to the recent approval in adult patients will continue to drive Koselugo's growth. We are well placed to deliver another year of strong performance, supported by global demand for rare disease medicine as well as meaningful indication expansion opportunities. Please advance to the next slide. Our antibody-based depletion portfolio for cardiac and systemic amyloidosis continue to advance with a focus on the 2 most prevalent form of amyloidosis, transthyretin and light chain. We announced the first Phase III results last year for our most advanced pipeline candidate, anselamimab. In the CARES Phase III program, anselamimab demonstrated a highly clinically meaningful improvement in both all-cause mortality and cardiovascular hospitalization in the subgroup of patients with kappa light chain amyloidosis. Global regulatory reviews and submissions are underway. We have also expanded our collaboration with Neurimmune in December '25 to include NI009, a fibril depleting antibody for the lambda light chain amyloidosis which represents 80% of the light chain population and complement anselamimab to address the broad patient population. We have accelerated development plan to move this molecule as quickly as possible into the clinic. Cliramitug, our first collaboration is Neurimmune is now in Phase III for ATTR cardiomyopathy. The DepleTTR trial completed enrollment, a full year ahead of plan with more than 1,000 patients recruited. As Sharon mentioned, we also plan to initiate a Phase IIb of our silence Wainua with our DepleTTR cliramitug and we believe the combination of these 2 medicines has the potential to deliver a new standard of care for patients with ATTR cardiomyopathy. The data generation to date reinforce our belief that targeted amyloid fibril depletion with specific antibodies can significantly reduce mortality and hospitalization transforming the course of the disease for these patients. And with that, please advance to the next slide, and I will hand back to Pascal. Pascal Soriot: Thank you, Marc. Please, next slide. As you can see here, the momentum of our pipeline continues, not just in 2026, but also through to 2027. We have a significant number of high-value Phase III trials that can read out and support our growth to 2030 and beyond. And in 2026 alone, the risk-adjusted combined figure revenue opportunities in excess of $10 billion, as I said before, and again, the same in 2027. So if we move to the next slide. In closing, we saw strong commercial momentum and great delivery across the pipeline in 2025. And our confidence in delivering the $80 billion ambition by 2030 is definitely increasing. With our broad portfolio and our deep pipeline, the meaningful progress we're making with our multiple transformation technologies, we can definitely reach this $80 billion ambition we have, but also continue to grow post 2030. So if we move to the next slide. Before we move to the Q&A, I want to thank Andy Barnett for his amazing contribution as Head of Investor Relations over the last few years. I know he has enjoyed very much interacting with you, and I'm sure you have enjoyed interacting with him. He's very knowledgeable. He's a great guy and he has a great sense of humor. So definitely a pleasure working with Andy, certainly for me and for the team, and I'm sure it was the case for you. I want to wish Andy a great success in his new role as Country President for Japan. I'm sure he will make a great contribution to our company in Japan, just like you did to the IR function. I also want to welcome Joris, who must be somewhere in the room, okay. I welcome Joris. So Joris was until recently the Country President for the U.S., Biopharma and overall President, Representative of AZ in the United States. And Joris has driven tremendous growth throughout our company in the United States, in particular, built Farxiga to what it is, Fasenra, Tezspire and really done a great job. Joris before being in the U.S. worked in Asia. And so he has really great experience across Asia, the U.S. and Europe. And since he joined the company in 2000. So I'm sure Joris will also do a great job in IR, and I'm sure you'll enjoy working with him. So if we move to the next slide, as Andy mentioned at the start of the call, please limit the number of questions you ask to allow everybody a fair chance to participate. [Operator Instructions] And with that, let's move to the first question. There are so many first questions. Over to you. Luisa Hector: Thank you, Pascal. So I've got 2 questions, please. I wanted to think a little bit about the growth beyond 2030, but it does connect to the readouts in 2026. You talked about the $10 billion risk-adjusted peak sales potential. Can you give us any more color on that, the mix of the $10 billion, the risk adjustments you've assumed any assets, in particular, dominating the $10 billion? And should we assume higher success rates now for AstraZeneca after last year's strong performance? So that's the readouts this year and the link to the growth beyond 2030. And then I'd love to hear an update from Iskra on China, 2026, a lot of moving parts but some good new launches and reimbursement going on as well. So just an update there on how we should think about '26 and perhaps some color on profitability of China versus history versus the rest of the group? Pascal Soriot: Thank you. Iskra, do you want to cover the second one? And maybe for the first one, we'll have to get input from a number of people there. But go ahead, Iskra to start. Iskra Reic: Thanks, Luisa, for the question. So let me start by saying that we are very happy to see the strong performance in China in '25 and it definitely gives us a confidence... Pascal Soriot: Can you speak in the microphone? Iskra Reic: So let me try. Is it better now? It definitely gives the confidence in the outlook of '26. Now when you think about '26 in China, I think there are 2 main components. One is obviously the headwind of the VBP for Farxiga, roxadustat and Lynparza. And as we have always seen, there is expectations from the decline post VBP that is driven by both price decrease as well as volume reduction. But when it comes specifically to Farxiga, I do believe that we can also expect the brand recovery in the midterm, and we saw the similar trend with the Betaloc and CRESTOR in the past. And it is really driven by the strong brand perception, strong brand loyalty and recovery, specifically in the retail channel. When it comes to the tailwinds in China, we feel very confident that we will continue to see the growth of the new launches, specifically driven by our success of including Fasenra, Truqap and Calquence tablets in the NRDL starting 1st of January this year. When you think about the Enhertu performance post-NRDL, they've mentioned that in his presentation, we saw very strong uptake and our ability to include Enhertu in the more than 1,000 hospital listings in the less than a quarter gives us the confidence that we will be able to see the successful launches going forward. When it comes to the profitability, profitability in China is still lower than the group. But I think you always need to think about a huge volume and huge unmet need and opportunity there and put that in the perspective of the -- a bit lower prices than in the rest of the world. Pascal Soriot: In your first question, I had like 2 sub-questions really. And then the second sub-question was about success rate. And I wish that we continue experiencing the same success rate, but I don't think we can promise this because, as you know, the risk is part of our industry, really. And we have to brace and accept the fact -- brace for the fact that we actually will experience failures. Now having said that, I'd like to ask maybe Susan to do 2 things. One is to talk about the joint venture, the project, we are working together with Tempus and using AI and multi-model model to actually help improve the probability of success in our studies and better shape them. So you can sort of give a little bit of highlights on this and then comment on what are the 2 or 3 big projects, not too many, 2 or 3 big projects you think will drive growth in oncology hematology? Susan Galbraith: Yes. Thanks, Pascal. So my reflection, if you like, of the last decade in oncology about the success rates we've had has been predicated on being able to identify the right patient population to treat. You've seen that there's been important with Lynparza, it's been important with Tagrisso. I think that continues to be something that's important. The foundation model work that we go with Tempus and Pathos as the ambition is that we'll have the largest multimodal foundation model that will take the unstructured data that's in patient records, the lab data, the genomics data, [ transit ] data were available imaging and pathology and integrate all of that into the largest foundation model for oncology because of the large data set that we have with Tempus and Pathos. The hope is, I mean what we've already been doing is using those kinds of real-world evidence data sets to both help design our Phase III trials and predict what the control arm performance is going to be, particularly when you're going in with a new biomarker, you don't necessarily have the historical literature data, but if you can benchmark that using these data, it's helpful. So the idea is that you would reduce the uncertainty in both the design and the production of outcome of Phase III trials by using these foundation models. The hope is also that you could better identify the patient populations where the biology is a little more complicated. So we're still relying, for example, on PD-L1 in the IO space as the only biomarker that has really broadly been uptaken. And everybody is aware that, that is imperfect. So I think this technology can really help in those spaces. Still to be proven, but I'm optimistic that, that can make a difference. Pascal Soriot: Dave, do you want to cover the second part of the -- and then Ruud if you could also talk about a couple of products in biopharma with [ drive growth ]? David Fredrickson: So Luisa, very specifically on the readouts that Pascal went through. EMERALD-3 is a blockbuster plus opportunity in HCC. And I think builds off of a program that has currently success with Imfinzi. Certainly, when you take a look at data across AVANZAR07, that is for just the AZ share alone, multi-blockbuster opportunity if those studies are positive, and we've got an opportunity to move forward with that. SERENA-4 is multi-blockbuster in terms of the opportunity that it represents. And then lastly, PAC-9, we don't talk a lot about PAC-9, but I think PAC-9, if that study were to come through, gives an opportunity to actually build off of our Pacific leadership where we've been able to enjoy a space without having much competition coming into the area. So those are the highlights I'd hit. Ruud Dobber: Yes. And a few highlights from a biopharma perspective, laroprovstat, our oral PCSK9. We're going to expect the first data set in the course of 2027 is, in our view, a very high potential -- potentially a $5 billion-plus potential. Clearly, baxdrostat, I'm sure many more questions about baxdrostat. It's not only the mono component but also the combination, I think, with the SGLT2, dapagliflozin is a very important one. And then the other 2 combinations, balci and dapa in kidney disease and heart failure, there's a high unmet medical need. And the combination of zibotentan and dapagliflozin has sales potential of between $3 billion and $5 billion. So there are a couple of big products. And then, of course, the bonus will be potentially those, as mentioned by Sharon, is a high unmet medical need still in the COPD space. If the product is hitting the TPP, I firmly believe that this will be a multibillion-dollar opportunity as well. Pascal Soriot: I got to stay on this table, but please, 1 question. I'll pick 1 question and give the second one. If you have a second one follow-up. Richard Vosser: Richard Vosser from JPMorgan. Maybe thoughts on the implications of the lidERA result over to the SERENA-4 trial in terms of design. Susan, you mentioned choosing the right patient population. Just thoughts on what you've done in SERENA-4 on the back of the lidERA result. And maybe if I can sneak it, thoughts on CAMBRIA-1 as well, given what lidERA just does that impact the commerciality. Pascal, ignore that if that is 2. Pascal Soriot: I will grant you the second one because it's still related to CAMBRIA anyway. So over to you, Susan. Susan Galbraith: So I mean, I think what we've now seen is proof, as we've been saying consistently that is -- because of the mechanism of action of both full antagonism and inhibition of estrogen receptor, but also degradation can have activity not just in the ESR1, but in the endocrine-sensitive is so wild type. And I think you've seen that. We've been saying it for a while. But when you look at the second-line setting, that is less endocrine sensitive and so the effect size has been smaller there. So the basis of SERENA-4's confidence is that we have try to design the study to enrich for the endocrine-sensitive components of the first-line setting. That's based on recruiting patients with recurrence of early-stage disease after at least 2 years of its standard adjuvant therapy because those that are less adequate sensitive will progress rapider than that. At least 12 months must have elapsed since the patient's last dose of the adjuvant AI. And then there's this some patients with de novo stage IV disease. So these are clinical features that are enriched -- to enrich for the endocrine-sensitive patient population. Of course, what you've also got is potentially the prevention of emergence of ESR1 mutations because you are essentially blocking that clonal selection drive because of the mechanism of action. So that's what underpins our confidence in SERENA-4. And I think having seen the fact that you've got activity in an adjuvant setting in an endocrine-sensitive population increases the confidence in that. But obviously, there still those trial design features. And of course, it's in combination with the CDK4/6 inhibitor. To your second question about CAMBRIA-1. Again, I would just point out that we're the only company that has 2 adjuvant studies with our SERD, 1 designed for the patient population after 2 to 5 years of [ CDK4/6 ], which is CAMBRIA-1 and the other from the patient population newly diagnosed, which is CAMBRIA-2. That gives us the opportunity to be able to -- if we're successful to access the largest group of patients in the adjuvant setting from those 2 different patient populations. And of course, the other difference is that we are allowing a combination with abemaciclib, which is going to be very relevant as the data continue to mature for CDK4/6 in the adjuvant setting. So I think that was the basis of the trial design that we had, and we're optimistic that those trials will read out positive given proof of principle, if you like, that this class can have a difference there. Pascal Soriot: Next we just finished this table. Matthew Weston: I think I've got the mic Pascal, if I can. It's Matthew Weston from UBS. One question, please, on elecoglipron, if I can. You've made the announcement that you're moving to Phase III, which I assume indicates confidence in the Phase II profile that you've seen. But I could read that 2 ways because you also have a unique target product profile, I think, in Phase III because you're looking about weight management in combination with other parts of your cardiovascular portfolio. So can you make some comments as to whether or not for you being confident to drive that move to Phase III means that you think you have efficacy at least as good or better than the competition or whether or not you think that it meets your target product profile of at least achieving modest weight loss which you can then use in combination with other agents? Pascal Soriot: Let me just answer this one because it's easy to answer, actually is, we would never move a product in Phase III and unleash the kind of spend we have. We are committing to if we didn't think we have a product with a competitive profile. So I think the short answer to your question is, we believe we have a very competitive profile and it doesn't rely on combinations. It actually relies on the amount of therapy itself. And of course, combination comes on top. But if monotherapy was not competitive, it would be hard to move it into Phase III and unlock so much investment. Maybe, James. Unknown Analyst: James from Barclays. One of the Phase III readouts in the first half is efzimfotase alfa which I think had been based is a $3 billion to $5 billion opportunity. But I'm aware there's 3 different trials. So is it all or nothing to get the $3 billion to $5 billion or other scenarios where some trials are more or less successful? And how would that break down? Marc Dunoyer: Yes. So thank you for asking the question there. As you are mentioning, there are 3 trials. There are 2 trials in the pediatric population, where Strensiq was originally approved. One of this trial is a switch from Strensiq to efzimfotase. There is another trial in the pediatric population in the naive -- in Strensiq-naive population against placebo. And the third trial combines both adolescent and adult. You know that the level of Strensiq, depending on the jurisdiction is usually focusing on the pediatric population. And sometimes, we have adult with pediatric onset in the label, but the intent of the efzimfotase program was to test in the totality of the population from pediatric, adolescent, adult -- and even adult of a certain age, if I may say, So this is what this program of 1850 covers, so that we would know the answer to the question. We have been asking a lot about Strensiq. And we are now expecting the results in the first half of 2026 and we'll put all this together and hopefully, we'll be able to submit for a product that is much easier another enzyme therapy product, but much easier to utilize than Strensiq, which has to be administered every day or every other day, which, of course, is very cumbersome. So this product would be provided once every other week, it would provide a great benefit. And if we demonstrate efficacy and safety in the total population, this would make efzimfotase alfa a product several times the value of Strensiq. Michael Leuchten: It's Michael Leuchten from Jefferies. I think this is for Dave and Susan. TROPION-Lung07 now has QCS in the protocol. Is that also the plan for TROPION-Lung08? And can you talk about the relative importance of AVANZAR versus TL07 or TL08? Susan Galbraith: Do you want to go first? Okay. Thanks for the question. So TROPION-Lung08 is only in the PD-L1 greater than 50% patient population, which is a smaller segment overall. So if you just look at the trial characteristics, it makes sense for the biomarker to be applied within the TL07 population. And that's what the priority has been there. Very similar to what we've seen with the AVANZAR redesign where we put it at the -- in the ITT, but also in the biomarker-positive patient population. Obviously, between AVANZAR and TL07, we'll be answering the question about the added benefit of platinum in addition as well. And I think these are all important trials that have the opportunity to really position Datroway as a key component of the first-line setting across multiple segments of that patient population. Graham Glyn Parry: Graham Parry from Citi. So it's another question follow-up to Richard's question on camizestrant in the adjuvant setting. So CAMBRIA-1 is looking at essentially switch from aromatase inhibitors, but the giredestrant and lidERA study suggest that perhaps that market opportunity might be quite small over time if giredestrant is become standard of care in naive patients in the intermediate risk setting. So is there any plans to run a lidERA-like study or would you be looking predominantly the market opportunity here coming in the high-risk population in combination with [ Verzenio ]? Susan Galbraith: So just to go over again, the CAMBRIA-2 studies in a setting that's very similar to lidERA, but it does allow for the combination with abemaciclib, which I think is going to become an increasing piece. So of course, what lidERA doesn't answer is relevance of the oral SERD in that context. And given that we think that CDK4/6 prevalence in the adjuvant setting is going to grow. I think it's very important to have the data with and without that combination and after a period of CDK4/6. That's why I'm saying, when you look at the 2 trials in totality, I think it gives us the opportunity to have the greatest segment of the patient population in the adjuvant should they both be positive. I don't know, Dave, if you want to comment? David Fredrickson: Yes. I'd simply amplify and echo some of the things that you had said previously, Susan on this, which is, if you think about CAMBRIA-1, which is in this 2- to 5-year population, that's the prevalent population. And so while it's true that over time, the upfront CAMBRIA-2 population, we would expect to grow. There is a large population of patients that are prevalent on AI and AI CDK4/6. And the program allows for looking at both AI and CDK4/6 combinations. It's the broadest program that also allows both that prevalent and incident pool, and it allows us to be in a competitive set of time lines by putting it together in the way that we have. Pascal Soriot: Thanks, Dave. Can we go here and then maybe there. Simon Baker: Simon Baker from Rothschild & Co Redburn. One if I may, please, probably for Sharon. Could you just remind us of the points of differentiation of tozorakimab both in terms of the molecule and trial design and how that underpins your confidence in the program? Sharon Barr: Sure. Thanks for the question. So the story about tozorakimab is the same one that we've been telling all along, which is that we think we have a highly differentiated IL-33 biologic. And the reason we think it's differentiated is because our molecule is able to hit both the ST2 pathway as well as the RAGE EGFR pathway and importantly, to impact signaling downstream event. And why does that matter? Because being able to inhibit signaling through RAGE EGFR is impacting mucus production and epithelial remodeling. And that's incredibly important in COPD where mucus production drives exacerbation, exacerbations drive mucus production, and it gives you a vicious cycle. So we think that's a really important component to our IL-33. Now as you know, we've designed a broad study to allow us to examine the efficacy of tozorakimab in current and former smokers. Our primary readout is in smokers, but we're looking at a broad population across eosinophil levels and across smoking status so that we have the opportunity to bring this to the broadest possible patient population. Pascal Soriot: Can we tie one more question in the room, and then we'll take Steve Scala's question online. Can we get a microphone over there? Christopher Uhde: Christopher Uhde from SEB. It's on Calquence and the room for growth. It's done a nice job beating again lately. Consensus has about 10%, give or take, growth for '26 or '25 and then another 10% from then to about 2031, so peaks $4.4 billion. So will AMPLIFY live up to its name? Or is consensus in the right ballpark? That's my question. And are there any other meaningful gating events to unlock? David Fredrickson: So thanks, Chris, for the question. AMPLIFY is very much an important part of the growth moving forward for Calquence and the fact that we've got positive study approval within Europe, and we're anticipating the U.S. approval is important. In general, the desire that we're hearing among hematologists across the multiple malignancies that they treat is to move towards more finite based therapies. That trend has already happened within Europe. And we've got, I think, a very differentiated and strong profile to be able to compete against the existing venetoclax-based options that are available there. In the U.S., remember that there is not a BCL2 and a BTKi combination finite CLL approach that's been approved. So we have an opportunity in the U.S. to really be the first to come into this space and 1 in 2 patients are receiving finite as opposed to treat progression in the U.S. So you can see how getting to growth numbers within the U.S., which is certainly the largest portion of our global Calquence sales really can be very, very meaningful. The other places in terms of opportunities, we have continued opportunity to expand Ecco in the second line MCL. And we also have DLBCL with ESCALADE which is something that will read out a little bit later on. Pascal Soriot: We need a microphone there. Justin Steven Smith: Justin Smith from Bernstein. Sharon, one for you, if that's okay, cardiac transforms. Could you just remind us on the powering with regards to monotherapy versus combo with TAF. Is the TAF combo arm big enough to prove something clinically meaningful? Sharon Barr: Right. So this question comes up a lot with Wainua. I think it really speaks to the interest in novel therapeutics for patients living with ATTR cardiomyopathy, which is a growing patient population as diagnostic rates improve. Now we have designed, as I mentioned earlier today, the largest ever cardiomyopathy study so that we would be powered to do preplanned subgroup analyses. One of those is to be able to differentiate between patients on baseline tafamidis versus those who are not. And our trial will have the largest proportion in number of patients who are on baseline tafamidis. So should we be able to proceed through the statistical hierarchy? And answer that question, we have designed a trial that allows us specifically to get at that. And we think it's important because that's going to inform treatment guidelines for patients and help to shape the way cardiomyopathy patients are treated in the clinic. So we look forward to the readout of this in the second half of this year, and we'll share the data when they are mature. Pascal Soriot: Thanks, Sharon. So we'll take Steve Scala's question online and then return to the room. I think Rajan has the microphone. Steve Scala: Pascal, a general question, but a hellaciously competitive market of undifferentiated products, which isn't growing very much despite huge awareness, doesn't strike me as the type of market AstraZeneca pursues aggressively. Obesity could be described as that, and you are not only involved but increased exposure. So what am I missing? Are you assuming that fundamentals improve that pricing stabilizes and increases, that strong growth will resume? I know that you're pursuing combos, but value-added products launched into a tough market would strike me as a high probability path to success. And if I could just tack on, can you shed light on why AstraZeneca continues to pursue an oral relaxant? Pascal Soriot: I will only take the first one, if I may. It's an easy one, Ruud for you. Ruud Dobber: No, I think it's a fair question. First of all, I think we truly believe that the market in itself is still quite immature. Yes, injectables have their place. The first oral is moving in, but there's still so much improvement possible in combination therapies and for obesity overweighted people, I think, is very crucial in order to help those patients to reduce their risk of cardiovascular events. So that's one big ticket item. Second part is that those products are still not very much used in, let's say, the international markets. If you look at the success of Farxiga, a big part of the success of Farxiga across the 3 indications is that we have a very large footprint in the international markets. So there's clearly room to maneuver. The third piece is that we are doing a lot of research and development work regarding the quality of weight loss. Yes, it's not only about the percentage of weight loss, but also are you able to preserve lean muscle, yes or no? Are you able to attach or attack the bad fat, the visceral fat. So I think there are still an enormous amount of possibilities to move to the next generation of anti-obese medicines. And I truly believe that AstraZeneca is one of those companies well equipped in order to address those questions. I think we have an excellent development and discovery team. You have seen our excitement of the deal we made last week with CSPC, which gives an opportunity to move in long-acting medicines. So I think there's still so much to win in this marketplace. And we are keen to play an important role in that. Rajan Sharma: It's Rajan Sharma from Goldman Sachs. I just wanted to focus on the growth drivers in 2026 outside of oncology. Do you think the biopharma business can grow through the Farxiga LOE? And then just thinking about the guidance for '26 at the group level, what has to go right to get to the upper end of that guidance? And when do we get visibility on those factors? Ruud Dobber: Yes. So let me take that question as a start. First of all, I think the respiratory and immunology portfolio is growing very fast. It was already $9 billion in the course of 2025. There's no reason to believe that products like Breztri potentially also with asthma or I said in my prepared remarks, product like Tezspire, Fasenra are not growing anymore double-digit moving forward. So that is, I think, a very important growth driver, not only in the United States and Europe, but also clearly in the international markets. So that's one big ticket item. The other one is clearly that hopefully, we will see the approval of baxdrostat in the course of this year as an approval that, of course, will not immediately generate substantial sales in the course of 2026. It's a highly dominated Part D population. But based on all the market research, we truly believe that this product has a multibillion-dollar opportunity as well. So if you see our internal forecast, yes, we will have a blip for sure regarding the Farxiga LOE but there are enough other growth drivers in order to compensate and potentially to exceed the growth moving forward. So we are quite bullish in our internal forecast regarding the forecast for the biopharma business. Rajesh Kumar: Rajesh Kumar from HSBC. Looking at 2026 you are sitting at 1.2x net debt to EBITDA. You got consensus, which is inching by the minute close to your $80 billion target by 2030. You've got a few patent lifts soon after that. When you think of capital allocation, people have factored in a higher R&D in their models now. Would you go the organic route to basically support growth beyond 2030 or what sort of firepower do you intend to deploy for acquisitions? The question is basically underpinned by what Steve Scala was asking earlier that you've gone to obesity at a time where almost no one is sure whether this market has the same kind of growth. And every player is going in. So if you keep going organically into different segments, you might run out of idea. So how are you thinking about that problem in terms of reallocation of capital, share buyback or future investments? Pascal Soriot: So let me make a general comment, and then Aradhana can make more specific comments about capital allocation. One thing I would add to what Ruud said about oral GLP-1 and others is cardiometabolism is going to be -- is today the biggest issue mankind is facing. So -- and we are in the early phase of this transformation and the way we can actually tackle this disease, if you want. And beyond GLP-1, you also have SGLT2, and I really believe in the oral segment, combining those 2 is going to make a huge difference to how people are treated. I think the foundation treatment of many of these people should be GLP-1 and an SGLT2, protect the kidneys, the heart, reduce weight, improve metabolic status. And then beyond that, we have other mechanisms, of course. So I think this is going to remain -- I mean, it is looking very crowded, but it is also a huge issue for medicine. And over time, I think things will settle down because not everybody will succeed in this market. We have the pipeline. We have the R&D strengths, in particular, development strengths, and we have the commercial network and the manufacturing network to manufacture those products and commercialize them around the world. So I think it will continue to -- it will be an important issue to tackle from a medical viewpoint, and it will be a driving growth for us -- a driver of growth, and we become profitable as soon as we can get to scale. In terms of a general question about capital allocation. Aradhana Sarin: Yes. So a few things to clarify. So the $80 billion ambition was on an organic basis, and that does not assume any M&A of any size and scale. And I think we're on track to achieve that. We do have substantial firepower. I think we're very comfortable at 1.2x leverage, but we have plenty of capacity. That being said, I think we remain very disciplined in terms of what type of assets we bring in because it's not about just buying assets. It's about actually creating value for shareholders from those assets that we acquire. And that requires substantial investments in R&D once we acquire those assets or license those assets, et cetera. And so again, we are very disciplined in how we do that, and we need to continue to add value. I think on your question of beyond 2030, that's why Pascal highlighted all -- I mean, if you look at our R&D expense, a substantial portion of that, I wouldn't say, the majority, but a substantial portion is going actually in assets, which won't have any substantial revenue in 2030. So that's all the investment for the beyond 2030 to continue the growth rates because we know in that time frame, there are going to be substantial LOEs. Pascal Soriot: If you look at it, I mean, we are in a good position. We don't have to go after Phase III assets that are proven in cost of fortune and you pay front which you're going to get later. We really try to focus our BD activities on earlier assets where we can add value and create shareholder value because we don't need products immediately. We need to invest for the future. And so our strategy really has been to build our pipeline, of course, and add to it, but through earlier BD investments and then add value over time. So that's really our strategy. And as you said, we have a good capacity in terms of raising debt if we wanted to. But we also have to absorb all these products in our P&L, right? So it's not only a question of cash, a question of P&L, too, and a question of focus. We have a very broad portfolio. But within this, we need to stay focused on what our key priorities are. Aradhana Sarin: There's one online. Pascal Soriot: Sorry, online, that's what you mean, I'm sorry. Over to you Peter Verdult. Peter Verdult: Peter Verdult here from BNP. Sorry, I can't be with you live. Just 2 quick ones, please, Susan and Sharon. For Susan on Alteogen. Can we have an update here and your confidence in this formulation technology significantly extending your key oncology biologic franchises? Are there any products you can call out that will be leading the charge or entering the clinic in the next 12 months? Secondly, for Sharon, sorry to do [indiscernible] But can I just try my luck. Can you sketch out in a little more detail what Astra would consider a win given existing silence data in the market? So put simply, do you think you can raise the bar further on outcomes in the silence market? Pascal Soriot: Can we focus on the first question? And if we have time, we will return to the second one later. Susan Galbraith: So obviously, I think subcutaneous formulations have the opportunity to offer convenience to patients, which I think is very attractive. And we're obviously investing in this across our immuno-oncology portfolio, the bispecifics and and Imfinzi to look at. But also we have the opportunity to look at subcutaneous formulations also with our ADC portfolio, which is perhaps slightly more surprising to people, but it is possible to do that in certain circumstances. And then, of course, across our T-cell engagers, the actual doses in the T-cell engager portfolio are often low enough that, that enables a subcutaneous formulation without necessarily requiring something like the hyaluronidase technology as well. So I would just say that this is a trend that you've seen already across multiple different settings and is one that I think will continue to grow across the biologics part of the portfolio. Sharon Barr: Sure. So going back to CARDIO-TTRansform for eplontersen. A few things to note about our clinical trial relative to competitors' clinical trial. The first is that the key objective of CARDIO-TTRansform was to have a balance of naive patients and defamitive patients. And given that CARDIO-TTRansform is the largest ever trial run in this setting, we've achieved that. So we'll be able to address that question pending positive results, which we think will be very informative to the clinical community. And the second is that CARDIO-TTRansform allows for stabilizer drop in, so acoramidis drop-ins, which speaks to the remaining unmet medical need. We know that patients who are currently on stabilizers continue to progress on therapy. If that were not true, we wouldn't be able to enroll our trial. So understanding how those patients are succeeding on a silencer on top of their standard of care, including a stabilizer is incredibly important. It's also important to note that in this larger trial, we have specific hard cardiac endpoints, including cardiovascular mortality as opposed to all-cause mortality, which really helps us understand how this drug is doing what it's doing and how it ultimately impacts those important readouts for patients who are living with ATTR cardiomyopathy. So overall, we expect to have landmark data for overall benefit and be able to demonstrate the additive benefit of a silencer on top of stabilizers. Pascal Soriot: So maybe we take the last one. Mattias Haggblom at Handelsbanken. Mattias Häggblom: I'm curious to hear how you think about the AstraZeneca's competitive advantage from an in-license or M&A point of view given you have 2 [ science ] sites in China when committing for assets with a competitor who does not have R&D on site in China. Pascal Soriot: So the first part of your question was a bit hard to understand, but I think you're asking us about our position in China from a BD viewpoint. If that's the question, let me try and I'm absolutely convinced we need to be in China to collaborate with, partner with Chinese companies but also to compete and learn -- learn to compete with them and how they compete, not only commercially, but mostly from an R&D perspective because the world has changed and they are increasingly becoming a fundamental part of innovation in our industry and some of them at some point will become global companies. So it's fundamental for us to be there. And I think we have quite a good position to do this. We have 2 R&D centers. We have a strong position, strong profile in China. A few of the deals we've made -- we were able to make because people wanted to work with us. With -- the recent deal we made, I know that someone else wanted to pay more money. But the company wanted to work with us. So I think that relationship we build with local Chinese companies over time and our reputation and our focus and the focus they know that we have on a few limited diseases have really helped us secure a number of deals over the last few years. Now what happens, though, is the cost, the price -- the price of these BD deals is going up, right? And that's -- I assume that would be the case. And that's why after COVID and when the contrary we opened, we quickly went down. We've done quite a number of deals over the last few years at reasonable prices and it's becoming more difficult because everybody is going there. But yes, I continue to think we have a good position. We can leverage our position in China, but we will have to remain disciplined because there's competition for this and the prices are going up. And of course, we have to stay focused on what we're doing. So Andy, I think we have to stop here. Some of us have to be on the road show. So thank you so much for all your interest and your great questions. Have a good rest of the day.

92天前Insight Analytics约5分钟阅读

CVS 2025 Q4 财报电话会议

Operator: Hello, and welcome to CVS Health's Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I would now like to pass the call to Larry McGrath, Chief Strategy Officer. Larry, please proceed. Laurence McGrath: Good morning, and welcome to the CVS Health Fourth Quarter 2025 Earnings Call and Webcast. I'm Larry McGrath, Executive Vice President of Capital Markets at CVS Health. I'm joined this morning by David Joyner, Chair and Chief Executive Officer; and Brian Newman, Chief Financial Officer. Following our prepared remarks, we'll host a question-and-answer session that will include additional members of the leadership team. Our press release and slide presentation have been posted to our website, along with our Form 10-K filed this morning with the SEC. Today's call is also being broadcast on our website. During this call, we'll make certain forward-looking statements. Our forward-looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially from currently projected results. We strongly encourage you to review the reports we file with the SEC regarding these risks and uncertainties, in particular, those that are described in the cautionary statement concerning forward-looking statements and risk factors in our recent SEC filings, including in our annual report on Form 10-K. During this call, we'll use certain non-GAAP measures, and you can find a reconciliation of these non-GAAP measures in this morning's press release and in the reconciliation document posted to the Investor Relations portion of our website. With that, I'd like to turn the call over to David. David? J. Joyner: Thank you, Larry, and good morning, everyone. I want to start today by recognizing that 2025 was a meaningful year of progress for CVS Health. As I close out my first full year as CEO, and I'm encouraged by our ongoing work to simplify the health care experience and make health care more affordable and accessible for American families. However, the health care experience is still not where it needs to be. Our leadership team and our 300,000 colleagues work hard every day to make it better and to realize our ambition of becoming America's most trusted health care company. I'm also proud of our progress, strengthening our operations and driving improved financial performance. This morning, we are pleased to once again report another quarter of strong results. In the fourth quarter, we delivered adjusted operating income of $2.6 billion and adjusted earnings per share of $1.09. We are also reaffirming our full year 2026 adjusted EPS guidance range of $7 to $7.20 that we shared at our Investor Day in December. For full year 2025, we delivered adjusted earnings per share of $6.75 and operating cash flow of $10.6 billion, exceeding our initial expectations coming into the year for adjusted EPS by approximately 15% and meaningfully outperforming our expectations on cash flow. We still have an incredible amount of earnings power to unlock across our diversified business, but our progress to date has been impressive. In our Aetna business, we dramatically improved our financial results, delivering a year-over-year adjusted operating income improvement of over $2.6 billion. We refreshed our leadership team, improved our culture and strengthened our key points of distinction, including the capabilities that enabled our leading Stars position among national payers. We entered 2026 with significant momentum and expect this year to be another strong step forward on our path to target margins. Our efforts are being recognized in the market. Recently, Aetna received the inaugural Press Ganey Health Plan of the Year award. This award acknowledged us for our high-quality offerings, technological innovation and the best-in-class experiences we deliver to our members, partners and providers. This recognition validates the disciplined execution and relentless commitment of our colleagues and is a powerful proof point that we are making progress driving distinction and improving simplicity in health care. Before I highlight some of the successes in our pharmacy businesses, I want to spend a moment on the 2027 Medicare Advantage advanced rate notice. The proposed rate simply does not match the level of medical cost trend in the industry. We are advocating for more appropriate funding to ensure adequate access as well as the stability and sustainability of a program relied on by more than half of the seniors in this country. While the advanced rate notice is disappointing, our commitment to margin recovery at Aetna is unchanged. We remain laser-focused on improving margins in our Medicare business while ensuring we have a sustainable and compelling product offering. We strongly believe the Medicare Advantage program delivers better outcomes at lower costs when compared to the traditional fee-for-service model. At CVS Health, we have multiple capabilities focused on serving MA members, collaborating with their health plans and supporting the Medicare Advantage program overall. We support CMS' desire to align diagnosis to encounters with medical professionals. We see the value of these encounters every time one of our Signify clinicians enters the home of the more than 3.5 million consumers we serve each year. Signify plays a critical role in providing increased access to provider-led health evaluations, particularly to members in rural areas or those who may have barriers to office business. These in-home visits include all the components of a typical annual wellness visit, in addition to capturing the social aspects of a member's health. Through these encounters, we are also able to facilitate connections back into the health care system to close gaps in care. Last year, our provider supported over 500,000 of these [ brief ] connections including nearly 100,000 urgent escalations. Signify plays an important role in making sure Aetna and other health plan partners understand the holistic health of their members which is critical to ensuring they receive appropriate care. Signify leaves this market because of our focus on innovating to meet the needs of the seniors who welcome us into their homes. We will continue this innovation to ensure we support our clients and their members. We are aligned with CMS and recognize the significant benefits of value-based care and its ability to deliver significant savings and better engagement and outcomes. While Oak Street Health represents a relatively small portion of our enterprise today, we are focused on thoughtfully expanding the number of patients we serve. We have taken steps to position ourselves for a more sustainable and attractive business over the long term, and we will continue making leading models like Oak Street available to more seniors. Turning to our Pharmacy businesses. We've made significant progress in 2025. The value proposition of Caremark and our Pharmacy Services businesses is more important today than it ever has been. Branded drug manufacturers continue to increase prices and put untenable strain on the U.S. health care system. Brand-list price increases have outpaced inflation by an average of 4% per year since 2012. And so far in 2026, branded manufacturers have made more than 750 drug price increases, adding $25 billion of cost to the health care system with no added value. Our relentless pursuit of driving savings and delivering the lowest possible net cost to our clients and their members is a critical check on the monopolistic tendencies of branded drug manufacturers. We use every tool at our disposal to achieve this goal, including our ability to generate competition among manufacturers, our innovative and transparent PBM model, our industry-leading specialty pharmacy capabilities and our unique position in the biosimilar market. Our offerings are resonating with new and existing clients who rely on us to manage the pharmacy benefit and partner with us to achieve their goals. Caremark's priorities have remained consistent, and this business has been adapted to client needs and market dynamics. This includes regulatory changes, and our perspective here is clear. We support legislation that does not impact our ability to create competition in the supply chain. We also support legislation that creates greater transparency for all stakeholders, including consumers, and enable savings to be seen directly at the pharmacy counter. We believe the recent regulatory changes impacting the commercial market are manageable, particularly given the time line for implementation. The changes are closely aligned to where we believe the industry needs to go and to the core principles of our TrueCost model. We have been moving in this direction since we announced TrueCost in December of 2023, and hope this legislation will lead to greater adoption of this model. This legislation will accelerate transparency and put the focus back on what matters most in the market, ensuring patients access the right medicine at the lowest possible cost and delivering superior experiences. Caremark consistently evolves to respond to our clients' needs and drive changes in the market. We did this 2 years ago with TrueCost and continue to do this today, including our work with the administration and our role as a key pharmacy partner to TrumpRx, helping to enable greater access and affordability of fertility medicines. This is a business that has regularly and proactively adapted to many market and regulatory changes over the last few decades. Importantly, our margins have remained durable as the value we deliver is vital to achieving prescription affordability in this country. And finally, CVS Pharmacy exceeded expectations in 2025 and established a new trajectory of at least flat earnings annually starting in 2026. This turnaround reflects our consistent investments in colleagues, technology and the consumer experience. These are important and deliberate actions to transform consumer engagement at a national scale and community pharmacies. They also ensure we maintain our position as a trusted provider in the local communities we serve. And importantly, I'm pleased to say that we have successfully completed the transition to a cost-based reimbursement. This was a significant step in creating a more transparent and stable pharmacy market for the long term. And I'm proud of our team's ability to deliver on this important commitment to you. The strong foundation we built in 2025 gives me confidence in our path forward. As we look ahead to 2026, we will continue building momentum and expect another year of meaningful progress as we execute against our multiyear objectives. Our commitment to reimagining the health care experience has never been stronger. We are taking a lead to address some of the biggest challenges in the U.S. health care system, its cost, its complexity and the fragmentation that exists today. By combining our unique set of enterprise capabilities, we can provide a connected solution for consumers that deliver better experiences and improved health outcomes at lower cost. Aetna members who have a combined medical and pharmacy offering have lower medical costs. Aetna members who consistently use CVS Pharmacy have higher medication adherence and lower ER utilization. Through the combination of Cordavis, Caremark and CVS Specialty, we are able to seamlessly transition share to low-cost biosimilars. Our HUMIRA biosimilar strategy allows us to drive 96% adoption of a low list price biosimilar with more than 80% of the members paying $0 out of pocket. This ultimately created more than $1.5 billion in savings for our clients and their members. These are strong examples of the value we can deliver with the power of our combined enterprise. We continue to focus on improving connectivity between our businesses, using technology to support greater interoperability and facilitate a common experience, which will ultimately make health care easier to navigate. By creating consumer engagement points and greater connections across our unique and impactful collection of capabilities, we can help improve consumer trust, lower cost for members and clients and better support the professionals who dedicate their lives to making people healthier. All of us as consumers of health care are experiencing the same growing affordability pressures that have been escalating for decades. To address this, we need to collectively have a transparent and honest dialogue about what is and what isn't driving up health care costs. Brand drug manufacturers raise prices. Hospitals raise prices. CVS Health lowers cost and drives affordability. We create competition and negotiate with providers and drug manufacturers, which directly lead to lower cost for consumers. Aetna's network negotiations resulted in over $235 billion of savings for our members and clients. Caremark's negotiations with drug manufacturers deliver an incremental $45 billion of annual savings. Together, that's over $280 billion of annual savings we generate for our clients and members. Additionally, our care management programs, our local pharmacists and our value-based care providers use clinical interventions and proactively manage the health of our members and patients to keep them healthy and avoid costly conditions. And our pharmacy businesses utilize their positions as some of the largest purchasers of pharmaceuticals in the world as well as their sophisticated technology capabilities to drive savings for our clients and ensure patients can get the right medications at the lowest possible cost. The work we do is critical to counterbalance the inflationary pressure that gets placed on the systems by hospitals, branded pharmaceutical manufacturers and, others who, unlike CVS Health are incentivized to raise the cost of health care. Across our businesses, we are also working to make the health care system easier to navigate. This starts with reducing the administrative obstacles that frustrate doctors and complicate treatment. Our Aetna business has the fewest medical services subject to prior authorization, about half as many as our nearest competitor. Additionally, 95% of eligible prior authorizations are approved within 24 hours with many completed instantaneously. We are making the process simpler, faster and less costly. We've previously highlighted the work we've done to streamline prior authorizations for musculoskeletal and oncology patients. Our condition-specific bundled prior authorizations replaced the multiple approvals with just one, allowing us to expedite care, reduce frustration and improve health outcomes. We have also begun to expand this approach for certain conditions and procedures such as IVF, combining authorizations for both medical care as well as the drug is required for treatment. Finally, as we talked about at our Investor Day, we are using our deep consumer engagement and extensive technology to address the lack of interoperability within the health care system. We continue to work diligently to unlock the potential value of this opportunity and look forward to providing you with updates. And in closing, I'm proud of what this team and organization accomplished in 2025. When I took this role, there were clearly more questions than answers about our businesses, our performance and our strategy. As you can see, we are answering those questions with confidence and strong performance. We are building significant momentum by strengthening our operations, expanding our capabilities and improving our financial performance. We share many of the same goals as the administration when it comes to improving the health care system and are uniquely positioned to deliver better outcomes and experiences at lower costs for our consumers, patients, members and clients. We are on the right path, and I'm excited about where we're headed. With that, I'll turn it over to Brian to walk through our financial details. Brian Newman: Thank you, David, and good morning. I will cover three key topics in my remarks this morning. First, an update on our full year and fourth quarter results. Then I'll discuss cash flow and the balance sheet. And finally, I'll wrap up briefly discussing our latest thoughts on our outlook for 2026. As David mentioned, 2025 was a strong year of progress at CVS Health. We made meaningful strides to ensure each of our businesses is best-in-class and are continuing to advance our ambition to become America's most trusted health care company. Importantly, we did all this while delivering on our financial commitments in spite of unexpected challenges in some of our businesses. In 2025, we delivered full year revenue of over $400 billion, adjusted EPS of $6.75, and operating cash flow of $10.6 billion, all of which meaningfully outperformed our initial expectations for the year. This is a direct result of the various actions we took to strengthen our operations and drive improved performance in 2025. Turning now to fourth quarter results. Specifically, we ended the year with another strong quarter. We generated over $105 billion of revenue, an increase of over 8% over the prior year quarter driven by growth across all operating segments. We delivered adjusted operating income of approximately $2.6 billion and adjusted EPS of $1.09. While these results were ahead of our expectations, they were modest declines from the prior year quarter. This was primarily driven by the expected decline in adjusted operating income in our Health Care Benefits segment. As a result of changes in the seasonality of the Medicare Part D program due to the impact of the Inflation Reduction Act. These decreases were partially offset by improved underlying performance in our Government business within our Health Care Benefits segment as well as increases in adjusted operating income in our Health Services and Pharmacy & Consumer Wellness segments. Finally, during the quarter, we generated cash flow from operations of approximately $3.4 billion. Turning now to each of our segments. In Health Care Benefits, we generated over $36 billion of revenue in the quarter, an increase of over 10% from prior year. This increase is primarily driven by our Government business, largely due to the impact of the IRA on the Medicare Part D program. We ended the year with approximately 26.6 million medical members, a slight decline sequentially and a decrease of approximately 500,000 members from the prior year. The year-over-year decrease is primarily driven by declines in our Individual Exchange and Government businesses, partially offset by growth in our commercial fee-based membership. The segment generated an adjusted operating loss during the quarter of $676 million, a modestly higher loss than the prior year quarter, primarily driven by changes in the seasonality of the Medicare Part D program. This result also reflects a deterioration of our risk adjustment position in our Individual Exchange business and a provision for increased flu activity observed late in the quarter. Partially offsetting these items was improved underlying performance in our Government business. Our medical benefit ratio in the quarter was 94.8%, consistent with the prior year quarter. This result was impacted by all the drivers I just described, in addition to the impact of Medicaid pass-throughs that came in the last few days of the year. The combination of fourth quarter items related to Medicaid pass-throughs our updated risk adjustment position and our provision for the flu resulted in an approximately 20 basis point impact on our full year MBR of 91.2%. While this result was slightly higher than the expectations we provided in early December, I want to be very clear, medical cost trends in the quarter remained elevated across all products but were broadly in line with our expectations. Days claims payable at the end of the quarter was approximately 38.9 days, a decrease of approximately 3.6 days sequentially, primarily driven by the utilization of premium deficiency reserves established in the first half of 2025, as well as continued improvements in claims processing. Excluding the impact of the PDRs, the sequential growth in reserves was consistent with the growth in premiums. We remain confident in the adequacy of our reserves. Shifting now to our Health Services segment. During the quarter, we generated revenues of over $51 billion, an increase of 9% year-over-year. This increase was primarily driven by pharmacy drug mix and brand inflation, partially offset by continued pharmacy client price improvements. We delivered adjusted operating income of approximately $1.9 billion in the quarter, an increase of over 9% from the prior year quarter, primarily driven by improved purchasing economics, partially offset by continued pharmacy client price improvements. Performance in our Health Care Delivery business during the quarter was broadly in line with our expectations. Total revenues grew approximately 21% compared to the same quarter last year, excluding the impact of our exit from our CVS Accountable Care business. This increase was primarily driven by patient growth at Oak Street Health. Our Pharmacy & Consumer Wellness segment delivered another strong quarter to close out a strong year. We generated revenues of nearly $38 billion, an increase of over 12% versus the prior year quarter, primarily driven by pharmacy drug mix and increased prescription volume, including incremental volume resulting from the Rite Aid transaction. These increases were partially offset by continued pharmacy reimbursement pressure and the impact of recent generic drug introductions. On a same-store basis, total revenues increased 16% in the quarter. Same-store pharmacy sales grew over 19% compared to the prior year quarter, driven by pharmacy drug mix, and a nearly 10% increase in same-store prescription volumes. Same-store front store sales increased 50 basis points versus the prior year quarter. Our retail pharmacy script share in the quarter grew to over 29%, supported by our continued focus on delivering superior customer experiences, which drove organic growth, as well as the contribution from the Rite Aid transaction. We generated adjusted operating income of over $1.9 billion, an increase of nearly 9% from the prior year quarter primarily driven by increased prescription volume and favorable drug mix. These increases were partially offset by continued pharmacy reimbursement pressure and increased investments in the segment's colleagues and capabilities. On a full year basis, we delivered over $6 billion of adjusted operating income, an increase of over 4.5% from the prior year. As David mentioned, this result reflects our continued focus on service and operational excellence as well as intentional investments in colleagues and technology to support the consumer experience. These actions have enabled us to solidify our position as the best run national pharmacy in the country over the last few years, as we discussed at our Investor Day in December. We view the underlying drivers of this improved performance as durable, which led us to revise our long-term annual earnings outlook for this business to at least flat going forward. Shifting now to cash flow and the balance sheet. In 2025, we generated cash flows from operations of approximately $10.6 billion. This strong result includes the receipt of certain payments at the end of the year that were previously expected in early 2026, as well as continued focus on working capital efficiencies. We distributed over $3 billion in dividends to our shareholders in 2025 and ended the quarter with approximately $2.8 billion of cash at the parent and unrestricted subsidiaries. Our leverage ratio as of year-end 2025 was approximately 4x, a meaningful improvement from the prior year, primarily driven by our strong financial performance in 2025. We expect to drive further improvement in our leverage this year as we continue to improve enterprise earnings. Shifting now to our outlook for 2026. As David and I both discussed at our Investor Day in December, we are focused on delivering on our financial commitments. Our guidance philosophy is predicated on reflecting thoughtful and credible targets while simultaneously striving to identify and execute on opportunities to deliver outperformance. It also includes our commitment to clear communication. These are the principles we used when issuing our initial 2026 guidance at the end of last year and are what you can expect as we move forward. Today, we are reaffirming our guidance for full year 2026 revenue of at least $400 billion, as well as our expectation for full year 2026 adjusted EPS in a range of $7 to $7.20. We are encouraged by the strength of our results as we closed out 2025 and by our momentum as we start this year. While medical cost trends remain elevated, our experience in 2025 is supportive of our trend assumptions underlying our guidance. We are also pleased with how we completed the Medicare Advantage annual enrollment period, with our enrollment coming in modestly down, which was in line with our expectations. We are updating our outlook for full year cash flow from operations to at least $9 billion. This reflects the impact from certain payments that shifted from 2026 into late 2025, as well as the persistence of underlying outperformance. Cash generation has long been a strength of this enterprise, and our position continues to improve as we make progress unlocking our embedded earnings power. While our expectation for 2026 operating cash flow is down slightly, when combined with the higher cash flow we delivered in 2025, our cumulative cash flow expectation across 2025 and 2026 has increased by over $1.5 billion. We continue to expect a roughly 55-45 split of earnings between the first half and second half. As a reminder, we expect the increase between first quarter and fourth quarter MBR to be approximately 850 basis points in 2026, which is slightly steeper than the initial expectations we provided for 2025. You can find additional details on the components of our 2026 guidance on our Investor Relations website. Overall, 2025 was a strong year at CVS Health. We successfully navigated unexpected challenges and delivered on our targets. The performance of our diversified enterprise in 2025 reinforces that we are on the right track in building significant momentum into 2026. I'm confident 2026 will be another year of meaningful progress as we deliver on the tremendous amount of earnings opportunity ahead of us. We see a clear path to an incredible amount of shareholder value and are excited about the year ahead. With that, we will now open the call to your questions. Operator? Operator: [Operator Instructions] Our first question comes from Justin Lake with Wolfe. Justin Lake: Can you hear me? J. Joyner: Yes. We can hear you, Justin. Justin Lake: All right. So I wanted to ask you about Medicare Advantage. My recollection is that the company had expected to return to target margins in MA by 2028. How should we think about the potential impact of these preliminary 2027 rates on that trajectory? Would you still expect Medicare Advantage margins to improve in 2027 despite these rates? And lastly, just let us know your view on the potential impact to your mid-teens earnings growth target through 2028 shared at Investor Day for these rates? J. Joyner: Yes. Perfect. So thanks, Justin, for the question. Obviously, the advanced rate notice is top of mind for us as a company. And it's -- as we look at it, it's really affecting two parts of our business. We'll have Steve Nelson speak to the impact to Aetna and I'll also give some perspectives on '27 and '28. And Dr. Sree will talk specifically about how it's impacting our Health Care Delivery business. So let me just put some context around the rate notice as we're looking at it today is obviously much more impactful to the Aetna business. Oak Streets remains an important part of our strategy. But I think it's important to note that it's a much smaller portion of our business and impact with the rate notice. So we remain committed to Medicare recovery. We think '25 proved that we've made meaningful progress. We expect to continue with that progress into '26. I also think as we look more broadly at the MA program, it remains an important offering in terms of lowering costs and improving care for the Medicare beneficiaries. We think it's one of the most successful private and public sector partnerships, and we've actually seen that -- and it's been proven to be successful just based off the growth rate that we've seen with the enrollment now representing more than 50% of the seniors. So the -- so two things on the rate notice. And I think, obviously, if you look at the risk coding aspects of it, this is how we operate our business today. So it's consistent with the policies in the advanced rate notice. We actually supported the documentation aligned with the encounters, and we're pleased to see that the in-home provider assessments have been maintained. That said, we obviously don't believe that the rates are sufficient that reflects the current medical costs. And so that's where the advocacy and what Steve will speak to. So I think the most important question that you asked is how -- while its disappointment in terms of the -- what we've seen is the preliminary rate for '27, we're committed to the Aetna margins, and that commitment remains unchanged. And we do not see this impacting our long-term enterprise guide that we provided in December during the Investor Day. So Steve, do you want to talk specifically about some of the work you're doing at Aetna? Steven Nelson: Sure Thanks, David. Justin, so I'm just going to echo what David said, the advanced rate notice. Those rates signal rates that are simply not adequate based on the trends in the medical cost that we've seen and we've already engaged with CMS, and we're going to continue to engage and hopefully be helpful as we can bring this data forward and over the next several weeks advance to -- hopefully, a final rate notice that is more in line with the trends that we're seeing. And we -- it's so important to the seniors that we serve to have access to these benefits and great health care that they need and deserve. So having said that, just a couple of points to build on David's about how we think about our Medicare business. We spent the last 1.5 years or so, laying down this really strong foundation for the business, and we're going to continue to build on it. So second straight successful year of executing both on bids and the AEP. We're exiting AEP, this recent AEP in line with what we signaled during our Investor Day with modest contraction, but very much strengthening the business with a better geographic and product mix. We also continue to maintain a leading Stars position. So this business is going to advance towards its recovery to target margin in 2026. In addition to that, we talked about our group Medicare Advantage business and that we had 50% of our block up for renewal in 2026, and we've executed on those rate renewals in a very positive way, and we'll continue to do that. So this business returns to target margin as well. It's an important part of our business for our enterprise. So all in all, great progress, and we're going to continue to build on that momentum. So specifically about 2027, the strategy, I'll just -- David said it, but I'll say it again, it remains unchanged. We are going to build on the momentum in 2026 and continue to drive the Medicare business back to target margins. We take a leading Stars position into 2027. That will be very helpful. And so notwithstanding the advanced rate notice, we think this, our business is well positioned. It's an important part of our portfolio at Aetna, and we really take pride in serving the members that we serve. So look, we have confidence in the outcome and our ability to drive the business forward. J. Joyner: Sree? Sreekanth Chaguturu: Thanks, David. Thanks, Steve. So as David mentioned, we are pleased to see the value of in-home provider visits are maintained, and that's a recognition of the importance of Signify's business model. And we'll continue to provide this value to payer, partners and members. However, as you've heard from David and Steve, the proposed rates fail to match utilization to cost trends, particularly as member needs become more complex. We firmly believe in the importance of value-based care. Oak Street Health is a best-in-class model. It delivers better outcomes and better experiences at lower cost for the patients we serve. We will continue to assess the rate notice to understand the full impact and continue to share our insights with CMS. We have clear line of sight to improved performance in Health Care Delivery, in Oak Street Health in 2026, and we'll continue to make progress in future years. Operator: Our next question comes from Lisa Gill with JPMorgan. Lisa Gill: David, I just want to follow up on a couple of your comments you made as it relates to the PBM side of the business. First, when you talked about regulatory, you said we're all for any type of regulation that doesn't impact the ability to create competition in the supply chain. So I have really a 3-part question here. The first is, do you feel that currently what the FTC is proposing would, in some way, hinder your ability to negotiate in the supply chain? And is that the reason that we haven't seen some type of settlement yet for CVS Health? And then secondly, when I think about the PBM legislation, again, you talked about how that's manageable. We've seen you really start to shift your business towards transparency, towards many of the things that are talked about. So when I think about this, will it be the new default option in the marketplace? When I think about transparency and some of the things they're asking for, whether it's pass-through rebates, et cetera? And then the third part is just really the long-term margin for the PBM. So we understand there's this headwind with the guaranteed rebates in 2026. But can you talk about the time frame and how you think about long-term margins? J. Joyner: Yes. Thanks, Lisa. And I'll -- let me try to take each one of those separately. And let me -- I think it's important to start with the long-term margin profile. And you've been -- and you've watched this industry for some time now. And we've had a long history of adapting to both changing client needs and a variety of different market dynamic changes. And what we've seen come through over the years is that we've been able to consistently earn what I believe are fair margins for the value the PBM delivers. That's not going to change with any of the things that you've seen presented. The PBM value, we believe, still stays intact. We remain the only entity that sole job is to create the competition and actually negotiate for lower prices on the pharmaceutical supply chain. I talked a lot in the opening comments about still there's big drivers. Just in '26 alone, when you have 750 price increases that represent $25 billion of added cost to our customers just on our book alone, the role of the PBM, I think, remains more important now than ever, especially when you have launch prices that we've seen a median price of over $350,000. So this, again, I think, speaks to somebody needs to play the role to continue to be the competition and/or create an entity that lowers cost for the consumer. So that said, what we've seen now, at least, is more clarity on where the reform is coming from. So the good news is, is that we know, at least with the legislation, how to operate and how to run our business, and we have time to put the changes in place. I can't speak to the FTC. While we're in conversations, we're really not in a position to be able to elaborate or talk to the specifics. But I will say, at least consistent with the PBM legislation, the tools that we've seen are essentially leaning into what we've been doing for the last couple of years. And this is in large part what I saw when I first came back into the business, which is the market needed to change. We were leading that change with both TrueCost on the PBM side and CostVantage at retail. So the fact is we anticipated these changes were driving the change. And now I'm going to have Ed DeVaney speak more broadly to how we're thinking about TrueCost and maybe this being an accelerator for the adoption. Ed DeVaney: So thank you, David, and I appreciate the question, Lisa. And with TrueCost, we anticipated the market events would demand change in the marketplace, which is really why Caremark innovated and led the market over 2 years ago. It's important to remember that TrueCost is built for transparency, durability and stable margins. The PBM industry is a dynamic market and profit pools, not only have evolved over time, but we certainly expect they will evolve in the future. And we ultimately believe the margin profile will be similar and underlying growth for Caremark remains unchanged. We're excited about the shift to greater transparency and believe this recent legislation will accelerate adoption of TrueCost. Operator: Your next question comes from Michael Cherny with Leerink. Michael Cherny: Maybe to keep the momentum going, I'd love to dig in a little bit on PCW. Great to hear the progress on CostVantage, the completion of the contracting. As you think about your market positioning to '26, especially going on a full basis with CostVantage with the Rite Aid scripts are continuing to ramp, how do you think about your opportunity to continue to gain share? And where do you see the competitive positioning across the market given the changing competitive dynamics that are currently in place relative to your position as an all-encompassing omnipresent pharmacy, obviously, with the mail side attached as well. J. Joyner: Yes. Thanks, Michael. I think I'm going to have Len Shankman, talk specifically to the PCW. Len Shankman: Thanks, David, and I appreciate the question, Michael. Let me start by just highlighting 2025, which really serves as the foundation for the future. PCW delivered another strong quarter, and we're delivering these results by operating at high levels of service, colleague engagement and driving strong execution across the business. In the Pharmacy, we saw prescription growth from market disruption, which is inclusive of the Rite Aid asset acquisition and pharmacy innovation as well. And let me remind you of the positive impacts that we saw through the Rite Aid acquisition. We successfully welcomed 9 million new patients into our stores and welcomed over 3,500 new colleagues from Rite Aid into CVS Health. And the transaction allowed us to serve patients who were left without a community pharmacy while also expanding our coast-to-coast footprint. And I think this success reflects our deep commitments to ensuring patients maintain continued access to care they need, especially in the communities we serve throughout our country. Finally, with pharmacy, as David mentioned in his prepared remarks, we have successfully completed the transition of cost-based reimbursement across commercial third-party discount, Medicare and Medicaid lines of business, and the cost-based pricing models are performing in line with our expectations. The front store performance was powered by a few initiatives in particular. We're focused on delivering value and driving loyalty through improved value propositions. We're localizing our assortment to better meet the needs of our customers. We're providing excellent customer service and the consumer sits at the center of all of our decisions and experiences, which combined for the front store is resulting in growth in our customer base, increased trips and increased retail market share, leading to our fourth consecutive quarter of front store comp growth. And finally, we continue to invest in our colleagues, technology and AI to improve consumer experience. And as Brian mentioned in his remarks, our results demonstrate that we are the best run pharmacy in the country, operating nationally with strong consumer engagement, expertise and trust. So if I shift to this year, we feel good about our position in 2026. And as discussed during our Investor Day, we've built a competitive advantage that we believe no one else in health care can replicate. We will continue to expand the role we play in customers' everyday health and retail convenience. And this is demonstrated by our pharmacy script growth driven by innovation, adherence and strong service levels, an emphasis on the front store through localized assortment, loyalty and best-in-class customer experience, all through value propositions that resonate with our customers. And let me just give you one example of those value propositions. We recently made a decision to reduce prices on products such as milk in thousands of our stores to provide our customers with affordable options for everyday essentials. And finally, as I mentioned, we remain focused on efforts to drive operational efficiencies with technology and AI. We fundamentally believe health care is best delivered locally in the community. It's best delivered by trusted caring and tech-enabled colleagues and retail customers desire freedom to shop and engage in a way that's most convenient for their busy lives. J. Joyner: Yes. Thanks, Len. And maybe just one additional point. While CostVantage is important in terms of the stable and durable profit margins in the business, I think what you hear Len saying is that our investments in the consumer and the experience and both in terms of how our colleagues support as well as the technology and also the assortment, the things that Len talks about, we will be the consumer-based health care company in this country. And I think in large part because of the work that we're doing within our retail stores. So thanks for the question, Michael. Operator: Our next question comes from Andrew Mok with Barclays. Andrew Mok: Your medical membership was revised up 200,000 members, even though AEP results were described as being consistent with prior expectations. Can you help us understand the drivers behind that change? And relatedly, what are your expectations for commercial group and ASO membership and any potential implications for commercial rebate dynamics? J. Joyner: Yes. So Steve, do you want to take that question, please? Steven Nelson: Sure. Andrew, so on respect to our commercial membership, we serve about 18 million members. It's the highest membership level that we've served in the last decade actually. And so this is a strong business for us, and it remains strong. We -- I think the overperformance and growth that we saw in '25 and then as we will continue to grow in '26, it's a result of better-than-expected retention. And just the innovative products and the approach that we're taking with these very sophisticated purchasers of health care, offering leading technology and solutions that they've been looking for. It's resonating with them. And so really pleased with the results there and the advancement we're making in the Commercial business. Fully insured remains pressure just due to the disciplined pricing approach. We're going to continue to be really disciplined in our pricing across all parts of this business, but that's been more than offset by growth in the self-funded business. So continue to be well positioned. Aetna has been a brand that's long been associated with product innovation and clinical innovation, and we're getting back to that. And as David mentioned in his prepared remarks, really, really proud to be honored by Press Ganey, acknowledging the innovative work we're doing around member experience and reducing friction there. And then the engagement we've had with our provider partners, again, plays out really well in terms of just reducing the friction, but also lowering the total cost of care. So I'm pleased with how the commercial business is performing and confident about the ability to continue to advance that. Operator: Our next question comes from Elizabeth Anderson with Evercore. Elizabeth Anderson: I was wondering if you could comment in a little bit more detail about sort of Medicaid rates. How are you thinking about how those are coming in versus your expectations for 2026? Anything changes in terms of acuity versus rate mismatch, either positive or negative on that side? J. Joyner: All right. Steve, another question for you. Steven Nelson: Sure. No, thanks. Look, the Medicaid business has been performing in line with our expectations. We had a really strong year of rate advocacy execution in 2025, and we're going to continue that focus and discipline there. And as we enter 2026, again, I think we're off to a strong execution start. It's obviously a high trend environment. We remain cautious and prudent as we think about this, but it's -- the trends that we're seeing are in line with what we've laid out in our expectations. So we're going to continue to work really closely with our state partners to make sure we have adequate rates, but also to provide clinical and operational excellence. This is a really important population that we serve and proud to do it. And look, I like our progress on the Medicaid business overall. Operator: Our next question comes from George Hill with Deutsche Bank. George Hill: I'll say, David, you're probably going to defer this one right to Steve as well. I guess I appreciate that you guys provided the color on the MLR expectations for 2026. Steve, I was just wondering if you might provide any color on kind of the directional pieces inside of MA, Medicaid, Commercial and any of the other lines of business kind of following up on Elizabeth's question, like kind of which where will MLR look a little bit better? Where will MLR look a little bit worse? And would love to hear any big moving pieces you would call out? J. Joyner: All right. I'm going to have Brian take this first, George. Brian Newman: Thanks, David. So last year was, I think, a strong first year of our journey to the target margins. You'll recall AOI improved by about $2.6 billion. We expect another year, George, of strong progress in '26. We continue to make progress towards achieving the target margins in each of the businesses. And we've been clear that trends are still very elevated, but we're not expecting that to change in '26. So as you think about the expectations embedded in the guide for each of the businesses, in Medicare, we expect another year of margin improvement driven by a rational disciplined approach to pricing in our individual and PDP products and repricing in our group MA business. On the Medicaid side, I'd expect to maintain our cautious outlook on performance in light of the broader pressures across the industry that we're seeing. And then lastly, in Commercial, we've maintained pricing discipline. And as a result, I think you can expect performance in '26 will remain strong. So I just emphasize tremendous earning power at Aetna. We have built a strong foundation in '25, and then we have confidence as we will go down the right path in '26. So Steve, do you want to provide some more color? Steven Nelson: Sure. Thanks, Brian. Yes, look, we're really pleased with the performance of the business overall -- the each business has made meaningful progress in 2025 -- build on the momentum. So I think it's important to understand some of the drivers that you asked about [indiscernible] discipline around exiting [indiscernible]. So we're always going to be focused on returning the business to target margins. I'm switching microphones here. So you can -- I guess there's audio problems. I'm not sure. But -- so I'll just keep going here. But look, we have an opportunity to continue to build on the momentum across the business. But an additional driver beyond just focus on the fundamentals is we've built this really strong culture at Aetna, which when you have more than 50,000 colleagues all aligned to returning the business to not only target margin, but leading capability and consumer solutions company, we're really excited about the progress there and just the engagement of our population. And I would include CVS overall as we feel supported by the enterprise. So we have a lot of passion around the competitive capabilities, better navigation, better advocacy, and better partnerships with a provider, so we're going to continue to build on the momentum and return the business to target margins. And there's a lot of drivers that are beyond just the focus on the fundamentals. Operator: Our next question comes from Erin Wright with Morgan Stanley. Erin Wilson Wright: Great. So on the technology investment side, you highlighted a lot of this at Investor Day, but can you break down a little bit more what some of those incremental investments are in 2026? Is there any sort of lumpiness to this that we should think about in terms of the quarterly progression of EPS and highlight some of those advancements or efficiencies gained from some of those investments? J. Joyner: Okay. That's a great question, and I'm going to have Brian kick it off on the investments and then have Prem speak a little bit to where we are currently with the open platform. Brian Newman: Yes. Thanks, Erin and David. AI, as you heard from us, it's being utilized across the enterprise, and we had the opportunity at Investor Day to highlight some of these examples and the way we're changing how we work, Erin, I think we're trying to change the experience we're able to provide in the health care system. So we're using AI to reimagine the health care experience, putting the consumer at the center and to ensure each business is best-in-class. It's helping us with our cost and growth goals, allows us to reinvest in product innovation, including the open engagement platform, which Prem and Tilak talked about at Investor Day, and hopefully enabling us to lead health services and technology from a corporate perspective. So still early days, but we see an incredible amount of opportunity to leverage the tools that we're investing in and connectivity. It will both drive savings as well as accelerate growth. Prem, do you want to provide a little color on what you're seeing? Prem Shah: Sure. Thanks, Erin, for the question. And we're incredibly excited about the prospect of our announcement at Analyst Day with the open engagement platform. Progress to date is performing well, and we believe we're uniquely positioned to create the next-generation of health care engagement. If you think about some of the things that Len said earlier, and David said, we have over 185 million consumers that engage with us across CVS Health every year. We have the best run pharmacy in our local footprint across the 9,000 community pharmacy destinations we have. And we have a really important trusted brand and a loyal set of customer bases that we can leverage and really engaging them inside of their health. We also have a unique set of existing capabilities that we've proven across business integration across Aetna, Caremark and retail, and we're extremely excited about kind of bringing that to market as we go forward. We continue to engage in productive conversations with potential partners across a diverse range of the health care ecosystem participants. And we strongly believe we can unlock the power of that connection with consumers and drive greater engagement in health care, improve the quality of health care and lower overall total cost of care. We plan to report our new product launches as well as partnership announcements in the coming quarters, and we're looking forward to bringing you guys all along our journey over the course of 2026. Operator: Our final question comes from Ann Hynes with Mizuho. Ann Hynes: We couldn't hear Steve in the beginning of George's question. So I might reask that a different way. Can you just tell us where you ended in the health insurance business, where you ended from a margin perspective in each subsegment? What's embedded in guidance for 2026 from a margin perspective? And then maybe trend, what trend was in each subsegment and what you're expecting it to be in 2026, that would be great. J. Joyner: Okay. Thanks, Ann. I'm going to have Brian talk more broadly about the margins and the trends, but not by product. Brian Newman: So thanks very much for the question. And as we think about the margins by business, I think you can expect Medicare to be another year of margin improvement. We think that's driven by a rational disciplined approach to pricing in our individual and PDP products and repricing of the group MA business. From a Medicaid perspective, maintain a cautious outlook on the performance in light of the broader pressures across the industry and finally, in commercial, I think maintaining pricing discipline as a result. Steve, maybe you can share some of the color that was muted on your microphone earlier. Steven Nelson: Sure. And I'm sorry about that. I'm not sure. We switched microphones, so hopefully, you can hear me now. But I was just highlighting that we maintain a real disciplined focus around the fundamentals of the business, and that has contributed to the success. We expect, as Brian said, progress in the Medicare business as we continue to strengthen that and that will be a meaningful driver of margin improvement overall Aetna, not just in 2026, but I believe in 2027 as well. We expect stable margins in our Medicaid business. We're off to a good start and cautious about the high trend environment, but it's in line with our expectations and the commercial business is strong. And we continue that to perform well even in the midst of this very dynamic high trend environment, we maintain pricing discipline, but bringing compelling products and capabilities and solutions to our sophisticated purchasers. But I would just highlight to the underlying culture of our team and how they've come together to drive kind of from a transaction mindset to this consumer solutions mindset, and it's resonating with our customers and our members. So really proud of that. And so look, we're going to continue to strengthen the business and drive towards target margins and really like the momentum we're seeing as we head into 2026. J. Joyner: Thank you, Steve, and thanks, everyone, for your questions. I think, Steve, closed with right focus. We are a consumer-based health care company, and this is occurring across all of our businesses, and I'm incredibly proud of the results that we delivered in 2025, also very bullish on the momentum that we're carrying into '26. So I just want to thank again the 300,000-plus colleagues that are actually delivering the work day in and day out to serve the consumers. I'm also proud of the work that we've done to make health care more affordable and accessible for American families. I do believe that CVS Health through our unique position in health care and our connections with millions of Americans in their communities is best positioned to simplify health care, one person, one family, one community at a time. So thank you for joining our call. Operator: Thank you for joining CVS Health's Fourth Quarter 2025 Earnings Call. This concludes today's conference call. You may now disconnect.

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XIFR 2025 Q4 财报电话会议

Operator: Good day, and welcome to the XPLR Infrastructure Fourth Quarter and Full-Year 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kanghee Jeon, Director of Investor Relations. Please go ahead. Unknown Executive: Thank you, Danielle. Good morning, everyone, and thank you for joining our fourth quarter and full-year 2025 financial results conference call for XPLR Infrastructure. With me this morning are Alan Liu, President and Chief Executive Officer of XPLR Infrastructure; and Jessica Geoffroy, Chief Financial Officer of XPLR Infrastructure. Alan will start with opening remarks, and then Jessica will provide an overview of our results and near-term priorities. Our executive team will then be available to answer your questions. On this call, we'll be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call, in the Risk Factors section of the accompanying presentation, or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www. xplrinfrastructure.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. With that, I'll turn the call over to Alan. Alan Liu: Thank you, Kanghee. Good morning, everyone. 2025 was a pivotal year for XPLR as we transitioned to a capital allocation business model. Our strategy in the near-term is focused on simplifying XPLR's capital structure and executing on selected investments enabled by our existing portfolio of energy infrastructure assets. We believe executing on this strategy will enhance XPLR's financial and strategic flexibility, position XPLR to benefit over time from demand growth in the U.S. power markets and ultimately, maximize the long-term value of our assets for unitholders. To that end, a year ago, we presented a plan that called for executing on selected asset sales, addressing near-term debt maturities, buying out certain convertible equity portfolio financings, or CEPFs, and investing in selected wind repowering projects with attractive returns. Today, I'm pleased to report the team has delivered on every major action item we laid out a year ago. First, on operational and financial performance. XPLR delivered full-year adjusted EBITDA of $1.88 billion and free cash flow before growth of $746 million. We believe these results reflect the strong underlying cash flow generating capabilities of our assets. We also achieved capital structure simplification objectives by addressing 2 CEPFs, which resulted in a reduction of more than $1.1 billion in third-party non-controlling equity interests. We completed the sale of our investments in the Meade pipeline and certain distributed generation assets, generating approximately $160 million of net proceeds that were used to support a $250 million reduction in corporate debt issuance previously contemplated for 2026. We achieved planned financing objectives by raising approximately $1.6 billion of project financing commitments to recapitalize certain assets and fund our wind repowering program. We also addressed near-term corporate debt maturities, including pre-funding 2026 maturities with an early notes issuance in November. As a result, we have now completed the financing plan we laid out for 2025 and 2026, and extended the duration of our debt maturity profile. We also made strong progress on our capital investment program. As of today, we have completed nearly 1.3 gigawatts of our previously announced repowering plans, with projects achieving commercial operations on time and on budget. All in all, we are pleased with the team's execution thus far. Looking forward, we believe long-term fundamentals continue to improve for existing energy infrastructure assets, particularly those that provide efficient, clean energy. XPLR's large and diversified portfolio of power generation assets produce substantial cash flows under long-term contracts with a strong set of creditworthy customers. So, our thesis remains the same. In the near term, retaining the cash flows generated by our portfolio should allow XPLR to continue to advance its capital simplification strategy, while also maintaining balance sheet strength and prudently managing liabilities. In using retained cash flows to fund selected CEPF buyouts, we plan to continue to reduce third-party investor ownership in assets that are highly valuable and that we believe could provide XPLR with future upside. Our cash flows are also supporting selected investments enabled by our existing assets, such as repowering projects that we expect will provide strong risk-adjusted return on capital and enhance the long-term value of our fleet. We believe XPLR's relationship with NextEra Energy provides meaningful competitive advantages when it comes to executing on these investments. Through long-term service agreements with NextEra Energy, XPLR benefits from scale in operations, engineering and construction expertise and supply chain access. These are advantages that are difficult for stand-alone platforms to replicate. We believe our strategy, commitment to capital discipline and strong execution will continue to enhance XPLR's financial and strategic flexibility and position it well to realize its upside potential over time. One example of how XPLR is unlocking embedded value in its portfolio is through the interconnection sale and battery storage co-investment agreement with NextEra Energy Resources that we are announcing today. Through this agreement, XPLR Infrastructure is monetizing surplus interconnection capacity and rights at certain of its existing project sites through sales to NextEra Energy Resources. XPLR will also have the ability to co-invest alongside NextEra Energy Resources in 4 of the new battery storage projects co-located with existing XPLR sites. The storage projects, which total 400 megawatts of capacity, have long-dated capacity agreements with investment-grade off-takers and are expected to reach commercial operations by the end of 2027. For XPLR, we believe this agreement creates a clear and capital-efficient way to add up to approximately 200 net megawatts of storage capacity to our portfolio while generating strong project-level equity returns. By using proceeds from the planned sales of interconnection assets and rights to fund its net equity investment in these projects, XPLR can generate new cash flow streams with 0 expected net corporate capital commitment. Let me talk through in detail how the agreement is structured. Each of the 4 projects co-located on existing XPLR sites is expected to be owned in a joint venture between XPLR and NextEra Energy Resources. XPLR has the right to invest up to a 49% ownership stake in each project. If XPLR elects to exercise its co-investment rights across all 4 projects, its expected net equity contribution is approximately $80 million after receipt of asset-level financing proceeds. To partially fund this investment, XPLR has agreed to sell certain interconnection assets and rights to the 4 co-located battery storage projects for approximately $31 million. XPLR will also sell additional interconnection assets and rights to a subsidiary of NextEra Energy Resources to enable a 150-megawatt storage project co-located with XPLR's Palo Duro Wind site for approximately $14 million. To fund the balance of its expected net equity contributions, XPLR intends to sell to NextEra Energy Resources interconnection assets and rights to enable up to 500 megawatts of potential future battery storage projects on different XPLR sites. XPLR will not have co-investment rights on these additional projects or the storage project co-located at the Palo Duro site. As part of the agreement, NextEra Energy Resources will provide development, engineering, construction services, as well as equipment to the 4 joint venture projects and will fund the balance of total project costs not invested by XPLR. This co-investment structure, which is subject to customary conditions, is expected to provide XPLR with the flexibility to bring high-quality projects to fruition on an accelerated time line with significantly reduced execution risk and is an efficient pathway to monetize non-cash flow generating surplus interconnection capacity embedded within existing assets. Repowering is another way that XPLR enhances the value of its portfolio. Given our execution progress in 2025, today, we are updating our previously announced 1.6 gigawatt repowering plan to approximately 2.1 gigawatts through 2030. The 500 megawatts of repowerings added to our current program are expected to deliver strong equity returns and take advantage of a window of opportunity to execute projects that enhance the value and longevity of our fleet. We anticipate that the new wind repowerings will be funded through a combination of retained cash flows and additional project-level financings. While the total repowering opportunity set in XPLR's portfolio is larger than the announced additions, we plan to continue to cadence our investments in a manner that maintains our near-term balance sheet priorities while achieving attractive returns. Over time, another way that XPLR's portfolio could realize upside is through recontracting at higher prices as our existing power purchase agreements expire. Today, approximately 80% of the megawatt hours that we sell are contracted at prices that are below where the market prices are currently and where power prices are forecasted to be in the future when contracts mature. Using third-party forecasted power prices to illustrate potential for further upside, the existing portfolio is estimated to be able to deliver more than $200 million of incremental revenue by 2040, recognizing that actual outcomes will depend on market conditions at the time of recontracting and our execution. In summary, XPLR is a scaled, contracted clean energy infrastructure platform with durable cash flows and a long operating runway. XPLR's assets are located across a diverse set of U.S. power markets that are experiencing increasing demand and tight supply. As those dynamics continue to play out, we believe our portfolio has significant embedded value and investment opportunities that can be harvested over time. We are taking actions to ensure XPLR is positioned to capture those opportunities as they may arise. With that, let me turn it over to Jessica, who will review the 2025 results in more detail and discuss near-term priorities for the business. Jessica Geoffroy: Thank you, Alan, and good morning, everyone. Let's begin with XPLR Infrastructure's detailed results. For the full-year 2025, XPLR's portfolio generated approximately $1.88 billion in adjusted EBITDA and $746 million in free cash flow before growth. The full-year adjusted EBITDA results were primarily impacted by the absence of an approximately $40 million one-time settlement payment that benefited the fourth quarter of 2024 and asset dispositions. As a reminder, XPLR sold its investments in the Meade pipeline and certain distributed generation assets in the third quarter of 2025. These impacts were partially offset by improved pricing, including contract escalators and more favorable market conditions at certain projects as well as lower net operating costs. Our 2025 free cash flow before growth results further reflect the impact of higher interest expense on corporate debt, which was issued during the year as part of our refinancing and capital structure simplification efforts and the timing of tax credit monetization. Taken together, the 2025 results reflect a portfolio that continues to generate strong cash flows from long-duration, contracted assets. This performance provides a solid foundation as we continue to execute our capital allocation priorities and manage the business with a focus on cash flow and balance sheet discipline. For 2026, we continue to expect adjusted EBITDA of $1.75 billion to $1.95 billion and free cash flow before growth of $600 million to $700 million. As always, our expectations assume our usual caveats, including normal weather and operating conditions. Turning to our capital structure simplification efforts. We successfully addressed more than $1.1 billion in CEPFs in 2025. Specifically, we bought out the remaining third-party non-controlling equity interest in our CEPF 1 asset portfolio, and we used the proceeds from the sale of our investment in the Meade pipeline to address CEPF 2. Before I talk through our plans for the remaining 3 CEPFs, I believe it is helpful to take a step back and explain how we think about these structures more broadly. CEPF's structures were designed to provide XPLR with flexibility over time. That flexibility includes the option to buy out the CEPF investors' equity interest in the assets under economic terms that were set at the time the CEPFs were formed. Our decisions on whether or not to exercise the call options are investment decisions that we continuously evaluate relative to all other capital allocation opportunities and balance sheet priorities. To the extent XPLR chooses not to exercise the call option, it can pursue a sale of the underlying assets with the consent of the CEPF investor or alternatively, let substantially all of the cash flows from the underlying assets transferred to the CEPF investor. For CEPF 3, we continue to evaluate our options, including a potential sale of the underlying assets. However, we do not have to make a definitive decision until the fourth quarter of 2027. At this time, given the expected equity returns on the buyouts and the potential upsides we see in the associated assets, we view the future buyouts on CEPF 4 and 5 as an attractive use of retained cash flows. We expect to exercise our call option on the first partial buyout for CEPF 5 later this year. The first opportunity for XPLR to exercise a call option for increased equity in CEPF 4 is not until the end of 2028. We will continuously evaluate all of the CEPFs over time in the context of our capital allocation priorities and will remain open to all potential options to maximize value for unitholders. Putting it all together, XPLR's current plan would result in a more than $2 billion reduction in third-party non-controlling equity interest in our assets by 2030. Importantly, the plan is expected to deliver this outcome without putting undue pressure on the balance sheet or relying on the issuance of new equity. As we look ahead to the next couple of years, our focus is on executing against the updated capital investment plan we have outlined today. We plan to increase our equity ownership in CEPF 5, with partial buyout investments of approximately $150 million in 2026 and $470 million in 2027. We expect to complete approximately 350 megawatts of incremental repowerings and add approximately 200 net megawatts of battery storage capacity to our portfolio through our new agreement with NextEra Energy Resources. We are also focused on addressing upcoming maturities in a disciplined manner and continuing to optimize the portfolio where opportunities allow us to unlock embedded value. Our capital plan through the end of the decade is expected to be largely funded by retained cash flows from the existing portfolio. Where appropriate, we expect to supplement that with project-level financing and selective use of corporate debt, all within our overall framework to enhance financial flexibility and maintain appropriate leverage. Our current capital plan is also supported by a strong and flexible liquidity position, including our fully undrawn revolving credit facility. We recently reduced the size of our corporate revolver from its previous level of $2.5 billion to its current level of $1.25 billion to further demonstrate discipline and align with our funding needs. Specifically, XPLR only has $750 million or less in corporate debt maturities over any 12-month period through year-end 2030. We believe that the combination of liquidity, robust cash flow generation and a disciplined capital plan allows XPLR to appropriately allocate retained cash flows in a value-maximizing manner as we execute over time. That discipline underpins our strategy and focus on long-term value creation as we take actions today that we believe strengthen XPLR's platform for the future. That concludes our prepared remarks. And we will now open the line for questions. Operator: [Operator Instructions] The first question comes from Nelson Ng from RBC Capital Markets. Nelson Ng: The first question I have just relates to capital allocation. I know Slide 12 has some details for the 2025 to '30 period. But just let me know if I'm thinking about this correctly for the '26 to 2030 period. So if free cash flow without growth is about $600 million to $700 million per year going forward and if it's flat for the next 5 years, that's like $3 billion to $3.5 billion of cash, of which I think roughly $2.2 billion would be used for CEPF 4 and 5. So, does that mean there's about $1 billion of capital available for investments and debt reduction? And I think what I'm trying to get to is, can you just talk about whether there's room for unit buybacks or restarting distributions over the next 5 years? And then the last part of that question is, I think for 2030, you have about $7.8 billion of total debt, tax equity and CEPFs at the end of 2030. I was just wondering what your assumptions are for the use of excess cash? Alan Liu: Nelson, this is Alan. I think what we've highlighted today is that in the operating environment that we're in, right, with what we feel is increasing fundamentals for power generation assets, it makes sense for us to continue to invest in this portfolio to position it well, such that we are able to realize upside in the portfolio and to enhance the value of the portfolio. So, I think what you're -- you need to also account for in your math there is that we have spent and have just announced today additional investments into the portfolio. And that's the capital -- CapEx piece that's outlined in that slide that you're referencing, right? So, retained cash flows fully cover the set of buy-outs and the equity investments into our portfolio. You have some incremental cash flow of which is going to partially fund the investments that we've announced. And then there are selected use of project debt to be able to finance the balance of it. Does that make sense? Nelson Ng: Yes, that makes sense. And then just one quick follow-up. For CEPF 3, in your previous plan, I think you gave people the impression that you would look to sell the underlying assets. And I think now it's -- I think you're evaluating the options given that you don't have to make a decision until late next year. But can you just talk about what has changed since then? Or what has changed in the last few months? Alan Liu: So, no change in the plan, Nelson, right? So, I just want to be clear about that. However, we continue to think about how do we help investors and analysts understand the CEPFs. And I think the right way to think about it is there are partnerships in which our partners have given us a series of call options that can be exercised over a period of time. Now as we sit here today, this call option doesn't have to be exercised until 2027. And so therefore, we're just making sure people understand that we're not -- there's no need to exercise the call option early and there's no need to monetize that call option early. To the extent that we don't choose to exercise it, as Jessica said, we have a number of options. Number one is you could potentially sell the underlying assets. So, this is similar to what we did with Meade. We sold the assets. We raised enough proceeds to be able to address the CEPF, as well as we took out excess proceeds from the sale. Now if we don't go down that pathway, we also have the ability to allow the majority or substantially all the cash flows to flip to the CEPF investor. So, those also continue to be our options, but we're just highlighting that it's a call option that there's still time and maturity on it, and we don't have to make a decision on that today. Operator: The next question comes from Julien Dumoulin-Smith from Jefferies. Hannah Velásquez: This is Hannah Vel�squez on for Julien. Congrats on the quarter. I just wanted to get a sense of timing on when these battery drop-downs might come to fruition and be reflected in your results. I don't think they're included in the 2026 bridge to free cash flow before growth. Alan Liu: That's correct. These are expected to reach commercial operations by the end of 2027. So, they would be adding to 2028 and beyond cash flows. Hannah Velásquez: Okay. Got it. And then also as a follow-up, interesting to see the continued relationship or I suppose, the return to drop-downs with NextEra. How can we think about future opportunities there? Is there anything beyond batteries that you might consider? Alan Liu: So, I would say, first of all, we've made no commitments beyond the transaction that we announced today. I think this is also different. I wouldn't think of this as a drop-down, right? These are effectively co-located projects, projects that are co-located with existing XPLR sites. Each partner is contributing a piece to this, right? Obviously, we own interconnection assets. So, we are monetizing a portion of those physical interconnection assets to be able to enable the co-invest or the co-located storage. NextEra Energy Resources is then coming in and providing all of the development, the construction, the equipment to take basically these rights and interconnection assets and to form it into a fully developed project. So it truly is a partnership that's come to fruition here. We really like this co-investment opportunity. But either way, basically, we're saying, hey, we're able to monetize it in multiple different ways, right? We can either monetize our surplus interconnection capacity as a sale for cash or a potential to roll it into a stream of contracted cash flows at our choosing. Hopefully, that clarifies the understanding of it. Hannah Velásquez: Yes. And just as a follow-up there. Is there any intention to maybe in the longer term or beyond 2030 return to drop-downs? Alan Liu: We are only focused on kind of the capital plan that we've laid out at hand at this point, right? So, we haven't committed to anything beyond the deal that we're announcing today. Operator: The next question comes from Christine Cho from Barclays. Christine Cho: Great to have these earnings calls again. On Slide 6, you list out these projects that you -- the battery storage agreements. I'm just curious, like some of these, you have the option to invest and some of these you don't. So, just curious how you and NEER determine which ones you are eligible to invest in? Alan Liu: So, I think the right way to think about it is we started with how do we create incremental cash flows for XPLR. But in the midst of everything else that we've outlined as capital priorities, not create incremental funding requirements, right, for XPLR. And so really, it's the self-equitize, if you will. And so as we thought through that, it was, hey, we're going to agree to identify additional projects that we can sell in order to fund our co-investment into the 4 projects. And that was how the deal was structured. Christine Cho: Okay. And so then you quantify $45 million from the sale of surplus interconnection. And then I guess, like this to be identified line item would bridge the additional $35 million that you would need for the $80 million for co-investment. How should we think about what the opportunity set for potential sales of surplus interconnections and rights is for your entire portfolio outside these assets? Alan Liu: Yes. I think many of our assets have surplus interconnection capacity, as we've alluded to and talked about before. But I think it's -- every project is different, right? Every location is different. So it really comes down to the project-specific economics and the opportunities of that project. So obviously, we're announcing this, and these are projects that we find very attractive today and the option to be able to co-invest in these storage projects, we like it a lot. So, I wouldn't read further into that other than we do have other interconnection assets, and we'll continue to think about how we optimize those for XPLR. Operator: [Operator Instructions] The next question comes from Mark Jarvi from CIBC Capital Markets. Mark Jarvi: Some interesting updates today. Just on that last point about other assets where you could monetize interconnection rights. Is it fair to assume that the assets underlying the CEPF 3 to 5 wouldn't be sort of eligible at this point or likely to be? Alan Liu: Yes. So again, I think about -- I would point you back to CEPF is we have an equity partner in that business, right? So to the extent we're moving forward with any in that front, then the equity partner has a say in how those assets are monetized and ultimately, the economics would be shared, right? Mark Jarvi: Understood. And then can you comment a little bit on returns between the battery joint venture investments versus the repowerings and just how the next phase of repowerings are comparing versus the ones you've already acted on in 2025? Alan Liu: So we've said in the past that we're targeting minimum double-digit returns for repowerings and simply, those are, in our minds, very low-risk projects that are sites that we control, right? These are very attractive projects, particularly if you think about it as we've taken assets that weren't producing any cash flows and converting them into either cash proceeds or streams of cash flows. So, they're highly attractive projects. Mark Jarvi: And just in terms of the battery investment opportunity, would they be modestly lower returning projects versus the repowerings? Or they are still double digist? Alan Liu: Yes, I was referring to the storage projects, right? We [ found ] repowerings as double-digit minimum, these are very attractive. And particularly if you think about it as taking non-cash flow assets that are embedded in our portfolio and creating cash flow streams out of them. Mark Jarvi: And not that it's a big number, but can you just clarify, is the $80 million of equity financing around the monetization of the interconnection assets, is that essentially done now? And sort of, I guess, if it doesn't, is there a fallback plan in terms of that funding cap? Alan Liu: Yes. I think the way to think about it is with this transaction, you have a pathway to at least half of the proceeds, the net equity investment, right? Again, we have an option to co-invest. And really, the option is finalization of our evaluation of the development plan. And then the other half of it is we have an agreement with NextEra Energy Resources to identify and seek other asset sales to be able to fund the balance of it. Mark Jarvi: And when would you meet or plan to reach an investment decision on it? Alan Liu: We have, under the agreement, 45 days to finalize our evaluation of the development plan and make an election. Operator: This concludes our question-and-answer session, and the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

92天前Insight Analytics约5分钟阅读

ECL 2025 Q4 财报电话会议

Operator: Greetings. Welcome to Ecolab Fourth Quarter 2025 Earnings Release Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. Reminder, this conference is being recorded. At this time, it's now my pleasure to introduce your host, Andy Hedberg, Vice President of Investor Relations. Andy, you may now begin. Andy Hedberg: Thank you. Hello, everyone, and welcome to Ecolab's fourth quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO, and Scott Kirkland, our CFO. A discussion of our results, along with our earnings release and the slides referencing the quarter's results, are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and associated supplemental materials include estimates of future performance. These are forward-looking statements, and actual results could differ materially from those projected. Factors that could cause actual results to differ are described under the Risk Factors section in our most recent form 10-K and in our posted materials. Also, refer you to the supplemental diluted earnings per share information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments. Christophe Beck: Thank you so much, Andy, and welcome to everyone joining us today. 2025 was another record year for Ecolab, with record-breaking sales margins, earnings per share, and free cash flow. This was all enabled by the exceptional total value our team and technologies delivered to customers, helping them achieve better business outcomes, operational performance, and environmental impact. Thanks to our team's dedication and expertise, we are entering 2026 with strong momentum and are very well positioned to deliver continued high performance with confidence. In Q4, we delivered 15% adjusted EPS growth with quarterly growth strengthening throughout the year. This was driven by accelerating underlying sales growth and continued strong OI margin expansion. Organic sales grew 3%, driven by 3% value pricing and positive volume growth. Volume actually was stronger than it appeared, with performance improving across most of our businesses. Food and beverage accelerated to 5%. Pest elimination and life sciences both accelerated to 7%. And specialty continued to drive significant share gains, growing 7% as well. Institutional underlying sales growth was consistent with prior quarters, excluding the unexpected short-term impact from lower distributor inventories. We also maintained strong double-digit growth in global high-tech and Ecolab Digital. Taken together, this strong momentum lifted Ecolab's underlying volume growth to 2%, driving mid-single-digit underlying organic sales growth when we exclude the impact from basic industries, paper, and these lower distributor inventories. In other words, our core businesses and our growth engines are doing very well. We expect the distributor impact to largely normalize in 2026. We also continue to anticipate basic industries and paper's performance to progressively improve in 2026. Combined with strong new business wins and continued momentum across our growth engines, we expect volume growth to get back to 1% as we exit the first quarter, with growth accelerating further as the year progresses. Our strengthening underlying sales drove organic operating income growth of 12% and expanded our organic operating income margin by 140 basis points to 18.5%. This resulted in a full-year operating income margin of 18%, up 150 basis points versus last year. We're confident we can continue to expand our OI margin well beyond the 20%. Now, before I move into our 2026 outlook, I want to take a moment to acknowledge current events in Minnesota. Ecolab has customers in more than 170 countries, but Minnesota has been our home for more than a century. It is where our headquarters sit and where thousands of our colleagues, customers, and communities count on us every single day. In recent weeks, Ecolab, along with other business leaders across the state, have come together to call for de-escalation and a constructive path forward. As a company that has always believed in doing well by doing good, we stepped in early to have a role in business leadership and support the efforts underway. I'm proud of the progress we're seeing and encouraged by the positive momentum. As expressed in an open letter signed by 60 Minnesota-based CEOs, the business community has an important role in supporting stability, strengthening local businesses, and helping build a brighter future for Minnesota. We will continue to work together to help ensure Minnesota remains a strong and resilient place to live, work, and grow. Now, looking ahead to 2026, our priorities are very clear. First, it's rapidly growing total value delivered to customers across our core businesses. Second is to accelerate our One Ecolab growth initiative. And third, is to fuel our growth engines. We expect 3% to 4% organic sales growth this year, with growth accelerating as the year progresses, driven by strengthening volume gains and continued 2% to 3% value price. Total reported sales, including the Ovivo Electronics acquisition, is expected to grow at upper single digits in 2026. And with this strong growth, OI margin is anticipated to expand 100 to 150 basis points to more than 19%, resulting in an OI growth of 14% to 16%. Altogether, this is expected to drive strong EPS growth of 12% to 15%, which includes the headwind of additional non-cash amortization from the Ovivo acquisition. Our first priority is to rapidly grow total value delivered, or as we call it, TVD, across our core businesses. TVD is our formal framework for measuring the business outcomes, operational performance, and environmental impact we deliver to customers. When we deliver measurable value across these three dimensions, it not only drives share gains, but it earns Ecolab the ability to value price. And with a strong customer value pipeline heading into 2026, we remain very confident in delivering 2% to 3% pricing this year. What makes our value model so powerful is our best-in-class approach. With our scale, digital intelligence, and global service, Ecolab partners with customers to define what best-in-class looks like and scale it across their operations, helping them achieve peak performance. This is how we consistently help customers lower costs, reduce risk, and improve performance across their entire enterprise. Innovation is also essential to our best-in-class value model, and our 2026 lineup is strong and keeps getting stronger. In global high-tech, we're launching directed chip cooling as a service to the data center market. This brings liquid cooling right where it's needed the most—the chip. By combining our CDU platform with Ecolab 3D Tracer real-time monitoring, advanced cooling technology, and on-site service, we improve uptime, lower cooling costs, and allow more power to be put towards compute. In food and beverage, we're launching CIPIQ, an AI-enabled digital solution that uses real-time analytics for a smarter way to optimize cleaning in place. It decreases capacity, reduces water and energy use, and improves quality control and product safety, helping customers run more efficiently at a time when every hour of production matters. Early interest is strong, and we're looking forward to a healthy rollout in 2026. In institutional specialty, we focused on scaling our IQ suite—Dish IQ, Aqua IQ, Kitchen IQ, and Beverage IQ. These solutions directly address labor shortages, guest satisfaction, and rising operating costs, giving operators smarter, more automated ways to run their kitchens and front-of-the-house operations. We expect strong growth from the suite in 2026 as well. And in pest elimination, we're expanding beyond our rodent-focused smart devices with a new smart solution for cockroaches, extending the reach and impact of our passive diligence platforms. Moving into our second priority in 2026, expanding the One Ecolab growth initiative. We've demonstrated immense success over the last year, aligning our global resources to better serve our top 35 global customers, where there is a $3.5 billion growth opportunity. In 2025, sales growth with this group outpaced the total company by approximately two percentage points. This year, we're expanding this model to our largest regional customers around the world, leveraging the tools, processes, and sales structures built for our top 35 customers. Within One Ecolab, we've also delivered more than $100 million in SG&A savings as of year-end 2025. We achieved this by consolidating functional work into our global centers of excellence and deploying a number of agentic AI applications as one of the most advanced companies. As we shared at Investor Day, our initial One Ecolab rollout exceeded expectations, allowing us to increase our savings target from $140 million to $225 million by 2027. And today, we're increasing our savings target again to $325 million by the same year, 2027, due to the continued success of the overall program. Finally, looking at our growth engines, they now represent about 20% of our portfolio, including Ovivo Electronics, which closed earlier than expected. Together, our growth engines have very attractive long-term OI margin profiles, and in 2026, we expect them to collectively grow double digits, lifting Ecolab's sales growth. When we look at what's fueling that trajectory, global high-tech is leading the way. As AI expands and every part of its value chain depends on water—the fabs that make the chips, the power plants that fuel the chips, and the data centers that run and cool them—Ecolab is uniquely positioned in all these markets to help enable the AI build-out. With Ovivo Electronics now part of Ecolab, we provide the ultra-pure water essential for semiconductor manufacturing, supporting the fabs producing the world's most advanced chips. As we bring our unmatched capabilities together, we're building a unique circular water offering for the fast-growing microelectronics sector. And Ovivo is off to a strong start in 2026, as we have already secured several new fabs where our leading ultra-pure water technologies will be deployed. On the data center side, the industry expects unprecedented demand for AI to continue to rapidly expand. Higher rack density and rising chip heat make liquid cooling mission-critical. Our directed chip cooling platform, including integrated 3D tracer monitoring and on-site service, positions us to help data centers improve cooling asset performance, reduce the power required to cool, and return more power to compute. And as the industry increasingly turns to water to cool next-generation chips, like NVIDIA's Vera Rubin platform, we're very well positioned. Backed by more than a century of experience managing cooling and water systems in complex environments at scale. As strong as that momentum is, it's only part of our growth engine story. Another major contributor is pest elimination. Nearly every Ecolab customer today uses some form of pest elimination. With our One Ecolab selling strategy, we are launching a $3 billion cross-sell opportunity by delivering the most compelling outcomes in the industry. Targeting 99% pest relocation, our digital connected pest intelligence platform leads us in deploying digital technologies to this commercial market, and we expect to have more than 1 million smart devices in the field in 2026. This technology not only drives best-in-class outcomes for our customers, but it also frees our team to spend more time driving strong sales growth while continuing to expand margin. We're also seeing exceptional progress in life sciences. We delivered our best year yet in bioprocessing, which saved up nearly 75% in 2025. Life sciences has the potential to be one of Ecolab's highest-margin businesses, where we target long-term operating margins of 30%. We're investing behind these attractive and significant long-term opportunities with breakthrough biopharma purification innovations, new digital solutions, and capacity expansion. That includes the capacity expansion of our life sciences industrial water purification business, which is expected to begin production in 2025 and position us for stronger growth in the years ahead. And the fourth engine powering our growth is Ecolab Digital. We've grown this business to nearly $400 million in annual sales, increasing more than 20% in 2025, and we're still in the very early days. We're investing heavily to bring market-leading digital solutions to our customers across our portfolio. In 2025, more than 25% of our innovation pipeline was digital, which has grown significantly over the last few years. The strength of Ecolab Digital comes from its focus on solving critical customer challenges and increasing the total value delivered to our customers. With all of this, we enter 2026 confident in our ability to deliver continued strong performance, and we're off to a strong start in the first quarter. For the year, we expect reported sales growth of 7% to 9% and organic sales growth of 3% to 4%, with organic growth accelerating as the year progresses, driven by strengthening volume growth. And with 100 to 150 basis points of OI margin expansion, we expect 14% to 16% OI growth and EPS growth of 12% to 15%, including the impact of Ovivo. I'll end where I often do: The best of Ecolab is yet to come. Our ability to improve customers' business outcomes, operational performance, and environmental impact is more relevant than ever and inspiring consistent double-digit EPS growth. So thanks so much for your interest and your investment in Ecolab. I look forward to your questions. Andy Hedberg: Thanks, Christophe. That concludes our formal remarks. Operator, would you please begin the question and answer period? Thank you. Operator: We'll now be conducting a question and answer session. I ask you to please limit yourself to one question per caller so others will have a chance to participate. If you have additional questions, please rejoin the Q&A queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And our first question is from the line of Tim Mulrooney with William Blair. Please proceed with your question. Timothy Michael Mulrooney: Good afternoon, Tim. I just wanted to double-click on the volume cadence as you move through the year, specifically organic volumes. Because I know you've got a couple of headwinds from paper and basic, and as well the inventory thing with institutional. How do you think about these headwinds moving through the year, as well as on the other side of it, you've got that solid momentum in some of these other businesses? Can you walk me through these pieces and, taking that all into account, how you're thinking about the trajectory for organic volumes specifically as you move through the year? Christophe Beck: I'd love to, Tim. And our framework remains the same with the 1% to 2% volume growth in Q2, Q3 to get to this 3% to 4% for the year, accelerating in 2026. And when I step back, the truth is that the volume growth in Q4 was almost the same as in Q3, as you know. So we round up or down our volume. And the difference versus around zero and around one was actually only a few million dollars. So at the end of the day, it was almost the same in Q4 as in Q3, which is why earnings were strong. And I feel great about where we're going. But what makes me the most optimistic about our future is that 85% of our businesses are doing great. As mentioned, F&B, which we're building around this F&B united idea of bringing hygiene and water very closely together. That's done in North America. Well, it's accelerated to 5%. Life science is 7%. Pest is 7%. Water ex-paper and basic, to 5%. And INS ex-distribution, inventory story there, was at 4% with specialty steady at 7%. So in other words, what I really like is that our portfolio is shifting to higher growth, higher margin businesses, which is exactly where we want to go. And we deal, obviously, with the 15% of the portfolio that needs work. There will always be something, and I expect paper and basics to kind of get to a much better place as we progress in 2026. So if I put all that together, improving the underperforming businesses of paper and basic, normalization of the distributor inventory, and 85% of the company growing very nicely, I expect Q1 to be pretty similar to Q4, but with acceleration towards the end of the quarter and acceleration continuing in the quarters to come during the year of 2026. So overall, very good trajectory, especially from the underlying growth. Timothy Michael Mulrooney: Thank you. Operator: Our next question is from the line of Manav Patnaik with Barclays. Please proceed with your question. Manav Patnaik: Thank you. Christophe, I was hoping you could just double-click on the global high-tech piece, you know, the water, the semi, the data center piece, post-Ovivo, just help us, you know, size what you think the growth rate is, where the opportunities are, and perhaps if you see any roadblocks to you, you know, achieving your growth ambitions there? Christophe Beck: I'd love to. Manav, thanks for that question. So global high-tech is kind of a new business for us, started it three, four years ago, really focused on data centers and on fabs, which is the short-term name for manufacturing of microelectronics, chips. And if I step back, as I mentioned so many times, why are we so interested in that field? On one hand, well, AI demand is booming. Is that going to be a straight line to heaven? Probably not. There's going to be ups and slower ups probably as well going forward, but the trend is clearly up, and we see it from an investment perspective. Second, the power and water that's required for that is incredible. As mentioned, by 2030, we expect an incremental need of power for the whole of the electrical consumption of India and the incremental needs of the freshwater use of the whole United States. So at the end of the day, at the heart of AI is water. As mentioned before, to produce the chips, because they're produced in ultra-pure water, to power the chips because power generation is the second-largest water user in the world after agriculture. And the third one is to cool chips, which is shifting towards water at the same time. So high-growth market, where water is at the heart of it, and especially so on those two key areas of fabs and data centers. One might argue that power generation is also part of it. It was kind of a flat market for a very long time, but that's changing because we need much more power that's going to help as well on the side. But it's not part of our global high-tech. So the way we're thinking about building it on fabs, since one fab requires the amount of water equivalent to 17 million people. That's an example in Korea, for instance, there. Well, the solution is to provide technology where you can recirculate water within the fab, which is really hard because at the same time, the quality of the water that's used to produce the chip is directly correlated to the quality of the advanced chips. And that's a thousand times more pure than water that's used in blood injections, by the way. So recycling water that's difficult to recycle at a super high standard, well, that's exactly what Ovivo helps us to do. That was the piece of the puzzle that was missing for us. And now we can provide the semiconductor manufacturers with circular water solutions, and we're seeing very high interest from the key players out there. And the second and last I'll mention is data centers. Well, for a long time, they've been air-cooled, that required cooling towers with a lot of water that we've been used to manage for a very long time. Now that's shifting to liquid cooling, which means that you reuse the liquid in the data center, that's coming straight on top of the chip, and that liquid is not water today. But it's getting towards water tomorrow because it's the liquid with the best thermal properties, which is what we master the most as well at the same time. So liquid cooling in circular mode for data centers and circular water for fabs manufacturing, that's the way we're thinking about it. We added Ovivo for fabs, and we will keep building our capabilities on data center today. Combined, these two businesses are roughly a billion dollars, growing strong double-digit right now at very high margin, and we see many opportunities to make that business way bigger in the years to come. Manav Patnaik: Thank you. Operator: Our next question is from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your question. Ashish Sabadra: Thanks for taking my question. Just wanted to drill down further on the drivers for the 100 to 150 basis points of margin expansion. You obviously raised the One Ecolab saving targets and talked about $100 million of savings already achieved in 2025. I was wondering if you could provide any incremental color on the savings in '26, but also payments from pricing as well as mix shift in '26. Thanks. Christophe Beck: Great. Thank you, Ashish. I'll pass it to Scott, just to start the answer here. Scott Kirkland: Yeah. Thanks, Ashish. Similar to the targets we set out at Investor Day last fall, this 100 to 150 basis points is anchored on really two things: gross margins, which is at 75 to 100 basis points annually, which we're thinking about that long-term same sort of targets for 2026. And then this 25 to 50 basis points of SG&A leverage annually through 2030. So that's how we get to this 100 to 150 points. And then just diving into the gross margin, the drivers of that being the value-based pricing that Christophe referenced, our mix of businesses as you see these growth engines being higher margin businesses, but also innovation. And then on the SG&A savings, if you look at over the last five years, we've delivered sales productivity almost 30%, which is sort of sales per head, which is part of that driver. Then on top of that, with that, we're also driving the One Ecolab program, which Christophe announced that we've now increased that savings target to $325 million. That $325 million, as we think about it, about $120 million. So think of sort of a third, a third, third. A little bit more than a third through the '25. And then the remaining $200 million will be sort of equally over the next two years. And so that'll be a driver of that 25 to 50 basis points as well. Operator: Our next question is from the line of John McNulty with BMO Capital Markets. Please proceed with your question. John McNulty: Yeah. Good morning. Thanks for taking or good afternoon. Thanks for taking my question. So wanted to drill down a little bit into the incremental margins because it looks like what we saw in pest was kind of a really explosive incremental margin in terms of how much kind of came down to the bottom line. And then when I look at things like the life sciences side, it was dramatically less so. It was probably the weaker of the performers of your businesses. So I guess can you unpack that a little bit in terms of what some of those dynamics might be? Why, you know, why we're seeing such different results by segment and how we should be thinking about that going forward? Christophe Beck: Hey. Thank you, John. Looks like Scott is on a roll, so he's gonna take the first part of the answer here. Scott Kirkland: Thanks, John. As we've talked about in the past, we don't really think about incremental margins in that way, but I get your point on life sciences and pest. The life sciences, you saw the OI growth in low single digits in Q4, but frankly, that was as we expected because we had targeted OI margins in that mid-teen range. It was due to two things. One, as we talked about, we're investing in that business, underlying margins are actually better. And on top of it, you had a year-on-year comparison sort of bad comp, if you will, on life sciences, really because of performance-based compensation. And that business sales accelerated throughout the year, as Christophe talked about. And the OI growth for the full year was 30%. And so they've earned that performance-based compensation. But we really expect that business going forward to increase NOI to increase double digits into '26 and going forward. And then pest, as you mentioned, was sort of the opposite. And, again, that was comparing against a comp last year. As you might remember, we had a spike in accidents at the end of last year, which is creating a lower base point for them. Again, that business is doing really well, as Christophe said, growing 7% top line. OI margins north of 20%, and we expect to continue that trajectory. Christophe Beck: So maybe a few points here to build on what Scott just said. So not every quarter is treated equal. You can have year-on-year, obviously, some comparisons like our accidents or in pest elimination, unfortunate a year prior. Obviously, that's changing, obviously, the MALT profile on a year-on-year basis. It's also investment pacing by business. We all in the spirit of investing the right way at the right time, not always equal in every quarter. And here I'm speaking about life science, for instance, as well. But generally, it's really making sure that we get or beat the 20% OI margin that we've talked about over 2027. We feel really good about it. So we're at 18%. So last year, we are planning to be north of 19% in '26. And I'm already thinking about what's beyond into 20% because many of our businesses are either beyond 20% already or have underlying margins that are already known, of it, which is the case of life science. Operator: Our next question is from the line of Chris Parkinson with Wolfe Research. Please proceed with your question. Chris Parkinson: Good afternoon. And, Christophe, if we could just dig in a little bit to what you're seeing in the global water business. Over the last couple of quarters, there's been a bit of a divergence between light and heavy within water. Mining seems, you know, mixed, perhaps some, you know, life in certain metals. F&B, it seems like it's inflected, and papers continue to be a drag. But can you just kind of give us some insights on how you're thinking about that business in 2026, you know, what you need to see at the top and the bottom end, and forgive me for my own range. But, you know, the to the three and a half to four and a half percent range, call it fourth, midpoint, obviously. Just how are you thinking about this business? And what are you hearing from your teams to kind of confirm or deny the bottom or the top end of that range? Thank you. Christophe Beck: I'd love to, Chris. Water is half the company. Sorry. It's a big chunk of it. We've built that business since 2011. Obviously, when we acquired Nalco. And our ambition was really to create the world's water company. And we've come to that ambition over the last ten years. And there is that feeling that we're just getting started, you know, on that journey. Now that being said, we're serving many end markets with water. Obviously, some are growing very fast, and some are growing a little bit less. But no one has the capabilities that we do have and the reach that we have around the world, plus the digital technology that we bring into it in order for our customers to reuse and recycle water, so in a closed circle, as mentioned, so for the GHT or Global Hi Tech. Example that I described a little bit before. So if we look at the performance of that business, Chris, yes, we grew up 2% organic in Q4 as a whole. But if you exclude basic and paper, which are in a down part of the cycle, well, water was growing 5% in Q4, which is very strong performance. And we still want to get better than that. As I mentioned, the biggest business in there is food and beverage. We are merging hygiene and water to provide the best solutions for our customers around the world. We've done it in North America. It's led to very good results, 5% for that business is good in an industry that's flat. By the way. I mean, the end customers that we are serving, as well Jira. And we've only done North America. With F&B United. We're gonna keep expanding around the world. Then there is the global high-tech story that I just described. Before, Chris, which is close to a billion dollars, which is growing, so in strong double-digit rates with very high margins as well at the same time. And then you have all the businesses in between. From manufacturing areas, for instance, to our institutional water business as well. Which is providing water services to our institutional businesses as well. But bottom line, so we end up with a business that underlying growth is close to the mid-singles, so this 5% drag down by basic and paper, but those two will recover. That's the good and the less good things of a little bit more cyclical businesses. And we will deal with that. So you bring together strong underlying growth, acceleration in global high-tech, and recovering of basic and paper industries, and you end up in a pretty good place in a business that has strong margins. We had a very good quarter in Q4. I think it was the second-highest quarter of the last five years. From a margin perspective, and water will get. As well, so to the 20% and move beyond the 20% in the years to come. Operator: Thank you. The next question is from the line of Seth Weber with BNP Paribas. Please proceed with your question. Seth Weber: Christophe, in your prepared remarks and the slide deck, there were a bunch of mentions about new business wins. I'm wondering, can you just give a little bit more color around that? Are these conquests from other providers or, you know, just new, you know, companies that are new to the space that are kind of just adding suppliers or any color around these new business wins would be helpful. Thank you. Christophe Beck: Yeah. New business is the number one focus of the whole company. We have this mantra of we're all in sales, so no one is not selling in the company. It's either you're dealing with customers every single day or you're supporting someone who is serving customers every single day. I have this objective myself to meet once a week the CEO of a customer. And last year, met close to 100 customers as well. So this is where we all collectively spent most of our time. Now we are focusing first and foremost on our current customers and our largest customers. As well. As mentioned earlier, our top 35 customers have a growth potential of $3.5 billion. Well, this is where we want to focus our attention first and foremost because it's the most obvious growth to get. And that's why we're growing much faster with those customers than everyone else. And it's the most cost-effective way, obviously, to get new business because we have service people going into those sites already today. So it's expanding the share of wallet. And at the same time, it's helping our customers because we go with end-to-end solutions, helping them get to best-in-class performance. They get better total value delivered. Better for their P&L, get their share of it, so at the same time, we get higher growth, better margin for us, and it's a better deal for our customers. That's the first priority that we have. And second, it's to do the same for our local large customers around the world. And the third priority is more individual customers around the world. And the last thing I say, we had our global blitz two weeks ago, which is engaging the whole organization around the world on new business. And within one week, we managed to grow our new business versus the same week a year ago by over 30% during that week as well. So a very good story. Our value proposition is very well received by our customers because they need it more than ever, either because they don't have enough water or they're trying to improve their cost performance because they have price pressure, cost pressure, and so on. This is the value that Ecolab provides to them. This is the way we sell, and this is why our new business is going very well, why retention remains very stable as well across our businesses around the world. Operator: Thank you. The next question is from the line of Andrew Wittmann with Baird. Please proceed with your question. Andrew Wittmann: Great. Excuse me. Thank you. I guess I wanted to ask a couple of kind of maybe kind of punch list items here. But, usually, you all have a view on FX that's included in your guidance, and I didn't see one in this press release. Scott, I was wondering if you could talk about the FX rates that are implicit in your EPS guidance raise. So those kind of kind of won there. And then I just on the expected volume improvements on the water side, Christophe, are you seeing that is this just gonna be a comps game where the comps get easier or are you in fact expecting the volumes in some of those more challenged industries to actually improve? And if so, what are you looking at that gives you that indication? Thank you. Christophe Beck: Thank you, Andy. So let me start with the second part, and then I'll pass the FX to Scott. So very different questions, obviously. The new business in for the old companies are at kept going up in absolute terms. So dollar of net new business. So net of what we might have lost, which is very little usually. This is true for water, and this is true for the giant businesses as well of basic and paper. They also got to record new business. It's just that the demand then afterwards of those businesses is lower year on year, and that's driving the growth or the slight decline that these two businesses are experiencing as well at the same time. But, generally, new business, Andy, is a very strong proposition for us. That's why we focused the whole organization on it. Making sure that whatever happens out there, new business is where you need to focus your time, gain share even in a market that might be declining. So good story even in our challenged businesses. Now on FX, Scott? Scott Kirkland: Yeah. Happy to answer the mechanical questions, Andy. On the FX for '26, we're not expecting a significant help or hurt. We're sort of thinking it's neutral for the year. Just given the current position of the dollar, probably slightly favorable in the first half, but really assuming neutral in the second half going in. Obviously, the FX is pretty dynamic. You know, the macro environment, so that could change. But that's our going-in assumption. But even any upside in the first half, as you look at sort of all items below OI, gonna be offsets to that as we had in our guidance that the tax rate is gonna go up from the 20.2 we had this year to somewhere between 28.5 to 21.5. And then also, which wasn't in our specific guidance, but other income is gonna be a little bit of a headwind. It'll be about $30 million next year, so that's about a $20 million decrease on that other income. Just due to pension assumptions. So, you know, if you look at as a whole below OI items, not a net health. Christophe Beck: But maybe a point on this FX because it's always when we think about the next year, the beginning of the year, so what are the assumptions? That we've taken when I think a year ago or even all the years prior, Andy? We were almost never right. We thought that FX would be a massive headwind in 2025 while it was not. We thought that our delivered product cost would be pretty benign. Okay. The whole tariff situation changed quite a bit during the year as we now. And we adjust it. So we've gotten used to become very agile. To adapt to local conditions and make absolutely sure that we still deliver our 12 to 15 earnings per share. So we hope we think that FX is going to be pretty benign in 2026. Maybe it's not. And if it's not, we would adjust accordingly as well as we've done in the past few years. Operator: Thank you. Your next question is from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question. Vincent Andrews: Thank you, and good afternoon. Just a question on the One Ecolab cost savings. You raised it again. I'm just wondering if your assessment is that, you know, this will probably be the last raise to it or if you still think there's opportunity there. Maybe there's some conservatism in the number because it looks like the cash costs associated with achieving these benefits are still nicely above the benefits themselves. And I often think of those two lines, those two numbers ultimately intersect. So maybe just your latest thoughts there and how that might carry forward to '27. Thank you. Christophe Beck: You know, maybe a comment before I pass it to Scott. I don't think it's conservatism. It could have been, but it's not. In that case, we're leveraging obviously the technology, AI agents, agentic technology as well here that no one has really done so far. So there's no real benchmark blueprint out there. You've probably seen that we ranked number nine on the Fortune AI list of most prepared companies for the age of AI. I really encourage the whole team to embrace technology, to stay at the frontier of what's out there, and to see how it works. And for the most part, it's been a very good story. It's not a perfect story. There are places where it didn't work, but 80% of the time, it's working really well where it's driving better outcomes for our customers, for our teams, the way we operate, while at the same time, driving huge productivity gains. And my feeling is that it's gonna keep improving in the years to come, but we don't know exactly where it's gonna come from because the technology in some cases doesn't even exist. Scott? Scott Kirkland: Yeah. Christophe said it very well, Vincent. You know, the savings momentum is better than we expected, as you said, moving from that $225 to $325 now by 2027. And it's that way as we're learning, but moving up the value chain as we deploy technology and AI and high-touch processes. And then leveraging the global COEs that Christophe referenced before, which allows us to deploy that technology at scale. But as we think about '26 to '27, that incremental $200 million from what we've already realized, I would think about that pretty evenly. And then long-term, this is really an enabler to this 25 to 50 basis points of SG&A leverage, which is our long-term target. That's relative to historically what we've done about 20 to 30 basis points. So, really, almost doubling our SG&A leverage that we've had historically enabled by the One Ecolab and the scalability that it provides. Operator: Thank you. At this time, the next line question is from the line of Patrick Cunningham with Citibank. Please proceed with your question. Patrick Cunningham: Hi. Good afternoon. Thanks for taking my question. Just on the digital sales piece, you maybe give us an update on how your ability to monetize these technologies has evolved in 2025, where you ultimately see it going, and where you're getting the best traction with customers. Thanks. Christophe Beck: I'd love that question. Well, we could argue we've been for a long time in the business of building great new businesses, and Ecolab Digital, as you know, is a fairly new business that we started two years ago. It's not that we started digital technology and digital offerings to our customers two years ago. We just did it as part of our offering for thirty years. When we invested in 3D technology. And we haven't monetized directly that offering to our customers for, okay, twenty-eight years of the last thirty years that we've been in that field. So we're building that new organization. We created a dedicated organization on that opportunity. It is in the early years. It's not perfect. It's a bit rough on the edges at the beginning, but that's always been true when we built new businesses. But the fact that we are already generating close to $400 million of sales, which encompasses only two components of it. It's connected hardware, and it's software. Those are the two elements that are driving those $400 million at very high margin and growing, obviously, north of 20%, and I think we'll grow probably 25% in '26 as well here. And we're really at the beginning of it. You know, the way we think about digital sales at Ecolab and especially in the future is what we call the one hundred one one hundred. Where 100% of the customer locations that we serve will have to be connected. 100% of the applications that we provide to each of those locations. Think about the hotel where you have a dish machine, a laundry machine, an AC unit, pest elimination, EcoSure audit systems, and all that. Those are the applications. 100% of them need to be connected. And the third element is 100% of the time, where people pay for itself. 100% of the units or 100% of the applications, 100% billable offering. This is the way we think about it. That's why when I think about the $400 million we have today, we have just scratched the surface of what we can do. We still have a lot of customers using those technologies that do not pay because they're still on the old programs. And we have a lot of customers that do not use it, new to date. Especially in institutional because it's relatively new. That cost barrier is not the barrier anymore. So for most of our customers, as well, and we have millions of customers out there that can use it. That's why Ecolab Digital is a great story. Very early in that development, and I think it's gonna become one of the biggest growth drivers of our company going forward. By driving customer benefits ultimately because our promise is to have reduce their total operating cost. That's the TBD that we've always promised to our customers. Operator: The next question is from the line of David Begleiter with Deutsche Bank. Christophe, back to Basic Industries Paper. Is your confidence in a back-half recovery just because of easier comps? Are you seeing some underlying improvement in these end markets as we progress through the quarter? Thank you. Christophe Beck: Thanks, David. It's a combination of both. That industry, so the paper and packaging industry, has had a dual challenge. On one hand, okay, a demand that was pretty low. And at the same time, related to it, consolidation of the industry. So consolidation means that they were closing paper mills, and a paper mill for us is a big chunk, so it can be up to $10 or $15 million of sales in one location. Well, if it happens that that location gets closed, okay, there's not much you can do because you're not gonna sell much to that location anymore. So we had to go through that the last twelve to twenty-four months, and that seems to be behind us. We haven't seen in our environment mill closures in the last few months, which obviously is a good news for us as we enter 2026. New business is good in that business as well. Innovation is strong as well at the same time. And the margin of that business was what 13% last year. So it's not Ecolab average, but it's still okay, if I may say. So the combination of both general recovering progressively, and pretty good margins even in a down environment in 2025, makes me a bit more optimistic for 2026, but I'm not even close to declaring victory on this one. Same for basic industries, different industries, obviously, but similar model as well. So we're dealing with it. Making sure we make money in all of those businesses. We keep gaining share as well. And as those industries recover, that's gonna help us as well over the next few quarters. Operator: The next question is from the line of Shlomo Rosenbaum with Stifel. Please just state your question. Shlomo Rosenbaum: Hi. Thank you very much. Quick questions. Christophe, if you normalize for that distributor inventory reduction, reductions, again, you know, just looking at a normalized way, what's going on with the volumes? Are the volumes actually going up? Like, if you didn't have that surprise, are the volumes going up or you're still, you know, you're kind of at a flattish trajectory? And then it's just a technical question I want to ask afterwards. On slide 13, on the top left, it talks about Waters' organic operating income growth is expected to something in the 2026, and there's it's blank or there's a word missing, is that expected to go up, go down before flat? You know, if someone could just answer that. Thank you. Christophe Beck: So thank you, Shlomo. So a few questions, obviously, that you have in there. INS, institutional and specialty, basically, changed from a demand perspective. And if you normalize, it was 4% organic. So for INS, 3% for the institutional division and 7% for specialty. So generally, nothing to see in INS. A market that's a difficult market, as you've probably noticed, that the restaurant, the hospitality industry, is not doing great right now, but we're gaining a lot of share, which is really good. Maybe a comment on this distributor inventory. Why did they go down and that's not under our control? It's obviously our customers deciding that. But the better we become in our supply chain service, the more reliable, the more accurate we become, well, the less inventory they need to carry from our products. We've seen that in the past a few times already. That happens mostly at the end of the year as well. Well, that's exactly what happens in the fourth quarter. And that takes a few weeks to happen, and then it takes a few weeks or a few months to normalize as well. But it's driven by two good things. On one hand, demand hasn't changed. And on the other hand, inventories went down because our service improved. Okay. We don't like the optics, but generally, it's a good thing as well as going forward. And your question on the water, so for the slide 13, I had no idea what slide 13 was, to be honest. So I'm glad I have some help here. I think that what was missing and what I'm seeing here, it should have said expected to accelerate. Shlomo Rosenbaum: That will be tapped. Thank you. Operator: The next question is from the line of Jeff Zekauskas with JPMorgan. Please proceed with your question. Jeffrey Zekauskas: Thanks very much. I have a couple of questions about Ovivo. Is Ovivo roughly $500 million in sales, maybe growing to $550? And is the EBIT, I don't know, $75 million, the EBITDA, $100? Can you give us an idea about that? And Ovivo is a combination, I think, of sale of equipment and consumables, you know, what's the balance between equipment sales and consumables? And in the fourth quarter, it seems that you excluded it. You know, that is you took out the interest costs that were connected with the acquisition, and the revenues of Ovivo itself. Why did you treat it that way from an accounting standpoint? What do you plan to do in the first quarter? Thank you. Christophe Beck: Thank you, Jeff. So I've got looking at me because I'm not the accountant here in the group there. So he's gonna say that question of the December account. And I cover your other questions after that. Scott Kirkland: Yeah. Thanks, Jeff. So as you know, Ovivo closed a bit earlier than we expected and wanted to show the Q4 really show the underlying business without the transaction noise, which was very consistent with how we handle both the Pure Light and Nalco acquisitions. So if you look at it because in Q4, the deal closed in December, in Q4, we have, like, a half a month of interest expense. But very minimal sales and a live benefit just given the timing and flows. And mix of the business geographically. So it would have been very noisy and was not part of our guidance that we had for Q4. And, again, it's consistent with how we treated Pure Light and Nalco. Christophe Beck: Thank you. The first part of the question. So I hope it answers your question, Jeff. And so now on Ovivo as a business, it's roughly half a billion dollars. Yes. It's a bit less than that, and it's growing double-digit. The way it looks for the first quarter is double-digit growth as well. I've been very pleased with the new business in that field. It's focused 99% on fabs, as you know. And we've closed a few very interesting deals in Singapore and in the US. It's very few customers, we know, that are producing some microelectronic chips. But those are very big, every single time. There's no one that can do what Ovivo can do, and there's no one that can do what together, we can do, which is the circular approach of using and recycling ultra-pure water. 95% of the water does not get recycled in microelectronics today, which is a major issue. Our ambition is to get north of 80% recycled, so from 5% to 80% or in some cases, even 100% of reuse. Now to your question on equipment and consumables, Ovivo as such is mostly technology and much less consumable. What's important to us is the combination of Ecolab and Ovivo, which then becomes very much like an Ecolab business, where it's mostly consumables and technology as a secondary growth driver. That's why we really like it. It was a technology that was really hard to develop. No one is even coming close to them, Jeff. We could have developed it ourselves. It would have taken years. The second issue is to get the credibility with those microelectronics manufacturers. They're very few, and they're not exactly risk-takers for technologies that are absolutely critical to the chip manufacturing. That would have been a second hurdle for us as well. And everything is happening as we speak as well at the same time. So a great business, coming with what we have done for a very long time in terms of water. Well, it's a typical one plus one equals three. I think that for our fabs business, it's gonna be game-changing. Operator: Thank you. Next question is from the line of Matthew DeYoe with Bank of America. Please proceed with your question. Matthew DeYoe: Yeah. Thanks for taking my call. My question is, I think you're done with year one of One Ecolab that you'd rolled out to, like, the three largest customers. What's the feedback and any wins learnings you can take as you deploy this to, I think, it's the top 25 customers in 2026, so an incremental 20. So ads. And when do we see this as more of a top-line driver? You know, what kind of rollout do you ultimately need? Because it did feel like you have a pretty considerable amount of sales opportunity just with that top 35 based on the kind of conversations we've had over time. Christophe Beck: Yeah. So it's 35 customers. So it's our top 20 largest customers in the world, and what we call our emerging 15. So those are not the biggest, but the ones having the potential to become some of our biggest microelectronic being a perfect example of one of those 15 you get to 35, that could drive $3.5 billion of share increase potential. That's why we focus on those ones first and foremost. It's simpler because it's fewer customers, and it's the biggest potential, the $3.5 billion in many locations around the world. So we've gotten organized behind those 35 customers, which are the biggest brands, obviously, that's, you know, in all industries as well at the same time. So that organization component has been done. The growth of those 35, as mentioned before, so it's 2% points higher than the rest of the company. So facts are demonstrating that it's working. And it's probably the second biggest moat that we have as a company, our first being our team, serving our customers everywhere around the world, is delivering best-in-class performance. Basically, we help each of those customers understand what's the best-in-class performance within their own company. If it's a restaurant, what's the best guest satisfaction, what's the best cost performance, what's the best environmental impact. If it's a data center, it's uptime, cost, and impact. You get the system here, and we help them drive the performance of all the units towards the best-in-class performing unit within their company, and we do the same across the industry, sharing the names, obviously, to have our customers at the standoff all day from best-in-class performance. So it's been developed based on an idea from a few of our customers a few years back, and those customers are ultimately asking even more than what we can deliver today, which is kind of a good problem to have. Because our customers, I would say, are ahead of us in terms of what they would like to see from us and what we can deliver. Well, that's a good problem to have, and that's where we are. Operator: Our next question is from the line of Mike Harrison with Seaport Research. Please proceed with your question. Mike Harrison: Hi. Good afternoon. Christophe, you mentioned the IQ Suite. I was wondering if you could talk about what penetration looks like today versus where you think penetration could go over the next, say, two to three years. You know, just curious. Are you five or 10% of the way to where you hope to be or more like 30, 40, 50%? And I guess as we think about growth in the IQ Suite, you know, where would we expect that to show up? Does it show up in digital sales? Does it show up in institutional volume growth? Or does it show up in margin expansion or all three? Christophe Beck: The short answer is all three, Mike. So first two questions, penetration. It's in the low single digit today, so we're very early here. As mentioned often, this is something we did not exactly do in our institutional end markets because it was too expensive for our customers to embrace that technology. Things have changed dramatically in the last two years, and we have the knowledge and expertise from our water industrial businesses. So we kind of, very well positioned for that. So very early on that journey. Second question, where it comes, when our reporting segments are our traditional four reported segments. That we have the digital sales that we're mentioning are the digital sales of those four segments. So they included in the four segments, which is the way so we've presented that in the last twelve or thirteen months that we're doing that. And last but not least, yes, it improves the margin because digital sales have a way higher margin because there's no real cost or hardware cost related to it on the software side. On the hardware side, it's a little bit different. But it's much higher than the average gross margin we have the company. So it's all three. Operator: Our next question comes from the line of Laurence Alexander with Jefferies. Please proceed with your question. Laurence Alexander: So good afternoon. Just wanted to flesh out a little bit how your thinking is evolving around the interplay between your M&A targets and your margin targets. The 20% margin has been kind of an elusive one over the years and kind of now it's within reach. Would you what type of M&A would you consider that would, you know, structurally push back the margin target a few years? Or do you see that as given the types of things you look at, just sort of structurally unnecessary? Christophe Beck: So just to be clear, we're not trying to push back any margin target. 20% by 27%, that remains the same. We had 18% last year. We hit north of 19 in 2026, and we'll get to 20% in '27. Then we'll keep growing, so 100 to 150 basis points as we shared as well on Investor Day. And M&A needs to help getting there. We will never do an M&A deal that's destroying value for shareholders. So return on investment needs to be at the right level. It needs to be growth and margin accretive. Those are the plans. Afterwards, whether everything happens as planned, that's an execution question, obviously. But we are very disciplined in how we do M&A. We will never do something that's destroying value. Because what we say inside the company, that's buying work, and it's dumb for shareholders. Well, those are two reasons for not doing that, at least not consciously. And we've done 100 deals the last ten years. We have a lot of practice. We've learned a lot. And we are very successful in how we do M&A in general. So no change for the margin targets. Operator: Our next question is from the line of John Roberts with Mizuho Securities. Please proceed with your question. John Roberts: Thank you. Hi. This is Edwin Rodriguez for John. Christophe, just one quick one on the 2026 guide. Can you talk about the factors that could drive the higher end or lower end of that range? Like, what are the swing factors in there? Christophe Beck: I guess all the things that we don't know are gonna happen. If we look at the last five years, there was not one year that happened as planned, not because of us, but because of what's happening around us, around the world. So we have this range of the 12 to 15%. The fact that we are very agile as a company on how we run our businesses, how we manage value price, how we drive surcharges if we need getting as well more performance out of One Ecolab as we discussed before as well. We have a great supply chain and procurement team as well. Doing unbelievable work in whatever conditions out there. So the big questions are the things I don't know, but I know that team knows how to deal with them. With everything we know now, I feel that the Europe is very well balanced, and I feel really good about the 12 to 15. Operator: Next question is from the line of Jason Haas with Wells Fargo. Please proceed with your question. Jason Haas: Curious if you could talk about hey. I'm curious if you could talk about the cadence of the contribution from pricing as we go through 2026. And the reason I ask is because I believe you put in a tariff surcharge that went into effect in 2025? So I'm curious if there's, like, a go-over effect where you'll have more contribution from price in 2026 and then less in the second half. Is that the right way to think about it? Christophe Beck: Well, the key point is also that surcharge, which was a trade surcharge. We had an energy surcharge in '21 or '22. I'm losing track of the year. We convert all that into structural pricing. And everything has been done as well. So as we speak, that's why on one hand, whatever happens on tariffs with the Supreme Court, I'm not worried about that. And on the other hand, well, it's gonna drive this 2% to 3% price in 2026, pretty consistently for the quarters to come. That's obviously assuming that nothing else happens in 2026, but that's not at the heart of your question here. So, basically, a traditional year in '26 with 2% to 3% value price, which is obviously a 100% margin. Driven by the total value delivered that we generate for our customers, which is a big growth driver for us. And probably one of the best ones that I really like, and we keep focusing on that in the future. Operator: Our next question is from the line of Josh Spector with UBS. Please proceed with your question. Josh Spector: Yeah. Hi. Good afternoon, and thanks for squeezing me in. Just a quick one here. I know you guys were spending a bit more on CapEx the last couple of years to basically grow into some new wins that I think you had in specialty. I guess with specialty growing 7% the last couple quarters, is that now in the run rate? Or is there more of that to come? And will CapEx step down into next year as a result or stay at similar levels? Christophe Beck: Let me pass it to Scott. Scott Kirkland: Yeah. Hi, Josh. Yeah. On CapEx, as you know, our historical CapEx has been in this 5% to 6% range, and about half of that is cost or equipment at customer locations. So which is why this thing grows in proportion to sales. The 2026 CapEx came in at about 6.5% of sales. To your point, because we're investing in growth, like the new business, but also the innovations around Dish IQ, pest intelligence, global high-tech, and that will continue to 2027. I expect that the CapEx in or sorry, into '26, I expect the CapEx for '26 to be around 7% and probably for the next couple of years because we're continuing to invest in those growth engines. Really to focus on accelerating sales and expanding margins. So we're investing organically and inorganically both to expand margins and drive sales. And at the end of the day, it comes down to ROIC, and we like where we're at in ROIC. Do you expand that in line with our long-term targets? Operator: Okay. Question is from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question. Kevin McCarthy: Christophe, on Slide six, you indicate organic sales growth of 3% to 4% accelerating through the year. And just wanted to understand that acceleration piece better. Is that to do with the aforementioned normalization or stabilization in basic industries? Or are you expecting your higher growth platforms to accelerate as well? And then related to that, would you make a comment on the expected growth in your data center linked businesses this year? Christophe Beck: The two questions, Jira. So you're right. The three to four starts where we are now, and so, toward the upper range, or more of the III to IV, driven by both actually. So the normalization of the more challenging industries in paper and basic. And our core and growth engine businesses that are doing extremely well. As we discussed before, our growth engines are growing double digits today. And some of our core businesses like in institutional and specialties are at four, F&B at five. So our core business and growth engines are doing really well at great margins and great margin development as well. So it's a combination of the two. And small specifically, the data center, we don't exactly disclose as such, but our global high-tech business is growing pretty strong, double-digit sales. We will publish our exact numbers in the first quarter, by the way, so I wanna make sure I'm getting ahead of my skis here. But we will get more color in the first quarter, but it's one of our best businesses that we have here. Very strong, strong margin, growing double-digit, strong rates, and Palivo is going to help in all the innovation I mentioned before on the cooling as a service. Is getting great reception from our customers that need it more than ever because chips get more powerful. They get more concentrated on a rack. They create more heat that requires more cooling. And if that doesn't happen, proceed so the data center stops operating. So it's absolutely essential as a component of the compute offering here. So very good story, and early on that story. I think that that's one of the businesses that's gonna become one of the best and biggest businesses we will have in the future. Operator: The next question is from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question. Scott Schneeberger: Thanks very much. Just a quick one. In life sciences, you had great momentum, a little setback in the fourth quarter on the margin trajectory. It looks like you're doing some global capability build-out. Just curious if that is going to be something that is pressured for multiple quarters, or are we going to get back to inflect and head high toward that target? Thanks. Christophe Beck: It's gonna be a great story in '26. We've been building that business for years, as you know. I always loved that opportunity. The first few years were more complicated than we were hoping. Not because of internal questions, but the market. So it was a bit more challenging place of the COVID. It helped us gain share, build further our business, and now we're collecting the fruits of what we've built in life science, and you've seen the growth acceleration, bioprocessing, which is a core part of it, is doing extremely well in there, is really at the forefront of innovation for the biotech industry as well as the second time. So we're all gonna really like the growth of that business starting in Q1, by the way, for life sciences. And our objective is to get to 30% margin. But we will not reduce our investment in the meantime to get to the margin quicker. But we wanna make sure is that we get as much share as we can in order to get the returns ultimately in the long run that that business needs to sell. Overall, a great story that keeps getting stronger. Operator: Thank you. Final question is from the line of Bob Rieslberger with Raymond James. Please proceed with your question. Bob Rieslberger: Thanks for taking the question. How is your customer retention in institutional and specialty? Christophe Beck: It hasn't changed. So it's always in the low to mid-nineties in terms of retention. Attrition is obviously the reverse of that. It stayed very stable over the years. We're looking at that very carefully because, well, we wanna make absolutely sure that we do not lose our customers. We have this mantra of never ever letting our customers down. In institutional and specialty. Well, there's another dimension. It's restaurants closing. There's not much we can do for that. It's very different by country, obviously, but the customers we have and the numbers I gave you include the close that we can't do anything against, obviously. So short answer, very stable. That's why I really like what our institutional is doing, has done over the last five years as well, shifting towards digital technology, all those IQ platforms. That we talked about, Aqua IQ, for instance, which is a remote service for pools around the world, when you think about the work that's required, well, that's taken over by AI with that application, those are game-changing innovations in that business that didn't exist five years ago. So institutionally in a very good place, specialty that serves some of the quick serve as part of this hospitality business. As you've heard, so growing very nicely. So at 7% very consistently with great margin as well. So I think that INS is in a very good shape. So I'll end where I started. The company is doing well, and I especially like the growth development we have in our core businesses. On top of it, the growth engines that are 20% of the company each day are growing double-digit. With over-average margins as well. So our portfolio is shifting towards higher growth businesses, higher margins, which is exactly where we want to get to. And that's why I feel as good as I can be in 2026 with everything I know today. Andy Hedberg: Thank you. That wraps up our fourth quarter conference call. This conference call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. Hope everyone has a great rest of the day. Operator: Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time, and have a wonderful day.

92天前Insight Analytics约5分钟阅读

PNNT 2026 Q1 财报电话会议

Operator: Good afternoon, and welcome to the PennantPark Investment Corporation's First Fiscal Quarter 2026 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and Chief Executive Officer of PennantPark Investment Corporation. Mr. Penn, you may begin -- go ahead and begin your conference. Arthur Penn: Good afternoon, everyone, and thank you for joining PennantPark Investment Corporation's First Fiscal Quarter 2026 Earnings Call. I'm joined today by Rick Allorto, our Chief Financial Officer. Rick, please start off by disclosing some general conference call information and include a discussion about forward-looking statements. Richard Allorto: Thank you, Art. I'd like to remind everyone that today's call is being recorded and is the property of PennantPark Investment Corporation. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on our website. I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking information. Our remarks today may include forward-looking statements and projections. Please refer to our most recent SEC filings for important factors that could cause actual results to differ materially from these projections. We do not undertake to update our forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our website at pennantpark.com or call us at 212-905-1000. At this time, I'd like to turn the call back to our Chairman and Chief Executive Officer, Art Penn. Arthur Penn: Thanks, Rick. I'll begin with an overview of our first quarter results and discuss our forward dividend strategy. I will then discuss the exit of our investment in JF Holdings and our ongoing strategy to reduce the portfolio's equity exposure. Lastly, I will then share our perspective on the current market environment and how the portfolio is positioned for the quarters ahead. Rick will follow with a detailed review of the financials, and then we'll open up the call for questions. For the quarter ended December 31, core net investment income was $0.14 per share. Turning to the dividend, beginning with the dividend payable in April. The total dividend will remain $0.08 per share, but will be comprised of a $0.04 per share base dividend and a $0.04 per share supplemental dividend. The base dividend is expected to be fully supported by current core net investment income and the supplemental dividend will be supported by our $41 million or $0.63 per share of undistributed spillover income. We anticipate maintaining the supplemental dividend payment through December 2026. During the quarter, we fully exited our equity investment in JF Holdings and received total proceeds of $68 million and generated a realized gain of $63 million. With the exit, we monetized 20% of the fair value of our equity portfolio. While we are pleased with the outcome for JF, we remain focused on reducing the total equity exposure of the fund. Turning to the market environment. We are seeing an increase in M&A transaction activity across the private middle market. This trend is expanding our pipeline of new investment opportunities. We also expect that this increase in M&A activity will drive repayments of existing portfolio investments, including opportunities to exit some of our equity co-investments and rotate that capital into new current income-producing investments. We believe the current environment favors lenders with strong private equity sponsor relationships and disciplined underwriting, areas where we have a clear competitive advantage. In the core middle market, the pricing on high-quality first lien term loans remains attractive, typically ranging from SOFR plus 475 to 525 basis points with leverage of approximately 4.5x. Importantly, we continue to get meaningful covenant protections in contrast to the covenant-light structures prevalent in the upper middle market. Turning to our portfolio performance. As of December 31, the median leverage across the portfolio was 4.5x with median interest coverage of 2.1x. During the quarter, we originated 3 new platform investments with a median debt-to-EBITDA of 4x, interest coverage of 2.9x and a loan-to-value ratio of 49%. With regard to the software risk that has been a recent market focus, we have stuck to our knitting. Only 4.4% of the overall portfolio is software and that 4.4% is structured consistently with how we invest. They are primarily all cash pay loans with covenants with reasonable leverage and an average maturity of 2.2 years on average. It's enterprise software that is integral to their customers' businesses and the vast majority of which is focused on heavily regulated industries such as defense, health care and financial institutions where safety, security and data privacy are paramount and where change will be slower. Peers typically invested much larger percentages of their portfolios in software, 20% to 30% with much higher leverage, 7x, 8x or more or loans against revenue, not cash flow with substantial PIK, covenant light and long maturities. This story is a significant differentiator from our peers. We ended the quarter with 4 nonaccrual investments, representing 2.2% of the portfolio at cost and 1.1% at market value. These strong credit metrics reflect the rigor of our underwriting process and the discipline of our investment approach. We continue to believe that our focus on core middle market provides us with attractive investment opportunities where we provide important strategic capital to our borrowers. The core middle market, companies with $10 million to $50 million of EBITDA is below the threshold and does not compete with the broadly syndicated loan or high-yield markets, unlike our peers in the upper middle market. In the core middle market because we are an important strategic lending partner, the process and package of terms we receive is attractive. We have many weeks to do our diligence with care. We thoughtfully structured transactions with sensible credit statistics, meaningful covenants, substantial equity cushions to protect our capital, attractive spreads and equity co-investment. Additionally, from a monitoring perspective, we received monthly financial statements to help us stay on top of the companies. Our rigorous underwriting standards remain central to our investment philosophy. Nearly all of our originated first lien loans include meaningful covenant protections, a key differentiator versus the upper middle market where covenant-light structures are common. Since inception nearly 19 years ago, PNNT has invested $9.2 billion at an average yield of 11.2%, while maintaining a loss ratio on invested capital of roughly 20 basis points annually, a testament to our consistent and disciplined approach through multiple market cycles. As a provider of strategic capital, it fuels the growth of our portfolio companies. In many cases, we participate in the upside of the company by making an equity co-investment. Our returns on these equity co-investments have been excellent over time. Overall, for our platform from inception through December 31, we have invested over $615 million in equity co-investments and have generated an IRR of 25% and a multiple on invested capital of 1.9x. As of December 31, our portfolio totaled $1.2 billion. And during the quarter, we continued to originate attractive investment opportunities and invested $115 million in 3 new and 51 existing portfolio companies. Our PSLF joint venture portfolio continues to be a significant contributor to our core NII. At December 31, the JV portfolio totaled $1.4 billion. And over the last 12 months, PNNT's average NII yield on invested capital and the JV was 16.4%. The JV has the capacity to increase its portfolio to $1.5 billion, and we expect that this additional growth, the JV will enhance our earnings momentum in future quarters. From an outlook perspective, our experienced and talented team and our wide origination funnel is producing active deal flow. We remain steadfast in our commitment to capital preservation and disciplined patient investment approach. We reiterate our objective to deliver compelling risk-adjusted returns through stable income generation and long-term capital preservation. We seek to find investment opportunities in growing middle market companies that have high free cash flow conversion. We capture that free cash flow primarily through debt instruments, and we pay out those contractual cash flows in the form of dividends to our shareholders. With that overview, I'll turn the call over to Rick for more detailed review of our financial results. Richard Allorto: Thank you, Art. For the quarter ended December 31, GAAP net investment income was $0.11 per share and core net investment income was $0.14 per share. Operating expenses for the quarter were as follows. Interest and credit facility expenses were $10.5 million, base management and incentive fees were $3.9 million. General and administrative expenses were $1.3 million and provision for excise taxes were $0.7 million. For the quarter ended December 31, net realized and unrealized change on investments and debt, including provision for taxes, was a loss of $2 million. As of December 31, our NAV was $7 per share, which is down 1.5% from $7.11 per share in the prior quarter. As of December 31, our debt-to-equity ratio was 1.3x, and our capital structure is diversified across multiple funding sources, including both secured and unsecured debt. In January, we raised $75 million of new unsecured debt, which will be used to partially repay our existing unsecured debt that is maturing in May. As of December 31, our key portfolio statistics were as follows. Our portfolio remains highly diversified with 158 companies across 37 different industries. The weighted average yield on our debt investment was 10.9%. The portfolio is comprised of 48% first lien secured debt, 3% second lien secured debt, 14% subordinated notes to PSLF, 6% other subordinated debt, 6% equity in PSLF and 23% in other preferred and common equity co-investments. 89% of the debt portfolio is floating rate. The debt-to-EBITDA on the portfolio is 4.5x, and interest coverage is 2.1x. With that, I'll turn the call back to Art for closing remarks. Arthur Penn: Thanks, Rick. In conclusion, we remain committed to delivering consistent performance, preserving capital and creating long-term value for all stakeholders. Thank you to our team for their dedication and our shareholders for their continued partnership and confidence in PennantPark. That concludes our remarks. At this time, I would like to open up the call to questions. Operator: [Operator Instructions] Our first question, Robert Dodd from Raymond James. Robert Dodd: A couple of kind of semi-housekeeping first. On the -- just for clarification, I think it's pretty clear. But on the dividend, you said the supplemental program will stay in place through December 2026. Just to clarify, you mean the $0.04 specifically supplemental monthly will stay in place through '26 and beyond that, who knows, right? But that's not just that there will be a supplemental, but it's the $0.04 level. Arthur Penn: That's correct. Robert Dodd: Got it. Second one, will there be any onetime expenses in calendar Q1 related to the new bond or the partial paydown of the May? Or are you just going to hold the cash until then? I mean, is there going to be anything onetime in Q1? Unknown Executive: No, Robert. There won't be any onetime expenses related to that. For that facility, the fees associated with issuing that new debt will be capitalized and amortized and no real impact from a onetime perspective on the revolving facility. Robert Dodd: Got it. Got it. Then I'm not going to ask you exactly the same question as I did earlier on software. But I mean, as you look at kind of the core niches that you've kind of really focused on at PNNT and obviously a combination of the size of businesses, but the type of borrowers that you have typically focused on. I mean, where would you rank -- I mean, do you think AI represents more of a risk or an opportunity for the typical borrowers that you lend to in the industries between size and industry? Arthur Penn: Yes, it's a great question, and we debate this every time we go through a company and investment committee. Is it a help or a hindrance is as AI? And ultimately, we keep asking ourselves the same question all over again, which is if this company goes away, who really cares? And if the company goes away, no one really cares, we shouldn't be investing in that company. And usually, if the answer is affirmative, people care. It means they've got really great customer relationships or they've got a high market share or a niche that's defensible. And usually, AI could be a help and present some upside to companies that are well positioned and have a moat, although there's no assurance, right? I mean one of the quotes that someone shared with me, it's a famous quote, which is people tend to overestimate the impact of technological change in the short run, and they tend to underestimate the impact of technological change in the long run. And it feels like we're in one of the short-run moments where the whole market is kind of spinning on the concept of AI and software. And as we've discussed and certainly for us, software is a very small percentage manageable and deeply embedded. But look, where things are going to be in 10 years, don't know. But look, it's nice to have a credit portfolio with short maturities. Our average software maturity might be around 3 years. Our average maturities are 3 to 5 years. It's nice to have covenants. It's nice to get cash flow. We don't have any pick really in these portfolios. So that's how we defend ourselves. And then also, we have to find companies that people will care about and have resilience and people -- and you see it in the margins, you see it in how they gain share. So hopefully, we're selecting those companies well. Of course, there's never a guarantee. Operator: Our next question, Paul Johnson with KBW. Paul Johnson: In terms of like the equity rotation, I guess, that's kind of left in the portfolio, there's still quite a bit even after the JF Intermediate exit. But do you still think that there's potential this year for additional meaningful exits at this point? Or it sounds like you're fairly optimistic about M&A coming in this year, but has like any of the recent volatility at all backed up interest in doing M&A in any of those names at all? Arthur Penn: Yes. Look, we still -- thanks, Paul. We still think there's -- based on what we can tell, M&A hasn't slowed down. Granted we're not big in software. So I couldn't tell you about M&A in the software space. I would imagine we probably slowed down right now. But like in the rest of the world and the rest of the community, we're still seeing good M&A. I will highlight that 2 of our bigger sectors are military, defense and government services as well as health care, both of which seem to be performing well and both of which from what we could tell, represent some meaningful M&A activity and where we have some substantial equity co-invest. So those have been 2 of our bigger sectors. And they've performed very well for us. There's not that many people are heavily focused on defense and government services, [indiscernible]. It's been a big space. The U.S. government seems to be increasing its expenditures and there's some tailwinds there. And then on health care, we've had a better experience on health care than many of our peers. I think it really is just attributed to just kind of not leveraging up the company as much. I think our peers tend to be willing to accept higher leverage. So when we do health care, we, again, tend to try to find companies that have a defensible moat, keep the leverage reasonable. And then in health care, our motto really is try to find companies that are providing high-quality service at a reasonable or low cost, given that government reimbursement is always a risk in health care. But if we can find companies that are going to reduce cost and still provide good service, it's going to be hard to be hurt. And I think that's kind of one of the reasons our health care names have probably performed better than some of our peers. Operator: Our next question is from Brian Mckenna from Citizens. Brian Mckenna: I'm curious, why not adjust the dividend to reflect the current outlook for core earnings and then repurchase stock with that capital. So you're actually driving some NAV per share accretion versus diluting it by about 1% plus a quarter? And then should we expect to see some insider buying post earnings here with the stock trading at 77% of book and an 18% dividend yield? Arthur Penn: Yes. No, on the -- I'm missing your question, we can dive into it. We have the substantial spillover that we are obligated to pay out. So there's been some debate, do you pay it all out at once? Do you pay it out over time? Given we want to maintain good credit ratings, given that we'd like to have a smooth glide path for our shareholders, we've elected to pay it out over time and we also want to keep our leverage reasonable. We kind of want to keep it kind of in the 1.2x, 1.3x debt-to-equity area. So then the question becomes like, okay, as you have incremental liquidity with rotation, whether it be equity or debt, what do you do with the capital? I mean we're obligated to pay out the supplemental dividends. We have to. So then kind of how do you -- what do you do with your excess capital then? And that's something we're always thinking about and talking about, again, we're cognizant of our credit ratings. We're cognizant of our debt-to-equity ratio. Buying back equity, albeit cheap, does impact your debt-to-equity ratio. But something we always consider. We've done buybacks in the past in PNNT, and we always consider that. Same thing with insider buying. We've had substantial insider buying over time. It's something that's always on the table, and we are always evaluating our options there as well. Brian Mckenna: Okay. That's helpful. And then, Art, you've clearly had a great tenure in the industry. You've managed the business in a number of different operating environments and also through periods of time when the industry kind of has come in and out of vogue. So what past experiences are you leaning on today to prudently manage the portfolios in the current environment and as that continues to evolve? And then is there also an opportunity here to maybe lean into some of the dislocation we've seen in the market, either from an origination perspective, maybe don't do as much in software, but even like strategically, and again, it's maybe not a PNNT question, but are there any incremental opportunities on the strategic acquisition front at the broader manager level? Arthur Penn: Yes. No, look, chaos does bring opportunity and it's brought opportunity for us over time and whether it was through the global financial crisis, whether it was through the energy downturn or more recently COVID, obviously, you have to defend first and make sure you're building resilience in the vehicles. And then you can look around and say, how can we take advantage of a little bit of the chaos. And that's what we're doing. Now within that, we kind of stick to our guns. And when we see reasonable leverage with covenants and good risk-adjusted return, we're going to lean in and try to take advantage of that. We're not seeing that yet. We'll see what happens with cash flows into the industry, whether it be through the high net worth channels, whether it be through the insurance channels. Are those cash flows going to hold up? Are they going to soften a little bit? Or software loss is going to work their way through and make certain managers more conservative and defensive? Time will tell, but we want to keep ourselves in a prudent position and be well balanced and look opportunistically. And then at the management company level, we're always looking for opportunities both at our BDC levels and more broadly. And again, chaos should bring opportunity. We think how we've navigated software to date is a differentiator, for instance, and can show in the larger capital allocators, the benefits of the core middle market where covenants are still prevalent, where leverage is reasonable and where there's very limited pick. And maybe that's what large allocators should be focused on versus chasing high leverage covenant-light PIK allocations. So we'll see, but we're always trying to defend number one and then try to judiciously figure out how to play offense number two. Operator: Our next question comes from Rick Shane with JPMorgan. Richard Shane: It's been a while. I think I was there 19 years ago, actually. Look, it's interesting looking at this with fresh eyes after all this time. And I think one of the things that has changed pretty dramatically is the competitive landscape. And I think that one of the factors that you guys are facing is you have a lot of peers out there who effectively have a different cost of capital. They can raise capital essentially at par. You guys are trading at a pretty significant discount at this point. How do you close that gap? And can you really continue to compete if you're in a universe where your primary competitors at this point essentially have a lower cost of goods sold in terms of funding. And with that, if you could talk a little bit about the sizing of the debt deal that you guys just did. It's $75 million [ box ], represents about 25% of your pending maturities this year. I'm curious how you think about sort of the next steps there. Arthur Penn: Yes. I'll take the second, Rick. Good to hear your voice, and welcome back to covering us and BDCs. First, I'll take the second question first, which is we do have some debt maturities. That was the first step, the $75 million, we just did. We're going to over the coming 3, 6, 9 months, chip away at them judiciously over that period of time and look at various different ways to raise debt capital that is available to us. On the competitive framework, look, we've been very open that PNNT is a work in process, you remember, you covered it, took some stumbles during the energy crisis, and it's been a challenging work since then. We're working hard and the main thing is really to reduce this equity exposure to the JF, the sale of JF was a big milestone for us and significantly reduce the equity exposure. We still have more to do. And that's really the focus, reduce the equity exposure of the portfolio, rotate that, clean up the portfolio, and then we'll come up for figure out what the next steps are for PNNT. In the meantime, to the cost of capital question, we have a very robust and strong track record of first lien core middle market senior secured debt where leverage is reasonable, 4.5x is our average loan, where we have maintenance tests, where we get monthly financials, where we're not rushed to do due diligence. And that track record is very strong, and it can be financed and captured very well for PNNT in the JV format where we use both credit facilities and securitization facilities to efficiently finance that and therefore, generate a very strong risk-adjusted return for PNNT shareholders. And you see a good example of that over at PFLT more broadly. So while we're working really hard to reduce the equity exposure in PNNT, we're also working hard to manage the JV, which is a large percentage of the pie. We understand, but it's a very well financed and very kind of strongly structured and efficiently managed from a cost standpoint to your kind of cost of capital comment. No management fees are charged on the JV. It's -- in essence, we are managing a larger pool of capital, not charging management fees and on a blended basis, is very attractive for shareholders. So that's really the game plan, rotate the equity, manage the JV, when we make a little bit more progress in J&F was a nice event, come up for it and figure out what to do next. Operator: Our next question comes from Christopher Nolan with Ladenburg Thalmann. Christopher Nolan: The decline in dividend income quarter-over-quarter, is that related to the senior loan fund? Unknown Executive: Chris, yes, it was related to PSLF, correct. Christopher Nolan: Great. And then should we expect use of the expanded facility for some of the refis going forward? Arthur Penn: Yes. I mean the expanded facility does give us the ability to really pick our spot on, when to issue bonds. So just more liquidity, more dry powder in our system. We think in times of market turbulence, it's good to have excess liquidity and dry powder, both for defensive and offensive purposes. Christopher Nolan: And final question. Given that -- are you finding that you're trading coupon for stronger covenants or that's not really a dynamic which is available in your negotiations? Arthur Penn: Yes. In our part of the market in the core middle market covenants are given. So if our average or median borrower does $20 million or $30 million of EBITDA, that's -- we're always getting covenants. We will trade off yield for credit quality. There's no question that the way we operate and the lesson we continually learn is don't skimp on credit quality if it's -- if it means giving up a few basis points and you get a much higher quality credit, that's usually the right call. Christopher Nolan: Great. Final question. I asked this on the last call. The $36 million in credit facility and debt issuance costs, was that relating to the $75 million issuance in January? Unknown Executive: No, that was related to the amend and extend of the revolving facility in the fourth quarter. Operator: Our next question comes from Casey Alexander with Compass Point. Casey Alexander: I'm glad that you brought up the PSLF, JV. The leverage in the JV is 2.8x, which is the highest that I've heard of any JV in a BDC. At the same point in time, your fair value of your equity in the JV has been marked down $22 million. And so that's a contributing factor to that high leverage ratio. At what point in time are you either going to be forced to add more equity to the JV or shrink the JV in order to temper the leverage ratio? Arthur Penn: These are good points. Thanks for raising, Casey, and thanks for your question. Just to level set, the broader PennantPark platform has a very large senior secured first lien middle market business. So when a first lien loan comes into the platform, it gets allocated across the platform, including the JVs where it makes sense, the private funds, the BDCs. And we also have a CLO platform in the middle market. And we've come to appreciate the benefits of securitization technology where you don't need to worry about a credit officer in a corner office having a bad hair day or human beings will react emotionally to market events. So we've run securitizations through COVID. We feel like we really understand them. And then the CLO portion of our business, it's not unusual for middle market CLOs to have 4x or 5x leverage, right? So -- and we run them well. We know how to operate. We know how to reduce risk. And if you run the securitization correctly, you're actually reducing risk because you understand the boxes. So then you sit here, you move that over to the joint venture. And we have joint ventures. We have -- we now have 3 joint ventures. They're all -- the goal there is usually to run them at least to 2x and 2.8x is on the higher end. I don't anticipate we're going to go any higher here. But just as background, we still think it's a very prudent structure to have against very low levered senior secured covenanted cash pay debt. There's no software in these things. There are covenants, et cetera. Now you raised a good point about equity diminution. And you know this and investors should know this. When you have a book of 100% debt, odds are you're going to have some losses and odds are your equity is going to diminish, right? What we do at PennantPark, as you know, is we have an equity co-invest program that over time has generated nearly a 2x MOIC and 25% IRR. And the reason we have that program is to help fill in the gaps that inevitably you're going to have with debt. So the JV specifically is a debt JV. Our JV partner does not want equity in there. We create equity and have equity kind of ready to go if need be to shore things up. The reason why we have excess liquidity, why we do bonds. The JF sale was a big milestone, and we used that equity to deleverage the balance sheet in PNNT, again, trying to create some dry powder and some excess prudent cushion in the overall platform. But your points are right. We're aware of them and feel comfortable with where we are at this point. Operator: That will conclude our question-and-answer session. I'd like to turn the call back over to Art Penn for closing remarks. Arthur Penn: I want to thank everybody for participating on today's call. We look forward to speaking with you next in early May. Operator: And this concludes today's call. Thank you for your participation. You may now disconnect.

92天前Insight Analytics约5分钟阅读

NYSE Group Consolidated Short Interest Report

NEW YORK--(BUSINESS WIRE)--NYSE today reported short interest as of the close of business on the settlement date of January 30, 2026. SETTLEMENT DATE EXCHANGE TOTAL CURRENT SHORT INTEREST TOTAL PREVIOUS SHORT INTEREST (Revised) NUMBER of SECURITIES with a SHORT POSITION NUMBER of SECURITIES with a POSITION >= 5,000 SHARES 01/30/2026 NYSE 16,361,583,497 16,215,801,695 2,871 2,597 01/30/2026 NYSE ARCA 2,297,133,128 2,305,450,999 2,524 1,768 01/30/2026 NYSE AMERICAN 915,314,421 888,958,930 303.

92天前Insight Analytics约5分钟阅读

UPXI 2026 Q2 财报电话会议

Operator: Good day. Welcome to Upexi, Inc. Fiscal Second Quarter 2026 Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Valter Pinto, Managing Director at KCSA's Communications. Please go ahead. Valter Pinto: Thank you, operator. Good evening, and welcome, everyone, to the Upexi, Inc. Fiscal Second Quarter 2026 Financial Results Conference Call. I'm joined today by Allan Marshall, Chief Executive Officer, Andrew Norstrud, Chief Financial Officer, and Brian Rudick, Chief Strategy Officer. Before we begin, I'm going to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to a variety of risks, uncertainties, and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I'll refer you to the press release issued this evening and filed with the SEC on Form 8-K, as well as the company's reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law. In addition, during the course of the call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States, and they may be different from non-GAAP financial measures used by other companies. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in our earnings release issued this evening, unless otherwise noted. I'd now like to turn the call over to Upexi's CEO, Allan Marshall. Allan Marshall: Thank you, Valter, and welcome to our second quarter 2026 earnings conference call. I'm happy to review our results and discuss why, despite the difficult market backdrop, I remain extremely optimistic for the future and why we remain well-positioned to win. The market presented two key challenges for us last quarter with both declining asset prices and treasury company multiple compression. This was reflected in our quarterly results as well as in our stock price. I'll discuss each in succession. On the former, the price of Solana fell 40% during the quarter, and it has fallen a further 31% since the quarter end. While there have been many reasons cited, including rising geopolitical risks, precious metals stealing the show, and many more, the fact of the matter is the biggest determinant of any treasury company's success has and always will be the performance of its underlying token. Thus, we are not immune, and Solana's performance had a big impact on the company. That said, I remain encouraged for three key reasons. The first is given their latency, such volatility is normal with digital assets. And Solana often exhibits large movements in both directions along a significant uptrend over time. Second, as Brian will discuss in more detail, the underlying fundamentals for Solana continue to improve as global finance moves on-chain. Here, I'm particularly optimistic because over time, price follows fundamentals. And improving fundamentals against the falling price is a recipe for greater potential upside. Lastly, as a treasury company, we have multiple mechanisms not available to native tokens or ETFs that can create value for shareholders, like accretive issuance and discounted lock token purchases. We have in the past and aim to, in the future, increase our Solana per share to help offset any decline in token price, or to add to any increase in price in an upmarket. So overall, between the volatility being expected, a positive view for potential Solana price appreciation, and our ability to increase Solana per share, we remain positive about the opportunity and continue to believe 2026 will be a strong year for Solana and Upexi. The second key challenge during the quarter was general multiple compression in the treasury space. We believe this was due to the law of supply and demand. With over 200 treasury companies, it's not hard to see why many are trading at discounts to net asset value. Despite this, I remain optimistic for so many reasons. First, I believe the subsector will work through some of its oversupply, either through M&A or from treasury companies selling their digital assets to close the discounts. Secondly, I believe there are fundamental reasons why Upexi can and should trade at a premium valuation in constructive market environments. As discussed in the past, these have to do with our multiple value accrual mechanisms which have value. Third, as we have publicly stated, we are working to increase the yield that we generate on a treasury in a risk-prudent and recurring fashion. Should we be successful, we believe this would increase our multiple, which in turn would accelerate the model and differentiate Upexi from others. Lastly, I believe we're likely to see multiple expansion in a bull market, as has been the case historically with public companies. And there are large catalysts like the potential passage of US digital asset legislation that could quickly bring this to fruition. In closing, while we have had a turbulent start to 2026, we remain positive about the future and the company has developed a strong strategic plan to, one, increase yield, two, hedge positions using maturing option markets, and lastly, capitalize on top of opportunities the volatility creates. All of these things should lead to significant growth in yield, cash flow, and stability for 2026 and beyond. With that, I'd like to turn the call over to our Chief Strategy Officer, Brian Rudick. Brian Rudick: Thanks, Allan, and hello, everyone. Despite the challenges during the quarter, the underlying fundamentals for both Solana and Upexi remained solid. As a brief reminder, Solana's North Star is what it calls Internet capital market, where it aims to upgrade our antiquated global financial infrastructure. Existing constructs like ACH and the credit card issuer networks were created fifty-plus years ago and are slow and expensive. While even fintech is simply a front-end wrapper on this antiquated infrastructure. But we can now use Internet and blockchain-based rails to upgrade this antiquated infrastructure for huge speed and cost savings, in addition to other benefits around transparency, composability, investor access, and many more. Solana continued to progress throughout the quarter with increased development, adoption, and usage. The Spot Solana ETFs launched and have seen over $850 million of net inflows since. Stablecoin supply reached a new record, tokenized equities are booming. Non-native tokens like MON, STRK began trading on Solana, and the FireDancer client launched on Mainnet. And importantly, key announcements were made by various leading institutions, including Western Union, Visa, Coinbase, Revolut, Robinhood, Cauchy, and SoFi. In short, Solana demonstrated strong momentum and particularly so related to its Internet capital markets goal. The opportunity to revolutionize finance is massive, and Solana is at its very heart. We remained active with the capital markets highlighted by the private placement of $19 million in common stock and warrants, and subsequent to quarter end, an additional $7 million common stock and warrants offering as well as a $36 million in-kind convertible note issuance. Both were done at a premium to our fully loaded NAV meaning they increased adjusted Solana per share. We also became self-eligible during the quarter and quickly filed our shelf statement on Form S-3 with the SEC which is now effective. And we announced a $50 million share repurchase program adding another important tool to manage capital. On the visibility front, we participated in over 10 conferences and events during the quarter, including Solana Breakpoint, Maxim, Cantor, Rothschild, Roth, Clear Street, and others. These resulted in myriad presentations and panels, as well as in over 100 investor meetings where we continue to evangelize both Solana and Upexi. And we continue to appear in many news articles and podcasts throughout the quarter. Put simply, Solana is executing on its Internet capital markets road map and Upexi is adding additional value for shareholders. And with that, I'd like to turn the call over to our Chief Financial Officer, Andrew Norstrud, for a review of our financial performance. Andrew Norstrud: Thank you, Brian. As of December 31, the company had approximately $1.6 million in cash and 2,170,000 Solana tokens. 1,320,000 of those tokens were liquid, 850,000 of those tokens were locked. For the six months ended 12/31/2025, the company had digital asset revenue of approximately $11.2 million or approximately 65,700 tokens added. We expect to increase the number of tokens we hold in our treasury each quarter and also increase the quarterly revenue from the treasury. The direct treasury expenses for the six months ended 12/31/2025 were approximately $6 million which included management fees, custodial fees, service fees, and interest. For the six months ended 12/31/2025, the treasury had an unrealized loss on digital assets of approximately $86.4 million reflective of the Solana price per token of $124.48 at 12/31/2025. There are no comparable financial information for the prior period as the Digital Treasury was started in April 2025. The company continues to develop the digital asset treasury with a focus on maximizing the return for shareholders and had approximately 95% of all token stake at 12/31/2025. For the second quarter, total revenue was approximately $8.1 million, an increase of approximately $4 million or just over 100%, compared to $4 million in the prior year quarter. For the six months period ended 12/31/2025, total revenue was $17.3 million compared to $8 million in the prior period. This increase reflects the addition of digital asset treasury business in 2025. The net loss for the quarter was approximately $178.9 million or approximately $2.94 per share. This loss was primarily driven by the $164.5 million of unrealized losses on digital assets reflecting non-cash quarter-end fair value adjustments as well as approximately $8.3 million of stock compensation expense. Excluding these fair value changes, the underlying treasury's performance remains strong. We increased the number of Solana tokens in our treasury during the quarter by approximately 106,000 tokens. The increase was driven by spot token purchases partially offset by a decline in the locked Solana through a swap transaction. We continue to strengthen our balance sheet in light of the changing market environment. Due primarily to accretive equity raises previously mentioned, we currently have approximately $9.7 million of cash on hand. Management continues to focus on growing Solana's holdings on a per-share basis through disciplined capital activities, staking yield, and opportunistic purchases of discounted locked tokens, while maintaining prudent leverage and risk management. And now I'll turn it back over to Allan for concluding remarks. Allan Marshall: Thanks, Andrew. I wanted to conclude the call by highlighting our top priorities. While we, as always, remain hyper-focused on external visibility and intelligent capital issuance, there are two key initiatives worth highlighting. The first is a continued focus on accretive growth. We aim to raise capital above NAV to increase our digital assets per share. We will continue to look for ways to raise equity capital in the most cost-effective manner available. Additionally, we will also continue to issue in-kind convertible notes at a premium to NAV. Such notes offer differentiated risk-reward for investors while significantly reducing credit risk for both parties. Our second key focus going forward is to increase the yield on the treasury in a low-risk fashion, which we believe would enhance our valuation. If we are successful, we should trade at a sustainable premium, which itself would accelerate the capital markets flywheel. In closing, we've remained active even in a significant downtrend, completing both a capital raise and an in-kind convert both at slowly or above NAV. While this has not helped stem the downturn in this or the stock performance, we believe it will accelerate the upturn when Solana and crypto begin to recover from the current drawdown. With that, I'll turn it over to the operator for questions. Operator: Thank you. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Brian Kinstlinger with Alliance Global Partners. Please proceed. Brian Kinstlinger: Great. Thanks for taking my questions. Recent pressure on Solana coupled with your high conviction, is there any change in terms of your capital raising strategy? Are you more willing to raise capital at a lower premium to MNAV? To reduce your average purchase price? And then is the goal to use the ATM as much as possible to lower your cost of capital. Allan Marshall: I'll jump in here, Brian. I don't think we've changed our perspective at all on this. We have one of the lowest costs on Solana tokens. We were able to, like we said, do two capital raises subsequent to the quarter end, with the one with Hivemind and then the cash one not too long ago, just over NAV. So we don't want to panic here and let or I shouldn't say panic, but, you know, decisions based on just daily movement. We continue to bring that cost down. We'll definitely be open to raising capital as that gap to NAV closes again, but we're still going to look to raise above NAV or at NAV as often as possible. The ATM, obviously, is the lowest cost. Now that we have all the tools in place going forward, we'll certainly be willing to use that, but we'll also be willing to sell Solana to buy stock back if that gap gets too wide as well. Well, to that point, you've got $9.7 million of cash. How do you weigh buying Solana versus keeping a reserve? I think the one thing that this downturn has taught everybody is to keep a reserve. Right? Like, the volatility has been even I think would from the crypto neos, we would consider pretty volatile in such a short period of time, especially into what everyone considers tailwinds. So right now, we're going to just be prudent. We do think we're getting close to washing out at the bottom here. Hopefully, it'll bounce around for a while and recover. So cash reserves are okay. What we've done is, you know, just kind of throw the balance sheet, make sure that we're set. The other thing with the whole market, and I said it in our call, is the options market and everything are getting much more liquid. So you're going to have a lot more opportunity to hedge these positions or to partially hedge these positions. We tried to do it earlier in the year. We're just unable to get a liquid enough market to do the size we wanted. Now looking back, we wish we could have, but with all of the new kind of attention to it, all of the ETFs launching with, you know, liquidity is coming. So everything's maturing, and I think all of that's going to still bring a lot of opportunity both to raise capital again, to hedge in any movements, to sit on cash. You know, right now, we're just in general, like, playing it as close to the vest we can, but we're still looking to grow. Brian Kinstlinger: Right. My last question is you've alluded to your high yield strategy plans. I think you had a press release a while back on that too. Any more you can share we've seen a number of DApps lend their digital coins they've generated a much higher return. I guess I'm curious is there a lower appetite or would be partners for this type of transaction given the pressure in cryptocurrency? Or are there still a number of parties that have a high degree of interest in something's imminent. Allan Marshall: Couple things. One is, like, I want to see what how that yield like, we understand how they're looping those tokens and everything. I don't believe that creates the yield that they're talking about, so I want to see how that's I'm not sure it's presented in apples to apples, presentation. So we want to see that. However, we are currently going through the exercise to pinpoint, like, the risk-adjusted, high yield strategies we're looking for opportunities. What we do believe there's a time and a place for on-chain yields, today is not it for us. We're not willing to go on-chain. We're still waiting for that regulatory clarity. The on-chain comes with additional smart contract liquidation risks. We don't want to enter into any of that. Like you said, with that volatility, and those yields, you know, can also compress. So what we're looking at is a more familiar and really easily understood by traditional kind of investors. We're looking at something that's more familiar in the markets. We're going to try to launch that here into the second quarter. April 4. And at that point, we'll probably give you more clarity on how we're doing that. But it's not on-chain. That's all I can tell you for now. Brian Kinstlinger: Okay. Thank you for taking my questions. Operator: As a reminder, it is star one on your telephone keypad if you would like to ask a question. Our next question is from Brett Knobloch with Cantor Fitzgerald. Please proceed. Brett Knobloch: Hi, Thanks for taking my question. I might have missed this, but is there an updated Solana balance following the direct offering in the placement of the convertible notes? In the press release, it said around 2,400,000. Is that the number that we should be using? Allan Marshall: That's the public number we have so far as it's really close. It's really close to that number. Nothing much has changed. Brett Knobloch: Perfect. Appreciate it. And then just to maybe double click on the generating additional yield outside of staking. Can you maybe elaborate in what forms of activities you would participate in? Obviously, you said nothing on-chain, but any additional color on how or where you would generate additional yield to staking? Allan Marshall: You know, what I'll let Brian step in here. But, yeah, what I will say is we're, you know, we will definitely collaborate on that going forward. But right now, we're trying to get it set up the way we want to get it set up. But I'll let Brian step in and elaborate a little bit there. Brian Rudick: Yeah. Thanks, Allan, and thanks, Brett. Yeah. As Allan mentioned, we're still in the exploratory phase. We think that we've identified specifically one strategy that can generate high yield in a low-risk way. But we're waiting till we're a bit further along in that path before we reveal too many details. The one thing I'd say is, like, we've got really two key things that we're focused on. One is making sure that this is recurring. And number two, making sure that this is low risk. And so when we think about it internally, our hurdle rate is that low to mid-teens that we can get on the lock. And so we've bought locked Solana at a 15% discount. When you think of it like OID and you put that 15% discount into the yield equivalent, we still get the 7% staking yield on that, and so it translates to an all-in, you know, low teens yield. And so that and we view that as low risk as well. So that is kind of the hurdle rate of what we're looking to do. And everything that we do will be compared against that. But we will give more information in the future as we continue to progress there. Brett Knobloch: Perfect. Thanks, guys. Appreciate it. Operator: There are no more further questions. I would like to turn the conference back over to Allan Marshall for closing remarks. Allan Marshall: Well, thank everybody for joining the call. I know it's been a tough quarter for everyone in crypto. We, like I said, during the call, we do think the future is still bright. We think we're on the right path. And thank you for the great questions. And we look forward to updating you guys during the quarter, and look forward to the next conference call. Thank you very much. Operator: The conference has now concluded. Thank you for attending today's call. You may now disconnect.

92天前Insight Analytics约5分钟阅读

TMVWY 2025 Q4 财报电话会议

Bisera Grubesic: Good morning, ladies and gentlemen, and welcome to TeamViewer's Q4 and Full Year '25 Earnings Call. I am Bisera Grubesic, Head of IR. Today, I am joined by our CEO, Oliver Steil; CFO, Michael Wilkens; and CRO, Mark Banfield. Oliver and Mark will run you through the quarterly business update. Michael will present Q4 and financial -- and full year financials, followed by the full year guidance and midterm targets. The presentation will be concluded by a Q&A session. Same as in the previous quarters, we will present non-IFRS pro forma top line and adjusted EBITDA performance. And also, please note that you can find the important notice and the APM disclosure on Slides 2 and 3. And I now hand it over to Oliver to kick off. Oliver Steil: Thank you, Bisera. Good morning, everyone. Also welcome from my side. Thank you for joining our call today. As the last year was clearly a year of transition after the 1E acquisition, I would like to start differently this time and give you some broader context before we dive into the results. When we look back at the year 2025, we see a lot of progress and proof that we are on the right track. But of course, there were also some challenges that require our full focus and which we continue to address in 2026 as we are firmly committed to reaccelerate top line growth. 2025 was again marked by macroeconomic difficulties and geopolitical tensions, which affected customer decision-making and made it more challenging for us to execute and operate as initially planned. And as you know, AI was one of the defining forces in 2025. At TeamViewer, we clearly view AI as a significant opportunity to drive platform growth. We progressed significantly with embedding AI into the core of our product to improve our offering. Our webinar for the Capital Markets last year November made it clear how we and our customers will benefit from AI. We are unique as we are the only company within our industry that can deliver what we do. This is based on our technology and proprietary data and the combination of TeamViewer and 1E product capabilities, which I will elaborate on later. While our Enterprise business continued to grow, we were disappointed with the SMB business as growth was slowing down. We needed to course-correct our approach regarding SMB customers and decided to suspend all short-term monetization activities like free-to-paid campaigns and pure price up to revitalize the ecosystem of noncommercial users and smaller SMB customers who are very price sensitive. Also, the 1E business performed below our expectations as integration work temporarily slowed momentum and some key talent left. With the new global sales and customer success setup under Mark's leadership, we are now focused on customer retention and rebuilding a strong pipeline, and we are already seeing early strategic wins. 2025 was clearly a pivotal year for TeamViewer. We integrated TeamViewer and 1E capabilities, invested heavily in R&D and sales and go-to-market. We launched several new products during the year. The first one, DEX Essentials, is an easy-to-implement DEX version for smaller IT teams. It was built in record time after the 1E acquisition and represents a stepping stone to our most important new product, TeamViewer ONE, our all-in digital workplace management platform, unifying DEX, AI-based remote support and RMM to create a new differentiated offering for companies of all sizes. We could see that our efforts paid off already in Q4 with a strong traction of TeamViewer ONE, highly strategic customer wins in DEX and Frontline as well as an overall continued strong TeamViewer Enterprise momentum. Let me now talk you through our full year results. We closed the year with 5% pro forma revenue growth in constant currency year-over-year. ARR grew 2% in constant currency and TeamViewer stand-alone Enterprise business was 19% up in constant currency and therefore, the main growth driver. New ARR from TeamViewer stand-alone even doubled year-over-year. The Enterprise business overall showed strength in Q4 with highly strategic wins in DEX and Frontline. At the same time, we were able to deleverage as expected and improved our net leverage ratio to 2.6x. Our profitability remained high, and we closed 2025 with a pro forma adjusted EBITDA margin slightly above 44%. 2026 will clearly be another transformational year for us. I will elaborate later more on what that means and which priority areas we will be focusing on. Let's now take a look at the regions and customer categories and how we have developed during the year. Revenue grew in constant currency across all regions in 2025. EMEA was our strongest region, contributing slightly above 50% to our revenue. The region delivered EUR 402 million in revenue, up 6% year-over-year. In the Americas, revenue reached EUR 292 million, up 3% in constant currency despite an ongoing difficult market environment in the U.S. Especially towards the end of Q4, the U.S. team brought in a few very important strategic deals, which I will show in a few minutes. APAC delivered EUR 73 million in revenue, up 4% in constant currency, driven by a good Enterprise performance. We were especially happy about a few DEX, Enterprise deals in the region. This is noteworthy as 1E didn't have any business in APAC, but TeamViewer was able to bring DEX to the region due to our dedicated APAC go-to-market efforts. Looking at our customer categories, Enterprise continued to demonstrate strength. Revenue as well as ARR grew by 11% year-over-year in constant currency. With this, the Enterprise business now contributes more than 30% to our business. In SMB, revenue grew by 2% in constant currency, while SMB ARR was down minus 1% in constant currency. As already explained, we were not satisfied with the SMB performance in 2025 and already took measures to course correct. Let us now look at the respective ARR value ranges in Enterprise and SMB. In Enterprise, all value ranges delivered double-digit growth, reflecting the enterprise momentum we saw throughout the year and especially in Q4. Notably, also the highest value range of above EUR 200,000 picked up again with the strategic DEX and Frontline wins in the quarter. In SMB, the highest value range grew by 3% year-over-year. The lower value ranges were down mid-single digits. This reflects successful upselling into richer product packages within SMB on the one hand, but also the price sensitivity of smaller customers that I already talked about. As usual, we saw net upsell from SMB to Enterprise of EUR 12 million reported, which demonstrates the effectiveness of our sales strategy to move customers up to higher value ranges. Let me now tell you a bit more about some of the Enterprise deals of Q4 that we are particularly excited about. In the fourth quarter, we won a few highly relevant large deals. I would like to highlight 3 of them, all from the U.S. First, we were able to convince a large and well-known U.S. company from the defense sector to introduce our DEX solution and use it across the vast IT landscape. For these customers, the capabilities customers -- the capabilities of our platform for real-time remediation and autonomous endpoint management were the decisive reasons to choose TeamViewer DEX. This equally applies to the second deal with Thrive, a large U.S.-based managed service provider with a growing presence across the globe. They will integrate our DEX solution into their managed services platform to enable better insights and more automation for their customers. They chose TeamViewer as we are a clear leader in the DEX space and in IT support automation and secondly, because of our ServiceNow integration. The last example I would like to highlight is the largest frontline deal in our history. It's one of the world's largest consumer food and beverage producers who will deploy our frontline picking solution across more than 350 warehouses, which also offers great potential for the future. We have been working with these customers on this project for quite some time and are very excited that we were able to close the deal now. Frontline is an integral part of our digital workplace platform as it is very much needed to digitalize physical work environments such as production lines or warehouses. We are a recognized leader in this space and have built a unique and differentiating positioning over the last years with large customers such as DHL, Coca-Cola, Nadro and now this additional win in the U.S. Some of our largest enterprise customers use TeamViewer Frontline to digitalize manual work in industrial settings. All in all, we see that whenever the requirements are complex, when critical processes are affected and real-time operations needed, we are very well positioned as we create very real business value for our customers in these environments. Let me now explain our strategic priorities for the year 2026 and beyond so that you know what to expect from us. We have a clear plan to make TeamViewer even stronger going forward. In this section, our CRO, Mark will also present a few topics. First, let me take a step back and look at what we are seeing in the market. Quite simply, IT is reaching an inflection point. Over the last decade, companies have layered tool upon tool to solve individual problems. The result is a highly complex and fragmented landscape with overlapping solutions, rising operating costs and frustrated users despite very significant investments. Too much time and money are being spent simply just keep the operations running and far too little on true innovation and value creation. At the same time, we are witnessing a secular technology shift with AI. Companies clearly recognize the potential of AI to transform IT operations, automate work and meaningfully improve productivity. But fragmented tools, manual processes and reactive operating models make it difficult to deploy AI at scale. And in many cases, AI even adds the complexity instead of reducing it. Taken together, this IT breaking point and the AI opportunity drives a fundamental market shift. Companies are now demanding simpler, more cost-efficient, AI-powered IT management. They are looking for consolidated platforms that reduce complexity, enable predictive problem solving and support the move towards autonomous operations. So the obvious next question is, who is best positioned to help customers drive this shift from reactive to predictive IT. Doing this well requires several things to come together at the same time. Seamless connectivity across very heterogeneous environments, a high-performing operational engine, proven automation capabilities, a large customer base and increasingly a unique AI advantage built on access to hard-to-get and high-quality data. And this is exactly where TeamViewer differentiates. Our core TeamViewer heritage is built on over 20 years of experience in remote support and connectivity at global scale. And with 1E, we added unmatched and proprietary capabilities for real-time remediation and autonomous endpoint management. Together, this gives us unique broad visibility into devices, applications, performance and user experience, the kind of data foundation that AI actually needs to deliver value. With TeamViewer ONE, we have deliberately unified these capabilities into a single best-of-suite platform, purpose-built to simplify complex IT environments and to drive a shift left towards proactive and predictive operations. It brings together all of TeamViewer's best-of-breed solutions and connects them through a shared data and AI layer. Every AI-powered remote support remediation generates insights that continuously reinforce our DEX-driven self-remediation engine. And that is why we believe TeamViewer is uniquely positioned to shape this market inflection. Our integrated capabilities position us at the very center of the shift towards intelligent consolidated IT operations. Looking at 2026, we have defined 4 key priorities that we will focus on in the coming months and that form building blocks for our transformation journey. We will elaborate on each of them in more details afterwards. Firstly, it is crucial to revitalize the SMB business as well as the performance of the stand-alone DEX business. Secondly, we will continue to invest organically in our market-leading product offering. Thirdly, we will accelerate global sales and go-to-market execution. And while doing all of this, we remain committed to our deleveraging goal of around 2.3x net leverage at the end of this year. We have clear actions in place to reignite revenue growth in 2026 and beyond. The first building block is the turnaround of our SMB business and the reacceleration of the 1E performance, meaning DEX for Enterprise. As we have already mentioned end of last year, we have started initiatives to revitalize the ecosystem of noncommercial users, for example, through avoiding aggressive free-to-paid campaign. Price increases will be tied to clear additional value in the product, for example, bundling our AI capabilities or automations into the remote licenses. We appointed Finn Faldi as Executive VP, Global Inside Sales to strengthen the global sales organization. And on top of that, we have set up sales and customer-facing organizations more efficiently and according to best practices with new sales and AI tech stack to ensure more focus and improved customer retention. This goes together with better onboarding and customer support throughout the entire life cycle to unlock potential and create value. Of course, also TeamViewer ONE will play a key role in retention and upselling strategies and represents a key strategic differentiator against competing RMM products. For 1E and DEX, we've also identified and implemented measures, in general, an enhanced product focus on the core DEX and automation use cases to release features the customers were waiting for. We enabled our global enterprise sales force to sell DEX, and we have improved relationships with long-standing 1E customers through a comprehensive customer success management framework and a structured customer advisory board program. Again, the TeamViewer ONE platform and our AEM proposition play an important role in this context, and Mark and I will elaborate on this in a few minutes. Now let's have a look at our ongoing organic product development. As part of these organic investments, I would like to show you again how we position our product offering in the market. All our different solutions are leaders in their respective space, Tensor and Remote in remote access and support, DEX in digital employee experience and Frontline in the connected workforce space. We will continue to improve them as stand-alone products. Additionally, through the 1E acquisition, we were able to successfully position us at the forefront of the emerging digital workplace and autonomous endpoint management categories, which we will naturally extend into frontline workplaces. With the unique combination of TeamViewer and 1E technology within the TeamViewer ONE platform, we are able to deliver an industry-leading one-stop shop for IT operations and AEM, covering the full spectrum from proactive auto remediation capabilities to remote expert support. Customers across the globe understand and embrace the value of DEX and the strategic road map towards more automation and ultimately autonomous endpoint management. All of this is powered by AI as this is horizontally embedded across the entire product portfolio and at the core of our offering. We will continue to invest organically in AI and develop more agents that can leverage the unique proprietary data we have access to. Our AI products saw good and quick adoption since the introduction of the growing suite of AI-powered features in summer 2025 as well as the announcement of TeamViewer's new intelligent agent, Tia at Microsoft Ignite in November. At the beginning of February, more than 13,000 customers had already opted in for the AI Session Insights feature and had used it to summarize more than 600,000 TeamViewer sessions. To illustrate our unique position in the autonomous endpoint management space, I would like to quickly explain again how the complementary capabilities of DEX and remote access and support work together and strengthen each other. In an ideal scenario, a new and until now unsolved digital friction occurs on one of the devices inside a company's IT landscape. A human expert will now take care and use remote support capabilities to look into the issue. Obviously, the expert will appreciate AI supporting him or her on root cause analysis and remediation of the issue. The session will be captured and automatically summarized by AI to make it available as a foundation for the future and increase intelligence across support operations. At the same time, our DEX technology is constantly analyzing device and system data in real time. This is matched against the DEX insights library with preconfigured automation for frequent issues. Closing the loop, we are able to build new automations out of the previously generated session summaries resulting from expert support. And this loop is constantly increasing the amount of automations across the support operations. Fixing an issue once means it is then fixed forever and can be executed autonomously at scale. With this, I'd like to hand over to Mark, who will talk about TeamViewer ONE as well as our go-to-market strategy. Mark Banfield: Thanks, Oliver, and a warm welcome from me, too. TeamViewer ONE, as we said 2 weeks ago at our global sales kickoff in Munich is clearly our #1. It's a unified digital workplace platform to enable autonomous IT and endpoint management. It combines all of our leading solutions and capabilities, remote access and support, DEX, RMM, AI at the core, and we are the only vendor who can unify this range of capabilities in a single platform. We will offer it to all our existing as well as all of our new customers across all geographies, all industries and across all customer categories as it is equally compelling for both SMBs, Enterprises as well as managed service providers. It adds enormous value to our customers as it unifies all IT operations under a single platform. This makes it our #1 go-to product, go-to-market product for this year and beyond. Of course, we will continue to sell our stand-alone solutions, but wherever there is a case of TeamViewer ONE, we will go for that as it offers endpoint pricing and therefore, financial upside, but also higher stickiness as we will become much more relevant to our customers. We have the right ingredients, the right products, the right proprietary data, the right customer base and an enabled global sales force to sell this leading solution and win in this space. Only recently in December, we released a major product update to TeamViewer ONE with a very compelling design and user experience. This gave another push to marketing and sales to focus on TeamViewer ONE, and we already see the first results. Now let me wrap up this section by talking about our go-to-market strategy. Our first focus area is to retain and grow customers. We need to set strong focus on churn prevention and work across sales and all customer-facing departments in lockstep. Of course, Enterprise customers need to be treated very differently than SMB ones. But overall, we need to reduce churn and instead drive demonstrable outcomes for our customers, satisfying them and using the momentum for upsell and cross-selling as we migrate them to TeamViewer. As I already outlined on the previous page, TeamViewer ONE is the leading go-to-market product for our sales force. If there is no direct entry point to TeamViewer ONE, we will go with the most suitable stand-alone solution and follow up with a very clear land and expand strategy. For all scenarios, we have developed a very comprehensive global sales playbook, and we have trained our entire sales force on this at the recent global sales kickoff. The third set of measures that will move the needle this year is ruthless prioritization of leading KPIs and a rigorous data-driven approach to decision-making. We will continue tracking and managing our pipeline as well as sales productivity and focus on operational excellence everywhere. This is not rocket science, but gives us a clear path to a strong global market -- global go-to-market execution. With that, I'd like to hand over to Michael for the financial section. Michael Wilkens: Thank you, Oliver and Mark, and good morning, everyone, from my side. Let's look at TeamViewer full year 2025 results on the next slide, please. In 2025, TeamViewer delivered a solid financial performance with revenue reaching approximately EUR 768 million, reflecting a 5% year-over-year increase in constant currency. This growth was broad-based with all regions contributing. Revenue landed within our guided range, aligned with the FX assumptions communicated at Q3 2025. The annual recurring revenue grew by 2% year-over-year in constant currency to EUR 760 million, meeting the updated guidance range also issued in October. Profitability further strengthened in 2025. Our pro forma adjusted EBITDA rose by 8% year-over-year to around EUR 340 million. We achieved again an industry-leading adjusted EBITDA margin of 44.3%, representing a 2 percentage point improvement versus 2024. Adjusted basic EPS also increased by a strong 17% year-over-year. We also continued to deleverage as planned. The pro forma net leverage ratio improved to 2.6x, down from 2.8x in Q3, fully in line with our targeted trajectory. Now let's look at the details of our Q4 2025 results. Pro forma revenue in Q4 increased by 2% year-over-year in constant currency, reaching approximately EUR 195 million. This performance reflects the continued transformation in the SMB segment and the expected softer revenue contribution from 1E. TeamViewer stand-alone delivered a strong quarter with revenue of EUR 179 million, up 3% year-over-year in constant currency. And the ARR grew by 2% year-over-year in constant currency to EUR 760 million. Profitability remained strong in Q4 with an adjusted EBITDA margin of 45%, underscoring the strength of our business model. Let us continue with our Enterprise business on Slide 22, please. Enterprise continued to deliver strong momentum, reinforcing the resilience of TeamViewer's core business. Enterprise ARR grew by 11% year-over-year in constant currency, reaching EUR 241 million now. As I mentioned earlier, TeamViewer stand-alone Enterprise had an excellent quarter with ARR increasing 90% year-over-year in constant currency. Growth was again broad-based across all regions, supported by a particularly resilient EMEA performance. As Oliver highlighted, the positive trajectory was bolstered by several notable new logo wins in Q4, including the largest TeamViewer frontline deal ever signed, contributing a mid-single-digit million ARR in the quarter. As a result, the new ARR doubled year-over-year in Q4 2025. 1E also showed encouraging progress. Q4 2025 marked a turnaround quarter with sequential ARR growth returning. This momentum was driven by 2 highly strategic DEX, Enterprise wins, together representing a total contract value of approximately EUR 10 million or around EUR 3 million in ARR. Our Enterprise customer base continued to expand, reaching 5,262 customers by the end of the fourth quarter. The pro forma Enterprise ASP increased to around EUR 46,000 per customer, reflecting continued success in delivering higher-value solutions across a growing customer set. The Enterprise net retention rate was 96% in Q4 on a constant currency basis. Adjusted for the upsell from SMB customers during the period, the Enterprise NRR reached 99%. This NRR trend preliminarily reflects a subdued ARR expansion among existing customers, lower SMB to Enterprise upsell and the stand-alone performance of 1E, combined with a higher share of new ARR in the quarter that is, of course, not captured in the NRR calculation. We have implemented measures designed to drive Enterprise NRR above the 100% mark in the midterm. Let us now move to our SMB business on Slide 23. Pro forma SMB revenue reached EUR 131 million in Q4, increasing 1% year-over-year in constant currency. The SMB ARR declined by 1% year-over-year to EUR 519 million. This development was fully in line with internal expectations and reflects 2 key dynamics: continued successful upsell of SMB customers into Enterprise and the deliberate SMB cost correction measures, which we introduced in the third quarter. These measures include discontinuing short-term monetization initiatives and price increases. As outlined in Q3, this strategy is focused on reinvigorating product usage across both the free user ecosystem and the broader SMB base. Encouragingly, the free user ecosystem is already demonstrating early signs of stabilization. The actions taken in Q3 2025 have a negative impact on ARR and the related KPIs shown on this slide. While SMB customer churn increased, value churn remained broadly stable quarter-over-quarter. As we work to revitalize the SMB business and to establish the foundation for sustainable growth, we expect SMB KPIs to remain soft through the first half of 2026. End of 2025, we served approximately 631,000 SMB customers. Our SMB ASP grew by 2% also year-over-year to reach EUR 822, underscoring the resilience of our monetization model. Let us now turn to our cost base on the next slide. For the full year 2025, our pro forma adjusted EBITDA margin was very strong at 44.3%, representing a 2 percentage point improvement compared to 2024. This performance reflects our disciplined cost management even as we continue to invest in growth and innovation across our product portfolio. Overall, pro forma recurring costs remained broadly stable throughout the year. Cost of goods sold increased by 5% year-over-year, driven by our ongoing customer platform investments and by development support for our frontline projects. Sales expenses rose by 8% year-over-year as we expanded our sales force and strengthened our enterprise technology stack to advance our transformation into a fully data-driven sales organization. Marketing costs decreased by 15% year-over-year, primarily due to optimized sponsorship spend. At the same time, we continue to invest in targeted branding initiatives and in the launch of new products. In total, marketing costs represented 13% of revenue, down from 16% in 2024. And as a result, overall sales and marketing efficiency improved meaningfully. In 2026, we will maintain a clear focus on driving further efficiency gains, sharpening our go-to-market execution and scaling data-driven demand generation. R&D expenses increased by 7% year-over-year, reflecting significant investments in product innovation, including our TeamViewer AI offering and the TeamViewer ONE platform. These investments form the foundation of our AEM strategy and position us strongly for future growth. G&A expenses developed in line with revenue, demonstrating consistent cost discipline. Other expenses amounted to around EUR 7 million for the year. Let us now turn to net income and EPS development on the next slide, please. Pro forma adjusted earnings per share was EUR 1.23 in 2025, a strong increase of 17% year-over-year. Our strong profitability and our continued focus on optimizing operating expenses supported this performance. This was partially offset by higher total interest expenses, which amounts to EUR 40 million in 2025, up EUR 22 million year-over-year, which is primarily driven by the financing of the 1E transaction. The FX result reflects negative translation effects related to an intercompany loan as required under IFRS. With this, let's move on to cash flow on Slide 26. In '25, adjusted levered free cash flow amounted to EUR 208 million after adjusting for nonrecurring items. This represents a cash conversion of 61% and demonstrates the continued strength of our underlying business model. Cash flow for the year was influenced by several factors, including moderate top line growth, FX headwinds and higher interest payments related to the 1E acquisition. In addition, cash flow reflected the acquisition-related payments for 1E and the settlement of a legal dispute in the first quarter of 2025. These effects were partly offset by lower tax payments resulting from changes in our tax scheme, which had a positive impact on cash flow in 2025. Looking ahead, we expect cash taxes to increase from 2026 onwards and return to normalized levels despite some positive one-off support because of the 1E deal structure. With that, let me now provide a brief update on our financing on Slide 27. We continued to deleverage in line with our commitments following the 1E acquisition. Our pro forma net leverage ratio improved further to 2.6x, demonstrating our clear focus on balance sheet strength and disciplined capital allocation management. At year-end, cash and cash equivalents amounted to approximately EUR 42 million and net debt was EUR 901 million. As mentioned in Q3, we also successfully refinanced EUR 30 million of the EUR 175 million bridge loan through a private placement, further strengthening our financial position. Looking ahead to 2026, reducing leverage remains our top financial priority. We reiterate our commitment to continued deleveraging and expect to reach a net leverage ratio of around 2 to 3x by year-end in 2026, subject, of course, to FX movements. At the same time, we will continue to invest organically in the areas that matter most, particularly R&D. These investments are essential to drive sustainable long-term growth and continued innovation across our product portfolio and our AEM platform. With that, let me now move on to our full year 2026 guidance and to our midterm targets on the next slide. Turning to our outlook for 2026. We expect another year of disciplined execution and continued operational progress. Our focus remains firmly on driving sustainable profitable growth while advancing our strategic road map. For the full year 2026, we anticipate a constant currency revenue growth in the range of 0% to 3% in full alignment with the lower end of our preliminary outlook for 2026, which we provided already back in October 2025. The guidance reflects the cost correction SMB as well as the seasonal ramp of Enterprise later in the year. Please also note that Q1 will be a soft start into 2026 as we face a few large but fully anticipated one-off churn effects in 1E. These effects are unavoidable, known and confined to Q1. We also expect to deliver another year of strong profitability. We guide our adjusted EBITDA margin again at industry-leading levels of around 43%. This is supported by continued cost discipline, operational efficiencies and the benefits of our increasingly integrated product and platform strategy. At the same time, we will continue to invest in the areas that drive long-term value creation, particularly R&D to capitalize on the significant opportunities in front of us. In addition, we remain fully committed to further deleveraging. As mentioned, we expect to reach a net leverage ratio of around 2.3x by year-end 2026, assuming FX remains stable. Strengthening our balance sheet is one of our core priorities, and we will continue to manage capital allocation with discipline. Finally, for our midterm outlook, we expect a reacceleration of growth into the mid- to high single-digit percentage range. This outlook reflects the inherent strength of our business model, supported by our focus on revenue expansion, consistently strong margins and robust cash flow generation. With that, let me walk you through the details of our '26 guidance and the midterm targets on the next slide. We guide revenue in constant currency, but reported figures will naturally move with FX. To keep the transparency high, we will show the expected quarterly FX impact on revenue growth and separately highlight the FX effect from releasing older deferred revenue to avoid systematic over or underestimation of these impacts. This helps to distinguish true operating performance from currency noise. Based on the 31st of December 2025 spot rates, the FX reduces Q1 2026 growth by 3.1 percentage points and full year 2026 by 2.8 percentage points with U.S. dollar as our largest exposure. Before we hand over back to the operator for Q&A, let me briefly sum up full year '25 and our outlook. 2025 was clearly a challenging year. Yet despite this backdrop, we delivered solid revenue growth and outstanding profitability. At the same time, we made substantial operational progress that strengthens our foundation for sustainable long-term growth. Looking ahead, 2026 will be another transitional year, but with our guidance and the measures already implemented, I'm very confident in our trajectory. We have the right priorities, the right focus and a clear path to unlock the next stage of our performance. With this, I would now like to hand the call back to the operator to open the Q&A. Operator: [Operator Instructions] The first question comes from the line of George Webb from Morgan Stanley. George Webb: I want to kick off with a couple of financial questions. I guess the first one, as we think to that FY '26 guidance range on revenues for 0% to 3% in constant currencies compared to that kind of 2% exit ARR growth level, it's quite a wide range on where ARR growth could exit in FY '26. So perhaps could you add a bit more color on how you think about that shape of growth in 2026? You've mentioned, Michael, kind of expect that softer Q1 on the 1E churn factors. If you could also kind of just highlight maybe the size of that 1Q headwind, that would be helpful. And then secondly, around levered free cash flow, you've kind of flagged the EUR 181 million you delivered in FY '25 overall pretty healthy EBITDA development will be quite muted year-over-year in '26. You kind of flagged that EUR 12 million one-off headwind you still had in '25. Are there any kind of other swing factors for free cash flow we should think about in 2026 or your ability to grow that EUR 181 million year-over-year? Michael Wilkens: Yes. First one on ARR, you're spot on. So the 1E part is in the vicinity of EUR 8 million of churn, more or less the same like in 2024 in Q1, always a tough quarter. But what we need to keep in mind, last year, we had the positive swing against this 1E churn in the SMB space of TeamViewer with price ups and commercial blocker, and this is de facto gone this year as we have the tougher comp. So this is why especially the ARR in Q1 and maybe partially in Q2 will be a little bit muted. But the important part is that ARR by year-end will be significantly higher than last year. So we will grow from there. That's the name of the game. The problem then starts, of course, with the revenue, which is obviously lagging, and this is also why we took the 0% to 3% guidance, which is fully in line with what we did in the earlier outlook. So that was number one. On the cash flow, indeed, a couple of swing factors. First, we are always a little bit prudent in the context also from the EBITDA guidance, you see the around 43%, which is more or less the same as last year. But with the top line range of revenue, then you have de facto the outcome on the EBITDA, which is one very decisive factor. And then there are 2 others. Interest should improve a little bit year-over-year in '26 vis-a-vis '25, rough cut EUR 5 million or so. And we expect a little bit of a positive impact on cash taxes based on the structure of the 1E deal, rough cut EUR 10 million, but that will be de facto balanced with the normal uptick of the normal cash taxes, which is actually a good one to have. So all in all, in the vicinity, cash flow, let's say, again, EUR 190 million to EUR 210 million. So broadly stable in absolute and also in cash conversion terms. Operator: The next question comes from the line of Victor Cheng from Bank of America. Hin Fung Cheng: Maybe to start, can you talk a bit about the DEX market? Obviously, there are a lot of industry reports out there showing kind of good growth. But what are you seeing with competitors? Are they maybe slowing down a bit in growth as well? What are you seeing more broadly in that field? And then 2 other quick ones. On the medium-term outlook, you said maintaining the current margins. I suppose that's referring to the 43% for '26. And then lastly, maybe any updates on the metrics for some of the newly launched products like DEX Essentials and Tia? Any updates on kind of usage and momentum there, please? Michael Wilkens: Yes, Victor, let me take your second one first. You're spot on. It's in context of the 43% out of -- for '26, which we then also confirm for the outer years. Oliver Steil: Mark, do you want to take the DEX market? Mark Banfield: Sure. Okay, sure. Look, I think overall, the DEX market continues to show strong tailwinds. I mean it's a growing market. It's -- there's clearly -- there is a movement within the IT market to invest in DEX as the kind of the next sort of platform for end-user computing. Some of our challenges last year, I think we've talked about quite a lot as they were specific challenges around the integration of the businesses. Q4 showed some real highlights actually. I mean the deals were mentioned there by Oliver, a couple of significant wins. These were head-to-head competitive wins and there were many more than that as well. So we're starting to see nice wins, larger wins. We're also starting to see TeamViewer customers start to adopt DEX, which we said at the time of the transaction would take some time to build that pipeline, but we started to see those deals convert in Q4. So I think we feel much better going into 2026. But yes, overall, I think the DEX market is continuing to accelerate. Oliver Steil: Yes. Maybe I'll take the last question. Metric on new products, obviously important and something we track. Important to say, Victor, that we launched these products all around last year, and it takes time to kind of mobilize -- enable and mobilize the sales force to really take this on and move this forward. And especially on TeamViewer ONE, this is a very new platform approach as we had laid out. So we had to connect different capabilities from 1E and TeamViewer into one place, make the user flow easy, easy onboarding and easy to add, manage devices and the like. So that took a while. That release was only done beginning of December. And what was really good to see that then in December, in the year-end business, we really saw a good number of TeamViewer ONE deals, although we hadn't enabled the whole organization. So that was very positive. Then obviously, year-end cleaning the pipeline and then moving into new year. And then we had the sales kickoff just 10 days ago. Super high excitement across the sales organization inside sales and enterprise. And why is that? TeamViewer ONE is selling and has been selling and is increasing to sale day by day. So there's transactions every day. The proposition lands with customers. Our sellers really feel this is a very competitive proposition, a clear step change compared to what we offered earlier in the marketplace, so confined remote support and some additions with partner products. But now it's really our own product bundle, and we see increase in billings and ARR additions really on a weekly basis. So very exciting. We will come with more color around it as we go through the year for sure. But this is starting to be meaningful on a daily basis really, especially on the TeamViewer ONE side. On AI, focus is on adoption still. As I mentioned, well above 600,000 sessions now have been done, have been used. There's customers opting into this. We will bundle it even more into the product. TeamViewer ONE will be a key catalyst for that because it is a built-in functionality in this product. We will also think about pricing and monetizing throughout the year. So we continue to see very good progression there in line with what we had anticipated when we did the AI webinar. Operator: We now have a question from the line of Alice Jennings from Barclays. Alice Jennings: So my first one is just there's a lot of AI-driven headlines in the news at the moment where we're seeing like really rapid innovation and lots of new products in the market. You've mentioned kind of already how you see the competitive environment for DEX specifically. But just wondering more generally, how do you see the competitive environment for endpoint management evolving? And are you seeing kind of any change in customer behavior as a result of these headlines? And then my second question is just on the medium-term guidance. Do -- can you tell us anything about your expectations for when you expect to be in the mid- to high single-digit range? Is this something that's realistic for 2027? Or is this a little bit further down the line? Oliver Steil: Yes. Let me start with question number one. AI drives the headlines, 100%. I think there's a lot of discussion around how customers' buying behavior will change. Obviously, we see that. As I said already in my presentation, customers want automation. They want to use AI. They want autonomous IT. They want simplicity. They want platform approach. They know that more is possible using AI, and that's why it's so important to build AI into the product range. This is not a stand-alone on the side AI gimmick, if I may say, but it's really a functionality and a capability across the product range. So taking what we see in sessions, learning from it, synthesizing it and making it available in the DEX automation library. That is the key thing which we're building and what customers really expect. We also believe that what you need is access to data, proprietary data, for sure, and we have that. Out of our 630,000 customers, you might call it an unfair advantage because we come there with this massive customer base and the millions of sessions that we're doing every month that we can tap into and leverage to build inside. So that's really important. We also believe what gets lost in the discussion about AI and application software risks is clearly that it depends a lot on the layer you are in. We are an infrastructure piece. We are connecting very heterogeneous environments. We're doing end-to-end solutions at very high security, and this is not easily replicated and being built by AI code in a few days or so. So this is a complex thing. It's touching the heart of operations. It's at the core of our customer, highly security relevant. And that's where we built our experience over the years, and that's why we are so strongly positioned in this because customers take very deliberate choices and what they try and what they not try and how they want to move forward in the use of AI. So we see that as clearly a tailwind for our product and our positioning in the market. Midterm outlook? Michael Wilkens: Yes. Midterm outlook, let's remind ourselves the distinction between the ARR and the revenues and the revenues, the lagging KPIs. So on ARR, we expect that already to uptick in '27 after '26, which is the first uptake important. But on the revenue, because it's lagging, it's more or less an inch-by-inch kind of thing. So it's mid-single digit and then rather in the outer years, '29, higher single digit. This is how we need to think about it. Operator: The next question comes from the line of Ben Castillo-Bernaus from BNP Paribas. Ben Castillo-Bernaus: Firstly, just on the SMB part of the business. I mean could you help us with what might be a realistic outcome here for 2026 if we're exiting at slightly negative ARR growth. We're digesting no price increases, commercial blocker. How can you help us think about that? How do we square that decision to, I guess, stop those campaigns, again, no pricing, we're seeing churn increasing. But presumably, we need to return to some growth here. And if we look at that sort of midterm outlook, in your internal assumptions, what does that SMB business need to do to help underwrite that? Michael Wilkens: Yes. I can start also with the ingredients. So first, full year versus full year, so minus 1% last year, '25, we expect the same vicinity in the end of '26, so around a minus 1 maybe. So kind of stabilizing in the full year. And indeed, especially Q1 and Q2 will be a little bit under pressure because of the tough comp. And the numbers that we need to climb is EUR 20 million versus last year, price ups and commercial blocker. And this needs a little bit of time. Oliver laid that out, 2nd of December, a strong launch of TeamViewer ONE, and this is firing on all cylinders, basic, advanced and enterprise, but especially basic and advanced are very important ingredients. And whenever we would do price ups, then clearly in a more-for-more logic. So where the customer actually also really gains new product features, new services and then gets the offer of a price up where they can also say, no, thank you. So that's one part of the equation, very important. And the second part of the equation in order to stabilize it throughout the second half of the year is, of course, the expected positive churn impact. Remember, we were faced with churn in the SMB business. And with the stop of the, let's call it, rather unfriendly price ups in commercial blocker, this negative churn effect should wash out over time and customers will come back and will stay, but this is rather expected for the second half of the year. So this gives a little bit of an outlook for '26. You asked also how we think further. So if we stabilize, of course, with the very strong injection of the TeamViewer ONE platform autonomous endpoint management across all business lines, we expect then from '27 onwards, obviously also a slight uptick in growth back in the SMB business. That's more or less the function. Oliver Steil: Yes. Maybe just to add, if you look at the TeamViewer ONE, it's a very central proposition for SMBs. It's the best of suite offering management platform, as Mark laid out and described. Now when we sell into SMBs, what we see at the moment is with kind of TeamViewer ONE advanced, this is a few thousand euro most of the time as a ticket size. Ultimately, this will be very important to drive SMB growth potentially in a way. But quite often, we also see ticket sizes than EUR 14,000, EUR 15,000, EUR 16,000. So by doing so, the valuable SMB customers move into enterprise in just one go. And that will also determine how much of the growth from TeamViewer ONE will actually land in SMB or in Enterprise. But obviously, we will be very explicit about how this is working because it's fundamentally obviously also a very good thing to move customers into the double-digit or lower teens euro range and have endpoint-based pricing, which is much stickier, much stickier and has more growth potential. So that's what in play here, and that will impact the SMB outcome as well. Ben Castillo-Bernaus: That's very helpful. Can I just squeeze in a follow-up just around the Enterprise business. You mentioned that the net retention rate, you hope that gets back above 100% over the midterm. I just wondered what's holding that back from happening sort of towards the latter part of 2026, given the new TeamViewer ONE solutions, the 1E integration, the upsell capabilities? What sort of time frame would you consider that to be? Michael Wilkens: Yes. Clearly, cautiousness. So this is -- this was our learning of 2025, to be a little bit more caution. And then, of course, the tougher situation in Q1 or the muted or softer Q1 index, we need to work against that. Operator: The next question comes from the line of Deepshikha Agarwal from Goldman Sachs. Deepshikha Agarwal: This one is more on SMB as in terms of just trying to understand like we have -- you have put out the strategy around like, again, normalizing the price increases, et cetera. So how should we be thinking about how SMB is going to track over the course of FY '26? And more -- like how will that be contributing to that growth improving to mid- to high single digits? So that will be the first one. And second one is more on the cash conversion. Now for this year, it's indicated to be roughly similar to what we saw in FY '25. Once the growth sort of starts picking up better and the margin sort of again, normalizes and it stays at a certain level, how should we be thinking about a more normalized level of cash conversion? Michael Wilkens: Yes. Let me take the last one first. Cash flow, indeed, stable in relative and absolute terms in '26 over '25. And you should de facto think in the same vicinity also in the outer years, maybe slightly growing the cash conversion from the 60% ranges into 63% or so. But let's talk about that when we get there, once we get there. On the SMB question, I'm not sure whether I just explained that, but let me do that again and then you come with a follow-up question. So Q1, Q2, SMB should be rather more muted, so i.e., negative based on all of the comp and what we explained from -- also from the churn effects. And from that moment onwards, SMB should clearly accelerate and go really back into sequential growth in Q3 and Q4, which then would mean that we are back into kind of stable [ month ] around minus 1% for the full year of '26. So that's the name of the game. With all what is kicking in, with all what we have had innovation features, platform, autonomous endpoint, topics at play, also what Oliver mentioned, from '27 onwards, SMB should be rather in the vicinity of 0, which would be then a slight growth, maybe even 1%. But it's also -- it will be determined also by the higher lower 10,000 range, whether this will be then an accelerated growth into the Enterprise space or whether we will see this in SMB. It's a little bit too early to quote victory yet. Operator: [Operator Instructions] We now have a question from the line of Gustav Froberg from Berenberg. Gustav Froberg: Just 2, please. First, around the SMB segment as well, just talking a little bit about churn. I was hoping you could give us a little bit more color as to kind of the continued uptick there, what you think is driving it and how you view competition on the SMB side and maybe also some of the action points that you are implementing to stem that churn? And then second is just on the pipeline for 1E. I'm just wondering if you could talk us through the pipeline there as we head into next year, churn aside and maybe what needs to happen to get customers across the line and signing those deals earlier in the year as opposed to later in the year? Oliver Steil: Yes. Let me start. So SMB segment churn, as you see, I mean value churn is broadly stable. I mean we've always communicated logo churn, and we're losing customers at the lower end, price-sensitive market in our what we call remote access product, the basic license. If there's not a lot of usage on the product and the user is clearly not a professional user that uses the full reach of our product, it's hard to keep those customers. We are not reducing prices there because we believe they have the premium product, and it's all about usage and adoption. But if the customer is a very occasional user, then it's tough. So that's where we see the logo churn. But we do see a good upsell motion. We have lower churn in the higher segments, and we're improving the product significantly in these higher segments, in these professional segments. And therefore, we do see reasonably and better churn development. Now what we have been suffering from is clearly in this segment, high usage, loyal users, that has been the segment where we had these like-for-like price increases. They didn't land well with customers, and this is washing itself out. So that will be a positive churn impact, plus positive churn impact through new products, cross-sell, stickier products and also the ability to expand our footprint across more managed devices. So whenever we go from seat-based to device-based or endpoint based, there is more upsell potential as you had historically also seen in the Tensor product range. So these are the forces at work there, and that's why we see an improvement in churn coming through driven by, I would say, the bulk of the loyal heavy use customers that get new propositions. On pipeline 1E, Mark, maybe? Mark Banfield: Yes, absolutely. Yes. I mean generally, pretty strong pipeline going into 2026. We focused heavily last year on enabling all of the sales organization. And it takes some time to enable sellers to become competent on positioning and selling tech, both to new logos as well as going back to existing customers. But we have a good pipeline going into this year. In terms of acceleration, how do we land those deals earlier, a couple of things to mention there. First off, just discipline around sales process, sales methodology. We use a tried and tested sales methodology called MEDDIC. We put this into a very prescriptive sales playbook, which I mentioned in the script there, which was -- which is really designed to enable all sellers to use a very consistent sales methodology, sales process, clear stages, clear gates that we move through and really educating sellers on how to drive value at every stage of the sales process. And so that will help us drive deals quicker. It will help us drive deals to closure quicker. The other thing to mention is we've talked a lot about TeamViewer ONE and quite rightly so because it's absolutely strategically critical for us this year. And we see really great early success with this product set. And that's a product that spans both SMB and Enterprise, very specific sort of a go-to-market approach for both those segments. One of the things that's absolutely critical is if you take the Enterprise space, where traditionally, we go up against head-to-head with traditional DEX players, we are, of course, taking a very differentiated approach now to DEX because we are combining it with TeamViewer Remote. And as Oliver outlined, with the ability to take these Session Insights and turn them into autonomous capabilities at the edge is totally unique. And it's not something anyone else is able to bring to market. And so far, we've seen tremendous traction from going out and talking to customers about it, so much so that it has accelerated already sales cycles and helps us win really. I mean we mentioned some significant wins in Q4. And I think we'll continue to see that trend because it's really setting us apart from the traditional DEX competition and given us a lot of differentiation. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Oliver Steil for any closing remarks. Oliver Steil: Yes. Thank you, operator. Yes, before we close, maybe a few general comments, important to note. In 2026, I think as you've heard, we have a very clear plan. Yes, last year, we had PMI glitches for sure. Now the organization is very energized. I think everybody internally gets it that we have a very highly innovative product platform, which is also resonating very well with our customers, but also industry analysts. I think we have a very good news flow around what we've put together now, and that's obviously very encouraging. We believe that we are exceptionally well positioned to shape this emerging, call it, super cycle of autonomous IT management. On the back of the capabilities we have, unique capabilities, proprietary data sources and really the massive customer footprint and endpoint footprint and remote session footprint. So we are excited. Clearly, 2026 will be a year of a very focused execution to capture this value, which is ahead of us. But we feel good about it because we do see, as Mark just said, also very encouraging traction already across the business and across the segments. So we look forward to continue speaking to you to update you on the progress. And as always, thank you very much for joining us today. Thank you for your support and partnership.

92天前Insight Analytics约5分钟阅读

TMV.DE 2025 Q4 财报电话会议

Bisera Grubesic: Good morning, ladies and gentlemen, and welcome to TeamViewer's Q4 and Full Year '25 Earnings Call. I am Bisera Grubesic, Head of IR. Today, I am joined by our CEO, Oliver Steil; CFO, Michael Wilkens; and CRO, Mark Banfield. Oliver and Mark will run you through the quarterly business update. Michael will present Q4 and financial -- and full year financials, followed by the full year guidance and midterm targets. The presentation will be concluded by a Q&A session. Same as in the previous quarters, we will present non-IFRS pro forma top line and adjusted EBITDA performance. And also, please note that you can find the important notice and the APM disclosure on Slides 2 and 3. And I now hand it over to Oliver to kick off. Oliver Steil: Thank you, Bisera. Good morning, everyone. Also welcome from my side. Thank you for joining our call today. As the last year was clearly a year of transition after the 1E acquisition, I would like to start differently this time and give you some broader context before we dive into the results. When we look back at the year 2025, we see a lot of progress and proof that we are on the right track. But of course, there were also some challenges that require our full focus and which we continue to address in 2026 as we are firmly committed to reaccelerate top line growth. 2025 was again marked by macroeconomic difficulties and geopolitical tensions, which affected customer decision-making and made it more challenging for us to execute and operate as initially planned. And as you know, AI was one of the defining forces in 2025. At TeamViewer, we clearly view AI as a significant opportunity to drive platform growth. We progressed significantly with embedding AI into the core of our product to improve our offering. Our webinar for the Capital Markets last year November made it clear how we and our customers will benefit from AI. We are unique as we are the only company within our industry that can deliver what we do. This is based on our technology and proprietary data and the combination of TeamViewer and 1E product capabilities, which I will elaborate on later. While our Enterprise business continued to grow, we were disappointed with the SMB business as growth was slowing down. We needed to course-correct our approach regarding SMB customers and decided to suspend all short-term monetization activities like free-to-paid campaigns and pure price up to revitalize the ecosystem of noncommercial users and smaller SMB customers who are very price sensitive. Also, the 1E business performed below our expectations as integration work temporarily slowed momentum and some key talent left. With the new global sales and customer success setup under Mark's leadership, we are now focused on customer retention and rebuilding a strong pipeline, and we are already seeing early strategic wins. 2025 was clearly a pivotal year for TeamViewer. We integrated TeamViewer and 1E capabilities, invested heavily in R&D and sales and go-to-market. We launched several new products during the year. The first one, DEX Essentials, is an easy-to-implement DEX version for smaller IT teams. It was built in record time after the 1E acquisition and represents a stepping stone to our most important new product, TeamViewer ONE, our all-in digital workplace management platform, unifying DEX, AI-based remote support and RMM to create a new differentiated offering for companies of all sizes. We could see that our efforts paid off already in Q4 with a strong traction of TeamViewer ONE, highly strategic customer wins in DEX and Frontline as well as an overall continued strong TeamViewer Enterprise momentum. Let me now talk you through our full year results. We closed the year with 5% pro forma revenue growth in constant currency year-over-year. ARR grew 2% in constant currency and TeamViewer stand-alone Enterprise business was 19% up in constant currency and therefore, the main growth driver. New ARR from TeamViewer stand-alone even doubled year-over-year. The Enterprise business overall showed strength in Q4 with highly strategic wins in DEX and Frontline. At the same time, we were able to deleverage as expected and improved our net leverage ratio to 2.6x. Our profitability remained high, and we closed 2025 with a pro forma adjusted EBITDA margin slightly above 44%. 2026 will clearly be another transformational year for us. I will elaborate later more on what that means and which priority areas we will be focusing on. Let's now take a look at the regions and customer categories and how we have developed during the year. Revenue grew in constant currency across all regions in 2025. EMEA was our strongest region, contributing slightly above 50% to our revenue. The region delivered EUR 402 million in revenue, up 6% year-over-year. In the Americas, revenue reached EUR 292 million, up 3% in constant currency despite an ongoing difficult market environment in the U.S. Especially towards the end of Q4, the U.S. team brought in a few very important strategic deals, which I will show in a few minutes. APAC delivered EUR 73 million in revenue, up 4% in constant currency, driven by a good Enterprise performance. We were especially happy about a few DEX, Enterprise deals in the region. This is noteworthy as 1E didn't have any business in APAC, but TeamViewer was able to bring DEX to the region due to our dedicated APAC go-to-market efforts. Looking at our customer categories, Enterprise continued to demonstrate strength. Revenue as well as ARR grew by 11% year-over-year in constant currency. With this, the Enterprise business now contributes more than 30% to our business. In SMB, revenue grew by 2% in constant currency, while SMB ARR was down minus 1% in constant currency. As already explained, we were not satisfied with the SMB performance in 2025 and already took measures to course correct. Let us now look at the respective ARR value ranges in Enterprise and SMB. In Enterprise, all value ranges delivered double-digit growth, reflecting the enterprise momentum we saw throughout the year and especially in Q4. Notably, also the highest value range of above EUR 200,000 picked up again with the strategic DEX and Frontline wins in the quarter. In SMB, the highest value range grew by 3% year-over-year. The lower value ranges were down mid-single digits. This reflects successful upselling into richer product packages within SMB on the one hand, but also the price sensitivity of smaller customers that I already talked about. As usual, we saw net upsell from SMB to Enterprise of EUR 12 million reported, which demonstrates the effectiveness of our sales strategy to move customers up to higher value ranges. Let me now tell you a bit more about some of the Enterprise deals of Q4 that we are particularly excited about. In the fourth quarter, we won a few highly relevant large deals. I would like to highlight 3 of them, all from the U.S. First, we were able to convince a large and well-known U.S. company from the defense sector to introduce our DEX solution and use it across the vast IT landscape. For these customers, the capabilities customers -- the capabilities of our platform for real-time remediation and autonomous endpoint management were the decisive reasons to choose TeamViewer DEX. This equally applies to the second deal with Thrive, a large U.S.-based managed service provider with a growing presence across the globe. They will integrate our DEX solution into their managed services platform to enable better insights and more automation for their customers. They chose TeamViewer as we are a clear leader in the DEX space and in IT support automation and secondly, because of our ServiceNow integration. The last example I would like to highlight is the largest frontline deal in our history. It's one of the world's largest consumer food and beverage producers who will deploy our frontline picking solution across more than 350 warehouses, which also offers great potential for the future. We have been working with these customers on this project for quite some time and are very excited that we were able to close the deal now. Frontline is an integral part of our digital workplace platform as it is very much needed to digitalize physical work environments such as production lines or warehouses. We are a recognized leader in this space and have built a unique and differentiating positioning over the last years with large customers such as DHL, Coca-Cola, Nadro and now this additional win in the U.S. Some of our largest enterprise customers use TeamViewer Frontline to digitalize manual work in industrial settings. All in all, we see that whenever the requirements are complex, when critical processes are affected and real-time operations needed, we are very well positioned as we create very real business value for our customers in these environments. Let me now explain our strategic priorities for the year 2026 and beyond so that you know what to expect from us. We have a clear plan to make TeamViewer even stronger going forward. In this section, our CRO, Mark will also present a few topics. First, let me take a step back and look at what we are seeing in the market. Quite simply, IT is reaching an inflection point. Over the last decade, companies have layered tool upon tool to solve individual problems. The result is a highly complex and fragmented landscape with overlapping solutions, rising operating costs and frustrated users despite very significant investments. Too much time and money are being spent simply just keep the operations running and far too little on true innovation and value creation. At the same time, we are witnessing a secular technology shift with AI. Companies clearly recognize the potential of AI to transform IT operations, automate work and meaningfully improve productivity. But fragmented tools, manual processes and reactive operating models make it difficult to deploy AI at scale. And in many cases, AI even adds the complexity instead of reducing it. Taken together, this IT breaking point and the AI opportunity drives a fundamental market shift. Companies are now demanding simpler, more cost-efficient, AI-powered IT management. They are looking for consolidated platforms that reduce complexity, enable predictive problem solving and support the move towards autonomous operations. So the obvious next question is, who is best positioned to help customers drive this shift from reactive to predictive IT. Doing this well requires several things to come together at the same time. Seamless connectivity across very heterogeneous environments, a high-performing operational engine, proven automation capabilities, a large customer base and increasingly a unique AI advantage built on access to hard-to-get and high-quality data. And this is exactly where TeamViewer differentiates. Our core TeamViewer heritage is built on over 20 years of experience in remote support and connectivity at global scale. And with 1E, we added unmatched and proprietary capabilities for real-time remediation and autonomous endpoint management. Together, this gives us unique broad visibility into devices, applications, performance and user experience, the kind of data foundation that AI actually needs to deliver value. With TeamViewer ONE, we have deliberately unified these capabilities into a single best-of-suite platform, purpose-built to simplify complex IT environments and to drive a shift left towards proactive and predictive operations. It brings together all of TeamViewer's best-of-breed solutions and connects them through a shared data and AI layer. Every AI-powered remote support remediation generates insights that continuously reinforce our DEX-driven self-remediation engine. And that is why we believe TeamViewer is uniquely positioned to shape this market inflection. Our integrated capabilities position us at the very center of the shift towards intelligent consolidated IT operations. Looking at 2026, we have defined 4 key priorities that we will focus on in the coming months and that form building blocks for our transformation journey. We will elaborate on each of them in more details afterwards. Firstly, it is crucial to revitalize the SMB business as well as the performance of the stand-alone DEX business. Secondly, we will continue to invest organically in our market-leading product offering. Thirdly, we will accelerate global sales and go-to-market execution. And while doing all of this, we remain committed to our deleveraging goal of around 2.3x net leverage at the end of this year. We have clear actions in place to reignite revenue growth in 2026 and beyond. The first building block is the turnaround of our SMB business and the reacceleration of the 1E performance, meaning DEX for Enterprise. As we have already mentioned end of last year, we have started initiatives to revitalize the ecosystem of noncommercial users, for example, through avoiding aggressive free-to-paid campaign. Price increases will be tied to clear additional value in the product, for example, bundling our AI capabilities or automations into the remote licenses. We appointed Finn Faldi as Executive VP, Global Inside Sales to strengthen the global sales organization. And on top of that, we have set up sales and customer-facing organizations more efficiently and according to best practices with new sales and AI tech stack to ensure more focus and improved customer retention. This goes together with better onboarding and customer support throughout the entire life cycle to unlock potential and create value. Of course, also TeamViewer ONE will play a key role in retention and upselling strategies and represents a key strategic differentiator against competing RMM products. For 1E and DEX, we've also identified and implemented measures, in general, an enhanced product focus on the core DEX and automation use cases to release features the customers were waiting for. We enabled our global enterprise sales force to sell DEX, and we have improved relationships with long-standing 1E customers through a comprehensive customer success management framework and a structured customer advisory board program. Again, the TeamViewer ONE platform and our AEM proposition play an important role in this context, and Mark and I will elaborate on this in a few minutes. Now let's have a look at our ongoing organic product development. As part of these organic investments, I would like to show you again how we position our product offering in the market. All our different solutions are leaders in their respective space, Tensor and Remote in remote access and support, DEX in digital employee experience and Frontline in the connected workforce space. We will continue to improve them as stand-alone products. Additionally, through the 1E acquisition, we were able to successfully position us at the forefront of the emerging digital workplace and autonomous endpoint management categories, which we will naturally extend into frontline workplaces. With the unique combination of TeamViewer and 1E technology within the TeamViewer ONE platform, we are able to deliver an industry-leading one-stop shop for IT operations and AEM, covering the full spectrum from proactive auto remediation capabilities to remote expert support. Customers across the globe understand and embrace the value of DEX and the strategic road map towards more automation and ultimately autonomous endpoint management. All of this is powered by AI as this is horizontally embedded across the entire product portfolio and at the core of our offering. We will continue to invest organically in AI and develop more agents that can leverage the unique proprietary data we have access to. Our AI products saw good and quick adoption since the introduction of the growing suite of AI-powered features in summer 2025 as well as the announcement of TeamViewer's new intelligent agent, Tia at Microsoft Ignite in November. At the beginning of February, more than 13,000 customers had already opted in for the AI Session Insights feature and had used it to summarize more than 600,000 TeamViewer sessions. To illustrate our unique position in the autonomous endpoint management space, I would like to quickly explain again how the complementary capabilities of DEX and remote access and support work together and strengthen each other. In an ideal scenario, a new and until now unsolved digital friction occurs on one of the devices inside a company's IT landscape. A human expert will now take care and use remote support capabilities to look into the issue. Obviously, the expert will appreciate AI supporting him or her on root cause analysis and remediation of the issue. The session will be captured and automatically summarized by AI to make it available as a foundation for the future and increase intelligence across support operations. At the same time, our DEX technology is constantly analyzing device and system data in real time. This is matched against the DEX insights library with preconfigured automation for frequent issues. Closing the loop, we are able to build new automations out of the previously generated session summaries resulting from expert support. And this loop is constantly increasing the amount of automations across the support operations. Fixing an issue once means it is then fixed forever and can be executed autonomously at scale. With this, I'd like to hand over to Mark, who will talk about TeamViewer ONE as well as our go-to-market strategy. Mark Banfield: Thanks, Oliver, and a warm welcome from me, too. TeamViewer ONE, as we said 2 weeks ago at our global sales kickoff in Munich is clearly our #1. It's a unified digital workplace platform to enable autonomous IT and endpoint management. It combines all of our leading solutions and capabilities, remote access and support, DEX, RMM, AI at the core, and we are the only vendor who can unify this range of capabilities in a single platform. We will offer it to all our existing as well as all of our new customers across all geographies, all industries and across all customer categories as it is equally compelling for both SMBs, Enterprises as well as managed service providers. It adds enormous value to our customers as it unifies all IT operations under a single platform. This makes it our #1 go-to product, go-to-market product for this year and beyond. Of course, we will continue to sell our stand-alone solutions, but wherever there is a case of TeamViewer ONE, we will go for that as it offers endpoint pricing and therefore, financial upside, but also higher stickiness as we will become much more relevant to our customers. We have the right ingredients, the right products, the right proprietary data, the right customer base and an enabled global sales force to sell this leading solution and win in this space. Only recently in December, we released a major product update to TeamViewer ONE with a very compelling design and user experience. This gave another push to marketing and sales to focus on TeamViewer ONE, and we already see the first results. Now let me wrap up this section by talking about our go-to-market strategy. Our first focus area is to retain and grow customers. We need to set strong focus on churn prevention and work across sales and all customer-facing departments in lockstep. Of course, Enterprise customers need to be treated very differently than SMB ones. But overall, we need to reduce churn and instead drive demonstrable outcomes for our customers, satisfying them and using the momentum for upsell and cross-selling as we migrate them to TeamViewer. As I already outlined on the previous page, TeamViewer ONE is the leading go-to-market product for our sales force. If there is no direct entry point to TeamViewer ONE, we will go with the most suitable stand-alone solution and follow up with a very clear land and expand strategy. For all scenarios, we have developed a very comprehensive global sales playbook, and we have trained our entire sales force on this at the recent global sales kickoff. The third set of measures that will move the needle this year is ruthless prioritization of leading KPIs and a rigorous data-driven approach to decision-making. We will continue tracking and managing our pipeline as well as sales productivity and focus on operational excellence everywhere. This is not rocket science, but gives us a clear path to a strong global market -- global go-to-market execution. With that, I'd like to hand over to Michael for the financial section. Michael Wilkens: Thank you, Oliver and Mark, and good morning, everyone, from my side. Let's look at TeamViewer full year 2025 results on the next slide, please. In 2025, TeamViewer delivered a solid financial performance with revenue reaching approximately EUR 768 million, reflecting a 5% year-over-year increase in constant currency. This growth was broad-based with all regions contributing. Revenue landed within our guided range, aligned with the FX assumptions communicated at Q3 2025. The annual recurring revenue grew by 2% year-over-year in constant currency to EUR 760 million, meeting the updated guidance range also issued in October. Profitability further strengthened in 2025. Our pro forma adjusted EBITDA rose by 8% year-over-year to around EUR 340 million. We achieved again an industry-leading adjusted EBITDA margin of 44.3%, representing a 2 percentage point improvement versus 2024. Adjusted basic EPS also increased by a strong 17% year-over-year. We also continued to deleverage as planned. The pro forma net leverage ratio improved to 2.6x, down from 2.8x in Q3, fully in line with our targeted trajectory. Now let's look at the details of our Q4 2025 results. Pro forma revenue in Q4 increased by 2% year-over-year in constant currency, reaching approximately EUR 195 million. This performance reflects the continued transformation in the SMB segment and the expected softer revenue contribution from 1E. TeamViewer stand-alone delivered a strong quarter with revenue of EUR 179 million, up 3% year-over-year in constant currency. And the ARR grew by 2% year-over-year in constant currency to EUR 760 million. Profitability remained strong in Q4 with an adjusted EBITDA margin of 45%, underscoring the strength of our business model. Let us continue with our Enterprise business on Slide 22, please. Enterprise continued to deliver strong momentum, reinforcing the resilience of TeamViewer's core business. Enterprise ARR grew by 11% year-over-year in constant currency, reaching EUR 241 million now. As I mentioned earlier, TeamViewer stand-alone Enterprise had an excellent quarter with ARR increasing 90% year-over-year in constant currency. Growth was again broad-based across all regions, supported by a particularly resilient EMEA performance. As Oliver highlighted, the positive trajectory was bolstered by several notable new logo wins in Q4, including the largest TeamViewer frontline deal ever signed, contributing a mid-single-digit million ARR in the quarter. As a result, the new ARR doubled year-over-year in Q4 2025. 1E also showed encouraging progress. Q4 2025 marked a turnaround quarter with sequential ARR growth returning. This momentum was driven by 2 highly strategic DEX, Enterprise wins, together representing a total contract value of approximately EUR 10 million or around EUR 3 million in ARR. Our Enterprise customer base continued to expand, reaching 5,262 customers by the end of the fourth quarter. The pro forma Enterprise ASP increased to around EUR 46,000 per customer, reflecting continued success in delivering higher-value solutions across a growing customer set. The Enterprise net retention rate was 96% in Q4 on a constant currency basis. Adjusted for the upsell from SMB customers during the period, the Enterprise NRR reached 99%. This NRR trend preliminarily reflects a subdued ARR expansion among existing customers, lower SMB to Enterprise upsell and the stand-alone performance of 1E, combined with a higher share of new ARR in the quarter that is, of course, not captured in the NRR calculation. We have implemented measures designed to drive Enterprise NRR above the 100% mark in the midterm. Let us now move to our SMB business on Slide 23. Pro forma SMB revenue reached EUR 131 million in Q4, increasing 1% year-over-year in constant currency. The SMB ARR declined by 1% year-over-year to EUR 519 million. This development was fully in line with internal expectations and reflects 2 key dynamics: continued successful upsell of SMB customers into Enterprise and the deliberate SMB cost correction measures, which we introduced in the third quarter. These measures include discontinuing short-term monetization initiatives and price increases. As outlined in Q3, this strategy is focused on reinvigorating product usage across both the free user ecosystem and the broader SMB base. Encouragingly, the free user ecosystem is already demonstrating early signs of stabilization. The actions taken in Q3 2025 have a negative impact on ARR and the related KPIs shown on this slide. While SMB customer churn increased, value churn remained broadly stable quarter-over-quarter. As we work to revitalize the SMB business and to establish the foundation for sustainable growth, we expect SMB KPIs to remain soft through the first half of 2026. End of 2025, we served approximately 631,000 SMB customers. Our SMB ASP grew by 2% also year-over-year to reach EUR 822, underscoring the resilience of our monetization model. Let us now turn to our cost base on the next slide. For the full year 2025, our pro forma adjusted EBITDA margin was very strong at 44.3%, representing a 2 percentage point improvement compared to 2024. This performance reflects our disciplined cost management even as we continue to invest in growth and innovation across our product portfolio. Overall, pro forma recurring costs remained broadly stable throughout the year. Cost of goods sold increased by 5% year-over-year, driven by our ongoing customer platform investments and by development support for our frontline projects. Sales expenses rose by 8% year-over-year as we expanded our sales force and strengthened our enterprise technology stack to advance our transformation into a fully data-driven sales organization. Marketing costs decreased by 15% year-over-year, primarily due to optimized sponsorship spend. At the same time, we continue to invest in targeted branding initiatives and in the launch of new products. In total, marketing costs represented 13% of revenue, down from 16% in 2024. And as a result, overall sales and marketing efficiency improved meaningfully. In 2026, we will maintain a clear focus on driving further efficiency gains, sharpening our go-to-market execution and scaling data-driven demand generation. R&D expenses increased by 7% year-over-year, reflecting significant investments in product innovation, including our TeamViewer AI offering and the TeamViewer ONE platform. These investments form the foundation of our AEM strategy and position us strongly for future growth. G&A expenses developed in line with revenue, demonstrating consistent cost discipline. Other expenses amounted to around EUR 7 million for the year. Let us now turn to net income and EPS development on the next slide, please. Pro forma adjusted earnings per share was EUR 1.23 in 2025, a strong increase of 17% year-over-year. Our strong profitability and our continued focus on optimizing operating expenses supported this performance. This was partially offset by higher total interest expenses, which amounts to EUR 40 million in 2025, up EUR 22 million year-over-year, which is primarily driven by the financing of the 1E transaction. The FX result reflects negative translation effects related to an intercompany loan as required under IFRS. With this, let's move on to cash flow on Slide 26. In '25, adjusted levered free cash flow amounted to EUR 208 million after adjusting for nonrecurring items. This represents a cash conversion of 61% and demonstrates the continued strength of our underlying business model. Cash flow for the year was influenced by several factors, including moderate top line growth, FX headwinds and higher interest payments related to the 1E acquisition. In addition, cash flow reflected the acquisition-related payments for 1E and the settlement of a legal dispute in the first quarter of 2025. These effects were partly offset by lower tax payments resulting from changes in our tax scheme, which had a positive impact on cash flow in 2025. Looking ahead, we expect cash taxes to increase from 2026 onwards and return to normalized levels despite some positive one-off support because of the 1E deal structure. With that, let me now provide a brief update on our financing on Slide 27. We continued to deleverage in line with our commitments following the 1E acquisition. Our pro forma net leverage ratio improved further to 2.6x, demonstrating our clear focus on balance sheet strength and disciplined capital allocation management. At year-end, cash and cash equivalents amounted to approximately EUR 42 million and net debt was EUR 901 million. As mentioned in Q3, we also successfully refinanced EUR 30 million of the EUR 175 million bridge loan through a private placement, further strengthening our financial position. Looking ahead to 2026, reducing leverage remains our top financial priority. We reiterate our commitment to continued deleveraging and expect to reach a net leverage ratio of around 2 to 3x by year-end in 2026, subject, of course, to FX movements. At the same time, we will continue to invest organically in the areas that matter most, particularly R&D. These investments are essential to drive sustainable long-term growth and continued innovation across our product portfolio and our AEM platform. With that, let me now move on to our full year 2026 guidance and to our midterm targets on the next slide. Turning to our outlook for 2026. We expect another year of disciplined execution and continued operational progress. Our focus remains firmly on driving sustainable profitable growth while advancing our strategic road map. For the full year 2026, we anticipate a constant currency revenue growth in the range of 0% to 3% in full alignment with the lower end of our preliminary outlook for 2026, which we provided already back in October 2025. The guidance reflects the cost correction SMB as well as the seasonal ramp of Enterprise later in the year. Please also note that Q1 will be a soft start into 2026 as we face a few large but fully anticipated one-off churn effects in 1E. These effects are unavoidable, known and confined to Q1. We also expect to deliver another year of strong profitability. We guide our adjusted EBITDA margin again at industry-leading levels of around 43%. This is supported by continued cost discipline, operational efficiencies and the benefits of our increasingly integrated product and platform strategy. At the same time, we will continue to invest in the areas that drive long-term value creation, particularly R&D to capitalize on the significant opportunities in front of us. In addition, we remain fully committed to further deleveraging. As mentioned, we expect to reach a net leverage ratio of around 2.3x by year-end 2026, assuming FX remains stable. Strengthening our balance sheet is one of our core priorities, and we will continue to manage capital allocation with discipline. Finally, for our midterm outlook, we expect a reacceleration of growth into the mid- to high single-digit percentage range. This outlook reflects the inherent strength of our business model, supported by our focus on revenue expansion, consistently strong margins and robust cash flow generation. With that, let me walk you through the details of our '26 guidance and the midterm targets on the next slide. We guide revenue in constant currency, but reported figures will naturally move with FX. To keep the transparency high, we will show the expected quarterly FX impact on revenue growth and separately highlight the FX effect from releasing older deferred revenue to avoid systematic over or underestimation of these impacts. This helps to distinguish true operating performance from currency noise. Based on the 31st of December 2025 spot rates, the FX reduces Q1 2026 growth by 3.1 percentage points and full year 2026 by 2.8 percentage points with U.S. dollar as our largest exposure. Before we hand over back to the operator for Q&A, let me briefly sum up full year '25 and our outlook. 2025 was clearly a challenging year. Yet despite this backdrop, we delivered solid revenue growth and outstanding profitability. At the same time, we made substantial operational progress that strengthens our foundation for sustainable long-term growth. Looking ahead, 2026 will be another transitional year, but with our guidance and the measures already implemented, I'm very confident in our trajectory. We have the right priorities, the right focus and a clear path to unlock the next stage of our performance. With this, I would now like to hand the call back to the operator to open the Q&A. Operator: [Operator Instructions] The first question comes from the line of George Webb from Morgan Stanley. George Webb: I want to kick off with a couple of financial questions. I guess the first one, as we think to that FY '26 guidance range on revenues for 0% to 3% in constant currencies compared to that kind of 2% exit ARR growth level, it's quite a wide range on where ARR growth could exit in FY '26. So perhaps could you add a bit more color on how you think about that shape of growth in 2026? You've mentioned, Michael, kind of expect that softer Q1 on the 1E churn factors. If you could also kind of just highlight maybe the size of that 1Q headwind, that would be helpful. And then secondly, around levered free cash flow, you've kind of flagged the EUR 181 million you delivered in FY '25 overall pretty healthy EBITDA development will be quite muted year-over-year in '26. You kind of flagged that EUR 12 million one-off headwind you still had in '25. Are there any kind of other swing factors for free cash flow we should think about in 2026 or your ability to grow that EUR 181 million year-over-year? Michael Wilkens: Yes. First one on ARR, you're spot on. So the 1E part is in the vicinity of EUR 8 million of churn, more or less the same like in 2024 in Q1, always a tough quarter. But what we need to keep in mind, last year, we had the positive swing against this 1E churn in the SMB space of TeamViewer with price ups and commercial blocker, and this is de facto gone this year as we have the tougher comp. So this is why especially the ARR in Q1 and maybe partially in Q2 will be a little bit muted. But the important part is that ARR by year-end will be significantly higher than last year. So we will grow from there. That's the name of the game. The problem then starts, of course, with the revenue, which is obviously lagging, and this is also why we took the 0% to 3% guidance, which is fully in line with what we did in the earlier outlook. So that was number one. On the cash flow, indeed, a couple of swing factors. First, we are always a little bit prudent in the context also from the EBITDA guidance, you see the around 43%, which is more or less the same as last year. But with the top line range of revenue, then you have de facto the outcome on the EBITDA, which is one very decisive factor. And then there are 2 others. Interest should improve a little bit year-over-year in '26 vis-a-vis '25, rough cut EUR 5 million or so. And we expect a little bit of a positive impact on cash taxes based on the structure of the 1E deal, rough cut EUR 10 million, but that will be de facto balanced with the normal uptick of the normal cash taxes, which is actually a good one to have. So all in all, in the vicinity, cash flow, let's say, again, EUR 190 million to EUR 210 million. So broadly stable in absolute and also in cash conversion terms. Operator: The next question comes from the line of Victor Cheng from Bank of America. Hin Fung Cheng: Maybe to start, can you talk a bit about the DEX market? Obviously, there are a lot of industry reports out there showing kind of good growth. But what are you seeing with competitors? Are they maybe slowing down a bit in growth as well? What are you seeing more broadly in that field? And then 2 other quick ones. On the medium-term outlook, you said maintaining the current margins. I suppose that's referring to the 43% for '26. And then lastly, maybe any updates on the metrics for some of the newly launched products like DEX Essentials and Tia? Any updates on kind of usage and momentum there, please? Michael Wilkens: Yes, Victor, let me take your second one first. You're spot on. It's in context of the 43% out of -- for '26, which we then also confirm for the outer years. Oliver Steil: Mark, do you want to take the DEX market? Mark Banfield: Sure. Okay, sure. Look, I think overall, the DEX market continues to show strong tailwinds. I mean it's a growing market. It's -- there's clearly -- there is a movement within the IT market to invest in DEX as the kind of the next sort of platform for end-user computing. Some of our challenges last year, I think we've talked about quite a lot as they were specific challenges around the integration of the businesses. Q4 showed some real highlights actually. I mean the deals were mentioned there by Oliver, a couple of significant wins. These were head-to-head competitive wins and there were many more than that as well. So we're starting to see nice wins, larger wins. We're also starting to see TeamViewer customers start to adopt DEX, which we said at the time of the transaction would take some time to build that pipeline, but we started to see those deals convert in Q4. So I think we feel much better going into 2026. But yes, overall, I think the DEX market is continuing to accelerate. Oliver Steil: Yes. Maybe I'll take the last question. Metric on new products, obviously important and something we track. Important to say, Victor, that we launched these products all around last year, and it takes time to kind of mobilize -- enable and mobilize the sales force to really take this on and move this forward. And especially on TeamViewer ONE, this is a very new platform approach as we had laid out. So we had to connect different capabilities from 1E and TeamViewer into one place, make the user flow easy, easy onboarding and easy to add, manage devices and the like. So that took a while. That release was only done beginning of December. And what was really good to see that then in December, in the year-end business, we really saw a good number of TeamViewer ONE deals, although we hadn't enabled the whole organization. So that was very positive. Then obviously, year-end cleaning the pipeline and then moving into new year. And then we had the sales kickoff just 10 days ago. Super high excitement across the sales organization inside sales and enterprise. And why is that? TeamViewer ONE is selling and has been selling and is increasing to sale day by day. So there's transactions every day. The proposition lands with customers. Our sellers really feel this is a very competitive proposition, a clear step change compared to what we offered earlier in the marketplace, so confined remote support and some additions with partner products. But now it's really our own product bundle, and we see increase in billings and ARR additions really on a weekly basis. So very exciting. We will come with more color around it as we go through the year for sure. But this is starting to be meaningful on a daily basis really, especially on the TeamViewer ONE side. On AI, focus is on adoption still. As I mentioned, well above 600,000 sessions now have been done, have been used. There's customers opting into this. We will bundle it even more into the product. TeamViewer ONE will be a key catalyst for that because it is a built-in functionality in this product. We will also think about pricing and monetizing throughout the year. So we continue to see very good progression there in line with what we had anticipated when we did the AI webinar. Operator: We now have a question from the line of Alice Jennings from Barclays. Alice Jennings: So my first one is just there's a lot of AI-driven headlines in the news at the moment where we're seeing like really rapid innovation and lots of new products in the market. You've mentioned kind of already how you see the competitive environment for DEX specifically. But just wondering more generally, how do you see the competitive environment for endpoint management evolving? And are you seeing kind of any change in customer behavior as a result of these headlines? And then my second question is just on the medium-term guidance. Do -- can you tell us anything about your expectations for when you expect to be in the mid- to high single-digit range? Is this something that's realistic for 2027? Or is this a little bit further down the line? Oliver Steil: Yes. Let me start with question number one. AI drives the headlines, 100%. I think there's a lot of discussion around how customers' buying behavior will change. Obviously, we see that. As I said already in my presentation, customers want automation. They want to use AI. They want autonomous IT. They want simplicity. They want platform approach. They know that more is possible using AI, and that's why it's so important to build AI into the product range. This is not a stand-alone on the side AI gimmick, if I may say, but it's really a functionality and a capability across the product range. So taking what we see in sessions, learning from it, synthesizing it and making it available in the DEX automation library. That is the key thing which we're building and what customers really expect. We also believe that what you need is access to data, proprietary data, for sure, and we have that. Out of our 630,000 customers, you might call it an unfair advantage because we come there with this massive customer base and the millions of sessions that we're doing every month that we can tap into and leverage to build inside. So that's really important. We also believe what gets lost in the discussion about AI and application software risks is clearly that it depends a lot on the layer you are in. We are an infrastructure piece. We are connecting very heterogeneous environments. We're doing end-to-end solutions at very high security, and this is not easily replicated and being built by AI code in a few days or so. So this is a complex thing. It's touching the heart of operations. It's at the core of our customer, highly security relevant. And that's where we built our experience over the years, and that's why we are so strongly positioned in this because customers take very deliberate choices and what they try and what they not try and how they want to move forward in the use of AI. So we see that as clearly a tailwind for our product and our positioning in the market. Midterm outlook? Michael Wilkens: Yes. Midterm outlook, let's remind ourselves the distinction between the ARR and the revenues and the revenues, the lagging KPIs. So on ARR, we expect that already to uptick in '27 after '26, which is the first uptake important. But on the revenue, because it's lagging, it's more or less an inch-by-inch kind of thing. So it's mid-single digit and then rather in the outer years, '29, higher single digit. This is how we need to think about it. Operator: The next question comes from the line of Ben Castillo-Bernaus from BNP Paribas. Ben Castillo-Bernaus: Firstly, just on the SMB part of the business. I mean could you help us with what might be a realistic outcome here for 2026 if we're exiting at slightly negative ARR growth. We're digesting no price increases, commercial blocker. How can you help us think about that? How do we square that decision to, I guess, stop those campaigns, again, no pricing, we're seeing churn increasing. But presumably, we need to return to some growth here. And if we look at that sort of midterm outlook, in your internal assumptions, what does that SMB business need to do to help underwrite that? Michael Wilkens: Yes. I can start also with the ingredients. So first, full year versus full year, so minus 1% last year, '25, we expect the same vicinity in the end of '26, so around a minus 1 maybe. So kind of stabilizing in the full year. And indeed, especially Q1 and Q2 will be a little bit under pressure because of the tough comp. And the numbers that we need to climb is EUR 20 million versus last year, price ups and commercial blocker. And this needs a little bit of time. Oliver laid that out, 2nd of December, a strong launch of TeamViewer ONE, and this is firing on all cylinders, basic, advanced and enterprise, but especially basic and advanced are very important ingredients. And whenever we would do price ups, then clearly in a more-for-more logic. So where the customer actually also really gains new product features, new services and then gets the offer of a price up where they can also say, no, thank you. So that's one part of the equation, very important. And the second part of the equation in order to stabilize it throughout the second half of the year is, of course, the expected positive churn impact. Remember, we were faced with churn in the SMB business. And with the stop of the, let's call it, rather unfriendly price ups in commercial blocker, this negative churn effect should wash out over time and customers will come back and will stay, but this is rather expected for the second half of the year. So this gives a little bit of an outlook for '26. You asked also how we think further. So if we stabilize, of course, with the very strong injection of the TeamViewer ONE platform autonomous endpoint management across all business lines, we expect then from '27 onwards, obviously also a slight uptick in growth back in the SMB business. That's more or less the function. Oliver Steil: Yes. Maybe just to add, if you look at the TeamViewer ONE, it's a very central proposition for SMBs. It's the best of suite offering management platform, as Mark laid out and described. Now when we sell into SMBs, what we see at the moment is with kind of TeamViewer ONE advanced, this is a few thousand euro most of the time as a ticket size. Ultimately, this will be very important to drive SMB growth potentially in a way. But quite often, we also see ticket sizes than EUR 14,000, EUR 15,000, EUR 16,000. So by doing so, the valuable SMB customers move into enterprise in just one go. And that will also determine how much of the growth from TeamViewer ONE will actually land in SMB or in Enterprise. But obviously, we will be very explicit about how this is working because it's fundamentally obviously also a very good thing to move customers into the double-digit or lower teens euro range and have endpoint-based pricing, which is much stickier, much stickier and has more growth potential. So that's what in play here, and that will impact the SMB outcome as well. Ben Castillo-Bernaus: That's very helpful. Can I just squeeze in a follow-up just around the Enterprise business. You mentioned that the net retention rate, you hope that gets back above 100% over the midterm. I just wondered what's holding that back from happening sort of towards the latter part of 2026, given the new TeamViewer ONE solutions, the 1E integration, the upsell capabilities? What sort of time frame would you consider that to be? Michael Wilkens: Yes. Clearly, cautiousness. So this is -- this was our learning of 2025, to be a little bit more caution. And then, of course, the tougher situation in Q1 or the muted or softer Q1 index, we need to work against that. Operator: The next question comes from the line of Deepshikha Agarwal from Goldman Sachs. Deepshikha Agarwal: This one is more on SMB as in terms of just trying to understand like we have -- you have put out the strategy around like, again, normalizing the price increases, et cetera. So how should we be thinking about how SMB is going to track over the course of FY '26? And more -- like how will that be contributing to that growth improving to mid- to high single digits? So that will be the first one. And second one is more on the cash conversion. Now for this year, it's indicated to be roughly similar to what we saw in FY '25. Once the growth sort of starts picking up better and the margin sort of again, normalizes and it stays at a certain level, how should we be thinking about a more normalized level of cash conversion? Michael Wilkens: Yes. Let me take the last one first. Cash flow, indeed, stable in relative and absolute terms in '26 over '25. And you should de facto think in the same vicinity also in the outer years, maybe slightly growing the cash conversion from the 60% ranges into 63% or so. But let's talk about that when we get there, once we get there. On the SMB question, I'm not sure whether I just explained that, but let me do that again and then you come with a follow-up question. So Q1, Q2, SMB should be rather more muted, so i.e., negative based on all of the comp and what we explained from -- also from the churn effects. And from that moment onwards, SMB should clearly accelerate and go really back into sequential growth in Q3 and Q4, which then would mean that we are back into kind of stable [ month ] around minus 1% for the full year of '26. So that's the name of the game. With all what is kicking in, with all what we have had innovation features, platform, autonomous endpoint, topics at play, also what Oliver mentioned, from '27 onwards, SMB should be rather in the vicinity of 0, which would be then a slight growth, maybe even 1%. But it's also -- it will be determined also by the higher lower 10,000 range, whether this will be then an accelerated growth into the Enterprise space or whether we will see this in SMB. It's a little bit too early to quote victory yet. Operator: [Operator Instructions] We now have a question from the line of Gustav Froberg from Berenberg. Gustav Froberg: Just 2, please. First, around the SMB segment as well, just talking a little bit about churn. I was hoping you could give us a little bit more color as to kind of the continued uptick there, what you think is driving it and how you view competition on the SMB side and maybe also some of the action points that you are implementing to stem that churn? And then second is just on the pipeline for 1E. I'm just wondering if you could talk us through the pipeline there as we head into next year, churn aside and maybe what needs to happen to get customers across the line and signing those deals earlier in the year as opposed to later in the year? Oliver Steil: Yes. Let me start. So SMB segment churn, as you see, I mean value churn is broadly stable. I mean we've always communicated logo churn, and we're losing customers at the lower end, price-sensitive market in our what we call remote access product, the basic license. If there's not a lot of usage on the product and the user is clearly not a professional user that uses the full reach of our product, it's hard to keep those customers. We are not reducing prices there because we believe they have the premium product, and it's all about usage and adoption. But if the customer is a very occasional user, then it's tough. So that's where we see the logo churn. But we do see a good upsell motion. We have lower churn in the higher segments, and we're improving the product significantly in these higher segments, in these professional segments. And therefore, we do see reasonably and better churn development. Now what we have been suffering from is clearly in this segment, high usage, loyal users, that has been the segment where we had these like-for-like price increases. They didn't land well with customers, and this is washing itself out. So that will be a positive churn impact, plus positive churn impact through new products, cross-sell, stickier products and also the ability to expand our footprint across more managed devices. So whenever we go from seat-based to device-based or endpoint based, there is more upsell potential as you had historically also seen in the Tensor product range. So these are the forces at work there, and that's why we see an improvement in churn coming through driven by, I would say, the bulk of the loyal heavy use customers that get new propositions. On pipeline 1E, Mark, maybe? Mark Banfield: Yes, absolutely. Yes. I mean generally, pretty strong pipeline going into 2026. We focused heavily last year on enabling all of the sales organization. And it takes some time to enable sellers to become competent on positioning and selling tech, both to new logos as well as going back to existing customers. But we have a good pipeline going into this year. In terms of acceleration, how do we land those deals earlier, a couple of things to mention there. First off, just discipline around sales process, sales methodology. We use a tried and tested sales methodology called MEDDIC. We put this into a very prescriptive sales playbook, which I mentioned in the script there, which was -- which is really designed to enable all sellers to use a very consistent sales methodology, sales process, clear stages, clear gates that we move through and really educating sellers on how to drive value at every stage of the sales process. And so that will help us drive deals quicker. It will help us drive deals to closure quicker. The other thing to mention is we've talked a lot about TeamViewer ONE and quite rightly so because it's absolutely strategically critical for us this year. And we see really great early success with this product set. And that's a product that spans both SMB and Enterprise, very specific sort of a go-to-market approach for both those segments. One of the things that's absolutely critical is if you take the Enterprise space, where traditionally, we go up against head-to-head with traditional DEX players, we are, of course, taking a very differentiated approach now to DEX because we are combining it with TeamViewer Remote. And as Oliver outlined, with the ability to take these Session Insights and turn them into autonomous capabilities at the edge is totally unique. And it's not something anyone else is able to bring to market. And so far, we've seen tremendous traction from going out and talking to customers about it, so much so that it has accelerated already sales cycles and helps us win really. I mean we mentioned some significant wins in Q4. And I think we'll continue to see that trend because it's really setting us apart from the traditional DEX competition and given us a lot of differentiation. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Oliver Steil for any closing remarks. Oliver Steil: Yes. Thank you, operator. Yes, before we close, maybe a few general comments, important to note. In 2026, I think as you've heard, we have a very clear plan. Yes, last year, we had PMI glitches for sure. Now the organization is very energized. I think everybody internally gets it that we have a very highly innovative product platform, which is also resonating very well with our customers, but also industry analysts. I think we have a very good news flow around what we've put together now, and that's obviously very encouraging. We believe that we are exceptionally well positioned to shape this emerging, call it, super cycle of autonomous IT management. On the back of the capabilities we have, unique capabilities, proprietary data sources and really the massive customer footprint and endpoint footprint and remote session footprint. So we are excited. Clearly, 2026 will be a year of a very focused execution to capture this value, which is ahead of us. But we feel good about it because we do see, as Mark just said, also very encouraging traction already across the business and across the segments. So we look forward to continue speaking to you to update you on the progress. And as always, thank you very much for joining us today. Thank you for your support and partnership.

92天前Insight Analytics约5分钟阅读

FISV 2025 Q4 财报电话会议

Operator: Welcome to Fiserv's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I will turn the call over to Walter Pritchard, Senior Vice President and Head of Investor Relations at Fiserv. Walter Pritchard: Thank you, and good morning. With me on the call today are Mike Lyons, our Chief Executive Officer; and Paul Todd, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com. Please refer to these materials for an explanation of the non-GAAP financial measures discussed on this call along with the reconciliation of those measures to the nearest applicable GAAP measures. Unless otherwise stated, performance references are year-over-year comparisons. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. You should refer to our earnings release for a discussion of these risk factors. And now I will turn the call over to Mike. Michael Lyons: Thank you, Walter, and welcome aboard. Good morning, everyone, and thank you for joining us. This quarter marked a decisive and positive step for building the foundation to consistently deliver on the pillars that have long distinguished Fiserv. These include exceptional client service, world-class execution, value-added technology and cutting-edge innovation. While there remains significant work ahead of us, we are clear on our strategy, laser-focused on our priorities, and are optimistic about our multi-quarter path towards delivering strong, sustainable operating performance and ultimately realizing Fiserv's full potential. While Paul will review our financial performance in detail, I would note that our Q4 results demonstrated stable broad-based business activity trends, and there were no major surprises relative to the outlook that we provided in October and that our 2026 guidance is in line with the preliminary view from Q3. As we told you in October, our headline results are below our go-forward expectations, and they will remain that way for the first half of 2026 as we invest in the franchise and lap a higher mix of nonrecurring revenue. Importantly, we continue to add senior talent, complementing the high-quality team that was in place when I came aboard. In addition to Paul, Walter and Dhivya, we have added leaders in technology, Clover and merchant product and sales, among other areas. Overall, I'm encouraged by the team's energy and pleased that our overall employee retention is up with retention of our top talent reaching a multiyear high in 2025. With the team in place and focused, we were firmly in execution mode in Q4, taking decisive actions across the One Fiserv plan. One Fiserv is at the foundation of our strategy and firmly integrated into our 2026 plan. With this in mind, I want to provide a brief update on the progress we have made across each of the 5 strategic areas of the plan. Operating with a client-first mindset, building the preeminent small business operating platform through Clover, creating differentiated, innovative platforms in finance and commerce, delivering operational excellence and efficiency enabled by AI and finally, employing disciplined capital allocation for the long term. Under our client-first pillar, we made targeted investments to better align around client needs, especially in our Financial Solutions business. Over time, we expect this shift to enhance client satisfaction and ultimately drive sustainable growth in average revenue per customer, which has been a hallmark of Fiserv. The actions we took this quarter included broadly increasing client-facing resources, revamping and improving our approach to working with consultants, including closing the Smith transaction. Delivering against the first phase of product development-related commitments we made at our Fiserv Form client event. Leveraging innovation, including AI trained on our DNA core to streamline product upgrades and implementations and accelerating our investment to modernize our technology platforms, including additional multisite resiliency measures across most of our consumer-facing payment platforms. We remain on track to complete this effort by mid-2026. We are encouraged by the early positive client response to these efforts and will be steadfast in our focus on delivering great service and value-added solutions to our clients. And to this point, corporate sales were up solidly in Q4 versus last year and the prior quarter, with positive contributions from both the Merchant and Financial Solutions segments. Some of the more meaningful wins included new and expansion Commerce Hub agreements with a leading medical device company, a large specialty retail company and AT&T, among others. An expansion of our relationship with California-based Mechanics Bancorp now with over $22 billion in assets, which selected Fiserv's core and added our XD digital platform following their merger with HomeStreet Bank. On Optis, we signed a multiyear extension with our client Atlanticus, a leading issuer, which includes converting the accounts they recently added with their Mercury acquisition to Fiserv. A new core deal with Republic Bank & Trust Company, a Kentucky-based $7 billion bank moving to DNA, enabling the bank to give their clients faster access to deposited funds through real-time continuous processing and enabling real-time account alerts and an expansion of our credit card relationship with Robinhood to add debit processing. Turning to our second pillar, Q4 saw continued momentum toward establishing Clover as the preeminent small business operating platform. In vertical markets, we remain on track to launch our PracticePay health care initiative and our professional services offering this quarter. In restaurant, we continue to see market share gains as we consolidate a number of strong assets to expand our offering under the Clover Hospitality brand, and achieve economies of scale. As part of this, we are rolling out new capabilities, including multi-location support, AI-generated menus, streamlined delivery enrollment checklist dining and new diner engagement tools. Horizontally, we are seeing strong early success in our workforce management partnership with Homebase, and we continued our build-out with ADP, a partnership that is already producing strong sales collaboration and that has significant potential over time. In December, we integrated CashFlow Central, our transformative AR/AP product directly into ADP's RUN platform, allowing small businesses to manage their cash flow more effectively. And finally, on the horizontal front. Clover Capital grew 30% in 2025 in North America as we continue to see significant upside with this high-value client offering, where we only have mid-single-digit penetration of our eligible client base today. Internationally, our launch in Brazil continues to be highly successful with results tracking ahead of plan and reflecting the importance of partnering with market-leading financial institutions like Caixa, Canada grew strongly in 2025 and should further accelerate as we ramp up our new strategic relationship with TD. And we introduced our flagship partnership with SMCC to offer Clover to SMBs in Japan starting later this year. This is a focused market for us given its size and low card penetration. Additionally, we are excited about the special support visas providing in this partnership. We grew and further diversified Clover distribution channels across the board in Q4, including adding 47 banks to the Clover referral ecosystem, refreshing our merchant relationship with Truist, which will now support businesses of all sizes across the bank's large footprint including 1,900 branches, expanding our industry-leading ISO and agent platforms; continuing to add direct salespeople in North America, where we have over 600 today; launching a new digital tool for our bank partners, which integrates Clover merchant onboarding into the bank's digital banking experience; introducing AI prospecting tools to assist with the identification and conversion of high-value merchants. And finally, building on the takeaways from prior pilots we began targeting select non-Clover SMB merchants in the U.S. with a Clover offering. While these efforts have been narrow in scope and it's still early, we have seen some promising results with benefits for our clients and higher revenue yield for us. Our efforts here will remain deliberate, ensuring we prioritize the right experience and fit for the client. To finish on Clover, we are driving a number of merchant experience improvements, including digital feature enrollment and setup, AI-driven end-to-end merchant life cycle orchestration, a range of automated and high-touch service capabilities and simplification to pricing and billing statements. Next, on the innovation front, we have prioritized appropriately resourcing and completing a focused set of deliverables that are driven by strong demand from our customers. In the quarter, we made significant progress on these strategic priorities. Commerce Hub is progressing well towards a fully integrated cloud-native global omnichannel gateway, supporting a best-in-class enterprise value proposition. In Q4, we launched this capability across the Americas and are ramping a leading video streaming service provider client. The platform continues to scale in North America, processing over $200 billion in 2025, a greater than 200% increase year-over-year. In Financial Solutions, we continued to invest in modernizing our core banking and card issuer processing platforms. In banking, we are building cloud-based real-time secure, API-enabled and more open capabilities, a modernization effort that began in 2022. At our Client Forum in September, we made it clear that there will be no forced upgrades or conversions as part of this effort, reflecting feedback we receive from our customers. With respect to our newest course, we went live with our first clients on CoreAdvance and Finxact continues to perform exceptionally well and gained broad recognition for innovation. The Finxact platform surpassed 30 million total accounts and positions, representing over 80% growth in 2025 and is becoming the ledger of choice for fintechs and digital banks. In card issuer processing, we continue to modernize Optis and build out Vision Next, our next-gen card issuing platform. On Optis, we signed a multiyear extension with PNC and a new mandate with Fidem Financial, a fast-growing credit card asset manager that has acquired over $15 billion in assets. Fiserv will power Fidem's new co-branded credit card programs. We are now live with 5 FI clients on CashFlow Central with over 100,000 of their SMBs using our transformative all-in-one AR/AP payments platform and seeing real value. With over 155 FI signed since launch and a pipeline of over 400 prospects, we are excited about CashFlow Central's long-term potential. We advanced our efforts in stablecoin through the exploration of pilots with Huntington and several other banks, including use cases in cross-border payments, digital escrow and interbank money movement. With the closing of the StoneCastle acquisition, we introduced stablecoin custody capabilities, allowing us to recycle reserves back to financial institutions, a unique capability in the space. We're also excited about StoneCastle's ability to introduce next-gen cash management capabilities to our merchants, including Clover clients. Lastly on innovation, we continue to develop agentic commerce capabilities for our merchants and are particularly excited about our unique position with Clover to bring turnkey agentic capabilities to small businesses. We see agentic fundamentally changing the payments landscape and are working with Google, Mastercard and Visa to bring agentic to mainstream commerce. Additionally, we're exploring arrangements to enable agentic commerce across the landscape of conversational AI platforms. Fourth, we are in full swing with Project Elevate, which is a highly structured enterprise-wide evaluation of all of our activities. We are encouraged by the potential here, given we have identified ample room to simplify the business, and execute faster and more efficiently, and we are attacking these opportunities with urgency. This includes a comprehensive review of how we can further deploy AI across Fiserv. We look forward to providing a more fulsome update on Elevate at our Investor Day. Rounding out our One Fiserv plan is our commitment to highly disciplined capital allocation. As we mentioned on our last call, we continue to evaluate businesses and assets to ensure that they are consistent with our go-forward strategy. This exercise is critical in focusing our time and resources on our most important assets and activities. In summary, we made good progress in Q4. We are focused and confident in our strategy and ability to execute. No other company has the assets, breadth and scale to connect all parts of the financial ecosystem. Our unique position at the center of Commerce and Finance, 2 massive TAMs strengthens the market position of both our merchant and financial solutions businesses and creates opportunities in areas like embedded finance, stablecoins, networks and merchant liquidity optimization, all expanding the boundaries of how our market is defined today. New technologies, especially AI, further accelerate our ability to capitalize on and scale these opportunities. We have scheduled an Investor Day for May 14 and look forward to sharing additional details on our strategy and financial outlook and introducing you to the leadership team responsible for executing on our plan. I'll finish by thanking our employees for their hard work and dedication and our clients for the continued trust they place in us. I will now pass it off to Paul to go into more detail on Q4 and 2026. Paul Todd: Thank you, Mike, and good morning, everyone. I will cover details on total company and segment performance in the fourth quarter and full year and then review our guidance for 2026. Beginning on Slide 6, total company Q4 adjusted revenue of $4.9 billion was flat and adjusted operating income was $1.7 billion, resulting in adjusted operating margin of 34.9%. This results in full year total company adjusted revenue of $19.8 billion, up 4%, with adjusted operating income of $7.4 billion, resulting in an adjusted operating margin of 37.4%, a decrease of 200 basis points, right in line with our guidance. Total company organic revenue was roughly flat, down approximately 40 basis points in Q4, resulting in annual organic revenue growth of 3.8% in the upper half of the 3.5% to 4% guidance range we gave on our last call. Turning to Slide 7. Merchant Solutions grew 6% organically for the year, while Financial Solutions grew 2%. Fourth quarter adjusted earnings per share was $1.99, resulting in annual adjusted earnings per share of $8.64, above our guidance range of $8.50 to $8.60. Free cash flow for the quarter was $1.6 billion and $4.44 billion for the year, ahead of our guidance of $4.25 billion, representing approximately 93% conversion. Now I will turn to the performance by segment for Q4, starting on Slide 8 on Merchant Solutions. Merchant Solutions organic revenue growth was 1% for the quarter, while adjusted revenue grew 2%. Small Business revenue grew 2% on an organic basis in Q4 and 3% on an adjusted basis with the impact of the CCV acquisition slightly greater than the FX headwind. In addition, the Clover fee eliminations we discussed last quarter were a 2-point headwind to small business growth in Q4. Small business volume grew 7% in the quarter, inclusive of CCV. Clover revenue grew 12% in Q4, 2 percentage points higher than our guidance. There was a 6-point growth headwind to Q4 Clover revenue from the fee eliminations we called out on our last call. Clover volume grew 6% on a reported basis and 9% excluding the previously discussed gateway conversion. Clover volume growth was below our expectations for the quarter, driven largely by softness we experienced in the month of November in the U.S., particularly in the restaurant and retail sectors where we have a large presence. This softness in the U.S. was consistent with broader industry trends and Clover volumes reaccelerated on a combined basis in December and January to approximately 11% ex the gateway conversion. Value-added services contributed 27% of Clover revenue in Q4, up 5 points from a year ago, driven by anticipation, software attach and Clover Capital. Clover revenue finished the year at $3.3 billion, up 23%, while non-Clover small business revenue ex Argentina was flat in Q4 and up 3% for the year. Consistent with our preliminary view in October and assuming stable macroeconomic conditions, we expect Clover GPV growth of 10% to 15% in 2026 ex the gateway conversion. The lower end represents the core growth rate, while the higher end assumes more significant conversion of non-Clover merchants. Based on these volume expectations, the impact of Clover fee eliminations and more moderate growth from Argentina, we expect Clover revenue to grow in the low double digits for 2026. On a structural basis, our medium-term revenue growth rate target for Clover remains in the 15% to 20% range. Moving on to enterprise. Our business grew 1% on an organic basis in Q4, while declining 2% on an adjusted basis. Excluding the revenue from network fee timing associated with a large PayFac client that went live in Q3 2024, adjusted revenue for enterprise would have been 6% higher in the quarter and more in line with the 6% transaction growth. Transaction growth slowed sequentially from Q3 due to lapping the ramp of the large PayFac client mentioned earlier. And finally, in processing, organic revenue declined 1%, while adjusted revenue grew 1%, driven by FX tailwinds. Fourth quarter adjusted operating income for the Merchant Solutions segment was $816 million, down 17%, with adjusted operating margin of 32.1%. For the full year, Merchant Solutions' adjusted operating income was down 2% to $3.5 billion with adjusted operating margin of 34.5%. Now I will cover Financial Solutions starting on Slide 9. For the quarter, both organic and adjusted revenue in Financial Solutions declined by 2%. In Digital Payments, organic and adjusted revenue declined by 1%. We saw good volume growth in debit processing and network volumes consistent with the growth levels from last quarter. Zelle transactions grew 15% in the quarter as we continue to see a slowing of the growth curve for Zelle as the product matures. Also, we started to ramp revenue from CashFlow Central in the quarter. Finally, ATM Managed Services was an approximate 1 point headwind to revenue growth in digital payments. In Issuing, revenue declined 1% on both an organic and adjusted basis, as global active accounts on file grew in the low single digits. Finally, in banking, revenue decreased 4% on an organic basis and was down 3% on an adjusted basis as we continue to be impacted by certain actions taken over the last several years. While an improvement sequentially, we are still facing comparative headwinds, and we'll continue to face these throughout the first half of next year, after which we expect a return to stability. As Mike mentioned earlier, this is a significant area of investment and focus for us. Fourth quarter adjusted operating income for the Financial Solutions segment declined 20% to $997 million and adjusted operating margin was 42.2% versus 51.7% in the prior year. The most significant impact on margins in Q4 was related to incremental vendor spend and headcount investments to improve client experience. For the year, adjusted operating income for the segment was down 2% to $4.4 billion with adjusted operating margin of 45.3%. At the corporate level, our adjusted effective tax rate was 19.3% for the quarter and 18.6% for the year. From a leverage standpoint, we finished the year with a debt-to-adjusted-EBITDA ratio of 3x, in line with our expectations. We continue to target long-term leverage at 2.5 to 3x. Turning to Slide 10. We also repurchased 3 million shares during the quarter for approximately $200 million and paid down over $1 billion in debt after funding the acquisitions of StoneCastle and a portfolio of TD merchant contracts. With respect to Project Elevate in Q4, we incurred $73 million of expenses related to this program, and we will continue to have related onetime costs in 2026. Now with Slide 11, I'll move on to 2026 guidance, which is in line with the preliminary view we gave on our last call. First, on revenue. We are continuing to provide guidance regarding our organic revenue growth for 2026, and we plan to supplement this with additional information about our assumptions to help investors and analysts arrive at adjusted revenue. Also, to provide further insight, we are giving growth expectations for the Merchant and Financial Solutions segments. We expect 2026 organic revenue growth in the range of 1% to 3% with Merchant Solutions revenue growth in the mid-single digits and Financial Solutions flat to slightly down. Reflecting higher nonrecurring revenue a year ago, we expect adjusted revenue growth in both quarters of the first half of 2026 to decline to the low single digits, with Q2 representing the trough in terms of the rate of decline. In our Financial Solutions business, we expect a more pronounced grow-over trend in the first half, resulting in a decline at the high end of mid-single digits. As we get to the second half of the year, we expect our adjusted revenue growth to be more tightly correlated to underlying drivers such as volume, transaction and account growth. We expect offsetting FX and M&A impacts for 2026 driving our expectation for adjusted revenue growth that is also in the range of 1% to 3%. As a reminder, Q1 is the last quarter of impact from the CCV acquisition and thus, we expect an approximate 1 point difference between organic and adjusted revenue in this period. We expect Argentina will have a modest positive impact to organic revenue growth in 2026, while having a slightly larger negative impact to adjusted revenue growth. As compared to prior years, based on our current expectations, this is a much more modest contribution from Argentina. We expect our effective tax rate to be in the range of approximately 19% to 19.5% for the full year and weighted average share count to be approximately 530 million. Putting it all together, we expect adjusted EPS of $8 to $8.30. Similar to our expectations around revenue, we expect a different level of operating margins in the first and second halves of the year. In the first half, we expect adjusted operating margin of 31% to 32%, with Q1 representing the low point just below 30%. In the second half of the year, we expect adjusted operating margin of 35% to 36% with Q4 representing the high point in the year. For the year, this translates into approximately 34% adjusted operating margin. To complete our strategic investments, we expect capital expenditures to remain approximately flat with 2025 levels and end the year with a leverage ratio of approximately 3x. We expect free cash flow conversion of approximately 90% of adjusted net income for the year, in line with historical levels. As always, Q1 will be our trough for free cash flow conversion. Finally, to the extent we generate any excess cash from business and asset optimization activities, we intend to deploy this additional cash to share repurchase. And with that, I will turn the call back to the operator to start the Q&A session. Operator: [Operator Instructions] Our first question comes from Darrin Peller from Wolfe Research. Darrin Peller: Mike, can you just touch on whether you believe the review you've taken in the business has really accomplished everything you need and you fully see what you needed to see that you feel confident on the numbers going forward? Michael Lyons: Yes. Thank you for the question. And we feel great as went through in the prepared comments, we feel great about the progress we're making and the pace that we're moving at. And relative to the conclusions that we outlined from the analysis we did in Q3, there's nothing new, and that's fully reflected in hitting up what we thought we'd do for Q4 and introducing guidance for '26 in line with the preliminary view we provided back in October. So as I said, it's a multi-quarter path. I feel great about the progress. We're fully aware of what we need to do to position our business as this constant compounder goal that we have. And 100% of our focus is on executing against the pillars we put forth in the One Fiserv plan, and I went through it. And as you saw and Paul talked about in his comments, we just have to -- there's a difficult compare in the first half of the year as we pivoted the strategy in the third quarter to focus on more recurring revenue. So overall, we feel good. The quarter was about execution, and that's where we go from here. Operator: Timothy Chiodo from UBS. Timothy Chiodo: I want to touch on digital payments, so that subsegment within the Financial Solutions segment. That is the largest bucket there. I believe it's about $4 billion or so in annual revenues. And correct me if I'm wrong, but I think STAR and Accel, the debit networks make up about maybe 1/4 of that, so say, $1 billion or so of that $4 billion of revenue within digital payments. Last quarter, you called out some pricing actions within that subsegment, and I believe some of them related to the debit networks as well and maybe some other portions of that subsegment. Maybe you could just add some more detail on those price changes and maybe an update or a response to what you saw in the market, whether it brought on additional volume, it protected volume that might have been lost? And anything else you can provide around really STAR and Accel as the focus. I know you mentioned that things are pretty consistent, but anything else you could add would be appreciated. Paul Todd: Sure, Tim. Thanks for the question. And yes, we did make comments on the last quarter call in regard to that. I wouldn't add anything new to that. There wasn't any new development in Q4 related to any of those actions. I would say we're very pleased not only with the sequential improvement in digital payments, but also what we saw on the volume side, particularly on the network side. We did see growth on the network volumes. And in that overall digital space, we also saw good transactions in our debit processing area as well. And I think that's what was the underpinning of the performance there. Just like with all the segments, we do have comparative headwinds that will continue in digital payments for the first half of next year, but there wouldn't be anything else I would add on the network side. Michael Lyons: I would just add, strategically, we continue to be very pleased with both STAR and Accel and the value we add on both sides of our business, classic synergy play between FS and MS sides of the business, and we continue to try to look for all ways that we can fully leverage those networks. Operator: We'll go to the line of Tien-Tsin Huang from JPMorgan. Tien-Tsin Huang: It seems like you got some good line of sight into the business, which is great. I want to better understand the expenses required to execute on Fiserv, specifically how much is structural versus onetime like consulting or IT staff augmentation, that kind of thing. It looks like you're going to exit the year at 36% margin. How clean is that 36%? Paul Todd: Yes. So Tien-Tsin, thanks. I would speak to the overall margin first and the expense. We don't see any material kind of expense ramp-up. As we kind of said on our last call, we have largely baked in the expenses related to One Fiserv and particularly around the infrastructure and some of the resiliency investments and such. So just as an operating margin standpoint, there is an increase year-over-year on expenses from an operating standpoint, but it's in line with exactly what we were expecting when we gave the guide and hence, the margin guide is in line. As it relates to the transformation Project Elevate expenses, particularly, we did call out the size of those. There was start-up-related expenses, particularly around professional services in there. We did have some infrastructure expenses as well. And that is about the right kind of cadence of what we expect quarterly expenses related to Project Elevate to be. They will increase some as we move forward and broaden the project as we focus now on process efficiencies and other efficiencies that we expect to get out of the business. And those will then be more kind of technological-related expenses as opposed to more professional services related. Operator: We'll go to Dave Koning from Baird. David Koning: And I guess my question is on the SMB portion of the Acceptance segment. You mentioned the Clover part will probably grow revenue low double digits. But I'm also wondering what do you expect from the non-Clover part of SMB that's been declining, maybe flattish ex Argentina. But then as a corollary to it, Argentina, the merchant cash advances look like they were down dramatically, like there's a lot less. So is that creating a little bit of a headwind in that non-Clover part? So I guess kind of multiple layer question just on how SMB is going to do in '26. Michael Lyons: Yes. So overall, we did comment on the Clover part of SMB. We do expect slight growth in the non-Clover SMB for next year. Just we kind of talked about that as being kind of flat to maybe just a little bit of growth on the non-Clover SMB. You're right, Dave, as it relates to Argentina in general, it's now really not a growth factor at all relative to the go-forward expectations in 2026. And so we do -- we had an impact in 2025 that we called out that if you took out Argentina, we actually did grow the non-Clover piece. But as you look forward in 2026, we expect roughly a flat to a slightly growth non-Clover SMB picture that's embedded in our guidance. Operator: We'll go to the line of Andrew Jeffrey from William Blair. Andrew Jeffrey: Mike, I'd like to dig in a little bit on your outlook for Clover yield. The medium-term revenue guidance in Clover obviously implies some nice share gains relative to at least the U.S. market. And yield growth, obviously, given the fee changes has slowed quite a bit. But can you talk about the areas where you think you have the ability to add sort of durable value with value-added services and what the yield progression in that business looks like over time? Just trying to get a little more clarity on the outlook for accelerating Clover revenue growth. Michael Lyons: So the -- I'd just start at the highest level as we were very pleased with the underlying trends we saw in Clover in Q4. We talked about some of the macro factors. And then more importantly, with the progress we made against the Clover business priorities that we highlighted as part of the One Fiserv action plan and pillar 2. And those are critical to reaching this goal of creating, I think, a little bit to where you're going is what we believe will be the preeminent small business operating platform. That's obviously our goal, not just be a payments box, but help small businesses run their full operations from there, and that goes to the partnerships on the horizontal side with Homebase, with ADP, with CashFlow Central, obviously, embedded into ADP, Clover Capital and then really to get after and drive higher yield for the overall SMB book, not just focusing on Clover, our entire SMB book is to continue to build out our vertical expertise and we mentioned in the opening comments that we'll launch this quarter on the health care side and the professional services side. And the more custom solutions and value-added solutions we can embed inside the platform of Clover, obviously, yield will grow with that. And we're optimistic on that over the long term. There's hard work being done to create a value proposition to the $4 billion or so of revenue we have sitting in non-Clover SMB. But more specifically in the guidance stuff, I'll let Paul comment on yield. Paul Todd: Yes. So Andrew, I think it would be fair to say we're very pleased with yield maintenance for 2025 overall, and we don't expect any change really on the yield side in 2026. And you can kind of see that based on our volume growth being in line with our revenue growth on a kind of overall kind of high level. And I think as it relates to go forward, like Mike commented, as we look at like vertical expansions, you would see 15% to 20% kind of growth on the revenue side in the longer term against that 10% to 15% growth, which speaks to a higher yield on a go-forward basis as we penetrate more in Clover Capital, as we do more on the software side. As Mike said, as we do more on the platform side, you'd see kind of that yield maintenance or even slight yield improvement on a go-forward basis so that's consistent with our strategy. And certainly, we'll give more color on that at our upcoming IR Day. Operator: We'll go to the line of Andrew Schmidt from KeyBanc Capital Markets. Andrew Schmidt: Just a quick 2-parter on the banking segment. Mike, I hear your comments on the sort of the core client retention. Maybe just a little bit more color on what you're seeing there. It sounds like you've been very proactive in being high touch with clients. And then just beyond the core, can you talk about how you view the portfolio today? Do you need additional capabilities, thinking digital, et cetera? Or do you feel good about where you're at from a capability perspective? Michael Lyons: Thanks for the question. First, on the core part, as I said in the opening comments, we're going down the path of core modernization. We're -- first of all, we're proud of our leading market share position broadly in core banking, and we support a lot of banks and credit unions across the country on our various platforms, and we're proud of that. We began that core modernization process in 2022, building cloud-based real-time secure API and really more open capabilities from our perspective. That plan remains in place and is a good thing for everyone. As we rolled out back at our Client Forum in September and talked about on the last call, based on some feedback we got from clients, we were explicitly clear that there are no forced conversions as part of this modernization. So if a client wants to make a change, it's totally on their time line. All that said, as a result of some actions taken over the last couple of years, including the prior core conversion approach, we have lost some market share, especially you see it on the smaller credit union side of our business and have been disappointed, obviously, in the results that have come through in the banking segment from those actions. Our view is given the pivot we made at Forum on the conversion approach as well as a series of other client commitments we made at Forum and a whole series of investments that I talked about earlier, both on the technology side and on the people side, day-to-day people side, we think we're on the right path to having banking return to positive growth, which we've talked about in the low single digits. And I think most importantly, what we feel good about is the fixes are really 100% in our control, and we're investing directly against them. These aren't things we can't solve. These are things that we need to do and are the right things for our clients to do. Specifically on core client attrition in 2025, it was above where we wanted to be, but stable with where it was in 2024 and 2023. We didn't see any change on that front. In the very near term and how we went into the planning for next year, we are realistic about the impact of past decisions and how fast we can bend the curve, and that's all included in our plan. But we look -- our goal is to serve all our great clients appropriately and compete strongly every day in the market. And on top of the cores to the second part of your question, we feel really good about the portfolio solutions we're adding, and we continue to listen to what banks and credit unions are focused on, which includes generating core deposits, which the StoneCastle capability helped us with how do you address the emerging value or threat of stablecoin and feel great about what we've done there, launching our own stablecoin on behalf of the banks FIUSD. And then creating what we think is the first closed-loop stablecoin deposit network by acquiring the custody capabilities through StoneCastle this year. And we think out more and more around AI in a box and other types of solutions around that CashFlow Central goes directly to the desire to build small businesses. So we feel great about the portfolio of solutions around it. If we have to add small capabilities, you've seen us do it with stuff like StoneCastle. But we're anxious to get our day-to-day service commitment levels and our clients back to one of that pillar of great client service and then focus on this great portfolio of value-added capabilities we have. Operator: We'll go to the line of Jason Kupferberg from Wells Fargo. Jason Kupferberg: I wanted to come back to Clover for a second. If you can talk about what drove some of the improvement in December, January, you said to 11%. And then the midpoint of your guide for '26 would suggest maybe a little bit more acceleration of this December, January levels so what drove the improvement in December, January? And then what are the drivers of some of the potential further improvement as you go through 2026. And if you can just remind us also when you think we lap the gateway conversion, that would be really helpful. Yes. Michael Lyons: Yes. A couple of parts there. First, I'd start is December and January went back to where we thought we'd be for the quarter. We had said 11% in Q3, came in under that, obviously. We cited November as being macro weakness. We saw that in other people participate in our industry. And part of our vertical build is to drive yield higher to the prior point, but it's also to reduce some of our concentration in the restaurant and retail areas, especially restaurants, and that had a weaker November. So macro anomaly in the month and then we saw volumes reaccelerate back to where we thought they'd be for the quarter. So we feel good about that. I think just longer term, if you exclude the gateway conversion over the last couple of years, we've been -- we bounce around quarter-to-quarter from the high single digits to the low double digits. The 4 quarters of '25 were between 9% and 11%, and that's sort of where we see the core growth rate of the business sometimes independent of macro factors. So I think that's a good view to lead -- a good area to lead around that. Just to be careful on the gateway conversion, remember, that -- there's not a technical lapping of the gateway conversion. You stop converting over a gateway and then there's continuous runoff over time. So it's not a traditional anniversarying thing that will -- as long as there are gateway converted clients on the system, if one of those runs off, it will impact growth going forward. But obviously, the magnitude of that will go down and we have it going it was 3 points for most of -- 3-point differential for most of this year, and it will go down in '26 and going forward. So hopefully, that's helpful. Anything to add, Paul? Paul Todd: Yes. The only thing I would add is, Jason, we feel good about where we sit. When we saw what December did, when we see what January did as it relates to that overall guide that we gave. And the things that we talked about in the prepared remarks around business development, expansion some of the verticals expansion. Those are all just kind of tailwinds that help us get very confident about the overall guide of GPV. And as Mike said earlier, the overall macro, we're assuming kind of a normalized macro and we also commented in the prepared remarks that the lower side of that guide is reflective of less kind of non-Clover transition and the higher side reflects kind of more on non-Clover transition. Operator: We'll go to the line of Dan Dolev from Mizuho. Dan Dolev: Lots of good things, improvements across the board, great job here. Mike, it's been a few months now. I mean, is anything that surprised you most? Any new surprises here? Anything you're seeing that hasn't been appreciated that you would like to highlight, that would be great. Michael Lyons: Yes. As as I mentioned earlier, with respect to new developments or surprises with the negative connotation from what we said in the third quarter, there are none, and our focus is all on execution. I think all the things -- the surprises on the positive side are the capability and potential for this company to not only deliver on the pillars that we've delivered on historically to serve 2 massive TAMs who are eager and have a high appetite for advice and advanced technology from us. That just continues to grow. And so we're anxious to get these investments made and be able to focus on exciting things similar to what I talked about in the banking core place. Our cores are great. They meet a lot of different needs of a lot of different institutions. We want to make sure the service is great on that. So then we can talk to the banks about how do you grow small business customers, how do you deal with modern forms of payments? How do you bring -- how can we, as an execution and orchestration layer on behalf of them, bring AI into their businesses. And the same thing on the merchant side, where agentic capabilities, our ability to democratize that for small businesses across the country and allow them to participate in a similar way is right in front of us. So lots of positive surprises. It the things that people have known about Fiserv for a long time, but as modern technology accelerates our ability to capitalize on those just gets greater and greater. Operator: We'll go to the line of Will Nance from Goldman Sachs. William Nance: I just had a little more here on the enterprise side, you've been calling out the PayFac grow-over issues for a bit now. Just remind us again when those lap and if there's any way of quantifying the magnitude on both revenue and transactions, that would be helpful as well. Paul Todd: Yes. So Will, we did -- in the prepared remarks, I made a couple of comments, particularly around enterprise. As I talked about, this will be the last quarter that we talk about enterprise transition of this PayFac client, and we had about 6 points of differential that existed in the fourth quarter related to this. If you kind of add that to the revenue side, the minus 2% goes to kind of more of a plus 4%. If you look at the transactions of 6%, which is kind of a clean number on the transaction side, that 4% revenue growth is very in line with the 6%. And then that kind of 4% or kind of mid-single-digit growth is consistent with what we've had in the third quarter and also consistent with roughly what we expect as we look forward to next year. And that mid-single-digit transaction growth would also be the right way to think about the business on a go-forward basis without the PayFac noise in that line. William Nance: Got it. Okay. So converging in the first quarter. Appreciate it. Operator: We'll go to Bryan Keane from Citi. Bryan Keane: Just a follow-up on that, Paul. How do we think about the mid-single-digit growth for the -- organic growth for the year in merchants? You just went through enterprise small business, though, with Clover, it looks like it will be about the same growth rate we saw in the fourth quarter. So going from 1% organic growth in the fourth quarter to mid-single digits we get a lift from enterprise, but do we also get any lift from SMB and processing? Paul Todd: Yes, Bryan. So I gave some comments on that in my prepared remarks around the overall mid-single-digit growth expectations we have for merchant next year. I would say, I think your comment related to Clover specifically is accurate when we gave the overall Clover growth -- revenue growth guidance of the low double digits. And so I think that kind of holds. And if you try to add back kind of the headwinds that we had in the fourth quarter, you get back to that mid-single-digit growth rate for merchant in the fourth quarter. So if you looked at it from a third quarter and a fourth quarter, how Merchant has performed overall, that gives you line of sight into roughly how we will perform in that range roughly for next year. I would just highlight that we do have the comparative dynamics in the first half of the year in Merchant like we do in Financial Solutions. It's not as dramatic. And so we obviously called out the more dramatic FX headwinds, comparative headwinds in the first half. But I think the third quarter, fourth quarter adjusted run rate, if you want to call it that, gives confidence of what the overall Merchant Solutions looks like for next year. Operator: Next, we'll go to the line of James Faucette from Morgan Stanley. James Faucette: I wanted to follow up on some of the fee changes that you've made and any color you can give there in terms of merchant response. I'm sure they're happy about it, but things that you can measure like changes in churn or retention? And how long do you think you'll see some of those impacts for? Michael Lyons: Thanks for the question. The changes we talked about last quarter with respect to the specific Clover fees, they were implemented, and we received positive feedback from our partners. I don't know if you can directly attribute it to in-quarter or any specific in-quarter movements. We just thought it was the right thing to do on behalf of our customers, partners and the business, and that's the way we'll continue to run the business. Operator: Next, we'll go to James Friedman from Susquehanna. James Friedman: A more general question on the Financial Solutions segment. Obviously, posted negative organic growth in the quarter. I'm just wondering what from your perspective needs to change for that segment to reaccelerate and grow. What indicators are you looking at? And what should investors watch in terms of the opportunity overall for Financial Solutions? Michael Lyons: Yes. Overall, again, we think we have a great platform. We talked about some of the investments in and around the client service and specifically around the core customer service platform that we have to make. We're making those. We're closely monitoring the progress of those. Obviously, there's easy KPIs for those in terms of client satisfaction and the like and average revenue per client. So we continue to watch those. I would say broadly, the impact of comparable periods and you have to continue to monitor that. If we look at the underlying volume growth across almost all aspects of the financial services business, it remains in trend areas that it's been in for a long time, and we feel good about. It's not just purely translating to period-on-period revenue growth as you go over the comparables from a prior period. So one of the most important things we watch and Paul mentioned in his comments is what are those underlying volume growth rates. And again, we feel good about those we told you in the banking space that we're not happy with where we are in performance last quarter. We remain there, but we know what we have to do to fix it, and we're addressing it. Paul Todd: Yes. And the only thing I would add on to that, Jamie, would be that we do expect to see in the back half of next year growth in all 3 of these areas of Financial Solutions based on those volume underpinnings that Mike just mentioned. These are very volume-driven businesses. We like the volumes as they're growing across those businesses. For 2026, we have these comparative -- nonrecurring kind of comparative headwinds. And so we will see expected growth across the board in the back half of the year. And we've talked about Financial Solutions being a low single-digit kind of growth business, and that's what we expect on a go-forward basis after we get past this year. Operator: We'll go to Kenneth Suchoski from Autonomous Research. Kenneth Suchoski: Just one on the non-Clover SMB part. I think you mentioned you're assuming slight growth in that business in 2026. We estimated it was down slightly in 2025 and maybe a little bit more of a decline in the second half. So maybe just talk about the drivers of the acceleration and how you get to that slight growth in that business in '26? Paul Todd: Yes. And I would start off by saying you're right in that rough estimation of slightly down overall and as we said, up ex Argentina. I would say we've got a very strategic approach as it relates, and I think Mike made some comments on this earlier around testing the non-Clover merchants as they move over to Clover and just a greater attention on just this book in general and how we go about that book. We are very focused on growing the Clover business, but we are also very focused on the transition of non-Clover merchants and the retention of non-Clover merchants as well. So I'd say all of the things that we're doing across the board are collaborative in nature. They're more Clover focused, but we're also focused on this side of the business as well. Operator: For the next question, we'll go to the line of Harshita Rawat from Bernstein. Harshita Rawat: Just two quick ones. On the Clover 10% to 15% volume growth for the year, Paul, what drives the pace of back book conversion that could land you at the high end of the range in volumes? And then Mike, I just want to follow up on your conversation with your banking customers, you -- there's been some satisfaction with the service and product levels that you talked about and also addressed at the Forum. You talked about the elevated churn. My question is, as you go on and change the organizational mindset and make these investments, what are you hearing currently from your customers? Paul Todd: Yes. On the 10% to 15% GPV, as I said earlier, the business on a core basis excluding any non-Clover to Clover transitions has been growing in high single digits, low double digits. That's the formation of 10%. You should think of that as the organic growth rate, assuming economic conditions stay in relatively constant form, over time, and we also mentioned that we're taking a very deliberate and thoughtful approach to any back book conversion, making sure that there's a right value proposition for the merchant because today, it's -- again, it's all Fiserv revenue, and we want to make sure if we do anything, it's very thoughtful and with a clear value proposition. That would have to be working in a very significant way, more than we contemplate in the near term to get to the high end of the range. And if we have some success in that, again, we're being very deliberate and very thoughtful as we do it, making sure we have the right vertical capabilities, the right paths to add value to those clients. So anything we do and we're successful there would bring it above that core line of growth. On the banking side, I think it's reflective of what I said for the first quarter of a multi-quarter effort. We are out doing the right things, making the right investments and the anecdotal feedback we're getting from clients is they like what they see, but they want to see it sustained and delivering on the commitments we made and that's 100% what we're focused on. Operator: Final question. Michael Lyons: Thank you all for joining us today, and we look forward to seeing you at the various conferences and different meetings over the course of the quarter. Operator: Thank you all for participating in the Fiserv Fourth Quarter 2025 Earnings Conference Call. That concludes today's call. Please disconnect at this time, and have a great rest of your day.

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